TCREUR_Public/130605.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, June 5, 2013, Vol. 14, No. 110



* CYPRUS: Fitch Lowers Local Curr. Issuer Default Rating to 'CCC'


* DENMARK: Crisis-Hit Banks Can Use New Hybrid Debt Instruments


KC GROUP: Owner Fights Jaak Roosipuu's Bankruptcy Claims


S-CORE 2007-1: Fitch Assigns 'C' Ratings to Three Note Classes


PIRAEUS BANK: S&P Raises Rating on Subordinated Notes to 'CC'


CAPITAL MORTGAGE: S&P Lowers Rating on Class E Notes to 'B+'
ENEL SPA: Moody's Assigns '(P)Ba1' to New Hybrid Securities


POLSKI KONCERN: Fitch May Upgrade Issuer Default Ratings From BB+


AK BARS: Fitch Affirms 'BB-' Long-term Issuer Default Rating
PIN TELECOM: Court Launches Six-Month Bankruptcy Proceeding


CPL: Creditors Request Receivership to be Relaunched


FTPYME BANCAJA: Fitch Cuts Rating on Class C Notes to 'Bsf'
LA SEDA DE BARCELONA: To Shut Down Artenius Hellas Plant
MADRID RMBS III: TdA Proposal No Impact on Moody's Notes Rating
REALIA: Extends EUR847-Mil. Loan to Avert Insolvency
NOSTRA EMPRESAS 1: Fitch Keeps BB+ Note Ratings on Watch Neg.

U N I T E D   K I N G D O M

MERLIN ENTERTAINMENTS: Moody's Assigns 'B1' Corp. Family Rating
WILLIAM HILL: Moody's Rates New GBP375MM Unsecured Notes '(P)Ba1'
WILLIAM HILL: S&P Assigns 'BB+' Rating to GBP375MM Unsec. Notes
* UK: Scottish Business Insolvencies Remain at Low Rate


* EU Commission Seeks Power to Shut Down Ailing Euro-Area Banks
* Moody's Says EMEA Bldg Materials Sector to Remain Stable
* Norton Rose Combines with Fulbright & Jaworksi



* CYPRUS: Fitch Lowers Local Curr. Issuer Default Rating to 'CCC'
Fitch Ratings has downgraded Cyprus's Long-term foreign currency
Issuer Default Rating (IDR) to 'B-' from 'B' with a Negative
Outlook, and the local currency IDR to 'CCC' from 'B'. The Rating
Watch Negative (RWN) on both ratings has been removed. The Short-
term foreign currency IDR and the Country Ceiling have been
affirmed at 'B'.

Key Rating Drivers

The downgrades of the Long-term foreign and local currency IDRs
reflect the resolution of the RWN assigned to the ratings on 26
March 2013. At that time Fitch stated that it would resolve the
RWN once details of the EU/IMF program had been agreed and also
made public, taking into consideration the official parameters
and the credibility of the assumptions, including those on the
economic and fiscal outlook and terms of financing and fiscal
sources and uses.

The downgrade of the foreign currency IDR to 'B-' reflects the
elevated uncertainty around the outlook for the Cypriot economy
due to the high implementation risks on the agreed program and
the restructuring of the banking industry. Fitch acknowledges
that the program improves the immediate position of the sovereign
from both a liquidity and solvency perspective (the May ESM loan
disbursement of EUR2 billion will be used to pay the EUR1.4
billion EMTN due in June). However, Cyprus has no flexibility to
deal with domestic or external shocks and there is a high risk of
the program going off track, with financing buffers potentially
insufficient to absorb material fiscal and economic slippage. A
premature lifting of capital controls that triggers material
capital flight could have large negative economic consequences.

Public debt is likely to peak higher than the 126% of GDP by 2015
assumed under the program, reflecting Fitch's assumption of a
deeper recession in the later years of the program and a slower
recovery than that assumed, with little visibility at this stage
of the potential for Cyprus to transform its economy successfully
away from sectors associated with the shrinking financial sector.

While the government has approved and agreed consolidation
measures of just over 7% of GDP for the period 2013 to 2018, a
further 4.7% of additional yet unidentified measures will be
needed under the program assumptions to hit the 4% of GDP target
for the primary fiscal balance by 2018 which is required to
reduce the debt load to the Troika's target of close to around
100% of GDP by 2020. The deteriorating economic situation will
make it increasingly difficult to identify new measures, which
are expected to be focused on the expenditure side. Revenue
generation from some of the announced measures is also uncertain,
including privatization proceeds.

Fitch's two notch downgrade of the local currency IDR to 'CCC'
and the consequent one notch differential with the foreign
currency IDR at 'B-' reflects the agency's assessment of the
greater vulnerability of bonds issued under domestic law relative
to foreign law bonds. The financing assumptions underpinning the
EU-IMF program reveal a preferential treatment of foreign law
sovereign bonds. The May IMF report on the program modalities
makes a distinction between foreign law bonds and domestic law
bonds, opening up the possibility of "a voluntary sovereign bond
exchange covering bonds maturing in 2013-15" for the latter in
the event of the program going off track.

In the near term the Cypriot government intends to roll over the
EUR0.7 billion of domestic law bonds due in July 2013, but the
agency notes that there are also redemptions due early in 2014
and 2015. Fitch acknowledges that it remains unclear if a
domestic debt swap will be implemented and whether the terms of
any such operation would be considered a distressed debt exchange
and hence an event of default from a rating perspective.
Nonetheless, in Fitch's opinion, the authorities may seek relief
on domestic debt in the event that financing gaps emerge because
of difficulties in meeting fiscal and other program targets.
Fitch's 'CCC' rating encapsulates substantial credit risk and
acknowledges that a restructuring is a real possibility. In
contrast, redemption of foreign law sovereign debt is currently
fully covered by the EU-IMF program. The one notch higher rating
of foreign law sovereign bonds (reflected in the foreign currency
IDR) reflects Fitch's opinion that the risk of restructuring
these bonds is somewhat lower than that of domestic law bonds.

Rating Sensitivities

The Negative Outlook on the Long-term foreign currency IDR
reflects the following risk factors that may, individually or
collectively, result in further pressure on the ratings:

-- Implementation risk for the program is high. The deep
   recession and sharply rising unemployment will make it
   more difficult to implement fiscal consolidation plans.
   Significant slippage from future program targets, in
   particular fiscal deficits, would undermine the rating.

-- The recession could be materially deeper and last longer
   than assumed under the EU/IMF program as has been the
   experience of other program countries in the eurozone.
   This would have direct and indirect consequences for the
   Cypriot debt dynamics.

-- Intensification of the banking crisis in Cyprus. There is
   a still high risk of capital flight from banks if capital
   controls are lifted prematurely, exacerbating the domestic
   credit contraction even assuming liquidity support from
   the ECB.

Fitch's sensitivity analysis does not currently anticipate
developments with a material likelihood of leading to a rating
upgrade in the near term. Much further in the future, the
realization of significant off shore gas and oil reserves could
significantly help the financing of fiscal deficits and place
upwards pressure on the rating.

Key Assumptions

There is considerable uncertainty over the near- and medium-term
evolution of output, unemployment and the government deficit. The
pressure on banks to de-lever is expected to exert considerable
pressure on the economy with knock on effects to public finances.
Fitch expects the recession to be deeper and last longer than
assumed under the EU/IMF program. Fitch also anticipates slippage
from fiscal targets reflecting the weak macroeconomic outlook and
implementation risks resulting in public debt to GDP ratios
materially higher than projected by officials.

Fitch currently assumes that the fiscal costs of bank
recapitalization will not exceed the EUR2.5 billion specified
under the EU-IMF program, which includes a contingency buffer.

Should the current banking sector instability result in a
prolonged breakdown in the domestic payments system, this would
lead to a surge in corporate bankruptcy and drive a deeper GDP
contraction. However, it is Fitch's expectation that the residual
banking system will be promptly recapitalized and that capital
controls will seek to allow depositors to access funds for
consumption and to pay suppliers.

Fitch has not factored possible hydrocarbon receipts into its
projections; these therefore represent an upside risk beyond the
near term. While the authorities claim government revenues to
range between EUR18.5 billion (102.9% of GDP) to EUR29.5 billion
(164.1% of GDP) in Block 12 alone, the economic viability of
extraction remains uncertain and beyond the horizon of the

Fitch assumes that there is no materialization of severe tail-
risks to eurozone financial stability that could trigger a sudden
and material increase in investor risk aversion and financial
market stress.


* DENMARK: Crisis-Hit Banks Can Use New Hybrid Debt Instruments
Frances Schwartzkopff at Bloomberg News reports that Denmark's
financial watchdog said banks facing stricter individual capital
requirements will be allowed to use new hybrid debt instruments
to build their regulatory buffers.

According to Bloomberg, Ulrik Noedgaard, director general of the
Financial Supervisory Authority, said in an interview that
lenders in the Scandinavian nation hit hardest by the global
financial crisis will be free to use bonds that convert to equity
at given triggers as well as debt that can absorb losses before a

The FSA's decision puts an end to speculation among Danish banks
they would have to fulfill lender-specific requirements using
only equity, Bloomberg notes.  Systemically important financial
institutions learned in March they may need to hold as much as 5
percentage points extra capital, a proposal lawmakers are still
debating, Bloomberg says.  Banks have argued pressure to build
reserves is threatening to restrict lending as capital costs
rise, Bloomberg states.

"We think we're coming with a solution that will address their
concerns," Bloomberg quotes Mr. Noedgaard as saying.  "Although
the point of reference for us is that these buffers would have to
be filled with common equity Tier 1, we are also happy with
having some kind of capital in place that has the same

The FSA plans to shed more light on which hybrid instruments
banks can use in coming weeks, Bloomberg discloses.  According to
Bloomberg, Mr. Noedgaard said that the emphasis will be on
capital that demonstrates an adequate loss-absorbing potential
while the bank is still solvent.  He said that banks will only be
allowed to use the hybrids to fulfill individual solvency buffers
above a minimum 8% equity requirement, Bloomberg notes.

Mr. Noedgaard, as cited by Bloomberg, said that the FSA is still
looking into the use of hybrids to fulfill proposed crisis-
management buffers for too-big-to-fail banks.  The Sifi committee
recommended the use of hybrids in March proposals that have yet
to be approved by lawmakers, Bloomberg relates.

While opening a door to less costly funding, relying on hybrid
debt also hides potential risks as rating companies redefine
their assessments of the securities, Bloomberg says.


KC GROUP: Owner Fights Jaak Roosipuu's Bankruptcy Claims
Toomas Hobemag at Aripaev reports that real estate developer
Margus Reinsalu is fighting bankruptcy claims that are brought by
investment banker Jaak Roosipuu.

Mr. Roosipuu has asked the court to declare KC Group, the
investment company of Mr. Reinsalu, bankrupt over a EUR290,000
loan that Mr. Roosipuu's investment company Neticom gave him in
2011, Aripaev relates.

According to Aripaev, lawyers of Mr. Reinsalu said that the loan
was backed by real estate and the bankruptcy application is a
hostile takeover attempt by Roosipuu.  The lawyers said that
since the assets owned by KC Group are tens of times the loan
amount, the bankruptcy claim is meaningless, Aripaev notes.
They say that Mr. Roosipuu is now claiming a total of EUR900,000
including the principal, interest and penalty fines, Aripaev

Mr. Roosipuu himself said that the lawyers of KC Group are not
telling the truth and that Neticom has financed the projects of
KC Group with significantly higher amounts than EUR290,000,
Aripaev notes.

"I have so far heard promises about repayment of the debt, but
nothing has happened.  So I assume the company is insolvent,"
Aripaev quotes Mr. Roosipuu as saying.

KC Group is based in Estonia.


S-CORE 2007-1: Fitch Assigns 'C' Ratings to Three Note Classes
Fitch Ratings has downgraded S-Core 2007-1 GmbH's class B and C
notes, due April 2016, and affirmed all other classes, as

EUR48.23m class A-1 secured notes (ISIN: XS0312778680): affirmed
at 'BBBsf; Negative Outlook

EUR91m class A-2 secured notes (ISIN: XS0312801763): affirmed at
'CCCsf'; assigned Recovery Estimate (RE) of 'RE75%'

EUR8.85m class B secured notes (ISIN: XS0312778920): downgraded
to 'CCsf' from 'CCCsf'; assigned 'RE0%'

EUR9.6m class C secured notes (ISIN: XS0312779068): downgraded to
'Csf' from 'CCsf'; assigned 'RE0%'

EUR12.4m class D secured notes (ISIN: XS0312779142): affirmed at
'Csf'; assigned 'RE0%'

EUR19.7m class E secured notes (ISIN: XS0312779225): affirmed at
'Csf'; assigned 'RE0%'

Key Rating Drivers

The downgrade reflects the limited available credit enhancement
for the class B and C notes compared to the material single
obligor concentrations. In particular, the available credit
enhancement for classes B and C is not sufficient to provide for
a default of the largest obligor that makes up 6.7% of the
outstanding portfolio notional.

The agency notes that four new defaults were caused since the
previous review in June 2012. Thus, the total defaulted notional
rose to EUR63.5 million from EUR43.2 million. The transaction
features a principal-deficiency ledger (PDL) mechanism which
allows trapping excess spread and recoveries in order to reduce
the total defaults.

As a result of this excess spread trapping mechanism, the total
defaults of EUR63.5 million have been reduced to EUR41.4 million
-- the outstanding PDL balance. However, the excess spread and
recoveries were not sufficient to prevent the outstanding PDL
balance from increasing to EUR41.4 million from EUR27.7 million
at the previous review. The effectiveness of the PDL has been
significantly reduced as a result of the swap which leaves the
SPV over hedged and out of the money, reducing available revenue
funds to pay off the PDL. In Fitch's view, the PDL balance is
unlikely to be significantly reduced until maturity; hence the
subordinated rated classes C, D and E are likely to suffer

Fitch applied its Portfolio Credit Model (PCM) to credit-assess
the portfolio quality. For this reason, the agency made use of
the pool tape including the bank-internal ratings assigned to the
respective obligors. Further, the agency mapped the bank-internal
ratings into annual probabilities of defaults (PDs) based on the
observed performance of Deutsche Bank's internal rating system.
In the agency's view, the derived rating-specific loss rates are
covered by the available credit enhancement of the notes, apart
from classes B and C notes.

The loans securitized in this transaction are bullet loans
maturing on different dates. The next loan maturity date is 20
March 2014 on which the remaining loans are scheduled to repay.
In Fitch's view, the clustered bullet maturities expose the
transaction to refinancing risk. Fitch expects weaker borrowers
to have difficulties refinancing at loan maturity, which could
lead to additional defaults. This risk is reflected in the
Negative Outlook on the senior class A-1 notes.

The current pool consists of 38 performing assets with a total
outstanding notional of EUR148.4m which is 29.4% of the initial
pool balance. All but one of the obligors exceed 50bps of the
outstanding portfolio balance. As a result of these obligor
concentrations, Fitch regards the transaction as vulnerable to
defaults of single obligors.

According to the arranger, total received liquidation proceeds
amount to EUR6.91m to date. They relate to seven defaulted loans,
the work-out process of which is reported to be ongoing. The
agency acknowledges that 19 loans have defaulted since closing
with a total notional of 63.5m. In that respect, the transaction
is underperforming other transactions that securitize similar

An interest swap pays three-month-Euribor to the SPV in return of
a fixed swap rate of 4.7% per year. The current swap notional is
the outstanding note balance (upper band) of classes A-1 to E.
Currently, the swap is out-of-money for the SPV, i.e. the SPV
makes significant net payments to the swap provider. This leaves
the SPV in Fitch's view over hedged, draining available revenue
funds that could otherwise be used to credit the PDL.

According to the transaction documentation, the SPV has the
option to opt for reducing the swap notional to the so-called
lower band. It is not clear to Fitch why the SPV has not utilized
this option to reduce the over hedge.

Based on the arranger's feedback, the agency understands that the
current upper swap notional will be reduced down to the
performing asset balance, starting from April 2013. This change
is expected to be reflected in the July 2013 investor report. In
the agency's view, reducing the swap notional to the performing
asset balance is positive to the SPV as this mitigates any
payment interruption risk with respect to the swap as well as the
class A notes interest.

Rating Sensitivities

The transaction is sensitive to defaults of single obligors given
the large obligor concentrations. The agency reflected this risk
by applying a higher correlation stress in its pool analysis by
PCM to all obligors exceeding 50bps of the current portfolio

Fitch assigned Recovery Estimates (RE) to all classes rated
'CCCsf' or below. REs are forward-looking, taking into account
Fitch's expectations for principal repayments on a distressed
structured finance security.

The transaction is a cash securitization of certificates of
indebtedness (Schuldscheindarlehen) of German SMEs originated and
serviced by Deutsche Bank AG ('A+'/Stable/'F1+').


PIRAEUS BANK: S&P Raises Rating on Subordinated Notes to 'CC'
Standard & Poor's Ratings Services said it has raised to 'CC'
from 'D' its issue ratings on its non-deferrable subordinated
notes issued by Piraeus Group Finance PLC and guaranteed by
Piraeus Bank S.A..  At the same time, S&P affirmed the 'C' rating
on Piraeus Bank's preferred securities.

The rating action follows the bank's announcement on May 28 that
it had completed its May 13 tender offer launched to repurchase
its outstanding preferred shares and non-deferrable subordinated
debt securities.  This action does not affect the counterparty
credit ratings on Piraeus Bank or any other issue ratings on the
bank.  As a result of the offer, Piraeus Bank's outstanding lower
Tier 2 securities amount to EUR236 million and outstanding
preferred securities to EUR19 million.

S&P had previously stated that it considered Piraeus Bank's
May 13 tender offer a "distressed exchange".  According to S&P's
criteria, it lowered its issue rating to 'D' on the bank's non-
deferrable subordinated debt.  S&P also stated that it would
review its issue ratings on any securities subject to the offer
that had not been purchased upon completion.

Based on S&P's criteria, it has raised the rating on the non-
deferrable subordinated securities to 'CC' from 'D'.  According
to S&P's general criteria, it considers obligations rated 'CC' as
being currently highly vulnerable to nonpayment.

S&P derives its issue rating on the non-deferrable subordinated
debt from Piraeus Bank's stand-alone credit profile, which, at
this level, reflects the very high risks that S&P believes
continue to weigh on its financial profile.

"Our affirmation of the ratings on the bank's preferred
securities is mainly due to the bank's decision to defer coupon
payment since July 2012.  According to the terms and conditions
of the preferred securities, mandatory deferral is limited to
cases where the coupon would exceed distributable reserves or
where the payment would cause the issuer to breach regulatory
capital requirements.  In addition, the coupon payment is not
required if the issuer does not pay any dividends on ordinary
shares in the same financial year."


CAPITAL MORTGAGE: S&P Lowers Rating on Class E Notes to 'B+'
Standard & Poor's Ratings Services lowered to 'B+ (sf)' from 'BB
(sf)' its credit rating on Capital Mortgage S.r.l. BIPCA Cordusio
RMBS' class E notes.  At the same time, S&P has affirmed its
ratings on the class A1, A2, B, C, and D notes.

The rating actions follow S&P's review of BIPCA Cordusio RMBS'
underlying asset pool's performance.

Defaults have slightly increased over the past year, with only a
partial stabilization following the peak in 2009-2010.  The
transaction's excess spread trapping mechanism has covered the
defaulted mortgages' entire balance.  The transaction documents
consider mortgage loans in arrears for 180 days or more to be in

Since the March 2009 interest payment date (IPD), the cash
reserve has been substantially drawn to alleviate the peak in
defaulted loans in 2009.  The reserve was subsequently
replenished, then marginally withdrawn again on the March 2013
IPD.  The cash reserve is now at 98% of the transaction
documents' EUR9.514 million target amount.

As of the March 2013 IPD, the cumulative default ratio has
increased to 4.65% from 3.83% in March 2012.  Over the same
period, the 90+ day delinquency level decreased slightly to 1.18%
from 1.48%.

The transaction is structured with cumulative defaults triggers
for the class B, C, D, and E notes.  If these triggers are
breached, the interest due on the relevant class of notes may be
deferred, as principal collections can no longer be used to cover
interest shortfalls, until the previous ranking notes fully


Class        Trigger (%)

   B             15
   C             10
   D              8
   E              6

For example, if the transaction's cumulative gross default ratio
exceeds 6%, principal collections can only be used to pay senior
expenses and interest on the class A1, A2, B, C, and D notes
until the class D notes are repaid.  In S&P's analysis, it has
considered the likelihood of the class B, C, D and E notes'
interest being deferred as a result of this structural feature.

In S&P's cash flow analysis, it stressed the transaction's
ability to meet timely payment of interest and ultimate repayment
of principal on the rated notes.  S&P's analysis indicates that
the credit enhancement available for the class A1, A2, B, C and D
notes is sufficient to mitigate the credit and cash flow risks at
the currently assigned rating levels.  Therefore, S&P has
affirmed its ratings on the class A1, A2, B, C, and D notes.

Conversely, in S&P's view, the risk of the class E notes
breaching the 6% cumulative default trigger in the short term
(less than two years) has substantially increased.  S&P has
therefore lowered to 'B+ (sf)' from 'BB (sf)' its rating on these

BIPCA Cordusio RMBS is a securitization of a pool of prime
performing mortgages secured on Italian residential properties
that Bipop-Carire SpA originated.


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:



Class     Rating         Rating
          To             From

Capital Mortgage S.r.l.
EUR951.65 Million Asset-Backed Floating-Rate Notes
(BIPCA Cordusio RMBS)

Rating Lowered

E         B+ (sf)        BB (sf)

Ratings Affirmed

A1        AA+ (sf)
A2        AA+ (sf)
B         AA+ (sf)
C         A+ (sf)
D         BBB (sf)

ENEL SPA: Moody's Assigns '(P)Ba1' to New Hybrid Securities
Moody's Investors Service has assigned a provisional (P)Ba1 long-
term rating to the proposed issuance of Capital Securities (the
"Hybrid"), in euro-, sterling- and US dollar-denominated
tranches, by ENEL S.p.A. ("Enel"). The outlook on the rating is
negative. The size and completion of the Hybrid remain subject to
market conditions.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign a definitive rating to the Hybrid. A definitive rating may
differ from a provisional rating.

Ratings Rationale

The rating of (P)Ba1 assigned to the Hybrid is two notches below
Enel's senior unsecured rating of Baa2. The rating differential
with the senior unsecured rating reflects the key features of the
Hybrid, namely that (1) it is a deeply subordinated instrument;
(2) it has a minimum 60-year maturity; (3) Enel can opt to defer
coupons on a cumulative basis; and (4) there is no step-up in
coupon prior to year 10 and the step-up will not exceed a total
of 100 basis points thereafter.

Moody's notes that the Hybrid issuance is in line with Enel's
financial policies announced at the time of its March update of
its 2013-17 business plan, which are factored in the current Baa2
senior unsecured rating. The company plans to reduce its high
leverage and enhance its financial flexibility through a series
of measures over the life of the plan. In addition to Hybrid
issuance, Enel plans to make asset disposals of EUR6 billion,
operating expenditure cuts of EUR4 billion, and maintain
flexibility in its capex program of EUR27 billion with the aim of
strengthening its financial profile by the end of 2014.

Moody's notes, however, that the macroeconomic, regulatory and
operating environment in its core Italian and Spanish markets
remains challenging, which could slow Enel's financial recovery.
The rating agency expects recent regulatory measures taken in
Spain during 2012 and early 2013 to result in a decline in Enel's
EBITDA of around EUR1.3 billion in 2013. Further regulatory
measures are expected to be announced by the government in the
summer that may also affect the company, although they are
unlikely to be of the same order of magnitude. Enel's generation
margins in both Italy and Spain remain under pressure because of
weak demand and market oversupply.

The Baa2 senior unsecured rating also factors (1) Enel's large
scale and geographic diversification; (2) the beneficial impact
of expected growth in its Latin American, international and
renewables business divisions although this will only partially
mitigate pressure on earnings in core Italian and Spanish
markets; and (3) its strong liquidity position.


Given that Enel's core markets are Italy and Spain, the current
negative outlook on the company's ratings is aligned to that of
the Baa2-rated Italian and Baa3-rated Spanish sovereigns.

What Could Change The Rating Up/Down

As the Hybrid rating is positioned relative to another rating of
Enel, either (1) a change in the senior unsecured rating of Enel
or (2) a re-evaluation of its relative notching could affect the
Hybrid rating.

Further negative rating pressure could result from (1) a further
deterioration of Spanish or Italian sovereign creditworthiness
below investment grade; (2) a significant deterioration in Enel's
operating environment; or (3) the company deviating significantly
from its plan to strengthen its financial profile over the 2013-
14 period such that it can generally achieve ratios in the region
of retained cash flow (RCF)/net debt in the mid-teens and funds
from operations (FFO)/net debt of around twenty in percentage

Given the current negative outlook, Moody's does not currently
anticipate any upwards rating pressure. The rating agency could
consider changing the outlook on the rating to stable if (1) the
outlook on both the Spanish and Italian sovereigns were to
stabilise; and (2) Enel were able to achieve and maintain the
improvement in financial metrics indicated.

Principal Methodology

The principal methodology used in this rating was Unregulated
Utilities and Power Companies published in August 2009.

Enel is the principal electric utility in Italy and is 31.2%-
owned by the Italian state. Through its ownership of Endesa S.A.,
Enel also has a leading position in electricity in Spain and
Latin America. Moreover, it has interests in Russia, South East
and Central Europe. Its renewables businesses are held through
Enel Green Power S.p.A..


POLSKI KONCERN: Fitch May Upgrade Issuer Default Ratings From BB+
Fitch Ratings has assigned Polish oil refining and marketing
company Polski Koncern Naftowy ORLEN S.A.'s (PKN) domestic four-
year PLN200m bonds a 'BBB+(pol)' National senior unsecured
rating. PKN is rated 'BBB+(pol)'/Positive Outlook on the National
Rating scale and 'BB+'/Positive Outlook on the international
rating scale.  This is the second bond issue within the PLN1bn
bond issue program. The bonds constitute senior unsecured
obligations of PKN. There are no financial covenants included in
the bond documentation.

Key Rating Drivers

Positive Outlook
The Positive Outlook reflects Fitch's view that PKN's ratings may
be upgraded in 2013-2014, including the company's Long-term
Issuer Default Ratings (IDRs) to 'BBB-' from 'BB+', should the
company consistently maintain credit ratios at a moderate level.
The future leverage level will mainly depend on the strategy
implementation in particular capex levels in relation to cash
flows, and the macroeconomic conditions for refining and
petrochemicals operations in the medium term.

Better Financial Profile
The ratings reflect PKN's improved financial profile thanks to
several measures taken by management to reduce leverage,
including the disposal of Polkomtel S.A. (after-tax proceeds of
PLN3.2 billion (US$1 billion)), its modest capex in 2011-2012
following a capex-intensive period in 2007-2010, and no dividends
paid in 2011-2012. This supports PKN's creditworthiness in the
still difficult conditions for the European oil refining sector
due to the overcapacity and weak demand.

Strategy Implementation
Fitch views PKN's strategy update announced in November 2012 as
supporting the company's credit profile. One of PKN's strategic
targets is to maintain credit ratios at a safe level, including
the gearing ratio below 30% and covenant net debt-to-EBITDA below
1.5x. While the capex plan for 2013-2017 of PLN22.5 billion is
large -- about 50% higher than in 2008-2012, the company also
expects an increase in EBITDA partly due to investments. Fitch
views positively the fact that around PLN7bn of the planned capex
for 2013-2017 is discretionary (mostly in the upstream and energy
segments) and may be deferred or cancelled in case of weaker than
expected cash flows.

Improved Flexibility
Fitch believes that PKN has much greater flexibility to reduce
its capex in case of weaker cash flows now than in 2007-2010,
when it was conducting some major committed investments. The
agency views positively PKN's proven ability to manage its
working-capital changes in line with changes in its financial
position. This could provide additional flexibility for the
company should industry conditions weaken, leading to a
deterioration of reported credit ratios potentially close to the
covenant level defined in the main bank loan agreements.

Cyclical Sectors
Most of PKN's EBITDA is generated in two highly cyclical sectors:
oil refining and petrochemicals (each sector generated about 40%
of 2011-2012 EBITDA before inventory holding gains/losses). The
remaining 20% of EBITDA comes from the more stable fuel retailing
business. Fitch views PKN as a refining company with high
business diversification in light of its substantial
petrochemical operations and a strong position in fuel retail


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

- The company's ability to consistently maintain credit ratios
  at moderate levels, including funds from operations (FFO)
  adjusted net leverage of about 2x (excluding inventory holding
  gains/losses) and FFO fixed charge cover of about 5x (excluding
  inventory holding gains/losses)

- Positive free cash flow across the cycle

- Reduced working capital burden for compulsory stock in case of
  changed Polish regulations increasing the role of government
  in the storage of compulsory stock

- Reduced volatility of PKN's profit margins

Negative: The current Outlook is Positive. As a result, Fitch's
sensitivities do not currently anticipate developments with a
material likelihood, individually or collectively, leading to a
rating downgrade. Nonetheless, factors that may potentially lead
to a stabilization of the Outlook or even negative rating action

- A marked deterioration in cash flows and credit metrics due,
  for example, to substantially weaker than expected conditions
  for refining and petrochemicals operations

- Capex substantially above FFO resulting in highly negative
  free cash flow in the medium term

- Aggressive dividend policy


At end-March 2013, short-term debt of PLN3.2 billion (US$1
billion) was covered by cash of PLN1.3 billion, and unused
committed bank facilities of PLN9.6 billion, which expire mostly
in 2016. PKN's debt maturity profile is not onerous with no major
repayments due until 2016. The company had sufficient headroom
within its financial covenants at end-December 2012.


Long-term foreign currency IDR at 'BB+'; Outlook Positive
Long-term local currency IDR at 'BB+'; Outlook Positive
Short-term foreign currency IDR at 'B'
Short-term local currency IDR at 'B'
Foreign currency senior unsecured rating at 'BB+'
Local currency senior unsecured rating at 'BB+'
National Long-term rating at 'BBB+(pol)'; Outlook Positive
National senior unsecured rating at 'BBB+(pol)'


AK BARS: Fitch Affirms 'BB-' Long-term Issuer Default Rating
Fitch Ratings has affirmed Ak Bars Bank's Long-term Issuer
Default Rating (IDR) at 'BB-' and revised the Outlook to Stable
from Negative. At the same time, Fitch has downgraded ABB's
Viability Rating (VR) to 'b-' from 'b'.


The revision of the Outlook to Stable from Negative reflects (i)
the moderate support which has been made available to the bank by
its main controlling shareholder, the Republic of Tatarstan's
(RT; BBB-/Stable); and (ii) the reduced near-term risk of large
losses which could have challenged RT's propensity and ability to
provide sufficient further support to ABB.

ABB has primarily received support from Sviazinvestneftekhim
(SINEK, BBB-/Stable), an RT-owned holding company which owns a
27.7% stake in the bank. In H212, SINEK purchased US$600 million
of subordinated bonds issued by ABB, which significantly
strengthened the bank's regulatory capital ratio and ensured
renewed compliance with a covenant in the bank's eurobond issue.

ABB also recently signed an agreement to sell RUB8 billion (equal
to 0.3x Fitch core capital (FCC)) of investment property to an
RT-related company by end-H113, and Fitch understands that ABB is
negotiating the sale of a further RUB8 billion. Fitch views these
investments as risky and a drag on the bank's capital, and hence
considers their purchase by an RT-related company at book value
as tangible support for the bank.

Fitch considers the risk of ABB incurring further large losses in
the near term has reduced as the volume of the bank's high-risk
assets has stabilized, and even decreased somewhat following the
sale of equity investments and (as planned) investment property.

ABB Long-Term IDRs, senior debt, National and Support Ratings
continue to reflect Fitch's view of the moderate probability of
support from RT. This is based on (i) ABB's considerable market
shares in the region, (ii) its large deposit base, (iii) RT's
ultimate control over the bank, (iv) the close association
between the local authorities and the bank and (v) significant
non-equity funding made available to ABB by the local government
and government-related entities.

The three-notch difference between the Long-term IDRs of ABB and
RT reflects: (i) RT's indirect and somewhat untransparent control
over ABB; (ii) some concerns over RT's financial flexibility and
ability to provide timely capital support in all circumstances;
and (iii) significant corporate governance concerns, as the bank
is still heavily exposed to entities which Fitch believes to be
connected to the local administration. The latter concern is
somewhat mitigated by the fact that decisions on potential
support to ABB would likely be made by some of the same people
that have benefited from the bank's related party lending.


The downgrade of ABB's VR reflects a reassessment of the bank's
standalone risk profile, given (i) its high-risk corporate
lending and investment property exposures, which, even after
sales, will materially exceed the bank's loss-absorption
capacity; and (ii) poor pre-impairment profitability. The VR also
reflects ABB's reasonably performing retail loan book, stable
deposit funding and reasonable liquidity.

Fitch estimates that at end-2012, ABB had RUB49bn (1.8x FCC) of
potentially high-risk exposures on the balance sheet, net of
planned investment propery sales. This figure includes:

- RUB23 billion of net loans (85% of FCC) related to ABB's
   management and the RT administration, the majority of which
   are related to construction projects in RT

- RUB11 billion of highly risky net non-related party loans (40%
   of FCC) to distressed agro businesses and property development
   at initial or middle stages of completion

- RUB10 billion of investment property (37% of FCC), which will
   remain after the planned RUB16 billion sale to an RT-related

- RUB5 billion of equities (18% of FCC), which mostly comprise
   Tatneft (BB+/Stable) shares

At the same time, the agency estimates that ABB would have been
able to withstand only RUB13 billion of additional losses at end-
Q113 before its regulatory capital ratio decreased to 10%. This
translates to average further losses of 26% on the above-listed
high-risk exposures, which in Fitch's view corresponds to only
mild economic stress. Internal capital generation is low, with
pre-impairment operating profit net of trading gains equal to
RUB1.3 billion, or 0.4% of risk weighted assets in 2012.

Liquidity is comfortable with 61% of liabilities coming from
customer accounts, of which roughly 25% represents balances of
government bodies, RT-controlled entities and other related
parties. Fitch views these balances as relatively sticky, and in
addition ABB's end-Q113 liquidity cushion, net of potential
wholesale repayments (including RUB10 billion of local bonds
maturing in Q413), was sufficient to withstand a 26% outflow of


Downside pressure on ABB's IDRs, senior debt, National and
Support Ratings could arise if there was any major weakening in
the relationship between RT and the bank, for example, as a
result of changes in any key senior regional officials or
pressure from the federal authorities for RT to divest its stake
in the bank (although neither of these are currently expected by
Fitch). A further marked increase in related party and
relationship lending could also give rise to downward pressure on
the bank's Long-term IDR if, in Fitch's view, this could make it
potentially more costly or less politically acceptable to support
the bank.

A downgrade of RT's ratings would likely result in a
corresponding change in ABB's ratings. However, an upgrade of RT
would be less likely to result in an upward revision of the
bank's ratings.


Downward pressure on ABB's VR could stem from a further marked
deterioration in its performance and asset quality, should these
erode the bank's capital, or renewed high-risk lending. An
upgrade of the VR would require further progress with work outs
of the bank's problem assets and maintenance of at least
moderately positive pre-impairment profitability.

ABB's subordinated debt is rated two notches lower than its Long-
term IDR, of which one notch reflects incremental non-performance
risk (higher probability of default on subordinated debt than on
senior obligations) and one notch reflects potential loss
severity (lower recoveries in case of default). Any changes to
the bank's Long-term IDR would likely impact the rating of the
subordinated debt.

The rating actions are as follows:

Long-term foreign currency IDR: affirmed at 'BB-'; Outlook
revised to Stable from Negative

Short-term foreign currency IDR: affirmed at 'B'

National Long-term rating: affirmed at 'A+(rus)'; Outlook revised
to Stable from Negative

Viability Rating: downgraded to 'b-' from 'b'

Support Rating: affirmed at '3'

Senior unsecured debt: affirmed at 'BB-'

Senior unsecured debt National rating: affirmed at 'A+(rus)'

Subordinated debt: affirmed at 'B'

PIN TELECOM: Court Launches Six-Month Bankruptcy Proceeding
PRIME Business News Agency reports that Russia's Arbitration
Court of St. Petersburg and the Leningrad Region has launched a
six-month bankruptcy proceeding against PiN Telecom.

According to PRIME, Nikolai Prilepin has been appointed
bankruptcy receiver and obliged him to submit a report on
November 27.

PiN Telecom applied for bankruptcy last March, PRIME recounts.

In June 2012, the St. Petersburg court placed the company under
observation procedures, PRIME relates.

PiN Telecom is telecommunications operator.  The company provides
services to about 3,500 corporate and 170,000 residential
subscribers in St. Petersburg and the Leningrad Region.


CPL: Creditors Request Receivership to be Relaunched
Sta News reports that after the Ljubljana Higher Court annulled
in April the decision of the District Court to send builder CPL
into receivership because the four workers who had proposed it
were paid on the day of the ruling.

The proceeding was restarted on June 3 based on a request from
creditor banks, according to Sta News.


FTPYME BANCAJA: Fitch Cuts Rating on Class C Notes to 'Bsf'
Fitch Ratings has affirmed two tranches and downgraded one
tranche of FTPYME Bancaja 2, FTA's notes, as follows:

EUR12.3m class A3(G) notes (ISIN ES0339751028): affirmed at 'AA-
sf', Outlook Negative

EUR12.1m class B notes (ISIN ES0336751036): affirmed at 'Asf',
Outlook Negative

EUR4.4m class C notes (ISIN ES0339751044): downgraded to 'Bsf'
from 'BBsf', Outlook Negative


The rating actions reflect the portfolio's performance since the
last annual review in July 2012. Since then, delinquencies over
180 days increased to 6.4% of the outstanding portfolio balance
from 5%. However, this was partially offset by increases in
credit enhancement on senior notes due to natural amortization.
Class A3(G)'s balance was reduced by EUR10.6 million and the
overall outstanding balance now represents 5.8% of the initial
balance. Credit enhancement for class A3(G) is currently 68% and
26% for class B.

The downgrade of the class C notes is related to increased
delinquencies, as well as current defaults, which have increased
by EUR1.3 million to EUR3.3 million since the last review in July
2012. Additionally, the reserve fund has been reduced by another
EUR1m and remains underfunded.

Class A3(G)'s ratings are subject to a rating cap on Spanish
structured finance of 'AA-sf' and a Negative Outlook due to the
Outlook on the Kingdom of Spain ('BBB'/Negative/'F2'). Concerns
regarding increased obligor concentration and delinquencies have
led to the Negative Outlook on class B and C's notes being

As of April 2013, the swap counterparty was replaced by Royal
Bank of Scotland ('A'/Stable/'F1') and therefore all
counterparties are eligible.

Rating Sensitivities

The agency incorporated two additional stress tests in their
analysis to determine the ratings sensitivity. The first
addressed a reduction of recovery expectations, whereas the
second simulated an increased default probability. In both stress
tests, class A3(G)'s ratings are stable. However, in both
scenarios a rating action on classes B and C would be likely.

FTPYME Bancaja 2, FTA, is a cash-flow securitization of loans
granted to Spanish small and medium-sized enterprises (SME) by
Caja de Ahorros de Valencia, Castellon y Alicante.

LA SEDA DE BARCELONA: To Shut Down Artenius Hellas Plant
Richard Higgs at Plastics & Rubber Weekly reports that La Seda de
Barcelona has begun the formal process of closing down its Greek
PET and packaging preforms subsidiary Artenius Hellas.

According to PRW, the group reported to the Spanish stock
exchange regulator CNMV, that, under the process, it has reached
agreement to terminate labour contracts with the workforce at the
Artenius Hellas plant in Volos, Greece.

Artenius Hellas, which was reported to have earlier cut salaries
of its workers, had been in statutory talks with representatives
of 92 employees prior to plans to cease operation of the
facility, PRW notes.

The group said that labor agreement follows the liquidation
decision over the loss making 80,000 tpa Greek PET operation
which has suffered from a reduction in production capacity and
falling local demand, PRW relates.

LSB, which is still struggling to reach an agreement over the
renegotiation of its outstanding EUR230 million debt, has been
granted a further reprieve on repayments for its syndicated loan,
PRW says.  The Catalan group has obtained a further month's
extension until June 30 to defer required payments, PRW

According to PRW, LSB is working to get a tentative debt
refinancing agreement involving the US Anchorage investment fund
ratified by the lenders of 75% of its syndicated debt,
representing more than half of its creditors.  Debt renegotiation
is essential for LSB to avoid bankruptcy, PRW notes.

If the deal is approved it could mean corporate restructuring and
separation of LSB's buoyant APPE packaging operations from its
less successful PET polymer and recycling divisions, PRW states.

La Seda de Barcelona is a European PET packaging group.

MADRID RMBS III: TdA Proposal No Impact on Moody's Notes Rating
Moody's has determined that the proposed action (the "Proposal")
of Titulizacion de Activos S.G.F.T.; S.A ("TdA") to replace the
interest rate option counterparty, will not, in and of itself and
at this time, result in a downgrade or withdrawal of the current
ratings of the notes (the "Notes") issued by Madrid RMBS III, FTA
(the "Issuer"). Moody's opinion addresses only the credit impact
of the Proposal, and Moody's is not expressing any opinion as to
whether the Proposal has, or could have other, non-credit related
effects that may have a detrimental impact on the interests of
note holders and/or counterparties.

Moody's has assessed the Proposal, which can be summarised as

- to replace Banco Bilbao Vizcaya Argentaria S.A (Baa3/P-3) as
interest rate option counterparty by Bankia (Ba2/NP) and make
certain amendments of the option documentation. The interest rate
option counterparty triggers have been lowered. Moody's has
assessed the probability and impact of a default of the option
counterparty on the ability of the Issuers to meet their
obligations under the transactions, including the impact of the
loss of any benefit from the option and any obligation the
Issuers may have to make a termination payment.

The methodologies used in rating this transaction are described
in "Moody's Approach to Rating RMBS Using the MILAN Framework"
published in May 2013, and "Framework for De-Linking Hedge
Counterparty Risks from Global Structured Finance Cashflow
Transactions" published in October 2010.

Moody's noted that on July 2, 2012, it released a Request for
Comment, in which the rating agency has requested market feedback
on potential changes to its rating implementation guidance for
assessing linkage to swap counterparties in structured finance
cash-flow transactions. If the revised rating implementation
guidance is implemented as proposed, the rating on the notes
should not be negatively affected. Please refer to Moody's
Request for Comment, entitled "Approach to Assessing Linkage to
Swap Counterparties in Structured Finance Cashflow Transactions:
Request for Comment" for further details regarding the
implications of the proposed methodology changes on Moody's

REALIA: Extends EUR847-Mil. Loan to Avert Insolvency
Property Investor Europe reports that Realia, slated for sale by
its owners, infrastructure conglomerate FCC and nationalized bank
Bankia, has extended an EUR847 million loan with creditor banks
as part of a plan to restructure debt and avoid insolvency.

FCC in March announced plans to refinance Realia debt ahead of a
planned sale, the first step in the group's new strategy to cut
costs and debt and focus on infrastructure and environmental
businesses, PIE says, citing Reuters.

The sale is coordinated with Bankia, Spain's fourth-largest
lender, which is also under pressure to sell assets and cut debt
in return for bailouts it received last year, PIE recounts.

Realia is a Madrid-listed developer.  The company was created in
2000 through the merger of the property ownership and management
from FCC and Bankia, which have both existed since the 1980s.  It
focuses on development and management of offices and shopping
centres, as well as housing.

NOSTRA EMPRESAS 1: Fitch Keeps BB+ Note Ratings on Watch Neg.
Fitch Ratings has maintained TDA SA Nostra Empresas 1 and 2,
FTA's notes on Rating Watch Negative as follows:

TDA SA Nostra Empresas 1 FTA:
Series C (ISIN: ES0377969029): 'BB+sf'; maintained on RWN
Series D (ISIN: ES0377969037): 'BB+sf'; maintained on RWN

TDA SA Nostra Empresas 2 FTA:
Series C (ISIN: ES0377957024): 'BB+sf', maintained on RWN

Key Rating Drivers

The ratings of the notes are credit linked to the ratings of
Banco Mare Nostrum (BMN; 'BB+'/RWN/'B'), the originator and
servicer, which holds the reserve fund. Most of the credit
enhancement to the notes is provided by the reserve fund. The
maintenance of the RWN on the notes reflects the RWN on BMN's

Rating Sensitivities

The ratings of the notes are sensitive to the resolution of the
RWN on BMN's ratings. For example, a one-notch downgrade of BMN's
ratings would result in a one-notch downgrade of the notes'

U N I T E D   K I N G D O M

MERLIN ENTERTAINMENTS: Moody's Assigns 'B1' Corp. Family Rating
Moody's Investors Service has assigned a B1 corporate family
rating (CFR) and a B2-PD probability of default rating (PDR) to
Merlin Entertainments ('Merlin', or 'the company'), which
is the ultimate holding company for Merlin Entertainment Group
and its operating subsidiaries. At the same time, Moody's has
assigned a B1 rating, with a loss given default assessment of LGD
3 (33%), to the GBP1.35 billion of senior secured facilities and
to the GBP138 million revolving credit facility borrowed at
Merlin Entertainments Group Luxembourg 2 and 3 S.r.l. This is
the first time that Moody's has assigned ratings to Merlin. The
outlook on the ratings is stable.

"The B1 CFR we have assigned to Merlin balances the company's
strong position as a global operator of theme parks and
attractions with its small scale and fairly leveraged capital
structure," says Richard Morawetz, a Moody's Vice President -
Senior Credit Officer and lead analyst for Merlin.

Ratings Rationale

The assigned CFR of B1 reflects that while Merlin has a strong
position as a global operator of theme parks and attractions, it
is still small relative to companies in the broader services
industry, and has a fairly leveraged capital structure. Merlin is
the second-largest operator of theme parks globally after Walt
Disney Company (A2 stable), owning internationally recognized
brand names including Madame Tussauds, The Dungeons, Alton
Towers, LEGOLAND, SEA LIFE, Gardaland and the London Eye. The
company's mixture of theme parks and midway attractions, as well
as indoor and outdoor activities (approximately 40% and 60% of
revenues, respectively), has proven resilient to external shocks
in recent years. The company has seen steady growth in visitor
numbers and the number of attractions, although comparable
visitor numbers and revenues (i.e. on a like-for-like basis)
dipped marginally in 2012, when the company experienced a
slowdown in visitor volumes in Europe, negatively affected by
both poor weather conditions and competition from the summer
Olympics in London. Nevertheless, Merlin's underlying EBITDA, as
reported, was at GBP346 million for FY2012, versus GBP306 million
in 2011 (for 53 weeks; or GBP296 million on a comparable 52-week
basis), with the increase reflecting acquisitions, new openings,
as well as reductions in certain variable costs.

While Merlin has grown its geographical coverage in recent years
(particularly in Asia-Pacific, with a concurrent diminishing
share of European revenues), its ratings are constrained by its
small scale and fairly leveraged capital structure. The company's
adjusted leverage, measured by debt/EBITDA, was at about 5x as of
financial year-end 31 December 2012, although this has been
declining gradually from 6.5x in FY2010 (on a comparable basis,
i.e., excluding the shareholder loan, which was converted into
equity that year). Merlin's current debt capital structure
consists principally of GBP1.35 billion in term loans, with a
bullet repayment in July 2017. Moody's notes that Merlin's
management has been targeting international growth, predominantly
through new site openings as well as broadening the offering to
attract multi-day visitors. This has had a clear impact on
growing the company's geographical footprint. The trend in
declining leverage has therefore been driven by growth in
Merlin's earnings, as the company's reported debt has actually
increased in the past two years. Moody's considers Merlin to be
strongly positioned in the B1 rating category at this point, and
that further deleveraging will largely depend on the company's
own growth strategy and financial policies.

Moody's expects Merlin's liquidity to remain solid, with no
significant debt maturities prior to the term loans maturing in
July 2017. The loans contain financial covenants for leverage,
interest coverage, cash flow cover, and a capex basket, for which
headroom remained strong as of the first quarter of 2013. The
term loans are multi-currency (GBP, EUR, USD and AUD), to largely
mirror the earnings structure by currency. The company's
liquidity is also supported by a GBP138 million revolving credit
facility, which has the same maturity and covenants as the term
loans and was fully undrawn as of FYE2012.

Merlin's earnings and cash flows tend to be fairly seasonal in
nature. Earnings are nearly entirely generated in the second and
third quarters. Cash flows from operations tend to be negative in
the first quarter due to lower earnings and seasonal capital
investment, albeit there is a working capital inflow in the
quarter, in part due to prepayments by ticket-holders for
activities during the summer. The company was largely free cash
flow neutral on average between 2010 and 2012 (after capex),
while investments in new attractions and acquisitions resulted in
a gradual growth in reported net debt in those years.

Under the terms of the senior facilities, the guarantors must
represent at least 80% of consolidated group EBITDA and assets
(at FYE2012 the actual numbers were approximately 88% and 86%;
these declined versus 95% and 92% FYE2011, but are expected to
rise again in 2013 as the acquired Australian assets accede to
the guarantors). Under the agreed security principles, the large
majority of the guarantors also provide a security over assets
for the loans. The loans represent nearly all of Merlin's
outstanding debt. In light of this guarantee and security
package, the term loans are rated B1, at the same level as the
CFR. The PDR of B2-PD reflects the use of the 65% family recovery
rate assumption, consistent with an all-bank capital structure.

Moody's notes that Merlin is currently in the process of amending
and extending its credit facilities, with the aim to better match
the currency structure with future revenues and improve pricing.
This is not expected to impact the company's credit profile, as
the overall quantum of debt is expected to remain largely
unchanged. Moody's understands that the proposed term loans
currently being negotiated would also contain covenants for
leverage and interest cover only, as well as setting different
baskets and thresholds to apply in case of an IPO. Moody's also
understands that the maturity of the term loans would be extended
to 2019, and 2018 for the new revolving credit facility. In light
of this, and the fact that the guarantor and security package are
to remain unchanged, with the expectation of strong covenant
headroom, Moody's would expect the new facilities to be rated at
the same level as the existing facilities.


The stable outlook on the ratings reflects the recent
strengthening of Merlin's metrics and Moody's view that this
trend may continue, albeit gradually.

What Could Change The Rating Up/Down

A deleveraging trend, with adjusted debt/EBITDA well below 5x,
could be positive for the rating or outlook. Conversely, a more
aggressive financial policy, or a significant industry downturn,
neither of which Moody's expects at this time, could lead to
negative ratings pressure if gross leverage were to rise beyond
6.0x. Although currently not expected, the emergence of liquidity
concerns could also exert downward pressure on the rating.

Principal Methodology

Merlin Entertainments Sarl's ratings were assigned by evaluating
factors that Moody's considers relevant to the credit profile of
the issuer, such as the company's (i) business risk and
competitive position compared with others within the industry;
(ii) capital structure and financial risk; (iii) projected
performance over the near to intermediate term; and (iv)
management's track record and tolerance for risk. Moody's
compared these attributes against other issuers both within and
outside Merlin Entertainments Sarl's core industry and believes
Merlin Entertainments Sarl's ratings are comparable to those of
other issuers with similar credit risk. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Please see the Credit Policy page on for a copy of
this methodology.

Merlin Entertainment Group, based in Dorset, the UK, is the
largest European, and second-largest global, operator of theme
parks and attractions in terms of visitor admissions. The company
reported about GBP1.1 billion in revenues and underlying EBITDA
of GBP346 million for FY2012 (to December), and attracted over 54
million visitors to its 94 locations in that year. The company's
owners include two private equity partners (Blackstone (34.0%)
and CVC (28.1%); Kirkbi, a Danish investment fund (36.5%); and
management (1.4%).

WILLIAM HILL: Moody's Rates New GBP375MM Unsecured Notes '(P)Ba1'
Moody's Investors Service has assigned a provisional (P)Ba1 long-
term rating with a loss given default assessment of 4 (LGD4, 50%)
to the proposed issuance of GBP375 million senior unsecured notes
due 2020 by William Hill plc, which will be guaranteed by its
wholly owned subsidiary William Hill Organization Limited.

Concurrently, Moody's has affirmed William Hill's Ba1 corporate
family rating (CFR) and probability of default rating (PDR) and
the Ba1 long-term senior unsecured rating of its GBP300 million
of guaranteed notes due 2016. The outlook is stable.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign a definitive rating to the proposed senior unsecured
notes. A definitive rating may differ from a provisional rating.

Ratings Rationale

The provisional (P)Ba1 rating assigned to the proposed notes
issuance is at the same level as William Hill's CFR, reflecting
their senior unsecured status. The new bonds will rank pari passu
with the company's other senior unsecured debt.

The Ba1 CFR primarily reflects the mature nature of William
Hill's premises-based retail business and that the company's
growth in online and mobile betting services will continue to
rely heavily on marketing and technological spend. However, more
positively, the rating also reflects the company's leadership
position in the UK retail betting industry, with the company
reporting a market share of around 26%, as measured by number of
licensed betting offices and its well-established and growing
presence in the online betting and gaming market. The company
also benefits from a strong brand name, high barriers to entry in
the retail segment and an established regulatory regime in its
core UK market. William Hill has started to diversify
internationally, with a presence in the U.S., Australia and
various European countries.

The ratings are further supported by William Hill's good level of
profitability and its strong financial metrics, with adjusted
debt/EBITDA of 2.1x as at financial year ended (FYE) January 1,
2013 (2.5x at FYE 2011) and adjusted retained cash flow (RCF)/net
debt of 28.1% as at the same period (22.4% at FYE 2011). The
improvement was on the back of strong earnings growth in the home
market (reported net profit after tax and minority interests up
21%), and in particular in the online segment (operating profit
up 36%). Although William Hill's credit metrics currently meet
Moody's guidance for what could exert upward pressure on the
rating, the rating agency has maintained a stable outlook because
of the possibility that the company may make use of its financial
flexibility and increase its leverage in the near term. In
particular, the company recently made two investments, namely the
acquisition of Sportingbet Plc's Australian business and the
exercise of its option to buy out Playtech's 29% holding in its
William Hill Online joint venture, which were partly debt-funded
(GBP510 million) and partly equity-funded with proceeds from the
recent rights issue (GBP373 million). Given that William Hill has
been well positioned within its current rating category, with
metrics strengthening in recent years, these acquisitions do not
exert downward pressure on the rating, although Moody's expects
some weakening in credit metrics in the current financial year.

William Hill has a good liquidity profile. The company has
generated positive free cash flow in each of the past five years,
thereby covering dividends and capital expenditure, which we see
as an essential part of its strategy to keep growing online and
mobile activity. As at 1 January 2013, the company held around
GBP73 million of unrestricted cash and had GBP440 million
available under its long-dated GBP550 million revolving credit
facility (RCF) that expires in November 2015. The amount
available under the RCF will have reduced to around GBP200
million as the RCF was used to part-finance the two recent
investments in addition to a GBP275 million bridge loan that was
raised for this purpose and expires in June 2014. The proposed
long-term notes issuance will refinance the bridge loan and part
of the drawings under the RCF, such that the majority of the RCF
will be undrawn. In addition, at 1 January 2013, the company
reported ample headroom under its financial covenants, which are
tested semi-annually.


Despite subdued consumer confidence and a sluggish economy in the
UK, the stable outlook reflects Moody's expectation that William
Hill's financial metrics will remain in line with the current
rating level, i.e., the company's ratio of RCF/net debt will
remain at least in the high teens in percentage terms and its
debt/EBITDA comfortably below 3.5x on a sustainable basis (both
ratios as adjusted by Moody's). The stable outlook is further
premised on William Hill maintaining an adequate liquidity
profile by (1) retaining its ample covenant headroom and
availability under its facilities; and (2) proactively
refinancing upcoming maturities well in advance.


Upward pressure could be exerted on the rating if William Hill's
adjusted debt/EBITDA decreases below 3.0x and its RCF/net debt
increases above 20%, both on a sustainable basis.

Conversely, negative pressure could be exerted on the rating if
credit metrics become weaker than the targets set for the rating
category, with the ratio of adjusted debt/EBITDA increasing
towards 4.0x. Challenges to the company's liquidity risk profile
could also have negative rating implications.

The principal methodology used in this rating was the Global
Gaming published in December 2009. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Please see the Credit Policy page on for a copy of
these methodologies.

William Hill plc is a leading sports betting and gaming company
that operates predominantly in the UK via 2,392 licensed betting
shops, and via mobile and internet connections through William
Hill Online. William Hill reported consolidated net revenues of
GBP1.28 billion for the financial year ending January 1, 2013.

WILLIAM HILL: S&P Assigns 'BB+' Rating to GBP375MM Unsec. Notes
Standard & Poor's Ratings Services said that it assigned its
'BB+' issue rating to the GBP375 million unsecured notes due
2020, issued by the U.K.'s largest retail betting shop operator
William Hill PLC.  At the same time, S&P assigned a recovery
rating of '3' to the notes, indicating its expectation of
meaningful (50%-70%) recovery for creditors in an event of
payment default.  The issue and recovery ratings are in line with
the ratings on the existing GBP300 million notes due 2016, also
issued by William Hill.

S&P understands that William Hill will use the proceeds of the
notes to fully repay the amount outstanding under its bridge loan
of about GBP275 million and to repay some of the drawings under
its revolving credit facility (RCF).  The terms and conditions of
the GBP375 million notes are expected to be in line with the
existing GBP300 million notes due 2016.  Both the existing and
new notes are unsecured and guaranteed by William Hill
Organization Ltd.

                        RECOVERY ANALYSIS

The recovery rating of '3' is supported by the favorable U.K.
jurisdiction, the fair guarantee package provided to the
noteholders (although William Hill Online does not guarantee the
rated notes directly), and the absence of significant priority
liabilities ahead of the notes.  However, the rating is
constrained by the unsecured nature of the notes.

In order to determine recoveries, S&P simulates a hypothetical
default scenario.  S&P assumes a payment default in 2018 as a
result of negative regulatory actions or tax changes.  S&P's
scenario also assumes an increase in competition, leading to
severely reduced free cash flow generation, combined with
aggressive financial policies.

S&P values William Hill as a going concern.  S&P's valuation is
based on its view of William Hill's satisfactory business risk
profile, strong market position, well-known brand, established
town-center gaming locations, and cash-generative capability.  It
is also based on the high barriers to entry into the highly
regulated sector. S&P's going-concern analysis leads to an
enterprise value of GBP820 million.

For the purposes of S&P's recovery analysis, it assumes that the
GBP550 million unsecured RCF due 2015 will be extended on the
path to default.  Overall, S&P assumes similar levels of
unsecured debt outstanding at the point of default to those S&P
sees now. Assuming pari passu ranking of the RCF and the
unsecured notes, S&P sees recovery prospects for the unsecured
lenders in the 50%-70% range at the point of default, which
translates into a recovery rating of '3'.

Potential limitations on recovery could arise if there are
changes to the capital structure (which consists of only
unsecured debt instruments) by the time of default; if
noteholders' claims cease to rank pari passu with those of
lenders under the GBP550 million RCF, due to potentially
ineffective negative pledge provisions; or if additional debt is
raised by William Hill Online, which does not guarantee the rated
notes.  Under the documentation of the new notes, S&P
understands, notably, that the company is permitted to give
security to up to GBP150 million of debt (compared with
GBP75 million under the documentation of the notes due 2016).

* UK: Scottish Business Insolvencies Remain at Low Rate
Martin Flanagan at The Scotsman reports that Scottish business
insolvencies have remained at an all-time low rate of just 0.03%
for five months in succession.

Meanwhile, the UK insolvency rate has now stayed at 0.08% for a
whole quarter -- February to April -- for the first time since
2007, the Scotsman discloses.

According to the Scotsman, analysts said the survey, from global
information services group Experian, indicated that despite
Britain's subdued economic picture the trading environment was
becoming more stable and there was greater resistance to business

Experian said that the latest insolvency data for April showed
that the very smallest and largest companies both experienced low
rates of failure, the Scotsman notes.

Of the UK's biggest five industries, insolvencies in building and
construction, and leisure and hotels, both fell 0.01% in April
compared with a year earlier, the Scotsman says.


* EU Commission Seeks Power to Shut Down Ailing Euro-Area Banks
Jim Brunsden at Bloomberg News reports that the European
Commission is seeking to give itself the power to shut down
failing euro-area banks as part of a draft crisis blueprint that
defies German calls for a more decentralized approach.

The Brussels-based authority is set to propose that decisions to
force losses on crisis-hit lenders' creditors, as well as other
steps to prevent a disorderly collapse, should be taken largely
out of national hands, according to a document obtained by
Bloomberg News.

Bloomberg notes that while the system would include a "newly-
created central resolution body," final decisions would be taken
by the commission itself.

The document said that "Among EU institutions, the commission is
best placed to play this role, bolstered by its experience of
bank restructuring during the crisis under state-aid control, and
given the need to ensure expeditious and effective decision-

The move puts the commission at odds with Germany, which has said
that a centralized approach to bank resolution in the euro area
should only come once the bloc has taken further steps toward
common fiscal and economic policies, Bloomberg states.

Under the commission's draft blueprint, to be discussed by the
institution's 27-member college today, June 5, an executive board
at the central resolution agency would prepare draft decisions
for the commission, Bloomberg discloses.  It would also be able
to initiate some measures itself, such as authorizing on-site
inspections of banks, Bloomberg says.

The document said this board would be dominated by commission and
ECB appointees, with only a "limited number" of national
representatives, Bloomberg notes.

The draft commission plans also include the creation of a
central, bank-financed fund, to cover the costs of winding down
failing lenders, Bloomberg discloses.

According to Bloomberg, the document said that the amount paid
into the fund by individual banks would be calculated against how
risky their activities are perceived to be by regulators.

* Moody's Says EMEA Bldg Materials Sector to Remain Stable
The outlook for the EMEA building materials sector will remain
stable over the next 12-18 months as aggregate EBITDA growth is
likely to remain flat to slightly positive, says Moody's in its
latest Industry Outlook report on the sector published. The EMEA
building materials sector's outlook has been stable since April

The new report, entitled "EMEA Building Materials: Cement Volume
Growth in Emerging Markets, North America Underpin Stable
Outlook", is now available on Moody's subscribers
can access this report via the link provided at the end of this
press release

Moody's forecasts that aggregate EBITDA growth in the EMEA
building materials sector will be between -4% and +4% over the
next 12-18 months, and more towards the upper end of that range,
between flat and 4% growth, in 2013, with large discrepancies
between European-focused producers and more geographically
diversified companies.

Over the next 12-18 months, Moody's expects most EMEA buildings
materials companies to focus on deleveraging to restore stronger
credit metrics and regain investment-grade ratings. This could
result in very little M&A activity.

"We expect to see good volume growth in Asia-Pacific and Latin
America as well as mid-single-digit increases in cement volumes
in North America, which will compensate for a mid-single-digit
decline in cement volumes in Western Europe in 2013. Demand will
remain very heterogeneous across Europe," says Stanislas
Duquesnoy, a Vice President - Senior Credit Officer in Moody's
Corporate Finance Group and author of the report.

In addition, Moody's expects energy costs to be more benign than
they were in 2012. Cement producers with more exposure to
emerging markets should continue to see higher cost inflation
than more European-focused peers because of inflation-related
payroll and logistics costs.

Moody's also notes that, due to new accounting changes in 2014,
issuers will no longer be able to account for joint ventures
using the proportional consolidation method and will have to
switch to equity consolidation. Lafarge SA (Ba1 stable),
HeidelbergCement AG (Ba1 stable) and CRH (Baa2 stable) will be
affected the most because more than 5% of their revenues are
generated from joint ventures.

Moody's could change its outlook for this industry to positive if
it believes that aggregated EBITDA growth is likely to exceed 4%
over the coming 12-18 months. This is unlikely at present, but
could occur if the European market recovers faster than
anticipated or if there is sustained growth in the US private
residential and commercial construction sectors, coupled with
continued growth in emerging markets. Moody's would consider
changing the outlook to negative if EBITDA growth declines by
more than 4% due to a fall in volumes resulting from more
pronounced macroeconomic pressure or a spike in inflation, both
of which would exert pressure on margins.

* Norton Rose Combines with Fulbright & Jaworksi
John Coleman, Managing Partner, Canada, at Norton Rose Fulbright,
disclosed that effective June 3, 2013, Norton Rose has formally
combined with leading US legal practice Fulbright & Jaworski LLP
to create Norton Rose Fulbright.

"This is an exciting step for us and one which we believe will
greatly benefit our clients," Mr. Coleman said.

"Norton Rose Fulbright has close to 3,800 lawyers and offers
worldwide coverage from more than 50 cities across Canada, the
United States, Europe, Latin America, Asia, Australia, Africa,
the Middle East and Central Asia.  In the United States, we have
one of the country's largest legal practices, with 750 lawyers
coast to coast, including New York, Houston, Dallas, Los Angeles
and Washington, DC."

"As Norton Rose Fulbright, we will be able to provide clients
with a full service US law capability with Canada's largest
trading partner.  We can now help with inbound and outbound
cross-border deals seamlessly, with lawyers based in our
country's key markets.  We will also have new north-to-south
access to the Americas, with close to 1,500 lawyers in Canada,
the US and Latin America.

"Norton Rose Fulbright aims to provide you with world-class legal
skills in corporate, M&A and securities; banking and finance;
dispute resolution and litigation; intellectual property;
antitrust and competition; employment and labour; real estate;
and tax.  We have one of the leading global regulation and
investigations practices, with highly experienced regulatory
lawyers in all of our principal locations.  We have also
significantly enhanced the depth and breadth of our resources in
financial institutions; energy; infrastructure, mining and
commodities; technology and innovation; transport; and life
sciences and healthcare, which comprise our key industry sector

"I will continue to be a member of our global management team and
am joined on the executive by Fulbright & Jaworski's US Managing
Partner, Kenneth Stewart.  Canadian Senior Partners Michael Lang
and Bill Tuer, and Partner Jane Caskey, are also members of our
global management team.  Our Global Chairman is Adrian Ahern,
based in Sydney and Norman Steinberg, our Canadian Chairman is
now also Global Co-Chair.

"The creation of Norton Rose Fulbright has been a long-term
ambition for us and represents a landmark achievement for both
practices.  It puts us on a new level of legal service to clients
in Canada, the US and around the world," Mr. Coleman said.

Norton Rose Fulbright is a global legal practice.  The firm
provides the world's pre-eminent corporations and financial
institutions with a full business law service.


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

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

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

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


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

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., 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,
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