/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/130807.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, August 7, 2013, Vol. 14, No. 155 Headlines G E R M A N Y SOLARWORLD AG: Creditors Back Restructuring Plan G R E E C E DRYSHIPS INC: Q2 Results Conference Call Scheduled for August 8 H U N G A R Y * HUNGARY: Moody's Outlook for Banking Sector Remains Negative I R E L A N D ALLIED IRISH: Reports EUR758 Million Net Loss in H1 2013 I T A L Y BANCO POPOLARE: Bond Amendments No Impact on Moody's Ratings SALINI SPA: Fitch Rates EUR400MM Senior Unsecured Bond 'BB' TELECOM ITALIA: Fitch Cuts Subordinated Hybrid Rating to 'BB' N E T H E R L A N D S NXP BV: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Positive PALLAS CDO II: S&P Cuts Ratings on Three Note Classes to 'CCC+' P O L A N D CENTRAL EUROPEAN: Dobrzyniecki to File Shareholder Suit POLIMEX-MOTOSTAL: Share Sale Deadline Extended to August 31 R U S S I A RUSSIAN PRIMSOTSBANK: Fitch Hikes LT Issuer Default Rating to B+ S W E D E N NORTHLAND RESOURCES: Implements Final Steps of Bond Restructuring SAS AB: S&P Raises Corp. Credit Rating to 'B-'; Outlook Stable U N I T E D K I N G D O M BENEFICIARIES LIMITED: Gets Order to Pay GBP200K Compensation EQUINOX ECLIPSE 2006-1: Fitch Cuts Rating on Class D Notes to 'D' GREENSOLUTIONS LTD: In Liquidation; Faces Clyde Gateway Suit HEARTS OF MIDLOTHIAN: Has Been Issued New Registration Embargo HUGHES CHILLED: Director Faces 10-Year Disqualification INVENSYS PLC: Moody's Puts 'Ba1' CFR Under Review for Upgrade MID STAFFORDSHIRE NHS: GP Calls for Lewisham Hospital's Survival NORTHERN ROCK: UKAR Pays GBP1.9BB to Taxpayers in 1st Half Year RAILCARE: Union Calls for Government Intervention by Vince Cable SALUBRIOUS PLACE: Goes Into Receivership X X X X X X X X * Firms May Rearrange Leases to Avoid Balance-Sheet Inclusion ********* ============= G E R M A N Y ============= SOLARWORLD AG: Creditors Back Restructuring Plan ------------------------------------------------ Stefan Nicola at Bloomberg News reports that Solarworld AG creditors have backed proposals to try to save Germany's biggest solar-panel maker. According to Bloomberg, Solarworld said in a statement that a total of 99.96% of noteholders present in a meeting in Bonn on Monday representing 35.78% of Solarworld's EUR150 million (US$198.9 million) of bonds due July 2016 backed the restructuring plan. A group representing at least 25% of the notes was required, Bloomberg notes. Solarworld reported net debt of EUR806.4 million in the first quarter, up from EUR757.6 million the year before, Bloomberg says, citing a company filing. The company has a EUR250 million revolving credit facility maturing in 2016, according to data compiled by Bloomberg. As reported by the Troubled Company Reporter-Europe on Aug. 6, 2013, Bloomberg News related that Solarworld said in June, Qatar Solar S.P.C. is seeking 29% of the company through a purchase of new equities after current share capital is cut by a ratio of 150:1. The company said bondholders would receive proceeds from the Qatari deal and a separate purchase of shares by the CEO, Bloomberg noted. SolarWorld AG is Germany's biggest solar-panel maker. The company is based in Bonn. =========== G R E E C E =========== DRYSHIPS INC: Q2 Results Conference Call Scheduled for August 8 --------------------------------------------------------------- DryShips Inc. on Aug. 1 disclosed that it will release its results for the second quarter 2013 after the market closes in New York on Wednesday, August 7, 2013. DryShips' management team will host a conference call the following day on Thursday, August 8, 2013, at 9:00 a.m. EDT to discuss the Company's financial results. Conference Call details: Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1(866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or +(44) (0) 1452 542 301 (from outside the US). Please quote "DryShips." A replay of the conference call will be available until Thursday, August 15, 2013. The United States replay number is 1(866) 247- 4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 2133051#. Slides and audio webcast: There will also be a simultaneous live webcast over the Internet, through the DryShips Inc. website (www.dryships.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. About DryShips Inc. Headquartered in Athens, Greece, DryShips Inc. (NASDAQ: DRYS) is an owner of drybulk carriers and tankers that operate worldwide. Through its majority owned subsidiary, Ocean Rig UDW Inc., DryShips owns and operates 10 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 8 ultra deepwater drillships, 3 of which remain to be delivered to Ocean Rig during 2013 and 1 is scheduled for delivery during 2015. DryShips owns a fleet of 46 drybulk carriers (including newbuildings), comprising of 12 Capesize, 28 Panamax, 2 Supramax and 4 Very Large Ore Carriers (VLOC) with a combined deadweight tonnage of about 5.1 million tons, and 10 tankers, comprising 4 Suezmax and 6 Aframax, with a combined deadweight tonnage of over 1.3 million tons. The Company reported a net loss of US$288.6 million on US$1.210 billion of revenues in 2012, compared with a net loss of US$47.3 million on US$1.078 billion of revenues in 2011. The Company's balance sheet at Dec. 31, 2012, showed US$8.878 billion in total assets, US$5.010 billion in total liabilities, and shareholders' equity of US$3.868 billion. Going Concern Doubt Ernst & Young (Hellas), in Athens, Greece, expressed substantial doubt about DryShips Inc.'s ability to continue as a going concern, citing the Company's working capital deficit of US$670 million at Dec. 31, 2012, and in addition, the non- compliance by the shipping segment with certain covenants of its loan agreements with banks. As of Dec. 31, 2012, the shipping segment was not in compliance with certain loan-to-value ratios contained in certain of its loan agreements. In addition, as of Dec. 31, 2012, the shipping segment was in breach of certain financial covenants, mainly the interest coverage ratio, contained in the Company's loan agreements relating to US$769,098,000 of the Company's debt. As a result of this non-compliance and of the cross default provisions contained in all bank loan agreements of the shipping segment and in accordance with guidance related to the classification of obligations that are callable by the creditor, the Company has classified all of its shipping segment's bank loans in breach amounting to US$941,339,000 as current at Dec. 31, 2012. ============= H U N G A R Y ============= * HUNGARY: Moody's Outlook for Banking Sector Remains Negative -------------------------------------------------------------- The outlook for the Hungarian banking system remains negative, says Moody's Investors Service in a new report entitled "Banking System Outlook: Hungary". The outlook, which has been negative since June 2009, reflects Moody's expectations of continued downside risks for Hungarian banks from the weak operating environment, which will result in pressures on asset quality and capitalization. The banks also continue to be heavily exposed to wholesale and foreign-currency (FX) funding, as well as parental support constraints in a system that is predominantly foreign-owned. Moody's expects Hungarian banks to continue deleveraging their balance sheets over the outlook period, as the challenging operating environment results in subdued supply and demand for credit. Moody's forecasts real GDP growth of just 0.2% in 2013 (2012: -1.7%) owing to weak demand for Hungarian exports and the poor investment climate. In addition, the heavy tax burden will continue to suppress banks' profitability. "Deleveraging and the weak operating environment will limit Hungarian banks' revenue- generating capacity, and we expect system net interest margins to be compressed by declining interest rates and rising problem loans," says Simone Zampa, a Moody's Vice President-Senior Credit Officer, and author of the report. Moody's notes that weak asset quality and pressure on capitalization will remain major credit challenges for the Hungarian banking system over the next 12-18 month outlook period. The rating agency also expects continued -- albeit slower -- growth in the problem loans ratio, which stood at 20% at the end of Q1 2013. The deterioration in asset quality will be driven by the weak economy, high unemployment and the sizeable amount of FX loans in the system, which renders the banks' loan books vulnerable to external currency market dynamics. "Against the background, the system-wide aggregate Tier 1 capital ratio stood at 13.5% at year-end 2012, but falls to 10.1% for rated banks under Moody's central scenario," adds Mr. Zampa. Despite continued deleveraging, Hungarian banks' wholesale funding reliance remains high, at about 40% of total funding at year-end 2012. Moody's notes that the banks' funding and liquidity profiles are also highly confidence-sensitive, given the banks' large FX funding needs. In addition, many foreign- owned banks rely on short-term FX funding facilities from their parent banks to fund their FX portfolios, thus exposing them to significant rollover risk in the current challenging funding environment. The Hungarian banking system is largely foreign-owned (90% of total capital as of end of Q1 2013), mainly by Western European parents, whose willingness and capacity to provide additional liquidity and capital support to local banks may be constrained by challenges in their domestic markets and by the adverse business climate in Hungary. ============= I R E L A N D ============= ALLIED IRISH: Reports EUR758 Million Net Loss in H1 2013 -------------------------------------------------------- Allied Irish Banks incurred a net loss of EUR758 million on EUR595 million of net interest income for half-year June 2013, as compared with a net loss of EUR1.05 billion on EUR568 million of net interest income for half year June 2012. As of June 30, 2013, AIB had EUR120.60 billion in total assets, EUR110 billion in total liabilities and EUR10.59 billion in total shareholders' equity. AIB's Chief Executive, David Duffy, described the interim results as encouraging adding that he expects the positive performance to continue. "We are mid-way through a three year plan to return to sustainable profitability. While we have met our key strategic objectives to date, we acknowledge the continuing challenges that lie ahead. "The bank's results for the first half of 2013 demonstrate that our strategy for stabilisation and recovery is delivering results. We are seeing a steady improvement in our operating performance and a return to pre-provision operating profit. I expect that overall progress made in the first half of 2013 will continue through this year. "Although the economic environment remains challenging we have observed early positive trends in the SME, corporate and mortgage sectors. AIB approved over EUR3 billion in lending in the Irish market in the first half of 2013 and we are well positioned to actively support growth in the economy," he said. A copy of the Report is available for free at: http://is.gd/VNiMOn About Allied Irish Banks Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. The Company reported a loss of EUR2.29 billion in 2011, a loss of EUR10.16 billion in 2010, and a loss of EUR2.33 billion in 2009. ========= I T A L Y ========= BANCO POPOLARE: Bond Amendments No Impact on Moody's Ratings ------------------------------------------------------------ Moody's Investors Service said that the lowering of various rating triggers will not, in and of itself and at this time, result in a downgrade or withdrawal of the current Baa2 ratings of the covered bonds issued by Banco Popolare Societa Cooperativa (deposits Ba3 negative outlook, standalone bank financial strength rating E+ / baseline credit assessment BCA b3 negative outlook). Moody's opinion addresses only the credit impact of the amendments, and Moody's is not expressing any opinion as to whether the amendments have, or could have other, non-credit- related effects that may have a detrimental impact on the interests of noteholders and/or counterparties. The amendments consist of: (1) Lowering to the loss of Ba3 from the loss of Baa3 the subordinated loan late-repayment provision trigger: If Moody's downgrades the issuer's rating below Ba3, the issuer will repay the subordinated loans six months after the longest maturing covered bonds. (2) Lowering to the loss of Ba3 from the loss of Baa3 the back-up servicer (BUS) appointment trigger: If Moody's downgrades the issuer's long-term rating below Ba3, the guarantor must appoint a BUS within 30 days. (3) Lowering to the loss of Ba3 from the loss of Baa3 the trigger for delivery of solvency certificates with subsequent transfers: Typically the guarantor requires a solvency certificate from the issuer to ensure that the insolvency administrator cannot claw-back the asset transferred. (4) Lowering to the loss of Ba3 from the loss of Prime-1 the trigger for the postponement of the release of the guarantee granted by the Guarantor: The guarantee will be in place until all covered bonds are fully redeemed. However, if Moody's downgrades the issuer's rating below Ba3, this guarantee may continue to exist beyond the redemption time if certain conditions are met. (5) Lowering to the loss of Prime-3/Ba3 from the loss of Prime- 1/A1 the pre-maturity test trigger for hard-bullet covered bonds maturing within 6 and 12 months, respectively: However, Moody's notes that there are no hard-bullet covered bonds outstanding and the issuer has stated the intention of continuing to issue soft-bullet bonds. The principal methodology used in this rating was "Moody's Approach to Rating Covered Bonds" published in July 2012. SALINI SPA: Fitch Rates EUR400MM Senior Unsecured Bond 'BB' ----------------------------------------------------------- Fitch Ratings has assigned Salini S.p.a.'s (BB/Stable) EUR400 million 2018 senior unsecured bond a final 'BB' rating. Key Rating Drivers The senior unsecured bond rating is in line with Salini's Issuer Default Rating (IDR), based on the assumption that the merger between Salini and Impregilo will be completed, as Fitch considers the possibility that the merger will not go ahead as very unlikely. However, if the merger is stopped for any reason, the bond rating would likely be notched down from the IDR, reflecting its structural subordination to the senior unsecured debt of Impregilo. After the merger, the bond would still be structurally subordinated to the operating companies' (including Todini) debt, none of which is the bond's guarantor. However, Fitch deems this structural subordination not to be material. Rating Sensitivities Positive: Future developments that could lead to positive rating actions include: -- Liquidity remaining comfortably above 1.25x on a sustained basis. -- FFO net leverage to improve to 1.0x or below on a sustained basis. Negative: Future developments that could lead to negative rating action include: -- Liquidity score below 1.1-1.2x on a sustained basis. -- FFO net leverage above 2.0x. -- Evidence of poor performance on major contracts with a material impact on profitability. TELECOM ITALIA: Fitch Cuts Subordinated Hybrid Rating to 'BB' ------------------------------------------------------------- Fitch Ratings has downgraded Telecom Italia SpA's (TI) Long-term Issuer Default Rating (IDR) to 'BBB-' from 'BBB'. The Outlook on the Long-term IDR is Negative. The downgrade reflects the worsening operating conditions in TI's domestic business due to regulatory pressure, a continued mobile price war and a weak economic environment. The erosion of TI's cash flow generation looks to continue into 2014. If the domestic business can be stabilized, and leverage brought under control, Fitch fundamentally views TI as an investment grade credit. Key Drivers - Domestic business deteriorating TI's H113 results and full year domestic guidance were weaker than Fitch expected. TI's revenue and EBITDA trends in 2013 are likely to be worse than that reported in 2012. The mobile price war in Italy is showing no signs of abating and the effects of a weak Italian economy could to persist into 2014. - Erosion of financial flexibility Increasing pressures in the domestic business, TI's main generator of cash flow, means visibility is worsening. Management has shown in the past it has been able to deal with regulatory and competitive pressures to prevent TI's credit metrics deteriorating. The Negative Outlook reflects Fitch's concerns that TI's financial cushion to deal with future adverse shocks to the business has been reduced. - High leverage to persist TI ended H113 with leverage of 2.9x - as measured by unadjusted net debt to EBITDA, excluding Telecom Argentina - which is an increase from 2.7x at the end of 2012. With continued declines in EBITDA, Fitch expects leverage will increase in 2013, and probably in 2014. - Protecting Cash Flow Generation The challenge facing TI is to maintain its domestic market position in an increasingly price competitive market while protecting free cash flow generation and reducing leverage. With regulatory and competitive developments, improving efficiency in operations and capital expenditure may not be enough to preserve profitability. However, continued investment in long-term evolution mobile network upgrades and fibre deployment should allow TI to increasingly differentiate its service offering based on network quality, albeit at a cost. - Limited Contribution from Brazil Brazil currently provides just under 10% of the group's EBITDA less capex (excluding Telecom Argentina). Revenue growth in 2013 and 2014 is likely to be hampered by a slowing economy and higher than expected mobile termination rate cuts. A weakened Brazilian real further reduces TIM Brasil's contribution to group EBITDA. Rating Sensitivities Negative: -- Leverage as measured by unadjusted net debt to EBITDA (excluding Telecom Argentina) sustainably above 3.5x could result in TI's Long-term IDR being downgraded. -- Continued weakness in the domestic business with expectations of further high-single digit EBITDA declines in 2014 would lead to a downgrade. Positive: -- A sustained improvement in the company's domestic business's operating and improvement in the company's financial flexibility would be required before the Outlook on Telecom Italia's IDR could be revised to Stable. Liquidity and Debt Structure TI's liquidity remains healthy. TI had EUR6.1 billion of cash and cash equivalents on its balance sheet at the end of June 2013 as well as EUR6.7 billion of undrawn committed facilities (which includes EUR4 billion available until May 2017 and EUR3 billion available until March 2018). Together, this liquidity should allow TI to cover debt maturing until 2015. The rating actions are as follows: Telecom Italia SpA Long-term IDR: downgraded to 'BBB-' from 'BBB', Outlook Negative Senior unsecured rating: downgraded to 'BBB-' from 'BBB' Subordinated hybrid rating: downgraded to 'BB' from 'BB+' Telecom Italia Capital and Telecom Italia Finance SA Senior unsecured rating: downgraded to 'BBB-' from 'BBB' ===================== N E T H E R L A N D S ===================== NXP BV: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its long-term corporate credit rating on Dutch semiconductor manufacturer NXP B.V. to 'BB-' from 'B+'. The outlook is positive. At the same time, S&P raised all issue ratings by one notch in line with the one-notch rise in the corporate credit rating. The recovery ratings remain unchanged. The upgrade reflects S&P's expectation that NXP's credit metrics will likely strengthen further in 2013 and 2014 as a result of continued solid revenue growth, improving operating margins, and significant free cash flow generation. S&P has revised its assessment of the group's financial risk profile to "significant" from "aggressive," as S&P's criteria define the term. Under S&P's base-case scenario, it expects the group's Standard & Poor's-adjusted gross-debt-to-EBITDA ratio to decline below 3.0x by year-end 2013, from 3.4x as of June 30, 2013, and further towards 2x by year-end 2014 if the group continues to apply its discretionary cash flow (DCF) generation primarily for debt reduction. In the 12 months to June 30, 2013, NXP reduced its gross consolidated financial debt by $438 million to $3,381 million. "In our revised base-case assessment, we expect NXP's revenues to increase by about 10% in 2013--previously we assumed low-single- digit growth--and in the mid-single digits in 2014, primarily due to continued strong demand in its High Performance Mixed Signal (HPMS) segment and despite still unstable economic conditions, particularly in Europe. In the first six months of 2013, HPMS revenues increased by 19% year-on-year. This will more than offset lower revenues in the Manufacturing Operations segment and currently soft demand prospects in the Standard Products segment, in our opinion. In addition, we expect NXP's reported EBITDA margin before share-based compensation expense to improve to about 26% in 2013 and more than 27% in 2014, from 23% in 2012, helped by higher revenues and good cost control. We also estimate that NXP will generate positive DCF of about $550 million in 2013, compared with $402 million in 2012," S&P said. "We expect that higher EBITDA and lower cash interest will more than offset significant working capital requirements, which totaled $182 million in the first half of 2013. We expect a further substantial increase in DCF in 2014, primarily due to higher EBITDA and lower working capital requirements. Furthermore, we assume continued dividend leakage from NXP's 61%- owned, but fully consolidated, subsidiary Systems on Silicon Manufacturing Co. Pte. Ltd. (SSMC; not rated) to its joint- venture partner Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). In 2013, SSMC paid a minority dividend of $46 million. We have not factored in any parent company dividend, in line with NXP's track record," S&P added. The positive outlook reflects the potential for an upgrade in 2014 if the group further reduces its gross indebtedness through DCF generation to reach and maintain a Standard & Poor's-adjusted gross-debt-to-EBITDA ratio of about 2.5x through the cycle. S&P also believes the group will continue to post further solid revenue growth in the next 12 months, primarily as a result of company-specific design wins, and to gradually improve its operating margins. At the same time, S&P expects the group to further increase its DCF generation in 2014, from about US$550 million in 2013. S&P might revise the outlook to stable if the group did not further reduce its gross indebtedness from current levels through DCF generation, for example as a result of significant acquisitions or higher shareholder distributions. PALLAS CDO II: S&P Cuts Ratings on Three Note Classes to 'CCC+' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered all of its credit ratings in Pallas CDO II B.V. The rating actions follow S&P's assessment of the transaction's performance since its previous review on April 30, 2012. S&P has applied its relevant criteria and considered recent transaction developments using data from the May 31, 2013 trustee report and from S&P's ratings database in its cash flow analysis. CREDIT ANALYSIS Since S&P's previous review, it has observed a negative ratings migration in the performing portfolio. The assets rated in the 'CCC' category (assets rated 'CCC+', 'CCC', or 'CCC-') have increased to 8% from 3%. This has since increased the scenario default rates for all classes of notes, as shown by S&P's CDO Evaluator (Version 6.0.1) model. The transaction's post-reinvestment period began in January 2012. The class A-1-a and A-1-d notes have amortized by about EUR42 million over the past 12 months. This has increased the available credit enhancement for all classes of notes. CASH FLOW ANALYSIS Following S&P's credit analysis, it subjected the transaction's capital structure to a cash flow analysis to determine the break- even default rate for each rated class of notes at each rating level. "In our analysis, we used the portfolio balance that we considered to be performing, the reported weighted-average spread (which has decreased to 1.02% from 1.38%), and the weighted- average recovery rates, in accordance with our 2009 corporate cash flow collateralized debt obligation (CDO) criteria and our CDO of structured finance assets criteria. We incorporated various cash flow stress scenarios using our standard default patterns in conjunction with different interest rate and currency stress scenarios. Our cash flow analysis shows that all of the classes of notes pass at lower rating levels," S&P said. SUPPLEMENTAL STRESS TESTS Nevertheless, the application of S&P's largest obligor default test constrained at 'CCC+ (sf)' its ratings on the class D-1-a and D-1-b notes, even though they passes S&P's cash flow analysis at the 'B- (sf)' rating level. S&P's largest obligor default test is a supplemental stress test that it introduced in its 2009 corporate cash flow CDO criteria. S&P has lowered its ratings on the class A-1-a, A-1-d, A-2, B, C, D-1-a, D-1-b notes, and the class P, Q, and R combination notes because, following its credit and cash flow analysis, S&P considers the available credit enhancement for these notes to be commensurate with lower ratings. Pallas CDO II is a cash flow CDO transaction of primarily European asset-backed securities (ABS). M&G Investment Management Ltd. manages the transaction, which closed in October 2006. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating Rating To From Ratings Lowered PALLAS CDO II B.V. EUR498.6 Million Senior Secured Fixed- And Floating-Rate Notes A-1-a A- (sf) A (sf) A-1-d A- (sf) A (sf) A-2 BBB- (sf) BBB+ (sf) B BB+ (sf) BBB (sf) C BB (sf) BBB- (sf) D-1-a CCC+ (sf) BB (sf) D-1-b CCC+ (sf) BB (sf) P Combo BB (sf) BBB- (sf) Q Combo CCC+ (sf) B+ (sf) R Combo BB (sf) BBB- (sf) =========== P O L A N D =========== CENTRAL EUROPEAN: Dobrzyniecki to File Shareholder Suit ------------------------------------------------------- According to Bloomberg News' Piotr Skolimowski, Parkiet newspaper, citing Andrzej Dobrzyniecki, managing partner at Dobrzyniecki & Partners Law Office LLP, reported on Monday that the firm expects to file a lawsuit on behalf of Polish shareholders of Central European Distribution Corp. by the end of this month. Central European Distribution Corp. filed for U.S. bankruptcy protection on April 8 with a pre-approved restructuring plan aimed at cutting about US$665.2 million in liabilities, Bloomberg recounts. About CEDC Mt. Laurel, New Jersey-based Central European Distribution Corporation is one of the world's largest vodka producers and Central and Eastern Europe's largest integrated spirit beverages business with its primary operations in Poland, Russia and Hungary. On April 7, 2013, CEDC and two subsidiaries sought bankruptcy protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 13-10738) with a prepackaged Chapter 11 plan that reduces debt by US$665.2 million. Attorneys at Skadden, Arps, Slate, Meagher & Flom LLP serve as legal counsel to the Debtor. Houlihan Lokey is the investment banker. Alvarez & Marsal will provide the chief restructuring officer. GCG Inc. is the claims and notice agent. The Bankruptcy Court approved the Disclosure Statement and confirmed the Second Amended and Restated Joint Prepackaged Plan of Reorganization. CEDC's Plan, which won approval from the U.S. Bankruptcy Court for the District of Delaware on May 13, 2013, was declared effective on June 5. POLIMEX-MOTOSTAL: Share Sale Deadline Extended to August 31 ----------------------------------------------------------- David McQuaid at Bloomberg News reports that Polimex-Mostostal's creditors agreed to extend the deadline to raise PLN250 million in share sales and modify several existing contracts to Aug. 31 The company had received a one-month extension from end-June to end-July, Bloomberg recounts. As reported by the Troubled Company Reporter-Europe on July 2, 2013, Bloomberg News related that Polimex failed to pay interest on its debt by the June 28 deadline. The company signed in December a deal with creditors allowing it to restructure outstanding debt and raise new capital, Bloomberg disclosed. Polimex-Mostostal is a Polish engineering and construction company that has been on the market since 1945. The Company is distinguished by a wide range of services provided on general contractorship basis for the chemical as well as refinery and petrochemical industries, power engineering, environmental protection, industrial and general construction. The Company also operates in the field of road and railway construction as well as municipal infrastructure. Polimex-Mostostal is a large manufacturer and exporter of steel products, including platform gratings, in Poland. =========== R U S S I A =========== RUSSIAN PRIMSOTSBANK: Fitch Hikes LT Issuer Default Rating to B+ ---------------------------------------------------------------- Fitch Ratings has upgraded Russian Primsotsbank's Long-term Issuer Default Rating (IDR) to 'B+' from 'B'. The Outlook is Stable. KEY RATING DRIVERS - IDRS, NATIONAL RATING, VIABILITY RATING The upgrade of Primsotsbank's Long-Term IDR, National Rating and Viability Rating (VR) reflect the bank's extended track record of solid performance, its reasonable asset quality and underwriting standards, limited related party business and comfortable liquidity. Offsetting these factors are the bank's limited franchise, moderate capitalization, recent rapid growth and contingent risks from sister bank, Levoberezhny (LB). Performance remained solid in 2012, with IFRS pre-impairment operating profit and net income equal to 4.7% and 2.2% of average assets, respectively. H113 statutory accounts suggest similar pre-impairment performance (although statutory provisions have been catching up with those under IFRS, somewhat pressuring bottom line profitability in the Russian accounts). Revenues are supported by solid margins and strong commission/trading income earned on money transfers and client foreign currency operations, which benefit from the bank's location in the Russian Far East and customers' foreign trade business. Primsotsbank's asset quality is reasonable, with non-performing loans (NPLs, over than 90 days overdue) accounting for 4% of gross loans at end-Q113, and renegotiated loans another 6%. Reserves fully covered NPLs, and management expects about half of the restructured loans to be repaid during H213. The corporate book, which comprised 60% of total loans at end-Q113, appears to be of decent quality, based on Fitch's review of the largest 25 exposures, which comprised about half the corporate portfolio. Reported related party lending was equal to 10% of Fitch core capital (FCC) at end-Q113 (15% at end-2012), although Fitch estimates this could have been moderately higher. The performance of the bank's retail lending is satisfactory. NPLs in the unsecured consumer book, which comprised 27% of gross loans at end-Q113, were a moderate 7%. Pay-roll clients comprise about 40% of these exposures, mitigating overall risks, while high rates create a significant margin of safety. Mortgage lending, 10% of gross loans, is predominantly a commission business, with the bank usually selling loans soon after origination. The bank's liquidity is supported by deposit collection through its regional branch network, and by negligible wholesale funding. A slowdown of loan growth in H113 (due to capital constraints) has also boosted liquidity, with liquid assets (cash, net short- term interbank and securities eligible for refinance with CBR) covering a significant 35% of customer funding at end-H113. Liquidity risks are also mitigated by moderate deposit concentrations, with the top 20 depositors accounting for 10.5% of customer accounts at end-Q113. Primsotsbank's capitalization weakened in 2012 as a result of rapid growth, and the FCC ratio fell to 10.1% from 12.0% at end- 2011. The regulatory capital ratio stood 11.2% at end-H113, but as Fitch understands this could be supported in H213 by a subordinated loan (equal to about 14% of end-H113 regulatory capital). Fitch views the moderate capital levels as a rating weakness, although this is offset by solid internal capital generation and the bank's demonstrated ability (during the 2008- 2009 crisis) to rapidly deleverage its balance sheet. Fitch views sister bank LB as a somewhat weaker credit than Primsotsbank due to its higher proportion of unsecured lending and even faster growth. However, LB's recent performance, asset quality and liquidity have been satisfactory, albeit offset, as at Primsotsbank, by rather tight capitalization. LB is of a similar size to Primsotsbank and based in Novosibirsk in Siberia. RATING SENSITIVITIES - IDRS, NATIONAL RATING, VR Potential for a further upgrade of Primsotsbank's ratings is limited, given its moderate franchise and capitalization. A significant weakening of asset quality or capitalization, or a marked deterioration in LB's credit profile, could result in a downgrade of Primsotsbank. KEY RATING DRIVERS AND SENSITIVITIES - SUPPORT RATING, SUPPORT RATING FLOOR Primsotsbank's '5' Support Rating and 'No Floor' Support Rating Floor reflect the limited probability of government support, given the bank's limited franchise. The Support Rating could be upgraded in case of acquisition by a stronger shareholder. The rating actions are: Primsotsbank: Long-Term IDR upgraded to 'B+' from 'B'; Outlook Stable Short-Term IDR affirmed at 'B' National Long-Term Rating upgraded to 'A-(rus)' from 'BBB(rus)'; Outlook Stable Viability Rating upgraded to 'b+' from 'b' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' =========== S W E D E N =========== NORTHLAND RESOURCES: Implements Final Steps of Bond Restructuring ----------------------------------------------------------------- Northland Resources S.A. and Northland Resources AB announced the implementation of the final steps of restructuring of the bond loans previously issued by Northland Resources AB. As previously announced, Northland's Extraordinary General Meeting on July 31, 2013 approved all resolutions. The Board therefore resolved to go through with the contemplated restructuring of the bond loans previously issued by Northland Resources AB with ISIN NO0010636137 and ISIN NO0010636194. The Second Lien Bonds are amended into the Second Lien Convertible Bonds on the terms set out in the Second Amendment and Restatement Bond Agreement dated 7 June 2013, between, amongst others, NRSA as issuer of the Second Lien Convertible Bonds and Norsk Tillitsmann ASA as bond trustee on behalf of the holders of the Second Lien Convertible Bonds. A copy of the Second Lien Convertible Bond Agreement is available on Stamdata at http://www.stamdata.no Having obtained the requisite approvals, Northland is taking all steps necessary to implement the final stages of the restructuring, including making the necessary registrations in the Norwegian Central Securities Depository (Verdipapirsentralen). Holders of Second Lien Convertible Bonds are reminded that, as per the terms and conditions of the Second Lien Convertible Bonds, those bonds can only be converted on an Interest Payment Date (as defined in the Second Lien Convertible Bond Agreement), the next Interest Payment Date being 15 January 2014; no action may be taken by any Second Lien Convertible Bondholder to convert their bonds before that time. About Northland Headquartered in Luxembourg, Northland Resources S.A. is a producer of iron ore concentrate, with a portfolio of production, development and exploration mines and projects in northern Sweden and Finland. The first construction phase of the Kaunisvaara project is complete and production ramp-up started in November 2012. The Company expects to produce high-grade, high-quality magnetite iron concentrate in Kaunisvaara, Sweden, where the Company expects to exploit two magnetite iron ore deposits, Tapuli and Sahavaara. Northland has entered into off-take contracts with three partners for the entire production from the Kaunisvaara project over the next seven to ten years. The Company is also preparing a Definitive Feasibility Study for its Hannukainen Iron Oxide Copper Gold project in Kolari, northern Finland and for the Pellivuoma deposit, which is located 15 km from the Kaunisvaara processing plant. As reported by the Troubled Company Reporter on July 15, 2013, Peter Pernlof, Acting CEO and COO of Northland Resources S.A., disclosed that the Lulea District Court approved on July 12 the reorganization plan for the Company's Swedish subsidiaries. As previously disclosed, the Lulea District Court held composition proceedings on July 12 in connection with the reorganization of companies Northland Resources AB (publ), Northland Sweden AB and Northland Logistics AB. During the proceedings the companies' creditors approved the terms of the proposed composition. The District Court held in accordance with this and approved the reorganization plan and composition. Norwegian subsidiary Northland Logistics AS is not going through formal reorganization, but has previously agreed with all of its creditors on a payment plan identical to that of the other subsidiaries. * * * As reported by the Troubled Company Reporter-Europe on April 1, 2013, Moody's Investors Service affirmed the Caa3 corporate family rating and bond rating of Northland Resources AB. Concurrently, Moody's has applied the 'limited default' ('/LD') indicator to the company's Ca-PD probability of default rating (PDR), to reflect the recently missed interest payment on its outstanding notes, which the rating agency considers a default according to its definition of default. As a result, Moody's PDR for Northland has been affirmed at Ca-PD/LD. In addition, the outlook on all ratings remains negative. SAS AB: S&P Raises Corp. Credit Rating to 'B-'; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised to 'B-' from 'CCC+' its long-term corporate credit rating on Sweden-based airline group SAS AB. The outlook is stable. "The upgrade reflects our view that SAS has reduced its near-term liquidity risk following the implementation of its refinancing and restructuring plan. In particular, SAS has made significant progress toward the sale of Norwegian regional airline Wideroe for Swedish krona (SEK) 2 billion. We understand that the sale has received clearance from the Norwegian completion authority, which is an important step toward closing by the anticipated September deadline. In addition, we believe that SAS' implementation of its restructuring program is moving key performance indicators in the right direction. We understand that second-quarter 2013 operating expenses were down by about 9% (before leasing costs) year-on-year and that underlying unit costs were down 3.6%. As a result, we now see less risk of a near-term default," S&P said. "However, we believe that SAS' main challenge in future will be the continued improvement of its cost competitiveness relative to low-cost carriers in its core markets. In addition, despite our understanding that headroom under SAS' new financial covenants is adequate as of the end of April 2013, we believe that it could tighten toward year-end if SAS does not complete its disposal and cost-cutting program as planned. It would put pressure on SAS' liquidity if the group were to breach any of its financial covenants. If this were to occur, we believe that the group would find it harder to fund its financial and operational needs in the seasonally weak first quarter of the calendar year," S&P added. "Our base-case credit scenario--including the impact of the restructuring plan--anticipates continued growth in passenger numbers for 2013, mostly due to SAS' successful expansion into the European leisure market. We anticipate flat to marginally positive revenues in 2013, based on growth in revenue passenger kilometers (RPK; the number of kilometers passengers have traveled) of about 2%, partially offset by a decline in RPK yield (average ticket price per kilometer traveled) of about 1%. The lower RPK yield would, in our view, be caused by an increase in capacity of 4%-5%, leading to pressure on ticket prices, as well as SAS' focus on leisure travelers. Based on the above, in our base-case scenario we calculate the load factor (a measurement of capacity utilization) at 73%. We assume that SAS will continue to reduce its nonfuel costs by as much as 6%," S&P noted. "We believe that SAS needs to achieve the cost reductions that the restructuring plan anticipates to become more competitive over the medium-to-long term. Ongoing cost reduction will be essential to the group's long-term survival in the challenging and highly competitive airline sector. As a result, we see significant downside risk to our current base case should SAS fail to implement the restructuring plan in full. Furthermore, we consider that adverse developments in fuel prices or currency movements, aggravated by economic uncertainty, could significantly weaken our current base case," S&P added. The stable outlook reflects S&P's view of SAS' improved liquidity and its opinion that increased efficiency linked to the cost- reduction program should allow SAS to improve its operating performance and maintain credit ratios S&P considers commensurate with the ratings. Nevertheless, the industry environment remains challenging, with high fuel prices and growing low-cost competition contributing to SAS' credit risk. S&P could take a positive rating action if it considers SAS' cost structure more competitive after it has completed its disposal program and fully implemented the restructuring plan. This would depend on SAS' liquidity position improving sustainably, with S&P's forecast anticipating sufficient headroom under its covenants. S&P could consider taking a negative rating action if it believes that SAS' operating performance will fall materially short of S&P's base-case forecast. S&P could also take a negative rating action if the disposals and restructuring plan do not complete as SAS has planned, and as a result S&P anticipates that the group will breach its covenants and lose access to its RCF. =========================== U N I T E D K I N G D O M =========================== BENEFICIARIES LIMITED: Gets Order to Pay GBP200K Compensation ------------------------------------------------------------- Daily Record and Sunday Mail reports that Beneficiaries Limited, a Scots heir-hunting firm who defrauded relatives of a dead woman, have been told to pay them compensation of more than GBP200,000. Beneficiaries Limited were also fined GBP25,000 for targeting three siblings when their 93-year-old aunt, who they didn't know existed, died without leaving a will for her GBP237,342 estate, according to Daily Record and Sunday Mail. The report relates that Judge Richard Parkes ordered the firm, who were based in Edinburgh, to pay up - even though they have gone into administration. Beneficiaries Limited, who charged the family inflated expenses and took massive cuts of their inheritance payouts, denied seven counts of fraud by false representation and three counts of misleading consumers by omission, the report discloses. However, the report notes that a jury returned guilty verdicts on all counts. Parties involved were told to agree to give the firm a 40 per cent share of any payout and to pay all expenses incurred - or get nothing, the report notes. The expenses included charging the siblings GBP200 per hour for meeting them, the report says. The report discloses that once the agreement was signed, Beneficiaries Limited sub-contracted work to other firms, which were also run by Pilley in a "highly artificial and very cynical way." The report notes that the company should have paid out GBP213,096,98 to the siblings and two of their cousins in Canada -but they haven't received a penny, Reading Crown Court heard. EQUINOX ECLIPSE 2006-1: Fitch Cuts Rating on Class D Notes to 'D' ----------------------------------------------------------------- Fitch Ratings has downgraded Equinox (Eclipse 2006-1) plc's class D commercial mortgage-backed notes as follows: GBP10.7m class D (XS0259280591) downgraded to 'Dsf' from 'Csf'; Recovery Estimate 0% Key Rating Drivers The downgrade of the class D notes reflects the GBP10.2 million allocation of loss to the class D notes on the July 2013 interest payment date (IPD). This follows the sale of the two remaining properties securing the Macallan Potfolio loan. Net recoveries from the remaining two properties were GBP0.75 million, resulting in a GBP17.9 million loan level loss, equivalent to 44% of the original securitized balance of GBP40.6 million. This GBP17.9 million loss was allocated reverse sequentially to the notes, resulting in a full write-down of the class E notes, and a partial write-down of the class D notes. Rating Sensitivities The GBP10.2 million loss allocation to the class D notes represented 49% of its outstanding balance. Fitch believes that the eventual resolution of a number of other loans within the portfolio will eventually lead this tranche to being fully written-down to zero. Fitch will continue to monitor the performance of the transaction. GREENSOLUTIONS LTD: In Liquidation; Faces Clyde Gateway Suit ------------------------------------------------------------ David Leask at Evening Times reports that Greensolutions (Glasgow) Limited, which was accused of "leaving behind" thousands of tonnes of contaminated dirt close to Commonwealth Games venues, has gone into liquidation. The company was wound up at the High Court in Belfast on Aug. 1 after the Evening Times revealed it was being sued by city regeneration agency Clyde Gateway, Evening Times relates. The company has always denied it was responsible for four spoil heaps towering over its former site at Poplin Street, next to key Games gateway Dalmarnock Railway Station, Evening Times notes. Greensolutions has been in dispute with Clyde Gateway over rent and the future of the dumped soil for months, Evening Times discloses. It is now not clear who, if anyone, will be in a position to remove them in time for next year's showcase, Evening Times states. Greensolutions (Glasgow) Limited is a spoil heap row firm. HEARTS OF MIDLOTHIAN: Has Been Issued New Registration Embargo -------------------------------------------------------------- Gavin McCafferty at The Independent reports that Hearts of Midlothian Football Club has been issued with a new registration embargo for going into administration. A Scottish Football Association judicial panel has imposed a ban on the club signing new players aged 21 and over until February 1 next year, the Independent discloses. The club cannot sign any player at the moment because of an automatic registration embargo which kicked in when they went into administration on June 19 under what were then Scottish Premier League rules, The Independent notes. Hearts, whose true debt was revealed as almost GBP29 million, have escaped a monetary punishment, the Independent relates. But their extended transfer ban will be a blow to manager Gary Locke, who only has two outfield players aged over 21, the Independent states. According to the Independent, Hearts were also hit with an automatic 15-point penalty in June and Mr. Locke will be unable to immediately bring in experienced players if the club exits administration before the end of the January transfer window. Hearts of Midlothian Football Club, more commonly known as Hearts, is a Scottish professional football club based in Gorgie, in the west of Edinburgh. HUGHES CHILLED: Director Faces 10-Year Disqualification ------------------------------------------------------- Margaret Canning at Belfast Telegraph reports that Kieran Patrick Hughes, boss of Hughes Chilled & Frozen Distribution, has been "frozen out" of the boardroom for trying to move assets out of the reach of administrators and other corporate misdemeanors. Mr. Hughes was disqualified as a director for 10 years by the Department of Enterprise, Trade and Investment -- five years off the lengthiest sanction of 15 years away from directorships, Belfast Telegraph discloses. Hughes Chilled & Frozen Distribution went into administration on February 17, 2010, owing GBP2.5 million after being in business for 15 years, Belfast Telegraph recounts. Mr. Hughes, who is 55, gave a disqualification undertaking to the department, and admitted unfit conduct including keeping back around GBP1 million which was owned to the Crown, which included GBP700,000 in unpaid Vat accumulated over two tax years, GBP114,000 in PAYE and GBP196,000 in unpaid national insurance contributions, according to Belfast Telegraph. Mr. Hughes also created at least five false accounting records in order to convince the administrator that the transfer to an associated company and a preferred transferee and taken place before the company went into administration, Belfast Telegraph relates. However, the assets were transferred around the time that administrators KPMG were called in, meaning that the assets were moved in an attempt to keep them in the associated company beyond the reach of the administrators, Belfast Telegraph notes. He also kept the company trading despite knowing that it was insolvent, a process which left creditors worse off, Belfast Telegraph states. He allowed his company to abuse its receivables finance agreement, an arrangement which enables it to use money owned by customers as collateral in a financing agreement, Belfast Telegraph discloses. According to Belfast Telegraph, Mr. Hughes also admitted keeping inaccurate books and records. Hughes Chilled & Frozen Distribution stored and distributed frozen and chilled foods around Europe from its headquarters at Annesborough Industrial Estate in Lurgan and Carn in Portadown. INVENSYS PLC: Moody's Puts 'Ba1' CFR Under Review for Upgrade ------------------------------------------------------------- Moody's Investors Service placed Invensys plc.'s Ba1 CFR and Ba1- PD ratings under review for upgrade. The action follows an announcement that Invensys's board of directors had accepted an offer for Invensys to be acquired by Schneider Electric SA (A3 stable). Ratings Rationale: "We have placed Invensys's ratings on review for upgrade because we expect that, as a result of the company's acquisition by Schneider, Invensys will be fully integrated into Schneider at some point in the future, which will lead to the rating being either withdrawn or equalized, more likely the former," says Roberto Pozzi, a Moody's Vice President - Senior Analyst and lead analyst for Schneider. The proposed transaction will value Invensys at approximately GBP3.3 billion, including acquired cash of GBP581 million as per end June 2013. A majority shareholder vote by Invensys's shareholders as well as anti-trust regulatory consent will be required, with the parties targeting closing the deal at the end of 2013. As of March 31, 2013, Invensys had no significant borrowings outstanding. However, the group, including Invensys Rail, had defined benefit obligations of GBP6.1 billion covered by plan assets with a value of GBP5.6 billion, which are largely invested in fixed-income instruments. Following the disposal of the rail business, Invensys has made a GBP400 million contribution to its UK pension scheme, thus significantly reducing the reported net pension liability, and made an additional GBP225 million contribution to a reservoir trust for use as a reserve for future potential funding requirements. The pension agreement results in cash savings of more than GBP40 million per annum, thus more than halving the company's top-up cash payments, and enhancing the group's free cash flow generation in the medium term. The review will focus on the outcome of the proposed transactions and any developments regarding the nature of credit support Schneider may provide to Invensys, if any, as well as the degree of integration of Invensys within Schneider. Moody's could align Invensys's rating with Schneider's A3 rating following the closing of the transaction. Principal Methodology The principal methodology used in this rating was the Global Manufacturing Industry published in December 2010. Headquartered in London, England, Invensys plc is a UK-listed technology company providing software, systems and control equipment to a variety of industries including chemicals, pharmaceuticals, oil & gas, and power & utilities. The group's revenue for the year ending March 31, 2013 was approximately GBP1.8 billion. On May 2, 2013, Invensys completed the disposal of its Invensys Rail business to Siemens for GBP1.7 billion in cash to refocus on industrial software, systems and controls. Schneider SA produces electrical products and systems addressing a wide range of industrial, commercial and consumer markets, with operations in more than 100 countries. Schneider is organized into five business segments: Power (36% of 2012 revenues and 52% of operating earnings before intragroup eliminations), Infrastructure (22% and 16%, respectively), Industry (19% and 23%), Information Technology (15% and 20%) and Buildings (7% and 3%). The company's revenue for fiscal 2012 (to December 31) was EUR23.9 billion and its market capitalization was approximately EUR33 billion on July 31, 2013. Schneider is headquartered in Rueil Malmaison, France. MID STAFFORDSHIRE NHS: GP Calls for Lewisham Hospital's Survival ----------------------------------------------------------------- BBC News reports that Dr. Louise Irvine, a GP who campaigned to keep services at a London hospital, has urged people to fight for Stafford Hospital. Administrators have recommended that Mid Staffordshire NHS Trust, trust which runs Stafford Hospital should be dissolved and some services moved elsewhere, BBC relates. According to BBC, Dr. Irvine, who chairs the Save Lewisham Hospital campaign, said Stafford Hospital was "much needed". On July 31, Health Secretary Jeremy Hunt's decision to reduce services at Lewisham Hospital was quashed, BBC discloses. The Mid Staffordshire NHS Trust went into administration on April 16 after a report concluded it was not "clinically or financially sustainable", BBC recounts. Under the Trust's proposals, Stafford Hospital will be part of the University Hospital of North Staffordshire (UHNS) in Stoke- on-Trent while Cannock Hospital will become part of the Royal Wolverhampton Trust, BBC notes. Other major proposals include Stafford Hospital losing its maternity unit but keeping its A&E department, which opens for 14 hours each day, BBC says. Seriously ill children would no longer be admitted to Stafford, and would instead go to the University Hospital of North Staffordshire, according to BBC. Downgrading Stafford's critical care unit and losing some emergency surgery is also proposed, BBC states. If approved, the proposals will be implemented in 2018, BBC notes. Dr. Irvine, as cited by BBC, said: "Mid Staffs has improved a lot over the years, it's a much needed hospital and this is an issue because of underfunding . . . [You] need to fund a much needed vital local health service." She urged campaigners to continue to gain the support of GPs and local councils and to have a campaign in "every corner of society." Mid Staffordshire NHS Foundation Trust is a NHS foundation trust which manages two hospitals: Stafford Hospital, which is an acute hospital with approximately 350 inpatient beds; and Cannock Chase Hospital, which has approximately 115 inpatient beds. NORTHERN ROCK: UKAR Pays GBP1.9BB to Taxpayers in 1st Half Year --------------------------------------------------------------- Press Association reports that the bad bank behind failed lenders Northern Rock and Bradford & Bingley paid another GBP1.9 billion to taxpayers in the first half of the year and saw a sharp fall in non-performing loans. UK Asset Resolution (UKAR), the state-owned firm responsible for winding down the mortgage books of the collapsed banks, said Government repayments surged more than 70% from GBP788 million a year earlier, Press Association relates. UKAR has now repaid a total GBP6.6 billion to the Government, but still owes another GBP42.1 billion, Press Association discloses. It repaid GBP1.3 billion in the first half, with fees, interest and taxes of around GBP500 million taking the half-year total to GBP1.9 billion, according to Press Association. It expects to fully repay the state within the next 10 years, Press Association notes. The company was formed in October 2010 to manage the loan books of B&B and Northern Rock after the former building societies failed during the financial crisis, Press Association recounts. It is winding down a GBP66.1 billion total loan book and has 584,000 customers, of whom around a third are on interest-only mortgages, Press Association discloses. Last month, UKAR raised GBP400 million after selling a portfolio of Northern Rock's personal loans to OneSavings Bank -- the group behind mutual Kent Reliance -- and debt recovery business Marlin Financial, Press Association recounts. OneSavings Bank, which is backed by US private equity group JC Flowers, bought Northern Rock Asset Management's loans that are not in default, adding 70,000 new customers, Press Association discloses. Operating some 70 branches across the UK, Northern Rock offers residential mortgages and savings accounts, including variable cash and fixed-rate Individual Savings Accounts (or ISAs, which are tax-exempt savings accounts offered in the UK), as well as bonds and traditional savings accounts. The bank also offers financial planning and mortgage-related insurance and life assurance products through third-party providers. RAILCARE: Union Calls for Government Intervention by Vince Cable ---------------------------------------------------------------- Scott Kirk at MKWeb reports that rail union RMT called for urgent intervention by Business Secretary Vince Cable to save 500 skilled engineering jobs in Glasgow and Milton Keynes after it was confirmed that rail fleet repairs and refurbishment company Railcare has been placed in administration. RMT understands that the Government has been approached by the company for assistance in getting Railcare through a short-term cash flow crisis but that they were turned down, according to MKWeb. The report relates that the union is pointing out that for want of what is estimated to be not much more than a million pounds in cash flow, the Government have turned their backs, while at the same time wasting an estimated GBP100 million on the aborted franchising timetable - a shambles which looks like it is the main cause of the crisis at Railcare. The report notes that unions had been made aware earlier this week that Railcare was in trouble after it failed to pay staff wages and after a planned takeover by a German company collapsed. Crisis talks this morning with another potential buyer are thought to have collapsed forcing the company into administration with BDO appointed as the administrators, the report says. MKWeb notes that RMT understands that although Railcare has a full order book and plenty of work in the pipeline from the train operators via the rail fleet leasing companies they ran into a cash-flow problem which has forced the move into administration threatening the jobs at the former British Rail plants at Springburn near Glasgow and Wolverton near Milton Keynes. The report says that RMT also understands that the key delays with moving the order book forwards have been caused by the franchising chaos in the wake of the West Coast fiasco which has held back fleet refurbishment plans while costing the taxpayer GBP100 million. "RMT is calling on Vince Cable and the Government to step in to secure the future of these 500 key rail fleet engineering jobs following the collapse of Railcare . . . . The Government cannot sit on their hands and watch this situation play out for the want of what we believe is not much more than a million pounds of cash flow finance. . . . Reports that Railcare have already been turned down for assistance make a mockery of the Government's business strategy and their stated objective of protecting skilled jobs. . . . This crisis has left 500 staff unpaid and without any security and the root cause appears to be the franchising shambles in the wake of the West Coast fiasco. . . . Vince Cable and the Government have a moral and economic duty to intervene urgently to save these jobs and protect the scheduled work and RMT will meet with him at any time to assist in moving this on. . . . All of us now need to work together to secure these jobs and the important work that the company is involved in," the report quoted RMT General Secretary Bob Crow as saying. SALUBRIOUS PLACE: Goes Into Receivership ---------------------------------------- Wales Online reports that a major leisure and entertainment development in Swansea has been put into receivership. Salubrious Place has tenants including TGI Fridays, a 116 bedroom Premier Inn Hotel, Vue Cinema and car park operator NCP. Peter Welborn and Elaine Tooke of international property consultancy Knight Frank have been appointed joint LPA (Law of Property Act) receiver, according to Wales Online. The report relates that the scheme from Brunswick Mansford was put into receivership by the Nationwide, which has financed its development. The report discloses that the Knight Frank receivers will manage the development and deal directly with tenants. "Salubrious Place is very much a going concern and remains fully viable. We will be able to deliver the injection of investment, energy and asset management expertise that it now needs to thrive. . . . We will be investing heavily and will work closely with the tenants to cement Salubrious Place's position as the number one leisure destination in Swansea," the report quoted Ms. Tooke as saying. =============== X X X X X X X X =============== * Firms May Rearrange Leases to Avoid Balance-Sheet Inclusion ------------------------------------------------------------- Fitch Ratings says new international accounting rules will give a better indication of the economic substance of leases, but could give companies an incentive to change the way lease deals are structured so they remain off balance sheet. The new standards will require that all leases with terms of over 12 months are brought on-balance sheet. This will aid analysis as we view longer-term leases as debt-like obligations and routinely adjust debt metrics to enable comparison of different financing models. However it is vital that information about cash rentals and the nature of leased assets remains available to ensure adjustments can be made if necessary. If companies did manage to keep any leases of longer-term assets off the balance sheet, robust disclosure will be essential so that analysts can still adjust key metrics. There are several ways that companies might try to structure arrangements to keep leases off the balance sheet. These include switching to a lease with a term of less than 12 months. The rules attempt to limit the appeal of this exemption by including renewal options within the 12 month period. Short-term leases might be a disadvantage because they create uncertainty over the future availability of the asset, but this could be less of a deterrent where contractual commitment for a longer period is not essential. Companies may also try to replace leases with contracts that give them access to a desired service without giving them rights over a specific asset. Since leases are defined as providing an identified asset that the lessee controls, these service contracts could remain off-balance sheet. This might be achieved by something as simple as giving the lessor the right to substitute an asset at will for a similar one, which may have little operations impact for either party. Fitch has published a Special Report titled "New Global Proposals to Reshape Lease Accounting" which explains how we assess leases in our analysis and how we will approach the changes proposed by the International Accounting Standards Board and the US Financial Accounting Standards Board. An effective date for the new standards has not yet been proposed, however, we would not expect them to become effective prior to 2017. ********* 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 * * *