/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/111104.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, November 4, 2011, Vol. 12, No. 219 Headlines I R E L A N D ANGLO IRISH: Former Finance Director Arrested ANGLO IRISH: EUR715-Mil. Bonds Expected to Be Repaid on Nov. 2 DECO 15: Fitch Affirms 'CC' Rating on EUR21.1MM Class E Notes MERCATOR CLO: Moody's Raises Rating on Class B-2 Notes to 'B1' I T A L Y SEAT PAGINEGIALLE: S&P Lowers Corporate Credit Rating to 'CC' N E T H E R L A N D S EUROLOAN CLO: Moody's Raises Rating on Class D Notes to 'Caa1' HAMLET I: S&P Says Assets Rated Below 'CCC-' Decreased SCUTE BALI: S&P Says Assets Rated in 'CCC' Category Decreased WOOD STREET: Moody's Upgrades Rating on Class E Notes to 'B1' R U S S I A RUSSIAN STANDARD: Fitch Assigns 'B+' Rating to Sr. Unsec. Bonds S W E D E N ZOOPARKEN: In Bankruptcy; Fails to Find New Buyers U N I T E D K I N G D O M ALU-FIX CONTRACTS: Goes Into Receivership, Cuts 40 Jobs ASTRUM: William Cook Acquires Firm Out of Administration CATTLES PLC: Files Suit Against PwC Over Accounting Misstatements LIFE: To Close for GBP1 Million Redevelopment LUMINAR GROUP: Liquid Envy Facing Closure Amid Administration LUMINAR GROUP: Administrators Closes Down Pure and Life MISSOURI TOPCO: S&P Lowers Corporate Credit Rating to 'B' NORWICH & PETERBOROUGH: Moody's Aligns Deposit Ratings SCOTSMAN HOTEL: Goes Into Administration, To Sell Hotel SEAFRANCE: Eurotunnel Seeks Assurances on Firm Takeover SOUTHERN PACIFIC: S&P Affirms 'B' Ratings on Two Note Classes SUPERGLASS: Investors Back Restructuring Deal X X X X X X X X * BOOK REVIEW: The Heroic Enterprise ********* ============= I R E L A N D ============= ANGLO IRISH: Former Finance Director Arrested --------------------------------------------- RTE News reports that former finance director of Anglo Irish Bank, now known as the Irish Bank Resolution Corporation, William McAteer has been arrested. Mr. McAteer was arrested on Tuesday at his home in Rathgar in Dublin by detectives from the Garda Bureau of Fraud Investigation, RTE relates. He is being detained at Irishtown Garda Station and can be questioned for up to 24 hours, RTE discloses. It is the second time Mr. McAteer has been arrested in connection with the ongoing investigation into alleged financial irregularities at the bank, RTE notes. As reported by the Troubled Company Reporter-Europe on Oct. 6, 2011, The Irish Times said that a file on Anglo Irish Bank's suspected failure to keep a register of directors' loans was sent by the Office of the Director of Corporate Enforcement to the Director of Public Prosecutions in September. It was the third investigation file in the ODCE's case on the bank to be sent to the DPP, The Irish Times noted. Director of Corporate Enforcement Paul Appleby said his office sent a file relating to Anglo's suspected failure to keep the register dating back to the period before the bank's nationalization in 2009, according to the Irish Times. The ODCE is investigating loans provided to former Anglo chairman Sean FitzPatrick and other Anglo directors, The Irish Times disclosed. 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. ANGLO IRISH: EUR715-Mil. Bonds Expected to Be Repaid on Nov. 2 -------------------------------------------------------------- Irish Examiner reports that some EUR715 million in unguaranteed bonds at Anglo Irish Bank were expected to be repaid on Nov. 2. According to Irish Examiner, the Government insisted it could not renege on the payment because it did not get European approval to do so. The chairman of Anglo, now named the Irish Bank Resolution Corporation, Alan Dukes has insisted that not paying the debts could impact negatively on Ireland's position in the markets. As reported by the Troubled Company Reporter-Europe on Oct. 19, 2011, BBC News related that Anglo Irish Bank has changed its name to Irish Bank Resolution Corporation (IBRC). Anglo Irish merged with Irish Nationwide Building Society this year, BBC recounted. The two lenders received EUR35 billion (GBP30.7 billion; US$48.5 billion) of state capital, BBC disclosed. That was more than half the entire bill for bailing out the country's banks, BBC noted. The two groups have had their boards overhauled, their deposits sold off and are being wound down over the next 10 years, BBC said. 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. DECO 15: Fitch Affirms 'CC' Rating on EUR21.1MM Class E Notes ------------------------------------------------------------- Fitch Ratings has affirmed DECO 15 - Pan Europe 6 Ltd, a commercial mortgage-backed securitization, as follows: -- EUR528.5MM class A1 due July 2014 (XS0307398841) affirmed at 'AAA'; Outlook Stable -- EUR287.5MM class A2 due July 2014 (XS0307400258) affirmed at 'AA'; Outlook Stable -- EUR143.8MM class A3 due July 2014 (XS0307400506) affirmed at 'A'; Outlook Stable -- EUR83.9MM class B due July 2014 (XS0307401140) affirmed at 'BBB-'; Outlook Stable -- EUR85.4MM class C due July 2014 (XS0307405133) affirmed at 'B'; Outlook Negative -- EUR55.8MM class D due July 2014 (XS0307405729) affirmed at 'CCC'; assigned Recovery Rating 'RR5' -- EUR21.1MM class E due July 2014 (XS0307406453) affirmed at 'CC'; assigned Recovery Rating 'RR6' The affirmation reflects the relatively stable collateral performance since the last rating action in October 2010, despite one of the loans failing to repay at its scheduled maturity date. The portfolio benefits from above-average interest coverage, although, in Fitch's view, several of the borrowers are in a position of negative equity, as reflected in the junior notes' low ratings. Approximately 85% of the portfolio is due to mature in 2014, leaving the transaction exposed to refinancing conditions at that point. Legal final maturity being in 2018 provides the servicer with some time and flexibility to work out defaulted loans The loan pool is bar-belled, as implied by the range of ratings on the bonds, and by Stable Outlooks being confined to the four senior tranches. This bar-belling is driven by the quality of the largest loan in the pool, accounting for almost 60% of the portfolio, the super-regional leisure and retail complex centre known as CentrO located in Oberhausen, Germany. The centre is undergoing substantial development works. The extension, scheduled for completion in September 2012, will provide a new three-storey mall to the front of the existing centre. The servicer reports that around 70% of the new space has been pre- let, which is a promising sign. MERCATOR CLO: Moody's Raises Rating on Class B-2 Notes to 'B1' -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Mercator CLO I Plc: Issuer: Mercator CLO I Plc -- EUR276MM Class A-1 Senior Secured Floating Rate Notes due 2023, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa1 (sf) Placed Under Review for Possible Upgrade -- EUR34MM Class A-2 Senior Secured Floating Rate Notes due 2023, Upgraded to Aa3 (sf); previously on Jun 22, 2011 Baa2 (sf) Placed Under Review for Possible Upgrade -- EUR24MM Class A-3 Deferrable Senior Secured Floating Rate Notes due 2023, Upgraded to A3 (sf); previously on Jun 22, 2011 Ba3 (sf) Placed Under Review for Possible Upgrade -- EUR18MM Class B-1 Deferrable Senior Secured Floating Rate Notes due 2023, Upgraded to Baa3 (sf); previously on Jun 22, 2011 B3 (sf) Placed Under Review for Possible Upgrade -- EUR22MM Class B-2 Deferrable Senior Secured Floating Rate Notes due 2023, Upgraded to B1 (sf); previously on Jun 22, 2011 Ca (sf) Placed Under Review for Possible Upgrade Ratings Rationale Mercator CLO I Plc, issued in April 2006, is a multi currency Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly high yield European loans. The portfolio is managed by NAC Management (Cayman) Limited. The reinvestment period ended in July 2011. It is predominantly composed of senior secured loans (92.5%) with some exposure to mezzanine and second lien loans (7.5%). 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 December 2009. 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 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. Moody's notes that the Class A-1 notes have been paid down by approximately 5.6%, or EUR14.8 million, since the rating action in December 2009. The overcollateralization ratios have increased since the rating action in December 2009. As of the latest trustee report dated September 30, 2011, the Class A-2, Class A- 3, Class B-1 and Class B-2 overcollateralization ratios are reported at 128.19%, 118.36%, 111.92% and 104.95%, respectively, versus October 2009 levels of 120.57%, 111.61%, 105.72% and 99.12%, respectively. 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"). Although the reported WARF has increased to 2927 from 2914 between October 2009 and September 2011, 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 EUR369.38 million, defaulted par of EUR3.67 million, a weighted average default probability of 20.74% (consistent with a WARF of 2922), a weighted average recovery rate upon default of 47% for a Aaa liability target rating, a diversity score of 34 and a weighted average spread of 3.11%. 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 92.50% 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, which could negatively impact the ratings of the notes, 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) Deleveraging: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio. Pace of amortization could vary significantly subject to market conditions and this may have a significant impact on the notes' ratings. In particular, amortization could accelerate as a consequence of high levels of prepayments in the loan market or collateral sales by the CLO Manager or be delayed by rising loan amend-and-extent restructurings. Fast amortization would usually benefit the ratings of the notes. (2) Moody's also notes that around 70.6% of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. For risks and stresses associated with credit estimates, please refer to the report titled "Updated Approach to the Usage of Credit Estimates in Rated Transactions" published in October 2009. (3) 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. Realization of higher than expected recoveries would positively impact the ratings of the notes. (4) The deal has significant exposure to non-EUR denominated assets. Volatilities in foreign exchange rate will have a direct impact on interest and principal proceeds available to the transaction, which may affect the expected loss of rated tranches. (5) 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. Extending the weighted average life of the portfolio may negatively impact the ratings of the notes. The principal methodology used in this rating was "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. Moody's modelled 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. This model was used to represent the cash flows and determine the loss for each tranche. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario; and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's analysis encompasses the assessment of stressed scenarios. 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. ========= I T A L Y ========= SEAT PAGINEGIALLE: S&P Lowers Corporate Credit Rating to 'CC' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Italy-based international publisher of classified directories SEAT PagineGialle SpA to 'CC' from 'CCC+'. The outlook is negative. "At the same time, we lowered to 'CCC-' from 'B-' our issue ratings on SEAT's first-lien term debt, revolving credit facility (RCF), and senior secured notes. The recovery ratings on these debt instruments are unchanged at '2', indicating our expectation of substantial (70%-90%) recovery in the event of a payment default," S&P related. "We also lowered to 'C' from 'CCC+' our issue rating on the subordinated notes issued by related entity Lighthouse International Co. S.A. The recovery rating on the notes is revised to '5' from '4', indicating our expectation of modest (10%-30%) recovery in the event of a payment default," S&P said. The downgrade follows SEAT's announcement, on Oct. 28, 2011, that it has decided to defer a coupon payment (about EUR52 million) on the subordinated bonds issued by Lighthouse International that mature in 2014. The payment due date fell on Oct. 31, 2011, and SEAT is using the 30-day grace period provided in the notes' indentures because it is in the process of restructuring its balance sheet. "Under our criteria 'Timeliness of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings,' published Dec. 23, 2010, we would consider the extension of a payment maturity as tantamount to a default if the payment falls later than five business days after the scheduled due date. This is irrespective of the grace period stipulated in the indentures," S&P related. "Although we believe that SEAT's liquidity would be sufficient to cope with upcoming interest payments, with reported balance-sheet cash of approximately EUR149 million, we nevertheless take a strict view on any payment deferral, in line with our criteria. We consider an extension of a due payment of interest as equivalent to a debt restructuring below par by a distressed issuer, and therefore a default," S&P said. "If SEAT were to postpone its due interest payment on Lighthouse International's subordinated notes beyond the fifth business day following the scheduled due payment (that is, beyond Nov. 7, 2011), we would lower the rating on these subordinated notes to 'D' (Default). At the same time, we would lower our long-term corporate credit rating on SEAT to 'SD' (Selective Default) should the company continue to honor its other debt obligations," S&P related. "We also take into account that credit momentum is still biased toward the downside. In our opinion, SEAT's capital structure is likely to become unsustainable, especially in light of the adverse trading environment. Due to SEAT's upcoming debt maturities from June 2012, we believe that management could implement credit-dilutive restructuring measures, which we would view as tantamount to a default under our criteria," S&P said. "Given our view of the continuous pressure on SEAT's revenues and profits, and the status of current discussions with the various stakeholders, we believe that a positive rating action is unlikely over the next few months," S&P said. ===================== N E T H E R L A N D S ===================== EUROLOAN CLO: Moody's Raises Rating on Class D Notes to 'Caa1' -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Euroloan CLO I B.V.: Issuer: Euroloan CLO I B.V. -- EUR65MM Class A2 Notes, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa1 (sf) Placed Under Review for Possible Upgrade -- EUR30MM Class B Notes, Upgraded to Aa1 (sf); previously on Jun 22, 2011 Aa3 (sf) Placed Under Review for Possible Upgrade -- EUR18MM Class C Notes, Upgraded to Baa2 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade -- EUR21MM Class D Notes, Upgraded to Caa1 (sf); previously on Jun 22, 2011 Caa3 (sf) Placed Under Review for Possible Upgrade Euroloan CLO I B.V., issued in October 2008, is a single currency Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly high yield European loans. The portfolio is static and is predominantly composed of senior secured loans. There are 31 different corporate obligors and the Moody's diversity score is 19. Ratings Rationale According to Moody's, the rating actions taken on the notes reflect consideration of credit improvement of the underlying portfolio, an increase in the transaction's overcollateralization ratios and deleveraging of the senior notes since the rating action in May 2011. Furthermore, the actions are also a result of applying Moody's revised CLO assumptions described in "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. Moody's notes that the Class A-1 notes have been paid down by approximately 48.7% or EUR 95.1 million since the rating action in May 2011. As a result of the deleveraging, the overcollateralization ratios have since increased. As of the latest trustee report dated September 2011, the Class A/B , Class C and Class D overcollateralization ratios are reported at 156.1%, 130.5% and 108.9%, respectively, versus March 2011 levels of 127.9%, 116.3% and 104.9%, respectively. The Class E overcollateralization ratio is reported at a level of 96.0%, which is lower than the previously reported level of 97.27%, primarily because of the increase in the Class E interest which has deferred. The Class D and Class E overcollateralization tests are currently still failing. Improvement in the credit quality is observed through a slightly better 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. Securities rated Caa or lower make up approximately 15% of the underlying portfolio versus 22% in May 2011; this CLO reports individual ratings of obligors but does not report any weighted average rating level. The actions also 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 changes to 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. 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 EUR162.3 million, defaulted par of EUR0 million, a weighted average default probability of 22.8% (consistent with a WARF of 4074), a weighted average recovery rate upon default of 46.9% for a Aaa liability target rating, a diversity score of 19 and a weighted average spread of 3.06%. 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 92.3% 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, which could negatively impact the ratings of the notes, 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 divergence in legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Sources of additional performance uncertainties are: (1) Deleveraging: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio. Pace of amortization could vary significantly subject to market conditions and this may have a significant impact on the notes' ratings. In particular, amortization could accelerate as a consequence of high levels of prepayments in the loan market or collateral sales by the liquidation agent or be delayed by rising loan amend-and-extent restructurings. Fast amortization would usually benefit the ratings of the notes. (2) Moody's also notes that around 80.6% of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. Large single exposures to obligors bearing a credit estimate have been subject to a stress applicable to concentrated pools as per the report titled "Updated Approach to the Usage of Credit Estimates in Rated Transactions" published in October 2009. 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. In addition, due to the low diversity of the collateral pool, Moody's CDOROMTM was used to simulate default scenarios then applied as an input in the cash flow model. 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. This model was used to represent the cash flows and determine the loss for each tranche. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario; and (ii) the loss derived from the cash flow model in each default scenario for each tranche. In rating this transaction, Moody's supplemented the model runs by using CDOROM to simulate the default and recovery scenario for each assets in the portfolio. Losses on the portfolio derived from those scenarios have then been applied as an input in the cash flow model.to determine the loss for each tranche. In each scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. By repeating this process and averaging over the number of simulations, an estimate of the expected loss borne by the notes is derived. The Moody's CDOROM(TM) relies on a Monte Carlo simulation which takes the Moody's default probabilities as input. Each asset in the portfolio is modelled individually with a standard multi-factor model reflecting Moody's asset correlation assumptions. The correlation structure implemented in CDOROM is based on a Gaussian copula. As such, Moody's analysis encompasses the assessment of stressed scenarios. 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. HAMLET I: S&P Says Assets Rated Below 'CCC-' Decreased ------------------------------------------------------ Standard & Poor's Ratings Services raised its credit rating to 'AA+ (sf)' from 'AA- (sf)' on Hamlet I Leveraged Loan Fund B.V.'s class A notes. "The rating actions follow our assessment of the transaction's performance and the application of relevant criteria for CLO transactions," S&P related. Hamlet I has been amortizing since the end of its reinvestment period in May 2010. "Since we last reviewed this transaction on Jan. 14, 2010 (see 'Transaction Update: Hamlet I Leveraged Loan Fund B.V.'), the issuer has repaid EUR56.3 million of class A note principal -- representing 25.38% of the original note balance. Our analysis indicates that this has resulted in increased credit enhancement for the class A notes," S&P related. "Our analysis also indicates that the portfolio's credit quality and the overcollateralization test result have improved since our previous review. For instance, the weighted-average spread earned on the portfolio has increased and we have also observed from the latest trustee report a reduction in the assets that we rate below 'CCC-' (i.e., 'CC', 'SD', or 'D')," S&P said. "We have subjected the capital structure to a cash flow analysis to determine the break-even default rate for each rated class. In our analysis, we have used: the reported portfolio balance that we consider to be performing (rated 'CCC-' or above); the principal cash balance; the current weighted-average spread; and the weighted-average recovery rates that we consider appropriate. We have incorporated various cash flow stress scenarios using various default patterns, levels, and timing for each liability rating category, in conjunction with different interest stress scenarios," S&P said. "Taking into account our credit and cash flow analyses and our 2010 counterparty criteria, we consider that the credit enhancement available to the class A notes is consistent with a higher rating than previously assigned. We have therefore raised our rating on the class A notes to 'AA+ (sf)'," S&P said. "The rating was not constrained by the application of the largest obligor default test -- a supplemental stress test that we introduced in our 2009 criteria update for corporate collateralized debt obligations (CDOs) (see 'Update to Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs,' published on Sept. 17, 2009)," S&P related. JP Morgan Chase Bank N.A. (AA-/stable/A-1+), Citibank N.A. (A+/Negative/A-1), and Credit Suisse International (A+/Stable/A- 1) currently provide currency swaps on the non euro-denominated assets in the portfolio. "We have applied our 2010 counterparty criteria and, in our view, the transaction documents do not completely reflect these criteria (see 'Counterparty And Supporting Obligations Methodology And Assumptions,' published on Dec. 6, 2010). Nonetheless, we have analyzed the counterparties' exposure to the transaction and consider that this is sufficiently limited not to affect our rating on the, class A notes if any of the counterparties failed to perform," S&P related. Hamlet I is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. SCUTE BALI: S&P Says Assets Rated in 'CCC' Category Decreased ------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit rating on SCUTE Bali B.V.'s EUR551.40 million outstanding deferrable- interest floating-rate class A notes to 'A+ (sf)' from 'A- (sf)'. "Our rating action follows our assessment of SCUTE Bali's Performance -- considering recent transaction developments -- and the application of our 2010 counterparty criteria (see 'Counterparty And Supporting Obligations Methodology And Assumptions,' published on Dec. 6, 2010)," S&P said. In February 2011, the issuer used available principal cash to: -- Repurchase EUR333.6 million of class A notes at par plus accrued interest; -- Repurchase EUR23.5 million of subordinated notes, and -- Prepay all outstanding amounts under the subordinated advance facility. "As a result, we estimate that the total amount of collateral available to this transaction has decreased to EUR1,021 million from EUR1,580 million since our rating action in February 2010, and credit enhancement available to the class A notes has increased to 45.98% from 44.00%," S&P said. "We have also observed a positive rating migration of the portfolio: Our analysis shows that the proportion of assets rated in the 'CCC' category (i.e., 'CCC+', 'CCC', or 'CCC-') has decreased to 2.32% from 21.95% since February 2010. Currently, we do not consider any asset to be defaulted in our analysis," S&P said. "We note that available principal cash currently represents 21% of the total collateral. The portfolio manager has confirmed that it intends to reinvest the cash into further assets. In line with the portfolio's eligibility criteria, our analysis has assumed that the cash is reinvested into 'B-' rated assets," S&P related. "We have subjected the capital structure to various cash flow scenarios, incorporating different default patterns and interest rate curves, to determine the class A notes' break-even default rate at each rating level. In our analysis, we have used the total collateral balance that we consider to be available to the class A notes, the covenanted weighted-average spread, and the weighted-average recovery rates that we consider to be appropriate," S&P said. "We note that one single obligor represents 11.07% of the portfolio. We have conducted further credit and cash flow analyses, which indicate that a default of this obligor would not affect our rating on the class A notes," S&P said. "In view of the developments, and as a result of our credit and cash flow analyses, we consider that the level of credit enhancement available to the class A notes is now commensurate with a higher rating than previously assigned. We have therefore raised our rating on these notes," S&P said. "Our rating was not affected by either the largest obligor default test or the largest industry default test -- two supplemental stress tests that we introduced as part of our criteria update (see 'Update To Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs,' published on Sept. 17, 2009)," S&P said. BNP Paribas Securities Services (AA-/Stable/A-1+) currently provides custodian and account bank services to the transaction. "We have applied our counterparty criteria and, in our view, it is adequately rated to support the rating on the notes," S&P said. SCUTE Bali is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. WOOD STREET: Moody's Upgrades Rating on Class E Notes to 'B1' ------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Wood Street CLO II B.V.: -- EUR228.12MM Class A-1 Senior Secured Floating Rate Notes, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa1 (sf) Placed Under Review for Possible Upgrade -- EUR40MM Class A-2 Senior Secured Floating Rate Notes, Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa1 (sf) Placed Under Review for Possible Upgrade -- EUR31.08MM Class B Senior Secured Floating Rate Notes, Upgraded to Aa3 (sf); previously on Jun 22, 2011 A3 (sf) Placed Under Review for Possible Upgrade -- EUR25.84MM Class C Senior Secured Deferrable Floating Rate Notes, Upgraded to Baa1 (sf); previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for Possible Upgrade -- EUR25.26MM Class D Senior Secured Deferrable Floating Rate Notes, Upgraded to Ba2 (sf); previously on Jun 22, 2011 B2 (sf) Placed Under Review for Possible Upgrade -- EUR9.135MM Class E Senior Secured Deferrable Floating Rate Notes, Upgraded to B1 (sf); previously on Jun 22, 2011 Caa2 (sf) Placed Under Review for Possible Upgrade -- EUR4.5MM Class Z Combination Notes, Upgraded to Baa3 (sf); previously on Jun 22, 2011 Ba3 (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 Z, 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 Wood Street CLO II B.V., issued in March 2006, is a single currency Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly high yield European loans. The portfolio is managed by Alcentra Limited. This transaction has passed its reinvestment period. It is predominantly composed of senior secured loans. 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 an increase in the transaction's overcollateralization ratios since the rating action in November 2009. 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 (1) standardizing the modeling of collateral amortization profile, and (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. Moody's notes that the Class A-1 and A-2 notes have been paid down by approximately 14.4% or EUR38.5 million since the rating action in November 2009. As a result of the deleveraging, the overcollateralization ratios have increased since the rating action in November 2009. As of the latest trustee report dated September 19, 2011, the Class B, Class C, Class D and Class E overcollateralization ratios are reported at 127.5%, 117.3%, 108.7% and 105.9%, respectively, versus September 2009 levels of 125.4%, 115.4%, 107.1% and 104.4%, respectively. However, these reported overcollateralization ratios did not take into account the EUR34.6 million payments to Class A-1 and Class A-2 on September 29, 2011. The reported WARF has increased from 2739 to 3083 between September 2009 and September 2011. However, this reported WARF overstates the actual deterioration 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 were reduced to 0 compared to EUR7.8 million of the underlying portfolio in September 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 of EUR354.4 million, defaulted par of 0, a weighted average default probability of 22.63% (consistent with a WARF of 3208), a weighted average recovery rate upon default of 46.58% for a Aaa liability target rating, a diversity score of 28 and a weighted average spread of 3.5%. 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 91.44% of the portfolio exposed to senior secured corporate assets would recover 50% upon default. In each case, historical and market performance trends 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, which could negatively impact the ratings of the notes, 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 either positively or negatively by 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 50% of the collateral pool consists of debt obligations whose credit quality has been assessed through Moody's credit estimates. Large single exposures to obligors bearing a credit estimate have been subject to a stress applicable to concentrated pools as per the report titled "Updated Approach to the Usage of Credit Estimates in Rated Transactions" published in October 2009. These large single exposures represent 6% of the performing par. (2) 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 participate in amend-to-extend offerings. Extending the weighted average life of the portfolio may positively or negatively impact the ratings of the notes depending on their seniority with the transactions structure. 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 CDOEdge model. This model was used to represent the cash flows and determine the loss for each tranche. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario; and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's analysis encompasses the assessment of stressed scenarios. 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. =========== R U S S I A =========== RUSSIAN STANDARD: Fitch Assigns 'B+' Rating to Sr. Unsec. Bonds --------------------------------------------------------------- Fitch Ratings has assigned Russian Standard Bank's (RSB, 'B+'/Positive) upcoming issue of senior unsecured bonds series 1 with a nominal value of RUB5 billion, an expected Long-term rating of 'B+(EXP)' and a Recovery Rating of 'RR4'. The bonds' final ratings will be contingent on the receipt of final documentation conforming to information already received. The bonds will have an expected maturity of three years and also provide investors with a put option after one year. RSB's obligations under the notes will rank equally with the claims on existing senior unsecured debt. The proceeds will be used to fund RSB's core business. At end-9M10, RSB was the 19th largest bank in Russia by equity and 31st largest by assets; according to management's estimates, it held 19% market share in credit cards and 9% in POS loans. Roustam Tariko indirectly owns 99.9% of RSB's shares. =========== S W E D E N =========== ZOOPARKEN: In Bankruptcy; Fails to Find New Buyers -------------------------------------------------- The Local reports that the bankruptcy of Zooparken has left three endangered crocodiles homeless and lawyers struggling to find someplace new for them to live. According to the Local, Peter Rimo, a lawyer administering the bankruptcy of Zooparken in Charlottenberg in central Sweden, told the Aftonbladet newspaper, "We can't put them down, they're endangered." The zoo went bankrupt last summer, and since then Rimo and others have been working hard to place animals at other facilities, the Local recounts. Initially, there was hope that new buyers would step forward and purchase the entire zoo, but earlier this month Mr. Rimo gave up hope of finding new owners and has instead focused on figuring out where to move the zoo's collection of exotic animals, the Local notes. Zooparken is a Swedish zoo. =========================== U N I T E D K I N G D O M =========================== ALU-FIX CONTRACTS: Goes Into Receivership, Cuts 40 Jobs ------------------------------------------------------- The Construction Index reports that Alu-Fix Contracts Limited has been placed in administrative receivership, with the loss of 40 jobs. Stephen Cave and Paul Rooney of PricewaterhouseCoopers' Business Recovery Services department in Belfast, have been appointed as joint administrative receivers by the secured lender, according to The Construction Index. "It appears that the company's funding position has deteriorated markedly over recent weeks, culminating in the company lacking sufficient cashflow to continue trading and this led to our appointment. . . . Our immediate objective is to determine the precise financial position and the current status on live contracts. Unfortunately we have had no option but to make the remaining 20 permanent staff in Belfast and 20 permanent staff on GB sites redundant, with immediate effect," the report quoted Mr. Cave as saying. Alu-Fix Contracts Limited is an aluminum installers to the United Kingdom construction industry, specializing in curtain walling, structural glazing, cladding and retail frontages. ASTRUM: William Cook Acquires Firm Out of Administration -------------------------------------------------------- Owen McAteer at The Northern Echo reports that Astrum was acquired out of administration by its former owner William Cook Holdings. Following the deal, no jobs will be lost amongst the general workforce although it emerged that Managing Director Phil Kite, who led the buy-out, will not be remaining with the firm, according to The Northern Echo. The report notes that in June, Astrum said its United Kingdom business had been hit by last October's Strategic Defense and Security Review, which will see an 8% cut in Ministry of Defense (MoD) spending over four years, and it was facing having to make up to 25 redundancies. Mark Clephan of financial services firm Ernst & Young will led the sale of the firm. Headquartered in Stanhope, Astrum is a tank track manufacturer company. It is Weardale's biggest employer with 250 staff. CATTLES PLC: Files Suit Against PwC Over Accounting Misstatements ----------------------------------------------------------------- Helia Ebrahimi at The Telegraph reports that PricewaterhouseCoopers is facing an GBP840 million legal action from Cattles, the sub-prime lender and former client, backed by the Royal Bank of Scotland. Cattles, which saw its shares suspended in 2009, claims PwC is responsible for years of gross accounting misstatements. The company alleges that between 2005 to 2007, PwC was to blame for "a gross misstatement at the heart of the accounts" that ultimately led to numerous profit warnings and left the company close to insolvency, the Telegraph discloses. According to the Telegraph, court documents show that Cattles claims the action against PwC could result in "substantial damages". In a preliminary legal hearing at the High Courts of Justice in October, Judge Henry Bernard Eder awarded Cattles the right to demand PwC produce secret documents relating to past audits of the company, the Telegraph discloses. The pre- disclosure hearing, which cost more than GBP250,000 in fees for barely a four-hour hearing, also gave PwC the right to gain access to the case material currently being assembled by Cattles and its lawyers, Ashurst, the Telegraph notes. It is thought Cattles will file a formal hearing in 2012, the Telegraph states. The Telegraph notes that according to an outline of the case by Judge Henry Bernard Eder, Cattles alleges PwC incorrectly classified loans that were in long-term arrears "which should have been treated as impaired". When the problem was discovered, Cattles, as cited by the Telegraph, said it was forced to report a loss in 2008 of GBP745 million. It also restated earnings from the previous year to a loss of GBP98.5 million, from a profit of GBP165.3 million, the Telegraph says. The case is already under investigation by the Accounting & Actuarial Disciplinary Board and comes at a time when the entire audit industry is facing a regulatory shake-up, the Telegraph notes. Cattles plc -- http://www.cattles.co.uk/-- is a financial services company engaged in providing consumer credit to non- standard customers in the United Kingdom and the provision of debt recovery services to external clients and the Company's consumer credit business. Cattles also provides working capital finance for small and medium size businesses. LIFE: To Close for GBP1 Million Redevelopment --------------------------------------------- Rachel Ryan at The Westmorland Gazette reports that the Lakeland Initiative and Wellbeing center (LIFE)'s new owners Hazelwood Wellness Company, who stepped in to take over in May, have put plans together to breathe life into the old center thanks to GBP1 million in funding. (LIFE) at Troutbeck Bridge went into administration in May after struggling to pay costly energy bills and will close in December, according to The Westmorland Gazette. However, the report relates that there is concern among locals that the 'valuable' facility will be closed and that another will fail to open. The Westmorland Gazette notes that the facility, which costs GBP12,000 a month to run, continued to operate on reduced hours throughout the summer thanks to the fund-raising efforts of Friends of Troutbeck Pool and a controversial GBP12,000 hand-out from South Lakeland District Council. David Howell, a former director of LIFE and now a director with Hazelwood Wellness Company, said that GBP1 million had already been secured by the company to build a new pool and a gym, the report discloses. Meanwhile, The Westmorland Gazette adds that Bill Smith, of Windermere Town Council, said that there was concern locally about whether the pool would re-open after it closed. Lakeland Initiative and Wellbeing center (LIFE) is a Lake District pool and fitness center. LUMINAR GROUP: Liquid Envy Facing Closure Amid Administration ------------------------------------------------------------- thisissussex.co.uk reports that Liquid Envy is facing closure of its operation after its parent company Luminar Group Holding PLC went into administration. Liquid Envy, which opened in July 2006 in Station Way, employs approximately 45 people and has a capacity of 2,000, according to thisissussex.co.uk. "Luminar's portfolio of nightclubs will continue to trade as a going concern as we seek a buyer for the business. . . . While a strategic review of the portfolio will be undertaken, we are keen to stress to our customers planning to spend nights out in the venues this weekend and going forward that it is very much business as usual. . . . The nightclub and bar sector is an extremely challenging and competitive sector and Luminar has struggled against a backdrop of increased competition and reduced disposable income from its customer base," the report quoted joint administrator Alan Hudson from Ernst and Young as saying. thisissussex.co.uk notes that the prospect of the club closing if a buyer cannot be found has left some worried about the impact this would have on the town's night-time economy. As reported in the Troubled Company Reporter on Oct. 28, 2011, MK News said that Luminar Group 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 related that the company's shares were temporarily suspended from trading when the news was announced. 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. LUMINAR GROUP: Administrators Closes Down Pure and Life ------------------------------------------------------- Neil Phillips at Bucks Free Press reports that Pure and Life on Mars nightclub's operations has been shut down by administrators cutting 20 jobs in the process. The club is set to be handed back to its landlords, according to Bucks Free Press. The report relates that Pure and Life on Mars is one of 11 clubs that will close after Luminar Group went into administration last month. Bucks Free Press notes that the 11 closures will result in the redundancies of around 300 employees in total. The other clubs set to close are venues in Brighton, Bury St Edmunds, Basingstoke, Wigan, Hemel Hempstead, Northampton, Mansfield, Redditch, Sunderland and Swindon. As reported in the Troubled Company Reporter on Oct. 28, 2011, MK News said that Luminar Group 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 related that the company's shares were temporarily suspended from trading when the news was announced. Pure and Life on Mars is a nightclub in High Wycombe. 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. MISSOURI TOPCO: S&P Lowers Corporate Credit Rating to 'B' --------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'B' from 'B+' its long-term corporate credit rating on Missouri TopCo Ltd., the parent company of U.K.-based clothing retailer Matalan. The outlook is stable. "At the same time, we lowered our issue rating on the GBP250 million senior secured notes issued by Matalan Finance Ltd. to 'BB-' from 'BB', and our issue rating on Matalan Finance's GBP225 million senior unsecured notes to 'CCC+' from 'B-'," S&P said. "The downgrades reflect our view that deterioration in Matalan's operating performance in a challenging U.K. retail market has caused its financial metrics to decline to what we categorize as highly leveraged. We foresee the difficult trading environment continuing over the medium term, with Matalan maintaining its credit metrics at their current level," S&P related. Matalan has been unable to implement its growth strategy due to low consumer confidence, relatively high unemployment, and inflation reducing its customers' discretionary spending. "As a consequence, we have revised our base-case scenario for the next two years in line with these trends. We now anticipate that full- year reported EBITDA to Feb. 28, 2012, will be 20%-25% lower than our previous forecast of GBP140 million," S&P said. According to Matalan's quarterly financial results to Aug. 27, 2011, reported EBITDA in the past 12 months was GBP118 million, on revenues of GBP1.1 billion. For the financial year to Feb. 28, 2012, Matalan's revenues will remain about GBP1.1 billion, with reported EBITDA of about GBP105 million. "As a result of the reduction in EBITDA, we anticipate that Matalan's Standard & Poor's-adjusted debt to EBITDA will remain above 5.0x over the next 12 months, which we view as equivalent to a highly leveraged financial risk profile," S&P related. "In our opinion, Matalan should be able to maintain the financial flexibility necessary to service its highly leveraged debt structure even in the event of prolonged pressure on its gross margins. Despite the difficult macroeconomic environment for U.K. retailers, we anticipate that Matalan will be able to generate positive free operating cash flow (FOCF) and sustain adjusted EBITDA interest coverage of more than 1.5x," S&P said. "We could lower the rating if Matalan's operating performance were to deteriorate further and adjusted EBITDA interest coverage were to fall to less than 1.5x. This would primarily result from reported EBITDA falling to less than GBP100 million, or from a significant operating cash outflow caused by mismanagement of working capital," S&P related. A positive rating action would be linked to growth in revenues from new store openings and improving margins on the back of lower cotton prices. Rating upside would depend on Matalan sustaining positive FOCF of about GBP50 million and adjusted debt to EBITDA comfortably within the range of 4.5x-5.0x. NORWICH & PETERBOROUGH: Moody's Aligns Deposit Ratings ------------------------------------------------------ Moody's aligned the long-term deposit ratings of Norwich & Peterborough Building Society ("N&P") with the long-term deposit ratings of Yorkshire Building Society ("YBS") at Baa2 (from Ba3), following the legal merger of these two entities. This concludes the rating for review on the long-term deposit ratings of N&P initiated on the 7th of October. Ratings Rationale At the same time, all ratings of N&P will be withdrawn as the society will cease to exist as a separate legal entity on November 1 following the completion of the merger. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. SCOTSMAN HOTEL: Goes Into Administration, To Sell Hotel ------------------------------------------------------- Mary Vancura at Business Sale reports that Scotsman Hotel is likely to be put up for sale, after the company behind the landmark venue, Scotsman Hotel Group, went into administration. The Scotsman newspaper reported that Scotsman Hotel Group was placed into administration by its bankers at Lloyds after accumulating debts reported to be in the region of GBP50 million, according to Business Sale. Business Sale says that the day-to-day operations of the hotel are not currently being affected by the administration process, and it is reported to be "trading normally". Headquartered in Edinburgh, Scotsman Hotel was built in 1905 and specifically designed to dominate the Edinburgh skyline and features incredible views of the city's most famous landmarks. SEAFRANCE: Eurotunnel Seeks Assurances on Firm Takeover ------------------------------------------------------- Elena Berton at Reuters reports that Eurotunnel has asked the French competition authority to ensure the cross-Channel transport market will remain fair in the eventual takeover of SeaFrance. A French court on Nov. 16 will select a buyer for SeaFrance, which went into receivership last year, from a number of proposals, according to Reuters. The report relates that these include a joint plan by French shipping company Louis Dreyfus Armateurs and Danish ferry operator DFDS to take over the troubled company and merge it with their Channel ferry lines. Reuters notes that an unnamed Eurotunnel spokeswoman said the company has not complained against any prospective buyers, but that it wanted to ensure the cross-Channel market remains "healthy and fair." Reuters, citing French daily Le Figaro, says that Eurotunnel lodged a complaint on Oct. 26 saying the offer by Louis Dreyfus and DFDS would be anticompetitive because it could benefit from state aid. An unnamed source said that Louis Dreyfus' ferry operator LD Lines could obtain EUR300 million (US$410 million) worth of aid as part of its plan to buy SeaFrance assets, Reuters notes. Reuters recalls that European Union antitrust regulators in October rejected a restructuring plan for SeaFrance saying the overhaul breached EU rules against state aid of private companies. SeaFrance is a cross-Channel ferry operator. The company went into receivership in 2010. SOUTHERN PACIFIC: S&P Affirms 'B' Ratings on Two Note Classes ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its credit ratings on all notes issued by Southern Pacific Securities 05-2 PLC. "The rating actions follow our credit and cash flow review of the most recent information that we have received for this transaction. Our analysis showed an improvement in collateral performance, and a generally positive trend in key performance indicators," S&P said. Following a series of reserve fund draws in 2009, the reserve fund has topped up to its required, nonamortizing amount of GBP2.55 million (3.58% of the current note balance). This, along with deleveraging, has led to credit enhancement for the class B notes increasing to 69.79%, from 9.75% at closing. Levels of severe delinquencies, while historically high, have recently improved -- falling to 26.89%. Repossessions have fallen and stabilized, with growth in cumulative losses also slowing. "We believe the transaction is performing as we anticipated and that the current ratings appropriately address the risk to the notes; thus, we have affirmed our ratings. We will continue to monitor future developments in the transaction," S&P said. Southern Pacific Securities 05-2 is a U.K. nonconforming residential mortgage-backed securities transaction securitizing mortgages originated by Southern Pacific Mortgage and Southern Pacific Personal Loans. Ratings List Class Rating Southern Pacific Securities 05-2 PLC GBP310.75 Million, EUR145.8 Million, and $205 Million Mortgage-Backed Floating-Rate Notes Ratings Affirmed B1a AA- (sf) B1c AA- (sf) C1a A (sf) C1c A (sf) D1a BBB- (sf) E1c B (sf) E2c B (sf) SUPERGLASS: Investors Back Restructuring Deal --------------------------------------------- Perry Gourley at The Scotsman reports that Superglass on Oct. 30 said it had received support from investors for a 1p-a-share equity issue as part of a restructuring deal. In September, the company, which has seen its market value plummet in recent months after an expected sales boost from a government energy efficiency scheme failed to materialize, warned it may not be able to meet the terms of its bank facilities if the restructuring did not go ahead, the Scotsman discloses. According to the Scotsman, Superglass, which has debts of more than GBP17.7 million, said it had reached an agreement in principle with its banker, Clydesdale Bank, to convert a proportion of the debt into shares or securities convertible into shares. It said the restructuring would also incorporate a substantial equity issue to finance the modernization of its plant and fund operating efficiency improvements, the Scotsman notes. In a statement issued to the stock market after it closed on Oct. 30, the firm said "significant progress" had since been made on the restructuring plans and that equity investors were supportive of a proposed share issue at an indicative price of 1p per share, the Scotsman relates. "The board is in the process of agreeing final amendments to the formal documentation required to support the transaction and the directors expect to announce full terms of the proposed equity issue and the restructuring shortly," the Scotsman quotes the firm as saying. Superglass is a Stirling-based insulation firm. =============== X X X X X X X X =============== * BOOK REVIEW: The Heroic Enterprise ------------------------------------ Author: John Hood Publisher: Beard Books, Washington, D.C. 2004 (reprint of book published by The Free Press/Division of Simon and Schuster in 1996). 246+xx pages Price: $34.95 trade paper ISBN 1-58798-246-3 Hood writes as a counterbalance to ideas that business should be expected to contribute to the common good along the lines of charities, say, or public health. He writes too against the highly partisan, pernicious perspective that business activity is antisocial and disruptive which at times gains some degree of credibility. Critiques of business have been around as long as commerce and business have been around. These come usually from religious or political zealots seeking dictatorial hold over all significant kinds of human activity and enterprise. In this work, Hood aims to counterbalance latter-day versions of such critiques arising in American society. The counterculture, antiestablishment 1960s was a time when such critiques were particularly strong. They have moderated since, yet remain a persistent chorus which influences politics and imagery and public affairs of business. Hood does not aim to stifle or eliminate debate about the effects of business on society or how business should engage in business. What he aims for is dismissing once and for all myopic and almost utopian conceptions about business and related erroneous purposes and values of it. Such conceptions are worrisome to businesspersons not because they believe they have any foundation, but because they waste resources and energy in having to continually correct them so business can function properly. And to the extent such myopic conceptions are believed or entertained by the public, they hamper the public and politicians in working out policies by which the greatest benefits of business can be reaped by society. The author clarifies the place and role of business by contrasting business with other parts of society. A standard, self-evident tenet of sociologists going back to the time of Plato is that society is made up of different parts fulfilling different roles for the varied needs of society and so that a society will function smoothly and survive. Business is distinguished from government and philanthropy. "Businesses exist to make and sell things," whereas by contrast "governments exist to take and protect things [and] charities exist to give things away." The social responsibility for each category of institution is inherent in its purposes and activities. For example, businesses alone cannot solve environmental problems. Whatever problems which can be attached to business are related to government policies and business's operations to satisfy consumer interests. Hence, business alone cannot solve environmental problems, and should not be expected to. Critics requiring that business solve environmental problems without similarly requiring changes in government policies and consumer interests are shortsightedly and unreasonably tarnishing business while not making any relevant or productive arguments for dealing with environmental problems. In elucidating business's proper place in and contributions to society, Hood is not unmindful that some businesses fail to fulfill their role in good faith and beneficially. But instead of criticizing business fundamentally, he proffers questions critics can ask before targeting particular businesses. Two of these are "Are corporations obtaining their profits through force or fraud?," and "Are corporations putting investments at their disposal to the most economically productive use?" Hood's perspective in support of business against unfair and irrelevant criticisms is based on the acknowledgment that business is operating productively, for the common good, and is open to cooperative activities with other parts of society in trying to resolve common problems. "The Heroic Enterprise" is not an argument for business -- for as a fundamental aspect of any society, business does not need an argument to justify it. The book mostly takes the approach of reviewing why business is necessary and therefore must be naturally, easily accepted -- namely, because of the manifold benefits business provides for society and because it along with good government and respectable morals has been a primary engine for the betterment of human life. John Hood has much experience in the media and communication as a syndicated columnist, TV commentator, and radio host. Author of three books and many articles for national publications such as the Wall Street Journal, he is President and Chairman of the John Locke Foundation in North Carolina. ********* 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 * * *