/raid1/www/Hosts/bankrupt/TCREUR_Public/101201.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, December 1, 2010, Vol. 11, No. 237
Headlines
A U S T R I A
A-TEC INDUSTRIES: AE&E In Talks With Costain Over Belvedere Job
G E R M A N Y
PROMISE-I MOBILITY: Moody's Cuts Rating on Class E Notes to Caa3
TUI AG: Preparing to Sell Hapag-Lloyd Stake
G R E E C E
* GREECE: Corporate Bankruptcies Up 44% in 2010, ESEE Says
I R E L A N D
ALLIED IRISH: Fitch Cuts Rating on Tier 2 Subordinated Debt to B
ANGLO IRISH: Strategy to Wind Down Loan Book Ready by January
ANGLO IRISH: DBRS Cuts Ratings on Subordinated Notes to 'D'
BANK OF IRELAND: Plans to Raise EUR2.2 Billion in Capital
BANK OF IRELAND: Fitch Cuts Rating on Lower Tier 2 Debt to 'BB'
EIRCOM GROUP: May Breach Loan Covenants; Assesses Options
FOUR STAR: High Court Confirms Appointment of Examiner
MCINERNEY GROUP: Oaktree Seeks Approval to Acquire Two Units
* S&P Changes Ratings on Irish Banks; Retains CreditWatch Negative
R U S S I A
HOME CREDIT: S&P Changes Outlook to Stable; Affirms 'B+' Rating
MOBILE TELESYSTEMS: Fitch Affirms 'BB+' Issuer Default Ratings
RUSSIAN STANDARD: S&P Gives Stable Outlook; Affirms 'B+' Rating
SISTEMA JOINT: Fitch Affirms 'BB-' Issuer Default Ratings
STROYKREDIT BANK: Moody's Assigns 'B3' Rating to Senior Debt
S E R B I A & M O N T E N E G R O
AGROZIV DD: Perutnina Eyes Acquisition
S P A I N
AYT GENOVA: S&P Puts Credit Ratings on Notes on Watch Positive
AYT GENOVA: S&P Affirms Rating on Class D Notes at 'BB- (sf)'
T U R K E Y
TOPLU KONUT: Fitch Gives Positive Outlook; Affirms 'BB+' Rating
* Fitch Gives Positive Outlook on Istanbul's 'BB+' Ratings
U K R A I N E
ZHYTOMYRSKI LASOSCHI: Faces Liquidation Amid Ownership Dispute
U N I T E D K I N G D O M
AFREN PLC: S&P Assigns 'B-' Long-Term Corporate Credit Rating
AFREN PLC: Fitch Assigns 'B' Long-Term Issuer Default Rating
ANGLO IRISH: Dec. 2 Hearing Set for Request to Question Ex-Chief
ATRIUM EUROPEAN: S&P Raises Corporate Credit Rating to 'BB'
BALL BROTHERS: Goes Into Administration
CATTLES: Reveals Rescue Plan to Avoid Administration
CONNAUGHT PLC: Auditor Policeman Probes PwC
EUROCASTLE CDO: S&P Junks Ratings on Two Classes of Notes
GHOST: Retail Tycoon Forced to Pay GBP2.5 Million
GLAMALCO: Goes Into Administration; 140 Jobs Axed
LOCAL HEROES: Goes Into Administration
LOWRY HOMES: Enters Administration
QUIBELL CONSTRUCTION: Two Building Firms Go Into Administration
SHEFFIELD WEDNESDAY: Has Takeover Deal; Averts Administration
TURBO FINANCE: Fitch Assigns 'BB+' Rating to Class C Notes
VEDANTA RESOURCES: S&P Keeps 'BB' Long-Term Corp. Credit Rating
*********
=============
A U S T R I A
=============
A-TEC INDUSTRIES: AE&E In Talks With Costain Over Belvedere Job
---------------------------------------------------------------
Jamie Dunkley at The Telegraph reports that construction group
Costain has entered into talks about the financing of the
Belvedere power plant in London after one of its key contractors
filed for insolvency.
The Telegraph relates that the company revealed it is owed
GBP22 million by AE&E Innova of Switzerland, whose German parent
collapsed last week.
Costain, which is a sub-contractor for the "construction and
delivery of a significant part of the energy-from-waste facility",
said it could not be certain AE&E Inova will make all future
payments under the terms of its contract, The Telegraph discloses.
"In light of the insolvency of AE&E Group, Costain is engaged in
active discussions with both AE&E Innova and Cory Environmental
regarding the financing and completion of the project," Costain
said in a statement, according to The Telegraph.
Belvedere -- a GBP120 million project near the Dartford Crossing
-- is one of the largest alternative energy projects in the UK and
will be used by London boroughs to reduce their spending on
landfill. The plant's output is expected to provide power for up
to 50,000 homes across London.
As reported in the Troubled Company Reporter-Europe on Nov. 26,
2010, Bloomberg News said A-Tec Industries AG's AE&E construction
unit received court clearance to reorganize debt after it failed
to sell the company or unfreeze a EUR798 million (US$1.06 billion)
credit line. AE&E will be managed by an administrator after it
filed for reorganization proceedings at the Vienna Commercial
Court on November 24. AE&E said under the restructuring, which is
part of the insolvency process, creditors are being offered 20% of
what they are owed.
The AE&E unit, which builds power plants for clients such as
utilities or steel makers, is A-Tec's biggest unit with 60% of the
group's revenue and 83% of pretax profit in 2009. Bloomberg noted
failure to keep it afloat would diminish the funds for creditors.
A-Tec Industries AG is an engineering company based in Vienna,
Austria.
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G E R M A N Y
=============
PROMISE-I MOBILITY: Moody's Cuts Rating on Class E Notes to Caa3
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 3 classes
of notes issued by Promise-I Mobility 2005-1.
This transaction is a synthetic balance sheet collateralized loan
obligations of senior corporate loans to SME borrowers
incorporated in Germany. All loans were originated by IKB
Deutsche Industriebank AG.
The affected notes are:
Issuer: Promise-I-Mobility 2005-1 plc
-- EUR27.8M A Notes, Confirmed at A1 (sf); previously on Nov 5,
2010 A1 (sf) Placed Under Review for Possible Downgrade
-- EUR8.3M B Notes, Confirmed at Baa2 (sf); previously on Nov 5,
2010 Baa2 (sf) Placed Under Review for Possible Downgrade
-- EUR7.5M C Notes, Downgraded to Ba2 (sf); previously on Nov 5,
2010 Ba1 (sf) Placed Under Review for Possible Downgrade
-- EUR5.3M D Notes, Downgraded to B3 (sf); previously on Nov 5,
2010 B1 (sf) Placed Under Review for Possible Downgrade
-- EUR5.3M E Notes, Downgraded to Caa3 (sf); previously on
Nov 5, 2010 Caa1 (sf) Placed Under Review for Possible
Downgrade
Ratings Rationale
These rating actions are mainly driven by: 1) the deterioration of
the asset pool reflected in the occurrence of additional credit
events (increase by EUR9 million), delinquencies (increase by
EUR3.3 million), and negative credit migration since the last
rating actions in May 2009 as evident from the latest investors
report and 2) the revision of IKB's internal rating scale and
process used to assess the creditworthiness of SME borrowers.
The Aaa rating of class A+ was maintained while classes A and B
saw their ratings confirmed given the short weighted average life
of these tranches (0.5 year for class A+ and 0.9 year for classes
A and B) and the strengthening of their credit enhancement levels
due to the relatively low level of losses experienced by the
portfolio in relation to its initial size (0.5%) coupled with fast
and substantial amortization of the portfolio (71% amortization
since August 2009 when redemption of notes started).
In order to assess the default probabilities of each of the
borrowers in the pool, Moody's relies on the internal credit
scores assigned to each borrower by IKB as originator of the
transaction. Following the recent revision by IKB of its internal
credit score scale which provides a more detailed assessment of
credit risk levels, Moody's revisited its mapping to IKB credit
scores i.e. the way the bank's internal credit scores are
translated into Moody's idealized default probabilities. The
greater conservativeness embedded in IKB's revised credit scores
drives IKB internal ratings to map to higher Moody's default
probabilities and therefore has a negative impact on the ratings
of the notes.
As a base case, Moody's analyzed the underlying collateral pool
with a weighted average rating factor of 2762 (B3) including
assets mapping to a Ca rating, which translated into 1508 (Ba3)
when such assets were excluded. A weighted average recovery rate
of 52.21% was used in this analysis.
Moody's additionally ran sensitivity analyses on key parameters
for the rated notes. Among these, Moody's considered the impact
of recovery rates deviating by plus or minus 5% from their mean
value of 52.21% and observed that the model results for all
tranches, except class A+, would likely be impacted by not more
than 2 notches. Moody's also considered the impact of further
stresses to large single exposures: a downgrade of the mapped
rating of the largest obligor (1.86%) in the pool from Ba1 to Caa2
had an impact lower than 2 notches on the rated notes. Given that
credit events can be called in this transaction only for
bankruptcy and failure to pay, Moody's considered a default
probability of 100% only on the portion of obligors currently
undergoing a restructuring that are likely to default within a
year. This adjustment permitted to avoid the occurrence of
"artificial" credit events in Moody's model which would
unnecessarily erode the credit enhancement below the rated notes.
Moody's Investors Service did not receive or take into account a
third-party due diligence report on the underlying assets or
financial instruments related to the monitoring of this
transaction in the past six months.
TUI AG: Preparing to Sell Hapag-Lloyd Stake
-------------------------------------------
TUI AG, the biggest single shareholder in the Hapag-Lloyd
steamship company, is working with three banks to prepare the sale
of its stake in the container line, Aaron Kirchfeld, Zijing Wu and
Holger Elfes at Bloomberg News report, citing four people with
knowledge of the process.
According to Bloomberg, the people, who declined to be identified
because the matter is private, said Credit Suisse Group AG,
Deutsche Bank AG and Goldman Sachs Group Inc. are advising TUI on
the sale, which would likely be done through an initial public
offering. Bloomberg relates two of the people said the IPO of the
stake in Hapag, Germany's biggest container line, would happen
next year, possibly in the second quarter.
"TUI hasn't made any decision yet on how to dispose of its stake
in Hapag," said Robin Zimmermann, a spokesman for TUI, by
telephone, according to Bloomberg. "We are still examining all
options to dispose of the stake to generate a maximum of value for
TUI's shareholders."
TUI holds 43% in Hapag and said Sept. 22 that its stake will
increase to 49.8% by the end of the year after some debt is
refinanced, Bloomberg discloses. The increase of its stake is the
result of the conversion of a hybrid loan for Hapag into equity,
Bloomberg says, citing the company's statement in September.
Bloomberg notes TUI has repeatedly said it wants to dispose of its
stake in Hapag to focus on tourism.
TUI AG -- http://www.tui-group.com/en/-- is a Germany-based
company mainly engaged in the tourism sector, focusing on the
markets of Central, Northern and Western Europe. TUI owns a
network of travel agencies and tour operators, including air
tours, Thomson, First Choice and TUI Deutschland. It also
operates several airlines, including Corsairfly, Thomsonfly and
First Choice Airways, among others. The Company is structured
into three segments: TUI Travel, TUI Hotels and Resorts, and
Cruises. TUI Travel comprises the Company's distribution, tour
operating, airline and incoming activities and services over 30
million customers in 180 countries. The TUI Hotels and Resorts
division offers a portfolio of 238 hotels, located in Spain,
Greece, Egypt, France, Turkey, Tunisia, the Balearics and the
Caribbean, among others. The Cruises sector comprises Hapag-Lloyd
Kreuzfahrten GmbH and TUI Cruises which provide luxury cruises,
and cruises within the German-speaking countries, respectively.
* * *
As reported by the Troubled Company Reporter-Europe on Sept. 29,
2010, Moody's Investors Service affirmed the Corporate Family
Rating and Probability of Default Rating of TUI AG at Caa1; the
unsecured rating and the subordinated ratings are also affirmed at
Caa2 and Caa3, respectively. Moody's said the outlook is changed
to stable from negative.
===========
G R E E C E
===========
* GREECE: Corporate Bankruptcies Up 44% in 2010, ESEE Says
----------------------------------------------------------
Xinhua, citing National Confederation of Greek Trade (ESEE),
reports that corporate bankruptcies in Greece increased by 44% in
2010 on an annual basis due to the severe economic crisis that has
hit the country.
According to Xinhua, ESEE President Vassilis Korkidis, presenting
the organization's annual report, said that approximately one in
two major enterprises or 43.7% intend to proceed to mass
dismissals of employees in 2011.
Xinhua relates noting the pessimistic projections of Greek
entrepreneurs on the short-term future, regarding sales, revenues
and investments, Mr. Korkidis stressed that 65% of major companies
forecasts further drops in investments and 60% of small and big
enterprises expects less sales and revenues in 2011.
=============
I R E L A N D
=============
ALLIED IRISH: Fitch Cuts Rating on Tier 2 Subordinated Debt to B
----------------------------------------------------------------
Fitch Ratings has downgraded Allied Irish Banks plc's and Bank of
Ireland's lower tier 2 subordinated debt to 'B' from 'BB' and 'BB'
from 'BBB+', respectively. It has also downgraded AIB's upper
tier 2 to 'CC' from 'B' Rating Watch Negative and tier 1 debt
securities to 'CC' from 'B-' RWN and 'CCC'. The ratings of the
UT2 and T1 securities are removed from RWN. The other ratings of
the two banks are unaffected by this action.
The rating action reflects Fitch's belief that the risks in the
subordinated debt instruments have worsened as a result of the
financial package likely to be provided to Ireland by the IMF and
EU, which could result in increased government ownership of these
two banks.
Although the contents of the package are not yet known, Fitch
expects AIB and BoI to receive additional government capital. In
the case of AIB, any extra capital is likely to bring the bank
closer to being 100% Irish government-owned. The agency believes
that the prospects of enforced burden sharing for T1, UT2 and LT2
debt holders is much more likely, although still not certain, when
government ownership approaches or reaches100%.
For BoI, the agency believes that Irish government ownership may
increase from its current level of 36%, but will probably not
reach 100%. Consequently, the agency continues to distinguish
between the greater risk it sees in AIB's LT2 debt and the
smaller, but increased, risk it sees in BoI's LT2 debt.
Allied Irish Banks
-- Long-term IDR 'A-' unaffected; Negative Outlook
-- Short-term IDR 'F1' unaffected
-- Individual 'D/E' unaffected
-- Support Rating '1' unaffected
-- Support Rating Floor 'A-' unaffected
-- Commercial paper 'F1' unaffected
-- Senior unsecured notes 'A-' unaffected
-- Sovereign-guaranteed notes 'A+' unaffected
-- Sovereign-guaranteed deposits 'A+' unaffected
-- Sovereign-guaranteed interbank liabilities 'A+' unaffected
-- Sovereign-guaranteed deposits 'F1' unaffected
-- Sovereign-guaranteed commercial paper 'F1' unaffected
-- Sovereign-guaranteed interbank liabilities 'F1' unaffected
-- Lower tier 2 subordinated debt downgraded to 'B' from 'BB'
-- Upper Tier 2 downgraded to 'CC' from 'B' RWN
-- Tier 1 (XS0257734037) downgraded to 'CC' from 'B-' RWN
-- Tier 1 downgraded to 'CC' from 'CCC'
Bank of Ireland
-- Long-term IDR 'A-' unaffected; Negative Outlook
-- Short-term IDR 'F1' unaffected
-- Individual 'C/D' unaffected
-- Support Rating '1' unaffected
-- Support Rating Floor 'A-' unaffected
-- Commercial paper 'F1' unaffected
-- Senior unsecured notes 'A-' unaffected
-- Sovereign-guaranteed notes 'A+' unaffected
-- Sovereign-guaranteed deposits 'A+' unaffected
-- Sovereign-guaranteed interbank liabilities 'A+' unaffected
-- Sovereign-guaranteed deposits 'F1' unaffected
-- Sovereign-guaranteed commercial paper 'F1' unaffected
-- Sovereign-guaranteed interbank liabilities 'F1' unaffected
-- Lower tier 2 subordinated debt downgraded to 'BB' from 'BBB+'
-- Upper tier 2 'B' RWN unaffected
-- Tier 1 'CCC' unaffected
ANGLO IRISH: Strategy to Wind Down Loan Book Ready by January
-------------------------------------------------------------
BBC News reports that the Republic of Ireland's central bank has
said that a strategy to wind down Anglo Irish Bank's loan book
should be ready by the end of January.
BBC says the plan will then be submitted for approval by European
and International Monetary Fund authorities.
BBC relates in a statement the central bank said that Anglo's
restructuring plan would be submitted by the end of January, as
agreed by Dublin and the European finance ministers. BBC notes
the central bank emphasized that it would take years to wind down
Anglo's loans, required as part of Dublin's EUR85 billion (GBP72.1
billion) bail-out.
According to BBC, Anglo is likely to be split into two banks, with
the heavily-indebted "bad" half wound down or eventually sold.
The bank is on course to cost the Republic's taxpayers between
EUR29 billion and EUR34 billion by the time it is fully wound
down, BBC states.
About Anglo Irish Bank
Anglo Irish Bank Corp PLC -- http://www.angloirishbank.com/--
operates in three core areas: business lending, treasury and
private banking. The Bank's non-retail business is made up of
more than 11,000 commercial depositors spanning commercial
entities, charities, public sector bodies, pension funds, credit
unions and other non-bank financial institutions. The Company's
retail deposits comprise demand, notice and fixed term deposit
accounts from personal savers with maturities of up to two years.
Non-retail deposits are sourced from commercial entities,
charities, public sector bodies, pension funds, credit unions and
other non-bank financial institutions. In addition, at Sept. 30,
2008, its non-retail deposits included deposits from Irish
Life Assurance plc. The Private Bank offers tailored products and
solutions for high net worth clients and operates the Bank's
lending business in Ireland and the United Kingdom.
* * *
As reported by the Troubled Company Reporter-Europe on Oct. 29,
2010, 2010, Standard & Poor's Ratings Services lowered its rating
on Anglo Irish Bank Corp. Ltd.'s nondeferrable dated subordinated
debt (lower Tier 2) securities to 'D' from 'CCC'. The downgrade
of the lower Tier 2 debt rating reflects S&P's opinion that the
bank's exchange offer is a "distressed exchange" and tantamount to
default in accordance with its criteria.
ANGLO IRISH: DBRS Cuts Ratings on Subordinated Notes to 'D'
-----------------------------------------------------------
DBRS has downgraded the ratings of the Euro Dated Subordinated
Notes (specifically the EUR325.2 million Floating Rate
Subordinated Notes due 2014, EUR500 million Callable Subordinated
Floating Rate Notes due 2016 and the EUR750 million Dated
Subordinated Floating Rate Notes due 2017) (collectively referred
to as the 2017 Notes) issued by Anglo Irish Bank Corporation
Limited (Anglo Irish or the Bank) to 'D' from 'C'. The downgrade
follows the execution of the Bank's note exchange offer. The
default status for the exchanged and now-extinguished 2017 Notes
reflects DBRS's view that bondholders were offered limited
options, which, as discussed in DBRS's press release dated October
25, 2010, is considered a default per DBRS policy.
Concurrently, DBRS has assigned a AA rating to the new Floating
Rate Notes due 2011 (the New Notes) of Anglo Irish issued in
consideration of the tendered subordinated notes. The New Notes
are eligible securities under the Irish Government's Eligible
Liabilities Guarantee Scheme 2010 (ELG Scheme). As such, the
ratings reflect the Republic of Ireland's ability to honor the
guarantee as determined by DBRS's rating of the sovereign. The
rating is Under Review with Negative Implications, reflecting the
review status of the sovereign rating, which was placed under
review on October 5, 2010.
Previously DBRS maintained one-rating on its website for all Dated
Subordinated Debt maturing after September 29, 2010, issued by
Anglo Irish. To reflect the results of the exchange offer, DBRS
has individually listed each subordinate bond.
BANK OF IRELAND: Plans to Raise EUR2.2 Billion in Capital
---------------------------------------------------------
BreakingNews.ie reports that Bank of Ireland has said it will be
trying to raise almost EUR2.2 billion of capital by February.
According to BreakingNews.ie, the move would bring the bank, which
is already 36% government-owned, close to nationalization.
BreakingNews.ie relates the bank unveiled its plan just a day
after the EUR85 billion rescue loan terms for Ireland were agreed.
Headquartered in Dublin, Bank of Ireland --
http://www.bankofireland.com/-- provides a range of banking and
other financial services. These include checking and deposit
services, overdrafts, term loans, mortgages, business and
corporate lending, international asset financing, leasing,
installment credit, debt factoring, foreign exchange facilities,
interest and exchange rate hedging instruments, executor, trustee,
life assurance and pension and investment fund management, fund
administration and custodial services and financial advisory
services, including mergers and acquisitions and underwriting.
The Company organizes its businesses into Retail Republic of
Ireland, Bank of Ireland Life, Capital Markets, UK Financial
Services and Group Centre. It has operations throughout Ireland,
the United Kingdom, Europe and the United States.
* * *
As reported by the Troubled Company Reporter-Europe on Nov. 4,
2010, Moody's Investors Service assigned A3/P-2 bank deposit
ratings and a D+ bank financial strength rating to Bank of Ireland
(UK) plc. Moody's said the outlook is stable.
BANK OF IRELAND: Fitch Cuts Rating on Lower Tier 2 Debt to 'BB'
---------------------------------------------------------------
Fitch Ratings has downgraded Allied Irish Banks plc's and Bank of
Ireland's lower tier 2 subordinated debt to 'B' from 'BB' and 'BB'
from 'BBB+', respectively. It has also downgraded AIB's upper
tier 2 to 'CC' from 'B' Rating Watch Negative and tier 1 debt
securities to 'CC' from 'B-' RWN and 'CCC'. The ratings of the
UT2 and T1 securities are removed from RWN. The other ratings of
the two banks are unaffected by this action.
The rating action reflects Fitch's belief that the risks in the
subordinated debt instruments have worsened as a result of the
financial package likely to be provided to Ireland by the IMF and
EU, which could result in increased government ownership of these
two banks.
Although the contents of the package are not yet known, Fitch
expects AIB and BoI to receive additional government capital. In
the case of AIB, any extra capital is likely to bring the bank
closer to being 100% Irish government-owned. The agency believes
that the prospects of enforced burden sharing for T1, UT2 and LT2
debt holders is much more likely, although still not certain, when
government ownership approaches or reaches100%.
For BoI, the agency believes that Irish government ownership may
increase from its current level of 36%, but will probably not
reach 100%. Consequently, the agency continues to distinguish
between the greater risk it sees in AIB's LT2 debt and the
smaller, but increased, risk it sees in BoI's LT2 debt.
Allied Irish Banks
-- Long-term IDR 'A-' unaffected; Negative Outlook
-- Short-term IDR 'F1' unaffected
-- Individual 'D/E' unaffected
-- Support Rating '1' unaffected
-- Support Rating Floor 'A-' unaffected
-- Commercial paper 'F1' unaffected
-- Senior unsecured notes 'A-' unaffected
-- Sovereign-guaranteed notes 'A+' unaffected
-- Sovereign-guaranteed deposits 'A+' unaffected
-- Sovereign-guaranteed interbank liabilities 'A+' unaffected
-- Sovereign-guaranteed deposits 'F1' unaffected
-- Sovereign-guaranteed commercial paper 'F1' unaffected
-- Sovereign-guaranteed interbank liabilities 'F1' unaffected
-- Lower tier 2 subordinated debt downgraded to 'B' from 'BB'
-- Upper Tier 2 downgraded to 'CC' from 'B' RWN
-- Tier 1 (XS0257734037) downgraded to 'CC' from 'B-' RWN
-- Tier 1 downgraded to 'CC' from 'CCC'
Bank of Ireland
-- Long-term IDR 'A-' unaffected; Negative Outlook
-- Short-term IDR 'F1' unaffected
-- Individual 'C/D' unaffected
-- Support Rating '1' unaffected
-- Support Rating Floor 'A-' unaffected
-- Commercial paper 'F1' unaffected
-- Senior unsecured notes 'A-' unaffected
-- Sovereign-guaranteed notes 'A+' unaffected
-- Sovereign-guaranteed deposits 'A+' unaffected
-- Sovereign-guaranteed interbank liabilities 'A+' unaffected
-- Sovereign-guaranteed deposits 'F1' unaffected
-- Sovereign-guaranteed commercial paper 'F1' unaffected
-- Sovereign-guaranteed interbank liabilities 'F1' unaffected
-- Lower tier 2 subordinated debt downgraded to 'BB' from 'BBB+'
-- Upper tier 2 'B' RWN unaffected
-- Tier 1 'CCC' unaffected
EIRCOM GROUP: May Breach Loan Covenants; Assesses Options
---------------------------------------------------------
John Glover and Finbarr Flynn at Bloomberg News report that
Eircom Group said it may breach the terms of its loans as
Ireland's austerity measures imposed to combat the collapse of the
banking system force consumers to cut spending.
Bloomberg relates Eircom's Chief Financial Officer Peter Cross
said on a conference call on Friday that the company, which has to
service EUR3.15 billion (US$4.2 billion) of debt used to fund its
buyout by Temasek Holdings Pte Ltd., is assessing its options.
"We have positive headroom as of September, so it is something we
have some time to deal with," said Mr. Cross said, according to
Bloomberg. Mr. Cross reiterated he's confident Eircom can avoid
default with an equity injection or by renegotiating the covenants
with lenders, Bloomberg discloses.
Bloomberg notes Eircom said in a statement declining revenue has
combined with "high" debt levels to push the company close to a
covenant breach. Eircom, as cited by Bloomberg, said the
company's loan covenants may be violated in the next 12 months if
no action is taken.
Headquartered in Dublin, Ireland, Eircom Group --
http://www.eircom.ie/-- is an Irish telecommunications company,
and former state-owned incumbent. It is currently the largest
telecommunications operator in the Republic of Ireland and
operates primarily on the island of Ireland, with a point of
presence in Great Britain.
FOUR STAR: High Court Confirms Appointment of Examiner
------------------------------------------------------
The Irish Times reports that the High Court has confirmed the
appointment of an examiner to the Four Star Pizza takeaway chain
after being told that an independent accountant believes it has a
reasonable prospect of survival if certain steps are taken.
The Irish Times relates Neil Hughes of Hughes Blake, who was
appointed interim examiner earlier this month, was confirmed as
examiner on Monday by Mr. Justice Brian McGovern.
According to The Irish Times, Four Star Pizza Ltd and its holding
parent company, Zowington Ltd, had sought the court's protection
because it was insolvent and unable to pay its debts.
The Irish Times notes Rossa Fanning, for Mr. Hughes, said the
company's outlets in Athlone, Cavan and Waterford had closed.
Ms. Fanning, as cited by The Irish Times, said the examiner hoped
as few of them as possible would shut, but the number could rise
to seven.
The court heard previously that, while Four Star had made small
profits last year and so far this year, its troubles were the
result of increased competition, the downturn in the economy and
difficulty for franchisees with paying rents, The Irish Times
recounts.
Four Star Pizza Ltd has 40 outlets and is the second largest
takeaway franchise in Ireland, employing 29 people directly and
400 indirectly.
MCINERNEY GROUP: Oaktree Seeks Approval to Acquire Two Units
------------------------------------------------------------
Gavin Daly at The Sunday Business Post Online reports that
international investment firm Oaktree Capital has sought the
go-ahead from the Competition Authority to buy two firms in the
McInerney building group.
According to The Post, the authority has started a preliminary
investigation into the proposed acquisition of McInerney Homes and
McInerney Contracting by an Oaktree company called Pilgrim.
The Post notes McInerney group has been in examinership since
September, with its 100-day period of court protection due to run
out at the end of this week.
Oaktree has been trying to strike a deal to buy McInerney's
EUR113 million debt from its banks -- Anglo Irish Bank, Bank of
Ireland and KBC -- for EUR25 million, The Post discloses.
Unsecured creditors would get 7% of what they are owed under the
Oaktree proposal, The Post states.
The Post relates the majority of McInerney's creditors backed
Oaktree's EUR48 million rescue scheme for the business at a
meeting on Friday.
The examiner, Billy O'Riordan of PricewaterhouseCoopers, will now
seek High Court approval for the plan, The Post says.
McInerney Holdings plc -- http://www.mcinerneyholdings.eu/-- is a
home builder and regional home builder in the North and Midlands
of England. It also undertakes commercial and leisure projects in
Ireland, United Kingdom and Spain. It operates in Ireland, the
United Kingdom and Spain. The main trading activities of the
Company's Irish home building business during the year ended
December 31, 2008, consisted of construction of private houses,
trading in developed sites and land, development of residential
land for third-parties and in joint-ventures, and contracting for
third-parties. The Company's commercial property development
division, Hillview Developments Ltd (Hillview), develops
industrial units in the Greater Dublin area. Hillview completed
1,223 square meters of industrial units as of December 31, 2008.
Its Spanish division, Alanda Group, is developing freehold
apartment schemes. As of December 31, 2008, the Company completed
1,359 private and contracting residential units in Ireland, the
United Kingdom and Spain.
* S&P Changes Ratings on Irish Banks; Retains CreditWatch Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services said that it has revised its
ratings on these Irish banks: S&P has lowered the counterparty
credit ratings on Anglo Irish Bank Corp. Ltd. to 'B/B' from
'BBB/A-2'. The ratings remain on CreditWatch with negative
implications.
S&P has lowered the long-term counterparty credit rating on Allied
Irish Banks PLC to 'BBB' from 'BBB+', and placed it, and the 'A-2'
short-term counterparty credit rating, on CreditWatch negative.
At the same time, S&P has lowered its ratings on AIB's wholly
owned U.K. subsidiary, AIB Group (UK) PLC to 'BBB-/A-3' from
'BBB/A-2', and placed them on CreditWatch negative. Further, S&P
has lowered AIB's lower Tier 2 subordinated debt rating by three
notches to 'B' from 'BB'. S&P continue to factor four notches of
support into the counterparty credit ratings on AIB above its
revised 'bb-' stand-alone credit profile.
S&P has lowered the long-term counterparty credit rating on Bank
of Ireland to 'BBB+' from 'A-', and placed it, and the 'A-2'
short-term counterparty credit rating, on CreditWatch negative.
In addition, S&P has lowered BOI's lower Tier 2 subordinated debt
rating by two notches to 'BB-' from 'BB+'. S&P continue to factor
four notches of support into the counterparty credit ratings on
BOI above its revised 'bb' SACP. S&P has lowered the long-term
counterparty credit rating on Irish Life & Permanent PLC to 'BBB'
from 'BBB+', and placed it, and the 'A-2' short-term counterparty
credit rating, on CreditWatch negative. In addition, S&P has
lowered IL&P's lower Tier 2 subordinated debt rating by one notch
to 'BB-' from 'BB'. S&P has lowered its view of the SACP of
IL&P's banking operations to 'bb' from 'bb+', but maintain two
notches of support above the 'bb+' SACP of IL&P (which in turn
incorporates a one-notch uplift for its view of the better
financial strength of its life insurance operations). S&P has
lowered the long-term counterparty credit and insurer financial
strength ratings on Irish Life Assurance PLC to 'BBB' from 'BBB+',
and placed them on CreditWatch negative, in line with its banking
parent.
In addition S&P lowered ILA's junior subordinated debt rating by
one notch to 'BB+' from 'BBB-'.
The rating action does not affect those issuances by these four
banks which are guaranteed by the Republic of Ireland.
S&P has lowered the long- and short-term counterparty credit
ratings on Barclays Bank Ireland PLC to 'A+/A-1' from 'AA-/A-1+',
and placed them on CreditWatch negative.
S&P has placed the 'A/A-1' long- and short-term counterparty
credit ratings on Ulster Bank Ltd. and core Irish subsidiary,
Ulster Bank Ireland Ltd., on CreditWatch negative.
S&P has placed the 'A-/A-2' long- and short-term counterparty
credit ratings on KBC Bank Ireland PLC on CreditWatch negative.
Domestically Owned Banks
The rating actions follow a turbulent period for the Irish banking
system, which in S&P's view has led to the fortunes of the Irish
sovereign becoming increasingly intertwined with those of its
banking system. On Nov. 23, 2010, S&P lowered the ratings on the
Republic of Ireland to A/Watch Neg/A-1 from AA-/Negative/A-1+,
reflecting its view that the government will have to shoulder
additional costs associated with further capital injections into
Ireland's troubled banking system.
In recent months, S&P saw that the domestically owned Irish banks
have struggled to source term funding, even when government
guaranteed. S&P also observed that the banks have also suffered
significant deposit outflows from institutional clients and become
highly reliant on central bank funding. S&P expects no near-term
respite and S&P believes the prospects for these banks to return
to near stand-alone funding profiles in the medium term are
receding.
In addition, S&P considers that the path back to profitability for
these banks is likely to be even more difficult than S&P
previously expected, based on its revised expectations for lower
economic growth in Ireland (S&P now expects close to zero nominal
GDP growth for 2011 and 2012 and S&P does not envisage GDP
exceeding 2% a year in real terms before 2013). This view also
reflects the multiple pressures S&P observes on liability spreads,
arising from increased wholesale funding costs and high deposit
competition squeezing margins, and the banks' limited ability to
meaningfully offset this through further asset repricing.
Taken together, S&P considers that the funding pressures and
weaker profitability outlook have led to a weakening in the
domestically owned banks' SACPs. The SACP takes into account all
existing government support S&P sees.
The funding weakness of these banks has contributed to the Irish
government agreeing to request financial support from the EU and
the International Monetary Fund. The Irish government has stated
that a central element of the EU/IMF program will be to support
further deep restructuring and the restoration of the long-term
viability and financial health of the Irish banking system. S&P
understands some of this support may be directed toward
significantly improving the capitalization of the most
systemically important Irish banks.
While this initiative may eventually succeed in addressing
investors' current lack of confidence in the system, S&P considers
that it is likely to be a long, slow process for AIB, BOI, and ILP
to wean themselves off this support.
In S&P's view, these developments also indicate that the Irish
government's ability to provide further extraordinary support to
the banks has weakened, although this support could yet be
forthcoming through the EU/IMF assistance program. While S&P
believes that considerable uncertainty remains, on balance S&P has
decided to maintain for the time being the existing notches of
support factored into the ratings on the domestically owned banks.
The CreditWatch placement indicates that S&P may take rating
action in the event that the sovereign rating is further lowered,
but also its intent to review the notches of explicit government
support factored into the ratings and the banks' SACPs.
Anglo Irish Bank Corp. Ltd.
The rating actions on Anglo reflect S&P's view that the Irish
government may be forced to reconsider its current supportive
stance toward Anglo's unguaranteed debt. S&P bases its view on
the role of the EU/IMF, which may force a new Irish government to
reappraise the existing strong statements of support, and the fact
that the Irish government has expressed its desire for Anglo to be
split into two and wound down over time. S&P considers Anglo to
be of lower systemic importance than AIB, BOI, and IL&P. The
ratings on Anglo remain on CreditWatch negative, where they had
been placed on Jan. 26, 2010. S&P plans to resolve the
CreditWatch placement once S&P has reviewed Anglo's restructuring
plan. S&P would expect, on resolution of the CreditWatch, to
classify Anglo as a government-related entity. Depending on its
view of Anglo's role and link to the government, and its view of
its SACP, S&P could lower the ratings by one or more notches.
Allied Irish Banks PLC
The rating actions on AIB reflect S&P's reassessment of its SACP
in light of the weak market conditions. S&P considers AIB to be a
highly systemically important institution. S&P has lowered the
ratings on AIB's subordinated debt (lower Tier 2) by three notches
because S&P believes that the likelihood of AIB being wholly
nationalized has increased. If this occurs S&P would expect,
based upon the experience that S&P has observed at nationalized
lenders Anglo Irish and Irish Nationwide (not rated), that
subordinated bondholders may suffer loss. The ratings will remain
on CreditWatch negative pending the outcome of the sovereign
rating review. In addition, S&P could lower the ratings on AIB in
particular if S&P considers that the prospects for its SACP will
deteriorate further.
Irish Life & Permanent PLC
The rating actions on IL&P reflect S&P's reassessment of the SACP
of its banking operations in light of the weak market conditions.
S&P considers IL&P to be a highly systemically important
institution. S&P has lowered the subordinated debt ratings on
IL&P by one notch, thus maintaining the four-notch differential
from the counterparty credit rating. S&P notes that IL&P has not
received any capital injections from the government. The ratings
will remain on CreditWatch negative pending the outcome of the
sovereign rating review. S&P also notes that IL&P is one of two
preferred bidders (the other is a non-Irish institution) for
government-owned mortgage and savings lender, EBS (not rated).
S&P understand that final bids are not required until mid-
December. IL&P's management has stated that, if successful in the
bid process, it intends to split its enlarged banking operations
from that of its life insurance company.
Bank of Ireland
The rating actions on BOI reflect S&P's reassessment of the bank's
SACP in light of the weak market conditions. S&P considers BOI to
be a highly systemically important institution. S&P has lowered
the ratings on BOI's subordinated debt by two notches because S&P
perceive an incremental risk that these bondholders will be
required to share the burden of supporting the bank. The ratings
will remain on CreditWatch negative pending the outcome of the
sovereign rating review, but S&P does anticipate that BOI's SACP
may emerge as the strongest of the domestically owned Irish banks.
Despite the high level of support that S&P factors into the
ratings on BOI, S&P would currently not equalize them with the
sovereign rating.
Foreign-Owned, Domestically Active Banks
S&P has also considered the immediate implications of the
sovereign rating action on the three rated foreign-owned,
domestically active banks: BBI, KBCI, and UBIL. While not
supported by the Irish government, these banks are typically rated
more highly than their domestically owned peers due to S&P's views
on the likelihood of parental support.
In S&P's view, these three banks have not seen the sort of stress
experienced by their domestic peers, particularly in access to
funding. However, under S&P's ratings methodology, S&P only
maintain ratings on financial institution above that of the
sovereign in exceptional circumstances. S&P only does so where
S&P conclude that the operating and financial characteristics of
an entity provide a high probability that it can meet its debt
obligations even when the sovereign cannot.
Barclays Bank Ireland PLC
The ratings have been lowered to 'A+/A-1' from 'AA-/A-1+' and
placed on CreditWatch negative pending the outcome of the
sovereign rating review. Given the exceptional circumstances S&P
see, S&P has not lowered the ratings to be in line with the 'A'
sovereign rating, instead allowing a one-notch differential. This
is because:
* S&P sees no problem with BBI or its parent being able to find
sufficient foreign or local currency to refund its liabilities
and all deposits; In S&P's view, BBI would be very easily
supported by its parent due to its small relative size and the
fact that the parent is highly rated, not being a government-
supported institution itself; and
* Its core status reflects S&P's view that substantial support
would be forthcoming. The CreditWatch placement reflects S&P's
view that, if the sovereign rating is lowered again, S&P would
likely lower the ratings on BBI, maintaining the one-notch
differential.
KBC Bank Ireland PLC
The ratings have been placed on CreditWatch negative pending the
outcome of the sovereign rating review. This is because:
* While some of the factors cited with regard to BBI apply to
KBCI, S&P does not see a convincing case to rate above the
sovereign, not least because S&P views the bank as strategically
important as opposed to core to a parent that is itself
government-supported; and
* While S&P still rates KBCI lower than the sovereign, the
sovereign rating may yet be lowered by more than one notch, in
which case S&P would likely lower the ratings on KBCI.
Ulster Bank Ireland Ltd., Ulster Bank Ltd.
The ratings have been placed on CreditWatch negative pending the
outcome of the sovereign rating review. This is because:
* S&P considers that UBIL is core to U.K.-incorporated UBL, being
about 70% of the consolidated assets, and highly integrated, and
that a deterioration of UBIL would weaken UBL;
* While some of the factors cited with regard to BBI apply in this
case, S&P does not see a convincing case to rate above the
sovereign, not least because UBL is strategically important to a
parent that is itself government-supported;
* UBIL is now rated the same as the sovereign, and if the
sovereign rating is lowered again, S&P would likely lower the
ratings on UBIL; and
* If S&P lowered the ratings on UBIL S&P would likely do the same
to those on UBL.
Ratings List
Downgraded; CreditWatch Action; Ratings Affirmed
Anglo Irish Bank Corp. Ltd.
To From
-- ----
Counterparty Credit Rating B/Watch Neg/B BBB/Watch Neg/A-2
Senior Unsecured B/Watch Neg BBB/Watch Neg
Allied Irish Banks PLC
To From
-- ----
Counterparty Credit Rating BBB/Watch Neg/A-2 BBB+/Negative/A-2
Senior Unsecured BBB/Watch Neg BBB+
Subordinated B/Watch Neg BB
AIB Group (UK) PLC
To From
-- ----
Counterparty Credit Rating BBB-/Watch Neg/A-3 BBB/Negative/A-2
Irish Life & Permanent PLC
To From
-- ----
Counterparty Credit Rating BBB/Watch Neg/A-2 BBB+/Negative/A-2
Senior Unsecured BBB/Watch Neg BBB+
Subordinated BB-/Watch Neg BB
Irish Life Assurance PLC
To From
-- ----
Counterparty Credit Rating BBB/Watch Neg/-- BBB+/Negative/--
Financial Strength Rating BBB/Watch Neg/-- BBB+/Negative/--
Junior Subordinated BB+/Watch Neg BBB-
Bank of Ireland
To From
-- ----
Counterparty Credit Rating BBB+/Watch Neg/A-2 A-/Negative/A-2
Senior Unsecured BBB+/Watch Neg A-
Subordinated BB-/Watch Neg BB+
Barclays Bank Ireland PLC
To From
-- ----
Counterparty Credit Rating A+/Watch Neg/A-1 AA-/Negative/A-1+
KBC Bank Ireland PLC
To From
-- ----
Counterparty Credit Rating A-/Watch Neg/A-2 A-/Stable/A-2
Senior Unsecured A-/Watch Neg A-
Ulster Bank Ireland Ltd.
Ulster Bank Ltd.
To From
-- ----
Counterparty Credit Rating A/Watch Neg/A-1 A/Stable/A-1
NB: This list does not include all ratings affected.
===========
R U S S I A
===========
HOME CREDIT: S&P Changes Outlook to Stable; Affirms 'B+' Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Russia-based Home Credit and Finance Bank LLC to stable
from negative. At the same time, S&P affirmed the 'B+' long-term
and 'B' short-term counterparty credit ratings on the bank.
"The outlook revision reflects S&P's view that the financial
performance of HCFB has improved owing to stabilizing operating
conditions in Russia," said Standard & Poor's credit analyst
Victor Nikolskiy. "In particular, the bank has recently
demonstrated positive commercial dynamics and an improvement in
its asset quality and funding profile."
The ratings on HCFB continue to be constrained by the bank's
strong focus on the consumer finance market, which S&P regards as
inherently high risk, and a still relatively high, albeit
lessening, reliance on wholesale funding. S&P considers these
negative factors to be partly offset by the bank's adequate credit
risk management, increasingly diverse funding profile, and strong
capitalization. The ratings reflect HCFB's stand-alone credit
profile and do not include any uplift for extraordinary external
support. HCFB is owned by PPF Group N.V. (not rated). However,
S&P note that HCFB has benefited from PPF's support, in terms of
capital, funding, technology, risk management, and information
technology.
"The stable outlook reflects the gradually stabilizing operating
conditions in Russia, which S&P think have reduced external
pressures on the bank's liquidity and asset quality," said
Mr. Nikolskiy.
MOBILE TELESYSTEMS: Fitch Affirms 'BB+' Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has changed Russia-based Sistema Joint Stock
Financial Corp.'s and subsidiary OJSC Mobile TeleSystems's
Outlooks to Positive from Stable. Sistema's Long-term foreign and
local currency Issuer Default Ratings have been affirmed at 'BB-',
respectively, and its foreign and local currency senior unsecured
ratings affirmed at 'BB-'. Sistema's national long-term rating
was affirmed at 'A+(rus)' and assigned a Positive Outlook and its
national senior unsecured rating was affirmed at 'A+(rus)'.
A full rating breakdown of Fitch's rating actions on MTS is
detailed below.
The Outlook change reflects Fitch's expectation that Sistema will
be able to reduce debt at the holding level, including off-balance
liabilities, and to improve leverage to below 2.5x net debt
(including off-balance sheet debt)/dividends on a sustainable
basis. This will likely require a cap on Sistema's debt exposure
at its loss-making Indian telecom subsidiary, Sistema Shyam
TeleServices Ltd.
Sistema has achieved notable deleveraging on a group-wide basis.
Net debt/EBITDA ratio improved to 1.7x at end-Q210 on an LTM basis
from 2.4x at end-2009. The key contributor to this was improving
operating and financial performance of Bashneft, Sistema's oil and
energy subsidiary, and debt reduction as a result of Sistema's
asset swap with the Svyazinvest group. In addition, corporate
reorganization at Bashneft and a merger of MTS and Comstar allowed
Sistema to substantially reduce the amount of debt at the holding
level; this declined to US$2,557 million at end-Q210 from US$4,276
million at end-Q209.
However, Sistema's off-balance sheet liabilities significantly
increased and remain substantial, primarily as a result of rapid
expansion at Shyam. An expected US$600 million investment by the
Russian government into Shyam's equity will likely be guaranteed
by Sistema.
Shyam's operating and financial performance and its strategic
positioning remain a key constraint on Sistema's credit quality.
In Q210 Shyam generated a US$85 million EBITDA loss on
US$23 million of revenues. The Indian mobile market is extremely
competitive, penetration is already high in key metropolitan areas
and ARPUs are low which calls into question the longer-term
viability of all new entrants including Shyam.
Sistema's ratings continue to be supported by its strong operating
and financial performance, robust free cash generation and modest
leverage at MTS. In view of MTS's low leverage of 0.8x net
debt/EBITDA at LTM to Q310, Sistema retains a flexibility to
increase dividend from this company without jeopardizing MTS's
stand-alone ratings.
Sistema's currency risks declined considerably over the past 12
months. The proportion of rouble debt increased to 63% at the
group level and 66% at the holdco level at end-Q210 from 33% and
39% respectively at end-Q209. The group's and holdco's maturity
profiles have improved since Q209; Sistema does not face
refinancing risks till end-2011.
MTS rating actions:
-- Long-term foreign currency IDR affirmed at 'BB+'; Outlook
changed to Positive from Stable
-- Short-term foreign currency IDR affirmed at 'B'
-- Senior unsecured foreign currency rating affirmed at 'BB+'
-- Long-term local currency IDR affirmed at 'BB+'; Outlook
changed to Positive from Stable
-- Short-term local currency IDR affirmed at 'B'
-- Senior unsecured local currency rating affirmed at 'BB+'
-- National Long-term rating affirmed at 'AA(rus)'; Outlook
changed to Positive from Stable
-- National senior unsecured rating affirmed at 'AA(rus)'
RUSSIAN STANDARD: S&P Gives Stable Outlook; Affirms 'B+' Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Russian Standard Bank CJSC to stable from negative. At
the same time, S&P affirmed its 'B+' long-term and 'B' short-term
counterparty credit ratings on the bank. In addition, the 'ruA'
Russia national scale rating was affirmed.
"The outlook revision reflects S&P's view that the financial
performance of Russian Standard Bank has improved on the back of
stabilizing operating conditions in Russia," said Standard &
Poor's credit analyst Ekaterina Trofimova.
Specifically, asset quality and profitability have improved and
the bank has increased its funding base via customer deposits.
S&P regard RSB as having a leading position in Russia's consumer
finance market with a dominant market share of the credit card
business (36.8%), as well as sound credit risk management and debt
collection. However, S&P considers these positive rating factors
to be tempered by high lending risks, which are typical for
unsecured consumer lending, and still relatively high, albeit
reducing, wholesale debt.
With total assets of $4.4 billion as of Sept. 30, 2010, RSB ranks
among the top-30 Russian banks. In response to a deep recession
in Russia that began in the fourth quarter of 2008, RSB
substantially decreased its loan portfolio. Following Russia's
emergence from recession, RSB has resumed its issuance of credit
cards and point-of-sale loans. S&P understands that the bank is
targeting a continuation of this growth in 2011. RSB's
nonperforming loans decreased to 2.7% of total loans as of Sept.
30, 2010, from 5.4% as of year-end 2009. At the same time, the
annual rate of net charge-offs for loans was a high 11.32% for the
year to Sept. 30, 2010, which S&P views as typical for consumer
finance banks. S&P notes that problem-loan indicators point to a
marked improvement in the portfolio's performance in 2010, as well
as good results in debt collection. S&P expects these
improvements to continue in 2011 due to stabilizing economic
conditions in Russia.
"The stable outlook reflects stabilizing operating conditions in
Russia, which S&P think reduce pressure on the bank's liquidity
and asset quality," said Ms. Trofimova.
SISTEMA JOINT: Fitch Affirms 'BB-' Issuer Default Ratings
---------------------------------------------------------
Fitch Ratings has changed Russia-based Sistema Joint Stock
Financial Corp.'s and subsidiary OJSC Mobile TeleSystems's
Outlooks to Positive from Stable. Sistema's Long-term foreign and
local currency Issuer Default Ratings have been affirmed at 'BB-',
respectively, and its foreign and local currency senior unsecured
ratings affirmed at 'BB-'. Sistema's national long-term rating
was affirmed at 'A+(rus)' and assigned a Positive Outlook and its
national senior unsecured rating was affirmed at 'A+(rus)'.
A full rating breakdown of Fitch's rating actions on MTS is
detailed below.
The Outlook change reflects Fitch's expectation that Sistema will
be able to reduce debt at the holding level, including off-balance
liabilities, and to improve leverage to below 2.5x net debt
(including off-balance sheet debt)/dividends on a sustainable
basis. This will likely require a cap on Sistema's debt exposure
at its loss-making Indian telecom subsidiary, Sistema Shyam
TeleServices Ltd.
Sistema has achieved notable deleveraging on a group-wide basis.
Net debt/EBITDA ratio improved to 1.7x at end-Q210 on an LTM basis
from 2.4x at end-2009. The key contributor to this was improving
operating and financial performance of Bashneft, Sistema's oil and
energy subsidiary, and debt reduction as a result of Sistema's
asset swap with the Svyazinvest group. In addition, corporate
reorganization at Bashneft and a merger of MTS and Comstar allowed
Sistema to substantially reduce the amount of debt at the holding
level; this declined to US$ 2,557 million at end-Q210 from
US$4,276 million at end-Q209.
However, Sistema's off-balance sheet liabilities significantly
increased and remain substantial, primarily as a result of rapid
expansion at Shyam. An expected US$600 million investment by the
Russian government into Shyam's equity will likely be guaranteed
by Sistema.
Shyam's operating and financial performance and its strategic
positioning remain a key constraint on Sistema's credit quality.
In Q210 Shyam generated a US$85 million EBITDA loss on
US$23 million of revenues. The Indian mobile market is extremely
competitive, penetration is already high in key metropolitan areas
and ARPUs are low which calls into question the longer-term
viability of all new entrants including Shyam.
Sistema's ratings continue to be supported by its strong operating
and financial performance, robust free cash generation and modest
leverage at MTS. In view of MTS's low leverage of 0.8x net
debt/EBITDA at LTM to Q310, Sistema retains a flexibility to
increase dividend from this company without jeopardizing MTS's
stand-alone ratings.
Sistema's currency risks declined considerably over the past 12
months. The proportion of rouble debt increased to 63% at the
group level and 66% at the holdco level at end-Q210 from 33% and
39% respectively at end-Q209. The group's and holdco's maturity
profiles have improved since Q209; Sistema does not face
refinancing risks till end-2011.
MTS rating actions:
-- Long-term foreign currency IDR affirmed at 'BB+'; Outlook
changed to Positive from Stable
-- Short-term foreign currency IDR affirmed at 'B'
-- Senior unsecured foreign currency rating affirmed at 'BB+'
-- Long-term local currency IDR affirmed at 'BB+'; Outlook
changed to Positive from Stable
-- Short-term local currency IDR affirmed at 'B'
-- Senior unsecured local currency rating affirmed at 'BB+'
-- National Long-term rating affirmed at 'AA(rus)'; Outlook
changed to Positive from Stable
-- National senior unsecured rating affirmed at 'AA(rus)'
STROYKREDIT BANK: Moody's Assigns 'B3' Rating to Senior Debt
------------------------------------------------------------
Moody's Investors Service has assigned a B3 long-term global local
currency debt rating to the Stroykredit Bank's senior unsecured
debt. The rating carries a stable outlook. Any subsequent senior
unsecured debt issuance by Stroykredit Bank will be rated at the
same rating level subject to there being no material change in the
bank's overall credit rating.
-- Ru.Rub1000M 13.25% Senior Unsecured Regular Bond Due 2011
Ratings Rationale
The assigned rating is in line with Stroykredit Bank's global
local currency deposit rating of B3. The rating is constrained
by: (i) narrow franchise; (ii) significant credit-risk
concentration and deteriorating asset quality; (iii) undiversified
funding base and (iv) weak corporate governance practices. At the
same time, BSK's historically good recurring earnings power and
adequate capital cushion support the ratings. The rating does not
incorporate any expectation of systemic support from the
authorities in case of need.
Headquartered in Moscow, Russia, Stroykredit Bank reported total
IFRS assets of RUB13.15 billion (US$435 million) and net losses of
RUB667 million (US$22 million) according to IFRS at YE 2009.
=====================================
S E R B I A & M O N T E N E G R O
=====================================
AGROZIV DD: Perutnina Eyes Acquisition
--------------------------------------
Boris Cerni at Bloomberg News, citing STA newswire, reports that a
Slovenian foodmaker Perutnina Ptuj d.d. is interested in acquiring
Agroziv d.d., which is undergoing bankruptcy proceedings.
According to Bloomberg, Stevan Moldovan, who is overseeing the
bankruptcy process, as cited by the Slovenian state-owned
newswire, said Agroziv may be valued at EUR35.4 million (US$46.6
million).
Agroziv d.d. is a Serbian agribusiness firm. It is based in the
city of Pancevo.
=========
S P A I N
=========
AYT GENOVA: S&P Puts Credit Ratings on Notes on Watch Positive
--------------------------------------------------------------
Standard & Poor's Ratings Services placed on CreditWatch positive
its credit ratings on the class B, C, and D notes in AyT Genova
Hipotecario VIII Fondo de Titulizacion Hipotecaria and AyT Genova
Hipotecario IX Fondo de Titulizacion Hipotecaria. At the same
time, S&P affirmed its ratings on the class A2 notes in both
transactions, and on all classes of notes in AyT Genova
Hipotecario X Fondo de Titulizacion Hipotecaria.
The Genova deals are Spanish residential mortgage-backed
securities transactions backed by pools of first-ranking mortgages
secured over owner-occupied residential properties in Spain.
Loans in Genova VIII were originated between September 2001 and
December 2005, between January 2002 and May 2006 in Genova IX, and
mainly between January 2005 and December 2006 in Genova X.
Levels of credit enhancement available to the rated notes have
increased since S&P's last review due to the deleveraging feature
embedded in these transactions. The performance of the underlying
collateral has so far been relatively stable.
S&P's analysis indicates that as of the latest available investor
reports (September 2010 for Genova X, October 2010 for Genova IX,
and November 2010 for Genova VIII), the ratio of cumulative
defaults over the original collateral balance was 0.08% for Genova
VIII, 0.21% for Genova X, and 0.33% for Genova IX. (Defaulted
loans in this securitization are defined as loans in arrears for
more than 18 months.)
Based on the current level of defaults and delinquencies in the
underlying portfolios, the structural features embedded in each of
the transactions, and the increase in the level of credit
enhancement available to the rated notes, S&P has affirmed the
current ratings on Genova Hipotecario X. For Genova VIII and IX,
S&P believes a positive rating action is likely following a
further analysis of these transactions, so S&P has placed the
ratings on CreditWatch positive and affirmed the 'AAA (sf)'
ratings.
Ratings List
AyT Genova Hipotecario VIII Fondo de Titulizacion Hipotecaria
EUR2.1 Billion Mortgage-Backed Floating-Rate Notes
Rating Affirmed
A2 AAA (sf)
Ratings Placed on CreditWatch Positive
Rating
------
Class To From
----- -- ----
B A+ (sf)/Watch Pos A+ (sf)
C BBB (sf)/Watch Pos BBB (sf)
D BB (sf)/Watch Pos BB (sf)
AyT Genova Hipotecario IX Fondo de Titulizacion Hipotecaria
EUR1 Billion Mortgage-Backed Floating-Rate Notes
Rating Affirmed
A2 AAA (sf)
Ratings Placed on CreditWatch Positive
Rating
------
Class To From
----- -- ----
B A (sf)/Watch Pos A (sf)
C BBB+ (sf)/Watch Pos BBB+ (sf)
D BB- (sf)/Watch Pos BB- (sf)
AyT Genova Hipotecario X Fondo de Titulizacion Hipotecaria
EUR1.05 Billion Mortgage-Backed Floating-Rate Notes
Ratings Affirmed
Class Rating
----- ------
A2 AAA (sf)
B A (sf)
C BBB+ (sf)
D BB- (sf)
AYT GENOVA: S&P Affirms Rating on Class D Notes at 'BB- (sf)'
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
all classes of notes in AyT Genova Hipotecario XI Fondo de
Titulizacion Hipotecaria.
The rating action follows S&P's analysis of the transaction's
performance based on the September 2010 investor report. S&P has
determined that the performance and credit enhancement for AyT
Genova Hipotecario XI is commensurate with the current ratings on
the notes.
The notes are currently supported by credit enhancement of 5.94%
for the class A notes, 4.05% for the class B notes, 2.29% for the
class C notes, and 1.04% for the class D notes.
S&P's analysis indicates that as of September 2010, the ratio of
cumulative defaults (defaulted loans in this securitization are
defined as loans in arrears for more than 18 months) was 0.57% of
the initial balance of the pool, and thus well below the first
trigger level of 4% for the class D notes.
As of September 2010, the reserve fund has been partially used and
is at 82% of its required level. Nevertheless, S&P believes that
credit enhancement levels are sufficient to maintain the ratings
on all classes of notes.
Based on the current level of defaults and delinquencies
experienced by the underlying portfolio and the structural
features protecting the rated notes, the transaction is in S&P's
opinion performing well, which supports S&P's affirmation of its
ratings on all classes of notes.
The Genova deals are Spanish residential mortgage-backed
securities transactions backed by pools of first-ranking mortgages
secured over owner-occupied residential properties in Spain. The
Spanish subsidiary of Barclays Bank PLC originated the loans,
which were underwritten to include lower loan-to-value ratios and
higher borrower income levels than typically seen. The
transaction closed in December 2007.
Ratings List
AyT Genova Hipotecario XI Fondo de Titulizacion Hipotecario
EUR1.2 Billion Mortgage-Backed Floating-Rate Notes
Ratings Affirmed
Class Rating
----- ------
A1 AAA (sf)
A2 AAA (sf)
B A (sf)
C BBB+ (sf)
D BB- (sf)
===========
T U R K E Y
===========
TOPLU KONUT: Fitch Gives Positive Outlook; Affirms 'BB+' Rating
---------------------------------------------------------------
Fitch Ratings has revised the Outlook on Turkey's Toplu Konut
Idaresi Baskanligi to Positive from Stable, following the agency's
sovereign rating action earlier this week.
The agency has also affirmed TOKI's Long-term foreign and local
currency ratings at 'BB+', respectively. Its National Long-term
rating has been affirmed at 'AA+(tur)' with Stable Outlook.
On 24 November, Fitch revised the Outlook on the Republic of
Turkey's Long-term foreign currency and local currency Issuer
Default ratings of 'BB+' to Positive from Stable.
TOKI's ratings are credit linked to the sovereign because of its
special public sector status, the sovereign's tight control,
through the Prime Minister's Office, over the entity and its
important role in the government's housing policy.
* Fitch Gives Positive Outlook on Istanbul's 'BB+' Ratings
----------------------------------------------------------
Fitch Ratings has revised the Outlook on Metropolitan Municipality
of Istanbul's ratings to Positive and affirmed the ratings:
-- Long-term foreign currency rating: affirmed at 'BB+'; Outlook
revised to Positive from Stable
-- Long-term local currency rating: affirmed at 'BB+'; Outlook
revised to Positive from Stable
-- National Long-term rating: affirmed at 'AA(tur); Outlook
revised to Positive from Stable
-- Short-term foreign currency rating: affirmed at 'B'
The rating action follows the revision of the Outlook on the
Republic of Turkey's Long-term foreign currency and local currency
'BB+' Issuer Default Ratings to Positive from Stable.
The ratings reflect Istanbul's strong socio-economic profile and
continued sound fiscal performance. The ratings also take into
account sharply rising direct risk, in particular from the public
entity IETT (Istanbul City Bus and Public Transport Authority) and
its significant capital expenditure needs. IETT's debt has been
considered in the overall assessment of Istanbul as it is not self
supporting. MMI's direct debt, and the Fitch classified debt of
IETT, is increasing, largely due to transport-related investments.
However MMI's total public-sector debt is still manageable, given
strong operating margins and still moderate debt dynamics.
Nevertheless, its financial position is being stretched, with
significant foreign currency risk and challenging liquidity
management.
Istanbul's operating performance remained resilient in challenging
economic conditions in 2009 due to its large and diversified local
tax base. With the recovery of the economy in 2010, Istanbul
expects to outperform its revenue budget. However, rising
interest payments due to a higher debt burden have accounted for
an increasing portion of operating balance and may result in
relatively lower current margins from previous years, at mid-40%
levels during 2010-2012, although margins are still expected to be
strong. Capital expenditure accounts for more than 60% of total
spending. Large transport-related projects, which might be
difficult to postpone, account for an increasing proportion of
capital expenditure, limiting flexibility compared with previous
years. However, the administration ultimately maintains control
of the rate of investment.
With almost 13 million inhabitants (18% of the national
population), Istanbul plays a key role in Turkey's economy, as it
is the country's main financial and commercial centre. Its
responsibilities are focused on investment, primarily in transport
infrastructure, and the provision of municipal services such as
public transport and water. Its main source of revenue is taxes
collected by central government and shared among the metropolitan
municipalities on which Istanbul has no rate setting discretion.
=============
U K R A I N E
=============
ZHYTOMYRSKI LASOSCHI: Faces Liquidation Amid Ownership Dispute
--------------------------------------------------------------
Interfax-Ukraine, citing Uriadovy Kurier newspaper, reports that
CJSC Zhytomyrski Lasoschi is to go into liquidation.
The decision on the liquidation of Zhytomyrski Lasoschi through
the merger with Kyiv-based Budstyle-XXI was made at an
extraordinary general meeting of the CJSC's shareholders held on
November 20, 2010, Interfax-Ukraine says, citing a report of the
liquidation commission.
According to Interfax-Ukraine, the report said the claims of
creditors can be submitted within two months.
Interfax-Ukraine notes control over the company is being fought by
U.S. citizens Yuriy Leschynsky and Roman Katznelson on the one
side, and Ihor Boiko on the other.
The conflict over Zhytomyrski Lasoschi became public when the
investigation department of the tax police in Zhytomyr region in
April 2010 opened a criminal case against non-payment of taxes on
an especially large scale by Zhytomyrski Lasoschi officials,
Interfax-Ukraine recounts.
Mr. Leschynsky, who at the start of the conflict was head of the
CJSC's supervisory board, said Mr. Boiko has gained operating
control over the company, Interfax-Ukraine discloses. His
opponents tried to regain control, Interfax-Ukraine states.
Interfax-ukraine notes Mr. Leschynsky said the former management
violated the stockholders' rights to control finances, corporate
rights and managerial decisions, as well as being involved in
political activity to the detriment of the confectionery's
interests.
CJSC Zhytomyrski Lasoschi is a confectionery maker.
===========================
U N I T E D K I N G D O M
===========================
AFREN PLC: S&P Assigns 'B-' Long-Term Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned its
'B-' long-term corporate credit rating to U.K.-based oil and gas
exploration and production company Afren PLC. The outlook is
positive.
S&P is assigning a 'B-' long-term rating to Afren PLC's proposed
bonds.
S&P's classification of Afren's business risk profile as
"vulnerable" reflects the company's high Nigerian country risk,
production concentration, and relatively small sized production.
While Afren has assets in various African countries, S&P believes
its production will likely remain concentrated in Nigeria
(B+/Stable/B). Key related risks are important security issues,
with a risk of disruptions especially to onshore oil production,
and uncertainties surrounding the 2011 presidential elections.
Although the new Petroleum Bill under discussion could also lead
to fiscal changes, S&P believes these will not be detrimental for
Afren.
S&P classify Afren's financial risk profile as "aggressive," given
the uncertain pace of acquisitions and potential future debt
increases, continued large capital spending needs for developing
reserves, and the high dependence of cash flows on the successful
startup of the Ebok field.
On Sept. 30, 2010, the company had net debt of US$192 million (pro
forma for the acquisition by FHN).
"The positive outlook reflects the possibility of a one-notch
upgrade by year-end 2011," said Standard & Poor's credit analyst
Lucas Sevenin.
"Such a move would hinge on favorable production and cash flows at
the Ebok field, improved visibility on any further acquisitions,
as well as a further evidence of a supportive financial policy,
particularly in terms of leverage and liquidity," said Mr.
Sevenin.
Secondarily, S&P will monitor uncertainties related to the
upcoming presidential elections in Nigeria and ongoing security
risks.
Rating upside would be less likely in case of material delays in
production start-up at the Ebok field, which S&P and the company
expect by the end of 2010. Similarly, if Afren's Nigerian tax
regime or royalties materially increase, or if sizable debt-funded
acquisitions occur and result in higher leverage than S&P
currently assume, an upgrade would be unlikely.
AFREN PLC: Fitch Assigns 'B' Long-Term Issuer Default Rating
------------------------------------------------------------
Fitch Ratings has assigned African-based oil producer Afren plc a
Long-term foreign currency Issuer Default Rating of 'B', and
assigned Afren's upcoming US$ notes issue an expected foreign
currency senior unsecured rating of 'B' and an expected recovery
rating of 'RR4'. The Outlook for the IDR is Stable. The final
senior unsecured rating for the instrument is contingent upon
receipt of final bond documentation conforming materially to
information already received by Fitch.
Fitch's expected senior unsecured rating assigned to the notes is
based on the agency's assessment of possible limitations realizing
collateral granted for the benefit of noteholders. Fitch's views
of recovery upon default are reflected in the 'RR4' rating.
Fitch's recovery rating currently assumes maximum prior-ranking
debt of US$230 million in the company's capital structure. If
this amount were to increase significantly, the recovery rating
and senior unsecured rating of the notes could be negatively
impacted.
Afren's rating reflects its niche positioning in the Nigerian
upstream oil production market with strong growth potential and an
experienced management team with developed local relationships.
Afren's rating is influenced by its ability to commence and ramp-
up production at the Ebok field largely on schedule and within
budget, which should lead to its oil and gas production roughly
tripling over the next 12 months (nine-month average production to
September 30, 2010 of 16.1 kboed) and leverage declining to a
gross adjusted forecast ratio below 1x in 2011.
Fitch believes that the inherent execution risk in the Ebok
development (e.g. delays and/or cost overruns) is mitigated to a
certain extent by Afren's track record of successfully developing
its projects (e.g. production at the Okoro Setu commenced in 2008
at a rate of 3.1 kbopd and increased to an average of 18.8 kbopd
in 2009), the advanced stage of Ebok's development, and the fact
that this field is not technologically challenging (shallow
waters).
The rating also reflects that in 2009, Afren was well placed
compared with its oil and gas peers based on its strong
profitability (EBITDAR margin of 72.1% and EBITDA per boe of
US$26/boe) and cash flow generation (CFO/revenue of 75%).
However, its leverage-related ratios (gross adjusted leverage of
2.5x and gross adjusted debt to proven reserves of US$13.5/boe)
were high compared with its counterparts. Fitch believes that the
expected improvement of the group's credit metrics following the
implementation of the expansion strategy will make it better
placed among its peers.
Furthermore, the rating takes into account Afren's small scale of
operations and low reserves life compared with other oil and gas
companies rated in the 'B'/'BB' rating categories. The company's
ability to book additional reserves is reliant on the success of
its exploration activities and/or acquisitions. Fitch believes
that Afren's prospective resources base of 2.3bn boe provides
large exploration potential, the outcome of which, however,
contains a high degree of uncertainty and risk.
In addition, the rating considers a high concentration of the
producing assets base consisting of one field at present and
expected to be expanded to two fields from end-2010, which makes
the company more vulnerable to any disruption of operations at the
assets. The rating also takes into consideration the high
political risk (including risk of militant attacks on oil and gas
infrastructure, etc) in Nigeria, the main country of Afren's
operations at present. The impact of this risk on the group's
business and financial profile could be further exacerbated by the
company's small size and production concentration primarily at two
assets (following commencement at Ebok).
ANGLO IRISH: Dec. 2 Hearing Set for Request to Question Ex-Chief
----------------------------------------------------------------
Colm Keena at The Irish Times reports that a hearing will be held
on December 2 on Anglo Irish Bank's request to question its former
chief executive, David Drumm.
The Irish Times relates Anglo has asked the U.S. Bankruptcy Court
for the District of Massachusetts to allow it to question Mr.
Drumm at the offices of its Boston lawyers in relation to his
application for bankruptcy. According to The Irish Times, Anglo
also said it should be allowed to get access to certain documents.
In support of its claim, the bank said it was Mr. Drumm's largest
creditor, being owed EUR8.5 million, The Irish Times notes.
Judge Frank Bailey in Boston has advised the parties concerned
that he is going to hold a hearing on the matter on December 2,
The Irish Times notes. The hearing is to be "non-evidentiary" in
nature, The Irish Times states. If, in the course of the hearing,
the court decides there is a disputed and material issue of fact,
it will schedule a further evidentiary hearing, The Irish Times
says, citing a notice posted Monday.
Mr. Drumm has asked the court to reject or constrain the bank's
application that it be allowed to question him extensively about
his debts to the bank, the circumstances behind his getting
residency in the US and the litigation he is involved in with the
bank in Ireland, according to The Irish Times.
About Anglo Irish Bank
Anglo Irish Bank Corp PLC -- http://www.angloirishbank.com/--
operates in three core areas: business lending, treasury and
private banking. The Bank's non-retail business is made up of
more than 11,000 commercial depositors spanning commercial
entities, charities, public sector bodies, pension funds, credit
unions and other non-bank financial institutions. The Company's
retail deposits comprise demand, notice and fixed term deposit
accounts from personal savers with maturities of up to two years.
Non-retail deposits are sourced from commercial entities,
charities, public sector bodies, pension funds, credit unions and
other non-bank financial institutions. In addition, at Sept. 30,
2008, its non-retail deposits included deposits from Irish
Life Assurance plc. The Private Bank offers tailored products and
solutions for high net worth clients and operates the Bank's
lending business in Ireland and the United Kingdom.
* * *
As reported by the Troubled Company Reporter-Europe on Oct. 29,
2010, 2010, Standard & Poor's Ratings Services lowered its rating
on Anglo Irish Bank Corp. Ltd.'s non-deferrable dated subordinated
debt (lower Tier 2) securities to 'D' from 'CCC'. The downgrade
of the lower Tier 2 debt rating reflects S&P's opinion that the
bank's exchange offer is a "distressed exchange" and tantamount to
default in accordance with its criteria.
ATRIUM EUROPEAN: S&P Raises Corporate Credit Rating to 'BB'
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it raised its long-
term corporate credit rating on Jersey-based real estate company
Atrium European Real Estate Ltd. to 'BB' from 'BB-'. The short-
term corporate credit rating on Atrium is unchanged at 'B'. The
outlook remains stable.
"The upgrade follows Atrium's improved operating performance in
the nine months to end-September, its successful deleveraging, and
improvements in its operating margins," said Standard & Poor's
credit analyst Maxime Puget. "It also takes into account S&P's
opinion that Atrium will pursue a prudent growth strategy
commensurate with the quality and size of its real estate
portfolio."
Atrium owns, manages, and develops retail real estate properties
in Central and Eastern Europe. On June 30, 2010, the market value
of its portfolio was EUR2.2 billion. S&P notes that the company
is subject to a litigation dating back to its existence as Meinl
European Land. As S&P is not at present able to assess the effect
of this pending litigation on credit quality, S&P has not factored
it into the current ratings.
The ratings on Atrium are constrained by S&P's view of the lack of
visibility on the timing of the company's execution of its growth
strategy, as well as ongoing pressure on its portfolio asset
values. Atrium also has a short track record of improvements in
corporate governance, an area that in S&P's opinion remains key to
restoring investor confidence.
These negative factors are balanced by the company's improved
capital structure and stronger credit metrics resulting from the
debt deleveraging; and what S&P considers an adequate liquidity
position, with no major debt refinancing in the next two years.
In S&P's view, Atrium's stabilizing operating performance and
solid capital structure support the current ratings. S&P believes
that the company will maintain a prudent debt leverage until its
property portfolio is able to generate stable cash flows, albeit
at a higher LTV ratio than currently. S&P also anticipate that
the company will manage its development projects prudently.
S&P could raise the ratings should the recovery in Atrium's main
real estate markets prove to be more dynamic than S&P anticipate,
providing higher rental growth prospects.
Conversely, the ratings could come under pressure if market
conditions become more difficult than S&P anticipate, or if debt-
financed acquisitions reduce the company's financial flexibility.
S&P would also view negatively any unexpected change in the
capital structure or corporate governance that adversely affects
investors' confidence. Furthermore, the ratings could be lowered
in the event that litigation results in additional liabilities for
Atrium.
BALL BROTHERS: Goes Into Administration
---------------------------------------
Balls Brothers has gone into administration.
Morning Advertiser reports that Zolfo Cooper has been brought in
to lead the restructuring process and Zolfo Cooper said all sites
would continue trading with no immediate job losses.
According to Morning Advertiser, it is believed that the company
had repeatedly breached its banking covenants and owes Barclay
Bank GBP7 million.
In the year to January 2009, Morning Advertiser notes, the last
accounts at Companies House show that the company slumped from a
post-tax profit of GBP2.6 million to a loss of GBP224,000.
Last week, the report says, the group appointed a new interim
chief operating officer following the departure of chief executive
Chris Sullivan, who was appointed by the banks back in April.
Headquartered in London, Balls Brothers is a wine bar and
restaurant operator.
CATTLES: Reveals Rescue Plan to Avoid Administration
----------------------------------------------------
The Press Association reports that Cattles has unveiled a last-
ditch rescue plan as part of a bid to stave off administration.
According to the report, the company has put on the table a deal
that would see bondholders paid just GBP49 million of the GBP750
million they are owed, while shareholders would receive 1p per
share. The Press Association relates that if the offer is
rejected when shareholders and creditors are given the opportunity
to vote in the new year, the management will put the company into
administration.
The report notes that the proposal was announced on the same day
the company released results showing it made a pre-tax loss of
GBP685.4 million in 2009, compared with a GBP764.6 million loss
the previous year.
The Press Association notes bosses are hopeful that the rescue
package will be approved because it already has the backing of
some of its biggest creditors.
The Press Association notes that it would be run by a "shell"
company, called Bovess, under the same management team, and it
would continue to collect its loans, some of which have a lifespan
of two years. The Press Association relates that it would also
allow the company to preserve jobs, at least in the short-term, as
it could gradually reduce its 2,800 staff, whereas administrators
might make drastic redundancies.
The terms of the offer have been thrashed out following weeks of
discussions with bondholders and banks, The Press Association
says.
The report relates that there are no plans to carry on lending
through its main trading arm, Welcome Finance. But its doorstep
lending and debt collection businesses have now returned to profit
and could continue trading for the foreseeable future, The Press
Association adds.
Headquartered in Batley, Cattles is a loan specialist.
CONNAUGHT PLC: Auditor Policeman Probes PwC
-------------------------------------------
The accounting policeman said that it has begun a probe into how
PwC audited the books of Connaught PLC, Reuters reports.
According to Reuters, Connaught PLC went into administration in
September after its bank lenders, owed 215 million pounds, refused
it a second emergency loan.
The Accountancy and Actuarial Discipline Board, part of the
Financial Reporting Council, said it has also launched an
investigation into conduct of members of the Institute of
Chartered Accountants in England and Wales (ICAEW), Reuters notes.
The report says that the probes will look at how accounts were
prepared and approved for the year ended August 31, 2009, and
interim financial statements for the six months ended February 28,
2010.
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.
EUROCASTLE CDO: S&P Junks Ratings on Two Classes of Notes
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Eurocastle CDO II PLC's class A-2, B, C, D, and E notes. At the
same time, S&P affirmed the rating on the class A-1 notes.
S&P's most recent rating action on Eurocastle CDO II took place in
May 2010, when S&P lowered its ratings on all classes of notes.
Capital Structure
Rtgs Rtgs Amount as Current CE as Current
Class from to of May amount(%) of May(%) CE(%)
----- ---- ---- --------- --------- --------- -------
A-1 AA (sf) AA (sf) 190.51 187.59 34.41 29.67
A-2 A (sf) BBB+ (sf) 33.00 33.00 23.05 17.30
B BB+ (sf) BB (sf) 28.50 28.50 13.24 6.62
C BB (sf) B- (sf) 8.75 8.88 10.22 3.29
D B+ (sf) CCC- (sf) 10.00 10.06 6.78 0.00
E B (sf) CCC- (sf) 3.12 3.15 5.70 0.00
Sub. NR NR 13.50 13.50 N/A N/A
Note: The amounts reported above are the amounts used in S&P's
analysis leading to its rating actions both and in May.
CE - Credit enhancement = (Performing balance + cash balance +
recovery on defaulted obligations - tranche balance
[including tranche balance of all senior tranches]) /
(Performing balance + cash balance + recovery on defaulted
obligations).
NR - Not rated.
NA -Not applicable.
The rating actions follow S&P's assessment of a decrease in the
credit enhancement available for all rated notes compared with its
previous rating action, mainly due to further defaults in the
portfolio. The amount of defaulted assets currently accounts for
10.1% of the total collateral, compared with 3.3% on the previous
rating action date.
As a result, the existing ratings on the class A-2, B, C, D, and E
notes are in S&P's opinion no longer commensurate with the
available credit enhancement, and S&P has therefore lowered the
ratings on these notes.
Transaction Key Features
As of May Current
--------- -------
Balance of performing assets 288.8 258.6
Number of defaulted assets 1 4
Balance of defaulted assets 10.0 29.7
Recovery value of defaulted assets 1.6 2.1
Principal cash 0.0 6.0
Total collateral 290.4 266.7
Weighted-average spread (%) 1.21 1.27
Senior par value ratio (%) 99.25 89.23
Mezzanine par value ratio (%) 92.48 82.93
Class A par value ratio (%) 111.82 100.76
Note: The amounts reported above are the amounts used in S&P's
analysis leading to its rating actions both and in May.
On Nov. 3, S&P understand that the issuer notified the trustee
that an event of default had occurred following a breach of the
class A collateral test. On the same day, the trustee sent a
notice to the noteholders, requesting that they disclose their
positions and relay their directions in relation to the Eurocastle
CDO II notes.
The terms of the notes provide that if an event of default is
triggered, a portfolio liquidation can only occur if:
* The trustee determines that the anticipated proceeds of a sale
of the collateral based on an estimate obtained from an
internationally recognized investment banking firm would allow
all of the noteholders (including the subordinate classes) to be
paid in full, and at least 51% by principal amount of the
holders of the controlling class agree with such determination;
or
* Two thirds (by principal amount outstanding) of each of the
class A, B, C, and D noteholders' consent to the sale of the
collateral.
In S&P's view, these conditions make it unlikely that the
portfolio will be liquidated.
The trustee has at present directed the portfolio manager to
retain the collateral intact, collect all payments from the
collateral, and continue making payments in accordance with the
priorities of payments. S&P also received confirmation from the
manager that there is no envisaged change in the priorities of
payments.
For these reasons, S&P believes that the occurrence of the event
of default, in and of itself, should not affect its ratings on
these notes.
S&P will continue to monitor the collateral performance, as well
as the noteholders' directions to the trustee with regards to the
Eurocastle CDO II notes.
Eurocastle CDO II is a cash collateralized debt obligation of
structured finance assets--involving largely U.K. commercial
mortgage-backed securities, residential mortgage-backed
securities, and commercial asset-backed securities--managed by
Fortress Investment Group LLC. The transaction closed in May 2005
and entered its post-reinvestment period in June 2010.
Ratings List
Eurocastle CDO II PLC
EUR300 Million Senior and Mezzanine Deferrable-Interest
Fixed- And Floating-Rate Notes
Ratings Lowered
Rating
------
Class To From
----- -- ----
A-2 BBB+ (sf) A (sf)
B BB (sf) BB+ (sf)
C B- (sf) BB (sf)
D CCC- (sf) B+ (sf)
E CCC- (sf) B (sf)
Rating Affirmed
Class Rating
----- ------
A-1 AA (sf)
GHOST: Retail Tycoon Forced to Pay GBP2.5 Million
-------------------------------------------------
Jason Hesse at Real Business reports that Kevin Stanford, the
entrepreneur who co-founded Karen Millen, has been forced to shell
out GBP2.5 million of his own fortune after personally
guaranteeing a bank loan to his failed fashion brand Ghost, which
went into administration in 2008.
According to the report, Kevin Stanford had a 50% stake in Ghost,
which had 32 stores in the UK when it fell into administration in
2008, owing GBP5 million to Icelandic bank VB Investment Bank.
The report notes the Daily Telegraph said that Iceland's Supreme
Court found Kevin Stanford personally liable for half of the loan
to VB, since he owned half of Ghost jointly with investment
partner Arev. The Daily Telegraph, Real Business says, said that
a panel of three judges ruled that according to contractual
documents, there was no collateral apart from Kevin Stanford's own
word that he would back the loan.
Real Business relates that Ghost was later rescued from
administration by Touker Suleyman, the owner of shirt retailer
Hawes & Curtis.
Kevin Stanford co-founded Karen Millen and went on to own stakes
in All Saints, House of Fraser and Mosaic -- all which were
Icelandic-backed businesses, Real Business discloses. Mr.
Stanford, who once had a fortune of GBP220 million, lost control
of several of these investments when the Icelandic banking system
collapsed in 2008, the report adds.
Ghost is a fashion brand.
GLAMALCO: Goes Into Administration; 140 Jobs Axed
-------------------------------------------------
Glamalco has made 140 people redundant before going into
administration, BBC News reports.
According to BBC News, sixteen staff have been retained to help
administrators KPMG. The report relates that KPMG said the
redundancies were made before the company went into
administration.
"Glamalco has encountered cashflow difficulties, which has
resulted in its inability to fund ongoing construction contracts,
and unfortunately, the business is unable to continue to trade.
We will now be pursuing an orderly wind-down of the business," the
report quoted Joff Pope, joint administrator and associate partner
at KPMG, as saying.
The administrators have been appointed for Glamalco and the
holding company, Glamorgan Aluminium Co Ltd.
Headquartered in Cardiff, Glamalco is an aluminium company. The
company, whose main site is on Ipswich Road, employs 156 staff
across three sites making and installing aluminium materials in
the construction industry. Glamalco has three sites - in Cardiff,
Andover in Hampshire and Redditch in Worcestershire. The company
was created in the early 1970s as Glamorgan Aluminium with a staff
of five working on shop fronts and domestic windows.
LOCAL HEROES: Goes Into Administration
--------------------------------------
Local Heroes Pub Company has collapsed into administration.
Paul Charity at Morning Advertiser reports that the company has
ceased trading on Thursday, November 25, 2010.
According to Morning Advertiser, two iconic York pubs hit by the
move were Tap And Spile, in Monkgate and the Golden Fleece.
Local Heroes Pub Company runs 18 pubs in the north-east. It ran
outlets within Northumberland, Durham, Teesside, North & West
Yorkshire. The directors of Local Heroes are Bill Overin, Andy
Mullin and Ian Perrett.
LOWRY HOMES: Enters Administration
----------------------------------
Rachel Constantine at Business Sale reports that KPMG has been
called in to Lowry Homes, which has been placed into
administration.
According to the report, Paul Flint and Brian Green of KPMG are
the joint administrators to Lowry Homes, along with two other
businesses of the same group -- Lowry Properties and Lowry
Renaissance.
Business Sale notes that KPMG is reported to have confirmed that
most of the group's remaining properties, along with most of the
staff, were transferred over to Prospect before the administration
process began.
"The administrators are dealing with a number of remaining
properties, which are owned by the two group companies," the
report quoted KPMG as saying.
It is understood that Prospect took on four development sites from
Lowry Homes, the report notes.
The last recorded accounts for Lowry Homes for the year to the end
of December 2008 reveal revenues of GBP17.8 million and pre-tax
losses of GBP1.4 million, the report adds.
Headquartered in Salford Quays, Lowry Homes, which was established
in 1997, specialized in house building to include town houses,
apartments, conversions and accommodation for the elderly. Its
parent Jackson Holdings is a large development company.
QUIBELL CONSTRUCTION: Two Building Firms Go Into Administration
---------------------------------------------------------------
Aaron Morby at Construction Inquirer reports that two Hull
building firms that form a key part of the Quibell Construction
Group have been placed into administration.
According to Construction Inquirer, administrators from
PricewaterhouseCoopers have axed more than 90 jobs from Quibell &
Son (Hull) and Humber Joiners.
The report notes that nine staff members at Quibell & Son (Hull)
have been kept on to help wind down the companies. Construction
Inquirer relates that the two other businesses within the group,
Quibell & Son Holding and Quibell & Son Development, continue to
operate normally.
Mark Loftus of PricewaterhouseCoopers said that both companies had
been making losses for a several years, the report notes.
"Trading has suffered in recent years and the administration is
clearly disappointing news for the stakeholders and employees in
particular," the report quoted Mr. Loftus as saying.
The firms are understood to have been hit by Government spending
cutbacks and the delay of a significant contract which hit
cashflows, Construction Inquirer says.
Construction Inquirer adds that four months ago Quibell
Construction Group announced it was shutting down its stonemasonry
and restoration division resulting in the loss of 15 jobs.
Quibell & Son (Hull) traces a history stretching back nearly 135
years, including building Hull's Guildhall building. It acted as
the main building contractor at the groupworking on hospital and
schools projects, and had secured places on the Yorbuild framework
covering work valued up to GBP1 million.
SHEFFIELD WEDNESDAY: Has Takeover Deal; Averts Administration
-------------------------------------------------------------
Michael Kavanagh at The Financial Times reports that Serbia-born
businessman Milan Mandaric has agreed to rescue Sheffield
Wednesday from the threat of administration by taking over the
football club for a nominal GBP1 (US$1.6).
According to the FT, the deal will see Mr. Mandaric, who has
previously owned a string of clubs including Portsmouth, Charleroi
of Belgium and Nice of France, pay up to GBP300,000 to HM Revenue
& Customs to avert a winding up order scheduled for today,
December 1.
The FT says Mr. Mandaric's investment vehicle, UK Football
Investments, will also pay GBP9 million to reach agreement with
creditors, allowing the League One club to clear its debts.
The club had accumulated debts of GBP26 million -- most of which
was owed to the Co-operative Bank -- and seen its trading
prospects hit this summer by relegation from the Championship to
League One, the FT discloses.
About Sheffield Wednesday
Sheffield Wednesday Football Club is a football club based in
Sheffield, South Yorkshire, England, who will compete in the
Football League One in the 2010/11 season, in England. Sheffield
Wednesday is one of the oldest professional clubs in the world and
the third oldest in the English league.
TURBO FINANCE: Fitch Assigns 'BB+' Rating to Class C Notes
----------------------------------------------------------
Fitch Ratings has assigned expected ratings to Turbo Finance Plc
notes backed by UK auto loan receivables originated by the
FirstRand Bank Limited, London Branch (rated 'BBB+'/Stable/'F2'):
-- GBP289m Class A: 'AAA(EXP)sf'; Outlook Stable; Loss Severity
Rating 'LS-1'
-- GBP63.6m Class B: 'A(EXP)sf'; Outlook Stable; LS Rating 'LS-
2'
-- GBP40.26m Class C: 'BB+(EXP)sf'; Outlook Stable; LS Rating
'LS-3'
The final ratings are contingent on the receipt of final documents
conforming to information already received.
The expected ratings of the new issuance are based on Fitch's
assessment of the origination and servicing procedures of FRB,
Fitch's expectations of future asset performance, the available
credit enhancement, and the transaction's legal structure. Credit
enhancement will be provided to the rated notes by subordination
and a cash reserve account funded at closing. The Class A notes
benefit from 28% credit enhancement (26.4% subordination, 1.6%
cash reserve), the Class B notes from 11.8% credit enhancement
(10.2% subordination, 1.6% cash reserve) and the Class C notes
from 1.6% credit enhancement (1.6% cash reserve). The Class C
note rating is capped at that of the servicer due to potential
commingling risk exposure; however, this is not currently a
constraining factor given the higher rating of FRB. The ratings
do not address payment of the additional subordinated interest
component on the Class C notes.
At closing, the proceeds of the Class A to C notes shall be
applied to purchase an amortizing pool of UK auto loan receivables
from the originator. The preliminary portfolio, as at 31 October
2010, comprised 71,705 loans with an average current balance of
GBP5,479. The portfolio consists primarily of used car loans
(89.4% by balance), with weighted average seasoning of 11 months
and a weighted average remaining term of 39 months. The portfolio
is diverse with respect to regional and manufacturer distribution.
The loans were originated by FRB under the trading name of Carlyle
Finance. Carlyle Finance is the fourth largest independent
provider of point of sale car finance within the UK, and
originates loans via car dealers and specialized car finance
brokers. The Carlyle Finance business was acquired by FRB in
2006. The origination and servicing operations are based in
Cardiff, Wales.
In Fitch's opinion the future performance of the underlying
receivables is a key rating driver. Fitch analyzed obligor credit
risk by forming base case default and recovery assumptions and
then stressing these assumptions according to the rating level of
each note. Although the underlying contracts do not feature any
direct residual value risk, Fitch notes that 90% of the underlying
receivables are regulated by the Consumer Credit Act and are
therefore exposed to voluntary termination losses. In Fitch's
opinion average used car values, original loan to value ratios and
original loan tenors are key drivers of voluntary termination
risk. Fitch formed a view on the extent of VT losses by
estimating the future car values relative to loan balances in
different rating scenarios.
In common with other UK auto loan ABS transactions, title to the
underlying vehicle will be retained by the originator; however,
the issuer has the right to receive all sale proceeds from the
vehicles. Based on the transaction structure, specifically the
provision for an administrator recovery incentive payment, Fitch's
quantitative analysis has assumed that the issuer will be able to
realize sale proceeds from defaulted and voluntarily terminated
vehicles.
From closing, FRB will act as servicer; a replacement servicer
shall be identified in the event that FRB is downgraded below
'BBB-'. The issuer will enter into two fixed / floating rate swap
agreements with BNP Paribas, London Branch (rated 'AA-
'/Stable/'F1+') to hedge the interest rate mismatch in relation to
the Class A and B notes respectively. BNP Paribas, London Branch
will also act as account bank to the issuer.
Fitch has a stable asset and rating performance outlook for the UK
auto ABS sector. Fitch considers that unemployment levels as well
as used car value are key drivers of asset performance in the UK
auto ABS sector.
VEDANTA RESOURCES: S&P Keeps 'BB' Long-Term Corp. Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it has kept its 'BB'
long-term foreign currency corporate credit rating on Vedanta
Resources PLC as well as the 'BB' issue rating on all of the
company's debt issuances on CreditWatch, where they were placed
with negative implications on Aug. 17, 2010.
S&P has maintained the ratings on Vedanta on CreditWatch with
negative implications to reflect the lack of clarity on the
approvals from the Indian government and government-related
entities that are necessary for the company's proposed acquisition
of Cairn India Ltd. to be completed.
"S&P originally placed the ratings on CreditWatch, following
Vedanta's announcement that it will acquire a controlling stake in
India-based oil and gas company Cairn," said Standard & Poor's
credit analyst Craig Parker. "The CreditWatch placement reflects
S&P's view that the proposed acquisition could significantly
increase Vedanta's debt and weaken its financial risk profile to
levels below its expectation for the rating."
S&P aim to resolve the CreditWatch action following its discussion
with Vedanta on the final funding structure for the acquisition
and its effect on the company's financial risk profile. In
addition, S&P will assess the potential effects on Vedanta's
business risk profile from petroleum-based earnings and the cost
structure at Cairn. S&P will also review Cairn's forecast
performance and the final capital structure at Vedanta. That
said, the acquisition is subject to approval from the Indian
government.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Frauline S. Abangan and Peter A. Chapman,
Editors.
Copyright 2010. All rights reserved. ISSN 1529-2754.
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