TCREUR_Public/140801.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Friday, August 1, 2014, Vol. 15, No. 151



NOVAFIVES: S&P Assigns 'BB-' Corp. Credit Rating; Outlook Stable
PEUGEOT SA: S&P Revises Outlook to Pos. & Affirms 'B+/B' CCRs


PFLEIDERER GMBH: S&P Assigns 'B-' CCR; Outlook Stable


4FINANCE SA: S&P Assigns 'B' Rating to New Sr. Unsecured Bonds
O'FLYNN CONSTRUCTION: Court Appoints Interim Examiner


BANK ASTANA-FINANCE: S&P Assigns 'B-/C' Counterparty Ratings


DLK GROUP: Moody's Assigns '(P)B2' Corporate Family Rating


PLAY HOLDINGS: S&P Cuts Long-Term Corporate Credit Rating to 'B'
PLAY TOPCO: Moody's Assigns (P)Caa1 Rating to EUR415MM PIK Notes


BANCO ESPIRITO: Posts EUR3.58-Bil. Net Loss in First Half 2014
BRISA CONCESSAO: Moody's Raises Sr. Secured Debt Rating to Ba1
ENERGIAS DE PORTUGAL: Moody's Affirms 'Ba1' Rating; Outlook Pos.
REDE FERROVIARIA: Moody's Raises Corporate Family Rating to 'Ba3'


MECHEL OAO: Vnesheconombank Won't Take Part in Rescue
MOSCOW INTEGRATED: S&P Withdraws 'BB-/B' Corp. Credit Ratings
PETROCOMMERCE BANK: Moody's Cuts Deposit & Debt Ratings to 'B2'
RUSSLAVBANK: Moody's Confirms B3 Long-term Global Deposit Rating


CATALUNYA BANC: Moody's Puts B3 Rating on Review for Upgrade
LA SEDA DE BARCELONA: Judge Approves Administrator's Rescue Plan
TELEPIZZA: Aims to Avert Debt Restructuring Through Refinancing

U N I T E D   K I N G D O M

DIGITAL SPARK: Bought Out of Administration by Silverlink
UNIPART AUTOMOTIVE: In Administration, Cuts Jobs
* UK: Administration Numbers for Food & Drink Firms Fall Sharply


HALK BANK: S&P Confirms 'B+/B' Counterparty Credit Ratings


* BOOK REVIEW: The First Junk Bond



NOVAFIVES: S&P Assigns 'BB-' Corp. Credit Rating; Outlook Stable
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Novafives, the parent company of
Fives, a French industrial engineering group.  The outlook is

"At the same time, we assigned our 'BB' issue rating to
Novafives' EUR90 million super senior senior revolving credit
facility (RCF). The recovery rating on this facility is '2',
indicating our expectation of high (70%-90%) recovery in the
event of a payment default.  We also assigned our 'BB-' issue
rating to the EUR200 million senior secured floating-rate notes
and EUR380 million senior secured fixed-rate notes.  The recovery
rating on these instruments is '4', indicating our expectation of
average (30%-50%) recovery in the event of a payment default,"
S&P said.

S&P's 'BB-' long-term corporate credit rating on Novafives
reflects its assessments of the group's financial risk profile as
"aggressive" and business risk profile as "fair."

Novafives' sizable adjusted debt constrains S&P's assessment of
the financial risk profile.  S&P anticipates that the group will
post an adjusted debt-to-EBITDA ratio of about 4.5x, including
hybrid instruments, based on a weighted average of the current
and the next two years.  S&P thinks this ratio will be slightly
below 5x at year-end 2014 and then decline gradually, thanks to
moderate EBITDA growth and reported free operating cash flow
(FOCF) generation of about EUR60 million-EUR70 million.  After
the refinancing, Novafives should display a good EBITDA-to-cash
interest ratio of roughly 5x.

At year-end 2014, S&P estimates that adjusted debt will reach
approximately EUR800 million, comprising notably about EUR100
million of various debt at subsidiaries' level, the EUR580
million senior secured notes, approximately EUR150 million of
surplus cash (after applying a 20% haircut), and about EUR180
million of hybrid instruments (convertible bonds and bonds
redeemable in shares).  S&P considers these instruments as debt
because they are held by the private equity fund Ardian, which
S&P views as a noncontrolling financial sponsor of Novafives.

Novafives' diversification of business, end-market, and
geographies, as well as its flexible cost structure, offset
somewhat below-average profitability and the small contribution
of the aftermarket to total revenues.  Despite its small size,
the group has a wide product offering and operates in several
different niche markets, where it often ranks among the top three
players.  Furthermore, it has a significant presence in the U.S.
and China.  Novafives' asset-light business model is another
supportive factor. By externalizing most of the manufacturing
process, the group benefits from a relatively flexible cost
structure and limits its capital expenditures (capex).

Within the overall capital goods industry, Novafives is of
limited size and operates in segments that S&P would generally
view as relatively competitive and fragmented.  Novafives' asset-
light model also results in part of added-value on equipment
delivered being transferred to its suppliers.  Consequently, the
group displays adjusted EBITDA margin and return on capital of
about 9% each, which S&P considers to be below average for the
capital goods sector.  This is partly mitigated, however, by good
FOCF generation.  On the downside, S&P also notes that
aftermarket accounts for 15%-20% of total revenues, which it
considers to be generally low for the sector.

In S&P's base case, it assumes:

   -- Revenue growth of about 5% annually over the next two
      years, driven by most of the group's divisions except
      Metal, and the contribution of recent acquisitions, namely
      MAG Aerospace and OTO Mills.

   -- A small increase in adjusted EBITDA margin for 2014 toward
      9%, driven by the decline in exceptional expenses (S&P
      deducted acquisition costs from 2013 EBITDA), and
      stabilization thereafter.

   -- Capex of about 1.5% of revenues, in line with historical

   -- No shareholder remuneration.

Based on these assumptions, S&P arrives at the following credit
measures for Novafives:

   -- A debt-to-EBITDA ratio slightly below 5.0x by year-end 2014
      (slightly above 3.5x excluding hybrid instruments) and
      improving to 4.5x in 2015 (below 3.5x excluding hybrids).

   -- Adjusted EBITDA of approximately EUR160 million in 2014 and
      EUR170 million in 2015.

   -- FOCF of about EUR60 million in 2014 and EUR70 million in

"The stable outlook reflects our view that Novafives will
maintain its leading market shares in its niche markets and that
its end-market diversification will offset possible operating
downturns. We also factor in our view that the management will
remain a long-term shareholder and that its financial policy will
stay prudent, with no large acquisition or shareholder
remuneration and a clear objective of keeping reported net debt
to EBITDA below 3x.  We anticipate the group will maintain an
adjusted EBITDA margin of about 9%-10% over the next 18 months
and generate significantly positive FOCF so that core credit
ratios firm up within our "aggressive" financial risk profile
category," S&P added.

S&P could lower the ratings on Novafives if adjusted debt to
EBITDA moved above 5x.  Such a scenario could unfold if, for
instance, an operating downturn led to a decline in earnings that
business diversity could not offset.  Negative rating pressure
could also arise if Novafives increased shareholder remuneration
or made a large debt-financed acquisition.  Finally, S&P might
also consider a downgrade if the group's FOCF declined

S&P could upgrade Novafives if its adjusted debt to EBITDA
decreased to below 4x on a sustainable basis.  Such an outcome
appears unlikely over the next 12 months, however.

PEUGEOT SA: S&P Revises Outlook to Pos. & Affirms 'B+/B' CCRs
Standard & Poor's Ratings Services revised its outlook on French
automotive manufacturer Peugeot S.A. and related entity GIE PSA
Tresorerie to positive from stable.  At the same time, S&P
affirmed its 'B+/B' long- and short-term corporate credit ratings
on the companies.

S&P also affirmed its 'B+' issue rating on the senior unsecured
notes issued by Peugeot and GIE PSA Tresorerie.  The recovery
rating is '4', indicating S&P's expectation of average (30%-50%)
recovery in the event of a payment default.

The outlook revision reflects S&P's view that Peugeot should post
meaningfully positive free operating cash flow (FOCF) by year-end
2014 and therefore achieve stronger-than-expected financial
metrics.  The outlook also factors, in S&P's view, that strategic
initiatives, cost savings, and restructuring measures may lead
the automotive division to remain close to break-even at the
operating income level.

"We see a possibility that Peugeot's adjusted funds from
operations (FFO)-to-debt ratio may exceed 20% in 2014, thanks to
better operating trends coming from the new strategic plan "Back
in the Race," compared with our previous expectation of 15%.  The
company's sound performances over the first half of 2014 have led
us to revise our previous expectation of sustained cash burning.
We now assume that the company will generate positive adjusted
FOCF in 2014 owing to a reduction in working capital and
marginally positive EBIT generation before exceptionals at the
automotive division.  This, combined with EUR2.9 billion of
proceeds from the recent capital increase, should drive a
substantial reduction in adjusted debt to our estimate of about
EUR6.5 billion in 2014, compared with EUR9 billion on Dec. 31,
2013," S&P said.

Yet, cash flow generation still constrains the rating, in S&P's
view.  S&P believes that FOCF may fall in 2015, as reducing
working capital further is challenging and new vehicle launches
seem less promising, even though the average age of the product
range is relatively low.  S&P calculates an adjusted FOCF-to-debt
ratio of less than 5% on average over the next three years, which
is low for the current rating level.

"While we still view Peugeot's business risk profile as 'weak,'
the company is starting to reap the benefit of restructuring
measures.  The ratings are still constrained by its low
profitability, its reliance on European markets, and the high
volatility of the group's earnings.  Still, Peugeot is reducing
its cost base and increasing the utilization rate of its European
facilities, which reached 84% in the first half of 2014, compared
with 72% in 2013.  The company is also performing well in China.
There are still several pockets of losses, however--notably in
Russia and Latin America.  Additionally, capital expenditures and
research and development costs appear low relative to peers,
although Peugeot benefits from cooperation agreements with
several auto makers," S&P noted.

Under S&P's base case, it assumes:

   -- Worldwide growth in real GDP of 3.4% in 2014 and 3.9% in
      2015, with mild recovery in Western Europe (1.4% in 2014
      and 1.8% in 2015).

   -- A growth in global car sales of 1.1% in 2014 and 4.2% in
      2015, with an increase of 4.2% and 4.4%, 2014 and 2015,
      respectively, in Western Europe.

   -- Automotive division close to break-even in 2014 and 2015.

   -- EUR350 million of restructuring expenses in 2014 and EUR200
      million in 2015.

   -- Stable capital expenditures-to-revenue ratio.

   -- No dividend payment in the next two years.

Based on these assumptions, S&P arrives at the following credit

   -- An adjusted EBITDA margin of about 6% in the next two

   -- An adjusted FFO-to-debt ratio of more than 20% in the next
      12 months.

   -- An average adjusted FOCF-to-debt ratio of less than 5%.

The positive outlook on Peugeot reflects S&P's view that higher-
than-expected FOCF generation may materially improve the
company's credit ratios over the next 12 months.  It also factors
in S&P's assumption that restructuring measures will enable the
automotive division to remain close to break-even at operating
income level. Under S&P's base-case scenario, it assumes for the
next 12 months a slight increase in revenues excluding currency
effect and an adjusted EBITDA margin of about 6%.

S&P may upgrade Peugeot if it observed that the company is able
to sustain an adjusted FFO-to-debt ratio of more than 20% and to
generate recurring positive FOCF.  If so, S&P would reassess its
view of the financial risk profile to "significant" from
"aggressive."  Such a scenario could unfold if the implementation
of new strategies enabled the automotive division to achieve
positive operating profit and if the company preserved the
reduction in working capital achieved at mid-year 2014.

S&P could revise the outlook to stable if Peugeot was unable to
maintain strengthened credit ratios because of declining earnings
or rising working capital.  S&P may also change the outlook to
stable if the automotive division failed to reduce its operating
losses, possibly due to a further weakening of the European car
market or falling market shares.


PFLEIDERER GMBH: S&P Assigns 'B-' CCR; Outlook Stable
Standard & Poor's Ratings Services assigned a 'B-' long-term
corporate credit rating to German wood-based panel producer
Pfleiderer GmbH.  The outlook is stable.

"At the same time, we assigned our 'CCC+' issue rating to the
EUR322 million senior secured notes. The recovery rating on the
notes is '5', indicating our expectation of average (10%-30%)
recovery in the event of a payment default.  We also assigned a
'B+' issue rating to the company's EUR60 million super senior
revolving credit facility (RCF) due 2019.  The recovery rating on
the super senior RCF is '1', indicating very high (90%-100%)
recovery in the event of a payment default," S&P said.

The rating on Pfleiderer reflects S&P's assessment of the group's
"highly leveraged" financial risk profile and "weak" business
risk profile, as S&P's criteria define these terms.

"Pfleiderer issued EUR322 million of senior secured notes to pay
down existing debt.  The group also issued a super senior RCF of
EUR60 million, which we understand will be undrawn post
refinancing.  The group's capital structure also includes
approximately EUR50 million of debt in its Core East subsidiary
based in Poland (of which Pfleiderer owns 65% and fully
consolidates).  In line with our methodology for ratios and
adjustments, we include in our calculation of debt the financing
relating to the sale of accounts receivables (about EUR70
million), pension obligations (about EUR40 million), and
operating leases (EUR40 million).  In addition, we note that
Pfleiderer, as part of its recent financial restructuring, has
pushed up debt to its owner, Atlantik S.A., a Luxembourg-based
holding company created to own shares in Pfleiderer.  This debt
amounted to about EUR609 million as of year-end 2013.  Although
we understand that this debt is contractually and structurally
subordinated and not cash interest paying, we still include it in
our financial analysis, since it ultimately needs to be serviced
with cash flows from Pfleiderer.  As a result, our adjusted debt
figure for Pfleiderer amounts to approximately EUR1.1 billion,"
S&P said.

"We assess Pfleiderer's financial risk profile as "highly
leveraged."  We take into account our assumptions that
Pfleiderer's stand-alone credit metrics will be consistent with
our "aggressive" financial risk profile, with funds from
operations (FFO) to debt at about 15% and debt to EBITDA slightly
above 4x in 2014.  We include financial obligations at the
holding company level, which leads to adjusted debt to EBITDA of
about 10x -- which is deep in our "highly leveraged" financial
risk profile category.  Because the debt at the holding company
accrues the interest, we forecast that there will be no room for
deleveraging in the coming five years on a consolidated basis.  A
partly offsetting factor to the very high consolidated leverage
is the ratio of cash flow to cash interest costs, as measured by
FFO to cash interest costs, which is strong for the "highly
leveraged" financial risk profile at a forecast level of about
3.5x for 2014," S&P added.

"Our assessment of Pfleiderer's business risk profile as "weak"
reflects the group's exposure to the highly cyclical and
commoditized wood-based panels industry, characterized by price-
based competition, volatile demand, high sensitivity to raw
material costs, and relatively high market fragmentation.  Our
assessment also reflects Pfleiderer's relatively limited size and
scope, with production in eight plants in Germany and Poland, a
high degree of sales geared toward mature Western European
markets, and historical underinvestment in core assets.  We
believe that Pfleiderer's profitability will remain highly
volatile due to its narrow product focus and relatively weak
pricing power, and this weighs on our profitability assessment of
the group.  A further constraint is the presence of a large
minority shareholder base at the Polish subsidiary, where
Pfleiderer owns only 65% and the rest is listed on the stock
exchange.  These factors are only partly mitigated by the group's
strong market positions in Germany and Poland, recent
profitability improvements, and a strong internal focus on cost
control, among additional improvements," S&P noted.

In S&P's base case, it assumes:

   -- GDP growth in the eurozone (European Economic and Monetary
      Union) of 1.0% in 2014 and 1.5% in 2015, with the German
      economy leading the recovery.

   -- GDP growth to be stronger in Poland and other parts of
      Eastern Europe, increasing in Poland by 2.8% in 2014 and
      3.5% in 2015.

   -- Demand for Pfleiderer's main products to improve gradually,
      with economic growth leading to higher capacity utilization
      across the sector.

   -- Profitability to improve on pricing initiatives and
      internal efficiency programs, with a Standard & Poor's-
      adjusted EBITDA margin of about 12.6% in 2014, improving to
      higher than 13% in 2015.

   -- Capital expenditures of just below EUR50 million and
      somewhat higher in 2015 to modernize current operating

   -- No significant mergers or acquisitions, and no dividends,
      apart from the payment of an annual management fee of about
      EUR3 million to Atlantik S.A. for operational expenses.

Based on these assumptions, S&P arrives at the following adjusted
credit measures:

   -- Debt to EBITDA of about 10.0x and FFO to debt of 0% in 2014
      and 2015(about 14% and 4.3x in 2014 without the debt at the
      holding company).

   -- FFO cash interest coverage of some 3.7x in 2014.

The stable outlook takes into account S&P's assumption that
Pfleiderer will see a gradual improvement in profitability driven
by a gradual improvement in market conditions and internal
efficiency measures.  It also reflects S&P's expectation that the
group will maintain an "adequate" liquidity profile, reflecting
S&P's forecast that cash sources will cover cash outflows by at
least 1.2x over the next 12-24 months.

S&P could lower the rating if the group's liquidity weakened to
such an extent that it thinks it likely there could be a
shortfall within the next two years.  This could be the result of
a significant drop in the demand and pricing of Pfleiderer's main
products, most likely triggered by a weakening economic
environment.  S&P could also lower the rating if the group's main
debt maturities fell due within two years, without the group
having a realistic refinancing plan.

Ratings upside is currently remote, in S&P's opinion, due to
excessive leverage and few possibilities to improve credit
metrics in the coming years, due to the accruing debt at the
holding company.  S&P also sees improvements in the business risk
profile as remote, given the group's limited size and scope and
inherent exposure to volatility.


4FINANCE SA: S&P Assigns 'B' Rating to New Sr. Unsecured Bonds
Standard & Poor's Ratings Services assigned its 'B' issue rating
to the proposed senior unsecured bonds to be issued by 4finance
S.A. and unconditionally and irrevocably guaranteed by 4finance
Holding S.A. (B/Stable/--), its non-operating holding company.
The issue rating on the proposed bonds reflects S&P's 'B' long-
term counterparty credit rating on 4finance Holding S.A. and the
preliminary terms of the issue in accordance with S&P's
methodology on rating finance companies' senior unsecured debt.

The proposed public bonds will be issued as senior notes in
accordance with laws of the state of New York and have a change
of control clause and other terms as outlined in the bond
transaction's preliminary prospectus.  The issue will amount to
US$350 million due in 2019.  S&P understands the proposed five-
year notes will replace the company's US$170 million long-term
debt, which matures in January 2015, and finance balance-sheet

S&P's rating on 4finance Holding S.A. reflects the company's high
exposure to regulatory and operational risks, short operating
history, and concentrated business model.  The company's strong
earnings track record relative to that of peers, flexible and
scalable business model, and strong quality of capital partly
offset these weaknesses.  The rating also incorporates S&P's
expectation that 4finance Holding S.A. will continue to expand
into new markets and show rapid balance-sheet growth.

O'FLYNN CONSTRUCTION: Court Appoints Interim Examiner
Mary Carolan at The Irish Times reports that Carbon Finance Ltd.,
a company of Blackstone investment fund management group which
bought EUR1.8 billion liabilities of the Cork-based O'Flynn
Construction Group from the National Asset Management Agency, has
secured the appointment of an interim examiner to four key
companies in the group.

According to The Irish Times, the four companies are O'Flynn
Construction Company, employing 16 people; O'Flynn Construction
BTC; O'Flynn Construction (Rochestown); and Eastgate Developments

The directors and principal shareholders of the companies have
not been "co-operative" with Blackstone and that, combined with
lack of information about accounts of the group, led to the
bringing of the petition, The Irish Times discloses.

The petition was brought by Carbon, as creditor of the companies,
and moved by its counsel Paul Sreenan SC on Wednesday afternoon
before Mr. Justice Brian McGovern, The Irish Times relays.

The Irish Times notes that while Carbon believed the companies
were insolvent as of now, it also believed they had a reasonable
prospect of survival and envisaged a scheme of arrangement which
would involve writing off a significant portion of the companies'
secured debt and further investment of some EUR16 million over
five years for purposes including to complete and rent out units
within the group's property portfolio.

Mr. Justice McGovern granted court protection to the four
companies and appointed Michael McAteer of Grant Thornton as
interim examiner, The Irish Times relays.  Court protection will
continue until the hearing of the petition on Aug. 27 on
condition an Interim Accountants Report, to be prepared by Kieran
Wallace of KPMG, is provided by Aug. 7, The Irish Times

O'Flynn Construction is a property development and construction
company based in Cork.


BANK ASTANA-FINANCE: S&P Assigns 'B-/C' Counterparty Ratings
Standard & Poor's Ratings Services assigned its 'B-' long-term
and 'C' short-term counterparty credit ratings to Bank Astana-
finance JSC.  The outlook is positive.

At the same time, S&P assigned its 'kzBB' Kazakhstan national
scale rating to the bank.

The ratings reflect the structurally high operating risks for a
bank operating primarily in Kazakhstan, factored into S&P's 'bb-'
anchor for local banks, as well as S&P's view of Bank Astana-
finance's "weak" business position, "strong" capital and
earnings, "moderate" risk position, "below average" funding, and
"adequate" liquidity, as S&P's criteria define these terms.

The ratings also take into account the committed shareholders who
are willing to inject capital to support the bank's growth as
well as lower single name loan concentrations than peers.
Offsetting these strengths are a modest competitive position in
the Kazakh banking sector, an untested growth strategy, low risk-
adjusted returns, and very high funding concentrations.

The positive outlook reflects S&P's expectation that, over the
next 12 months, the bank will diversify its funding profile by
reducing its reliance on funding support from its shareholder
Astana Finance Holding, reducing single-name funding
concentrations among corporate depositors, and increasing the
share of retail depositors, thus achieving a funding profile
broadly in line with other rated small and midsize Kazakh banks.

If the bank achieves the above-mentioned metrics, S&P would
revise its assessment of its funding to average from below
average and upgrade the bank, everything else being equal, in the
next 12 months.

S&P expects the bank to maintain capital and liquidity at current
levels and further diversify its lending and funding profiles.
S&P also expects that the shareholders will continue their track
record of making capital injections to support the bank's growth

S&P could take a negative rating action if the bank's loan growth
significantly exceeds its forecast or the shareholders' planned
capital injection is delayed, thus leading to weakened loss-
absorption capacity, with S&P's forecast RAC ratio declining
below 10%.  A significant increase in NPLs, from already above-
peer levels, and the need to create significant additional
provisions would also negatively affect the bank's profitability
and capitalization.


DLK GROUP: Moody's Assigns '(P)B2' Corporate Family Rating
Moody's Investors Service has assigned a corporate family rating
(CFR) of (P)B2 to DLK Group B.V. ('Delek').

Concurrently, Moody's has assigned a (P)B1 rating to the EUR 555
million senior secured first-lien bank facilities and a (P)Caa1
rating to the EUR 100 million second lien facility due 2019 to be
issued by DLK Acquisitions B.V. The outlook is stable.

Proceeds from the loans will be used to refinance existing debt
and fund the acquisition of Delek by TDR Capital, a UK-based
financial sponsor.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign a definitive rating to the facilities. A definitive rating
may differ from a provisional rating.

Ratings Rationale

Delek's (P)B2 CFR reflects the company's (i) low profit margins,
due to the large share of fuel retail operations; (ii) relatively
high earnings concentration in its portfolio of sites and; (iii)
high adjusted debt to EBITDA of around 5.7x at closing and slow
deleveraging prospects in the context of an uneven track record
of cash flow generation.

The (P)B2 CFR also reflects Delek's (i) strong market position as
a motor fuel forecourt operator in the Benelux and France; (ii)
exposure to broadly stable fuel demand patterns and supportive
long-term trends towards convenience offerings and; (iii) large
and well-invested portfolio of sites.

Delek's low EBITDA margin of about 3% reflects the prevalence of
its fuel retail operations, in which Moody's estimate that the
company generates EBITDA margins in line with the industry. Fuel
gross margins have been broadly stable historically since the
company uses a cost plus model. However, Moody's believe that
Delek still bears some fuel volume risk and generally retains
exposure to economic conditions. The non-fuel business, largely
food-focused, enjoys EBITDA margins which Moody's expect to grow
as the company expands and improves its product offering to focus
on higher-margin products. Delek exhibits a relatively high
earnings concentration in its current portfolio of sites. The top
200 sites, which represent c.16.5% of the estate, generate c.73%
of EBITDA and the top 10 sites, which represent less than 1% of
the estate, generate c.10% of EBITDA. In addition, concessions on
highway sites come up for renewal on a regular basis, which puts
the company at risk of losing earnings if bids are unsuccessful.
However, historically Delek has been successful in renewing most
of their concessions in the Benelux and France.

At closing of the transaction, Delek's pro-forma Moody's adjusted
leverage will be 5.7x. Moody's expect deleveraging to be moderate
and confined to earnings growth in the context of a non-
amortising debt structure. Moody's anticipate that Delek's cash
flow generation will continue to be somewhat volatile since
upcoming concession renewal capex does not follow a regular

Moody's views Delek's liquidity profile as adequate, although
potentially exposed to working capital fluctuations e.g.,
resulting from fuel price changes. The transaction will leave the
group with EUR9 million cash at closing, representing a lower
level of cash than at any recent year end. In this context,
Moody's expect the company to make use of its new EUR75 million
revolving credit facility. Both the first and second lien
facilities will have several maintenance covenants against which
Moody's expect Delek to have adequate headroom (at least 20%).
Seasonal patterns in terms of outflows of working capital or
investments are not very pronounced whilst cash generation is
higher in the summer months due to heightened traffic levels.

The senior secured first lien facilities are rated (P)B1, one
notch above the CFR, reflecting their large share in the capital
structure, whilst the second lien facility is rated (P)Caa1,
reflecting its contractual subordination.

The stable outlook on the ratings reflects Moody's expectation
that: (1) Delek's fuel volumes will remain resilient and
management's initiatives in the non-fuel segment will yield
moderate growth in earnings; (2) the level of investment will
remain somewhat volatile without putting the company's cash flow
generation in jeopardy; and (3) the company will maintain an
adequate liquidity profile and headroom under its financial

As Delek is rather weakly positioned within the B2 category, and
deleveraging is likely to be slow, near-term positive ratings
pressure is unlikely. However, earnings growth beyond
expectations, leading to a debt/EBITDA ratio falling sustainably
towards 4.5x could put positive pressure on the ratings.

Negative pressure could be exerted on Delek's ratings if: (1)
operating performance were to deteriorate e.g., due to large
declines in fuel volumes and lack of growth in the non-fuel
segment, such that leverage would exceed 6.0x on a sustained
basis; or (2) free cash flow turned negative for an extended
period of time; or (3) its liquidity profile were to weaken.

Principal Methodologies

The principal methodology used in these ratings was the Global
Retail Industry published in June 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.

Corporate Profile

Headquartered in Breda, the Netherlands, Delek is a large
independent petrol forecourt operator. It operates over 1,200
sites across the Benelux and France. It has two main segments:
fuel and non-fuel, which chiefly comprises the company's
convenience stores at its sites. For the last twelve months
ending March 31, 2014 the company reported pro-forma EBITDA of
103.9 million.


PLAY HOLDINGS: S&P Cuts Long-Term Corporate Credit Rating to 'B'
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Poland-based wireless telecoms
operator Play Holdings 2 S.a.r.l. to 'B' from 'B+'.

At the same time, S&P lowered its issue ratings on the senior
secured notes issued by Play Topco S.A. to 'B' from 'B+' and on
the senior unsecured notes to 'CCC+' from 'B-'.

In addition, S&P assigned a 'CCC+' issue rating to the proposed
payment-in-kind (PIK) toggle notes to be issued by Play Topco
S.A. The outlook is stable.

The downgrade follows Play's announcement that it plans to issue
EUR415 million of PIK toggle notes at Play Topco S.A., the
group's top holding company, and distribute the funds to its
shareholders. Following this announcement, S&P is revising its
assessment of the group's financial policy to reflect its more
aggressive shareholder policies, which include two sizable
dividend recaps made within a year.  S&P therefore believes that
it is unlikely that the group will comfortably and sustainably
deleverage to below 5x Standard & Poor's-adjusted leverage.  S&P
estimates that Play's shareholders will likely take advantage of
continued performance-related growth to make further shareholder-
friendly distributions.  As a result, S&P currently views Play's
financial risk profile as "highly leveraged."  S&P also thinks
that the upcoming long-term evolution (LTE) 800 megahertz
(MHz)/2600MHz spectrum auction, which could be costly and
potentially funded with additional debt at the operating company
level, may further constrain Play's deleveraging potential.

Play remains exposed to possible foreign exchange volatility
arising from the group's nearly 100% cash flow exposure to the
Polish zloty (PLN), against its substantially euro-denominated
debt.  While S&P considers that there is a risk that depreciation
of the zloty could lead to weaker credit metrics at Play, S&P
views the group's relatively strong supplemental credit ratios as
a key mitigating factor; these include EBITDA interest coverage
of well over 3x and free operating cash flow (FOCF) to debt of
more than 5%.

S&P continues to view Play's business risk profile as "fair."
This notably reflects the group's substantial subscriber base and
market share, improved profitability, continued successful
challenger strategy that bears ongoing double-digit revenue
growth, and relatively low churn for its contracted subscriber
base.  However, the business risk profile remains constrained by
meaningfully lower profitability and product diversity than most
of its competitors, as well as narrower network coverage.

S&P's base case for 2014-2015 assumes:

   -- Continued meaningful organic top-line growth of 10%-12% in
      2014, declining to mid-single-digit growth in 2015.  This
      reflects continued, albeit slower, subscriber growth and
      stabilizing average revenue per user due to growth in data

   -- Improving adjusted EBITDA margins to over 28% from about
      22% in 2013, contributed to by increasing operating
      leverage, lower roaming costs due to a recent agreement
      with T-Mobile, and a lower rate of subscriber acquisition
      costs as a percentage of revenues.

   -- Capital expenditure (capex) of 11%-12% of revenues in 2014,
      mainly due to investments in increasing LTE coverage.

   -- S&P currently do not assume any capex spent on the spectrum
      acquisition, given the uncertainties with regards to the
      cost and the timing of the auction.

Based on these assumptions, S&P arrives at the following credit

   -- Debt to EBITDA of about 5.0x in 2014;

   -- EBITDA interest coverage of about 3.5x, including the PIK
      toggle interest;

   -- Funds from operations (FFO) to debt of about 14%; and

   -- FOCF to debt of 6%-7% including the PIK toggle interest.

The stable outlook reflects S&P's assessment that Play will
continue to grow its revenues and operating margins and generate
positive recurring FOCF.

A negative rating action seems unlikely over the medium term.
S&P could consider a downgrade, however, if Play fails to sustain
its competitive position, and experiences higher subscriber churn
and weaker profitability.  The same would also be true if
additional recapitalization further meaningfully weakens S&P's
forecasts of Play's credit metrics or liquidity position.

As long as there remain uncertainties surrounding the cost and
potential funding of the spectrum auction, and Play's competitive
position after such an auction, S&P would not consider a positive
rating action.  S&P could consider a one-notch upgrade if Play's
adjusted debt-to-EBITDA ratio were to decline to comfortably less
than 5x for a prolonged period, with no expected

PLAY TOPCO: Moody's Assigns (P)Caa1 Rating to EUR415MM PIK Notes
Moody's Investors Service has assigned a provisional (P)Caa1
rating to the proposed issuance of EUR415 million (PLN1.7 billion
equivalent) of payment-in-kind (PIK) toggle notes due 2020 by
Play Topco S.A. (Play Topco), the ultimate parent of P4 Sp. Z
o.o. (PLAY), Poland's fourth-largest mobile network operator.
Concurrently, Moody's has assigned a corporate family rating
(CFR) of B2 and a probability of default rating (PDR) of B1-PD to
Play Topco, and withdrawn the B1 CFR and Ba3-PD PDR at the Play
Holdings 2 S.a.r.l (Play Holdings 2) level. Moody's has affirmed
the B1 rating on the EUR600 million and PLN130 million worth of
senior secured notes due in 2019 issued by Play Finance 2 S.A.,
as well as the B2 rating on the EUR270 million worth of senior
unsecured notes due in 2019 issued by Play Finance 1 S.A. The
outlook for all ratings is stable.

Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect the rating agency's
preliminary credit opinion regarding the transaction only. Upon a
conclusive review of the final documentation, Moody's will
endeavor to assign a definitive rating to the company's proposed
PIK notes. The definitive rating may differ from the provisional

Ratings Rationale

Provisional (P)Caa1 Ratings on New PIK Notes and Affirmation
of Existing Instrument Ratings

The (P)Caa1 rating on the new PIK notes issued by Play Topco is
two notches below the group's B2 CFR. This notching differential
reflects the PIK notes' structural and effective subordinated
position relative to the other debt instruments in the group's
capital structure. Due to the high initial leverage and the
substantial amount of secured notes and senior unsecured notes
that effectively rank ahead of the new PIK notes in case of
enforcement, Moody's expects that the recoveries for the PIK
noteholders in a default scenario would be very limited.

The B1 rating on the senior secured notes issued by Play Finance
2 S.A. and the B2 rating on the senior unsecured notes issued by
Play Finance 1 S.A. remain unchanged after this transaction. This
is because the new PIK notes will absorb the first losses in a
default scenario, providing an additional cushion for the
existing senior secured and senior unsecured notes.

B2 Corporate Family Rating

Moody's has reassigned the CFR within the group entities, from
Play Holdings 2 to Play Topco, given that following the PIK notes
issuance, Play Topco will become the top company within the
restricted group.

The B2 CFR of Play Topco is one notch below the B1 CFR that
Moody's previously assigned to Play Holdings 2. The differential
reflects (1) the material increase in group leverage as a result
of the PIK notes issuance, the proceeds of which the company will
use to pay a distribution to its shareholders; (2) the financial
strategy implemented by the shareholders, which is more
aggressive than initially expected; and (3) the increased
exposure to foreign currency risk, given that the PIK notes are
denominated in euro while the group's cash flows are generated in
Polish zloty.

Following the shareholder distribution, Moody's expects that Play
Topco's adjusted debt/EBITDA for FY2014 will increase by around
1.3x, to 5.0x compared with 3.7x pre-transaction. This is outside
of the 3.5x-4.2x range that the rating agency considers
appropriate for Play to be rated in the B1 category.

This is a large shareholder distribution funded with additional
debt. Post PIK notes issuance, consolidated gross debt of PLN5.5
billion will be roughly 45% higher than pre-transaction (PLN3.8
billion). In addition, this shareholder distribution occurs only
a few months after the rating agency assigned initial ratings to
PLAY in January 2014, and is the demonstration of an aggressive
financial policy from PLAY's shareholders. The terms of this "pay
if you can" PIK note provide for cash interest payments subject
to compliance with the restricted payments capacity and a minimum
of EUR20 million of average daily cash balance. Given the current
restricted payments capacity, it is likely that the PIK notes
coupon will be paid in cash, resulting in lower free cash flow
generation than anticipated and reducing the flexibility to bid
in the spectrum auction, which the company now expects to take
place at the earliest in late 2014, and more likely during 2015.

More positively, Moody's notes that the company's operating
performance year-to-date has been strong, in line with or
slightly exceeding management's budget. As a result, continued
performance in line with the budget should translate into a rapid
deleveraging profile, despite the high initial leverage.

The B2 CFR negatively reflects (1) PLAY's small size, its fourth-
place position in the Polish mobile market and its concentration
in Poland; (2) its mobile-only business model, which Moody's
believe is weaker than an integrated business model; (3) its
foreign exchange risk, given that the majority of its debt and
part of its costs and capex are denominated in foreign currency
while revenues are primarily denominated in local currency; (4)
the uncertainty regarding the outcome of the 800MHz/2600MHz
spectrum auction; (5) the track record of aggressive financial
policies implemented to date by the shareholders; and (6) Moody's
expectation that the shareholders could make use of the financial
flexibility that PLAY will develop over time as it progressively
deleverages, in light of the debt incurrence test of 4.75x net
reported debt/EBITDA

At the same time, the rating positively reflects (1) PLAY's track
record of growth in market share and revenues since commercial
launch in 2007; (2) better growth prospects for the Polish market
when compared with other European markets; (3) the expected
stabilization of the competitive and regulatory environments in
Poland; (4) the expected fast deleveraging profile, as the
company benefits from operating leverage and stable capex; (5)
its growing free cash flow generation; and (6) its adequate
liquidity profile.

Rationale for the Stable Outlook

The stable outlook reflects the initially weak positioning of
PLAY's credit metrics for the rating category, but also factors
in Moody's expectation that the company will deleverage quickly
and maintain an adjusted debt/EBITDA ratio (as adjusted by
Moody's) between 5.0x and 4.2x, at the same time as it continues
to generate positive free cash flows.

What Could Change the Rating UP/DOWN

Upward pressure on the rating could develop if the company
delivers on its business plan, such that its adjusted debt/EBITDA
ratio (as adjusted by Moody's) drops below 4.2x on a sustained
basis. However, upward pressure on the rating may be limited
owing to the flexibility embedded in the debt documentation, as a
result of which the shareholders may relever the balance sheet up
to 4.75x net reported debt/EBITDA.

Downward pressure could be exerted on the rating if PLAY's
operating performance weakens, or the company increases debt as a
result of acquisitions or shareholder distributions such that its
adjusted debt/EBITDA (as adjusted by Moody's) remains above 5.0x.
A weakening in the company's liquidity profile could also exert
downward pressure on the rating.

Principal Methodologies

The principal methodology used in these ratings was the Global
Telecommunications Industry published in December 2010. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.

Play Topco S.A. is the ultimate parent of P4 Sp. Z o.o., Poland's
fourth mobile network operator in terms of subscribers. The
company operates under the commercial name "PLAY" and offers
voice, non-voice and mobile broadband products and services to
residential and business customers. As of March 2014, PLAY had
approximately 10.9 million reported subscribers (of which 45%
were contract subscribers) and a mobile market share of 19.3%. In
the last 12 months ended March 2014, PLAY reported revenues of
PLN3.8 billion (EUR919 million) and EBITDA of PLN800 million
(EUR192 million). PLAY's shareholders are Olympia Development
(through Tollerton Investments Limited) with a 50.3% stake, and
Novator with a 49.7% stake.


BANCO ESPIRITO: Posts EUR3.58-Bil. Net Loss in First Half 2014
Peter Wise at The Financial Times reports that Banco Espirito
Santo has posted a first-half net loss of EUR3.58 billion that
exposes the full extent of the Portuguese lender's exposure to
the financial woes engulfing its main shareholder, the Espirito
Santo family group.

BES, Portugal's largest listed lender by assets, said
"extraordinary events" had resulted in impairment and contingency
costs totaling EUR4.25 billion and had cut its capital strength
to below the regulatory minimum, the FT relates.

The record loss wipes out BES's existing capital buffer of EUR2.1
billion and implies that it will have to raise fresh capital, the
FT discloses.  The result marks a vertiginous fall from a loss of
EUR237.4 million in the first half of 2013, the FT notes.

BES, as cited by the FT, said that contingencies included a
provision of EUR1.2 billion for its exposure to the distressed
Espirito Santo group as well as the writing off of "irrecoverable
interest" on loans granted by its Angolan unit.

Fears over the exposure of BES to the woes of Espirito Santo
group sparked a sell-off in European markets last month, the FT

The three main companies in the Espirito Santo group, which owns
about 20% of BES, have been placed under controlled management by
the Luxembourg courts after applying for protection from their
creditors, the FT recounts.

BES has cancelled an extraordinary shareholders meeting scheduled
for July 31 because of the creditor protection granted to
Espirito Santo Financial Group, which directly holds the family
group's stake in the bank, the FT relates.

According to the FT, BES said on Tuesday that the creditor
protection process rendered all proposals made by ESFG ahead of
the meeting null and void.  These had included creating a non-
executive strategic board, the FT states.

However, the postponement of the shareholders meeting will not
affect the appointment of Vitor Bento, who took over at the head
of a new management team on July 14, when all members of the
Espirito Santo family stepped down from the executive board, the
FT states.

Banco Espirito Santo is a private Portuguese bank based in
Lisbon.  It is 20% owned by Espirito Santo Financial Group.

BRISA CONCESSAO: Moody's Raises Sr. Secured Debt Rating to Ba1
Moody's Investors Service has upgraded to Ba1 from Ba2 the senior
secured debt rating of Brisa Concessao Rodoviaria S.A. (BCR).
Concurrently, Moody's has upgraded to (P)Ba1 from (P)Ba2 the
provisional rating on the EUR3 billion medium-term note (EMTN)
program. The outlook on the ratings is positive.

The rating action concludes the review for upgrade announced on
May 13, 2014.

The action follows Moody's decision to upgrade to Ba1 from Ba2
the rating of the Government of the Republic of Portugal (RoP),
as announced on July 25, 2014.

Ratings Rationale

The rating action takes account of the improvement in traffic
volumes on BCR's network coupled with the stabilization of the
financial environment in Portugal as reflected in the upgrade of
the RoP's rating to Ba1 from Ba2. The upgrade of BCR's ratings
further reflects Moody's expectation that the company will be
able to demonstrate credit metrics consistent with the terms of
its financing structure and it will continue to maintain a strong
liquidity position.

In the first half of 2014, BCR's network saw an increase in
traffic volumes of 4.6%, which is among the best performances
reported by the European toll road operators over this period.
Better traffic performance reflects an improvement in business
sentiment in the Portuguese economy and growth in domestic
consumption. Given stronger volumes, BCR continued to deleverage
with net debt/EBITDA decreasing to 5.98x, which is below the
trigger level of 6.25x. The company's liquidity position is
strong with the EUR600 million bond maturing in December 2016
being largely pre-funded, thus significantly reducing the
refinancing risk that previously weighed on BCR's ratings.

BCR's rating continues to reflect (1) the large size and
importance of its network for Portugal's transport system; (2)
the transparency of the concession and regulatory framework; (3)
the company's modest capital investment program, which should
support free cash flow generation; (4) the covenant package and
other creditor protections incorporated within BCR's debt
documentation; and (5) a policy of prudent financial management.
However, BCR's rating remains constrained by (1) the short track
record of positive traffic trends, which follow significant
traffic volume declines during the financial crisis; (2) still
fairly high leverage; (3) the refinancing needs of the company
given sizeable debt maturities, albeit somewhat mitigated by a
pre-funding strategy.

The positive outlook reflects Moody's expectation of continued
positive traffic trends on BCR's network, which could lead to
improved credit metrics that would be commensurate with an
investment grade rating.

What Could Change the Rating UP/DOWN

BCR's rating could be upgraded if (1) there was a longer track
record of positive traffic trends on the company's network; and
(2) the company was able to demonstrate a minimum funds from
operations (FFO)/debt ratio above 8% (or FFO/net debt in high
single digits in percentage terms recognizing the pre-funding of
debt maturities) and FFO interest cover ratio above 2.5x on a
sustainable basis. This would be under an assumption of continued
strong liquidity of the company. Given the company's domestic
focus, the rating is not likely to be higher than one notch above
the government's rating.

Downwards rating pressure could develop if (1) there is a
material change in the terms and conditions of the concession
that negatively affects the company's business or financial risk
profile; (2) there is evidence of political interference and/or
discriminatory fiscal measures; (3) there is a deterioration in
the company's liquidity profile; or (4) there is an increased
risk of covenant breaches. In addition, a material deterioration
in the Portuguese sovereign creditworthiness would likely result
in an adjustment of BCR's ratings.

ENERGIAS DE PORTUGAL: Moody's Affirms 'Ba1' Rating; Outlook Pos.
Moody's Investors Service has affirmed the Ba1, (P) Ba1 and non-
prime ratings of EDP-Energias de Portugal S.A. (EDP), EDP Finance
B.V. and Hidroelectrica del Cantabrico SA. The outlook has been
changed to positive from negative.

Rationale for Change in Outlook

The change in outlook to positive from negative reflects (1) an
improving operating and macroeconomic environment for EDP, as
reflected in the recent Portuguese sovereign upgrade to Ba1
stable; and (2) Moody's view that EDP will gradually deleverage
as outlined in the company's recent strategic plan update.

A more benign operating environment for the company is reflected
in the (1) improved funding and pricing conditions in the
financial markets for Portuguese issuers resulting in a lower
marginal cost of debt and improved liquidity achieved by EDP
during 2014; (2) modest recovery in electricity demand in
Portugal; and (3) a reduced risk of further large regulatory cuts
to EDP's earnings in Iberia. The Portuguese government has
announced that it will probably impose a similar extraordinary
levy on the energy sector in 2015 as in 2014, which Moody's
expects to be in line with the EUR47 million cut to EDP's post
tax earnings and which the company has incorporated into its
business plan.

The rating action also factors the company's revised deleveraging
targets as announced in its updated 2014-17 strategic plan in
May, targeting net debt/ EBITDA (excluding regulatory
receivables) of 3x by 2017. The company plans EUR5.6 billion of
net investments, mainly focused on completing new and repowering
existing hydro generation plants in Portugal and Brazil to
increase production flexibility and growth in renewables,
primarily in the US which should allow for a gradual improvement
in group earnings over the life of the plan. EDP plans to achieve
its objectives with the assistance of its strategic partner,
China Three Gorges (CTG) through the completion of its EUR2
billion plan of divestments and co-investments.

Rationale for Ba1 Rating

The current Ba1 ratings continue to take into account EDP's
strategic position as Portugal's largest utility, as well as the
company's strong mix of largely regulated businesses or
generation under contract, with limited exposure to volume or
price risk and its geographic diversification, with more than 50%
of EBITDA emanating from businesses outside of Portugal in US,
Brazil and Spain.

At the same time, Moody's factors the still rather highly
leveraged financial profile of EDP with retained cash flow(RCF)
/net debt of 9.3% and funds from operations (FFO)/net debt of
13.5% as of financial year end 2013. The company's financial
profile has been adversely affected by (1) cuts to earnings as a
result of a suite of regulatory measures in Iberia amounting to
around EUR300 million of EBITDA; (2) a high level of regulatory
receivables funded by EDP (EUR3.1 billion, of which EUR2.6
billion were in Portugal, as of Q1 2014); and (3) a difficult
operating environment for its Brazilian operations as a result of
adverse currency movements against the euro and extreme drought
conditions pushing up the costs of electricity, although Moody's
would expect the hydrological environment to normalize in due

EDP remains affected by the high level of regulatory receivables
in the Portuguese system which are currently funded by the
company until monetized. Moody's notes however that the company
has achieved a level of more than EUR1 billion of monetizations
so far this year. According to EDP and government projections,
these receivables are expected to peak at around EUR5.3 billion
in 2015 and then decline, there are nonetheless a number of
variables that may affect their evolution, such as the pace of
electricity demand recovery, access tariff increases as well as
the level of system costs, in particular those related to
renewable energy.

What Could Move the Rating Up/Down

Further positive pressure could develop on the rating provided
that the company continues to demonstrate delivery against its
plan. This would be reflected in an improving financial profile
trending towards RCF/net debt in the low double digits and
FFO/net debt of mid-teens by 2015/16 on a sustainable basis.
These ratios should improve thereafter to accommodate increasing
business risk as the company's earnings from Portuguese long-term
generation contracts with a guaranteed return run off by 2017 and
they will become more exposed to the liberalized Iberian energy
markets. Moody's would consider continuing evidence of an
improving macroeconomic and operating environment, without any
significant setbacks, such as a more difficult funding
environment, a rise in regulatory receivables that were not
monetized by EDP or further large regulatory cuts, as supportive
of this positive trend towards further financial strengthening.

The outlook on the rating could stabilize if deleveraging plans
were significantly delayed or there were a significant downturn
in the company's operating environment.

Principal Methodology

The principal methodology used in these ratings was Unregulated
Utilities and Power Companies published in August 2009.
EDP based in Lisbon, Portugal, is the country's largest
vertically integrated utility. The company also has interests in
Spain, Brazil and the US. It is active in the renewables sector
through EDP Renovaveis. As at fiscal year ended 2013, EDP had
revenues of EUR16.1 billion.

Hidroelectrica del Cantabrico, is headquartered in Oviedo, Spain,
and is the 99.87%-owned Spanish electric and gas subsidiary of
EDP - Energias de Portugal (EDP). As of FYE 2013, it had revenues
of EUR4.1 billion.

REDE FERROVIARIA: Moody's Raises Corporate Family Rating to 'Ba3'
Moody's Investors Service has upgraded the Ba3 corporate family
rating (CFR) and senior unsecured rating, the Ba3-PD probability
of default rating (PDR) and the (P)Ba3 EUR3 billion EMTN rating
of Rede Ferroviaria Nacional-REFER, E.P.E. (REFER) to Ba2, Ba2-PD
and (P)Ba2, respectively. Concurrently, Moody's also upgraded
from (P)Ba2 to (P)Ba1 the rating of REFER's EUR3 billion EMTN
program, which provides for the issuance of government-guaranteed
notes, and from Ba2 to Ba1 the rating of government-guaranteed
notes issued under the program. The outlook on all the ratings is

The actions follow Moody's recent decision to upgrade to Ba1 from
Ba2, with a stable outlook, the rating of the Republic of
Portugal (RoP), as announced on July 25, 2014.

Ratings Rationale

The upgrade of REFER's ratings reflects the linkages between the
company and the RoP and the strengthened support that the
Portuguese government has provided to the company over the past
three years. REFER's standalone credit quality remains
exceptionally weak, but the government has continued to provide
loans or fresh capital to REFER in sufficient amounts to ensure
that the company can meet all of its debt obligations on a timely
basis. Such loans and capital injections are expected to continue
to be provided, thus enabling REFER to cover ongoing interest and
operating expenses as well as upcoming debt repayments.

Moody's continues to make a one-notch rating distinction between
REFER and the RoP, recognizing the residual risk, albeit small in
the rating agency's view, that the sovereign may not be able to
make payments in the future or that REFER's unguaranteed debt may
not be treated as part of government debt in any restructuring.
Absent such payments, REFER would likely have minimal value as a
standalone enterprise. REFER's guaranteed debt continues to be
rated at the same level of the RoP.

REFER is considered a Government-Related Issuer (GRI) under
Moody's methodology. Consequently, the Ba2 rating of REFER
reflects the combination of the following inputs: (i) a Baseline
Credit Assessment (BCA) of caa1; (ii) the Ba1 local currency
rating of the RoP; (iii) an assumption of very high support; and
(iv) very high dependence.

The outlook on REFER's ratings is stable, in line with the
outlook on the RoP's rating.

What Could Change the Rating Up/Down

An upgrade of the rating of the RoP would likely result in an
upgrade of the ratings of REFER, with the one-notch differential
in respect of the company's CFR, PDR and unguaranteed debt
ratings expected to be maintained. Conversely, a downgrade of the
rating of the RoP would likely result in a downgrade of the
rating of REFER. Furthermore, any evidence that the provision of
financial support from the RoP would not be forthcoming to REFER
if required would result in a downgrade of the rating of REFER.

Principal Methodologies

The principal methodologies used in rating REFER were Government
Owned Rail Network Operators published in April 2009 and the
Government-Related Issuers: Methodology Update published in July


MECHEL OAO: Vnesheconombank Won't Take Part in Rescue
Darya Korsunskaya and Andrey Kuzmin at Reuters report that
Vladimir Dmitriev, chairman of Russia's state development bank
Vnesheconombank, has ruled out taking part in a rescue of ailing
miner Mechel, possibly making a rival government-promoted debt-
for-equity deal involving creditors a more likely option to save
the company.

Russia, Reuters says, has been looking into ways to help Mechel,
a coal-to-steel group with US$8.6 billion in debt and 70,000
workers, for several months and has proposed two schemes, both
involving a change in ownership.

The first option would involve the participation of VEB, though
it has already recommended avoiding further restructuring
schemes, Reuters notes.

The head of VEB stuck to his guns on Wednesday, saying any
involvement in saving Mechel, controlled by businessman
Igor Zyuzin, was not in the bank's best interests, Reuters

"The scheme involving VEB's participation is loss-making for us
-- we cannot participate in this," Reuters quotes Mr. Dmitriev as

The government's other proposal is to convert part of Mechel's
US$8.6 billion debt into shares, with the involvement of the main
creditor banks, according to Reuters.

Andrei Belousov, President Vladimir Putin's top economic aide, as
cited by Reuters, said on Wednesday that the final decision on
which course to follow lies with Mechel's owners and its creditor
banks -- mainly Sberbank, VTB and Gazprombank, warning of the
risks if a consensus isn't reached.

"Bankruptcy will happen if they do not reach an agreement,"
Reuters quotes Mr. Belousov as saying.  "If they manage to reach
an agreement, all these options in one form or another involve at
least a temporary change of ownership," he said, promising a
decision within days.

Mechel OAO is a Russian steel and coking coal producer.

As reported by the Troubled Company Reporter-Europe on April 2,
2014, Moody's Investors Service downgraded Mechel OAO's corporate
family rating (CFR) and probability of default rating (PDR) to
Caa1 and Caa1-PD, respectively.  Moody's said the outlook remains

MOSCOW INTEGRATED: S&P Withdraws 'BB-/B' Corp. Credit Ratings
Standard & Poor's Ratings Services affirmed its 'BB-/B' long- and
short-term corporate credit ratings and its 'ruAA-' Russia
national scale rating on heating utility Moscow Integrated Power
Co. JSC (MIPC).  S&P subsequently withdrew the ratings at MIPC's

The outlook was stable at the time of the withdrawal.

The affirmation reflected S&P's assessment of MIPC's business
risk profile as "weak" and its financial risk profile as
"significant," at the time of the rating withdrawal.  In S&P's
view, MIPC's business risk profile was constrained by Russia's
regulatory system, which S&P thinks lacks long-term certainty,
predictability, and independence from political influence, nor
does it guarantee operators full and timely cost recovery with a
margin.  Other constraints included MIPC's exposure to high
country risk in Russia, weather-dependent demand for heat,
reliance on Mosenergo for about two-thirds of the supplied heat,
and below-average profitability, as reflected by a low return on
capital.  Supportive factors included MIPC's position as Moscow's
leading district heating utility, its 100% regulated earnings,
and diverse customer base.  S&P's assessment of MIPC's financial
risk profile incorporated its projection of negative free
operating cash flow over the next 24 months.  This stemmed from
S&P's assumption of MIPC's sizable investment spending and
reliance on external financing.  S&P anticipated that MIPC's
debt-to-EBITDA ratio would stay below 3.0x and funds from
operations to debt higher than 30% in 2014 and 2015.  S&P
assessed MIPC's liquidity as "adequate," as defined by its
criteria.  S&P's assessment was based on the expectation that
Gazprom group would refinance MIPC's short-term debt and cover
its investment needs with internal loans (already committed).

PETROCOMMERCE BANK: Moody's Cuts Deposit & Debt Ratings to 'B2'
Moody's Investors Service has downgraded to B2 from B1
Petrocommerce Bank's long-term foreign- and local-currency
deposit ratings and local-currency debt ratings.

The downgrade of Petrocommerce's ratings is driven by (1) its
weak profitability stemming from recently high provisioning
charges against problem loans; and (2) its deteriorated capital

Concurrently, the bank's Not Prime short-term foreign and local-
currency ratings were affirmed. The outlook on all long-term
ratings is stable. Petrocommerce's standalone bank financial
strength rating (BFSR) remains at E+ with a stable outlook, now
equivalent to a baseline credit assessment (BCA) of b2 (formerly

Moody's assessment of the issuer's ratings is largely based on
the announced sale of Petrocommerce to Otkritie Holding as well
as the bank's audited financial statements for 2013.

Ratings Rationale

Weak Profitability

New provision charges, largely from the bank's recently
recognised problem legacy loans, meant that Petrocommerce Bank
posted RUB9.7 billion losses (according to audited IFRS) in 2013.
As of year-end 2013, the level of Petrocommerce's problem loans
(defined as individually impaired in the corporate segment, and
90+ days overdue in the retail segment) remained significant: 22%
of the gross loan book (2012: 23.7%), despite sales of a part of
the bank's problem loans in 2013. Most of these problem loans are
concentrated in the corporate segment, representing legacy loans
that Petrocommerce originated before the 2008-09 global financial
crisis. In Moody's view, the likelihood of recovery for most of
these problem loans is limited over the next 12-18 months.

Moody's says that despite some progress in diversifying into
higher-margin business Petrocommerce demonstrated weak pre-
provision income (net of gains from the sale of loans to the
shareholder) relative to total assets: year-end 2013: 1.3% and
year-end 2012: 1.6%.

Deteriorated Capital Levels

On the back of this adverse performance, Petrocommerce has a
modest capital buffer with which to absorb potential losses
arising from further asset-quality erosion. This is because the
bank reported substantial erosion of its capital base, with the
total capital adequacy ratio (CAR) and Tier 1 ratio falling to
15.4% and 9.7% (Basel I), respectively, at year-end 2013 (year-
end 2012: 18.0% and 14.7%).

Stable Outlook

The change in outlook on Petrocommerce's long-term ratings to
stable reflects Moody's view that the bank's new shareholders
will continue to support the bank, thereby helping to dilute
problem assets as a proportion of new performing loans, and
optimizing its organizational structure. Moody's also notes that
the bank's existing legacy problem loans are largely recognized,
and their provisioning has improved.

According to the sale agreement, Petrocommerce's current major
shareholder (IFD Kapital Group) will dispose of its controlling
stake in Petrocommerce to Otkritie Holding: a leading Russian
financial institution, which also controls Otkritie Financial
Corporation Bank OJSC (deposits Ba3 stable; BFSR D- stable/BCA
ba3) and its subsidiary banks. Moody's expects the deal to be
closed by year-end 2014 with Otkritie Holding accumulating more
than 95% of Petrocommerce; thereafter, Petrocommerce will fully
merge with OFCB under the latter name.

What Could Move The Ratings Up/Down

The downgrade of Petrocommerce's long-term ratings implies that
upward rating pressure is limited. The outlook on the long-term
ratings could be changed to positive if the bank improves its
profitability and asset quality, while maintaining adequate
capital and liquidity levels.

Moody's says that Petrocommerce's ratings could be downgraded if
the financial aid from the new shareholders is not sufficiently
adequate to mitigate the bank's existing weak performance (e.g.,
asset quality, capital and profitability).

Principal Methodology

The principal methodology used in this rating was Global Banks
published in July 2014.

Headquartered in Moscow, Russia, Petrocommerce reported total
assets of RUB239 billion (US$7 billion) under IFRS (audited) as
of year-end 2013. The bank's net loss totaled RUB9.7 billion
(around US$300 million) in 2013.

RUSSLAVBANK: Moody's Confirms B3 Long-term Global Deposit Rating
Moody's Investors Service has confirmed the B3 long-term global
local and foreign-currency deposit ratings and B3 local-currency
senior unsecured debt rating of Russlavbank (Russia).
Simultaneously, the rating agency confirmed the bank's E+
standalone bank financial strength rating (BFSR) (which is
equivalent to a baseline credit assessment (BCA) of b3). The
outlook on the E+ standalone BFSR and B3 long-term deposit and
debt ratings is negative.

The ratings confirmation concludes the bank's ratings review
initiated by Moody's on May 7, 2014.

Russlavbank's Not Prime short-term global local and foreign-
currency deposit ratings were not subject to the review.

Moody's rating action is primarily based on Russlavbank's
unaudited financial statements for January-July 2014, which were
prepared in accordance with local GAAP.

Ratings Rationale

Moody's confirmation of Russlavbank's ratings reflects the bank's
stabilized liquidity profile, with its liquidity buffer rising to
16% of total assets as at July 10, 2014 compared to 10% at 1 May
2014, as reported under local GAAP. The rating agency notes that
while this liquidity cushion still requires further bolstering,
it appears to be sufficient to (1) serve the bank's short-term
obligations; and (2) withstand some moderate outflow of funding
sources, should it occur. Moody's also views positively
Russlavbank's plan to attract RUB1 billion subordinated loan by
the end of August 2014, which should support both the bank's
liquidity profile and its capital buffer.

Moody's further explained that its negative outlook on
Russlavbank's ratings reflects the rating agency's assessment of
risks associated with the bank's weakening earnings generation,
as well as its weak asset quality.

Russlavbank had to sell out or pledge a sizeable proportion
(approximately one third) of its loan portfolio in order to
attract additional financing and stabilize its liquidity profile,
and Moody's believes that further sales of loans to third-party
financial institutions are possible. Russlavbank also entered
into a transaction whereby it disposed of its CONTACT payment
system, which had previously been an intrinsic part of the bank's
business and had contributed a large proportion of its fee-and-
commission income. The rating agency expects that the reduction
of Russlavbank's business volumes and curtailing of certain
business lines will put pressure on the bank's profits
generation, as the bank has already recorded a 10% decline in net
interest income and its fee-and-commission income was halved in
the second quarter compared to the first quarter of 2014.

Moody's notes persistent risks regarding Russlavbank's asset
quality, as the bank operates in a high-risk, albeit high-margin,
segment of unsecured retail lending. As at year-end 2013,
Russlavbank's problem loans as a percentage of total gross loans
were high at 12.3% (2012: 12.9%), and the cost of risk (defined
as loan loss provisions as a percentage of average gross loans)
amounted to 13.9% in 2013 (2012: 12.9%). Factors partially
mitigating the asset quality risks include (1) the bank's
strengthened -- following recent deleveraging -- capital cushion,
with a regulatory total capital adequacy ratio of 14.84% reported
at 1 July 2014, as well as (2) the currently good coverage of
problem loans by loan loss reserves at 123%, as reported at year-
end 2013 under IFRS.

According to Russlavbank's management, the bank is going to sell
its accumulated distressed assets at their book value of
approximately RUB2 billion by the end of 2014, which would clean-
up the bank's balance sheet. Moody's explained that, in order to
resolve its negative outlook on Russlavbank's ratings, it would
seek to observe the successful implementation of this plan and
also require clear evidence that the newly generated loan
vintages are of better quality, because these vintages will
likely be seasoning in Russia's currently challenging
macroeconomic conditions.

What Could Move The Ratings Up/Down

Russlavbank's E+ standalone BFSR and B3 deposit and debt ratings
have low upside potential in the next 12 to 18 months, given the
negative outlook currently assigned to these ratings. However,
Moody's could revise the outlook on the bank's long-term ratings
to stable from negative if Russlavbank re-establishes its
franchise value while simultaneously demonstrating sustainable
improving performance in terms of profitability, asset quality
and liquidity.

Moody's could potentially downgrade Russlavbank's E+ standalone
BFSR and its B3 deposit and debt ratings if the bank's financial
fundamentals materially deteriorate from the current, already
weakened, levels.

Principal Methodology

The principal methodology used in this rating was Global Banks
published in July 2014.

Headquartered in Moscow, Russia, Russlavbank reported -- as per
audited IFRS -- total assets of US$1.0 billion and total
shareholders' equity of US$126 million as at year-end 2013. The
bank's net IFRS profits for 2013 stood at US$427,000.


CATALUNYA BANC: Moody's Puts B3 Rating on Review for Upgrade
oody's Investors Service has placed on review for upgrade the
mortgage and public sector covered bonds issued by Catalunya Banc
SA (Catalunya Banc; deposits B3 on review for upgrade, bank
financial strength rating (BFSR) E /adjusted baseline credit
assessment (BCA) caa2), following the rating agency's decision to
place the issuer's respective bank ratings on review for upgrade.

Ratings Rationale

The rating action is prompted by Moody's decision to place
Catalunya Banc's B3 long-term debt and deposit ratings on review
for upgrade, which has been triggered by the announcement on
July 21, 2014 of the successful bid for Catalunya Banc by Banco
Bilbao Vizcaya Argentaria, S.A. (BBVA; deposits Baa2 positive;
BFSR C-/BCA baa2).

For further information on the rating actions taken by Moody's
Financial Institutions Group, please refer to "Moody's reviews
Catalunya Banc's B3 debt and deposit ratings for upgrade".

Key Rating Assumptions/Factors

Moody's determines covered bond ratings using a two-step process;
an expected loss analysis and a TPI (timely payment indicator)
framework analysis.

EXPECTED LOSS: Moody's uses its Covered Bond Model (COBOL) to
determine a rating based on the expected loss on the bond. COBOL
determines expected loss as (1) a function of the probability
that the issuer will cease making payments under the covered
bonds (a CB anchor event); and (2) the stressed losses on the
cover pool assets following a CB anchor event.

For the two covered bond programs, the cover pool losses are an
estimate of the losses Moody's currently models if a CB anchor
event occurs. Moody's splits cover pool losses between market
risks and collateral risk. Market risks measure losses stemming
from refinancing risks and risks related to interest rate and
currency mismatches (these losses may also include certain legal
risks). Collateral risks measure losses resulting directly from
cover pool assets' credit quality. Moody's derives the collateral
risk from the collateral score.

The CB anchor for these programs is the senior unsecured/deposit
rating (SUR) plus 0 notches given that the debt ratio is below

(1) Catalunya Banc's Mortgage Covered Bonds

The cover pool losses for this program stand at 34.3%, with
market risk of 16.8% and collateral risk of 17.5%. The collateral
score is 26.1%. The over-collateralization (OC) in the cover pool
is 153.3%, of which 25% is on a committed basis. The minimum OC
level that is consistent with the Ba1 rating target is 16%. These
numbers demonstrate that Moody's is not relying on uncommitted OC
in its expected loss analysis.

(2) Catalunya Banc's Public Sector Covered Bonds

The cover pool losses for this program stand at 33.2%, with
market risk of 12% and collateral risk of 21.2%. The collateral
score is 42.4%. The over-collateralization (OC) in the cover pool
is 492.5%, of which 42.9% is on a committed basis. The minimum OC
level that is consistent with the Ba1 rating target is 15.5%.
These numbers demonstrate that Moody's is not relying on
uncommitted OC in its expected loss analysis.

TPI FRAMEWORK: Moody's assigns a TPI, which indicates the
likelihood that the issuer will make timely payments to covered
bondholders in the event of an issuer default. The TPI framework
limits the covered bond rating to a certain number of notches
above the CB anchor.

For these programs, Moody's has assigned a TPI of "Probable".

Factors That Would Lead To An Upgrade Or Downgrade Of The Rating:

The CB anchor is the main determinant of a covered bond program's
rating robustness. A change in the level of the CB anchor could
lead to an upgrade or downgrade of the covered bonds. The TPI
Leeway measures the number of notches by which Moody's might
lower the CB anchor before the rating agency downgrades the
covered bonds because of TPI framework constraints.

The TPI assigned for both Catalunya Banc's programs is Probable.
The TPI Leeway for these programs is limited, and thus any
reduction of the CB anchor may lead to a downgrade of the covered

A multiple-notch downgrade of the covered bonds might occur in
certain limited circumstances, such as (1) a sovereign downgrade
negatively affecting both the issuer's senior unsecured rating
and the TPI; (2) a multiple-notch downgrade of the issuer; or (3)
a material reduction of the value of the cover pool.

LA SEDA DE BARCELONA: Judge Approves Administrator's Rescue Plan
Charles Penty at Bloomberg News reports that La Seda de Barcelona
said in a regulatory filing on July 31 that a Barcelona judge has
approved a rescue plan drawn up by the company's court-appointed

La Seda de Barcelona is a Spanish plastics bottle maker.  The
Catalonia-based company makes bottles in Europe, Turkey and North
Africa.  In June 2013, LSB placed itself in voluntary insolvency
after failing to reach agreement with creditors to restructure
its debt.  In February 2014, La Seda de Barcelona entered the
liquidation phase following a ruling by a commercial court judge
in Barcelona, Spain.

TELEPIZZA: Aims to Avert Debt Restructuring Through Refinancing
Claire Ruckin at Reuters reports that banking sources said on
Tuesday Telepizza is set to refinance existing loans with a new
first lien loan and a new Payment In Kind (PIK) loan that will
help it escape an expensive debt restructuring.

According to Reuters, the refinancing will repay most lenders in
full.  Most of an existing PIK loan will be swapped for equity
and private equity firm KKR is making a new EUR180 million
investment in the company, Reuters discloses.

Private equity firm Permira bought Telepizza in 2006 for EUR962
million (US$1.31 billion), Reuters recounts.  The business was
hit by a slowdown in consumer spending during the eurozone crisis
and has been looking at ways to manage its EUR575 million debt,
Reuters relays.

After the refinancing, Permira will own a 55% stake in Telepizza,
KKR will own 36%, and former PIK lenders will own 9%, Reuters

The banking sources, as cited by Reuters, said Morgan Stanley and
KKR Capital Markets are leading the refinancing and a call was
held with lenders on Tuesday.

The refinancing is proposing to repay lenders to the existing
EUR325 million senior and second lien loan and the EUR150 million
mezzanine loan at par, or face value, Reuters discloses.
Investors will then be able to recommit to the new deal, Reuters

Lenders to the existing EUR100 million PIK loan are talking to
Permira about the level of losses to be taken in the debt for
equity swap, Reuters relates.

The bankers said that around EUR85 million of the EUR100 million
PIK loan will be equitized, Reuters notes.

According to Reuters, the PIK investors and Permira are close to
reaching an agreement on the PIK loan debt for equity swap, which
is necessary to complete the refinancing.

Telepizza is a Spanish pizza delivery business.

U N I T E D   K I N G D O M

DIGITAL SPARK: Bought Out of Administration by Silverlink
Insider Media Limited reports that Digital Spark has been bought
out of administration by Newcastle-based counterpart Silverlink

The newly acquired business, based on Lower Steenberg's Yard, was
bought in a pre-pack deal, according to Insider Media Limited.

The report notes that the deal came shortly after the business
fell into administration on Thursday, July 10, 2014, when Neil
Matthews of Leather Matthews Restructuring was appointed

Silverlink promised it would work with the existing team at
Digital Spark and its customers to ensure 'business as usual'
while integration takes place, the report relates.

The company added it would continue to develop and sell the
products of Digital Spark, which specializes in healthcare
software, the report notes.

"The acquisition is an opportunity to extend Silverlink's
healthcare IT strategy of providing modular, best-of-breed
systems with Digital Sparks' clinically-superior functionality,
the report quoted Tim Quainton, managing director of Silverlink,
as saying.

"We are integrating the Digital Spark team into Silverlink to
ensure the customer base receive full support and maintenance
during the transition," Mr. Quainton said, the report relates.

Silverlink Software is based at Cobalt Business Exchange.

UNIPART AUTOMOTIVE: In Administration, Cuts Jobs
Burton Mail reports that staff who work at the Burton branch of
Unipart Automotive lost their jobs as the car part supplier heads
into administration amidst business problems.

The report notes that the six staff who work at the branch on the
Crown Industrial Estate, in Oxford Street, are among 1,244 staff
at Unipart branches nationwide who have lost their jobs.

It follows the appointment of administrators KPMG, which had been
seeking a buyer for the business, the report relays.

Immediately upon appointment, the administrators sold part of the
business in a joint deal to Andrew Page, which distributes car
parts, workshop equipment, tools and diagnostics, and The Parts
Alliance, the report discloses.  The deal, which has saved 361
jobs, will see Andrew Page buy 21 branches and The Parts Alliance
12, the report relays.

However, the report notes that the Burton site was not part of
the deal.

Headquartered in Solihull, Unipart Automotive was one of the UK's
largest independent suppliers of car parts, workshop consumables
and garage equipment.  It operated a network of 180 branches and
distribution hubs trading under the Unipart Automotive, Partco
Autoparts and Express Factors brands.

* UK: Administration Numbers for Food & Drink Firms Fall Sharply
The Grocer reports that fewer food and drink firms are falling
into administration despite the tumultuous grocery market
conditions, new data has revealed.

A study by Grant Thornton found the number of industry business
failures has fallen in recent months and a growing proportion of
companies entering administration are being rescued rather than
dissolved, according to The Grocer.

The report notes that a total of 70 companies went into
administration in 2012, but that number plummeted to 45 last

The report relates that the downward trend has continued into
2014, with only 21 companies calling in the administrators in the
first half of the year.  Of those firms to have entered
administration so far this year 38% were subsequently acquired,
compared with 28% in 2013, the report notes.

The report says that examples so far this year include Fabulous
Bakin' Boys, the Oxfordshire-based bakery business bought by
Dutch baker Daelmans Group in April, and Autobar, the food and
drink vending machine company that private equity firm CVC
Capital Partners sold to a consortium of US creditors in a 'debt
for equity' deal last month.

The report relates that Trefor Griffith, partner and head of food
and beverage at Grant Thornton commented: "Against the backdrop
of a weak grocery market, it is encouraging to see that fewer
food and beverage companies are falling into administration and
that a good number have been acquired."

Although falling grocery sales and the growth of the dicounters
have made life increasingly difficult for a lot of UK food and
drink manufacturers, pressure has been eased by the continuation
of historically low UK interest rates, the report notes.

Grant Thornton also highlighted how debt pricing has recently
become more advantageous and more non-bank lenders are entering
the market and offering longer-term financing options, the report


HALK BANK: S&P Confirms 'B+/B' Counterparty Credit Ratings
Standard & Poor's Ratings Services confirmed its 'B+/B' long- and
short-term counterparty credit ratings on Uzbekistan-based Halk
Bank.  The outlook is stable.

The affirmation reflects the bank's stable business profile as
the fourth-largest bank in Uzbekistan, and its pivotal role in
collecting retail deposits and acting as the country's exclusive
manager for pension fund deposits.  This gives Halk Bank a better
funding profile than its peers.  At the same time, the bank's
capital position is eroding as assets are expanding quicker than
profits and capital injections have not yet materialized.

The ratings reflect the 'b+' anchor for a bank operating
primarily in Uzbekistan, as well as Halk Bank's "adequate"
business position, "weak" capital and earnings, "adequate" risk
position, "above average" funding, and "adequate" liquidity, as
S&P's criteria define these terms.  The stand-alone credit
profile (SACP) is 'b+'.  Although S&P do not rate Uzbekistan, the
ratings on Halk Bank are constrained by its assessment of the
sovereign's creditworthiness.

"In our view, Halk Bank is of "high" systemic importance in the
Uzbek banking sector.  We also consider the bank to be a
government-related entity with a "very high" likelihood of
support from the Republic of Uzbekistan.  This reflects our view
of Halk Bank's "very important" role for the Uzbek government due
to its 27% share in retail deposits and "very strong" link with
the sovereign through its shareholding structure split between
the Ministry of Finance and the Central Bank of Uzbekistan.
However, given our assessment of the sovereign's
creditworthiness, which is based on publicly available
information, we include no notches of uplift in the ratings," S&P

The stable outlook reflects S&P's expectation that continued
state ownership and ongoing support from the government, notably
via capital increases, should offset any potential increase in
credit risks due to rapid growth over the past several years.

S&P believes that the creditworthiness of Uzbek banks, including
Halk Bank, and that of the sovereign are very closely linked.
S&P is therefore unlikely to raise the ratings on the bank if it
don't see an improvement in the sovereign's creditworthiness,
which S&P currently considers to be a rating constraint.  In
S&P's view, the likelihood of an upgrade based on improvements in
some bank-specific factors appears limited in the next two years.

A deterioration of the bank's capital adequacy represents the
main risk for its financial profile and creditworthiness.  S&P
could lower the ratings on the bank if the government was unable
or unwilling to support the bank's capital base and failed to
inject fresh capital within the next 12 months.  Other factors
that could lead S&P to take a negative rating action are
weakening asset quality and uncontrolled credit expansion in
risky sectors.


* BOOK REVIEW: The First Junk Bond
Author: Harlan D. Platt
Publisher: Beard Books
Softcover: 236 pages
List Price: $34.95
Review by Gail Owens Hoelscher

Order your personal copy today and one for a colleague at
Only one in ten failed businesses is equal to the task of
reorganizing itself and satisfying its prior debts in some
fashion. This engrossing book follows the extraordinary journey
of Texas International, Inc (known by its New York Stock
Exchange stock symbol, TEI), through its corporate growth and
decline, debt exchange offers, and corporate renaissance as
Phoenix Resource Companies, Inc. As Harlan Platt puts it, TEI
"flourished for a brief luminous moment but then crashed to
earth and was consumed." TEI's story features attention-grabbing
characters, petroleum exploration innovations, financial
innovations, and lots of risk taking.

The First Junk Bond was originally published in 1994 and
received solidly favorable reviews. The then-managing director
of High Yield Securities Research and Economics for Merrill
Lynch said that the book "is a richly detailed case study. Platt
integrates corporate history, industry fundamentals, financial
analysis and bankruptcy law on a scale that has rarely, if ever,
been attempted." A retired U.S. Bankruptcy Court judge noted,
"(i)t should appeal as supplementary reading to students in both
business schools and law schools. Even those who practice in the
areas of business law, accounting and investments can obtain a
greater understanding and perspective of their professional

"TEI's saga is noteworthy because of the company's resilience
and ingenuity in coping with the changing environment of the
1980s, its execution of innovative corporate strategies that
were widely imitated and its extraordinary trading history,"
says the author. TEI issued the first junk bond. In 1986 it
achieved the largest percentage gain on the NYSE, and in 1987
suffered the largest percentage loss. It issued one of the first
bonds secured by a physical commodity and then later issued one
of the first PIK (payment in kind) bonds. It was one of the
first vulture investors, to be targeted by vulture investors
later on. Its president was involved in an insider trading
scandal. It innovated strip financing. It engaged in several
workouts to sell off operations and raise cash to reduce debt.
It completed three exchange offers that converted debt in to

In 1977, TEI, primarily an oil production outfit, had had a
reprieve from bankruptcy through Michael Milken's first ever
junk bond. The fresh capital had allowed TEI to acquire a
controlling interest of Phoenix Resources Company, a part of
130King Resources Company. TEI purchased creditors' claims
against King that were subsequently converted into stock under
the terms of King's reorganization plan. Only two years later,
cash deficiencies forced Phoenix to sell off its nonenergy
businesses. Vulture investors tried to buy up outstanding TEI
stock. TEI sold off its own nonenergy businesses, and focused on
oil and gas exploration. An enormous oil discovery in Egypt made
the future look grand. The value of TEI stock soared. Somehow,
however, less than two years later, TEI was in bankruptcy. What
a ride!

All told, the book has 63 tables and 32 figures on all aspects
of TEI's rise, fall, and renaissance. Businesspeople will find
especially absorbing the details of how the company's bankruptcy
filing affected various stakeholders, the bankruptcy negotiation
process, and the alternative post-bankruptcy financial
structures that were considered. Those interested in the oil and
gas industry will find the book a primer on the subject, with an
appendix devoted to exploration and drilling, and another on oil
and gas accounting.

Harlan Platt is professor of Finance at Northeastern University.
He is president of 911RISK, Inc., which specializes in
developing analytical models to predict corporate distress.


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.

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


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

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

Copyright 2014.  All rights reserved.  ISSN 1529-2754.

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

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

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

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