/raid1/www/Hosts/bankrupt/TCREUR_Public/130606.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Thursday, June 6, 2013, Vol. 14, No. 111
Headlines
B E L G I U M
BRUSSELS AIRPORT: S&P Raises Sr. Secured Debt Rating From 'BB+'
F R A N C E
KKR RETAIL: Moody's Assigns First-Time B2 Corp. Family Rating
G E R M A N Y
CENTROTHERM PHOTOVOLTAICS: Ends Insolvency Proceedings
KION GROUP: S&P Puts 'B' Corp. Credit Rating on Watch Positive
TITAN EUROPE 2006-2: Moody's Affirms B3 Rating on EUR0.05MM Notes
G R E E C E
FREESEAS INC: Inks Investment Agreement with Dutchess
HELLENIC TELECOM: Moody's Alters Outlook on Caa1 CFR to Stable
NATIONAL BANK: Launches Cash Tender Offer for 22,500,000 ADS
NAVIOS MARITIME: Moody's Assigns 'Ba3' Corporate Family Rating
NAVIOS MARITIME: S&P Assigns 'BB' Long-Term Corp. Credit Rating
I T A L Y
BRL MORTGAGES: Moody's Updates on Series 5 Updates
N E T H E R L A N D S
LAMBDA FINANCE: S&P Raises Ratings on Two Note Classes to 'B'
R O M A N I A
VULCAN BUCHAREST: Bucharest Court Approves Insolvency Process
* ROMANIA: Insolvency Rate Set to Rise by 10% This Year
S P A I N
INSTITUTO VALENCIANO: S&P Affirms 'BB-/B' Issuer Credit Ratings
* Moody's Takes Action on Notes in Two Spanish RMBS
S W E D E N
SWEDBANK AB: Moody's Hikes Preferred Stock Rating to Ba1(hyb)
UNILABS HOLDING: S&P Assigns Prelim. 'B+' Corp. Credit Rating
S W I T Z E R L A N D
BARR CALLEBAUT: Moody's Rates New Senior Notes '(P)Ba1'
U N I T E D K I N G D O M
ASSET REPACKAGING: S&P Withdraws All Ratings Following Redemption
BAKKAVOR FINANCE: Moody's Changes Outlook on 'B2' CFR to Stable
BAKKAVOR FINANCE: S&P Affirms 'B-' Long-Term Corp. Credit Rating
CABOT FINANCIAL: S&P Affirms 'BB-' Counterparty Credit Rating
CO-OPERATIVE BANK: Hires Richard Pennycook as Finance Director
COOL HOLDING: Moody's Corrects Prob. of Default Rating to Ba3-PD
HEART OF MIDLOTHIAN: Downplays Administration Fears Over Tax Bill
RANGERS INTERNATIONAL: No Evidence to Link Craig Whyte to Buyer
ROYAL BANK: Gov't Has Until Sept. to Draw Up Options for Future
* UK: High Streets May Lose Another 5,000 Shops in Next 5 Years
U Z B E K I S T A N
UNIVERSAL BANK: Fitch Affirms 'CCC' LT Issuer Default Rating
X X X X X X X X
* Upcoming Meetings, Conferences and Seminars
*********
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B E L G I U M
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BRUSSELS AIRPORT: S&P Raises Sr. Secured Debt Rating From 'BB+'
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Standard & Poor's Ratings Services said that it had corrected its
issue rating on the senior secured debt of Belgium-based airport
operator Brussels Airport Holding S.A./N.V. (BAH) by raising it
to 'BBB-' from 'BB+'.
Due to an administrative error, on April 22, 2013, when S&P
upgraded BAH, it did not raise the rating on BAH's senior secured
debt after the publication of S&P's research update, "Brussels
Airport Upgraded To 'BBB-' On Improved Financial Performance;
Outlook Stable".
This action corrects this error.
RATINGS LIST
Upgraded
To From
Brussels Airport Holding S.A./N.V.
Senior Secured BBB- BB+
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F R A N C E
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KKR RETAIL: Moody's Assigns First-Time B2 Corp. Family Rating
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Moody's Investors Service has assigned a first-time B2 corporate
family rating (CFR) and B1-PD probability of default rating (PDR)
to KKR Retail Partners Midco S.… r.l (Midco), the ultimate
holding company of SMCP Group (Sandro Maje Claudie Pierlot).
Concurrently, Moody's has assigned a provisional (P)B3 rating,
with a loss given default (LGD) assessment of LGD5, 78%, to the
proposed EUR290 million worth of senior secured notes due 2020 to
be issued by SMCP S.A.S. The outlook on the ratings is stable.
The proceeds from the proposed issuance will be used to (1) repay
certain existing debt, including a mezzanine facility and
bilateral facilities; and (2) finance the acquisition by KKR and
certain members of management of the share capital of Groupe SMCP
S.A.S (a subsidiary of the issuer), and related transaction
costs. The financing of this acquisition will be supplemented by
ordinary and preferred shares and convertible bonds issued to
affiliates of KKR and certain members of management.
"The B2 rating we have assigned to Midco balances SMCP group's
small size, its exposure to fashion risk, reliance on the
competitive and fragmented French market, limited brand portfolio
focused on womenswear and its high leverage with its good brand
recognition in the 'affordable luxury' segment, track record of
dynamic sales growth and solid and growing profitability," says
Yasmina Serghini-Douvin, a Moody's Vice President - Senior
Analyst and lead analyst for SMCP Group.
Moody's issues provisional ratings in advance of the final sale
of securities and these reflect Moody's credit opinion regarding
the transaction only. Upon a conclusive review of the final
documentation Moody's will endeavour to assign definitive
ratings. A definitive rating may differ from a provisional
rating.
Ratings Rationale
-- B2 CFR/B1-PD PDR --
The B2 CFR reflects SMCP group's modest scale, with revenue of
EUR290 million in the financial year ended 31 December 2012, and
its reliance on its domestic market, France, which represented
approximately 73% of its revenue in 2012. The rating also
reflects the group's reliance on a limited number of brands, with
its core Sandro and Maje brands representing the vast majority of
the retailer's revenue, albeit with a growing contribution from
Sandro Men and Claudie Pierlot. Importantly, SMCP Group's 'fast
fashion' positioning, targeting fashionable and affluent
customers, means that it is exposed to fashion risk and that it
competes against a number of players, including established
luxury brands with more affordable lines, other 'affordable
luxury' players and mass retailers.
In addition, Moody's cautions that SMCP group's fast-paced
expansion strategy, particularly in new markets, creates
integration risks. The rating agency expects this strategy to
result in the group making sustained high investments and
therefore generating no, or modestly negative, free cash flow in
the next 18 months. Furthermore, the B2 rating factors in a high
leverage -- defined as debt/EBITDA, after Moody's adjustments
principally for capitalised operating leases -- which the rating
agency estimates will be in excess of 5.0x at the end of the
current financial year, pro forma for the transaction. For its
calculations, Moody's has treated the new yield free convertible
preferred equity certificates ('YFCPECs') issued by Midco to its
parent holding company (situated outside of the restricted group)
as 100% equity.
However, on May 14, 2013, Moody's has published a Request for
Comment ('RfC') for a new proposed approach for assigning debt
and equity treatment to hybrid securities of speculative-grade
non financial companies with a Corporate Family Rating (CFR) of
Ba1 or below. The RfC is open until 14th June 2013. At this
juncture, Moody's believes that the YFCPECs meet the criteria
highlighted by the RfC for full equity credit including a
restriction on possible changes to the shareholder instrument
until its maturity. That said, this assessment will remain
preliminary until the new methodology is implemented.
More positively, the B2 rating considers the good brand
recognition of the core SMCP brands, the solid sales growth
recorded by the group in recent years, both organically and
through the opening of new points of sale, and its solid
profitability, which compares favourably with that of other rated
apparel and apparel retail companies. SMCP group's adjusted EBIT
margin was 20% in 2012 (on the basis of a revenue net of
concession fees). The retailer's performance has benefited from
the positive trends within the 'affordable luxury' segment, which
has generally proved more resilient than mid-priced and value
apparel categories, and from tight inventory management, which
reduces markdown expenses. High price tags also give more pricing
flexibility, protecting margins from the adverse effects of
fluctuations in commodity prices. Moreover, SMCP Group's
development model, covering both leased stores and concessions in
department stores, would provide the group with somewhat more
flexibility should demand fall because the retailer could, in
theory, exit its concession contracts more quickly.
-- (P)B3 RATING ON SENIOR SECURED NOTES --
The (P)B3 rating (LGD5, 78%) assigned to the company's proposed
senior secured notes due 2020 reflects their position behind a
significant amount of operating subsidiaries' non-financial debt,
including trade payables and a committed EUR50 million super
senior revolving credit facility. The proposed notes and the
revolver are both guaranteed by certain parent holding companies
(no upstream guarantees), and benefit, on a first-priority basis,
from certain share pledges. Moody's assessment factors in
significant limitations on the enforcement of the guarantees and
collateral under Luxembourg and French law. It also factors in
additional committed secured local bilateral facilities, which
Moody's expects will rank at the same level as the proposed
senior secured notes.
The super-senior facility will only have one maintenance covenant
which is expected to be tested only when the facility is drawn at
25%, and the headroom under it will be comfortable. In Moody's
opinion, this is not a very restrictive covenant.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook on the ratings reflects Moody's expectation
that SMCP group will deliver further sales growth in the next 12-
18 months as it continues to expand, in a controlled manner, its
points of sale network whilst benefiting from a positive momentum
in the 'affordable luxury' segment. To maintain a stable outlook,
SMCP group would need to (1) reduce its adjusted leverage ratio
below 5.0x and to deliver an adjusted EBITA/interest expense
ratio above 1.7x; and (2) maintain an appropriate liquidity
profile, including access to the committed EUR50 million
revolving credit facility and other local bank facilities, which
are key to the group covering its seasonal working capital
requirements, especially in the latter part of the calendar year.
WHAT COULD CHANGE THE RATING UP/DOWN
Moody's could downgrade the ratings if there was evidence of
pressure on SMCP group's sales growth as a result of the retailer
experiencing difficulties in implementing its international
expansion strategy or a shift in consumer behaviour away from the
'affordable luxury' segment. Quantitatively, an adjusted
debt/EBITDA ratio above 5.5x could trigger a downgrade.
Conversely, Moody's could upgrade the ratings if SMCP group
establishes a longer track record of profitable growth and
successfully diversifies its business profile, which is currently
very dependent on France and a few core brands. An upgrade would
also require the group to deliver and maintain positive free cash
flow and improved credit metrics, such as adjusted debt/EBITDA
comfortably below 4.5x and adjusted EBITA/interest expense above
2.5x.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was the Global
Retail Industry published in June 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Headquartered in Paris, France, SMCP group is an apparel retailer
focused on the 'affordable luxury' segment and operating four
core brands, namely Sandro, Sandro Men, Maje and Claudie Pierlot.
The group generated EUR291 million in revenue and EUR50 million
in operating profit in the financial year ended December 31,
2012.
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G E R M A N Y
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CENTROTHERM PHOTOVOLTAICS: Ends Insolvency Proceedings
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Mark Osborne at PV-Tech reports that centrotherm photovoltaics,
said it had successfully restructured the company under
insolvency proceedings, securing around 900 jobs.
The Ulm District Court has approved centrotherm photovoltaics'
insolvency plan, enabling the company to operate independently
once again, PV-Tech relates. According to PV-Tech, subsidiaries,
centrotherm thermal solutions and centrotherm SiTec GmbH, are
also expected to have proceedings halted.
As previously planned, creditors have agreed a debt-for-equity
swap and will hold a majority share in the company, PV-Tech. The
company, as cited by PV-Tech, said that the restructuring has
also secured its stock market listing, central to creditors
potentially recouping debts completely.
PV-Tech is a Germany-based provider of technology and services
for the photovoltaics industry.
KION GROUP: S&P Puts 'B' Corp. Credit Rating on Watch Positive
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Standard & Poor's Ratings Services placed its 'B' long-term
corporate credit rating on Germany-based material handling
equipment manufacturer KION GROUP GmbH (KION), on CreditWatch
with positive implications.
S&P also placed its 'B' issue ratings on KION's existing
EUR650 million and EUR500 million secured notes on CreditWatch
positive. The recovery rating on EUR500 million and
EUR650 million back-to-back loan facilities borrowed by Linde
Material Handling is '4', indicating S&P's expectation of average
(30%-50%) recovery prospects for lenders in the event of a
payment default.
The CreditWatch placement reflects S&P's view that, if
successful, KION's proposed IPO could lead to a significant and
sustainable reduction in leverage. At this time, private equity
investor KKR and Goldman Sachs together with management hold 75%
of KION's shares. The remainder is held by China's Weichai Power
Co. Ltd. (Weichai) following Weichai's subscription to a capital
increase that became effective at the end of 2012.
The IPO should result in a material reduction in KKR's and
Goldman's level of control and will provide liquidity in the
remaining stake in KION. However, S&P expects the current
shareholders to retain an important influence over financial
policy matters, including future dividend payouts. On the other
hand, S&P anticipates KION's financial policy to remain targeted
around organic growth including bolt-on acquisitions with a focus
on further deleveraging of the currently highly leveraged capital
structure.
The current rating remains constrained by S&P's view of the
group's highly leveraged financial structure, with FFO to debt
for 2012 of about 11% and debt to EBITDA of about 5.1x (or
estimated FFO to debt of slightly less than 10% and debt to
EBITDA of 5.6x when excluding cash flow and earnings from its
Hydraulics business that was deconsolidated after KION sold an
80% share in this business to Weichai). S&P believes that
following a successful IPO, KION's credit metrics could improve
to a level compatible with an "aggressive" financial risk
descriptor, which includes FFO to debt of between 12% and 20%.
The positive outlook that S&P assigned on April 15, 2013,
reflected its view that a sustainable improvement of leverage
ratios could be achieved by the group's operating performance,
but a successful IPO, depending on the size of proceeds, could
offer further upside potential for the financial risk profile, in
S&P's view.
KION's "satisfactory" business risk profile benefits from its
very strong market position in Europe where it generates close to
80% of sales, and its significant revenues generated with less
cyclical aftersales activities. KION also has good end-market
and customer-base diversity. This is tempered to some degree by
its exposure to cyclical demand for new material handling
equipment and its volatile, though improved, operating
profitability.
S&P aims to resolve the CreditWatch placement upon completion of
the IPO, which S&P understands could take place in June 2013. If
the IPO is successful, S&P could raise the corporate credit
rating and issue ratings. S&P's review will include an
assessment of KION's post IPO capital structure, and financial
policy. At this stage, S&P expects upside potential for the
rating of up to two notches. If high proceeds, coupled with a
continued solid operating performance, lead to FFO to debt of
more than 20%, S&P could raise the rating by three notches.
TITAN EUROPE 2006-2: Moody's Affirms B3 Rating on EUR0.05MM Notes
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Moody's Investors Service has taken rating actions on the
following classes of Notes issued by Titan Europe 2006-2 plc
(amounts reflect initial outstanding):
EUR530M Class A Notes, Upgraded to A3 (sf); previously on
Aug 7, 2012 Confirmed at Baa3 (sf)
EUR0.05M Class X Notes, Affirmed B3 (sf); previously on Aug 22,
2012 Downgraded to B3 (sf)
Moody's does not rate the Class B, C, D, E, F, G, H, and J Notes.
Ratings Rationale
The upgrade action is driven by the substantial increase in
credit enhancement for the Class A Notes (87%) which has built up
following the sequential allocation of principal receipts from
the Petrus Portfolio Loan repayment and the recovery proceeds
from the Velvet portfolio Loan. This enhancement level more than
offsets the impact of Moody's higher loss expectations for the
remaining pool. The rating on the Class X Notes is affirmed
because the current rating is commensurate with the updated risk
assessment.
Moody's expects full repayment of the Class A Notes before the
legal final maturity date in January 2016. However, the extent of
the upgrade is limited by the remaining tail period of 2.75 years
and the lack of visibility on the work-out timing for the two
remaining German multi-family loans that are in special
servicing. Currently, none of the underlying properties are in
sale process and given their mostly secondary quality and overall
high vacancy levels averaging around 19%, the disposal process
could be extended into the final year of the tail period.
There are no B-loan portions for the Margaux and Labrador
Portfolio Loans and Moody's current weighted average LTV is 139%.
In comparison, the Underwriter (UW) LTV is 100.8%. Moody's value
for the whole securitized portfolio is EUR 228 million versus the
EUR 315.16 million UW value. Both loans are in maturity payment
default and given Moody's underlying property value, Moody's has
a 25%-50% loss expectation for both loans.
The key parameters in Moody's analysis are the default
probability of the securitised loans (both during the term and at
maturity) as well as Moody's value assessment for the properties
securing these loans. Moody's derives from those parameters a
loss expectation for the securitised pool.
In general, Moody's analysis reflects a forward-looking view of
the likely range of commercial real estate collateral performance
over the medium term. From time to time, Moody's may, if
warranted, change these expectations. Performance that falls
outside an acceptable range of the key parameters such as
property value or loan refinancing probability for instance, may
indicate that the collateral's credit quality is stronger or
weaker than Moody's had anticipated when the related securities
ratings were issued. Even so, a deviation from the expected range
will not necessarily result in a rating action nor does
performance within expectations preclude such actions. There may
be mitigating or offsetting factors to an improvement or decline
in collateral performance, such as increased subordination levels
due to amortisation and loan re- prepayments or a decline in
subordination due to realised losses.
Primary sources of assumption uncertainty are the current
stressed macro-economic environment and continued weakness in the
occupational and lending markets. Moody's anticipates (i) lending
will remain constrained over the next years, while subject to
strict underwriting criteria and heavily dependent on the
underlying property quality, (ii) strong differentiation between
prime and secondary properties, with further value declines
expected for non-prime properties, and (iii) occupational markets
will remain under pressure in the short term and will only slowly
recover in the medium term in line with anticipated economic
recovery. Overall, Moody's central global macroeconomic scenario
for the world's largest economies is for only a gradual
strengthening in growth over the coming two years. Fiscal
consolidation and volatility in financial markets will continue
to weigh on business and consumer confidence, while heightened
uncertainty hampers spending, hiring and investment decisions. In
2013, Moody's expects no growth in the Euro area and only slow
growth in the UK.
Moody's Portfolio Analysis
Currently, two loans of the initial seven remain in the pool and
are secured by first-ranking legal mortgages over 47 properties.
The pool exhibits above average concentration in terms of
geographic location and property type as all are multi-family
properties in Germany. Moody's uses a variation of Herf to
measure diversity of loan size, where a higher number represents
greater diversity. Large multi-borrower transactions typically
have a Herf of less than 10 with an average of around 5. This
pool has a Herf of 1.31 compared to a Herf of 5.23 at closing.
The multi-family Petrus Portfolio Loan with EUR 208 million
securitized balance was repaid on the January 2013 IPD. This loan
and the Margaux Portfolio Loan had the same sponsor and were
cross defaulted only. The sale of the Petrus Portfolio resulted
in EUR 15 million of surplus sale proceeds. Despite not being
cross collateralized, a portion of the surplus will be used to
fund capex requirements under the Margaux Portfolio and will also
be used towards repayment of amounts due under the Margaux
Portfolio Loan.
The Velvet Portfolio Loan was sold in April 2013. This resulted
in EUR 125.63 million recovery for the Class A Notes and EUR
15.37 million loss allocated to the Class J and H Notes.
The Margaux Portfolio Loan (86.2% of the pool) is secured by 66
properties (grouped together into 4 properties by the servicer)
located mainly in East Germany. There are approximately 8,350
residential units, 120 commercial units and 1,106 other units.
The vacancy in the portfolio is 19.3% which has improved compared
to 2008-2009 when vacancy was 27%. The high vacancy is partly
driven by the poor condition of some of the properties and the
weak demographic profile of some of the properties' locations.
The June 2012 valuation report indicated a EUR 15.9 million capex
requirement compared to the capex spend in 2012 of EUR 6.8
million. The current Moody's LTV of 140%, should improve over
time as a portion of the GBP 15 million Petrus surplus sales
proceeds is expected to be used towards the Margaux Loan and
properties. The UW LTV is 102%.
The Labrador Portfolio Loan (13.8% of the pool) is secured by 43
multifamily properties in Northern Germany with approximately
1,500 residential units. The vacancy of this portfolio is also
high at 18.7%. The loan has been in special servicing since
November 2010 and cold forced administration with the insolvency
administrator has been finalised recently. There is very limited
visibility on the performance of this portfolio due to
insufficient reporting. Moody's LTV is 134% versus the UW LTV of
91.4%.
Rating Methodology
The methodologies used in this rating were Moody's Approach to
Real Estate Analysis for CMBS in EMEA: Portfolio Analysis (MoRE
Portfolio) published in April 2006 and Rating Caps for CMBS in
the Tail Period, published in October 2011.
Other factors used in this rating are described in European CMBS:
2013 Central Scenarios published in February 2013.
The updated assessment is a result of Moody's on-going
surveillance of commercial mortgage backed securities (CMBS)
transactions. Moody's prior assessment is summarised in a press
release dated August 22, 2012. The last Performance Overview for
this transaction was published on May 13, 2013.
In rating this transaction, Moody's used both MoRE Portfolio and
MoRE Cash Flow to model the cash-flows and determine the loss for
each tranche. MoRE Portfolio evaluates a loss distribution by
simulating the defaults and recoveries of the underlying
portfolio of loans using a Monte Carlo simulation. This portfolio
loss distribution, in conjunction with the loss timing calculated
in MoRE Portfolio is then used in MoRE Cash Flow, where for each
loss scenario on the assets, the corresponding loss for each
class of notes is calculated taking into account the structural
features of the notes. As such, Moody's analysis encompasses the
assessment of stressed scenarios.
Moody's ratings are determined by a committee process that
considers both quantitative and qualitative factors. Therefore,
the rating outcome may differ from the model output.
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G R E E C E
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FREESEAS INC: Inks Investment Agreement with Dutchess
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FreeSeas Inc. entered into an Investment Agreement with Dutchess
Opportunity Fund II, LP, a fund managed by Dutchess Capital
Management, II, LLC, pursuant to which, for a 36-month period,
the Company has the right to sell up to 2,304,662 shares of the
Company's common stock, subject to conditions the Company must
satisfy as set forth in the Investment Agreement. The Company
intends to use the proceeds of the sale of shares pursuant to the
Investment Agreement for general corporate and working capital
purposes.
For each share of common stock purchased under the Investment
Agreement, the Investor will pay 98 percent of the lowest daily
volume weighted average price during the pricing period, which is
the five consecutive trading days commencing on the day the
Company delivers a put notice to the Investor. Each such put may
be for an amount not to exceed the greater of $500,000 or 200
percent of the average daily trading volume of the Company's
common stock for the three consecutive trading days prior to the
notice date, multiplied by the average of the three daily closing
prices immediately preceding the notice date. In no event,
however, will the number of shares of common stock issuable to
the Investor pursuant to a put cause the aggregate number of
shares of common stock beneficially owned by the Investor and its
affiliates to exceed 9.99 percent of the outstanding common stock
at the time.
A copy of the Investment Agreement is available at:
http://is.gd/9Z397B
About FreeSeas Inc.
Headquartered in Athens, Greece, FreeSeas Inc., formerly known as
Adventure Holdings S.A., was incorporated in the Marshall Islands
on April 23, 2004, for the purpose of being the ultimate holding
company of ship-owning companies. The management of FreeSeas'
vessels is performed by Free Bulkers S.A., a Marshall Islands
company that is controlled by Ion G. Varouxakis, the Company's
Chairman, President and CEO, and one of the Company's principal
shareholders.
The Company's fleet consists of six Handysize vessels and one
Handymax vessel that carry a variety of drybulk commodities,
including iron ore, grain and coal, which are referred to as
"major bulks," as well as bauxite, phosphate, fertilizers, steel
products, cement, sugar and rice, or "minor bulks." As of
Oct. 12, 2012, the aggregate dwt of the Company's operational
fleet is approximately 197,200 dwt and the average age of its
fleet is 15 years.
Freeseas disclosed a net loss of US$30.88 million in 2012, a net
loss of US$88.19 million in 2011, and a net loss of US$21.82
million in 2010. The Company's balance sheet at Dec. 31, 2012,
showed US$114.35 million in total assets, $106.55 million in
total liabilities and US$7.80 million in total shareholders'
equity.
RBSM LLP, in New York, issued a "going concern" qualification on
the consolidated financial statements for the year ended Dec. 31,
2012. The independent auditors noted that the Company has
incurred recurring operating losses and has a working capital
deficiency. In addition, the Company has failed to meet
scheduled payment obligations under its loan facilities and has
not complied with certain covenants included in its loan
agreements. It has also failed to make required payments to
Deutsche Bank Nederland as agreed to in its Sept. 7, 2012,
amended and restated facility agreement and received notices of
default from First Business Bank. Furthermore, the vast majority
of the Company's assets are considered to be highly illiquid and
if the Company were forced to liquidate, the amount realized by
the Company could be substantially lower that the carrying value
of these assets. These conditions among others raise substantial
doubt about the Company's ability to continue as a going concern.
HELLENIC TELECOM: Moody's Alters Outlook on Caa1 CFR to Stable
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Moody's Investors Service has changed to stable from negative the
outlook on the Caa1 corporate family rating (CFR) of Hellenic
Telecommunications Organisation S.A. (OTE). Concurrently, Moody's
has changed to stable from negative the outlook on the company's
Caa2-PD probability of default rating and on the Caa1 senior
unsecured ratings on the global medium-term notes (GMTN) and
global bonds issued by OTE PLC (OTE's fully and unconditionally
guaranteed subsidiary). At the same time, Moody's has affirmed
all ratings.
"We have changed the outlook on OTE's ratings to stable because
we expect that the company's recently improved liquidity profile
and credit metrics will be sustained over the medium term as a
result of the continued execution of its business plan," says
Carlos Winzer, a Moody's Senior Vice President and lead analyst
for OTE.
Ratings Rationale
The change of outlook on OTE's ratings to stable from negative
reflects the fact that management has substantially improved the
company's liquidity risk management as well as increased its
capacity to de-lever, as a result of recent asset disposals.
This, together with the recent bond issue has created a c. EUR1.4
billion cash buffer which, together with the expected future free
cash flow generation, comfortably prefunds OTE's cash needs
beyond the next 24 months.
In addition, Moody's expects the company to sustain improvement
in its credit metrics over the medium term. Moody's notes that
the company's credit metrics have been on an improving trend over
the past two years, driven by management's execution of its
business plan, which includes minimizing the impact on the
company of the adverse macroeconomic conditions in Greece.
Specifically, Moody's recognizes management's focus on opex
containment, cash flow generation and a progressive reduction in
debt, as well noting the substantial improvement in the company's
liquidity risk management.
Moody's country ceiling for Greece remains at Caa2 and is based
on the risk of an exit by the country from the euro area. The
Caa2-PD PDR reflects that, despite the improvements achieved, OTE
still faces a high risk of defaulting on its bank debt owing to
the fact that a substantial amount of that debt is subject to
Greek law and therefore susceptible to redenomination. While
acknowledging that the risk of a currency redenomination in
Greece is significant, this is not currently Moody's central
scenario.
The Caa1 CFR and rating on the bonds issued under OTE's GMTN
program is one notch above the ceiling and reflects that (1) the
major part of the debt is issued by a non-Greek financial
subsidiary; (2) that around 30% of revenues and cash-flows are
generated outside of Greece; (3) that Moody's expects OTE to
maintain substantial cash balances of around EUR1.5 billion or
more earmarked for the repayment of the bonds and therefore
mitigate the risks linked to a potential exit by Greece; and (4)
the degree of support from Deutsche Telekom.
In the event of Greece's exit from the euro area, Moody's says
that the risk of OTE's being forced to default on some of its
debt would be exacerbated by the risk of a redenomination of the
country's currency, as well as by the imposition of capital
controls.
However, more positively, Moody's also recognizes the outstanding
corporate restructuring process that OTE has in place, which has
contributed to (1) the recent improvement in its EBITDA margin,
liquidity risk management and operating performance trends, the
latter demonstrated in 2012 and Q1 2013; (2) the strengthening of
the company's cash flow; and (3) significant deleveraging.
OTE's Caa1 CFR continues to reflect the company's underlying
business risk, given that it operates in a very challenging
market, in which revenues remain under pressure due to a
contraction in consumer spending and tough competition. Moody's
expects OTE's operating performance to continue to be affected by
adverse macroeconomic conditions in Greece, intense competition
across all segments and the increasing challenge the company
faces to further reduce costs while its revenues remain under
pressure. However, the rating agency believes that these factors
will be mitigated by (1) the company's strong market positions in
both domestic fixed-line and mobile services; (2) a degree of
international diversification, which contributes to the company's
growth outside of Greece; (3) quality of management, which has
enabled the company to cut operational expenditure to offset
pressure on revenues and contain further erosion of its EBITDA
margin; and (4) the ongoing implicit support from its largest
shareholder, Deutsche Telekom (Baa1 stable).
OTE has a strong liquidity profile and has no need to issue more
debt in the near term. Indeed, it will only do so to take
advantage of opportunities that may arise in the market. In
Moody's view, internal annual cash flow generation of around
EUR550 million and cash of some EUR1.4 billion, as of March 2013,
should enable OTE to cover its debt maturities of EUR714 million
this year, EUR903 million in 2014 and EUR788 million in 2015. In
addition, the company has now received cash proceeds of some
EUR208 million from the sale of HellaSat and is expecting by
September EUR717 million from the sale of Globul.
Outlook
The stable outlook on the ratings incorporates Moody's
expectation of a strong liquidity profile and sustainable
improvement in credit metrics.
What Could Change The Ratings Up/Down
In the absence of a more explicit statement of support from
Deutsche Telekom, Moody's currently expects no upward pressure on
OTE's ratings in the short term, as reflected by the stable
outlook. However, Moody's could change the outlook on the ratings
to positive if the macroeconomic environment in Greece were to
improve such that (1) the rating agency perceives that this
improvement would favorably affect OTE's operating performance on
a sustainable basis; (2) the company's free cash flow is
sufficient to allow a further improvement in credit metrics and
steady deleveraging; and (3) Moody's concerns over the impact on
OTE of a euro exit by Greece are mitigated.
Negative pressure on OTE's ratings could arise if (1) conditions
in the domestic environment were to deteriorate further as a
result of a further default by Greece or the material increase in
risk of Greece exiting the euro area; and/or (2) unexpected
pressure on its liquidity, in particular failure to maintain
comfortable cash balances
Principal Methodology
The principal methodology used in these ratings was the Global
Telecommunications Industry published in December 2010. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Headquartered in Athens, Hellenic Telecommunications Organisation
SA (OTE) is the leading telecommunications operator in Greece,
servicing 3.1 million fixed access lines, 1.2 million fixed-line
broadband connections, 149,031 TV subscribers, and 7.6 million
mobile customers in the country as of end Q1 2013. In addition to
its wireless operations in Greece, OTE offers mobile telephony
services to customers in Albania (1.9 million customers) and
Romania through Cosmote, Greece's leading provider of mobile
telecommunications services. OTE offers mobile telephony through
a number of subsidiaries, all of which command leading positions
in their respective markets. In addition, OTE offers wireline
services in Romania through RomTelecom. OTE is also involved in a
range of activities in Greece, notably in real estate and
satellite telecommunications. OTE owns 100% of Germanos, the
largest distributor of technology-related products in southeast
Europe. For 2012 OTE reported revenues of EUR 4.7 billion and
EBITDA of EUR 1.7 billion.
NATIONAL BANK: Launches Cash Tender Offer for 22,500,000 ADS
------------------------------------------------------------
National Bank of Greece S.A. on May 31 disclosed that it has
launched an offer to purchase for cash up to 22,500,000 of the
outstanding 25,000,000 American Depositary Shares (ADS CUSIP
633643507), each representing one of its Non-Cumulative
Preference Shares, Series A, nominal value EUR0.30 per share,
upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 31, 2013 and the accompanying Letter
of Transmittal, which, as each may be amended and supplemented
from time to time, constitute the offer. On the terms and
subject to the conditions of the Offer, the Bank is offering to
pay US$12.50 per ADS net to the seller in cash, less any
applicable withholding taxes and without interest, after
deduction of any other applicable fees and taxes, for ADSs
validly tendered and not validly withdrawn.
The Offer aims to generate Core Tier 1 capital for the Bank and
to further strengthen the quality of its capital base.
The Bank will purchase up to 22,500,000 ADSs. If more than
22,500,000 are validly tendered and not validly withdrawn, the
ADSs tendered will be purchased on a pro rata basis. As of
May 30, 2013, there were 25,000,000 ADSs outstanding. All of our
outstanding Preference Shares are represented by ADSs. The offer
is not conditional on any minimum number of ADSs being tendered
or the availability of any financing. However, the Offer is
conditional on certain conditions, as set out in the Offer to
Purchase.
The Offer and withdrawal rights will expire at 12:00 midnight,
New York City time, on Friday, June 28, 2013 (being the end of
the day on June 28, 2013), unless the Bank extends the offer and
subject to the absolute right of the Bank, in its sole discretion
and in accordance with applicable law, to terminate or amend the
Offer at any time. Holders of ADSs may validly withdraw tendered
ADSs at any time prior to the Expiration Time. Any ADSs validly
tendered and not validly withdrawn prior to the Expiration Time
may not be withdrawn unless the Bank extends the Expiration Time
or is otherwise required by law to permit such withdrawal.
Settlement is expected to occur on July 3, 2013, subject to the
rights or obligations of the Bank to extend or amend the Offer.
The Bank will submit for cancellation any ADSs purchased pursuant
to the Offer, and will cancel the Preference Shares represented
thereby, subject to the requisite corporate approvals for
cancellation of the Preference Shares.
The Bank will publicly announce no later than 9:00 a.m., New York
City time, on the first business day following the Expiration
Time the results of the Offer, the aggregate number of ADSs
accepted for purchase by the Bank, the satisfaction or waiver of
the Offer conditions and the proration factor, if applicable.
INDICATIVE TIMETABLE
The following table sets forth the expected times and dates of
the key events relating to the Offer. This is an indicative
timetable, and is subject to change at the discretion of the
Bank.
Events Times and Dates
Commencement of the Offer May 31, 2013
Expiration Time 12:00 midnight New York
City time, June 28, 2013
(which shall be the end of
the day of June 28, 2013)
Announcement of Offer Results July 1, 2013 (by no later
than 9:00 a.m. New York
City time)
Settlement Date July 3, 2013
The above times and dates are subject to the Bank's right to
extend, re-open, amend and/or terminate the Offer (subject to
applicable law and as provided in the Offer to Purchase).
Holders of ADSs are advised to check with any broker or other
securities intermediary through which they hold ADSs whether such
securities intermediary would require receipt of instructions to
participate in, or revocation of instructions to participate in,
the Offer before the deadlines set out above. The deadlines set
by any such securities intermediary, by DTC and by other clearing
systems for the submission of any tender instruction will also be
earlier than the relevant deadlines specified above.
On the Settlement Date, the Bank will pay the Tender Offer
Consideration to the Tender Agent in cash, less any applicable
withholding taxes and without interest thereon, for the ADSs
accepted for payment and subject to proration. Under no
circumstances will interest on the Tender Offer Consideration for
the ADSs be paid, regardless of any delay in making such payment.
DIVIDENDS AND FUTURE REDEMPTIONS
The Bank has not paid any dividends on the Preference Shares
since March 2011, and it will not make any dividend payments in
2013 in respect of 2012.
The Bank will not exercise its redemption right in respect of
Preference Shares that becomes exercisable on the interest
payment date falling in June 2013, as permitted in accordance
with the terms and conditions governing the Preference Shares at
the redemption price set out therein, and does not currently
intend to exercise its redemption right that is exercisable on
future interest payment dates. Any future decision to exercise
redemption rights, or calls, in respect of Preference Shares
underlying ADSs that are not purchased pursuant to the Offer will
be made on the basis of prevailing economic conditions, the then-
current regulatory framework and the best interests of the Bank,
subject, in any case, to the approval of the Bank of Greece and
any other relevant authority (including the European Commission
General Directorate for Competition and the Hellenic Financial
Stability Fund), as further described in the Offer to Purchase.
FURTHER INFORMATION
In connection with the Offer, Bank of America Merrill Lynch is
acting as Dealer Manager, D.F. King Worldwide is acting as
Information Agent and The Bank of New York Mellon is acting as
the Tender Agent.
The Bank has agreed to pay to each Retail Processing Dealer a
Retail Processing Fee related to the tender of the ADSs under
certain circumstances, as described further in the Offer to
Purchase.
The Bank filed on May 31 a Tender Offer Statement on Schedule TO,
together with the Offer to Purchase and related Letter of
Transmittal that are exhibits to the Tender Offer Statement, with
the Securities and Exchange Commission, and may file amendments
thereto. Each such document, as well as any amendments,
supplements or additional exhibits thereto, will be available
when filed by the Bank, free of charge, from the SEC's website at
http://www.sec.gov
Holders of ADSs are encouraged to read these documents, as they
contain important information about the Offer.
Requests for documents and information should be directed to the
Dealer Manager and the Information Agent for this Offer, at the
contacts set forth below.
Bank of America Merrill Lynch
Merrill Lynch, Pierce Fenner & Smith Incorporated
Attention: Liability Management Group
214 North Tryon Street, 21st Floor
Charlotte, North Carolina 28255
Collect: +1-980-683-3215
U.S. Toll Free: +1-888-292-0070
Merrill Lynch International
2 King Edward Street
London EC1A 1HQ
United Kingdom
Attn: John Cavanagh, +44 20 7995 3715
john.m.cavanagh@baml.com
Tommaso Gros-Pietro, +44 20 7995 2324
tommaso.gros-pietro@baml.com
INFORMATION AGENT
D.F. King Worldwide
In New York:
48 Wall Street, 22nd Floor
New York, New York 10005
Attn: Elton Bagley
(Toll-Free): (800) 967-4617
(Collect): (212) 269-5550
In London:
Citypoint, 11th Floor
1 Ropemaker Street
London, EC2Y 9AW
Attn: Damian Watkin / Katerina Papamichael
Call: +44 20 7920 9700
Email: nbg@king-worldwide.com
About National Bank of Greece
National Bank of Greece S.A., domiciled in the Hellenic Republic,
is a limited liability stock company (societe anonyme) organized
under the laws of the Hellenic Republic. National Bank of Greece
S.A. and its consolidated subsidiaries comprise a diversified
financial services group engaged in a wide range of banking,
financial services, insurance, stock-brokerage and finance-
related activities throughout the Hellenic Republic and
internationally. The Bank's headquarters are located at 86 Eolou
Street, Athens 10232, the Hellenic Republic and its telephone
number is +30-210-334-1000.
The ADSs are listed on the New York Stock Exchange under the
symbol "NBG-A". Each ADS represents one Preference Share.
Athens-based National Bank of Greece S.A. holds a significant
position in Greece's retail banking sector, with 511 branches and
1,348 ATMs as at Dec. 31, 2012. NBG's core focus outside of
Greece is in Turkey and South Eastern Europe, where the Company
currently operates in Bulgaria, Serbia, Romania, Albania, Cyprus
and the Former Yugoslavian Republic of Macedonia.
* * *
As reported by the Troubled Company Reporter-Europe on April 15,
2013, Standard & Poor's Ratings Services said that it had
affirmed its 'CCC/C' long- and short-term counterparty credit
ratings on both National Bank of Greece (NBG) and Eurobank
Ergasias S.A. S&P affirmed its 'CC' ratings on the banks'
preferred securities and subordinated debt. The outlook is
negative. The affirmation follows the banks' announcement that
they would be recapitalized independently of each other and that
the previously announced merger had been suspended.
NAVIOS MARITIME: Moody's Assigns 'Ba3' Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service has assigned to Navios Maritime
Partners L.P. ("NMP") a first-time corporate family rating (CFR)
of Ba3 and a probability of default rating (PDR) of Ba3-PD. At
the same time, the rating agency has assigned a (P)Ba3 rating,
with a loss given default (LGD) assessment of LGD3/48%, to the
company's proposed $250 million senior secured Term Loan B due
2018.
Ratings Rationale
"The Ba3 CFR assigned to NMP reflects its low financial leverage,
relative to its peers and its charter policy (based on long-term
contracts, ie 2 to 5 years currently), which provides good
revenue visibility. In addition, NMP benefits from a strong
customer base, and the protection accorded to all the company's
long-term revenues by credit insurance granted by an Aa3-rated
insurance company of a European Union member state. This
mitigates the risk that some of the company's current charterers
may ask to renegotiate their contracts," explains Marco Vetulli,
a Moody's Vice President - Senior Credit Officer and lead analyst
for NMP.
"Other key drivers are NMP's low operating costs as a result of
the low average age of its fleet, the fleet-management contract
the company signed with Navios Maritime Holdings, Inc (Navios
Holdings, B2 negative), which fixes the cost until December 2013,
and NMP's strong assets base," adds Mr. Vetulli. Moody's notes
Navios Holdings is not only NMP's sponsor and major shareholder
with 21.4 % holding, but also fully controls NMP's general
partner (Navios GP. L.L.C.).
However, Moody's says that NMP's CFR is constrained by the
company's small size, its significant refinancing risk due to the
its statutes and the high probability that it will not be able to
redeploy some of its vessels at the same high rates and its
dependence on Navios Holdings for its operations. NMP's revenues
were only approximately $205 million as at financial year-end
2012, whilst its freight contracts will expire progressively over
the next few years; this might exert pressure on the company's
ability to sustain its solid profitability as challenging
conditions within the dry bulk market are likely to translate in
lower rates for ships being redeployed.
NMP's intention is to raise a $250 million five-year Term Loan B
on the US market. The Term Loan B will be secured with a first
lien on part of its assets and its stock. Moody's understands
that it will use the proceeds from the financing primarily to
refinance existing debt and to fund some of its acquisitions.
Moody's expects to remove the (P)Ba3 rating on the loan and
assign definitive ratings upon satisfactory review of final
documentation and completion of the issuance. The (P)Ba3 rating
and LGD3/48% assessment on the proposed $250 million Term Loan is
in line with NMP's CFR and PDR of Ba3, because all of the
company's debt is secured.
Rationale for the Stable Outlook
The stable outlook on the ratings reflects Moody's expectation
that NMP's underlying business profile will remain robust and
that its financial profile will improve with the additional ships
that will be put into operation and generate additional cash
flows in the near future.
What Could Change The Rating Up/Down
The outlook could be changed to positive or the ratings upgraded
if NMP can demonstrate the ability to deleverage, to the extent
that its (1) debt/EBITDA ratio is sustained below 2.5x; and (2)
funds from operations (FFO) interest coverage (FFO +
interest/interest) approaches 10x;
The outlook could be changed to negative or the ratings
downgraded if the company's (1) debt/EBITDA increases above 3.5x
in the intermediate term; and (2) FFO interest coverage (FFO +
interest/interest) is sustained below 7x.
In addition to that, Moody's outlines that refinancing risk is
particularly high for NMP giving its nature of General
Partnership that constrains its capability to produce positive
Free Cash Flow as by its statutes it must distribute most of the
operating cash flow it generates. As a result of that, we will
monitor carefully the capability of the company to repay its
financial debt with its own assets and thus the rating could be
downgraded if the debt asset coverage of the company (computed as
market value of the vessels divided by total financial debt)
decreases below 175% .
Principal Methodology
The principal methodology used in this rating was the Global
Shipping Industry 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.
NMP is a limited partnership formed on August 2007 under the law
of the Republic of Marshall Islands by Navios Holdings. Navios GP
L.L.C. (the General Partner), a wholly owned subsidiary of Navios
Holdings, was also formed on that date to act as general partner
of NMP and received a 2% general partner interest in Navios
Partners. Currently, Navios Holdings owns approximately 21.4% of
NMP whereas the remaining 76% is spread among several
institutional investors. The company's revenues totalled $205
million as of 31 December 2012.
NAVIOS MARITIME: S&P Assigns 'BB' Long-Term Corp. Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned its
'BB' long-term corporate credit rating to the Marshall Islands-
registered drybulk shipping company Navios Maritime Partners L.P.
(Navios Partners). The outlook is stable.
S&P also assigned its 'BB' issue rating to the company's proposed
US$250 million senior secured term loan.
The rating on Navios Partners reflects S&P's assessment of the
company's "weak" business risk profile and its "significant"
financial risk profile. Navios Partners owns and operates
drybulk vessels. As of March 31, 2013, the New York Stock
Exchange-listed company owned 21 drybulk vessels of different
classes: seven Capesize, 12 Panamax, and two Ultra Handymax. It
also is awaiting a delivery of four additional dry bulkers by
March 31, 2014. Navios Partners' fleet is 6.5 years old, well
below the industry average of about 10 years.
Navios Partners' business risk profile is constrained by the
higher-than-average industry risks of the drybulk shipping
sector, such as high capital intensity and the significant
volatility of charter rates and asset values, which leads to
highly unpredictable earnings and profitability. A further
constraint is the currently weak charter rate environment, which
S&P expects will persist over the near term.
Key credit support for Navios Partners comes from its
conservative charter policy, which S&P expects will provide
earnings stability and downside protection in the context of the
volatile shipping industry. The company has a predictable and
competitive cost structure, underpinned by a fixed-cost
arrangement with Navios Maritime Holdings Inc. (BB-/Negative/--;
its largest shareholder holding 23.4% of share capital) at a
daily fee per vessel set every few years, which supports the
company's profitability. S&P believes Navios Maritime Holdings'
large controlled fleet of 106 vessels and consequent economies of
scale will limit any material increase in these operating costs
upon renegotiation at the end of 2013.
Navios Partners' financial risk profile is constrained by the
company's "aggressive" financial policy--including an aggressive
dividend payout and resulting marginal excess cash flows. This,
S&P believes, prevents the company from accumulating cash ahead
of debt repayments and therefore makes it dependent on its
ability to refinance. S&P's assessment also reflects the
company's "adequate" liquidity and conservatively funded
expansion with a resulting ratio of Standard & Poor's-adjusted
funds from operations (FFO) to debt that S&P forecasts will
weaken to about 35% in 2013 from about 49% in 2012.
S&P considers Navios Maritime Holdings' ongoing role as the
general partner of Navios Partners to be a positive rating
factor, supporting the company's better-than-industry average
operating efficiency, day-to-day management, and long-term
operating strategy. However, S&P's rating on Navios Partners is
not directly linked to Navios Maritime Holdings' credit quality,
and so it reflects Navios Partners' stand-alone credit profile.
The stable outlook reflects S&P's view that, despite a charter
rate environment that is persistently weak albeit set to
gradually improve, Navios Partners will maintain rating-
commensurate credit measures thanks to its medium-term time-
charter profile backed by credit default insurance, its
competitive cost structure, and its predictable and relatively
stable operating cash flow.
Ratings downside could primarily stem from unexpected significant
debt-funded investments in additional tonnage, higher-than-
anticipated cyclical pressure on charter rates and asset values,
or more-aggressive-than-forecast shareholder distributions, which
would weaken the company's liquidity and credit measures
Ratings upside is limited in the medium term, in S&P's opinion.
=========
I T A L Y
=========
BRL MORTGAGES: Moody's Updates on Series 5 Updates
--------------------------------------------------
Moody's has reviewed Series 5 programs of BPL Mortgages SRL in
conjunction with the proposal of lowering the replacement trigger
for the cash reserve account bank to Ba3, from Baa3. At this
time the proposed action will not, in and of itself, result in
any reduction or withdrawal of the ratings of the notes. Moody's
opinion address only the credit impact of the proposed action,
and Moody's is not expressing any opinion as to whether the
action has, or could have, other non-credit related effects that
may have a detrimental impact on the interest of note holders
and/or counterparties.
Moody's has assessed the proposed changes to the Agency and
Accounts Agreement, where the replacement trigger for the bank
where the cash reserve is held has been lowered to Ba3, from
Baa3. In case the bank would be downgraded below the trigger it
will have to find an eligible replacement, which is rated at
least Baa3, within 30 days. The replacement trigger for the
collections account has not been changed, i.e. it is still set at
loss of Baa3.
The methodologies used in this rating were Moody's Approach to
Rating RMBS using the MILAN framework May 2013, and The Temporary
Use of Cash in Structured Finance Transactions: Eligible
Investments and Bank Guidelines published in March 2013.
Moody's will monitor this transaction on an ongoing basis.
=====================
N E T H E R L A N D S
=====================
LAMBDA FINANCE: S&P Raises Ratings on Two Note Classes to 'B'
-------------------------------------------------------------
Standard & Poor's Ratings Services took various rating actions in
Lambda Finance B.V.'s series 2007-1 (also known as Gracechurch
Corporate Loans 2007-1; see list below).
Specifically, S&P has:
-- Lowered to 'A+ (sf)' from 'AA- (sf)' its ratings on the
class A1, A2, A3, AB1, and AB2 notes;
-- Lowered to 'A+ (sf)' from 'AA- (sf)' and removed from
CreditWatch negative its ratings on the class B1, B2, and
B3 notes;
-- Raised its ratings on the class E1, E2, F1, and F2 notes;
-- Affirmed and removed from CreditWatch negative its
'A+ (sf)' ratings on the class C1, C2, and C3 notes; and
-- Affirmed its 'BBB+ (sf)' ratings on the class D1 and D2
notes.
The rating actions follows the application of S&P's updated
criteria for European collateralized loan obligations (CLOs)
backed by small and midsize enterprises (SMEs), S&P's 2012
counterparty criteria, as well as S&P's assessment of the
transaction's performance using the March 2013 investor report
and portfolio data from the servicer.
On Jan. 17, 2013, when S&P's updated European SME CLO criteria
became effective, it placed on CreditWatch negative its ratings
on the class B1, B2, B3, C1, C2, and C3 notes.
CREDIT ANALYSIS
Lambda Finance's series 2007-1 is a fully funded synthetic
balance sheet CLO transaction that references Barclays Bank PLC's
loans granted to U.K. SMEs.
The transaction's reference notional amount has decreased to
GBP692.47 million from GBP3.50 billion at closing in February
2007. The reference pool's current size is now less than 20% of
its size at closing. The pool currently has 640 loans. This
increases concentration risk because defaults could rise if one
of the largest loans fails to pay, or experiences a credit event,
which could result in a jump in the cumulative defaults.
Cumulative defaults are lower than 2.5% of the closing balance.
S&P has also observed negative ratings migration for the pool's
borrowers (based on Barclays' internal grading system). The
comparisons above are made against the initial pool.
The reserve fund's balance is GBP26.13 million, which is less
than the transaction documents' required amount of GBP45.5
million.
Under S&P's updated European SME CLO criteria, it categorizes the
originator as 'moderate' (based on tables 1, 2, and 3 in S&P's
criteria), taking account of the U.K.'s Banking Industry Country
Risk Assessment (BICRA) in line with S&P's criteria. This has
not resulted in any adjustment to the 'b+' archetypical European
SME average credit quality assessment. As a result, S&P's
average credit quality assessment of the pool was 'b+'.
S&P further applied a portfolio selection adjustment of minus one
notch to the 'b+' credit quality assessment derived above. As a
result, S&P's average credit quality assessment of the pool to
derive the portfolio's 'AAA' SDR was 'b'. S&P assumed that each
loan in the portfolio had a credit quality that is equal to its
average credit quality assessment for the portfolio.
S&P has reviewed historical originator default data, and assessed
the U.K.'s market trends and developments, macroeconomic factors,
changes in country risk, and the way these factors are likely to
affect the loan portfolio's creditworthiness. S&P also
considered the pool's remaining weighted-average remaining life,
the largest outstanding loans, historical default trends, and
their relation to the originator's internal rating scores.
As a result of this analysis, S&P's 'B' SDR is 8.5%.
The SDRs for rating levels between 'B' and 'AAA' are interpolated
in accordance with S&P's updated European SME CLO criteria.
RECOVERY RATE ANALYSIS
At each liability rating level, S&P assumed a weighted-average
recovery rate (WARR) by taking into consideration the asset type
(secured/unsecured), its seniority (first lien/second lien), and
the country recovery grouping. S&P also factored in the actual
recoveries from the historical defaulted assets to derive the
recovery rate assumptions that S&P applied in its credit
analysis.
As a result of this analysis, S&P's WARR assumption in a 'B'
scenario was 50%.
Based on the interpolated SDRs and S&P's recovery assumptions at
each rating level, it derived the scenario loss rate (SLR; SDRs
multiplied by the loss at each rating level). S&P then compared
the SLRs with the pool's available credit enhancement.
COUNTERPARTY RISK
The issuer has entered into a credit default swap and a cross
currency swap (exchanging the pool's British pound sterling
denominated proceeds), and established a cash deposit account
with Barclays. S&P's 2012 counterparty criteria classify the
currency swap provider as a 'derivative counterparty' and the
cash deposit account as 'direct support, funded synthetic'. S&P
applied its 2005 counterparty criteria to the credit default swap
based on its role in the transaction.
S&P's 2012 counterparty criteria limit the maximum achievable
ratings in the transaction at its 'A+' long-term rating on
Barclays, due to the transaction's exposure to Barclays as the
cash deposit account holder.
S&P has therefore lowered to 'A+ (sf)' from 'AA- (sf)' its
ratings on the class A1, A2, A3, AB1, and AB2 notes. At the same
time, S&P has lowered to 'A+ (sf)' from 'AA- (sf)' and removed
from CreditWatch negative its ratings on the class B1, B2, and B3
notes. Although the credit enhancement available to these notes
can support higher ratings, S&P has lowered its ratings because
the cash deposit account documentation does not support a higher
rating under its 2012 counterparty criteria.
Based on S&P's credit analysis, it considers the credit
enhancement available to the class C1, C2, C3, D1 and D2 notes to
be commensurate the currently assigned ratings. S&P has
therefore affirmed and removed from CreditWatch negative its 'A+
(sf)' ratings on the class C1, C2, and C3 notes. At the same
time, S&P has affirmed its 'BBB+ (sf)' ratings on the class D1
and D2 notes.
S&P has raised its ratings on the class E1, E2, F1, and F2 notes
in line with its view of the increased credit enhancement
available to these classes of notes.
Lambda Finance series 2007-1 is a synthetic balance sheet CLO
transaction backed by a pool of loans granted to U.K. SMEs. The
transaction closed in February 2007. Its replenishment period
ended 36 months after closing.
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
Lambda Finance B.V.
EUR1.406 Billion, GBP1.396 Billion, And US$2.323 Billion
Secured Floating-Rate Notes
(Gracechurch Corporate Loans Series 2007-1)
Class Rating Rating
To From
Ratings Lowered
A1 A+ (sf) AA- (sf)
A2 A+ (sf) AA- (sf)
A3 A+ (sf) AA- (sf)
AB1 A+ (sf) AA- (sf)
AB2 A+ (sf) AA- (sf)
Ratings Lowered And Removed From CreditWatch Negative
B1 A+ (sf) AA- (sf)/Watch Neg
B2 A+ (sf) AA- (sf)/Watch Neg
B3 A+ (sf) AA- (sf)/Watch Neg
Ratings Raised
E1 BB+ (sf) BB (sf)
E2 BB+ (sf) BB (sf)
F1 B (sf) B- (sf)
F2 B (sf) B- (sf)
Ratings Affirmed And Removed From CreditWatch Negative
C1 A+ (sf) A+ (sf)/Watch Neg
C2 A+ (sf) A+ (sf)/Watch Neg
C3 A+ (sf) A+ (sf)/Watch Neg
Ratings Affirmed
D1 BBB+ (sf)
D2 BBB+ (sf)
=============
R O M A N I A
=============
VULCAN BUCHAREST: Bucharest Court Approves Insolvency Process
-------------------------------------------------------------
ACTMedia reports that Bucharest Court approved the insolvency of
Vulcan Bucharest, owned by businessman Ovidiu Tender, because of
a debt of EUR37 million, according to Remus Borza, the head of
Euro Insol, the judicial administrator of the company, quoted by
Mediafax.
* ROMANIA: Insolvency Rate Set to Rise by 10% This Year
-------------------------------------------------------
Romania Insider reports that the rate of insolvencies in Romania
is one of the highest in the region, according to a new study by
consultancy firm Coface. Last year, 23,665 Romanian companies
went insolvent and the number is set to rise by 10 percent in
2013.
Coface said in Bulgaria, 1,339 companies went insolvent in 2012,
an enormous 243.3 percent increase on the previous year,
meanwhile in Poland, 877 insolvencies were reported, 21.3 percent
up on 2011, Romania Insider relates.
According to the report, Romania ranks second in Central Europe
for insolvencies, with a rate of 5.67 percent of the total number
of active firms, which number close to 420,000. Only Serbia has a
higher rate, where the number of insolvencies out of the total
number of active firms is 7.93 percent, the report notes.
Coface expects a worsening situation in the region, with the
number of insolvencies increasing, as in Romania, in most
countries in Central and Eastern Europe, the report adds.
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S P A I N
=========
INSTITUTO VALENCIANO: S&P Affirms 'BB-/B' Issuer Credit Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'BB-/B'
long- and short-term issuer credit ratings on financial agency
Instituto Valenciano de Finanzas (IVF). At the same time, S&P
removed the ratings from CreditWatch with negative implications,
where S&P placed them on March 7, 2013. The outlook is negative.
The ratings on IVF reflect S&P's view of the strength of the
Autonomous Community of Valencia (Valencia)'s explicit statutory
guarantee, which considers IVF's liabilities to be part of the
region's debt.
S&P understands that IVF's debt maturities are included in
Valencia's request for financial support from Spain's regional
liquidity fund (Fondo de Liquidez Autonomico; FLA), the vehicle
used by the central government to assist regions in servicing
their debt.
S&P sees IVF as a government-related entity (GRE). S&P believes
there is an "almost certain" likelihood that Valencia would
provide timely and sufficient support to IVF if needed, according
to its GRE criteria. S&P bases its view on its assessment of
IVF's:
-- "Critical" role for the region. IVF carries out key
functions that a private entity could not undertake, such
as managing regional debt and public credit policy.
Consequently, S&P thinks that the markets would perceive a
default by IVF as tantamount to a default by the region,
especially considering Valencia's financial guarantee
covering IVF's debt.
-- S&P believes IVF's importance to Valencia is also reflected
in the regional government's strong involvement in IVF's
management and stable financial support; and
-- "Integral" link with Valencia, given that it exerts total
control over IVF's strategy and day-to-day operations, and
carries out extremely tight financial oversight.
Based on IVF's critical role for and integral link with Valencia,
as S&P's GRE criteria define these terms, it equalizes the
ratings on IVF with those on Valencia. S&P has therefore
affirmed its ratings on IVF and resolved the CreditWatch, in line
with its recent rating action on Valencia.
S&P assess IVF's stand-alone credit profile (SACP) as 'b'. This
reflects its view that IVF is facing higher credit risk due to
its growing exposure to the public sector and a riskier and less
resilient private sector, which is suffering from the effects of
sluggish economic growth in the region.
S&P also factors into the SACP our view of IVF's total reliance
on Valencia and the FLA to cover upcoming funding maturities and
offset low capitalization and losses in earnings.
The negative outlook on IVF mirrors that on Valencia. If S&P
downgraded Valencia, it would downgrade IVF, all other things
being equal.
* Moody's Takes Action on Notes in Two Spanish RMBS
---------------------------------------------------
Moody's Investors Service has downgraded the ratings of two notes
in one Spanish residential mortgage-backed securities (RMBS)
transactions: GC SABADELL 1, FTA. At the same time, Moody's
confirmed the ratings of one senior note of GC SABADELL 1, FTA
and IM Cajastur MBS 1, Fondo de Titulizacion de Activos and
furthermore confirmed a junior note in IM Cajastur MBS 1, Fondo
de Titulizacion de Activos. The downgrade has been prompted by
insufficiency of credit enhancement to address sovereign risk in
GC SABADELL 1, FTA.
The rating action concludes the review of three notes placed on
review on July 2, 2012, following Moody's downgrade of Spanish
government bond ratings to Baa3 from A3 on June 2012 and two
notes placed on review on November 23, 2012, following Moody's
revision of key collateral assumptions for the entire Spanish
RMBS market.
Ratings Rationale
The downgrade action primarily reflects the insufficiency of
credit enhancement to address sovereign risk. Moody's confirmed
the ratings of securities whose credit enhancement and structural
features provided enough protection against sovereign and
counterparty risk.
The determination of the applicable credit enhancement driving
the rating actions reflects the introduction of additional
factors in Moody's analysis to better measure the impact of
sovereign risk on structured finance transactions (see
"Structured Finance Transactions: Assessing the Impact of
Sovereign Risk", 11 March 2013).
-- Additional Factors Better Reflect Increased Sovereign Risk
Moody's has supplemented its analysis to determine the loss
distribution of securitised portfolios with two additional
factors, the maximum achievable rating in a given country (the
local currency country risk ceiling) and the applicable portfolio
credit enhancement for this rating. With the introduction of
these additional factors, Moody's intends to better reflect
increased sovereign risk in its quantitative analysis, in
particular for mezzanine and junior tranches.
The Spanish country ceiling, and therefore the maximum rating
that Moody's will assign to a domestic Spanish issuer including
structured finance transactions backed by Spanish receivables, is
A3. Moody's Individual Loan Analysis Credit Enhancement (MILAN
CE) represents the required credit enhancement under the senior
tranche for it to achieve the country ceiling. By lowering the
maximum achievable rating for a given MILAN, the revised
methodology alters the loss distribution curve and implies an
increased probability of high loss scenarios.
-- Revision of Key Collateral Assumptions
Moody's has maintained its lifetime loss expectation (EL) as well
as its MILAN CE assumption in all two transactions.
Moody's has maintained the EL assumptions in GC SABADELL 1, FTA,
IM Cajastur MBS 1, Fondo de Titulizaci˘n de Activos at 0.58% and
8% respectively.
During its review Moody's has maintained the MILAN CE assumption
in GC SABADELL 1, FTA, IM Cajastur MBS 1, Fondo de Titulizaci˘n
de Activos at 10% and 25.50% respectively.
-- Exposure to Counterparty Risk
The exposure to the account banks in IM Cajastur MBS 1 and in GC
SABADELL 1, FTA, which are Banco Santander S.A. (Spain) (Baa2/P-
2) and Barclays Bank PLC (A2/P-1) respectively, do not have a
negative impact on the outstanding ratings for these
transactions. For all two transactions, there is no negative
impact from exposure to swap counterparties.
-- Other Developments May Negatively Affect the Notes
In consideration of Moody's new adjustments, any further
sovereign downgrade would negatively affect structured finance
ratings through the application of the country ceiling or maximum
achievable rating, as well as potentially increased portfolio
credit enhancement requirements for a given rating.
As the euro area crisis continues, the ratings of structured
finance notes remain exposed to the uncertainties of credit
conditions in the general economy. The deteriorating
creditworthiness of euro area sovereigns as well as the weakening
credit profile of the global banking sector could further
negatively affect the ratings of the notes.
Moody's describes additional factors that may affect the ratings
in "Approach to Assessing Linkage to Swap Counterparties in
Structured Finance Cashflow Transactions: Request for Comment"
(http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS
_SF289772), published on 2 July 2012.
The methodologies used in these ratings were "Moody's Approach to
Rating RMBS Using the MILAN Framework", published in May 2013 and
"The Temporary Use of Cash in Structured Finance Transactions:
Eligible Investment and Bank Guidelines", published in March
2013.
In reviewing these transactions, Moody's used its cash flow
model, ABSROM, to determine the loss for each tranche. The cash
flow model evaluates all default scenarios that are then weighted
considering the probabilities of the lognormal distribution
assumed for the portfolio default rate. In each default scenario,
Moody's calculates the corresponding loss for each class of notes
given the incoming cash flows from the assets and the outgoing
payments to third parties and noteholders. Therefore, the
expected loss for each tranche is the sum product of (1) the
probability of occurrence of each default scenario and (2) the
loss derived from the cash flow model in each default scenario
for each tranche.
As such, Moody's analysis encompasses the assessment of stressed
scenarios.
In the context of the rating review, the transactions have been
remodeled and some inputs have been adjusted to reflect the new
approach described above.
List of Affected Ratings
Issuer: GC Sabadell 1 Fondo de Titulizacion Hipotecario
EUR1020.6M A2 Notes, Confirmed at Baa1 (sf); previously on Nov
23, 2012 Downgraded to Baa1 (sf) and Remained On Review for
Possible Downgrade
EUR19.2M B Notes, Downgraded to Ba2 (sf); previously on Nov 23,
2012 Downgraded to Baa2 (sf) and Remained On Review for Possible
Downgrade
EUR10.2M C Notes, Downgraded to B1 (sf); previously on Jul 2,
2012 Baa2 (sf) Placed Under Review for Possible Downgrade
Issuer: IM Cajastur MBS 1, Fondo de Titulizaci˘n de Activos
EUR492M A Notes, Confirmed at A3 (sf); previously on Jul 2, 2012
Downgraded to A3 (sf) and Remained On Review for Possible
Downgrade
EUR123M B Notes, Confirmed at B1 (sf); previously on Jul 2, 2012
B1 (sf) Placed Under Review for Possible Downgrade
===========
S W E D E N
===========
SWEDBANK AB: Moody's Hikes Preferred Stock Rating to Ba1(hyb)
-------------------------------------------------------------
Moody's Investors Service has upgraded Swedbank AB's long-term
debt and deposit and issuer rating to A1 from A2, following the
raising of the bank's baseline credit assessment (BCA) to baa1
from baa2. The upgrade of Swedbank's ratings reflects that, in
Moody's opinion, the bank's credit profile has strengthened as a
result of (1) sustainable reduction of its risk profile and
strengthening of the bank's corporate governance; (2) the
continued reduction of problem loans and stabilization of
revenues; and (3) enhanced capital levels and improved funding
profile.
The rating agency has affirmed the bank's short-term Prime-1
ratings and the standalone bank financial strength rating (BFSR),
which remains unchanged at C-. Moody's has also upgraded the
ratings of the bank's subordinated debt, junior subordinated debt
and non-cumulative preferred stock by one notch each, to
(P)Baa2/Baa2, (P)Baa3 and Ba1(hyb), respectively.
In line with the rating action on its parent Swedbank AB, Moody's
has upgraded Swedbank Mortgage AB's senior unsecured and issuer
ratings to A1 from A2. Swedbank Mortgage's Prime-1 short-term
rating is affirmed.
The outlook on Swedbank AB's and Swedbank Mortgage AB's ratings
is stable. The Aaa ratings assigned to government-guaranteed debt
issued by Swedbank and Swedbank Mortgage are not affected by this
rating action.
RATINGS RATIONALE
SWEDBANK
--- REDUCED RISK PROFILE AND ENHANCED CORPORATE GOVERNANCE
Since 2009, Swedbank has introduced a new management team and all
but one of the bank's board members have been replaced. In the
last four years, Swedbank has refocused on its core markets of
Sweden and the Baltics, and has not entered new markets. The bank
has consistently reduced the risk in its Baltic subsidiaries,
scaled-down its operations in Russia, and sold its Ukrainian
subsidiary; the combined share of these operations reduced to 10%
of net lending at year-end 2012, from 20% at year-end 2008.
Within its core markets, Swedbank has reduced portfolio risks by,
among others, tightening underwriting criteria for higher-risk
mortgage lending, which has helped to reduce the average loan-to-
value ratio of its residential mortgage book. Moody's expects
Swedbank to continue to operate with this more geographically
focused and lower-risk business profile, stabilizing its revenue
generation compared to prior years.
--- IMPROVING ASSET QUALITY AND STABILISATION OF REVENUE
Swedbank has seen a strong improvement in its asset quality in
recent years, which has prompted improvements in profitability;
in particular the turned-around Baltic operations have been a key
driver in returning the group to profitability.
Problem loans have decreased to 0.90% of gross loans at end-March
2013, from 3.11% at year-end 2009, and after booking losses from
Q4 2009 to Q2 2010, the bank's Baltic operations returned to
profit in Q3 2010. Aside from a relapse in Q4 2011 when goodwill
was written down in Latvia, these operations have remained
profitable since then. The Swedish retail franchise remains
strong and contributed 62% of net profits since 2010 on a pre-tax
profit basis.
---ENHANCED CAPITALISATION AND FUNDING PROFILE
In addition, Moody's says that the bank's capitalization has
improved materially since the financial crisis, mainly as a
result of rights issues in 2008 and 2009, retained profits, and a
reduction in risk-weighted assets due to the bank's lower
exposure in the Baltic countries, positive rating migrations, and
capital optimization. Swedbank reports good capital levels,
relative to European peers, with Tier 1 capital and total capital
ratios as of end-March 2013 (in accordance with Basel II with
transitional floors) of 10.9% and 11.6%, respectively. With
respect to full Basel III, the bank reports these ratios at 17.8%
and 19.4%, respectively. Although Swedbank's increased its
dividend policy in early 2013 to distribute 75% of income, from
50% previously, we expect capitalization to remain a rating
strength.
Moody's says that Swedbank's funding profile has been
strengthened and the bank has issued debt without a government
guarantee since July 2009. It subsequently left the government
support program in April 2010. Swedbank has progressively reduced
its short-term funding sources and it has refinanced maturing
debt with longer maturities. This has lengthened the average
maturity of its market financing to 33 months at year-end 2012
from 14 months in 2008. Reliance on covered bonds has increased,
up to almost 35% of total funding at year-end 2012, from about
19% at end-2008, but we believe that Swedbank's market funding
access has shown considerable improvement.
Swedbank's A1 long-term debt and deposit ratings are supported by
(1) the bank's baa1 BCA; and (2) the Aaa local-currency deposit
ceiling of Sweden, the underlying support provider. In view of
Swedbank's strong market position and importance to the payments
system, Moody's assesses a very high probability of systemic
support for the bank in the event of a stress situation,
resulting in a three-notch uplift for the A1 deposit rating from
the baa1 BCA.
The upgrade of Swedbank's subordinated debt, junior subordinated
debt and non-cumulative preferred stock ratings reflects Moody's
methodology and guidelines, notching these ratings off the bank's
BCA.
WHAT COULD CHANGE THE RATING -- UP
The stable outlook assigned to Swedbank's ratings after the
upgrade reflects Moody's expectation that upward pressure on the
ratings is limited in the short to medium-term. Nevertheless,
Swedbank's ratings could see positive pressure as a result of a
further improvement in the bank's risk appetite, culture, and
governance, combined with (i) reduced reliance on market funding,
and/or continued extension of the bank's funding maturity profile
combined with strong liquidity levels while limiting the
structural subordination of senior unsecured creditors, (ii)
maintained improvement in core earnings without increasing risk
profile and/or (iii) continued reductions of asset
vulnerabilities, including the bank's Baltic operations, exposure
to commercial real estate and exposure to high loan-to-value and
interest only residential loans.
WHAT COULD CHANGE THE RATING -- DOWN
The bank's ratings could see negative pressure if (i) there is a
significant macroeconomic deterioration in its main operating
markets leading to a weakening of performance, (ii) the bank
increases reliance on market funding, or the maturity profile of
existing funding deteriorates (iii) there are signs of pressure
on profits, e.g. arising from weakening economic stability,
franchise value and/or risk positioning, and/or (iv) the bank's
risk profile increases due to increased exposures to more
volatile sectors.
SWEDBANK MORTGAGE
The upgrade of Swedbank Mortgage's senior unsecured debt and
issuer ratings reflects the full, unconditional and irrevocable
guarantee this entity receives from its parent Swedbank. The
guarantee covers all non-subordinated debt instruments issued by
Swedbank Mortgage.
The data referred to in this press release is generally sourced
from Swedbank's annual report and fact book for 2012, as well as
from annual reports and fact books for earlier years.
The principal methodology used in these ratings was Global Banks
published in May 2013.
Headquartered in Stockholm, Sweden, Swedbank AB reported total
consolidated assets of SEK1,917 billion (EUR229 billion) at the
end of March 2013.
UNILABS HOLDING: S&P Assigns Prelim. 'B+' Corp. Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
preliminary 'B+' long-term corporate credit rating to Sweden-
based medical diagnostics company Unilabs Holding AB (Unilabs).
The outlook is stable.
At the same time, S&P assigned a preliminary issue rating of 'B+'
to the proposed EUR510 million senior secured notes and senior
secured floating-rate notes to be issued by Unilabs SubHolding
AB. The recovery rating on these notes is '4', indicating S&P's
expectation of average (30%-50%) recovery prospects in the event
of a payment default, albeit at the low end of the range.
In addition, S&P assigned a preliminary issue rating of 'B-' to
the proposed EUR175 million payment-in-kind (PIK) toggle notes to
be issued by Unilabs MidHolding AB. The recovery rating on the
PIK toggle notes is '6', indicating S&P's expectation of
negligible (0%-10%) recovery prospects in the event of a payment
default.
The final ratings are subject to the successful closing of the
proposed issuance and depend on our receipt and satisfactory
review of all final transaction documentation. Accordingly, the
preliminary ratings should not be construed as evidence of the
final ratings. If the final debt amounts, the assumed interest
rates, and the terms of the final documentation materially depart
from the documentation S&P has already reviewed, or if S&P do not
receive the final documentation within what it considers to be a
reasonable time frame, it reserves the right to withdraw or
revise its ratings.
The ratings on Unilabs reflect S&P's view of the company's
relatively aggressive capital structure on account of its
ownership by private equity groups Apax Partners, Apax France,
and Nordic Capital. The ratings on Unilabs also reflect S&P's
assessment of its financial risk profile as "highly leveraged"
and its business risk profile as "fair."
Unilabs plans to raise EUR685 million of notes to refinance its
existing bank debt. Based on the proposed capital structure
after the refinancing, S&P estimates that Unilabs' Standard &
Poor's-adjusted net debt-to-EBITDA ratio will be about 10x by
Dec. 31, 2013. S&P's estimate includes financial debt of about
EUR700 million, comprising the proposed EUR175 million PIK toggle
notes, about EUR442 million in the form of preference shares and
shareholder loans, and about EUR80 million of lease adjustments.
S&P believes that despite the potentially negative effects of
European public spending cuts on health care, Unilabs will
sustain positive underlying revenue growth of at least low single
digits, while successfully integrating new acquisitions and at
least maintaining its operating performance and cash flow
generation.
S&P views adjusted EBITDA cash interest coverage of 2.5x at all
times and positive FOCF generation as commensurate with the 'B+'
rating. S&P could take a negative rating action if adjusted
EBITDA interest coverage drops to less than 2.5x. This would
most likely occur if Unilabs' operating margins deteriorate due
to an inability to profitably integrate newly acquired
operations.
A positive rating movement is unlikely over the next two years,
in S&P's view, due to Unilabs' already high adjusted leverage.
However, S&P would likely take a positive rating action if the
company sustains adjusted debt to EBITDA of less than 5x.
=====================
S W I T Z E R L A N D
=====================
BARR CALLEBAUT: Moody's Rates New Senior Notes '(P)Ba1'
-------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Ba1
rating with a loss given default assessment of 4 (LGD 4) to the
issuance of US$600 million of senior unsecured notes due 2023 by
Barry Callebaut Services NV, a fully owned and guaranteed
subsidiary of Barry Callebaut AG ("Barry Callebaut", the
"company"). All other ratings, including Barry Callebaut's Ba1
corporate family rating and the Ba1 ratings on the company's
existing EUR350 million of senior notes due 2017 and EUR250
million of senior notes due 2021, remain unchanged. The outlook
on all ratings is stable.
Ratings assigned:
Issuer: Barry Callebaut Services NV
-- (P)Ba1 rating assigned to new US$600 million of senior
unsecured notes due 2023
"Our assignment of a (P)Ba1 rating to Barry Callebaut's new
senior unsecured notes follows [the] announcement by the company
of their proposed offering and reflects our expectation that they
will rank pari passu with all of the chocolate manufacturer's
other senior unsecured debt," says Andreas Rands, a Moody's Vice
President - Senior Analyst and lead analyst for Barry Callebaut.
Barry Callebaut will use the proceeds of the offering to part-
fund the acquisition of the Cocoa Ingredients Division of Petra
Foods Ltd ("Petra"), which is expected to close in summer 2013.
In addition, and to accommodate the Petra acquisition, Barry
Callebaut has amended its existing EUR600 million senior
unsecured revolving credit facility due 2016 (with a one-year
extension option), principally by amending the interest coverage
and profitability covenants.
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 endeavour to
assign a definitive rating to the notes. A definitive rating may
differ from a provisional rating.
Ratings Rationale
The (P)Ba1 rating on the new senior unsecured notes reflects
Moody's expectation that they will rank pari passu with all of
Barry Callebaut's other senior unsecured debt, including its
existing EUR350 million of senior notes due 2017, its EUR250
million of senior notes due 2021 and the amended senior revolving
credit facility due 2016. Whilst Barry Callebaut will assume
around $43 million of local Petra debt on completion, this is not
material from a structural subordination perspective, especially
given that the company intends to repay the facility within one
year of completion. The (P)Ba1 new senior unsecured notes rating
is in line with Barry Callebaut's CFR and the existing senior
unsecured instrument ratings. This reflects the lack of
significant structural subordination and that the notes are fully
guaranteed by Barry Callebaut AG. The company's probability of
default (PDR) rating of Ba1-PD reflects the use of a 50% family
recovery rate, consistent with a bank and bond capital structure.
Moody's believes that, if successful, the note offering and the
amended revolving credit facility will provide the necessary
financial flexibility to accommodate the Petra acquisition and
improve Barry Callebaut's debt maturity profile.
The new notes will be guaranteed on a senior basis by the
issuer's direct parent company, Barry Callebaut, and certain of
its material subsidiaries that also guarantee the existing 2017
and 2021 notes and the amended revolving credit facility. As at
31 August 2012, the issuer and the guarantors represented
approximately 74% of the company's EBIT and 82% of its net sales
on a consolidated basis.
The new senior notes will benefit from negative pledge, change-
of-control (investor put at 101%) and cross-acceleration
provisions, consistent with a cross-over credit covenant
structure.
The amended revolving credit facility which is due June 2016
(with a one-year extension option at the discretion of the
banks), incorporates a EUR75 million swingline facility for
general corporate and working capital purposes. It also includes
an accordion option (also at the discretion of the banks),
whereby the facility amount could potentially be increased to
EUR750 million. A pool of obligors has to contribute at least 75%
of the company's consolidated net sales and 65% of its EBIT,
prior to February 2014; for periods thereafter the coverage has
been relaxed to 65%-70% for net sales and 60% for EBIT, in order
to accommodate the Petra acquisition.
The existing financial covenants, to be tested on a semi-annual
basis, include an interest coverage ratio, profitability ratio
and minimum tangible net worth. These covenants remain in the
amended revolving credit facility but the interest coverage and
profitability ratios have been relaxed to accommodate the Petra
acquisition. The company has the option to replace the
profitability ratio with a 3.25x total net leverage covenant to
August 2013; for periods thereafter this covenant has been
relaxed to 3.50x as part of the amendment exercise. The revolving
credit facility also includes limitations on dividends to the
amount of 50% of net income. Covenant headroom has to date been
satisfactory and Moody's forecasts that this will remain the
case.
The company's liquidity consists of the amended EUR600 million
revolving credit facility as well as a EUR400 million commercial
paper program and a EUR275 million asset-backed security program.
Moody's considers that following the transaction, these
facilities should be sufficient to fund the company's growth
strategy and to cover potentially higher levels of volatility in
working capital cycles owing to fluctuations in cocoa prices.
That said, the rating agency anticipates that the cost of
financing under the commercial paper program will have increased
following the recent downgrade of Barry Callebaut's long-term
issuer rating to Ba1 from Baa3 in May 2013.
Barry Callebaut's Ba1 CFR reflects the fact that recent
acquisitions, infrastructure investments and costs associated
with outsourcing contracts have weakened Barry Callebaut's key
credit metrics, which we expect to remain in high-yield territory
for the foreseeable future. Further, the Petra transaction --
which the company expects to complete in summer 2013 -- will test
Barry Callebaut's ability to turn around the financial
performance of a large business. Barry Callebaut is reliant on
politically unstable countries such as C“te d'Ivoire for the
supply of cocoa beans. Whilst we recognize that the political
situation in C“te d'Ivoire has stabilized since the turmoil in
2011, and that Barry Callebaut has begun diversifying to
countries with a more stable political environment such as
Malaysia and Indonesia (and Brazil through the Petra
acquisition), the company remains significantly exposed to
politically unstable countries. This adds to existing supply
disruption risks, although these are inherent to the industry.
However, more positively, the rating also reflects Barry
Callebaut's established presence in all major global markets, and
its focus on diversifying the current Europe-based revenues
towards new markets such as Brazil, Russia, India, China and
Mexico, which typically display higher growth prospects. Through
the Petra acquisition, Barry Callebaut will further expand its
operations in Singapore, Malaysia and Indonesia and gain new
facilities in Thailand. The company's rating also reflects the
resilience of its hedging policy to volatile cocoa bean prices.
Barry Callebaut's cost-plus business model, which covers around
80% of its sales volumes, has proved successful in recent years
and enabled it to sustain fairly stable operating margins levels,
despite volatile cocoa bean prices. Moody's expects that Petra's
less successful cocoa hedging strategies will be replaced by
Barry Callebaut's.
Outlook
The stable outlook on the ratings reflects Barry Callebaut's
solid business profile and operating performance. It also
reflects Moody's expectation that the company's key credit
metrics will weaken over the next three to five financial years
if the Petra acquisition completes. Regardless of whether or not
the transaction closes, Moody's expects Barry Callebaut's metrics
to weaken over the next 12-18 months as a result of the company's
recent significant investment activity. To the extent that
deleveraging is delayed beyond the expected timeframe, the
company's ratings would likely experience downward pressure.
What Could Change The Rating Down/Up
Negative pressure could be exerted on the rating if Barry
Callebaut's credit metrics were to remain weak, with adjusted
retained cash flow (RCF)/net debt in the mid-teens in percentage
terms and adjusted leverage above 3.75x. Negative rating pressure
could also occur if the company were unable to maintain its
adjusted EBITDA margins at high single-digit levels, or if
Moody's were to have renewed concerns with regard to supply risk.
Conversely, although not expected in the short term, positive
rating pressure could develop if, in conjunction with increased
diversification of raw materials supply, Barry Callebaut were
able to (1) deliver improved credit metrics on a sustainable
basis, with adjusted RCF/net debt above 20% and adjusted leverage
trending towards 3.0x; and (2) improve its adjusted EBITDA
margins towards double-digit levels on a sustainable basis.
Principal Methodology
The principal methodology used in this rating was the Global
Protein and Agriculture Industry published in May 2013. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Headquartered in Zurich, Switzerland, and with reported annual
sales of CHF4.8 billion (approximately EUR4.0 billion) for
financial year (FY) 2011/12 (ended 31 August), Barry Callebaut AG
is the world's leading supplier of premium cocoa and chocolate
products (based on sales volumes), servicing customers across the
wide spectrum of the global food industry.
===========================
U N I T E D K I N G D O M
===========================
ASSET REPACKAGING: S&P Withdraws All Ratings Following Redemption
-----------------------------------------------------------------
Standard & Poor's Ratings Services has withdrawn all of its
credit ratings in Asset Repackaging Vehicle Ltd.'s series 2010-4
and 2010-5.
The calculation agent, HSBC Bank PLC, has confirmed that all of
the notes in series 2010-4 and 2010-5 have fully redeemed.
Series 2010-4 and 2010-5 were resecuritizations of GEMINI
(ECLIPSE 2006-3) PLC's class A notes.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:
http://standardandpoorsdisclosure-17g7.com
RATINGS LIST
Ratings Withdrawn
Class Rating Rating
To From
Asset Repackaging Vehicle Ltd.
GBP69.4 Million Resecuritization Notes Series 2010-4
A1 NR B- (sf)
A2 NR CCC- (sf)
A3 NR CCC- (sf)
A4 NR CCC- (sf)
A5 NR CCC- (sf)
A6 NR CCC- (sf)
A7 NR CCC- (sf)
B NR CCC- (sf)
Asset Repackaging Vehicle Ltd.
GBP14.8 Million Resecuritization Notes Series 2010-5
A1 NR B- (sf)
A2 NR CCC- (sf)
A3 NR CCC- (sf)
A4 NR CCC- (sf)
A5 NR CCC- (sf)
A6 NR CCC- (sf)
A7 NR CCC- (sf)
B NR CCC- (sf)
NR-Not Rated.
BAKKAVOR FINANCE: Moody's Changes Outlook on 'B2' CFR to Stable
---------------------------------------------------------------
Moody's Investors Service has changed to stable from negative the
outlook on the B2 corporate family rating (CFR) and the B2-PD
probability of default rating (PDR) of Bakkavor Finance (2) plc
(Bakkavor), as well as on the B2 rating on the company's existing
GBP350 million of senior secured notes due 2018. Concurrently,
Moody's has affirmed these ratings. In addition, the rating
agency has assigned a provisional (P)B2 rating to the company's
proposed GBP150 million of senior secured notes due 2020.
"We have changed the outlook on Bakkavor's B2 rating to stable
from negative to reflect the company's adequate operating
performance to date, as well as the improvements we expect to its
debt maturity profile pro forma for the company's refinancing
transaction," says Anthony Hill, a Moody's Vice President --
Senior Analyst and lead analyst for Bakkavor.
Bakkavor recently announced a refinancing transaction that will
result in the issuance of approximately GBP250 million in new
indebtedness, comprising (1) the proposed GBP150 million of
senior secured notes due 2020; and (2) a new senior credit
facility and a new receivables facility, both unrated. Moody's
expects that Bakkavor will use the proceeds of the refinancing
transaction to (1) repay its existing senior secured facilities
(unrated); and (2) execute a tender offer of up to GBP20 million
of its existing GBP350 million of senior secured notes due 2018.
Moody's issues provisional ratings in advance of the final sale
of debt instruments and these ratings reflect the rating agency's
preliminary credit opinion regarding the transaction only. Upon a
conclusive review of the final documentation, Moody's will
endeavour to assign a definitive rating to the debt. A definitive
rating may differ from a provisional rating.
Ratings Rationale
The rating action reflects Moody's revised expectation that
Bakkavor will be able to maintain its current profitability
levels and liquidity profile, despite the challenging trading
environment and volatile raw material prices. The change of
rating outlook to stable also reflects the company's improved
maturity profile pro forma for the refinancing transaction.
Currently, Bakkavor has approximately GBP260 million of debt
coming due by fiscal year end 2014 (FYE 2014). Pro forma the
refinancing transaction, Moody's expects Bakkavor to have
approximately GBP10 million of debt coming due by FYE 2014 and
GBP80 million due FYE 2016.
Bakkavor remains weakly positioned in the B2 rating category.
However, despite the ongoing pressure on the company's
profitability that is being driven by the depressed UK consumer
environment and continuing input price volatility, Moody's now
expects Bakkavor's margins, retained cash flow (RCF), and
leverage metrics to stabilise around their current levels over at
least the next two years.
Moody's expects Bakkavor to be able to maintain its current
profitability through a combination of (1) improving sales,
product innovation and targeted promotions; and (2) the ongoing
selective sale or closure of underperforming businesses and/or
product lines. As of the quarter ended 31 March 2013, Bakkavor's
last-12-month Moody's-adjusted EBIT margin of 4.0% had been
approximately the same since FYE 2011, and the rating agency
forecasts that it will remain around this level through at least
FYE 2014. Bakkavor's RCF generation for the same period improved
to 7.4% from 5.6% at FYE 2011, and Moody's anticipates that this
metric will further improve to around 12% by FYE 2014. The
company's Moody's-adjusted leverage remains high for the B2
category at around 5.5x debt/EBITDA, for the quarter ended 30
March 2013 and pro forma the refinancing transaction; however,
Moody's expects this adjusted leverage to fall to, and be
sustained at, around 5.0x debt/EBITDA by FYE 2013.
Moody's believes that Bakkavor's liquidity, pro forma for the
refinancing transaction, will be adequate to cover its near-term
requirements. Pro forma for the transaction, Moody's expects the
company to exhibit an adjusted cash balance of approximately
GBP10 million. Internally generated cash flow, a new undrawn
GBP70 million revolving credit facility (unrated) and GBP40
million availability on a new receivables facility (unrated)
should cover the company's ongoing basic cash needs, such as debt
service and amortisation, working capital needs and expected
capital expenditures. Pro forma for the refinancing transaction,
the rating agency expects Bakkavor's covenant compliance headroom
to be comfortably set at around 15% or above.
What Could Change The Rating Up/Down
Positive pressure on the rating could materialise if Bakkavor
were to achieve (1) a Moody's-adjusted EBIT margin that is
sustainably around 8%; (2) a Moody's-adjusted debt/EBITDA ratio
approaching 4.5x; and (3) a RCF/net debt percentage in the low
teens in percentage terms.
Conversely, Moody's would consider downgrading Bakkavor's ratings
if the company's liquidity profile and credit metrics deteriorate
as a result of (1) a weakening of its operational performance;
(2) acquisitions; or (3) a change in its financial policy.
Quantitatively, Moody's would consider downgrading Bakkavor's
ratings if the company's Moody's-adjusted (1) EBIT margin falls
below 3.5%; (2) debt/EBITDA ratio rises towards 6.0x; or (3)
RCF/net debt falls sustainably below 7.5%.
Principal Methodology
The principal methodology used in this rating was the Global
Packaged Goods published in December 2012. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in
June 2009.
Headquartered in London, Bakkavor is a leading fresh prepared
foods producer. The company has approximately 19,000 employees
producing 19 product categories in 54 facilities based around the
world but predominantly in the UK. Approximately 88% of
Bakkavor's revenue is generated from the UK, 5% in Europe and the
remainder in the US and Asia. For the last-12-months ending 31
March 2013, Bakkavor's Moody's-adjusted revenues and EBITDA were
approximately GBP1.6 billion and GBP118 million, respectively.
BAKKAVOR FINANCE: S&P Affirms 'B-' Long-Term Corp. Credit Rating
----------------------------------------------------------------
Standard and Poor's Rating Services said that it affirmed its
'B-' long-term corporate credit rating on U.K.-based food
producer Bakkavor Finance 2 PLC (Bakkavor).
At the same time, S&P affirmed its 'B-' issue rating on
Bakkavor's existing GBP350 million 8.25% senior secured notes due
2018. The recovery rating on the notes is unchanged at '4',
indicating S&P's expectation of average (30%-50%) recovery
prospects in the event of payment default.
In addition, S&P assigned its 'B-' issue rating to Bakkavor's
proposed GBP150 million senior secured notes due 2020. The
recovery rating on the notes is '4', indicating S&P's expectation
of average (30%-50%) recovery prospects in the event of a payment
default.
The rating actions follow Bakkavor's proposal to refinance its
debt by issuing GBP150 million notes. Under the current debt
structure, S&P assess the company's liquidity as "less than
adequate," reflecting S&P's assessment of little covenant
headroom on its existing term loan and medium-term debt
maturities. Following the issuance of the proposed notes, the
company will be able to place a new term loan, which S&P
understands will have new covenants with increased headroom.
Assuming the placement of the new term loan, S&P assess
Bakkavor's liquidity as "adequate," reflecting headroom of 15%-
30% under the new loan's covenants.
The rating on Bakkavor continues to reflect S&P's assessment of
its financial risk profile as "highly leveraged" and its business
risk profile as "weak."
In S&P's view, Bakkavor should be able to stabilize its operating
performance and manage its liquidity over the next 12 months. S&P
also believes that adjusted EBITDA interest coverage will remain
at the higher end of its forecast range of 1.5x-2.0x over the
next 12 months, which S&P considers to be commensurate with the
'B-' rating.
S&P could take a positive rating action if Bakkavor demonstrates
a sustainable improvement in its operating performance such that
it could maintain interest coverage of more than 2x and generate
positive free cash flow. S&P believes Bakkavor could achieve
this if it was able to deliver volume growth on the back of capex
investments and cost efficiencies, and recover input cost
inflation in a timely fashion. A positive rating action also
depends on the company extending its debt maturities and
restoring adequate (15%-30%) covenant headroom.
S&P could take a negative rating action if it believes that
Bakkavor may not be able to comply with its financial covenants,
or if its liquidity position worsens. This may result from a
deterioration in operating performance. In addition, a failure
to complete the refinancing currently in progress could put
pressure on the rating.
CABOT FINANCIAL: S&P Affirms 'BB-' Counterparty Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' long-term
counterparty credit rating on U.K.-based finance company, Cabot
Financial Ltd. (Cabot).
At the same time, S&P affirmed the 'BB' issue rating and '2'
recovery rating on the GBP265 million senior secured term notes
issued by Cabot's wholly owned subsidiary, Cabot Financial
(Luxembourg) S.A. The outlook is stable.
The affirmation reflects S&P's view that the announced change of
Cabot's ownership to J.C. Flowers & Co. (JCF) from AnaCap
Financial Partners, and the intended sale of part of JCF's stake
to Encore Capital Group, Inc. (Encore) have limited implications
for bondholders at this time. S&P understands that the Encore
transaction will require bondholder consent, without which it is
unlikely to proceed.
Cabot is a nonoperating holding company. Its cash flows derive
principally from its ownership of Cabot Financial (U.K.) Ltd., an
operating subsidiary that is in S&P's view "core" to Cabot.
Cabot is itself a wholly owned subsidiary of Cabot Credit
Management Ltd., the ultimate holding company that will be
jointly owned by JCF, Encore, and Cabot's management.
S&P's ratings on Cabot primarily reflect the 'bb-' group credit
profile (GCP) of the consolidated group that it heads (defined in
the notes' bondholder agreement as the "restricted group"). S&P
now uses this scope of consolidation because it considers that
the clauses related to the restricted group, as defined in the
bondholder agreement, sufficiently dilute the ultimate owners'
control over the cash flows and debt-servicing capacity of Cabot.
That said, S&P do see changes to ownership as being relevant for
bondholders because they may influence Cabot's financial policy,
corporate strategy, and risk appetite.
The ratings on Cabot are in line with the 'bb-' GCP, reflecting
S&P's view that there will be no material barriers to cash flows
from its operating subsidiaries, once the existing senior
facilities are repaid. The notes are issued by Cabot Financial
(Luxembourg) S.A., a wholly owned subsidiary of Cabot, and they
are guaranteed by Cabot and its material subsidiaries. S&P
understands that the change of ownership does not affect the
companies within the restricted group that provide the
guarantees.
"We note that gross collections in 2012 increased by 13% over
2011 to GBP160.9 million. Cash generation, as measured by EBITDA
plus portfolio amortization (Standard & Poor's-adjusted EBITDA;
portfolio amortization is a noncash item), has also grown
gradually, reaching about GBP111 million in the full year-ended
Dec. 31, 2012 from GBP61 million in 2008 (adjusted on a like-for-
like basis). We do not expect the change of ownership to result
in substantive changes to the company's strategy of price
discipline and focus on purchasing semi-performing portfolios.
That said, we consider that Cabot's cash spend on portfolio
purchases will likely increase materially, given the wider market
opportunities that will be available to it after the transaction.
In our view, Encore's long track record and experience in the
U.S. markets will bring a degree of institutional expertise to
Cabot's existing operations and provide the potential for further
operational efficiencies. However, there is a risk that the
change of ownership could lead to a more aggressive financial
policy and/or business strategy, such as expansion into riskier
debt segments," S&P said.
"We expect Cabot's debt-servicing capacity as measured by
adjusted EBITDA coverage of cash interest expense, to be weak at
around 4.5x over the next 12 months, as a higher proportion of
portfolio purchases is funded with additional bank facility
drawdowns. Cabot's leverage at end-December 2012, measured as the
ratio of gross debt (excluding shareholder loan notes) to
adjusted EBITDA, was 2.4x. We expect leverage to remain at this
level in the near term. Finally, our view of Cabot's financial
profile factors in the estimated remaining collections (ERCs) of
the company's back book. These will allow Cabot to remain cash
generative over the medium term, even in the unlikely scenario of
no additional portfolio purchases. ERCs over 84 months, have
grown by 25% to GBP750 million as of March 31, 2013, from GBP601
million as of June 30, 2012," S&P added.
The stable outlook reflects S&P's expectation that Cabot's
sustained growth in total collections will continue to support
its credit profile, resulting in broadly stable cash flow
coverage and leverage metrics over the next 12-24 months.
S&P could lower the ratings on Cabot if adjusted EBITDA to gross
cash interest falls to less than 4x, or if S&P sees evidence of a
failure in its control framework, adverse changes in the
regulatory environment, or material declines in total
collections, against management's expectations. The ratings
could also come under pressure if Cabot's new owners pursue a
more aggressive financial policy.
S&P considers a positive rating action to be remote at this
stage. S&P could consider an upgrade over the long term if it
observes a material reduction in the company's leverage,
sustained growth in cash flow generation, and successful
diversification into new customer segments over time.
CO-OPERATIVE BANK: Hires Richard Pennycook as Finance Director
--------------------------------------------------------------
Rebecca Clancy at The Telegraph reports that The Co-operative
Group has hired a respected finance director and former bank
chief to help with the financial restructuring of the mutual
which faces an estimated GBP1.8 billion hole in its capital
reserves.
According to the Telegraph, Richard Pennycook, widely regarded as
a turnaround specialist, has been appointed as group finance
director.
The mutual has also hired Richard Pym, the former chief executive
of Alliance & Leicester, as chairman of The Co-operative Bank
with immediate effect, replacing Paul Flowers who stepped down
after three year, the Telegraph discloses.
Mr. Pym told Reuters that the bank's financial performance had
been "a dissappointment", but he was determined to work with
Britain's financial regulator in the coming weeks to resolve
questions over the bank's future, the Telegraph relates.
"I've run good banks and bad banks and I have confidence that the
Co-op will be a very good bank. There is an absolute
determination to resolve the questions that have been asked with
our regulator," the Telegraph quotes Mr. Pym as saying.
The Telegraph notes he added that the focus now was to get the
bank "on a more profitable path".
The Co-operative Group is searching for ways to fill a capital
hole in the bank estimated to be GBP1 billion to GBP1.8 billion,
the Telegraph discloses. It has until the end of the month to
come up with a plan that is acceptable to its supervisor, the
Prudential Regulatory Authority (PRA), the Telegraph states.
Alongside bondholder "haircuts", the Co-op is expected to raise
funds by selling assets, the Telegraph says.
Founded in 1863, the Co-op has more than six million members,
employs more than 100,000 people and has turnover of more than
GBP13 billion.
* * *
As reported by the Troubled Company Reporter-Europe on May 13,
2013, Moody's Investors Service downgraded the deposit and senior
debt ratings of Co-operative Bank plc to Ba3/Not Prime from
A3/Prime 2, following its lowering of the bank's baseline credit
assessment (BCA) to b1 from baa1. The equivalent standalone bank
financial strength rating (BFSR) is now E+ from C- previously.
COOL HOLDING: Moody's Corrects Prob. of Default Rating to Ba3-PD
----------------------------------------------------------------
Moody's Investors Service has corrected the probability of
default rating (PDR) of Cool Holding Ltd to Ba3-PD from Baa3-PD.
Due to an internal administrative error, when the rating was
changed from provisional (P)Ba3-PD to definitive on January 23,
2013, it was inadvertently changed to Baa3-PD. The correct rating
is Ba3-PD.
HEART OF MIDLOTHIAN: Downplays Administration Fears Over Tax Bill
-----------------------------------------------------------------
Evening Telegraph reports that Heart of Midlothian Football Club
has downplayed the latest fears they could be set to enter
administration over an unpaid tax bill.
According to Evening Telegraph, reports on Tuesday suggest the
Tynecastle club has just seven days to settle a GBP100,000 sum
owed to Her Majesty's Revenue and Customs for PAYE or face being
handed a winding-up order.
But a spokesman for the club, as cited by Evening Telegraph, said
on Tuesday: "We are in dialogue with HMRC and expect to make
payment in the very near future."
Appealing to fans, he claimed the club hoped to have cleared
their financial problems in time for the new season, Evening
Telegraph notes.
Heart of Midlothian Football Club, more commonly known as Hearts,
is a Scottish professional football club based in Gorgie, in the
west of Edinburgh.
RANGERS INTERNATIONAL: No Evidence to Link Craig Whyte to Buyer
---------------------------------------------------------------
Peter Woodifield at Bloomberg News reports that Rangers
International Football Club Plc said an investigation found no
evidence that Craig Whyte, the owner of the 54-time Scottish
soccer champion before it went into liquidation last year, had
any involvement with the company that bought the business from
the administrators.
According to Bloomberg, the Glasgow-based club said in a
statement on the London Stock Exchange Thursday that there was no
evidence that Mr. Whyte invested in Rangers Football Club Ltd. or
Rangers International FC directly or indirectly or that he had
any involvement with Sevco Scotland Ltd., the company behind the
purchase.
The investigation, carried out by law firm Pinsent Masons LLP and
overseen by Roy Martin, was set up after Mr. Whyte said he
colluded with Charles Green, who headed the group that acquired
the club for GBP5.5 million (US$8.3 million) from the
administrators, to buy its assets, Bloomberg notes.
Mr. Green resigned as chief executive officer of the club after
Mr. Whyte's allegations became public, Bloomberg relates.
Rangers went into liquidation last year over unpaid tax bills of
more than GBP93 million, Bloomberg recounts.
ROYAL BANK: Gov't Has Until Sept. to Draw Up Options for Future
---------------------------------------------------------------
Harry Wilson at The Telegraph reports that the Commission on
Banking Standards is expected to suggest that the Treasury report
back at the latest by September on how to resolve the future of
RBS.
According to the Telegraph, among the options suggested in its
report will be proposals to split RBS into several regional
lenders; the separation of the bank into a "good bank" and "bad
bank"; and handing out shares in the business to the public.
The Telegraph relates that sources close to the commission said
the report -- currently at the draft stage -- is expected to say
that the current strategy of running the bank, which is 81% owned
by the state, is no longer sustainable and that the Government
must consider "more radical options" for the business.
Splitting up RBS would be controversial and George Osborne, the
Chancellor, has made clear he is not in favor of such a dramatic
restructuring of a bank that, despite scaling back its operations
since the financial crisis, remains one of the country's biggest
lenders to small businesses and homebuyers, the Telegraph notes.
Sources close to the bank revealed that Stephen Hester, the RBS
chief executive, has been given assurances by the Treasury that
the "good bank/bad bank" split was unlikely to happen as it would
delay the privatization process and could cost up to GBP10
billion, according to the Telegraph.
The Royal Bank of Scotland Group plc (NYSE:RBS) --
http://www.rbs.com/-- is a holding company of The Royal Bank of
Scotland plc (Royal Bank) and National Westminster Bank Plc
(NatWest), which are United Kingdom-based clearing banks. The
company's activities are organized in six business divisions:
Corporate Markets (comprising Global Banking and Markets and
United Kingdom Corporate Banking), Retail Markets (comprising
Retail and Wealth Management), Ulster Bank, Citizens, RBS
Insurance and Manufacturing. On October 17, 2007, RFS Holdings
B.V. (RFS Holdings), a company jointly owned by RBS, Fortis N.V.,
Fortis SA/NV and Banco Santander S.A. (the Consortium Banks) and
controlled by RBS, completed the acquisition of ABN AMRO Holding
N.V. (ABN AMRO). In July 2008, the company disposed of its
entire interest in Global Voice Group Ltd.
* UK: High Streets May Lose Another 5,000 Shops in Next 5 Years
---------------------------------------------------------------
Hannah Kuchler at The Financial Times reports that British high
streets are forecast to lose another 5,000 shops in the next five
years, as stores -- caught between cautious consumers and
competition from online and out-of-town rivals -- lower the
shutters for the last time.
Town center shopping streets have lost 5% of their outlets in the
last two years, the FT says, citing new research from the Local
Data Company and the Said Business School. If this trend
continues at the same rate, they project that high streets will
shed another 13% of stores by 2018, the FT notes.
Tracking the fortunes of 1,300 UK high streets over the past two
years, the joint study shows the changing nature of the shops
that remain, reshaping retail precincts across the country, the
FT discloses.
According to the FT, the research shows that almost one in ten
high street stores sell discount or second-hand goods. Alongside
the poundshops, pawnbrokers and convenience stores, the UK now
has more nail bars than Chinese restaurants, the FT states.
Matthew Hopkinson, director of LDC, said the high street was
seeing its biggest period of change in the last thirty years --
and the pace of transformation could even accelerate, the FT
relates.
===================
U Z B E K I S T A N
===================
UNIVERSAL BANK: Fitch Affirms 'CCC' LT Issuer Default Rating
------------------------------------------------------------
Fitch Ratings has affirmed Uzbekistan-based Universal Bank's (UB)
Long-Term local currency Issuer Default Rating (IDR) at 'CCC'.
Key Rating Drivers
UB's IDRs reflect its modest and geographically concentrated
franchise, high concentrations on both sides of the balance
sheet, low operating efficiency, potential for related-party
transactions and relatively short track record of operations. The
bank was founded in 2001, and remains one of the smallest (25th
of 30) domestic banks by assets (end-4M13: US$30.5 million).
The ratings also continue to take into account limitations in
UB's credit profile following the revocation of the bank's
license on foreign currency operations in July 2012. As a result
of this, UB experienced significant deposit outflow (around UZS8
billion) in H212, which led to visible slowdown of the bank's
growth (5% in 2012 versus 38% in 2011) and to some pressure on
its performance. Liquidity risks were muted by end-1M13 as the
bank had accumulated a solid liquidity buffer (equal to 31% of
its customer accounts), although the funding base remains
undermined by high depositor concentrations (with the top 20
accounting for 64% of the total).
UB's asset quality metrics have worsened, reflecting the
challenges of SME lending and some weaknesses in Uzbekistan's
operating environment. Non-performing loans (90+ days overdue)
rose to 6.4% at end-2012 (from 2.8% at end-2011) and loans
overdue from 30 to 90 days comprised an additional 15.3% of the
portfolio. Increased credit impairment charges cut UB's return on
average assets to a low 0.6% during 2012, while impairment
reserves were still only 3.8% of loans at end-2012. However,
unreserved credit risks were largely mitigated by the bank's
solid reported capitalization (32% regulatory capital ratio at
end-2012), which was sufficient to fully absorb problems in the
bank's loan book.
Rating Sensitivities
Upward potential for UB's ratings is currently limited, although
further development of the bank's franchise will be credit
positive. Downward rating pressure could arise from resumed
deposit outflow or further worsening of UB's asset quality if not
offset by sufficient equity injections.
The rating actions are:
-- Long-Term local currency IDR: affirmed at 'CCC'
-- Short-Term local currency IDR: affirmed at 'C'
-- Viability Rating: affirmed at 'ccc'
-- Support Rating: Affirmed at '5'
-- Support Rating Floor: affirmed at 'No Floor'
===============
X X X X X X X X
===============
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Apr. 10-12, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Spring Conference
JW Marriott Chicago, Chicago, Ill.
Contact: http://www.turnaround.org/
Apr. 18-21, 2013
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Gaylord National Resort & Convention Center,
National Harbor, Md.
Contact: 1-703-739-0800; http://www.abiworld.org/
June 13-16, 2013
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Mich.
Contact: 1-703-739-0800; http://www.abiworld.org/
July 11-13, 2013
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Hyatt Regency Newport, Newport, R.I.
Contact: 1-703-739-0800; http://www.abiworld.org/
July 18-21, 2013
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
The Ritz-Carlton Amelia Island, Amelia Island, Fla.
Contact: 1-703-739-0800; http://www.abiworld.org/
Aug. 8-10, 2013
AMERICAN BANKRUPTCY INSTITUTE
Mid-Atlantic Bankruptcy Workshop
Hotel Hershey, Hershey, Pa.
Contact: 1-703-739-0800; http://www.abiworld.org/
Aug. 22-24, 2013
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
Hyatt Regency Lake Tahoe, Incline Village, Nev.
Contact: 1-703-739-0800; http://www.abiworld.org/
Oct. 3-5, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Wardman Park, Washington, D.C.
Contact: http://www.turnaround.org/
Nov. 1, 2013
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
Atlanta Marriott Marquis, Atlanta, Ga.
Contact: 1-703-739-0800; http://www.abiworld.org/
Dec. 2, 2013
BEARD GROUP, INC.
19th Annual Distressed Investing Conference
The Helmsley Park Lane Hotel, New York, N.Y.
Contact: 240-629-3300 or http://bankrupt.com/
Dec. 5-7, 2013
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Terranea Resort, Rancho Palos Verdes, Calif.
Contact: 1-703-739-0800; http://www.abiworld.org/
*********
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 * * *