TCREUR_Public/121206.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

          Thursday, December 6, 2012, Vol. 13, No. 243



* GEORGIA: S&P Affirms 'BB-/B' Long-Term Issuer Credit Ratings


CENTROTHERM PHOTOVOLTAICS: Moves to the General Standard
DECO 7: Fitch Cuts Rating on EUR35.6-Mil. Class H Notes to 'Dsf'
PROVIDE VR 2002-1: S&P Lowers Rating on Class D Notes to 'D'


MAGYAR EXPORT-IMPORT: S&P Assigns 'BB' Rating to MTN Program


SPENCER DOCK: Convention Center Parent in Liquidation


NXP BV: S&P Rates $500-Mil. Senior Secured Term Loan 'B+'


SANTANDER TOTTA: Fitch Affirms 'bb-' Viability Rating


SISTEMA JOINT: Fitch Affirms 'BB-' LT Issuer Default Rating
UNITED CONFECTIONERS: Fitch Affirms 'B' IDR; Outlook Stable


BANCO ESPANOL: Fitch Lowers Subordinated Debt Rating to 'BB+'
IBERCAJA BANCO: S&P Puts 'BB+' Counterparty Rating on Watch Neg.
NCG BANCO: Fitch Maintains 'BB+' Long-Term Issuer Default Rating


SAAB AUTOMOBILE: Swedish National Debt Office to Take Over

U N I T E D   K I N G D O M

BI COMPOSITES: In Administration, 20 Jobs at Risk
DECO 12: Fitch Cuts Rating on GBP0.7-Mil. Class F Notes to 'Dsf'
HUGHES GROUP: In Administration, Almost 150 Jobs Lost
OBEL TOWER: KMPG Takes Over Ireland's Tallest Building
THOMAS COOK: Fitch Cuts Long-Term Foreign Currency IDR to 'B-'

WELLINGTON PUB: Fitch Lowers Rating on Class B Notes to 'B-'


* EUROPE: Fitch Says Companies Likely to Default Again
* Upcoming Meetings, Conferences and Seminars



* GEORGIA: S&P Affirms 'BB-/B' Long-Term Issuer Credit Ratings
Standard & Poor's Ratings Services affirmed its long-term
foreign- and local-currency ratings on the Government of Georgia
at 'BB-'. "At the same time, we affirmed our short-term foreign-
and local-currency ratings at 'B'. The outlook is stable. The
recovery rating is '4'. The transfer and convertibility (T&C)
assessment is 'BB'," S&P said.

"The affirmation reflects our view that Georgia's economy will
continue to perform strongly and its new government remain
committed to fiscal consolidation and market-oriented policies.
The ratings are constrained by high external vulnerabilities,
limited monetary flexibility, and low GDP per capita. They are
supported by strong economic growth prospects, fairly low private
and public debt, and stabilizing public finances. We view the
recent peaceful and democratic government transition following
the October 2012 elections as a positive, underlining the
strength of political institutions, although we remain cautious
about political stability domestically and also regionally, with
regard to Georgia's separatist regions and Russia," S&P said.

"The coming year will be a key test for the stability and
predictability of Georgia's policymaking. Georgia underwent its
first leadership change within the bounds of post-Rose Revolution
institutions when the Georgian Dream coalition won a surprise
victory over President Mikheil Saakashvili's ruling party, the
United National Movement (UNM), in parliamentary elections. The
election results, and the fact that Saakashvili and his party
quickly conceded, bode well for dynamism and diversity in
Georgian politics. The new prime minister, Bidzina Ivanishvili,
formed a government by the end of October -- replacing for the
most part only ministers and deputy ministers -- and proposed a
draft 2013 budget in early November. In our view, the degree of
institutionalization of democratic processes over the past eight
years will help anchor the transition," S&P said.

"That said, we expect the relationship between Prime Minister
Ivanishvili, until recently an unknown figure, and President
Saakashvili to remain tense. A set of constitutional amendments
will become effective after Saakashvili's second term as
President expires in late 2013, reducing the power of the
executive in favor of the prime minister and parliament. Until
these changes are in effect, there remains residual uncertainty
regarding future policy direction, and tensions between the two
main parties could remain," S&P said.

"We expect the new government's policies to remain broadly in
line with the UNM's, particularly with regard to market
orientation, fiscal consolidation, and expenditure- and growth-
enhancing investment agendas. Ivanishvili seems to favor more
positive relations with Russia, but we think it is unlikely that
bilateral relations will improve significantly, or that the trade
embargo imposed by Russia will be lifted any time soon," S&P

"We expect the new government to stick with the fiscal
consolidation program, and for the deficit to narrow to 3% of GDP
in 2013 from 3.5% in 2012, as the fiscal rule mandates. The new
government's draft budget indicates that social protection,
education, and agricultural outlays will be increased partly at
the expense of cuts to capital expenditure. The large share of
capital expenditure in the budget -- 27% of total expenditures in
2011 -- gives the government some degree of fiscal flexibility.
The government is expected to continue with the slow drawdown of
undisbursed funds from the support package amounting to 35% of
GDP that Georgia received from international donors after its
five-day war with Russia in 2008. The undisbursed portion amounts
to 17% of 2012 GDP," S&P said.

"The high level of dollarization, currently around 60% of
deposits, remains a major challenge for Georgia's monetary
policy, although the level is falling," S&P said.

"The stable outlook balances our view of Georgia's external
vulnerabilities against the strong economic growth prospects and
improving political environment," S&P said.

"We might consider raising the ratings if the political
transition, including a successful presidential succession,
continues smoothly. Continued strong economic performance driven
by domestic and foreign direct investment, further progress in
consolidating public finances, and the stabilization of external
balance sheets could also support a ratings upgrade," S&P said.

"We might lower the ratings if the political environment
deteriorated, domestically or regionally, or if the external
imbalances were to widen significantly," S&P said.


CENTROTHERM PHOTOVOLTAICS: Moves to the General Standard
The first creditors' meeting after the insolvency protection
proceedings introduced in July 2012 has confirmed the agreed
restructuring roadmap of centrotherm photovoltaics AG.

As part of the reporting and verification meeting called by Ulm
county court, the represented creditors unanimously resolved that
the company should continue in self-administration.  In addition,
the temporary committee of creditors initially set by the court
was declared the final committee of creditors after the election
of one further member.

"This resolution and the both constructive and faithful
cooperation with the creditors leave us optimistic for the
success of the further restructuring and the resolution of the
insolvency plan," says centrotherm Management Board member Tobias
Hoefer, responsible for the self-administration. Previously, he
reported to the creditors on the starting position in the
insolvency protection proceedings, the successes already achieved
in the restructuring process as well as on the prospects for the
continuation of the company's business.

The administrator appointed by the court and also confirmed by
the creditors' meeting, lawyer Prof. Dr. Martin Hormann from
anchor Rechtsanwalte, also agreed with the recommendations of
centrotherm photovoltaics AG.

The draft of the insolvency plan of centrotherm photovoltaics AG
provides for the company to continue business while maintaining
its stock exchange listing and strengthen the capital structure
by converting the claims of the unsecured creditors into shares
in the company. This is aimed at striking a balance between the
interests of the shareholders and the company with regards to its
continued existence and capital market access, and best possibly
satisfying the creditors' claims. The insolvency plan requires
the approval of the creditors and the confirmation of the
insolvency court. After that, the insolvency proceedings can be
terminated in line with the regulations of the German Act
Relating to the Further Simplification of the Reorganization of
Companies (ESUG), and the German Insolvency Directive (InsO).
centrotherm photovoltaics AG could then operate again on a solid
basis on the market as a restructured company on a fully
independent basis.

The creditors' meetings for the subsidiaries centrotherm thermal
solutions GmbH & Co. KG and centrotherm SiTec GmbH, which are
currently engaged in their own proceedings, also resolved that
business should continue under self-administration.

As reported in the Troubled Company Reporter-Europe on Oct. 3,
2012, the reorganization of centrotherm photovoltaics AG has
entered a decisive phase.  The District Court of Ulm on Oct. 1
granted the company's application to open reorganization
proceedings under its own administration.  The same also applies
for the subsidiaries centrotherm thermal solutions GmbH & Co. KG
and centrotherm SiTec GmbH, which have also been in insolvency
protection proceedings since July 12. The provisional creditor
committee had provided unanimous support to the application.

                        About centrotherm

photovoltaics AG centrotherm photovoltaics AG, which is based at
Blaubeuren, Germany, is a technology and equipment provider for
the photovoltaics sectors.  The Group currently employs around
1,300 staff, and operates globally in Europe, Asia and the USA.

DECO 7: Fitch Cuts Rating on EUR35.6-Mil. Class H Notes to 'Dsf'
Fitch Ratings has downgraded DECO 7 - Pan Europe 2 plc's class H
(DECO 7), due January 2018, as follows:

  -- EUR35.6m class H (XS0246475445) downgraded to 'Dsf' from
     'Csf'; RE 0%

The downgrade reflects the note loss allocation which occurred on
the October interest payment date (IPD), as a result of the
workout and liquidation fee of EUR284,403 paid at the July 2012
IPD. The workout and liquidation fee incurred by the issuer are
related to the sale of three properties (Koeln-Chorweiler,
Detmold, Elmshorn) securing the Karstadt Kompakt loan.

The EUR284,403 of losses has led to a partial (0.7%) loss on the
class H notes.

PROVIDE VR 2002-1: S&P Lowers Rating on Class D Notes to 'D'
Standard & Poor's Ratings Services raised to 'AAA (sf)' from 'AA
(sf)' its credit rating on PROVIDE VR 2002-1's class C notes and
PROVIDE-VR 2003-1 PLC's class B notes. "At the same time, we
lowered to 'D (sf)' from 'CCC- (sf)' our rating on PROVIDE VR
2002-1's class D notes. We have also affirmed our ratings on all
other classes of notes in these transactions," S&P said.

"The rating actions follow our analysis of the performance of
these transactions, using the latest available data from the
investor reports (dated November 2012 for PROVIDE VR 2002-1 and
September 2012 for PROVIDE-VR 2003-1)," S&P said.

"Since closing, sequential amortization and net losses have
reduced the principal balance in PROVIDE VR 2002-1 to
approximately EUR56.7 million from EUR623.3 million, and in
PROVIDE-VR 2003-1 to approximately EUR84.0 million from
EUR449.0 million," S&P said.

In both transactions, delinquencies in the 30, 60, and 90+ days
buckets have been reported below 1% since the beginning of 2005.

Credit events (i.e., loans in foreclosure) have decreased in
absolute terms:

    Since 2005 in PROVIDE VR 2002-1, when they peaked at about
    EUR18.2 million, to EUR4.1 million currently; and

    Since 2007 in PROVIDE-VR 2003-1, when they peaked at about
    EUR10.9 million, to about EUR3.9 million currently.

"Since our previous reviews of PROVIDE VR 2002-1 and PROVIDE-VR
2003-1 on Sept. 28, 2011 and Dec. 2, 2011, cumulative net losses
have further increased," S&P said.

"According to the latest investor report (for the Nov. 27, 2012
payment date), net losses have reduced PROVIDE VR 2002-1's class
E notes' balance to zero. At the same time, losses were allocated
to the next most junior tranche, the class D notes, whose balance
has been reduced to EUR22.8 million from EUR23.0 million. Since
September 2011, cumulative net losses in PROVIDE VR 2002-1 have
increased, by approximately EUR1.3 million, to about EUR15.8
million--or 2.5% of the closing balance," S&P said.

"In PROVIDE-VR 2003-1, net losses have reduced the class E notes'
balance to approximately EUR1.3 million currently, from EUR2.0
million in December 2011. We have observed regular net losses in
this transaction since 2006. However, the amounts have decreased
over the past two years, averaging at about EUR325.000 per
quarter since 2010. Cumulative net losses in PROVIDE-VR 2003-1
amount to approximately EUR9.2 million, or 2.1% of the closing
balance," S&P said.

Recovery rates have remained low at about 35%, in both
transactions, due to a relatively high amount of second-lien

"Taking into account realized losses and delinquencies to date,
and considering historical recovery rates in these particular
portfolios, we have assessed the likelihood of future losses for
both the performing and nonperforming parts of the collateral
pools," S&P said.

"We have raised to 'AAA (sf)' from 'AA (sf)' our ratings on
PROVIDE-VR 2003-1's class B and PROVIDE VR 2002-1's class C notes
because of the increased credit enhancement available to these
classes of notes," S&P said.

"We have also lowered to 'D (sf)' from 'CCC- (sf)' our rating on
PROVIDE VR 2002-1's class D notes because net losses have been
allocated to this class of notes on the latest payment date," S&P

"Furthermore, we have affirmed our ratings on PROVIDE VR 2002-1's
class A, B, and E notes and PROVIDE-VR 2003-1's class A+, A, C,
D, and E notes, as we consider the current amount of credit
enhancement available to them to be commensurate with their
current ratings," S&P said.

"Amortization has reduced the pool factors in PROVIDE VR 2002-1
and PROVIDE-VR 2003-1 to 9% and 19%, respectively. We will
continue to monitor the development of credit events, arrears,
and actual losses in these transactions," S&P said.

PROVIDE VR 2002-1 and PROVIDE-VR 2003-1 are partially funded
synthetic German residential mortgage-backed securities (RMBS)
transactions using the Provide Platform provided by Kreditanstalt
fr Wiederaufbau (AAA/Stable/A-1+).


SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:


Class              Rating
            To               From

EUR115.45 Million Floating-Rate Credit-Linked Notes

Rating Raised

C           AAA (sf)         AA (sf)

Rating Lowered

D           D (sf)           CCC- (sf)

Ratings Affirmed

A           AAA (sf)
B           AAA (sf)
E           D (sf)

EUR75.75 Million Floating-Rate Credit-Linked Notes

Rating Raised

B           AAA (sf)         AA (sf)

Ratings Affirmed

A+          AAA (sf)
A           AAA (sf)
C           BBB (sf)
D           CCC- (sf)
E           D (sf)


MAGYAR EXPORT-IMPORT: S&P Assigns 'BB' Rating to MTN Program
Standard & Poor's Ratings Services assigned its 'BB' rating to
Magyar Export-Import Bank's (Hungary Eximbank; BB/Stable/B)
global medium-term note (MTN) program.

"The 'BB' long-term rating on the EUR2 billion debt program
reflects the foreign currency long-term counterparty credit
rating on Hungary Eximbank. In turn, the ratings on Hungary
Eximbank are equalized with those on the Hungarian sovereign
(BB/Stable/B), reflecting our opinion that there is an 'almost
certain' likelihood that the Hungarian government would provide
timely and sufficient extraordinary support to the bank,
sufficient to meet its liabilities, in case of financial
distress," S&P said.

"Established in 1994 under Act No. XLII, Hungary Eximbank is a
100% state-supported government export credit agency. The bank
benefits from two state guarantees, for on-balance and off-
balance sheet liabilities. The statutory guarantee for on-
balance-sheet liabilities is explicit and unconditional, with an
upper limit defined in the budget, currently HUF1.2 trillion.
Although the guarantee does not address timeliness, we equalize
the ratings because of our assessment of the 'almost certain'
likelihood of timely and wide-ranging support from the
government, in conjunction with the critical economic role played
by Hungary Eximbank. Hungary Eximbank also provides off-balance-
sheet guarantees, which are guaranteed by the state, of up to
HUF80 billion (this ceiling will be increased to HUF350 billion
from 2013)," S&P said.

"The stable outlook on Hungary Eximbank mirrors that on the
Hungarian sovereign. As long as the government continues to
provide support, any change in the ratings on the sovereign will
likely result in a similar rating action on Hungary Eximbank.
Conversely, any change in our assessment of Hungary Eximbank's
critical role for, and integral link with, the government could
lead to downward pressure on the rating," S&P said.

"Notes under the program will be issued in series, with each
series comprising one or more tranches, issued on different
dates. The price, amount, form, interest, currency, and maturity
will be series-specific and these will be reviewed by Standard &
Poor's when assessing each series," S&P said.


SPENCER DOCK: Convention Center Parent in Liquidation
John Walsh at The Irish Examiner reports that the company that
runs the Convention Centre in Dublin made a EUR6 million profit
for the year ended Feb 29, 2012, but parent is in liquidation.

The Convention Centre is run by Spencer Dock Convention Centre
Dublin Ltd -- a subsidiary of the Spencer Dock Development
Company, which went into liquidation in October, according to the

The fate of the company will ultimately be decided by the
liquidator and the banks, the Examiner relays.

According to the report, the Convention Centre was a public
private partnership between the Spencer Dock Development Company
and the Office of Public Works.  The agreement was to build a
convention centre in Dublin and run it over a 25-year period.

The report notes Spencer Dock Development Company was owned by
John Ronan and Richard Barrett of Treasury Holdings and the
property developer Harry Crosbie.  Mr. Ronan and Mr. Barrett had
been involved in a long and complex legal tussle with Nama for
much of the past year.  They ultimately lost the case which
resulted in a number of their companies going into liquidation,
the report says.


NXP BV: S&P Rates $500-Mil. Senior Secured Term Loan 'B+'
Standard & Poor's Ratings Services assigned its 'B+' issue rating
to the proposed US$500 million senior secured term loan due 2020,
to be issued by Dutch semiconductor manufacturer NXP B.V.
(B+/Stable/--) and its wholly owned subsidiary NXP Funding LLC
(together, NXP). The issue rating is in line with the corporate
credit rating on NXP B.V. "At the same time, we assigned a
recovery rating of '4' to the proposed loan, indicating our
expectation of average (30%-50%) recovery prospects in the event
of a payment default," S&P said.

"In addition, we affirmed our 'B+' issue rating on NXP's existing
senior secured notes (denominated in U.S. dollars and euros) and
senior secured term loans. The recovery rating on these notes and
loans remains unchanged at '4', indicating our expectation of
average (30%-50%) recovery in the event of a payment default,"
S&P said.

"Finally, we affirmed our 'BB' issue rating on NXP's EUR620
million super senior revolving credit facility (RCF) due March
2017. (NXP recently increased this RCF by EUR120 million.) The
recovery rating on the RCF remains unchanged at '1', reflecting
our expectation of very high (90%-100%) recovery for debtholders
in the event of a payment default," S&P said.

"We understand that NXP will use the proceeds of the proposed
loan to fund a US$500 million tender offer that it has announced
for its 9.75% senior secured notes due 2018," S&P said.

                         RECOVERY ANALYSIS

"Our recovery rating on the proposed senior secured loan is
supported by our valuation of NXP as a going concern and by the
fairly comprehensive security package provided to the senior
secured lenders," S&P said.

"The difference between the issue rating on the senior secured
debt instruments and that on the RCF reflects the super senior
status of the RCF, with RCF lenders ranking ahead of the secured
noteholders and other lenders in the event of default," S&P said.

"Under our hypothetical scenario, we envisage, among other
things, declining revenues as a result of a significant
macroeconomic and industry slowdown; increasing competitive
pressure; a significant drop in operating margins; and meaningful
capital expenditure and research and development commitments. At
our hypothetical point of default in 2016, we calculate that
EBITDA would decline to about US$430 million," S&P said.

"We estimate the stressed enterprise value of the group at the
point of hypothetical default to be approximately US$2.6 billion,
which is equivalent to 6.0x stressed EBITDA," S&P said.

"After taking these factors into account and deducting the costs
of enforcement and other priority liabilities of about US$290
million, we arrive at a net enterprise value of about US$2.3
billion. Our valuation assumes a proportionate consolidation of
NXP's 61% subsidiary, Systems on Silicon Manufacturing Co. Pte.
Ltd. (SSMC). However, we believe there could be additional upside
to our valuation of SSMC at the point of default," S&P said.

"We envisage about US$830 million of super priority debt
(including the fully drawn RCF and six months of prepetition
interest). This equates to very high (90%-100%) recovery
prospects for the RCF lenders, and translates into a recovery
rating of '1' on this instrument," S&P said.

"With about US$3.1 billion outstanding at default for the senior
secured debtholders, we see recovery prospects within the 30%-50%
range. This translates into a recovery rating of '4' on the
various senior secured debt instruments, including the proposed
loan," S&P said.


New Rating

NXP Funding LLC
Senior Secured Debt                     B+
  Recovery Rating                        4

Ratings Affirmed

NXP Funding LLC
Senior Secured Debt                     B+
  Recovery Rating                        4
Senior Secured Debt                     BB
  Recovery Rating                        1


SANTANDER TOTTA: Fitch Affirms 'bb-' Viability Rating
Fitch Ratings has affirmed Santander Totta SGPS's (Santander
Totta) and its bank subsidiary, Banco Santander Totta SA's (BST),
Long-term Issuer Default Ratings (IDR) at 'BBB-', Short-term IDRs
at 'F3', Support Ratings at '2' and Viability Ratings (VR) at
'bb-'.  The Outlook for the Long-term IDRs is Negative.

Santander Totta is a Portuguese holding company wholly owned by
the Spanish bank, Banco Santander S.A (Santander;
'BBB+'/Negative).  BST is its main operating subsidiary and is
Portugal's fourth largest bank.

BST and Santander Totta's ratings are the same because the two
share the same regulator and are viewed as a consolidated entity,
the bank is wholly-owned by the holding company, common branding
is applied to both entities and the holding company has no
outstanding debt.


The affirmation of Santander's Totta and BST's IDRs reflect a
high probability of support from Santander, as expressed by a '2'
Support Rating.  The Long-term IDRs are one notch higher than the
Portuguese sovereign's ('BB+'/Negative).

Nevertheless, Banco Santander's propensity and ultimate ability
to provide full and timely support to Santander Totta and BST is
likely to be linked to banking sector and sovereign risks in
Portugal, which are closely correlated.  The two entities' IDRs
are therefore sensitive to a further downgrade of the sovereign
rating and/or of Santander's IDRs, indicated by their Negative


BST's preference shares have been affirmed at 'BB-' and remain
capped at the level assigned to equivalent securities issued by
the parent bank in line with Fitch's criteria on 'Rating Bank
Regulatory Capital and Similar Securities' (dated 15 December
2011 at

The rating of BST's preference shares remains sensitive to a
downgrade of Santander's VR and/or BST's IDR.


The two entities' VRs reflect BST's good national franchise,
which supports reasonable earnings generation, efficient cost
structure, sound capitalization and an improved funding profile.
BST has not required state aid and it is not reliant on its
parent for funding.  The VRs also take into account market
funding constraints and the challenge to maintain asset quality
and profitability at levels which compare favorably to peers'
amid weak economic prospects in Portugal.

The banks' VRs are sensitive to a further deterioration in the
operating environment, ongoing market funding constraints and/or
of further pressure on asset quality.

The ratings actions are as follows:

Santander Totta:

  -- Long-term IDR affirmed at 'BBB-', Outlook Negative
  -- Short-term IDR affirmed at 'F3'
  -- Viability Rating affirmed at 'bb-'
  -- Support Rating affirmed at '2'

Banco Santander Totta S.A.:

  -- Long-term IDR affirmed at 'BBB-', Outlook Negative
  -- Short-term IDR affirmed at 'F3'
  -- Viability Rating affirmed at 'bb-'
  -- Support Rating affirmed at '2'
  -- Senior debt affirmed at 'BBB-'
  -- Commercial paper and short-term debt affirmed at 'F3'
  -- Preference shares affirmed at 'BB-'


SISTEMA JOINT: Fitch Affirms 'BB-' LT Issuer Default Rating
Fitch Ratings has affirmed Sistema Joint Stock Financial Corp.'s
Long-Term Issuer Default Rating (IDR) at 'BB-'.  The Outlook is

Sistema ratings continue to be supported by the solid operating
and financial performance of its two largest subsidiaries, OJSC
Mobile TeleSystems (MTS) ('BB+'/Stable) and Joint Stock Oil
Company Bashneft (Bashneft, 'BB'/Stable).  As a majority
shareholder, Sistema retains a flexibility to shape shareholder
remuneration at these companies and can exert significant
influence over their cash flows which makes distributions from
these entities visible and reliable.  However, leverage at the
holdco level remains high, and the asset portfolio is likely to
be under active review over the next couple of years exposing
Sistema to elevated M&A risks.

Strong Key Subsidiaries:

Sistema's key operating subsidiaries, MTS and Bashneft, generate
strong free cash flow (FCF), with an ability to pay large
dividends, and are the key contributors to Sistema's credit
profile.  Sistema can exert significant influence over its
subsidiaries' cash flows and retains a flexibility to shape their
dividend policy.

MTS's leverage remains relatively low, with reported net
debt/adjusted last-12-months EBITDA at 1.2x at end-Q312.  Sistema
retains a flexibility to significantly increase shareholder
remuneration from MTS without jeopardizing its ratings.  The oil
and gas segment is much more cyclical than telecoms, and Bashneft
is only a medium-sized player in Russia.  It faces substantial
capex requirements in connection with the Trebs-Titov oil field
development, which reduces its flexibility to support additional
leverage and makes its shareholder remuneration payments more
volatile.  However, Fitch expects the company to be able to
continue paying sizable dividends to Sistema.

Weak Developing Assets:

All Sistema's "developing assets" are fairly weak credits, and
some are highly leveraged, most notably Sitronics JSC ('B-
'/Negative).  Sistema is only likely to provide support to its
subsidiaries as long as it sees positive equity value in these
investments, but additional reputational/strategic considerations
may apply.

Off-Balance-Sheet Exposure:

Sistema's holding company (holdco) guarantees some of its
subsidiaries' debt, most notably Sistema Shyam TeleServices
(SSTL).  The holdco also granted a number of put options to some
equity investors in its operating companies, which effectively
turns their equity stakes into debt recourse to Sistema.  These
obligations significantly increase the holdco's effective
leverage and exposure to refinancing risks.

Diversification Efforts Jeopardise Leverage:

Sistema's plans to create a third stable business 'leg' within
the group may trigger a substantial leverage increase at the
holdco level.  Sistema announced its strategic ambitions to
become a controlling shareholder in a large company, likely in
transportation or logistics segment.  This may require a number
of holdco financed acquisitions to accumulate a desired size
which may drive an increase in the amount of debt and leverage at
the holdco level.  The ultimate impact would depend on Sistema's
ability to find partners willing to financially support these
investments and the amount of debt that the holdco would be able
to push down to the subsidiary level.  However, the latter option
would not be available for investments into minority stakes or
entities where Sistema does not have full control over cash flows
such as joint ventures.

Strong Cash Movement Ability:

As a majority shareholder, Sistema can exercise discretion over
the amount of dividends from MTS and Bashneft.  However, its
flexibility to sell assets to publicly listed MTS has become much
more limited.

High M&A Risks:

As an investment holding company, Sistema is intrinsically
exposed to high M&A risks.  These somewhat increased in 2012 as
Sistema flagged its potential interest to a number of deals in
various industries.  M&A risks are somewhat mitigated by its
effective status as custodian of strategic assets.  Sistema is
likely to continue developing assets considered strategically
important in the domestic context, such as high tech.


Holdco Leverage, Opco Fundamentals: Reduction in the off-balance-
sheet liabilities and deleveraging at the holdco level to net
debt including off-balance-sheet obligations to normalised
dividends to below 2.5x on a sustained basis could lead to an
upgrade.  A sustained rise in the ratio of net debt including
off-balance-sheet obligations to normalized dividends to above
4.3x could lead to a downgrade.  A portfolio reshuffle increasing
the share of subsidiaries with a low credit profile may also be
ratings negative.


  -- Long-Term IDR: Affirmed at 'BB-', Outlook Stable

  -- Local Currency Long-Term IDR: Affirmed at 'BB-, Outlook

  -- National Long-Term Rating: Affirmed at 'A+(rus)', Outlook

  -- Senior Unsecured Debt: Affirmed at 'BB-' foreign and local
     currency, 'A+(rus)'.

  -- Loan Participation Notes issued by Sistema Funding S.A. and
     guaranteed by Sistema: Affirmed at 'BB-'

UNITED CONFECTIONERS: Fitch Affirms 'B' IDR; Outlook Stable
Fitch Ratings has affirmed Russia-based OJSC Holding Company
United Confectioners' (UC) Long-term foreign currency Issuer
Default Rating (IDR) at 'B' with a Stable Outlook.  Fitch has
also affirmed UC's National Long-term Rating at 'BBB+(rus)' with
a Stable Outlook.

The agency has also upgraded the senior unsecured rating
applicable to OOO United Confectioners Finance's (UC Finance)
bond due April 2013 to 'B' from 'B-'.  The upgrade reflects the
redemption in May 2012 of one of the group's bonds issued by UC
Finance which benefited from a different guarantee package
relative to the remaining bond; therefore the existing bond issue
is rated at the same level as the IDR, at 'B'.  The recovery
rating for the bond is 'RR4' due to a soft cap set by Fitch's
country-specific treatment of Recovery Ratings.

UC managed to retain or improve its leading position in core
market segments in 2011 and 2012.  However, with the margin
deteriorating in 2011 on higher cost of goods sold and marketing
expenses and further negative developments in 2012, Fitch expects
the 2012 full-year EBITDA margin to be broadly flat compared to
2011.  Fitch expects UC to be able to transfer price increases to
consumers in most price segments, due to the strength of its core
brands.  Profitability is expected to be supported by new product
launches in 2013.  However, slower price progression in several
low-price segments (caramel, bulk candies) and an increase in
competition from other participants (such as Roshen) could result
in further margin deterioration.  An EBIT margin in the high-
single digits is commensurate with peers in the packaged food
sector, albeit in the low end of expectations.

High capital expenditures in 2011 were mainly debt-funded and led
to increase in leverage metrics.  However, Fitch still considers
UC to have low leverage for the current rating level relative to
peers.  Debt is expected to be kept flat in absolute terms, with
leverage metrics mainly reliant on the trend in profitability.
Sales growth is expected at high single digits in 2012-2014, with
EBIT margin not exceeding the 2010 level.  Fitch therefore
expects a slow but healthy deleveraging path for UC, with funds
from operations (FFO) adjusted leverage expected to go from 2x-
2.5x in 2012 to less than 1.9x in 2015.

Following a successful repayment of its bond in May 2012, UC
maintains sufficient liquidity to meet its upcoming bond maturity
in April 2013, supported by both a high amount of cash on its
balance sheet and available undrawn revolving lines from major
Russian banks.  The Stable Outlook is also supported by strong
free cash flow (FCF).  UC remained FCF positive in 2011, despite
a considerable increase in capital expenditures and a moderate
slowdown in working capital turnover.  Fitch expects FCF margin
to stay positive and within a range of 2.5%-4.5% of sales in
2012-13 (FY11: 1.9%).

Corporate governance issues remain a key credit concern for
Fitch, in particular increasing loans to related parties that
exceed inter-group borrowings.  This net creditor position is
treated by Fitch as shareholder-friendly, potentially adversely
affecting unsecured creditors (in case such loans to related-
parties exceed FCF consistently).  In addition, UC maintains a
significant portion of its cash in Guta-Bank (unrated). Fitch
also notes that the shareholders control the board (which does
not have any independent directors) thereby translating into a
potential misalignment of interests between shareholders and debt
holders.  Greater transparency and disclosure on the rest of the
group activities and intra-group transactions would help
alleviate governance concerns.  Currently these factors override
the strength in UC's financial metrics translating into one-notch
discount from its standalone rating at 'B+' level.


Negative: Future developments that could lead to negative rating
actions include:

  -- Material deterioration in FCF generation or any major debt-
     funded acquisition
  -- Sustained FFO adjusted leverage above 3.0x or FFO adjusted
     leverage above 2.5x if the share of foreign-currency debt
     reaches 50%
  -- Net increase in related-party investments plus a net
     decrease in related party borrowings altogether exceeding
     cash flow from operations minus maintenance capex.

Positive: Future developments that could lead to positive rating
actions include:

Subject to evidence of a standalone business model with reduced
inter-relationship with Guta Group, future developments that may,
individually or collectively, lead to a positive rating action
include: .

  -- Sustained FFO adjusted leverage below 1.7x for at least two
     consecutive years
  -- Maintenance of positive FCF above RUB1 billion annually.
  -- Liquidity score of more than 1.5x (cash, available committed
     lines and FCF for the next year divided by the amount of
     short-term debt commitments).


BANCO ESPANOL: Fitch Lowers Subordinated Debt Rating to 'BB+'
Fitch Ratings has affirmed Banco Espanol de Credito's (Banesto)
Long-term Issuer Default Rating (IDR) at 'BBB+', its Short-term
IDR at 'F2' and Support Rating at '2'.  The Outlook on the Long-
term IDR is Negative.  At the same time the agency has downgraded
Banesto's Viability Rating (VR) to 'bbb-' from 'bbb+' and has
removed the Rating Watch Negative (RWN) on the VR.

Fitch has also downgraded Banesto's preference shares to 'B' from
'BB' to reflect the notching from its implied standalone rating
as this instrument is subject to Banesto's individual capacity to
generate income and not that of its 89.95% shareholder, Banco
Santander (Santander; 'BBB+'/Negative).

A full list of rating actions is at the end of this comment.


Banesto's VR has been downgraded to reflect the effects of
Spain's recessionary environment on the bank's asset quality and
performance.  It also reflects Banesto's dependence on wholesale
funding sources, although the loans-to-retail derived funding has
been improving, largely as a consequence of loan deleveraging.

The affirmation of Banesto's Long-term IDR reflects Fitch's
expectation of a continued high probability of support from its
parent, Santander.  Santander's Long-term IDR is based on its VR
of 'bbb+' and is one notch above the sovereign rating based on
its geographically diversified business and resilient performance
to date


Banesto's IDRs and senior debt ratings are based on support from
Santander and not on Banesto's intrinsic strength as captured by
its VR.  Banesto's Long-term IDR is aligned with that of
Santander, given Fitch's view that it is part of Santander's core
banking business in Spain as well as its close integration with
the group, particularly in terms of IT systems.

The bank's IDRs are sensitive to any rating action on Santander
and, indirectly on the Spanish sovereign.  Banesto's IDRs could
be lower than Santander's if the latter were to reduce its stake
in in the bank considerably or if Banesto were to become less
integrated, which in Fitch's view is unlikely at the present


Banesto's VR reflects its good banking franchise in Spain,
consistently sound profitability, though weakened in 2012, and
adequate liquidity position and capital levels.  However, it also
reflects the weak Spanish economy, which has led to lower volumes
that have affected performance, and the effects on asset quality
of the collapse of the property sector.  The bank is consciously
deleveraging, particularly in real estate exposures. Real estate
exposures are below that of other Spanish peers' at 12% of total
real estate exposure (including foreclosed assets).

Banesto's VR is sensitive to an even more protracted and deeper
recessionary environment in Spain than currently assumed, which
could further affect profitability and asset quality, or an
unanticipated liquidity shock.


Banesto' subordinated debt is rated one notch below its VR and
its preferred stock is rated five notches below the VR in
accordance with Fitch's assessment of each instrument's
respective non-performance and relative loss severity risk
profiles.  The preference shares are notched two times for loss
severity and three times for non-performance risk. The ratings of
these instruments are primarily sensitive to any change in the VR
of Banesto.


Banesto Financial Products plc is a wholly owned financing
subsidiary of Banesto whose debt ratings are aligned with its
parent and whose ratings are sensitive to the same factors that
might drive a change in Banesto's IDR.

The rating actions are as follows:


  -- Long-term IDR: affirmed at 'BBB+'; Outlook Negative
  -- Short-term IDR: affirmed at 'F2'
  -- VR: downgraded to 'bbb-' from 'bbb+'; RWN removed
  -- Support Rating: affirmed at '2'
  -- Senior unsecured rating: affirmed at 'BBB+'
  -- Short-term debt rating: affirmed at 'F2'
  -- Subordinated debt: downgraded to 'BB+' from 'BBB'
  -- Preferred stock: downgraded to 'B' from 'BB-'
  -- Market-linked senior unsecured securities: affirmed at
  -- Mortgage covered bonds: unaffected

Banesto Financial Products plc:

  -- Senior unsecured rating: affirmed at 'BBB+'
  -- Short-term debt rating: affirmed at 'F2'

IBERCAJA BANCO: S&P Puts 'BB+' Counterparty Rating on Watch Neg.
Standard & Poor's Ratings Services placed its 'BB+' long-term
counterparty credit rating on Ibercaja Banco S.A. (iberCaja) on
CreditWatch with negative implications and affirmed its 'B'
short-term rating. "At the same time, we placed all issue ratings
on CreditWatch negative," S&P said.

"The CreditWatch placement follows iberCaja's shareholders'
announcement of a potential agreement to acquire Spain-based
Banco Grupo Cajatres (not rated), and reflects our view that the
acquisition could weaken iberCaja's standalone credit profile
(SACP), and in particular its credit risk profile. Approval from
Spanish and European authorities, and the general assemblies of
the savings banks that own iberCaja and Cajatres is still
pending. The agreement is also subject to approval by the
authorities overseeing Cajatres's restructuring plan and capital
support from the government, and the implementation of the
conditionality attached to state aid. We believe that the
acquisition could be concluded by the end of the first quarter of
2013," S&P said.

"We believe that the acquisition of Cajatres would reinforce
iberCaja's leading market position in its core markets in the
northern Spanish regions of Aragon and La Rioja, and the province
of Guadalajara. A merged group would also have strong market
shares in the regions of Castilla Leon and Extremadura. However,
the combined entity would account for less than 3% of the Spanish
banking system's loans and about 4% of its deposits as it would
still be smaller than large domestic peers," S&P said.

"We currently believe that iberCaja's asset quality and credit
loss experience is better than the system average. We understand
that the potential acquisition of Cajatres would take place after
the transfer of most of its real estate exposures to the Spanish
asset management company for assets from the restructuring of the
banking system. However, we think that the asset quality and the
size of Cajatres's remaining loan book, which we estimate
represented more than 30% of iberCaja's portfolio at the end of
June 2012, could potentially weaken our view of iberCaja's risk
position as 'strong,'" S&P said.

"We also think that if the acquisition went ahead our assessment
of iberCaja's capital and earnings would likely remain unchanged.
This is because we believe the transaction will probably have a
limited impact on iberCaja's regulatory capital ratios. iberCaja
is already taking specific measures to reinforce its capital --
prior to any acquisition -- to cover the higher minimum capital
requirements. Additionally, our current risk-adjusted capital
(RAC) ratio projection of 4%-4.5% by the end of 2013 provides a
cushion within the 3%-5% standard range of our 'weak' capital
assessment. However, iberCaja has not yet announced what form of
capital it will use to finance the transaction," S&P said.

"We also think that the impact of the acquisition on our
assessment of iberCaja's funding and liquidity would likely be
limited because of Cajatres's more balanced funding structure--
its loan to deposit ratio is better than iberCaja's. Moreover,
following the transfer of the real estate assets to the Spanish
asset management company, Cajatres will likely receive liquid
securities that are eligible for discount at the European Central
Bank (ECB; AAA/Stable/A-1+)," S&P said.

"We aim to resolve the CreditWatch placement on completion of the
transaction and after we review a complete set of business and
financial information on Cajatres and the combined group," S&P

"We will assess the impact of the acquisition on iberCaja's
financial profile, especially on its risk position. If as a
result we were to lower our assessment of iberCaja's SACP by one
notch, this could trigger a similar downgrade of the bank. If we
saw no negative impact on iberCaja's SACP, we could affirm the
ratings at their current level," S&P said.

"We might also affirm our ratings on iberCaja and remove them
from CreditWatch if the acquisition was not finally completed,
and if our view of iberCaja's SACP remained unchanged despite the
strategic challenges it faces in the increasingly consolidated
financial system," S&P said.

NCG BANCO: Fitch Maintains 'BB+' Long-Term Issuer Default Rating
Fitch Ratings has maintained NCG Banco, S.A.'s (NCG) Long-term
Issuer Default Rating (IDR) of 'BB+', Support Rating of '3' and
Support Rating Floor (SRF) of 'BB+' on Rating Watch Negative
(RWN) and downgraded its Viability Rating (VR) to 'f' from 'c'.

Rating Action Rationale

The downgrade of the VR reflects the recent European Commission
approval of the restructuring plan for NCG which calls for the
injection of EUR5.4 billion in capital by Spain's Fund for
Orderly Bank Restructuring (FROB) previous to burden sharing by
subordinated debt and preference shareholders is undertaken and
real estate assets are transferred to an asset management company
(Sareb). In Fitch's opinion, NCG has failed, and would have
defaulted had it not received extraordinary support.

NCG's IDRs and Support Ratings were placed on RWN on October 10,
2012, to reflect the fact that there was a risk that alternative
scenarios under orderly resolution by which some form of default,
or 'restricted default', under Fitch's definition and criteria,
could be undertaken. As the bank is undergoing restructuring,
this is no longer the case.

However, the RWN has been maintained on the Long-term IDR, the
Support Rating and the SRF to reflect the fact that NCG is being
forced to reduce its size significantly as a condition to
receiving capital assistance and will become less systemically
important.  Also, Fitch expects the propensity of the state to
support an entity that has already received substantial state
assistance to diminish in the future.  In addition to the EUR5.4
billion expected capital injection, NCG has already received
EUR3.6 billion in funds from the FROB.


NCG's Long-term IDR is at the SRF.  On the downside, NCG's IDRs,
Support Rating and SRF are sensitive to a downgrade of the
Spanish sovereign rating or to any change in Fitch's assumptions
around the strategic importance of this institution as well as
the propensity of the state to support the bank in the future.

Fitch expects to resolve the RWNs once it has been able to meet
with the bank's management and reassess the bank's credit profile
and its systemic importance following restructuring and


Once capital is injected into NCG, the agency will reassess the
banks VR and upgrade it to a level commensurate with its post-
support credit and financial profile.  The initial scope for this
upgrade is likely to be constrained by weak economic conditions
and still close relationship between sovereign and bank ratings.


NCG's subordinated debt and preference shares have been affirmed
at 'C' as these form part of the burden sharing of losses after
capital injection as per the Memorandum of Understanding signed
between the Spain and the Eurogroup on July 2012.

The rating actions are as follows:


  -- Long-term IDR: 'BB+', maintained on RWN
  -- Short-term IDR: affirmed at 'B', removed from RWN
  -- Viability Rating: downgraded to 'f' from 'c'
  -- Support Rating: '3' maintained on RWN
  -- Support Rating Floor: 'BB+', maintained on RWN
  -- Senior unsecured debt long-term rating: 'BB+', maintained on
  -- Senior unsecured debt short-term rating and commercial
     paper: affirmed at 'B' removed from RWN
  -- Subordinated lower tier 2 debt: affirmed at 'C''
  -- Subordinated upper tier 2 debt (ISIN: ES0214958045):
     affirmed at 'C'
  -- Preferred stock: affirmed at 'C'
  -- State-guaranteed debt: affirmed at 'BBB'


SAAB AUTOMOBILE: Swedish National Debt Office to Take Over
Katarina Gustafsson at Dow Jones Newswires reports that the
Swedish National Debt Office Wednesday said it has decided to
take ownership of Saab Automobile Parts AB, a unit of bankrupt
Swedish car maker Saab Automobile AB.

According to Dow Jones, the debt office has requested the Swedish
government to transfer the shares to the state-ownership division
of the ministry of finance.

The debt office became the largest creditor in the bankruptcy
estate of Saab, after the auto maker filed for bankruptcy in
December 2011, as it had issued guarantees to Saab Automobile AB
for a loan by the European Investment Bank in February 2010, Dow
Jones relates.  As a security for its claims, the debt office has
received pledges of shares in Saab Automobile Parts AB and the
tool company Saab Automobile Tools AB, Dow Jones discloses.

Since the bankruptcy of the troubled Swedish car maker, the parts
company has been owned by the bankruptcy estate, Dow Jones notes.

The takeover is expected to take a few weeks, Dow Jones says.

           About Saab Automobile AB and Saab Cars N.A.

Saab Automobile AB is a Swedish car manufacturer owned by Dutch
automobile manufacturer Swedish Automobile NV, formerly Spyker
Cars NV.  Saab Automobile AB, Saab Automobile Tools AB and Saab
Powertain AB filed for bankruptcy on Dec. 19, 2011, after running
out of cash.

On Jan. 30, 2012, more than 40 U.S.-based Saab dealerships filed
an involuntary Chapter 11 petition for Saab Cars North America,
Inc. (Bankr. D. Del. Case No. 12-10344).  The petitioners,
represented by Wilk Auslander LLP, assert claims totaling $1.2
million on account of "unpaid warranty and incentive
reimbursement and related obligations" or "parts and warranty
reimbursement."  Leonard A. Bellavia, Esq., at Bellavia Gentile &
Associates, in New York, signed the Chapter 11 petition on behalf
of the dealers.

The dealers want the vehicle inventory and the parts business to
be sold, free of liens from Ally Financial Inc. and Caterpillar
Inc., and "to have an appropriate forum to address the claims of
the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg

Saab Cars N.A. is the U.S. sales and distribution unit of Swedish
car maker Saab Automobile AB.  Saab Cars N.A. named in December
an outside administrator, McTevia & Associates, to run the
company as part of a plan to avoid immediate liquidation
following its parent company's bankruptcy filing.

On Feb. 24, 2012, the Court granted Saab Cars NA relief under
Chapter 11 of the Bankruptcy Code.

Donlin, Recano & Company, Inc., was retained as claims and
noticing agent to Saab Cars NA in the Chapter 11 case.

On March 9, 2012, the U.S. Trustee formed an official Committee
of Unsecured Creditors and appointed these members: Peter Mueller
Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of
North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and
Delaware Motor Sales, Inc.  The Committee tapped Wilk Auslander
LLP as general bankruptcy counsel, and Polsinelli Shughart as its
Delaware counsel.

U N I T E D   K I N G D O M

BI COMPOSITES: In Administration, 20 Jobs at Risk
Express & Star reports that BI Composites has gone into
administration putting 20 jobs at risk.

The problems at BI Composites are largely being blamed on a
GBP4 million pension deficit, according to Express & Star.

Kevin Murphy, Craig Povey and Brian Hamblin, partners and
restructuring specialists at national accountancy firm Chantrey
Vellacott DFK, have been appointed administrators.

The report relates that Mr. Hamblin, partner at Chantrey
Vellacott DFK's Birmingham office, said BI Composites was a
strong business and was trading as normal as a search for a buyer
is underway.

The company is a wholly owned subsidiary of Coventry-based BI
Group plc, which is trading as normal and is not affected by the
administration, the report says.

BI Composites is a manufacturer firm based in Cannock.  It
distributes molded components made from composite materials. It
has a site in Halesowen.

DECO 12: Fitch Cuts Rating on GBP0.7-Mil. Class F Notes to 'Dsf'
Fitch Ratings has downgraded DECO 12 - UK 4 p.l.c.'s class F
notes due January 2020, as follows:

  -- GBP0.7m class F (XS0289644980) downgraded to 'Dsf' from
     'Csf'; RE 0%

The downgrade reflects the note loss allocation which occurred on
the October interest payment date (IPD), as a result of the
crystallization of losses following the sale of the last property
securing the Industrial Realisation (Famborough) loan.

The EUR382,751 of losses has led to a partial write-down of the
class (34%) F notes.

HUGHES GROUP: In Administration, Almost 150 Jobs Lost
Ballymoney Times reports that Joseph Hughes Group has gone into
administration cutting almost 150 jobs in the process.

Administrators have been called to a number of companies within
the Dunloy-based, Joseph Hughes Group, according to Ballymoney

The report relates that the Hughes group said its position was
"untenable" due to the Patton Group collapse.

Companies included in the administration are Joseph Hughes
Painting Contractors Limited and JH Industrial Cleaning Services
Limited, the report discloses.

The report relays that joint Administrator Stephen Cave said the
group had "suffered growing cash flow difficulties" as a direct
result of the downturn in the construction sector.

"A Company Voluntary Arrangement was already in place, but the
collapse of Pattons has made the group's position untenable and
it can no longer continue to trade . . . .  We regret that we
have this morning, advised the workforce that all 147 of staff
will be made redundant, with immediate effect," the report quoted
Mr. Cave as saying.

The group's businesses were established in 1977 and are based in
Dunloy with offices in Belfast, collectively employing 147 staff,
who provide specialist services, primarily to the construction

OBEL TOWER: KMPG Takes Over Ireland's Tallest Building
The Score reports that the Obel Tower in Belfast, Ireland's
tallest building, has been taken over by administrators according
to three appointment of administrator notices published on
Dec. 1, 2012.

The Score says the notices were published on The Belfast Gazette
website, which is the government publication in Northern Ireland
for insolvency and company law.

According to the report, administrators from KPMG have been
appointed to Obel Ltd, Obel Offices Ltd and Donegall Quay Ltd,
the three companies which control the 28-storey building after
the companies applied for insolvency.

The report relates that financial accounts filed last year for
Donegall Quay showed the company owed Bank of Scotland Ireland
more than GBP51 million.

The sky scraper, located a Donegall Quay was built in 2005 and at
a cost of GNP60 million.  Measuring 85 metres in height, the
tower has dominated the Belfast skyline ever since and remains
Ireland's tallest building, The Score says.

THOMAS COOK: Fitch Cuts Long-Term Foreign Currency IDR to 'B-'
Fitch Ratings has downgraded Thomas Cook Group plc's (TCG) Long-
term foreign currency Issuer Default Rating (IDR) and senior
unsecured rating to 'B-' from 'B'.  The Outlook is Stable.

The downgrade reflects Thomas Cook plc's weaker trading
performance and credit metrics (adjusted net debt/ EBITDAR at
about 6.1x at FYE September 2012) which was higher than initially
anticipated.  Fitch considers that TCG currently has the features
of a 'B-' rated credit, namely its leverage, a limited margin of
safety and exposure to further deterioration in the business and
therefore relatively high execution risks in tackling its medium
term refinancing risk.  The Stable Outlook reflects Fitch's
expectation that TCG's performance will stabilize thanks to
management initiatives to improve profitability (yield
management, rationalization of its distribution and airline
capacity), and better free cash flow generation that should lead
to lower leverage in FY13.  However, Fitch expects lease-adjusted
net debt (including GBP700 million for working changes)/EBITDAR
above the threshold of 5.5x for FY13.


Competitive, Low-Margin Industry:

Competition in the sector remains intense, notably from direct
competitors, low-cost airlines in Germany and the rapid
development of online companies.  TCG is implementing efficiency
measures (yield management, optimization of its airlines
'capacity and operational efficiencies) in order to turn around
its UK and French businesses.  Fitch believes that benefits from
these efficiency measures should start materializing in FY13.

Fuel and FX Risks:

TCG's costs are exposed to currency fluctuations, through a
strengthening of the US dollar or euro against the pound, and to
the jet fuel price.  The group manages this risk internally
through hedging instruments.  TCG has incurred higher jet fuel
costs (GBP110 million) in FY12 than in FY11, due to higher jet
fuel prices.  This has impacted the group's operating profit in
FY12.  Fitch expects a more moderate negative impact on fuel
costs in FY13 due to a slight increase in jet fuel prices and
reduced airline capacity.

Asset Disposals:

The group has divested businesses (obtaining total proceeds of
GBP122.7 million) and carried out some sale and lease-back
transactions on its aircraft (GBP189.4 million) in order to
improve liquidity and stabilize its debt level in FY12.  Fitch
expects moderate asset divestments in FY13 and therefore bulk of
the future de-leveraging will arise from profit enhancement

Exceptional Costs:

The group's reported exceptional cost was GBP129.9 million at
FY12. Although lower than in FY12, Fitch expects TCG to incur
still significant exceptional costs in FY13 due to its
transformation plan for the UK, Russia and North America.
Management has publicly guided towards a reduction in exceptional
costs by about GBP50 million which Fitch considers to be

Seasonality and Leverage:

Working-capital cash outflow increases in the September to
December period due to it being a traditionally quieter holiday
season.  For instance, the group's adjusted net debt to EBITDAR
leverage was 3.9x in September 2011 and increased to about 5x at
end-December 2011.  Fitch expects TCG's credit metrics in 2013 to
improve due to lower costs (personnel, restructuring benefit from
the UK, West Europe and Russia), improved working capital
management and lower exceptional costs.

Bank Debt Maturity Extension and Liquidity:

On May 5, 2012 the group announced that it had agreed a new
financing package with its lenders that extends the maturity of
its financing until 31 May 2015 and provides further stability
for the business.  Under the amended terms there will be no fixed
repayments and the company will now retain the proceeds of
certain disposals.  As of September 2012, the group's liquidity
headroom under the banking facilities was GBP981 million,
compared to GBP821m as at September 2011.

The Recovery Rating of 'RR4':

Fitch's recovery ratings assigned to the bonds indicates expected
recoveries in the range of 31%-50%.  These recovery expectations
are driven by an estimated post-restructuring EBITDA of EUR376m
(similar to FYE11), which Fitch believes should be sustainable,
and a going concern Enterprise value/EBITDA multiple of 4x.


Positive: Future developments that could lead to positive rating
actions include:

  -- An improvement of the group's operating margin towards 3%, a
     restoration of the UK trading profitability and reduced
     leverage such as a lease-adjusted EBITDAR / gross interest
     +rents above 2x and a lease-adjusted net debt / EBITDAR
     below 4x or lease-adjusted net debt (including GBP700m for
     working capital changes)/EBITDAR below 5x would be positive
     factors for the ratings.

  -- Additional factors are related to the group's ability to
     generate positive free cash flow (after restructuring and
     exceptional costs), significant reduction in gross debt and
     good visibility on the group's 2015 debt refinancing plan.

Negative: Future developments that could lead to negative rating
action include:

  -- A further deterioration of TCG's group or UK operating
     profit margin and higher leverage such as lease-adjusted net
     debt (including GBP700m for working capital changes)/EBITDAR
     above 6x and liquidity headroom below GBP200m would have a
     negative impact on the rating.



  -- Long-term IDR: downgraded to 'B-' from 'B'; Outlook Stable
  -- Senior Unsecured Debt: downgraded to 'B-' from 'B'; Outlook

WELLINGTON PUB: Fitch Lowers Rating on Class B Notes to 'B-'
Fitch Ratings has downgraded Wellington Pub Company plc's fixed
rate notes, as follows:

  -- GBP128.4m class A fixed-rate notes due 2029: downgraded to
     'B+' from 'BB'; Negative Outlook
  -- GBP33.7m class B fixed-rate notes due 2029: downgraded to
     'B-' from 'B'; Negative Outlook

The downgrades are driven by further declines in business
performance as demonstrated by rising rental arrears, growing
numbers of lease forfeitures as well as pubs not let on long
leases.  The decline in performance is compounded by limited
scope for operational change and structural weaknesses.  The
Negative Outlook reflects the agency's view that Wellington's
performance remains challenged by macroeconomic factors such as
the uncertainty about the jobs' market, the ongoing change in
consumer behavior, especially affecting wet-led pubs (estimated
at ca. 80% of the portfolio), further exposure to alcohol
taxation, the continued strength of the off-trade, all coinciding
with a large number of leases coming up for renewal in 2013.

The agency's base case free cash flow (FCF) debt-service coverage
ratio (DSCR) (minimum of both the average and median DSCRs to the
notes' legal final maturity) for the class A and B notes is c.
1.23x and just under 1.0x, respectively.  The minimum FCF DSCR
for class A in Fitch's base case is c. 1.15x and is expected to
occur towards the end of the transaction's life.

Fitch's FCF forecasts only give credit to operating cash flows.
The agency's forecasted DSCRs will be constrained by modest
declines in EBITDA, mainly due to a portion of lease expiries
that are assumed not to be renewed on long leases, rental value
declines and repossessions.  FCF is forecast to decline more than
EBITDA as Fitch understands that Wellington is expected to resume
corporate income tax payments from FY13 onwards after group loss
carry forwards have recently been exhausted.  However, the
transaction benefits from a flat, annuity debt profile for class
A and even a downward sloping profile for class B.

A decline in Fitch's base case FCF DSCR metrics to anything
substantially below 1.20x (minimum FCF DSCR of 1.15x) and 0.95x
for the class A and B notes respectively (caused by any
significant and continued decline in performance) could result in
a downgrade of the notes.

The lease renewal process remains an area of concern for Fitch as
a significant portion of the portfolio is due for renewal over
the next three years -- more than 16% of all leases are set to
expire by 2013.  Wellington continues to experience a shortage of
experienced and financially strong tenants looking to enter
substantive agreements for residential pubs, and as a result, 159
pubs are (as per September 2012 reporting) not on long leaseholds
(up from 102 pubs at the same time in 2011), of which 55 are
vacant.  During the four quarters up to September 2012 73
properties have been repossessed (up from 38 properties the year
before) -- the highest number within any four quarter period thus
far.  More are expected in the next few quarters, partly due to
expiring leases but also rising rental arrears deemed non-
recoverable. Almost half of the portfolio is currently (at least
in parts) in arrears with its rental payments by more than 180
days (vs. just about one-third last year).  If a pub becomes
vacant it takes on average 10 months to find a replacement
tenant, although some pubs have remained closed for much longer.
Consequently the closed house costs (e.g. security, legal,
utilities, business rates, etc.) have remained high.

TTM rental income dropped only mildly by 1.4% with TTM EBITDA
down by 2.3%.  However, there is a risk that if the 63 pubs on
temporary agreements closed (or a proportion of them) as well as
the 57 leases currently in the process of being renegotiated did
not extend/renew and the rental arrears grew further, revenues
would shrink, operating costs increase and EBITDA would be
further pressured.

Another area of concern is the state of repair of the portfolio.
All substantive agreements are on full repairing and insuring
(FRI) leases, placing the obligation to maintain the properties
on the tenant.  However, with tenants struggling to pay their
rent (as indicated by the high delinquencies) the asset manager
estimates that about 80% of the portfolio is suffering from some
degree of deferred maintenance.  Wellington tends to spend
comparatively small amounts of capex on currently vacant

Wellington is a securitization of rental income from 805 free-of-
tie pubs predominantly located in residential areas mainly in the
south-east of the UK.  As the landlord only receives a dry rent,
there is limited visibility of the trading performance of the
pubs. Consequently, Wellington is less able to estimate the
affordability of the tenants' rental payment and has no influence
in the publicans' offering (e.g. encouraging stronger focus on
food, etc.).

Unlike traditional whole business securitizations (WBS) featuring
an issuer-borrower loan structure, the transaction's pubs are
directly owned by the bond issuer.  The operational risk is
mitigated to some extent by Wellington merely being a property
holding company with the actual management of the estate
outsourced to Criterion Asset Management Limited.  However, in
the agency's view, the transaction's risk profile is negatively
impacted by the structure mainly due to a low liquidity support
(only a liquidity reserve account covering around four months of
debt service) and the lack of a financial covenant which in other
WBS transactions gives bondholders more control by being able to
appoint an administrative receiver well ahead of a payment
default.  As the liquidity reserve is not tranched among the
class A and B notes, it could potentially be depleted by drawings
to support the subordinated class B notes with nothing left to
support the class A notes if needed.  This makes the class A
notes more vulnerable than suggested by an average or median DSCR
but gives greater emphasis to minimum DSCR forecasts.

Fitch used its UK whole business securitization criteria to
review the transaction's structure, financial data and cash flow
projections and to stress-test each of the rated instruments.


* EUROPE: Fitch Says Companies Likely to Default Again
Some of the companies that defaulted in 2010 with high recovery
rates for loan investors are likely to default again, Fitch
Ratings says.  This time more debt will be wiped off their
capital structures.

The recoveries on the first default do not reflect accurately the
true value of the defaulted and restructured debts for many low-
rated European leveraged borrowers.  This is reflected in our
rating assumptions about expected recoveries, which have so far
been lower than the observed recoveries for senior secured loans.
We expect the final recovery rates after further restructuring to
be more in line with our assumptions.

Our view is that many of these defaulted borrowers remain
vulnerable to renewed default.  For example, since 2008 in Europe
35 of the 57 leveraged borrowers that Fitch still has Credit
Opinions on after their default have credit opinions of 'CCC*' or
'CC*' after restructuring.  Five of those borrowers defaulted
again, within an average of 16 months of their restructuring.

There have also been serial defaulters in the US.  Our analysis
in August showed that 50 issuers in the Fitch US High-Yield
Default Index have defaulted twice or more since 2000.

The main drivers of the repeated defaults are failures to resolve
challenges to the business model, often operating cost issues, or
to reduce debt to more sustainable levels.  In Europe, the flurry
of light restructurings in 2009 and 2010 often included waiving
covenants with some cash injection, but without sufficient debt
write-offs or easing of the interest burden.

Many of the weakest borrowers in Europe may be forced to write
off a substantial part of their existing debt when they reach
their refinancing deadline, which for a large number of borrowers
is 2014.  The absence of a primary loan market in Europe for the
low-credit quality borrowers means we expect them to find
refinancing challenging.

* Upcoming Meetings, Conferences and Seminars
Dec. 4-8, 2012
      ABI/SJUSL Mediation Training Symposium
         St. John's University, Queens, N.Y.
            Contact:   1-703-739-0800;

Jan. 24-25, 2013
      Rocky Mountain Bankruptcy Conference
         Four Seasons Hotel Denver, Denver, Colo.
            Contact:   1-703-739-0800;

Feb. 7-9, 2013
      Caribbean Involvency Symposium
         Eden Roc Renaissance, Miami Beach, Fla.
            Contact:   1-703-739-0800;

Feb. 17-19, 2013
      Advanced Consumer Bankruptcy Practice Institute
         Charles Evans Whittaker Courthouse, Kansas City, Mo.
            Contact:   1-703-739-0800;

Feb. 20-22, 2013
         Four Seasons Las Vegas, Las Vegas, Nev.
            Contact:   1-703-739-0800;

Apr. 10-12, 2013
      TMA Spring Conference
         JW Marriott Chicago, Chicago, Ill.

Apr. 18-21, 2013
      Annual Spring Meeting
         Gaylord National Resort & Convention Center,
         National Harbor, Md.
            Contact:   1-703-739-0800;

June 13-16, 2013
      Central States Bankruptcy Workshop
         Grand Traverse Resort, Traverse City, Mich.
            Contact:   1-703-739-0800;

July 11-13, 2013
      Northeast Bankruptcy Conference
         Hyatt Regency Newport, Newport, R.I.
            Contact:   1-703-739-0800;

July 18-21, 2013
      Southeast Bankruptcy Workshop
         The Ritz-Carlton Amelia Island, Amelia Island, Fla.
            Contact:   1-703-739-0800;

Aug. 8-10, 2013
      Mid-Atlantic Bankruptcy Workshop
         Hotel Hershey, Hershey, Pa.
            Contact:   1-703-739-0800;

Aug. 22-24, 2013
      Southwest Bankruptcy Conference
         Hyatt Regency Lake Tahoe, Incline Village, Nev.
            Contact:   1-703-739-0800;

Oct. 3-5, 2013
      TMA Annual Convention
         Marriott Wardman Park, Washington, D.C.

Nov. 1, 2013
      NCBJ/ABI Educational Program
         Atlanta Marriott Marquis, Atlanta, Ga.
            Contact:   1-703-739-0800;

Dec. 2, 2013
      19th Annual Distressed Investing Conference
          The Helmsley Park Lane Hotel, New York, N.Y.
          Contact:   240-629-3300 or

Dec. 5-7, 2013
      Winter Leadership Conference
         Terranea Resort, Rancho Palos Verdes, Calif.
            Contact:   1-703-739-0800;

The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday.  Submissions via
e-mail to are encouraged.


Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged.  Send announcements to

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through  Go to order any title today.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA.  Valerie U. Pascual, Marites O. Claro, Rousel Elaine T.
Fernandez, Joy A. Agravante, Ivy B. Magdadaro, Frauline S.
Abangan and Peter A. Chapman, Editors.

Copyright 2012.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$625 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 240/629-3300.

                 * * * End of Transmission * * *