/raid1/www/Hosts/bankrupt/TCREUR_Public/130102.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
Wednesday, January 2, 2013, Vol. 14, No. 1
Headlines
B E L G I U M
DEXIA SA: EU Commission Authorizes "Orderly Resolution"
* BELGIUM: Records 11,083 Corporate Bankruptcies in 2012
G E R M A N Y
SILENUS NO. 25: S&P Downgrades Rating on Class E Notes to 'B'
I C E L A N D
GLITNIR BANK: Ex-CEO Gets Nine Months in Prison for Fraud
LANDSBANKI ISLANDS: PwC to "Vigorously Defend" Suit Over Collapse
I T A L Y
CLARIS FINANCE: S&P Lowers Rating on Class B Notes to 'BB+'
LUCCHINI: To Halt Furnace Temporarily, Requests Receivership
K A Z A K H S T A N
FORTEBANK JSC: S&P Assigns 'kzBB' National Scale Rating
L U X E M B O U R G
HARVEST CLO II: S&P Raises Ratings on Two Note Classes to 'BB+'
M A C E D O N I A
* MACEDONIA: Moody's Comments on B1/B2-Rated Municipalities
N E T H E R L A N D S
EMF-NL 2008-1: S&P Lowers Rating on Class D Notes to 'CCC'
EUROSAIL-NL 2007-1: S&P Lowers Rating on Class E1 Notes to 'CCC'
PLAZA CENTERS: S&P Cuts Long-Term Corp. Credit Rating to 'B-'
TELECONNECT INC: Ralph Kroner Appointed to Board of Directors
R U S S I A
ALFA-BANK OJSC: S&P Raises LT Issuer Credit Rating to 'BB+'
BALTIYSKIY BANK: S&P Assigns 'B-/C' Counterparty Credit Ratings
ROSGOSSTRAKH OAO: S&P Assigns 'BB-' Counterparty Credit Rating
S E R B I A & M O N T E N E G R O
AGROEXPORT: Court Commences Liquidation Procedure
S P A I N
ABENGOA SA: S&P Puts 'B+' Issuer Credit Rating on Watch Negative
AYT HIPOTECARIO: S&P Lowers Rating on Class C Notes to 'B (sf)'
BBVA FINANZIA 1: S&P Cuts Rating on Class C Notes to 'CCC-'
T U R K E Y
PETKIM PETROKIMYA: Fitch Affirms 'B+' IDR; Outlook Negative
U N I T E D K I N G D O M
DIGITAL YACHT: In Administration After Difficulties With Supplier
EYECONOMY LIMITED: Media Corp Places Firm Into Administration
LONMIN PLC: Chief Executive Steps Down Due to Illness
MF GLOBAL: U.S. and UK Units Reach Key Agreements
MINERALS LTD: S&P Cuts Long-Term Corp. Credit Rating to 'B-'
SKETCHLEY GRANGE: In Administration, HMRC Gives Winding Up Order
SWIFT HORSMAN: In Administration, Cuts 220 Jobs
THIERRY'S: In Administration, Creditors Prepare Claims
WICKHAM VINEYARD: Falls Into Administration on Poor Harvest
*********
=============
B E L G I U M
=============
DEXIA SA: EU Commission Authorizes "Orderly Resolution"
-------------------------------------------------------
Aoife White and Stephanie Bodoni at Bloomberg News report that
Belfius Bank NV, nationalized by the Belgian government, will be
able to refocus on its core banking and insurance businesses as
part of a restructuring plan approved by European Union
regulators that will wind down most of Dexia SA.
According to Bloomberg, the EU regulator in Brussels said on
Dec. 28 in a statement that the European Commission authorized
the "orderly resolution" of the Dexia group, the sale of its
refinancing unit for French local authorities, known as Dexia
Municipal Agency, and the restructuring of Belfius.
Dexia shareholders last week voted to continue the company's
activities, approving a EUR5.5 billion (US$7.25 billion) capital
increase by the Belgian and French governments and avoiding a
default on EUR386.5 billion of debt, Bloomberg relates. Belgium
in 2011 bought the local consumer-banking unit, now called
Belfius, Bloomberg recounts.
State aid for Belfius "is limited to the minimum necessary to
enable its return to long-term viability," Bloomberg quotes the
EU as saying. Belfius "will not distribute profits in order to
reinforce its regulatory capital, it will reduce risky business
lines and will refocus on its core markets of financial services
to the public and quasi-public sector as well as retail and
insurance businesses."
The EU approval also allows Dexia to receive state guarantees of
EUR85 billion and the recapitalization from France and Belgium,
Bloomberg notes. The bank, whose shares have lost almost all
their value, reported a loss for the third quarter of EUR1.23
billion, Bloomberg discloses.
Dexia SA is a Belgium-based banking group with activities
principally in Belgium, Luxembourg, France and Turkey in the
fields of retail and commercial banking, public and wholesale
banking, asset management and investor services. In France,
Dexia Bank focuses on funding public sector bodies and providing
financial services to local government. In Luxembourg, Dexia
operates in two main areas: commercial banking (for personal and
professional customers) and private banking (for international
investors). In Turkey, Dexia is involved in retail and
commercial banking and offers services to ordinary account
holders, business and local public sector customers and
institutional clients. The Company operates through its
subsidiaries, such as Dexia Credit Local, DenizBank, Dexia
Credicop, Dexia Sabadell, Dexia Kommunalbank Deutschland, Dexia
Asset Management, among others.
* BELGIUM: Records 11,083 Corporate Bankruptcies in 2012
--------------------------------------------------------
Kuwait News Agency reports that some 11,083 Belgian companies
went bankrupt in 2012 and the number of bankruptcies is expected
to increase still further this year due to the economic crisis,
According to KUNA, one in 82 companies in Belgium went bust last
year. In December alone, a total of 951 companies went under,
KUNA notes.
The bankruptcies resulted in the loss of over 22,000 jobs in the
country, KUNA discloses.
=============
G E R M A N Y
=============
SILENUS NO. 25: S&P Downgrades Rating on Class E Notes to 'B'
-------------------------------------------------------------
Standard & Poor's Ratings Services EUR lowered its credit ratings
on Silenus (European Loan Conduit No. 25) Ltd.'s class B, C, D,
and E notes, and affirmed its ratings on the class A, F, and G
notes. "At the same time, we removed our ratings on classes B, C,
D, and E from CreditWatch negative," S&P said.
"On Dec. 6, 2012, we placed on CreditWatch negative our ratings
on Silenus (ELOC No. 25)'s class B, C, D, and E notes following
an update to our criteria for rating European commercial
mortgage-backed securities (CMBS) transactions," S&P said.
"EUR's rating actions follow our review of the credit quality of
the eight remaining underlying loans in the pool under our
updated criteria for European CMBS transactions. We have
generally revised downward our view on the properties backing the
loans. Factors affecting our opinion of the loans and underlying
assets include market conditions, declining lease lengths, and
impending loan maturities. As a consequence, we anticipate a
number of the loans in the pool will incur losses," S&P said.
CREDIT QUALITY
"The eight remaining loans in this transaction are secured by 123
properties, predominantly office and retail premises, across
Germany, Italy, and France. Three of the loans left in the
transaction are currently specially serviced loans. These loans
represent about 29% of the aggregate loan amount. Although the
remaining five loans are performing, we consider some are at risk
of being transferred to special servicing, given their upcoming
maturities and our view that the difficulty of refinancing them
has increased," S&P said.
"In August 2012, the servicer reported a weighted-average
securitized loan-to-value (LTV) ratio of 71.08%. We consider that
the LTV ratio reported does not reflect current property market
conditions and is unlikely to adequately address the risk of
principal losses in this transaction in EUR's market. Our base-
case scenario indicates that we expect five of the eight
remaining underlying loans, representing 66% of the loan pool, to
be at risk of principal losses," S&P said.
"Taking into account our review of the deteriorating performance
of the remaining eight loans, we consider that the risk of losses
has significantly increased. Our analysis indicates that the
class E notes and below are becoming more vulnerable to principal
losses," S&P said.
"We consider that the available credit enhancement to the class D
notes and above are no longer sufficient to cover asset-credit
risk at the current rating levels," S&P said.
"Consequently, we consider that the notes' creditworthiness has
deteriorated," S&P said.
The three largest loans together account for 72% of the total
securitized loan pool balance.
THE EUROCASTLE RETAIL D PORTFOLIO LOAN (26.65% OF THE POOL BY
LOAN BALANCE)
"The Eurocastle Retail D Portfolio Loan is the largest loan
outstanding within the transaction. The loan was originated in
May 2006 and is currently secured against 63 non-high-street
retail outlets, predominantly supermarket units located
throughout Germany," S&P said.
"The current whole loan balance is EUR147,556,090 and the
maturity date is May 2016; it represents the longest-dated loan
maturity within the transaction. The remaining weighted-average
lease term as of August 2012 is below that of the remaining loan
term," S&P said.
"In August 2012, the servicer reported a securitized LTV ratio of
76.63% and a secured interest coverage ratio (ICR) of 1.76x, the
latter down from 1.90x at closing," S&P said.
"The underlying properties have not been revalued since an
original 2006 valuation at loan origination. The loan is
interest-only and, as such, the principal balance remains
unchanged from issuance. Following considerable property market
declines since 2006, we consider that the loan will likely suffer
principal losses," S&P said.
THE ORAZIO LOAN (26.16% OF THE POOL BY LOAN BALANCE)
"This loan is backed by a portfolio of properties in Naples,
Rome, and Milan, as well as 41 retail assets in secondary,
northern Italian cities. Overall, the portfolio has a strong
tenant base and current vacancy levels are below 1%," S&P said.
"The loan started as a fixed-rate facility with no scheduled
amortization. Instead, amortization was subject to a requirement
to meet specific LTV covenant triggers yearly, throughout the
loan term. The original business plan was to sell down the
portfolio so as to reduce the LTV ratio throughout the loan term
but no properties have been sold to date," S&P said.
"The loan was transferred to special servicing on May 6, 2011,
due to a breach of the LTV ratio covenant. From Jan. 31, 2012, a
change to Italian fund regulations resulted in the sponsor fund
being placed into liquidation. The resolution will be managed by
the borrower which must liquidate the assets by January 2017.
Sales agents have recently been appointed for the entire
portfolio," S&P said.
In August 2012, the servicer reported a securitized LTV ratio of
82.18%, and a securitized ICR of 1.31x.
"We anticipate that a sale of the assets, particularly those
considered secondary, will be particularly difficult to
facilitate given current property market conditions. As of August
2012, the weighted-average remaining lease term for the assets
was 2.16 years," S&P said.
"As a result of the above loan- and asset-level conditions, we
consider that the securitized loan will likely suffer principal
losses," S&P said.
TISHMAN MUNICH ELISENHOF LOAN (19.24% OF THE POOL BY LOAN
BALANCE)
"The whole loan has an outstanding balance of EUR124,117,000, of
which EUR106,517,000 represents the senior securitized element.
The subordinated portion of the whole loan (the B-note) does not
form part of the securitization," S&P said.
"The Tishman Munich Elisenhof Loan is secured against the
Elisenhof building, a multifunctional retail and office complex
in the city center of Munich. The property is considered to be in
a good office location, on the edge of the CBD directly opposite
the main Munich railway station," S&P said.
The main tenant within the building is Landeshauptstadt Munich
(the City of Munich), which provides 15.5% of the current rental
income. The remaining weighted-average lease term of the asset is
4.14 years.
The loan has a maturity date of February 2014. In August 2012,
the servicer reported a securitized LTV ratio of 78.84% and a
securitized ICR of 1.15x.
"We consider that whole loan refinancing may be difficult to
achieve if current market conditions persist, although we do not
currently anticipate principal losses on this loan," S&P said.
"Silenus (ELOC No. 25) is a true sale CMBS transaction, which
closed in March 2007 with a note balance of EUR1.245 billion. The
underlying pool initially held 16 loans secured on real estate
assets in Germany, Italy, and France. On the most recent note
interest payment date, eight loans remained outstanding against a
current note balance of EUR553.7 million. Eight loans have repaid
since closing, including two loans which repaid in full at the
November 2012 payment date," 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 mechanism 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
Silenus (European Loan Conduit No. 25) Ltd.
EUR1.246 Billion Commercial Mortgage-Backed Variable- And
Floating-Rate Notes
Class Rating
To From
Ratings Lowered and Removed From CreditWatch Negative
B BBB+ (sf) A (sf)/Watch Neg
C BB+ (sf) BBB+ (sf)/Watch Neg
D BB- (sf) BBB- (sf)/Watch Neg
E B (sf) BB- (sf)/Watch Neg
Ratings Affirmed
A A (sf)
F CCC- (sf)
G D (sf)
=============
I C E L A N D
=============
GLITNIR BANK: Ex-CEO Gets Nine Months in Prison for Fraud
---------------------------------------------------------
Richard Milne and Josephine Cumbo at The Financial Times report
that Larus Welding, the former chief executive of Glitnir, which
was Iceland's third-largest bank before its collapse in October
2008, was on Friday sentenced to nine months in prison for fraud,
although six months were suspended for two years.
The trial marks the start of prosecutions brought in Iceland
against bankers after the collapse of its three largest lenders
forced the Nordic island into an international bailout following
their massive expansion leading up to the 2008 financial crisis,
the FT notes.
Iceland is seeking "national reconciliation", in the words of its
prime minister, through an in-depth criminal investigation by a
special prosecutor of the events that led to the demise of the
three banks, which in turn brought down Iceland's government and
much of its economy, the FT discloses.
Gudmundur Hjaltason, Glitnir's former head of corporate finance,
was also found guilty in the case, in which prosecutors said they
had in early 2008 approved a loan to a company that had a stake
in the bank outside the usual decision-making process, eventually
leading to a loss of about EUR54 million, the FT relates.
The special prosecutor is examining dozens of cases and has
already this year indicted the former chief executive and
chairman of Kaupthing as well as Jon Asgeir Johannesson, the best
known of Iceland's corporate raiders who at one time owned
several leading UK retailers, the FT says. According to the FT,
Mr. Welding was also indicted alongside Mr. Johannesson before
Christmas in connection with another loan Glitnir made shortly
before its demise.
About Glitnir Banki
Headquartered in Reykjavik, Iceland, Glitnir banki hf --
http://www.glitnir.is/-- offers an array of financial services
to corporation, financial institutions, investors and
individuals.
Judge Stuart Bernstein of the U.S. Bankruptcy Court for
the Southern District Court of New York granted Glitnir
permission to enter into a proceeding under Chapter 15 of the
U.S. bankruptcy code on January 6, 2008.
LANDSBANKI ISLANDS: PwC to "Vigorously Defend" Suit Over Collapse
-----------------------------------------------------------------
Richard Milne and Josephine Cumbo at The Financial Times report
that the UK arm of PricewaterhouseCoopers, the global accounting
group, said on Dec. 29 that it would "vigorously" defend a
multimillion-pound legal action relating to the collapse of
Landsbanki.
Landsbanki was one of several Icelandic banks to be swept up in
the financial crisis of 2008, and its failure affected hundreds
of thousands of UK savers who had deposits with its internet
banking subsidiary, Icesave, the FT recounts.
It emerged that the Landsbanki winding-up board is taking legal
action against not only PwC in Iceland but also PwC in the UK
over the bank's failure, the FT discloses.
According to reports, the winding-up board is seeking an
estimated GBP400 million for damages caused by incorrect and
misleading accounting of Landsbanki from mid-2007 until the
collapse of the bank in October 2008, the FT notes.
The writ, lodged in the Reykjavik County Court, has not yet been
published, but the legal action is expected to be heard in 2013,
the FT says.
According to the FT, PwC said on Dec. 29 that the inclusion of
its UK arm in the legal action was "both misguided and without
any basis".
"PwC UK were not the auditors of the claimant," the FT quotes the
accounting group as saying. "PwC UK will, of course, vigorously
defend its position if this matter ever proceeds."
About Landsbanki Islands
Landsbanki Islands hf, also commonly known as Landsbankinn in
Iceland, is an Icelandic bank. The bank offered online savings
accounts under the "Icesave" brand. On October 7, 2008, the
Icelandic Financial Supervisory Authority took control of
Landsbanki and two other major banks.
Landsbanki filed for Chapter 15 protection on Dec. 9, 2008
(Bankr. S.D. N.Y. Case No.: 08-14921). Gary S. Lee, Esq., at
Morrison & Foerster LLP, represents the Debtor. When it filed
for protection from its creditors, it listed assets and debts of
more than US$1 billion each.
=========
I T A L Y
=========
CLARIS FINANCE: S&P Lowers Rating on Class B Notes to 'BB+'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'BB+ (sf)' from
'BBB- (sf)' and removed from CreditWatch negative its credit
rating on Claris Finance 2006 S.r.l.'s class B notes. "Our
ratings on the class A1 and A2 notes remain unaffected by the
rating actions," S&P said.
"The rating actions follow our Dec. 20, 2012 lowering to 'BB+'
from 'BBB-' of our long-term counterparty rating on Veneto Banca
S.C.P.A. (BB+/Negative/B) -- the liquidity guarantee provider for
Claris Finance 2006," S&P said.
"On Sept. 3, 2012, we placed our 'BBB- (sf)' rating on Claris
Finance 2006's class B notes on CreditWatch negative following
our Aug. 5, 2012 CreditWatch negative placement of our 'BBB-/A-3'
long- and short-term counterparty ratings on Veneto Banca," S&P
said.
"According to Claris Finance 2006's transaction documents, the
liquidity guarantee covers the timely payment of interest and
ultimate payment of principal of the rated notes. Based on this
guarantee, we have weak-linked our rating on Claris Finance
2006's class B notes to our rating on Veneto Banca as the
liquidity guarantee provider. Therefore any change to our rating
on Veneto Banca would result in an equivalent change to our
rating on Claris Finance 2006's class B notes. We have therefore
lowered to 'BB+ (sf)' from 'BBB- (sf)' and removed from
CreditWatch negative our rating on Claris Finance 2006's class B
notes," S&P said.
"Our ratings on Claris Finance 2006's class A1 and A2 notes are
unaffected by our downgrade of Veneto Banca, since our rating on
these classes are delinked from the ratings on the liquidity
provider," S&P said.
Claris Finance 2006 is a residential mortgage-backed securities
(RMBS) transaction, backed by a pool of mortgage loans secured
over residential and commercial properties in Italy. The
transaction closed in July 2006 and its revolving period elapsed
in March 2010.
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
LUCCHINI: To Halt Furnace Temporarily, Requests Receivership
------------------------------------------------------------
Reuters reports that Lucchini, Italy's second largest producer,
has requested to be placed under receivership procedures to save
it from bankruptcy.
The measure, which involve the appointment of an administrator
chosen by the government, aims at saving large insolvent
companies, according to Reuters.
"The board hopes it will be possible to find a solution for the
company's crisis which can value the efforts so far borne by the
firm," the steelmaker said in a statement obtained by Reuters.
Russian steel producer Severstal acquired Lucchini, previously
owned by the family of the same name, in 2005, but has since sold
a majority stake to its owner, Russian businessman Alexei
Mordashov, to facilitate its sale, the report recalls.
Reuters notes that the disposal of the heavily indebted
steelmaker however has proved impossible in the context of
falling steel prices and economic recession.
Last month, Swiss industrial group Klesch expressed interest in
acquiring Lucchini, but Italy's biggest trade union voiced doubt
that the purchase would take place, the report relates.
===================
K A Z A K H S T A N
===================
FORTEBANK JSC: S&P Assigns 'kzBB' National Scale Rating
-------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'kzBB' Kazakhstan
national scale rating to ForteBank JSC.
"The rating reflects the 'bb-' anchor for banks operating in
Kazakhstan, our view of the bank's weaker business and risk
positions than the system average, while capital and earnings,
funding, and liquidity are neutral rating factors," S&P said.
"Under our bank criteria, we use our Banking Industry Country
Risk Assessment economic risk and industry risk scores to
determine a bank's anchor, the starting point in assigning an
issuer credit rating. Our anchor for a commercial bank operating
only in Kazakhstan is 'bb-'. Kazakhstan's economic risk score is
'8' and the industry risk score is '7'," S&P said.
===================
L U X E M B O U R G
===================
HARVEST CLO II: S&P Raises Ratings on Two Note Classes to 'BB+'
---------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Harvest CLO II S.A.
Specifically, S&P said:
-- raised its ratings on the class A-1A, A-1B, A-2, B, C-1, C-2,
D-1, and D-2 notes;
-- have withdrawn its rating on the class P combination notes;
and
-- affirmed its ratings on the class E-1 and E-2 notes, and on
the class U and X combination notes.
"The rating actions follow our credit and cash flow analysis to
assess the transaction's performance since our previous review on
Jan. 26, 2012," S&P said.
CAPITAL STRUCTURE
Notional
Current as of
Rating Rating notional Jan. 2012
Class to from (mil.EUR) (mil.EUR) Interest
A-1A AAA(sf) AA+(sf) 90.81 96.96 6mEURIBOR+0.23%
A-1B AA+(sf) AA(sf) 11.00 11.00 6mEURIBOR+0.36%
A-2 AA+(sf) AA(sf) 228.81 242.61 6mEURIBOR+0.25%
B A+(sf) A-(sf) 66.15 66.15 6mEURIBOR+0.37%
C-1 BBB+(sf) BB+(sf) 32.10 32.10 6mEURIBOR+0.65%
C-2 BBB+(sf) BB+(sf) 3.00 3.00 4.431%
D-1 BB+(sf) BB(sf) 17.25 17.25 6mEURIBOR+1.55%
D-2 BB+(sf) BB(sf) 3.00 3.00 5.355%
E-1 B+(sf) B+(sf) 11.50 11.50 6mEURIBOR+5.50%
E-2 B+(sf) B+(sf) 2.00 2.00 9.323%
F NR NR 56.50 56.50 N/A
6mEURIBOR - Six-month EURIBOR (Euro Interbank Offered Rate).
N/A - Not applicable.
NR - Not rated.
Since its previous review, S&P notes that the transaction has
benefitted from:
-- Improved credit quality of the portfolio--assets rated in the
'CCC' category ('CCC', 'CC', 'SD') decreased to 3.22% from
4.03% of the portfolio of assets;
-- An increase in the portfolio's weighted-average spread to
3.92% from 3.32%; and
-- An increase in the portfolio's weighted-average recovery
rates.
"We subjected the notes to various cash flow scenarios
incorporating different default patterns and interest rate
curves, to determine each tranche's break-even default rate at
each rating level. In our analysis, we gave credit to an
aggregate collateral balance of EUR491.81 million, the
portfolio's weighted-average spread, and weighted-average
recovery rates for each rating scenario calculated in line with
our criteria," S&P said.
"JP Morgan Chase Bank N.A. (A+/Negative/A-1), Credit Suisse
International (A+/Negative/A-1), and Citibank N.A. (A/Negative/A-
1) currently provide currency hedges on an aggregate EUR85.04
million of non-euro-denominated assets. We have reviewed each
counterparty's downgrade provisions, and in our opinion, they do
not comply with our 2012 counterparty criteria. Therefore, when
we conducted our scenario analysis at ratings above 'A+', we
analyzed the transaction's cash flow without giving benefit to
the counterparties," S&P said.
"As a result of these developments, and following our credit and
cash flow analysis, we have raised our ratings on the class A-1A,
A-1B, A-2, B-1, B-2, C-1, C-2, D-1, and D-2 notes," S&P said.
"Our rating on the class E notes is constrained at 'B+ (sf)' by
the application of the largest obligor default test, a
supplemental stress test we introduced as part of our 2009
criteria update for corporate collateralized debt obligations
(CDOs). We have therefore affirmed our 'B+ (sf)' rating on the
class E notes," S&P said.
The rated combination notes initially comprised:
Class P: EUR2.20 million of French "obligations assimilable
du tresor" (OATs) and EUR0.95 million of class F notes.
Class U: EUR3.00 million of French OATs and EUR0.90 million
of class F notes.
Class X: EUR3.30 million of French OATs and EUR1.00 million
of class F notes.
COMBINATION NOTES
Current Rated balance
Rating Rating rated balance as of Jan.2012 Rated
Class to from (EUR) (EUR) interest
P NR AA+(sf) 1 15,504 N/A
U AA+(sf) AA+(sf) 3,000,000 3,000,000 N/A
X AA+(sf) AA+(sf) 2,314,945 2,455,185 N/A
NR - Not rated.
N/A - Not applicable.
"The ratings on the class U and X combination notes are linked to
our rating on the Republic of France (AA+/Negative/A-1+).
Therefore, we have affirmed our 'AA+ (sf)' ratings on these
notes," S&P said.
"The initial EUR2.20 million rated balance of the class P
combination notes has been fully repaid. Therefore, we have
withdrawn our rating on the class P notes," S&P said.
"Harvest CLO II is a cash flow collateralized loan obligation
(CLO) transaction that closed in April 2005. The portfolio of
loans to primarily speculative-grade corporate firms is managed
by 3i Debt Management Investments Ltd.," 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
Rating
Class To From
Harvest CLO II S.A.
EUR573.95 Million Fixed- and Floating-Rate Notes
Ratings Raised
A-1A AAA (sf) AA+ (sf)
A-1B AA+ (sf) AA (sf)
A-2 AA+ (sf) AA (sf)
B A+ (sf) A- (sf)
C-1 BBB+ (sf) BB+ (sf)
C-2 BBB+ (sf) BB+ (sf)
D-1 BB+ (sf) BB (sf)
D-2 BB+ (sf) BB (sf)
Ratings Affirmed
E-1 B+ (sf)
E-2 B+ (sf)
U AA+ (sf)
X AA+ (sf)
Rating Withdrawn
P (combo) NR AA+ (sf)
NR-Not rated.
=================
M A C E D O N I A
=================
* MACEDONIA: Moody's Comments on B1/B2-Rated Municipalities
-----------------------------------------------------------
In its sector comment on Macedonian municipalities, Moody's
Investors Service says that the ratings of rated entities (B1/B2
stable) will remain unaffected by new debt for capital
investments. Rated municipalities are expected to maintain their
ratings, since they already incorporate some increase in debt in
a context of improving budgetary performances.
Macedonian municipalities will gain the access to new lending
facilities at the beginning of 2013, which will increase their
debt levels in the next two years. The Ministry of Finance and
the World Bank through its Municipal Services Improvement Project
(MSIP 2) and the German development bank (KfW; Aaa negative)
provide new loans at favorable conditions, which will lower
municipal cost of funding and enable the municipalities to
undertake an ambitious investment pipeline, key for their
economic development.
Both loan facilities will target improvements in revenue-
generating public services and/or other investment projects of
high priority for municipalities with relevant energy-saving and
cost-reduction potential.
"Municipal debt levels should progressively increase toward MKD
3.4 billion or nearly 12.6% of forecasted operating revenue by
2014. We estimate that investments financed under MSIP2 will
represent around 67% of the total. In any case, we expect
municipalities' overall debt to remain at low-to-moderate levels,
while aggregate debt service should be manageable at below 1.5%
of operating revenue per year," says Gjorgji Josifov, a Moody's
Assistant Vice President and lead analyst of Macedonian
municipalities.
Moody's notes that rated cities have enjoyed healthy and growing
budgetary performances since the start of decentralization
process in 2007, mainly driven by improved operating surpluses
and scaling down of capital investments in response to adverse
economic conditions.
"The combined effect of an upward trend in the own-source
revenues and intergovernmental transfers with a slower growth of
operating expenditures is likely to lead to an additional rise in
average GOBs toward 20-25% of operating revenues in 2013,"
concludes Mr. Josifov. "The expected improvement of operating
margin will help sustain capital investments and ensure adequate
debt servicing capacity."
Moody's rates 6 municipalities in Macedonia, and apart from the
Municipality of Ilinden (B2/Stable), all other rated
municipalities (Gevgelija, Kumanovo, Stip, Strumica and Veles)
are assigned a B1 issuer rating with stable outlook.
=====================
N E T H E R L A N D S
=====================
EMF-NL 2008-1: S&P Lowers Rating on Class D Notes to 'CCC'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit ratings on EMF-NL 2008-1 B.V.'s
class A2 and A3 notes. "At the same time, we have lowered and
removed from CreditWatch negative our ratings on EMF-NL 2008-2
B.V.'s class A1, A2, B, C, and D notes," S&P said.
"EUR's rating actions follow our review of EMF-NL 2008-1 and
2008-2's performance. We have conducted a credit and cash flow
analysis, using the most recent transaction information dated
October 2012, and have applied our Dutch residential mortgage-
backed securities (RMBS) criteria," S&P said.
"On Dec. 5, 2012, we placed on CreditWatch negative our ratings
on all classes of notes in EMF-NL 2008-1 and 2008-2 due to
deteriorating credit performance," S&P said.
CREDIT AND CASH FLOW ANALYSIS
"As highlighted in our Dec. 5, 2012 publication, the overall
arrears performance for both transactions has deteriorated over
2012, most notably in the 90+ days arrears bucket. We attribute
this large increase to the lack of repossessions and foreclosures
made on the underlying loans in these transactions. In EMF-NL
2008-1, 90+ days arrears have increased to 11.15% from 9.29% in
October 2011. EMF-NL 2008-2 has also experienced an increase to
15.30% from 14.01%," S&P said.
"We have analyzed the payment rate of loans that are more than
six months in arrears. We have concluded that approximately 81%
of borrowers who are more than six months in arrears for EMF-NL
2008-1, and 83% for EMF-NL 2008-1, have not paid their full
scheduled mortgage payments in their previous three payments.
Therefore, in our analysis, we excluded approximately 6.78% and
10.34% of loans from the collateral pool and assumed a 50%
recovery, to be realized after 18 months. As the majority of the
borrowers for these loans have not been current or paying for an
extended period of time, we believe they provide no immediate
cash flow credit to these transactions until recovery," S&P said.
"For the remaining performing collateral, we applied an
additional 5% decrease in house prices, while giving full credit
to the house price index (HPI) movement. Furthermore, we expect
arrears to increase; therefore, we have adjusted our weighted-
average foreclosure frequency (WAFF) by projecting arrears based
on the historical performance for each transaction. For EMF-NL
2008-1 and 2008-2 we have projected additional 90+ days arrears
that are equal to 2.96% and 4.89%, respectively," S&P said.
"Since November 2011, we have observed an accelerated decline in
Dutch house prices, most significantly in the past six months.
Our calculations show that the weighted-average indexed loan-to-
value ratio for both of these pools has increased, with the
decrease in house prices being the main driver. Subsequently our
weighted average loss severity (WALS) calculations for these
pools have increased. The increase in the WAFF is due to the
deteriorating performance of the assets. Based on our analysis,
both the WAFF and WALS and the overall credit coverage levels
have increased at each rating level since our last review in July
2011," S&P said.
EMF-NL 2008-1
Rating WAFF WALS CC
level (%) (%) (%)
AAA 48.90 48.86 23.89
AA 40.35 45.39 18.31
A 30.35 40.32 12.24
BBB 19.98 37.01 7.39
BB 15.15 31.30 4.74
EMF-NL 2008-2
Rating WAFF WALS CC
level (%) (%) (%)
AAA 45.21 45.52 20.58
AA 37.88 41.80 15.83
A 29.23 36.37 10.63
BBB 19.85 32.87 6.52
BB 15.77 26.91 4.25
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
CC--Credit coverage.
"The reserve funds for both transactions are fully funded,
although the 2008-2 reserve fund was drawn in April 2012 and
topped back up in July 2012. There are no liquidity facilities
for these deals, as there has been no replacement liquidity
facility in place following Lehman Brothers' insolvency in 2008.
Therefore, the transaction's external liquidity support is
limited to each respective reserve fund," S&P said.
"Our assumed servicing fees have increased for both these
transactions as there was an increase to the servicing fees in
2011, and we assume that higher interest rate assets will default
causing spread compression. This, coupled with our
undercollateralized pool assumption, and no liquidity facilities,
mean that after the stresses we apply, the available liquidity is
extremely limited to ensure timely payment of interest," S&P
said.
"If the heavily delinquent loans in both transactions were
actively being foreclosed and losses crystalized, available
revenue would be used to cover these losses, but currently these
amounts are being paid out of the transaction structure as excess
spread. As of October 2012, there was no balance on the principal
deficiency ledger recording losses on the underlying asset
portfolio. Based on discussions with the servicer, our conclusion
is that the servicer is waiting for more favorable market
conditions before foreclosing on long-term arrears," S&P said.
"After applying our stresses, it is our view that the class A2
and A3 notes in the 2008-1 transaction only have enough current
credit enhancement to pass our cash flow analysis at 'A- (sf)'
and 'BBB+ (sf)' rating levels, respectively. Therefore, we have
lowered and removed from CreditWatch negative our ratings on
these classes of notes," S&P said.
"We have lowered and removed from CreditWatch negative our
ratings on EMF-NL 2008-2's class A1, A2, and B notes due to our
view of the current amount of credit enhancement being
insufficient to maintain their current ratings. We have lowered
our ratings on the class C and D notes to 'B- (sf)' and 'CCC
(sf)', respectively, as under our 'BB' cash flow stresses, there
is a risk that these notes could default on their timely payment
of interest in the medium term. In our view, this risk is less
likely to apply to the class C notes than the class D notes,
given that they have a higher amount of credit enhancement and
are senior to the class D notes in the payments waterfall," S&P
said.
Both EMF-NL 2008-1 and 2008-2 are backed by a pool of Dutch
nonconforming residential mortgages originated by ELQ Hypotheken
N.V.
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 mechanism 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
EMF-NL 2008-1 B.V.
EUR265.01 Million Mortgage-Backed Floating-Rate Notes
Ratings Lowered And Removed From CreditWatch Negative
A2 A- (sf) AA+ (sf)/Watch Neg
A3 BBB+ (sf) AA (sf)/Watch Neg
EMF-NL 2008-2 B.V.
EUR285.1 Million Mortgage-Backed Floating-Rate Notes
Ratings Lowered and Removed From CreditWatch Negative
A1 BBB+ (sf) A+ (sf)/Watch Neg
A2 BBB- (sf) A- (sf)/Watch Neg
B BB- (sf) BBB (sf)/Watch Neg
C B- (sf) BB (sf)/Watch Neg
D CCC (sf) B- (sf)/Watch Neg
EUROSAIL-NL 2007-1: S&P Lowers Rating on Class E1 Notes to 'CCC'
----------------------------------------------------------------
Standard & Poor's Ratings Services took various credit rating
actions in Eurosail-NL 2007-1 B.V. and Eurosail-NL 2007-2 B.V.
Specifically, S&P has:
-- lowered and removed from CreditWatch negative its ratings on
Eurosail-NL 2007-1's class D and E1 notes;
-- lowered and removed from CreditWatch negative its ratings on
Eurosail-NL 2007-2's class B, C, and D1 notes;
-- affirmed and removed from CreditWatch negative its ratings on
Eurosail-NL 2007-1's class A, B, and C notes; and
-- affirmed and removed from CreditWatch negative its ratings on
Eurosail-NL 2007-2's class A and M notes.
"The rating actions follow our review of the transactions'
October 2012 data, the application of our Dutch residential
mortgage-backed securities (RMBS) criteria and 2012 counterparty
criteria," S&P said
"On Dec. 5, 2012, we placed on CreditWatch negative our ratings
on all classes of notes in Eurosail-NL 2007-1 and Eurosail-NL
2007-2 due to deteriorating credit performance," S&P said.
CREDIT AND CASH FLOW ANALYSIS
"As highlighted in our Dec. 5, 2012 publication, the overall
arrears performance for both transactions has deteriorated over
the past 12 months, most notably in the 90+ days arrears bucket.
We attribute this large increase to the lack of repossessions and
foreclosures made on the underlying loans in these transactions.
In Eurosail-NL 2007-1, 90+ days arrears have increased to 10.85%
from 7.02% in October 2011. Eurosail-NL 2007-2 has experienced a
more severe increase to 13.95% from 7.99%," S&P said.
"We have analyzed the payment rate of loans that are more than
six months in arrears. We have concluded that approximately 85%
of borrowers who are more than six months in arrears for
Eurosail-NL 2007-2, and 90% for Eurosail-NL 2007-1, have not paid
their full scheduled mortgage payments in their previous three
payments. Therefore, in our analysis, we excluded approximately
6.88% and 9.25% of loans from the collateral pool of Eurosail-NL
2007-1 and Eurosail-NL 2007-2, respectively, and assumed a 50%
recovery, to be realized after 18 months. As the majority of the
borrowers for these loans have not been current or paying for an
extended period of time, we believe they provide no immediate
cash flow credit to these transactions until recovery," S&P said.
"For the remaining performing collateral, we applied an
additional 5% decrease in house prices, while giving full credit
to the recent house price index (HPI) movement. Furthermore, we
expect arrears to increase; therefore, we have adjusted our
weighted-average foreclosure frequency (WAFF) by projecting
arrears based on the historical performance for each transaction.
For Eurosail-NL 2007-1 and Eurosail-NL 2007-2 we have projected
an additional 90+ days arrears that are equal to 4.50% and
5.14%," S&P said.
"Since November 2011, we have observed an accelerated decline in
Dutch house prices, most significantly in the past six months.
Our calculations show that the weighted-average indexed loan-to-
value ratio for both of these pools has increased, and
subsequently our weighted-average loss severity (WALS)
calculations for these pools have increased. Declining house
prices have had less of a negative effect on our WAFF, the
increase in the WAFF being due to the deteriorating performance
of the assets. Based on our analysis, both the WAFF and WALS have
increased at each rating level since our last review in July
2011," S&P said.
EUROSAIL-NL 2007-1
Rating WAFF WALS CC
level (%) (%) (%)
AAA 44.27 37.62 16.65
AA 37.51 33.66 12.63
A 29.33 28.17 8.26
BBB 20.00 24.76 4.95
BB 16.20 19.28 3.12
EUROSAIL-NL 2007-2
Rating WAFF WALS CC
level (%) (%) (%)
AAA 45.38 43.86 19.90
AA 37.98 40.15 15.25
A 28.99 34.73 10.07
BBB 19.63 31.25 6.13
BB 15.34 25.51 3.91
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
CC--Credit coverage.
"As the loans backing these transactions are nonconforming,
borrowers pay a floating interest rate (100% for Eurosail-NL
2007-1 and approximately 97% for Eurosail 2007-2) and the rate is
typically higher than for standard prime loans," S&P said.
"We have seen relatively volatile historical excess spread in
both transactions due to the high losses and the January 2011
increased servicer fees. Eurosail-NL 2007-1's current weighted-
average cost of funds is lower than Eurosail-NL 2007-2's and the
transaction has experienced fewer losses. Therefore, Eurosail-NL
2007-1 has generally reported higher excess spread. If the
heavily delinquent loans in both transactions were actively being
foreclosed and losses crystalized, available revenue would be
used to cover these losses, but currently these amounts are being
paid out of the transaction structure as excess spread. As of
October 2012, there was no balance on the principal deficiency
ledger recording losses on the underlying asset portfolio. Based
on discussions with the servicer, our conclusion is that the
servicer is waiting for more favorable market conditions before
foreclosing on long-term arrears," S&P said.
"On the October 2012 interest payment date, the issuer drew on
Eurosail-NL 2007-1's reserve account to cover losses, leaving the
reserve account at 95.66% of its target. Eurosail-NL 2007-2's
reserve fund is at its target amount, although it had been
previously drawn--most recently in January 2012 to cover losses,"
S&P said.
"Our assumed servicing fees have increased for both these
transactions since our last review, and we assume that each
transaction will experience asset spread compression due to
higher interest rate assets defaulting first. These factors
coupled with our undercollateralized pool assumption, means the
available revenue in the deal is limited to ensure timely payment
of interest," S&P said.
"For both transactions, credit coverage levels have increased
significantly since our last review. Consequently, we have
lowered and removed from CreditWatch negative our ratings on
Eurosail-NL 2007-1's class D and E1 notes and on Eurosail-NL
2007-2's class B, C, and D1 notes due to the increased liquidity
and credit stresses that are present in the transactions," S&P
said.
"Based on our stressed cash flow analysis, it is likely that
Eurosail-NL 2007-1's class E1 notes will experience an interest
shortfall within the next 18 months. Although we expect Eurosail-
NL 2007-2's class D1 notes to also experience an interest
shortfall, we do not expect this to happen within 18 months in
the current interest rate environment. Furthermore, these notes
benefit from more credit enhancement and external liquidity
support than Eurosail-NL 2007-1's class E1 notes," S&P said.
COUNTERPARTY ANALYSIS
"On May 30, 2012, we lowered our long- and short-term ratings on
Danske Bank A/S (A-/Positive/A-2)--the transaction account and
liquidity facility provider for both transactions," S&P said.
"Following the breach of its 'A-1' rating trigger, a standby
liquidity drawing was made on June 29, 2012. Danske Bank remains
as the transaction account provider even though the remedy period
has expired in which to find a replacement provider. Due to the
replacement framework specified in the transaction documents and
under our 2012 counterparty criteria, the ratings on the notes in
both transactions are capped at Danske Bank's 'A-' long-term
issuer credit rating. We have therefore affirmed and removed from
CreditWatch negative our 'A- (sf)' ratings on Eurosail-NL 2007-
1's class A, B, and C notes and Eurosail-NL 2007-2's class A and
M notes," S&P said.
Eurosail-NL 2007-1 and Eurosail-NL 2007-2 are backed by a pool of
Dutch nonconforming residential mortgages originated by ELQ
Hypotheken N.V.
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 mechanism 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
RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE
Eurosail-NL 2007-1 B.V.
EUR361.2 Million Mortgage-Backed Floating-Rate Notes and An
Overissuance Of Excess Spread-Backed Floating-Rate Notes
D BB (sf) BBB (sf)/Watch Neg
E1 CCC (sf) BB (sf)/Watch Neg
Eurosail-NL 2007-2 B.V.
EUR353.675 Million Mortgage-Backed Floating-Rate Notes Including
An Overissuance Of EUR3.675 Million Excess Spread-Backed
Floating-Rate Notes
B BB (sf) A- (sf)/Watch Neg
C BB- (sf) A- (sf)/Watch Neg
D1 B- (sf) BBB (sf)/Watch Neg
RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE
Eurosail-NL 2007-1 B.V.
EUR361.2 Million Mortgage-Backed Floating-Rate Notes And An
Overissuance Of
Excess Spread-Backed Floating-Rate Notes
A A- (sf) A- (sf)/Watch Neg
B A- (sf) A- (sf)/Watch Neg
C A- (sf) A- (sf)/Watch Neg
Eurosail-NL 2007-2 B.V.
EUR353.675 Million Mortgage-Backed Floating-Rate Notes Including
An Overissuance
Of EUR3.675 Million Excess Spread-Backed Floating-Rate Notes
A A- (sf) A- (sf)/Watch Neg
M A- (sf) A- (sf)/Watch Neg
PLAZA CENTERS: S&P Cuts Long-Term Corp. Credit Rating to 'B-'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on The Netherlands-based real estate(or
shopping mall developer)company, Plaza Centers N.V., to 'B-' from
'B', and at the same time placed the rating on CreditWatch with
negative implications.
"The downgrade and CreditWatch placement reflects our view that
Plaza Centers' liquidity has deteriorated to a level we view as
'weak' under our criteria. We also factor in the reduction in
Plaza Centers' financial flexibility, which depends highly on
proceeds from asset sales, and the increasing threat to the
company's business risk profile and liquidity from its major
shareholder, Elbit Imaging, which we regard as vulnerable to non-
payment over the next 12 months," S&P said.
TELECONNECT INC: Ralph Kroner Appointed to Board of Directors
-------------------------------------------------------------
Mr. Ralph Kroner was appointed as a non-executive (supervisory)
director of Teleconnect Inc. to fill a remaining vacancy, and he
will serve until the next annual meeting of the shareholders or
until his successor is duly elected and qualified.
Ralph Kroner (62), of Dutch nationality, is well known for his
expertise and experience in corporate governance, (international)
litigation and space law (former member of the European center
for Space law in Paris), and has served as non-executive director
on a number of boards of commercial business.
After a long service record at Simmons & Simmons and its legal
predecessors, Ralph Kroner was appointed Of Counsel at the
international law firm Eversheds Faasen in Rotterdam on Sept. 15,
2010. He is chairman of the Rotterdam Eye Hospital.
Mr. Kroner is considered to be a great source of knowledge for
the Company and his experience will be of great value to help
position Teleconnect's age validation business both in The
Netherlands and internationally.
About Teleconnect Inc.
Based in Breda, in The Netherlands, Teleconnect Inc. (OTC BB:
TLCO) Teleconnect Inc. (initially named Technology Systems
International Inc.) was incorporated under the laws of the State
of Florida on November 23, 1998.
Serving as a telecommunications service provider in Spain for
almost 9 years, the Company never fully reached expectations and
decided late in 2008 to change its course of business. In
November 2009, 90% of the Company's telecommunication business
was sold to a Spanish group of investors, and on October 15,
2010, the Company completed the acquisition of Hollandsche
Exploitatie Maatschappij BV (HEM), a Dutch entity established in
2007. HEM's core business involves the age validation of
consumers when purchasing products which cannot be sold to
minors, such as alcohol or tobacco. The Company regards this age
validation business as its new strategic direction. The Dutch
companies acquired in 2007 (Giga Matrix, The Netherlands, 49% and
Photowizz, The Netherlands, 100%) are considered to function
complementary to this new service offering.
Through the purchase of HEM and its ownership in Photowizz and
Giga Matrix the Company now controls all four pillars under its
business model: the manufacturing and leasing of electronic age
validation equipment, the performance of age validation
transactions remotely, the performance of market surveys and the
broadcasting of in-store commercial messages using the age
validation equipment in between age checks.
Coulter & Justus, P.C., in Knoxville, Tenn., expressed
substantial doubt about the Company's ability to continue as a
going concern following the fiscal 2011 financial results. The
independent auditors noted that the Company has suffered
recurring losses from operations and has a net capital deficiency
in addition to a working capital deficiency.
The Company reported a net loss of US$3.26 million on US$112,722
of sales for the fiscal year ended Sept. 30, 2011, compared with
net income of US$1.97 million on US$254,446 of sales during the
prior year.
The Company's balance sheet at March 31, 2012, showed
US$7.21 million in total assets, US$11.08 million in total
liabilities, all current, and a US$3.87 million total
stockholders' deficit.
===========
R U S S I A
===========
ALFA-BANK OJSC: S&P Raises LT Issuer Credit Rating to 'BB+'
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term issuer
credit rating on Russia-based Alfa-Bank OJSC to 'BB+' from 'BB'
and affirmed the short-term rating at 'B'. "We also have raised
the Russia national scale rating on Alfa-Bank to 'ruAA+' from
'ruAA'. At the same time, we have affirmed the 'BB-/B' long- and
short-term ratings on ABH Financial Ltd., a nonoperating holding
company of OJSC Alfa-Bank. The outlook on both entities is
stable," S&P said.
"We believe that the Alfa-Bank's risk position has improved over
the past three years, as demonstrated by a track record of credit
costs and nonperforming loans below the sector average. We
believe this improvement is to a large extent due to Alfa-Bank's
efficient risk management framework, notably for recoveries, and
is sustainable over time," S&P said.
Standard & Poor's bases its ratings on Alfa-Bank on its 'bb'
anchor for banks operating predominantly in Russia, as well as
its view of Alfa-Bank's "adequate" business position, "moderate"
capital and earnings, "adequate" risk position, "average"
funding, "adequate" liquidity, and "moderate systemic importance"
in Russia.
Alfa-Bank and its affiliated companies, including Amsterdam Trade
Bank (not rated), are owned by ABH Financial Ltd., a limited
liability company registered in the Republic of Cyprus
(CCC+/Negative/C).
"We base our analysis of Alfa-Bank on the consolidated financials
of ABH Financial, which are prepared according to International
Financial Reporting Standards," S&P said.
"Alfa-Bank is a core entity of ABH Financial because it
represents about 90% of ABH Financial's assets and liabilities
and is the driving force of the group's creditworthiness. The
group credit profile (GCP) is 'bb'. Our counterparty credit
rating on Alfa-Bank is one notch higher than the GCP, reflecting
our opinion of the bank's 'moderate systemic importance' in
Russia and a 'moderate' likelihood that the Russian government
would provide extraordinary support to Alfa-Bank if needed," S&P
said.
"Our ratings on ABH Financial reflect the strength of Alfa-Bank's
operations. The long-term rating on ABH Financial is now two
notches lower than that on the operating entity Alfa-Bank," S&P
said.
"The rating differential is mainly due to ABH Financial's
reliance on dividends and other distributions from Alfa-Bank to
meet its obligations. In addition, we consider there to be a high
level of double leverage, which we define as investment in
subsidiaries divided by the holding company's unconsolidated
shareholders' equity. The rating differential also reflects
liquidity risks and burgeoning debt burden of Cyprus, where the
company is domiciled and where we see that sovereign-related
risks are increasing," S&P said.
"The stable outlook reflects our expectations that Alfa-Bank will
grow at a moderate pace in 2013, that top-line revenues will
remain resilient, and that credit costs will remain below those
of peers. We also forecast that Alfa-Bank's balance sheet will
continue to expand at a nominal 15%-20% annually in 2013. The
outlook on ABH Financial reflects the outlook on Alfa-Bank," S&P
said.
"We believe that the potential for ratings upside is currently
limited," S&P said.
"The ratings would come under pressure if the operating
environment in Russia worsened, or if credit costs rose
significantly and exceeded those of peers, potentially resulting
in a weaker capital position," S&P said.
"We also note that Alfa-Bank is reliant on wholesale funding and
has, thanks to its market franchise, had good access to debt
markets. Any deterioration of the bank's liquidity position,
coming from systemwide or bank specific issues, could put
pressure on the ratings as well," S&P said.
BALTIYSKIY BANK: S&P Assigns 'B-/C' Counterparty Credit Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' long-term
and 'C' short-term counterparty credit rating to Russia-based
Baltiyskiy Bank. The outlook is stable. "At the same time, we
assigned an 'ruBBB-' Russia national scale rating," S&P said.
"The ratings on Baltiyskiy Bank reflect the 'bb' anchor for a
bank operating primarily in Russia, its 'moderate' business
position, 'weak' capital and earnings, 'weak' risk position,
'average' funding, and 'adequate' liquidity, as our criteria
define these terms. The stand-alone credit profile is 'b-'," S&P
said.
"Under our bank criteria, we use our Banking Industry Country
Risk Assessment's economic and industry risk scores to determine
a bank's anchor, the starting point in assigning an issuer credit
rating. The anchor for a commercial bank operating only in Russia
is 'bb', based on an economic risk score of '7' and an industry
risk score of '7'," S&P said.
"The stable outlook on Baltiyskiy Bank reflects the balance
between our anticipation of its growth in retail lending and
further development of its franchise in the North-West Federal
District against its persistently weak capitalization and
operating performance," S&P said.
"The probability of rating actions in 2013 is low, in our
opinion. We believe that Baltiyskiy Bank's risk profile is
unlikely to improve in the next 12-18 months, given relative
concentrations, and exposure to real estate. However, we could
raise the ratings if Baltiyskiy Bank's capital adequacy improved
significantly, notably because of higher earnings generation or
capital injection, which could raise our projected risk-adjusted
capital (RAC) ratio (before adjustments for diversification) to
more than 5% on a sustainable basis and create a buffer above the
minimum regulatory capital adequacy ratio," S&P said.
"We would consider a negative rating action if the bank's
liquidity sharply deteriorated or nonbank assets expanded on the
balance sheet. The decline of the projected RAC ratio to less
than 3%, which could arise from higher unexpected growth or
elevated credit costs, could also lead to a downgrade," S&P said.
ROSGOSSTRAKH OAO: S&P Assigns 'BB-' Counterparty Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
counterparty credit and insurer financial strength ratings and
'ruAA-' Russian national scale rating to Russian-based OAO
Rosgosstrakh and its core subsidiary OOO Rosgosstrakh. The
outlook on both entities is stable.
"The ratings reflect Standard & Poor's Ratings Services' view of
Rosgosstrakh's strong competitive position and adequate operating
performance, which is on a positive trend," S&P said.
"The ratings are constrained by the company's weak capitalization
and investments, weak financial flexibility, and the high
industry risks it faces in the insurance market in Russia
(Russia; foreign currency BBB/Stable/A-2; local currency
BBB+/Stable/A-2; Russia national scale 'ruAAA')," S&P said.
"The rating on OOO Rosgosstrakh is at the same level as the
rating on OAO Rosgosstrakh because OOO Rosgosstrakh is 99.9%
owned by OAO Rosgosstrakh and is a core subsidiary of OAO
Rosgosstrakh. OOO Rosgosstrakh is the largest operating company
within the OAO Rosgosstrakh group, it constitutes about 98% of
consolidated assets, nearly 90% of consolidated shareholders'
equity, and 98% of the group's premium," S&P said.
"The stable outlook incorporates our view that OAO Rosgosstrakh
will sustain the improvement in its operating performance and
continue to generate stable investment returns. We also expect a
reduction in single-name concentrations in the investment
portfolio to contribute to an improvement in capital adequacy,"
S&P said.
"We would consider a negative rating action if Rosgosstrakh's
operating performance significantly deteriorated, leading to
bottom-line losses and pressuring capitalization. We could
consider a downgrade if OAO Rosgosstrakh's high financial
leverage put pressure on liquidity," S&P said.
"We would consider a positive rating action if the company were
to significantly improve its capital base, at least to a marginal
level, as well as reducing its risk concentrations and financial
leverage," S&P said.
=====================================
S E R B I A & M O N T E N E G R O
=====================================
AGROEXPORT: Court Commences Liquidation Procedure
-------------------------------------------------
SeeNews reports that a Bosnian court said on Thursday it launched
a liquidation procedure against Agroexport.
According to SeeNews, the district court in Doboj is inviting all
creditors of the insolvent company to state their financial
claims within 30 days from the day of the publication of the call
in the official gazette of the Serb Republic.
The court will hold a session with the creditors on February 11,
2013, SeeNews discloses.
Agroexport is a trading company based in Doboj, in the Serb
Republic.
=========
S P A I N
=========
ABENGOA SA: S&P Puts 'B+' Issuer Credit Rating on Watch Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' long-term
ratings on Spain-headquartered engineering and construction
(E&C), technology, and energy group Abengoa S.A. and on its
indirect subsidiary Befesa Zinc S.A.U. on CreditWatch with
negative implications.
"The CreditWatch listing reflects our view that there is now a
50% chance of a downgrade in the short-term if Abengoa's 2012
credit metrics are weaker than previously assumed or if the
recently reported deteriorated performance continues, because we
believe it would delay the deleveraging we factor into our base
case for the 'B+' rating level," S&P said.
"The CreditWatch listing on Befesa Zinc mirrors that on its
indirect owner Abengoa, as we expect the rating on Befesa to be
directly affected if we were to downgrade Abengoa, given the
latter's effective control over Befesa," S&P said.
"We expect to resolve the CreditWatch within the next three
months, following the analysis of the 2012 full-year results and
the management's plan to address the current deterioration in
performance," S&P said.
"The negative implications of the CreditWatch listing reflect our
view that there is a 50% chance we would downgrade Abengoa if
2012 metrics fell materially short of our previous expectations
or if we believed the group would no longer meet our midterm
expectations for the current rating level, namely a gradual
deleveraging through growth in revenues and profitability,
reaching positive consolidated free operating cash flow by 2015,"
S&P said.
"This could happen, in our view, if the deterioration observed in
the results reported for the last two quarters did not reverse or
if there were a deceleration in the E&C business leading to cash
burn or a significant reduction in the E&C backlog, which could
reduce the visibility over revenues. It could also occur if there
were a significant overrun in the completion or budget of
concession-based projects or if mature assets were sold, but the
proceeds would need to be applied to absorb further unwinding of
the working capital deficit," S&P said.
"We would also lower the rating if we were to reassess our view
of Abengoa's liquidity downward from 'adequate' as defined in our
criteria," S&P said.
AYT HIPOTECARIO: S&P Lowers Rating on Class C Notes to 'B (sf)'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
AyT Hipotecario Mixto V, Fondo de Titulizacion de Activos' class
A, B, and C notes.
"The rating actions follow the application of our 2012
counterparty criteria. We have also reviewed the transaction's
performance by conducting our credit and cash flow analysis," S&P
said.
COUNTERPARTY RISK
"In July 2012, Barclays Bank PLC (A+/Negative/A-1) replaced the
bank account provider for this transaction at the time,
Confederacion Espanola de Cajas de Ahorros (CECA; not rated),
which is now known as Cecabank S.A. (BB+/Negative/B). Under our
2012 counterparty criteria and the transaction documents,
Barclays Bank is considered eligible to support the current
ratings on the class A to C notes," S&P said.
"On Nov. 12, 2012, CECA transferred most of its assets and
liabilities to the newly created Cecabank. Cecabank currently
acts as swap provider for this transaction," S&P said.
"Under our 2012 counterparty criteria, a counterparty rated 'BB+'
cannot support ratings on notes that are rated higher than 'BB+
(sf)'. We have therefore performed our credit and cash flow
analysis without giving benefit to the swap to assess the effect
of the swap mechanism on the ratings on the notes," S&P said.
"Following our credit and cash flow analysis, in which we did not
give benefit to the swap, we determined that AyT Hipotecario
Mixto V's class A, B, and C notes cannot achieve a rating higher
than the long-term 'BB+' issuer credit rating on Cecabank as swap
provider," S&P said.
CREDIT AND CASH FLOW ANALYSIS
"Following our performance review, as of December 2012, the level
of cumulative defaults increased to 0.77% from 0.55% in April
2011. As of December 2012, the percentage of the outstanding
balance in arrears for more than 90 days (excluding defaults) has
increased to 2.19% from 1.59% in April 2011," S&P said.
"As of the December 2012 interest payment date, the reserve fund
was at EUR5.55 million, representing 96.79% (EUR5.36 million) of
its required level under the transaction documents," S&P said.
"Our analysis indicates that the credit quality deterioration is
limited in terms of the level of cumulative defaults and
delinquencies. However, the margin generated by the underlying
collateral (the margin) has decreased significantly since our
previous review on March 29, 2012. We also note that, under the
transaction documents, all the loans in the pool have the right
to renegotiate their margins, without any limit. In addition,
there is no excess spread in this transaction," S&P said.
"The principal deficiency triggers under the transaction
documents also affect the transaction. Under the transaction
documents, the interest on the class B notes cannot be deferred
until the principal deficiency is more than double the
outstanding balance of the class B and C notes combined. The
interest on the class C notes can only be deferred when the
principal deficiency is greater than 2.5 times the outstanding
balance of class C notes. Therefore, interest due on the junior
notes can only be deferred late in the life of the transaction.
Until then, all the available funds are used to pay interest due
on the junior classes of notes--not the principal due on the
senior classes of notes. The level of protection provided to
senior classes of notes is minimal," S&P said.
"A number of loans originated by Caja Navarra are linked to
properties acquired under a subsidized scheme (VPO). Even though
these loans are not currently receiving any subsidy from the
government, the borrowers can only sell the property at a maximum
price, which is usually below the value obtained by certified
appraisers, regardless of the evolution of house price indexes,"
S&P said.
"The transaction is particularly sensitive to the decrease in the
margin in light of the principal deficiency triggers and because
we are not giving benefit to the swap. The decrease in the margin
is insufficient to maintain the ratings on the notes. In
addition, our 2012 counterparty criteria cap our ratings in this
transaction at 'BB+ (sf)'. Following our credit and cash flow
analysis and the application of our 2012 counterparty criteria we
have lowered our ratings on the class A, B, and C notes," S&P
said.
"AyT Hipotecario Mixto V is a residential mortgage-backed
securities (RMBS) transaction that closed in July 2006. It
securitizes a portfolio of residential mortgage loans secured
over properties in Spain. Caixa d'Estalvis Comarcal de Manlleu,
Caja General de Ahorros de Granada, and Caja de Ahorros y Monte
de Piedad de Navarra originated and service the loans," 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
AyT Hipotecario Mixto V, Fondo de Titulizacion de Activos
EUR675 Million Mortgage-Backed Floating-Rate Notes
Ratings Lowered
A BB+ (sf) AA- (sf)
B BB- (sf) BBB+ (sf)
C B (sf) BB (sf)
BBVA FINANZIA 1: S&P Cuts Rating on Class C Notes to 'CCC-'
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
BBVA Finanzia Autos 1, Fondo de Titulizacion de Activos' class A
and B notes. "At the same time, we have lowered to 'CCC- (sf)'
from 'CCC (sf)' our rating on the class C notes," S&P said.
"On July 15, 2011, we lowered our ratings on the class A and B
notes to 'A (sf)' and 'BB (sf)', and affirmed our 'CCC (sf)'
rating on the class C notes, in light of the significant
performance deterioration that we had observed, including rising
cumulative defaults, which had exceeded our expectations," S&P
said.
"Since then, the transaction has paid down significantly. The
outstanding pool balance has decreased to 15.0% of the closing
balance as of the last interest payment date (IPD) in October
2012 from 32.5% at our last review (using data from the April
2011 IPD)," S&P said.
"Based on the latest available investor report from the trustee
(dated November 2012), long-term delinquent loans (defined in
this transaction as loans in arrears for between three and 12
months) accounted for 4.19% of the outstanding portfolio balance
excluding defaults--compared with 3.62% of the outstanding
portfolio balance excluding defaults in April 2011," S&P said.
"As of November 2012, cumulative defaults had increased to 6.47%
of the original balance, compared with 5.88% year-on-year, which
exceeded our expectations in July 2011. The increase in the level
of defaults has resulted in the transaction's reserve fund being
fully depleted since April 2010. Since then, the reserve fund has
not been replenished because the performing collateral balance
has decreased as defaults keep increasing. As of the last IPD,
the transaction accumulated EUR4.2 million of principal
deficiency, which is the difference between the principal
withholding on the notes and the available funds in accordance
with the priority of payments (the principal deficiency in April
2011 stood at EUR3 million)," S&P said.
"However, despite this principal deficiency, the paydown of the
assets has led to a high level of senior note amortization, which
has in turn resulted in the level of credit enhancement rising
for the class A and B notes," S&P said.
"Given the significant increase in credit enhancement available
to the class A and B notes, our ratings on the notes in this
transaction are not constrained by the long-term issuer credit
rating (ICR) on the swap provider, Banco Bilbao Vizcaya
Argentaria S.A. (BBVA; BBB-/Negative/A-3). On Oct. 15, 2012, we
lowered our ICR on BBVA to 'BBB-/A-3' from 'BBB+/A-2'," S&P said.
"Since Oct. 15, 2012, our short-term rating on BBVA has been
below the level required by the transaction documents, which do
not reflect our 2012 counterparty criteria. Therefore, we have
conducted our cash flow analysis assuming that the transaction
does not benefit from any support under the swap agreement," S&P
said.
"Even without the benefit of the swap, because of the high
seasoning of the collateral in this transaction and the increased
level of credit enhancement available to these notes, the class A
notes can achieve a 'AA+ (sf)' rating and the class B notes can
achieve a 'BBB (sf)' rating under our 2012 counterparty
criteria," S&P said.
"Nevertheless, under our criteria on nonsovereign ratings, the
maximum achievable rating for Spanish structured finance
transactions is capped at six notches above the rating of the
Kingdom of Spain (BBB-/Negative/A-3). Accordingly, our rating on
the class A notes is limited to 'AA- (sf)' because of this
sovereign cap. Therefore, we have raised our ratings on the class
A and B notes to 'AA- (sf)' from 'A (sf)' and to 'BBB (sf)' from
'BB (sf)'," S&P said.
"Although the level of credit enhancement provided by the
performing balance is positive for the class A and B notes, it is
negative for the class C notes. As a result, there is
insufficient performing collateral available to fully repay the
principal amount outstanding for the class C notes, which are
undercollateralized by 14.35% of their current balance," S&P
said.
"We have therefore lowered our rating on the class C notes to
'CCC- (sf)' from 'CCC (sf)', to reflect our opinion that the
issuer is unlikely to have the capacity to meet its financial
commitment in respect of the principal due at maturity on this
class of notes. Our ratings on the notes in this transaction
address the timely payment of interest due under the rated notes,
and ultimate payment of principal at maturity of the rated
notes," S&P said.
"Our ratings on the notes in this transaction are not constrained
by the ICR on the treasury account provider and paying agent.
BBVA is the treasury account provider and benefits from a
guarantee from the Spanish branch of Societe Generale. Under our
2012 counterparty criteria, Societe Generale (A/Negative/A-1) is
considered an eligible counterparty at the current rating levels
on the notes. The Spanish branch of Societe Generale has also
replaced BBVA as paying agent. The replacement language in this
agreement also complies with our 2012 counterparty criteria," S&P
said.
"Finanzia Banco de Credito S.A.--the consumer finance arm of
BBVA--originated the transaction, which closed in April 2007. The
revolving period ended in April 2008, one year ahead of the
scheduled date, because the delinquency rate was higher than the
trigger threshold level," 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
BBVA Finanzia Autos 1, Fondo De Titulizaci¢n De Activos
EUR800 Million Asset-Backed Floating-Rate Notes
Ratings Raised
A AA- (sf) A (sf)
B BBB (sf) BB (sf)
Rating Lowered
C CCC- (sf) CCC (sf)
===========
T U R K E Y
===========
PETKIM PETROKIMYA: Fitch Affirms 'B+' IDR; Outlook Negative
-----------------------------------------------------------
Fitch Ratings has affirmed Petkim Petrokimya Holdings A.S.
(Petkim)'s Long-term foreign and local currency Issuer Default
Rating (IDRs) at 'B+' and National Long-term rating at 'A-(tur)'.
The agency has revised the Outlook on the Long-term IDRs to
Negative from Stable.
The IDRs incorporate a one-notch uplift for support from State
Oil Company of the Azerbaijan Republic (SOCAR; 'BBB-'/Stable),
Petkim's main shareholder.
The revision of the Outlook reflects Fitch's concerns about
Petkim's weak credit metrics as of end-Q312 and about its ability
to sustain the recovery in operating cash flow and margins
observed in H212, amid forecasts of lackluster demand and
increased volatility for the petrochemicals sector in 2013.
KEY DRIVERS
Weak Cost Position
Petkim's financial underperformance in 9M12 highlights its
vulnerability to cyclical downturns and its weak cost position.
The group's results in 2012 are likely to compare poorly with
Fitch's previous forecasts, despite the agency's pre-existing
assumptions of margin erosion and downward pressure on the credit
metrics. Reported EBITDA margin dropped to 0.9% in 9M12 from
8.1% a year earlier. Fitch's revised base case for 2012
incorporates a sequential recovery in profitability Q312 and Q412
but projects EBITDA margin at 1.6% for the full year.
Essential Capex Delayed
Petkim's reduced operating cash flow generation constrains its
ability to implement de-bottlenecking and expansionary
investments, which Fitch regards as crucial to defend its
competitive position. Capex for 2012 has been revised down to
US$50 million from US$171 million budgeted at the start of the
year. Similarly, capex for 2011 was reduced to US$90 million
against an initial budget of US$131 million. Fitch understands
that the group has also postponed some of its projects (ethylene
and PTA capacity increases) to fully assess the implications of
the new investment incentive package designed by the Turkish
government in 2012.
Working Capital Swings
Petkim was able to maintain healthy cash balances aided by lower
capex and working capital inflows (mainly increased accounts
payables). The Negative Outlook captures uncertainties about the
sustainability of these movements, particularly as Petkim's
naphtha bill also results in material swings in working capital.
The group held TRY186 million in cash at end-Q312 against debt of
TRY277 million, 88% of which consisted of short-term credit lines
from banks.
Liquidity Profile
The rating base case assumes that the working capital bank lines
will be rolled over. Fitch also assumes an increase in capex to
around US$115 million in 2013. The working capital relief of
2012 is not expected to be repeated and the base case forecasts
negative free cash flow with a gradual increase in net debt.
Under Fitch's revised base case for 2012, gross funds from
operations (FFO) leverage is projected at 2.2x (2.3x at end-2011)
and declines thereafter as profitability improves. The group's
higher debt burden renders it increasingly vulnerable to a
further deterioration in market conditions.
Challenging Market in 2013
Amid weak global macroeconomic conditions and sluggish demand in
Europe in 2013, Fitch forecasts lower average demand and prices
for petrochemicals in 2013, intensifying competition in Turkey.
This is only partly mitigated by the increase in custom duties on
LDPE, PP and HDPE in Turkey for Middle Eastern, US and Far
Eastern importers. The rating base case projects no revenue
growth and some margin improvement resulting from some of the
energy efficiency projects. In particular, Fitch believes that
Petkim's cost base will benefit from the recent agreement with
Socar Power for the supply of natural gas at lower prices.
SOCAR Support
The rating uplift is in line with Fitch's "Parent and Subsidiary
Rating Linkage" methodology and is underpinned by the cross
default clause to "any member of the group" under SOCAR's debut
five-year US$500 million Eurobond (February 2012). Fitch also
factored in the increasing strategic ties, as illustrated by
SOCAR's acquisition of additional stakes in Petkim from Turcas,
from the Privatisation Administration and from the market, and by
the start of the works on the US$5 billion greenfield refinery
(no financial contribution from Petkim).
RATING SENSITIVITY GUIDANCE:
Negative: Future developments that could lead to negative rating
action include:
-- A visible and prolonged deterioration in profitability with
EBITDA margin eroding below 5%
-- Any large debt financed investments or dividend payments
resulting in a sustained FFO leverage ratio above 4.0x
-- Evidence of weakening support from SOCAR or a deterioration
in SOCAR's credit standing
-- A marked deterioration in the group's liquidity position
The current Rating Outlook is Negative. As a result, Fitch's
sensitivities do not currently anticipate developments with a
material likelihood, individually or collectively, of leading to
a rating upgrade. Future developments that may nonetheless
potentially lead to a positive rating action include:
-- Fundamental and material improvements in Petkim's business
profile and cost position relative to peers could warrant a
positive rating action. This is not currently envisaged in
the rating horizon.
===========================
U N I T E D K I N G D O M
===========================
DIGITAL YACHT: In Administration After Difficulties With Supplier
-----------------------------------------------------------------
Insider Media reports that Digital Yacht Technologies Ltd entered
administration after "difficulties" settling an account with a
supplier, a new report has revealed.
Unsecured creditors of Digital Yacht Technologies Ltd have "no
prospect" of a return, it has also been revealed, according to
Insider Media.
Gilbert John Lemon and Paul David Wood of Smith & Williamson were
appointed joint administrations of Digital Yacht Technologies
Ltd.
Insider Media notes that according to a report from the
administrators seen by Insider, Digital Yacht Technologies traded
successfully for "many years" and at the end of 2011 part of the
business was sold to Cactus Communication & Navigation Ltd, now
known as Bridge Wharf Ltd, which has a common director with
Digital Yacht.
The report relates that the remaining business continued to trade
but "incurred difficulties" in settling an account with Raymarine
Belgium BVBA.
This led to a period of negotiation but a statutory demand was
issued by Raymarine on July 13, the report says.
A settlement offer negotiated by the directors was not acceptable
to Raymarine and a winding up petition was issued on August 21,
the report relays.
Negotiations continued after this but the administrators said it
"became apparent" that a settlement would not be reached and
Smith & Williamson was formerly instructed on September 24 before
being appointed administrators on October 2, the report
discloses.
Following the appointment, four staff were made redundant as the
business continued to trade on a "very limited basis" while a
buyer was sought, the report notes.
Insider Media relates that the only offer received from the
business from Digital Yacht Ltd, a company with common
shareholders and directors of Digital Yacht Technologies Ltd, and
the business's assets except for the debtor ledger were sold for
GBP80,070 to Digital Yacht Ltd on October 31, the report notes.
Barclays Bank, the company's secured creditor, is owed GBP88,000.
It is expected that the bank will have a shortfall of GBP55,663
on its lending, the report says.
Insider Media notes that preferential creditors are owed GBP5,000
and are "likely to be paid in full".
But, unsecured creditors are owed GBP253,411, Insider Media
relates.
The administrators said "there is no likelihood of funds becoming
available to unsecured creditors other than by way of the
prescribed part," the report adds.
Digital Yacht Technologies Ltd is a marine electronics company
based in Bristol.
EYECONOMY LIMITED: Media Corp Places Firm Into Administration
-------------------------------------------------------------
RTT News reports that Media Corporation Plc. has placed Eyeconomy
Limited, an internet advertising business and wholly owned
subsidiary of the company, into administration with KRE Corporate
Recovery LLP.
On Dec. 12, 2012, the company said that due to tough trading
conditions, revenues had softened and Eyeconomy was expected to
make a loss for the division for the 15-month period ending
December 31, 2012.
Eyeconomy's considerable drop in sales, coupled with the growing
negative net asset position of the business, has led the Board of
the company to take the tough decision that as Eyeconomy is no
longer an appropriate fit with the ongoing strategic direction of
the Group its resources are better focused on the pending launch
of Intabet and associated sites the company said, RTT News notes.
The company stated that other trading operations are unaffected
and continue to trade as normal, the report relates. The Company
remains completely focused on development of the Intabet platform
and new, complimentary technologies and products, the report
adds.
LONMIN PLC: Chief Executive Steps Down Due to Illness
-----------------------------------------------------
Michael Kavanagh at The Financial Times reports that Lonmin plc,
which has been at the center of the industrial strife in South
Africa's mining sector, has parted company with chief executive
Ian Farmer.
Mr. Farmer had been on sick leave since August when he stepped
aside in favor of acting chief executive Simon Scott after being
diagnosed with a serious illness, the FT relates.
The announcement on August 16 of Mr. Farmer's illness came on the
same day as clashes between police and striking workers at
Lonmin's Marikana platinum mine complex left 34 workers dead in
one of the worst episodes of violence in post-apartheid South
Africa, the FT relates.
Amid strikes, a collapse in production and falling platinum
prices, Lonmin warned in August that it faced a breach of banking
covenants by the end of 2012, the FT recounts.
September saw striking miners agree a deal to return to work
after accepting wage increases ranging between 11% and 22%, the
FT discloses. But in October Lonmin rejected a takeover approach
and calls for changes in senior leadership from top shareholder
Xstrata, after launching a US$817 million rights issue, the FT
recounts.
Lonmin completed the rights issue in early December without
formally conceding to one of Xstrata's demands that it should
nominate a new chief executive, the FT relates. But Xstrata,
while dropping demands for the ceding of management control, said
it would continue to seek board changes after agreeing to back
the rights issue amid continuing concerns over "the destruction
of value of our shareholding", the FT notes.
On Friday Mr. Scott ruled himself out of the running to become
Lonmin's next permanent chief executive, the FT says. Instead,
he said he wished to return to his post of chief financial
officer once a permanent replacement to Mr. Farmer has been
appointed, according to the FT.
Lonmin Plc is a United Kingdom-based company. The principal
activities of the Company during the fiscal year ended
September 30, 2011 (fiscal 2011), were mining, refining and
marketing of Platinum Group Metals (PGM). The Company has three
operating segments: PGM Operations, Evaluation and Exploration.
It runs a vertically integrated operational structure from mine
to market. Its Mining operations extract ore, which its process
division converts into refined PGMs, for delivery to its
customers.
MF GLOBAL: U.S. and UK Units Reach Key Agreements
-------------------------------------------------
James W. Giddens, Trustee for the Securities Investor Protection
Act (SIPA) liquidation of MF Global Inc. (MFGI), and Richard
Heis, a Joint Administrator of MF Global UK Ltd. (MFGUK), jointly
announced that they have reached an agreement to resolve all
claims between the two entities, including the 30.7 client assets
and repo to maturity valuation disputes currently before the High
Court of England. Mr. Giddens has filed a motion with the United
States Bankruptcy Court for the Southern District of New York,
the Honorable Judge Martin Glenn presiding, seeking entry of an
order approving the agreement.
Simultaneously, Mr. Giddens and the Chapter 11 Trustee for MF
Global Holdings Ltd., et al, (MFGH), Louis J. Freeh, have agreed
to resolve all claims between their respective estates. Further,
MFGH and MFGUK have agreed to resolve the claims between their
respective estates and the litigation commenced by MFGH against
MFGUK, subject to the satisfaction of certain conditions.
Combined, the agreements are expected to benefit customers and
creditors of the primary MF Global insolvency estates worldwide:
MF Global Inc., MF Global UK Ltd. and MF Global Holdings Ltd.
The agreements, which are subject to certain conditions being
satisfied before they become effective, put in place the key
conditions needed for these estates to make significant
distributions by avoiding lengthy and costly litigation,
providing additional certainty on the total value of claims
against the estates and reducing required reserves held against
such claims.
"These agreements are in the best interests of former customers
and other creditors and allow us to request court approval for
significant additional distributions for securities and
commodities customers," said Mr. Giddens. "Resolving complex
issues with these entities marks a critical milestone in
administering the MF Global Inc. estate. The agreements could
not have come about without cooperation from all parties and the
involvement of the Securities Investor Protection Corporation,
the Commodity Futures Trading Commission and the Securities and
Exchange Commission. We are now focused on court approval,
satisfying the conditions to the agreements and making additional
distributions."
"Our agreement with MF Global Inc. will clear important obstacles
and allow us to significantly reduce reserves that have blocked
us from additional distributions to the former customers and
creditors of MF Global UK," Mr. Heis said. "Mainly as a result
of litigation, we have been able to distribute only some 10
percent of the approximately US$2.5 billion that we have
collected. This settlement, if concluded, will allow a major
escalation in this, and we will move quickly to get money in
agreed claimants' pockets at the earliest opportunity."
MF Global Inc. and MF Global UK Ltd. Agreement
As a result of the agreement between MFGI and MFGUK, it is
estimated that between US$500 million and US$600 million would be
ultimately returned to the MFGI estate, depending on final payout
rates from the MFGUK client money and general creditor estates.
Mr. Giddens anticipates the possibility of 100 percent
satisfaction of allowed securities customers' claims and
significant additional distributions to commodities customers who
traded on US exchanges (4d funds) and commodities customers who
traded on non-US exchanges (30.7 funds). Mr. Giddens has filed
an application for additional distributions with the Bankruptcy
Court.
The Joint Special Administrators will early in January produce a
further updated estimated outcome statement showing the projected
position of MFGUK post-settlement and an estimate of the increase
in the client money distribution percentage and the amount of an
initial dividend. The Joint Special Administrators will seek to
pay as soon as possible after the settlement becomes effective.
The Joint Special Administrators approached Mr. Giddens and his
team with substantial relevant information developed by KPMG and
the management and staff of MFGUK concerning the financial
position of the MFGUK estate. This allowed Mr. Giddens to
conduct a detailed review, which determined there is reasonable
basis for the projected payments from MFGUK to MFGI, although the
ultimate amounts recovered are not guaranteed.
The parties are grateful for the cross-border cooperation between
the staffs of Mr. Giddens and the Joint Special Administrators at
KPMG. The Joint Special Administrators also have welcomed the
assistance the Financial Services Authority has provided
throughout the special administration.
All currently pending litigation between MFGI and MFGUK will be
temporarily suspended to allow for completion of the agreement.
The agreement is not an admission of liability in relation to
30.7 issues before the High Court of England, or any comment upon
the merits of the 30.7 litigation or the legal issues that arise
in relation to it or in relation to the effect of Rule 30.7 of
the United States Commodity Futures Trading Commission.
Conditions that must be completed before the agreement becomes
effective include the Bankruptcy Court making an order that (i)
approves the settlement, (ii) prohibits MFGI 30.7 customers from
making or continuing claims against MFGUK that are duplicative of
claims made by MFGI, and (iii) requires 30.7 customers with
allowed claims with a value of greater than US$12,000 to give a
release in favor of MFGUK in respect of any duplicative claims as
a condition to receiving further payment from MFGI. The agreement
is also conditional upon MFGH withdrawing its litigation against
MFGUK.
About MF Global
New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/
-- is one of the world's leading brokers of commodities and
listed derivatives. MF Global provides access to more than 70
exchanges around the world. The firm is also one of 22 primary
dealers authorized to trade U.S. government securities with the
Federal Reserve Bank of New York. MF Global's roots go back
nearly 230 years to a sugar brokerage on the banks of the Thames
River in London.
MF Global Holdings Ltd. and MF Global Finance USA Inc. filed
voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-
15059 and 11-5058) on Oct. 31, 2011, after a planned sale to
Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF
Global had US$41,046,594,000 in total assets and
US$39,683,915,000 in total liabilities. It is easily the largest
bankruptcy filing so far this year.
Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel. The Garden City Group, Inc., serves as
claims and noticing agent. The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of
MF Global Finance USA Inc.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at
Hughes Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy
filing.
U.S. regulators are investigating about US$633 million missing
from MF Global customer accounts, a person briefed on the matter
said Nov. 3, according to Bloomberg News.
Bankruptcy Creditors' Service, Inc., publishes MF GLOBAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by MF Global Holdings and other insolvency and
bankruptcy proceedings undertaken by its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000 )
MINERALS LTD: S&P Cuts Long-Term Corp. Credit Rating to 'B-'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Jersey-incorporated, leading manganese
ore producer Consolidated Minerals Ltd. (Jersey) (ConsMin) to
'B-' from 'B'. The outlook is negative.
"At the same time, we lowered our issue rating on ConsMin's
outstanding US$405 million senior secured notes to 'B-' from 'B'.
The recovery rating on the notes is unchanged at '4', indicating
our expectation of average (30%-50%) recovery prospects in the
event of a payment default," S&P said.
"The downgrade reflects our view that protracted softness in the
manganese market will continue to pressure ConsMin's EBITDA in
the fourth quarter of 2012 and in 2013. We therefore expect that
the group's leverage will be high, with a Standard & Poor's ratio
of adjusted debt to EBITDA at more than 10x at year-end 2012,
compared with 3.5x at the end of 2011. We also factor in the
prevailing uncertainty on the supply-demand balance and price for
manganese in 2013, which we think may prevent ConsMin from
improving EBITDA and lead to continued negative free operating
cash flow (FOCF). The downgrade also takes into account our view,
under our criteria, of the group's 'less than adequate'
liquidity, which we think could weaken further if FOCF turns
substantially negative," S&P said.
"Lower Chinese imports of manganese pulled down ConsMin's sales
volumes by 18% in the first nine months of 2012, with a
particularly severe contraction in the Electrolytic Manganese
Metal (EMM) end market. We expect very weak fourth-quarter
results, given the lower benchmark manganese price of US$5.2/dmtu
(dry metric ton unit) during the period (versus US$5.35/dmtu in
the third quarter), and the group's decision to temporarily halt
production in Ghana in November and December in order to focus on
waste stripping amid feeble demand from the EMM market," S&P
said.
"We think that the group will post weak EBITDA of about US$32
million for full-year 2012 (excluding a noncash inventory write-
back of about US$34 million), assuming that fourth-quarter EBITDA
is close to breakeven. Its cash balances at the end of 2012 will
likely decrease to about US$80 million from US$133 million
reported on Sept. 30, 2012," S&P said.
"The negative outlook reflects the risk of a downgrade in the
next 12 months if we saw a substantial reduction in ConsMin's
cash balance and ensuing deterioration in its liquidity. This
could stem from sizable negative FOCF in 2013, which could in
turn be triggered by EBITDA below the US$90 million we anticipate
in our base case, owing to further manganese price declines, or
delays in the group's cost reduction plan, and the absence of
timely capex adjustments," S&P said.
"We could revise the outlook to stable if ConsMin successfully
executed its program to cut cash costs, and returned to
sustainable neutral-to-positive FOCF based on manganese prices
steadily above US$5/dmtu," S&P said.
SKETCHLEY GRANGE: In Administration, HMRC Gives Winding Up Order
----------------------------------------------------------------
The Hinckley Times reports that Sketchley Grange Hotel has gone
into administration after Her Majesty Revenue and Customs issued
a winding up order to its sister company due to a mountain of
unpaid VAT.
Business Advisory firm Deloitte stepped in and took control from
Sketchley Grange Hotel Ltd that was run by Hinckley businessmen
Kevin and Nigel Downes and employs around 160 staff, according to
The Hinckley Times.
The report notes that the company was forced into administration
after its sister company FE Downes Limited went into liquidation
when HM Revenue and Customs applied for a winding up order for an
unpaid VAT bill.
FE Downes, a property developing side of the Downes business
portfolio, was carrying out a major hotel extension to provide an
additional 43 bedrooms and conference/wedding facilities, the
report relates. However, the report relates that work on the
extension was disrupted when the winding up order was issued
impacting financially on the hotel and causing administrators to
step in.
Downes Properties Limited, which is also run by the former
Hinckley Utd Football Club chairman, was also named on a
Companies Court winding up list, the report discloses.
Deloitte said it will work with the current management and staff
while it seeks a new management company in the New Year but the
hotel will remain open and all customers' deposits for future
functions will be honored, the report notes.
Adrian Berry, joint administrator and restructuring services
partner at Deloitte, said: "The disruption to the hotel arising
from the delay to the extension, combined with a downturn in
economic conditions has impacted on the hotel's trading
performance . . . . Sketchley Grange Hotel Limited's lender was
willing to support the company, however, it has been impacted by
HM Revenue & Customs recently issuing a winding up order in
relation to significant VAT liabilities owed by FE Downes Ltd.
The four star 95-bedroom Sketchley Grange Hotel in Burbage is
owned by prominent Hinckley businessmen Kevin and Nigel Downes.
SWIFT HORSMAN: In Administration, Cuts 220 Jobs
-----------------------------------------------
Aaron Morby at Construction Inquirer reports that Swift Horsman
has fallen into administration.
PricewaterhouseCoopers have been confirmed as administrators and
have made all 220 staff redundant, according to Construction
Inquirer.
Karen Dukes, joint administrator and partner at PwC said: "The
company has suffered as a result of cost overruns on recent
projects, impacted by the difficulties in the construction sector
. . . . The directors have been attempting to sell the business,
but no buyer could be confirmed and they had no option but to
place the company into administration . . . . Unfortunately, we
have had to make all the employees redundant immediately and will
now be seeking a sale of the business and assets."
Construction Inquirer notes that the bad news was broken to staff
at the Hertfordshire head office when they were told go home
because the business had run into cash flow problems, according
to Construction Inquirer.
The report says that the firm suffered losses in recent years and
is understood to have been hit by delayed retention recovery and
late payment.
Swift Horsman is best known joinery and fit-out specialists.
THIERRY'S: In Administration, Creditors Prepare Claims
------------------------------------------------------
Rosie Davenport at Off Licence News reports that Thierry's has
been placed into administration.
The company, which was established by Thierry Cabanne in 1981,
was sold in October to investment firm KKVMS, according to Off
Licence News.
The report relates that Sidcup-based Abbot Fielding has been
appointed to handle the administration and creditors may have to
wait up to two months to discover whether they will recoup any
cash.
Thierry's former managing director Hatim Dungarwalla said told
the news agency: "The administrators have written to all
creditors and they are now waiting for the creditors to submit
their claims. The administrator is currently preparing his
report, which is expected to be ready in about two months."
KKVMS head Richard Baizley told OLN last month that it was
prepared to negotiate with suppliers left out of pocket by
Thierry's, but that KKVMS had "no moral obligation" to repay
debts, the report adds.
WICKHAM VINEYARD: Falls Into Administration on Poor Harvest
-----------------------------------------------------------
Southern Daily Echo reports that Wickham Vineyard has gone into
administration on poor harvest and lack of investment have been
blamed for the situation at Wickham Vineyard, which has resulted
in the loss of 24 jobs.
The company also owned high street chain Wine Shak, established
when Wickham Vineyard bought 14 former Threshers and Wine Rack
off-licenses, according to Southern Daily Echo.
The report relates that there were shops in Southampton and
Alresford -- but according to the vineyard, the company went into
voluntary liquidation about three weeks ago, resulting in a
further 34 job losses.
The report discloses that a spokesman for the vineyard said that
there had been difficult trading conditions for about 12 months.
The report says that it is unclear what will happen to the
vineyard, as the land and buildings are not owned by Wickham
Vineyard Ltd.
The Vineyard Restaurant, run by chef Paul Dive, who used to work
for Raymond Blanc, was also closed, the report relays. But it is
understood that there are plans to keep the restaurant open, the
report relates.
Wickham Vineyard is a Hampshire vineyard that produced wines for
the Queen has gone into administration.
*********
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., Washington, D.C., 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 2013. 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$775 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 215-945-7000 or Nina Novak at
202-241-8200.
* * * End of Transmission * * *