/raid1/www/Hosts/bankrupt/TCREUR_Public/111109.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, November 9, 2011, Vol. 12, No. 222
Headlines
A U S T R I A
ERSTE GROUP: Moody's Reviews Ba1 (hyb) Junior Subordinated Rating
B E L A R U S
* BELARUS: Moody's Confirms Bond Ratings at B3; Outlook Negative
D E N M A R K
* DENMARK: Businesses Want Banks to Look for Credit Options
F I N L A N D
M-REAL CORP: S&P Affirms 'B-/B' Issuer Ratings; Outlook Stable
F R A N C E
LEJABY: Goes Into Judicial Administration for Six Months
QUINTA INDUSTRIES: Put Under Bankruptcy Protection
G E R M A N Y
CART 1: S&P Affirms Rating on Class E Notes at 'CCC-'
HECKLER & KOCH: Moody's Confirms Corp. Family Rating at 'Caa1'
* GERMANY: Business Insolvencies Down 2.9% in August 2011
H U N G A R Y
* HUNGARY: Mandatory Liquidations Up 15.5% in October 2011
I R E L A N D
MCSWEENEY PHARMACY: Allied Irish Banks to Oppose Examinership
MR BINMAN: Receiver Won't Cut Jobs; Operations to Continue
SHEFFS LTD: Secures Ongoing Court Protection From High Court
I T A L Y
F-E GOLD: Fitch Affirms Rating on EUR9-Mil. Notes at 'BBsf'
K A Z A K H S T A N
ASTANA FINANCE: Kenes Rakishev Acquires Insurance Unit
L U X E M B O U R G
BREEZE THREE: S&P Lowers Rating on Class A Notes to 'B+'
CRC BREEZE: S&P Affirms 'C' Rating on Class B Notes
N E T H E R L A N D S
EMEA CMBS: Moody's Lowers Rating on Class D Notes to 'Caa2'
NORTH WESTERLY: Moody's Raises Ratings on 2 Note Classes to 'B2'
N O R W A Y
MARINE GEOPHYSICAL: S&P Assigns 'BB' Rating to $300-Mil. Notes
S L O V E N I A
KONSTRUKTOR VGR: Maribor Court Launches Receivership
S P A I N
IM BANCO POPULAR: DBRS Assigns 'B' Rating to Series B Notes
IM FTPYME: DBRS Assigns 'B' Rating to Series B Notes
S W E D E N
SAAB AUTOMOBILE: GM Won't Allow Chinese Firms to Use Technology
T U R K E Y
TURK EXIMBANK: Moody's Assigns 'Ba1' Senior Unsecured Debt Rating
U N I T E D K I N G D O M
AC YULE: Goes Into Administration, 300 Jobs at the Risk
EUROSAIL-UK: Moody's Confirms Rating on GBP63M A2c Notes at 'Ba2'
GEMGARTO 2011-1: S&P Assigns 'BB+' Rating to Class B2 Notes
LEARNING & SKILLS: Goes Into Administration on Income Decline
LUMINAR GROUP: The Gallery to Remain Open Despite Administration
MAX TWO: S&P Affirms 'B-' Rating on EUR100-Mil Sr. Secured Notes
PREMIER FOODS: Gets Extra Breathing Space From Banks
RANGERS FC: Countdown to HMRC's GBP49MM Tax Case Verdict Begins
WAVENEY PUB: Goes Into Administration, Cuts 14 Jobs
* UK: Number of Pub Sector Business Failures Increases
X X X X X X X X
* Three U.S. Corp Defaults Last Week Raise S&P Tally to 39
*********
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A U S T R I A
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ERSTE GROUP: Moody's Reviews Ba1 (hyb) Junior Subordinated Rating
-----------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade
Erste Group Bank AG's standalone bank financial strength rating
(BFSR) of C- (mapping to Baa1 on the long-term scale) and the A1
long-term debt and deposit ratings. Consequently, several
subordinated and junior subordinated debt ratings were placed on
review for downgrade. The P-1 short-term rating was affirmed. A
full list of affected ratings is listed at the end of this press
release.
The review for downgrade on the BFSR follows the bank's report of
a major loss that partly stems from previously undisclosed credit
default swap (CDS) exposures. Accordingly, the review will focus
on Erste's risk management, internal controls and financial
transparency as well as the risk-adjusted profit generating
capacity of its business model. The review for downgrade of the
A1 long-term ratings follows the review on the BFSR.
As part of the re-assessment of the C- BFSR, a lower mapping of
the standalone credit strength to Baa2 from Baa1 is likely, while
a move of the BFSR below the C- range cannot be ruled out
entirely. Consequently, the rating agency notes that a one-notch
downgrade of the long-term debt and deposit ratings is the most
likely outcome of the rating review.
Ratings Rationale
The decision to review Erste's C- BFSR for downgrade was prompted
by Moody's concerns about the bank's risk appetite as well as its
related risk-management policies, internal controls and financial
transparency following an announcement on October 10, 2011 of
extraordinary charges leading to a net loss of EUR1.5 billion in
Q3 2011. Particularly relevant is the disclosure of a EUR5.2
billion net CDS portfolio (protection sold), which appears to be
unrelated to Erste's core business operations and had previously
been recognized at cost, rather than at fair value. Erste also
announced the harmonization of IT tools requiring the restatement
of certain income-recognition accounting, raising questions about
the uniform application of appropriate risk-management tools as
well as financial transparency on a group-wide basis.
Both changes may mean that earlier qualitative assumptions that
Moody's had assumed are no longer consistent with the C- BFSR and
the Baa1 standalone credit assessment.
At the same time, Moody's acknowledges the bank's announcement --
during its Q3 2011 earnings call -- that it has reduced its net
CDS exposure to EUR300 million as of October 27, 2011 through
various measures such as novation, close-outs and -- to a much
lesser extent -- hedges. It is Moody's understanding that these
actions have effectively reduced the contingent liability
relating to these derivatives contracts and related earnings
volatility. However, the restatement of the CDS exposures had a
negative impact of approximately EUR460 million after tax. This,
combined with the other extraordinary charges (predominantly
goodwill write-offs for its Hungarian and Romanian businesses),
required the bank to postpone the planned repayment of EUR1.2
billion in government-provided participation capital. This could
limit the bank's strategic and financial flexibility for a longer
period than Moody's previously expected. In the absence of
previously anticipated meaningful profit generation for the full-
year 2011, Erste's 7.4% core Tier 1 capital ratio (excluding
government participation capital) as per September 30, 2011 is
weak compared with other banks' capital ratios rated at the C-
BFSR level. In Moody's view, the comparative weakness increases
the pressure on Erste to make a rapid return to its earlier
earnings-generation capacity to bolster its regulatory capital
levels.
Erste's A1 long-term ratings currently benefit from the very high
support assumptions as a systemically relevant bank in Austria
which results in three notches of uplift from the bank's Baa1
standalone credit strength. Accordingly, the long-term rating is
expected to move in tandem with Erste's standalone risk
assessment.
WHAT COULD CHANGE THE RATING UP/DOWN
There is currently no upward rating pressure as expressed by the
review for downgrade.
In addition to the factors described above, the bank's BFSR could
come under downward rating pressure due to (1) a stalled economic
recovery in Eastern Europe resulting in additional substantial
credit charges, beyond levels anticipated by Moody's, (2) an
extended period of weak earnings and hence lower internal capital
generation, and (3) weakened capitalization levels as a result of
strong asset growth in Eastern Europe.
The bank's long-term ratings could come under downward pressure
in case of a weakening in its intrinsic financial strength, as
well as adverse changes in the systemic support assumptions
currently factored into Erste's ratings. However, Moody's does
not consider this likely at present.
RATINGS AFFECTED
Erste Group Bank AG:
These ratings are on review for downgrade:
-- C- bank financial strength rating mapping to Baa1 on the
long-term rating scale
-- A1 long-term bank deposit and senior unsecured debt ratings
-- A2 subordinated debt ratings
-- Ba1 (hyb) junior subordinated rating (cumulative)
-- Ba2 (hyb) junior subordinated rating (non-cumulative)
-- Ba1 (hyb) non-cumulative preferred securities
These ratings were affirmed:
-- Prime-1 short-term ratings
PRINCIPAL METHODOLOGIES
The principal 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.
Erste Group Bank AG is headquartered in Vienna, Austria. At
September 30, 2011 it had total assets of EUR216 billion and
reported a net loss of EUR973 million for the first nine month of
2011.
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B E L A R U S
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* BELARUS: Moody's Confirms Bond Ratings at B3; Outlook Negative
----------------------------------------------------------------
Moody's Investors Service has confirmed at B3 the foreign- and
local-currency government bond ratings of Belarus. The country's
B3 foreign-currency bond ceiling and the Caa1 foreign-currency
bank deposit ceiling were also confirmed. The outlook on the
ratings is negative. In addition, Moody's has confirmed the
local-currency bond ceiling at Ba3 and downgraded the local-
currency bank deposit ceiling to B1 from Ba3.
The actions conclude a review for possible downgrade initiated in
July 2011. The confirmation of the government bond ratings was
prompted by:
(1) The potential narrowing of the country's account deficit due
to currency depreciation
(2) The possibility of Belarus obtaining near-term financing for
the deficit
(3) Incremental efforts (such as exchange rate liberalization) to
rebalance the macro-economic framework
The negative outlook on the rating reflects the following
concerns: (i) a likely significant slowdown in economic growth in
2012 will worsen profitability and asset quality in the banking
system, increasing the government's contingent liabilities; (ii)
the relatively low levels of foreign currency reserves leave
Belarus's balance of payments vulnerable to event risk; and (iii)
political risks.
RATING RATIONALE
The 65-70% depreciation of the Belarusian ruble against the US
dollar in 2011 could help narrow the country's current account
deficit to US$3.5 billion - US$4 billion in 2012 from an
estimated US$6 billion in 2011. This would considerably reduce
the country's external financing requirements in 2012. In the
near term, Moody's expects these financing requirements to be met
by disbursements from the Eurasian Economic Community (EurAsEc),
continued energy subsidies from Russia and privatization
revenues.
However, until authorities substantially raise international
reserve levels, secure medium-term external financing and
rebalance the economy away from credit driven growth, Belarus
will remain susceptible to domestic and external shocks. Moody's
believes that an International Monetary Fund (IMF) agreement
would alleviate external financing risk while supporting the
establishment of a more balanced macro-economic policy framework.
However, at this time, the prospects of an IMF agreement are
uncertain.
Exchange rate depreciation has raised the ruble value of foreign-
currency debt, bringing the external debt to gross domestic
product (GDP) ratio to 70% in 2011, from 25% in 2008. With the
change in exchange rate regime from fixed to managed float in
October, the ruble may depreciate further over the next year.
This will substantially raise the external debt repayment burden,
heightening repayment risk.
On the other hand, the market-based determination of the exchange
rate will signal the true cost of additional foreign borrowing to
Belarusian borrowers, which the fixed-exchange rate did not.
Therefore, liberalizing the exchange rate removes one of the
regulatory distortions that underpinned Belarus's dependence on
external credit for growth.
While loose credit drove GDP growth of 7.9% over the first three
quarters of 2011, Moody's anticipates that growth will slow in
2012 on the back of ruble devaluation, external liquidity
constraints, producer price inflation, creditor restrictions on
fiscal stimulus and a less benign global growth environment.
Indeed, the main driver of the one-notch downgrade of Belarus's
local-currency bank deposit ceiling is Moody's assessment that
lower growth prospects will pose a risk to bank profitability and
asset quality. In an adverse situation, the government may be
able to support banks through capital infusions of local
currency. However, foreign-currency reserve levels are too low to
meet banks' foreign-currency deposit and external debt
obligations. As the Caa1 foreign-currency bank deposit ceiling
suggests, the risk of a freeze on foreign-currency bank deposits
remains high.
RATIONALE FOR NEGATIVE OUTLOOK
The negative outlook on the ratings indicates three main concerns
held by Moody's.
First, at its current rate of 35%, the central bank's benchmark
refinancing rate is negative in real terms. If inflation, which
stood at 79.6% in September, and credit growth remain high, the
current account deficit will not correct to the extent required
to alleviate balance of payments pressures.
Second, the large scale of the country's short-term debt ($14.3
billion) relative to reserves leaves external finances vulnerable
to refinancing risk. It should be noted that most of this short-
term external debt consists of trade credits and bank
liabilities and has generally been rolled over in the past.
Third, the ability of Belarusian authorities to maintain
political stability will be tested in 2012, as household incomes
decline in real terms because of the impact of devaluation and
inflation. Meanwhile, EurAsian Economic Community (EurAsEc)
loan-related restrictions on the country's budget deficit may not
allow for the compensation of this decline via increased
subsidies.
WHAT COULD CHANGE THE RATING UP/DOWN
A downgrade could be triggered by (i) Belarus's failure to
maintain reserve levels, secure medium-term external financing or
take additional steps to rebalance the economy; (ii) an acute
growth downturn, which precipitates a prolonged and severe
banking crisis; or (iii) a worsening political situation that
jeopardizes growth and repayment capacity.
A reconsideration of the negative outlook on the government bond
ratings would depend upon (i) Belarus securing sufficient
external financing to raise reserve levels and meet repayment
obligations over the medium term; (ii) the Belarusian economy
avoiding a major and prolonged deterioration in growth; (iii) a
shift in policy focus that removes existing distortions while
raising international competitiveness; and (iv) a stable domestic
and foreign policy outlook, including relations with external
creditors.
PREVIOUS RATING ACTION & METHODOLOGY USED
The previous rating action on Belarus was implemented on 21 July
2011 when Moody's downgraded the government's bond rating to B3
from B2, the foreign currency bond and bank deposit ceilings to
B3 and Caa1(from B1 and B3 respectively), and the local currency
bond and bank deposit ceilings were downgraded to Ba3 from Ba1.
In addition, the ratings were placed under review for downgrade.
The principal methodology used in determining the rating of
Belarus was "Moody's Sovereign Bond Methodology", which was
published in September 2008.
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D E N M A R K
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* DENMARK: Businesses Want Banks to Look for Credit Options
-----------------------------------------------------------
Frances Schwartzkopff at Bloomberg News reports that Danish firms
are entreating banks in the Nordic country to step up their
efforts to find funds that can be channeled into corporate
lending as a lack of credit threatens to choke business, kill
jobs, and trigger a recession.
According to Bloomberg, the Copenhagen-based Confederation of
Danish Industry said that the banks aren't making proper use of
less standard funding sources, ignoring a possible way out of the
crisis.
Lenders may shun a DKK400 billion (US$74 billion) central bank
liquidity line to escape the stigma of relying on such support,
Bloomberg says, citing Sydbank A/S and Spar Nord Bank A/S.
Nykredit A/S said in August a pooled funding vehicle to help
smaller lenders attract investors by spreading risk fell through,
Bloomberg recounts. Thomas Soerensen, director of SMEs at the
Confederation of Danish Industry, as cited by Bloomberg, said
that with funding options disappearing, banks should make better
use of the Luxembourg-based European Investment Bank, which
specializes in loans designed to support small- and medium-sized
enterprises.
Finance Minister Bjarne Corydon signaled last week that Denmark's
banks are unlikely to get more state aid after receiving four
rescue packages since 2008, Bloomberg discloses. Standard &
Poor's said in July that without the funds needed to stay afloat,
Denmark risks more bank defaults, Bloomberg notes.
Only two Danish lenders have tapped the EIB for funds since 2008:
Spar Nord Bank and Rinkjoebing Landbobank A/S, Bloomberg
discloses. Most banks are shrinking their balance sheets by
dumping assets and denying borrowers credit, Bloomberg states.
A quarter of Danish companies surveyed for a June report by the
confederation said they had limited, or no, financing options in
the second quarter, according to Bloomberg. The confederation,
as cited by Bloomberg, said that lending to businesses has
slumped 25% since the start of the credit crisis in 2008.
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F I N L A N D
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M-REAL CORP: S&P Affirms 'B-/B' Issuer Ratings; Outlook Stable
--------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
Finland-based forest products company M-real Corp. (M-real) to
stable from positive. At the same time, the long- and short-term
corporate credit ratings were affirmed at 'B-' and 'B'.
"In addition, we affirmed the issue ratings on the senior
unsecured debt at 'B-'. The recovery rating on this debt is '4',
indicating our expectation of average (30%-50%) recovery in an
event of payment default," S&P said.
"The outlook revision primarily reflects our opinion that the
likelihood of an upgrade has materially declined. We base this
view on a combination of a weakening performance in the second
half of 2011, our expectations of cash restructuring outlays over
the coming two quarters, and growing uncertainty about market
conditions over the near term. In addition, the group faces a
refinancing need in April, 2013, which could put pressure on its
liquidity profile unless resolved by the end of the first quarter
of 2012," S&P related.
"Over the short term, we believe that increased macroeconomic
uncertainties will continue to put pressure on the group's pulp
and paper operations. However, we expect the consumer packaging
division to balance these negative effects to a degree. Demand
for the group's packaging products has remained relatively
resilient, and the group has secured a large number of contracts
at stable or slightly higher price levels for 2012 compared with
2011," S&P said.
"In addition, we assume that ongoing and recently announced
restructuring measures will impact both profitability and cash
flows negatively over the near term. At the same time, we
recognize that the measures could result in material
improvements, primarily at the end of 2012 and in 2013," S&P
related.
"In our base case, we believe that M-real can maintain a ratio of
funds from operations to debt of about 10% (about 10% in the 12
months to September 2011), a level which we consider commensurate
with the rating. Prospects for meaningful free operating cash
flow generation have deteriorated in our view, primarily at the
end of 2011 and beginning of 2012. Some upside exists after that,
but this is highly dependent on market conditions and successful
restructuring," S&P said.
"Downside risk to our forecast relates primarily to market
conditions. In a downside scenario, we think that pressure on
demand and selling prices could increase from its current level.
Lower input costs and, potentially, a working capital release,
may provide a cushion against this scenario, in our view," S&P
stated.
The ratings continue to reflect M-real's weak business risk
profile, including below-average operating efficiency. They also
reflect the company's highly leveraged financial risk profile,
with weak credit measures and limited free operating cash flow
generation. These factors are partly offset by M-real's sizable
shares of the European paperboard and uncoated fine paper
markets, past and ongoing operating and strategic initiatives,
and adequate liquidity profile.
"The stable outlook reflects our assumption that the group's
paperboard operations will provide a cushion against the negative
effects of weaker market conditions and cash restructurings in
the pulp and paper segments. It also reflects the prospects of
material cost savings over the near to medium term, neutral to
moderately positive free operating cash flow generation, and
a maintained adequate liquidity profile," S&P added.
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F R A N C E
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LEJABY: Goes Into Judicial Administration for Six Months
--------------------------------------------------------
Knitting Industry reports that insolvent company Lejaby has been
put into judicial administration by a Lyon court for a period of
six months, to allow the company to continue to trade while it
restructures its business and prepares a recovery plan.
Just-Style.com news said that Lejaby's debts to its suppliers
will be frozen while workers' salaries will be paid through
insurance protection, under the terms of the court's judgment,
according to Knitting Industry. The report, citing Just-
Style.com news, relates that Lejaby, which closed three of its
four French production sites at the end of last year, posted a
loss of EUR2.7 million for the 2010/2011 financial year.
Knitting Industry notes that restructuring is said to have
involved almost 200 jobs cuts and the transfer of production to
North Africa. "Lejaby put its difficulties down to a significant
shrinking in the multi-brand retailer channel, the main outlet
for its products and whose global turnover has fallen by 25%
between 2007 and 2010," Just-Style.com said, Knitting Industry
relates.
Lejaby is a French lingerie manufacturing brand.
QUINTA INDUSTRIES: Put Under Bankruptcy Protection
--------------------------------------------------
Elsa Keslassy at Variety reports that Tarak Ben Ammar's Quinta
Industries has been placed under France's equivalent to
Chapter 11 bankruptcy protection by a French court.
According to Variety, Mr. Ben Ammar said he would present a plan
aimed at safeguarding jobs to the company's employees within the
next two months. Workers went on strike last month when they
didn't receive their salaries, Variety recounts.
The French-Tunisian exec owns 83% of the company, while the
remaining stake is owned by Technicolor, which came out of
bankruptcy protection in February, Variety discloses.
Mr. Ben Ammar told French news agency AFP that with the bulk of
Quinta Industries' activities linked to production of 35mm
release prints, the acceleration of French theaters' digital
conversion over the last three months led to the company's
downfall, Variety relates.
Quinta Industries is one of France's biggest post-production and
vfx facilities groups. The group, which includes LTC, Scanlab
and Duran Duboi, employs nearly 200 staff. It is part of Quinta
Communications, Tarak Ben Ammar's production and distribution
powerhouse.
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G E R M A N Y
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CART 1: S&P Affirms Rating on Class E Notes at 'CCC-'
-----------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
all classes of notes in CART 1 Ltd.
The rating actions follow a review of the performance of the
portfolio underlying CART 1. The reference portfolio contains
loans, overdraft facilities, and other payment claims to
corporate obligors as well as small and midsize enterprises,
which are mainly based in Germany. Deutsche Bank AG originated
the portfolio. The reference portfolio may replenish until June
2014.
"As the portfolio references a large share (currently about 70%)
of loans to corporate borrowers, we have applied, in our
analysis, our criteria for corporate collateralized debt
obligations (CDOs) (see 'Related Criteria And Research')," S&P
stated.
"Since our last rating action on Dec. 7, 2009 (see 'Ratings
Lowered On All Classes In CART 1's Synthetic CDO Following Credit
Migration'), the transaction has continued to replenish in
accordance with the eligibility criteria and replenishment
conditions as set out in the transaction documents. Since that
review, the weighted-average portfolio rating, derived from a
mapping of Deutsche Bank's internal rating scale against Standard
& Poor's rating scale, has remained unchanged at 'B+'," S&P said.
"We note that the notional amount of investment-grade rated
assets has increased substantially due to upgrades of the
existing assets in the portfolio, as well as replenished assets
that had above-average ratings relative to the pool. Assets
mapped to an investment-grade rating on Standard & Poor's scale
currently amount to about EUR1.3 billion, compared with EUR961.2
million in December 2009," S&P stated.
"However, from the information Deutsche Bank provided to us, we
note that about EUR57.3 million of reference assets are currently
rated 'iCC+' and below on Deutsche Bank's internal scale. We have
mapped these assets to 'D' on Standard & Poor's rating scale.
These assets have not yet triggered a credit event, but
we believe they are at risk of doing so in the future," S&P said.
"We note that, since our last review in December 2009, two
reference obligations (together amounting to about EUR59.8
million) have completed their workout procedures. This resulted
in a loss allocation of about EUR33.6 million to the unrated
class F notes. The overall recovery rate achieved has been higher
than we assumed when we last took rating action on this
transaction," S&P stated.
In addition, since our last review, the transaction has
experienced three further credit events (defaults) amounting to
EUR9.75 million. This caused the total defaulted principal amount
undergoing workout to rise to about EUR31 million. "We expect
further losses to be allocated to the unrated class F notes
over the coming payment dates, as more reference obligations are
completing their workout procedure. This will cause a further
reduction in the subordination available to the rated notes," S&P
said.
"While there is a noticeable increase in the proportion of
investment-grade assets in the portfolio, this is in our view
offset by a rise in assets graded 'iCC+' and below," S&P said.
"We are therefore affirming our current ratings on the class A+,
A, B, C, and D notes, as in our view the available credit
enhancement remains sufficient to support the current ratings on
these classes. We are affirming our 'CCC- (sf)' rating on the
class E notes, as they remain vulnerable to nonpayment, in our
View," S&P related.
Ratings List
Class Rating
CART 1 Ltd.
EUR263.5 Million Floating-Rate Credit-Linked Notes
Ratings Affirmed
A+ A+ (sf)
A A+ (sf)
B BBB (sf)
C BB+ (sf)
D B+ (sf)
E CCC- (sf)
HECKLER & KOCH: Moody's Confirms Corp. Family Rating at 'Caa1'
--------------------------------------------------------------
Moody's Investors Service has confirmed the Caa1 Corporate Family
Rating (CFR) and the Caa1 Probability of Default Rating (PDR) of
Heckler & Koch GmbH ("HK"). Concurrently, Moody's assigned a
definitive Caa1 rating to the currently outstanding EUR295
million senior secured notes. The outlook on all ratings was
changed to negative. This concludes the review of HK's ratings
which was initiated on March 7, 2011.
The rating action reflects the ongoing liquidity constraints of
HK despite the recent bond issuance which are due to the absence
of sufficient committed long-term credit lines, the requirement
from some banks to pledge cash in order to obtain performance
guarantees as well as limited flexibility of HK to adjust its
production to changing volumes. Correspondingly, Moody's
considers HK's liquidity to be very dependent on timely payment
of invoices by its major clients. At the same time Moody's takes
some comfort that HK has no near-term debt maturities with the
EUR295 million bond coming due in 2018. Leverage of currently
7.0x debt/ EBITDA and 1.4% FCF/ debt remains elevated. The
capital structure of HK has limited ability to absorb shocks and
Moody's considers the current debt level unsustainable in the
long-term given an interest burden of around EUR28 million HK has
to pay every year with limited cash flow remaining for capex and
working capital financing.
Assignments:
Issuer: Heckler & Koch GmbH
-- Senior Secured Regular Bond/Debenture, Assigned Caa1
Outlook Actions:
Issuer: Heckler & Koch GmbH
-- Outlook, Changed To Negative From Rating Under Review
Confirmations:
Issuer: Heckler & Koch GmbH
-- Probability of Default Rating, Confirmed at Caa1
-- Corporate Family Rating, Confirmed at Caa1
The current Caa1 rating also takes into account i) HK's strong
position in the global market for small arms behind Freedom Group
(rated B1/ stable outlook) and Smith & Wesson (unrated) as well
as ii) HK's solid operating performance over the last years which
has limited room for further improvement given headwinds from
government austerity measures, higher costs for raw materials and
HK's challenge to obtain export licenses to non-NATO countries,
particularly in the light of the currently ongoing investigations
focusing on a potential violation of export licenses.
Furthermore, the rating incorporates iii) HK's customer
concentration with 64% of sales generated by the four biggest
customers in 2010, iv) the concentration of 98% of the production
in one single plant in Oberndorf, v) ongoing legal risks related
to the company's business model and vi) the limited flexibility
of HK to adjust its workforce and production to a changing demand
pattern.
The negative outlook incorporates HK's tight liquidity due to the
absence of additional financing or other cash sources and the
imminent risk that HK will not be able to pay its interest
obligations in May and November every year without sufficient
cash flow or credit lines in place. Moreover, it takes into
account that HK might lose business opportunities due to the lack
of a letter of credit bank line and therefore the need to pledge
cash in order to obtain bid bonds or performance guarantees.
Upward pressure on HK's rating is currently limited. An upgrade
could be considered if HK's liquidity improved with significant
headroom to cover the cash needs for the next 12 months on a
rolling basis. Moreover, gross leverage of HK would have to trend
towards 6.0x Moody's adjusted debt/ EBITDA and the group would
have to achieve a Moody's adjusted FCF/ net debt ratio above 2.5%
on a sustainable basis.
HK's rating could be downgraded if liquidity weakened further and
the readily available liquidity arrangements (comprising
unrestricted cash and available long-term committed credit lines
which are currently not present) fell below EUR10 million. Also
cash burn evidenced by significantly negative free cash flow in
any quarter could trigger a downgrade.
Despite the current all-bond capital structure Moody's has
aligned the CFR to the PDR given HK's weak liquidity which could
accelerate a default. Moreover, the Caa1 rating of the EUR295
million senior secured notes is in line with both CFR and PDR
given that the notes are issued by an operating entity which
conducts substantially all of the production and a significant
proportion of sales. Moreover, the notes benefit from upstream
guarantees of all direct and indirect subsidiaries and are
secured by share pledges Moody's views as less valuable than
tangible assets.
The principal methodology used in rating Heckler & Koch GmbH was
the Global Aerospace and Defense Industry Methodology published
in June 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.
Headquartered in Oberndorf, Germany, HK is a leading, privately
owned, defense contractor in the small arms sector. The company
generated sales of EUR229 million in the last twelve months
ending in June 2011. HK supplies the armed forces of NATO and
NATO allies, European and US Special Forces, European police
forces and US federal law enforcement agencies and other
countries. HK designs, produces and distributes small arms,
including rifles, side arms, fully automatic weapons and grenade
launchers, as well as a variety of related products. It also
provides parts and services to the military sector.
* GERMANY: Business Insolvencies Down 2.9% in August 2011
---------------------------------------------------------
According to RTTNews, data released by the Federal Statistical
Office showed Tuesday that business insolvencies in Germany
decreased from last year in August.
The number of enterprise insolvencies declined 2.9% on an annual
basis to 2,583 in August, RTTNews discloses.
In the January to August period, corporate insolvencies decreased
7.1% year-on-year to 20,334, RTT News notes.
=============
H U N G A R Y
=============
* HUNGARY: Mandatory Liquidations Up 15.5% in October 2011
----------------------------------------------------------
MTI-Econews, citing company information provider Opten, reports
that the number of mandatory liquidations initiated against
Hungarian companies came to 1,659 in October, up 15.5% yr/yr.
According to MTI, the number of voluntary liquidations was 2,815
in October, up 105.7% from a year earlier. In January to
October, the number of voluntary liquidations exceeded 20,000,
MTI notes.
=============
I R E L A N D
=============
MCSWEENEY PHARMACY: Allied Irish Banks to Oppose Examinership
-------------------------------------------------------------
The Irish Times reports that Allied Irish Banks is to oppose a
petition for examinership brought by 11 companies in the
McSweeney pharmacy group.
The court has previously heard Firms in Northern Ireland are not
affected by the petition, The Irish Times relates.
According to The Irish Times, Rossa Fanning, for McSweeney Assets
Group Holdings Ltd., told Mr. Justice Frank Clarke on Friday that
AIB was a secured creditor of the companies and had indicated it
would oppose the petition to be heard this week.
James Doherty, for AIB, said while there was an underlying
business in the companies, the bank believed it would be better
served by receivership, The Irish Times notes.
Examinership is being sought for 11 companies in the group with
debts of more than EUR17 million, The Irish Times discloses.
An independent accountant had expressed the view that the 11
petitioning companies had a reasonable prospect of survival
provided certain conditions were met, including securing
investment and implementation of an existing cost reduction plan,
The Irish Times notes.
McSweeney pharmacy group employs 95 people across Ireland.
MR BINMAN: Receiver Won't Cut Jobs; Operations to Continue
----------------------------------------------------------
Limerick Leader reports that receiver Kieran Wallace of KPMG
confirmed that the bin collection service to Mr. Binman's 56,900
domestic customers will continue without interruption.
Following separate meetings with local TDs Kieran O'Donnell,
Niall Collins and Willie O'Dea, the receiver has also said there
will be no job cuts, Limerick Leader relates.
Mr. Binman is one of Limerick's largest employers, with 331
people on the payroll, while at least 200 more rely on the firm,
Limerick Leader discloses. There were fears for these jobs when
the company's biggest creditor, Bank of Scotland (Ireland) --
owed around EUR53 million -- appointed joint receivers to the
firm, Limerick Leader says.
This followed the High Court's rejection of Mr. Binman's attempt
to instead enter examinership, Limerick Leader notes.
Mr. Binman is an Ireland-based waste disposal group. It
also operates the local authorities' waste-gathering services in
Limerick city.
SHEFFS LTD: Secures Ongoing Court Protection From High Court
------------------------------------------------------------
Mary Carolan at The Irish Times reports that Sheffs Ltd. has
secured continuing High Court protection.
The company had sought protection after Bank of Scotland
appointed a receiver over the bars on Nov. 4, The Irish Times
relates.
According to The Irish Times, the company claimed the receiver's
appointment came as a surprise as it was engaged in what it
believed were "good faith" negotiations with the bank, its
largest creditor. It secured interim protection from Mr. Justice
Iarfhlaith O'Neill at a High Court sitting on Oct. 29 after
presenting a petition for examinership, The Irish Times
discloses. He returned the matter to Oct. 3 when it came before
Mr. Justice Kelly, The Irish Times recounts.
After hearing from lawyers for the company, the bank and the
receiver, the judge, as cited by The Irish Times, said he would
continue protection pending the hearing on Nov. 15 of the
petition for examinership. The judge noted the company was
insolvent with a deficit on a going-concern basis of EUR1.7
million, rising to EUR6.8 million if the company was wound up,
The Irish Times discloses. He noted Bank of Scotland had said it
would oppose examinership and had also raised issues about
protection being granted on Nov. 5 in circumstances where a
report of an independent accountant expressing a view the company
had a reasonable prospect of survival was not before the court,
according to The Irish Times. The judge noted the bank had also
raised issues about the status of the receiver, The Irish Times
relates. The judge said that the receiver had stood down on
being informed of the granting of court protection, The Irish
Times notes.
Sheffs Ltd. operates Harvey's Late Bar and the Mantra Garden Bar
and Club. The two pubs employ 94 people in Waterford and Co.
Kildare.
=========
I T A L Y
=========
F-E GOLD: Fitch Affirms Rating on EUR9-Mil. Notes at 'BBsf'
-----------------------------------------------------------
Fitch Ratings has affirmed three Italian mixed-lease receivables-
backed transactions as follows:
F-E Green S.r.l. (F-E Green)
-- EUR11.2m class A notes affirmed at 'AAAsf'; Outlook Stable
-- EUR108.5m class B notes affirmed at 'AAAsf'; Outlook Stable
F-E Gold S.r.l. (F-E Gold)
-- EUR273.7m class A2 notes affirmed at 'AAAsf'; Outlook
Negative
-- EUR49.4m class B notes affirmed at 'BBBsf'; Outlook Negative
-- EUR9m class C notes affirmed at 'BBsf'; Outlook Negative
F-E Red S.r.l. (F-E Red)
-- EUR951.3m class A notes affirmed at 'AAAsf'; Outlook Stable
The affirmations follow Fitch's review of the transactions'
performance. However, the agency acknowledges specific
difficulties related to F-E Gold's performance and as a result
maintains a Negative Outlook on all tranches.
F-E Green's class B note benefits from a guarantee from the
European Investment Fund (rated 'AAA'/Stable/'F1+'), which makes
it credit-linked to the rating of the guarantor. In addition,
with a cumulative loss ratio (CLR) of 2.51% compared to a base
case of 2.44%, this transaction is performing better than the
other two.
F-E Gold has performed below Fitch's expectations since closing
and the cumulative default ratio (CDR) and the CLR have reached
6.75% and 4.31%, respectively, compared to a base case of 3.33%
and 2.44% for the same seasoning. Moreover, delinquencies have
been increasing over the past three quarters and reached a peak
of 7.37% on the latest interest payment date (IPD) in October
2011.
The share of real estate leases in the F-E Gold portfolio has
increased since closing to 95.6% from 65.9%. However, this sub-
pool shows the best performance in terms of both delinquencies
and defaults. The obligor concentration in the portfolio is
consistent with Fitch's criteria.
F-E Gold has been amortizing pro rata for the last two IPDs. In
its analysis, Fitch considered scenarios where the notes will
continue to amortize pro rata until their full redemption.
Amortisation would revert back to sequential if any of the
contractual pro rata triggers is breached.
F-E Red has performed within the original base case assumptions
to date. Fitch believes that the credit enhancement (CE) that
protects Class A notes against losses, which was 49.8% on the
last IPD is sufficient to affirm the 'AAAsf' rating. The CE is
provided by a non-amortizing cash reserve account (CRA) of
EUR170.9 million (or 10.5% of the outstanding notes) as of
October 2011 as well as two fully-collateralized unrated junior
tranches for a total EUR590.2 million. Of these, the EUR250
million class C was added by the originator in February 2011.
F-E Red's hedging counterparty is Unicredit S.p.A. (Unicredit,
'A'/RWN/'F1'), which Fitch placed on Rating Watch Negative (RWN)
on 11 October. Consistently with both Fitch's criteria and the
transaction documents, Unicredit collateralized the swap within
14 days following the rating action.
The three transactions were originated in 2004, 2006 and 2009,
respectively, and have similar structures. Each is endowed with a
CRA funded at closing that provides CE to the rated notes. Each
CRA was at the required amount as of the last IPD and had never
been drawn. In addition, F-E Gold and F-E Red have a trapping
mechanism that prevents the excess spread being paid out if
defaults are in excess of certain threshold levels.
In all transactions, the collateral comprises three sub-pools:
real estate, motor vehicles and equipment leases. Although
concentration limits constrained the migration within the
portfolio during the revolving period, the transactions have
subsequently become dominated by real estate leases as auto
leases and equipment leases tend to have shorter maturities. As
of the last IPD, real estate leases made up the following
percentages of the respective transaction pools: 98% (F-E Green),
96% (F-E Gold) and 83% (F-E Red).
===================
K A Z A K H S T A N
===================
ASTANA FINANCE: Kenes Rakishev Acquires Insurance Unit
------------------------------------------------------
Nariman Gizitdinov at Bloomberg News reports that the insurance
unit of AO Astana Finance, the Kazakh financial company that
defaulted in 2009, was acquired by Kenes Rakishev, the son-in-law
of Imangali Tasmagambetov, the mayor of the country's capital.
According to Bloomberg, the Almaty-based regulator said in an
e-mailed statement on Monday that Mr. Rakishev owns 100% of AO
Insurance Company Astana Finance as of Oct. 26 after the central
bank permitted him to become a "large shareholder".
Astana became the third Kazakh lender to default after it stopped
servicing its international debt in May 2009 as Kazakhstan
slipped into its first recession in a decade, Bloomberg recounts.
The company said in September that it planned to sell a 100%
stake in its commercial bank and invited buyers to submit bids,
Bloomberg notes.
Joint Stock Company Astana Finance (Astana Finance), through its
subsidiaries, provides various financial products and services in
the Republic of Kazakhstan. It provides current accounts, saving
accounts, and other deposits; investment savings products; and
various loans comprising mortgage, consumer, and car loans, as
well as other credit facilities.
===================
L U X E M B O U R G
===================
BREEZE THREE: S&P Lowers Rating on Class A Notes to 'B+'
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term issue
rating on the EUR287 million senior secured Class A notes due
2027 (Class A notes) issued by Luxembourg-based special purpose
entity Breeze Finance S.A. to 'B+' from 'BB-'. "The outlook is
negative. The recovery rating on the Class A notes is '2',
indicating our expectation of a substantial (70%-90%) recovery of
principal (in the absence of a bond insurance guarantee) in the
event of a payment default," S&P said.
"At the same time, we affirmed our 'C' long-term issue rating on
the EUR84 million subordinated Class B notes due 2027 (Class B
notes) issues by Breeze Finance. The outlook is negative. In
addition, we assigned a recovery rating of '6' to the Class B
notes, thereby correcting an internal administrative error. The
error occurred when we assigned our long-term issue rating of 'C'
to the Class B notes on June 17, 2008, but we did not assign a
recovery rating to the notes. The recovery rating on the Class B
notes reflects our expectation of negligible (0%-10%) recovery of
principal in the event of a payment default," S&P stated.
The Class A notes benefit from an unconditional and irrevocable
guarantee of payment of scheduled interest and principal from
MBIA U.K. Insurance Ltd. (B/Negative/--). "Under our criteria, a
rating on monoline-insured debt reflects the higher of the rating
on the monoline insurer or Standard & Poor's underlying rating
(SPUR) on the debt. Therefore, the current rating on the notes
reflects the SPUR," S&P said.
The downgrade of the Class A notes reflects the continuing
underperformance of wind conditions, which has led to further
deferrals of subordinated debt and increased negative equity.
"This, in our view, increases the risk of insolvency of the whole
transaction in light of a forthcoming change to German insolvency
law," S&P said.
The affirmation of the 'C' long-term issue rating on the Class B
notes reflects the continued full deferral of the notes'
principal since the April 2009 payment date. The deferral of
Class B notes is authorized under the notes' documentation and
does not constitute an event of default of this note class.
In 2008, the German Financial Market Stabilization Act (GMFSA)
temporarily amended the German law definition of insolvency to
the effect that a debtor whose assets no longer cover existing
liabilities is not considered "over-indebted," and therefore
insolvent, if the continuation of its business is predominantly
likely. This temporary amendment will expire on Jan. 1, 2014,
when the definition of insolvency will revert to its pre-GMFSA
wording. This will imply that a debtor whose assets no longer
cover existing liabilities is considered "over-indebted" and
insolvent even if the continuation of its business is
predominantly likely.
"We understand that, despite our expectation that Breeze Finance
will likely keep servicing its Class A notes in full, the
intermediary German borrower Breeze Three Energy GmbH & Co. KG
may potentially meet this definition of "over-indebtedness" due
to its negative equity if the German insolvency law is restored
from 2014, unless there is a significant restoration of the wind
conditions and/or if management implements remediation measures
aimed at strengthening its capital structure. We understand that
such an insolvency would trigger an event of default of the notes
issued by Breeze Finance," S&P stated.
"However, the affirmation of the 'B+' long-term issue rating on
the Class A notes reflects our view that the most likely scenario
for Breeze Three is currently not one of insolvency: We are of
the opinion that noteholders in this transaction -- especially
subordinated noteholders -- typically face a higher likelihood of
recovery from a going-concern company as opposed to forcing
liquidation. Therefore, we believe that subordinated noteholders
will likely accept a deeper subordination of their respective
notes before compromising the continuation of the business," S&P
said.
"The negative outlook on the Class A notes reflects our view that
we could lower the rating over the next 12 months if the
project's operating performance weakens -- further eroding
liquidity -- and/or if the negative equity situation is not
reversed. Conversely, we could revise the outlook to stable
if we think there is a high likelihood that the project will
reverse its negative equity position, and if the prospects for
operating cash flow generation materially improve," S&P said.
"The negative outlook on the Class B notes reflects our view
that, before the pre-GMFSA German insolvency law is restored in
early 2014, project managers could attempt to reverse the
negative equity situation by converting the Class B notes into
equity or through a restructuring that would negatively affect
the original promise reflected in these notes' terms and
conditions. If this occurs, we would likely consider such a
change as tantamount to a default and, in line with our criteria,
and we would lower our rating on the Class B notes to 'D'," S&P
said.
CRC BREEZE: S&P Affirms 'C' Rating on Class B Notes
---------------------------------------------------
Standard & Poor's Ratings Services revised its outlook to
negative from stable on the EUR50 million Class-B subordinated
notes due 2016 (Class B notes) issued by CRC Breeze Finance S.A.
The 'C' long-term issue rating on the Class B notes was affirmed.
"In addition, we assigned a recovery rating of '6' to the
subordinated Class B notes, thereby correcting an internal
administrative error. The error occurred when we assigned our
issue rating of 'C' to the Class B notes on July 18, 2007, but we
did not assign a recovery rating to the notes. The '6' recovery
rating reflects our expectation of negligible (0%-10%) recovery
of principal in the event of a payment default," S&P said.
"At the same time, we affirmed the 'B-' long-term issue rating on
the EUR300 million Class A senior secured amortizing notes due
2026 (Class A notes) issued by CRC Breeze Finance. The outlook on
the Class A notes is negative. The '2' recovery rating on the
senior secured Class A notes is unchanged, indicating our
expectation of substantial (70%-90%) recovery of principal in
the event of a payment default," S&P stated.
"The outlook revision reflects our view that the Class B notes
could suffer some kind of restructuring over the next two years
in light of a forthcoming change to German insolvency law," S&P
said.
The affirmation of the 'B-' long-term issue rating on the Class A
notes follows the full payment of this class' debt service on May
8, 2011. "In addition, we also expect that debt service will be
met in full on the next payment date (Nov. 8, 2011) without
needing to tap the Class A debt service reserve," S&P related.
In 2008, the German Financial Market Stabilization Act (GMFSA)
temporarily amended the German law definition of insolvency to
the effect that a debtor whose assets no longer cover existing
liabilities is not considered "over-indebted," and therefore
insolvent, if the continuation of its business is predominantly
likely. This temporary amendment will expire on Jan. 1, 2014,
when the definition of insolvency will revert to its pre-GMFSA
wording. This will imply that a debtor whose assets no longer
cover existing liabilities is considered "over-indebted" and
insolvent even if the continuation of its business is
predominantly likely.
"We understand that, despite our expectation that CRC Breeze
Finance will likely keep servicing its Class A notes in full, the
intermediary holding borrower Breeze Two Energy GmbH & Co. KG may
potentially meet this definition of 'over-indebtedness" due to
its negative equity if the pre-GMFSA German insolvency law is
restored from 2014, unless there is a significant restoration of
wind conditions and/or if management implements remediation
measures aimed at strengthening its capital structure and
eliminating negative equity. We understand that such insolvency
would trigger an event of default of the notes issued by CRC
Breeze Finance," S&P said.
"That said, the affirmation of the 'B-' long-term issue rating on
the Class A notes reflects our view that the most likely scenario
for Breeze Two is currently not one of insolvency: We are of the
opinion that noteholders in this transaction -- especially
subordinated noteholders -- typically face a higher likelihood of
recovery from a going-concern company as opposed to forcing
liquidation. Therefore, we believe that subordinated noteholders
will likely accept a deeper subordination of their respective
notes before compromising the continuation of the business," S&P
said.
"The negative outlook on the Class B notes reflects our view
that, before the pre-GMFSA German insolvency law is restored in
early 2014, project managers could attempt to reverse the
negative equity position of the transaction by converting the
Class B notes into equity, or through a restructuring that would
negatively affect the original promise included in the notes'
terms and conditions. If and when this occurs, we would likely
consider such a change as tantamount to a default in line with
our criteria, and we would lower our rating on the Class B notes
to 'D'," S&P said.
"The negative outlook on the Class A notes reflects our view of
Breeze Two's weakened liquidity position. We could lower our
rating on the Class A notes if the project's negative equity
position is not reversed as the expiry of the GFMSA approaches.
Rating downside could also be triggered by a further
deterioration of Breeze Two's financial performance, owing to
continued weak wind conditions and/or an increase in the
likelihood of Breeze Two shouldering material extra costs. This
could occur, for example, if Breeze Two were to bear the costs
caused by the malfunctioning turbines manufactured by Vestas Wind
Systems A/S (currently under litigation)," S&P stated.
"We could revise the outlook to stable if we consider that Breeze
Two's financial profile has stabilized and if reported operating
issues, including problems with the turbines, do not intensify,"
S&P said.
=====================
N E T H E R L A N D S
=====================
EMEA CMBS: Moody's Lowers Rating on Class D Notes to 'Caa2'
-----------------------------------------------------------
Moody's Investors Service has downgraded the Class A2, Class A3,
Class B, Class C, Class D Notes and affirmed the Class A1 Notes
issued by DECO 14 -- Pan Europe 5 B.V. (amounts reflect initial
outstandings):
EUR950M Class A-1 Commercial Mortgage Backed Floating Rate Notes
due 2020 Certificate, Affirmed at Aaa (sf); previously on Mar 29,
2007 Definitive Rating Assigned Aaa (sf)
EUR160M Class A-2 Commercial Mortgage Backed Floating Rate Notes
due 2020 Certificate, Downgraded to Aa1 (sf); previously on Mar
29, 2007 Definitive Rating Assigned Aaa (sf)
EUR65M Class A-3 Commercial Mortgage Backed Floating Rate Notes
due 2020 Certificate, Downgraded to Aa3 (sf); previously on Apr
8, 2011 Aa2 (sf) Placed Under Review for Possible Downgrade
EUR100M Class B Commercial Mortgage Backed Floating Rate Notes
due 2020-1 Certificate, Downgraded to Baa1 (sf); previously on
Apr 8, 2011 A1 (sf) Placed Under Review for Possible Downgrade
EUR65M Class C Commercial Mortgage Backed Floating Rate Notes due
2020 Certificate, Downgraded to Ba1 (sf); previously on Apr 8,
2011 Baa1 (sf) Placed Under Review for Possible Downgrade
EUR101M Class D Commercial Mortgage Backed Floating Rate Notes
due 2020 Certificate, Downgraded to Caa2 (sf); previously on
Apr 8, 2011 B1 (sf) Placed Under Review for Possible Downgrade
The Class A3, Class B, Class C and Class D Notes were placed on
review for possible downgrade on 8 April 2011. The action
concludes Moody's review of the transaction. Moody's does not
rate the Class E, Class F, Class G and the Class X Notes.
RATINGS RATIONALE
The downgrade action reflects Moody's increased loss expectation
for the loan pool since its last review. This is primarily due to
an increase in the refinancing risk for all loans in the pool,
resulting from (i) significantly lower values for non-prime
properties, which are not expected to recover over the short
term, (ii) the dormant refinancing market, especially for highly
leveraged loans, and (iii) the uncertainty with respect to the
path and timing for a recovery of the lending market.
The rating on the Class A1 Notes is affirmed because its current
credit enhancement level of 38.6% is sufficient to maintain the
rating despite the increased loss expectation for the pool.
The key parameters in Moody's analysis are the default
probability of the securitized loans (both during the term and at
maturity) as well as Moody's value assessment for the properties
securing these loans. Moody's derives from those parameters a
loss expectation for the securitized pool.
Based on its reassessment of the underlying property values, the
weighted average (WA) Moody's loan-to-value (LTV) ratio on the
securitized pool is 84% and on the whole loan is 88%. This
compares with the underwriter's (U/W) WA LTV of 73% on the
securitized pool and 75% on a whole loan basis. Moody's notes
that for five of the currently performing loans (20% of the
pool), the Moody's LTV ratios on the whole loan are above 90%,
translating into high probability of default at maturity (>50%).
Moreover, two loans, the Arcadia and the DD Karstadt Hilden Loans
which together contribute 8% to the current pool balance are in
special servicing undergoing workout. Moody's expects significant
losses on these loans, ranging from 25-50% on Arcadia and 50-75%
for DD Karstadt Hilden. Of the currently performing ten loans in
the pool, one loan, (4% of the current pool) matures in 2012
while two loans (49%) mature in 2013 and five loans (26%) mature
in 2014. The remaining two loans mature later, in 2015 and 2016,
respectively.
For all classes of Notes, Moody's latest assessment incorporates
the uncertainty surrounding the performance of the largest loan
in the pool, the WOBA Loan (39% of the current pool). Moody's
considered in its analysis an increased likelihood of default of
the loan at its maturity date in May 2013 resulting from the
ongoing litigation involving the borrowing entities under the
loan. However, the recovery assumption remains generally
unchanged as Moody's assumes that the security position of the
loan securing the Notes is still valid and not impacted by the
litigation against the borrowing entities.
Given that the sequential triggers have not yet been breached in
the transaction, proceeds from a potential repayment of the Sofia
Business Park Loan (4% of the current pool) on its maturity date
in January 2012 would be allocated only to the Class D Notes. In
such an outcome, with lower credit enhancement levels available
to them, the credit risk for all Notes apart from the Class A1
Notes would increase. However, the rating sensitivity is limited,
and, with a Moody's whole loan LTV of 114%, Moody's views a
timely repayment of the loan as unlikely. Moody's expects that
the loan will either be extended by the servicer or be
transferred into special servicing due to non-payment at
maturity.
In general, Moody's analysis reflects a forward-looking view of
the likely range of commercial real estate collateral performance
over the medium term. From time to time, Moody's may, if
warranted, change these expectations. Performance that falls
outside an acceptable range of the key parameters such as
property value or loan refinancing probability for instance, may
indicate that the collateral's credit quality is stronger or
weaker than Moody's had anticipated during the current review.
Even so, deviation from the expected range will not necessarily
result in a rating action. There may be mitigating or offsetting
factors to an improvement or decline in collateral performance,
such as increased subordination levels due to amortization and
loan re- prepayments or a decline in subordination due to
realized losses.
Primary sources of assumption uncertainty are the current
stressed macro-economic environment and continued weakness in the
occupational and lending markets. Moody's anticipates (i) delayed
recovery in the lending market persisting through 2012, while
remaining subject to strict underwriting criteria and heavily
dependent on the underlying property quality, (ii) values will
overall stabilize but with a strong differentiation between prime
and secondary properties, and (iii) occupational markets will
remain under pressure in the short term and will only slowly
recover in the medium term in line with the anticipated economic
recovery. Overall, Moody's central global scenario remains
'hooked-shaped' for 2011; Moody's expects sluggish recovery in
most of the world's largest economies, returning to trend growth
rate with elevated fiscal deficits and persistent unemployment
levels.
MOODY'S PORTFOLIO ANALYSIS
DECO 14 - Pan Europe 5 B.V. closed in March 2007 and represents
the securitization of initially 13 mortgage loans originated by
Deutsche Bank A.G. and Deutsche Bank S.p.A. Currently 12 loans
remain in the pool and the loans are secured by first-ranking
legal mortgages over 3,913 commercial and multi-family
properties. The properties are located throughout Germany (88% of
the current pool by underwriter market value), Italy (8%) and
Bulgaria (4%). The properties are predominantly multi-family
(75%) followed by office (14%), retail (10%), and mixed-use (1%).
At the October 2011 interest payment date, the total securitized
loan balance was EUR1,393 million, down from EUR1,491 million at
closing. The vast majority of redemption to date has been from
the partial prepayment of the WOBA Loan following property
disposals as well as the prepayment of the Accor Loan (1.1% of
the initial pool balance).
To date, no loan has realized a loss. As per the latest investor
report on the transaction (July 2011), there were two loans in
special servicing: the Arcadia Loan contributing 7.6% and the DD
Karstadt Hilden Loan contributing 0.4% to the pool, both of which
have had payment defaults. A total of four loans (51% of the
current pool) appeared on the Servicer's watchlist in July 2011
including the WOBA and the Sofia Business Park Loans.
The WOBA Loan, the largest loan in the pool, is syndicated and
50% of the loan (EUR537.7 million) is securitized in DECO 14 -
Pan Europe 5 B.V. As at closing of the transaction, the loan was
secured by a residential portfolio of 42,688 residential units,
1,110 commercial units and 8,683 parking units (2,566,344 square
meters) located throughout Dresden, Germany. At closing, the
portfolio represented approximately 15% of the housing stock in
Dresden. Following disposals, the loan is now secured by a total
of 46,466 units with a total area of 2,486,725 square meters. The
latest reported vacancy on the portfolio is 6.3%, substantially
lower than 14.5% as at closing of the transaction. There is no
scheduled amortization for the loan and the latest reported
interest coverage ratio is 1.80x. Moody's LTV for the loan is 71%
based on its latest assessment of the portfolio value.
In March 2011, the City of Dresden filed a request for
arbitration against WOBA Holding GmbH and initiated legal
proceedings against Sudost Woba Dresden GmbH and Wohnbau Nordwest
GmbH, being part of the borrowing group for the loan. As reported
by the servicer of the loan, the City claims contractual
penalties for a total of EUR1.084 billion under the privatisation
agreement of 2006 (WOBA SPA). The claims are based on the opinion
of the City that in several cases the obligations to pass on
duties under the WOBA SPA were not completely implemented when
real estate not yet split into flat freeholds was sold to third
parties by the borrower. The borrower is reported to have
asserted numerous defenses to the claims and have filed
counterclaims against the City of Dresden. It is not yet clear
when a decision will be made by the courts. In its analysis,
Moody's considered a scenario in which a significant payment
claim cannot be met by the borrowers under the loan. In this
extreme scenario, Moody's would expect the borrowers under the
WOBA loan to default. Moody's also considered a prolonged period
for the resolution of the claims which makes a successful
refinancing of the loan in May 2013 very challenging. As
previously mentioned, the recovery assumption has been broadly
unchanged as Moody's assumes that the security position of the
loan securing the Notes is still valid and not impacted by the
litigation against the borrowing entities.
The second largest loan is the GA 1 MF Loan (EUR149.9 million --
10.8% of the current pool) secured by a portfolio of 124
residential properties (415,926 square meters) located mainly in
North-Rhine Westphalia in Germany. The sponsor of the loan,
Gagfah S.A., is the same as for the WOBA Loan. Overall, the loan
has had a stable performance and the main risk that Moody's sees
for the loan is the refinancing in October 2013. Moody's value
estimate for the portfolio is 13% below the current UW market
value as of September 2006. Taking into account the senior
ranking subsidized debt of EUR15 million, the Moody's LTV at
refinancing is 73%. Given the loan size and the expected state of
the lending market, Moody's has substantially increased its
refinancing default risk for the loan compared with its previous
assessment.
Moody's has also updated its view on the Armilla Clarice 2 Loan
(EUR136.7 million -- 9.8% of the current pool), the third largest
loan in the pool. The loan is secured by a portfolio of 14
properties located throughout Italy, all let to Telecom Italia
S.p.A. (senior unsecured rating of Baa2). The properties are
special-purpose built and comprised 75% of telephone switching
equipment and 25% of office space as per closing of the
transaction. The property cash flows generated by Telecom Italia
are credit positive for the loan as the leases do not expire
until November 2021. However, Moody's believes that the pressure
on the Italian economy will impact both the yields in the market
for properties with strong cash flows but shortening leases, as
well as the availability of financing against such properties.
The loan is fixed-rate with no scheduled amortization until
maturity in October 2016. Moody's LTV for refinancing is 71% and
has resulted in a substantial increase of the default risk at
maturity of the loan compared with Moody's previous assessment.
The revised assumptions also conclude the review of the impact of
the downgrade of the government of Italy for this transaction, as
announced in Moody's press release on October 4, 2011.
For the two loans currently in special servicing, Moody's expects
significant losses. Due to the appraisal reduction in relation to
the DD Karstadt Loan, the interest shortfalls on this loan can no
longer be covered by drawings made under the liquidity facility
and all previous interest shortfall draws made in relation to
this loan were repaid on the October 2011 interest payment date
(IPD). As a result, no interest was paid to the Class E, Class F
and Class G Notes on the October 2011 IPD and a portion of the
interest due on the Class D Notes (EUR 107k) was deferred.
Moody's expects the deferred interest on the Class D Notes to be
recouped in the coming IPDs from interest that would otherwise be
available to pay the more junior Notes (Classes E, F and G).
Nevertheless, due to its subordinated position in the transaction
with a credit enhancement of 3.6%, Moody's views the Class D
Notes as subject to very high credit risk which has resulted in
the downgrade of the Notes to Caa2.
Portfolio Loss Exposure: Moody's expects a substantial amount of
losses on the securitized portfolio, stemming mainly from the
refinancing profile of the securitized portfolio. Given the
default risk profile and the anticipated work-out strategy for
potentially defaulting loans, the expected losses are likely to
crystallize only towards the end of the transaction term with the
exception of the currently defaulted Arcadia and DD Karstadt
Loans for which Moody's expects losses to be realized in the
medium term.
RATING METHODOLOGY
The methodologies used in this rating were Moody's Approach to
Real Estate Analysis for CMBS in EMEA: Portfolio Analysis (MoRE
Portfolio) published in April 2006, and Update on Moody's Real
Estate Analysis for CMBS Transaction in EMEA published in June
2005.
Other factors used in this rating are described in EMEA CMBS:
2011 Central Scenarios published in February 2011.
The updated assessment is a result of Moody's on-going
surveillance of commercial mortgage backed securities (CMBS)
transactions. Moody's transaction assessment prior to the April
2011 watchlist action is summarized in a press release dated 21
May 2009. The last Performance Overview for this transaction was
published on 25 October 2011.
In rating this transaction, Moody's used both MoRE Portfolio and
MoRE Cash Flow to model the cash-flows and determine the loss for
each tranche. MoRE Portfolio evaluates a loss distribution by
simulating the defaults and recoveries of the underlying
portfolio of loans using a Monte Carlo simulation. This portfolio
loss distribution, in conjunction with the loss timing calculated
in MoRE Portfolio is then used in MoRE Cash Flow, where for each
loss scenario on the assets, the corresponding loss for each
class of notes is calculated taking into account the structural
features of the notes. As such, Moody's analysis encompasses the
assessment of stressed scenarios.
NORTH WESTERLY: Moody's Raises Ratings on 2 Note Classes to 'B2'
----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of these notes
issued by North Westerly CLO II B.V.:
-- EUR297.4M Class A Senior Floating Rate Notes due 2019,
Upgraded to Aaa (sf); previously on Jun 22, 2011 Aa3 (sf)
Placed Under Review for Possible Upgrade
-- EUR5.4M Class B-1 Deferrable Interest Fixed Rate Notes due
2019, Upgraded to A3 (sf); previously on Jun 22, 2011 Ba1
(sf) Placed Under Review for Possible Upgrade
-- EUR31.3M Class B-2 Deferrable Interest Floating Rate Notes
due 2019, Upgraded to A3 (sf); previously on Jun 22, 2011
Ba1 (sf) Placed Under Review for Possible Upgrade
-- EUR14.1M Class C Deferrable Interest Floating Rate Notes
due 2019, Upgraded to Ba1 (sf); previously on Jun 22, 2011
B1 (sf) Placed Under Review for Possible Upgrade
-- EUR7.68M Class D-1 Deferrable Interest Fixed Rate Notes due
2019, Upgraded to B2 (sf); previously on Jun 22, 2011 Caa3
(sf) Placed Under Review for Possible Upgrade
-- EUR13.02M Class D-2 Deferrable Interest Floating Rate Notes
due 2019, Upgraded to B2 (sf); previously on Jun 22, 2011
Caa3 (sf) Placed Under Review for Possible Upgrade
RATINGS RATIONALE
North Westerly CLO II B.V., issued in September 2004, is a single
currency Collateralised Loan Obligation ("CLO") backed by a
portfolio of mostly high yield European loans. The portfolio is
managed by NIBC Bank N.V.. 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 modelling 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 notes have been paid down by
approximately 25% or EUR75 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 30, 2011, the Class A, Class B, Class C, and Class D
overcollateralization ratios are reported at 141.5%, 121.4%,
115.14% and 107.0%, respectively, versus September 2009 levels of
129.2%, 115.0%, 110.3% and 104.2%, respectively.
The reported WARF has increased from 2520 to 2991 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 1 September 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 of EUR314.8 million, defaulted par of EUR4
million, a weighted average default probability of 21.2%
(consistent with a WARF of 3217), a weighted average recovery
rate upon default of 47.3% for a Aaa liability target rating, a
diversity score of 34 and a weighted average spread of 3.2%. 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 93.31% 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 77% 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. This large single
exposure represents 4% 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.
===========
N O R W A Y
===========
MARINE GEOPHYSICAL: S&P Assigns 'BB' Rating to $300-Mil. Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' issue rating
to the proposed $300 million senior unsecured notes due 2018 to
be issued by Norway-based marine geophysical company Petroleum
Geo-Services ASA (PGS; BB/Stable/--). The issue rating is at the
same level as the corporate credit rating on PGS. "At the same
time, we assigned a recovery rating of '4' to the proposed notes,
indicating our expectation of average (30%-50%) recovery for
creditors in the event of a payment default," S&P said.
Recovery Analysis
The recovery rating on the proposed notes is underpinned by PGS's
substantial valuation, based on its good market positions and its
diversified portfolio by market, geography, and customers. The
recovery rating is also supported by the notes' senior unsecured,
unconditional, joint, and several guarantees provided by
substantially all the company's subsidiaries. These guarantees
are almost identical to those for PGS' outstanding credit
facility. This credit facility comprises a US$600 million term
loan, drawn by US$470.5 million on June 30, 2011, and an undrawn
US$350 million revolving credit facility (RCF). Both debt
instruments are due in 2015.
However, the recovery rating on the notes is constrained by the
fact that the credit facility benefits from pledges over the
shares of substantially all PGS's subsidiaries; the existence of
maintenance financial covenants in the RCF documentation; and the
relatively weak protection for the notes in their documentation.
"We assume that the credit facility's financial covenants could
allow bank lenders to improve their security on the path to
default. However, we believe that, given the company's likely
capital structure at the hypothetical point of default and its
substantial enterprise value, recovery for the proposed notes
would likely be in the 30%-50% range," S&P said.
"We understand that PGS will use the majority of the proceeds
from the proposed notes to repay most of its existing US$293.1
million convertible notes due 2012. We also understand that the
proposed notes will be issued by PGS and will sit alongside PGS's
existing credit facility. In addition, our analysis takes account
of a new US$250 million export credit financing facility that PGS
is planning to put in place to finance the two fifth-generation
Ramform vessels that are on order, with delivery estimated in
March 2013. We expect that this export facility will benefit from
guarantees and a first-priority mortgage over the two vessels,"
S&P related.
"We believe that if a default of PGS were to occur, it would most
likely result from significant financial leverage, combined with
operational underperformance. Given what we see as PGS's good
market position and valuable customer base, we value the business
as a going concern at the point of default, using a proxy for
EBITDA at default. Under our simulated default scenario, we
assume that a default would occur in 2015, when the credit
facility is due, at which point we estimate that the company's
EBITDA would have declined to US$262 million, compared with the
company's expectation of approximately US$525 million in 2011.
This translates into a stressed enterprise value of about US$1.18
billion at the point of default, which equates to a stressed
EBITDA multiple of 4.5x. The relatively modest multiple reflects
the cyclicality and volatility of PGS's profits, the high level
of capital expenditures required to support growth, and the
volatility we see in equivalent multiples for rated peers," S&P
said.
"After deducting enforcement costs, financial leases, 50% of the
pension deficit, and the credit facility (including prepetition
interests), we estimate that recovery for the proposed notes
would be in the 30%-50% range, which is commensurate with a '4'
recovery rating. Recovery for the existing convertible notes
would be in the 0%-10% range, which is commensurate with a '6'
recovery rating," S&P said.
Ratings List
New Ratings
Petroleum Geo-Services ASA
Senior Unsecured Debt BB
Recovery Rating 4
===============
S L O V E N I A
===============
KONSTRUKTOR VGR: Maribor Court Launches Receivership
----------------------------------------------------
STA reports that the Maribor District Court launched receivership
at Konstruktor VGR. This came as a relief to some 250 workers,
who have not received their pay since May and have been on strike
since mid-July, STA notes.
Matjaz Polencic, the administrator of the court-mandated debt
restructuring at the Maribor construction company, who filed for
bankruptcy again last week and was now appointed as the receiver,
stressed that this was at least an end to the agony of the
workers, STA relates.
At the hearing, Konstruktor boss Samo Majcenovic was only asked
to explain when and how the workers would get their pay, and as
he failed to answer, the judge confirmed the bankruptcy, STA
discloses.
The director was critical of the slow court procedures in the
cases of Konstruktor's claims amounting to several million euros,
which he believes could have prevented receivership, STA states.
Konstruktor is a Slovenia-based builder.
=========
S P A I N
=========
IM BANCO POPULAR: DBRS Assigns 'B' Rating to Series B Notes
-----------------------------------------------------------
DBRS Ratings Limited has assigned final ratings to the Notes
issued by IM Banco Popular FTPYME 3, F.T.A. (the "Issuer"), as
follows:
* EUR475 million Series A1 Notes: AAA (sf)
* EUR500 million Series A2 (G) Notes: AAA (sf)
* EUR325 million Series B Notes: B (high) (sf)
The transaction is a cash flow securitization collateralized
primarily by a portfolio of bank loans originated by Banco
Popular Espanol, S.A. to large corporations and small and medium
enterprises ("SMEs") domiciled in Spain.
As of October 27, 2011, the final portfolio included 6,690 loans
with a weighted average maturity of 5.9 years and a notional
amount of EUR1,300 million.
The portfolio is reasonably diversified in terms of industry and
region concentration. The top three industries by NACE code are
Construction, Manufacturing and Wholesale and Retail Trade
representing 22.9%, 21.0% and 16.6% of the portfolio balance,
respectively. The top three regions are Madrid, Catalonia
and Andalusia representing 24.5%, 18.7% and 15.1% of the
portfolio balance, respectively. The largest obligor represents
2.3% while the largest ten obligors total 15.7% of the portfolio
balance.
These ratings are based upon DBRS's review of the following
analytical considerations:
* Transaction structure, the form and sufficiency of
available credit enhancement.
-- Credit enhancement is provided in the form of
subordination, through the Reserve Fund and excess
spread. The current credit enhancement of 40.75% is
sufficient to support the AAA (sf) rating on both the
Series A1 and Series A2 (G) Notes. The 15.75% credit
enhancement provided by the Reserve Fund is sufficient
to support the B (high) (sf) rating on the Series B
Notes.
-- The Reserve Fund has been initially set at 15.75% of the
aggregate balance of the Series A and Series B Notes, or
EUR 204.75 million. The Reserve Fund is available to
cover shortfalls in the senior expenses and interest on
the Series A1 and A2 (G) Notes, throughout the life of
the Notes. On the last payment date or the early
liquidation payment date (if it occurs), the Reserve
Fund can be used to pay interest and principal on the
Series A1, the Series A2 (G) and the Series B
Notes.
-- The Reserve Fund cannot be reduced during the life of
the transaction, except for required payments to cover
interest shortfalls.
-- The Reserve Fund will be funded at inception through the
issuance of a subordinated loan granted by Banco
Popular.
* The ability of the transaction to withstand stressed cash
flow assumptions and repay investors according to the
approved terms. For this transaction, the final ratings of
the Series A1 and A2 (G) Notes address the timely payment
of interest and the payment of principal on or before the
Final Maturity Date on 22 November 2047, as defined in the
transaction documents. The final rating of the Series B
Notes addresses the ultimate payment of interest and the
payment of principal on or before the Final Maturity Date,
as defined in the transaction documents. The
payments of interest and principal on the Notes will be
made monthly, generally on the 22nd day of each month. The
first payment date is scheduled for December 22, 2011.
* The transaction parties' financial strength and
capabilities to perform their respective duties and the
quality of origination, underwriting and servicing
practices.
* Soundness of the legal structure and presence of legal
opinions which address the true sale of the assets to the
trust and the non-consolidation of the special purpose
vehicle, as well as the consistency with the DBRS Legal
Criteria for European Structured Finance Transactions.
The principal methodology is Master European Granular Corporate
Securitisations (SME CLOs), which can be found on DBRS's website
under Methodologies.
DBRS determined key inputs used in its analysis based on
historical performance data provided for the originator and
servicer, as well as analysis of the current economic
environment. Further information on DBRS's analysis of this
transaction will be available in a rating report on
http://www.dbrs.comor by contacting us at info@dbrs.com
The sources of information used for these ratings include parties
involved in the rating, including but not limited to IM Banco
Popular FTPYME 3, F.T.A., Intermoney Titulizacion, S.G.F.T., S.A.
and Banco Popular. DBRS considers the information available to
it for the purposes of providing this rating was of satisfactory
quality.
This is the first DBRS rating on this financial instrument.
For additional information on DBRS European SME CLOs, please see
European Disclosure Requirements, located at
http://www.dbrs.com/research/235269
Ratings assigned by DBRS Ratings Limited are subject to EU
regulations only.
Lead Analyst: Carlos Silva
Rating Committee Chair: Jerry van Koolbergen
Final Rating Date: November 1, 2011
IM FTPYME: DBRS Assigns 'B' Rating to Series B Notes
----------------------------------------------------
DBRS Ratings Limited has assigned final ratings to the Notes
issued by IM FTPYME Sabadell 9, F.T.A. (the "Issuer"), as
follows:
* EUR295 million Series A1 Notes: AAA (sf)
* EUR650 million Series A2 (G) Notes: AAA (sf)
* EUR555 million Series B Notes: B (high) (sf)
The transaction is a cash flow securitisation collateralized
primarily by a portfolio of bank loans originated by Banco de
Sabadell, S.A. to large corporations and small and medium
enterprises ("SMEs") domiciled in Spain.
As of October 27, 2011, the final portfolio included 6,443 loans
granted to 6,039 borrowers with a weighted average maturity of
8.1 years and a notional amount of EUR1,500 million.
The portfolio is well diversified in terms of industry and
obligor concentration.
The top three industries by NACE code are Real Estate Activities,
Manufacturing, and Wholesale and Retail Trade representing 22.8%,
20.3% and 16.1% of the portfolio balance, respectively. The
largest obligor represents 0.9% while the largest ten obligors
total 6.8% of the portfolio balance.
The portfolio has a high exposure to the bank's home region of
Catalonia which represents 43.5% of the portfolio balance.
Madrid and the Valencian Community, with 14.9% and 7.2% of the
portfolio balance respectively, complete the top three
region distributions of the borrowers.
These ratings are based upon DBRS's review of the following
analytical considerations:
* Transaction structure, the form and sufficiency of
available credit enhancement.
-- Credit enhancement is provided in the form of
subordination, through the Reserve Fund and excess spread. The
current credit enhancement of 47% is sufficient to support the
AAA (sf) rating on both the Series A1 and Series A2 (G) Notes.
The 10% credit enhancement provided by the Reserve Fund is
sufficient to support the B (high) (sf) rating on the Series B
Notes.
-- The Reserve Fund has been initially set at 10% of the
aggregate balance of the Series A and Series B Notes, or EUR 150
million. The Reserve Fund is available to cover shortfalls in
the senior expenses and interest on the Series A1 and A2 (G)
Notes, throughout the life of the Notes. On the last payment
date or the early liquidation payment date (if it occurs), the
Reserve Fund can be used to pay interest and principal on the
Series A1, the Series A2 (G) and the Series B Notes.
-- The Reserve Fund cannot be reduced during the life of the
transaction, except for required payments to cover interest
shortfalls.
-- The Reserve Fund will be funded at inception through the
issuance of a subordinated loan granted by Banco Sabadell.
* The ability of the transaction to withstand stressed cash
flow assumptions and repay investors according to the approved
terms. For this transaction, the final ratings of the Series A1
and A2 (G) Notes address the timely payment of interest and the
payment of principal on or before the Legal Final Maturity Date
on January 17, 2046, as defined in the transaction documents.
The final rating of the Series B Notes addresses the ultimate
payment of interest and the payment of principal on or before the
Legal Final Maturity Date on January 17, 2046, as defined
in the transaction documents. The payments of interest and
principal on the Notes will be made quarterly, generally on the
17th day of January, April, July and October. The first payment
date is scheduled for January 17, 2012.
* The transaction parties' financial strength and
capabilities to perform their respective duties and the quality
of origination, underwriting and servicing practices.
* Soundness of the legal structure and presence of legal
opinions which address the true sale of the assets to the trust
and the non-consolidation of the special purpose vehicle, as well
as the consistency with the DBRS Legal Criteria for European
Structured Finance Transactions.
The principal methodology is Master European Granular Corporate
Securitisations (SME CLOs), which can be found on DBRS' website
under Methodologies.
DBRS determined key inputs used in its analysis based on
historical performance data provided for the originator and
servicer, as well as analysis of the current economic
environment. Further information on DBRS's analysis of this
transaction will be available in a rating report on
http://www.dbrs.comor by contacting us at info@dbrs.com
The sources of information used for these ratings include parties
involved in the rating, including but not limited to IM FTPYME
Sabadell 9, F.T.A., Intermoney Titulizacion, S.G.F.T., S.A. and
Banco Sabadell. DBRS considers the information available to it
for the purposes of providing this rating was of satisfactory
quality.
This is the first DBRS rating on this financial instrument.
For additional information on DBRS European SME CLOs, please see
European
Disclosure Requirements, located at
http://www.dbrs.com/research/235269
Ratings assigned by DBRS Ratings Limited are subject to EU
regulations only.
Lead Analyst: Carlos Silva
Rating Committee Chair: Jerry van Koolbergen
Final Rating Date: November 1, 2011
===========
S W E D E N
===========
SAAB AUTOMOBILE: GM Won't Allow Chinese Firms to Use Technology
---------------------------------------------------------------
The Associated Press reports that General Motors Co. on Monday
said it won't allow two Chinese companies to use its technology
if they go ahead with a planned purchase of Saab Automobile, a
former GM unit.
The announcement raises doubts about a rescue plan for the ailing
Swedish brand, which is being reorganized under bankruptcy
protection after running out of cash to pay suppliers and staff,
the AP notes.
Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile
Trade Co. agreed last month to buy Saab from current owner
Swedish Automobile for EUR100 million (US$140 million), the AP
recounts.
According to the AP, GM, which sold the loss-making brand in
2010, said in a statement it would block existing technology
licenses and stop supplying the GM-built Saab 9-4X crossover SUV
"following the proposed change in ownership as it would not be in
the best interests of GM."
Saab Automobile AB is a Swedish car manufacturer owned by Dutch
automobile manufacturer Swedish Automobile NV, formerly Spyker
Cars NV.
===========
T U R K E Y
===========
TURK EXIMBANK: Moody's Assigns 'Ba1' Senior Unsecured Debt Rating
-----------------------------------------------------------------
Moody's Investors Service has assigned a first-time Ba1 foreign-
currency senior unsecured debt rating to Export Credit Bank of
Turkey AS (Turk Eximbank). The outlook on the rating is positive.
RATINGS RATIONALE
The Ba1 rating and its outlook assigned to the senior unsecured
bond issuance is the same as the foreign currency issuer rating
already assigned to Turk Eximbank, as ultimately all the payment
obligations within the structure remain with Turk Eximbank.
The debt issuance is being offered under Rule 144A, Regulation S.
The terms and conditions of the notes include (among others) a
negative pledge, cross-default and a change of control clause.
The notes will be unconditional, unsubordinated and unsecured
obligations and will rank pari passu with all Turk Eximbank's
other senior unsecured obligations. The rating of the notes is in
line with Turk Eximbank's foreign-currency issuer rating. Any
subsequent foreign-currency senior unsecured bonds issued by Turk
Eximbank would also be rated Ba1.
A possible rise in the ceiling for foreign currency debt would
lead to an upgrade in Turk Eximbank's rating, given that the
bank's issuer rating is currently constrained by the ceiling. Any
downgrade in the country ceiling for foreign currency debt would
lead to a similar action on Turk Eximbank's own rating.
Alternatively any significant departure from the bank's current
business profile -- such that it would lead to deterioration in
its financial metrics -- could also precipitate a rating
downgrade.
The principal 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.
Turk Eximbank is headquartered in Ankara, Turkey, and at the
yearend 2010 had total assets of US$4 billion.
===========================
U N I T E D K I N G D O M
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AC YULE: Goes Into Administration, 300 Jobs at the Risk
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Gary Cruden at stv news reports that AC Yule has gone into
administration after being hit with financial difficulties
putting 300 jobs at risk in the process.
AC Yule has bases in Aberdeen, Elgin, Livingston, Forfar, Glasgow
and Boldon, near Sunderland.
At least 50 staff in Aberdeen has already been told that they are
to be made redundant and staff in Elgin was also told to clear
their desks, according to stv news.
stv news notes says that in July this year, the firm shed around
120 jobs after shutting its fabrication factory in England,
citing a slowdown in contracting work throughout the construction
industry. The report relates that the company posted a pre-tax
loss of GBP342,000 in the year to Jan. 31, 2010.
AC Yule is Scotland's leading window manufacturer.
EUROSAIL-UK: Moody's Confirms Rating on GBP63M A2c Notes at 'Ba2'
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Moody's Investors Service has concluded the review of five
tranches of mortgage backed securities issued Eurosail-UK 2007-
3BL PLC and confirmed the ratings of these notes. The ratings
were initially placed on review direction uncertain due to the
uncertainty whether or not an enforcement notice would be served
to switch the transaction to post-enforcement waterfall in Nov
2008.
Issuer: Eurosail-UK 2007-3BL PLC
-- GBP63M A2c Notes, Confirmed at Ba2 (sf); previously on
Nov 25, 2008 Downgraded to Ba2 (sf) and Placed Under Review
Direction Uncertain
-- GBP64.5M A3c Notes, Confirmed at B2 (sf); previously on
Nov 25, 2008 Downgraded to B2 (sf) and Placed Under Review
Direction Uncertain
-- US$100M A2b Notes, Confirmed at Ba2 (sf); previously on
Nov 25, 2008 Downgraded to Ba2 (sf) and Placed Under Review
Direction Uncertain
-- EUR64.5M A2a Notes, Confirmed at Ba2 (sf); previously on
Nov 25, 2008 Downgraded to Ba2 (sf) and Placed Under Review
Direction Uncertain
-- EUR215M A3a Notes, Confirmed at B2 (sf); previously on
Nov 25, 2008 Downgraded to B2 (sf) and Placed Under Review
Direction Uncertain
RATING RATIONALE
The rating action is primarily driven by: (i) the reduced
possibility of note enforcement following the ruling of the Court
of Appeal that Eurosail is presently balance sheet solvent, (ii)
the stabilized performance of underlying assets, (ii) the limited
foreign exchange rate fluctuations since last review in December
2010.
Court Judgment
In 2010, the High Court found that Eurosail was balance sheet
solvent for the purposes of Section 123(2) of the Insolvency Act
1986, and no insolvency Event of Default had occurred under the
Condition of the notes. This decision was subsequently confirmed
by Court of Appeal in March 2011. Based on these court
directions, Moody's now considers that it is less likely that an
enforcement notice will be served and assumes that the senior
notes will continue to pay sequential in the base case scenario.
Portfolio Performance
The portfolio arrears has shown signs of stabilization since
2009, currently loans in more than 3 month arrears remain stable
at 17.60%, compared to 17.63% in December 2010. Cumulative losses
have increased slightly from 2.56% to 2.89%. Moody's considers
the transaction performance to be in line with its expectations.
FX Exposure
In its most recent reviews, Moody's has assessed FX risk. This is
because the currency swap agreement in the transaction was
terminated following the bankruptcy filing of LBHI. The Issuer
has not entered into a replacement swap and Moody's assumes that
it will not be able to do so in the future, resulting in exposure
to foreign exchange rates until maturity. The trends in the
foreign exchange markets experienced so far are still within the
levels of stress applied by Moody's in its previous reviews.
Hence, the foreign exchange fluctuations since the last review
have had no impact on the current rating of the notes.
Key Assumption
Moody's has maintained the expected loss and Milan Aaa CE
assumption for the transaction. The expected loss Moody's assumed
is 7.25% as of the original portfolio balance; the Milan Aaa CE
used in the analysis is 19.2% as a percentage of the current
portfolio balance.
These assumptions remain subject to uncertainties such as the
future general economic activity and house prices. If realized
recovery rates were to be lower or default rates were to be
higher than assumed, the rating would be negatively affected. In
addition if FX rates move significantly from current levels this
will affect the rating of this transaction.
Further, Moody's notes that the Court of Appeal's decision will
be appealed. If the Supreme Court overrules the Court of Appeal
and the transaction switches to post-enforcement waterfall, the
ratings of the senior notes will be impacted.
The principal methodology used in this rating was Moody's
Approach to Rating RMBS in Europe, Middle East, and Africa
published in October 2009.
In rating this transaction, Moody's has modeled the cash flows to
determine the loss for each tranche. The cash flow model
evaluates all default scenarios that are then weighted
considering the probabilities of the lognormal 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 addition, Moody's has applied
stressed foreign exchange risk assumptions for different rating
levels to incorporate the future volatility of FX rates and
applied a buffer to the current levels of exchange rates in order
to limit the rating transition driven by short term volatility in
the foreign exchange markets. In the past three years, spot rates
have been less favorable to the issuer compared to those entered
into at closing, and the undercollateralization has gradually
built up. Moody's has taken into account the stressed exchange
rates and future build up of undercollateralization. For example,
when considering the ratings of the class A2 notes, Moody's has
assumed that GBP will depreciate against Euro/USD by
approximately 10% in the next year. As such, Moody's analysis
encompasses the assessment of stressed scenarios.
GEMGARTO 2011-1: S&P Assigns 'BB+' Rating to Class B2 Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
credit ratings to Gemgarto 2011-1 PLC's class A1, M1, M2, B1, and
B2 notes.
Gemgarto 2011-1 will be the first transaction to securitize
collateral originated under Kensington Mortgage Company Ltd's (a
wholly owned subsidiary of Investec Bank PLC) revised
underwriting framework.
The collateral pool consists primarily of first-lien U.K.
nonconforming residential (80.30%) and buy-to-let (19.70%)
mortgage loans originated in or after 2010. Of the collateral,
97.20% initially pay interest at a fixed rate and 2.80% have
their interest rate capped. There are no self-certified loans in
the pool and the weighted-average indexed loan-to-value ratio is
75.19%.
On the closing date, Gemgarto 2011-1 will issue mortgage-backed
class A1, M1, M2, and B1 notes, and non-mortgage-backed class B2
notes. At the same time, it will issue unrated class R notes. "We
understand that the issuer will use the proceeds from the class R
notes, among other things, to fund the reserve fund to 1.0% of
the collateralized note balance at closing, and will redeem them
using residual interest income," S&P said.
The issuer will initially pay interest and principal
sequentially, with principal payments switching to pro-rata after
three years and subject to certain conditions outlined in the
transaction documents. The structure benefits from a reserve fund
and yield reserve fund both of which will be funded at closing.
The issuer may use principal to pay revenue shortfalls or trap
into a liquidity reserve fund to cover future shortfalls subject
to certain conditions which are outlined in the transaction
documents.
At closing, Gemgarto 2011-1 will enter into a fixed-for-floating
interest rate swap agreement. Under this agreement, it will pay a
fixed rate in exchange for receiving sterling LIBOR. Furthermore,
two interest rate caps are in place with differing notionals,
maturities, and strike rates. The issuer may use proceeds from
these caps to pay revenue shortfalls or otherwise trap in a cap
reserve fund to cover future shortfalls.
S&P's analysis indicates these key risks:
The portfolio at closing will not equal the principal value
of the collateralized notes (A1, M1, M2, and B1). Part of the
sale proceeds will be retained and used to purchase
collateral into the pool until February 2012.
The risk of such loans being of an inferior quality is
partially mitigated by such loans having to comply with the
eligibility standards set out in the Mortgage Sale Agreement.
"We have also analyzed data on loans which will likely form
this prefunding element," S&P related.
"Our analysis assumes a recessionary period, during which we
assume a proportion of the pool defaults. It is probable in
our view that loans with higher yields, reflecting a greater
risk profile are more likely to default first. Our analysis
accounts for this spread compression by assuming that the
highest yielding proportion of the pool equal to the 'AAA'
WAFF defaults, leaving a residual pool with a lower yield in
place," S&P stated.
There remains some uncertainty about the outlook for the U.K.
economy, and the future movements in economic growth and
unemployment rates. "As we observe that unemployment rates
correlate with delinquencies and defaults, first-time buyers
and less seasoned loans are particularly vulnerable. These
risks are incorporated into our credit analysis and reflected
in the weighted-average foreclosure frequency and weighted-
average loss severity," S&P said.
Potential Effects of Proposed Criteria Changes
"We have assigned the preliminary ratings to notes issued by
Gemgarto 2011-1 PLC, based on our criteria for rating U.K.
residential mortgage-backed securities (RMBS). However, these
criteria are under review (see 'Request For Comment: U.K. RMBS
Methodology And Assumptions,' published on Sept. 15, 2011)," S&P
related.
"As highlighted in the Sept. 15 Request For Comment, we are
soliciting feedback from market participants with regard to
proposed changes to our U.K. RMBS criteria. We will evaluate the
market feedback, which may result in further changes to the
criteria. As a result of this review, our future U.K. RMBS
criteria may differ from our current criteria. The criteria
change may affect the ratings on all outstanding notes in the
transaction," S&P stated.
"Until such time that we adopt new criteria for rating U.K. RMBS,
we will continue to rate and surveil these transactions using our
existing criteria (see 'Related Criteria And Research')," S&P
related.
Standard & Poor's 17g-7 Disclosure Report
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities.
The Standard & Poor's 17g-7 Disclosure Report included in this
credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com/1111244.pdf
Ratings List
Gemgarto 2011-1 PLC
Up To GBP200 Million Mortgage-Backed Floating-Rate Notes and GBP4
Million Non-Mortgage Backed Notes
Class Prelim. Prelim.
rating amount
(mil. GBP)
A1 AAA (sf) 174
M1 AA (sf) 14
M2 A (sf) 8
B1 BBB (sf) 4
B2 BB+ (sf) 4
R NR TBC
NR--Not rated.
LEARNING & SKILLS: Goes Into Administration on Income Decline
-------------------------------------------------------------
Niki May Young at Civil Society Finance reports that the Learning
and Skills Network has gone into administration as after it
suffered a decline in income and "significant pension
liabilities", which increased from GBP5.2 million to
GBP7.9 million in financial year end March 2010.
Pricewaterhousecoopers (PwC) was appointed as LSN's administrator
on November 3.
It is now seeking a buyer from within its five educational
businesses: Technology for Learning; National Extension College;
Education, Skills and Research; Development Services and the
Learning and Skills Development Agency (Northern
Ireland)/Learning and Skills Network, according to Civil Society
Finance.
The report notes that LSN has seen a reduction in income from an
average of GBP43 million in the three years previous, to GBP27.5
million in financial year end March 2010. As a result, it
implemented a new strategy which involved acquiring three new
businesses and a merger with the National Extension College which
took place in July 2010, Civil Society Finance relates.
Civil Society Finance says that it also established a shared
service program for colleges and increased its employee
contributions for pensions. This, it was expected was to
significantly increase income in 2010/11 and eliminate the
pension deficit within 10 years, the report relays. However it
has not been enough to save the charity, Civil Society Finance
discloses.
"The charity operates a number of businesses and has suffered a
dramatic decline in contract income since 2009 with its funded
programs diminished due primarily to the cuts in government
spending. . . . As a result of the decline in income and
significant pension liabilities within the charity, the trustees
concluded that they were unable to continue and have placed the
charity into administration. . . . Our immediate priority is to
seek buyers for the successful businesses within the charity,"
Civil Society Finance quoted David Hurst, joint administrator
from PwC, as saying.
About Learning and Skills
Learning and Skills Network is a not-for-profit set up to develop
the performance and skills of education sector staff and to
promote and encourage education learning and skills of people and
organizations. Its services range from leadership and
management, to HR and merger support and its clients include the
Department for Education, BIS, the Ministry of Defense and
Barclays Wealth.
The charity employs 117 staff in five offices with 48 employees
in London, 14 in Oxford, 16 in Olney, 26 in Cambridge, and 13 in
Belfast.
LUMINAR GROUP: The Gallery to Remain Open Despite Administration
----------------------------------------------------------------
Aimee Howarth at the yorker reports that the Gallery nightclub in
York is to remain open, despite its owner Luminar Group Holding
PLC going into administration.
However, Luminar Head of Marketing Stephen Lynn revealed that The
Gallery, in York, will not be closing as a result of its owner's
struggles, according to the yorker.
"As part of the administration process, 11 loss-making clubs in
the Luminar estate have been closed -- this doesn't include The
Gallery in York. . . . The Gallery will continue to provide the
residents of York one of the best nights out for the foreseeable
future," the yorker quoted Mr. Lynn as saying.
The Gallery, situated in the historic York Institute building on
Friargate, boasts five bars, three rooms and a large gallery and
opens every day of the year, except Christmas day.
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.
MAX TWO: S&P Affirms 'B-' Rating on EUR100-Mil Sr. Secured Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' long-term
issue rating on the EUR100 million senior secured amortizing
notes due 2024, issued by Jersey-based wind energy special-
purpose vehicle (SPV) Max Two Ltd. (MTL). "At the same time, we
removed the rating from CreditWatch with negative implications,
where it was placed on March 21, 2011. We subsequently suspended
the 'B-' long-term issue rating on the senior secured notes, due
to a lack of critical information. At the time of the suspension,
the outlook on the notes was negative," S&P related.
"The affirmation reflects our view that MTL's recent operating
and financial performance is in line with our expectations for
the 'B-' rating. In particular, we understand that, to date, all
of the 2011 scheduled debt service payments (in March and
September) from the wind farms to MTL and all debt service from
MTL to the noteholders have been met in full without recourse to
the respective debt service reserve accounts (DSRAs)," S&P said.
"We are suspending the rating because we consider that we lack
information of sufficient quality to maintain surveillance on the
notes. In particular, we have not yet received an updated
auditor's opinion on MTL's financial situation, given that the
2010 audited financial statements are not yet available to us,"
S&P said.
"We understand from our ongoing contact with the project
operators, the cash manager, and the administrator, that this
information might be provided within the next couple of months,
although we believe the timing is uncertain. We will likely
withdraw the rating if we do not receive the 2010 audited annual
accounts and other relevant operational and financial performance
information by Jan. 31, 2012, and, subsequently, on a timely
ongoing basis," S&P related.
MTL is a special-purpose vehicle that issued the notes to finance
the Breeze One wind power project. MTL used a portion of the
issuance proceeds to provide senior loans to five wind farms in
Germany and three in Portugal. MTL also provided subordinated
loans to one of the Portuguese wind farms and to the Tandem 1 and
Tandem 2 wind farms in Germany. The notes are serviced by loan
payments from the individual wind farms. The wind farm loans are
not cross-collateralized and therefore the lowest of the ratings
on the wind farm loans determines the rating on the notes. The
senior loans to the wind farms are supported by six-month DSRAs,
with some held at MTL and some held at the respective wind farms.
The subordinated loans are supported by an 18-month DSRA held at
MTL.
"At the time of suspension, the outlook on the notes was
negative, reflecting, amongst other things, the lack of
information on MTL's level of equity, our consequent uncertainty
regarding the project's status as a going concern, and the risk
of a decline in the project's debt repayment capacity. The latter
could occur if the project's operating performance and liquidity
weaken as a result of, for example, continued weak wind
conditions," S&P said.
PREMIER FOODS: Gets Extra Breathing Space From Banks
----------------------------------------------------
Victoria Thomson at The Scotsman reports that Premier Foods on
Sunday said it had been given extra breathing space by its banks
to get its finances in order.
According to the Scotsman, debt-laden Premier Foods said tests on
financial covenants, which were due on Dec. 31, have now been
deferred for three months as it buys more time to thrash out a
refinancing package.
Premier has been scrapping for its life in recent months as
profits plummet and it struggles to keep up with repayments on
its GBP850 million debt mountain, the Scotsman relates.
Under the leadership of new boss Michael Clarke, the company is
considering the possible sale of some of its well-known brands as
it looks to shore up its balance sheet.
Premier Foods plc is United Kingdom-based company engaged in food
manufacturing, processing and distribution.
RANGERS FC: Countdown to HMRC's GBP49MM Tax Case Verdict Begins
---------------------------------------------------------------
John Greechan at MailOnline reports that the tax tribunal that
could send Rangers Football Club PLC tumbling into administration
kicked off.
The countdown has begun towards a verdict on Her Majesty's
Revenue Custom's GBP49 million demand after the first-tier
tribunal -- a hearing involving tax experts appointed by the club
and representatives from the government -- was reconvened at an
undisclosed location, according to MailOnline.
The report notes that HMRC are aggressively seeking to recoup
GBP35 million, as well as penalties of GBP14 million, from the
company now owned by Craig Whyte, who admits that the club are in
'crisis mode' because of the outstanding demand.
MailOnline discloses that the government is pursuing Rangers FC
strongly because they see this as a test case which, if won, will
open the door for the tax man to recoup hundreds of millions of
pounds from clubs who used a similar avoidance scheme.
As reported in the Troubled Company Reporter-Europe on Nov. 1,
2011, dailyrecord.co.uk said that Rangers FC could be hammered
with a total deduction of 25 points if they are forced into
administration. And should the Ibrox side have to start again
under a new name, it is possible all of those points would come
off before the end of this season, according to
dailyrecord.co.uk.
The report related that if 75% of the shareholders and the same
percentage of creditors accept a fraction of what they're owed,
the club can come out of administration and carry on with no
further penalty. But, the report noted, if HMRC managed to put a
block on the deal, the club, would cease to be and assets would
be transferred to a new company. If Rangers lose the tax case
into the Employee Benefits scheme, they could be facing a tax
bill of GBP40 million plus, the report added.
About Rangers Football Club
Rangers Football Club PLC -- http://www.rangers.premiumtv.co.uk/
-- is a United Kingdom-based company engaged in the operation of
a professional football club. The Company has launched its own
Internet television station, RANGERSTV.tv. The station combines
the use of Internet television programming alongside traditional
Web-based services. Services offered include the streaming of
home matches and on-demand streaming of domestic and European
games, which include dedicated pre-match, half-time and post-
match commentary. The Company will produce dedicated news
magazine and feature programs, while the fans can also access a
library of classic European, Old Firm and Scottish Premier League
(SPL) action. Its own dedicated television studio at Ibrox
provides onsite production, editing and encoding facilities to
produce content for distribution on all media platforms.
WAVENEY PUB: Goes Into Administration, Cuts 14 Jobs
---------------------------------------------------
Eatout magazine reports that Waveney Pub Company Limited has been
placed into administration with Adam Clarke and David Whitehead,
of Larking Gowen being appointed joint administrators.
Cash flow difficulties as a result of difficult trading
conditions and pressure from a number of creditors are blamed for
the company's difficulties, according to Eatout magazine.
The report notes that the company's King's Head and The Donkey
and Buskins have been closed and 14 staff made redundant but the
Tavern remains open and trading as normal with all staff
retained.
Waveney Pub Company Limited, which employed 23 people, operated
three pubs across East Anglia - The Tavern in Holland-on-Sea,
Essex, The Donkey and Buskins in Layer de la Haye, Essex and the
Kings Head in Woodton, Suffolk.
* UK: Number of Pub Sector Business Failures Increases
------------------------------------------------------
StockMarketWire.com reports that The Morning Advertiser's new
down-beat figures from revealed that the number of businesses
falling into administration in the licensed trade increased by
more than one quarter between Q2 and Q3 2011.
The Morning Advertiser reported that the number of pub and bar
operators going into administration more than doubled, from six
to 13, although there was one fewer administration among
restaurant operators in the quarter (13), according to
StockMarketWire.com.
StockMarketWire.com discloses that across the licensed trade,
excluding hotels, administrations went from 23 in Q2 to 31 in Q3.
Year-on-year comparatives were also bleak for the industry, with
27 administrations in Q3 2010, the report relays.
StockMarketWire.com notes that there was also a rise in
compulsory liquidations in the industry, with 68 in Q3 against 44
in the previous quarter. Meanwhile, the number of company
voluntary agreements in the sector fell from 14 to seven between
Q2 and Q3 2011, the report says.
"The latest insolvency statistics for the hotel and licensed
sectors support our previous predictions. Challenging trading
conditions have translated into a significant number of bar,
nightclub, restaurant and hotel insolvencies in Q3, with wet led
pubs and bars being particularly badly hit. As expected, there
is some regional variation with the London markets holding up
better than the provinces. . . . As Christmas approaches and the
prospects for a full scale economic recovery become less certain,
the key issues for the sector will continue to center around
consumer confidence and spending power, restricted working
capital availability and, as a consequence, the threat that
businesses will not be able to absorb the impact of unforeseen
events such as adverse weather. . . . This may well lead to a
greater number of insolvencies in Q4 2011 and Q1 2012," the
report quoted Peter Cooper, partner at Baker Tilly Restructuring
and Recovery LLP, as saying.
===============
X X X X X X X X
===============
* Three U.S. Corp Defaults Last Week Raise S&P Tally to 39
----------------------------------------------------------
Three U.S.-based corporate issuers defaulted this week, raising
the 2011 global corporate default tally to 39, said an article
published Nov. 3 by Standard & Poor's Global Fixed Income
Research, titled "Global Corporate Default Update (Oct. 28 -
Nov. 2, 2011)."
Standard & Poor's Ratings Services lowered its ratings on MF
Global Holdings Ltd. to 'D' after the company filed for Chapter
11. This is the first time a U.S.-based corporate issuer has
defaulted from an investment-grade rating since the ratings on
Washington Mutual Bank were lowered to 'D' after it was placed
into FDIC receivership and simultaneously sold to JPMorgan Chase
& Co. on Sept. 26, 2008.
The other two defaulters this week were homebuilder Hovnanian
Enterprises Inc. and Native American casino operator River Rock
Entertainment Authority. Standard & Poor's Ratings Services
lowered its issuer credit rating on Hovnanian to 'SD' after the
company completed a distressed tender offer, and the ratings on
River Rock were lowered to 'D' following the issuer's failure
to repay principal on its existing $200 million senior notes at
maturity.
Of the total defaulters this year, 29 are based in the U.S.,
three are based in New Zealand, two are in Canada, and one each
is in the Czech Republic, Greece, France, Israel, and Russia. Of
the defaulters by this time in 2010, 53 were U.S.-based issuers,
nine were from the other developed region (Australia, Canada,
Japan, and New Zealand), eight were from the emerging markets,
and two were European issuers.
Fifteen of this year's defaults were due to missed interest or
principal payments and eight were due to distressed exchanges--
both of which were among the top reasons for defaults in 2010.
Bankruptcy filings followed with seven defaults, and regulatory
actions accounted for three. Of the remaining defaults, one
issuer failed to finalize refinancing on its bank loan, one
issuer had its banking license revoked by its country's central
bank, another was appointed a receiver, and three were
confidential.
By comparison, in 2010, 28 defaults resulted from missed interest
or principal payments, 25 from Chapter 11 and foreign bankruptcy
filings, 23 from distressed exchanges, three from receiverships,
one from a regulatory directive, and one from administration.
*********
Monday's edition of the TCR delivers a list of indicative prices
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*********
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