/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/120803.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, August 3, 2012, Vol. 13, No. 154 Headlines C Y P R U S REPUBLIC OF CYPRUS: S&P Lowers Sovereign Credit Rating to 'BB' G E O R G I A VTB BANK: Fitch Affirms 'BB' Long-Term IDR; Outlook Stable G R E E C E * GREECE: Moody's Says Banking System Outlook Remains Negative I R E L A N D ANDERSON VALLEY: S&P Lowers Rating on Class B-1 Notes to 'CC' P O L A N D BOMI SA: Declared Bankrupt; Seeks Arrangement with Creditors P O R T U G A L * PORTUGAL: Insolvency Cases Up 77% in First Quarter R U S S I A * MANGISTAU REGION: Fitch Affirms 'BB+' LT Currency Ratings S P A I N GRIFOLS SA: S&P Raises Credit Rating to 'BB'; Outlook Stable U N I T E D K I N G D O M B ROURKE: In Administration, Cuts 37 Jobs COASTAL NETWORK: Board Puts Charity Into Administration DEWEY & LEBOEUF: U.K. Administrators Propose Liquidation DIXON SCAFFOLDING: In Administration on HRMC Arrears HEIN GERICKE: In Administration on Going Economic Pressure ITV PLC: Moody's Changes Outlook on 'Ba1' CFR to Positive NORFOLK FRAMES: In Liquidation; 60 Jobs Affected ROYAL BANK: Cabinet Ministers In Talks Over Full Nationalization SOUTHERN CROSS: To Implement Company Voluntary Arrangements TITAN EUROPE 2006-4: S&P Withdraws 'B-' Rating on Class A2 Notes WHEEL OF LIVERPOOL: Goes Into Administration X X X X X X X X * EUROPE: Moody's Says Supranational Ratings Resilient to Crisis * EUROPE: Moody's Says ABS SME Performance Stable in June 2012 * BOOK REVIEW: Ralph H. Kilmann's Beyond the Quick Fix ********* =========== C Y P R U S =========== REPUBLIC OF CYPRUS: S&P Lowers Sovereign Credit Rating to 'BB' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the Republic of Cyprus to 'BB' from 'BB+'. "At the same time, we affirmed our short-term sovereign credit rating on Cyprus at 'B'," S&P said. "We also placed the long-term rating on CreditWatch with negative implications," S&P said. "Our transfer and convertibility (T&C) assessment for Cyprus, as for all European Economic and Monetary Union (eurozone) members, is 'AAA', reflecting our view that the likelihood of the European Central Bank restricting nonsovereign access to foreign currency needed for debt service is extremely low," S&P said. "We continue to hold the view that the government of Cyprus will negotiate a financial support package to recapitalize its banking system to meet the European Banking Association's regulatory minimum. We also expect that, through a conditional lending program, the Troika will provide Cyprus with a credible back-stop to further bank losses, as well as budgetary support. We are therefore fully factoring into our ratings on Cyprus our estimates of a likely financial support package. However, even with official assistance -- which we view as vital if Cyprus is to avoid default -- we believe the government will remain in a weak fiscal position due to a banking system that has been unable to cope without government support as a result of its exposure to Greek customers," S&P said. "We estimate that Cyprus needs the equivalent of just over 60% of its GDP to recapitalize its banks, absorb further bank losses, and meet 2012-2014 borrowing requirements. In our base case, we forecast an average increase in general government debt of over 10% of GDP in 2012 and 2013, peaking at 108% of GDP in 2013," S&P said. "Excluding financial support, we estimate that the underlying budgetary deficit (the fiscal balance excluding non-recurrent spending to recapitalize the banks) will narrow to an average of close to 3.5% of GDP between 2012 and 2014, from 6.3% in 2011. We also take into account that part of the Cypriot banks' recapitalization could occur via non-debt-increasing means, such as increased holdings of private shareholders. However, even excluding bank-recapitalization-related Troika support, we believe the higher government debt burden related to budgetary support considerably reduces the government's capacity to respond to any new external shocks. Such shocks could include any further economic deterioration in Greece (CCC/Stable/C), which could deepen if Greece were to exit the eurozone," S&P said. "After writing down holdings of Greek government debt, the Bank of Cyprus and Cyprus Popular Bank--together representing nearly 40% of domestic financial system assets--will require EUR2.3 billion to recapitalize. The government has already acquired about EUR1.8 billion of shares in Cyprus Popular Bank after exchanging them for a bond. Including our credit loss estimates on the remaining stock of Greek private sector loans, which are equivalent to 120% of Cyprus' GDP, we estimate the total capital requirements for the banking system to be about EUR4.5 billion or 25% of GDP," S&P said. "We also expect that the government will likely need about EUR6.6 billion or 36% of GDP to cover maturing debt and underlying deficits during 2012-2014," S&P said. "While we believe that lending rates from the Troika (or from bilateral sources such as the Russian government) will be relatively low, we expect that the increased burden of financing a gross general government debt stock of 108% of GDP, and the expected continuation of budgetary cuts will weigh significantly on Cyprus' near-term growth prospects. This drag will come over and above the negative impact on domestic demand from financial sector deleveraging," S&P said. "We project that Cyprus' real GDP growth will contract by 1.5% this year and to at best stagnate during 2013. These estimates are subject to the uncertainties inherent in projecting growth trends in small economies," S&P said. "We anticipate that at least some of Cyprus' financing needs will be met by the European Financial Stability Facility (EFSF) or the European Stability Mechanism (ESM). We understand that loans from the ESM could be subject to an explicit understanding that they be treated as senior to other outstanding commercial debt. If that decision were taken, it would also weigh on our view of Cyprus' creditworthiness," S&P said. "We anticipate that official creditors will impose significant conditionality on all loans to Cyprus. In line with recent European Commission stability program proposals, we expect that the most contentious discussions will center on public sector wage cuts, changes to (or even the abolition of) the automatic wage indexation mechanism, and potential modifications to Cyprus' advantageous tax environment. Should the government implement the conditionality fully, the implications would likely be positive for Cyprus' creditworthiness as these would aim to reform public finances and reduce large economic imbalances," S&P said. "In 2012, the Cypriot government has issued about EUR600 million in T-Bills. This step-up in reliance on shorter-term funding increases rollover risk on the government's debt stock, in our view," S&P said. "We estimate the government's gross refinancing requirement at EUR1.7 billion through to October 2012. Absent official funding, we believe this amount will likely be financed by nonresident banks and institutional investors. However, prolonged negotiations about the conditionality of official assistance, or further economic turmoil in Greece, could complicate Cyprus' financing plans. That said, we believe EFSF or ESM funding could be mobilized at short notice once an agreement is reached," S&P said. "Cyprus is a small, services-based economy; its large domestic banking system (assets equivalent to 800% of GDP) and developed tourism sector have traditionally contributed significantly to both growth and government revenues. We understand that recent natural gas discoveries in Cypriot territorial waters could be commercially exploited over the medium term. This could further diversify the economy and be an additional valuable source of government revenues and current account receipts. While the timing of this remains uncertain, we have seen that such developments typically take five to 10 years to have a meaningful impact on a country's fiscal and external balance sheet," S&P said. ============= G E O R G I A ============= VTB BANK: Fitch Affirms 'BB' Long-Term IDR; Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed VTB Bank (Georgia)'s (VTBG) Long-term Issuer Default Ratings (IDR) at 'BB' and Liberty Bank's (LB) Long- term IDR at 'B', both with Stable Outlooks. At the same time, the agency has upgraded LB's Viability Rating (VR) to 'b' from 'b-'. Rating Action Rationale: LIBERTY BANK'S VR and IDRS The upgrade of LB's VR reflects the strengthening of the bank's capitalization and the extended track record of sound performance under new management since the takeover in 2009. The affirmation of LB's Long-term IDR reflects the fact that it was already 'B' as a result of the bank's 'B' Support Rating Floor (SRF), and so is not impacted by the VR upgrade. Following the change in the VR, LB's Long-term IDR is now driven by its VR, while still being underpinned at its current level by the SRF. Rating Drivers: LIBERTY BANK'S VR and IDRS LB's VR and IDRs reflect the bank's sound recent performance in terms of both pre-impairment profitability and the quality of non- legacy loans, its solid capitalization, currently comfortable liquidity, the absence of debt funding, the predominantly local currency balance sheet and good standards of management, governance and disclosure. At the same time, the ratings also consider inherent risks in LB's rapid loan growth in the relatively high-risk operating environment, the bank's still rather narrow franchise, significant concentrations in the deposit base and some reliance on government and municipal funding. Capitalization has improved as a result of equity injections and earnings retention, which have increased the bank's Fitch core capital/risk-weighted assets ratio to 13.0% at end-Q112 (end-2010: 8.3%). The regulatory capital ratios are significantly lower (Tier 1 8.5%; total 10.9% at end-H112), mainly as a result of the non-inclusion of fixed assets revaluations in capital. The bank is still reliant on a waiver from the National Bank of Georgia, exempting it from minimum capital requirements (Tier 1 8%; total 12%) until September 2012. Fitch believes retained earnings should be sufficient to ensure regulatory compliance by the time the waiver expires, but potential conversion of a GEL18.8m contingent capital facility (subscribed mainly by LB's main shareholder; mandatory conversion into ordinary shares in case of non-compliance), would also strengthen capital ratios by approximately 3ppts. The bank's earning capacity is improving on the back of rapid net loan growth (104% in 2011; 20% in H112), which has improved scale efficiencies, reasonable asset quality, and a wide net interest margin, which is supported by the bank's focus on mass retail banking. Non-performing loans in the non-legacy loan book were a moderate 3.0% at end-Q112, while a large majority of exposures in the pre-acquisition legacy book (10% of loans at end-Q112) were impaired. Positively, and in contrast to other rated Georgian banks, LB's funding is predominantly GEL-denominated (83% of H112 customer deposits), as a result of which the majority of customer loans are also issued in local currency. LB's liquidity position is also comfortable, with highly liquid assets (cash, interbank assets and unpledged government securities) covering 32% of customer funding at end-H112. However, significant reliance on government and municipal funding (54% of customer deposits at FYE11, including some large balances), can make funding levels somewhat volatile. Rating Drivers: LIBERTY BANK'S SUPPORT RATING and SRF LB's '4' Support Rating and 'B' SRF reflect Fitch's view of the moderate probability of government support given the bank's important social function of providing banking services in remote parts of the country and its role in distributing pensions and public sector salaries, as well as the track record of government support in 2008-2009. Rating Sensitivities: LIBERTY BANK LB's VR and Long-term IDR could be upgraded if the bank builds a further track record of sound performance and gradually strengthens its franchise, while maintaining adequate levels of capital and liquidity. Further improvements in the Georgian operating environment could also support an upgrade. A marked deterioration in asset quality as the bank continues its rapid growth, or significant negative shocks for the Georgian economy, could result in downward pressure on the VR. However, this would only result in a downgrade of the Long-term IDR if Fitch also downgraded the bank's Support Rating and SRF. The latter is possible if there is a sovereign downgrade or a marked reduction of LB's social importance/agency role, neither of which are currently anticipated by Fitch. Rating Action Rationale and Drivers: VTBG'S SUPPORT RATING & IDRs The affirmation of VTBG's Long-term IDR at 'BB'/Stable, and its Support Rating at '3', reflects Fitch's continued view of the likelihood of shareholder support from its 96%-owner, JSC Bank VTB (VTB, 'BBB'/Stable), the state-controlled, second-largest bank in Russia. In Fitch's view, VTB would have a high propensity to support its Georgian subsidiary, given VTBG's small size, the significant amount of funding VTBG receives from VTB, the track record of capital support from its parent and the banks' common branding. At the same time, VTBG's ability to receive and utilize parent support could be restricted by transfer and convertibility restrictions, the risk of which is reflected in Georgia's Country Ceiling ('BB'). Rating Sensitivities: VTBG'S SUPPORT RATING AND IDRS VTBG's Long-term IDR could be upgraded or downgraded if there was a similar change in Georgia's Country Ceiling and sovereign ratings. The rating could also be downgraded if there was a multi-notch downgrade of VTB, or any clear indication that Russian government support for VTB would not be allowed to flow through to its foreign subsidiaries, neither of which is currently anticipated. Rating Action Rationale and Drivers: VTBG'S VR The affirmation of VTBG's VR at 'b-' reflects the bank's small size and modest franchise, concentrated balance sheet, limited track record of reasonable credit underwriting and significant proportion of foreign currency lending. However, the rating also considers the bank's return to profitability in 2011 as a result of significantly lower impairment charges and an increase in cheaper parent funding, and currently acceptable capitalization and liquidity. Rating Sensitivities: VTBG'S VR An extended track record of better performance and credit underwriting could result in an upgrade of the VR. Further relapses in risk management and asset quality could result in a downgrade. LB was the fourth-largest bank in Georgia, holding 6.6% of system assets at end-Q112. At end-2011, it was 76.5% owned by Liberty Capital LLC, with a majority of the remainder held by institutional investors through the bank's unlisted GDR program. VTBG held 3.4% of end-Q112 banking sector assets. The rating actions are as follows: JSC Liberty Bank: -- Long-term Foreign Currency IDR affirmed at 'B'; Outlook Stable -- Short-term Foreign Currency IDR affirmed at 'B' -- Viability Rating: upgraded to 'b' from 'b-' -- Support Rating: affirmed at '4' -- Support Rating Floor: affirmed at 'B' JSC VTB Bank (Georgia): -- Long-term Foreign Currency IDR affirmed at 'BB'; Outlook Stable -- Short-term Foreign Currency IDR affirmed at 'B' -- Viability Rating: affirmed at 'b-' -- Support Rating: affirmed at '3' =========== G R E E C E =========== * GREECE: Moody's Says Banking System Outlook Remains Negative -------------------------------------------------------------- The outlook on Greece's banking system remains negative, says Moody's Investors Service in a new Banking System Outlook published on August 1. The negative outlook continues to reflect the rating agency's view that the stressed operating environment - - characterized by deep and prolonged economic contraction, elevated sovereign credit risk and fragile depositor confidence -- will continue to erode banks' asset quality, capital, profitability and funding. The new report, entitled "Banking System Outlook: Greece", is now available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release. Following a -6.9% contraction in real GDP in 2011, Moody's expects that real GDP will contract by -7% in 2012 and -2.3% in 2013, exerting further pressure on the already stressed banking system. Declining purchasing power and liquidity of banks' retail and corporate customers -- exacerbated by reductions in government expenditures and increasing unemployment -- will continue to erode repayment capacity and constrain banks' business opportunities. In addition, Moody's says that although it is not its central scenario, the risk of Greece exiting the euro area remains material. If it were to occur, an exit would trigger acute economic dislocations and severe downside consequences for the banking system. Moody's believes that the Greek banking sector will remain loss- making in 2012 and 2013, following record losses in 2011 mainly due to the Greek government debt-exchange. Economic contraction and asset deleveraging will lead to lower business volumes, affecting top-line revenues, while high provisioning requirements will erode bottom line results. Moody's says that the banks' cost- cutting initiatives and profitable operations in South-Eastern Europe will not be strong enough to reverse these trends. The Greek government debt-exchange in March 2012 depleted the banks' capital bases, rendering them economically insolvent and generating immediate recapitalization needs of around EUR30 billion. Taking into account additional losses on banks' loan books, Moody's central scenario indicates that total capital requirements could reach up to EUR40-50 billion over the outlook horizon (or around 20% of Greece's 2011 GDP). Moody's expects the bulk of these capital funds to come from the EU and the IMF via a EUR50 billion commitment to the Hellenic Financial Stability Fund (HFSF), which has already disbursed EUR18 billion to the four largest banks. Moody's expects that Greek banks will remain locked-out of the wholesale and interbank markets and continue to face further deposit outflows over the coming 12-18 months. Private-sector deposits declined by 36.7% (or by EUR87.2 billion) from their peak in September 2009 through June 2012, with an acceleration of deposit outflows in May and June 2012 due to the inconclusive outcome of the first round of elections. Prolonged economic contraction, fragile investor sentiment and susceptibility to event risk all indicate that the risk of accelerated deposit outflows remains high. Declining deposits and restricted collateral availability for ECB funding has also meant that banks have increased their emergency liquidity assistance (ELA) reliance from Bank of Greece over the last six months and Moody's expects that this trend will continue. On 20 July, the ECB suspended the eligibility as collateral of bonds issued or guaranteed by the Greek government, pending Troika's progress report on Greece under the second support program, increasing further Greek banks' ELA reliance. ============= I R E L A N D ============= ANDERSON VALLEY: S&P Lowers Rating on Class B-1 Notes to 'CC' ------------------------------------------------------------- Standard & Poor's Ratings Services has lowered its credit ratings on Anderson Valley CDO PLC's class S-1, S-2, and B-1 notes. "At the same time, we have affirmed our ratings on the class A-1, A-2, C-1, D-1, and Q combo notes," S&P said. "The rating actions follow our assessment of the transaction's performance since our previous review in October 2010, using information from the latest trustee report dated June 20, 2012. They reflect further credit events in the portfolio, which have reduced the collateral available for repaying the notes," S&P said. Anderson Valley I is a hybrid partially-funded cash flow collateralized debt obligation (CDO) that closed in December 2006, and is managed by BlackRock Inc. Its notes are denominated in U.S. dollars. A related euro-denominated transaction, Anderson Valley II CDO PLC, closed in February 2007. The transactions are similar in concept, and both have diversified credit default swap (CDS) reference portfolios comprising primarily investment-grade corporate and sovereign entities. "To help limit losses arising from credit events in the reference portfolio, Anderson Valley CDO has a net losses event of default trigger under the terms and conditions of its notes. An event of default is triggered if net losses, as defined in the transaction documents, equal or exceed 10%. At present, the CDS counterparty has the right to enforce security following an event of default, which would likely lead to liquidation of the cash collateral and termination of all CDSs in the transaction," S&P said. S&P said since its previous review: - The amount of net losses increased to 9.68% from 9.16%, thereby pushing closer to the 10% event of default trigger; and - Its estimation of the amount available to withstand future losses and repay noteholders decreased to $190.6 million (of principal cash) from US$200.4 million (of bonds and principal cash). "The class S-1 and S-2 note balance combined is currently $112 million. Given our view on the increased likelihood of a net losses event of default, and reduced credit enhancement, we have lowered to 'B (sf)' from 'BB (sf)' our ratings on the class S-1 and S-2 notes," S&P said. "Our analysis indicates that the class A-1 and A-2 notes remain vulnerable to nonpayment, mainly due to the uncertainty regarding the mark-to-market value of a CDS portfolio following an event of default trigger breach. We have therefore affirmed our 'CCC- (sf)' rating on the class A-1 and A-2 notes," S&P said. "Our analysis further indicates that the available collateral is unlikely to be sufficient to repay the class B-1, C-1, and D-1 notes. We have therefore lowered to 'CC (sf)' our rating on the class B-1 notes, and affirmed our 'CC (sf)' ratings on the class C-1 and D-1 notes," S&P said. "The class Q combo notes are combination notes benefiting from all the cash flows from the class S-2 and A-2 notes, and 29.76% of the cash flows from the subordinated notes. Our analysis indicates that if the class S-2 and A-2 notes repay in full, the rated balance of the class Q combo notes will be repaid even if no further payments are made on the subordinated notes," S&P said. "Although the rated balance of the class Q combo notes may be repaid even if the class A-2 notes are not repaid in full, we continue to consider it appropriate to link our rating on the class Q combo notes to our rating on the class A-2 notes, given the current reliance on cash flows from the class A-2 notes. We have therefore affirmed our 'CCC- (sf)' rating on class Q combo notes," S&P said. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this credit rating report are available at: http://standardandpoorsdisclosure-17g7.com RATING LIST Class Rating To From Anderson Valley CDO PLC US$438.6 Million Fixed- And Floating-Rate Notes Ratings Lowered S-1 B (sf) BB (sf) S-2 B (sf) BB (sf) B-1 CC (sf) CCC- (sf) Ratings Affirmed A-1 CCC- (sf) A-2 CCC- (sf) C-1 CC (sf) D-1 CC (sf) Q combo CCC- (sf) =========== P O L A N D =========== BOMI SA: Declared Bankrupt; Seeks Arrangement with Creditors ------------------------------------------------------------ Pawel Kozlowski at Bloomberg News reports that Bomi SA said a court declared it bankrupt and allowed the company to seek arrangement with creditors. Bomi announced the court decision in a regulatory filing today. Bomi SA is a Polish grocery chain. =============== P O R T U G A L =============== * PORTUGAL: Insolvency Cases Up 77% in First Quarter ---------------------------------------------------- Henrique Almeida at Bloomberg News reports that the Justice Ministry said the number of people and companies declared insolvent by Portuguese courts rose 77% in the first quarter from a year earlier. According to Bloomberg, the ministry said in a report posted on its Web site on Wednesday that insolvency cases increased to 3,900 in the first three months of the year from 2,206 cases. =========== R U S S I A =========== * MANGISTAU REGION: Fitch Affirms 'BB+' LT Currency Ratings ----------------------------------------------------------- Fitch Ratings has affirmed Kazakhstan's Mangistau Region's Long- term foreign and local currency ratings at 'BB+', Short-term foreign currency rating ay 'B' and National Long-term rating at 'AA-(kaz)'. The Outlooks for the Long-term ratings are Stable. The agency simultaneously has withdrawn all ratings. Fitch has withdrawn the ratings as Mangistau Region has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for Mangistau Region. ========= S P A I N ========= GRIFOLS SA: S&P Raises Credit Rating to 'BB'; Outlook Stable ------------------------------------------------------------ Standard & Poor's Ratings Services raised its long-term corporate credit rating to 'BB' from 'BB-' on Spain-based global specialty biopharmaceutical company Grifols S.A. The outlook is stable. "At the same time, we raised our issue rating on Grifols' senior secured bank debt to 'BB+' from 'BB'. The recovery rating on this instrument remains unchanged at '2' (70%-90% recovery). We also raised our issue rating on Grifols' unsecured notes to 'B+' from 'B'. The recovery rating on this instrument remains unchanged at '6' (0%-10% recovery)," S&P said. "The rating upgrade reflects our opinion that Grifols will continue its solid performance thanks to persistent growing demand from healthcare providers worldwide for blood plasma-derivative products. This should lead to a reduction in its adjusted leverage to close to 4x by the end of 2012, and sustainably below 4x thereafter," S&P said. Grifols' exposure to the Kingdom of Spain (BBB+/Negative/A-2) causes only a modest drag on our rating assessment of the company. S&P said it expects that demand for plasma-derivatives products will continue to grow by 5%-7% a year, based on: -- A rise in the number of patients as a result of increased access to medical care. Thus, plasma-based products will become available to people who previously needed the treatment but had no access to it. This is typically the case in emerging markets. S&P also expects to see more people in need of treatment, which typically reflects the aging population in mature markets. -- New products applications and indications. In particular, plasma-based products are being studied for potential use in Alzheimer's disease. "However, we expect pricing to remain flat after having stabilized in the first half of 2012. This reflects our opinion that the positive impact of growing demand will be offset by pressure resulting from austerity measures and lower reimbursement rates, particularly in Southern Europe," S&P said. On this basis, S&P said, its forecast for Grifols for 2012 and 2013 encompasses these assumptions: -- About 10% sales growth in 2012, and around 5% in 2013. This incorporates Grifols' strong results in the first half of 2012, with pro forma revenues up 15%, but also includes S&P's opinion that market conditions thereafter will weaken as austerity measures toughen in Europe. -- S&P's projections of a continued increase in profitability, to about 32.5% adjusted EBITDA margins in 2013. This will primarily stem from optimized capacity utilization following the June 2011 acquisition of Talecris Biotherapeutics Inc. -- About EUR450 million of capex over the 2012-2016 period, as Grifols is investing in capacity to be able to address the growth in demand. -- No dividend payment in 2012 and limited dividend payments thereafter of about 40% of net income. -- Limited acquisitions. -- No share buy-back activity. -- Significant debt repayment of around EUR1 billion over the next three years, including moderate mandatory amortization of EUR292 million and additional voluntary prepayment, signifying Grifols' capacity and willingness to delever rapidly. "Under these assumptions, we project that leverage will reduce to around 4x by the end of 2012 and below 4x thereafter on a sustainable basis. The reduction in leverage also incorporates the group's commitment to a disciplined financial policy following the 2011 transformational acquisition of U.S.-based Talecris," S&P said. "The stable outlook reflects our opinion that Grifols will continue its strong performance, leading to a reduction in its adjusted debt leverage to close to 4x by the end of 2012 and below 4x on a sustainable basis thereafter. The stable outlook also reflects our opinion that Grifols' cash balances, revolving credit facility, and internally generated free cash flow will continue to comfortably cover its upcoming moderate debt repayments, as liquidity is drying up in Spain and access to external sources of cash may be restrained," S&P said. "The stable outlook does not factor in any significant change of the sovereign rating on Spain. Despite our view of Grifols' limited exposure to Spain, the rating on Grifols would need to be reviewed should there be any material change in the economic and political situation in Spain or in the sovereign rating on Spain, where Grifols is headquartered," S&P said. "An upgrade could occur if Grifols reduces it debt leverage to close to 3x, through a combination of EBITDA growth and further debt repayment. This could occur if Grifols' revenues increased by 10% and EBITDA margins improved to above 34% in 2013, compared with our base-case assumptions of 5% and 32.5%," S&P said. "Conversely, we could lower the rating if leverage does not improve sustainably to below 4x in 2013. This could happen if the austerity measures in Europe had a higher-than-expected impact or if the synergies from the merger with Talecris were lower than expected. We calculate that flat revenues growth and EBITDA margins below 29% in 2013 would cause leverage to increase above 4x," S&P said. "We could also lower the ratings if Grifols was to unexpectedly deviate from its publicly stated financial policy of reducing net reported leverage to below 2.5x by 2014, which could take the form of material debt-financed acquisition or shareholder return," S&P said. "Finally, though we consider it unlikely at this stage, given the group's track record, we could downgrade the rating if performance and cash generation were to deteriorate due to a product recall or contamination, impairing the group's ability to reduce its leverage," S&P said. =========================== U N I T E D K I N G D O M =========================== B ROURKE: In Administration, Cuts 37 Jobs ----------------------------------------- Burnley Express reports that Burnley ironsmith, B Rourke and Co, has gone into administration with the loss of 37 jobs. The current economic climate and difficult trading conditions, were given as reasons for the shock closure, according to Burnley Express. Business restructuring partners Patrick Lannagan and Tracey Pye were appointed joint administrators over the company. Burnley Express notes that the company is being wound down with 19 employees made redundant shortly after the joint administrators' appointment. The 18 remaining employees are expected to be made redundant over the next couple of weeks as the operations of the company are brought to a close, Burnley Express says. "Unfortunately, the current economic climate and difficult trading conditions significantly affected the business. . . . The company had been seeking a buyer over recent weeks but, despite contact with a significant number of potential acquirers, there was no interest in the business as a going concern. . . . The joint administrators are taking all necessary steps to mitigate losses to all stakeholders and, going forward, will seek to maximize recoveries for the benefit of all creditors," the report quoted Patrick Lannagan, BDO business restructuring partner, as saying. B Rourke and Co, based in Accrington Road, was a wrought iron manufacturer that specialised in the production of iron gates and railings for private and commercial clients in this country and abroad. COASTAL NETWORK: Board Puts Charity Into Administration ------------------------------------------------------- EADT24 News reports that the board of trustees of CoastNet - The Coastal Network, which has offices in Rowhedge, near Colchester, and also in Devonport in Plymouth, has placed the charity into administration. The charity also had seven directors/trustees. Its eight employees - three of which were directly based in Colchester - have been made redundant, although there is a possibility they could be offered future employment if talks on the transfer of projects are fruitful, administrators said, according to EADT24 News. The report relates that a further three staff were based in Plymouth, and the others between sites. Lee De'ath and Richard Toone, insolvency practitioners at accountancy firm Chantrey Vellacott DFK have been appointed joint administrators. Mr. De'ath, partner at Chantrey Vellacott DFK's Colchester offices on Balkerne Hill, confirmed that the administrators are in discussions with a number of parties to try and transfer the management of CoastNet's projects, the report discloses. "CoastNet worked to support underprivileged communities through a range of projects, from cricket on the beach to educational trips away . . . . Due to insufficient funding some of the projects are now unfortunately unable to go ahead, although we are in talks with more than one organization with the objective of transferring some of the on-going projects," the report quoted Mr. De'ath as saying. CoastNet, which was established in 1996, was the only national charity dedicated to sustainable development of the UK's coasts. It worked on projects to help improve the quality of life of underprivileged people living in coastal communities through education, community and social enterprise. DEWEY & LEBOEUF: U.K. Administrators Propose Liquidation -------------------------------------------------------- Karin Matussek and Jeremy Hodges at Bloomberg News report that Dewey & LeBoeuf LLP's U.K. administrators proposed liquidating the defunct law firm's British assets last week a day after the German operations were put in insolvency proceedings by a Frankfurt court. According to Bloomberg, administrators at BDO LLP said in a July 27 regulatory filing that the U.K. partnership, which includes the London and Paris offices, should be moved into liquidation. White & Case LLP attorney Andreas Kleinschmidt was appointed preliminary administrator July 26 in Germany, Bloomberg says, citing the country's online insolvency registry. Dewey's U.S. partnership failed on May 28 after suffering a loss of dozens of partners, Bloomberg relates. It had drawn US$75 million of a US$100 million bank credit line when the loan came due on April 16, according to people familiar with its finances, Bloomberg discloses. Mr. Kleinschmidt said he couldn't comment on the German case as he had only recently been appointed to the role, Bloomberg notes. He may be reached at: Andreas Kleinschmidt WHITE & CASE LLP Bockenheimer Landstrasse 20 60323 Frankfurt am Main Germany Tel: + 49 69 29994 0 Fax: + 49 69 29994 1444 The BDO proposal filed at the U.K.'s Companies House said U.K. unsecured creditors are owed GBP5.2 million (US$8.1 million), according to Bloomberg. The administrators, as cited by Bloomberg, said that the amount includes a claim for around GBP3.8 million by HM Revenue & Customs for unpaid payroll and "other taxes". Kate Moffat, a spokeswoman for BDO, declined to comment, according to the report. About Dewey & LeBoeuf New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of US$245 million and assets of US$193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for US$6 million. The Pension benefit Guaranty Corp. took US$2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey & LeBoeuf has won Court authority to use lenders' cash collateral through July 31, 2012. DIXON SCAFFOLDING: In Administration on HRMC Arrears ----------------------------------------------------- Insider Media Limited reports that Dixon Scaffolding (Transmission) Ltd entered administration after missing a 'Time to Pay' agreement with Her Majesty's Revenue & Customs. Administrators were appointed to Dixon Scaffolding (Transmission) Ltd in early July, but managed to secure a pre-pack sale of the business and assets, according to Insider Media Limited. David Hill, Peter Richard Dewey, and Julie Anne Palmer of Begbies Traynor were called in on July 6, 2012. Insider Media Limited notes that the administrators said two 'Time to Pay' agreements had been entered into, but the company missed a payment of GBP10,000. The report relates that this led to the agreements being cancelled. HMRC then indicated a winding up petition would be issued if payment was not made and Begbies Traynor was contacted by the company to negotiate to avoid the action, the report relays. The report notes that concerns from the company's bank, Royal Bank of Scotland, led to delays in appointing an administrator and as the bank had decided not to consent to the appointment, a going concern sale was prevented. A debenture was created in favor of directors Mike Dixon, Kathleen Dixon and Tracey Dixon to create a fixed and floating charge over the company's assets, the report discloses. The report relates that on July 6, 2012, administrators from Begbies Traynor were appointed and the business was sold. The administrators said the secured creditors, who are the directors, are likely to be repaid in full, the report says. They are owed GBP747,000 from the repayment of the bank's overdraft facility, the report notes. Insider Media Limited discloses that preferential creditors are owed GBP63,503 and the administrators said since their appointment, the employees' claims have been paid in full by associated company Dixon Pentland Scaffolding Company. The report says that it is estimated that GBP3.3 million is owed to unsecured creditors. Insider Media Limited notes that this includes GBP1.8 million to HMRC, GBP464,542 to trade creditors, GBP201,161 to connected companies and GBP11,801 to employees. The administrators said there "may be sufficient funds to enable a divided to be paid to the unsecured creditors," Insider Media Limited adds. Dixon Scaffolding (Transmission) was founded more than 40 years ago and provided scaffolding to the energy and heavy industrial sectors. The business employed more than 100 staff. HEIN GERICKE: In Administration on Going Economic Pressure ---------------------------------------------------------- Stay On The Block reports that Motorcycle Trader is reporting that Hein Gericke UK Ltd has been placed into administration. The administrators (Moorfields Corporate Recovery) are looking to sell the UK business, which currently operates 49 stores across England, Wales, Scotland and Northern Ireland, and are asking interested parties to make contact by August 6, according Stay On The Block. Simon Thomas, joint administrator at Moorfields Corporate Recovery, said: "Hein Gericke (UK) Ltd is one of the leading suppliers of motorcycle accessories in the UK and has a well- established infrastructure in place that will allow a potential buyer to focus on generating sales. While the ongoing economic pressures have affected sales in recent years I am confident the business model has a lot of potential with a dedicated customer base and staff who are obviously passionate about working for the company." Hein Gericke opened his first shop in Germany in the 1970s and within a few years, it had quickly become the largest motorcycle dealership in Germany. In 1987, when the business had grown globally, Hein sold out. The brand is now sold through its own shops across Europe. ITV PLC: Moody's Changes Outlook on 'Ba1' CFR to Positive --------------------------------------------------------- Moody's Investors Service has changed the outlook on ITV Plc's Ba1 corporate family rating (CFR), probability-of-default rating (PDR) and senior unsecured debt ratings to positive from stable. Moody's decision to change the rating outlook reflects: (i) ITV's continued solid operating performance in H12012 with strong growth in particular from non-advertising revenues (in particular ITV Studios); (ii) ITV's steady progress towards executing its strategic plan; (iii) broadly stable net advertising revenue ("NAR") trend expected for 2012 despite the difficult macro- economic environment; (iv) company's solid credit metrics helped by the recent debt buyback with Moody's adjusted Gross Debt/EBITDA ratio improving to around 2.3x at the end of June 2012 on a last twelve months (LTM) basis; and (v) ITV's solid liquidity profile. Ratings Rationale After growing by 4% year-on-year in 2011, ITV's revenues grew by 10% in H12012. ITV's performance in H12012 was largely helped by non-NAR revenue growth of 26% driven by ITV Studios. Non advertising revenues accounted for 32% of total external revenues during the half year (versus 29% in 2011). ITV delivered double- digit growth across all of its Studios businesses. This growth was partly helped by the front-loaded delivery of some shows in H12012 as well as the inclusion of ITV Breakfast production (as Daybreak is now produced by ITV Studios). Nevertheless, Moody's notes that ITV expects its Studios business (excluding ITV Breakfast) to grow organically by around 10% in 2012. ITV Family NAR was also up 3% outperforming the TV advertising market which was up by around 2% in H1 2012. However, ITV's family share of viewing was down 1% year-on-year (at 23.0%). ITV1's share of viewing declined by -3% in 2011 and ITV1's adult share of commercial impacts ('SOCI') also declined by -5%. SOV and SOCI for digital channels on the other hand was up by 5% and 3% respectively. Moody's remains cautious on the macro-economic outlook for the UK but expects the company to outperform the UK TV advertising market in 2012, helped by its good on-screen performance. In 2012, Moody's also expects ITV to stabilize its SOV (and SOCI) for ITV1. Although ITV's net advertising revenues (NAR) remain exposed to cyclical ups and downs, Moody's expects the underlying NAR growth trend to remain on a broadly stable trajectory, going forward. In H12012, ITV repurchased GBP275 million nominal of its bonds comprising EUR138 million 2014 bonds, GBP75 million of the 2015 bonds and GBP89 million of the 2017 bonds. This helped the company reduce adjusted Gross Debt/ EBITDA to around 2.3x as of June 30, 2012 on a LTM basis (from 2.9x as of December 31, 2011). This incorporates ITV's IAS 19 pension deficit, which increased to GBP421 million (from GBP 390 million at the end of 2011). Supported by its considerable cash balance, ITV had a net cash position of GBP92 million at the end June 2012. ITV has guided that it is likely to pay a total dividend of 2.4p for 2012 and plans to continue with a 'progressive' dividend policy. ITV expects its programming budget at GBP1 billion for 2012 as well as the GBP25 million of operating investment and GBP70-80 million of capital expenditure for the year. After delivering GBP20 million of incremental cost savings in 2011 (against its target of GBP15 million), the company is targeting another GBP20 million in cost efficiency in 2012. The company has made steady progress towards delivering its strategic plan. Over time, ITV aspires to generate approximately half of its revenues from non-television advertising. While in the short term the company will remain focused at growing organically, Moody's believes that the company may need to make add-on acquisitions over the short to medium term to increase its exposure to non-television advertising. Moody's considers ITV's current liquidity profile to be very solid. As of June 30, 2012, the company had cash and cash equivalents of GBP577 million (including certain restricted and unavailable cash amounts totaling GBP81 million). The company also has a GBP125 million receivables facility (available to September 2015), which currently remains fully undrawn and is covenant-free. In July 2012, after the bond tender, ITV entered into a GBP250 million revolving credit facility which also remains undrawn. The facility matures in 3 years but is extendable for a further 2 years. It contains leverage and interest coverage covenants. In Moody's view, ITV's cash on hand and internally generated cash flows should be sufficient to cover the company's operational needs in the near term, while giving it good flexibility to make acquisitions. Notwithstanding ITV's strong operating performance and credit metrics, the Ba1 CFR takes into consideration: (i) ITV's still meaningful exposure to the cyclical nature of TV advertising spending; (ii) the company's high operating leverage; (iii) the execution risks associated with the implementation of the remaining transformational plan; and (iv) absence of a publicly articulated medium term financial policy and leverage target. In Moody's view, ITV's ratings could be upgraded with: (i) a continued stable underlying trend in ITV's NAR development in 2012 and beyond; (ii) ITV (at least) maintaining its family share of viewing and ITV1's SOCI broadly stabilizing around the current levels (around 26%); (iii) ongoing evidence of the company gradually increasing its exposure to non-advertising revenues with good growth potential; and (iv) Gross Adjusted Debt/ EBITDA remaining at or below 2.5x on a sustained basis (including any M&A), together with positive free cash flow generation (as defined by Moody's -- post capex and dividends) -- supported by a publicly articulated financial policy that is consistent with the above. Downward pressure on ITV's ratings could result from a (i) material deterioration in UK net advertising spending; (ii) ITV Family of channels (in particular ITV1) losing significant share of viewing and experiencing a material decline in its SOCI; (iii) and company's Gross Debt/EBITDA (as calculated by Moody's) materially weakening towards 3.5x on a sustained basis, potentially through any material acquisition/s. The principal methodology used in rating ITV plc was the Global Broadcast and Advertising Related Industry Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in London, United Kingdom, ITV plc is the leading commercial free-to-air broadcaster and producer of television programming. NORFOLK FRAMES: In Liquidation; 60 Jobs Affected ------------------------------------------------ According to Norwich Evening News' Annabelle Dickson, hopes that Norfolk Frames could be saved have been dashed as the company has gone into liquidation with the loss of 60 jobs. Norwich insolvency and business recovery specialist McTear, Williams & Wood, which put the company into administration in April, is now selling off the assets as part of the break up of the business, Norwich Evening News discloses. Partner Andrew McTear said that it expected to pay a small dividend to unsecured creditors, owed about GBP2 million, Norwich Evening News relates. Mr. McTear added that Norfolk Frame's troubles had been triggered by a major contract for the firm in the London area which had gone wrong, Norwich Evening News notes. When the company went into administration in April, it was hoped a rescue plan could be put together. Marsham-based window manufacturer Norfolk Frames, which had an annual turnover of GBP7 million, specialized in the design, manufacture and fitting of GRP doors and UPVC windows exclusively into the social housing sector. ROYAL BANK: Cabinet Ministers In Talks Over Full Nationalization ---------------------------------------------------------------- James Hurley and Nathalie Thomas at The Telegraph report that Cabinet ministers are reported to have held discussions over a full nationalization of Royal Bank of Scotland but talks are understood to have stalled amid a lack of support from the Treasury. According to the Telegraph, Senior Treasury sources on Wednesday played down a report in the Financial Times that the Government is prepared to spend GBP5 billion buying the remaining 12% stake of RBS that isn't already under state control. The Government has been holding a series of talks over how to boost bank lending to British businesses and some ministers are believed to have raised a full takeover of RBS as one possible option, the Telegraph notes. The FT reported people close to RBS saying full nationalization was unlikely. They questioned how the state could force the bank to lend more to small businesses without putting "excessive risks" on the taxpayer, the Telegraph notes. According to the Telegraph, full nationalization would mean the taxpayer taking on responsibility for all the bank's toxic debt. However, the government's current large stake means it is effectively is in full control of the bank, the Telegraph says. The Royal Bank of Scotland Group plc (NYSE:RBS) -- http://www.rbs.com/- is a holding company of The Royal Bank of Scotland plc (Royal Bank) and National Westminster Bank Plc (NatWest), which are United Kingdom-based clearing banks. The company's activities are organized in six business divisions: Corporate Markets (comprising Global Banking and Markets and United Kingdom Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. On October 17, 2007, RFS Holdings B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V., Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and controlled by RBS, completed the acquisition of ABN AMRO Holding N.V. (ABN AMRO). In July 2008, the company disposed of its entire interest in Global Voice Group Ltd. SOUTHERN CROSS: To Implement Company Voluntary Arrangements ----------------------------------------------------------- Southern Cross Healthcare has announced that, following the positive votes by creditors and members, the further conditions to implementation of the Company Voluntary Arrangements (CVAs) under Part I of the Insolvency Act 1986 have now been satisfied. The CVA Supervisors are proceeding with the implementation of the CVAs for all of the recently active entities in the Group. Southern Cross Healthcare provides residential and nursing care to more than 31,000 residents cared for by 45,000 staff in 750 locations. It also operates homes that specialize in treating people with dementia, mental health problems, and learning disabilities. TITAN EUROPE 2006-4: S&P Withdraws 'B-' Rating on Class A2 Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its credit ratings on Titan Europe 2006-4 FS PLC's class A1 and A2 notes. "The rating actions follow the full redemption of all of the outstanding classes of notes on July 23, 2012, after the cash manager confirmed that all of the classes of notes have fully repaid," S&P said. A portfolio of 408 health care facilities backed Titan Europe 2006-4 FS, a U.K. secured loan commercial mortgage-backed securities transaction. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Ratings To From Titan Europe 2006-4 FS PLC GBP600 Million Commercial Mortgage-Backed Floating-Rate Notes Ratings Withdrawn A1 NR A- (sf) A2 NR B- (sf) NR-Not rated. WHEEL OF LIVERPOOL: Goes Into Administration -------------------------------------------- Liverpool Echo reports that the Wheel of Liverpool has gone into administration. News came that the city's major tourist attraction had ceased turning earlier, according to Liverpool Echo. The report notes that an employee of the administrators confirmed the firm was in administration to the ECHO. Wheel of Liverpool is located near the ECHO arena and at one time sponsored by the Echo, opened in March 2010 with a stunning firework show. =============== X X X X X X X X =============== * EUROPE: Moody's Says Supranational Ratings Resilient to Crisis ---------------------------------------------------------------- Ratings on supranational institutions continue to be largely resilient to the European sovereign debt crisis because their credit quality incorporates factors beyond the strength of the support of their member states, says Moody's Investors Service in the new report "Supranational Ratings Resilient to European Sovereign Debt Crisis." These factors include financial buffers and their capacity to absorb and mitigate heightened risk. Moody's says that the impact of the European debt crisis on an individual supranational's credit quality also depends on the diversity of the supranational's supporting governments, its geographic focus and the variety of its lending and investment operations. The new Moody's report assesses the vulnerability of the nine Moody's-rated supranationals that are most exposed to Europe, given the characteristics of their ownership and loan portfolios. To date, Moody's rating actions on the European sovereigns contributed to only a single rating action on a supranational -- the negative outlook placed on the Aaa rating of the European Financial Stability Facility (EFSF). All other European supranationals have stable outlooks. The two broad categories into which the supranationals generally fall are different in their abilities to withstand a decline in their members' ability to support them, says Moody's. In general, the ratings of multilateral development banks (MDBs) can withstand a deterioration in members' ability to give support because they hold substantial capital and liquidity buffers, with an earnings capacity to add to them over time. "The MDB sector is typically characterized by a dedicated, conservative, and active risk management function in support of the financial buffers which would have to be depleted before the MDB would need to rely on support from members," says Moody's in the report. The ratings of financing facilities, the second category, will not be able to withstand as significant a deterioration in member support as the MDBs, says Moody's, because they do not hold as large financial buffers and generally have less active risk management. The report is available at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_144364 * EUROPE: Moody's Says ABS SME Performance Stable in June 2012 -------------------------------------------------------------- The performance of EMEA SME ABS transactions was relatively stable in June 2012, according to the latest indices published by Moody's Investors Service. Cumulative default levels on the original balance after 36 months remained weak in Greece (2.95%) in Italy (2.83%) and the UK (2.56%). In Germany (0.90%), the Netherlands (0.89%) and Switzerland (0.96%) they remained stable and lower than the other markets. The weak performance of UK defaults is mostly due to one transaction, Goodwood Gold Plc. The performance of this transaction also explains the drop in defaults 55 months after it closed, at which point the transaction dropped out of the UK index seasoning line. Italian cumulative defaults after 36 months worsened to 2.83% in June 2012 from the 1.80% level recorded in the November 2011 index report. UBI Finance 2 S.r.l. and Adriatico Finance SME S.r.l., which were rated in 2011, are negatively affecting the Italian index with defaults levels higher than other Italian SME transactions. Cumulative default levels after 36 months in Portugal have improved, dropping to 1.02% in June 2012 from 4.54% level recorded in the November 2011 index report. This improvement is due to new transactions having entered the market and not yet having reported defaults. In particular, the Lusitano SME No. 2 transaction had a high original balance (EUR1,943 million) and has been repaid before reporting any defaults. While Moody's expects collateral performance to deteriorate in Portugal, Italy and Spain, its outlook for Germany is stable. Greece, Portugal, Italy and Spain are currently recession (see "European ABS and RMBS Outlooks: June 2012 Update", June 2012). While Germany will avoid recession, GDP growth will slow substantially to 0.8% in 2012, from 3.1% in 2011. The rating agency expects that company insolvencies will rise in Greece, Portugal, Italy and Spain as a result of the recession. In Germany, where bankruptcies fell by 5.9% in 2011 (Federal Statistical Office, Germany), company insolvencies will remain broadly flat in 2012. Moody's expects that house prices will fall in Greece, Portugal, Italy and Spain, which will increase losses on foreclosed SME loans that use property as collateral. On 2 July 2012, Moody's downgraded to A3(sf) notes in 328 Spanish ABS, RMBS and CLO transactions due to the decision to lower the Spanish country ceiling. As such, the maximum rating that Moody's will assign to a domestic Spanish issuer, including structured finance transactions backed by Spanish receivables, is A3(sf). The downgrades reflect the rating agency's downgrade of Spain's government bond ratings to Baa3 from A3 on 13 June 2012 and the initiation of a review for further downgrade. Currently 318 tranches in EMEA ABS SME transactions are on review for downgrade. New issuances in the first half of 2012 decreased compared to the second half of 2011. That said, six new transactions have been rated in 2012: IM CAJAMAR EMPRESAS 4, FTA; FTA SANTANDER EMPRESAS 11; Sandown GOLD 2012-1 PLC; Mercurius Funding NV/SA; Asti Finance PMI S.r.l.; and Marche M5 S.r.l. As of June 2012, the total outstanding pool balance of EMEA ABS SME transactions rated by Moody's stood at EUR133,991 million compared to EUR138,763 million in June 2011. The pool balance in the Italian market continued to rise in June 2012 (compared to June 2011) and now stands at EUR19,326 million and represents the second-largest market in Spain (EUR49,317 million). http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF293767 Moody's indices are published mid-month and can be found on www.moodys.com in the Structured Finance sub-directory under the Research & Ratings tab, under the Structured Indices sub-category of Industry/Sector Research. * BOOK REVIEW: Ralph H. Kilmann's Beyond the Quick Fix ------------------------------------------------------ Author: Ralph H. Kilmann Publisher: Beard Books Hardcover: 320 pages Listprice: $34.95 Review by Henry Berry Every few years, a new approach is offered for unleashing the full potential of organized efforts. These are the quick fixes to which the title of this book refers. The jargon of the quick fix is familiar to any businessperson: decentralization, human resources, restructuring, mission statement, corporate strategy, corporate culture, and so on. These terms are all limited in scope or objective, and some are even irrelevant or misconceived with regard to the overall well-being and purpose of a corporation. With his extensive experience as a corporate consultant, author of numerous articles, and professor in business studies, Kilmann recognizes that each new idea for optimum performance and results is germane to some area of a corporation. However, he also recognizes that each new idea inevitably falls short in bringing positive change -- that is, a change that is spread throughout the corporation and is lasting. At best, when a corporation relies on an alluring, and sometimes little more than fashionable, idea, it is a wasteful distraction. At worst, it can skew a corporate organization and its operations, thereby allowing the corporation's true problems or weaknesses to grow until they become ruinous. As the author puts it, "Essentially, it is not the single approach of culture, strategy, or restructuring that is inherently ineffective. Rather, each is ineffective only if it is applied by itself -- as a "quick fix"." Kilmann tells corporate leaders how to break the cycle of embracing a quick fix, discarding it after it proves ineffective, and then turning to a newer and ostensibly better quick fix that soon proves to be equally ineffective. For a corporation to break this self-defeating cycle, the author offers a five-track program. The five tracks, or elements, of this program are corporate culture, management skills, team-building, strategy-structure, and reward system. These elements are interrelated. The virtue of Kilmann's multidimensional five-track program is that it addresses a corporation in its entirety, not simply parts of it. Kilmann's five tracks offer structural and operational aspects of a corporation that executives and managers will find familiar in their day-to-day leadership and strategic thinking. Thus, the author does not introduce any unfamiliar or radical perspectives or ideas, but rather advises readers on how to get all parts of a corporation involved in productive change by integrating the five tracks into "a carefully designed sequence of action: one by one, each track sets the stage for the next track." Kilmann does more, though, than bring all significant features of a modern corporation together in a five-track program and demonstrate the interrelation of its elements. His singularly pertinent and useful contribution is providing a sequence of steps to be implemented with respect to each track so that a corporation progresses toward its goals in an integrated way. Beyond the Quick Fix is a manual for implementing and evaluating the progress of a five-track program for corporate success. The book should be read by any corporate leader desiring to bring change to his or her organization. Ralph H. Kilmann has been connected with the University of Pittsburgh for 30 years. For a time, he was its George H. Love Professor of Organization and Management at its Katz Graduate School of Business. Additionally, he is president of a firm specializing in quantum transformations. ********* 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 * * *