/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/120831.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 31, 2012, Vol. 13, No. 174 Headlines G E R M A N Y LANDESBANK BERLIN: Moody's Assigns Rating to Covered Bonds Q-CELLS SE: Creditors Back Hanwha's Takeover Bid I R E L A N D EPIC DRUMMOND: S&P Cuts Ratings on Three Note Classes to 'CCC-' FLEET STREET: Fitch Affirms 'CCsf' Rating on Class D Notes FLEET STREET: Fitch Lowers Rating on Class B Notes to 'CCCsf' KBC BANK: S&P Continues to Base Ratings on Bank's 'bb' Anchor RMF EURO III: S&P Affirms 'BB' Rating on Class V Notes TARGET EXPRESS: Put In Liquidation Amid Worker Protests L U X E M B O U R G ARDAGH PACKAGING: S&P Cuts Long-Term Corp. Credit Rating to 'B' KLOECKNER PENTAPLAST: Moody's Rates Bond Issuance 'Caa1' N E T H E R L A N D S FAB CBO 2005-1: S&P Downgrades Rating on Class A2 Notes to 'BB+' S P A I N FTPYME TDA: Fitch Affirms 'BB-' Rating on Class 3SA Notes S W I T Z E R L A N D TAURUS CMBS: S&P Lowers Rating on Class C Notes to 'CCC-' U N I T E D K I N G D O M BL SUPERSTORES: S&P Raises Rating on Class C1 Bonds From 'BB' COBRA UK: In Administration; 18 Jobs Affected CORAL INNS: Enters Into Administration DAWSON INTERNATIONAL: Scottish Mill Bid Deadline Passes FINDLAY CLARK: Put into Liquidation; 31 Workers Lose Job JJB SPORTS: Put Up for Sale; Shares May Be Worthless PROMINENT CMBS 2: S&P Cuts Ratings on 3 Note Classes to 'CCC-' TITAN EUROPE 2007-3: S&P Cuts Rating on Class A2 Notes to 'CCC-' X X X X X X X X * Moody's Says Euro Area Economic Shocks to Hit CEE & CIS States * BOOK REVIEW: John Hood's The Heroic Enterprise ********* ============= G E R M A N Y ============= LANDESBANK BERLIN: Moody's Assigns Rating to Covered Bonds ---------------------------------------------------------- Moody's Investors Service has assigned a provisional long-term rating of (P)Aaa to the Series 1-2012 mortgage covered bonds to be issued by Landesbank Berlin AG (LBB) issued under its Daheim program. Ratings Rationale A covered bond benefits from (i) the issuer's promise to pay interest and principal on the bonds; and (ii) if the issuer defaults, the economic benefit of a collateral pool (the cover pool). The ratings therefore take into account the following factors: (1) The credit strength of LBB (A1, deposits; D+/baa3, Prime-1, stable). (2) The value of the cover pool in the event of issuer default. The stressed level of losses modelled in event of issuer default (cover pool losses) for this transaction is 28.1% on a weighted average basis. The analysis of the value of the cover pool considered: - 2.1) The credit quality of the assets backing the covered bonds. The covered bonds are backed by German residential mortgage loans originated by two German Sparkassen. The weighted average collateral score of the cover pools is 16.9%. - 2.2) The structure of the program. Notable aspects of the structure include a built-in extension to the maturity of the notes (thus mitigating refinancing risk) and, the matching of the maturities of the pledged secured loan with those of the notes (thus mitigating market and refinancing risks). - 2.3) The exposure to interest rate risk. - 2.4) The over-collateralization levels in the cover pool is expected to be provided on a "committed" basis. The minimum over- collateralization levels that are consistent with the Aaa rating are 23.0% and 27.0% respectively, which should be provided in a "committed" form. These numbers show that Moody's is not relying on "uncommitted" over-collateralization in its expected loss analysis. The TPI assigned to this transaction is Probable. Moody's TPI framework does not constrain the rating. At present, the total value of the assets included in the cover pool, comprising 1,779 residential mortgage loans is approximately EUR91 million. The loans have a weighted-average seasoning of 60 months and a weighted-average loan-to-value (LTV) ratio of 59.1%. The provisional rating assigned by Moody's addresses the expected loss posed to investors. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. Moody's issues provisional ratings in advance of the final sale of securities and these ratings only represent Moody's preliminary opinion. Upon a conclusive review of the transaction and associated documentation Moody's will endeavor to assign a definitive rating to the covered bonds. KEY RATING ASSUMPTIONS/FACTORS Covered bond ratings are determined after applying a two-step process: an expected loss analysis and a TPI framework analysis. EXPECTED LOSS: Moody's determines a rating based on the expected loss on the bond. The primary model used is Moody's Covered Bond Model (COBOL), which determines expected loss as (i) a function of the issuer's probability of default (measured by the issuer's rating); and (ii) the stressed losses on the cover pool assets following issuer default. The cover pool losses for the covered bonds are 28.1% on a weighted average basis. This is an estimate of the losses Moody's currently models if LBB defaults. Cover pool losses can be split between market risk of 16.8% and collateral risk of 11.3% (both on a weighted average basis). Market risk measures losses as a result of refinancing risk and risks related to interest-rate and currency mismatches (these losses may also include certain legal risks). Collateral risk measures losses resulting directly from the credit quality of the assets in the cover pool. Collateral risk is derived from the collateral score, which is currently 16.9% on a weighted average basis. The minimum over-collateralization levels that are consistent with the Aaa rating target are 23.0% and 27.0% respectively. Therefore, Moody's is not relying on "uncommitted" over- collateralization in its expected loss analysis. For further details on cover pool losses, collateral risk, market risk, collateral score and TPI Leeway across covered bond programs rated by Moody's please refer to "Moody's EMEA Covered Bonds Monitoring Overview", published quarterly. All numbers in this section are based on Moody's most recent modelling (based on data, as per July 31, 2012). TPI FRAMEWORK: Moody's assigns a "timely payment indicator" (TPI), which indicates the likelihood that timely payment will be made to covered bondholders following issuer default. The effect of the TPI framework is to limit the covered bond rating to a certain number of notches above the issuer's rating. For Daheim Series 2012-1, Moody's has assigned a TPI of Probable. SENSITIVITY ANALYSIS The robustness of a covered bond rating largely depends on the issuer's credit strength. The TPI Leeway measures the number of notches by which the issuer's rating may be downgraded before the covered bonds are downgraded under the TPI framework. Based on the current TPI of Probable the TPI Leeway for Daheim Series 2012-1 is 2 notches, meaning the covered bonds might be downgraded as a result of a TPI cap once the issuer rating is downgraded below A3, all other variables being equal. A multiple-notch downgrade of the covered bonds might occur in certain limited circumstances, such as (i) a sovereign downgrade negatively affecting both the issuer's senior unsecured rating and the TPI; (ii) a multiple-notch downgrade of the issuer; or (iii) a material reduction of the value of the cover pool. As the euro area crisis continues, the ratings of covered bonds remain exposed to the uncertainties of credit conditions in the general economy. The deteriorating creditworthiness of euro area sovereigns as well as the weakening credit profile of the global banking sector could negatively impact the ratings of covered bonds. For more information please refer to the Rating Implementation Guidance published on February 13, 2012 "How Sovereign Credit Quality May Affect Other Ratings". Furthermore, as discussed in Moody's special report "Rating Euro Area Governments Through Extraordinary Times -- An Updated Summary," published in October 2011, Moody's is considering reintroducing individual country ceilings for some or all euro area members, which could affect further the maximum structured finance rating achievable in those countries. Moody's is also continuing to consider the impact of the deterioration of sovereigns' financial condition and the resultant asset portfolio deterioration in covered bond transactions. The principal methodology used in this rating was "Moody's Approach to Rating Covered Bonds" published in July 2012. Q-CELLS SE: Creditors Back Hanwha's Takeover Bid ------------------------------------------------ Stefan Nicola at Bloomberg News reports that Hanwha Group, a South Korean industrial group, won backing from Q-Cells SE's creditors to buy the company. According to Bloomberg, a Q-Cells statement said that Hanwha will take over most of Q-Cells under an agreement signed Aug. 26 that won backing at a creditor meeting on Wednesday in Dessau-Rosslau, Germany. Hanwha said on Aug. 27 it will pay as much as EUR40 million (US$50 million) in cash for the Thalheim-based company's plants in Germany and Malaysia, and sales units in the U.S., Australia and Japan, Bloomberg notes. It will assume MYR850 million (US$272 million) of debt guaranteed by Q-Cells Malaysia, Bloomberg discloses. In April, Q-Cells filed for protection from creditors, who chose Hanwha over Isofoton SA, a Spanish power plant developer that offered to invest EUR300 million with the Rocket Venture Fund, Bloomberg recounts. The cash part of the sale will depend "on the volume of additional liabilities that will have to be taken over," Q-Cells, as cited by Bloomberg, said in the statement. Q-Cells said that Hanwha will take on 1,250 employees of the company's 1,550 global workforce, Bloomberg relates. Q-Cells said the company's shareholders will receive neither dividends nor other benefits from the proceeds of the sale, Bloomberg notes. Q-Cells SE is a German solar-panel maker. ============= I R E L A N D ============= EPIC DRUMMOND: S&P Cuts Ratings on Three Note Classes to 'CCC-' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Epic (Drummond) Ltd.'s class A, B, C, D, E, F, and G notes. "We have taken the rating actions in the context of our regular surveillance of this transaction. They follow the occurrence of swap-breakage costs in the Countrywide loan reported to be of at least EUR26 million and the sale of the assets securing the Project DD loan for less than the securitized loan amount. We have lowered our ratings on all of the classes of notes following our review of the recoverable proceeds of several assets backing the reference loans and in view of their respective sovereign risks," S&P said. "Epic (Drummond) is a synthetic commercial mortgage-backed securities (CMBS) transaction. At closing in June 2007, it entered into credit default swap agreements with The Royal Bank of Scotland PLC (RBS; A/Stable/A-1) for a portfolio of reference loans originated and serviced by RBS. Loss allocation to the noteholders is synthetically linked to the performance of a reference pool, originally comprising 13 loans secured on 71 properties located in Germany, Finland, Italy, Spain, Greece, Portugal, and Poland," S&P said. "RBS continues to own the reference loans, which do not provide security for the notes. Instead, at closing, the proceeds of the issuance were deposited in a bank account and this cash acts as security for the rated notes. The current note balance is EUR945.0 million (from EUR1,143.3 million at closing). The final maturity date of the notes is in January 2022, and the loans are scheduled to mature between 2012 and 2017," S&P said. "Of the 12 loans in this transaction, the Project DD and Countrywide loans are in special servicing. These two loans represent 56% of pool balance," S&P said. The Project DD Loan (21% of the Pool Balance) "This loan is the second-largest loan in the pool and was scheduled to mature in January 2012. It is backed by predominantly retail, office, and industrial properties in the Helsinki Metropolitan area, which are leased to 167 tenants," S&P said. "According to the latest special notice regarding this loan, the assets were sold and the servicer expects that the net proceeds of the sale will be applied to the notes by January 2013. Following the swap provider's deduction of enforcement costs and swap payments until January 2013, we believe that a significant portion of the proceeds will be sequentially applied to the class A notes, with the remaining unpaid amounts applied in reverse sequential order. The losses from the remaining unpaid amounts would likely the class E, F, and G notes," S&P said. The Countrywide Loan (35% of the Pool Balance) The Countrywide loan is the largest loan in the pool and is now scheduled to mature in April 2014. "It is backed by a portfolio of six shopping centers and four retail parks, mainly in eastern Germany, and leased to 499 tenants. Each property benefits from Kaufland as an anchor tenant, until at least 2022. Kaufland is a German hypermarket chain, which is part of the same group as Lidl and Handelshof," S&P said. "According to the latest servicer report, the reported net income is approximately EUR26.0 million (compared with EUR23.2 million at cut-off) and the vacancy rate stands at about 7%. The servicer does not report the weighted-average lease term; however, we understand that about 25% of the leases may expire within 36 months," S&P said. Other Loans "The remaining loans are backed by properties throughout Spain, Portugal, Poland, Italy, and Greece. We have reviewed each loan based on reported data. They range in size from EUR27.0 million to EUR87.5 million, and have maturity profiles ranging from 2011 to 2017. The loans are, in our view, mostly backed by strong tenants or long and diversified leases that we believe are less likely to result in losses," S&P said. Sovereign Risks "Our criteria for nonsovereign ratings that exceed European Monetary Union (EMU) sovereign ratings consider sovereign and country risks to be relevant rating factors for securitization ratings. Country risk can affect our view of the credit quality of loans secured on assets in particular jurisdictions. Our criteria permit up to a six-notch rating differential between nonsovereign issuers and structured finance transactions and the related EMU sovereign. Following the application of these criteria, we have lowered our estimate regarding the expected recoverable proceeds in the Greek, Spanish, and Portuguese loans in this transaction to reflect country risk," 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 Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From Epic (Drummond) Ltd. EUR1.143 Billion Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered A BB (sf) BBB+ (sf) B B+ (sf) BBB- (sf) C B- (sf) BB (sf) D B- (sf) BB- (sf) E CCC- (sf) B (sf) F CCC- (sf) B- (sf) G CCC- (sf) B- (sf) FLEET STREET: Fitch Affirms 'CCsf' Rating on Class D Notes ---------------------------------------------------------- Fitch Ratings has upgraded Fleet Street Finance Two plc's class A notes, and affirmed all others, as follows: -- EUR219.1m class A (XS0268932836) due 2014 upgraded to 'BBBsf' from 'BBsf'; Outlook Stable -- EUR166.5m class B (XS0268933487) due 2014 affirmed at 'Bsf'; Outlook Stable -- EUR140.1m class C (XS0268934451) due 2014 affirmed at 'CCCsf'; Recovery Estimate (RE) 80% -- EUR96.9m class D (XS0268934618) due 2014 affirmed at 'CCsf'; RE 0% The upgrade of the class A notes is driven by the loan's significant pay-down since the last rating action in September 2011. Over the past 12 months, 24 properties have been sold, either as single assets or through portfolio sales. Consequently, the loan has amortised by around 40%, reducing the class A balance to EUR219.1m as at the July interest payment date, down from EUR592.4m a year previously. With all sale proceeds allocated on a fully sequential basis, evidence of strong asset sales in the past year (each above the respective allocated loan amount) has improved the prospects for senior bondholders. Structural concerns that had contributed to a rating cap of 'BBsf' have been largely allayed. Some 'tail risk' is presented by the reliance on a single tenant for income, although typically prime locations mitigate some of this exposure. The size of the properties may pose a bigger risk. Most of the amortisation achieved recently is attributable to the sale of a trophy asset, the Oberpollinger property in Munich, which resulted in a EUR188.3m prepayment. Many of the remaining stores have over three floors, limiting the number of potential replacement operators or owners. While it would be possible to subdivide the assets to house a number of smaller operators, this would incur redevelopment expenses. Concerns about asset size are illustrated by the composition of the properties that have been sold, with the majority considerably smaller than those unsold, almost half of which (21) offer greater than 10,000sq m of space. Around 40 of the original 109 properties sold were smaller than 1,000sq m, thus appealing to small investors somewhat removed from the funding constraints afflicting the wider German real estate market. Fitch will continue to monitor the progress of asset sales for any impact on credit quality. FLEET STREET: Fitch Lowers Rating on Class B Notes to 'CCCsf' ------------------------------------------------------------- Fitch Ratings has downgraded Fleet Street Finance Three plc's notes due October 2016, as follows: -- EUR346.0m class A1 (XS0302957062) downgraded to 'BBBsf' from 'Asf'; Outlook Stable -- EUR66.7m class A2 (XS0302957575) downgraded to 'Bsf' from 'BBsf'; Outlook Negative -- EUR52.6m class B (XS0302958110) downgraded to 'CCCsf' from 'Bsf'; Recovery Estimate RE55% The downgrades reflect Fitch's increased concern about the largest loan in the transaction, EUR327.6 million Corleone (55.9% of the securitized portfolio). The sponsor failed to repay the debt in full at loan maturity in April 2012. Instead of enforcing, the servicer opted to extend the loan until October 2014, two years prior to final legal maturity. Fitch believes the extension may indeed be beneficial, by allowing the borrower more time to manage an orderly portfolio sale. However, this does not allay Fitch's concerns about the prospects for secondary quality collateral, on which the bulk of the portfolio is secured. The agency therefore believes that a forced liquidation of the portfolio will be hard to avoid, potentially implying significant market value declines if compared to the latest reported valuation. The borrower of the EUR212 million Blue Star loan (31.7% of the securitized portfolio) also failed to repay its debt at maturity in April 2012. A standstill arrangement has been put in place until October 2012 to allow the special servicer and borrower time to discuss options for a successful exit. One of the three single-let properties serving as collateral is exposed to imminent re-letting risk as the underlying lease expires in September 2013. Therefore almost 30% of the borrower's rental income is subject to possible lease termination. A lease renewal would result in a substantial appreciation in collateral value. In the absence of that, potential investors may either delay making any investment decisions or demand a significant discount in purchase price in order to compensate for the uncertainty surrounding the tenant's willingness to stay. The collateral securing the Orange loan was sold in May 2012. While losses are yet to be allocated to the notes, the servicer reports that a sale price of EUR50 million has been accepted for the collateral, some way short of the EUR67 million senior debt at the April 2012 interest payment date. This confirms Fitch's expectation that declining occupier demand for aging stock of secondary Dutch office property in need of significant capital expenditure would limit investor appetite. The expected loss allocation will fully wipe out class E and result in a partial write-down of class D (both not rated by Fitch). KBC BANK: S&P Continues to Base Ratings on Bank's 'bb' Anchor ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB-/A-3' long- and short-term counterparty credit ratings on KBC Bank Ireland PLC (KBCI). The outlook remains negative. "On Aug. 7, 2012, KBC Group reported that KBCI made a post-tax loss of EUR72 million in the second quarter of 2012, after registering a EUR136 million impairment charge. This follows the reported EUR126 million post-tax loss in the first quarter and sizable losses in the 2010/2011 financial years, due to high loan impairment charges across the bank's retail and commercial lending portfolios. As in 2011, the first half losses led parent KBC Bank NV (KBC; A-/Stable/A-2) to make a capital injection, totalling EUR125 million, to ensure the stability in the bank's regulatory capitalization. KBCI's Tier 1 ratio at June 2012 was a reported 11.1%, little changed on the preceding quarters. We expect that the ratio will remain at this level for the foreseeable future. Even so, we project that capitalization, measured by our risk-adjusted capital (RAC) framework, may be at risk of sustained deterioration through to end-2013," S&P said. "We calculate that KBCI's RAC ratio was 5.1% at end-2011, little changed on the pro forma 5.0% ratio that we calculated for end- 2010, based on our updated November 2011 criteria. The large gap between the RAC ratio and the Tier 1 ratio primarily reflects a material difference in the risk-weights that we apply to credit exposures. The quality of the bank's capital is sound, in our view, as it is all common equity. While a reduced interest margin has led to some pressure on revenues, the bank's high efficiency and advantageous cost of funds means that it continues to have a positive earnings buffer, unlike several other Irish peers, which suggests an achievable return to profitability once the impairment charge subsides," S&P said. "Given the apparently reducing pace of deterioration in the bank's asset quality, as reported by KBC, we consider the group's guidance of a EUR500 million - EUR600 million impairment charge for 2012 to be broadly credible, which in our view points to a post-tax loss of a little above EUR300 million. We expect the losses to narrow in 2013, but that the bank will not become profitable until 2014 at the earliest. While ongoing moderate deleveraging will continue to reduce risk-weighted assets, our ratings assume that KBC will make further material capital injections into KBCI in the coming quarters as it seeks to maintain the bank's Tier 1 ratio at around 11%," S&P said. "We estimate that the RAC fell to slightly below 5.0% at June 30, 2012 and, while we currently project that it may well move back above the 5.0% level by end-2012 and stay there, in our view there is meaningful risk that the RAC ratio could instead decline through the period to end-2013, albeit most likely remaining above 4.0%. This divergent trend from the projected stable Tier 1 ratio reflects the fact that potentially supportive elements within Tier 1 capital would not be reflected in total adjusted capital (TAC, the numerator of the RAC calculation). These include the likely reducing deductions for the expected loss shortfall and rising deferred tax assets for tax-loss carryforwards. As a result, capital injections that may be sufficient to maintain the Tier 1 ratio at around 11% would likely be insufficient to prevent a fall in the RAC ratio, in our view," S&P said. "Standard & Poor's continues to base its ratings on KBCI on the bank's 'bb' anchor, which is based on our view of the banking system in Ireland. We consider KBCI's business position to be 'moderate' as we consider that its business mix and stable franchise are somewhat offset by its somewhat niche market position. We view capital and earnings as 'moderate' since we expect that while the RAC ratio may have fallen below 5.0%, it may well move back above 5.0% by end-2012 and stay there. Our assessment of risk position is 'adequate', reflecting geographical concentration on a par with relevant peers, and loss experience that, while heavy in the current environment, is in our view not materially better or worse than peers. We view funding as 'average' and liquidity as 'adequate' due to support from KBC which has enabled KBCI to deal with any refinancing risk despite the limited nature of its own deposit-taking franchise," S&P said. "The long-term counterparty credit rating is three notches higher than the 'bb-' stand-alone credit profile (SACP), reflecting our view that KBCI is 'strategically important' to its parent, KBC, in accordance with our group rating methodology for banks. While KBC remains highly supportive of its Irish subsidiary, we note it has publicly stated that KBCI is not a core part of its future growth strategy. KBCI would not ordinarily meet our criteria for being assessed as a 'strategically important' subsidiary; in particular that the subsidiary is unlikely to be sold and is important to the group's long-term strategy or is reasonably successful at what it does (which in our view is difficult in the context of the uncertain Irish operating environment, as our high BICRA score of '7' for Ireland demonstrates). However, we consider that any potential sale is highly unlikely over the two- year outlook time horizon and we understand that KBC will continue to be supportive of KBCI's capital and funding needs. We consider KBCI to be of 'low' systemic importance and we factor no government support into its ratings," S&P said. "The negative outlook principally reflects our view that while KBCI's regulatory Tier 1 capital may remain robust, there is a risk that capitalization measured by Standard & Poor's RAC framework may move persistently below the 5.0% threshold. It also acknowledges the risk that the apparent slowing pace of deterioration in KBCI's asset quality, and economic and collateral value trends in Ireland could yet take a further turn for the worse, further delaying the bank's return to profitability," S&P said. "The ratings reflect our expectation that KBCI will remain loss- making in the second half of 2012 and full-year 2013, mainly as a result of continued elevated loan impairment charges. We expect that KBCI will continue to receive capital injections from the parent that will hold the regulatory Tier 1 ratio at around 11%. In our view, this may well result in the RAC ratio moving back above the 5.0% level by end-2012 and staying there. We further expect the parent to remain supportive with regard to funding, at a time when KBCI is trying to grow its retail customer deposit base," S&P said. "We could potentially lower the ratings if KBCI's SACP deteriorates. This would most likely arise if we project the RAC ratio to be below 5.0% through end-2013 -- which would lead us to revise our assessment of KBCI's capital and earnings to 'weak' from 'moderate'. It could also result if KBCI's asset quality and impairment loss trends become demonstrably weaker than peers' -- a factor that we would most likely reflect in a revision of the bank's risk position assessment to 'moderate' from 'adequate'," S&P said. "We may also take negative rating action if we observe that the links between KBCI and KBC are weakening, even allowing for our expectation of continued support. This could result in a revision of our group status designation for KBCI to 'moderately strategic'. Assuming no change in the SACP, the latter assessment would lead to a two-notch downgrade of the counterparty credit ratings. This is because a 'moderately strategic' group status only allows for one notch of group support compared with the current three notches," S&P said. "We could revise the outlook on KBCI to stable if, in our view, the links between KBC and KBCI do not weaken. It would also be supported by clear evidence that the impairment charge is on a sustainable downward track, leading to a high probability that the bank's earnings and capitalization will be, at worst, in line our expectations," S&P said. RMF EURO III: S&P Affirms 'BB' Rating on Class V Notes ------------------------------------------------------ Standard & Poor's Ratings Services raised its credit ratings on RMF Euro CDO III PLC's class II, and III notes. "At the same time, we have affirmed our ratings on the class I, IV, and V notes," S&P said. "The rating actions follow our assessment of the transaction's performance since our previous review on Sept. 5, 2011, taking into account recent developments. We have used data from the trustee report dated July 9, 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 increase to 9.68% from 4.69% in the proportion of assets that we consider to be rated in the 'CCC' category ('CCC+', 'CCC', or 'CCC-'). Of the portfolio, 0.34% now comprises defaulted assets (rated 'CC', 'SD' [selective default], or 'D')," S&P said. "Our analysis indicates that the level of available credit enhancement for the class I notes has marginally increased due to their deleveraging. At the same time, the level of available credit enhancement for the class II to V notes has decreased. In addition, the weighted-average spread earned on the collateral portfolio has increased and the portfolio's weighted-average maturity has decreased. However, the portfolio's negative credit migration has caused our scenario default rate to increase in the transaction," S&P said. "We have subjected the capital structure to a cash flow analysis, to determine the break-even default rate for each rated class of notes. In our analysis, we have used the reported portfolio balance, weighted-average spread, and weighted-average recovery rates that we consider to be 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, RMF Euro CDO III entered into swap obligations to mitigate currency risks, which do not fully reflect our 2012 counterparty criteria. As a result, our criteria limit the maximum potential rating on the notes at the issuer credit rating on the counterparty plus one notch. Accordingly, we have conducted our analysis taking into account the transaction's exposure to the swap counterparty and the potential effects if the swap did not perform. Under this scenario, the cash flow stresses cannot support a higher rating than 'AA+ (sf)' on the class I notes. We have therefore affirmed our 'AA+ (sf)' rating on the class I notes," S&P said. "We have raised our ratings on the class II and III notes because, although the level of credit enhancement has slightly decreased, the increase in the spread and the decrease in the weighted-average life support a higher rating on these classes of notes," S&P said. "We have affirmed our ratings on the class IV and V notes because, although the level of credit enhancement available to these classes of notes decreased, it is still commensurate with the ratings that we assigned in our last review," S&P said. "We have applied our largest obligor default test--a supplemental stress test in our 2009 cash flow criteria. We have also applied our largest industry default test (another supplemental stress test). The application of our supplemental tests did not constrain our ratings on any of the notes," S&P said. RMF Euro CDO III is a cash flow collateralized loan obligation (CLO) transaction that closed in August 2005 and securitizes loans and bonds to primarily speculative-grade corporate firms. 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 Rating To From RMF Euro CDO III PLC EUR357 Million Secured Floating-Rate Notes Ratings Raised II AA- (sf) A+ (sf) III A (sf) A- (sf) Ratings Affirmed I AA+ (sf) IV BB+ (sf) V BB (sf) TARGET EXPRESS: Put In Liquidation Amid Worker Protests ------------------------------------------------------- Barry O'Halloran and Louise Roseingrave at The Irish Times report that Target Express was placed in liquidation on Wednesday as workers continued sit-ins at some of its depots. Target ceased trading with the loss of 398 jobs this week, the Irish Times relates. Managing director Seamus McBrien claimed the Revenue Commissioners forced it out of business in a row over EUR175,000, the Irish Times notes. According to the Irish Times, the High Court on Wednesday appointed Michael McAteer and Stephen Tennant of Grant Thornton as provisional liquidators to College Freight, which trades as Target Express. Jim Hamilton and Peter Doherty of BDO were appointed liquidators of Asda Properties, a holding company for the Target group's properties, the Irish Times discloses. Workers have been holding sit-in protests at Target depots in Cork and Galway in a bid to get unpaid wages due to them, the Irish Times recounts. A statement issued by Grant Thornton said that Messrs. McAteer and Tennant would treat workers' claims -- including minimum notice, redundancy payments and the processing of their P45s -- as a priority, the Irish Times notes. The company asked the High Court to appoint the provisional liquidators Wednesday afternoon, the Irish Times recounts. They are due back in court on September 19 to have their appointments confirmed, the Irish Times says. Target Express opened in 1988 and is Ireland's largest privately owned transport and distribution company with 12 operating depots throughout the 32 counties and 4 within the UK. It employs 390 staff in Ireland and the UK. =================== L U X E M B O U R G =================== ARDAGH PACKAGING: S&P Cuts Long-Term Corp. Credit Rating to 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'B' from 'B+' its long-term corporate credit ratings on Luxembourg-based glass- container and metal packaging manufacturer Ardagh Packaging Group Ltd. (Ardagh) and related entities Ardagh Packaging Holdings Ltd. and ARD Finance S.A. "At the same time, we removed the ratings from CreditWatch, where they were placed with negative implications on July 17, 2012. The outlook is stable," S&P said. "In addition, we lowered our issue ratings on Ardagh's senior secured debt instruments to 'B+' from 'BB-', and our issue ratings on the group's senior debt instruments and subordinated payment-in-kind (PIK) notes to 'CCC+' from 'B-'. These ratings were also removed from CreditWatch, where they were placed with negative implications on July 17, 2012," S&P said. "The downgrades follow Ardagh's announcement that it has completed the debt-funded acquisition of U.S.-based glass container producer Anchor Glass Container Corp. (Anchor Glass). The downgrades reflect our view of Ardagh's ongoing high leverage and lower-than-anticipated deleveraging prospects as a result of its persistently aggressive financial policy," S&P said. "In our view, Ardagh's credit metrics are no longer commensurate with a 'B+' rating and are unlikely to recover in the near term. This is due to the group's high debt leverage, which in turn is driven by a series of debt-funded acquisitions in recent years. Following the group's three-part notes issuance in July 2012, Ardagh's Standard & Poor's-adjusted debt totals about EUR4.7 billion," S&P said. "In our opinion, Ardagh's free operating cash flow generation is unlikely to make a significant contribution toward reducing debt over the near term because adjusted funds from operations to debt is unlikely to exceed 10%. This is because we believe that economic weakness in Europe will continue to dampen volumes in the group's Metals division, particularly in the more cyclical sectors (such as aerosols and paints) that represent about 26% of divisional sales," S&P said. "In our view, Ardagh's credit metrics will remain at levels commensurate with the 'B' rating. Specifically, this means adjusted FFO to debt is unlikely to exceed 10%. The outlook also takes into account the group's aggressive financial policy and ongoing, largely debt-funded growth strategy," S&P said. "We could take a positive rating action if the group deleverages and improves its credit measures in line with those we consider commensurate with a 'B+' rating. This could occur if Ardagh uses an IPO to reduce its debt," S&P said. "Equally, we could lower the ratings if Ardagh's credit measures deteriorate further -- for example, because of further debt- funded acquisitions, financial underperformance, or unexpected material shareholder returns. Similarly, we could downgrade Ardagh if the group suffers from liquidity issues. However, we consider these risks to be remote in the near term," S&P said. KLOECKNER PENTAPLAST: Moody's Rates Bond Issuance 'Caa1' -------------------------------------------------------- Moody's Investors Service has assigned a definitive Caa1 (LGD 5, 85%) rating to Kloeckner Pentaplast's (KP) recent bond issuance. The senior secured notes have been issued by finance vehicle KP Germany Erste GmbH, an indirect subsidiary of Kloeckner Holdings S.C.A., the ultimate holding company of the Kloeckner Pentaplast group. The notes mature in July 2017. Ratings Rationale Moody's definitive ratings on this debt obligation confirms the provisional rating assigned on June 28, 2012. The proceeds from the issuance, together with proceeds from the PEC's and TPEC's from new sponsors led by Strategic Value Partners, have been used to refinance existing senior debt at Kloeckner Pentaplast/Kleopatra as part of the recent debt restructuring of the group. The assigned Caa1 rating of the senior secured notes is two notches below the group's B2 corporate family rating, reflecting the sizeable portion of priority debt ranking ahead of the notes. While the notes benefit from the same collateral package as the group's senior secured bank debt, in a default scenario noteholders will benefit from any proceeds on a subordinated basis only and payments in respect of the guarantees supporting the notes are applied first to the senior secured revolving credit facility and senior secured term loan B and only thereafter to the notes. The assigned B2 Corporate Family Rating reflects the group's high financial leverage with Debt/EBITDA as adjusted by Moody's of 6.4x on a pro forma basis based on the capital structure that has been implemented in June 2012, which positions KP initially weakly in its rating category. Furthermore, the rating is constrained by the group's fairly commoditized product portfolio as well as the price competitive nature of the industry. In addition, input cost management is deemed to be a major challenge as only about 50% of contracts contain automatic pass-through mechanisms, leaving the group exposed to the price volatility of resin and to individual negotiations with its customers to preserve profitability. Moody's notes, however, the solid track record with fairly stable EBITDA generation over the past years. The rating also reflects (i) the group's solid size and market position in the rigid plastic packaging market with leading positions in most of its business areas; (ii) fairly stable volumes through the cycle as a result of a high share of sales towards non-discretionary pharma and food end markets with solid customer diversification and longstanding relationships; (iii) the stable operating profitability over the past years despite challenging economic conditions and extensive restructuring measures, helped by the group's ability to swiftly pass on input cost volatility. Upwards pressure could build should KP manage to significantly reduce leverage towards 5 times, measured as debt/EBITDA, on a sustainable basis on the back of improvements in operating profitability. Furthermore, the rating could enjoy upwards pressure were KP to improve free cash flow generation towards 5% of total debt and interest cover in terms of EBIT/Interest towards 1.5 times. A deterioration in profitability, caused for instance by increasing competition or challenges to manage volatile raw material costs resulting in weaker profitability and material negative free cash flow or a the inability to improve Debt/EBITDA as adjusted by Moody's towards 6 times (from a pro forma leverage of 6.4x as of June 2012) as well as tightening headroom under the company's financial covenants could put negative pressure on the ratings. The principal methodology used in rating KP Germany Erste GmbH was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology published in June 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Kloeckner Holdings S.C.A., with legal domicile in Luxembourg, is the ultimate holding company of German plastic packaging Manufacturer Kloeckner Pentaplast, a global leader in the manufacturing of rigid plastic films for the pharmaceutical, food, medical, electronics and other packaging industry. The group generated EUR1.2 billion of sales in the last twelve months ending March 2012. ===================== N E T H E R L A N D S ===================== FAB CBO 2005-1: S&P Downgrades Rating on Class A2 Notes to 'BB+' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its credit ratings on FAB CBO 2005-1 B.V.'s class A1 and A2 notes. FAB CBO 2005-1 also previously issued unrated class B and C notes. "The rating actions follow our assessment of the transaction's performance since our previous review on May 3, 2011, and the application of our collateralized debt obligation (CDO) of structured finance (SF) assets criteria. We performed our credit and cash flow analysis using data from the trustee report dated July 30, 2012. We have also applied our 2012 counterparty criteria," S&P said. "On March 19, 2012, we placed on CreditWatch negative our ratings on the class A1 and A2 notes in this transaction following our update to the criteria and assumptions we use to rate CDOs of structured finance assets, which became effective on March 19, 2012," S&P said. "From our analysis, we have observed an increase in the proportion of assets that we consider to be rated in the 'CCC' category ('CCC+', 'CCC', and 'CCC-') and a decline in the proportion of defaulted assets (rated 'CC', 'C', 'SD' [selective default], or 'D') in the collateral pool, since we previously performed a full review of this transaction. We have also seen further principal payments made toward the senior class of notes (the class A1 notes), which increased credit enhancement levels available to the class A1 notes. The portfolio is diversified among five industries and 10 countries. The portfolio also benefits from a higher weighted-average spread since our last review," S&P said. "We factored in the above observations and subjected the capital structure to our cash flow analysis, based on the methodology and assumptions outlined by our CDO of SF assets criteria, to determine the break-even default rate (BDR). We used the reported portfolio balance that we considered to be performing, the principal cash balance, the current weighted-average spread, and the weighted-average recovery rates that we considered to be appropriate. We incorporated various cash flow stress scenarios using various default patterns, levels, and timings for each liability rating category, in conjunction with different interest rate stress scenarios," S&P said. "We also determined the scenario default rate (SDR) for each rated class of notes, which uses our CDO Evaluator 6.0 model to determine the default rate expected on a defined portfolio at each rating level based on the reclassification of asset types under our CDO of SF assets criteria to address the apparent lack of performance diversity in each structured finance asset type, amendments to asset-specific maturities, and updated asset correlation parameters which have resulted in higher SDRs, which we then compared with the respective BDRs," S&P said. "The application of our largest obligor default test did not constrain our ratings on any of the notes. This is a supplemental stress test that we introduced in our September 2009 update to our CDO criteria, which assesses whether a CDO has sufficient credit enhancement to pass the applicable thresholds at each liability rating level. We have used the same obligor or structured finance asset ratings used in our CDO Evaluator model for the supplemental tests," S&P said. "Taking into account our credit and cash flow analysis, we consider the level of credit enhancement available to the class A1 and A2 notes in this transaction to be commensurate with lower ratings then we previously assigned. We have therefore lowered and removed from CreditWatch negative our ratings on these classes of notes," S&P said. FAB CBO 2005-1 is a cash flow mezzanine structured finance CDO transaction that closed in April 2005. 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 Rating To From FAB CBO 2005-1 B.V. EUR305.6 Million Secured Floating-Rate Notes Ratings Lowered and Removed From CreditWatch Negative A1 A- (sf) AA (sf)/Watch Neg A2 BB+ (sf) A (sf)/Watch Neg Ratings Unaffected B NR C NR NR-Not rated. ========= S P A I N ========= FTPYME TDA: Fitch Affirms 'BB-' Rating on Class 3SA Notes --------------------------------------------------------- Fitch Ratings has affirmed FTPYME TDA CAM 2, F.T.A.'s notes, as follows: -- EUR58.2m Class 1CA(G) (ISIN ES0339758015): affirmed at 'AA- sf'; Outlook Negative -- EUR27.8m Class 2SA (ISIN ES0339758023): affirmed at 'Asf'; Outlook Negative -- EUR7.7m Class 3SA (ISIN ES033975031): affirmed at 'BB-sf'; Outlook Negative Fitch has removed the class 1CA(G) and 2SA notes from Rating Watch Negative following the transfer of the treasury account to Barclays Bank plc ('A'/Stable/'F1'). Barclays Bank plc is an eligible counterparty according to the transaction documentation. The affirmation is based on the credit enhancement available to the notes. The class 1CA(G) and 2SA notes continue to accumulate additional CE as the transaction deleverages. Fitch notes the credit quality of the portfolio has deteriorated markedly in 2012. Loans more than 90 days in arrears represent 9.2% of the portfolio balance, up from 3.6% in December 2011. The class 1CA(G) notes' rating and Outlook is limited by the rating of the Kingdom of Spain ('BBB'/Negative/'F2'). The highest achievable rating for Spanish structured finance transactions is 'AA-sf', five notches above the rating of the sovereign. See "Fitch: SF Impact of Spanish, Italian & Irish Sovereign Rating Actions", dated 1 Feb 2012 at www.fitchratings.com, for details of Fitch's view on the link between sovereign Issuer Default Ratings and structured finance ratings for eurozone countries. The Negative Outlook for the class 2SA and 3SA notes reflects the notes' sensitivity to a sudden spike in defaults which would deplete the reserve fund. Rising arrears and default levels have already started to erode the reserve fund, which declined to EUR7.1m from EUR8.2m in December 2011. Fitch expects further drawings on the reserve fund given the sizable arrears pipeline. The transaction considers loans more than 12 months in arrears as defaulted. FTPYME TDA CAM 2, F.T.A., is a static cash flow SME CLO originated by Caja de Ahorros del Mediterraneo (CAM), now part of Banco de Sabadell ('BB+'/Stable/'B'). At closing, the issuer used the note proceeds to purchase a EUR750m portfolio of secured and unsecured loans granted to Spanish small and medium enterprises and self-employed individuals. The transaction is managed by Titulizacion de Activos, S.G.F.T., S.A. ===================== S W I T Z E R L A N D ===================== TAURUS CMBS: S&P Lowers Rating on Class C Notes to 'CCC-' --------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Taurus CMBS (Pan-Europe) 2006-3 PLC's class A, X1, X2, B, and C notes. "At the same time, we have affirmed our 'D (sf)' rating on the class D notes and subsequently withdrew our ratings on the class X1 and X2 notes," S&P said. "The rating actions reflect our opinion on cash flow disruptions in the transaction," S&P said. "As reflected in the August 2012 cash manager report, the issuer failed to meet its interest payment obligation under the notes on the August 2012 payment date. The class C and D notes continue to accrue unpaid interest. As of August 2012, these two classes of notes accrued a cumulative interest shortfall amount of EUR96,154 (against EUR71,759 on the previous payment date). The existing shortfall on the class C notes continues to be minor, in our view," S&P said. "The earlier repayment of five of the seven initial loans caused a spread compression between the two remaining loans and the remaining notes. Although the two remaining loans pay full interest, the weighted-average cost of the remaining notes, which includes the class X1 and X2 notes, exceeds the weighted-average loan coupon. We understand from the reporting agent that the transaction excess spread, if any, is not available to cover overdue interest under the regular notes, and is instead distributed to the class X1 and X2 noteholders," S&P said. "The payment of ordinary but nonrecurring fees due to third parties may result in increased interest shortfalls if such payments are not spread over several quarters, in our opinion. In addition, we believe that the repayment of only one of the two remaining loans at maturity may exacerbate the risk of cash flow disruptions. Given these factors, we believe that interest shortfalls may increase on future payment dates and potentially affect interest payments to the class B notes, particularly in the current low-interest-rate environment. Therefore, the class B notes have become more vulnerable to cash flow disruptions, in our opinion. We also now believe that the credit enhancement available to the class A, X1, and X2 notes is no longer sufficient to cover liquidity risks at their current rating levels," S&P said. RATING ACTIONS "Our ratings address timely payment of interest, payable quarterly in arrears, and payment of principal not later than the legal final maturity date (in May 2015). We have affirmed our 'D (sf)' rating on the class D notes and lowered to 'CCC- (sf)' from 'B- (sf)' our rating on the class C notes because additional unpaid interest was deferred on the August 2012 payment date. We have not lowered our rating on the class C notes to 'D (sf)', because the existing shortfall remains minor, in our view. However, continuing interest shortfall on this class of notes could lead us to lower our rating to 'D (sf)'. We have also lowered to 'B+ (sf)' from 'BB+ (sf)' our rating on the class B notes to reflect our opinion that they have become more vulnerable to interest shortfalls. We have lowered to 'A- (sf)' from 'AA- (sf)' our ratings on the class A, X1, and X2 notes because we believe their credit enhancement is no longer sufficient to cover liquidity risks at their current rating levels. We will continue to monitor the situation. Further rating actions would likely be warranted if the risk of interest shortfalls were to increase," S&P said. "Subsequently, we have also withdrawn our ratings on the class X1 and X2 notes, to reflect our criteria 'Global Methodology For Rating Interest-Only Securities,' published on April 15, 2010. Under these criteria, in the case of ratings on interest-only securities that were outstanding on April 15, 2010, we maintain those ratings until they are retired or drop below 'AA-', at which time we withdraw them," S&P said. "The rating actions have not resulted from a change in our opinion on the default probability and likely recovery associated with the remaining pool of loans backing the transaction," S&P said. "Taurus CMBS (Pan-Europe) 2006-3 closed in November 2006 with a note balance of CHF0.1 million and EUR447.75 million. The underlying pool initially held seven loans secured on real estate assets in Switzerland, France, and Germany. On the most recent note interest payment date, in August 2012, two loans remained outstanding, and the outstanding note balance was CHF0.1 million and EUR74.9 million," S&P said. POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES "We have taken the rating actions based on our criteria for rating European commercial mortgage-backed securities (CMBS). However, these criteria are under review," S&P said. "As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently, it may affect both new and outstanding ratings on European CMBS transactions," S&P said. "On June 4, we published a request for comment (RFC) outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow and value. We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized," S&P said. "However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market- specific adjustments. An application of these criteria to European Transactions will therefore be published when we release our updated rating criteria," S&P said. "Until we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria," 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 Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From Taurus CMBS (Pan-Europe) 2006-3 PLC CHF0.1 Million, EUR447.75 Million Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered A A-(sf) AA- (sf) B B+ (sf) BB+ (sf) C CCC- (sf) B- (sf) Ratings Lowered and Withdrawn X1 A- (sf) AA- (sf) NR A- (sf) X2 A- (sf) AA- (sf) NR A- (sf) Rating Affirmed D D (sf) =========================== U N I T E D K I N G D O M =========================== BL SUPERSTORES: S&P Raises Rating on Class C1 Bonds From 'BB' ------------------------------------------------------------- Standard & Poor's Ratings Services has raised its credit ratings on BL Superstores Finance PLC's class M1 and C1 bonds. "At the same time, we have affirmed our ratings on the class A2, B2, and B3 bonds," S&P said. "The rating actions follow our periodic review of the transaction's loan and structural features," S&P said. "BL Superstores Finance is a secured-loan commercial mortgage- backed securities (CMBS) transaction that closed in February 2006. The loan is now secured on 32 properties (down from 35 at closing) throughout the U.K. All properties are let to Sainsbury's Supermarkets Ltd. with a J Sainsbury PLC guarantee. The leases expire from 2022 to 2086, with the largest concentration of expiries in 2024 (37% of the total rental income)," S&P said. "The transaction's performance has been stable since closing: The issuer has made all scheduled principal payments, paying down 18% of the bonds, and the class D1 bonds fully repaid at their expected maturity date in April 2009. The remaining bonds are expected to repay in October 2015 (class C1), July 2025 (class B2), and October 2025 (classes A2, B3, and M1). Their legal final maturity date is in October 2030--five years after the last expected maturity date," S&P said. "The transaction documents allow for automatic property substitutions, subject to tests that seek broadly to maintain the portfolio's credit quality. A number of substitutions have occurred since closing," S&P said. PROPERTY PORTFOLIO "A number of properties have entered and exited the portfolio since closing. The latest change was in June 2012, when five properties were removed: Beckenham, Bodmin, Chadwell Heath, Frimley, and Leicester. As a result of these removals, the weighted-average lease term at loan maturity has increased to 3.5 years from 2.3 years at closing," S&P said. "Additionally, a number of properties deemed to be of lesser quality or performance have been removed from the portfolio since closing--thereby increasing the remaining properties' credit quality. The portfolio's credit quality has also improved since closing because a number of properties have been refurbished or extended," S&P said. "The portfolio's net operating income has increased to GBP62.9 million, from GBP58.3 million at closing. This is mainly because of additional rents resulting from store extensions and rents increasing at scheduled rent reviews," S&P said. "The properties' total market value is currently GBP1.20 billion compared with GBP1.15 billion at closing--representing a current 52% reported loan-to-value (LTV) ratio. The loan has deleveraged because of the increased market value and significant amortization payments made on the loan," S&P said. THE LOAN "The loan is tranched, to reflect the tranching of the bonds. The D1 loan tranche has repaid, and both the M1 and C1 loan tranches have paid down significantly. Each loan tranche has its own amortization schedule, which has been met since closing," S&P said. "The transaction benefits from scheduled amortization. If amortization continues on schedule, we would expect the loan balance at loan maturity to be approximately 27% of the loan balance at closing. There are no LTV or interest coverage ratio covenants for this loan," S&P said. RATING ACTIONS "The class M1 bonds have paid down significantly (as per their amortization schedule) and credit enhancement has increased to a level that we consider commensurate with a higher rating than we previously assigned. We have therefore raised to 'AAA (sf)' from 'AA (sf)' our rating on the class M1 bonds," S&P said. "The class C1 bonds are subject to large amounts of scheduled principal payments in the few years preceding their expected maturity date in October 2015. Since we took rating action in May 2010, they have paid down 65% of their outstanding balance, thereby reducing the risk of shortfalls in a tenant default scenario. We have therefore raised to 'BBB (sf)' from 'BB (sf)' our rating on the class C1 bonds," S&P said. "We have affirmed our ratings on the class A2, B2, and B3 bonds at 'AAA (sf)', 'A (sf)', and 'A (sf)' to reflect their stable performance since our previous review," S&P said. COUNTERPARTY RISK "The transaction documents related to the swap and bank account agreements are not consistent with our 2012 counterparty criteria. Our ratings, however, are not constrained by these criteria because either the ratings are already below the counterparty constraint or the credit characteristics of the relevant tranches permit ratings higher than those of any counterparty constraint," S&P said. POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES "We have taken the rating actions based on our criteria for rating European CMBS. However, these criteria are under review," S&P said. "As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently, it may affect both new and outstanding ratings on European CMBS transactions," S&P said. "On June 4, 2012, we published a Request For Comment outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow and value. We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized," S&P said. "However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market- specific adjustments. An application of these criteria to European transactions will therefore be published when we release our updated rating criteria," S&P said. "Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria," 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 property-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 BL Superstores Finance PLC GBP753 Million Fixed- and Floating-Rate Bonds Class Rating To From Ratings Raised M1 AAA (sf) AA (sf) C1 BBB (sf) BB (sf) Ratings Affirmed A2 AAA (sf) B2 A (sf) B3 A (sf) COBRA UK: In Administration; 18 Jobs Affected --------------------------------------------- BBC News reports that Cobra UK has gone into administration. BBC relates that administrators said 18 staff were being made redundant at Cobra UK but 120 would remain as they seek to sell the firm as a going concern. According to BBC, Kim Rayment, one of the joint administrators, said: "Unfortunately the economic climate and difficult trading conditions significantly affected the business. "However, we are hopeful of securing a sale and the company will continue to trade while this is explored." Cobra UK is car components firm which relocated to Wrexham from Powys eight months ago. CORAL INNS: Enters Into Administration -------------------------------------- BBC News reports that Coral Inns (NI) has been placed into administration. The company had been under financial pressure for some time, BBC notes. Last year, it entered a standstill agreement with its creditors. Under that agreement, creditors were due to be repaid over a 14- month period with a third party investor also injecting GBP100,000 into the business, according to BBC. The administrators were appointed by the directors earlier this month, but the club has remained open for business and will do so for the forseeable future, BBC relates. The company's main creditors were HM Revenue and a drinks supplier, BBC discloses. Coral Inns (NI) runs Rain nightclub in Belfast. DAWSON INTERNATIONAL: Scottish Mill Bid Deadline Passes ------------------------------------------------------- The Scotsman reports that the bid deadline for Dawson International's historic Scottish mill passed on Wednesday with administrators unwilling to disclose the level of interest. According to the Scotsman, the Barrie Knitwear mill in Hawick, which employs 180 and serves customers including fashion houses Chanel and Hermes, is being sold to fill a GBP129 million hole in Dawson's pension liabilities after attempts to offload the fund failed. Early indications have suggested about 35 potential buyers in the mill, including cashmere company Belinda Robertson, the Scotsman notes. Dawson International is a leading cashmere business. It comprises two trading divisions, based in the UK and the USA. The UK division comprises the Barrie Knitwear business, based in Hawick Scotland. FINDLAY CLARK: Put into Liquidation; 31 Workers Lose Job -------------------------------------------------------- Greig Cameron at heraldscotland reports that Findlay Clark Landscapes (Aberdeen) has been placed in liquidation after struggling to keep skilled workers from moving to better paid oil and gas jobs. The business was hit by a mild winter causing a drop in demand for its gritting and snow clearing services, the report says. According to the report, administrators from accountancy firm RSM Tenon said the general economic environment and cashflow difficulties partly caused by customers withholding payments also contributed to the liquidation. All 31 staff at the firm have been made redundant and it has ceased trading, the report notes. Findlay Clark Landscapes (Aberdeen) provided garden design, landscaping and maintenance to a range of domestic, commercial and public sector clients in the north-east of Scotland. It recently expanded into paving and driveway installations plus snow clearing and its most recent turnover was about GBP1.5 million. JJB SPORTS: Put Up for Sale; Shares May Be Worthless ---------------------------------------------------- Rachel Cooper at The Telegraph reports that JJB Sports has put itself up for sale following a slide in sales amid stiff competition, but the chain warned investors that their shares may be worthless. JJB announced on Thursday that its directors did not believe the chain would be able to raise enough money to stage a turnaround and had therefore decided to put the retailer up for sale, the Telegraph relates. But, it warned investors that their shares may end up worthless due to the amount owed by the company, which stands at around GBP36.4 million in total, the Telegraph notes. JJB, which has 4,000 staff and 180 shops, has issued a string of profit warnings as sales slid amid tough competition, the Telegraph discloses. According to the Telegraph, JJB on Thursday said that Bob Corliss, who was brought in as chairman, would lead the company through the sale process. The decision to sell the retailer followed a warning last month that a deterioration in trading was likely to accelerate the timing of additional funding required by the company, the Telegraph states. JJB Sports plc is a Wigan-based sports retailer supplying branded sports and leisure clothing, footwear and accessories. PROMINENT CMBS 2: S&P Cuts Ratings on 3 Note Classes to 'CCC-' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on all classes of notes in Prominent CMBS Conduit No. 2 Ltd. Prominent 2 is a U.K. commercial mortgage-backed securities (CMBS) transaction in which the payments under the notes are synthetically linked via credit default swaps to the payments under five loans. The loans in turn are backed by office and retail assets in England and Wales. Of the five loans, credit events have occurred with regard to three. The Cavendish loan failed to repay following the appointment of a receiver to one of the corporate entities who was an obligor under the Cavendish Reference Obligation. The appointment of the receiver constituted an event of default and repayment of the Reference Obligation was accelerated. With regard to both the Roade One loan and the Ambassador loan, the servicer declared a credit event following the bankruptcy of the respective borrowers. "In a synthetic transaction, the issuer does not own the loans. If a credit event occurs under a loan, the servicer would typically enforce the loan security in order to work out the loan and subsequently calculate the loan loss. This loss can consist of principal and interest lost under loan plus enforcement costs and any swap break fees. After the loss has been calculated, the trustee will engage a third party, the verification agent, to verify the loss. After the verification, the loss will be applied to the notes in reverse sequential order," S&P said. LOAN PORTFOLIO "The Cavendish loan defaulted on the July 2011 interest payment date. The property portfolio securing the loan consisted of 15 Halifax branches located across the U.K. Of the 15 properties, the servicer has sold 12 at a price of GBP37.13 million. After costs, the net recovery was GBP36.37 million (2% costs). Moreover, the parties are close to selling the remaining three assets for GBP5.68 million. If the three assets were sold at that price, the total recovery would be GBP41.9 million. Compared with a loan balance of GBP51.3 million, this would result in losses of approximately GBP9.3 million, which would then be further increased by enforcement costs. We estimate that the loss severity from the loan could be higher than 20%," S&P said. "The Roade One loan was secured by a portfolio of 18 mixed-use assets (20 at closing), which were located across the U.K. A bankruptcy credit event occurred with regard to the loan on July 29, 2011, following breaches of the loan-to-value and issuer credit rating covenants, which constituted events of default under the loan. Up until this time, interest had been paid in full under the loan," S&P said. "After the credit event, Drivers Jonas, in its capacity as property advisor, sold 17 of the remaining 18 assets. The combined price for the sold assets was GBP58.6 million. Net receipts were GBP57.94 million (after 1.2% selling costs). The last remaining asset is under offer for GBP500,000. Moreover, the swap was terminated as of Sept. 28, 2011, incurring hedge break costs of GBP14.2 million, which will increase the loss," S&P said. "The total recovery will likely be around GBP58.4 million. After allowing for enforcement costs and the swap break fees, the loss severity of the GBP80.1 million loan could be in the region of 50%," S&P said. "The Ambassador loan is a seven-year interest-only loan that expires in October 2013. The loan is secured by a mixed-use portfolio initially comprising 12 retail assets and four office assets across the U.K. A bankruptcy credit event occurred in August 2011 with regard to the loan and the servicer subsequently broke the hedging arrangement and incurred swap break costs of GBP18.2 million," S&P said. "The parties have sold three assets and exchanged contracts for another seven. The combined net receipts of the three assets as a percentage of the day 1 value was 52%. Applying a similar market value decline to the remaining assets leads us to believe that the loss severity for this loan could also be around 50% after allowing for swap break fees and enforcement costs," S&P said. "The two largest loans, Colombina and Lavincino, are currently performing in accordance with their respective loan documents. The loans have a combined securitized balance of GBP220.5 million and are backed by office and retail assets in central London," S&P said. RATING ACTIONS "Following completion of the work-out process of the Roade One loans and with that of the Cavendish loan being near completion, we believe the losses from these two loans will affect the class D, E, and F notes. We have therefore lowered our ratings on all of these classes to 'CCC- (sf)'," S&P said. "Additionally, the recovery from the Ambassador loan will, in our opinion, lead to further losses that could also affect the class A, B, and C notes. We have therefore lowered our ratings on these classes to 'B- (sf)', 'CCC+ (sf)', and 'CCC (sf)'," S&P said. "The combined recoveries from these three loans, together with the expected repayments under the Lavincino loan and the Colombina loan, will likely not be sufficient to repay the class A notes in full, in our view," S&P said. POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES "We have taken the rating actions based on our criteria for rating European CMBS. However, these criteria are under review," S&P said. "As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently it may affect both new and outstanding ratings on European CMBS transactions," S&P said. "On June 4, 2012, we published a Request For Comment outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow and value. We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized," S&P said. "However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market- specific adjustments. An application of these criteria to European transactions will therefore be published when we release our updated rating criteria," S&P said. "Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria," 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 Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.pdf RATINGS LIST Class Rating To From Prominent CMBS Conduit No. 2 Ltd. GBP454.3 Million Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered A B- (sf) BBB (sf) B CCC+ (sf) BB (sf) C CCC (sf) BB- (sf) D CCC- (sf) B+ (sf) E CCC- (sf) B (sf) F CCC- (sf) B- (sf) TITAN EUROPE 2007-3: S&P Cuts Rating on Class A2 Notes to 'CCC-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its credit ratings on Titan Europe 2007-3 Ltd.'s class A1 and A2 notes. "At the same time, we placed our rating on the class A1 notes on CreditWatch negative. In addition, we have affirmed our ratings on the class B, C, D, E, F, and G notes," S&P said. "The rating actions follow the interest shortfall that occurred on the class A2 to G notes on the July 2012 payment date, and reflect our assessment of the issuer's ability to pay interest on all of the notes on future payment dates," S&P said. "As reflected in the July 2012 cash manager report, the class A2, B, C, D, E, F, and G notes experienced interest shortfalls. Although the existing interest shortfall on the class A2 notes is minor, in our view, we believe that the risk of additional interest shortfalls on this class has increased. We also think that the issuer's ability to service senior classes of notes has deteriorated, given the reported performance of the underlying pool of loans and the deal cash-flow mechanics, in a low interest-rate environment. In light of these factors, we now believe that the class A1 notes have become more vulnerable to cash flow disruptions in the future. Therefore, the likelihood of an event of default on this class of notes has increased, in our opinion," S&P said. "We understand that the transaction has been progressively deferring unpaid interest since October 2008. This is because the excess spread, which is distributed to the class X notes, is not available to mitigate notes' interest shortfalls resulting from partial interest collections on the underlying pool of loans or from certain prior-ranking expenses. The issuer relies on servicer advances to address timely payment of interest on the notes. However, the transaction documents indicate to us that the back-up advancer is not allowed to make servicing advances to cover interest shortfalls under the notes, if such shortfalls have resulted from," S&P said: Extraordinary expenses payable to the transaction parties (e.g., special servicing fees or special servicing expenses); or The reduction of servicing advances, if required to meet interest shortfalls under any of the loans, following the determination of an appraisal-reduction amount (the appraisal-reduction mechanism was structured to prevent drawings on the portion of the securitized loans that represents more than 90% of the securitized loan). "In our opinion, interest shortfalls become more difficult to manage for senior classes of notes in general in low interest- rate environments because, all else being equal, the subordinated interest available to absorb interest shortfalls diminishes," S&P said. "Titan Europe 2007-3 is a U.K. commercial mortgage-backed securities (CMBS) transaction that closed in August 2007 and is currently secured on 13 U.K. commercial real estate loans. The legal maturity date of the notes is October 2016," S&P said. RATING ACTIONS "The rating actions have not resulted from a change in our opinion of the probability of default and likely recovery prospects of the remaining pool of loans backing the transaction. Our ratings in this transaction address timely payment of interest, payable quarterly in arrears, and payment of principal not later than the legal final maturity date in October 2016," S&P said. "We have therefore lowered to 'CCC- (sf)' from 'B (sf)' our rating on the class A2 notes. We have not lowered our rating on the class A2 notes to 'D (sf)', because the existing shortfall is minor, in our view," S&P said. "We have also lowered to 'BB (sf)' from 'A (sf)' our rating on the class A1 notes because we see this class of notes as being vulnerable to interest shortfalls and therefore as no longer commensurate with an investment-grade rating. Further rating actions on the A1 and A2 classes of notes would be likely if further interest shortfalls occur. We have placed the rating on the class A1 notes on CreditWatch negative owing to uncertainty over potential for continued interest shortfalls, which we believe could eventually lead to an event of default under this class of notes," S&P said. "The class B, C, D, E, F, and G notes, which have already experienced interest shortfalls on previous payment dates, are rated 'D (sf)'. We have affirmed our ratings on these classes of notes," S&P said. POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES "We have taken the rating actions based on our criteria for rating European CMBS. However, these criteria are under review," S&P said. "As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently, it may affect both new and outstanding ratings on European CMBS transactions," S&P said. "On June 4, we published a request for comment (RFC) outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow and value. We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized," S&P said. "However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market- specific adjustments. An application of these criteria to European Transactions will therefore be published when we release our updated rating criteria," S&P said. "Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria," 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 Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From Titan Europe 2007-3 Ltd. GBP778.822 Million Commercial Mortgage-Backed Floating-Rate Notes Rating Lowered and Placed On CreditWatch Negative A1 BB (sf)/Watch Neg A (sf) Rating Lowered A2 CCC- (sf) B (sf) Ratings Affirmed B D (sf) C D (sf) D D (sf) E D (sf) F D (sf) G D (sf) =============== X X X X X X X X =============== * Moody's Says Euro Area Economic Shocks to Hit CEE & CIS States ---------------------------------------------------------------- Some economies in Central and Eastern Europe (CEE) and, to a lesser extent, in the Commonwealth of Independent States (CIS) could potentially be negatively affected by further economic stress emanating from the euro area, says Moody's Investors Service in a report published on Aug. 29. These conclusions are based on an econometric assessment of the numerous linkages and transmission channels between CEE and CIS countries and the euro area. The new report is entitled "CEE and CIS Countries Could be Affected by Possible Euro Area Economic Shocks, Albeit to Varying Degrees". Moody's report assesses the potential short- to medium-term effects of any further negative economic shocks from the euro area on some economies in the CEE and CIS by using the econometric technique of Vector Auto Regression (VAR) to examine three possible channels of transmission: trade, foreign direct investment and bank flows. The report does not speculate on the likelihood of further economic shocks occurring or on how these may materialize. As part of its analysis, Moody's has grouped CEE and CIS economies into three categories to take account of the different levels of institutional integration with the euro area: (1) the EU member states in the CEE that are not members of the euro area, (2) EU accession countries in the CEE, and (3) economies in the CIS that are often referred to as the EU's "Eastern Neighbourhood." By applying the VAR technique, Moody's arrived at the following estimates of the likely extent to which the three categories of CEE and CIS economies might be affected by any further economic stress emanating from the euro area: - The CEE region's EU economies that are not members of the euro area have a high average sensitivity and would be significantly affected by further euro area developments. - EU accession countries in the CEE would, to varying degrees, also be affected by further euro area shocks. - While the economies in the EU's Eastern Neighbourhood are the least exposed compared with the other two groups, they would nevertheless be affected by euro area shocks, despite the absence of the comprehensive integration frameworks that are available to EU and accession countries. Debt ratings currently assigned to sovereign governments covered by this report reflect Moody's current economic forecast for the euro area, which calls for a slight contraction in 2012 and weak recovery next year. Although not Moody's central scenario, this report suggests that a deep and prolonged contraction in the euro area following an intensification of the current crisis would likely have negative rating implications for some countries in the CEE region and possibly in the CIS. Rating implications arising from such a situation would ultimately be a function of each country's shock absorption capacity, fiscal position and debt profile, as well as the effectiveness of the country's policy response to manage the economic and financial pressures that would arise from a severe economic disruption in the euro area. * BOOK REVIEW: John Hood's The Heroic Enterprise ------------------------------------------------ Author: John Hood Publisher: Beard Books, Washington, D.C. 2004 (reprint of book published by The Free Press/Division of Simon and Schuster in 1996). 246+xx pages Price: $34.95 trade paper ISBN 1-58798-246-3 Hood writes as a counterbalance to ideas that business should be expected to contribute to the common good along the lines of charities, say, or public health. He writes too against the highly partisan, pernicious perspective that business activity is antisocial and disruptive which at times gains some degree of credibility. Critiques of business have been around as long as commerce and business have been around. These come usually from religious or political zealots seeking dictatorial hold over all significant kinds of human activity and enterprise. In this work, Hood aims to counterbalance latter-day versions of such critiques arising in American society. The counterculture, antiestablishment 1960s was a time when such critiques were particularly strong. They have moderated since, yet remain a persistent chorus which influences politics and imagery and public affairs of business. Hood does not aim to stifle or eliminate debate about the effects of business on society or how business should engage in business. What he aims for is dismissing once and for all myopic and almost utopian conceptions about business and related erroneous purposes and values of it. Such conceptions are worrisome to businesspersons not because they believe they have any foundation, but because they waste resources and energy in having to continually correct them so business can function properly. And to the extent such myopic conceptions are believed or entertained by the public, they hamper the public and politicians in working out policies by which the greatest benefits of business can be reaped by society. The author clarifies the place and role of business by contrasting business with other parts of society. A standard, self-evident tenet of sociologists going back to the time of Plato is that society is made up of different parts fulfilling different roles for the varied needs of society and so that a society will function smoothly and survive. Business is distinguished from government and philanthropy. "Businesses exist to make and sell things," whereas by contrast "governments exist to take and protect things [and] charities exist to give things away." The social responsibility for each category of institution is inherent in its purposes and activities. For example, businesses alone cannot solve environmental problems. Whatever problems which can be attached to business are related to government policies and business's operations to satisfy consumer interests. Hence, business alone cannot solve environmental problems, and should not be expected to. Critics requiring that business solve environmental problems without similarly requiring changes in government policies and consumer interests are shortsightedly and unreasonably tarnishing business while not making any relevant or productive arguments for dealing with environmental problems. In elucidating business's proper place in and contributions to society, Hood is not unmindful that some businesses fail to fulfill their role in good faith and beneficially. But instead of criticizing business fundamentally, he proffers questions critics can ask before targeting particular businesses. Two of these are "Are corporations obtaining their profits through force or fraud?," and "Are corporations putting investments at their disposal to the most economically productive use?" Hood's perspective in support of business against unfair and irrelevant criticisms is based on the acknowledgment that business is operating productively, for the common good, and is open to cooperative activities with other parts of society in trying to resolve common problems. "The Heroic Enterprise" is not an argument for business -- for as a fundamental aspect of any society, business does not need an argument to justify it. The book mostly takes the approach of reviewing why business is necessary and therefore must be naturally, easily accepted -- namely, because of the manifold benefits business provides for society and because it along with good government and respectable morals has been a primary engine for the betterment of human life. John Hood has much experience in the media and communication as a syndicated columnist, TV commentator, and radio host. Author of three books and many articles for national publications such as the Wall Street Journal, he is President and Chairman of the John Locke Foundation in North Carolina. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, 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 * * *