/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/120504.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Friday, May 4, 2012, Vol. 13, No. 89 Headlines C Z E C H R E P U B L I C CENTRAL EUROPEAN: Moody's Reviews' B3' CFR/PDR for Upgrade D E N M A R K CIMBER STERLING: Files for Bankruptcy; Cancels All Flights F R A N C E PAGESJAUNES FINANCE: Fitch Rates Senior Secured Notes 'BB' G E R M A N Y VORARLBERGER LANDES: Moody's Issues Summary Credit Opinion I R E L A N D ALLIED IRISH: Won't Be Able Pay EUR280MM Cash Dividend by May 13 SHAFIN DEVELOPMENTS: Deep in Debt, Goes Into Receivership L U X E M B O U R G SCHMOLZ + BICKENBACH: Moody's Rates EUR300MM Sr. Sec. Notes (P)B1 R U S S I A GAZPROMBANK: Moody's Assigns '(P)Ba1' Subordinated Debt Rating GLOBALTRANS INVESTMENT: Moody's Says MIT Buyout Credit Neutral METALLOINVEST JSC: Moody's Says MIT Disposal Credit Neutral U N I T E D K I N G D O M AQUASCUTUM: YGM Trading Enters Into Deal to Buy Business CAITHNESS BEEF: Owner to Sue Bank of Scotland for GBP10MM CITY SITE ESTATES: PwC Appointed as Receiver for Developer ICICI BANK: Moody's Retains 'D' BFSR; Outlook Stable MICRO ANVIKA: Creditors Back Company Voluntary Arrangement PELICAN: Goes Into Receivership, Seeks Buyer RANGERS FOOTBALL: Bill Miller Named Preferred Bidder SCARLETS REGIONAL: Auditors Express Going Concern Doubt SYNCORA HOLDINGS: Moody's Issues Summary Credit Opinion * SCOTLAND: Number of Collapsed Firms Increases * Dundas & Wilson's Verrill Joins Chadbourne's London Office X X X X X X X X * Moody's Says Cost Inflation Hits EMEA Building Materials Sector * BOOK REVIEW: Corporate Venturing -- Creating New Businesses ********* =========================== C Z E C H R E P U B L I C =========================== CENTRAL EUROPEAN: Moody's Reviews' B3' CFR/PDR for Upgrade ---------------------------------------------------------- Moody's Investors Service placed Central European Media Enterprises' (CME) ratings under review for upgrade. The ratings affected by this review are the company's corporate family rating ("CFR", currently B3), its probability of default rating ("PDR", currently B3), the senior unsecured notes ratings (currently Caa1) and the senior secured notes rating (currently Ba3) assigned at the CET21 level. On April 30, 2012, CME announced that it had entered into a series of agreements with its major shareholders, Time Warner Inc. ("TW", rated Baa2) and Ronald Lauder, to enable CME to fund tender offers to purchase up to an aggregate of US$300 million of its outstanding notes. The broad terms of the proposed transaction include: (i) the provision by TW to CME of a loan facility (the "TW Loan") of up to US$300 million; (ii) a tender offer for the full outstanding amount of the 2013 notes held by third parties at par; (iii) buyback of the Euro equivalent of US$170 million of the 2014 notes (at a price between 86% and 92%) and the 2016 notes (at a price between 97% and 100%); (iv) the conversion by TW of the TW loan into Class A shares within six months of the initial drawing of that loan -- this conversion is guaranteed by the put option held by CME which allows it to sell Class A shares to TW at the end of the six months period. Moody's review for upgrade is likely to be concluded at the time of the completion of the tender offers and once the amount of debt reduction is finalized, which Moody's expects to happen before the end of Q2 2012. Moody's currently anticipates that the review will result in a ratings upgrade of at least one notch. Ratings Rationale The successful completion of the proposed transactions would result in a significant reduction in CME's Moody's adjusted leverage ratio from 7.9x at the end of December 2011. In addition, the transaction will see CME emerge with an improved liquidity profile as the company will have no debt maturing until the 2014 notes come due in May of that year. The decrease in debt should also help CME in reversing the trend of producing negative free cash flows. As part of the review Moody's will assess CME's liquidity profile following the transaction, as well as the evolution of the key credit metrics. In particular, the review will focus on the evolution of CME's leverage ratio under the premise that the TW loan will be equitized within the stated timeframe, and not refinanced through the issuance of new debt. The review will also take into account the evolution of CME's market share in the different geographies it operates in as well as the company's performance over the first few months of 2012 and whether the positive trends in advertising seen in 2011 continue to drive recovery in the company's activities. The principal methodology used in these ratings was the Global Broadcast Industry Methodology published in June 2008. CME, a Bermuda-incorporated company, is a media and entertainment company with networks and content production units in six Central and Eastern European countries: the Czech Republic, Romania, Slovakia, Slovenia, Croatia and Bulgaria. Launched in 1994, CME currently operates 30 TV channels in those countries. In the year ended December 31, 2011, CME reported net revenues of US$865 million and OIBDA of US$167 million. ============= D E N M A R K ============= CIMBER STERLING: Files for Bankruptcy; Cancels All Flights ---------------------------------------------------------- Lennart Simonsson at Deutsche Presse-Agentur reports Cimber Sterling on Thursday filed for bankruptcy, cancelling all its flights with immediate effect. According to DPA, the company management related in a statement that the owners had "decided not to support the company financially any longer." Danish news agency Ritzau reported that the administrator, Lise Bo Larsen, had no immediate information on how many passengers were stranded abroad, DPA relates. Chief Executive Jan Palmer, as cited by DPA, said management was to work with the administrator and would propose that the airline continue to operate four aircraft on regional routes it is operating for the airline SAS. Investment group Mansvell Enterprises, controlled by Ukrainian businessman Igor Kolomoisky, took over the loss-making airline in August, DPA recounts. According to its latest financial report, its operating loss was DKK81.5 million (US$14.4 million), DPA discloses. The Board of Directors has decided to declare the company bankruptcy and a declaration of bankruptcy is handed over to the court of Sonderborg Thursday morning. The management team of the company said that it is highly sorry that this is the outcome of several months of intense work ensuring a turn around but the management will be fully supportive for the curator the coming days to ensure as much value as possible in the company. "It is highly sorry the Board of Directors has been forced to take the decision to declare the company bankruptcy. The Board of Directors and the management team has worked intensely to ensure a turn around of the company for several months but unfortunately we did not succeed before we ran out of time. It was simply not possible to change the direction of the company as fast as needed and thereby in due time deliver the necessary financial results," says Jan Palmer, CEO in Cimber Sterling and continues: "The management team will work closely together with curator to ensure as much value as possible in the company and to continue as much of the operation as possible under a reconstruction of the company. It is our proposal to curator that we for a start and as a minimum continues to fly four aircrafts on the regional routes that the company are operating for SAS. At the same time, we will suggest that we together with curator explores the possibilities to operate more aircrafts and thereby ensure as much value as possible for a possible buyer". The court of Sonderborg will point out one or more curators that will handle the company going forward. Curator will handle the company and the communication going forward as the management team formally will has stop working as the declaration of bankruptcy is handed over. "It is a day of sorrow for Danish aviation, for Cimber Sterling and for me personally. But it is not at least sad for all the passengers that at this moment have worthless tickets and lost expectations. And it is highly sad for a lot of employees that risk losing their job," says Jan Palmer. He continues, "It is the expectation that a plan can be drafted within the next three days concerning the future of the company activities. Unfortunately in situations like these there will be a lot of loose ends that have to meet. Therefore we will work intensely on all options the coming days". Cimber Sterling is a Danish budget airline. =========== F R A N C E =========== PAGESJAUNES FINANCE: Fitch Rates Senior Secured Notes 'BB' ---------------------------------------------------------- Fitch Ratings has assigned PagesJaunes Finance & Co S.C.A.'s senior secured notes a final 'BB' rating with a Recovery Rating (RR) of 'RR2'. Fitch has simultaneously affirmed PagesJaunes Groupe S.A.'s Long-term Issuer Default Rating (IDR) at 'B+'. The Outlook on the Long-term IDR is Negative. This follows the receipt of the final description of the notes and the confirmation that their proceeds were used to repay the Term Loan A2. ============= G E R M A N Y ============= VORARLBERGER LANDES: Moody's Issues Summary Credit Opinion ---------------------------------------------------------- Moody's Investors Service issued a summary credit opinion on Vorarlberger Landes- und Hypothekenbank AG and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Vorarlberger Landes- und Hypothekenbank AG and its affiliates. Moody's current ratings on Vorarlberger Landes- und Hypothekenbank AG and its affiliates are: Senior Unsecured (domestic and foreign currency) ratings of A1 Senior Unsecured MTN Program (domestic currency) ratings of (P)A1 Long Term Bank Deposits (domestic and foreign currency) ratings of A1 Bank Financial Strength ratings of D+ Subordinate MTN (domestic currency) ratings of (P)A2, on review for downgrade Short Term Bank Deposits (domestic and foreign currency) ratings of P-1 BACKED Senior Unsecured (domestic and foreign currency) ratings of Aaa BACKED Senior Unsecured MTN Program (domestic currency) ratings of (P)Aaa BACKED Long Term Bank Deposits (foreign currency) ratings of Aaa BACKED Subordinate (domestic currency) ratings of Aa1 BACKED Subordinate MTN Program (domestic currency) ratings of (P)Aa1 BACKED Short Term Bank Deposits (foreign currency) ratings of P-1 Hypo Vorarlberg Capital Finance (Jersey) Ltd BACKED Subordinate (foreign currency) ratings of Ba3 RATING RATIONALE Moody's assigns a standalone bank financial strength rating (BFSR) of D+ to Vorarlberger Landes- und Hypothekenbank AG (VLH), which maps to a standalone credit strength of baa3; the outlook on the BSFR is stable. The BSFR reflects VLH's stable retail and commercial franchise within a highly competitive domestic market, as well as acceptable financial fundamentals, with particular strengths in terms of efficiency. VLH's A1 long-term global local currency (GLC) debt and deposit ratings carry a negative outlook. The bank's rating is underpinned by (i) its baa3 standalone credit strength; (ii) Moody's assessment of the high probability of support from the Austrian Federal State of Vorarlberg; and (iii) Moody's expectation of the probability of systemic support from the Austrian government. As a result, VLH's GLC deposit rating receives a five-notch uplift from its standalone credit strength. The bank's debt rating for 'grandfathered' obligations issued before April 2007 is Aaa, with negative outlook, as these continue to benefit from deficiency guarantees (Ausfallbšrgschaft) from the Austrian Federal State of Vorarlberg, reflecting the financial strength of the guarantor. Rating Outlook The outlook on VLH's long-term ratings is negative and the outlook on the bank's BFSR is stable. What Could Change the Rating - Up There is currently no upward pressure on the bank's long-term ratings, as reflected by the negative outlook. Upward pressure could be exerted on VLH's D+ BFSR by a combination of the following: (i) marked improvements in profitability without increasing its risk profile; (ii) maintaining efficiency and further improving asset quality; (iii) improving capital levels; and (iv) successful implementation of a long-term sustainable funding structure, thereby gradually preparing to replace government-guaranteed funding sources which will progressively diminish over the next five years. Such modest upward pressure on the BFSR is, however, unlikely to immediately trigger an upgrade of the long-term ratings in view of the high support assumptions already factored into the bank's senior debt and deposit ratings. What Could Change the Rating - Down Downward pressure on VLH's BFSR could principally be triggered by a material deterioration in the bank's overall franchise value, risk positioning or financials. More specifically, the rating could be downgraded if re-investment of recent pre-funding activities yields higher risks with a parallel negative impact on financials. Moreover, deterioration in profitability or asset quality could exert downward pressure on the BFSR. A downgrade of VLH's long-term debt rating could be triggered by any of the following (i) a change in its standalone credit strength; (ii) a deterioration in creditworthiness of the Austrian Federal State of Vorarlberg; (iii) a weakening of the bank's relationship with the state or a perceived weakening of implicit support; (iv) a change in ownership; or (v) a negative change in systemic support. Any change in the backed Aaa rating for those obligations benefiting from 'grandfathered' deficiency guarantees would be directly linked to changes in the financial assessment of the Austrian Federal State of Vorarlberg. Principal Methodologies The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012. ============= I R E L A N D ============= ALLIED IRISH: Won't Be Able Pay EUR280MM Cash Dividend by May 13 ---------------------------------------------------------------- Allied Irish Banks, p.l.c., said that the annual cash dividend of EUR280 million on the EUR3.5 billion 2009 Non-Cumulative Preference Shares held by the National Pensions Reserve Fund Commission (NPRFC), on behalf of the Irish State, due May 13, 2012, will not be paid. As a result, AIB becomes obliged to issue and allot ordinary shares to the NPRFC in accordance with AIB's Articles of Association. The number of Bonus Shares to be issued will be calculated by dividing the unpaid dividend amount on the 2009 Preference Shares by the average price on an ordinary share over the period of 30 days trading immediately preceding the annual dividend date. The final amount of Bonus Issue of ordinary shares will therefore be announced in due course. The Irish State, through the NPRFC, owns 99.8% of the ordinary shares of AIB. About Allied Irish Banks Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. The Company reported a loss of EUR2.29 billion in 2011, a loss of EUR10.16 billion in 2010, and a loss of EUR2.33 billion in 2009. Allied Irish's consolidated statement of financial position for the year ended Dec. 31, 2011, showed EUR136.65 billion in total assets, EUR122.18 billion in total liabilities and EUR14.46 billion in shareholders' equity. SHAFIN DEVELOPMENTS: Deep in Debt, Goes Into Receivership --------------------------------------------------------- JOE.IE reports that Shafin Developments has officially gone into receivership. The company is owned by Westlife's Shane Filan who is now deep in debt. The Irish Independent reported that the former Westlife singer has failed to prevent receivers being appointed to the troubled company that he co-owns with his brother, according to JOE.IE. The report notes that Ulster Bank have apparently appointed KPMG as receivers to Shafin Developments and it is estimated that Mr. Filan and his brother owe the banks debts more than EUR5 million, JOE.IE discloses. Earlier this year, JOE.IE notes that Mr. Filan insisted that he would not allow the firm to go into receivership, but according to well-placed financial sources who spoke to the Irish Independent, overall, the singer is currently battling with a massive EUR23 million debt, including his property woes. JOE.IE relates that sources said that he has already employed a well-known, reputable firm of accountants that are based in London and he is also currently negotiating financial arrangements with banks -- including Ulster Bank and Bank of Ireland -- in an attempt to avoid having to declare himself bankrupt. JOE.IE disc discloses that Mr. Filan is trying to keep any earnings that he makes on the upcoming Westlife farewell tour out of his current financial negotiations. The report relates that the Westlife farewell tour will make the band a massive EUR12 million and Mr. Filan is determined that no one will touch this money. =================== L U X E M B O U R G =================== SCHMOLZ + BICKENBACH: Moody's Rates EUR300MM Sr. Sec. Notes (P)B1 ----------------------------------------------------------------- Moody's Investors Service has assigned a (P)B1 (LGD3, 42%) rating to the proposed EUR300 million of senior secured notes due 2019 being issued by SCHMOLZ + BICKENBACH Luxembourg S.A., a wholly- owned subsidiary of SCHMOLZ + BICKENBACH AG (S+B). At the same time, a (P)B1 corporate family rating and probability of default rating were assigned. If the proposed financing concludes as expected, the provisional ratings will become definitive ratings at the conclusion of the proposed financing. The rating outlook is stable. S+B is a leading global producer of specialty long steel with steel mills and processing plants in Europe and North America. Ratings Rationale Moody's (P)B1 rating reflects the competitive nature of the specialty steel industry, the cyclical nature of the primary end markets S+B serves, and the few costs the company has under its control given that approximately 60% of its costs are raw material and energy costs. As a result of these factors, S+B experiences EBIT margin shrinkage during downcycles due to reduced volumes and the impact of lower capacity utilization on fixed costs. These pressures have impacted its profitability over the last four years, when EBIT margins ranged between 3.4% and 5.5%, excluding the EBIT loss in 2009. This, along with relatively high historic capex and considerable swings in working capital, have kept cash flow generation modest. The rating positively reflects the company's significant market share in its key markets, its production, process and technological expertise, and its integrated business model, all of which make it an important supplier and partner to a diversified customer base. While S+B can't control raw material costs, it benefits from the industry-wide practice of passing through nickel and other alloy costs through a surcharge mechanism, although it has a short-term timing mismatch on nickel prices. Moody's also notes that the company's leverage is relatively modest for its (P)B1 rating. Leverage will be approximately 3.8x gross debt to EBITDA and 61% debt to capital pro forma for the contemplated financing and applying Moody's standard adjustments. The stable rating outlook reflects the company's solid market share, breadth of products, long-term customer relationships, good liquidity, and ability to pass through raw material costs representing about half of its operating costs. The rating could be raised if the company were to push operating margins higher, say to a 6.5% EBIT margin, and consistently generate free cash such that FCF to debt was above 6% and debt to EBITDA was under 3.7x. The rating could be pressured if S+B's EBIT margins declined to less than 5%, free cash was persistently negative, or if liquidity were to significantly lessen. The proposed senior secured notes are rated (P)B1, the same level as S+B's corporate family rating, due to their pari passu ranking with much of S+B's other debt and other non-debt obligations. The bonds are being issued by SCHMOLZ + BICKENBACH Luxembourg S.A., a Luxembourg public limited liability company and a wholly-owned subsidiary of SCHMOLZ + BICKENBACH AG. The bonds are supported by guarantees from each of the company's subsidiaries that are guarantors under its senior secured credit facilities and by a first-priority lien over receivables, inventory, and certain other assets, but not PPE, of the issuer and the guarantors. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect the rating agency's preliminary credit opinion regarding the transaction. Upon a conclusive review of the final documentation Moody's will assign a definitive rating to the notes. A definitive rating may differ from a provisional rating. The methodologies used in these ratings were Global Steel Industry published in January 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. S+B is a leading global producer, processor and distributor of specialty long steel operating in all three major sub-segments of the specialty long steel market: tool steel, stainless long steel and engineering steel. It operates nine production facilities in Europe and North America, 11 processing plants in Europe and the US, and 86 distribution branches in 35 countries around the world. In 2011, S+B had revenues of EUR3.9 billion. =========== R U S S I A =========== GAZPROMBANK: Moody's Assigns '(P)Ba1' Subordinated Debt Rating -------------------------------------------------------------- Moody's Investors Service has assigned (P)Ba1 long-term foreign and local currency subordinated debt ratings to the US$10 billion loan participation notes program of Gazprombank for the issuance of loan participation notes through GPB Eurobond Finance Plc -- an Ireland-based special purpose vehicle. The notes under the program are to be issued on a limited recourse basis for the sole purpose of financing subordinated loans to Gazprombank. The outlook on the subordinated debt ratings is stable. Moody's already rates at (P)Baa3 senior notes that can be issued under this program. At the same time, Moody's assigns a (P)Ba1 long-term foreign currency debt rating (stable outlook) to the US$500 million 7.25% loan participation notes due 2019. The rating on this issue is subject to Moody's review of final documentation. This issue forms part of the US$10 billion notes program of Gazprombank. The notes are issued on a limited recourse basis for the sole purpose of financing a subordinated loan to Gazprombank. Ratings Rationale Moody's says that the (P)Ba1 rating assigned to the subordinated notes, which is one notch lower than Gazprombank's Baa3 senior unsecured debt rating, takes into account (i) the extent of the notes' subordination against various classes of debt, and (ii) associated differences in expected loss in case of default. Moody's states that if Gazprombank were to issue notes containing features enhancing its subordination and/or debts with other special features, the ratings will be assessed individually and may not correspond to the ratings currently assigned to the program. Principal Methodologies The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012. Headquartered in Moscow, Russia, Gazprombank reported total assets of US$77 billion and net income of US$1.3 billion according to audited IFRS at YE2011. GLOBALTRANS INVESTMENT: Moody's Says MIT Buyout Credit Neutral -------------------------------------------------------------- Moody's Investors Service has said that it views as credit neutral for Globaltrans Investment PLC its announced acquisition of 100% of Metalloinvesttrans (MIT), a captive railcar operator of JSC Holding Company METALLOINVEST (Metalloinvest; Ba3 positive), for a total consideration of US$540 million. As a result, Globaltrans' Ba3 rating and positive outlook are unaffected by the acquisition. "Although we expect that the acquisition will be financed largely with debt, this should not affect Globaltrans' credit profile materially, as its leverage is relatively low and the group could accommodate some increase within its current rating," explains Artem Frolov, an Assistant Vice President -- Analyst and lead analyst for Globaltrans. "We expect the group to retain the potential for an upgrade over the next 12-18 months, reflected by the positive outlook on its rating." Moody's notes that Globaltrans' leverage decreased to 1.4x adjusted debt/EBITDA at year-end 2011 from 2.2x a year earlier. This was a result of both growth in adjusted EBITDA of more than 30% and a decline in adjusted debt, which in turn was partially a result of a material reduction in Globaltrans' leased-in fleet and, consequently, of estimated operating lease expenses, which contributed materially to the group's adjusted leverage in 2008- 10. As a result of the acquisition and Globaltrans' large capital expenditure program for 2012, which is also largely debt- financed, Moody's expects that the group's leverage will approach 2.0x adjusted debt/EBITDA at year-end 2012. At the same time, the rating agency notes that on a pro-forma basis, Globaltrans' leverage will be lower, given that the group will start consolidating MIT in its financial statements only from the second half of the year. In addition, Moody's takes some comfort from management's intention to keep leverage under control. Although it considers the acquisition to be credit neutral, Moody's recognizes that it is beneficial for Globaltrans' business profile because it will (i) expand its railcar fleet by 8,256 own railcars (around 20% of its own fleet as of year-end 2011), adding an estimated USD140 million to the group's consolidated annual EBITDA; and (ii) provide the group with a three-year contract, agreed as part of the transaction, to transport Metalloinvest's cargos. Cyprus-based Globaltrans Investment PLC is one of the largest private railway transportation groups operating in Russia, with a fleet of 47,580 railcars as of year-end 2011. In 2011, the group transported around 70 million tonnes of various cargos and generated US$1.7 billion of revenue and US$650 million of EBITDA (adjusted by Moody's). The group's customers are large Russian blue-chip companies operating mainly in the metals and mining, oil and oil products industries, as well as small and medium- sized companies. Globaltrans is a public company that has been listed on the London Stock Exchange since 2008. METALLOINVEST JSC: Moody's Says MIT Disposal Credit Neutral ----------------------------------------------------------- Moody's Investors Service has said that it views as credit neutral for JSC Holding Company METALLOINVEST (Metalloinvest) its disposal of 100% of LLC Metalloinvesttrans (MIT), its captive freight rail transportation operator, for US$540 million on a cash- and debt-free basis. As a result, Metalloinvest's Ba3 corporate family rating and positive rating outlook are unaffected by the disposal. Moody's believes that the transaction will allow Metalloinvest to free up capital, which will help the company to focus on its core activities and smooth out increased debt levels in the event that it decides to go ahead with the acquisition of 20% of its own shares currently held by VTB. Metalloinvest sold 100% of MIT to Globaltrans Investment PLC (Ba3 positive), a leading Russian private freight rail transportation group, in an all-cash transaction. The transaction is expected to be closed by the end of May 2012, subject to regulatory approvals. As at December 31, 2011, MIT operated 9,202 railcars (of which it owned 8,256, which had an average age of approximately 8.7 years). MIT handled 44.2 million tonnes of cargoes in 2011, with a focus on metallurgical cargoes (83%), as well as coal (10%) and other cargoes (7%). In 2011, MIT had adjusted revenue of US$344 million, adjusted EBITDA of US$140 million (up 13% year on year) and an adjusted EBITDA margin of 41%. The disposal of MIT to Globaltrans has allowed Metalloinvest to unlock the value of its transportation subsidiary at a time when the Russian freight transportation market is being consolidated by several independent players at a price equivalent to approximately US$65,000 per railcar, with an average useful life of 20-22 years. Moody's notes that during the 2008 commodity price rally, railcar prices spiked at US$80,000-90,000 per new railcar, but went on to fall to US$40,000-50,000 per new railcar during 2009, demonstrating significant volatility. Currently, a new railcar can be bought at a price range of US$75,000-80,000. Based on Metalloinvest's financial results for the period ended December 31, 2011, Moody's estimates that that the company's EBITDA margin will deteriorate by around 1% as a result of the disposal of MIT. Despite the fact that MIT used to handle almost all of its owner's railway cargoes, Moody's does not expect that Metalloinvest's operations will be materially affected by the disposal of its freight rail transportation operator. As part of the transaction, Globaltrans and Metalloinvest have agreed a three-year service contract. In accordance with this contract, Globaltrans will provide rail freight transportation and logistics services to Metalloinvest, handling 100% of all its rail transportation cargo volumes in year one based on agreed pricing terms and 60% in the following two years based on a "right of first refusal" principle. Moreover, MIT's key management team will stay at Metalloinvest, helping the company to coordinate its cargo logistics via independent operators. As at December 31, 2011, Metalloinvest had total debt of approximately US$5.6 billion and US$1.2 billion of cash and cash equivalents. Metalloinvest drew-down US$916 million of its existing credit facility agreements in January 2012 and issued around US#850 million of 10-year rouble-denominated bonds in March 2012. In Moody's view, this could indicate that the company is planning a significant transaction in the not-so-distant future, namely, a potential acquisition of its 20% share from VTB. It is estimated that VTB bought its 20% share stake for approximately US$2.5 billion at the end of 2011 from its previous shareholder, Mr. Anisimov. Moody's notes that raising US$540 million in cash in the course of its disposal of MIT will allow the company to lessen its debt burden, which the company accumulated during first quarter of 2012. Looking ahead, the disposal of MIT will allow Metalloinvest to focus on its core activity of iron ore, pellets and hot- briquetted iron (HBI)/direct-reduced iron (DRI) production and to benefit from the growing competition and capacity in the freight rail transportation market in Russia. Among Metalloinvest's core investment projects are Pellet Plant #3 and HBI-3 plant, which will significantly ramp up the company's capacities in pellets and HBI production and which management estimates will require investment of around US$1.3 billion over the next three years. The principal methodology used in rating Metalloinvest was the Global Mining Industry Methodology, published in May 2009. Founded in 2005 and with headquarters in Moscow, Russia, Metalloinvest is a leading global iron ore and HBI producer, with a 36% domestic market share of iron ore production (59% for pellets and 100% for HBI/DRI). The company has the world's second-largest iron ore reserve base of 14.9 billion tonnes, is the largest iron ore producer in Europe and Russia in terms of volumes and the fifth-largest supplier globally in terms of market share. In 2011, Metalloinvest produced approximately 40.1 million tons (2010: 36.8 million tons) of iron ore, 22.4 million tons (2010: 22 million tons) of pellets, 5.2 million tons (2010: 4.7 million tons) of HBI/DRI and 5.8 million tons (2010: 6.1 million tons) of crude steel. For twelve months ending December 31, 2011 the Company reported revenue of US$9.9 billion (2010: US$7.2 billion) and EBITDA of US$3.9 billion (2010: US$2.6 billion). Metalloinvest's production facilities are primarily located in the European part of Russia, at Lebedinsky GOK (LGOK), Mikhailovsky GOK (MGOK) and OEMK. Metalloinvest is owned by Mr. Usmanov, Mr. Moshiri, Mr. Skoch and VTB. =========================== U N I T E D K I N G D O M =========================== AQUASCUTUM: YGM Trading Enters Into Deal to Buy Business -------------------------------------------------------- Jennifer Thompson at The Financial Times reports that YGM Trading, the Hong Kong-based owner of the Aquascutum brand in Asia, is set to consolidate its control of the luxury British fashion label which collapsed into administration last month. According to the FT, YGM Trading has entered into an exclusivity agreement with FRP Advisory, administrator of the classic clothing company, to acquire "the ongoing business and assets" for an undisclosed sum. These include 37 Aquascutum stores in Europe, including 26 in the UK, and the global brand rights, the FT notes. YGM Trading bought the rights to the Aquascutum name in Asia in 2009, the FT recounts. The exclusivity period will last until May 9 but FRP, as cited by the FT, said a "financial commitment has been obtained," and that "both parties are now focused on dealing with the necessary legal documentation to effect the sale". The FT relates that Geoff Rowley, joint administrator at FRP, said: "The joint administrators have been very encouraged by the significant interest shown in the business over the last two weeks and have chosen to proceed with the offer that delivers the best outcome for the creditors of Aquascutum." FRP said that it had received "significant interest" in Aquascutum, founded in 1851 as a raincoat maker, from "in excess of 70 interested parties" around the world, the FT notes. The deadline for bids passed last Friday, the FT discloses. However the future of its factory at Corby, which employed 115 people and was shut in April, remains unclear, the FT says. According to the FT, FRP said expressions of interest for the facility had been received and more were expected, but no deadline has been set for a sale. Aquascutum is a British clothing label known for its trench coats. CAITHNESS BEEF: Owner to Sue Bank of Scotland for GBP10MM --------------------------------------------------------- scotsman.com reports that businessman John Sutherland is threatening to sue the Bank of Scotland for GBP10 million after claiming he was forced to put a GBP4 million meat processing plant into administration. Mr. Sutherland insists the bank had committed funding towards the venture, which was handed GBP1.145 million in public funding, according to scotsman.com. Mr. Sutherland, according to the report, insists the bank's failure to provide promised funding landed the business in financial trouble. Mr. Sutherland said they were GBP350,000 short towards building costs, and another GBP2 million was pledged to get the business up and running, scotsman.com notes. "This has nothing to do with a downturn in the beef and lamb trade . . . . The Bank of Scotland is certainly in the wrong. We were dealing with fantastic people at the start at the bank. . . . We had Highlands and Islands Enterprise and the Scottish Government backing us, and we all signed off to the same business plan. But the bank did not keep to the business plan." As reported in the Troubled Company Reporter-Europe on May 2, 2012, business7.co.uk said that Caithness Beef and Lamb has been placed into administration due to intense competition and rising costs within the meat slaughtering and processing sectors blamed. The report relates that it has never gone into full production, having only operated trial production runs to date. Iain Fraser and Tom MacLennan of RSM Tenon are named as joint administrators. business7.co.uk discloses that a spokesman for the administrators said as such it would be "a handful" of employees who may be affected in the administration process. The administrators hope the facility will attract interest from Europe's farming and food processing industries, the report noted. Caithness Beef and Lamb is a meat processing plant. The GBP4 million, 1300 sq. metre production facility in Wick has processing and packaging facilities, an abattoir, offices and storage facilities. CITY SITE ESTATES: PwC Appointed as Receiver for Developer ---------------------------------------------------------- Jonathan Randles at Bankruptcy Law360 reports that Scottish-based real estate development firm City Site Estates, which values its property portfolio at more than $568 million, has been placed into receivership, PricewaterhouseCoopers said Monday. Law360 relates that David Chubb and Alan Brown of PwC were appointed as joint receivers of City Site Estates, which owns several commercial properties in Glasgow and London, on April 25. According to the report, Mr. Chubb said in a statement that PwC's immediate priority would be to review City Site Estates' portfolio to extract the best value for creditors. ICICI BANK: Moody's Retains 'D' BFSR; Outlook Stable ---------------------------------------------------- Moody's Investors Service has placed on review for downgrade the Baa2 long-term debt and deposit ratings, the P-2 short term rating, the Baa3 subordinated rating and the Ba1 (hyb) junior subordinated rating of ICICI Bank UK plc. The rating action follows the announcement by Moody's on 30 April 2012 to place the C- standalone bank financial strength rating (which maps to baa2 on the long term scale) of the bank's parent, ICICI Bank Limited on review for downgrade along with two other Indian banks whose standalone credit assessments are currently positioned above India's sovereign debt rating. ICICI Bank UK's standalone BFSR of D/ba2 is not affected by this action. Ratings Rationale The ratings of ICICI Bank UK have been put on review for downgrade in line with the review of the BFSR ratings of its parent bank. Currently, Moody's incorporates a very high level of parental support for ICICI UK, resulting in three notches of uplift from its D standalone Bank Financial Strength Rating (BFSR, mapping to ba2 on the long term scale). Therefore, the review of ICICI UK's ratings is driven by the review and outcome for the ratings of its parent, and will focus on the impact that the potential change in the BFSR of ICICI Bank Limited, as expressed in the review for downgrade, may have on the current parental support uplift of 3 notches in ICICI UK 's ratings. The rating action on the Indian banks reflects Moody's revised assessment of the linkage between the credit profiles of sovereigns and financial institutions globally, which is further discussed in the rating implementation guidance "How Sovereign Credit Quality May Affect Other Ratings" published on 13 February, 2012. WHAT COULD CHANGE THE RATING -- UP/DOWN An upgrade of the bank deposit and senior debt rating is highly unlikely given the current review for possible downgrade. Upward pressure on the standalone BFSR would likely require a further sustained improvement in the bank's UK corporate and retail franchise, including a meaningful diversification among its core customer base and reduction in its loan concentrations. An established track-record of a core retail deposit base and minimizing the impact of one-off events on its profitability would also contribute to this trend. A sharp reduction in profitability or losses, caused by the realisation of the negative mark-to-market valuation of some investments could lead to downward pressure on the BFSR. Pressure on the liquidity position or high volatility in the deposit base given its price- sensitivity could also put a significant downward pressure on the bank's standalone ratings. A downgrade of ICICI Bank Limited 's BFSR is likely to lead to downgrade of ICICI UK senior ratings. The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012. MICRO ANVIKA: Creditors Back Company Voluntary Arrangement ---------------------------------------------------------- Paul Kunert at Channel Register reports that Micro Anvika's short-term future is looking more secure after suppliers gave its proposed rescue package the thumbs up. The firm has shuttered more than half its stores and laid off more than 60% of staff in a bid to convince creditors, owed GBP2.7 million in total, that it could once again become an economically viable enterprise, Channel Register relates. Biz advisor Re10, which Micro Anvika appointed last December to explore whether it could turn around operations, held a meeting of creditors on 26 April, Channel Register recounts. The Company Voluntary Arrangement (CVA) was approved by 84% of those present -- more than the 75% needed to green light the deal, Channel Register discloses. Gary Rupping, manager at Re10, told Channel Register creditors can expect to see a minimum of a 32-pence-on-the-pound return on their debts over the next five years, which he said was preferable to the other alternative -- insolvency. Mr. Rupping, as cited by Channel Register, said the retailer had closed four stores -- three in London and one in Surrey -- and the headquarters based in the capital. "It has gone from 140 employees to around 50," Channel Register quotes Mr. Rupping as saying. Micro Anvika is a Tottenham Court Road retailer. PELICAN: Goes Into Receivership, Seeks Buyer -------------------------------------------- View Online reports that receivers have been appointed to find a buyer for Weymouth's Tall Ship Pelican, currently used for youth training voyages. The Pelican is in the hands of joint receivers Steve Adshead and Greg Palfrey from the South Coast office of accountancy and investment management group Smith & Williamson, according to View Online. The report relates that they have been tasked with securing a new owner for the 370-tonne sailing vessel, with offers around GBP2.45 million. View Online notes that a number of private individuals, who kept the ocean-going ship afloat with funds, are owed nearly GBP2.5 million, the receivers said. The report says that the receivers stressed that the charity, Weymouth-based Adventure Under Sail Ltd (AUSL), has no formal relationship with the owner of the 45-metre long vessel. Pelican was built in Le Havre, France, in 1946 as a double-beam Arctic fishing trawler. The vessel was acquired in 1997 by retired Naval Commander Graham Neilson as a restoration project for circumnavigation under sail and was meticulously reconstructed over 12 years in Portland. RANGERS FOOTBALL: Bill Miller Named Preferred Bidder ---------------------------------------------------- Bob Bensch at Bloomberg News reports that the administrators for Rangers Football Club chose American businessman Bill Miller as the preferred bidder for the Glasgow soccer team. Rangers, which has won a record 54 Scottish titles, went into administration, a form of bankruptcy, in February as U.K. tax authorities chased the team over unpaid bills, Bloomberg recounts. "Mr. Miller now proposes to complete his transaction by the end of the season," Bloomberg quotes administrators Duff & Phelps as saying in a statement on Rangers Web site. As reported by the Troubled Company Reporter-Europe on May 2, 2012, BBC Scotland related that Mr. Miller's bid for Rangers is worth significantly more than the Blue Knights and Brian Kennedy's. The Blue Knights' Paul Murray told BBC Scotland on Friday evening that he believes his joint bid with Sale Sharks owner Kennedy outbids the American's, BBC Scotland disclosed. Both bids depend on taking the club's bond holders' debt, around GBP7 million, out of a Company Voluntary Arrangement, BBC Scotland noted. But it is thought the Knights' bid uses that figure as part of its offer, BBC Scotland said. BBC Scotland noted that administrators Duff & Phelps said "neither bid involves liquidation of the football club". 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. SCARLETS REGIONAL: Auditors Express Going Concern Doubt ------------------------------------------------------- Martin Shipton at Wales Online reports that Scarlets Regional Ltd. chief executive Mark Davies on Wednesday night insisted the club is on course for a stable financial future despite concerns expressed by its auditors in the latest annual accounts. Mr. Davies gave a detailed briefing to the Western Mail about the revival plan for the region, stressing his determination to drive it through at a time when there are fears about the financial sustainability of the entire regional game, Wales Online relates. Newly-published accounts for the year ended June 2011 show that Scarlets made a loss of more than GBP1.8 million, Wales Online discloses. According to Wales Online, a note in the accounts from auditors Grant Thornton states: :The company incurred a net loss of GBP1,819,158 during the year ended June 30, 2011 and, at that date, the company had an excess of liabilities over assets of GBP1,946,066. "These conditions . . . indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern." Mr. Davies confirmed that the company was only able to survive at present because of the generosity of four benefactors who sit as directors on the board, Wales Online notes. But he said the Scarlets are on course in terms of their current level of financial performance to become "cost neutral" by June 2014, Wales Online recounts. Loans totalling GBP5.4 million made to the Scarlets by directors had been converted into equity shareholdings -- a fact that Mr. Davies, as cited by Wales Online, said demonstrated the directors' commitment to the club's future. The club has also secured a deal with Her Majesty's Revenue and Customs to pay off a historic debt, Wales Online states. SYNCORA HOLDINGS: Moody's Issues Summary Credit Opinion ------------------------------------------------------- Moody's Investors Service issued a summary credit opinion on Syncora Holdings Ltd. and includes certain regulatory disclosures regarding its ratings. The release does not constitute any change in Moody's ratings or rating rationale for Syncora Holdings Ltd. Moody's current ratings on Syncora Holdings Ltd. and its affiliates are: Syncora Holdings Ltd. Preferred Stock Non-cumulative (foreign currency) ratings of C (hyb) Syncora Guarantee Inc. Insurance Financial Strength ratings of Ca Syncora Guarantee (U.K.) Ltd. Insurance Financial Strength ratings of Ca Ratings Rationale Moody's Ca insurance financial strength ratings for Syncora Guarantee Inc. ("Syncora Guarantee" or the "Company"), reflects the company's weak capital adequacy position, continued stress in its portfolio, impaired financial flexibility and run-off status. In its YE2011 statuatory filing, management expressed doubts around the Company's ability to continue as a going concern. In April 2009, the New York State Department of Financial Services ("NYDFS") ordered the company to suspend all claim payments on financial guaranty policies until its statutory surplus position had been restored to the US$65 million minimum amount required as per New York Insurance Law. To address the policyholders' deficit and liquidity issues, the Company established a remediation plan to reduce portfolio exposure in July 2009, called the 2009 Master Transaction Agreement ("2009 MTA"). The plan included purchases of certain guaranteed exposures and various other loss remediation and restructuring actions. Syncora Guarantee announced completion of the plan in July 2009 and then took other remediation measures in early 2010, including liquidity enhancement steps, prior to being ordered to recommence claim payments in July 2010. All accrued and unpaid claims from April 2009 to July 2010 were paid by November 2010. As of December 31, 2011, Syncora Guarantee had a statutory policyholders' surplus of US$186.1 million. As part of the remediation plan, Syncora Guarantee paid cash and issued long- and short-term surplus notes in 2009 to counterparties in order to commute certain portfolio exposures. A total of US$625 million was issued, US$150 million maturing December 28, 2011. Repayment was contingent on certain conditions and in December 2011, the NYDFS disallowed a scheduled repayment on Syncora Guarantee's short-term suplus notes, bringing total principal, paid-in-kind interest, and accrued and unpaid interest on such short term surplus notes to US$169.6 million. Under the terms of the notes and New York insurance law, such principal and interest payments may only be made with the prior approval of the NYDFS and to the extent the company has free and dividible surplus to make such payments. Absent the satisfaction of these conditions, the Company is not entitled to make any payment on its surplus notes and timing around future payment is unknown. Syncora Guarantee Inc is an indirect subsidiary of Bermuda domiciled Syncora Holdings Ltd. Following the 2009 restructuring, Syncora Guarantee's counterparties owned 40% of Syncora Holdings and US$625 million of short term and long term surplus notes issued by Syncora Guarantee. Also as part of the 2009 MTA, Syncora Capital Assurance Inc ("SCAI") was created as a wholly owned subsidary of Syncora Guarantee. SCAI reinsures a portion of Syncora Guarantee's US public finance and global infrastructure portfolio on a cut-through reinsurance basis. Syncora Guarantee also novated its non-commuted CDS exposures to SCAI. As of year- end 2011, SCAI had assets of US$716.2 million and assumed US$58.8 billion of risk from Syncora Guarantee. Credit Strengths - The company has substantially reduced its exposure to the most distressed and volatile segments, particularly its former ABS CDO portfolio. - Completion of NYDFS-required remediation plan and the restart of claims payments in 2010. Credit Challenges - Though improved since 2008, policyholder surplus still only marginally above required level - Limited visiblity around magnitude and timing of ultimate portfolio losses, particularly in RMBS and Jefferson County. Rating Outlook The developing outlook reflects the possibility of both positive and negative pressure on Syncora Guarantee's insurance financial strength rating. If Syncora Guarantee is able to substantially improve its capital position or financial positions, the rating could be upgraded. If the NYDFS takes regulatory action on Syncora Guarantee, the insurance financial strength rating could be under further downward stress. Further, movement in Jefferson County, Alabama bankruptcy, negative movement in litigation with RMBS originators around putbacks or further potential deterioration in its statutory capital position could create additional downward pressure. What Could Change the Rating - Up - Material improvement in statutory surplus position and Moody's capital adequacy estimate - Substantial success in loss mitigation efforts, including putback claims - Repayment of the short-term surplus notes What Could Change the Rating - Down - Placement of the company into regulatory rehabilitation or liquidation The principal methodology used in these ratings was Moody's Rating Methodology for the Financial Guaranty Insurance Industry published in September 2006. * SCOTLAND: Number of Collapsed Firms Increases ----------------------------------------------- BBC News reports that official figures have revealed that a record number of Scottish firms went bust in the first three months of this year. Accountant in Bankruptcy (AiB) reported 385 Scottish firms became insolvent or entered receivership in the last quarter, according to BBC News. The report relates that the number was 37.5% higher than the previous quarter and 30.9% higher than the same period last year. BBC News discloses that the figures showed nearly 30 businesses a week went bust in Scotland in the first 13 weeks of this year. Accountants PKF said it was the highest number in any quarter on record. BBC News relays that PKF corporate recovery partner Bryan Jackson said: "These figures show the real state of the Scottish economy. Many companies are simply having to close down as they cannot see an end to the economic gloom. . . . There will undoubtedly be businesses which have used up years of cash reserves to stay afloat but have now found they are unable to carry on due to the relentless lack of an upturn in the economy. . . . The news that the UK economy has fallen into a double-dip recession is unlikely to surprise any of the business owners who have gone bust in the first three months of this year." Meanwhile, BBC News notes that AiB reported there were more than 4,850 personal insolvencies in Scotland -- a 4% increase on the previous quarter. BBC News relates that the figure was 14% higher than the corresponding period last year. Bankruptcy numbers fell slightly, while there was a 10% increase on the previous quarter in the number of protected trust deeds (PTDs), which are voluntary arrangements, BBC News notes. The number of debt payment programs approved under the Debt Arrangement Scheme (DAS), which allows people to repay their debt over an extended period, nearly doubled compared with the same period last year, BBC News says. * Dundas & Wilson's Verrill Joins Chadbourne's London Office ------------------------------------------------------------ The international law firm Chadbourne & Parke LLP announced that John Verrill has joined the Firm's London office as a partner in the insolvency and financial restructuring group. Mr. Verrill comes to Chadbourne from Dundas & Wilson, a leading UK corporate and commercial firm, where he was co-head of the insolvency and restructuring team, and before that was a partner at Lawrence Graham LLP. With over 25 years of experience in the corporate recovery sector, Mr. Verrill is a highly qualified restructuring partner. During his career, he has advised on restructuring and insolvency issues in a wide range of sectors, both debtor and creditor side, with a particular focus on complex cross-border insolvency matters and company voluntary arrangements. He has extensive experience in both contentious and non-contentious roles. "Having John join us in London is strategically important for Chadbourne's insolvency and financial restructuring group," said Claude Serfilippi, Managing Partner of Chadbourne's London office. "He will be well placed to drive and support matters handled by our integrated insolvency practice in our New York, Mexico City, Warsaw and Moscow offices." "John's high visibility in the London market and cross-border insolvency experience complements our existing international and cross-border capabilities," added Howard Seife, global chair of the Firm's insolvency and financial restructuring practice. "John will be a tremendous asset for our clients." Chadbourne is a leader in the use of cross-border ancillary proceedings, including its representation in Chapter 15s of the liquidators of Hellas Telecommunications and the receiver in the Russian bankruptcy of Yukos Oil. "This is an exciting time for Chadbourne's London office as we continue to add first-rate legal talent and expand upon our existing practice areas," remarked Chadbourne Managing Partner Andrew A. Giaccia. "We are proud to have John on our team and look forward to benefitting from the strong experience and insights he will bring on insolvency matters." Chadbourne's bankruptcy and restructuring lawyers have represented clients in Chapter 11 cases and corporate restructurings in the United States and abroad, working for financial institutions, insurance companies, bondholders, funds and formal and ad hoc committees. They have had leading roles in the Tribune, TOUSA, Xerium, Capmark, Chrysler, Lehman Brothers, Enron, Refco and Mirant Chapter 11 cases. Mr. Verrill is a member of the Insolvency Lawyer's Association; the Association of Business Recovery Professionals (R3), INSOL Europe; INSOL International. He received his LL.B. with honors from University College, London. About Chadbourne & Parke Chadbourne & Parke LLP -- http://www.chadbourne.com/-- is an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, private funds, corporate finance, venture capital and emerging companies, energy/renewable energy, communications and technology, commercial and products liability litigation, arbitration/IDR, securities litigation and regulatory enforcement, special investigations and litigation, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, executive compensation and employee benefits, employment law, trusts and estates and government contract matters. Major geographical areas of concentration include Russia, Central and Eastern Europe, Turkey, the Middle East and Latin America. The Firm has offices in New York, Washington D.C., Los Angeles, Mexico City, Sao Paulo, London, Moscow, Warsaw, Kyiv, Istanbul, Dubai and Beijing. =============== X X X X X X X X =============== * Moody's Says Cost Inflation Hits EMEA Building Materials Sector ----------------------------------------------------------------- Although cost inflation will continue to pressure the margins of building materials producers in the Europe, Middle East and Africa (EMEA) region, the outlook for the sector over the next 12-18 months is stable, says Moody's Investors Service in a new report published on May 2. The new report is entitled "EMEA Building Materials: Cost inflation continues to Pressure Operating Margins". "Our stable outlook for the EMEA building materials sector reflects our expectation that the aggregate EBITDA growth for our European universe will be between -4% and +4%," says Stanislas Duquesnoy, a Vice President -- Senior Analyst in Moody's Corporate Finance Group. "This implies flat to declining margins as the top line will grow only modestly, supported by slightly higher volumes." "However, we believe that energy cost inflation across all geographies and general cost inflation -- mainly affecting issuers that generate a large proportion of their revenues from emerging markets -- will continue to exert pressure on the operating margins of EMEA building materials producers," adds Mr. Duquesnoy. Overall, growth in cement volumes will be modest in important markets for EMEA building materials producers, largely driven by emerging markets. Moody's would expect mid-single-digit percentage increases in volumes in Asia and Latin America, while North America markets will remain broadly flat. Demand will remain very heterogeneous across countries in Europe. Moody's anticipates that any recovery in cement volumes in developed markets will not be strong enough to materially improve capacity utilization levels, which remain low. This will make any sustainable price adjustments to fully cover energy cost inflation difficult to implement. Emerging markets are still operating at higher capacity utilization but new capacity additions depend upon utilization levels and cost inflation is more pronounced in those markets, making it difficult to maintain margins. Moody's believes that political risk will be an important consideration when assessing the credit prospects of Moody's issuers in 2012. Emerging markets offer better longer-term growth prospects given their positive demographics and a growing share of cement consumption per unit of Gross Domestic Product (GDP), but they are also politically less stable. The difficulties that Lafarge SA (Ba1 stable) and Italcementi SpA (Ba1 negative) faced in Egypt during 2011 are a prime example (a 23% decline in revenues for Lafarge in Egypt in 2011; a 30% decline in revenues and a 52% drop in recurring EBITDA for Italcementi). A key to success in this industry over the next few years will be a diverse and balanced geographical profile, as this will mitigate rising political risk. Apart from Compagnie de Saint-Gobain SA (Baa2 positive) and CRH plc (Baa2 stable), which continue to benefit from solid balance- sheet structures and more resilient business profiles, most other players in the EMEA buildings materials sector are focusing on deleveraging to restore stronger credit metrics over time. Moody's would consider changing the industry outlook to positive upon signs that aggregated EBITDA growth is likely to exceed 4% over the coming 12-18 months. The rating agency considers this unlikely at present, but it could result from a sustained recovery in the US private residential construction market. Moody's would consider changing the outlook to negative if EBITDA growth declines by more than 4%. This would occur if volumes fall in response to more pronounced macroeconomic pressure, or as a result of a spike in inflation, both of which would exert further pressure on margins. * BOOK REVIEW: Corporate Venturing -- Creating New Businesses ------------------------------------------------------------- Authors: Zenas Block and Ian C. MacMillan Publisher: Beard Books, Washington, D.C. 2003 (reprint of 1993 book published by the President and Fellows of Harvard College). List Price: 371 pages. $34.95 trade paper, ISBN 1-58798-211-0. Creating new businesses within a firm is a way for a company to try to tap into its potential while at the same time minimizing risks. A new business within a firm is like an entreprenuerial venture in that it would have greater flexibility to opportunistically pursue profits apart from the normal corporate structure and decision-making processes. Such a business is different from a true entrepreneurial venture however in that the business has corporate resources at its disposal. Such a company business venture has to answer to the company management too. Corporate venturing--to use the authors' term--offers innovative and stimulating business opportunities. Though venturing is in a somewhat symbiotic relationship with the parent firm, the venture would never threaten to ruin the parent firm as a entrepreneur might be financially devastated by failure. Block and MacMillan contrast an entreprenuerial enterprise with their subject of corporate venturing, "When a new entrepreneurial venture is created outside an existing organization, a wide variety of environmental factors determine the fledgling business's survival. Inside an organization . . . senior management is the most critical environmental factor." This circumstance is the basis for both the strengths and limitations of a corporate venture. In their book, the authors discuss how senior management working with the leadership of a corporate venture can work in consideration of these strengths and weaknesses to give the venture the best chances for success. If the venture succeeds beyond the prospects and goals going into its formation, it can always be integrated into the parent company as a new division or subsidiary modeled after the regular parts of a company with the open-ended commitment, regular hiring practices, and reporting and coordination, etc., going with this. As covered by the authors, done properly with the right commitment, sense of realism and practicality, and preliminary research and ongoing analysis, corporate venturing offers a firm new paths of growth and a way to reach out to new markets, engage in fruitful business research, and adapt to changing market and industry conditions. The principle of corporate venturing is the familiar adage, "nothing ventured, nothing gained." While it is improbable that a corporate venture can save a dying firm, a characteristic of every dying firm is a blindness about venturing. Just thinking about corporate ventures alone can bring to a firm a vibrancy and imagination needed for business longevity. Ideas, insights, and vision are the essence of corporate venturing. But these are not enough by themselves. Corporate venturing is based as much on the right personnel, especially the top leaders. The authors advise to select current employees of a firm to lead a corporate venture whenever feasible because they already have relationships with senior management who are the ultimate overseers of a venture and they understand the corporate culture. In one of their several references to the corporate consultant and motivational speaker Peter Drucker, the authors quote him as identifying only half jokingly the most promising employees to lead the corporate venture as "the troublemakers." These are the ones who will be given the "great freedom and a high level of empowerment" required to make the venture workable and who also are most suited to "adapt rapidly to new information." Such employees for top management of a venture are not entirely on their own. The other side of this, as Brock and MacMillan go into, is for such venture management to earn and hold the trust and confidence of the firm's top management and work within the framework and follow the guidelines set for the venture. Corporate venturing is an operation which is a hybrid of the standard corporate interests and operations and an independent business with entrepreneurial flexibility mainly from focus on one product or service or at most a few interrelated ones, simplified operations, and streamlined decision-making. From identifying opportunities and getting starting through the business plan and corporate politics, Brock and MacMillan guide the readers into all of the areas of corporate venturing. Zenas Block is a former adjunct professor with the Executive MBA Program at the NYU Stern School of Business. Ian C. MacMillan is associated with Wharton as a professor and a director of a center for entrepreneurial studies. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, Frauline S. Abangan and Peter A. Chapman, Editors. Copyright 2012. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 240/629-3300. * * * End of Transmission * * *