/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/110310.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, March 10, 2011, Vol. 12, No. 49 Headlines A Z E R B A I J A N INTERNATIONAL BANK: Fitch Puts D/E Individual Rating on Neg. Watch B U L G A R I A MOSTSTROY AD: Sofia Court Starts Bankruptcy Proceedings PETROL AD: Fitch Affirms Long-Term Issuer Default Rating at 'CC' C Z E C H R E P U B L I C SAZKA AS: Administrator Wants to Ban Managers From Handling Assets F R A N C E COEUR DEFENSE: Cour de Cassation Overturns 2010 Bankruptcy Ruling G E R M A N Y GROHE HOLDING: Moody's Upgrades Corporate Family Rating to 'B2' GROHE HOLDING: S&P Assigns 'B-' Rating to EUR400-Mil. Senior Notes HECKLER & KOCH: Moody's Junks Corporate Family Rating From 'B3' G R E E C E * GREECE: One in Two Businesses Need to Refinance Debt, Poll Shows * Moody's Downgrades Greece's Government Bond Rating to 'B1' I C E L A N D KAUPTHING BANK: Owes Money to 70 Indian Companies I R E L A N D CAIRN HIGH: S&P Affirms 'CC' Ratings on Four Classes of Notes COALPORT BUILDING: High Court Lifts Winding-Up Order HOUSE OF EUROPE: S&P Cuts Ratings on Various Notes to 'CCC- (sf)' KILDARE SECURITIES: S&P Cuts Rating on Class D Notes to 'BB (sf)' MURPHY'S WORLD: Goes Into Liquidation; 30 Jobs Lost SUNDAY TRIBUNE: Receiver Sues IMOS Over Fake Newspaper N E T H E R L A N D S HYVA GLOBAL: Moody's Assigns 'B1' Corporate Family Rating HYVA GLOBAL: S&P Assigns 'B+' Long-Term Corporate Credit Rating R U S S I A EVROFINANCE MOSNARBANK: Fitch Gives Pos. Outlook; Keeps B+ Rating * SWEDEN: Corporate Failures Up 5% to 500 in February 2011 U K R A I N E VTB BANK: Fitch Assigns 'B+' Rating to Senior Unsecured Bonds U N I T E D K I N G D O M ACE: Goes Into Administration, Ceases Trading & Axes 22 Jobs CONNAUGHT PLC: Landscape Unit Sale Saves 2,700 Jobs FENCHURCH INT'L: Goes Into Administration on High Labor Costs MODEC: Liberty Electric Seeks to Acquire Firm TASC GROUP: Goes Into Administration X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* =================== A Z E R B A I J A N =================== INTERNATIONAL BANK: Fitch Puts D/E Individual Rating on Neg. Watch ------------------------------------------------------------------ Fitch Ratings has placed International Bank of Azerbaijan's ratings, including its 'BBB-' Long-term Issuer Default Rating, on Rating Watch Negative. The RWN on the Long-term IDR reflects greater uncertainty about the readiness of the Azerbaijan authorities to provide timely assistance to IBAR, given the prolonged failure to recapitalize the bank and bring it into compliance with prudential regulations and loan covenants. The RWN also takes into account ongoing discussions within the government about future strategy towards IBAR, in particular the possibility of its further privatization, which could result in the state's stake falling below 50%. Fitch is also increasingly concerned about the implications for government support of the current ownership structure, in which the Ministry of Finance barely owns a majority stake (50.2%). Fitch does not exclude the possibility that delays with IBAR's recapitalization are partly due to financial constraints of minority shareholders. Fitch also notes IBAR's significant lending to private related-party entities, and cannot rule out the possibility that this would lead the Azerbaijan authorities to want beneficiaries of these related party borrowers to participate in any support package together with the government. However, the lack of transparency on the ultimate holders of the minority stakes complicates any analysis of the relationship between government and private shareholders. At the same time, Fitch's view of the Azerbaijan authorities' propensity to provide assistance continues to be supported by IBAR's dominant market shares, its part policy role and its moderate size relative to the authorities' financial resources. At end-2010, IBAR accounted for over 40% of banking sector assets and 24% of retail deposits. However, its total liabilities at end-2010 were equal to a moderate 13% of 2010 GDP, and the bank's external liabilities equated to 4% of GDP or 7% of the combined sovereign wealth fund and FX reserves. In light of these factors, any downgrade of IBAR's Long-term IDR would likely be limited to one notch, to 'BB+'. The RWN on the 'D/E' Individual rating reflects the deterioration in IBAR's standalone credit profile in light of prolonged breaches of regulatory capital adequacy ratios and concerns about the bank's asset quality. Since January 2010, IBAR's total capital adequacy ratio has been below the 12% regulatory requirement (at end-February 2011 the ratio was 10.45%), while at end-2010 reported NPLs (loans overdue by 90 days) stood at 14.4% and reserve coverage of these was a moderate 55%. IBAR has AZN580m (equal to 12% of liabilities) of bank borrowings maturing in April-December 2011, and will need to refinance these, generate additional liquidity internally or receive funding support to repay these facilities, given the limited liquid assets currently on the balance sheet. Fitch expects to resolve the RWN based on: the authorities' actions, if any, to recapitalize IBAR; the development of privatization plans for the bank; Fitch's review of disclosures in the bank's audited 2010 IFRS accounts, including in respect to asset quality; and the availability of sufficient liquidity to meet scheduled wholesale debt repayments in 2011. The rating actions are: -- Long-Term Foreign Currency IDR: 'BBB-'; placed on RWN -- Short-Term Foreign Currency IDR: 'F3'; placed on RWN -- Individual Rating: 'D/E'; placed on RWN -- Support Rating: '2'; placed on RWN -- Support Rating Floor: 'BBB-'; placed on RWN =============== B U L G A R I A =============== MOSTSTROY AD: Sofia Court Starts Bankruptcy Proceedings ------------------------------------------------------- Elizabeth Konstantinova at Bloomberg News reports that the Sofia Court of Appeal started bankruptcy proceedings for Moststroy AD. Bloomberg relates that the company said in a filing to the Bulgarian Stock Exchange on March 8 that the court decided to declare the company insolvent since Sept. 30 and scheduled a meeting of creditors for April 4. The company said the court has also appointed a receiver, Bloomberg reports. According to Bloomberg, the court's decision overturns a Dec. 21 ruling of the Sofia City Court rejecting Moststroy's insolvency claim on the grounds the company had sufficient assets for debt repayment. As reported by the Troubled Company Reporter-Europe on Oct. 11, 2010, Bloomberg News said Moststroy filed for insolvency after all its bank accounts were frozen because of unpaid debts. Bloomberg disclosed Moststroy said it had no funds to repay a loan borrowed from the United Bulgarian Bank, a unit of the National Bank of Greece SA, which was due on May 31. Its construction machines and other equipment leased from Interlease EAD were seized by Interlease, which canceled the contracts, Moststroy, as cited by Bloomberg, said. Moststroy AD is a construction company based in Bulgaria. The company participates in the construction of the country's high- profile Trakiya motorway. The company is controlled by Bulgarian billionaire Vassil Bozhkov. PETROL AD: Fitch Affirms Long-Term Issuer Default Rating at 'CC' ---------------------------------------------------------------- Fitch Ratings has affirmed Bulgaria-based fuel distributor Petrol AD's Long-term Issuer Default Rating at 'CC' and senior unsecured rating of 'CC' for its EUR100 million notes, due in October 2011. Fitch has simultaneously removed both ratings from Rating Watch Negative, where they were placed on July 28, 2010. The Recovery Rating on the notes is 'RR4'. The resolution of the RWN reflects Petrol AD's improved cash flow generation in 2010, mainly thanks to the fuel margin improvement in the Bulgarian market and the cost-cutting implemented by the company. The ratings incorporate the company's weak credit ratios and corporate governance standards compared with other oil refining and/or fuel-marketing companies rated by Fitch. The ratings reflect the company's high refinancing risk, predominantly related to the EUR100 million notes due in October 2011, which accounts for the vast majority of the company's debt. The company's currently available liquidity is insufficient to repay the notes. However, Fitch understands that Petrol AD plans to redeem the EUR100 million notes by either raising new bank funding or, alternatively, through a sale and lease-back transaction in the next few months. Petrol AD is a leading fuel distributor in Bulgaria. It operates a wholesale and retail distribution business. =========================== C Z E C H R E P U B L I C =========================== SAZKA AS: Administrator Wants to Ban Managers From Handling Assets ------------------------------------------------------------------ CTK, citing the insolvency register, reports that Josef Cupka, the preliminary insolvency administrator of Sazka, has asked the Municipal Court in Prague to ban Sazka managers from handling the company's assets unless they do so with his approval. Mr. Cupka criticized the fact that Sazka's management had last Friday approved two contracts with the firm Gladiolus, set up by companies Penta and E-Invest, which want to enter Sazka, CTK relates. The other contract sets up a new body, a controlling committee that will comprise mostly of Gladiolus representatives, CTK discloses. The committee is to give instructions to the Sazka board, under a sanction of CZK300 million in case the board fails to fulfil them, CTK says. According to CTK, Mr. Cupka said that Sazka's steps are in "sharp contradiction" with the insolvency law. CTK notes that Prague Municipal Court spokeswoman Martina Lhotakova said the content of Mr. Cupka's proposal is almost identical with a previous proposal for injunction filed by the group KKCG, which the court has met only partially. According to CTK, Sazka spokesman Jan Tuna said the information in Cupka's proposal were untrue, incomplete and distorted. CTK relates that KKCG on Tuesday repeatedly asked the court to issue an order that Sazka managers can take certain steps only with a written approval of the preliminary insolvency administrator. Like Mr. Cupka's proposal, KKCG's step is a reaction to Sazka board's approval of contracts with Gladiolus at a secret meeting, CTK notes. Ms. Lhotakova, as cited by CTK, said the court would decide on both Mr. Cupka's and KKCG's proposals by Wednesday. Sazka on Tuesday appealed against the appointment of Cupka as a preliminary administrator, questioning Cupka's impartiality, CTK notes. According to CTK, Sazka pointed to the fact that Mr. Cupka had in the past been involved in bankruptcy proceedings against entrepreneur Vaclav Fischer. CTK notes that Sazka said Fischer's creditors at that time included Karel Komarek's group KKCG that is eyeing Sazka at present. Sazka, as cited by CTK, said that in addition, the administrator failed to be appointed in line with objective conditions set by the insolvency law. Sazka is facing two insolvency petitions at present, cTK discloses. One of them has been filed by KKCG, the other by entrepreneur Radovan Vitek, who claims to be Sazka's biggest creditor, CTK notes. Sazka AS is a provider of lotteries and sport betting games in the Czech Republic. =========== F R A N C E =========== COEUR DEFENSE: Cour de Cassation Overturns 2010 Bankruptcy Ruling ----------------------------------------------------------------- Heather Smith at Bloomberg News reports that Coeur Defense, Europe's largest office complex, won a bid to overturn a lower court's decision to throw out its 2008 bankruptcy filing. According to Bloomberg, the Cour de Cassation, France's highest appeals court, said the lower tribunal erred in its 2010 ruling that the building owner's difficulties in renegotiating loan terms weren't enough to qualify it for creditor protection. Lehman bought the complex for EUR2.11 billion (US$2.9 billion), a record for the Paris market, in March 2007, Bloomberg recounts. Heart of La Defense SAS, the vehicle Lehman had formed to buy it, obtained creditor protection in November 2008, Bloomberg discloses. That was two months after Lehman's collapse, when HOLD and parent Dame Luxembourg Sarl couldn't reach a new hedging agreement on EUR1.6 billion of loans taken to fund the purchase, Bloomberg discloses. Lehman had issued commercial mortgage-backed securities against the purchase loans, called Windermere XII FCT bonds, managed by Paris-based EuroTitrisation, which made the earlier appeal fighting the bankruptcy filing and opposed HOLD's appeal to the Cour de Cassation, Bloomberg relates. "EuroTitrisation will proceed with a thorough analysis of these decisions and of their consequences and will assert the interests of the creditor which it represents before the court of appeal of referral," Bloomberg quotes the group as saying in an e-mailed on Tuesday. Coeur Defense, designed by Jean-Paul Viguier and completed in 2001, is in the Paris financial district of La Defense. It was valued at EUR1.8 billion following Lehman's collapse, according to Bloomberg. ============= G E R M A N Y ============= GROHE HOLDING: Moody's Upgrades Corporate Family Rating to 'B2' --------------------------------------------------------------- Moody's Investors Service upgraded Grohe Holding GmbH's Corporate Family Rating to B2 from B3 and Probability of Default Rating to B1 from B3. Concurrently, Moody's upgraded to B2 from B3 the rating on Grohe's outstanding senior secured Notes, and to B3 from Caa1 the EUR335 million senior Notes (due in October 2014). Moody's also assigned a (P)B2 rating to Grohe's new EUR400 million senior secured Notes (due in 2017/ 2018) announced. The outlook on all ratings is stable. Ratings Rationale The upgrade reflects strong operating performance of Grohe supported by the company's successful strategy in its key products and markets as well as an improved debt maturity profile. As part of the partial refinancing of the capital structure announced, Grohe will issue a new five year EUR150 million revolving credit facility to replace the existing EUR150million RCF maturing in 2012. Grohe will also issue EUR400 million of new senior secured notes due in 2017/2018 to refinance EUR400 million of the existing EUR800 million senior secured floating rate notes maturing in 2014. The floating-rate tranche of the new notes matures in September 2017, six months before the fixed-rate tranche due in March 2018. "Against the backdrop of stabilizing but still challenging trading conditions, Grohe has achieved strong growth in sales and EBITDA and substantial de-leveraging from 2009 level, which has exceeded Moody's expectations," said Tanya Savkin, Moody's lead analyst for Grohe. "The company's leverage still remains high, at 6.9x as of the end of 2010 (Moody's adjusted). However it is offset by solid EBITDA margins which have remained stable at around 20-21% in the past three years. The refinancing plan undertaken will remove the uncertainty about the RCF maturing in January 2012 and improve the maturity profile of the company, which together support the B2 CFR". In 2010 Grohe reported a 19% growth in sales and 29% growth in normalized EBITDA, reversing the negative trend seen in 2009, when the company's CFR was downgraded from B2 to B3.The strong performance demonstrates the success of the company's efforts to develop strong portfolio of new products, expand its geographical and distribution reach as well as improve productivity and reduce costs. However, Moody's notes the group's exposure to raw material prices which will remain a key constraint for the company's ratings. The voluntary tender offer for shares in Joyou AG in China announced on Feb. 14 2011 will strengthen the company's position in the fast-growing Asian markets and provide further geographical diversification away from its key region of Europe. As a result Grohe's ownership of Joyou AG will increase to at least 30%. The acquisition, subject to regulatory approvals, will be made through Grohe Asia AG, a joint-venture which is outside of the restricted group. Moody's acknowledges the group's positive cash flow generation throughout 2010, before payment of the EUR54.8 million European Commission fine in September 2010. This is due to improved performance and reduced restructuring costs compared to previous years and has also helped to build additional liquidity. The new capital structure includes a single covenant of minimum EBITDA in the RCF, and no debt repayment before 2014. The five-year RCF has a springing maturity feature leading to potentially accelerated re-financing date, if the 2014 notes have not been refinanced three months prior to their maturity date. The PDR of B1, one notch above CFR of B2, reflects the covenant-lite nature of the structure leading to the assumption of 35% recovery rate. The stable outlook reflects Moody's expectations that Grohe is well positioned for cyclical recovery in the water technology products market and will continue to maintain stable growth in sales and profitability. While Moody's believes that a rating upgrade is unlikely in the short- to-medium term due to Grohe's high leverage, positive rating pressure could develop if there is a continued improvement in the company's profitability leading to EBITA/interest increasing towards 2.5x; gross debt/EBITDA approaching 5.0x; or free cash flow / debt at around 6%. Negative rating pressure could develop if the company fails to maintain its gross debt/EBITDA ratio below 7.0x; EBITA/Interest ratio falls towards 1.5x; or if free cash flow / debt falls towards 2%. Headquartered in D�sseldorf, Germany, Grohe Holding GmbH is a leading single-brand manufacturer and supplier of sanitary fittings for bathrooms and kitchens. Grohe operates six production facilities, which are located in Germany, Portugal, Canada and Thailand. In 2010, the company reported revenue of EUR980 million and Normalized EBITDA of EUR200 million. GROHE HOLDING: S&P Assigns 'B-' Rating to EUR400-Mil. Senior Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it assigned its 'B-' issue rating to the proposed EUR400 million senior secured notes to be issued by German-based sanitary fittings manufacturer Grohe Holding GmbH (B-/Stable/--). The recovery rating on the proposed senior secured notes is '3', indicating its expectation of meaningful (50%-70%) recovery in the event of a payment default. In addition, S&P assigned its 'B+' issue rating to the proposed super senior secured revolving credit facility to be issued by Grohe's subsidiaries Grohe Beteiligungs GmbH and Grohe AG. The recovery rating on the proposed super senior RCF is '1', indicating its expectation of very high (90%-100%) recovery prospects in the event of a payment default. At the same time, S&P affirmed the issue rating on Grohe's existing EUR800 million senior secured notes due 2014 at 'B-', on the understanding that the proceeds of the proposed notes will be used to pay down EUR400 million of the existing notes. The recovery rating on the existing notes is unchanged at '3'. S&P also affirmed the issue rating on Grohe's senior subordinated notes due 2014 at 'CCC'. The recovery rating on these notes is unchanged at '6', indicating its expectation of negligible (0%- 10%) recovery in the event of a payment default. The recovery ratings on the existing notes remain unchanged as a result of what S&P considers to be only minor changes in Grohe's debt structure. This is because the proceeds from the proposed notes will be used to redeem EUR400 million of the existing senior secured notes maturing in 2014. Its assessment is also based on its assumption that Grohe will be successful in executing the proposed super senior RCF in conjunction with the issuance of the proposed notes. Recovery Analysis The proposed senior secured notes will rank pari passu with the existing EUR400 million senior secured notes due 2014 and will benefit from the same security and guarantees. These guarantees primarily comprise a first-lien claim over extensive asset security (such as bank accounts, inventory, real estate, trade receivables, and intellectual property) and share pledges. In addition, a guarantee package provided to both classes of senior secured debtholders will cover the majority of the Grohe group's EBITDA and assets (currently about 80%). The super senior RCF will rank ahead of the proposed and existing senior secured notes and will benefit from the same security package, in respect of the entitlement to security proceeds, plus some additional guarantees from Grohe Holding and some Spanish and Italian subsidiaries. The security package for the existing senior subordinated notes due in 2014 is rather weak, in its view, consisting of some second-ranking share pledges and security over intercompany loans. The documentation for the proposed super senior RCF will also include one maintenance covenant (an EBITDA floor of EUR100 million). It will also contain a change-of-control clause and a springing maturity provision (whereby the RCF could be repaid three months before the existing bonds mature, should the latter not have been refinanced). The RCF documentation will be governed by English law. The indenture governing the existing EUR800 million senior secured notes restricts, among other things, the ability of the Grohe group to raise additional debt, pay dividends, sell certain assets, or merge with other entities. The documentation contains a change-of-control clause, and is governed by New York law. The indenture governing the proposed EUR400 million senior secured notes limits Grohe in the same way as it does the existing notes. However, an important part of the covenants could be suspended if the notes are rated at investment grade. The documentation contains a change-of-control clause, and is governed by New York law. The documentation for the EUR335 million senior subordinated notes contains similar restrictions in terms of additional debt, dividend distribution, sales of assets, and mergers and acquisitions. However, it does not contain a senior leverage covenant restricting additional debt incurrence (contrary to the documentation for the existing and proposed notes). Similar to the existing and the proposed senior secured notes, the documentation for the senior subordinated notes contains a change- of-control clause, and is governed by New York law. In order to determine recoveries, S&P simulates a default. Under its hypothetical scenario, S&P envisage, among other things, a prolonged and severe deterioration in the construction market and a weak macroeconomic environment from 2011 onward. In its simulation, Grohe experiences a prolonged negative trading environment leading to pressure on its revenues. In its view, increasing pressure on margins would result from a higher proportion of fixed costs on the back of a stronger-than- anticipated decline in revenues, together with some increased raw material prices. Furthermore, S&P assume that Grohe will be unable to repay its existing EUR400 million senior secured notes and EUR355 million senior subordinated notes after having redeemed its RCF early, triggered by the springing maturity provision. This would lead to a default in 2013, with EBITDA declining to about EUR143 million. At the hypothetical point of default, S&P values Grohe at about EUR860 million using a combination of discounted cash flow and market multiple methodologies. S&P believes that, in a default, Grohe would be reorganized rather than liquidated, given its view of the strength of the group's brand. From this enterprise value, S&P deducts priority liabilities of EUR152 million, comprising EUR60 million of enforcement costs and EUR92 million of pensions deficit. This results in a residual value of EUR707 million to reimburse: first, the proposed RCF; second, the senior secured notes; and third, the senior subordinated notes. S&P estimates that the outstanding amount of the super senior RCF, including six months of prepetition interest at the hedged rate, would be about EUR155 million at default. This results in recovery prospects of between 90%-100%, underpinning its recovery rating of '1' on this debt. There is sufficient value remaining for 50%-70% recovery for the pari passu-ranking proposed and existing senior secured notes, which S&P estimates at EUR833 million (including six months of prepetition interest). This supports its recovery rating of '3' on these instruments. There would be no value left for the senior subordinated notes. Ratings List New Rating Grohe Holding GmbH Senior Secured Debt[1] B- Recovery Rating 3 Grohe AG Grohe Beteiligungs GmbH Revolving Credit Facility* B+ Recovery Rating 1 Ratings Affirmed Grohe Holding GmbH Senior Secured Debt B+ Senior Secured Debt B- Recovery Rating 3 Senior Subordinated Notes CCC Recovery Rating 6 Grohe Beteiligungs GmbH Senior Secured Debt[2] B+ Recovery Rating 1 [2] Guaranteed by Grohe Holding GmbH. [1] Grohe Beteiligungs GmbH. HECKLER & KOCH: Moody's Junks Corporate Family Rating From 'B3' --------------------------------------------------------------- Moody's Investors Service has downgraded these ratings of Heckler & Koch GmbH: the corporate family rating to Caa1 from B3; the probability-of-default rating to Caa1 from B3; and the rating on the company's EUR120 million senior unsecured notes to Caa1 from B3. The ratings have been placed on review with direction uncertain. Ratings Rationale The downgrade to Caa1 reflects an increasing risk associated with the refinancing of the company's EUR120 million notes that mature in July 2011. On Feb. 28, 2011, HK announced its plan to issue new notes with a face value of around EUR100 million by the end of the second quarter of 2011. The agency cautions that the envisaged timeline leaves very limited headroom for any delays in the execution of this process and that a possible failure to refinance the notes could also have negative repercussions on overall recovery prospects. While Moody's notes that HK has a relatively healthy capital structure, Moody's caution that a successful refinancing will also depend upon market conditions and external factors and could be impacted by concerns around an additional layer of debt in form of EUR165 million PIK notes at Heckler & Koch Beteiligungs GmbH, which is however outside the restricted group of the outstanding notes. In Moody's view, this very tight timeframe as well as the lack of readily-available contingency funding plans are indications of an aggressive financial policy which was also indicated by dividend payouts of around EUR16 million in 2010. Nevertheless, the agency continues to acknowledge the solid operating performance of the company as observed over the last years. According to preliminary figures published by HK, revenues and profitability could again be improved in 2010 and should lead to a pension and lease adjusted debt/EBITDA ratio of around 3x per year-end 2010. The rating review will focus on the progress in refinancing the EUR120 million senior unsecured notes due July 2011. Moody's notes that the ratings could be upgraded again, if (i) HK manages to successfully refinance the EUR120 million notes, (ii) the agency gains comfort in a refinancing strategy regarding debt at the holding level of Heckler & Koch Beteiligungs GmbH and (iii) the operating performance continues to be positive. Should HK not be able to refinance its EUR120 million senior unsecured notes, the ratings could be downgraded by several notches as this would trigger a default event. In addition, any material shifts within the restricted group, caused for example by a simultaneously refinancing of the EUR 165 million PIK notes outstanding at the level of HKB, could place downward pressure on the ratings if this were to result in higher financial leverage for the company. Moody's most recent rating action on HK was implemented on Dec. 1, 2010, when the CFR was downgraded to B3 from B2, the PDR to B3 from B1, the rating on the EUR120 million worth of senior unsecured notes to B3 from B2, and all ratings were placed under review for possible downgrade. Downgrades: Issuer: Heckler & Koch GmbH -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Corporate Family Rating, Downgraded to Caa1 from B3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 from B3 On Review Direction Uncertain: Issuer: Heckler & Koch GmbH -- Senior Unsecured Regular Bond/Debenture, Placed on Review Direction Uncertain, currently =========== G R E E C E =========== * GREECE: One in Two Businesses Need to Refinance Debt, Poll Shows ------------------------------------------------------------------ Agence France-Presse, citing research by auditors Ernst & Young, reports that one in two leading businesses in recession-hit Greece will need to refinance their loans or debt obligations over the coming year. According to AFP, the study found that 48% of Greek firms will have to raise new loans amid deteriorating financial conditions in the country, which is itself laboring under a public debt of over EUR300 billion (US$420 billion). Some 34% respondents said that access to funding will not be a problem for their organizations in the next 12 months, AFP discloses. AFP says nearly fifty executives from Greek companies in 11 industry sectors with at least EUR10 million (US$14 million) in revenue were polled for the study. Seventy-percent of the businessmen polled by Ernst and Young said the country's finances will take between two and five years to recover, AFP notes. * Moody's Downgrades Greece's Government Bond Rating to 'B1' ------------------------------------------------------------ Moody's Investors Service has downgraded Greece's government bond ratings to B1 from Ba1, and assigned a negative outlook to the rating. The rating action completes a review that commenced on Dec. 16, 2010. Moody's decision to downgrade Greece's rating is driven by three reasons: 1.) The fiscal consolidation measures and structural reforms that are needed to stabilize the country's debt metrics remain very ambitious and are subject to significant implementation risks, despite the progress that has been made to date. 2.) The country continues to face considerable difficulties with revenue collection. 3.) There is a risk that conditions attached to continuing support from official sources after 2013 will reflect solvency criteria that the country may not satisfy, and result in a restructuring of existing debt. Moreover, the risk of a post- 2013 restructuring might lead the Greek authorities and investors to participate in a voluntary distressed exchange before that time. The negative outlook on the B1 rating reflects Moody's view that the country's very large debt burden and the significant implementation risks in its structural reform package both skew risks to the downside. Greece's country ceilings for bonds and bank deposits are unaffected by the rating action and remain at Aaa (in line with the Eurozone's rating). Greece's Non Prime (NP) short-term rating is also unaffected by this action. Ratings Rationale Moody's recognizes the very significant progress that Greece has made in implementing a large fiscal consolidation and introducing the legislation required to support a wide-ranging structural reform program. However, Moody's believes that the Greek government still faces a very significant challenge in its continued execution of the measures required to both increase revenue and achieve efficiency savings as part of the austerity program. Whether relating to improvements in the operating efficiency of state-operated enterprises, to the savings required in the health service or in military expenditure, or to the implementation of deregulation measures passed by parliament, the task facing officials and managers remains enormous. Moody's therefore continues to see large implementation risks to the government's reform plans and, while much of the enabling legislation has been passed, implementation progress has not been sufficiently rapid to mitigate the rating agency's concerns. Secondly, government revenues have been slow to rebound, which is in part the result of a continued weakness in tax collection mechanisms that Moody's anticipates will improve only slowly. Moody's has long attached great importance to the implementation of measures to increase government revenues alongside the planned cost-cutting measures. As previously stated, the rating agency continues to place particular emphasis on measures to combat the endemic tax evasion that has contributed to the deterioration in Greece's creditworthiness. While the Greek government has made some progress with the collection of value-added taxes (VAT), Moody's notes that progress on income tax collection has been slower to improve -- indeed, revenue shortfalls recorded in 2010 contributed to the upward revision in the country's deficit projections for that year. Moreover, Moody's expects income tax collections to be adversely affected by significant administrative hurdles and by the inevitable resistance to tax compliance among parts of Greek society. Legislation to address these issues is currently before parliament, but will be challenging to implement, both because of human resource limitations (such as skills shortages) and because of vested interests that will be resistant to change. The third driver of the rating action is the lack of certainty surrounding (i) the precise nature and conditions of support that will be available to Greece after 2013, and (ii) its implications for bondholders. Moody's acknowledges that the IMF and European authorities have expressed very strong support for Greece provided that the country follows through with this economic program. The rating agency's baseline assumption is that this support will continue to be forthcoming and that the Greek authorities will continue to do their best to comply with the conditions contained in the Memorandum of Understanding. However, public statements by European officials have suggested that additional liquidity support after 2013 would be conditional on a solvency evaluation, the result of which is uncertain at this point in time. If Greece were viewed as insolvent at this time, there is some possibility that private creditors would be expected to bear some losses. Moody's also notes that discussions are reportedly underway among Eurozone policymakers on the design of a longer-term support mechanism, and those discussions may result in changes to the terms of credit provided to Greece by the Troika. Although such changes may reduce the pace and magnitude of the deterioration in Greece's debt affordability metrics, they are unlikely to have a very large impact on the overall debt burden, and would not therefore directly address the issues that are of greatest concern. Moody's Central Scenario -- and What Could Undermine It Moody's central scenario remains that bondholders will not bear losses. However, the rating agency believes that the likelihood of a default or distressed exchange has risen since its last downgrade of the Greek government debt rating in June 2010. Moody's does not believe that continued liquidity support by the Troika and an event of default (including, but not limited to, a distressed exchange via a debt buyback) are mutually exclusive. The precise nature and conditions of future external support for Greece-- and their implications for bondholders -- are unclear, and may remain so, even after the greater clarity on permanent crisis resolution mechanisms is achieved. Moody's believes that, over time, the risks surrounding the implementation of the economic program may grow and a solution that requires private- sector creditors to bear losses may become more appealing. This view is reflected in the B1 rating announced. Over five-year investment horizons, around 80% of B1-rated sovereigns, non-financial corporates and financial institutions have consistently met their debt service requirements on a timely basis, while around 20% have defaulted. What Could Change the Rating Up/Down A further downgrade could follow if the Greek government's commitment to the austerity program were to appear to weaken, or if the Troika's willingness to provide support were to start diminishing. Conversely, an upgrade could follow if the probability of a default event were judged to be diminishing in likelihood and the pace of fiscal consolidation were to proceed more rapidly than Moody's currently expects -- for example, through the receipt of large amounts of privatization revenues, or if positive surprises to tax receipts were to reveal strong progress in the government's fight against tax evasion. If the Troika were to extend long-term fiscal support to Greece, without imposing losses on bondholders, this could also lead to an upgrade. Moody's previous rating action on Greece was implemented on 16 December 2010, when the rating agency placed Greece's government bond ratings on review for possible downgrade. Prior to that, Moody's last rating action on Greece was taken on June 14, 2010, when the rating agency downgraded Greece's government bond ratings Ba1 from A3 and assigned a stable outlook. ============= I C E L A N D ============= KAUPTHING BANK: Owes Money to 70 Indian Companies ------------------------------------------------- Dinesh Unnikrishnan and Appu Esthose Suresh at livemint.com report that about 70 Indian companies and individuals are set to lose money kept with or owed to them by Kaupthing Bank HF. Mint says the list includes institutions such as state-run Bank of Baroda (BoB) and India's largest software firm Tata Consultancy Services Ltd (TCS), and many individuals, mostly diamond merchants and non-resident Indian (NRI) businessmen. Federal agencies are examining the transactions involved for possible misappropriations, Mint discloses. According to Mint, a senior official with one of the federal investigative agencies said the transactions are currently being examined to check whether they have anything to do with the flow of black money. The value of these deposits, receivables or investments in local bonds, is estimated to be around US$30 million, Mint notes. Among the Indian creditors, the value of BoB's exposure to Kaupthing Bank is now around US$13.2 million (US$6.6 million each in two accounts), Mint says, citing documents reviewed by Mint, and that of TCS is US$18,641.22. Mint relates that R.K. Bakshi, executive director of BoB, said the bank will have to assess what portion of its investments can be recovered following the settlement process. Kaupthing Bank, which is currently in the midst of a winding up process, has called a creditors' meeting on April 13 at Reykjavik, where the claims of the creditors will be considered for any possible settlement, Mint discloses. As of Dec. 31, 2010, Kaupthing Bank had total assets of ISK1.19 trillion, out of which loans to and claims against credit institutions stood at ISK213.29 billion while loans to customers were at ISK279.25 billion. About Kaupthing Bank Headquartered in Reykjavik, Kaupthing Bank -- http://www.kaupthing.com/-- is Iceland's largest bank and among the Nordic region's 10 largest banking groups. With operations in more than a dozen countries, the bank offers a range of services including retail banking, corporate finance, asset management, brokerage, private banking, treasury, and private wealth management. Kaupthing was created by the 2003 merger of Bunadarbanki and Kaupthing Bank. In October 2008, the Icelandic government assumed control of Kaupthing Bank after taking similar measures with rivals Landsbanki and Glitnir. As reported by the Troubled Company Reporter-Europe, on Nov. 30, 2008, Olafur Gardasson, assistant for Kaupthing Bank hf., filed a petition under Chapter 15 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York commencing the Debtor's Chapter 15 case ancillary to the Icelandic Proceeding and seeking recognition for the Icelandic Proceeding as a "foreign main proceeding" under the Bankruptcy Code and relief in aid of the Icelandic Proceeding. ============= I R E L A N D ============= CAIRN HIGH: S&P Affirms 'CC' Ratings on Four Classes of Notes ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its credit ratings on Cairn High Grade ABS CDO I PLC's class A1, A2, B, C, and E notes. S&P's rating actions follow publication of the transaction's February 2011 payment date report. In its opinion, it is clear from the report that all noteholders will ultimately experience principal losses. According to the payment date report, in February 2011 the issuer sold portfolio assets with a par value of $703.47 million and received total sale proceeds of US$372.97 million. After distributing the sales proceeds and amounts in the transaction's principal and interest accounts, the issuer held remaining assets with a total par value of US$13.20 million. Given the issuance still outstanding, it is now clear, in its opinion, that all noteholders will ultimately experience principal losses. As no class of notes is yet in payment default, S&P does not consider it appropriate to lower its ratings to the 'D' level. S&P has therefore affirmed all ratings at the 'CC' level, indicating that the notes are currently highly vulnerable to nonpayment. Cairn High Grade ABS CDO I is a cash flow CDO of dollar- denominated structured finance securities. The transaction closed in August 2005 and is managed by Cairn Financial Products Ltd. Ratings List Cairn High Grade ABS CDO I PLC US$1 Billion Floating-Rate Notes Ratings Affirmed[1] Class Rating ----- ------ A1 CC (sf) A2 CC (sf) B CC (sf) C CC (sf) E CCp (sf) [1] Note that S&P does not rate the class D notes in this transaction. COALPORT BUILDING: High Court Lifts Winding-Up Order ---------------------------------------------------- Mary Carolan at The Irish Times reports that the High Court has lifted an order to wind up Coalport Building Company Ltd. after being told the company had paid a debt of EUR140,000 to the Revenue Commissioners. The Irish Times relates that the order was vacated by Ms. Justice Mary Laffoy on Monday after the Revenue said it was withdrawing its petition for the winding up of the company. According to The Irish Times, the judge vacated the wind-up order and adjourned the matter for a week to allow MCR Personnel Ltd. and Theresa McGuinness, who claim they are owed money by Coalport, time to consider if they wish to take over the Revenue's petition. Coalport Building Company Ltd. is a Dublin-based company owned by developer Thomas McFeely. HOUSE OF EUROPE: S&P Cuts Ratings on Various Notes to 'CCC- (sf)' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on the class A2, A3a, A3b, and B notes issued by House of Europe Funding V PLC, a cash flow collateralized debt obligation of asset-backed securities transaction that closed in October 2006. At the same time, S&P affirmed its ratings on the class A1, C, D, E1, and E2 notes. S&P's rating actions follow its assessment of the deterioration in the credit quality of the underlying portfolio, coupled with an increase in losses since its last review on Feb. 2, 2010. The ratings are unaffected by its revised counterparty criteria. While the transaction has not witnessed an increase in assets rated 'CCC+' and lower since its last review, the ratings distribution of assets in the underlying portfolio has generally experienced downward rating pressures. In addition, losses resulting from the default of one obligor have led to a fall in credit enhancement levels for all classes of notes apart from the class A1 notes. Given the proportion of corporate CDOs in the portfolio (approximately 25% of the performing balance), S&P considered it appropriate to analyze the transaction using two versions of CDO Evaluator, 4.1 and 5.1. This approach is described in the section "Treatment of other asset types in corporate CDOs" in its corporate CDO criteria "Update To Global Methodologies And Assumptions for Corporate Cash Flow And Synthetic CDOs," published Sept. 17, 2009. According to the latest available trustee report of February 2011, the transaction continues to fail its overcollateralization tests and the issuer has continued to pay down the class A1 notes in an attempt to bring the tests back into compliance. While it applied both interest and principal proceeds to reduce the notional of the class A1 notes on the February payment date, reported overcollateralization ratios have nevertheless deteriorated since its last review. In its view, amortization has resulted in an increase in credit enhancement available to the class A1 notes. The increase in credit enhancement is sufficient, in its opinion, to counterbalance the rise in scenario default rates determined in its analysis, and S&P has therefore affirmed its 'AA+ (sf)' rating on the class A1 notes. In contrast, the deterioration in credit quality of the underlying portfolio has increased the SDRs to an extent where, in its view, current credit enhancement levels on classes A2, A3a, A3b, and B are no longer sufficient to maintain their previous ratings. Therefore, S&P has lowered its rating on the class A2 notes to 'A- (sf)' from 'A+ (sf)', which, in its view, is commensurate with the lower current credit enhancement level. Similarly, the fall in credit enhancement for the class A3a, A3b, and B notes, coupled with an increase in SDRs, has led us to lower its ratings on these classes to 'CCC- (sf)'. In its view, the ratings reflect the current likelihood of repayment to their respective noteholders. S&P has affirmed its 'CC (sf)' ratings on the class C, D, E1, and E2 notes, as S&P still believe that ultimate repayment of these notes is unlikely. Ratings List House of Europe Funding V PLC EUR996 Million Fixed-and-Floating Rate Notes and EUR4 Million Annuity Notes Ratings Lowered Rating ------ Class To From ----- -- ---- A2 A- (sf) A+ (sf) A3a CCC- (sf) B+ (sf) A3b CCC- (sf) B+ (sf) B CCC- (sf) CCC+ (sf) Ratings Affirmed Class Rating ----- ------ A1[1] AA+ (sf) C CC (sf) D CC (sf) E1 CC (sf) E2 CC (sf) [1] According to the terms and conditions of the notes, the class A1 delayed draw notes were consolidated with the class A1 notes and the issuer treats them as identical to the class A1 notes in all aspects. KILDARE SECURITIES: S&P Cuts Rating on Class D Notes to 'BB (sf)' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Kildare Securities Ltd.'s class A3, B, C, and D notes. The class A2 notes remain on CreditWatch negative for sovereign and counterparty reasons. The class A3 and B notes remain on CreditWatch negative for counterparty reasons. S&P removed the class C and D notes from CreditWatch negative. On Nov. 11, 2010, S&P placed all outstanding classes of notes in this transaction on CreditWatch negative due to: * Irish house price declines and resulting high loan-to-value (LTV ratios); * Concerns about increases to arrears; and * The downgrade of the short-term rating on Bank of Ireland, which is the guaranteed investment contract and transaction account provider. Then, following the negative rating action on the Republic of Ireland, S&P updated the CreditWatch status of the class A2, A3, and B notes on Dec. 7, due to heightened sovereign risk. Lastly, on Jan. 18, S&P again updated the CreditWatch status of the ratings on the class A2, A3, B, and C notes when S&P's updated counterparty criteria became effective. S&P's downgrades are a result of its credit and cash flow analysis. S&P has kept on CreditWatch negative the rating on the class A2 notes for sovereign and counterparty reasons. S&P has lowered the ratings on the class A3 and B notes. They remain on CreditWatch for counterparty reasons only. Only classes rated 'AAA' or 'AA+' were affected by the Dec. 7 sovereign CreditWatch action. Because of the downgrade of the class A3 and B notes to below 'AA+', they are no longer on CreditWatch negative for sovereign reasons. S&P has lowered and removed from CreditWatch negative the rating on the class C notes for performance reasons. S&P has removed it from CreditWatch negative for counterparty reasons because the rating is now at a level which can be supported by the current rating on the supporting counterparties. The class D notes were on CreditWatch negative for performance reasons only. S&P has now lowered the rating and removed it from CreditWatch negative. According to the Permanent TSB/ESRI House Price Index, house prices in Ireland have fallen 38% since the price peak at the end of 2006. This transaction closed in March 2007 and house price declines have increased the indexed weighted-average LTV ratio of the loans in the pool to 88.3% from 62.3%, according to the November investor report. This report also shows that 32.9% of the pool has an indexed LTV ratio greater than 90%. This compares with just 3.1% of the pool at close. The increase in LTV ratios has increased S&P's expectation of the loss on this portfolio. Increased WAFF and WALS figures (i.e., weighted-average foreclosure frequency and weighted-average loss severity) mean that the class A3, B, C, and D notes no longer pass S&P's cash flow stresses at the current rating level. S&P has also noted that ICS Building Society, in its role as investment manager, has stated that it is discontinuing a previous practice of buying back loans that become interest-only. S&P believes this will have a negative effect on the deal, as, in its opinion, loans that convert to interest-only will carry a greater risk than other loans in the portfolio. Arrears in this transaction remain lower than those S&P has observed in other Irish transactions, and there have been no reserve fund draws. However, in S&P's opinion the declining house prices and the presence of interest-only loans, together with high unemployment and continuing austerity measures in Ireland, are likely to cause higher delinquencies and to increase pressure on the cash flows of this deal. This transaction was originated by ICS Building Society. The collateral consists of a portfolio of first-ranking prime residential mortgages secured over properties in Ireland. Ratings List Kildare Securities Ltd. EUR1.276 Billion and US$2.176 Billion Mortgage-Backed Floating-Rate Notes Ratings Lowered and Remaining on CreditWatch Negative Rating ------ Class To From ----- -- ---- A3 AA- (sf)/Watch Neg AAA (sf)/Watch Neg B A- (sf)/Watch Neg AA+ (sf)/Watch Neg Ratings Lowered and Removed From CreditWatch Negative Rating ------ Class To From ----- -- ---- C BB+ (sf) A (sf)/Watch Neg D BB (sf) BBB+ (sf)/Watch Neg Rating Remaining on CreditWatch Negative Class Rating ----- ------ A2 AAA (sf)/Watch Neg MURPHY'S WORLD: Goes Into Liquidation; 30 Jobs Lost --------------------------------------------------- RTE News Ireland reports that Murphy's World of Wonder, a family- run chain of toy stores, went into liquidation on March 7 with the loss of 30 jobs. Murphy's World of Wonder, with shops in Mallow, Blackpool, Midleton and Fermoy, confirmed Monday that the family have put the company into voluntary liquidation. Gerald Murphy, the company's managing director, cited the state of the economy, lack of access to credit from banks and suppliers, and the high costs of running a business, for its decision. Murphy's World of Wonder started as a family-run grocery business in Mallow in 1929, but became a full toy store in 1999, expanding two years later with shops opening in Blackpool, Fermoy and Midleton. SUNDAY TRIBUNE: Receiver Sues IMOS Over Fake Newspaper ------------------------------------------------------ Vivion Kilfeather at Irish Examiner reports that The Irish Mail on Sunday newspaper is being sued at the Commercial Court over its alleged "brazen and outrageous" publication last month of a fake copy of the Sunday Tribune newspaper just days after a receiver was appointed to it. According to Irish Examiner, John Gordon, counsel for Jim Luby, the receiver appointed to Tribune Newspapers plc on Feb. 1, said his side would be seeking damages, including "exemplary damages" over this "direct attack" on the goodwill of the Sunday Tribune. Neil Steen, for Associated Newspapers (Ireland) Ltd, trading as the IMOS, said the IMOS would be seeking to bring a preliminary motion for security of the legal costs of these proceedings against Tribune newspapers. Irish Examiner notes the counsel said that this was probably the "most outrageous" example of a "passing off" matter to have come before the courts in recent years and the IMOS had outlined no defense to it. Mr. Gordon, as cited by Irish Examiner, said this incident was self-evidently extremely damaging to the Sunday Tribune and he would like to see what defense was being offered. According to Irish Examiner, in an affidavit, Mr. Luby said the most valuable asset owned by Tribune Newspapers plc is the goodwill in the title "Sunday Tribune". After being appointed receiver on Feb. 1, he offered the newspaper for sale and also decided it would not be published on Feb. 6 as he was unable to obtain libel insurance cover, Irish Examiner recounts. However, he learned on Feb. 6 editions of the IMOS were published and offered for sale that day with a wraparound with the same title, coloring and layout as the Sunday Tribune so any member of the public would assume they were buying the Tribune when it was actually the IMOS, Irish Examiner relates. According to Irish Examiner, Mr. Luby said that "alternative" newspaper was an attempt to misappropriate the goodwill and value of the Tribune's business and an extremely cynical and outrageous attempt" to target its readers. Mr. Justice Peter Kelly said he would transfer the proceedings to the Commercial Court as it was admissible within the rules relating to passing off cases, Irish Examiner discloses. According to Irish Examiner, he noted that there is no longer a monetary threshold for a case of "passing off." The Sunday Tribune is an Irish Sunday broadsheet newspaper published by Tribune Newspapers plc. Independent News & Media has been an investor in the Sunday Tribune since 1992. ===================== N E T H E R L A N D S ===================== HYVA GLOBAL: Moody's Assigns 'B1' Corporate Family Rating --------------------------------------------------------- Moody's Investors Service has assigned a B1 Corporate Family Rating and B1 Probability of Default Rating to Hyva Global B.V., which was acquired in December 2010 by private equity investors and management with closing expected for March 2011. The proposed US$375 million bonds to be issued by Hyva Global B.V. will be guaranteed on a senior secured basis by certain regional holding companies of the group but not by Hyva China and Hyva India, which together accounted in 2010 for more than half of group sales and about three quarters of normalized EBITDA. Moody's has assigned a (P)B1 rating with a loss-given-default rating LGD4, 51% to these proposed bonds. The outlook for the ratings is stable reflecting Hyva's capacity for fast deleveraging as a result of substantial growth and profit opportunities in the company's developing market businesses. This is the first time that Moody's has assigned ratings to Hyva. Moody's issues provisional ratings for debt instruments in advance of the final sale of securities or conclusion of credit agreements. Upon a conclusive review of the final documentation, Moody's will endeavour to assign a definitive rating to the different capital instruments. A definitive rating may differ from a provisional rating. Ratings Rationale "The B1 CFR for Hyva reflect its (i) modest scale for a global company with revenues close to EUR500 million expected for 2010, (ii) its risk concentrations with a narrow product focus in hydraulic systems for trucks and high exposure to the developing markets China and India, and (iii) high leverage initially after the transaction " said Wolfgang Draack, a Senior Vice President in Moody's Corporate Finance Group. The rating is supported by (i) the company's international presence with good growth opportunities in emerging markets, (ii) leadership in core markets based on brand, product efficiency and reliability and an established global service network; and (iii) a flexible cost base with low operating leverage. Moody's views the business risk that Hyva is exposed to as moderate, because of clear leadership positions in the national niche markets with strong growth trend, of established distributions network to truck bodybuilders rather than the automotive OEMs, and a flexible business model with lean operations and localization of supplies. As a result, Hyva has a good cash generation capacity which could be used for fast debt reduction, but the accelerating growth of the business may also require more than expected investments into capacity or side businesses (e.g. tippers), diverting cash from (unscheduled) debt amortization. The high leverage and the respective debt service requirements are the primary factors constraining the B1 rating. The stable outlook for Hyva's ratings incorporates the expectation of relatively fast de-leveraging towards about 4.0x debt/EBITDA by FYE 2011 from about 4.8x pro-forma. This would require continued strong growth in developing markets and stability at least in Europe with resilient operating margins. A near-term rating upgrade is currently not envisaged. It would require growth in EBITDA above expectations leading to a debt/EBITDA ratio below 3.5x and generation of free cash flows rising above 10% of debt on a sustained basis. Stalled growth, margin erosion or maintenance of leverage above 4.5x through 2011 would place pressure on the ratings. Upon the closing of the transaction, expected to be in March 2011, senior manager Alex Tan through his company Ocean Fortune Trading will own a 20% stake in Hyva China, the group's largest operation and primary contributor to earnings. Tan, however, agreed to sell his 20% stake in Hyva China to Hyva Global, subject to regulatory approvals. He will invest, together with other senior managers in the group's top holding company. This company will be owned by Unitas and NWS (35% each) and management (30%). In line with Moody's LGD approach, the rating agency groups Hyva's debt into three classes of creditor protection: (i) the US$30 million (about EUR 23 million) secured revolving credit (a standard 75% expected to be outstanding at a potential financial restructuring) with super-priority ranking in liquidation; (ii) approximately US$375 million (about EUR272 million senior secured bonds at LGD4 (51%) and about EUR89 million trade payables, and (iii) about EUR7 million pension obligations and next year's installment of capital leases as an estimate of the lease rejection claim in liquidation ranked at the bottom of the waterfall. Issuer: Hyva Global B.V. Assignments: -- Probability of Default Rating, Assigned B1 -- Corporate Family Rating, Assigned B1 -- Senior Secured Regular Bond/Debenture, Assigned (P)B1 LGD4, 51% -- Senior Secured Regular Bond/Debenture, Assigned (P)B1 LGD4, 51% Hyva Global, headquartered in the Netherlands, is a leading global provider of hydraulic (tipping) solutions for the commercial vehicle industry. It is also an important player in the manufacturing and supply of compactors and waste collecting units for the environmental services industry. Hyva generated EUR486 million revenues in its 2010 fiscal year. HYVA GLOBAL: S&P Assigns 'B+' Long-Term Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Hyva Global B.V. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' issue rating to the company's proposed issue of up to US$375 million in senior secured notes due 2016. The rating on the notes is subject to Standard & Poor's review of the final documentation for the notes issuance. "The rating on Hyva reflects the company's narrow product focus, potential margin compression, and its aggressive financial risk profile," said Standard & Poor's credit analyst Joe Poon. "Hyva's good brand recognition, and established sales and distribution networks partly offset these factors. Its low-cost production base and good growth potential in emerging markets offer additional support." Hyva's business risk profile is weak. S&P believes its margins could decline over the next few years, at least, due to intense competition from domestic and global players in emerging markets. Product concentration is also likely to remain high; cylinder and wet kits contributed 63% of its total sales in 2010. Nevertheless, Hyva's high-quality after-sales services allow it to charge premium prices. In its view, Hyva can maintain its leading position in terms of sales in its niche market of hydraulic systems. Over the past few years, the company has expanded into high-growth emerging markets. It has an established brand name and good penetration in China, India, and Brazil, where it benefited from a first-mover advantage. High government expenditure on infrastructure projects (such as roads and railways) in emerging markets and a low-cost production base should help drive Hyva's growth for the next five years, in its opinion. The company's high leverage is a rating constraint. Its co- sponsors, NWS Holdings Ltd. and private-equity company Unitas Capital Pte. Ltd., will inject equity in the form of common equity and subordinated preferred shares into a holding company a few levels above the parent guarantor. In accordance with its criteria on leveraged buyouts, S&P has treated the preferred shares as debt when calculating credit ratios. S&P ascribes certain equity characteristics to the shares when interpreting the company's metrics and assessing its financial risk profile. S&P does not expect the sponsors to pursue an aggressive financial policy, given its expectation that NWS will view Hyva as a strategic investment. Hyva's financial risk profile is likely to remain aggressive over the next 12 months, at least, given the likelihood of weak financial metrics (including the preferred shares). The company's financial performances have been historically volatile due to the cyclicality of end markets. S&P expects Hyva to increase sales in emerging markets and gradually recover those in Europe. As a result, excluding the preferred shares, the adjusted ratio of total debt to EBITDA is likely to be less than 4.5x and the ratio of funds from operations to total debt more than 10% over the next 12 months, according to its base-case scenario. S&P believes Hyva's liquidity will be adequate following the LBO and proposed bond issuance, with support from its positive free operating cash flow generation. As at Dec. 31, 2010, the company had cash and cash equivalents of about EUR125.5 million and EUR167.0 million short-term debt due. Upon the completion of the LBO transaction and the proposed bond, S&P expects Hyva to have about US$50 million in cash and no debt due until 2016. The company also has US$30 million in committed undrawn banking facilities. Hyva aims to raise US$375 million from the proposed bond issue. It intends to hold the proceeds in an escrow account to complete the acquisition of Hyva Holding B.V. from 3i Group PLC (BBB+/Stable/A-2) for about EUR525 million. The proceeds will be released when the acquisition from 3i is completed. Hyva has sufficient liquidity for operating and financing needs, in its opinion, given its light capital expenditure and modest working capital needs. The company's financial performances deteriorated materially during the global financial crisis; but it has still been able to generate positive free cash flow since 2007. Accumulating cash for debt servicing and maintaining sufficient operating cash are likely to be the company's key financial objectives. S&P has not factored any major acquisitions into the rating. "The stable outlook reflects its expectation that Hyva should benefit from the growth potential in emerging markets. In addition, S&P believes the company will be able to maintain sufficient liquidity and cash flow generation to cope with market competition and for debt servicing. S&P assume Hyva will continue to preserve cash with no dividend payouts before its debt leverage improves," said Mr. Poon. S&P could lower the rating if: (1) the adjusted ratio of FFO to total debt consistently stays below 10% or the adjusted ratio of total debt to EBITDA is more than 5x (excluding preferred shares); (2) Hyva substantially increases its capital expenditure beyond its current plan or engages in major debt-funded acquisitions; or (3) its sponsors aggressively extract value from the group. Rating upside is limited for the next 12 months. Nevertheless, S&P could raise the rating if: (1) Hyva can improve its financial strength on a sustained basis, with say an adjusted ratio of total debt to EBITDA below 3x and FFO to total debt of more than 20% (excluding preferred shares). This could occur if the company uses its cash resources to reduce debt, supported by improvement in EBITDA. =========== R U S S I A =========== EVROFINANCE MOSNARBANK: Fitch Gives Pos. Outlook; Keeps B+ Rating ----------------------------------------------------------------- Fitch Ratings has revised Evrofinance Mosnarbank's Outlook to Positive from Stable and affirmed its Long-term Issuer Default Rating at 'B+'. The Outlook revision reflects EMB's strengthened balance sheet, which is a result of the recent change in ownership, and the potential for the bank's franchise and performance to be enhanced due to its improved access to business with some of Russia's leading corporates. Following the ownership changes in February 2011, EMB is now jointly owned by entities closely linked to the Russian and Venezuelan governments. Russia's JSC VTB Bank ('BBB'/Stable) and Gazprombank (together with their subsidiaries) each hold 25% plus one share, and the National Development Fund of Venezuela has 50% minus two shares. The Presidents of both countries have supported the change in EMB's ownership structure, and there are plans for the bank to support joint Russian-Venezuelan projects. The change in ownership did not entail any capital injections. However, in Fitch's view, asset quality improved following the transaction, due to former shareholders of the bank purchasing a sizable portfolio of mainly construction loans from EMB. Partly as a result of this, at 1 March 2011 the bank had a very strong balance sheet, with equity exceeding gross loans, the regulatory capital ratio standing at 41.6% and highly liquid assets covering almost all deposits. However, customer business on both sides of the balance sheet remains highly concentrated. Fitch believes there is significant uncertainty over EMB's future strategy and business profile. The bank's new supervisory board is still to be elected and a strategy review is only just beginning. It seems unlikely that EMB will become a major lender to joint Russian-Venezuelan oil sector projects due to its relatively small size, but the bank may become more involved in servicing cash flows relating to these projects. More generally, management aims to broaden its business with large Russian corporates and expects rapid growth of its loan portfolio in the near term, supported by the bank's currently low leverage. If EMB succeeds in strengthening and diversifying its franchise and enhancing its performance while maintaining a robust balance sheet, the bank's Long-term IDR may be upgraded. A demonstration of more tangible financial support for the bank from the Russian authorities and a strengthening of its government ties and policy role could also contribute to an upgrade. However, if the bank increases its leverage without deriving any significant franchise or support benefits from its new role, the rating may be affirmed at its current level. Based on unaudited IFRS financials, EMB had total assets of US$1.2 billion and equity of US$432 million at the end of 2010. At the same date, EMB was the 92nd-largest Russian bank by assets and 40th-largest by equity. The rating actions are as follows: -- Long-term foreign currency IDR: affirmed at 'B+'; Outlook revised to Positive from Stable -- Short-term foreign currency IDR: affirmed at 'B' -- Local currency long-term IDR: affirmed at 'B+'; Outlook revised to Positive from Stable -- National Long-term rating: affirmed at 'A-(rus)'; Outlook revised to Positive from Stable -- Support Rating: affirmed at '5', -- Individual Rating: affirmed at 'D' -- Support Rating Floor: affirmed at 'No Floor' * SWEDEN: Corporate Failures Up 5% to 500 in February 2011 ---------------------------------------------------------- M2 Communications, citing credit information agency Upplysningscentralen (UC) AB, reports that the number of corporate failures in Sweden went up 5% year-on-year to 500 in February 2011. According to M2, in the first two months of 2011, the number of bankruptcies rose by 3% on the year to 988. Construction and retail trade were the only sectors that registered an increase (18% and 23%, respectively), while transport saw the biggest decline (-32%), M2 discloses. ============= U K R A I N E ============= VTB BANK: Fitch Assigns 'B+' Rating to Senior Unsecured Bonds -------------------------------------------------------------- Fitch Ratings has assigned PJSC VTB Bank (Ukraine)'s four series of UAH-denominated senior unsecured bonds (totaling UAH1 billion) expected Long-term local currency ratings of 'B+(exp)', Recovery Ratings of 'RR4' and National Long-term ratings of 'AAA(ukr)(exp)'. The bonds' final ratings are contingent on the receipt of final documents materially conforming to information already received. The expected terms of the issues are: Series C: -- Size: UAH300 million -- Placement: from March 2011 -- Maturity: January 2015 -- Put option: February 2012, February 2013, February 2014 Series D: -- Size: UAH200 million -- Placement: from June 2011 -- Maturity: January 2015 -- Put option: June 2012, June 2013 Series E: -- Size: UAH300 million -- Placement: from June 2011 -- Maturity: January 2015 -- Put option: June 2012, June 2013 Series F: -- Size: UAH200 million -- Placement: from January 2012 -- Maturity: January 2015 -- Put option: January 2013, January 2014 The bank's obligations under the issues will rank at least equal to the claims of other senior unsecured creditors of VTBU, except those preferred by relevant legislation. Under Ukrainian law, the claims of retail depositors rank above those of other senior unsecured creditors. At end-2010, retail deposits accounted for 17% of VTBU's total liabilities, according to the bank's local GAAP accounts. VTBU's ratings are: Long-term foreign currency Issuer Default Rating 'B', Long-term local currency IDR 'B+', Short-term foreign currency IDR 'B', Individual 'E', Support '4' and National 'AAA'(ukr)'. The Long-term IDRs and the National Rating have Stable Outlooks. VTBU is a medium-sized Ukrainian bank, ranked eighth by assets in the country at end-2010. The bank's IDRs and National Rating reflect the support it may receive if needed from its majority shareholder, JSC VTB Bank (VTB;'BBB'/Stable), which holds more than 99% of VTBU. =========================== U N I T E D K I N G D O M =========================== ACE: Goes Into Administration, Ceases Trading & Axes 22 Jobs ------------------------------------------------------------ Aaron Morby at ConstructionInquirer reports that Ace has ceased trading with the loss of 22 jobs. Ace carried out plumbing, joinery and electrical work and was working on contracts with Highland Council and a bathroom showroom, according to ConstructionInquirer. The report relates that the firm is understood to have run into financial problems after the collapse of an important contract. Ace is a Scottish family-owned plumbing and heating firm. Owners Chris and Gail Surtees built the business up from premises above a garage more than 30 years ago. CONNAUGHT PLC: Landscape Unit Sale Saves 2,700 Jobs --------------------------------------------------- Alan Purkiss at Bloomberg News, citing London-based Times, the sale of the environmental unit of Connaught Plc was completed on March 8, 2011, saving 2,700 jobs in the process. A group led by Royal Bank of Scotland Group Plc and Alchemy Partners LLP, a private-equity company, bought the business, which provides landscaping and forestry services, including trimming trees along railway lines, the newspaper said, according to Bloomberg. The unit, which has resumed its old name, Fountains, was listed on London's Alternative Investment Market until Connaught acquired it in 2009; it's been run as a going concern by KPMG, Connaught's administrator, the Times said, Bloomberg adds. About Connaught plc Connaught plc -- http://www.connaught.plc.uk/-- is a United Kingdom-based company engaged in the provision of integrated asset services to the public and private sectors. The Company operates in two business segments: social housing and compliance. Social Housing segment provide social housing landlords throughout the United Kingdom with a range of planned and response maintenance services, as well as compliance and estate management. The Compliance segment provides safety, health and risk management solutions. It has information, advisory, training and servicing capabilities to provide integrated compliance solution throughout the United Kingdom. On July 22, 2009, the Company completed the acquisition of UK Fire (International) Limited and Igrox Limited. On September 15, 2008, the Company completed the acquisition of Lowe Group Holdings Ltd. On November 26, 2008, the Company completed the acquisition of certain assets of Predator Pest Control Plc. * * * As reported by the Troubled Company Reporter-Europe on Sept. 9, 2010, Bloomberg News said Connaught Plc appointed partners from KPMG as administrators after the business as a whole failed to secure "sufficient support" to trade as a going concern. Bloomberg disclosed the company said in a statement on Sept. 8 that KPMG's Richard Heis, Richard Hill and Richard Fleming were appointed administrators to Exeter, England-based Connaught Plc, and Heis, Mark Firmin, Brian Green and David Costley-Wood were appointed joint administrators to Connaught Partnerships Ltd. Connaught Environmental Ltd. and their subsidiaries were not put into administration, Bloomberg noted. The TCR-Europe, citing Business Sale, reported on Feb. 4, 2011, that private equity group Better Capital acquired 50% of the compliance division of Connaught plc. According to Business Sale, GBP15 million has been put forward by Better Capital to finance the acquisition and pay for restructuring efforts. FENCHURCH INT'L: Goes Into Administration on High Labor Costs ------------------------------------------------------------- FashionUnited reports that Fenchurch International went into administration last week, blaming the rising cost of cotton and higher labour costs. RSM Tenon has been appointed as the administrator. The administration puts 40 head office jobs at threat, according to FashionUnited. FashionUnited notes that Fenchurch International turned over GBP11 million in the 12 months to April 31, 2010 and achieved a gross profit of 35%, according to an advert RSM Tenon placed offering the company up for sale. It predicts 30% sales growth in 2011 and 2012, the report adds. Fenchurch International is a fashionable streetwear brand. MODEC: Liberty Electric Seeks to Acquire Firm --------------------------------------------- The Journal reports that Liberty Electric Cars is looking to buy Modec after it went into administration. As reported in the Troubled Company Reporter-Europe on March 8, 2011, Birmingham Post said that Modec has fallen into administration with the loss of 26 jobs. The report related that the firm has called in Zolfo Cooper after experiencing "severe cashflow difficulties." Modec had expected to be taken over by current stakeholder US- based Navistar, but the deal fell through, according to The Journal. The report relates that Liberty is now interested in rescuing the company's business. The Journal notes that Libery gave few details about the proposed rescue package but said that its Cramlington base was likely to benefit from the deal if it went through. Headquartered in Coventry, Modec is a West Midlands electric vehicle firm. It employs 53 staff. TASC GROUP: Goes Into Administration ------------------------------------ Insider Media Limited reports that TASC Group Construction has gone into administration only two years after receiving a GBP300,000 investment from the South Yorkshire Investment Fund (SYIF). At the time of the investment, managing director Steve Copley said: "This latest investment of GBP300,000 is a wonderful boost for the business -- it's helping us to move into bigger premises on the industrial estate and in turn, expand our target market. SYIF have always been there to help us, they've been brilliant. They are always positive with us and I think that during these difficult economic times that's a huge asset -- SYIF give longevity to companies across the region," according to Insider Media Limited. The report notes that the investment from SYIF was TASC's second loan, after the company received GBP385,000 from SYIF in 2006 to assist a management buyout. Headquartered in Dore Industrial Estate, Sheffield, TASC specialized in diamond drilling and fire protection solutions. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Mar. 7-9, 2011 AMERICAN BANKRUPTCY INSTITUTE Conrad Duberstein Moot Court Competition Duberstein U.S. Courthouse, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - Florida Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10-12, 2011 AMERICAN BANKRUPTCY INSTITUTE SUCL/ Alexander L. Paskay Seminar on Bankruptcy Law and Practice Marriott Tampa Waterside, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 17-19, 2011 AMERICAN BANKRUPTCY INSTITUTE Byrne Judicial Clerkship Institute Pepperdine University School of Law, Malibu, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ April 27-29, 2011 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott, Chicago, IL Contact: http://www.turnaround.org/ May 5, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - New York City Association of the Bar of the City of New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ May 6, 2011 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Hilton New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ June 6, 2011 AMERICAN BANKRUPTCY INSTITUTE Canadian-American Cross-Border Insolvency Symposium Fairmont Royal York, Toronto, Ont. Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Mich. Contact: http://www.abiworld.org/ July 21-24, 2011 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 27-30, 2011 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Sanctuary at Kiawah Island, Kiawah Island, S.C. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 4-6, 2011 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 14, 2011 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Tampa Convention Center, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. __, 2011 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Dublin, Ireland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 19-22, 2012 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2012 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 2-4, 2012 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Psyche A. Castillon, Julie Anne G. Lopez, Ivy B. Magdadaro, Frauline S. Abangan and Peter A. Chapman, Editors. Copyright 2011. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *