/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/110825.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, August 25, 2011, Vol. 12, No. 168 Headlines A U S T R I A A-TEC INDUSTRIES: Wants Penta Investments to Narrow Offer D E N M A R K * DENMARK: FSA Probes DKK79BB Loans of Banks at Risk of Collapse G R E E C E * GREECE: Finland Open to Adjusting Collateral Arrangement I R E L A N D ALLIED IRISH: Mulls Staff Relocation to Head Office to Cut Cost ANGLO IRISH: Gets Second-Round Bids for US Loan Portfolio SMURFIT KAPPA: Moody's Changes Outlook on Ba3 Rating to Positive K A Z A K H S T A N ASTANA FINANCE: Creditor Committees Reject Restructuring Plan N E T H E R L A N D S QUEEN STREET: Moody's Upgrades Rating on Class E Notes to 'Ba3' ZIGGO BOND: Moody's Upgrades CFR to 'Ba2'; Outlook Stable S P A I N TDA PASTOR: S&P Lowers Rating on Class B Notes to 'B' S W E D E N SAAB AUTOMOBILE: May Delay Payment of Employees' Wages for August U N I T E D K I N G D O M LUMINAR GROUP: Replaces Auditor Week Before Debt-Covenant Tests X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* ============= A U S T R I A ============= A-TEC INDUSTRIES: Wants Penta Investments to Narrow Offer --------------------------------------------------------- Lenka Ponikelska at Bloomberg News reports that A-Tec Industries AG, which filed for insolvency last year, asked potential buyer Penta Investments Ltd. to narrow its offer to just one of the company's units. According to Bloomberg, Jakub Korinek, Penta's investment manager in charge of the bid, said that Penta, a Prague-based investment company, was approached last week by A-Tec Chief Executive Officer Mirko Kovats, who asked it to bid for only the minerals and metals division. "We're currently assessing the proposal, however, we consider this change surprising and confusing," Bloomberg quotes Mr. Korinek as saying in a phone interview from Vienna on Tuesday. "We stand behind our original offer that is in line with the insolvency rules," Mr. Korinek, as cited by Bloomberg, said. He wouldn't comment on whether a price for the unit was discussed, Bloomberg notes. A-Tec declined to comment on a narrowing of bids, Bloomberg states. Penta, a Czech and Slovak private equity group, submitted a bid to buy and restructure all A-Tec assets in June, Bloomberg recounts. Other bidders for A-Tec include hedge fund Springwater Capital and Pakistani billionaire Alshair Fiyaz, Blomberg says, citing Format magazine. Bloomberg relates that Format said the company's supervisory board was set to meet yesterday to discuss bids. On Oct. 22, 2010, the Troubled Company Reporter-Europe, citing Bloomberg News, reported that A-Tec sought court clearance to reorganize debt after losing access to its line of credit because of an Australian power-station project's financial difficulties. A-Tec said in an Oct. 20 statement that it had filed for self- administered reorganization proceedings at the Vienna Commercial Court and appointed trustees for bondholders, Bloomberg disclosed. The company has a EUR798 million (US$1.11 billion) revolving credit facility and EUR302 million in outstanding bonds, according to Bloomberg data. A-TEC Industries AG engages in plant construction, drive technology, machine tools, and minerals and metals businesses in Europe and internationally. The company is based in Vienna, Austria. ============= D E N M A R K ============= * DENMARK: FSA Probes DKK79BB Loans of Banks at Risk of Collapse ---------------------------------------------------------------- According to Bloomberg News' Tasneem Brogger, Copenhagen-based newspaper Borsen, citing confidential documents from Denmark's new bank bill, said that the country's Financial Supervisory Authority is probing combined bank loans of DKK79 billion (US$15.3 billion) given by lenders "in danger of collapsing." Bloomberg relates that an unidentified person close to the talks told the newspaper that the legislation is close to being approved by lawmakers. =========== G R E E C E =========== * GREECE: Finland Open to Adjusting Collateral Arrangement ---------------------------------------------------------- Kati Pohjanpalo at Bloomberg News reports that Prime Minister Jyrki Katainen said Finland is open to adjusting its collateral arrangement with Greece after several euro members criticized the Nordic country for securing a bilateral deal to protect its commitment. "Everybody knew beforehand that this is a red line for us, we have tried to solve the problem, we have done it together with Greece," Bloomberg quotes Mr. Katainen as saying on Sunday in an interview in Helsinki. "It's a well-functioning technical solution, but if this particular model isn't possible, then we have to try to find another model." Finland's Aug. 16 announcement that it had secured extra assurances its contribution to a second Greek bailout will be repaid triggered a backlash of criticism and prompted calls for similar deals from Austria and the Netherlands, which both share Finland's AAA rating, as well as Slovakia and Slovenia, Bloomberg recounts. Austria has warned Finland's collateral deal threatens to undermine rescue efforts, Bloomberg relates. "I don't think there is a risk, because everybody knows that we have this opinion that we need collateral," Mr. Katainen, as cited by Bloomberg, said. "We have told our partners in Europe and the euro zone the reason why this is important. It's a part of our government agreement and we know that it will not change. We also know that it's a delicate issue in many countries and it's our responsibility to find a solution to it." Austrian Finance Minister Maria Fekter has proposed a separate collateral model after deriding Finland's arrangement as being "financially unviable" and having the potential to "blow up" Greece's second rescue package, Bloomberg discloses. The government in Vienna wants euro members to have less access to collateral deals if their banks are already benefiting from incentives included in the private sector portion of Greece's new EUR159 billion rescue, Bloomberg states. Finland's agreement requires Greece to deposit cash in a state account that the Nordic country will invest in top-rated bonds, according to Bloomberg. The interest generated will raise the amount to cover Finland's bailout contribution, Bloomberg says. Ms. Fekter said that the deposit will be equal to 20% of the collateral needed, Bloomberg notes. ============= I R E L A N D ============= ALLIED IRISH: Mulls Staff Relocation to Head Office to Cut Cost --------------------------------------------------------------- Laura Noonan at Irish Independent reports that Allied Irish Banks plc believes it can cut EUR18 million from its annual cost base by moving 1,000 staff from offices around Dublin city center to the bank's sprawling head office complex in Ballsbridge. The savings target is revealed in an internal bank email, which AIB "transformation director" Keith Davies sent to staff last week, to outline details of the relocation program, Irish Independent discloses. AIB executive chairman David Hodgkinson had previously told the Irish Independent the bank was negotiating with landlords about ways to "improve our use of property from a cost point of view." The office move is one of the most visible parts of a transformation that will see AIB radically shrink its size and reshape its business, Irish Independent notes. The bank is gearing up to begin a 2,000 redundancy program in October, pending agreement with trade unions and the Department of Finance on severance terms, Irish Independent relates. AIB has also committed to slimming down its portfolio by some EUR19.4 billion over the next three years, and has a dedicated 'non-core' unit to handle the process, Irish Independent states. About Allied Irish Banks, p.l.c. Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland, noted that there are a number of material economic, political and market risks and uncertainties that impact the Irish banking system, including the Company's continued ability to access funding from the Eurosystem and the Irish Central Bank to meet its liquidity requirements, that raise substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of EUR10.16 billion on EUR1.84 billion of interest income for 2010, compared with a net loss of EUR2.33 billion on $2.87 billion of interest income for 2009. ANGLO IRISH: Gets Second-Round Bids for US Loan Portfolio --------------------------------------------------------- Laura Noonan at Irish Independent reports that Anglo Irish Bank on Tuesday night received second-round bids for its US$9.5 billion US loan portfolio, which is expected to fetch more than US$7 billion. Some reports suggested that as few as five bidders had submitted bids, Irish Independent says. The opening round of offers attracted interest from as many as 25 investment groups, including some of the biggest names in global finance, Irish Independent discloses. According to Irish Independent, many of the bidders were acting in consortium and most wanted to purchase only parts of Anglo's 248 commercial loans, stretching from Manhattan to Boston to Florida. It is expected that Anglo may provide some update on the process tomorrow, when it reports its first-half results, Irish Independent notes. Some EUR1.9 billion (or about US$2.7 billion) of provisions had been taken on the US loans by the end of last year, implying that the nationalized bank would make a gain if the loans were to sell for anything over US$6.8 billion, Irish Independent recounts. Any funds raised from the sale would also help the bank reduce its EUR45 billion dependence on central bank funding, which includes some EUR28.1 billion of "exceptional" support from the Central Bank of Ireland, Irish Independent states. Irish Nationwide Merger As reported by the Troubled Company Reporter-Europe on July 1, 2011, BreakingNews.ie related that The European Commission cleared a bailout plan for Anglo Irish Bank and the Irish Nationwide Building Society. BreakingNews.ie disclosed that the proposal, which was submitted for approval in January, provides for the merger of the two troubled institutions and their winding down over the next 10 years. Anglo Irish and Irish Nationwide jointly received EUR34.7 billion in capital injections from the State to cover losses on property loans, BreakingNews.ie noted. 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. SMURFIT KAPPA: Moody's Changes Outlook on Ba3 Rating to Positive ---------------------------------------------------------------- Moody's Investors Service has changed to positive from stable the rating outlook for Smurfit Kappa Group plc (SKG). Concurrently, Moody's has affirmed the group's Ba3 corporate family rating (CFR) and probability of default rating (PDR). All ratings of the group remain unchanged. Ratings Rationale "The change of outlook to positive from stable reflects SKG's solid progress in increasing its financial flexibility, achieved on the back of recovering operating profitability and considerable free cash flow generation applied towards net debt reduction over the past quarters," says Anke Rindermann, a Moody's Assistant Vice President and lead analyst for SKG. "The rating action also reflects management's guidance for continued focus on net debt reduction, which in Moody's view is likely to support further gradual improvements in the group's debt coverage metrics over the short to medium term, despite an increasingly uncertain economic climate," adds Ms. Rindermann. However, Moody's notes that the long-term structural demand growth trend for paper-based packaging products in Europe remains intact, while implemented cost cuts as well as the lower debt load is likely to limit future credit metric volatility. In addition, applying its central scenario of a continued but sluggish economic recovery, Moody's expects that SKG is likely to be able to achieve and sustain credit metrics that are commensurate with a higher rating, as exemplified by a retained cash flow/(RCF) debt ratio in the mid-teens in percentage terms. During first half 2011, SKG delivered solid revenue growth of 14% year-over-year and reported EBITDA improvements of 25%. Key drivers were a solid recovery in European corrugated box prices, benefits from implemented cost savings as well as the strong performance of the group's Latin American operations. While high input cost inflation for key raw materials, such as recovered fibre and energy, continued to pressure the profitability of the group, its cash flow generation remained strong, as evidenced by positive free cash flow of EUR59 million generated in first half 2011, despite a considerable build-up in working capital. Given anticipated further net debt reductions and SKG's strong focus on further recovering high input costs through targeted price increases in its corrugated operations, Moody's believes that the group is likely to be able to sustain improvements in credit metrics, even in a scenario of more difficult trading conditions. Therefore, the positive rating outlook indicates that Moody's could upgrade SKG's ratings over the next few quarters if the group establishes a track record of maintaining current metric levels as well as a balanced financial policy, thereby demonstrating its resilience in a scenario of potentially less benign market conditions. More fundamentally, SKG's Ba3 CFR takes into account the group's (i) leading market positions for paper-based packaging in Europe and Latin America; (ii) good geographic diversification; (iii) strong and relatively stable operating margins through the cycle, supported by its integrated containerboard and corrugated operations; (iv) track record of solid free cash flow generation; and (v) solid financial flexibility, with Moody's expecting the group to take a proactive approach towards managing its 2013-14 peak debt maturities. SKG's rating is constrained by the (i) cyclical and highly competitive nature of the industry, which leaves little room for differentiation and the resulting commodity character of large parts of SKG's product portfolio; (ii) the group's low segmental diversification as a result of its focus on kraftliner, testliner and corrugated packaging products; and (iii) its still elevated debt levels on a Moody's adjusted basis, although Moody's takes comfort from management's stated intention to achieve further debt reductions. There would likely be upward pressure on SKG's rating if the group were to (i) establish a track record of EBITDA margins above 12%; (ii) improve its EBITDA/interest coverage such that it moved towards 3.0x; (iii) achieve an RCF/debt ratio in the mid- teens in percentage terms while preserving solid financial flexibility. Moody's would consider downgrading SKG's rating if the group's EBITDA margins were to trend below 10%, or its leverage in terms of RCF/debt were to fall below 10%. In addition, material negative free cash flow generation or significantly tightening covenant headroom could exert pressure on the rating. Outlook Actions: Issuer: Smurfit Kappa Acquisitions -- Outlook, Changed To Positive From Stable Issuer: Smurfit Kappa Funding plc -- Outlook, Changed To Positive From Stable Issuer: Smurfit Kappa Group plc -- Outlook, Changed To Positive From Stable Issuer: Smurfit Kappa Treasury Funding Limited -- Outlook, Changed To Positive From Stable Previous Rating Action & Principal Methodology The principal methodology used in rating Smurfit Kappa Group plc was the Global Paper and Forest Products Industry Methodology published in September 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies. Smurfit Kappa Group plc, headquartered in Dublin, Ireland, is Europe's leading manufacturer of containerboard and corrugated containers as well as specialty packaging, such as bag-in-box packaging of liquids. The group also holds the leading position for its major product lines in Latin America. SKG reported EUR7.1 billion in revenues in the last 12 months ending June 2011. =================== K A Z A K H S T A N =================== ASTANA FINANCE: Creditor Committees Reject Restructuring Plan ------------------------------------------------------------- JSC Astana Finance on Aug. 23 disclosed that, in connection with the ongoing financial restructuring of the Company's debt obligations, the Company's most recent restructuring proposals made (subject to contract) to the international creditors' committee and certain export credit agencies, in the letter sent on behalf of the Company to their respective legal advisers dated July 26, 2011 and published by RNS on August 4, 2011, have been rejected by the Creditors' Committees. The Company reiterates that a negotiated restructuring remains its preferred outcome and that it will continue to engage with the Creditors' Committees with this objective in mind. Joint Stock Company Astana Finance (Astana Finance), through its subsidiaries, provides various financial products and services in the Republic of Kazakhstan. It provides current accounts, saving accounts, and other deposits; investment savings products; and various loans comprising mortgage, consumer, and car loans, as well as other credit facilities. ===================== N E T H E R L A N D S ===================== QUEEN STREET: Moody's Upgrades Rating on Class E Notes to 'Ba3' -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Queen Street CLO I B.V: Issuer: Queen Street CLO I B.V.: -- EUR66.5M Class A2 Senior Secured Floating Rate Notes due 2023, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible Upgrade -- EUR38.75M Class B Senior Secured Floating Rate Notes due 2023, Upgraded to Aa3 (sf); previously on Jun 22, 2011 A2 (sf) Placed Under Review for Possible Upgrade -- EUR41.3M Class C1 Senior Secured Deferrable Floating Rate Notes due 2023, Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba2 (sf) Placed Under Review for Possible Upgrade -- EUR1.2M Class C2 Senior Secured Deferrable Fixed Rate Notes due 2023, Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba2 (sf) Placed Under Review for Possible Upgrade -- EUR12.95M Class D1 Senior Secured Deferrable Floating Rate Notes due 2023, Upgraded to Ba1 (sf); previously on Jun 22, 2011 B3 (sf) Placed Under Review for Possible Upgrade -- EUR5.8M Class D2 Senior Secured Deferrable Fixed Rate Notes due 2023, Upgraded to Ba1 (sf); previously on Jun 22, 2011 B3 (sf) Placed Under Review for Possible Upgrade -- EUR20M Class E Senior Secured Deferrable Floating Rate Notes due 2023, Upgraded to Ba3 (sf); previously on Jun 22, 2011 Caa2 (sf) Placed Under Review for Possible Upgrade -- EUR7M Class X Combination Notes due 2023, Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba3 (sf) Placed Under Review for Possible Upgrade -- EUR10M Class Y Combination Notes due 2023, Upgraded to Baa3 (sf); previously on Jun 22, 2011 B3 (sf) Placed Under Review for Possible Upgrade -- EUR33.14M Class Z Combination Notes due 2023, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible Upgrade The ratings of the Combination Notes address the repayment of the Rated Balance on or before the legal final maturity. For Classes X, Y and Z, which do not accrue interest, the 'Rated Balance' is equal at any time to the principal amount of the Combination Note on the Issue Date minus the aggregate of all payments made from the Issue Date to such date, either through interest or principal payments. The Rated Balance may not necessarily correspond to the outstanding notional amount reported by the trustee. Ratings Rationale Queen Street CLO I B.V. issued in January 2007, is a single currency Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly high yield European loans. The portfolio is managed by Indicus Investment Management Ltd. This transaction will be in reinvestment period until April 15, 2013. It is predominantly composed of senior secured loans but with exposure to mezzanine obligations (8.02%) and CLO securities (4.13%). According to Moody's, the rating actions taken on the notes are primarily a result of applying Moody's revised CLO assumptions described in "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. The actions also reflect consideration of credit improvement of the underlying portfolio The actions reflect key changes to the modelling assumptions, which incorporate (1) a removal of the temporary 30% default probability macro stress implemented in February 2009, (2) increased BET liability stress factors as well as (3) change to a fixed recovery rate modeling framework. Additional changes to the modelling assumptions include (1) standardizing the modelling of collateral amortization profile, (2) changing certain credit estimate stresses aimed at addressing the lack of forward looking indicators as well as time lags in receiving information required for credit estimate updates and (3) adjustments to the equity cash-flows haircuts applicable to combination notes. Improvement in the credit quality is observed through a better average credit rating of the portfolio (as measured by the weighted average rating factor "WARF"). In particular, as of the latest trustee report dated July 2011, the WARF is currently 2671 compared to 2706 in the October 2009 report. However, the reported WARF understates the actual improvement in credit quality because of the technical transition related to rating factors of European corporate credit estimates, as announced in the press release published by Moody's on September 1, 2010. Additionally, defaulted securities total about EUR3.97 million of the underlying portfolio compared to EUR13.21 million in October 2009. Due to the impact of revised and updated key assumptions referenced in "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011, key model inputs used by Moody's in its analysis, such as the portfolio par amount, WARF, diversity score, and weighted average recovery rate, may be different from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool to have a performing par and principal proceeds balance of EUR485.78 million, defaulted par of EUR3.97 million, a weighted average default probability of 20.823% (consistent with a WARF of 2679), a weighted average recovery rate upon default of 45.18% for a Aaa liability target rating, a diversity score of 32 and a weighted average spread of 2.75%. The default probability is derived from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The average recovery rate to be realized on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed that 86% of the portfolio exposed to senior secured corporate assets would recover 50% upon default, while the remainder non first-lien loan corporate assets would recover 10%. In each case, historical and market performance trends and collateral manager latitude for trading the collateral are also relevant factors. These default and recovery properties of the collateral pool are incorporated in cash flow model analysis where they are subject to stresses as a function of the target rating of each CLO liability being reviewed. Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, as evidenced by 1) uncertainties of credit conditions in the general economy and 2) the large concentration of speculative-grade debt maturing between 2012 and 2015 which may create challenges for issuers to refinance. CLO notes' performance may also be impacted by 1) the manager's investment strategy and behavior and 2) divergence in legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Sources of additional performance uncertainties are: 1) Moody's also notes that around 54% of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. 2) Recovery of defaulted assets: Market value fluctuations in defaulted assets reported by the trustee and those assumed to be defaulted by Moody's may create volatility in the deal's overcollateralization levels. Further, the timing of recoveries and the manager's decision to work out versus sell defaulted assets create additional uncertainties. Moody's analyzed defaulted recoveries assuming the lower of the market price and the recovery rate in order to account for potential volatility in market prices. 3) Weighted average life: The notes' ratings are sensitive to the weighted average life assumption of the portfolio, which may be extended due to the manager's decision to reinvest into new issue loans or other loans with longer maturities and/or participate in amend-to-extend offerings. Moody's tested for a possible extension of the actual weighted average life in its analysis. 4) Other collateral quality metrics: The deal is allowed to reinvest and the manager has the ability to deteriorate the collateral quality metrics' existing cushions against the covenant levels. Moody's analyzed the impact of assuming lower of reported and covenanted values for weighted average rating factor, weighted average spread and diversity score. The principal methodology used in the rating was "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. Moody's modeled the transaction using the Binomial Expansion Technique, as described in Section 2.3.2.1 of the "Moody's Approach to Rating Collateralized Loan Obligations" rating methodology published in June 2011. The cash flow model used for this transaction, whose description can be found in the methodology listed above, is Moody's CDOEdge model. In addition to the quantitative factors that are explicitly modeled, qualitative factors are part of the rating committee considerations. These qualitative factors include the structural protections in each transaction, the recent deal performance in the current market environment, the legal environment, specific documentation features, the collateral manager's track record, and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, may influence the final rating decision. ZIGGO BOND: Moody's Upgrades CFR to 'Ba2'; Outlook Stable --------------------------------------------------------- Moody's Investors Service has upgraded the corporate family rating (CFR) and probability of default (PDR) ratings of Ziggo Bond Company B.V. to Ba2 from Ba3. Concurrently, Moody's upgraded the rating on the EUR750 million senior secured notes due 2017 to Ba1 from Ba2 and the rating on the EUR1.2 billion senior notes due 2018 to B1 from B2. The outlook on the ratings is stable. Ratings Rationale The upgrade reflects (i) Ziggo's consistent track record of operating performance over the past 18 months, translating into better revenue and EBITDA growth than originally anticipated; (ii) the de-leveraging of the group through meaningful free cash flow generation, to a level that is now commensurate with a Ba2 rating category; (iii) good visibility for Ziggo to continue to grow the business within its own footprint; and (iv) a regulatory environment that continues to be favorable to cable in the Netherlands. At the same time, the Ba2 CFR continues to reflect (i) the intense competition in the Netherlands' TV and broadband markets and (ii) Ziggo's still leveraged capital structure under the current ownership. During 2010 and H1 2011, Ziggo grew revenue by approximately 7%, mainly contributed by RGU and triple play penetration as well as the conversion of customers from basic analog packages into digital TV and Pay TV. Moody's believes there remains room for Ziggo to pursue this strategy and continue to grow the business whilst maintaining EBITDA margin around 55%. In addition, Moody's expects Capex spend to remain in the mid teens (as a % of sales) going forward and the group to continue to generate strong free cash flow and comfortably de-leverage overtime. As of June 2011, Ziggo had a leverage of approximately 4.2x adjusted debt to EBITDA and free cash flow to debt around 9%. The rating does not incorporate any event risk related to a potential change in the group's ownership structure. Moody's notes that Ziggo's capital structure allows for a change of control under certain circumstances without triggering a put for note holders provided that the group's consolidated leverage is below 4.5x. Moody's notes that future rating improvements may be limited by the absence of a publicly articulated financial policy, also tied in to potential exit strategy of Ziggo's private equity shareholders. Upward pressure on the rating could be exerted if (i) adjusted debt/ EBITDA falls below 4.0x and free cash flow to debt remains around its current level and (ii) there is greater clarity regarding longer-term ownership and related financial policy. Downward pressure on the rating could be seen if (i) the company's operating performance significantly deteriorates; (ii) adjusted debt/EBITDA increases towards 5.0x; or (iii) free cash flow to debt falls to about 5%. The last rating action on Ziggo was implemented on October 21, 2010, when Moody's assigned (P)Ba2 rating to Ziggo's senior secured notes due 2017. The principal methodologies used in rating Ziggo were Global Cable Television Industry published in July 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Ziggo, with central offices in Utrecht, is the largest cable operator in the Netherlands. In the last twelve months to June 30, 2011, the company reported approximately EUR1.4 billion in revenue and EUR783 million in recurring EBITDA. ========= S P A I N ========= TDA PASTOR: S&P Lowers Rating on Class B Notes to 'B' ----------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its credit ratings on TDA Pastor Consumo 1, Fondo de Titulizacion de Activos' class A and B notes. The class C notes are unaffected. "On April 27, 2011, we took various rating actions in this transaction following a review of the credit quality of the underlying collateral of consumer loans (see 'Ratings Lowered In Spanish Consumer ABS Transaction TDA Pastor Consumo 1'). Since then, we have reviewed the underlying collateral in the transaction again, and as was the case in April, we have updated our default and recovery assumptions," S&P related. The collateral in this transaction comprises unsecured loans granted between 1999 and 2007 by Banco Pastor S.A. to Spanish residents to finance consumer goods and services. The revolving period was initially scheduled to last two years from the closing date, but as required by the transaction documents, it was terminated early in October 2008 when the level of assets in arrears for more than 90 days reached the 2.25% trigger level. "Following our April observations, defaults have continued to increase and recoveries are lower than expected. As a result, the transaction is currently undercollateralized and our 'CCC (sf)' rating on the class C notes reflects our opinion that the issuer will not have the capacity to meet its financial commitment in respect of the principal due at maturity on this class. While the level of credit enhancement provided by the performing balance remains positive for the class A and the class B notes, it is below zero for the class C notes," S&P stated. Based on the latest available investor report from the trustee (dated July 2011), the pool factor is at 28%, with assets classified as delinquent (arrears between three months and 18 months from the payment due date) accounting for 4.00% of the current portfolio and 1.24% of the portfolio's closing balance. "Although we have continued to observe stabilizing -- or even marginally decreasing in the case of some baskets -- delinquency levels since our April review, long-term delinquencies have continued to roll into default. As these delinquencies continue to roll into defaults, they are associated with very low recovery levels on defaulted assets observed in the transaction's portfolio. Based on the latest available data, cumulative defaulted assets account for 4.86% of the original pool balance at closing, compared with the April 2011 level of 4.20%," S&P related. "The level of recoveries on defaulted assets is lower than our initial assumptions at closing. As a consequence, we have lowered our recovery assumptions, resulting in a significant increase in our loss given default expectations," S&P noted. "The reserve fund has been fully depleted since July 2010. As already observed in our April review, the excess spread provided by the interest rate swap is more than offset by the level of nonperforming assets. This would indicate that, in some scenarios, the reserve fund is unlikely to be replenished. Consequently, in the absence of any reserve fund, the transaction relies solely on excess spread to cure defaults, which we believe is insufficient. Furthermore, in some scenarios, we anticipate that current levels of undercollateralization would likely increase as principal would be drawn to fund interest," S&P noted. "We have also applied our Credit Stability criteria to our analysis in order to factor in the likelihood of the underlying portfolio experiencing unusually large adverse movements in its credit quality under conditions of moderate stress (see 'Methodology: Credit Stability Criteria,' published on May 3, 2010)," S&P related. "As a consequence of all of the factors, we have lowered our ratings on the class A and B notes to reflect our view of the weakening capacity of the issuer to meet its financial commitments. Our ratings on the notes in this transaction address the timely payment of interest due under the rated notes, and ultimate payment of principal at maturity of the rated notes," S&P noted. Ratings List TDA Pastor Consumo 1, Fondo de Titulizacion de Activos EUR300 Million Asset-Backed Floating-Rate Notes Class Rating To From Ratings Lowered and Removed From CreditWatch Negative A BB- (sf) BBB- (sf)/Watch Neg B B (sf) BB-(sf)/Watch Neg(sf) Rating Unaffected C CCC (sf) =========== S W E D E N =========== SAAB AUTOMOBILE: May Delay Payment of Employees' Wages for August ----------------------------------------------------------------- BBC News reports that Saab Automobile has said it may not have the funds to pay its employees' wages on time in August. If so, this will be the third consecutive month that at least some of Saab's 3,700 employees will have seen their salaries delayed, BBC notes. Swedish Automobile, Saab's new owner, has been trying to find new sources of funding since April, when production was halted as unpaid suppliers stopped deliveries, BBC relates. According to BBC, analysts say Saab needs a long-term investor to solve its liquidity problems. "There is a risk of delayed payment of August wages to Saab Automobile employees as some of the funds that were committed by investors may not be paid in time," BBC quotes Saab and Swedish Automobile as saying in a statement. It added that Saab was taking "all necessary actions" to collect those funds in time but there could be "no assurance that the necessary funding will be obtained or the funds collected." Saab Automobile AB is a Swedish car manufacturer. =========================== U N I T E D K I N G D O M =========================== LUMINAR GROUP: Replaces Auditor Week Before Debt-Covenant Tests --------------------------------------------------------------- Rose Jacobs at The Financial Times reports that Luminar Group has dropped its auditor a week before its debt-covenant tests are widely expected to fail. According to the FT, the company told shareholders on Tuesday that PricewaterhouseCoopers has resigned after the board decided "a fresh audit relationship would benefit the Luminar group moving forward". Luminar will hire KPMG instead, the FT says. The move comes a week before tests on the group's banking covenants are due next Wednesday, the FT notes. Lloyds Banking Group, Barclays and Royal Bank of Scotland, Luminar's lenders, agreed to waive the tests in May to give time to "determine the appropriate basis for a longer term restructuring of the group's debt arrangements in light of continued challenging trading conditions", the company previously said, the FT recounts. Luminar has seen double-digit sales declines in quarter after quarter in recent years, the FT discloses. It went from pre-tax profits of GBP5.5 million last year to a loss of GBP1.1 million in 2010/11, the FT relates. Its net debt stood at GBP82.2 million in May, a slight improvement on the GBP92.7 million it owed the year before, the FT discloses. Simon French, an analyst with Panmure Gordon, as cited by the FT, said that a restructuring looked inevitable: "If they couldn't meet [covenants] in May, given the trading update in July where like-for-likes dropped 12%, I can't really see how things would have turned around since then." Panmure Gordon's Mr. French expect that the lenders might be reluctant to agree to debt for equity swaps, the FT discloses. "Banks probably won't want to take any of this on the balance sheet," the FT quotes Mr. French as saying. The banks might also decide to waive the covenant tests once more, giving Luminar time to sell freeholds to pay down debt, the FT states. The tests measure two metrics: net debt to earnings before interest, tax, depreciation and amortization, and fixed interest cover, the FT notes. Based in Milton Keynes, United Kingdom, Luminar Group Holdings plc -- http://www.luminar.co.uk/-- is engaged in the ownership, development and operation of nightclubs and themed bars. Its main branded venues are Oceana, Liquid, and Lava & Ignite. The company's product brands include Big Night Out, Vibe, Red Carpet Moments and UK Club Culture (UKCC). =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- 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/ April 3-5, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Grand Hyatt Atlanta, Atlanta, Ga. Contact: http://www.turnaround.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/ November 1-3, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Westin Copley Place, Boston, Mass. Contact: http://www.turnaround.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/ April 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ October 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.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, 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 * * *