/raid1/www/Hosts/bankrupt/TCREUR_Public/131018.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, October 18, 2013, Vol. 14, No. 207
Headlines
F R A N C E
CASINO GUICHARD: S&P Assigns BB Rating to New Subordinated Notes
LANA PAPIERS: Exits Receivership, Sold to Lasse Brinck
G E R M A N Y
OPERA GERMANY: Fitch Affirms 'CCC' Rating on Two Note Classes
TELE COLUMBUS GMBH: Cinven, CVC Capital in Acquisition Talks
G R E E C E
* GREECE: ECB Official Sees Additional Financing Needs
I C E L A N D
HOUSING FINANCING: Operations Not Sustainable, FSA Director Says
I R E L A N D
DAG WELDS: Goes Into Receivership, Closes Doors
RMF EURO IV: Moody's Affirms Ba1 Rating on EUR12.6MM Cl. V Notes
* IRELAND: Bailout Exit Hinges on Bank Stress Test Outcome
I T A L Y
ALITALIA SPA: Needs to Obtain EU Approval for Capital Increase
CATENE D'ITALIA: Goes Into Receivership, Seeks Buyer
L I T H U A N I A
UKIO BANKO: Bankruptcy Administrators Set to Take Control
N E T H E R L A N D S
EURO-GALAXY II: S&P Affirms 'CCC+' Rating on Class E Notes
GRESHAM CAPITAL: S&P Lowers Rating on Class F Notes to 'CCC+'
STORM 2012-IV: Fitch Affirms 'BB' Rating on Class E Notes
R U S S I A
ALROSA OJSC: Fitch Raises LT Issuer Default Rating to 'BB'
NOMOS-BANK: Fitch Rates Senior Unsecured Bond Issue 'BB-'
UNITY RE: S&P Affirms 'BB' Counterparty Credit Rating
S P A I N
FAGOR: Files for Creditor Protection After Sales Decline
OBRASCON HUARTE: Moody's Lowers CFR to 'Ba3'; Outlook Stable
U N I T E D K I N G D O M
BROWNS COACHWORKS: Goes Into Administration
CATALYST HEALTHCARE: S&P Raises LT Issue Rating From 'BB+'
DUNFERMLINE ATHLETIC: Bought Out of Administration by Pars United
HONOURS SERIES 2: S&P Puts BB Rating on Cl. D Notes on Watch Neg.
INEOS GROUP: Shuts Grangemouth Plant Amid Union Dispute
LONDON & COUNTRY: SFP Called in as Administrators
SOHO HOUSE: S&P Assigns 'B-' Corp. Credit Rating; Outlook Stable
TITAN EUROPE: Moody's Lowers Rating on Class X Notes to 'Caa3'
WET N' WILD: In Administration, 70 Jobs at Risk
X X X X X X X X
* BOOK REVIEW: Bankruptcy Crimes
*********
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F R A N C E
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CASINO GUICHARD: S&P Assigns BB Rating to New Subordinated Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its 'BB'
rating to the proposed perpetual deeply subordinated notes to be
issued by France-based food retailer Casino Guichard - Perrachon
& Cie S.A.
The completion and size of the placement remain subject to market
conditions. S&P expects the bond to be benchmark size.
According to S&P's criteria, it classifies the perpetual deeply
subordinated notes as having "intermediate" equity content.
Therefore, in S&P's calculation of Casino's credit ratios, it
will treat 50% of the principal outstanding and accrued interest
under the notes as equity-like rather than debt-like.
S&P's assessment of the notes' "intermediate" equity content
reflects the following:
-- The notes are unsecured and deeply subordinated
instruments.
-- Casino has the option to defer coupon payment, and deferred
interest is cumulative and bears interests.
-- The notes have no maturity date, but S&P considers the
effective maturity date to be January 2039, when coupon
payments will increase by 275 basis points.
Therefore, S&P will no longer recognize the instrument as having
"intermediate" equity content after the first call date in 2019
because the remaining periods until the effective maturity would,
by then, be less than 20 years.
S&P may also revise its equity content assessment to "minimal" if
it has reason to believe that Casino is likely to redeem the
hybrid bond before its effective maturity. This would be the
case if S&P observed that the loss of the "intermediate" equity
content in January 2019 would cause the company to call the bond
without replacing it with a similar instrument. The issuer's
willingness to maintain or replace the instrument in the event of
a reclassification of equity content to minimal is underpinned by
its statement of intent. S&P could also revise the equity
content to "minimal" if it was to believe that a change in
Casino's financial policy may prompt the group to buy a
substantial amount of hybrid bonds in the open market.
In S&P's view, the issuer's option to defer payment on the
proposed securities is discretionary. However, any outstanding
deferred interest payment will have to be settled in cash if
Casino declares or pays an equity dividend or interest on equally
ranking securities, and if the group or its subsidiaries redeem
or repurchase shares or equally ranking securities. S&P sees
this as a negative factor. That said, this condition remains
acceptable under S&P's methodology because once the issuer has
settled the deferred amount, it can still choose to defer on the
next interest payment date.
As per S&P's criteria, the two-notch differential between its
'BB' rating on the proposed notes and its 'BBB-' corporate credit
rating on Casino is based on:
-- A one-notch differential for the proposed bonds'
subordination; and
-- A further one-notch differential for the optional
deferability of interest.
LANA PAPIERS: Exits Receivership, Sold to Lasse Brinck
------------------------------------------------------
Euwid Pulp and Paper reports that Lana Papiers Speciaux has
exited receivership and has been taken over by entrepreneur Lasse
Brinck.
The new managing director plans to focus on the production of
paper, labels and packaging containing security features for
luxury packaging, according to Euwid Pulp and Paper.
French Company Lana Papiers Speciaux has found a buyer. In an
official statement, Danish entrepreneur Lasse Brinck announced he
acquired the specialty paper manufacturer that had been in
receivership since January, the report notes. According to a
company spokesperson, the takeover had been completed on
October 8, the report discloses.
The report relays that Mr. Brinck said that Lana would continue
producing security, art, graphic and technical papers but would
further develop these sectors.
Mr. Brinck told EUWID he planned to focus more on the protection
of luxury products such as wine or perfume against forgery.
"Brand manufacturers find it more and more difficult to guarantee
the authenticity of their products since printed security
features can be imitated too easily . . . . That was why he
planned to insert security features into the paper itself. These
were much more difficult to copy," the report quoted Mr. Brinck
as saying.
The report notes that Lana operates two paper machines at its
site in Strasbourg, which have a combined production capacity of
15,000 tpy. According to the company, around 65 % of the
machines' capacity is currently utilized.
Lana has 59 employees, but Mr. Brinck aims to raise the number of
employees to 65 as soon as possible, the report adds.
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G E R M A N Y
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OPERA GERMANY: Fitch Affirms 'CCC' Rating on Two Note Classes
-------------------------------------------------------------
Fitch Ratings has downgraded Opera Germany (No. 2) p.l.c.'s CMBS
notes as follows:
EUR314.9m class A (XS0278492706) downgraded to 'BBsf' from
'Asf'; Outlook Negative
EUR46.8m class B (XS0278493001) downgraded to 'BBsf' from
'BBBsf'; Outlook Negative
EUR65.6m class C (XS0278493266) affirmed at 'Bsf'; Outlook
Negative
EUR63.7m class D (XS0278493340) affirmed at 'CCCsf'; Recovery
Estimate 'RE50%'
EUR9.4m class E (XS0278493423) affirmed at 'CCCsf'; 'RE0%'
Key Rating Drivers
The downgrade reflects the default at loan maturity on 15 October
2013 and the short one-year tail period following a restructuring
of the loan in 2009. The Negative Outlook is due to the
uncertainty relating to the possible refinancing or sale of the
assets during Q114.
Of the three remaining centers, the EUR252.4 million Rhein-Ruhr-
Zentrum (RRZ) and Schwannenmark (EUR51.6 million) have been
marketed since October 2011 in line with the December 2009
restructuring plan. The borrower is currently pursuing a
refinancing plan for these assets instead of an asset sale. Based
on information from the special servicer, the borrower has been
in contact with multiple lending institutions. Given the loan's
high leverage (86.6%) an equity injection seems unavoidable to
secure bank lending for these two assets.
Koe-Galerie's (EUR274.1 million) marketing process started a few
weeks back and the borrower has informed the special servicer of
preliminary bids for the asset. Marketing of the asset had been
kept back, awaiting for its refurbishment and re-letting plan to
reach an advanced stage. Although some new retail leases have
been signed, a large part of office space remains vacant. The
current letting situation, together with the increased
competition in retail and office space in Dusseldorf, will likely
complicate the sale of this asset or place pressure on the sales
price.
In order to redeem the class A notes, either a loan refinancing
or a sale of both the Koe-Galerie and RRZ are required. Whilst
the previous loan restructuring has been beneficial in preserving
value in the centres, it has led to a shortening of the tail
period to one year from three. Due to this, Fitch sees increasing
operational risks related to a timely asset sale prior to the
notes' legal final maturity in October 2014.
Given the average-to-good asset quality, Fitch believes the
special servicer, Hypothekenbank Frankfurt (Eurohypo), may find
the sponsor reticent to allow a collateral sale by October 2014
at a price substantially under current market value. Furthermore,
the controlling party (the most junior class of notes), as the
only party allowed to substitute the special servicer, is not
likely to be motivated to force a quick sale at a discount. This
brings further uncertainty over resolution timing.
Rating Sensitivities
Further downgrades may be triggered by continuous uncertainty
over the resolution plan in the next few months, in light of the
approaching legal final maturity of the notes.
TELE COLUMBUS GMBH: Cinven, CVC Capital in Acquisition Talks
------------------------------------------------------------
Eyk Henning and Archibald Preuschat at The Wall Street Journal
report that private-equity firms Cinven Group Ltd. and CVC
Capital Partners Ltd. are among several financial investors in
talks to buy closely held Tele Columbus GmbH, signaling fresh
interest among potential investors in further consolidating
Germany's smaller cable players.
According to the Journal, several people familiar with the matter
said that these buyers are considering fusing highly indebted
Tele Columbus with Primacom GmbH, a smaller, closely held rival.
Tele Columbus Chief Executive Ronny Verhelst said the company is
in "well advanced talks with several potential acquirers," and
that it hopes to conclude a sale by year-end. He declined to
comment on names of suitors.
Tele Columbus, with a subscriber base of around 2 million German
households, could be valued at about EUR600 million (US$813
million), the Journal says, citing to people familiar with the
matter. An attempt to sell Tele Columbus for slightly above
EUR600 million to its largest rival, Kabel Deutschland AG failed
earlier this year because of antitrust concerns, the Journal
recounts.
According to the Journal, people familiar with the matter said
that amid talks over Tele Columbus, Cinven and other financial
investors are also weighing the possibility of buying the smaller
Primacom at the same time. The people, as cited by the Journal,
said that the price tag for Primacom could range between EUR250
million and EUR400 million.
It is unclear, however, if such a one-two punch is feasible. Both
companies have complex shareholding structures, the Journal says.
According to the Journal, Tele Columbus, which is held by a
consortium of banks, has a complicated debt structure, including
senior and mezzanine debt, making a transaction more difficult.
Primacom's owners are a mix of banks and hedge funds, the Journal
notes.
Tele Columbus -- http://www.telecolumbus.de/-- is a cable TV,
Internet, and phone service provider. With more than 2 million
subscribers, Tele Columbus is among Germany's top cable providers
(behind Kabel Deutschland and Unitymedia). It offers analog and
digital cable, high-speed Internet, and cable telephone service.
Both Tele Columbus and PrimaCom are owned by holding company
Orion Cable; Tele Columbus has a presence across northern and
western Germany, while PrimaCom's customers are focused in the
eastern part of the country. Orion Cable is owned by a holding
company controlled by investment banking firm Nikolaus & Co.
Tele Columbus was founded in 1985.
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G R E E C E
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* GREECE: ECB Official Sees Additional Financing Needs
------------------------------------------------------
Matina Stevis at The Wall Street Journal reports that Greece will
need to pass fresh budget cuts next year to hit the targets set
by its international creditors, setting the stage for another
clash with Athens over how much austerity the country can bear.
European Central Bank executive board member Jorg Asmussen,
appointed last year from the German Finance Ministry, said
Greece's international creditors will need to do more to cover
the country's financing needs, starting from mid-2014, the
Journal relates. He put the figure at additional EUR5 billion to
EUR6 billion (US$6.8 billion to US$8.1 billion) -- the first time
a senior European official has stated such figures publicly,
although in line with earlier, unofficial estimates made by
others, the Journal discloses.
The Greek finance minister, Yannis Stournaras, conceded there was
a financing gap but denied that the government's budget plans had
strayed off track, the Journal notes. He said that Greece is
talking to euro zone capitals and the International Monetary Fund
to resolve the issue, but aren't discussing a third bailout -- on
top of the EUR240 billion that has already been pledged to
Athens, the Journal relays.
The additional financing needs -- beyond what was foreseen when
Greece's last bailout was designed -- relate to the approximately
EUR4.4 billion worth of Greek government bonds held by national
central banks in the euro zone, the Journal states.
According to the Journal, while a tacit understanding was in
place that they would allow those to roll over, alleviating
immediate pressure for cash on Athens, they have since said they
are no longer prepared to do that.
Greece's bailout, due to expire at the end of 2014, will now only
keep the government fully financed until mid-2014, the Journal
states.
Questions are also looming about whether Athens will need to pass
more politically unpopular austerity measures, the Journal says.
Mr. Stournaras flatly rejected the claim that there is a
"significant fiscal gap" in the country's 2014 budget, and told
reporters that Mr. Asmussen didn't repeat this claim inside the
meeting, the Journal recounts.
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I C E L A N D
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HOUSING FINANCING: Operations Not Sustainable, FSA Director Says
----------------------------------------------------------------
Omar R. Valdimarsson at Bloomberg News reports that the
operations of Iceland's Housing Financing Fund aren't sustainable
and the government now needs to recognize the lender's accrued
losses.
"The business model isn't sustainable -- that's something that
has to be faced," Bloomberg quotes Unnur Gunnarsdottir, director
general of the Reykjavik-based Financial Supervisory Authority,
as saying in an interview. "The fund's legacy problems and
unrealized debts are huge and HFF's business model won't be able
to counter the losses over time."
The government has been struggling to find a solution for HFF,
which is near insolvency as homeowners strain to repay loans and
the lender loses business to commercial banks, Bloomberg relates.
Landsbankinn hf, Iceland's largest lender, estimated in June that
it may cost the Treasury ISK100 billion (US$825 million) to save
HFF, Bloomberg relays.
The lender saw its capital adequacy ratio fall to 2.5% at the end
of June, based on a loan portfolio of ISK777 billion, Bloomberg
discloses. In August, 8.6% of HFF's home loans were in default
as the shock of Iceland's 2008 collapse continues to reverberate
through the US$14 billion economy, Bloomberg recounts. The
nominal value of HFF's bonds, which are guaranteed by Iceland,
was ISK495.9 billion in August, Bloomberg states.
Bloomberg relates that the government this month said HFF was
"its weakest link," and estimated it will have to inject
ISK9 billion through 2015 to keep the lender afloat. That's on
top of ISK46 billion provided to HFF since 2009, Bloomberg notes.
HFF lost about ISK3 billion in the first half of this year,
Bloomberg discloses. Bloomberg notes that Mr. Gunnarsdottir said
the FSA estimates that HFF will need about ISK11.5 billion just
to meet its 5 percent capital adequacy ratio requirement.
"We don't see that some sort of restructuring of the fund will
suffice to stop the losses," Mr. Gunnarsdottir, as cited by
Bloomberg, said. "It's unavoidable that the cost will be
shouldered by taxpayers."
Housing Financing Fund is Iceland's biggest mortgage bank.
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I R E L A N D
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DAG WELDS: Goes Into Receivership, Closes Doors
-----------------------------------------------
Leinster Leader reports that an iconic rural West Kildare pub
with links to one of Ireland's most prominent families has been
placed in receivership.
Dag Welds, located at what is formally known as Blackwood Cross,
but informally known simply as 'Dags' closed its doors some weeks
ago, according to Leinster Leader.
The report relates that the company behind the pub, Blackwood
Taverns, lodged documents with the Company Registration Office on
September 23 indicating the appointment of a receiver to the
company.
Dag Welds was established by the owner of the same name, Dag
(David) Weld - a relative of county councilors Brendan and the
late Charlie.
The report discloses that the establishment of bar facilities at
Woodlands Golf Club on the outskirts of Coill Dubh, took some
business but that company has had its own problems, having gone
into receivership during the summer.
RMF EURO IV: Moody's Affirms Ba1 Rating on EUR12.6MM Cl. V Notes
----------------------------------------------------------------
Moody's Investors Service has upgraded the rating of the
following notes issued by RMF Euro CDO IV PLC:
EUR39.3M Class II Senior Secured Floating Rate Notes, due
2022, Upgraded to Aaa (sf); previously on Nov 30, 2012
Upgraded to Aa1 (sf)
EUR15.3M Class III Deferrable Mezzanine Floating Rate Notes,
due 2022, Upgraded to Aa2 (sf); previously on Nov 30, 2012
Upgraded to A1 (sf)
Moody's also affirmed the ratings of the following notes:
EUR310.2M (current outstanding balance of EUR171.8M) Class I
Senior Secured Floating Rate Notes, due 2022, Affirmed Aaa
(sf); previously on Nov 30, 2012 Upgraded to Aaa (sf)
EUR21.6M Class IV-A Deferrable Mezzanine Floating Rate Notes,
due 2022, Affirmed Baa2 (sf); previously on Nov 30, 2012
Upgraded to Baa2 (sf)
EUR3.5M Class IV-B Deferrable Mezzanine Fixed Rate Notes, due
2022, Affirmed Baa2 (sf); previously on Nov 30, 2012 Upgraded
to Baa2 (sf)
EUR12.6M Class V Deferrable Mezzanine Floating Rate Notes,
due 2022, Affirmed Ba1 (sf); previously on Nov 30, 2012
Upgraded to Ba1 (sf)
RMF Euro CDO IV PLC, issued in May 2006, is a Collateralised Loan
Obligation ("CLO") backed by a portfolio of mostly high yield
senior secured European and US loans, managed by Pemba Credit
Advisers. This transaction ended its reinvestment period in May
2012.
Ratings Rationale:
According to Moody's, the upgrade actions taken on the Class II
and III notes are primarily a result of significant amortization
of the Class I notes and subsequent improvement of the senior
overcollateralization ratio as well as the improvement in the
credit quality of underlying collateral pool since the last
rating action in November 2012.
Moody's notes that the Class I notes have been paid down by
approximately 44.6% or EUR138.4 million since closing and 38.3%
or EUR118.8 million since the last rating action in November
2012. Furthermore, EUR 65.9 million of principal proceeds was
applied to paydown the Class I note on the payment date in
September 2013. As a result of the deleveraging, the
overcollateralization ratios have increased. Moody's has taken
such payment (not yet reflected in the Trustee reported OC
levels) into account in rating actions. As of the latest trustee
report in September 2013, the Class I/II, III, IV and V
overcollateralization ratios are reported at 126.6%, 120.0%,
110.5% and 106.3%, respectively, compared to 123.3%, 117.8%,
109.8% and 106.2% in the October 2012 report upon which the last
rating action was based. All overcollateralization tests are
currently in compliance.
Improvement in the credit quality is observed through a better
average credit rating of the portfolio (as measured by the
weighted average rating factor "WARF") and a decrease in the
proportion of securities from issuers rated Caa1 and below. In
particular, as of the latest trustee report in September 2013,
the WARF is 2744 compared to 2858 in the October 2012 report upon
which the last rating action was based. Securities rated Caa1 or
lower currently make up approximately 5.0% of the underlying
portfolio versus 10.9% in October 2012.
Moody's notes that the key model inputs used by Moody's in its
analysis, such as par, weighted average rating factor, diversity
score, and weighted average recovery rate, are based on its
published methodology and may be different from the trustee's
reported numbers. In its base case, Moody's analyzed the
underlying collateral pool to have a performing par and principal
proceeds balance of EUR282.3 million, defaulted par of EUR24.4
million, a weighted average default probability of 20.8%
(consistent with a WARF of 2852), a weighted average recovery
rate upon default of 46.0% for a Aaa liability target rating, a
diversity score of 31 and a weighted average spread of 4.3%. The
default probability is derived from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The average recovery rate to be realized on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating,
Moody's assumed that 88.7% of the portfolio exposed to first lien
senior secured corporate assets would recover 50% upon default,
while the remainder non first-lien loan corporate assets would
recover 15%. In each case, historical and market performance
trends and collateral manager latitude for trading the collateral
are also relevant factors. These default and recovery properties
of the collateral pool are incorporated in cash flow model
analysis where they are subject to stresses as a function of the
target rating of each CLO liability being reviewed.
In addition to the base case analysis described above, Moody's
also performed sensitivity analyses on key parameters for the
rated notes: Deterioration of credit quality to address the
refinancing and sovereign risks -- approximately 10.6% of the
portfolio are European corporate rated B3 and below and maturing
between 2014 and 2016, which may create challenges for issuers to
refinance. Approximately 8.92% of the portfolio are exposed to
obligors located in Ireland, Spain and Italy. Moody's considered
a model run where the base case WARF was increased to 3284 by
forcing ratings on 25% of such exposure to Ca. This run generated
model outputs that were within one notch from the base case
results.
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 1) uncertainties of credit
conditions in the general economy and 2) the large concentration
of lowly rated debt maturing between 2014 and 2016 which may
create challenges for issuers to refinance. CLO notes'
performance may also be impacted either positively or negatively
by 1) the manager's investment strategy and behavior and 2)
divergence in legal interpretation of CDO documentation by
different transactional parties due to embedded ambiguities.
Sources of additional performance uncertainties are described
below:
1) Portfolio amortization: The main source of uncertainty in this
transaction is the pace of amortization of the underlying
portfolio. Pace of amortization could vary significantly subject
to market conditions and this may have a significant impact on
the notes' ratings. In particular, amortization could accelerate
as a consequence of high levels of prepayments in the loan market
or collateral sales by the Collateral Manager or be delayed by
rising loan amend-and-extend restructurings. Fast amortization
would usually benefit the ratings of the senior notes but may
negatively impact the mezzanine and junior notes.
2) Moody's also notes that around 37.9% of the collateral pool
consists of debt obligations whose credit quality has been
assessed through Moody's credit estimates. Large single exposures
to obligors bearing a credit estimate have been subject to a
stress applicable to concentrated pools as per the report titled
"Updated Approach to the Usage of Credit Estimates in Rated
Transactions" published in October 2009.
3) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to be
defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility in
market prices. Realization of higher than expected recoveries
would positively impact the ratings of the notes.
Moody's modelled the transaction using the Binomial Expansion
Technique.
Under this methodology, Moody's used its Binomial Expansion
Technique, whereby the pool is represented by independent
identical assets, the number of which is being determined by the
diversity score of the portfolio. The default and recovery
properties of the collateral pool are incorporated in a cash flow
model where the default probabilities are subject to stresses as
a function of the target rating of each CLO liability being
reviewed. The default probability range is derived from the
credit quality of the collateral pool, and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority of the assets in the collateral pool.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's CDOEdge
model.
This model was used to represent the cash flows and determine the
loss for each tranche. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario; and (ii) the loss derived from the cash flow
model in each default scenario for each tranche.
As such, Moody's analysis encompasses the assessment of stressed
scenarios.
In addition to the quantitative factors that are explicitly
modelled, 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.
On August 14, 2013, Moody's released a report, which describes
how Moody's proposes to incorporate/assess the additional credit
risk of exposures domiciled in countries with country ceilings
that are single A or lower when rating CLO tranches that carry
ratings higher than those ceilings. See Request for Comment:
"Moody's Approach to Capturing Country Risk in CLOs" published in
August 2013.
* IRELAND: Bailout Exit Hinges on Bank Stress Test Outcome
----------------------------------------------------------
Suzanne Lynch and Simon Carswell at The Irish Times report that
Ireland's ambitions to exit its bailout without having to take a
precautionary credit line from the European Union and the
International Monetary Fund may be stymied by European concerns
about the strength of the Irish banks.
Taoiseach Enda Kenny said last weekend that Ireland would exit
its three-year bailout on December 15, The Irish Times discloses.
Having indicated in June its intention to seek a precautionary
credit line to ease its passage back to full private market
funding, Ireland may now seek to exit the program unaided, The
Irish Times states. Any credit line would come with conditions
similar to those that applied during the bailout and undermine
claims Ireland has regained economic sovereignty, The Irish Times
notes.
According to The Irish Times, euro zone sources have made it
clear that any decision on an exit strategy for Ireland will be
predicated on the outcome of bank stress tests which are being
undertaken by the Irish Central Bank.
Balance sheet assessments of AIB, Bank of Ireland and Permanent
TSB have been ongoing since late summer and must be submitted to
Brussels and Frankfurt by the end of this month, The Irish Times
says. These reviews will feed into Europe-wide stress tests next
year in preparation for the European Central Bank assuming the
role of supervisor of euro zone banks, The Irish Times stats.
However, the balance sheet assessments will also be scrutinized
by euro zone authorities next month when discussions on an exit
strategy for Ireland are expected to intensify, The Irish Times
notes. According to The Irish Times, one senior euro zone
official said "clarity" on the Irish banks was needed.
Dublin is expected to argue the State is well-funded to deal with
any potential capital issues from its own resources, The Irish
Times relays. It wants any negotiations on a precautionary
credit line to be decoupled from the Irish bank stress tests, and
is expected to reiterate that the review of the bank loans should
run in line with the Europe-wide stress tests, according to The
Irish Times.
The Irish Times relates that ECB president Mario Draghi declined
to comment on whether Ireland would require a precautionary
credit line as it was "just being discussed by the relevant
authorities."
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I T A L Y
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ALITALIA SPA: Needs to Obtain EU Approval for Capital Increase
--------------------------------------------------------------
Alex Barker, Andrew Parker and Giulia Segreti at The Financial
Times report that the European Commission on Monday warned Italy
to seek its approval before pressing ahead with a proposed EUR300
million capital increase for Alitalia involving the country's
state-owned postal services group.
Brussels' statement came after International Airlines Group urged
the commission to stop Alitalia benefiting from a capital
injection by Poste Italiane, the FT notes.
"We have always been opposed to state aid . . . We would urge
and expect the European Commission to take interim measures to
suspend this manifestly illegal aid," the FT quotes
IAG, parent of British Airways, as saying.
According to the FT, Brussels is now expected to examine
Alitalia's proposed capital increase involving Poste Italiane, to
assess whether it complies with EU rules restricting state
support to companies. Alitalia's board on Oct. 11 approved a
EUR300 million capital increase -- in which Poste Italiane could
contribute up to EUR75 million, the FT relates.
Italy has yet to approach the commission, even informally, to
discuss the Alitalia situation, but Brussels wants Italy to apply
for permission for the capital increase before it happens, the FT
states.
Brussels, as cited by the FT, said: "We expect Italian
authorities to notify the envisaged measure to the European
Commission. Only after receiving the notification will we be able
to assess its compatibility with EU state aid rules."
In the event of a probe, Brussels would examine whether the
proposed Post Italiane investment was imputable to the state, the
FT says. If the capital injection is not executed on the same
terms as a private investor, the intervention is classed as state
aid and subject to Brussels' approval, according to the FT.
Italy Optimistic on Rescue Plan
Reuters reports that Italy's transport minister Maurizio Lupi on
Wednesday said it does not believe a government-sponsored rescue
plan for loss-making airline Alitalia will fall foul of European
state aid rules.
"We are absolutely certain of our reasons. We do not have to
justify our actions but rather explain them. I believe the
European Union will share our view," Reuters quotes Mr. Lupi as
saying.
According to Reuters, Mr. Lupi said the Italian government had
identified air transport as a strategic sector and asked private
investors to share the burden in the re-launch of Alitalia, which
has been unable to turn a profit for more than a decade and was
only rescued from imminent bankruptcy in 2008.
About Alitalia
Alitalia-Compagnia Aerea Italiana has navigated its way through
a successful restructuring. After filing for bankruptcy
protection in 2008, Alitalia found additional investors, acquired
rival airline Air One, and re-emerged as Italy's leading airline
in early 2009. Operating a fleet of about 150 aircraft, the
airline now serves more than 75 national and international
destinations from hubs in Fiumicino (Rome), Milan, Turin, Venice,
Naples, and Catania. Alitalia extends its network as a member of
the SkyTeam code-sharing and marketing alliance, which also
includes Air France, Delta Air Lines, and KLM. An Italian
investor group owns a majority of the company, while Air France-
KLM owns 25%.
CATENE D'ITALIA: Goes Into Receivership, Seeks Buyer
----------------------------------------------------
Jeweller News reports that Catene d'Italia, a specialist
manufacturer and supplier of gold and silver chains, has been
placed into receivership.
Michael Basedow, principal at Pitcher Partners, has been
appointed receiver and manager.
Mr. Basedow is attempting to sell the business as a going
concern, which includes significant plant and equipment, all
intellectual property and customer database with an option to
purchase existing stock including gold and silver chains and
other jewelry, according to Jeweller News.
The report notes that while there is no indication of the current
predicament on the Catene d'Italia's website, phone calls to the
office are answered with a message advising the company was
placed into official receivership on September 17, 2013, and
directs all callers to Pitcher Partners' Adelaide office. The
report relates that it's understood that more than 10 staff have
been placed on annual leave and may lose their jobs if a buyer is
not found.
Expressions of interest close November 6.
Catene d'Italia, well-known for its crosses, crucifixes and
pendant jewellery, as well as bangles and bracelets, began in
Italy in 1972 but shifted its manufacturing operations to
Adelaide in 1988.
=================
L I T H U A N I A
=================
UKIO BANKO: Bankruptcy Administrators Set to Take Control
---------------------------------------------------------
Alan Temple and Alan Pattullo at The Scotsman report that hopes
that Hearts of Midlothian can emerge from administration by the
end of the year have been buoyed by the news that former majority
shareholder Ukio Banko Investicine Grupe (Ubig) are set to be
formally declared bankrupt.
According to The Scotsman, a hearing is scheduled to take place
on Oct. 24 at Kaunas District Court, during which it is expected
that bankruptcy administrators will be placed in control of the
firm's assets.
The administration process at Hearts has been in limbo for
several weeks because BDO, the financial experts in control at
Tynecastle, are unable to negotiate with Ubig until
administrators are appointed, The Scotsman notes. BDO, The
Scotsman says, require Ubig's 50% shareholding in the club, along
with Ukio Bankas's 29.9% stake and the ownership of Tynecastle
Stadium, if they are to oversee a successful company voluntary
arrangement (CVA) and sell the club to the fans' group Foundation
of Hearts.
"The Court decided to re-open examination of the case, assign
three judges and set the case hearing on October 24," The
Scotsman quotes Gintaris Adomonis of Valnetas UAB, who are
overseeing the administration procedure at Ukio Bankas, as saying
to STV News on Wednesday night.
"Nothing can be done to speed up the procedure and we need to
wait for the final decision. We expect that the administrator to
Ubig shall be appointed on 24th of October."
Representatives from FoH were remaining cautiously optimistic on
Wednesday night following previous postponements of court dates,
The Scotsman notes. However, should the case proceed as planned
in Lithuania, then it marks a hugely significant step in Hearts'
efforts to emerge from administration, The Scotsman states.
"If it does happen, then it means that the assets of Ubig are
able to be dealt with and the offer that is on the table on
behalf of the Foundation in terms of 79.9% of the club's assets
comes into play," The Scotsman quotes FoH chairman and Edinburgh
South MP Ian Murray as saying.
"Our offer is obviously conditional of getting the majority
shareholding. Until the Ubig situation is resolved we are unable
to determine the shape of the majority shareholding. Now that is
looking like it will be resolved we can get on with talking about
how we can get hold of it."
=====================
N E T H E R L A N D S
=====================
EURO-GALAXY II: S&P Affirms 'CCC+' Rating on Class E Notes
----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
Euro-Galaxy II CLO B.V.'s class A, B, C, D, and E notes.
The rating actions follow S&P's assessment of the transaction's
performance, using data from the August 30, 2013 trustee report,
and the application of its relevant criteria.
Since S&P's Sept. 19, 2012 review, it has observed an increase in
the weighted-average spread earned on the collateral pool to
4.13% from 3.94%. The transaction's weighted-average life has
increased to 4.53 years from 4.39 years over the same period.
S&P has also observed that the proportion of assets that it
considers to be rated in the 'CCC' category ('CCC+', 'CCC', and
'CCC-') and assets that S&P considers to be defaulted (assets
rated 'CC', 'C', 'SD' [selective default], and 'D') have
increased in notional and percentage terms.
Additionally, the transaction's exposure to lower-rated
sovereigns is lower than 10%. According to S&P's nonsovereign
ratings criteria, this does not constrain the highest rating that
S&P can assign to the notes. Under S&P's criteria, it do not
give credit to assets that represent more than 10% of the
collateral pool and which are domiciled in sovereigns rated six
notches below S&P's ratings on the notes.
The class A/B, C, and D par value tests comply with the required
triggers under the transaction documents. However, the class E
par value and the interest reinvestment tests do not comply with
the required triggers.
"We have observed that available credit enhancement has decreased
for all classes of notes. In our view, this is a result of the
reduced aggregate collateral balance, which has decreased to
EUR384.244 million from EUR388.540 million since our September
2012 review. This reduction is greater than the class E notes'
partial amortization. Since our 2012 review, the class E notes'
balance has decreased by EUR1.64 million, resulting in a current
outstanding aggregate balance of 91.55% of its original balance.
Interest proceeds were used to partially amortize the class E
notes after the transaction breached its interest reinvestment
test on the April 2013 payment date," S&P said.
In S&P's analysis, it has also considered that Euro-Galaxy II CLO
is still in its reinvestment period, which will end in October
2014. S&P therefore considered a scenario where the
EUR35.7 million of available cash for this transaction will be
fully reinvested.
S&P subjected the capital structure to its cash flow analysis, by
applying its 2009 corporate cash flow collateralized debt
obligation (CDO) criteria, to determine the break-even default
rate (BDR) at each rating level. S&P used the reported portfolio
balance that it considered to be performing, the principal cash
balance, the weighted-average spread, and the weighted-average
recovery rates that S&P considered to be appropriate.
S&P incorporated various cash flow stress scenarios, using
various default patterns, levels, and timings for each liability
rating category, in conjunction with different interest rate
stress scenarios. To help assess the collateral pool's credit
risk, S&P used CDO Evaluator 6.0.1 to generate scenario default
rates (SDRs) at each rating level. S&P then compared these SDRs
with their respective BDRs.
Taking into account S&P's observations, it considers that the
application of the largest obligor test, a supplemental stress
test that S&P introduced in its 2009 corporate cash flow CDO
criteria, constrains its ratings on the class C, D, and E notes.
Although the results of S&P's cash flow analysis suggest higher
ratings for these classes of notes, it has affirmed its 'BBB+
(sf)' rating on the class C notes, its 'BB+ (sf)' rating on the
class D notes, and its 'CCC+ (sf)' rating on the class E notes.
Based on S&P's counterparty analysis, it has concluded that the
transaction documents for the derivative counterparties--Morgan
Stanley & Co. International PLC (A/Negative/A-1)--do not fully
comply with its current counterparty criteria. As a result,
S&P's current counterparty criteria constrain its maximum
potential ratings in this transaction to one notch above its
long-term issuer credit ratings on the derivative counterparties.
However, this does not apply if the available credit enhancement
for the class of notes in question is sufficient to support
higher ratings, after adjusting the pool balance in accordance
with S&P's current counterparty criteria.
S&P's ratings on the class A and B notes reflect its opinion of
the available credit enhancement after its adjusted the aggregate
pool balance, in accordance with its current counterparty
criteria, and conducted its credit and cash flow analysis. In
S&P's opinion, the available credit enhancement for these classes
of notes is commensurate with the currently assigned ratings.
S&P has therefore affirmed its 'AA+ (sf)' rating on the class A
notes and its 'AA- (sf)' rating on the class B notes.
Euro-Galaxy II CLO is a cash flow collateralized loan obligation
(CLO) transaction that securitizes loans to primarily
speculative-grade corporate firms. The transaction closed in
August 2007.
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
Euro-Galaxy II CLO B.V.
EUR415 Million Senior Secured Floating-Rate Notes
Ratings Affirmed
A AA+ (sf)
B AA- (sf)
C BBB+ (sf)
D BB+ (sf)
E CCC+ (sf)
GRESHAM CAPITAL: S&P Lowers Rating on Class F Notes to 'CCC+'
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Gresham Capital CLO III B.V.'s class A-1E, A-1S, A-1R, A-2, B, C,
D, and E notes. At the same time, S&P has lowered its rating on
the class F notes.
The rating actions follow S&P's assessment of the transaction's
performance using data from the Sept. 3, 2013 trustee report and
its application of relevant criteria for transactions of this
type.
S&P subjected the capital structure to its cash flow analysis to
determine the break-even default rate (BDR) for each class of
notes at each rating level. In S&P's analysis, it used the
reported portfolio balance that it consider to be performing
(EUR384,332,313), the current weighted-average spread (3.75%),
and the weighted-average recovery rates that S&P considered
appropriate. S&P incorporated various cash flow stress scenarios
using alternative default patterns and levels, in conjunction
with different interest and currency stress scenarios.
The class A-1E, A-1S, and A-1R notes have paid down further since
S&P's Sept. 19, 2012 review. The current notional balances now
stand at approximately 50% of their initial notional balances.
The amortization of these senior classes has increased the
available credit enhancement and the overcollateralization ratio
tests for all classes of notes. Additionally, S&P has observed
an increase in the weighted-average spread. These factors have
led to an increase in the BDR at each tranche rating level.
Since S&P's previous review, the portfolio's overall credit
quality has slightly improved and the transaction's weighted-
average life has remained stable, which has led to a small
decrease in the scenario default rates (SDRs) that S&P observe at
each rating level.
The class A-1S notes are denominated in British pound sterling
and the class A-1R notes may be drawn in various permitted
currencies. The class A-1R notes are currently drawn in euros,
sterling, U.S. dollars, and Australian dollars. Accordingly, the
assets purchased with these drawings are denominated in various
currencies. Of the portfolio, 25% comprises of non-euro-
denominated assets.
"To mitigate the risk of foreign-exchange-related losses, the
issuer has entered into currency options agreements with Barclays
Bank PLC (A/Stable/A-1) as a counterparty. Under our current
counterparty criteria, our analysis of the derivative
counterparty and the associated documentation indicates that it
cannot support ratings on the notes that are rated higher than
'A+ (sf)'. To assess the potential effect on our ratings, we
have assumed that the transaction does not benefit from the
currency options agreements. We concluded that, in this
scenario, the class A-1E, A-1R, A-1S, and A-2 notes would be able
to achieve a 'AAA (sf)' rating, the class B notes a 'AA+ (sf)'
rating, and the class C notes a 'AA (sf)' rating. We have
therefore raised our ratings on these classes of notes," S&P
said.
The results of S&P's credit and cash flow analysis indicate that
the available credit enhancement for the class D and E notes is
now commensurate with higher ratings. S&P has therefore raised
its ratings on these classes of notes.
Following a reduction in the aggregate collateral balance, the
application of the largest obligor test constrains at 'CCC+ (sf)'
S&P's rating on the class F notes. This is a supplemental stress
test that S&P introduced in its 2009 corporate collateralized
debt obligations criteria. Therefore, S&P has lowered to 'CCC+
(sf)' from 'B- (sf)' its rating on the class F notes.
Gresham Capital CLO III is a cash flow collateralized loan
obligation (CLO) transaction that securitizes loans to primarily
speculative-grade corporate firms. This transaction reached the
end of its reinvestment period in March 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 Rating
To From
Gresham Capital CLO III B.V.
EUR540 Million, œ41 Million Secured Floating-Rate Notes
Ratings Raised
A-1E AAA (sf) AA+ (sf)
A-1S AAA (sf) AA+ (sf)
A-1R AAA (sf) AA+ (sf)
A-2 AAA (sf) AA (sf)
B AA+ (sf) AA- (sf)
C AA (sf) A (sf)
D A+ (sf) BBB (sf)
E BB+ (sf) BB- (sf)
Rating Lowered
F CCC+ (sf) B- (sf)
D BB
STORM 2012-IV: Fitch Affirms 'BB' Rating on Class E Notes
---------------------------------------------------------
Fitch Ratings has affirmed Storm 2012-IV B.V. and Storm 2012-V
B.V., as follows:
Storm 2012-IV B.V
Class A1 (ISIN XS0815105043) affirmed at 'AAAsf'; Outlook Stable
Class A2 (ISIN XS0815105472) affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN XS0815105985) affirmed at 'AA-sf'; Outlook Stable
Class C (ISIN XS0815106108) affirmed at 'BBB+sf'; Outlook Stable
Class D (ISIN XS0815106520) affirmed at BB+sf'; Outlook Stable
Class E (ISIN XS0815107098) affirmed at 'BBsf'; Outlook Stable
Storm 2012-V B.V
Class A (ISIN XS0835845560) affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN XS0835850560) affirmed at 'AA-sf'; Outlook Stable
Class C (ISIN XS0835858118) affirmed at 'BBB+sf'; Outlook Stable
Class D (ISIN XS0835859272) affirmed at BB+sf'; Outlook Stable
Class E (ISIN XS0835860106) affirmed at 'BBsf'; Outlook Stable
Key Rating Drivers
Asset Performance within Expectations
As of July 2013, the portion of arrears by more than three months
as a percentage of the outstanding collateral balance stood at
0.14% in Storm 2012-IV and 0.17% in Storm 2012-V. In addition,
the number of foreclosures remains limited to date with the
proportion of cumulative defaults as a percentage of initial
balance at just 0.11% in both transactions. The affirmations
reflect the solid performance of the underlying assets in both
transactions.
Sufficient Credit Enhancement
The reserve funds, which were underfunded at the close of both
deals have now reached their targeted levels by trapping excess
spread. This has boosted the credit support available for the
rated notes and therefore the notes have been affirmed.
Rating Sensitivities
Home price declines beyond Fitch's expectations could have a
negative effect on the ratings as this would limit recoveries,
putting additional stress on portfolio cash flows.
===========
R U S S I A
===========
ALROSA OJSC: Fitch Raises LT Issuer Default Rating to 'BB'
----------------------------------------------------------
Fitch Ratings has upgraded Russian diamond producer OJSC ALROSA's
(ALROSA) Long-term Issuer Default Rating (IDR) and senior
unsecured rating to 'BB' from 'BB-'. The Outlook on the Long-term
IDR is Stable. ALROSA's Short-term IDR is affirmed at 'B'.
The upgrade reflects Fitch's expectations that ALROSA would
deleverage using proceeds from the sale of its gas assets to OJSC
OC Rosneft (Rosneft, BBB/RWN). The assets (100% interest in CJSC
Geotransgaz, Urengoy Gas Company LLC, CJSC Irelyakhneft and 99.9%
interest in OJSC ALROSA-Gas) would be sold for US$1.38 billion in
cash.
Key Rating Drivers
Leverage to Fall
ALROSA plans to use the sale proceeds to repay short-term
borrowings, which Fitch estimates would reduce funds from
operations (FFO) adjusted gross leverage to 2.0x by end-2013 from
2.4x at end-2012. It will also contribute to an improvement in
the company's liquidity position. Sale of the non-core assets
will allow ALROSA to focus on the development of its core diamond
mining operations in the Republic of Sakha (Yakutia; BBB-
/Stable).
Significant Scale
ALROSA is the world's largest rough diamond producer by volume
with a strong reserve base. The company has more than 973 million
carats of resources, indicating an average mine life of more than
30 years.
State Support
Fitch assesses ALROSA's linkages with its controlling
shareholder, the Russian Federation (BBB/Stable), as firm, which
provides a one-notch uplift to the company's standalone rating of
'BB-'. State support during 2008-2009 included the purchase of
diamonds via the Russian State Depository for Precious Metals and
Stones, plus financing provided via state-owned Bank VTB (JSC)
(BBB/Negative).
The planned sale of a 16% stake in Q413 within a public offering
will be neutral on the company's ratings, as the Russian
Federation and the Republic of Sakha will remain joint
controlling shareholders of the company.
Increasing Cash Costs
Like other mining companies in Russia, ALROSA faces higher mining
cost inflation than general inflation. An expected increase in
the proportion of underground mining will also negatively affect
average cash mining costs.
Rating Constraints
ALROSA's lack of product diversification and its exposure to the
cyclical diamond market are rating constraints. In addition, the
company is exposed to Russia's higher-than-average political,
business and regulatory risks.
Rating Sensitivities:
Positive: Future developments that could lead to positive rating
actions include:
-- FFO adjusted gross leverage sustained below 2.0x together
with positive free cash flow generation
Negative: Future developments that could lead to negative rating
action include:
-- Inability to roll over maturing debt and attract new
financing to meet debt obligations
-- Reduction of support from the Russian Federation
-- FFO adjusted gross leverage above 3.0x on a sustained basis
-- EBITDAR margin below 20% (41.9% in FY12)
NOMOS-BANK: Fitch Rates Senior Unsecured Bond Issue 'BB-'
---------------------------------------------------------
Fitch Ratings has assigned NOMOS-Bank's (Nomos) RUB7bn senior
unsecured fixed-rate exchange bond issue (BO-6 series), with a
final maturity on Oct. 8, 2016 and a put option after one year, a
Long-term rating of 'BB-' and National Long-term Rating of
'A+(rus)'.
Key Rating Drivers
The issue's ratings are driven by Nomos' Long-term local currency
Issuer Default Ratings (IDRs) of 'BB-' with a Negative Outlook
and a National Long-term Rating of 'A+(rus)' with a Negative
Outlook.
These in turn reflect Nomos' material related party and
relationship exposures following the takeover by Otkritie
Financial Corporation (OFC), and significant contingent risks
resulting from high overall group leverage. However, the ratings
continue to be supported by the bank's sound performance, low
level of non-performing loans (NPLs) and generally adequate
liquidity. The Negative Outlook reflects the potential for the
ratings to be downgraded further if OFC is unable to raise equity
to reduce its leverage, and Nomos's balance sheet is further
weakened by the need to support OFC or other group entities.
Rating Sensitivities
Downward pressure on Nomos' Long-term IDRs, and consequently the
issue's ratings, could arise if OFC is unable to raise equity to
reduce group leverage, and Nomos's balance sheet is further
weakened by the need to support OFC or other group entities. A
further material increase in higher-risk related party or
relationship lending, or general continued rapid loan growth,
resulting in lower capital ratios, could also result in a
downgrade. A reduction in group leverage and related party
exposures would help the ratings to stabilize at their current
levels.
UNITY RE: S&P Affirms 'BB' Counterparty Credit Rating
-----------------------------------------------------
Standard & Poor's Ratings Services said it had affirmed its 'BB'
insurer financial strength and counterparty credit ratings and
'ruAA' Russia national scale rating on Russia-based reinsurer
Unity Re. The ratings were subsequently withdrawn at the
issuer's request. The outlook was stable at the time of
withdrawal.
=========
S P A I N
=========
FAGOR: Files for Creditor Protection After Sales Decline
--------------------------------------------------------
Clare Kane at Reuters reports that Fagor filed for protection
from creditors while it tries to refinance its debt, the company
said on Wednesday, after suffering a prolonged period of falling
sales.
According to Reuters, Fagor said in a statement it had begun
"negotiations with creditors to reach a refinancing agreement to
guarantee its financial stability."
Under Spanish bankruptcy rules, it has four months to reach a
deal, Reuters says. Its total debt has risen to EUR1.1 billion
(US$1.5 billion) according to Thomson Reuters data.
The company, which says it is the fifth largest electrical
appliance company in Europe, started warning of liquidity
problems in 2009, Reuters recounts.
Fagor's annual sales of EUR1.17 billion in 2012 are down by a
third since 2007, the year that a decade-long real estate bubble
in Spain came to an abrupt end, triggering five years of economic
recession or stagnation, Reuters discloses.
The company had 5,642 employees as of June 30, Reuters notes.
Fagor is a Spanish consumer appliance company.
OBRASCON HUARTE: Moody's Lowers CFR to 'Ba3'; Outlook Stable
------------------------------------------------------------
Moody's Investors Service has downgraded to Ba3 from Ba2 the
corporate family rating (CFR) and senior unsecured debt ratings
of Obrascon Huarte Lain S.A. ("OHL"). OHL's senior unsecured
ratings have a loss given default (LGD) assessment of LGD4 (50%).
Concurrently, Moody's has downgraded to Ba3-PD from Ba2-PD OHL's
probability of default rating (PDR). The outlook on the ratings
is stable.
Ratings Rationale:
"The downgrade primarily reflects OHL's lack of material progress
in reducing leverage and improving credit metrics to levels
consistent with the previous Ba2 rating," says Ivan Palacios, a
Moody's Vice President - Senior Credit Officer and lead analyst
for OHL.
"The reduction in consolidated and recourse debt achieved by OHL
in Q4 2012 has proved to be only temporary, given that shortly
afterwards, the company increased leverage again to pursue its
strategic objectives, such as raising its equity stake in Abertis
to 18.9%," adds Mr. Palacios.
As of Q2 2013, OHL materially exceeded the leverage levels
required for the Ba2 rating category, with net recourse
debt/recourse EBITDA at 5.4x (vs. guidance for the Ba2 rating of
less than 3.0x), and gross recourse debt/recourse EBITDA of 7.1x
(vs. guidance for Ba2 of less than 4.0x). Note that Moody's
defines recourse EBITDA as consolidated EBITDA less Concessions
EBITDA. In Q2 2013, the company's net adjusted consolidated
debt/EBITDA stood at 5.1x (vs. guidance for Ba2 of less than
5.0x) and it would be even higher if Moody's stripped out the
"non-cash" EBITDA derived from the guaranteed returns from the
company's main Mexican concessions.
The downgrade also reflects the company's strategy of re-
leveraging assets at their maximum capacity in order to raise
funds for additional investment opportunities. While this
strategy demonstrates OHL's capacity to monetize the value
embedded in its good portfolio of concessions, it also leads to
sustained higher leverage levels than those commensurate with the
previous rating.
In addition, the extensive use of margin loans at intermediate
holding companies backed by OHL shares in listed assets
complicates the group's debt structure. This could exert pressure
on the group's liquidity profile if the value of the shares
declines below the specified trigger levels and additional
collateral is required.
More positively, Moody's notes that OHL enjoys good visibility on
the performance of its construction business as a result of its
large order book, which now represents more than three years of
revenues. Thanks to the strong growth in OHL's international
contracts, Spain currently accounts for only 18% of the company's
order book, down from 40% in 2010. However, the company's order
book is also more concentrated on only 5 projects. Moody's
estimates that these 5 projects represent around 44% of the
backlog.
A key supporting factor for the Ba3 rating is the value embedded
in OHL's portfolio of listed assets. OHL's stakes in Abertis
(18.9%) and OHL Mexico (63.6%) are currently worth around EUR4.6
billion. The net asset value of these investments, after
deducting debt associated with these stakes of EUR1.6 billion
(i.e. current loan-to-value (LTV) of 36%), is around EUR2.9
billion, which represents 1.4x the company's gross recourse debt
of around EUR2.1 billion. The value of these stakes provides OHL
with significant financial flexibility to support the
deleveraging of the recourse activities if required. However,
Moody's notes that currently all of OHL's shares in Abertis and
43% of its 63.6% stake in OHL Mexico are pledged.
In Moody's view, OHL's liquidity is currently adequate. This
assessment assumes continued access to revolving lines of credit
and a successful refinancing of the April 2015 bond at least 12
months ahead of maturity.
OHL's Ba3 CFR takes into account (1) its position as one of
Spain's leading construction companies and one of the world's
largest concessions operators; (2) its portfolio of businesses,
through which it balances cyclical construction activities with
more predictable concession-generated revenues; (3) its exposure
to multiple geographies, with a growing portfolio of
international construction projects, (4) its large order backlog,
which supports the good visibility of the construction
activities; and (5) the value embedded in its equity stakes in
Abertis and OHL Mexico.
However, the rating also factors in (1) OHL's high leverage, both
on a recourse and consolidated basis; (2) its sustained negative
free cash flow generation; (3) the macroeconomic situation
affecting its business in Spain and a degree of reliance on the
domestic banking sector; (4) the complex debt structure of the
group, with margin loans used extensively at intermediate holding
companies; and (5) that the company's order backlog has a degree
of concentration on large contracts.
Ratioanale for Stable Outlook:
The stable rating outlook incorporates Moody's expectation that
OHL's credit metrics will likely improve in 2014, supported by
the initial cash flows from some of the company's large projects,
for which the design phase will soon finish and the construction
phase begin. The outlook also reflects the embedded value in
OHL's portfolio of listed concession assets.
In addition, the outlook assumes a successful refinancing of the
April 2015 bond at least 12 months ahead of maturity and that the
company will continue to enjoy strong access to bank financing
for working capital funding.
What Could Change the Rating Down/Up:
Moody's could downgrade the Ba3 rating if OHL's credit metrics
weaken on a sustained basis such that the company's (1) net
consolidated debt/EBITDA (as adjusted by Moody's) increases above
5.5x; (2) gross recourse debt/recourse EBITDA rises above 5.0x;
and (3) net recourse debt/recourse EBITDA stays above 3.5x. The
rating could also come under downward pressure if the LTV ratio
of OHL's equity stakes in Abertis and OHL Mexico approaches 50%.
In addition, downward pressure could be exerted on the rating if
there are signs that the group's liquidity is becoming
constrained -- including, but not limited to, a reduction in
covenant headroom.
Conversely, upward ratings pressure could develop if OHL's credit
metrics improve on a sustainable basis such that (1) net
consolidated debt/EBITDA (as adjusted by Moody's) falls below
4.5x; (2) gross recourse debt/recourse EBITDA drops below 4.0x;
and (3) net recourse debt/recourse EBITDA falls well below 3.0x.
Upward ratings pressure would also need to be supported by a
solid liquidity profile.
===========================
U N I T E D K I N G D O M
===========================
BROWNS COACHWORKS: Goes Into Administration
-------------------------------------------
BBC News reports that Browns Coachworks Limited has gone into
administration.
The future is uncertain after administrators were appointed last
week, but the company remains open, according to BBC News. No-
one from the company would comment.
BBC News notes that news of its troubles come on the day
unemployment fell in Northern Ireland for the eighth consecutive
month.
Browns Coachworks Limited - a family business with a factory in
Lisburn - has been operating for about 150 years. As well as
being coach builders, it makes fire engines and horse boxes.
CATALYST HEALTHCARE: S&P Raises LT Issue Rating From 'BB+'
----------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term issue
rating to 'BBB-' from 'BB+' on the senior secured debt issued by
the U.K.-based special-purpose vehicle Catalyst Healthcare
(Manchester) Financing PLC (ProjectCo). The outlook is stable.
The debt comprises GBP218.05 million of senior secured bonds
(including GBP38 million in variation bonds) due in 2040 and a
GBP175 million senior secured loan from the European Investment
Bank (EIB) due in 2037.
The senior secured debt retains an unconditional and irrevocable
guarantee provided by Ambac Assurance U.K. Ltd. of payment of
scheduled interest and principal. Under Standard & Poor's
Ratings Services' criteria, a rating on a monoline-insured debt
issue reflects the higher of the rating on the monoline and
Standard & Poor's underlying rating (SPUR). The long-term debt
rating on the bonds currently reflects the SPUR.
The raising of the issue rating follows the stabilization of
ProjectCo's operating performance over the past year, which has
in turn led to an improvement in the working relationships
between the project's various parties. S&P understands that
these parties have reached an agreement on the quality of
facilities management (FM) services provided by the FM
contractor, Sodexo. The past poor quality of these services was
a cause of friction between ProjectCo and U.K.-based Central
Manchester and Manchester Children's University Hospitals
National Health Service (NHS) Trust (the Trust). However,
progress has been made and recognized by all parties, including
the Trust, which had been particularly critical of Sodexo's
service delivery. With the resolution of this issue, the project
has now entered into a steady operation phase, with fewer
deductions for poor performance and fewer service failure points.
ProjectCo's financial performance has also slightly improved. In
particular, the minimum debt service coverage ratio (DSCR) has
shown an improvement--to 1.22x from 1.14x a year ago--due to the
introduction of an insurance-sharing reserve mechanism. This
spreads the payment of the insurance gain-share amount to the
Trust over three years, instead of having a one-off payment every
three years. The mechanism has provided a cushion that mitigates
the volatility of cash flows available for debt service, mainly
driven by retail price index (RPI) mismatch.
S&P believes that the stabilization of ProjectCo's operational
performance is the result of Sodexo bringing on site a team of
executives with suitable experience. The new team has adequately
addressed the issues that had been hindering the project's
progress.
Since the completion of the construction phase in June 2009,
ProjectCo is providing maintenance and certain nonclinical
services under a 38-year project agreement, to the Trust, under a
private-finance initiative (PFI).
The 'BBB-' issue rating reflects the following credit risks:
-- The project is exposed to RPI volatility (in particular
short-term volatility), given that various elements of the
financial structure--including the bonds and EIB debt,
unitary payments, and operational costs--are indexed
against the RPI but have different effective dates.
-- An aggressive financing structure of 90% debt to 11%
equity; with 80% of debt due to be repaid over the 10 years
prior to debt maturity.
-- Although most of the disagreements outstanding between the
parties have progressed, an ultimate solution has not yet
been reached.
The above weaknesses are, however, offset by the following
project strengths:
-- Availability-based revenue over the concession's life.
-- Strong consortium members, with investment-grade-rated
parent companies.
-- Benign financial management services.
-- ProjectCo does not retain lifecycle risk.
The minimum and average DSCRs--excluding interest income--are
1.22x and 1.26x, respectively.
The stable outlook reflects S&P's view that the project's stable
operational performance over the past year has led to a more
effective working environment, reinforcing the relationships
between parties, and enabling the project to enter into a steady
operational phase.
S&P could take a negative rating action if the project's
financial profile deteriorates from current levels or if there is
a weakening of the project's operational performance. This could
arise, for instance, if the Trust issues warning notices, which
could tarnish the newly revived working relationships between
parties.
S&P sees a positive rating action as unlikely at this stage, due
to the project's cash flow volatility, which is driven by
exposure to short-term RPI changes. This is despite the
introduction of the insurance sharing reserving mechanism, which
has partly mitigated the effect of RPI volatility.
DUNFERMLINE ATHLETIC: Bought Out of Administration by Pars United
-----------------------------------------------------------------
Rachael Singh at Accountancy Age reports that BDO administrators
have sold collapsed football club Dunfermline Athletic six months
after their appointment.
According to Accountancy Age, the supporter-backed entity Pars
United have had their company voluntary arrangement (CVA)
accepted by creditors and the purchase finalized.
A CVA is where 75% or more of creditors, by value of debt, vote
in favor of the arrangement.
In a further coup, Pars United also managed to buy Dunfermline's
stadium, which was also in administration with KPMG
administrators appointed, Accountancy Age discloses.
It was previously thought that Pars United would be unable to
acquire both out of administration, Accountancy Age notes.
Dunfermline entered administration earlier this year following a
winding-up petition from the taxman for GBP134,000, Accountancy
Age recounts.
Dunfermline Athletic Football Club is a Scottish football team
based in Dunfermline, Fife, commonly known as just Dunfermline.
HONOURS SERIES 2: S&P Puts BB Rating on Cl. D Notes on Watch Neg.
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its credit ratings on
Honours PLC series 2's class C and D notes on CreditWatch
negative.
Honours series 2 is backed by student loans in the U.K. by the
Student Loans Co. Series 2 closed in 2006. Borrowers who earn
below the threshold amount (currently set at 85% of the national
average earnings) are able to defer repayment of their loans.
During deferment, principal on the loan is deferred and interest
is capitalized. Loans are exposed to default risk once they exit
deferment.
At closing, S&P stressed the number of loans exiting deferment in
its cash flow analysis, assuming that many loans would exit at
one time. This rapid decrease in deferred loans increased the
number of loans being repaid and lowered the overall outstanding
pool balance more rapidly. S&P combined this assumption with its
base-case gross loss assumption based on the number of repaid
loans.
S&P has conducted an initial review of the transaction and the
observed data indicate the rate of loans exiting deferment is
lower than its 2006 assumptions. This has led S&P to reassess
its loans exiting deferment assumptions. Additionally, S&P has
increased its base-case gross loss rate assumptions based on the
actual loss rates observed. In S&P's view, these adjustments
could have a potential negative ratings impact on the class C and
D notes. Consequently, S&P has placed on CreditWatch negative
its ratings on these classes of notes. In S&P's view, these
adjustments could negatively affect its ratings on the junior
classes of notes. The senior classes of notes are unaffected by
the CreditWatch placements due to sufficient credit enhancement
as a result of the class A notes' amortization since closing.
S&P expects to resolve the CreditWatch placements once it has
conducted a further review.
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
Honours PLC
GBP418.2 Million Asset-Backed Floating-Rate Notes Series 2
Ratings Placed On CreditWatch Negative
C BBB (sf)/Watch Neg BBB (sf)
D BB (sf)/Watch Neg BB (sf)
INEOS GROUP: Shuts Grangemouth Plant Amid Union Dispute
-------------------------------------------------------
Simon Falush at Reuters report that Swiss-based Ineos said on
Wednesday it had closed the 210,000 barrel per day refinery and
petrochemicals complex and may only re-open it if workers accept
new working terms. Ineos says Grangemouth has made losses for
the past four years, Reuters notes.
"The plant is shut down until Tuesday. It is not operating. We
will be putting a proposal to the workforce and we are giving
them the weekend to decide and expect a response on Monday,"
Reuters quotes an Ineos spokeswoman as saying.
"We'll review with stakeholders what the workforce says on
Tuesday and whether it re-opens depends on their response," the
spokeswoman, as cited by Reuters, said.
A company statement had earlier said Grangemouth was financially
distressed and that the industrial action called by the Unite
union had inflicted significant further damage, Reuters relays.
Ineos said earlier this week it had begun winding down operations
at Grangemouth, ahead of a planned strike by Unite union members
over the treatment of a union representative, Reuters recounts.
Unite called the strike off earlier on Wednesday, Reuters
discloses.
According to Reuters, a source familiar with the situation said
that it would take around three weeks to get the plant back to
full operations, whenever a decision was made.
Underlying the immediate dispute with the union was Ineos's plan
to cut jobs and pensions at the petrochemical plant, which it has
said would have to close unless costs can be reduced, Reuters
discloses.
INEOS Group is the world's third largest chemical company
consisting of some 15 businesses. Product lines include ethylene
oxide-based specialty and intermediate chemicals, fluorochemicals
used as refrigerants and propellants, and phenol and acetate
products. INEOS Chlor makes chlor-alkali chemicals. INEOS Group
was formed in 1998 after CEO Jim Ratcliffe, who controls the
group, led a management buyout. It now operates more than 60
manufacturing facilities in 13 countries worldwide. Ratcliffe
has placed INEOS among the world's top chemical companies (with
ExxonMobil, Dow, and BASF) through his many and varied
acquisitions.
LONDON & COUNTRY: SFP Called in as Administrators
-------------------------------------------------
Nationwide insolvency practitioners, SFP has been appointed
Administrators to London-based property company, London & Country
Property Co Limited (LCP), after it encountered financial
difficulties.
LCP was established in October 2000 as a property investor and
speculator, investing in property let to high street retailers
such as Clarks and Superdrug.
Simon and Daniel Plant -- both licensed members of the Insolvency
Practitioners' Association -- were appointed joint administrators
on September 12, 2013.
"The reduction in market value of properties led to the company
experiencing pressure from mortgagees to reduce its debt, which
put extra pressure on LCP's cash flow and has seen the company
enter into Administration, says Simon Plant, Director of the SFP
Group.
"We will be looking for potential buyers of the company's assets
including two freehold properties."
SOHO HOUSE: S&P Assigns 'B-' Corp. Credit Rating; Outlook Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B-'
long-term corporate credit rating to U.K.-based private club
operator Soho House Group Ltd. The outlook is stable.
At the same time, S&P assigned its 'B-' issue rating to the
GBP115 million senior secured notes issued by Soho House Bond
Ltd. The recovery rating on the notes is '4', indicating S&P's
expectation of average (30%-50%) recovery in the event of a
payment default.
S&P assigned its 'B+' issue rating to the GBP25 million super
senior revolving credit facility (RCF) of SHG Acquisition (UK)
Ltd. and Soho House U.S. Corp. The recovery rating on the RCF is
'1', indicating S&P's expectation of very high (90%-100%)
recovery in the case of a payment default.
The ratings on Soho House reflect S&P's view of the company's
"highly leveraged" financial risk profile and "weak" business
risk profile.
"Soho House's sizable debt and negative free operating cash flow
(FOCF) constrain our assessment of its financial risk profile.
Pro forma the refinancing, we expect Standard & Poor's adjusted
debt-to-EBITDA and EBITDA-to-cash interest ratios at about 9x and
1.7x, respectively, at year-end 2013. In our view, reported FOCF
should remain negative over the next two years since the company
is investing heavily. We forecast that the reported capital
expenditure-to-revenue ratio will reach about 10%. We calculate
adjusted debt of roughly GBP270 million at year-end 2013,
consisting of GBP115 million of notes, about GBP5 million of
other debt, approximately GBP130 million of operating leases
(applying a discount rate of 8%), and about GBP20 million of
shareholder loans," S&P said.
"Our assessment of the business risk profile factors in our view
that Soho House is a small player in the leisure sector and that
its growth plans entail some degree of execution risk. The
company plans to open several new locations in the coming years,
and we see a risk that growth may not meet the company's
expectations if new clubs fail to attract new members. We note,
however, that the company has a good track record in this regard.
In our view, opening clubs also depresses profitability, since
new properties have a ramp-up period of two to three years. We
therefore view Soho House's adjusted EBITDA margin as lower than
that of other single site club operators. Additional risks
include a sensitivity of earnings to raw commodity prices (the
sale of food and beverages accounts for two-thirds of revenues)
and geographic concentration (the company generates about half of
its cash flows in the London area)," S&P added.
However, the company has maintained positive like-for-like
revenue growth and stable profitability over the past five years,
despite adverse economic conditions. S&P thinks this sound
business model hinges on the loyalty of the company's membership
base. Its attrition rate was only 4% at the peak of the
recession in 2009. Moreover, the long waiting list provides
additional support to the group's credit quality.
S&P forecasts that EBITDA generation will increase markedly over
the next 12 months. S&P expects a low-double-digit rise in
revenues over the next two years, on the back of new openings and
the ramp-up of existing clubs. However, S&P anticipates only a
limited improvement in credit ratios since Soho House will likely
draw its GBP25 million super senior revolving credit facility
(RCF) to finance expansion. In addition, S&P thinks that
operating leases are likely to increase. As a result, S&P
believes that the adjusted debt-to-EBITDA and EBITDA-to-cash
interest ratios should remain at 7x-8x and 1.5x-2.0x,
respectively, in 2014.
The stable outlook reflects S&P's view that Soho House's
ambitious expansion plan will translate into marked earnings
growth, based on management's good track record. S&P also
factors in that liquidity will likely remain adequate. In S&P's
forecast for the next 12 months, it believes that growth in the
company's adjusted EBITDA will exceed 20%. Additionally in the
same period, the adjusted debt-to-EBITDA and EBITDA-to-cash
interest ratios will stay at about 8x and 1.7x, respectively, by
S&P's estimates.
S&P could lower the rating on Soho House if liquidity weakens.
This could occur if the growth plan fails to materialize, which
would cause a higher-than-expected drawdown under the RCF; -or if
headroom under covenants were to tighten significantly. Negative
rating pressure would also arise if adjusted EBITDA to cash
interest fell to about 1.0x. Moreover, S&P would also take a
negative rating action if it believed that the capital structure
had become unsustainable.
S&P could raise the rating on Soho House if adjusted EBITDA to
cash interest were to rise sustainably above 2.0x. This could
occur following Soho House's successful implementation of its
organic growth strategy, notably in foreign markets.
TITAN EUROPE: Moody's Lowers Rating on Class X Notes to 'Caa3'
--------------------------------------------------------------
Moody's Investors Service has taken rating action on the
following classes of Notes issued by TITAN EUROPE 2006-3
p.l.c.(amounts reflect initial outstanding):
EUR471.975M Class A Notes, Downgraded to B1 (sf); previously on
Mar 18, 2013 Downgraded to Ba1 (sf)
EUR0.05M Class X Notes, Downgraded to Caa3 (sf); previously on
Mar 18, 2013 Affirmed Caa2 (sf)
Rating action does not impact the rating on the Class B, C, D, E
and F Notes. Moody's does not rate the Class G, H and the Class V
Notes.
Ratings Rationale:
Downgrade action results from the high probability of a Note
Event of Default (NEoD) on the October 2013 interest payment date
(IPD). The transaction relies on the liquidity facility and
principal payments on the loans to make full payment of interest
on the Class A and X Notes which rank pari passu. Only EUR 1.35
million of undrawn commitment remains under the liquidity
facility which will not be enough to cover the expected EUR 3.0
million-plus interest shortfall on the loans. Additionally, there
will be insufficient principal payments available to prevent a
NEoD.
Moody's assessment of the underlying portfolio of loans remains
largely unchanged compared to the March 2013 downgrade action
except with respect to the Target Loan which contributes 46.5% to
the pool. Moody's anticipated that the loan would default on its
maturity date in July 2013 but expected that interest payments
would continue to be met. However, following the borrower's
initiation of safeguard proceedings, a moratorium on debt service
has been imposed by the French courts until further notice. This
moratorium on debt service payments has contributed to the
increase in quarterly liquidity facility drawings and a faster
depletion of the undrawn amounts. The rating of the Class X notes
is sensitive to changes in expected loss of the loan pool.
In general, Moody's analysis reflects a forward-looking view of
the likely range of commercial real estate collateral performance
over the medium term. From time to time, Moody's may, if
warranted, change these expectations. Performance that falls
outside an acceptable range of the key parameters such as
property value or loan refinancing probability for instance, may
indicate that the collateral's credit quality is stronger or
weaker than Moody's had anticipated when the related securities
ratings were issued. Even so, a deviation from the expected range
will not necessarily result in a rating action nor does
performance within expectations preclude such actions. There may
be mitigating or offsetting factors to an improvement or decline
in collateral performance, such as increased subordination levels
due to amortization and loan re- prepayments or a decline in
subordination due to realized losses.
Primary sources of assumption uncertainty are the current
stressed macro-economic environment and continued weakness in the
occupational and lending markets. Moody's anticipates (i) lending
will remain constrained over the next years, while subject to
strict underwriting criteria and heavily dependent on the
underlying property quality, (ii) strong differentiation between
prime and secondary properties, with further value declines
expected for non-prime properties, and (iii) occupational markets
will remain under pressure in the short term and will only slowly
recover in the medium term in line with anticipated economic
recovery. Overall, Moody's central global macroeconomic scenario
for the world's largest economies is for only a gradual
strengthening in growth over the coming two years. Fiscal
consolidation and volatility in financial markets will continue
to weigh on business and consumer confidence, while heightened
uncertainty hampers spending, hiring and investment decisions. In
2013, Moody's expects no growth in the Euro area and only slow
growth in the UK.
WET N' WILD: In Administration, 70 Jobs at Risk
-----------------------------------------------
The Northern Echo reports that Wet N' Wild Enterprises Ltd has
gone into administration, putting almost 70 jobs at risk.
PricewaterhouseCoopers has been appointed as joint
administrators.
"Despite operating profitably for much of the year the business
faced liquidity issues over the forthcoming months. The
directors therefore had no option but to place the company into
administration. . . . Unfortunately, with the quieter winter
trading period upon us we have had no alternative but to close
the waterpark with immediate effect and make the majority of
employees redundant. We will continue to maintain the water park
whilst seeking a sale. . . . Clearly we are very keen to hear
from anyone with an interest in acquiring the business and
assets, and would encourage parties to contact us as soon as
possible," the report quoted Toby Underwood, joint administrator
and partner at PwC, as saying.
Wet N' Wild Enterprises Ltd operated an indoor water park at
Royal Quays in North Shields.
===============
X X X X X X X X
===============
* BOOK REVIEW: Bankruptcy Crimes
--------------------------------
Author: Stephanie Wickouski
Publisher: Beard Books
Softcover: 395 Pages
List Price: $124.95
http://is.gd/LuspaE
Review by Gail Owens Hoelscher
Did you know that you could be executed for non-payment of debt
in England in the 1700s? Or that the nailing of an ear was the
sentence for perjury in bankruptcy cases in 1604? While ruling
out such archaic penalties, Stephanie Wickouski does believe "in
the need for criminal sanctions against bankruptcy fraud and for
consistent, effective enforcement of those sanctions." She
decries the harm done to individuals through fraud schemes and
laments the resulting erosion in public confidence in the
judicial system. This leading authoritative treatise on the
subject of bankruptcy fraud, first published in August 2000 and
updated annually with new material, will prove invaluable for
bankruptcy law practitioners, white collar criminal
practitioners, and prosecutors faced with criminal activity in
bankruptcy cases. Indeed, E. Lawrence Barcella, Jr. of Paul,
Hastings, Janofsky, and Walker, in Washington, DC, says, "If I
were a lawyer involved in a bankruptcy matter, whether civil or
criminal, and had only one reference work that I could rely
upon, it would be this book." And, Thomas J. Moloney with
Cleary, Gottlieb, Steen & Hamilton describes the book as "an
essential reference tool."
An estimated ten percent of bankruptcy cases involve some kind
of abuse or fraud. Since launching Operation Total Disclosure in
1992, the U.S. Department of Justice has endeavored to send the
message that bankruptcy fraud will not be tolerated. Bankruptcy
judges and trustees are required to report suspected bankruptcy
212 crimes to a U.S. attorney. The decision to prosecute is
based on the level of loss or injury, the existence of sufficient
evidence, and the clarity of the law. In some cases, civil
penalties for fraud are deemed sufficient to punish and deter.
Ms. Wickouski suggests that some lawyers might not recognize
criminal activity that the DOJ now targets for investigation.
She gives several examples, including filing for bankruptcy
using an incorrect Social Security number, and receiving
payments from a bankruptcy debtor that were not approved by the
bankruptcy court. In both of these real life examples, DOJ
investigations led to convictions and jail time.
Ms. Wickouski says that although new schemes in bankruptcy fraud
have come along, others have been around for centuries. She
takes the reader through the most common traditional schemes,
including skimming, the bustout, the bleedout, and looting, as
well as some new ones, including the bankruptcy mill.
The main substance of Bankruptcy Crimes is Ms. Wickouski's
detailed analysis of the U.S. Bankruptcy Criminal Code, chapter
9 of title 18, the Federal Criminal Code. She painstakingly
analyzes each provision, carefully defining terms and providing
clear and useful examples of actual cases. She ends with a good
chapter on ethics and professional responsibility, and provides
a comprehensive set of annexes.
Bankruptcy Crimes is never dry, and some of the cases will make
you nostalgic for the days of ear-nailing. This comprehensive,
well researched treatise is a particularly invaluable guide for
debtors' counsel in dealing with conflicts, attorney-client
relationships, asset planning, and an array of legal and ethical
issues that lawyers and bankruptcy fiduciaries often face in
advising clients in financially distressed situations.
Stephanie Wickouski is a partner in the New York office of Bryan
Cave LLP. Her practice is concentrated in business bankruptcy,
insolvency, and commercial litigation.
This book may be ordered by calling 888-563-4573 or through your
favorite Internet bookseller or through your local bookstore.
*********
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
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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
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