TCREUR_Public/120713.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, July 13, 2012, Vol. 13, No. 139



ESCALON MEDICAL: Had US$639,800 Net Loss in March 31 Quarter
PEUGEOT CITROEN: To Close Factory in France; 14,000 Jobs Affected


NECKERMANN.DE GMBH: At Risk of Insolvency After Labor Talks Fail
NORDENIA INT'L: Moody's Reviews 'B1' PDR for Possible Upgrade
NORDENIA INT'L: S&P Puts 'B+' Corporate Rating on Watch Positive


AI FINANCE: Moody's Expects Timely Repayment of US$150MM Bonds
DUCHESS VI: S&P Raises Rating on Class E Notes to 'B+(sf)'
HALCYON STRUCTURED: S&P Lowers Rating on Class D Notes to 'CCC+'
PINAFORE HOLDINGS: Moody's Says Tender No Impact on 'Ba3' CFR


PBG SA: Ministries Propose Different Rescue Options


* PORTUGAL: Creditors May Have to Ease Terms of Bailout
* PORTUGAL: S&P Affirms Ratings on Six Financial Institutions


CAJA GRANADA I: Fitch Affirms Rating on Class D Notes at 'Bsf'
CAJA MADRID: S&P Cuts Debt Rating on Preferred Stock to 'C'
* SPAIN: Private Sector Bear Cost of Bank Restructuring
* SPAIN: Finland May Get Bank Shares as Bailout Collateral


BANK ESKHATA: Moody's Assigns 'E+ BFSR; Outlook Stable

U N I T E D   K I N G D O M

GLOBAL SHIP: DePrince Race Owns 10.3% of Class A Shares
RANGERS FC: Players' Contracts Included in Green Acquisition
SOUTH LONDON: In Administration Following Financial Woes
TULLOCH HOMES: Implements Second Massive Debt-for-Equity Swap
WINDERMERE VIII: Fitch Affirms 'Dsf' Rating on GBP19-Mil. Notes


* BOOK REVIEW: Corporate Debt Capacity



ESCALON MEDICAL: Had US$639,800 Net Loss in March 31 Quarter
Escalon Medical Corp. filed its quarterly report on Form 10-Q,
reporting a net loss of US$639,786 on US$6.07 million of revenues
for the three months ended March 31, 2012, compared with a net
loss of US$1.92 million on US$6.40 million of revenues for the
three months ended March 31, 2011.

For the nine months ended March 31, 2012, the Company reported a
net loss of US$5.0 million on US$18.37 million of revenues,
compared with a net loss of US$3.62 million on US$19.08 million
of revenues for the nine months ended March 31, 2011.

The Company's balance sheet at March 31, 2012, showed
US$10.57 million in total assets, US$8.97 million in total
liabilities, and stockholders' equity of US$1.60 million.

"The Company has incurred recurring operating losses, no longer
have the benefit of cash inflows from Vascular and on May 11,
2012, the BHH debtholder informed the Company that it intends to
declare the BHH debt, which is guaranteed by Escalon, into
default, as such, the entire debt of US$4,149,516 is recorded as
a current liability.  These conditions raise substantial doubt
about the Company's ability to continue as a going concern."

"On Jan. 12, 2012, BH Holdings, S.A.S. ("BHH"); a wholly owned
subsidiary of Drew [Drew Scientific, Inc., a wholly owned
subsidiary of Escalon] initiated the filing of an insolvency
declaration with the Tribunal de Commerce de Rennes, France
("Commercial Court").  The Commercial Court on Jan. 18, 2012,
opened the liquidation proceedings with continuation of BHH's
activity for three months and named an administrator to manage
BHH.  Since BHH is no longer controlled by Drew it was
deconsolidated in the Dec. 31, 2011, consolidated financial
statements and prior period amounts are presented as discontinued

"The filing of the insolvency declaration at BHH will have a
material effect on results of operations in subsequent periods.
BHH's product line revenues from operations were US$4,763,056, US
US$5,254,574 and US$2,647,877 in fiscal 2011, 2010 and 2009,
respectively.  Losses from operations, net of taxes, were
(US$1,232,904), (US$635,952) and (US$1,068,040) in 2011, 2010 and
2009, respectively."

As reported in the TCR on Oct. 18, 2011, Mayer Hoffman McCann
P.C., in Plymouth Meeting, Pennsylvania, says that the ongoing
debt payments on the debt related to the Biocode Hycel
acquisition and continued losses from operations and negative
cash flows from operating activities raise substantial doubt
about Escalon Medical's ability to continue as a going concern.

A complete text of the Form 10-Q is available for free at:


Wayne, Pa.-based Escalon Medical Corp. operates in the healthcare
market, specializing in the development, manufacture, marketing,
and distribution of medical devices and pharmaceuticals in the
areas of ophthalmology, diabetes and hematology.  The Company and
its products are subject to regulation and inspection by the
United States Food and Drug Administration (the "FDA").

PEUGEOT CITROEN: To Close Factory in France; 14,000 Jobs Affected
Mathieu Rosemain at Bloomberg News reports that PSA Peugeot
Citroen, Europe's second biggest carmaker, will shut the first
auto factory in France in 30 years and reduce its workforce by
6.7% in an effort to stem widening operating losses.

According to Bloomberg, Chief Executive Officer Philippe Varin
said on Thursday that the automaker will cut a total of 14,000
jobs, with 8,000 additional positions being eliminated on top of
the 6,000 posts already announced last year.

Moody's Investors Service in March was the last of the three main
credit-reporting companies to cut Peugeot's debt rating to junk,
Bloomberg recounts.

"Peugeot is struggling with the power of Volkswagen, especially
on the credit side, as VW benefits from lower costs of
financing," Bloomberg quotes Kristina Church, a Barclays analyst
in London with an "underweight/neutral" rating on Peugeot shares,
as saying.  "More importantly, Peugeot still has an issue with
overcapacity and is in a worse position than Renault."

It said that the French company will stop production at its 39-
year-old factory in Aulnay, on the outskirts of Paris, in 2014
and focus the building of small cars at a nearby plant in Poissy,
Bloomberg notes.  Peugeot will also lower production at a plant
in Rennes to slash operational costs, Bloomberg says.

Peugeot said on Thursday that the company's first-half operating
loss in the automotive unit will hit EUR700 million compared with
a profit of EUR405 million a year earlier, Bloomberg relates.

PSA Peugeot Citroen S.A. --
-- is a France-based manufacturer of passenger cars and light
commercial vehicles.  It produces vehicles under the Peugeot and
Citroen brands.  In addition to its automobile division, the
Company includes Banque PSA Finance, which supports the sale of
Peugeot and Citroen vehicles by financing new vehicle and
replacement parts inventory for dealers and offering financing
and related services to car buyers; Faurecia, an automotive
equipment manufacturer focused on four component families: seats,
vehicle interior, front end and exhaust systems; Gefco, which
offers logistics services covering the entire supply chain,
including overland, sea and air transport, industrial logistics,
container management, vehicle preparation and distribution, and
customs and value added tax (VAT) representation, and Peugeot
Motocycles, which manufactures scooters and motorcycles.  In
2008, PSA Peugeot Citroen S.A. sold more than 3.2 million
vehicles in 150 countries worldwide.


NECKERMANN.DE GMBH: At Risk of Insolvency After Labor Talks Fail
Julie Cruz at Bloomberg News, citing Handelsblatt, reports that GmbH is at risk of insolvency as owner Sun Capital
Partners Inc. and Ver.di labor union can't agree on conditions
for job cuts amid restructuring plans for the company. GmbH is a German mail order company.

NORDENIA INT'L: Moody's Reviews 'B1' PDR for Possible Upgrade
Moody's Investors Service affirmed Mondi Group's Baa3 issuer
rating and senior unsecured rating and changed the outlook to
stable from positive. Concurrently, Moody's placed the credit
ratings of Nordenia International AG under review for upgrade.

The rating actions follow the announcement that Mondi has reached
an agreement with Oaktree, the majority shareholder of Nordenia,
regarding the acquisition of Nordenia for a total enterprise
value of EUR655 million including assumed debt, valuing Nordenia
at around 6.6 times 2011 reported EBITDA. The acquisition will be
funded through a new bridge facility of EUR250 million with a 24
months tenor and incremental drawings under the group's existing
credit lines. Debt to be assumed amounts to approximately EUR400
million, including EUR280 million second priority notes issued by
Nordenia Holdings GmbH.

The corporate family and probability of default ratings of
Nordenia are likely to be withdrawn following the closing of the
proposed transaction. With regards to Nordenia's B2 second
priority notes rating, the review will focus on the pro forma
capital structure following closing of the transaction and the
relative ranking of Nordenia's debt securities (including the
type of support provided, if any).

The transaction is subject to customary closing conditions
including approval from regulatory authorities, which is only
expected to be obtained by Q4 2012.

Ratings Rationale

The stabilization of the outlook of Mondi's Baa3 rating is a
reflection of Moody's assessment that the proposed acquisition is
overall credit negative. This assessment is substantiated by the
expected increase in net debt by about EUR655 million as a result
of the transaction, which will consume much of the headroom
incorporated in the current rating, making an upgrade within the
next 12-18 months rather unlikely. It is also a reflection of the
a more aggressive approach towards cash spending with
approximately EUR1 billion earmarked for acquisitions and
portfolio clean ups in 2012 so far, including the Nordenia
transaction. Moody's notes however that despite the expected
weakening of credit metrics, Mondi will remain comfortably
positioned in the Baa3 rating category with Debt/EBITDA pro forma
for the acquisition of around 2.5x and RCF/Debt above 25%.

In terms of business profile, Moody's views the transaction as
modestly positive, considering that Nordenia will extend Mondi's
customer base with more stable fast moving consumer goods
companies and adds growth perspectives on the back of rising
demand for hygiene products, where Nordenia has a particularly
strong position for diaper components. At the same time, Moody's
notes that Nordenia's product offering is fairly complementary
and therefore, synergy potential is in Moody's view modest. While
the acquisition of Nordenia will be dilutive in terms of
profitability margins, Moody's nevertheless expects solid free
cash flow generation of the combined group to allow for a fairly
swift reduction in incremental leverage.

The stable rating outlook reflects Moody's expectation of a
moderate weakening of financial metrics due to the incremental
debt load as well as lower operating profitability of Mondi,
reflecting weak industry conditions during the last months and
continued low visibility for the second half of 2012. At the same
time, driven by improving demand for most of the group's products
as well as price increases implemented, these should help Mondi
to improve operating profitability sequentially compared to Q1

Liquidity of Mondi is expected to remain solid post the
transaction closing. Cash of EUR191 million as of December 2011
and internal cash flow generation, with funds from operations of
EUR833 million during the last twelve months ending December 2011
should be sufficient to comfortably cover operational cash needs
of the combined group. In addition, Mondi has access to various
credit lines, the core facility being a EUR750 million syndicated
revolving credit facility, which was fully undrawn per year end
2011 and protected by a financial covenant with currently solid

An upgrade would require a track record of sustaining the
improved profitability and cash flow generation as evidenced by
EBITDA margins in the high teens, RCF/Debt towards 30% and
leverage in terms of Debt/EBITDA close to 2x. A further important
consideration will be the group's approach to cash usage going
forward, in particular with regards to shareholder return and
growth projects.

Rating pressure could build up were Mondi unable to sustain
recent performance improvements as indicated by RCF/Debt trending
to below 20%, EBITDA margins deteriorating towards 10% or should
the group generate negative free cash flows.

The review for upgrade of Nordenia's ratings reflects the better
credit profile of Mondi and Moody's assumption that there is a
high likelihood that the transaction will be completed as
presented. With regards to Nordenia's B2 second priority notes
rating, the review will focus on the pro forma capital structure
following closing of the transaction and the relative ranking of
Nordenia's debt securities (including the type of support
provided, if any).

Outlook Actions:

  Issuer: Mondi Plc

    Outlook, Changed To Stable From Positive

  Issuer: Mondi Finance plc

    Outlook, Changed To Stable From Positive

  Issuer: Nordenia Holdings GmbH

    Outlook, Changed To Rating Under Review From Stable

  Issuer: Nordenia International AG

    Outlook, Changed To Rating Under Review From Stable On Review
    for Possible Upgrade:

  Issuer: Nordenia Holdings GmbH

    Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Upgrade, currently B2, LGD4, 67 %

  Issuer: Nordenia International AG

     Probability of Default Rating, Placed on Review for Possible
     Upgrade, currently B1

     Corporate Family Rating, Placed on Review for Possible
     Upgrade, currently B1

The methodologies used in these ratings were Global Paper and
Forest Products Industry published in September 2009 and Global
Packaging Manufacturers: Metal, Glass, and Plastic Containers
published in June 2009.

Mondi is an integrated paper and packaging group which generated
revenues of EUR5.7 billion in 2011. The group is principally
involved in the manufacture of packaging paper and converted
packaging products, uncoated fine paper as well as specialty
products. Mondi has production operations in 28 countries, with a
focus on Northern and Eastern Europe, as well as South Africa,
and employs about 23,400 people.

Nordenia International AG, based in Greven, Germany, is an
integrated developer and manufacturer of customized plastic
hygiene components and flexible plastic packaging products,
largely focused on the consumer goods industry. In 2011, Nordenia
generated revenues of EUR881 million.

NORDENIA INT'L: S&P Puts 'B+' Corporate Rating on Watch Positive
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit rating on Germany-based flexible film and
packaging manufacturer Nordenia International AG (Nordenia) on
CreditWatch with positive implications.

"At the same time, we placed our 'B' issue rating on Nordenia's
EUR280 million senior unsecured second-priority notes due 2017 on
CreditWatch with positive implications," S&P said.

The CreditWatch placement follows the announcement by South
Africa-headquartered paper and packaging producer Mondi Group
(Mondi; BBB-/Stable/--) that it has agreed to acquire Nordenia.
Mondi will pay EUR240 million for over 93% of Nordenia.

Nordenia has been majority controlled by Los Angeles-based
investment management company Oaktree Capital Management L.P.
(Oaktree; A-/Stable/A-2) since 2006.

"In accordance with our corporate criteria on rating parents and
their subsidiaries, we would likely raise our long-term corporate
credit rating on Nordenia following its acquisition by Mondi,
because we assess Mondi as having stronger credit quality than
Nordenia. This could result in a multi-notch upgrade of Nordenia.
While Mondi and Oaktree have signed a sale and purchase
agreement, we note that the transaction will have to pass certain
regulatory checks before it is completed," S&P said.

"The ratings on Nordenia reflect our view of the group's
"aggressive" financial risk profile and "fair" business risk
profile. In our opinion, the key ratings constraints for Nordenia
include an aggressive financial policy; exposure to volatile raw
material prices; and significant customer and production capacity
concentration. We view these constraints as being partly offset
by Nordenia's leading positions in niche markets, established
long-term customer relationships, and a strong record of passing
on input cost increases," S&P said.

"We aim to resolve the CreditWatch placement on completion of the
acquisition. We will seek to understand the integration and
operational implications of the transaction, as well as the
liquidity and funding of the consolidated group. We anticipate
that, in the event of a successful acquisition, we would raise
our long-term corporate credit rating on Nordenia. At the same
time, we could raise our issue rating on the EUR280 million
senior unsecured second-priority notes accordingly.  In contrast,
we could remove the ratings from CreditWatch if Mondi does not
complete the acquisition," S&P said.


AI FINANCE: Moody's Expects Timely Repayment of US$150MM Bonds
Moody's Investors Service says that it expects the US$150 million
of bonds issued by AI Finance B.V. and guaranteed by Agri
International Resources Pte Ltd (Caa2, stable, "Agri"), which
mature on July 15th , to be repaid on time, following the efforts
made by Agri's parent company, Bakrie Sumatera Plantations (Caa2,
stable, "BSP") to refinance the bond. Once confirmed, a
successful refinancing and repayment of the bond could lead to
some upward pressure on both corporate family ratings.

However, the performance of the downstream oleochemical and
refining assets continues to disappoint and this part of the
business is many months late in coming on-stream. In addition,
the yields of BSP's plantations are consistently weaker than
those achieved by rated peers. These fundamental constraints are
thus likely to limit the extent of any recovery in ratings.
Moody's however also notes that the recent changes in senior
management may help to re-invigorate the company.

"Based on the good prospects for the palm oil sector, the
repayment of the bond may be the first step in what could be the
long-drawn out recovery of BSP's rating," says Alan Greene, a
Vice President -- Senior Credit Officer at Moody's.

Moody's notes the tight conditions and heavy amortization
schedules of the previously refinanced loans for "Domba Mas" and
for BSP's own bond refinancing last year.

"However, depending on the terms of any Agri bond refinancing,
there is a risk that the debt service burden could yet extinguish
any glimmer of recovery at BSP," adds Mr. Greene, who is also
Lead Analyst for BSP.

Assuming that there is no default on the Agri bond, Moody's would
expect to re-assess the rating of BSP in the light of the changes
to the financial profile of the Group post-refinancing, and of
any significant variances in operating performance.

Bakrie Sumatera Plantations Tbk is an Indonesian plantation
company operating mainly in Sumatra, Indonesia, with rubber
plantations of some 19,000 planted hectares and oil palm
plantations of 107,000 planted hectares (including Agri's 32,000
hectares). During 2010, it acquired a downstream oleochemicals
business, "Domba Mas", for US$440 million. It is 27.4%-owned by
the conglomerate PT Bakrie & Brothers. Its IPO occurred in 1990
and BSP is listed on the Indonesia Stock Exchange.

DUCHESS VI: S&P Raises Rating on Class E Notes to 'B+(sf)'
Standard & Poor's Ratings Services raised its credit ratings on
Duchess VI CLO B.V.'s class A, B, C, D, and E notes, and the Rev
ln fac notes.

"The rating actions follow our assessment of the transaction's
performance since our previous review in October 2010. We have
used data from the trustee report dated May 2012 and our cash
flow analysis, considering recent transaction developments," S&P

"In our review, we have applied our 2012 counterparty criteria
and our 2009 collateralized debt obligation (CDO) cash flow
criteria (see "Counterparty Risk Framework Methodology And
Assumptions," published on May 31, 2012, and "Update To Global
Methodologies And Assumptions For Corporate Cash Flow And
Synthetic CDOs," published on Sept. 17, 2009).  Our analysis
shows that the level of assets that we consider to be rated in
the 'CCC' category ('CCC+', 'CCC', and 'CCC-') has decreased to
4.38% from 16.95% of the portfolio balance, excluding cash.
Assets that we consider to be rated in the 'BB' category ('BB+',
'BB', and 'BB-') have also decreased to 3.57% from 11.95%. The
bucket of defaulted assets ('CC', 'C', 'SD' [selective default],
or 'D']) has increased to 6.90% from 0.32%," S&P said.

Additionally, the weighted-average life of assets in the
portfolio has decreased to 4.44 years from 5.07 years, and the
weighted-average spread has increased to 3.94% from 2.77%.

"We have subjected the transaction's capital structure to a cash
flow analysis, to determine the break-even default rate for each
rated class of notes at each rating level. In our analysis, we
used the portfolio balance that we considered to be performing
(EUR443.9 million), the reported weighted-average spread (3.94%),
and the weighted-average recovery rates that we considered to be
appropriate. We incorporated various cash flow stress scenarios
using our standard default patterns, levels, and timings for each
rating category assumed for each class of notes, in conjunction
with different interest rate stress scenarios," S&P said.

"All of the transaction's coverage tests have improved and
currently meet the minimum levels of coverage required.  Based on
our analysis, we have raised our ratings on the class A, B, C, D,
and E notes, and the Rev ln fac notes in this transaction to
levels that reflect the current levels of credit enhancement,
portfolio credit quality, and transaction performance. Based on
this analysis, the class A notes and the Rev ln fac notes can
achieve 'AA- (sf)' ratings, when giving credit to the hedge
agreement with Citibank N.A. (A/Negative/A-1). However, we do not
consider that the transaction documents relating to the hedge
counterparty support a 'AA- (sf)' rating under our 2012
counterparty criteria. Therefore, in our cash flow analysis, we
have tested additional scenarios without giving benefit to the
options agreement. Without giving benefit to the hedge agreement,
the class A notes and the Rev ln fac notes can achieve 'A+ (sf)'
ratings in our cash flow scenarios. We have therefore raised our
ratings on the class A notes and the Rev ln fac notes to 'A+
(sf)'," S&P said.

"In any case, if the replacement language in the hedge agreement
reflects any of our previous counterparty criteria, we allow the
counterparty to support tranches rated not higher than our long-
term issuer credit rating (ICR) on the  counterparty plus one
notch, which is 'A+( sf)' in this transaction," S&P said.

Duchess VI CLO is a cash flow CDO transaction, backed primarily
by leveraged loans to speculative-grade corporate firms. It
closed in August 2006, and is managed by Babson Capital Europe

Ratings List

Class           Rating          Rating
                To              From

Duchess VI CLO B.V.
EUR501 Million Senior Secured and Deferrable Floating-Rate Notes

Ratings Raised

A               A+ (sf)         A (sf)
Rev ln fac      A+ (sf)         A (sf)
B               A (sf)          BBB+ (sf)
C               BBB+ (sf)       BB+ (sf)
D               BB+ (sf)        B+ (sf)
E               B+ (sf)         CCC+ (sf)

HALCYON STRUCTURED: S&P Lowers Rating on Class D Notes to 'CCC+'
Standard & Poor's Ratings Services took various credit rating
actions on Halcyon Structured Asset Management CLO 2008-II B.V.'s
outstanding EUR189.28 million notes.

"Specifically, we have raised our ratings on the class A1, A2, B,
C1, C2, and D notes, and lowered our rating on the class E
notes," S&P said.

"The rating actions follow our assessment of the transaction's
performance since our previous review on Dec. 9, 2010, taking
into account recent developments. We have used data from the
trustee report dated May 31, 2012, and our cash flow analysis. We
have applied our 2012 counterparty criteria and our 2009 cash
flow criteria," S&P said.

"Based on our analysis, the portfolio's performance has
deteriorated. This has been primarily due to the decreased
proportion of assets that we consider to be rated in the 'BB'
category ('BB+', 'BB', or 'BB-') to 5.16% from 16.95%," S&P said.

"At the same time, the proportion of assets that we consider to
be rated in the 'CCC' category ('CCC+', 'CCC', or 'CCC-') has
decreased marginally to 8.03% from 8.42%, and the proportion of
defaulted assets (rated 'CC', 'SD' [selective default], or 'D')
decreased to 0.00% from 1.76%. Our analysis indicates that credit
enhancement levels for all classes of notes have increased
(significantly for the class A1 notes, to 53.13% from 31.95%),
due to the deleveraging of the class A1 notes. Additionally, the
weighted-average spread earned on the collateral portfolio has
increased, and the portfolio's weighted-average maturity has
decreased," S&P said.

"However, the portfolio's negative credit migration has caused
our scenario default rate to increase at each rating level in the
transaction. We have subjected the capital structure to a cash
flow analysis, to determine the break-even default rate for each
rated class of notes. In our analysis, we have used the reported
portfolio balance, weighted-average spread, and weighted-average
recovery rates that we consider appropriate. We have incorporated
various cash flow stress scenarios, using alternative default
patterns, levels, and timings for each liability rating category
('AAA', 'AA',  and 'BBB'), in conjunction with different interest
rate stress scenarios," S&P said.

At closing, Halcyon Structured Asset Management CLO 2008-II
entered into derivative obligations to mitigate currency risks in
the transaction. "We consider that the documentation for these
derivatives does not fully reflect our 2012 counterparty
criteria. Therefore, in our cash flow analysis, we have assumed
that the transaction does not benefit from the support of
derivatives," S&P said.

"Based on this analysis, we have raised our rating on the class
A1 notes to 'AAA (sf)' from 'AA+ (sf)'. We have applied our
largest obligor default test--a supplemental stress test in our
2009 cash flow criteria. Additionally, we have applied our
largest industry default test--another of our supplemental stress
tests. These supplemental stress tests have constrained our
ratings on the class A2, B, C1, C2, D, and E notes, which could
achieve higher ratings when only considering our cash flow
analysis," S&P said.

"Considering all of these factors, we have raised our ratings on
the class A2, B, C1, C2, and D notes because our analysis
indicates that the credit enhancement level available to each
class of notes is commensurate with higher ratings than we
previously assigned. We have lowered our rating on the class E
notes, based on the outcome of our supplemental stress tests,
which have constrained our rating to a lower level than that
commensurate with the  results of our cash flow analysis. Halcyon
Structured Asset Management CLO 2008-II is a cash flow
collateralized loan obligation (CLO) transaction that closed in
August 2008 and securitizes  loans to primarily speculative-grade
corporate firms," S&P said.

Ratings List

Class             Rating
            To             From

Halcyon Structured Asset Management CLO 2008-II B.V.
EUR444 Million Subordinated Notes

Ratings Raised

A1          AAA (sf)       AA+ (sf)
A2          AA+ (sf)       A+ (sf)
B           A+ (sf)        A- (sf)
C1          BBB+ (sf)      BBB (sf)
C2          BBB+ (sf)      BBB (sf)
D           BB- (sf)       B+ (sf)

Rating Lowered

E           CCC+ (sf)      B- (sf)

PINAFORE HOLDINGS: Moody's Says Tender No Impact on 'Ba3' CFR
Moody's Investors Service said that the announcement by Pinafore
Holdings B.V. that its tender offer for up to $475 million in
aggregate principal amount of its 9% Senior Secured Second Lien
Notes, due 2018, has been oversubscribed is viewed as a positive
credit development. Concurrent with the tender offer, Pinafore
has received approval under a consent solicitation to amend its
indenture to allow for increased restricted payments, including
shareholder returns. The benefits of the debt reduction under the
tender offer are balanced against the potential for increasing
shareholder returns under the consent agreement and result in no
immediate change to the Ba3 Corporate Family Rating.

Pinafore Holding BV is the parent holding company for the
operations of Tomkins Ltd (Tomkins) following its acquisition by
Pinafore Acquisitions Limited (jointly owned by Onex and the
Canada Pension Plan Investment Board). Tomkins is a diversified
global engineering company focused on industrial and automotive-
related activities -- including power transmission, fluid power
and fluid systems, accounting for 78% of sales; as well as
building products, accounting for 22% of sales. In FY 2011,
Tomkins generated sales of US$4.6 billion and employed around
24,700 people through operations in 32 countries.


PBG SA: Ministries Propose Different Rescue Options
Anthony Adams reports that Warsaw Business Journal reports that
the Treasury is pushing for state support for PBG SA, while the
finance minister has called for a free-market approach.

Different ministries in the Polish government have contradictory
views on the course of action to take with PBG, WBJ says.

On Wednesday, Treasury Minister Mikolaj Budzanowski, Economy
Minister Waldemar Pawlak and Finance minister Jacek Rostowski all
offered different solutions, from bailouts to a fully free-market
approach, WBJ relates.

According to WBJ, Mr. Budzanowski told Reuters that "We will
either decide to grant state support (to PBG) worth PLN385
million, which requires the approval of the European Commission
and that will take a few months.  The other option is that ARP
(state-agency) takes over some subsidiaries of PBG."

Meanwhile, Mr. Pawlak has proposed that the government buy bonds
from troubled construction companies, many of which became
indebted due to their involvement in Euro 2012 infrastructure
projects, WBJ discloses.

On the other end of the spectrum, Finance Minister Jacek
Rostowski has said that the government should refrain from
involving itself, WBJ notes.

As reported by the Troubled Company Reporter-Europe on June 15,
2012, Bloomberg News related that a Poznan, western Poland-based
court agreed to declare bankruptcy of PBG SA aimed at arrangement
with creditors.

PBG SA is Poland's third largest builder.


* PORTUGAL: Creditors May Have to Ease Terms of Bailout
Henrique Almeida at Bloomberg News reports that Portugal's
international creditors may soon have to ease terms of the
country's bailout to prevent the plan from derailing as the
government faces setbacks in attaining its deficit goals.

Prime Minister Pedro Passos Coelho's struggle to meet deficit
pledges were further hampered last week when about EUR2 billion
(US$2.5 billion) of planned cuts to pensions and civil servants'
holiday pay were ruled unconstitutional, Bloomberg discloses.
With Portugal's 10-year bond yield above 10%, returning to the
markets next year may be untenable, requiring more international
aid despite the premier's insistence he won't seek concessions,
Bloomberg states.

"Lisbon's strategy is to continue to be the good student among
bailed-out countries until it becomes clear that Brussels and
Berlin must ease the rules of the game for it to succeed,"
Bloomberg quotes Antonio Barroso, a London-based analyst at
Eurasia group, as saying.

Finance Minister Vitor Gaspar signaled the government's
intentions not to seek concessions on Tuesday in Brussels even
after euro-region finance ministers agreed to give Spain an extra
year to meet its deficit goals and eased terms of its EUR100
billion bank bailout, Bloomberg relates.  Mr. Gaspar, as cited by
Bloomberg, said that the Portuguese and Spanish cases are
different and the government won't be deterred by the court

According to Bloomberg, he said that "The Portuguese government
is studying measures of equal impact on the budget" to compensate
for the court's ruling.

Ricardo Santos, a London-based economist at BNP Paribas SA, said
that Portugal may end the year with a deficit of more than 5.5%
of GDP, missing the rescue plan's target by more than 1
percentage point and prompting an easing of bailout terms,
Bloomberg notes.

* PORTUGAL: S&P Affirms Ratings on Six Financial Institutions
Standard & Poor's Ratings Services affirmed its ratings on six
Portugal-based financial institutions: Banco BPI S.A. (BPI) and
its core subsidiary Banco Portugues de  Investimento S.A., Banco
Comercial Portugues S.A. (Millennium bcp), Caixa  Geral de
Depositos S.A. (CGD), and Banco Espirito Santo S.A. (BES) and its
core subsidiary Banco Espirito Santo de Investimento S.A. (BESI).
The outlooks on the long-term ratings remain negative.

"At the same time, we took various negative rating actions or
CreditWatch placements on the non-deferrable subordinated debt,
preferred stock, and junior subordinated debt of BPI, Millennium
bcp, and CGD," S&P said.

"The rating actions follow our review of the implications of the
recent recapitalization measures taken by these Portuguese banks.
We had already incorporated into our ratings the likelihood that
these Portuguese banks would reinforce their capital this year to
comply with the European Banking Authority's (EBA) 9% core tier 1
ratio by end-June 2012, and with the Bank of Portugal's 10% core
Tier 1 ratio by year-end 2012," S&P said.

The banks have recently undertaken different actions to ensure
their compliance with the higher capital requirements: BPI,
Millennium bcp and CGD have issued a hybrid instrument that has
been subscribed by the Portuguese government.  CGD has also
received a capital injection from the state. BES has reinforced
its capital privately. The Portuguese government (Republic of
Portugal, BB/Negative/B) has subscribed to the hybrid issues of
Millennium bcp, BPI, and CGD, which allowed these banks to comply
with the higher EBA capital requirement by end-June 2012, and
will allow them to meet Bank of Portugal's core minimum capital
requirement by  year-end 2012. "However, in contrast with the EBA
and regulatory approach, these hybrid instruments don't qualify
for equity credit under our criteria," S&P said.

This is because of these instruments' short residual life -- with
repayment expected within five years -- and the annual step-ups
that provide an incentive to redeem the instruments even sooner.

"We have therefore assigned these hybrid instruments "minimal
equity content," as our criteria define the term, and we have
excluded them from our risk-adjusted capital (RAC)
calculations. That said, we think that the hybrid issues help
mitigate some vulnerabilities to which these banks' capital bases
are exposed, including the potential impact of sizable unrealized
losses resulting from banks' sovereign exposures," S&P said.

"We have therefore improved our risk position assessments for
those banks that have issued hybrid instruments subscribed to by
the government. We raised BPI and CGD's stand-alone credit
profiles (SACPs) by one notch to reflect the positive impact of
the Portuguese government's support on their financial profiles,"
S&P said.

"The ratings nevertheless remained unchanged because the
improvement in these banks' SACPs is offset by the fact that we
no longer incorporate a one-notch uplift into the ratings for
government support. This is because we believe that any uplift
for government support should not result in bank ratings that are
at the same level as the long-term rating on the sovereign, which
in Portugal's case is 'BB'," S&P said.

"The affirmation of Millennium bcp reflects our view that the
marginally positive impact we see from the government's
subscription to the bank's hybrid issue is offset by weaker
profitability prospects. As a result, Millennium bcp's SACP
remains unchanged. As opposed to the other Portuguese banks we
rate, our ratings on Millenium bcp continue to stand one notch
above the SACP because we factor in government support," S&P

"We affirmed our ratings on BES and BESI because, although we
view their recapitalization positively, we had already
incorporated into the ratings the likelihood of BES undertaking a
capital increase this year. We took several negative rating
actions on nondeferrable subordinated debt, preferred stock, and
junior subordinated debt issued by Millennium bcp, BPI, and CGD.
These mainly reflect possible EU restrictions on payment of
coupons following the state aid," S&P said.

Ratings List

Ratings Affirmed

Banco BPI S.A.                              BB-/Negative/B
Banco Portugues de Investimento S.A.        BB-/Negative/B
Banco Comercial Portugues S.A.              B+/Negative/B
Caixa Geral de Depositos S.A.               BB-/Negative/B
Banco Espirito Santo S.A.                   BB-/Negative/B
Banco Espirito Santo de Investimento S.A.   BB-/Negative/B


CAJA GRANADA I: Fitch Affirms Rating on Class D Notes at 'Bsf'
Fitch Ratings has affirmed Ayt Caja Granada Hipotecario I, Fondo
de Titulizacion de Activos's (Caja Granada I) notes, as follows:

  -- Class A (ISIN ES0312212006) 'AA-sf'; placed on Rating Watch

  -- Class B (ISIN ES0312212014) affirmed at 'BBBsf'; Outlook

  -- Class C (ISIN ES0312212022) affirmed at 'BBsf'; Outlook

  -- Class D (ISIN ES0312212030) affirmed at 'Bsf'; Outlook

Caja Granada I's pool comprises residential loans originated and
serviced in Spain by Caja General de Ahorros de Granada, part of
Banco Mare Nostrum S.A. ('BB+'/Stable/'B').

The affirmation of the ratings reflects the sufficient level of
credit enhancement available to the rated notes.  The notes are
paying down sequentially and the reserve fund is not expected to
amortize due to breach of arrears triggers, which is benefiting
the rated notes.

The Negative Outlook assigned to the class B, C and D notes
reflects Fitch's concerns over the future performance of the
pool.  Fitch believes that the performance of the underlying
assets remains exposed to the stresses in the Spanish
macroeconomic environment.  Loans in arrears by more than three
months increased to 4.9% of the current pool balance in March
2012, from 2.3% as of December 2011.  No period defaults (defined
as loans in arrears by more than 18 months) have been reported at
the past four interest payment dates (IPDs), although the volume
of loans in later-stage arrears is above levels seen in most
other Fitch-rated Spanish RMBS transactions.

The transaction replenished its reserve fund to the target level
at the March 2011 IPD after incurring several draws between
September 2009 and December 2010.  Fitch believes that the
replenishment was driven by the high volume of recoveries on
defaulted loans (total amount reached EUR6.2 million).  The
reported recovery rate on defaulted loans is 100%, which is
unusually high in comparison to transactions with similar
characteristics.  In most cases these recoveries are the result
of the originator refinancing the defaulted loans leading to the
full repayment of the defaulted loans in the pool.  Given the
tightening in liquidity on the market, Fitch believes that the
practice of refinancing defaulted borrowers may not be
sustainable indefinitely.  For this reason, Fitch has applied its
standard market value decline assumptions to derive the recovery
rates on future defaults.

Following the downgrades of the servicer, Banco Mare Nostrum S.A.
('BB+'/Stable/'B'), there is an increased risk of note payment
interruption.  In the event of a default of the servicer the
transaction's structure may not be able to cover the resultant
liquidity shortfalls.  Although the reserve fund is presently at
the target amount, the agency believes that future reserve fund
draws are likely to occur, which means that in case of servicer
disruption, the reserve fund cannot be relied upon.  For this
reason, the agency has placed the class A notes on Rating Watch

CAJA MADRID: S&P Cuts Debt Rating on Preferred Stock to 'C'
Standard & Poor's Ratings Services  lowered to 'C' from 'CC' its
debt rating on preferred stock issued by Caja Madrid Finance
Preferred S.A. and guaranteed by Banco Financiero y de  Ahorros
S.A. (BFA, B+/Watch Neg/B), parent company of Spanish bank Bankia
S.A.  (BB+/Watch Neg/B).

The issue concerned has the ISIN number ES0115373005.  According
to BFA the current amount outstanding is 2 million. Due to an
error, the rating on this issue was not lowered when the dividend
payment was skipped on June 17, 2012.

Ratings List

                                     To         From

Caja Madrid Finance Preferred S.A.
Preference Stock*                    C          CC

* Guaranteed by Banco Financiero y de Ahorros S.A.

* SPAIN: Private Sector Bear Cost of Bank Restructuring
John O'Donnell at Reuters reports that the private sector will be
involved in bearing the cost of restructuring Spain's banks, but
senior bank bondholders and depositors will not be affected by
such burden-sharing.

"Once we have a clear sense of the costs of restructuring . . .
we will work on the principle that private sector participation
in the distribution of losses is necessary in order to ensure
that taxpayers do not have to shoulder an unfair burden," Reuters
quotes Simon O'Connor, a spokesman for the European Commission,
as saying on Wednesday.

"This approach has been based on the principles of minimizing the
costs to taxpayers while at the same time safeguarding financial

The spokesman said, however, that senior bondholders and
depositors would not be involved, Reuters relates.

* SPAIN: Finland May Get Bank Shares as Bailout Collateral
Kati Pohjanpalo at Bloomberg News reports that Finland Finance
Minister Jutta Urpilainen said the Nordic country is in talks to
get shares in Spanish banks in exchange for its contribution to a
bailout agreed last month.

"We've discussed the option of bank shares," Bloomberg quotes
Ms. Urpilainen said in an interview on state-owned broadcaster
YLE TV1 as saying on Wednesday.  "There are several different
alternatives and it's still impossible to say what the concrete
model for collateral will be."

Finland wants the collateral in exchange for loans to Spain paid
from Europe's temporary rescue fund to shield its taxpayers from
losses, Bloomberg discloses.  Ms. Urpilainen only has a few weeks
in which to strike a deal as the first installment of Spain's
rescue is due to be paid this month, Bloomberg notes.  Euro-area
finance ministers this week decided Spain will get the first
EUR30 billion (US$36.7 billion) in July, Bloomberg relates.


BANK ESKHATA: Moody's Assigns 'E+ BFSR; Outlook Stable
Moody's Investors Service has assigned the following ratings to
Bank Eskhata:

- E+ standalone bank financial strength rating (BFSR)

- B3 long-term and Not Prime short-term local-currency deposit

- Caa2 long-term and Not Prime short-term foreign-currency
   deposit ratings

The outlook on all long-term ratings is stable

Moody's assessment is primarily based on Bank Eskhata's financial
statements for 2011 (audited) -- prepared under IFRS.

Ratings Rationale

"Eskhata's ratings are constrained by the bank's vulnerability to
the weak and potentially volatile operating environment in
Tajikistan where the bank operates. In addition, Eskhata's
ratings reflect (i) its increasing credit risk appetite as
demonstrated by recent rapid loan book growth and (ii) a very
high proportion of FX-denominated loans which raises asset
quality concerns," says Lev Dorf, Moody's lead analyst for this

At the same time, Moody's notes that Eskhata's ratings are
underpinned by: (i) the high granularity of its loan book,
supported by the bank's focus on microfinance and retail
business; (ii) currently satisfactory financial fundamentals
including asset quality, liquidity and profitability; and (iii)
currently sufficient capitalization to absorb expected credit
losses under Moody's central scenario.

Moody's notes that Eskhata's deposit ratings are strongly
dependent upon government policy and Tajikistan's operating and
economic environment. Despite the acceleration of economic growth
in recent years (Tajikistan GDP grew by 7.4% in 2011, and 6.5% in
2010), Tajikistan's economic conditions and the operating
environment remain weak and constrained by the country's limited
economic development, weak institutions and high levels of
dollarization. "Given the country's heavy dependence on
remittances from Russia (in 2011 remittances accounted for around
50% of Tajikistan GDP), the local economy and the banking sector
are highly vulnerable to external shocks -- particularly to a
drop in international commodity prices which would undermine a
major source of foreign exchange, economic growth and household
income," adds Mr. Dorf.

Despite the challenging economic environment, opportunities are
being created for local banks aided by the low level of financial
intermediation in Tajikistan and low competitive pressures in the
domestic banking sector. In recent years, Eskhata has materially
improved its market franchise, and became the fifth-largest bank
in Tajikistan in terms of assets at year-end 2011, as its loan
portfolio grew by 50% in 2011 (compared with 40% growth in 2010).
The bank is focusing on microfinance, SME and retail businesses
that, together, accounted for 80% of the bank's loan portfolio.

In 2010-2011, Eskhata reported good profitability. Its net income
in 2011 grew by 87% to TJS15.8 million (US$3.3 million),
translating into return on average assets (RoAA) of 3.67% (2010:
2.63%). The rating agency notes that Eskhata's solid
profitability metrics are driven by its healthy net interest
margins (10% in 2011) given the bank's focus on high-margin
microfinance and retail lending. Eskhata's profitability also
benefited from its strong fee-generating capacity. The bank's fee
and commission income (which accounted for around 32% of total
operating income in 2011) was mostly generated by remittance
business, and will, in Moody's opinion, remain one of the main
income sources for Eskhata in 2012.

In light of Eskhata's highly profitable lending business, Moody's
views the bank's asset quality as adequate (loans 90+ days
overdue and restructured loans together accounted for around 4.5%
of gross loans in 2011). However, the rapid loan book growth in
recent years, along with a very high proportion of FX-denominated
loans (90% of gross loans) could adversely impact asset quality
and could raise concerns if the operating environment
deteriorates. Furthermore, the assigned ratings reflect Eskhata's
satisfactory liquidity position which has been supported by
growing retail deposits and sufficient level of liquid assets
(23-30% of total assets in the period 2011-Q1 2012).

Moody's also notes that Eskhata's capital position -- with a
Total capital adequacy ratio (CAR) of 19 % at Q1 2012 -- would be
sufficient to absorb expected credit losses under Moody's central


According to Moody's, an upgrade of Eskhata's ratings is unlikely
in the near term, given the weak and potentially volatile
operating environment in which the bank operates. However,
downward pressure could be exerted on Eskhata's ratings if
economic conditions were to worsen beyond current expectations,
leading to materially weaker asset-quality profiles, impaired
profitability and weaker capitalization levels.

The principal methodology used in this rating was Moody's
Consolidated Global Bank Rating Methodology published in June

Headquartered in Khudjand, Tajikistan, Eskhata reported -- as at
December 31, 2011 -- total assets of TJS516.6 million (US$108.6
million), shareholders equity of TJS54.6 million (US$11.5
million) and net income of TJS15.8 million (US$3.3 million),
according to its audited IFRS.

U N I T E D   K I N G D O M

GLOBAL SHIP: DePrince Race Owns 10.3% of Class A Shares
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, DePrince, Race & Zollo, Inc., disclosed
that, as of June 30, 2012, it beneficially owns 4,871,738 shares
of Class A Common Stock of Global Ship Lease, Inc., which
represents 10.26% of the shares outstanding.  A copy of the
filing is available for free at

                     About Global Ship Lease

London, England-based Global Ship Lease (NYSE: GSL, GSL.U and
GSL.WS) -- is a containership
charter owner.  Incorporated in the Marshall Islands, Global Ship
Lease commenced operations in December 2007 with a business of
owning and chartering out containerships under long-term, fixed
rate charters to world class container liner companies.

Global Ship Lease owns 17 vessels with a total capacity of 66,297
TEU with a weighted average age at June 30, 2010, of 6.3 years.
All of the current vessels are fixed on long-term charters to CMA
CGM with an average remaining term of 8.6 years.  The Company has
contracts in place to purchase two 4,250 TEU newbuildings from
German interests for approximately US$77 million each that are
scheduled to be delivered in the fourth quarter of 2010.  The
Company also has agreements to charter out these newbuildings to
Zim Integrated Shipping Services Limited for seven or eight years
at charterer's option.

As reported in the Dec. 1, 2012 edition of the TCR, Global Ship
Lease disclosed that it had entered into an agreement with its
lenders to waive until Nov. 30, 2012 the requirement under its
credit facility to conduct loan-to-value tests.  The credit
facility requires that loan-to-value, which is the ratio of
outstanding borrowings under the credit facility to the aggregate
charter-free market value of the secured vessels, cannot exceed

The Company's balance sheet at March 31, 2012, showed US$937.52
million in total assets, US$595.25 million in total liabilities
and US$342.26 million in total stockholders' equity.

RANGERS FC: Players' Contracts Included in Green Acquisition
STV reports that Charles Green's GBP5.5 million agreement to buy
the assets of Rangers included a GBP2.75 million payment to
purchase the contracts and registrations of the club's players.

According to STV, a report from administrators Duff and Phelps
has broken down the "asset realisations" of their sale of the
business to Sevco Scotland Limited.  It shows Mr. Green paid for
the club's employees to transfer to his company under TUPE
regulations, STV notes.

Numerous players have subsequently refused to take up employment
with Sevco, exercising their right under employment law to
terminate their contracts, STV says.

Mr. Green has vowed to challenge those who have departed, with
the Scottish FA so far having refused to issue International
Transfer Certificates to allow players to complete transfers to
new clubs.

It is claimed Mr. Green also paid GBP1.5 million for "heritable
properties", understood to be Ibrox Stadium, Murray Park and the
Albion car park, STV notes.

                  About Rangers Football Club

Rangers Football Club PLC --
-- is a United Kingdom-based company engaged in the operation of
a professional football club.  The Company has launched its own
Internet television station,  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.

SOUTH LONDON: In Administration Following Financial Woes
BBC News reports that South London Healthcare NHS Trust is to be
put into administration after it ran into financial trouble.

Health Secretary Andrew Lansley has appointed Matthew Kershaw as
special administrator to go into the trust, BBC relates.

The trust has run up deficits of more than GBP150 million since
being created in 2009, BBC discloses.

It is the first time an NHS trust has been put into
administration, BBC notes.

It is expected that even in the best case scenario the yearly
deficit of the trust will shrink to GBP15 million over the next
five years, BBC says.

Mr. Lansley, as cited by BBC, said that the decision to put the
trust into administration followed a recent statutory
consultation with the trust board, the strategic health authority
and local NHS commissioners.

South London Healthcare NHS Trust was created by merging three
hospitals - the Princess Royal in Orpington, Queen Mary's in
Sidcup and the Queen Elizabeth in Woolwich - and serves more than
one million people.

TULLOCH HOMES: Implements Second Massive Debt-for-Equity Swap
Peter Ranscombe at The Scotsman reports that Lloyds Bank has
carried out a second massive debt-for-equity swap at Tulloch
Homes that will "secure the future" of the business but will also
see it post losses of GBP65 million.

It is understood that the lender has written off GBP50 million of
Tulloch's GBP145 million debt, on top of the GBP30 million
refinancing the bank mounted in December 2009, the Scotsman

Bank of Scotland, now part of Lloyds, bought its original 40%
stake in the Inverness-based firm in April 2008 for GBP27.5
million, the Scotsman recounts.  According to the Scotsman, the
bank will be issued with further "preference shares" as a result
of the latest deal, which do not carry voting rights.

Lloyds now has 90 million preference shares in Tulloch, which
would have to be bought out in any takeover, the Scotsman says.

Under the refinancing, Tulloch -- which has 120 directly employed
staff -- will write down the value of its land and unsold houses
by some GBP56 million, which will lead to a loss of GBP65 million
for the 18 months to June 30, the Scotsman notes.

The firm had posted a loss of GBP7.2 million for 2010 after a
GBP2.9 million write down, according to the Scotsman.

Tulloch Homes is an Inverness-based housebuilder.

WINDERMERE VIII: Fitch Affirms 'Dsf' Rating on GBP19-Mil. Notes
Fitch Ratings has taken the following rating actions on
Windermere VIII CMBS plc:

  -- GBP34.9m class A2: affirmed at 'AAAsf'; Outlook Stable

  -- GBP46.5m class A3: upgraded to 'AAAsf' from 'AAsf'; Outlook

  -- GBP49.7m class B: upgraded to 'AAsf' from 'Asf'; Outlook

  -- GBP50.1m class C: upgraded to 'Bsf from 'CCCsf'; Outlook

  -- GBP43.7m class D: affirmed at 'CCsf'; Recovery Estimate (RE)

  -- GBP19.1m class E: affirmed at 'Dsf'; Recovery Estimate (RE)

The upgrades of the class A3, B and C notes are driven by the
higher than expected recovery proceeds from the sale of the
Monument loan collateral and by the strong income profile of the
largest remaining loan in the pool (the Government Income loan,
which accounts for 81.6% of portfolio balance).

The special servicer, Hatfield Philips International ('CSS2-'),
announced that the properties securing the GBP15.6 million
Monument loan (6.4% of the portfolio) had been sold on July 4,
2012.  The sale price was significantly higher than the March
2009 valuation: GBP13.3 million against a value of GBP3 million.
While final net recoveries are yet to be disclosed, the sales
proceeds will be applied sequentially to the capital structure,
to the benefit of the senior noteholders.  Full recovery is not
anticipated and the loss will be allocated reverse sequentially
to the notes, resulting in a further partial write-down of the
class E note balance.  While the loss should not be allocated
until the July 2012 interest payment date (IPD), it is already
reflected in the 'Dsf' rating.

After the full repayment of the Mid City loan and the AMG loan
occurred in 2011, the outstanding portfolio now has significant
exposure to the Government Income loan, which falls due in
October 2012.  A weighted average (WA) lease length of just over
eight years, the almost 98% occupancy and the dominance of public
sector tenants are all credit positive.  However, Fitch expects
the asset value to continue to be eroded as the residual lease
terms falls and the secondary nature of most of the assets should
limit the investment demand.  While options to extend the loan
are limited for the special servicer at loan maturity (legal
final maturity of the bonds is April 2015), Fitch believes that
the collateral remains an attractive investment, given the
strength of the tenancy profile and the average size of the
assets (GBP7 million by market value).  Even in scenarios where
the residual value of the collateral beyond lease expiries is
close to zero or very limited, the classes A3 to C notes would
still be protected by the credit enhancement offered by the
junior bonds.

The other two remaining loans, together accounting for 12% of the
loan pool balance, are both in special servicing.  Although the
special servicer is currently exploring a number of different
exit strategies, Fitch believes there is a high risk of loss on
both the Amadeus and Wood Green loans, which have both
experienced declines in value.  This is reflected in the lower
ratings at the bottom of the structure.


* BOOK REVIEW: Corporate Debt Capacity
Author: Gordon Donaldson
Publisher: Beard Books, Washington, D.C. 2000 (reprint of 1961
book published by the President and Fellows of Harvard College).
List Price: 294 pages. $34.95 trade paper, ISBN 1-58798-034-7.

"The research project who results are reported in this volume was
primarily concerned with the risk element involved in the
utilization of debt as a source of permanent capital for
business," Bertrand Fox, Director of Research, succinctly writes
in the "Foreword".  The research project was funded by and
conducted by an organization connected with Harvard College, the
original publishers of this book in the early 1960s.

The research was not a body of data for analysis as research
typically is in business studies or sociological studies.  In the
end, Donaldson recommends perspectives and practices going beyond
the research.  This doesn't necessarily go against the findings
of the research, but rather shows the limitations of the thinking
of most businesspersons at the time or their blind spots
regarding the role of debt, especially with respect to potentials
for growth, longevity, and other interests of business

The businesses are not identified.  Given Donaldson's credibility
and reputation and the Harvard name behind the research project
however, the research data is taken as factual and reliable.  The
research was garnered from participating corporations and
financial institutions.

Though there are a few tables, the research is not limited to
financial information strictly as figures and other balance sheet
data.  Donaldson was interested as much in corporate leaders'
psychology and presumptions about debt more than current debt
situations and corporate policies regarding debt.  Financial
institutions were included as part of the study as well because
their views toward corporate debt and the way they worked with
the 210 financial parts of corporations had an effect on
corporate debt of the time.

As Donaldson found from the research, both corporations and
financial institutions understood debt in conventional,
traditional, ways.  For the corporations, these ways could be
hampering operations and strategy.  The ways corporations were
being hampered were unseen however unless they started looking at
their books differently and became open to taking on debt
differently.  Donaldson's singular achievement was to see in the
research ways in which corporations were being hampered and in
thus propose a new way of regarding debt.  This was a
revolutionary step for the large majority of businesses.  And for
even the small number of businesses which were pursuing
unconventional debt practices, Donaldson's studies and new
perspective put these on solid ground giving better guidance.
Donaldson's readings of the research reflect corporate managers'
own statements (also part of the research) regarding their views
on their company's financial analysis and debt.  Managers are
quoted, "Our management is essentially conservative."; "The word
which describes our corporate image is 'dignified'."; "I supposed
in a way we're lazy."  The author treats these as "attitudes"--as
in a chapter "Management Attitudes to Non-Debt Sources"--
realizing that it is such "attitudes" more than what financial
figures disclose or debt itself which colors practices about the
fundamental business matter of debt.  Donaldson brings into the
open managers false sense of debt.  This false sense is bound in
with conventional, inherited concepts and images of a corporation
having no relation to facts. Such conventional views are
perpetuated by an aversion to risk.  The less debt, the less
risk, according to the prevailing precept.  But Donaldson points
out that managers who observe this actually often pursue greater
risks in product development, entering new markets, mergers, and
other activities.

Corporate "attitudes" to debt since the book's 1961 publication
attest to the deep influence of Donaldson's groundbreaking
perspective.  Consumer debt, the growth of credit cards, and
other financial phenomena also evidence changed regard of debt
found in Donaldson's work.  The tipping of the balance to too
much debt for many corporations and beyond cannot be attributed
to the book however.  For in urging new concepts and uses of debt
for the better management of corporations, Donaldson also goes
into determination and control of risks entailed in new types of
debt. Gordon Donaldson retired in 1993 after close to 20 years at
the Harvard Business School.


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

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  Go to 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.

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