TCREUR_Public/131003.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, October 3, 2013, Vol. 14, No. 196



CONTINENTAL AG: S&P Raises Corp. Credit Rating to 'BB+'
HESS AG: Nordeon Takes Over Form + Licht Business Operations
LOEWE AG: Gets Court Approval for Self-Administered Insolvency
PRAKTIKER AG: Court Opens Insolvency Proceedings for Eight Units
PRAKTIKER AG: Two Big Investors Expected to Bid for Max Bahr

SCHAEFFLER AG: S&P Raises CCR to 'BB-'; Outlook Stable


* ATHENS: Payment Default Prompt Moody's to Cut Rating to C


TMD FRICTION: Moody's Withdraws B3 CFR & PDR for Business Reasons


POLIMEX-MOTOSTAL SA: In Talks with Creditors on New Debt Deal


DIVERTA: 36 Units Closed Since Insolvency Filing


BANK SAINT-PETERSBURG: Moody's Affirms Ba3 Deposit Rating
* ULYANOVSK: Fitch Affirms 'BB-' Long-Term Currency Ratings


PESCANOVA SA: Creditor Banks Mull Debt-for-Equity Swap


GDANSK SHIPYARD: On Brink of Bankruptcy; Seeks Cash Injection

U N I T E D   K I N G D O M

MALLORY PARK: Goes Into Administration


* SEYCHELLES: Fitch Affirms 'B' Long-Term Foreign Currency IDR
* EUROPE: Weak Market Conditions Pressure US Auto Manufacturers
* Upcoming Meetings, Conferences and Seminars



CONTINENTAL AG: S&P Raises Corp. Credit Rating to 'BB+'
Standard & Poor's Ratings Services said it raised its long-term
corporate credit rating on German automotive supplier Continental
AG to 'BB+' from 'BB'.  The outlook is stable.

S&P also raised its issue rating on the company's senior
unsecured notes to 'BB+ from 'BB'.  The '3' recovery rating on
these notes remains unchanged, reflecting S&P's expectation of
meaningful (50%-70%) in the event of a payment default.

The upgrade reflects the improved credit quality of the
Schaeffler group, which S&P views as Continental's parent under
its criteria. S&P raised its rating on the Schaeffler group to
'BB-' from 'B+' on Oct. 1 following its sale of a 3.9% stake in

S&P continues to apply its parent-subsidiary criteria in
determining the rating on Continental.  Despite Continental's
bank facility agreements including covenants protecting creditors
and bond indentures including incurrence covenants protecting
Continental, S&P incorporates Schaeffler's influence over
Continental's strategic actions in S&P's rating on Continental.

Schaeffler continues to hold a 46% stake in Continental and has
four representatives on Continental's supervisory board.  S&P
continues to incorporate its weaker rating on the parent into
Continental's financial risk profile, which S&P assess as

S&P's assessment of Continental's stand-alone credit profile
(SACP) is unchanged at 'bbb'.  S&P derives the SACP from its
assessments of the company's business risk profile as
"satisfactory" and financial risk profile as "intermediate."
The SACP is not a rating, but a component of a rating.

S&P bases the SACP on its belief that Continental can continue to
slightly improve its financial credit metrics in 2013, including
bringing funds from operations (FFO)-to-debt to a range of 35%-
40% and debt to EBITDA to about 1.8x.  S&P also continues to
believe that Continental can considerably improve its credit
metrics in 2014 as a result of substantial discretionary cash
flow -- free operating cash flow (FOCF) less dividends -- that we
expect for this year.

S&P's base case reflects moderate sales growth of 2%-3% in 2013
with an adjusted EBIT margin just above 10%.  This is slightly
more cautious than Continental's expectation and continues to
reflect S&P's somewhat more prudent stance on developments in
global replacement tire markets, especially in Europe and the
U.S. Results for the first half of 2013 were in line with S&P's
base-case expectations.

S&P continues to envisage FOCF of about EUR800 million for
Continental in 2013 under S&P's base case, including the
EUR0.6 billion reversal of the positive working capital swing
that Continental reported in 2012.  In view of the announced
dividend, S&P expects discretionary cash flow to be positive in

Continental's bank facility still includes covenant restrictions
on dividends and special dividends and prohibitions on loans and
guarantees to major shareholders.  Continental cannot undertake
acquisitions or joint ventures exceeding EUR1.0 billion without
majority lender consent.  In view of the contractual ring fencing
of Continental's assets and cash, any combination of Schaeffler
and Continental's assets appears to be subject to the prior
consent of the Continental lending group.

S&P's view of Continental's business risk profile as satisfactory
reflects its solid market shares, sustainable market positions,
size, diversity, and technological capabilities, and ability to
generate above-industry-average profitability.  S&P assess
Continental's management and governance as "strong" under its
criteria, supported by the company's comprehensive risk
management and strategic planning processes.

The stable outlook reflects S&P's belief that Continental is
likely to continue to slightly improve its credit profile from
2013, notably by bringing FFO-to-debt to a range of 35%-40% and
debt-to-EBITDA to about 1.8x.

A positive rating action would not, however, automatically follow
an improvement in Continental's stand-alone credit metrics,
because S&P primarily bases the rating on our parent-subsidiary

S&P might consider a positive rating action on Continental if it
upgraded Schaeffler.  A key driver for an upgrade of Continental
would be a decrease in Schaeffler's influence over Continental.
This could happen if Schaeffler sold a significant portion of its
remaining stake in Continental and simultaneously reduced its
representation on the supervisory board.

S&P might consider a negative rating action if Continental's
operating performance weakened.  This could occur if FFO to debt
fell below 25%, which S&P views as unlikely at this stage.

HESS AG: Nordeon Takes Over Form + Licht Business Operations
Hess AG on Oct. 1 disclosed that business operations of Hess AG
Form + Licht were transferred to an association founded by
NORDEON B.V. by way of an asset deal on October 1, 2013.
Business operations are being continued with the company Hess
GmbH Licht + Form.  Furthermore, NORDEON B.V. has taken over the
Hess associations in the USA as well as in Scandinavia by way of
a share deal, i.e. through taking over the total shares.

The obtained purchase price in the context of the acquisition
serves to satisfy insolvency creditors of Hess AG Form + Licht.
There a hereby no payments accounting for the stocks.  Hess AG
initially remains as an empty coat through the disposition of
business operations and is going to be fully liquidated in the
course of the ongoing insolvency proceedings.

Provided that shareholders who acquired shares on the basis of
the listing prospectus claim for damages, these will not be
treated as subordinate debts of insolvency and will be paid
according to the insolvency quota.  A precise statement regarding
the level of the insolvency quota cannot be made at this point.

Hess AG is a German street light maker.

LOEWE AG: Gets Court Approval for Self-Administered Insolvency
Christine Benders-Rueger at The Wall Street Journal reports that
a German insolvency court in Coburg Tuesday granted Loewe AG
permission to carry out insolvency proceedings under the
company's own administration, and the television and
entertainment console maker has already received several offers
from interested investors in recent days.

The company has been under creditor protection since July, the
Journal notes.

Loewe said that the company will remain in full operation, the
Journal relates.  But the company faces pressure to come up with
a new investor, or otherwise be dissolved, the Journal says.

According to the Journal, Loewe Chief Executive Matthias Harsch
said the company has received several written offers from
interested investors in recent days, evidence that the company's
nearly-completed restructuring program is yielding results,
according to the release.  As part of the program, 150 jobs were
cut Tuesday, the Journal discloses.

Meanwhile, creditors will need to agree to the insolvency plan,
which foresees a fresh investor, in the coming weeks, the Journal

Loewe spokesman Axel Gentzsch told the Journal that the issue of
a new investor should be wrapped up within weeks, and emphasized
that the company is still capable of paying wages.

Loewe ran into problems over the past decade when it failed to
begin producing flat television screens soon enough, amid rising
competition. Sharp Corp., a large Loewe shareholder in Japan, is
itself facing problems, issuing shares and selling factories to
generate cash, the Journal recounts.

Loewe wasn't successful in an attempt to raise capital earlier
this year, the Journal relays.

Loewe AG is a German high-end television maker.

PRAKTIKER AG: Court Opens Insolvency Proceedings for Eight Units
Alexander Kell at Bloomberg News reports that Praktiker AG said
that the Hamburg district court has opened insolvency proceedings
for eight company units.

As reported by the Troubled Company Reporter-Europe on August 1,
2013, Reuters related that the insolvency administrators of
Praktiker on July 30 said they have stepped up the search for an
investor by appointing Macquarie as advisor.  The administrators
hope that by finding an investor they can secure as many jobs and
stores as possible at the group, which has around 20,000 full and
part-time employees, Reuters disclosed.  They said they did not
expect any results from the search before the start of September,
but that all the 300 stores affected by the insolvency would
continue trading for now, Reuters related.  Of the 300 stores in
the insolvency process, 168 are Praktiker stores, 78 are Max Bahr
stores and a further 54 are Praktiker-branded shops that have
recently been converted to the Max Bahr signage, Reuters noted.

Praktiker AG is a German home-improvement retailer

PRAKTIKER AG: Two Big Investors Expected to Bid for Max Bahr
According to Bloomberg News' Julie Cruz, Sueddeutsche Zeitung,
citing unidentified Praktiker AG employees, reports that the
company's administrators expect "at least two large investor
groups" to submit an offer for most of Max Bahr.

The newspaper said that the offers are expected until today,
Oct. 3, Bloomberg relates.

Bloomberg notes that administrator Jens-Soeren Schroeder, as
cited by SZ, said some investors may also be willing to take over
several Praktiker locations.

As reported by the Troubled Company Reporter-Europe on August 1,
2013, Reuters related that the insolvency administrators of
Praktiker on July 30 said they have stepped up the search for an
investor by appointing Macquarie as advisor.  The administrators
hope that by finding an investor they can secure as many jobs and
stores as possible at the group, which has around 20,000 full and
part-time employees, Reuters disclosed.  They said they did not
expect any results from the search before the start of September,
but that all the 300 stores affected by the insolvency would
continue trading for now, Reuters related.  Of the 300 stores in
the insolvency process, 168 are Praktiker stores, 78 are Max Bahr
stores and a further 54 are Praktiker-branded shops that have
recently been converted to the Max Bahr signage, Reuters noted.

Praktiker AG is a German home-improvement retailer

SCHAEFFLER AG: S&P Raises CCR to 'BB-'; Outlook Stable
Standard & Poor's Ratings Services said it raised its long-term
corporate credit rating on Germany-based automotive component and
systems and industrial bearings manufacturer Schaeffler AG to
'BB-' from 'B+'.  S&P also raised its long-term corporate credit
rating on Netherlands-based Schaeffler Holding Finance B.V., the
financing entity that issued the junior notes at holding level,
to 'BB-' from 'B+'.  The outlook on both companies is stable.

At the same time, S&P raised its issue ratings on Schaeffler's
senior secured debt instruments to 'BB-' from 'B+', in line with
the corporate credit rating.  The recovery rating on these
instruments remains unchanged at '3', indicating S&P's
expectation of meaningful (50%-70%) recovery in the event of a
payment default.

S&P also raised its issue ratings on Schaeffler Holding Finance
B.V. subordinated debt instruments to 'B' from 'B-', two notches
below the corporate credit rating.  The recovery rating on these
instruments is '6', indicating S&P's expectation of negligible
(0%-10%) recovery in the event of a payment default.

The upgrade reflects Schaeffler's debt reduction, including a
EUR1.3 billion decrease in its senior and junior bank loans by
the end of September 2013.  These actions have materially
strengthened Schaeffler's financial risk profile and have led S&P
to trim its forecast for Schaeffler's Standard & Poor's-adjusted
debt by about EUR1 billion.  Because Schaeffler credit metrics
have improved since S&P's previous base-case scenario, it now
forecasts for 2013 that adjusted debt to EBITDA will be about 5x
(versus S&P's previous estimate of about 6x ), which is
commensurate with a 'BB-' rating.

"We have consequently revised our assessment of Schaeffler's
financial risk profile to "aggressive" from "highly leveraged,"
given the group's stronger credit metrics.  Although we
anticipate that free cash flow generation will be positive in
2013 and 2014, it will continue to be insufficient to ensure
marked debt reduction, despite our expectation of continuously
strong operating performance.  Schaeffler's EBITDA cash
conversion is hampered by large cash interest payments--more than
EUR0.5 billion per year--that weigh on the generation of funds
from operations (FFO).  However, we expect cash interest payments
to fall below EUR500 million per year by end of 2014 due to the
expiration of interest rate swaps in mid-2014 and lower overall
debt levels.  In addition, the capital-intensive nature of
Schaeffler's business--we expect capital expenditures will remain
above 5% of revenues each year--will further weigh on the
generation of free operating cash flow (FOCF), in our opinion,"
S&P said.

"We have also revised our assessment of Schaeffler's financial
policy to "aggressive" from "very aggressive."  Despite the still
high debt burden following the 2008 acquisition of Continental,
we consider the group's financial risk profile to be less
aggressive than in the past.  This is due to the lower debt-to-
EBITDA ratios and the group's strategy to reduce debt and change
its maturity profile.  We note, however, that the group will have
a great need for refinancing in the next three to four years.  We
do not expect Schaeffler's management to undertake any large
acquisitions or adopt an aggressive dividend policy.  Instead, we
think the group will continue to focus on trimming debt and
strengthening liquidity, as it has done over the past three years
through the sale of Continental shares and debt restructuring,"
S&P added.

"We assess Schaeffler's business risk profile as "satisfactory"
and supportive of the group's credit quality.  However, it does
not provide strong uplift to the rating because of the group's
high debt. Our assessment of business risk derives from
Schaeffler's leading market positions, robust profitability,
excellent operating and technological capabilities, good
geographical diversity, and well-diversified customer base.
However, it also reflects the group's exposure to the volatile
and competitive, albeit fairly entrenched, automotive component
and systems markets (about two-thirds of sales) and industrial
bearings markets (about one-third of sales).  We believe that
Schaeffler's strong focus on providing energy-efficient products
to customers, especially in the automotive sector, will foster
growth above the market average and provide solid pricing power
in the medium term," S&P noted.

In S&P's base-case scenario, it assumes that Schaeffler's stake
in Continental will remain unchanged, and that Schaeffler will
not closely integrate Continental into its operations.  So, S&P's
assessment of Schaeffler's business risk profile does not factor
in any meaningful synergies from a potential tie-up with
Continental, or any integration risk.

The stable outlook on Schaeffler reflects S&P's opinion that the
group will maintain a strong operating performance in 2013-2014,
including an adjusted EBITDA margin of approximately 18% and
slightly positive FOCF.  S&P views an FFO-to-adjusted debt ratio
of above 10% and adjusted debt to EBITDA of about 5x as
commensurate with our 'BB-' rating.

S&P believes that Schaeffler has limited headroom under the
current 'BB-' rating level, given its very high debt and limited
FOCF generation under its capital structure.  Therefore, S&P sees
marginal prospects of reducing its debt over its 2013-2014
forecast horizon.  S&P would likely lower the rating if
Schaeffler meaningfully underperforms its base-case expectations.

S&P sees a limited rating upside if the group does not change its
capital structure to obtain a markedly lower adjusted debt-to-
EBITDA ratio.  S&P don't currently assume this in its base case.


* ATHENS: Payment Default Prompt Moody's to Cut Rating to C
Moody's Investors Service has downgraded the City of Athens's
issuer rating to C from Caa3 and has not assigned an outlook to
the rating.

Moody's decision to downgrade the city's rating is driven by
evidence of default. The city's rating is now aligned with the
Greek sovereign rating of C, with no outlook.

Ratings Rationale:

Moody's downgrade is driven by the recent disclosure of accrued
penalty interest resulting from a missed payment on a EUR29.5
million bullet loan due in 2010. Athens originally incurred this
loan from the Agricultural Bank of Greece (ATE) to finance
Olympic-related works in 2003. The city has recently incurred a
10-year amortizing loan from another state-owned entity in order
to refinance the principal and cover a portion of the interest
due to ATE, which is currently undergoing liquidation. Moreover,
due to the existence of a cross-default clause in another loan
contract, Moody's believes that the city is exposed to
significant liquidity risks. The rating agency has received
confirmation that the city is currently meeting interest and
principal payments on its other borrowings, which are entirely
formed of bank loans.

Moody's decision to align Athens's rating to the sovereign
reflects the city's limited fiscal flexibility to act
independently from the sovereign, notwithstanding its commitment
to fiscal consolidation. Athens has faced strong fiscal pressures
in the past few years, stemming from volatile government
transfers and lower own-source revenue streams. That being said,
substantial expenditure-streamlining initiatives enabled it to
keep operating costs in line with lower revenue and to record a
thin operating surplus of 1.1% in 2012 (on a cash basis).
Including the aforementioned debt in default (principal and
accrued interest), the city had a debt stock of EUR182 million at
year-end 2012, equivalent to a moderate 41% of the city's
operating revenue for the year.

What Could Move The Rating Up

Any upward movement in Athens's rating will require a similar
change in the sovereign rating and evidence that it is no longer
in default on its debt obligations. In addition, a rating upgrade
is dependent upon an improvement in the city's financial position
and cash reserves, which would indicate that the risk of another
default has diminished.

Specific economic indicators as required by EU regulation are not
applicable for this entity.

On September 26, 2013, a rating committee was called to discuss
the rating of the Athens, City of. The main points raised during
the discussion were: The issuer's governance and/or management,
have materially decreased. The issuer's fiscal or financial
strength, including its debt profile, has materially decreased.
An analysis of this issuer, relative to its peers, indicates that
a repositioning of its rating would be appropriate.

The principal methodology used in this rating was Regional and
Local Governments published in January 2013.


TMD FRICTION: Moody's Withdraws B3 CFR & PDR for Business Reasons
Moody's Investors Service has withdrawn the B3 corporate family
rating and B3-PD probability of default rating (PDR) of TMD
Friction Group S.A. The ratings had a stable outlook.

Moody's has withdrawn the rating for its own business reasons.

This action does not reflect a change in the company's

TMD Friction Group S.A. is a manufacturer of brake pads and
linings based in Luxembourg with manufacturing operations in
Europe, USA, China, Mexico, Brazil and South Africa. The company
generated EUR634 million of revenues in 2012. In total, TMD
Friction operates 16 manufacturing sites with more than 4,500


POLIMEX-MOTOSTAL SA: In Talks with Creditors on New Debt Deal
Maciej Martewicz at Bloomberg News reports that Polimex is in
talks with creditors on a new debt agreement after it failed to
meet some conditions of the previous one.

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.


DIVERTA: 36 Units Closed Since Insolvency Filing
Mirabela Tiron at Ziarul Financiar reports that Diverta has
closed down 36 units since becoming insolvent in 2010 and is now
left with 26 stores.

As reported in the Troubled Company Reporter-Europe on May 31,
2010, ZiarulFinanciar said Octavian Radu, Diverta's owner, filed
for insolvency with a view to its judicial reorganization.  The
court-appointed administrator is Casa de Insolventa Transilvania
(Transylvania Insolvency Firm).  "Diverta's debts top EUR10
million and this is why we chose to go in judicial
reorganization.  The current conditions of the economy and the
inflexibility of developers (i.e. the shopping centers where
Diverta has stores opened) have given rise to the current cash
flow problems," Ziarul Financiar quoted Diverta CEO Amalia Buliga
as saying.

Based in Romania, Diverta is a distributor of an extensive range
of products, including books, music, movies, toys, video games,
IT and stationery.  Diverta is part of the RTC holding, owned by
Romanian investor Octavian Radu.


BANK SAINT-PETERSBURG: Moody's Affirms Ba3 Deposit Rating
Moody's Investors Service has affirmed Bank Saint-Petersburg's
Ba3 long-term foreign-currency deposit rating, B1 foreign-
currency subordinated debt rating and standalone D- bank
financial strength rating (BFSR) which is equivalent to a
baseline credit assessment (BCA) of ba3. Moody's has also
affirmed the provisional (P)Ba3 foreign-currency senior
unsecured, the (P)B1 foreign-currency subordinated debt, and the
Not-Prime short-term foreign-currency deposit ratings.

Ratings Rationale:


The affirmation of Bank Saint-Petersburg's long-term ratings
reflects: (1) the bank's entrenched positions in the corporate
lending and the deposit-taking segments in St. Petersburg; (2)
healthy pre-provision income and operating efficiency; (3) high
single-name concentrations in the loan book; and (4) modest
capital adequacy.

With total assets of US$11.4 billion at June 30, 2013, Bank
Saint-Petersburg is the leading local commercial bank in its home
region with an entrenched market position in the corporate
lending, mortgages and deposits-taking segments where it commands
around 10% market share. The bank's effective customer-reach
strategy, with 582 ATMs, and 41 branches (as at end-June 2013)
located primarily in St. Petersburg enables the bank to report
sound efficiency metrics due to its large asset size in relation
to its limited branch network: the cost-to-income ratio was 42%
in H1 2013 and pre-provision income accounted for 2.6% of average
assets in H1 2013.

High concentration of Bank Saint-Petersburg's corporate loan book
represents a major negative rating driver, with top 20 net loan
exposures at around 200% of its Tier 1 capital, and many large
loans provided to finance investment projects. These exposures
and, in Moody's view, high credit risk appetite render the bank's
revenue volatile (as was the case in 2011-12).

As of June 30, 2013, Bank Saint-Petersburg's (Basel I) Tier 1
ratio stood at 9.33% (year-end 2012: 9.90%), and its total
capital adequacy ratio stood at 13.30% (2012: 13.79%). The bank's
total capital adequacy should marginally improve to 14% following
the attraction of RUB3 billion into its capital in September
2013. At the same time, the rating agency considers these capital
levels to be marginal against any potential losses that may
crystallize over the coming years given Moody's assessment of
Russia's weak growth outlook; and the bank's risk profile; i.e.,
high single-name loan book concentration combined with a high
credit risk appetite to financing investment projects.

Rationale For The Negative Outlook

Moody's notes the marginal enhancement of Bank Saint-Petersburg's
capital adequacy following the recent replenishment of its Tier 1
capital by RUB3 billion as well as the bank's partly restored
operating efficiency and pre-provision profits in H1 2013.
However, Moody's considers a longer track record of a healthy
performance is required to trigger a change in the rating outlook
to stable. In Moody's view, the ongoing deceleration of economic
growth might exert negative pressure on the bank's asset quality
and profitability in the next 12-18 months, particularly because
many large loans are provided to finance project-finance and
investment deals.

What Could Move The Ratings Up/Down

Bank Saint-Petersburg's ratings have limited upside potential, as
captured in the negative outlook. However, the rating outlook can
be changed to stable if the bank proves its ability to maintain
its capital adequacy and profitability amid the weakened
operating environment.

The ratings could be downgraded if Bank Saint-Petersburg's
profitability weakens in the next 12 to 18 months, or if the
deterioration in the operating environment negatively affects the
bank's financial fundamentals.

The principal methodology used in this rating was Global Banks
published in May 2013.

Headquartered in Saint-Petersburg, Russia, Bank Saint-Petersburg
reported total (unaudited IFRS) assets of RUB374 billion (US$11.4
billion) and shareholder equity of RUB41.4 billion (US$1.3
billion) at June 30, 2013. Net income for the first six months of
2013 was RUB2.0 billion (US$61 million).

* ULYANOVSK: Fitch Affirms 'BB-' Long-Term Currency Ratings
Fitch Ratings has affirmed Ulyanovsk Region'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 region's National Long-term rating at 'A+(rus)'
with Stable Outlook.

Key Rating Drivers

The affirmation reflects Fitch's expectation of moderate recovery
of Ulyanovsk's budgetary performance in 2014-2015, still modest,
albeit increasing direct risk, and low immediate refinancing
risk. However, the ratings also factor in pressure on operating
expenditure, which resulted in a negative operating balance in
2012 and a continued budget deficit in the past three years.

Fitch forecasts that the region will record a slight improvement
in its operating performance after a sharp deterioration in 2012
caused by an increase in operating expenditure and unexpected
reduction of current transfers from the Russian Federation. Fitch
expects the operating balance will turn positive in 2013 but will
remain weak at 0.5%-1% of operating revenue (2012: -0.6%). Fitch
expects the region's operating margin to consolidate at about 3%-
4% during 2014-2015.

Fitch expects Ulyanovsk's direct risk to be at a moderate 36% of
current revenue during 2014-2016. The region recorded a deficit
before debt variation during the past three years, which peaked
at 12.4% of total revenue in 2012. Fitch expects the deficit to
narrow but to a still high 9% in 2013. As a result, the region's
direct risk will reach RUB12 billion in 2013, up 36% on 2012.
Debt coverage (direct risk/current balance) will remain weak in
the medium term due to a low operating balance.

The immediate refinancing risk of the region is low. Ulyanovsk
has contracted a RUB2.9 billion unused credit line with local
banks, which will cover its RUB500 million maturing debt till the
year-end and its forecasted budget deficit in 2013. However,
refinancing pressure exists over the medium term. The region
mostly relies on bank loans with a three-year maturity and has to
pay back RUB7.3 billion of maturing bank loans and budget loans
during 2014-2015, which is equivalent to 72% of total risk as of
end-Q313. Nevertheless, the agency expects the region to roll
over these loans with the banks.

The region has no outstanding guarantees, and therefore its
contingent liabilities are limited to the modest indebtedness of
its public sector enterprises (PSEs). The financial debt of the
region's PSEs was a modest RUB840 million at end-2012 and the
region has not had to cover the obligations of its PSEs so far.

The region's economy is modest in size and per capita gross
regional product was 20% lower than the national median in 2011.
This has resulted in a low self-financing capacity for capital
outlays and a dependence on federal capital grants for capex
financing. Capital grants from the Russian Federation averaged a
high 60% of the region's capital spending during 2010-2012.

Rating Sensitivities

An improvement of the region's operating balance to about 10% of
operating revenue leading to maintenance of stable debt coverage
at below eight years could lead to an upgrade.

Inability to restore operating margin to 3%-4%, coupled with a
direct risk growth above 50% of current revenue, would lead to a

Key Assumptions

  -- Russia has an evolving institutional framework with a system
     of intergovernmental relations between federal, regional and
     local governments still under development. However, Fitch
     expects Ulyanovsk will continue to receive a steady flow of
     transfers from the federation

  -- Russia's economy will continue to demonstrate modest
     economic growth. Fitch does not expect dramatic external
     macroeconomic shocks

  -- The federal government's budgetary performance will remain
     sound, which will support the Ulyanovsk region

  -- Ulyanovsk Region will continue to have fair access to
     domestic financial markets to enable it refinance maturing


PESCANOVA SA: Creditor Banks Mull Debt-for-Equity Swap
Manuel Baigorri at Bloomberg News, citing Expansion, reports that
Pescanova SA's creditor banks including Banco Santander and BBVA
may control about 50% of the company's capital by converting debt
into equity.

According to Bloomberg, Pescanova Chairman Juan Manuel Urgoiti,
as cited by Expansion, said that the banks will also lose part of
the debt and refinance a small portion of debt to convert it into
long-term debt.

Pescanova SA 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


GDANSK SHIPYARD: On Brink of Bankruptcy; Seeks Cash Injection
Jan Cienski at The Financial Times reports that the Gdansk
shipyard was on the verge of bankruptcy and would not survive
without a massive cash injection.

According to the FT, Sergei Taruta, a steel magnate from eastern
Ukraine whose company ISD owns 75% of the shipyard, said: "The
situation is being pushed to the limit.  To save the shipyard we
have only days, not weeks or months."  He said that the company
needs PLN180 million (US$58 million) to continue functioning, the
FT relates.

The shipyard is in deep trouble, the FT says.  It was late in
paying salaries last month, a supplier has applied for it to be
declared bankrupt and the treasury ministry, which owns 25% of
the shipyard though its industrial development agency, said that
from 2011 to the end of the first half of 2013, the yard made a
loss of PLN375 million on sales of PLN540 million, the FT

The shipyard's two owners have also become embroiled in a bitter
battle over who bears the blame for its current parlous state and
who should help rescue it, the FT states.

According to the FT, Mr. Taruta laid the bulk of the
responsibility on the government, saying: "I feel that our
partner, who owns about 25 per cent of the shipyard, is not
interested in its development . . .  We appeal to the government
for help so that we can save the Gdansk shipyard."

He would like the agency to release a lien on a mortgage on the
shipyard's enormous production hall, which would allow the yard
to borrow the money needed to continue functioning, the FT notes.

The shipyard received PLN150 million in public help after it was
bought by ISD in 2007, and Wlodzimierz Karpinski, the treasury
minister, as cited by the FT, said that the state has no
intention of pumping more money or other aid into the business.

ISD was supposed to turn the troubled shipyard around, relying on
the company's knowledge of the steel industry, according to the

The Gdansk shipyard now has about 1,800 employees and has been
through two bankruptcies, once in 1988 and again in 1996.

U N I T E D   K I N G D O M

MALLORY PARK: Goes Into Administration
Annie Knightly at AboutMyArea/NN12 reports that Park Motorsport
Limited has gone into administration.

Mallory Park has been operating as a motorcycle and car race
circuit for many years and has much history attaching to the

In 1985, a highly restrictive Noise Notice was attached to
Mallory Park Motorsport Limited embracing all circuit activities
but, significantly, a number of the provisions within the Notice
were very much open to interpretation, according to

The report relates that MPML has enjoyed a long and fruitful
relationship with Hinckley & Bosworth Borough Council over the
years and a level of understanding had been established to work
within the 1985 Notice.  Regrettably, however, this arrangement
was placed under scrutiny by local residents some of whom were
new to the village, who made representations to HBBC to apply the
rigid interpretation of the 1985 Notice, the report notes.

The report says that MPML and the local authority worked
extremely hard with the residents to find a compromise solution
but, unfortunately, the council decided to prosecute MPML on five
charges of the Notice during 2012 which involved operating on a
Saturday over and above the four days agreed in the Notice.

The report recalls that the court hearing took place in August
2013 and ruled that MPML was guilty of this breach on the five
occasions, but MPML was given the right to take the establishment
rights of the 1985 Notice to a higher court.

AboutMyArea/NN12 notes that the immediate implication of the
Court decision was to oblige MPML to observe the provision of the
1985 Notice, which allows only for 40 days racing on Sundays  per
annum (but with a dispensation to allow four Saturdays per annum)
and testing on Wednesdays.

The report says that MPML was accordingly obliged to cancel all
track day operations, resulting in a significant loss of income
(a situation also felt by local businesses and local employers)
and use of the track for local community activities - young
driver training etc.  Overall, the imposition of such
restrictions has inevitably led to MPML having a financially
unstable business plan, the report relays.

The report notes that following the Court case, MPML immediately
implemented the highly restrictive conditions of the 1985 Notice,
thus effectively reducing the circuit activity to two days per

The report notes that significant losses were being incurred
which no business can sustain.  It was clear that a more dynamic
approach needed to be taken to overcome the significant hurdles
and two weeks ago MPML developed an innovative three stage
Recovery Plan to take Mallory forwards which would hopefully
meets the wishes of the residents and form the basis of a viable
business, the report relays.

The report relates that very constructive dialogue was held with
the Leader of HBBC and senior officials and we were receiving
very encouraging reactions from them to the Plan.  A fundamental
component of the Plan was the agreement of the Land Owner to
reduce the annual lease rental, which had risen by over 40% over
the last eight years and had reached untenable levels, the report
notes.  Very regrettably, despite intense work by the MPML board,
the Land Owner - Titan Properties Ltd - refused to make a
substantive offer to allow the Recovery Plan to proceed, the
report says.

Accordingly, having no firm visibility into 2014 and beyond, MPML
directors had no option but to place the company into
Administration, the report says.

"I will be working with all the stakeholders to ensure that
Mallory Park will see racing again.  I hope the administration
process can assist in finding a solution which will be beneficial
to all parties concerned," the report quoted administrator, Ian
Robert -- --  of Kingston Smith & Partners LLP,
as saying.  "To that end, I will be negotiating with the landlord
and the council, with the support of the BARC, to ensure that
racing can be enjoyed at Mallory Park for years to come.
Although it is early days, I am hopeful that, once a solution to
the lease is found, all of the company's creditors should receive
a substantial dividend, which I understand is very much the
driving force behind the continued support of the BARC."


* SEYCHELLES: Fitch Affirms 'B' Long-Term Foreign Currency IDR
Fitch Ratings has affirmed Seychelles' Long-term foreign currency
Issuer Default Rating (IDR) at 'B', Long-term local currency IDR
at 'B+' and Short-term foreign currency IDR at 'B'. The Outlook
is Positive. Fitch has also affirmed Seychelles' Country Ceiling
at 'B'.

Key Rating Drivers

Seychelles' 'B' IDRs and Positive Outlook reflect the following
key rating drivers:

   -- Positive fiscal dynamics. Strong budget discipline has been
enforced since the start of the IMF-supported program at end-
2008. The primary budget surplus has averaged 8% of GDP since
2009 due to substantial reforms including a marked cut in public
sector employment, tighter control on expenditure and reform in
public companies. Fitch expects the primary surplus to be 5.1% of
GDP in 2013 and public debt to decline to 54% of GDP by 2015
(from 70.5% in 2012) due to continuing surpluses.

  -- Improved macroeconomic stability. Inflation has slowed since
its peak in mid-2012 (8.9%) to 3.7% in August 2013, supported by
an appreciation of the Seychelles rupee (+8% against the USD from
end-2012). Fitch expects on-going reforms in liquidity
management, with the introduction of longer maturities
instruments, combined with a gradual building of foreign reserves
(FX), to benefit economic stability in the longer term.

  -- Completion of public debt restructuring. The central
government debt declined to 70.5% of GDP in 2012 (from 178% in
2008) due to public debt restructuring following a fiscal and
balance-of-payment crisis in 2008. Debt is still high relative to
that of 'B'-rated peers' median (40% of GDP) but external debt
service is lower than peers' due to favorable post-restructuring
repayment conditions. The short tenor of domestic debt limits
fiscal financing flexibility.

   -- Sustained GDP growth. Fitch expects GDP growth to reach
3.5% in 2013 and 4% by 2015 (from 2.9% in 2012), supported by a
gradual recovery in the eurozone and continued expansion into new
markets. Seychelles has offset recent weakness in traditional
European tourist arrivals with an increase in new tourism markets
from Asia (+29% in the first six months of 2013, +57% from China)
and the Gulf (+22% from the UAE). Unemployment is low, at about
2%, due to job opportunities in the tourism sector.

   -- High level of economic and human development. GDP per
capita, at USD13,000, is much higher than peers', reflecting a
high value-added economy and a favorable business environment.
Scores on UN human development indicators and World Bank
governance indicators are also much higher than those of peers.

Rating Sensitivities

The main factors that could lead to an upgrade are:

   -- Continued reduction in public-sector debt due to fiscal
      discipline and structural reforms, including the adjustment
      of utility prices to cost recovery levels.

   -- Enhanced credibility of the macroeconomic framework by
      establishing a track record of moderate inflation and
      greater confidence in the flexible exchange rate regime to
      absorb shocks without threatening price and financial

   -- Continued increase in external liquidity through rising
      foreign exchange reserves. Increasing reserves is key to
      improving confidence in the currency given a large current
      account deficit and as a buffer to meet public external
      debt service which will start to rise from 2013.

   -- Sustained GDP growth underpinned by continuing structural
      reforms to improve the business environment and diversify
      the economy. Lower dependence on Western Europe, through
      diversification of tourist arrivals as successfully
      initiated in 2012, would also support the ratings.

The current Outlook is Positive. Consequently, Fitch's
sensitivity analysis does not currently anticipate developments
with a material likelihood of leading to a rating downgrade.
However, any reversal of fiscal reforms or relaxation of
expenditure control would be rating- negative.

Key Assumptions

Despite recent diversification, Seychelles'' main tourism market
remains Europe, and especially eurozone countries (France and
Italy). Fitch expects eurozone growth to gradually recover to
1.3% in 2015 from -0.6% in 2013.

Seychelles' current account payments are dependent on commodity
prices, and especially oil. Fitch expects oil prices to remain in
a range of USD100-105/barrel between now and 2015.

Fitch's current judgment is that the authorities will continue to
enforce fiscal discipline in a way consistent with their debt
reduction target of 50% of GDP by 2018.

* EUROPE: Weak Market Conditions Pressure US Auto Manufacturers
In advance of upcoming third-quarter 2013 earnings calls, Fitch
Ratings has published a report reviewing what management at U.S.
auto manufacturers and suppliers said regarding market conditions
in Europe during their second-quarter earnings calls.

A combination of austerity programs and fiscal concerns has
resulted in low consumer confidence in Western Europe, which has
driven a decline in sales every year since 2007. The weak market
conditions have pressured the profits of U.S. auto manufacturers
and suppliers with significant exposure to the region.

Despite a continued downbeat assessment of the market, a common
theme on the second-quarter 2013 earnings calls was guarded
optimism that the bottom of the market may be near. However, the
more positive tone did not suggest that an inflection point has
been reached yet. Instead, most industry participants believe
that vehicle sales will stay near the market bottom for an
extended period before starting to grow sometime in 2014 or 2015.

To better match supply to reduced demand in the region, virtually
all manufacturers and suppliers are ramping up their
restructuring programs in the region. However, due to restrictive
labor laws and powerful unions, closing plants in Western Europe
is a challenging and lengthy process. As a result, the benefits
of European restructuring activities generally will not be a
meaningful driver of improvement in manufacturers' and suppliers'
results until 2015 or 2016.

* Upcoming Meetings, Conferences and Seminars
Oct. 3-5, 2013
      TMA Annual Convention
         Marriott Wardman Park, Washington, D.C.

Nov. 1, 2013
      NCBJ/ABI Educational Program
         Atlanta Marriott Marquis, Atlanta, Ga.
            Contact:   1-703-739-0800;

Dec. 2, 2013
      19th Annual Distressed Investing Conference
          The Helmsley Park Lane Hotel, New York, N.Y.
          Contact:   240-629-3300 or

Dec. 5-7, 2013
      Winter Leadership Conference
         Terranea Resort, Rancho Palos Verdes, Calif.
            Contact:   1-703-739-0800;


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

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

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

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


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

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Ivy B. Magdadaro, Frauline S. Abangan and Peter
A. Chapman, Editors.

Copyright 2013.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at

                 * * * End of Transmission * * *