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/raid1/www/Hosts/bankrupt/TCREUR_Public/130829.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, August 29, 2013, Vol. 14, No. 171 Headlines C R O A T I A INGRA: HANFA Initiates Pre-Bankruptcy Proceedings C Z E C H R E P U B L I C * Czech Republic Outperforms LatAm Counterparts, Moody's Says G E R M A N Y EUROMAX VI: Fitch Affirms 'C' Ratings on Four Note Classes HESS AG: Nordeon Takes Over Business Operations P O L A N D CENTRAL EUROPEAN: Suspends Filing of Reports With U.S. Regulator POLIMEX-MOTOSTAL: Lighthouse Files Bankruptcy Petition in Warsaw POLIMEX-MOTOSTAL SA: Intesa Invokes Guarantee in Romanian Unit * Poland Outperforms LatAm Counterparts, Moody's Says R U S S I A * SAMARA CITY: Fitch Affirms ST Foreign Currency Rating at 'B' * Moody's Notes Stable Performance of Russian RMBS in June 2013 S P A I N NATRA SA: Creditors Agree on Loan Repayment Extension PESCANOVA SA: Major Shareholder Wants to Cut Number of Directors U N I T E D K I N G D O M AA BOND CO: S&P Affirms 'BB' Rating on Class B Notes HD ADMINISTRATORS: FSCS Mulls Compensating Clients I-TRACK NETWORKS: Goes Into Liquidation MOSHEN LTD: Chief Suspended; Set to Call Insolvency Experts PRO SERV CORPORATE: Taylor Shaw Buys Firm Out of Administration RAILCARE: Jobs Secured as Administrators Agree Sale X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* ============= C R O A T I A ============= INGRA: HANFA Initiates Pre-Bankruptcy Proceedings ------------------------------------------------- SeeNews reports that Ingra said Croatian financial regulator, HANFA, initiated on Tuesday pre-bankruptcy proceedings against the company. According to SeeNews, Ingra said in a filing to the Zagreb bourse that HANFA scheduled the first hearing for October 11 and invited all Ingra's creditors to report their claims they have with the company. Ingra is a Croatian blue-chip civil engineering company. =========================== C Z E C H R E P U B L I C =========================== * Czech Republic Outperforms LatAm Counterparts, Moody's Says ------------------------------------------------------------- The Czech Republic and Poland are rated three notches higher than their Latin American (LatAm) counterparts, Mexico and Brazil, despite sharing very similar economic and fiscal indicators. This rating gap is largely explained by the quality of the countries' institutional framework and governance, says Moody's Investors Service in a new Special Comment entitled "Czech Republic And Poland: 'Institutional Premium' Leads to Rating Gap with LatAm Peers." Moody's notes that just like their LatAm peers, the Czech Republic and Poland are the largest economies within their region. The largest (Poland and Brazil) and second largest (Czech Republic and Mexico) economies in their respective regions share similar metrics in terms of wealth and the openness of the economy. Moreover, the Czech Republic and Mexico also have similar general government debt metrics, while Poland and Brazil share comparatively higher debt levels than their smaller regional counterparts. Overall, these indicators would appear to point to similar credit profiles. However, Moody's says that both the Czech Republic and Poland outperform their LatAm peers on a range of institutional strength indicators like the Human Development Index, Corruption Perceptions Index and the World Bank Governance Indicators. This has been supported by the EU accession process, with the associated technical assistance and funding for public-sector reform facilitating a comprehensive overhaul of CEE countries' institutions. Moody's notes that, to compensate for weaker governance indicators, LatAm sovereigns have sought to introduce institutional arrangements, such as fiscal rules to enhance policy continuity, transparency and predictability. Notwithstanding Mexico's comparatively lower level of institutional strength, over the past year a series of major reforms have been debated and passed by the new government. This renewed commitment to enacting legislation to enhance potential output growth rates, if fully implemented, is likely to help narrow the economic and institutional development gap between Mexico and its CEE counterparts. ============= G E R M A N Y ============= EUROMAX VI: Fitch Affirms 'C' Ratings on Four Note Classes ---------------------------------------------------------- Fitch Ratings has affirmed Euromax VI ABS Ltd's notes, as follows: Class A (XS0294719082): affirmed at 'CCCsf' Class B (XS0294720171): affirmed at 'CCsf' Class C (XS0294720338): affirmed at 'Csf' Class D (XS0294720841): affirmed at 'Csf' Class E (XS0294721146): affirmed at 'Csf' Class G (XS0294722201): affirmed at 'CCsf' Class H (XS0294722896): affirmed at 'Csf' Key Rating Drivers The affirmation reflects levels of credit enhancement (CE) commensurate with the ratings. Although the credit quality of the portfolio has deteriorated since the last review in September 2012, the increase in CE for the class A and B notes has offset this deterioration. CE for the class A notes has increased to 35.7% from 32% as of the last annual review in September 2012, and for the class B notes to 18.4% from 17.9%. Over the past year, the underlying portfolio has experienced a negative migration of ratings towards 'CCsf' and 'Csf' ratings. Assets rated 'CCsf' or below have increased since September 2012 to 28.3% of the outstanding portfolio balance and the balance of assets rated 'Csf' has increased to 12.7% from 3.8%. The lowest rated assets are mainly German CMBS and to a lesser extent, SF CDOs. The portfolio is mainly concentrated in RMBS and CMBS assets, which represent 49.5% and 42.3% of the balance, respectively, and residually in SF CDO, corporate CDO and commercial ABS. The vast majority of the assets are mezzanine with tranche thickness below 10%. Consequently, recoveries are expected to be low. All the over-collateralization tests have failed since 2009 and have deteriorated since then. Consequently the excess spread is being used to repay the class A notes. The interest coverage test is passing. While the class A and B notes are paying interest on a timely basis, the class C, D and E notes have been accumulating deferred interest since H209 and Fitch does not expect this situation to change. Euromax VI ABS Ltd (the issuer) is a cash arbitrage securitization of structured finance assets. Rating Sensitivities The ratings of the notes are already at distressed levels and therefore a further deterioration of the portfolio is unlikely to affect the ratings. HESS AG: Nordeon Takes Over Business Operations ----------------------------------------------- Hess AG on Aug. 23 disclosed that Nordeon takes over all assets necessary for the continuation of business operations of Hess AG at the site in Villingen-Schwenningen by way of an asset deal effective October 1, 2013. The asset deal is based on the future concept for Hess GmbH Licht+Form mutually developed and implemented by the insolvency administrator Dr. Volker Grub and the management of Hess AG. Further, the sales company of Hess located in Scandinavia as well as the production site and sales of Hess in the USA are being taken over. The working relationships of about 180 Hess employees in total are being continued. Hess invests a great deal in the development of energy-efficient lighting products and concentrates on meeting all requirements for lighting design in the public space as well as for the indoor and outdoor illumination of objects with a wide range of design- oriented luminaires. The product portfolio is completed by premium street and site furnishings. Nordeon is an internationally positioned company based in the Netherlands and with sites in Germany and France. The company was founded in October of 2012 as part of a spin-off from Philips in Springe and expanded as early as two months later through acquiring the Philips production site in France. A further step in growth was taken in March of this year acquiring Vulkan GmbH, which then belonged to the Hess group. By taking over Hess, Nordeon significantly extends its product line in the range of outdoor lighting and continues its growth strategy at the same time. Accordingly pleased is Pierre van Lamsweerde, CEO of the Nordeon group: "Hess is a world-wide known and prestigious brand and has a high reputation especially concerning the design and the quality of the luminaires. We are further strengthening our range of outdoor lighting through this acquisition. We are now in the position to offer technical- functionally as well as decorative outdoor lighting of high quality from a single source. Likewise, Hess further reinforces our production focused on Europe". Insolvency administrator Dr. Volker Grub is also more than satisfied: "With the strategic investor Nordeon, we have found an ideal solution for Hess." And Andreas R. Budde, Managing Director of Hess AG, continues: "An ideal solution that maintains jobs on the one hand and ensures the long-term continuation of the company on the other hand." Hess AG is a German street light maker. =========== P O L A N D =========== CENTRAL EUROPEAN: Suspends Filing of Reports With U.S. Regulator ---------------------------------------------------------------- Central European Distribution Corporation filed a Form 15 with the U.S. Securities and Exchange Commission to voluntarily terminate the registration of its common stock, US$0.01 par value. No holder of the Company's common shares as of Aug. 13, 2013. As a result of the Form 15 filing, the Company will not anymore be obligated to file reports with the SEC. The Company also terminated the offering of its securities under 2007 Stock Incentive Plan. 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: Lighthouse Files Bankruptcy Petition in Warsaw ---------------------------------------------------------------- Maciej Martewicz at Bloomberg News reports that Polimex-Mostostal SA in a filing said Lighthouse Consultants filed for its bankruptcy in Warsaw court. According to Bloomberg, the company is in talks with Lighthouse and plans "legal steps" that would lead to withdrawing the motion. The company said earlier on Tuesday that it's close to agreeing "financial package" with creditors that would increase its liquidity, Bloomberg relates. 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. POLIMEX-MOTOSTAL SA: Intesa Invokes Guarantee in Romanian Unit -------------------------------------------------------------- Maciej Martewicz at Bloomberg News reports that Poland's Polimex- Mostostal SA said Intesa Sanpaolo's Romanian unit invoked guarantee that the Polish builder issued to its Romanian Coifer unit. Polimex said the court-appointed bailiff seized the company's stakes in 5 units valued at PLN1.83 million, Bloomberg relates. Accoding to Bloomberg, the company said that the bailiff seized stakes after Imtech Polska filed motion. Polimex, as cited by Bloomberg, said that the liability to Imtech is "disputable". The company on Tuesday asked court to cancel the seizures, Bloomberg discloses. 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. * Poland Outperforms LatAm Counterparts, Moody's Says ----------------------------------------------------- The Czech Republic and Poland are rated three notches higher than their Latin American (LatAm) counterparts, Mexico and Brazil, despite sharing very similar economic and fiscal indicators. This rating gap is largely explained by the quality of the countries' institutional framework and governance, says Moody's Investors Service in a new Special Comment entitled "Czech Republic And Poland: 'Institutional Premium' Leads to Rating Gap with LatAm Peers." Moody's notes that just like their LatAm peers, the Czech Republic and Poland are the largest economies within their region. The largest (Poland and Brazil) and second largest (Czech Republic and Mexico) economies in their respective regions share similar metrics in terms of wealth and the openness of the economy. Moreover, the Czech Republic and Mexico also have similar general government debt metrics, while Poland and Brazil share comparatively higher debt levels than their smaller regional counterparts. Overall, these indicators would appear to point to similar credit profiles. However, Moody's says that both the Czech Republic and Poland outperform their LatAm peers on a range of institutional strength indicators like the Human Development Index, Corruption Perceptions Index and the World Bank Governance Indicators. This has been supported by the EU accession process, with the associated technical assistance and funding for public-sector reform facilitating a comprehensive overhaul of CEE countries' institutions. Moody's notes that, to compensate for weaker governance indicators, LatAm sovereigns have sought to introduce institutional arrangements, such as fiscal rules to enhance policy continuity, transparency and predictability. Notwithstanding Mexico's comparatively lower level of institutional strength, over the past year a series of major reforms have been debated and passed by the new government. This renewed commitment to enacting legislation to enhance potential output growth rates, if fully implemented, is likely to help narrow the economic and institutional development gap between Mexico and its CEE counterparts. =========== R U S S I A =========== * SAMARA CITY: Fitch Affirms ST Foreign Currency Rating at 'B' -------------------------------------------------------------- Fitch Ratings has affirmed Russia's Samara City's Long-term foreign and local currency ratings at 'BB', with Stable Outlooks, and its Short-term foreign currency rating at 'B'. The agency has also affirmed the city's National Long-term rating at 'AA-(rus)' with Stable Outlook. Key Rating Drivers The affirmation reflects Samara's sound budgetary performance underpinned by a strong and diversified local economy and potential financial support from Samara Region. It also factors in the city's continuous budget deficit during the past four years and increasing, albeit still moderate, overall risk including liabilities of public sector entities (PSEs). Fitch expects Samara's budgetary performance to stabilize at the current sound level with margins averaging 12% in 2013-2015. The city's operating balance improved in 2012 to 12.5% of operating revenue from 10.5% in 2011. Improvement of the operating balance led to a narrowing of the deficit before debt variation to 5.9% of total revenue from 9.7% in 2011. Fitch expects the city's 2013 deficit before debt variation to stabilize at about RUB1.2bn, which is equivalent to 6% of total revenue. The city is the capital of Samara Region, which has a well- developed diversified economy, based on a strong industrial sector. Local companies' sound economic performance supports Samara's strong fiscal capacity, with taxes that contributed 65% of operating revenue in 2012. The city's administration forecasts continued expansion of the local economy, driven by an average 5% yoy industrial production growth in 2013-2015. Samara's capital expenditure is high relative to national peers. It accounted for 27% of total spending in 2012 (2011: 30%) as the city continuously funded development projects. The city's self- financing capacity remained sound with capital revenue and current balance on average covering 80% of annual capex over 2010-2012. Fitch expects the city's capex to gradually decline to 21%-23% of total spending during 2013-2015 following the decline in capital transfers from the regional government. Fitch expects the city's direct risk to increase by 20% in 2013 and reach RUB6.4 billion. Despite the projected increase, it still remains a moderate 34% of current revenue. Starting from 2009 the city recorded a continuous deficit caused by capex funding needs. This fuelled fast direct risk increase albeit from a low base. In 2012 the liabilities of the city's PSEs also increased substantially to RUB1.6 billion, driven by new loans contracted by the city's water supply and public transport public companies. Samara mostly relies on bank loans for deficit financing. The city's debt stock at end-2012 was 71% composed of bank loans with less than one year to maturity. In H213 the city needs to repay RUB1.9 billion of maturing bank loans, which is equivalent to 51% of direct risk stock as of 1 July 2013. This exposure to refinancing risk is partially mitigated by revolving credit lines contracted by the city from SMP Bank. The lines totaled RUB700 million and mature in October 2015. Rating Sensitivities Debt Stabilization Positive Stabilization of overall debt burden, including PSEs' liabilities, below 40% of current revenue and lengthening of debt maturity profile coupled with maintenance of sound budgetary performance in line with Fitch expectation would be positive for the ratings. Poor Performance Negative Significant deterioration of budgetary performance with operating margin dropping to 5% coupled with high refinancing pressure from the short-term debt would lead to a downgrade. Key Assumptions -- Russia's economy will continue to demonstrate moderate economic growth. Fitch does not expect dramatic external macroeconomic shocks, which could lead to significant deterioration of the city's tax base. -- The tax sharing system between Samara City and Samara Region will remain stable. Samara will continue to receive a steady flow of transfers from Samara Region, the bulk of which will be earmarked to particular social spending. -- Samara will continue to have fair access to the domestic financial markets sufficient for refinancing of maturing debt. * Moody's Notes Stable Performance of Russian RMBS in June 2013 --------------------------------------------------------------- The performance of Russian residential mortgage-backed securities transactions remained relatively stable during the six-month period leading up to June 2013, according to the latest indices published by Moody's Investors Service. In June 2013, the worst performing transactions in the market were City Mortgage MBS Finance and Moscow Stars B.V. Both transactions are made up of assets denominated in US dollars. City Mortgage MBS Finance's 60+ day delinquency levels, which are the highest in the market, rose to 16.6% in June 2013 from 13.6% in June 2012. The transaction portfolio comprises only 333 loans and the senior notes have been repaid in full. In terms of outstanding defaults, Moscow Stars B.V. remained the worst performer in the past 12 months. While the transaction's default level slightly decreased from the overall high reached in September 2012 at 13.7% to 11.8% in June 2013, it remains the highest in the market. In most other Russian RMBS deals, outstanding defaults remain stable in the 12-month period leading up to June 2013. On June 14, 2013, Moody's upgraded the credit ratings of senior notes issued by Closed Joint Stock Company Second Mortgage Agent of AHML and Closed Joint Stock Company Mortgage Agent of AHML 2008-1. The rating action was prompted by the credit enhancement build-up under the affected notes since closing and the good performance of the portfolios backing the transactions. As of June 2013, the 27 Moody's-rated Russian RMBS transactions had an outstanding pool balance of $3.430 billion, a 93.2% year- over-year increase due to rising new emissions volumes following stimulation of the Russian RMBS market through several government programs of RMBS note purchase. Moody's included new transactions closed in the period from November 2012 to April 2013 into the index. After their first payment dates, the rating agency will include in the index further three new Russian RMBS transaction that closed in the period from June to July 2013. ========= S P A I N ========= NATRA SA: Creditors Agree on Loan Repayment Extension ----------------------------------------------------- Patricia Laya at Bloomberg News reports that Natra related in a filing that it proposed extension of loan repayments for the last three years of its EU130.8 million syndicated loan. According to Bloomberg, 17 banks agreed on the terms and conditions proposed by Natra. The agreement is subject to contract formalization due in September, Bloomberg discloses. The syndicated loan maturity date was set for 2016, Bloomberg notes. Natra SA is a Spain-based holding company principally engaged in the production and commercialization of cocoa derivates and chocolate products. PESCANOVA SA: Major Shareholder Wants to Cut Number of Directors ---------------------------------------------------------------- SeafoodSource.com reports that less than a month before Pescanova SA holds its shareholders' extraordinary general meeting on Sept. 12, several Spanish media have revealed that Damm -- the company's second most important shareholder -- has proposed reducing the number of Pescanova's directors from 13 to 7. The shareholders will vote on the proposal, which represents a reorganization of the troubled seafood giant's board, during the meeting, SeafoodSource.com discloses. The candidates for the new Board are Jose Carceller, brother of Damm's chairman; Fracois Tesch, from Luxempart; and Jose Antonio Perez Nievas, from Iberfomento, according to SeafoodSource.com. The remaining members would be independent directors, SeafoodSource.com says, citing media reports. This new organization would be provisional, until the group overcomes the current stage of the bankruptcy proceedings, SeafoodSource.com states. Most noticeable is the exclusion of the members close to former chairman Manuel Fernandez de Sousa, SeafoodSource.com notes. According to SeafoodSource.com, none of the members of the current board is expected to stand as the new chairman of the fishing company, which suggests the post would be taken up by one of the new independent directors. Pescanova is a Galicia-based fishing company. The company catches, processes, and packages fish on factory ships. It is one of the world's largest fishing groups. Pescanova filed for insolvency on April 15, 2013, on at least EUR1.5 billion (US$2 billion) of debt run up to fuel expansion before economic crisis hit its earnings. The Pontevedra mercantile court in northwestern Galicia accepted Pescanova's insolvency petition on April 25. The court ordered the board of directors to step down and proposed Deloitte as the firm's administrator. =========================== U N I T E D K I N G D O M =========================== AA BOND CO: S&P Affirms 'BB' Rating on Class B Notes ---------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' credit ratings to AA Bond Co Ltd.'s tap issuance of the fixed-rate secured class A1 and A2 notes. S&P has also affirmed its ratings on the original class A and B notes. The transaction is a corporate securitization of the operating business of the Automobile Association group. The group operates a roadside assistance service in the U.K. and Ireland and also provides complementary services such as insurance, driving services, and home emergency response. Breakdown services are provided either through a membership model or as part of a business service agreement where the service is provided to the underlying customer base of AA Group's corporate clients. Business customers typically include fleet operators and motor manufacturers. The AA Group is also a large U.K. personal lines insurance broker particularly in distributing motor and home insurance. AA Bond Co will onlend the proceeds from the issuance of the two pari passu class A notes to the borrower, AA Senior Co Ltd. (AA), via intercompany loans. The proceeds of the tap issuance will be used to redeem a portion of the borrower's bank debt, which has remained outstanding since the transaction closed in July 2013. The payment of interest and repayment of principal by AA under the issuer-borrower secured loan, provides AA Bond Co with its primary source of funds to make interest payments and principal payments when due under the class A1 and A2 notes. The tap will increase the size of both the class A1 and class A2 notes by GBP175 million each. Therefore, total class A notes outstanding will increase by GBP350 million. The issuance will be fungible with the original class A1 and class A2 notes, and, given that both bonds are currently trading above par, the notes will issue above par. Effectively, issuance proceeds from the GBP350 million par amount of notes will be GBP362 million and the proceeds will be used to pay down GBP362 million of the bank debt. This means that the tap issuance has a very slight deleveraging impact on the transaction. Consistent with S&P's criteria "Methodology For Rating And Surveilling European Corporate Securitizations," published Jan. 23, 2008, on RatingsDirect on the Global Credit Portal, S&P has first assessed the business risk profile, evaluated the risks embedded in the transaction (including structural and legal risks), and submitted the securitized business to a set of cash flow stresses driven by the characteristics of the specific industry/sector and business. BUSINESS RISK PROFILE S&P continues to view the AA's business risk profile as satisfactory, reflecting the following key business strengths: -- AA's clear market-leading position in the U.K., which has high barriers to entry; -- A mass membership model with excellent renewal rates and revenue visibility; -- High profitability, which is superior to that of its closest competitor; -- Good revenue visibility because of the loyal individual membership base and contracts on corporate service deals lasting three to five years; and -- Good cash flow due to a)minimal working capital needs, as a high percentage of members pay their annual membership fees up front, and b)low capital expenditure requirements, with strong cash flow conversion However, these strengths are tempered by: -- High dependence on a single country--almost all revenues are sourced in the U.K.; -- Some vulnerability to potential reputational damage and subsequent risk of litigation in the insurance and financial services businesses; and -- Some sensitivity to macroeconomic factors such as consumer confidence, driver habits, fuel prices, and weather patterns. TRANSACTION STRUCTURE Principal on the class A and B notes is not scheduled to amortize before their expected maturity dates. To reduce refinancing risk at the various expected maturity dates, the structure includes a feature which gives AA's management and the equity holders an incentive to refinance the debt before its expected maturity. If the business cannot refinance the intercompany loans associated with the class A1 notes or bank debt in year 5, all of AA's excess cash flow may be used to pay down the class A and class B notes before the legal final maturity date. However, AA Bond Co's failure to refinance will also be considered an event of default under the common terms agreement. After such an event, the creditors could choose to enforce their security and accelerate the debt, i.e., make it immediately payable in full. In S&P's view, the incentives of the bank lenders at this time may not be aligned with the incentives of the noteholders. The transaction therefore gives the class A noteholders a veto over the option to accelerate the debt. This veto would require more than 50% of the class A noteholders to vote for acceleration. None of the agreements for the swap counterparties, liquidity facility provider, or the obligor account providers in the transaction provide a commitment to mitigate a potential downgrade, in line with S&P's criteria. S&P do not consider this a limiting factor for the rating as all counterparties are rated above the rating on the notes. However, if any of the counterparties are downgraded, this may trigger a negative rating action on the notes. The AA Group operates defined benefit pension plans that are currently underfunded. The pension trustee is therefore granted super senior security up to the value of GBP150 million in the post-acceleration waterfall. However, S&P anticipates that this security arrangement will only remain in place for a limited timeframe. S&P expects that once the final pension deficit is calculated pursuant to the 2013 valuation, the AA Group and the pension trustee will enter into an asset-backed funding structure over a 25-year period. At this point, the pension trustee's security would be a GBP200 million first fixed charge over the AA brands. If the AA Group were not able to continue making the required payments under this agreement, the pension trustee could enforce this fixed charge security and the AA group might no longer have use of its brands. The borrower, AA, is highly leveraged. The securitization structure encourages reduction of leverage by sweeping 50% of excess free cash flow to pay down the bank debt, while the bank debt is outstanding. In addition, the transaction documents contain restrictions that limit payments to entities outside of the securitization (for example, dividends to shareholders) while the bank debt remains outstanding. S&P's cash flow stresses have been tested under the assumption that the borrower is unable to refinance either the term facilities or the bullet notes. S&P has therefore incorporated in its modeling all transaction features aimed at facilitating the repayment of the issuer's and borrower's liabilities. These include mandatory cash sweeps, lock-up triggers, and liquidity enhancements. In assigning S&P's ratings to the tap issuance of notes, its modeling validates that interest and principal are repaid as promised under a stress scenario commensurate with its ratings on the notes. RATINGS LIST AA Bond Co. Ltd. GBP3.405 Billion Fixed-Rate Secured Notes (Including Tap Issuances) RATINGS ASSIGNED Class Rating Amount (mil. GBP) A1 BBB- (sf) 175 A2 BBB- (sf) 175 RATINGS AFFIRMED A1 BBB- (sf) 300 A2 BBB- (sf) 325 B BB (sf) 655 HD ADMINISTRATORS: FSCS Mulls Compensating Clients -------------------------------------------------- Carmen Reichman at IFAonline reports that the Financial Services Compensation Scheme (FSCS) is considering whether it will pay compensation to those invested through the troubled self-invested personal pension (SIPP) operator HD Administrators (HDA). The company was placed into liquidation in June 2012 after the Financial Services Authority (FSA) -- now the Financial Conduct Authority (FCA) -- had removed HDA's permissions following the arrest of two of its directors for allegations of fraud, IFAonline recalls. "FSCS is reviewing whether the firm is liable for investors' claims and will need to consider the investigations of other interested parties, such as the administrator and Serious Fraud Office," the scheme said, IFAonline relates. "The FSCS will provide a further update as soon as the position is clearer. At that time, we will also confirm any claims process for clients of HD Administrators LLP who have not yet made a claim to FSCS." IFAonline says an FSA investigation into the SIPP operator was launched in March 2012 after investors claimed the firm had defrauded them of GBP20 million through the promotion of unregulated collective investment schemes (UCIS) through a SIPP. At the end of the year, the Serious Fraud Office announced that it was investigating allegations of serious fraud regarding the investments, and the involvement of Arck, a property investment vehicle already in liquidation with which HDA shared directors, HDA and other related companies, IFAonline reports. I-TRACK NETWORKS: Goes Into Liquidation --------------------------------------- oilfiredup.com reports that heating oil energy monitoring specialist i-Track Networks Limited has gone into liquidation. Originally established as Hopedale Securities Limited in 2009, the London-registered but Belfast-based company specialised in the development and supply of domestic heating oil smart monitors. Headquartered in Belfast's 'Northern Ireland Science Park', i-Track Networks was backed by a combination of private and UK government funding, oilfiredup.com discloses. According to the report, the company's IT1000 and IT9000 devices, were developed with several international technology partners including US based Texas Instruments; Tyndall National Institute in Cork, Ireland; The Queen's University of Belfast, UK; Nihon Dempa Kogyo in Tokyo, Japan; and, EMC Technologies in Australia. The company specialised in technology, which allowed customers to monitor and analyse heating oil usage and consumption. A range of complementary products was also under development, but it is understood none of these reached the market prior to the company's demise, oilfiredup.com notes. In early 2012, i-Track signed an exclusive trading agreement with fuel tank manufacturer Clarehill Plastics Limited. The agreement saw i-Track devices supplied with the Clarehill's range of i-Tank Bunded Heating Oil Tanks. However, Clarehill recently announced it was instead to supply Apollo products manufactured by i-Track rival, Dunraven Systems Limited, adds oilfiredup.com. MOSHEN LTD: Chief Suspended; Set to Call Insolvency Experts ----------------------------------------------------------- insidermedia.com reports that the chief executive of a Lancaster digital app agency whose clients include the Premier League, Manchester City and Facebook has been suspended. Insolvency practitioners are also set to be appointed to Moshen after apparent "financial irregularities" were uncovered, the report says. Concha plc, the AIM-listed company which is an investor in Moshen and led by former Leeds United chief executive Christopher Akers, told the stock exchange it had uncovered the irregularities which indicated a significant working capital shortfall at Moshen, according to insidermedia.com. "Concha has been made aware of a significant creditor claim resulting from a material contract which was not disclosed as part of the due diligence exercise performed prior to its investment," Concha said in a statement obtained by insidermedia.com. "The company is working with its advisers to obtain an accurate assessment of liabilities and the possible impact on the company's investment in equity and loans to Moshen. "The irregularity pertains to a contract unconnected with Moshen's core trading activities and relates solely to that company." insidermedia.com notes that Concha provided circa GBP867,000 worth of funding to Moshen, comprising GBP400,000 as equity and GBP467,000 as secured term loan. PRO SERV CORPORATE: Taylor Shaw Buys Firm Out of Administration --------------------------------------------------------------- thisisthewestcountry.co.uk reports that more than 250 jobs have been saved at a Bridgwater catering firm after it was bought out of administration. Pro Serv Corporate Limited, based in Bristol Road, had been providing catering services to schools and corporate clients throughout the South-West for nearly a decade, but it went into administration on August 23, according to thisisthewestcountry.co.uk. Ian Walker -- ian.walker@begbies-traynor.com -- and Chris Norman -- christopher.norman@begbies-traynor.com -- , both of Begbies Traynor's Exeter office, were appointed joint administrators. "Unfortunately, the company began to experience financial difficulties over the last 12 months as a result of increased competition within the industry. . . . This led to reduced operating margins which, coupled with significant losses at certain of its sites, meant that cash flow problems started to occur and this eventually resulted in the appointment of administrators," the report quoted Mr. Walker as saying. However, the report notes that 260 jobs were saved when Taylor Shaw, part of the Waterfall Group, a national catering company with offices in Warrington, Durham, Sheffield and Milton Keynes, agreed to buy Pro Serve's principal business. The deal is expected to be completed within days. "We are delighted to have found such a reputable buyer for most of the business of Pro Serv, which should ensure the continuation of many of its 30 catering contracts and the preservation of employment for around 260 staff," Mr. Walker said, the report relays. The report discloses Jim Lovett, group managing director of Taylor Shaw, said: "We have been seeking to expand within the South-West for some time and when we became aware that Pro Serv was in trouble, we registered our interest to enter into negotiations. . . . While a national company with contracts and suppliers countrywide, the South-West was the only region in which Taylor Shaw did not have a strong foothold." The acquisition of Pro Serv has changed that. "Staff will make the transition with immediate effect and we will enter into discussion with existing suppliers and clients to answer any questions they may have, hopefully continuing and strengthening all existing relationships," the report adds. RAILCARE: Jobs Secured as Administrators Agree Sale --------------------------------------------------- Scott McCulloch at businessinsider reports that more than 200 jobs have been secured at rail maintenance firm Railcare has been sold out of administration to German firm Knorr-Bremse Rail Systems (UK) Ltd. Railcare, which has facilities in Glasgow's Springburn and in Wolverton, Milton Keynes, was placed into administration in July with the loss of 150 jobs - including 33 in Scotland, according to businessinsider. The report relates that appointed administrators BDO said in a statement earlier this month they had stabilized the business and secured funds to pay staff working through the administration process while bids were considered. Support was provided by the Scottish Government through its Partnership Action for Continuing Employment (PACE) initiative, the report discloses. BDO said the business and assets have now been sold to Knorr- Bremse Rail Systems (UK) Ltd, though no details have been released on the deal value, the report relays. The deal secures 202 jobs across Railcare's two sites. "The sale of Railcare's business and assets to Knorr-Bremse will secure a future for the business and jobs. . . . Under the conditions of the sale Knorr-Bremse has agreed to pay retained employees their July salaries, which Railcare was unable to provide before it entered administration. . . . Current employees will therefore be paid for all work they have done to date. . . . We are delighted with this very positive outcome for the business, employees and more broadly for the communities of Wolverton and Springburn, both of which have strong railways heritage," the report quoted BDO business restructuring partner Kim Rayment as saying. Commenting on the sale, Scottish Government Finance Secretary, John Swinney said: "We welcome the news that Railcare has now been bought by Knorr Bremse, and their commitment to paying staff their wages. . . . Through our Partnership Action for Continuing Employment (PACE) initiative, we have supported Railcare staff since the company went into administration. . . . Representatives from our local PACE team were on site to provide support when employees were made redundant and have continued to provide support to those employees. . . . Railcare has a loyal workforce and a healthy order book, and we look forward to the company going forward on a healthy footing. . . . Scottish Enterprise has provided account management support to Railcare and we look forward to engaging with the new owners to assist them in consolidating and strengthening their new operation in Scotland," the report adds. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 19th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. 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