/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/130823.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 Friday, August 23, 2013, Vol. 14, No. 167 Headlines B E L G I U M TELENET NV: Fitch Affirms 'B+' Long-Term Issuer Default Rating C R O A T I A CROATIA AIRLINES: Accelerates Search for Buyer F I N L A N D METSA BOARD: S&P Hikes Corp. Credit Rating to 'B'; Outlook Stable F R A N C E PICARD BONDCO: S&P Lowers Rating on EUR300MM Senior Notes to 'B' G E R M A N Y ATU AUTO-TEILE-UNGER: Moody's Cuts CFR to Caa3; Outlook Negative IVG IMMOBILIEN: Bonn Court Okays Self-Administration Application I C E L A N D * ICELAND: No Talks Yet with Creditors of Failed Banks I R E L A N D ANGLO IRISH: More Than 130 Art Pieces Put Up for Auction TITAN EUROPE 2006-5: Fitch Cuts Rating on Class A3 Notes to 'CC' K A Z A K H S T A N KAZTEMIRTRANS JSC: Moody's Changes Outlook on Ba1 CFR to Positive N E T H E R L A N D S ELM BV: Moody's Lowers Ratings on EUR84MM SF CDO Notes to Caa2 EURO-GALAXY CLO: S&P Raises Rating on Class D Notes From 'BB+' UCM RESITA: Privatization Authority to Take Over Debts R U S S I A RUSSIAN STANDARD: Moody's Rates US$200MM Subordinated Notes 'B2' S P A I N CAVENDISH SQUARE: Fitch Affirms 'B' Rating on Class C Notes U N I T E D K I N G D O M EDWARDS GROUP: Moody's Reviews 'B1' CFR for Possible Upgrade MCCARTHY & STONE: Completes GBP518.9-Mil. Debt Restructuring RAILCARE: Labor Politicians Call for Summit to Help Secure Future RSM TENON: Tilly Rescues Business Via Pre-Pack Administration X X X X X X X X * BOOK REVIEW: The Phoenix Effect ********* ============= B E L G I U M ============= TELENET NV: Fitch Affirms 'B+' Long-Term Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has affirmed Telenet NV's Long-term Issuer Default Rating (IDR) of 'B+' its Short-term IDR of 'B'. The Outlook on the Long-term IDR is Stable. The agency also affirmed the group's senior secured rating at 'BB.' Fitch has assigned Recovery Ratings of 'RR2' to the secured debt. The ratings take into account strong operational metrics, consistent revenue and cash flow growth and progressive telecoms management. Concerns relate to the potential unbundling of Belgium's cable networks and what advantage alternative network operators might gain from this, along with the margin dilutive effects of the company's mobile strategy. The key constraint to the rating is the company's stated financial policy which appears increasingly driven by the main shareholder -- including a leverage target and commitment to shareholder distributions which are inconsistent with a higher rating than 'B+'. Key Rating Drivers Financial Policy Constraining Rating Telenet N.V.'s ratings are constrained by the group's publically stated financial policy of managing net leverage (effectively its bank debt and secured notes) towards the higher end of a 3.5x to 4.5x range. When operating leases and liabilities related to mobile spectrum (which combined amounted to EUR469.5 million at end-2012) the ratio is expected to be kept close to a 5.0x threshold. Strong Fundamentals Telenet has consistently generated strong results - both operationally and financially. An incumbent position in the TV market, where cable continues to dominate as the platform of choice for the majority of TV households, has positioned it well to sell-through its high-speed broadband and telephony product. Multi-play penetration is high (at 73% Q213), supporting one of the highest average revenue per user (ARPU) and revenue growth performances in the sector - with Telenet viewed as among the strongest in the peer group. Standalone Rating The standalone approach taken by Fitch in rating the company reflects the non-recourse nature of Telenet's debt to its majority shareholder, Liberty Global Plc. and the wider Liberty Global cable portfolio. Fitch nonetheless expects financial policies to increasingly reflect a Liberty Global target range of net total debt to EBITDA of 4.0x - 5.0x and that the metric is likely to be managed towards the higher end of this range. A significant number of departures at the most senior levels of management since the start of 2013 raise further questions over the ongoing autonomy of management. Effective Incumbent Competitor Telenet's TV penetration stands at 73% and is believed to command in the region of 75%-80% TV market share within its franchise area. Belgium incumbent, Belgacom, is nonetheless regarded as having done an effective job in developing its own TV product (reporting 26% TV market share at Q113) and multi-service customer base. Regulatory Risk The Belgian regulator plans to impose cable unbundling which would force the company to offer either TV (analog or digital) or a bundled digital TV plus broadband, on wholesale terms. While any regulatory imposition is likely to be inconvenient and could prove detrimental, the exact nature and impact of any wholesale regulation on Telenet is unclear at this stage Fitch does not anticipate any material impact on Telenet's credit profile in the near term. Rating Senstivities Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- Net funds from operations (FFO) leverage expected to consistently trend above 5.5x - to apply whether driven by weakened operational performance - at present considered less likely - or the maintenance of high/excessive distributions. -- FFO fixed charge cover trending below 2.5x. Positive: Future developments that may, individually or collectively, lead to negative rating action include: -- A firm commitment from both Telenet and Liberty Global that Telenet is committed to a more conservative leverage profile and distribution policy. This seems unlikely at present. Instrument ratings are affirmed as follows: Telenet N.V. senior secured bank facility: 'BB'/'RR2' Telenet Finance Luxembourg S.C.A. EUR500m due 2020: 'BB'/'RR2' Telenet Finance Luxembourg II S.A. EUR100m due 2016: 'BB'/'RR2' Telenet Finance III Luxembourg S.C.A. EUR300m due 2021: 'BB'/'RR2' Telenet Finance IV Luxembourg S.C.A. EUR400m due 2021: 'BB'/'RR2' Telenet Finance V Luxembourg S.C.A. EUR450m due 2022: 'BB'/'RR2' ============= C R O A T I A ============= CROATIA AIRLINES: Accelerates Search for Buyer ---------------------------------------------- Jasmina Kuzmanovic at Bloomberg News reports that Croatia is accelerating its search for a buyer for Croatia Airlines d.d., the flag carrier of the European Union's newest member, as airlines in the region attract interest from Asia as a gateway into Europe. Transport Minister Sinisa Hajdas Doncic said on Wednesday that he will travel to Jakarta on Aug. 24 to meet with representatives of PT Garuda Indonesia after the state-controlled airline expressed interest in the Croatian carrier, Bloomberg relates. "The best option for Croatia Airlines would be to find a partner from the Far East, though we wouldn't want to exclude any bidder," Bloomberg quotes Mr. Doncic as saying. "Our ultimate aim is to sell the whole company." Mr. Doncic, as cited by Bloomberg, said that partners from outside the EU may only acquire as much as a 49% stake. Airlines in Eastern Europe have attracted suitors including Etihad Airways PJSC, which bought a stake in Serbia's largest carrier, and Korean Air Lines Co., which acquired a 44% stake in Ceske Aerolinie AS, the Czech flag carrier, Bloomberg discloses. According to Bloomberg, Mr. Doncic said that the value of Croatia Airlines, which made a net loss of HRK475 million (US$84 million) in 2012, is estimated at as much as HRK350 million. He said that the buyer may either purchase new shares or invest in government stock, Bloomberg relates. A tender for expression of interest may be published in October, Bloomberg notes. As reported by the Troubled Company Reporter-Europe on May 20, 2013, ATWOnline related that Mr. Doncic said the carrier would go bankrupt if the restructuring plan is not put into action. According to ATWOnline, local newspapers reported that unions said the restructuring measures include plans to cut around 200 employees and salaries to 40%. Croatia Airlines d.d. is the national airline and flag carrier of the Republic of Croatia. ============= F I N L A N D ============= METSA BOARD: S&P Hikes Corp. Credit Rating to 'B'; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it had raised its long-term corporate credit rating on Finland-based forest products group Metsa Board Corp. to 'B' from 'B-'. The outlook is stable. At the same time, S&P affirmed the 'B' short-term corporate credit rating on Metsa Board. "The upgrade reflects our view of a sustainable improvement in the group's financial risk profile, stemming from successful restructuring and lower debt levels. We consider Metsa Board's transformation from a large, unprofitable forest products group into a smaller but more profitable company primarily focused on paperboard to be positive. This has led to what we view as a sustainable improvement in operational performance and has resulted in lower debt. As a consequence, we have revised our assessment of the group's financial risk profile to "aggressive" from "highly leveraged". We still consider Metsa Board's business risk profile to be "weak", although we could revise this assessment to "fair" if the group's paper operations were to stabilize while paperboard operations continued to improve over time," S&P said. The long-term rating on Metsa Board reflects S&P's assessment of the company's business risk profile as "weak", due to its exposure to the inherently volatile forest products industry and historical below-average operating efficiency, which has created a need for substantial restructuring charges. These factors are partly offset by a change in strategy that focuses on less cyclical paperboard, Metsa Board's large market shares in European paperboard, and backward integration to key raw materials, such as pulp and energy. The rating also reflects Metsa Board's "aggressive" financial risk profile. Although Metsa Board's credit metrics fall into that category, S&P forecasts that they could further improve in the coming years, thanks to stable paperboard operations and rather low investment levels. The financial risk profile also takes into account S&P's view of a supportive long-term majority owner, the Metsaliito Cooperative, which S&P assess as having a stronger credit profile than that of Metsa Board. Based on historic support and current financial standing, S&P thinks that the Metsa Group has the capacity and willingness to provide some support to Metsa Board if funding were needed in an unforeseen liquidity crisis. The stable outlook reflects S&P's view that Metsa Board's paperboard operations will continue to support group performance and partly offset continued weak performance in its graphic paper operations. S&P expects Metsa Board to maintain a ratio of adjusted FFO to debt of at least 12% at the current rating level. S&P would consider a positive rating action if Metsa Board's operating performance and credit metrics further improved in 2013-2014. S&P considers a sustained and stabilized EBITDA margin of above 10% as commensurate with a higher rating, providing that credit metrics continue to improve to a level where adjusted FFO to debt would be at least 15%. A proactive and prudent refinancing of the EUR150 million bridge loan maturing in June 2014 would be supportive of a higher rating. S&P could take a negative rating action if it saw that Metsa Board's financial policy was becoming more aggressive, for example by not proactively managing the refinancing in June 2014 or engaging in extensive debt-financed expansions or high shareholder payouts, although S&P sees the latter scenario as unlikely at the moment. Downside pressure on the ratings could also materialize if operational performance deteriorated during 2013, for example due to lower-than-expected capacity utilization in the paperboard segment, unforeseen cost inflation, adverse currency movements, or a deterioration in selling prices. =========== F R A N C E =========== PICARD BONDCO: S&P Lowers Rating on EUR300MM Senior Notes to 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it has lowered the issue rating on the EUR300 million senior notes issued by Picard Bondco S.A. to 'B' from 'B+'. At the same time, S&P removed the rating from CreditWatch, where it placed it with negative implications on July 24, 2013. S&P also lowered the recovery rating on these notes to '5' from '4', indicating its expectation of modest (10%-30%) recovery prospects in the event of a default. "On July 24, 2013, we said that we intended to revise the recovery rating on Picard's existing senior notes due 2018 to '5' from '4' upon the group's successful placement of the EUR480 million senior secured notes due in 2019. This action reflects our expectation of lower recovery prospects for the senior bondholders following the issuance of the secured notes. This is because we forecast that, at our simulated point of default, a larger amount of secured debt will rank ahead of the EUR300 million senior notes now that Picard has replaced its previous amortizing term loan A with a bullet debt facility using the proceeds of the recently issued secured notes," S&P said. At the same time, S&P affirmed the recovery rating of '2' and issue rating of 'BB-' on the EUR480 million secured notes recently issued by Picard Groupe S.A.S. Our 'B-' issue rating and '6' recovery rating on Picard's payment-in-kind (PIK) notes are unchanged. ============= G E R M A N Y ============= ATU AUTO-TEILE-UNGER: Moody's Cuts CFR to Caa3; Outlook Negative ---------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating of A.T.U. Auto-Teile-Unger Investment GmbH & Co. KG to Caa3 from Caa2 and the probability of default rating to Caa3-PD from Caa2-PD; the rating of the issuer's EUR143 million senior subordinated floating rate notes has been changed to Ca from Caa3. At the same time, Moody's has downgraded the rating of the EUR375 million senior secured notes as well as the EUR75 million senior secured floating rate notes issued by A.T.U. Auto-Teile- Unger Handels GmbH & Co. KG to Caa2 from Caa1. The outlook remains negative. The following ratings are affected: Downgrades: Issuer: A.T.U. Auto-Teile-Unger Invtmt GmbH & Co. KG Probability of Default Rating, Downgraded to Caa3-PD from Caa2-PD Corporate Family Rating, Downgraded to Caa3 from Caa2 EUR150M Senior Subordinated Regular Bond/Debenture Oct 1, 2014, Downgraded to Ca from Caa3 EUR150M Senior Subordinated Regular Bond/Debenture Oct 1, 2014, Downgraded to a range of LGD5, 87 % from a range of LGD5, 86 % Issuer: ATU Auto-Teile-Unger Handels GmbH & Co. KG EUR75M Senior Secured Regular Bond/Debenture May 15, 2014, Downgraded to Caa2 from Caa1 EUR75M Senior Secured Regular Bond/Debenture May 15, 2014, Downgraded to a range of LGD3, 37 % from a range of LGD3, 36 % EUR375M 11% Senior Secured Regular Bond/Debenture May 15, 2014, Downgraded to Caa2 from Caa1 EUR375M 11% Senior Secured Regular Bond/Debenture May 15, 2014, Downgraded to a range of LGD3, 37 % from a range of LGD3, 36 % Outlook Actions: Issuer: A.T.U. Auto-Teile-Unger Invtmt GmbH & Co. KG Outlook, Remains Negative Issuer: ATU Auto-Teile-Unger Handels GmbH & Co. KG Outlook, Remains Negative Ratings Rationale: "The rating action has been triggered by the assessment that ATU's capital structure is not sustainable anymore driven by the continued decline of the group's operating performance during the first six months of 2013, the ongoing cash burn resulting in a tightened liquidity position, reduced covenant headroom under the group's revolving credit facility as well as by the reduced timeframe to solve the question how to refinance the outstanding bonds totaling EUR593 million, falling due between May and October 2014." says Oliver Giani, lead analyst at Moody's for ATU. Despite of numerous restructuring measures taken -- personnel and other expenses have been reduced by EUR31 million year-over-year -- ATU's EBITDA fell by more than 40% to EUR61.9 million in fiscal year 2012/13 ending in June 2013. ATU is exposed to a very high interest burden of around EUR 66 million per year. This is a result of the high debt load of more than EUR610 million (as reported, before Moody's debt adjustment for operating leases), which even increased further by more than EUR30 million during FY 2012/13 reflecting the ongoing cash burn and seasonal swings of the business. The company's profitability and cash flow generation ability can be negatively influenced by unfavorable weather conditions such as a mild winter or an extended winter season as seen in 2013. Combined with its weak capital structure this makes ATU highly vulnerable. Including Moody's adjustments, ATU's leverage based on the preliminary financial results per June 2013 was estimated to be at a very high level of 11.2x. However, according to ATU's latest quarterly reporting the group's operating result is improving reflecting various measures taken and positive effects improving the margin. Moody's notes that a turnaround in EBITDA is key in order to avoid a covenant breach under ATU's loan documentation. ATU claims that efforts to establish a long-term refinancing concept are in an advanced stage. Given the unsustainable capital structure Moody's believes that there is a high likelihood of a transaction to refinance upcoming debt maturities that could qualify for a distressed exchange. Management now expects to be able to present a long-term viable concept by end of October at the latest. Liquidity has weakened significantly due to the poor performance during H1 / 2013. As of June, ATU's main source of liquidity was a cash position of EUR15.5 million. The company's EUR45 million super-senior revolving credit facility ("RCF") maturing in March 2014, was fully drawn. Moody's notes that drawings under this facility are dependent on a minimum EBITDA covenant, headroom under which reduced to a minimum given the decline in operating performance. In addition, the need to build up working capital to be prepared for the winter season will require substantial additional liquidity. The negative outlook reflects Moody's ongoing concerns about ATU's ability to secure a long-term financing structure ahead of final maturity. It also mirrors the increased risk that the group's lenders may be required to participate in a potential restructuring, which could qualify as a distressed exchange. Any indication, that the refinancing cannot be achieved before final maturity, or the company plans to engage in a distressed exchange, would put further pressure on the ratings. Downward pressure would also intensify if the group's restructuring efforts prove to be insufficient to maintain an appropriate earnings level and the leverage would continue to increase. Moody's would revise the outlook to stable if ATU is able to timely and sustainably refinance its upcoming debt maturities, and avoid any further deterioration in its leverage ratio and liquidity profile. The rating could be upgraded in case of a reduction in the overall debt level leading to a more sustainable capital structure. 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. Based in Weiden, Germany, ATU is Germany's leading operator of brand-independent car workshops with integrated specialist auto retail stores. As of June 2013, ATU operated a network of 646 branches, 598 of which are located in Germany, others in Austria, the Czech Republic, the Netherlands, Switzerland and Italy. In fiscal year 2012/13, ATU generated EUR1.16 billion revenues through its 10,879 employees. The vast majority of sales (around 80%) are generated in the vehicle workshops through servicing and repairs, with the remaining approximately 20% generated through the sale of auto parts and accessories in stores and online. ATU is owned by private equity firm KKR and management. IVG IMMOBILIEN: Bonn Court Okays Self-Administration Application ---------------------------------------------------------------- Property Magazine reports that the Local Court Bonn yesterday approved the application of IVG Immobilien AG for the opening of protective shield proceedings on self-administration according to applicable German law, Sec. 270b InsO. Horst Piepenburg, German Attorney-at-Law and an expert in restructuring based in Dusseldorf, has been appointed as preliminary trustee for IVG Immobilien AG, Property Magazine relates. Several weeks of negotiations with various creditor groups did not bear fruit, Property Magazine discloses. As IVG has not managed to achieve a comprehensive concept for its restructuring, the board of directors has applied for creditor protection at the local court of Bonn, Property Magazine notes. According to Property Magazine, under the so called Schutzschirmverfahren (protective umbrella procedure), the company has the possibility to restructure itself under the supervision by a court-appointed trustee, not unlike chapter 11 in the US. The IVG shares were shortly suspended from trading in the afternoon hours, Property Magazine recounts. IVG Immobilien is a real estate company based in Bonn, Germany. ============= I C E L A N D ============= * ICELAND: No Talks Yet with Creditors of Failed Banks ------------------------------------------------------ According to Bloomberg News' Omar R. Valdimarsson, magazine Kjarninn, citing Premier Sigmundur David Gunnlaugsson, reports that Iceland hasn't held talks with the creditors of the country's failed banks on financing the new government's pledge to cut household debt. Kjarninn relates that Mr. Gunnlaugsson said creditors must suggest solutions. Bloomberg notes that he "hopes" for creditor offer "soon". Mr. Gunnlaugsson was voted into power in April on promises of debt relief and tax cuts, Bloomberg recounts. To finance his pledges and ease pressure on Iceland's currency, Mr. Gunnlaugsson has signaled he will ask for writedowns on about US$3.6 billion in krona-denominated claims held by the creditors of Glitnir Bank hf, Kaupthing Bank hf and Landsbanki Islands hf, Bloomberg relates. ============= I R E L A N D ============= ANGLO IRISH: More Than 130 Art Pieces Put Up for Auction -------------------------------------------------------- Press Association reports that more than 130 pieces of art from the corridors and offices of the bailed-out Anglo Irish Bank are going under the hammer. The rogue lender's corporate art collection is expected to raise just EUR200,000 when auctioned next month on the orders of the bank's liquidators KPMG, Press Association discloses. The bank, which was renamed the Irish Bank Resolution Corporation (IBRC), is expected to eventually cost the taxpayer EUR30 billion, Press Association notes. According to Press Association, auctioneer James O'Halloran, of Adams in Dublin, said the collection includes superb oil paintings by some of Ireland's best-known contemporary artists including Louis le Brocquy, Martin Gale, Felim Egan and Stephen McKenna. Watercolors, prints, sculptures, photographs and street scenes are also among the lots, valued from EUR50 up to EUR12,000, Press Association states. The IBRC was placed into liquidation by Minister for Finance Michael Noonan in February, Press Association recounts. Mr. O'Halloran, as cited by Press Association, said its art was bought to simply decorate offices, unlike collections at AIB and Bank of Ireland which were investments worth millions of euros. About Anglo Irish Anglo Irish Bank was an Irish bank headquartered in Dublin from 1964 to 2011. It went into wind-down mode after nationalization in 2009. In July 2011, Anglo Irish merged with the Irish Nationwide Building Society, with the new company being named the Irish Bank Resolution Corporation (IBRC). Standard & Poor's Ratings Services said that it lowered its long- and short-term counterparty credit ratings on Irish Bank Resolution Corp. Ltd. (IBRC) to 'D/D' from 'B-/C'. S&P also lowered the senior unsecured ratings to 'D' from 'B-'. S&P then withdrew the counterparty credit ratings, the senior unsecured ratings, and the preferred stock ratings on IBRC. At the same time, S&P affirmed its 'BBB+' issue rating on three government- guaranteed debt issues. The rating actions follow the Feb. 6, 2013, announcement that the Irish government has liquidated IBRC. TITAN EUROPE 2006-5: Fitch Cuts Rating on Class A3 Notes to 'CC' ---------------------------------------------------------------- Fitch Ratings has downgraded Titan Europe 2006-5 plc's classes A1 to A3 and affirmed all others classes; as follows: EUR139.4m Class A1 (XS0277721618) downgraded to 'BBBsf' from 'AAsf'; Outlook Negative EUR109.0m Class A2 (XS0277725361) downgraded to 'BBsf' from 'Asf'; Outlook Negative EUR60.1m Class A3 (XS0277726500) downgraded to 'CCsf' from 'Bsf'; Recovery Estimate (RE) 10% EUR55.1m Class B (XS0277728381) affirmed at 'CCsf'; RE 0% EUR7.9m Class C (XS0277729439) affirmed at 'Dsf'; RE0% EUR0.0m Class D (XS0277732144) affirmed at 'Dsf'; RE0% EUR0.0m Class E (XS0277733548) affirmed at 'Dsf'; RE0% EUR0.0m Class F (XS0277734199) affirmed at 'Dsf'; RE0% Key Rating Drivers The rating action is driven by the prolonged forced administration of the EUR114.8 million Quartier 206 loan, a process which began when the loan was transferred to special servicing in April 2010. Loan interest payments have not been made since the October 2011 interest payment date (IPD), leaving the issuer to rely on the transaction's liquidity facility (LF) to pay the borrower's fixed-rate interest obligations to the swap counterparty. Uncertainty remains over when a resolution of the administration process will be achieved, with a forced auction sale being the most likely outcome. At the current rate the LF could be exhausted towards the end of 2014; therefore, if the work out is not completed by this time, the issuer would not have sufficient funds to meet swap counterparty payments or interest payments due to noteholders. Whilst Fitch expects the resolution to be finalized prior to that date, the downgrade of the class A1 notes to 'BBBsf' reflects the increased uncertainty around timely payment of interest. Fitch still views the likelihood of full principal recoveries as very high for the A1 class -- a view that is unchanged since the agency's previous review. The credit quality of this class is underpinned by the strength of the EUR160 million Hotel Adlon loan, which provides the bulk of the anticipated investment grade recoveries. The loan is secured by the five-star Hotel Adlon Kempinski located in Berlin, which was valued at EUR242 million in November 2011. The repayment of this loan would itself redeem the entire A1 class, although the A2's would still require substantial recoveries from the four other loans. Fitch's expectation of recovery for the Quartier loan is lower than the most recent publically available appraisal would suggest (the collateral has been valued at EUR86 million in December- 2010). Beside a conservative take on the real estate, net recoveries may also be affected by the aforementioned senior ranking liquidity facility claims, and could be further reduced by interest rate swap break costs if the asset is sold prior to the loan's hedging expiry in 2016 (coterminous with the loan's maturity). These expectations are reflected in the now speculative grade rating of the A2 tranche and the distressed rating of the A3 class which are also now deferring interest due to senior ranking fees. Material losses are also expected on the EUR20.4 million Carat Park Shopping Centre loan, which is valued at EUR14.8 million as at December 2012. The headline tenant, Edeka, has extended their lease for 10 years, albeit on reduced rent and floor area, which was seen as a positive development given the minimal vacant possession value this asset benefits from. The sponsor, however, has fallen into bankruptcy and it is expected that the borrower will be dragged into these proceedings sometime in 2013, a process that is likely to add uncertainty on final recoveries. Titan Europe 2006-5 plc closed in December 2006 and was originally the securitization of eight commercial loans originated by Credit Suisse ('A'/Stable/'F1'). At the first IPD, the EUR40.2 million Hotel Balneario Blancafort loan defaulted due to non-payment of debt service and was subsequently repurchased by the originator. Rating Sensitivities Delays in the Quartier work out beyond summer 2014 would likely see further downgrades to the senior note classes. =================== K A Z A K H S T A N =================== KAZTEMIRTRANS JSC: Moody's Changes Outlook on Ba1 CFR to Positive ----------------------------------------------------------------- Moody's Investors Service has changed to positive from stable the outlook on the Baa3 ratings of seven corporate government-related issuers (GRIs) operating in the oil and gas sector, namely: KazMunayGas NC JSC (KMG) and its subsidiaries Kazmunaigas Exploration & Production (KMG EP), KazMunaiGaz Finance Sub B.V., JSC KazTransOil (KTO), JSC KazTransGas (KTG), Intergas Central Asia (ICA), and Intergas Finance B.V. Moody's has also changed to positive from stable the outlook on the Baa3 rating of the country's railway transportation company JSC National Company Kazakhstan Temir Zholy (KTZ), Kazakhstan Temir Zholy Finance B.V., and on the Ba1 corporate family rating (CFR) and Ba1-PD probability of default rating (PDR) ratings of its fully owned subsidiary JSC Kaztemirtrans (KTT). Concurrently, Moody's affirmed these ratings. The outlook on the Baa3 ratings of JSC Kazatomprom and Kazakhstan Electricity Grid Operating Company (KEGOC) remained unchanged at stable. The rating actions follow Moody's revision of the outlook for Kazakhstan's sovereign ratings to positive from stable on August 16, 2013. Ratings Rationale: The action reflects Moody's view that the affected companies have strong linkages with the government and would benefit from the government's strengthening ability to provide support in the event of financial distress. Moody's notes that one of the factors positively affecting the government's rating, namely the favorable GDP growth outlook for Kazakhstan, driven by enhanced hydrocarbons production, is also likely to promote improvements in the affected companies' business profiles. The rating agency also believes that the government's financial strength, driven by, inter alia, an increase in the National Oil Fund's assets and a reduction of external debt, alleviates the risk of government's interference and potentially excessive demands on the GRIs' financial flexibility. Rationale For Stable Outlook On Baa3 Ratings Of JSC Kazatomprom And KEGOC The outlook on the Baa3 ratings of JSC Kazatomprom remains stable given the low correlation between the company's and the government's ratings. The outlook on the Baa3 rating of Kazakhstan Electricity Grid Operating Company (KEGOC) remains stable primarily due to its relatively low baseline credit assessment (BCA). What Could Change The Ratings Up/Down Given the high support assumption embedded in the ratings of Kazmunaygas NC and its subsidiaries, as well as KTZ, the ratings and outlook of these issuers are likely to move in line with the sovereign rating, subject to other components of the ratings remaining unchanged (such as BCAs, support and dependence assumptions). Moody's assumption of strong state support for KTT is based on the rating agency's expectation that the state support would be provided to KTT indirectly, i.e. by the company's parent, KTZ. Nevertheless, given that KTT is an integral part of KTZ, its ratings are likely to follow that of KTZ, provided there are no material changes in KTT's ownership structure and its role within the KTZ group. A reduction in Moody's assessment of government support for the companies, or a weakening of their BCAs, could trigger downward pressure on their ratings. The principal methodology used in rating KazMunayGas NC JSC and KazMunaiGaz Finance Sub B.V. was Global Integrated Oil & Gas Industry published in November 2009. The principal methodology used in rating Kazmunaigas Exploration & Production was Global Independent Exploration and Production Industry published in December 2011. The principal methodology used in rating JSC KazTransOil was Global Midstream Energy published in December 2010. The principal methodology used in rating JSC KazTransGas , Intergas Central Asia, and Intergas Finance B.V. was Natural Gas Pipelines published in November 2012. The principal methodology used in rating Kazakhstan Temir Zholy (KTZ), Kazakhstan Temir Zholy Finance B.V., and Kaztemirtrans, JSC was Global Surface Transportation and Logistics Companies published in April 2013. Other methodologies used include the Government-Related Issuers: Methodology Update published in July 2010. Headquartered in Astana, Kazakhstan, KMG is Kazakhstan's national oil and gas company. KMG is fully owned by the Sovereign Wealth Fund Samruk-Kazyna and is mandated by the state to protect its interests in the oil & gas sector. In 2012, KMG reported revenue of approximately US$19.8 billion and EBITDA of US$6.6 billion. KMG EP is 65% owned by KMG. It is Kazakhstan's second-largest oil-producing company, headquartered in Astana. The company operates two major producing assets, Uzenmunaigas and Embamunaigas. In addition, KMG EP holds a 50% stake in both JV Kazgermunai LLP and CITIC Canada Petroleum Limited's main asset, Karazhanbasmunai, as well as a 33% stake in PetroKazakhstan Inc. In 2012, KMG EP reported revenue of approximately US$5.3 billion and EBITDA of US$2.6 billion. KTO, a subsidiary of KMG, is a monopoly operator of the state oil and water pipeline infrastructure in Kazakhstan. KTO accounts for transportation of more than 60% of oil produced in Kazakhstan. In 2012, KTO reported revenue of approximately US$959 million, and EBITDA of US$478 million. Following an IPO held in December 2012, 10% of KTO is in free float at the Kazakhstan Stock Exchange (KASE). KTG, a 100% subsidiary of KMG, is a holding company mainly engaged in the transportation, sale, exploration and production of natural gas within Kazakhstan. Via its main subsidiary ICA, KTG exports Central Asian gas to OJSC Gazprom (Gazprom, Baa1 stable) and ultimately to Europe and maintains transit of Russian gas via Orenburg-Novopskov pipeline on its Kazakhstan sector. In 2012, KTG reported revenue of approximately US$1.75 billion, EBITDA of US$455 million and negative free cash flow (FCF) of US$231 million. ICA is the main gas transmission company in Kazakhstan and operates a network of high pressure gas pipelines in the country. ICA is wholly owned by KTG, it is a natural monopoly and has political significance beyond its domestic importance because it fully controls the transit of Central Asian gas to Gazprom and, ultimately, to Europe. In 2012, ICA reported revenue of approximately US$656 million and EBITDA of US$262 million. Headquartered in Astana, Kazakhstan, KTZ is the 100% state- controlled vertically integrated rail group operating the national rail network of the Republic of Kazakhstan. The sole shareholder of KTZ is the state, represented by JSC National Welfare Fund SamrukKazyna. KTZ is the monopoly provider of rail infrastructure services and has the leading position in the railway transportation market in Kazakhstan, with 155,131 employees in 2012. In 2012, the group generated revenue of around $5.3 billion, 86% of which was provided by freight transportation services. Headquartered in Astana, KTT is a 100% owned subsidiary of KTZ, which is, in turn, the 100% state-controlled vertically integrated rail group operating the national rail network of the Republic of Kazakhstan. KTT is the owner and operator of the largest freight railcar fleet in Kazakhstan. KTZ intends to transfer the national freight carrier function to KTT by 2014. As part of the people's IPO initiative, the state, via KTZ, may privatize a 5%-10% stake in KTT in 2014. However, it expects to retain a controlling stake in the company in the longer term. KTT continues to benefit from state support as the company forms an integral part of the KTZ group. Headquartered in Astana, Kazakhstan, KEGOC is the 100% state- controlled regulated natural monopoly business, which owns and operates the national electricity transmission grid of the Republic of Kazakhstan. KEGOC's 2012 revenues amounted to KZT65.9 billion (US$448.4 million). ===================== N E T H E R L A N D S ===================== ELM BV: Moody's Lowers Ratings on EUR84MM SF CDO Notes to Caa2 -------------------------------------------------------------- Moody's Investors Service has downgraded the rating of the following notes issued by ELM B.V.: EUR84,000,000 Series 41 Floating Rate Credit Linked Secured Notes due 2056, Downgraded to Caa2 (sf); previously on Sep 16, 2011 Downgraded to B1 (sf) This transaction is a synthetic CDO referencing a portfolio of European ABS assets. Ratings Rationale: Moody's explained that the rating action taken is the result of credit deterioration of the reference portfolio. The rated tranche is a first loss piece whose credit quality is directly influenced by that of the lowest rated asset in the reference pool. Over the last year, two assets were downgraded to Caa2 (sf). According to Moody's approximately 11.39% of the reference assets are rated in the Ba category compared to 0.34% in September 2011 at the previous rating action. Approximately 31% of the assets are domiciled in Greece, Ireland, Italy, Portugal and Spain, countries that have been affected by the sovereign credit crisis. In the process of determining the final rating, Moody's took into account the result of a sensitivity analysis where the lowest rated assets with the shortest weighted average lives were excluded in order to measure the portfolio credit quality of the remaining assets. The corresponding model output is consistent with the rating assigned. Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, which could negatively impact the ratings of the notes, as evidenced by uncertainties of credit conditions in the general economy. SF CDO notes' performance may also be impacted either positively or negatively by 1) the calculation agent behavior and 2) divergence in legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Sources of additional performance uncertainties: Portfolio Amortization: Pace of amortization could vary significantly subject to market conditions and this may have a significant impact on the notes' ratings. Assets domiciled in countries affected by the sovereign credit crisis may amortize over a longer time horizon than Moody's model assumptions. In addition well performing assets typically amortize earlier than expected, increasing the concentration of poor credit quality assets. The principal methodology used in this rating was Moody's Approach to Rating SF CDOs published in May 2012. In rating this transaction, Moody's used CDOROM to model the cash flows and determine the loss for each tranche. The Moody's CDOROM(TM) is a Monte Carlo simulation which takes the Moody's default probabilities as input. Each SF CDO reference asset is modeled individually with a standard multi-factor model incorporating intra- and inter-industry correlation. The correlation structure is based on a Gaussian copula. In each Monte Carlo scenario, defaults are simulated. Losses on the portfolio are then derived, and allocated to the notes in reverse order of priority to derive the loss on the notes issued by the Issuer. By repeating this process and averaging over the number of simulations, an estimate of the expected loss borne by the notes is derived. As such, Moody's analysis encompasses the assessment of stressed scenarios. In addition to the quantitative factors that are explicitly modeled, qualitative factors are part of the rating committee considerations. These qualitative factors include the structural protections in each transaction, the recent deal performance in the current market environment, the legal environment, specific documentation features, the collateral manager's track record, and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, may influence the final rating decision. EURO-GALAXY CLO: S&P Raises Rating on Class D Notes From 'BB+' -------------------------------------------------------------- Standard & Poor's Ratings Services raised its credit ratings on Euro-Galaxy CLO B.V.'s class B-1, B-2, C, and D notes. At the same time, S&P has affirmed its ratings on the class A-1, A-2, and E notes. The rating actions follows S&P's assessment of the transaction's performance, using data from the July 11, 2013 trustee report. S&P has taken into account recent developments in the transaction and conducted its credit and cash flow analysis, applying its relevant criteria. S&P's analysis indicates that the available credit enhancement for all of the rated notes has increased since it last reviewed the transaction on Jan. 19, 2012. In S&P's opinion, this is mostly due to the class A-1 and A-2 notes partially amortizing. Since S&P's 2012 review, EUR51.985 million of class A1 and A2 notes have amortized. The transaction's weighted-average spread has increased to 3.97% from 3.41%. At the same time, the transaction's weighted-average life has increased to 4.45 years from 4.20 years. In addition, S&P's analysis indicates positive rating migration in the portfolio. The proportion of assets that S&P considers to be rated in the 'CCC' category (rated 'CCC+', 'CCC' or 'CCC-') increased to 3.13% from 2.78%. The proportion of defaulted assets (rated 'CC', 'C', 'SD', and 'D') has decreased to 1.23% from 2.65%. S&P has subjected the capital structure to a cash flow analysis to determine the break-even default rate (BDR) for each rated class. In S&P's analysis, it used the performing portfolio balance, the current weighted-average spread, and the weighted- average recovery rates that it considered to be appropriate. S&P incorporated various cash flow stress scenarios, using various default patterns and levels for each liability rating category, in conjunction with different interest rate stress scenarios. "We have noted that assets located in Ireland (BBB+/Positive/A- 2), Italy (BBB/Negative/A-2), and Spain (BBB-/Negative/A-3) comprise a substantial share of the portfolio (more than 10%). We have therefore taken into account this additional sovereign risk in our 'AAA' stresses by applying our nonsovereign ratings criteria. As a result of our credit and cash flow analysis, together with our assessment of sovereign and foreign exchange risks, we have affirmed our 'AA+ (sf)' ratings on the class A-1 and A-2 notes," S&P noted. "Our credit and cash flow analysis indicates that the BDRs and credit enhancement for the class B-1, B-2, C, and D notes are commensurate with higher ratings than previously assigned. We have therefore raised our ratings on the class B-1, B-2, C, and D notes," S&P said. S&P's rating on the class E notes is constrained by the application of the largest obligor test, a supplemental stress test that S&P introduced in its 2009 cash flow collateralized debt obligation criteria. This test addresses event and model risk that might be present in the transaction. The results of this supplemental test for the class E notes have not improved since S&P's 2012 review. S&P has therefore affirmed its 'B+ (sf)' rating on the class E notes. From S&P's analysis, 13.7% of the portfolio comprises non-euro- denominated assets, hedged via specific asset-swap agreements. S&P's cash flow analysis also considered scenarios where the currency swap counterparty does not perform and where, as a result, the transaction is exposed to changes in currency rates. Therefore, S&P has run additional foreign exchange stresses for the class A-1, A-2, B-1, and B-2 notes in our credit and cash flow analysis. Euro-Galaxy CLO is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. It is managed by Pinebridge Investments Europe Ltd. The transaction's reinvestment period ended in October 2012. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar Securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From Euro-Galaxy CLO B.V. EUR412.775 Million Senior Secured Fixed- And Floating-Rate Notes Ratings Raised B-1 AA (sf) AA- (sf) B-2 AA (sf) AA- (sf) C A (sf) BBB+ (sf) D BBB (sf) BB+ (sf) Ratings Affirmed A-1 AA+ (sf) A-2 AA+ (sf) E B+ (sf) UCM RESITA: Privatization Authority to Take Over Debts ------------------------------------------------------ Ioana Tudor at Ziarul Financiar reports that Romania's privatization authority AAAS will take over the debts of UCM Resita to tax authority ANAF and will cede a part of the insolvent company's assets through dation in payment or sell its operating assets. UCM Resita is a Romanian engine manufacturer. =========== R U S S I A =========== RUSSIAN STANDARD: Moody's Rates US$200MM Subordinated Notes 'B2' --------------------------------------------------------------- Moody's Investors Service has assigned a B2 (hyb) rating to Russian Standard Bank's US$200 million 11.5% subordinated notes due 2024 that are subject to contractual loss absorption upon the breach of a predefined trigger and/or the start of the bank's financial rehabilitation. The notes were issued under Russian Standard Bank's US$2.5 billion program for the issuance of loan participation notes. This is the first time that Moody's has assigned a rating to a Basel-III-compliant debt instrument issued by a Russian bank. Ratings Rationale: In line with Moody's "Global Banks" methodology, the assigned B2 (hyb) rating is positioned two notches below Russian Standard Bank's ba3 baseline credit assessment (BCA). This approach is in line with Moody's standard notching guidance for subordinated debt with loss triggered at the point of non-viability such as when the bank is subject to financial rehabilitation and/or upon the breach of capital triggers set at or close to the point of non-viability, both on a contractual basis. Under the terms of the subordinated notes, their principal will be written down (partially or in full) in the event that Russian Standard Bank's core Tier 1 ratio falls below 2%, or if the Central Bank of Russia together with the Deposit Insurance Agency start the bank's financial rehabilitation (so-called 'sanatsiya' procedure under Russian law). In case of a write-down event, the accrued interest on the notes is cancelled (partially or in full, depending on the write-down of the principal). The principal methodology used in this rating was Global Banks published in May 2013. Headquartered in Moscow, Russia, Russian Standard Bank reported total assets of RUB295 billion (US$9.7 billion) and net income of RUB6.3 billion (US$207 million), according to audited IFRS at year-end 2012. ========= S P A I N ========= CAVENDISH SQUARE: Fitch Affirms 'B' Rating on Class C Notes ----------------------------------------------------------- Fitch Ratings has affirmed Cavendish Square Funding 2 Limited's notes, as follows: Revolving Credit Facility: affirmed at 'Asf'; Outlook Stable Class A1-N: affirmed at 'Asf'; Outlook Stable Class A2: affirmed at 'BBB-sf'; Outlook Negative Class B: affirmed at 'BBsf'; Outlook Negative Class C: affirmed at 'Bsf'; Outlook Negative Class P combination notes: affirmed at 'BBsf'; Outlook Negative Key Rating Drivers The affirmation reflects the notes' level of credit enhancement relative to the portfolio's credit quality. The portfolio's credit quality has improved since the previous review in September 2012, with assets rated 'B-sf' or below representing 10% of the performing portfolio, down from 13%. The improvement in credit quality is mainly due to the migration of some lowly rated assets to default as the cumulative defaults increased to EUR46.5 million from EUR30.3 million at the previous review. All over-collateralization (OC) and interest coverage (IC) tests as of the July 2013 investor report are passing with sizeable cushions. The weighted average spread test is passing with a cushion of 1bp against the required threshold while the weighted average life test is failing at 6.0 years compared to a required threshold of 3.24 years. The credit enhancement on the rated notes has decreased -- on average by 2% -- since the previous review due to the additional defaults. The transaction has benefitted from significant par building by the collateral manager with the portfolio par value at EUR469 million compared to the current rated note balance of EUR382.4 million. The par build up has offset the impact of defaults in the transaction till date. The transaction will exit its re-investment period in September 2013. The transaction documents allow the collateral manager to re-invest unscheduled principal proceeds and sales proceeds from credit improved and credit impaired assets beyond the re- investment period subject to -- among other conditions -- the ratings of senior notes not having been downgraded by at least one sub-category from the initial ratings. Since the ratings of the senior notes are two rating categories below their initial ratings, the collateral manager cannot re-invest unscheduled principal proceeds or sales proceeds from credit impaired and credit improved assets beyond the re-investment period. The underlying assets have yielded considerable principal paydowns over the past year, which have been actively re-invested by the collateral manager. Since the re-investment period ends on the next payment date, the rated notes will start amortizing rapidly if the principal paydowns follow a similar trend to that of the past 12 months. Fitch believes that a material risk for the transaction is that the portfolio assets' maturity may extend beyond their reported weighted-average expected life. The Negative Outlooks on the class A2 to C notes reflect the extension risk of the portfolio assets, which may prolong the risk horizon of the portfolio. The two largest industry sectors in the portfolio are RMBS at 79.0% of the portfolio and CMBS at 13.3%. Additionally, the pool mainly comprises Spanish and Italian assets, which account for 23.4% and 22.8% of the portfolio balance respectively. The total portfolio exposure to assets of the eurozone periphery (Spain, Italy, Portugal, and Greece) is 53.5% of the portfolio. The rating of the class P combination notes reflect the ratings of its component classes i.e. EUR14.8 million class B notes and EUR4.4 million subordinated notes, total distributions to date (which count towards reducing the rated balances) and future distributions expected on each of the component classes. The rated balance of the class P notes currently stands at EUR13.1 million. Rating Sensitivities Applying a 1.25x default rate multiplier to all assets in the portfolio would not result in a downgrade of the rated notes from the current rating levels. Applying a 0.75x recovery rate multiplier to all assets in the portfolio would not result in a downgrade of the rated notes from the current rating levels. =========================== U N I T E D K I N G D O M =========================== EDWARDS GROUP: Moody's Reviews 'B1' CFR for Possible Upgrade ------------------------------------------------------------ Moody's Investors Service has placed the B1 corporate family rating and B1-PD probability of default rating of Edwards Group Limited under review for upgrade following the announcement that Edwards has entered into a definitive agreement to be acquired by Atlas Copco AB (rated A2, stable). Concurrently, the Ba1 revolving credit facility rating and B2 secured term loan rating at Edwards (Cayman Island II) Limited are also placed under review for upgrade. Ratings Rationale: On August 19, 2013, Edwards announced that it has entered into a definitive agreement to be acquired by Atlas Copco AB (rated A2, stable). The transaction values Edwards at up to US$1.6 billion including drawn reported debt of GBP358 million as of June 30, 2013. The share offer price of US$9.25 initially in cash and an additional up to US$1.25 per share subject to 2013 operating performance are above the closing price of US$8.45 prior to the transaction (August 16, 2013). Moody's views the outlined transaction as positive for Edwards. The new parent's financial flexibility, overlapping customer base and complementary geographic footprint will support growth opportunities. Although Edwards provides different products, there is technological overlap between Atlas' compression and Edwards' vacuum business that may also provide for manufacturing efficiency improvements or research and development collaborations. However, Edwards has already been proactive over recent years in addressing its cost base through restructuring efforts and improvements in its manufacturing footprint towards lower cost locations, which may limit immediate cost-cutting potential. Moody's notes that the transaction will trigger the change of control covenant of Edwards's senior secured facilities at closing. While it currently remains uncertain whether Edwards's debt will be repaid following closing of the transaction, Moody's notes that the funding cost at the parent are considerably lower. Edwards' shareholders are expected to vote on the transaction at an extraordinary general meeting in October and it has been unanimously approved by the board of directors while 84% of shareholders, primarily representing CCMP Capital and Unitas Capital, have entered into agreements to vote in favor of the transaction subject to certain conditions. The companies expect to close the transaction in the first quarter of 2014 subject to amongst other regulatory clearance. The ratings of Edwards could be upgraded by several notches if and when the acquisition by Atlas Copco will be closed. Negative pressure would build in case the transaction would fail, and if Edwards' operating performance would be to weaken in 2013 with an interest cover of below 2.5x (Moody's adjusted EBITA/interest expense). The principal methodology used in these ratings was the Global Manufacturing 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. Edwards Group Limited, headquartered in Crawley / United Kingdom, is a specialized manufacturer of highly engineered vacuum and abatement systems to a wide range of customers in the semiconductor, flat panel, solar PV, industrial, pharmaceutical, chemical, scientific, process, glass coating and food packaging industries. Edwards' products are also used for research and development purposes and are often an important component of its customers' production process. In 2012, Edwards generated revenues of GBP595 million and company-adjusted EBITDA of GBP114 million. MCCARTHY & STONE: Completes GBP518.9-Mil. Debt Restructuring ------------------------------------------------------------ Sandrine Bradley at Reuters reports that McCarthy & Stone announced on Tuesday it has completed the restructuring of GBP518.9 million (US$813.55 million) of debt, reducing the debt burden of the company by GBP350 million. As part of the transaction, a group of 24 institutional investors in the company has injected GBP367 million into the business and refinanced a further GBP160 million with a new five-year term loan facility, Reuters discloses. A core group of these investors comprising Goldman Sachs, Anchorage, TPG and Alchemy Partners now own over 50% of the business, Reuters notes. "The cash injection is basically a rights issue to pay down debt," Reuters quotes one source close to the negotiations as saying. "A significant amount of McCarthy & Stone's debt has traded out of the hands of legacy lenders in the last couple of months and left this final group of 24 investors including distressed funds such as Oaktree." McCarthy & Stone said the GBP527 million raised will be used to pay down its outstanding debt, which comprises GBP510.3 million in loans and an GBP8.6 million swap, as well as any further transaction costs, Reuters relates. In November last year, McCarthy & Stone appointed financial advisor Moelis & Company to conduct a strategic review of the business, which has been owned by its lenders following a 2009 debt for equity swap, Reuters recounts. According to Thomson Reuters LPC, that deal resulted in GBP200 million of mezzanine loans being wiped out, leaving around 500 million pounds of senior debt in place. The restructuring was a result of the homebuilder being unable to service its debt after the housing market slump meant fewer elderly people were able to sell their properties to move into care homes, Reuters says. McCarthy & Stone is a UK retirement home developer. RAILCARE: Labor Politicians Call for Summit to Help Secure Future ----------------------------------------------------------------- Alan Jones at Press Association reports that labor politicians have urged the UK government to hold a summit to help secure the future of Railcare, which has gone into administration threatening hundreds of job losses. MPs and councilors from Glasgow and Milton Keynes, where the company has sites, have written to Business Secretary Vince Cable calling for talks, Press Association relates. Around 150 skilled jobs have been axed after Railcare went into administration earlier this month and unions fear hundreds more will be lost unless action is taken to help the firm, Press Association recounts. "Ongoing uncertainty about the future of the firm risks further destabilizing rescue plans and future orders. It is essential that the Government helps broker a successful resolution for the firm, and provides stability for the workforce whilst negotiations continue," Press Association quotes the letter as saying. "The future of Railcare is directly linked to the success of the rail industry throughout the UK. These are highly skilled, important engineering jobs that could be lost from the rail industry with orders and future work going abroad." Railcare is a rail engineering firm. RSM TENON: Tilly Rescues Business Via Pre-Pack Administration ------------------------------------------------------------- Alistair Osborne at The Telegraph reports that debt-laden accountant RSM Tenon has wiped out its shareholders and left Lloyds Banking Group facing chunky losses on its GBP80.4 million debt after being rescued by rival accountancy Baker Tilly via a pre-pack administration. Tilly had made an "unsolicited" bid approach to the troubled RSM last month, The Telegraph recounts. But in a piece of brinkmanship, Tilly hastened the collapse of RSM by pulling out of the bid talks and forcing its target into administration, The Telegraph notes. According to The Telegraph, in a pre-pack deal, overseen by administrators Deloitte, Tilly than snapped up RSM's main "trading entities", ensuring that about 2,300 of RSM's staff retained their jobs at the accountant's 35 offices. RSM had warned on Friday that, even if Tilly agreed a bid for the business, only "minimal value, if any" would accrue to shareholders, The Telegraph recounts. The Telegraph relates that on Wednesday it said the pre-pack sale would "realize no value for the ordinary shares of the company", while the terms of the agreement meant that "Lloyds will not recover its secured debt in full". Lloyds, which is 39% owned by the taxpayer, had earlier refused to grant a "covenant waiver" to RSM over its GBP80.4 million debts after Tilly pulled out of the takeover talks for the group, The Telegraph discloses. RSM, which styles itself as "a dynamic leading accountancy and advisory firm" with both corporate and government clients, has never recovered from January 2012's accounting mishap when it overstated its own accounts, The Telegraph states. The firm, which has since lost about 10,000 of the 50,000 customers it once had -- partly due to business disposals -- said the accounting blunder had come to light after the arrival of a new chief financial officer, Adrian Gardner, The Telegraph relates. The then chairman, Bob Morton, and chief executive Andy Raynor left the company immediately, with Chris Merry subsequently hired from outside to succeed Mr. Raynor, The Telegraph recounts. RSM plunged to a full-year loss that year of GBP88.7 million, The Telegraph discloses. Despite Mr. Merry's attempts to sort out the business, the latest half-year figures showed it GBP10 million in the red and reeling under more than GBP80 million of debts -- the legacy of past acquisitions, including rival Bentley Jennison and assets from Vantis, according to The Telegraph. The sale covers RSM businesses, including RSM Tenon, RSM Tenon Investment Solutions, RSM Tenon Financial Management, RSM Corporate Transactions and RSM Tenon Corporate Finance, The Telegraph says. =============== X X X X X X X X =============== * BOOK REVIEW: The Phoenix Effect --------------------------------- Authors: Carter Pate and Harlann Platt Publisher: John Wiley & Sons, Inc. Softcover: 244 Pages List Price: $27.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt Think of all the managers of faltering companies who dream of watching those companies rise from the ashes all around them! With a record number of companies failing in 2001, and another record-setting year expected for 2002, there are a lot of ashes from which to rise these days. Carter Pate and Harlan Platt highly value strong leadership able to sharpen a company's focus and show the way to the future. They believe that all too often, appropriate actions required to improve organizations are overlooked because upper management either isn't aware of the seriousness of the issues they face or they don't know where to turn for accurate information to best address their concerns. In the Phoenix Effect, the authors present their ideas to "confront, comprehend, and conquer a company's ills, big and small." These ideas are grouped into nine steps: (i) Find out whether the company needs a tune-up, a turnaround, or crisis management. Locate the source of "the pain." (ii) Analyze the true scope of the company's operations. Decide whether to stay in the same businesses, withdraw from existing businesses, or enter new ones. (iii) Hold the company to its mission statement. If it strives to be "the most environmentally friendly." Figure out how. (iv) Manage scale. Should the company grow, stay the same size, or shrink? (v) Determine debt obligations and work toward debt relief. (vi) Get the most from the company's assets. Eliminate superfluous assets and evaluate underused assets. (vii) Get the most from the company's employees. Increase output and lower workforce costs. (viii) Get the most from the company's products. Turn out products that are developed and marketed to fill actual, current customer needs. (ix) Produce the product. Search for alternate ways to create the product: owning or leasing facilities, outsourcing, etc. The authors believe that "how you're doing is where you're going." They assert that the "one fundamental source of life in companies, as in people,.is the capacity for self-renewal, the ability to excite your team for game after game. to go for broke season after season." This ability can come from "(g)enetics, charisma, sheer luck, stock options - all crucial, yes, but the best renewal insurance is a leader who always knows exactly how his or her company is doing." There are a lot of books written on this topic. Pate and Platt successfully bridge the gap between overgeneralization and too detail. They are equally adept at advising on how to go about determining a business's scope and arguing for Monday rather than Friday for implementing layoffs. They don't dwell on sappy motivational techniques. They don't condescend to the reader or depend too much on folksy vernacular and clich,. Their message is clear: your company's phoenix, too, can rise from its ashes. * Carter Pate is a well known turnaround expert at PricewaterhouseCoopers with more than 20 years experience providing strategic consulting and implementation strategies. * Harlan Platt is a professor of finance at Northeastern University and author of the book Principles of Corporate Renewal. ********* 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 * * *