/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/111028.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 Friday, October 28, 2011, Vol. 12, No. 214 Headlines B U L G A R I A BDZ: Sells 515 Freight Railway Cars for BGN3.5 Million D E N M A R K * DENMARK: Prepares Bill to Clamp Down Banks G R E E C E * GREECE: EU Persuades Bondholders to Take 50% Losses on Debt I R E L A N D DRYDEN IX: Moody's Raises Ratings on Two Note Classes to 'Ba1' L U X E M B O U R G APERAM SA: S&P Affirms 'BB' Corp. Credit Rating; Outlook Negative N E T H E R L A N D S E-MAC NL: S&P Lowers Rating on Class E Notes to 'BB- (sf)' HYDE PARK: Moody's Raises Rating on Class E Notes to 'B1 (sf)' UPC FINANCING: Moody's Assigns '(P)Ba3' Rating to $500MM Facility R O M A N I A * ROMANIA: Quarter of State-Owned Companies Practically Bankrupt S W E D E N SAAB AUTOMOBILE: Delays Payment of Wages for Fourth Time SAAB AUTOMOBILE: Terminates Funding Deals With Youngman, Pang Da T U R K E Y YUKSEL INSAAT: Moody's Affirms 'B1' CFR; Outlook Negative U N I T E D K I N G D O M CLINTON CARDS: Swings to GBP10.7 Million Loss in FY2011 EUROPEAN HOME: Investor in Farepak Scheme Remains Unpaid HARLOW TOWN FC: Owner Reassures Supporters Over Closure Threat LUMINAR GROUP: Goes Into Administration, Shares Suspended SEAFRANCE: Court Defers Decision Over Rescue Options X X X X X X X X * EUROPE: Banks Need to Raise EUR106BB in Fresh Capital, EBA Says * BOOK REVIEW: Performance Evaluation of Hedge Funds ********* =============== B U L G A R I A =============== BDZ: Sells 515 Freight Railway Cars for BGN3.5 Million ------------------------------------------------------ BDZ has made a meager BGN3.5 million by selling a total of 515 freight railway cars, Novinite.com reports. According to Novinite.com, Vladimir Vladimirov, head of BDZ's board, said the management completed the deal for the sale of the cars Monday. Mr. Vladimirov stressed that the management has developed a package of measures to save the technically bankrupt company whose mounting debts have reached BGN771 million and keep growing, Novinite.com. Novinite.com says the reform package is to be presented to Finance Minister Simeon Djankov, who recently froze the Bulgarian government's talks with the World Bank for a badly needed loan of BGN600 million for the railway sector in Bulgaria, including BGN460 million for BDZ and BGN160 million for National Company "State Infrastructure". Mr. Djankov's major argument was that he would not pour a single BGN until he sees actual reform in the state company, Novinite.com notes. BDZ is Bulgaria's state railway company. ============= D E N M A R K ============= * DENMARK: Prepares Bill to Clamp Down Banks -------------------------------------------- Tasneem Brogger at Bloomberg News reports that Denmark is preparing a bill designed to clamp down on banks that fail to reveal the risks lurking on their balance sheets. According to Bloomberg, Economy Minister Ole Sohn said in a statement on his ministry's Web site on Wednesday that the proposal will be presented before Christmas. The announcement follows a report by the auditor general that criticized the Financial Supervisory Authority for underestimating the risky assets held by Amagerbanken A/S before the lender's February failure, Bloomberg relates. The collapse triggered the European Union's first senior creditor losses within a resolution framework and left most of Denmark's banks cut off from international funding markets, Bloomberg notes. "It's a criticism we're taking very seriously. That's why we're looking into tightening reporting rules in future," FSA Director General Ulrik Noedgaard told broadcaster TV2. "It's clear there are challenges associated with the situation we have now and that can lead to bank closures." Mr. Sohn said that taxpayers won't have to foot the bill for the error, Bloomberg notes. The auditor general also found that the FSA arrived at a different conclusion as to the scope of Amagerbanken's risky operations from the state winding-up unit, the Financial Stability Company, Bloomberg discloses. "I have noted that the auditor finds it unfortunate that the FSA and the Financial Stability Company had different views on Amagerbanken," Bloomberg quotes Mr. Sohn as saying. Both units are independent and regulated by their own laws, meaning the ministry isn't in a position to give them instructions, Mr. Sohn, as cited by Bloomberg, said, adding he will investigate whether more can be done in future to avoid a similar situation. =========== G R E E C E =========== * GREECE: EU Persuades Bondholders to Take 50% Losses on Debt ------------------------------------------------------------- James G. Neuger and Stephanie Bodoni at Bloomberg News report that European leaders persuaded bondholders to take 50% losses on Greek debt and boosted the firepower of the rescue fund to EUR1 trillion (US$1.4 trillion), responding to global pressure to step up the fight against the financial crisis. Last-ditch talks with bank representatives led to the debt-relief accord, in an effort to quarantine Greece and prevent speculation against Italy and France from ravaging the euro zone and wreaking global economic havoc, Bloomberg relates. Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market, Bloomberg discloses. Bloomberg relates that ECB President Jean-Claude Trichet said the steps "have to be fully implemented, as rapidly and effectively as possible." ============= I R E L A N D ============= DRYDEN IX: Moody's Raises Ratings on Two Note Classes to 'Ba1' -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Dryden IX Senior Loan Fund 2005: -- US$262.5M Class A-1 Notes, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible Upgrade -- EUR115.1M Class A-2 Notes, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible Upgrade -- US$34.1M Class B-1 Notes, Upgraded to A1 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade -- EUR3.4M Class B-2 Notes, Upgraded to A1 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade -- EUR2.7M Class B-3 Notes, Upgraded to A1 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade -- US$74.15M (Current Notional Amount US$25,438,188) Dollar Fund Notes, Upgraded to Ba1 (sf); previously on Jun 22, 2011 Caa1 (sf) Placed Under Review for Possible Upgrade -- EUR30.3M (Current Notional Amount EUR10,394,836) Euro Fund Notes, Upgraded to Ba1 (sf); previously on Jun 22, 2011 Caa1 (sf) Placed Under Review for Possible Upgrade -- EUR10M (Current Notional Amount EUR0m) Lower Levered Fund Notes, Withdrawn (sf); previously on Jun 22, 2011 B1 (sf) Placed Under Review for Possible Upgrade The ratings of the Dollar Fund Note and the Euro Fund Note address the repayment of the Rated Balance on or before the legal final maturity. The 'Rated Balance' is equal at any time to the principal amount of the Fund 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. The rating of the Lowered Levered Fund note has been withdrawn as the note has been fully unwound. RATINGS RATIONALE Dryden IX Senior Loan Fund 2005, issued in October 2005, is a multi-currency Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly US Senior Secured loans. The portfolio is managed by Pramerica Investment Management and will be in reinvestment period until September 2012. 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 and an increase in the transaction's overcollateralization ratios since the rating action in January 2010. 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 modelling framework. Additional changes to the modelling assumptions include standardizing the modelling of collateral amortization profile. Moody's also notes that this action also reflects improvements of the transaction performance since the last rating action. The overcollateralization ratios of the rated notes have improved the rating action in Jan 2010. The Class A and Class B overcollateralization ratios are reported at 133.66%, and 121.38%, respectively, versus November 2009 levels of 127.00%, and 115.50%, respectively. All overcollateralization tests are currently in compliance. Improvement in the credit quality is observed through a stronger average credit rating of the portfolio (as measured by the weighted average rating factor "WARF") and a decrease in the proportion of securities from issuers rated Caa1 and below. In particular, as of the latest trustee report dated September 2011, the WARF is currently 2553 compared to 2688 in the Nov 2009 report, and securities rated Caa or lower make up approximately 7.84% of the underlying portfolio versus 13.91% in November 2009. In addition, 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. 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 US$358 million, defaulted par of US$6.68 million, a weighted average default probability of 19.22% (consistent with a WARF of 2560), a weighted average recovery rate upon default of 47.07% for a Aaa liability target rating, a diversity score of 67 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 91% 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. The deal is allowed to reinvest and the manager has the ability to deteriorate the collateral quality metrics' existing cushions against the covenant levels. However, in this case given the limited time remaining in the deal's reinvestment period, Moody's analyzed the impact of assuming weighted average spread consistent with the midpoint between reported and covenanted values. 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 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 25% 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) Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that at transaction maturity such an asset has a liquidation value dependent on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. The principal methodology used in this 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 EMEA Cash-Flow model. In addition to the quantitative factors that are explicitly modelled, 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. =================== L U X E M B O U R G =================== APERAM SA: S&P Affirms 'BB' Corp. Credit Rating; Outlook Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Luxembourg-based stainless steel producer Aperam S.A. to negative from stable. At the same time, the 'BB' long-term corporate credit rating on the company was affirmed. "The outlook revision reflects our view that Aperam's financial flexibility is currently limited. It also reflects increased uncertainties regarding the global economic environment that may put further pressure on Aperam's financial metrics in 2012. In particular, we believe that financial metrics would likely deteriorate below the levels we consider commensurate with the current rating in the event of an economic recession in Europe. We currently estimate the probability of a new recession in Western Europe next year at about 40% (see 'The Specter Of A Double Dip In Europe Looms Larger," published Oct. 4, 2011). The rating on Aperam reflects our expectation that, in the context of slow economic growth in Europe assumed in our base-case scenario, stainless steel industry conditions in 2012 will not deteriorate substantially below 2010 and mid-year 2011 levels. "Consequently, we anticipate that in such an economic climate, Aperam's fully Standard & Poor's-adjusted funds from operations (FFO) to debt will remain at about 20%--in line with the lower end of the 20%-30% range we consider commensurate with the current rating," S&P related. "The negative outlook reflects our view of the increased likelihood of a weak stainless steel industry environment in 2012 that could weigh on Aperam's credit metrics," S&P said. "In particular, we anticipate that in a double-dip recession scenario, Aperam's EBITDA will decline to about US$300 million or below in 2012. This is still substantially above the US$120 million achieved in 2009, because we base our estimate on current low inventory levels compared with mid-2008, and on the anticipated effect of management's rationalization efforts. In this scenario, fully adjusted FFO to debt will deteriorate to 10%- 15% in 2012, despite expected working capital inflows and management's potential initiatives to further cut costs and capex, which is below the levels commensurate with the current rating," S&P related. "We could revise the outlook back to stable if the industry environment remains supportive in 2012 and the company maintains FFO to debt within the 20%-30% range. This would also depend on the profitability of Aperam's Brazilian operations, which have declined in 2010-2011, as well as the effectiveness of management's rationalization plan," S&P said. ===================== N E T H E R L A N D S ===================== E-MAC NL: S&P Lowers Rating on Class E Notes to 'BB- (sf)' ----------------------------------------------------------Standard & Poor's Ratings Services lowered its credit ratings on the class D and E notes in E-MAC NL 2006-II B.V. "At the same time, we affirmed our ratings on the class A, B and C notes," S&P related. "The rating actions follow our credit and cash flow analysis of the most recent transaction information that we have received," S&P said. Credit Analysis "Our credit analysis incorporates our standard Dutch criteria (see 'Dutch RMBS Market Overview And Criteria,' published on Dec 16, 2005)," S&P related. "In addition, we also incorporate credit stability as an important factor in our rating opinions. We consider whether we believe that an issuer or security has a high likelihood of experiencing unusually large adverse changes in credit quality under conditions of moderate stress (see 'Methodology: Credit Stability Criteria,' published on May 3, 2010)," S&P said. "For Dutch transactions, we adjust our weighted-average loss severities (WALS) by applying a 5% decrease in house prices and giving full credit to the house price index (HPI). If there has been an upward trend in arrears, we adjust our weighted-average foreclosure frequency (WAFF) by projecting arrears based on historical data," S&P related. "We have projected an additional 0.82% of 120+ day arrears, as we have seen an upward trend in long-term arrears over the past year," S&P said. This transaction is structured such that the reserve fund can amortize if there is no debit balance on the principal deficiency ledgers. The reserve fund started amortizing in July 2009; it is currently at EUR1,787,387 and will continue amortizing to a floor of EUR1,100,000. "Our WAFF and WALS for the pool have increased for each rating level since closing, due to an increase in the calculated weighted-average loan-to-foreclosure value (WALTFV) to 79.52%, and an increase in arrears to 1.02%," S&P said. The available credit enhancement for the class D notes does not mitigate the increase in required credit coverage as these notes only benefit from credit enhancement provided by the amortizing reserve fund. "We have therefore lowered to 'BB (sf)' our rating on this class of notes as they are unable to maintain their current ratings under our cash flow scenarios," S&P related. The class E notes are excess spread notes, and are currently paying down in line with the amortization of the reserve fund. The transaction is structured such that if 90+ day arrears increase above 2%, then the reserve fund would need to be topped up to EUR7,425,000 before any excess spread could be used to pay down the class E principal. "These notes are unable to maintain their current rating under our cash flow stresses due to this trigger being breached. Therefore, we have lowered our rating on the class E notes to 'BB- (sf)'," S&P stated. "In our view, the credit enhancement available for the class A, B, and C notes mitigates the subsequent increase in required credit coverage. Also, these notes pass our cash flow stresses at their current rating levels. Therefore, we have affirmed our ratings on the class A, B, and C notes," S&P related. Counterparty Criteria "We do not consider the bank agreements for E-MAC NL 2006-II to be in line with our 2010 counterparty criteria as they do not include an absolute commitment from the counterparty that it will replace itself following a downgrade below our minimum required rating. Therefore, under our criteria, the highest potential rating on the notes in this transaction is equal to the issuer credit rating on the bank account provider, The Royal Bank of Scotland N.V. (A+/Stable/A-1) (see 'Ratings List Resolving European Structured Finance Counterparty CreditWatch Placements - June 17, 2011 Review')," S&P related. Ratings List Class Rating To From E-MAC NL 2006-II B.V. EUR456.131 Million Residential Mortgage-Backed Floating-Rate Notes Ratings Lowered D BB (sf) BBB (sf) E BB- (sf) BB (sf) Ratings Affirmed A A+ (sf) B A+ (sf) C A (sf) HYDE PARK: Moody's Raises Rating on Class E Notes to 'B1 (sf)' -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Hyde Park CDO B.V.: EUR29.5M Class B-1 Senior Secured Floating Rate Notes due 2022, Upgraded to Aa2 (sf); previously on Jun 22, 2011 A2 (sf) Placed Under Review for Possible Upgrade EUR14M Class B-2 Senior Secured Fixed Rate Notes due 2022, Upgraded to Aa2 (sf); previously on Jun 22, 2011 A2 (sf) Placed Under Review for Possible Upgrade EUR42.5M Class C Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade EUR20M Class D Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to Ba1 (sf); previously on Jun 22, 2011 B2 (sf) Placed Under Review for Possible Upgrade EUR11.5M Class E Senior Secured Deferrable Floating Rate Notes due 2022, Upgraded to B1 (sf); previously on Jun 22, 2011 Caa2 (sf) Placed Under Review for Possible Upgrade EUR21.9M Class T Combination Notes due 2022, Upgraded to Aa3 (sf); previously on Jun 22, 2011 A3 (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 Class T, 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 Hyde Park CDO B.V., issued in February 2006, is a single currency Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly high yield European Leveraged loans. The portfolio is managed by Blackstone Debt Advisors L.P. This transaction will be in reinvestment period until June 14, 2012. 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 reflect key changes to the modeling 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 modeling assumptions include 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 if there are combos:, and (3) adjustments to the equity cash-flows haircuts applicable to combination notes. Reported WARF has increased from 2679 to 2960 between June 2009 and September 2011. The change in reported WARF masks the actual credit quality stability 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. In addition, securities rated Caa or lower make up approximately 7.0% of the underlying portfolio versus 7.1% in June 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 EUR469.5 million, defaulted par of EUR8.3 million, a weighted average default probability of 21.5% (consistent with a WARF of 2911), a weighted average recovery rate upon default of 46.2% for a Aaa liability target rating, a diversity score of 36 and a weighted average spread of 3.19%. 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 90.67% 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. The deal is allowed to reinvest and the manager has the ability to deteriorate the collateral quality metrics' existing cushions against the covenant levels. However, in this case given the limited time remaining in the deal's reinvestment period, Moody's analyzed the impact of assuming weighted average spread consistent with the midpoint between reported and covenanted values. 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 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 55.1% of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. The risks and stresses associated with the usage of credit estimates are described in a report titled "Updated Approach to the Usage of Credit Estimates in Rated Transactions" published in October 2009." 2) 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 the worse of reported and covenanted values for weighted average rating factor and diversity score. However, as part of the base case, Moody's considered spread levels higher than the covenant levels due to the large difference between the reported and covenant levels and also considered alternative sensitivity runs with a higher diversity score than the covenant of 36 due to the difference with the current diversity score of 41. The principal methodology used in this 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 EMEA Cash-Flow 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. UPC FINANCING: Moody's Assigns '(P)Ba3' Rating to $500MM Facility ----------------------------------------------------------------- Moody's Investors Service has assigned a provisional (P) Ba3 rating to the USD500 million additional term loan facility AB due in December 2017 being issued by UPC Financing Partnership. The rating outlook is stable. UPC Financing is an entity indirectly wholly-owned by UPC Holding B.V. ('UPC'; CFR at Ba3/ Stable) and is an established borrower under the UPC Bank Facility together with UPC Broadband Holding B.V. ('UPC Broadband'). The proceeds of the new loan will be used to repay some of the outstanding revolver drawings under the UPC Bank Facility. RATINGS RATIONALE The (P) Ba3 rating on the new term loan ('Facility AB') is in line with the rating for the UPC bank facilities (rated Ba3) reflecting the pari-passu status of this loan with the existing senior secured bank facilities for UPC. Facility AB will be documented in the Additional Facility Accession Agreement which will set out the conditions precedent to drawing and pursuant to which lenders will accede to the existing UPC Broadband bank facility agreement. Thus facility AB will benefit from the same security package and guarantees as the existing bank debt facilities. The current Ba3 corporate family rating reflects (i) UPC's significant scale of operations and its geographical diversification across European markets; (ii) its good operating performance in Western Europe; and (iii) UPC's continued adherence to its publicly stated financial policy of not exceeding 5.0x Total Debt to EBITDA as enshrined in the terms and conditions of its existing debt instruments. However, the rating also takes into account the strong competition in its countries of operations (notably in the CEE region). Moody's ratings incorporate the fact that UPC is fully controlled by Liberty Global Inc. (CFR at Ba3) and pursues a strategy whereby it aims to keep the leverage close to its stated leverage parameters thereby continuing to maintain tight headroom under its financial covenants. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavor to assign a definitive rating to the loan. A definitive rating may differ from a provisional rating. The stable outlook reflects Moody's expectation that the company should continue to at least maintain revenue and EBITDA while managing towards the stated leverage target and, as a result, its leverage should not increase materially above 5.0x Gross Debt to EBITDA (as defined by Moody's). What Could Change the Rating - Up Positive ratings development would most likely result from leverage decreasing and remaining solidly below 4.5x and moving towards 4x on a Gross Debt to EBITDA (as adjusted by Moody's) basis on the back of strong operating performance. What Could Change the Rating - Down Sustained weak operating performance in conjunction with an increase in Gross Debt to EBITDA (as adjusted by Moody's) towards 5.5x could result in downward pressure. Furthermore weak liquidity would put a downward pressure on the rating. The principal methodology used in rating UPC Financing was the Global Cable Television Industry Methodology published in July 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. UPC is a pan-European cable provider, a principal subsidiary of Liberty Global Inc. In 2010, the company generated EUR3.7 billion in revenue and EUR1.8 billion in reported operating cash flow. ============= R O M A N I A ============= * ROMANIA: Quarter of State-Owned Companies Practically Bankrupt ---------------------------------------------------------------- According to Ziarul Financiar, a World Bank study revealed that a quarter of Romania's 760 state-owned enterprises, like RADET, CFR or Oltchim, are unprofitable, with nonviable assets and de facto bankrupt, meaning almost 100,000 employees would be left jobless if these companies were to close. =========== S W E D E N =========== SAAB AUTOMOBILE: Delays Payment of Wages for Fourth Time -------------------------------------------------------- Ola Kinnander at Bloomberg News reports that Saab Automobile delayed paying monthly wages for a fourth time this year while management negotiates a possible deal with two Chinese companies. According to Bloomberg, spokesman Eric Geers said that Saab was supposed to pay its 1,500 factory workers on Tuesday. Saab has received payments from the Swedish government to cover salaries through Oct. 21, while the company must cover the rest of the month itself, Bloomberg discloses. "The only thing we know right now is that the salaries should have been paid [Tues]day," Bloomberg quotes Darko Davidovic, counsel at the IF Metall workers union, adding that the monthly salaries including taxes to his members amount to about SEK40 million (US$6.1 million.) Mr. Geers, as cited by Bloomberg, said Saab management was set to meet with Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. in Stockholm on Wednesday to continue investment negotiations. Bloomberg notes that Pang Qinghua, chairman of Pang Da, China's biggest auto dealer by market value, said in an interview Oct. 24 that the parties "continue to look at new proposals." On Oct. 26, 2011, the Troubled Company Reporter-Europe, citing Bloomberg News, related that Swedish Automobile NV said it has given notice to terminate an agreement to sell a majority stake in Saab to the two Chinese companies and rejected their offers to buy all of the European carmaker. Swedish Auto said in a statement on Oct. 24 Pang Da and Youngman had "failed to confirm their commitment" to the agreement and provide bridge funding. According to Bloomberg, the Zeewolde, Netherlands-based carmaker also found subsequent conditional offers from the two companies on Oct. 19 and Oct. 22 to buy all of Saab "unacceptable," though discussions are continuing. As reported by The Troubled Company Reporter-Europe on Oct. 24, 2011, Bloomberg News related that Saab, which has produced few cars since it first halted production in March because of a lack of money, staved off bankruptcy after a Swedish court on Sept. 21 granted the carmaker's request for protection from creditors, Bloomberg disclosed. The court had been scheduled to meet Oct. 31 to decide whether the reorganization can carry on, Bloomberg noted. For the reorganization to continue, the court must see that Saab has cash to pay for immediate expenses, Bloomberg stated. The company said on Oct. 20 that it received a US$70 million funding pledge from North Street Capital LP, a Greenwich, Connecticut-based private equity firm, Bloomberg recounted. Those funds, which consist of a loan and share sale, were aimed at ensuring the continuity of the reorganization, Bloomberg said. About Saab Automobile Saab Automobile AB is a Swedish car manufacturer owned by Dutch automobile manufacturer Swedish Automobile NV, formerly Spyker Cars NV. Swedish Automobile N.V. disclosed that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB received approval for their proposal for voluntary reorganization from the Court of Appeal in Gothenburg, Sweden on Sept. 21. The purpose of the voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions by Pang Da and Youngman. SAAB AUTOMOBILE: Terminates Funding Deals With Youngman, Pang Da ---------------------------------------------------------------- Dow Jones' Daily Bankruptcy Review reports that Saab Automobile AB inched closer to bankruptcy after it said it had terminated rescue funding agreements with Chinese auto makers Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co., though the three companies remained in talks. About Saab Automobile Saab Automobile AB is a Swedish car manufacturer owned by Dutch automobile manufacturer Swedish Automobile NV, formerly Spyker Cars NV. Swedish Automobile N.V. disclosed that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB received approval for their proposal for voluntary reorganization from the Court of Appeal in Gothenburg, Sweden on Sept. 21. The purpose of the voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions by Pang Da and Youngman. =========== T U R K E Y =========== YUKSEL INSAAT: Moody's Affirms 'B1' CFR; Outlook Negative --------------------------------------------------------- Moody's Investors Service has affirmed the B1 ratings of Yuksel Insaat A.S. and changed the outlook on the ratings to negative from stable. The following ratings were affected: B1 Corporate Family Rating and Probability of Default Rating and the B1 rating for the US$200 million senior notes due in 2015. RATINGS RATIONALE The change of Yuksel's rating outlook to negative reflects Moody's concerns over Yuksel's weakening liquidity profile and operational performance in the first half of 2011. "The change of outlook to negative follows the deterioration of Yuksel's liquidity profile and tighter covenant headroom of 5% as of June 2011 under its debt to EBITDA incurrence covenant of 4 times, which could limit Yuksel's future financing options," says Martin Kohlhase, a Moody's Vice President -- Senior Analyst and lead analyst for Yuksel. "The change of outlook also reflects the more challenging operating environment with a loss of revenue stemming from Libya as well as related losses and unpaid receivables. This increases the pressure to find alternative revenue sources from projects in other countries where Yuksel has previously not been active," added Mr. Kohlhase. Yuksel's B1 ratings are underpinned by the company's segment diversity and high order backlog. Moody's understands that management is currently pursuing a number of options to strengthen its liquidity profile by largely pursuing small-scale asset disposals. If these disposals are executed in a timely manner, these proceeds could support Yuksel's equity contribution for the Gebze Highway for which Yuksel has to make payments unless it chooses to back out of the project. In the absence of steps to reverse the downward trend Moody's sees a higher probability for a downgrade. The ratings remain constrained by the moderate size of the company compared to global peers and weak financial metrics following foregone revenues of ca. US$170 million in Libya with potential that lead to a decrease in profitability and cash flow. Despite the weakened operational and financial performance, the current ratings assume Yuksel will successfully stem its revenue losses by winning new contracts as well as maintaining covenant headroom. Should Yuksel not be able to shore up its liquidity position to maintain funding options this could result in a downgrade of the ratings. The principal methodology used in rating Yuksel Insaat A.S. was the Global Construction Methodology published in November 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Yuksel Insaat A.S. (Yuksel), with corporate headquarters in Ankara/Turkey, is among the ten largest construction companies in Turkey. Established in 1963 by the Sazak and Sert families, Yuksel has grown its revenue base from US$104 million in 2001 to US$875 million in 2010. The company still has a strong foothold in Turkey where more than half of its revenues have been generated, but has expanded into the MENA region as well as Central Asia over the past years to diversify its revenue streams. More than two thirds of Yuksel's completed contracts were related to buildings, transportation and power, dam and industrial projects. =========================== U N I T E D K I N G D O M =========================== CLINTON CARDS: Swings to GBP10.7 Million Loss in FY2011 ------------------------------------------------------- BBC News reports that struggling retailer Clinton Cards has said falling consumer confidence pushed it to a GBP10.7 million loss in the year to July 31. The loss compares with a pre-tax profit of GBP11.97 million in the previous year, the report says. BBC News relates that the company said like-for-like sales were down 2.9% and revenue down 8% to GBP364 million. The company said it had extended its credit facility with its banks through to 2013, BBC News reports. Clinton cards put its Birthdays Ireland business into liquidation in March, the report notes. Clinton Cards is a greetings card retailer. The company owns 596 Clinton Cards shops and 127 Birthdays shops. EUROPEAN HOME: Investor in Farepak Scheme Remains Unpaid -------------------------------------------------------- BBC News reports that Jackie Southby, who lost almost GBP8,500 when Christmas savings scheme Farepak went bust, has still not received any compensation five years on. Farepak is owned by European Home Retail (EHR). Ms. Southby is one of nearly 120,000 people who are owed GBP38 million in total after the firm went into administration, according to BBC News. The report recalls that the Christmas savings club first had problems in June 2006 when it looked for extra funding, and went into administration four months later. BBC News relates that in April 2010 a final financial offer of 15p in the pound was made to customers following a settlement between the liquidators -- BDO Stoy Hayward -- and Farepak's directors. Customers of Farepak paid money monthly to the company as a practical way to put cash aside for Christmas -- receiving hampers and vouchers to use in shops, BBC News notes. The report says that an unnamed spokeswoman for the liquidators said the liquidation committee had concluded that it was "in the creditors' interests" for them to continue to identify "whether there are opportunities to secure further monies from other parties" for the benefit of creditors. The liquidation committee was set up as directed by a court order and approved by Farepak's customers and creditors, and represented all those who lost money as a result of the collapse of Farepak, she added, BBC News relays. HARLOW TOWN FC: Owner Reassures Supporters Over Closure Threat -------------------------------------------------------------- Harlow Star reports that Harlow Town Football Club co-owner Tommy Cunningham has moved to reassure supporters that the club will not be pushed into administration despite being threatened with closure over unpaid tax bills. Her Majesty Revenue & Customs has filed a petition to wind up the business for failing to pay outstanding debts, according to Harlow Star. The club is set to present its case at the High Court on November 14. Harlow Star discloses that if it succeeds in convincing the judge to issue a winding-up order, the club could fold unless the money owed is paid up in full or a new buyer is found. Mr. Cunningham told Harlow Star in an interview that the matter was "in hand" and would be resolved. "Since we've taken over we've had to deal with a lot of problems and have worked extremely hard to bring stability and success to the club . . . . This is just another issue that needs resolving. . . . .I want to assure our loyal supporters that we have the matter in hand and it will be dealt with. . . . There's absolutely no need for anyone to worry about the club going into administration because we will quite simply not let that happen," the report quoted Mr. Cunningham as saying. About Harlow Town F.C. Harlow Town Football Club is an English football club based in Harlow, Essex. The club currently plays in the Division One North of the Isthmian League, after relegation from the Isthmian League Premier Division in 2009. LUMINAR GROUP: Goes Into Administration, Shares Suspended --------------------------------------------------------- MK News reports that Luminar Group Holdings PLC has gone into administration, saying it cannot meet its banking obligations. Luminar Group said it could not pay back debts to Lloyds TSB Bank, Barclays Bank and the Royal Bank of Scotland which due to be repaid on Oct. 26, according to MK News. The report relates that the company's shares were temporarily suspended from trading when the news was announced. "The Directors of Luminar have no option but to take steps to place the Company and certain of its subsidiaries into administration and to request the UKLA to suspend trading in Luminar's shares with immediate effect," the company said in a statement obtained by the news agency. Luminar Group Holding PLC owns the Oceana chain as well as Liquid and the Lava and Ignite brand. It is Britain's biggest nightclub owner with 76 outlets in United Kingdom. SEAFRANCE: Court Defers Decision Over Rescue Options ---------------------------------------------------- Kent Online reports that SeaFrance workers will have to wait until November 16 to find out their fate after the court deferred decision to fully explore all options for the company. According to the report, crunch talks to decide the future of the ferry firm in Paris on Monday lasted a gruelling five hours. But none of the options tabled to rescue the stricken company -- including a buy-out and liquidation -- was ruled out. SeaFrance has been in administration since last year and now the EU has decided a financial rescue package from French firm SNCF can't go ahead, the report notes. SeaFrance is a cross-Channel ferry operator. The company went into receivership in 2010. =============== X X X X X X X X =============== * EUROPE: Banks Need to Raise EUR106BB in Fresh Capital, EBA Says ----------------------------------------------------------------- Ben Moshinsky and Jim Brunsden at Bloomberg News report that the European Banking Authority said Europe's banks will need to raise EUR106 billion (US$147 billion) in fresh capital under tougher rules being introduced in response to the euro area's sovereign debt crisis. The EBA said on Wednesday that seventy banks were tested, with Spanish banks needing EUR26.2 billion and Italian banks EUR14.8 billion in core tier 1 capital, Bloomberg relates. The lenders have until Dec. 25 to submit their plans for raising the money to national supervisors, Bloomberg notes. The extra reserves are needed to meet a temporary requirement for lenders to hold 9% in core reserves, after sovereign debt writedowns, Bloomberg states. "The building of these buffers will allow banks to withstand a range of shocks while still being able to maintain an adequate capital level," Bloomberg quotes the EBA as saying in a statement on its Web site. The EBA recommended banks withhold bonuses and dividends and go to private markets before seeking government funds to cover any shortfall, Bloomberg discloses. According to Bloomberg, the agency said that lenders' reserves will be measured using a definition of core tier 1 capital that is "largely the same" as that applied by the EBA in this year's round of stress tests on European Union banks. The agency, as cited by Bloomberg, said that the 70 lenders will be required to reach the 9% capital threshold by the end of June 2012. * BOOK REVIEW: Performance Evaluation of Hedge Funds ---------------------------------------------------- Edited by Greg N. Gregoriou, Fabrice Rouah, and Komlan Sedzro Publisher: Beard Books Hardcover: 203 pages Listprice: $59.95 Review by Henry Berry Hedge funds can be traced back to 1949 when Alfred Winslow Jones formed the first one to "hedge" his investments in the stock market by betting that some stocks would go up and others down. However, it has only been within the past decade that hedge funds have exploded in growth. The rise of global markets and the uncertainties that have arisen from the valuation of different currencies have given a boost to hedge funds. In 1998, there were approximately 3,500 hedge funds, managing capital of about $150 billion. By mid-2006, 9,000 hedge funds were managing $1.2 trillion in assets. Despite their growing prominence in the investment community, hedge funds are only vaguely understood by most people. Performance Evaluation of Hedge Funds addresses this shortcoming. The book describes the structure, workings, purpose, and goals of hedge funds. While hedge funds are loosely defined as "funds with no rules," the editors define these funds more usefully as "privately pooled investments, usually structured as a partnership between the fund managers and the investors." The authors then expand upon this definition by explaining what sorts of investments hedge funds are, the work of the managers, and the reasons investors join a hedge fund and what they are looking for in doing so. For example, hedge funds are characterized as an "important avenue for investors opting to diversify their traditional portfolios and better control risk" -- an apt characterization considering their tremendous growth over the last decade. The qualifications to join a hedge fund generally include a net worth in excess of $1 million; thus, funds are for high net-worth individuals and institutional investors such as foundations, life insurance companies, endowments, and investment banks. However, there are many individuals with net worths below $1 million that take part in hedge funds by pooling funds in financial entities that are then eligible for a hedge fund. This book discusses why hedge funds have become "notorious as speculating vehicles," in part because of highly publicized incidents, both pro and con. For example, George Soros made $1 billion in 1992 by betting against the British pound. Conversely, the hedge fund Long-Term Capital Management (LTCP) imploded in 1998, with losses totalling $4.6 billion. Nonetheless, these are the exceptions rather than the rule, and the editors offer statistics, studies, and other research showing that the "volatility of hedge funds is closer to that of bonds than mutual funds or equities." After clarifying what hedge funds are and are not, the book explains how to analyze hedge fund performance and select a successful hedge fund. It is here that the book has its greatest utility, and the text is supplemented with graphs, tables, and formulas. The analysis makes one thing clear: for some investors, hedge funds are an investment worth considering. Most have a demonstrable record of investment performance and the risk is low, contrary to common perception. Investors who have the necessary capital to invest in a hedge fund or readers who aspire to join that select club will want to absorb the research, information, analyses, commentary, and guidance of this unique book. Greg N. Gregoriou teaches at U. S. and Canadian universities and does research for large corporations. Fabrice Rouah also teaches at the university level and does financial research. Komlan Sedzro is a professor of finance at the University of Quebec and an advisor to the Montreal Derivatives Exchange. ********* 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 * * *