TCREUR_Public/140903.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

         Wednesday, September 3, 2014, Vol. 15, No. 174



NYRSTAR NV: Moody's Assigns '(P)B3' Corporate Family Rating
NYRSTAR NV: S&P Assigns Prelim. 'B-' CCR; Outlook Stable
STANDARD INT'L: Fitch Lowers Issuer Default Ratings to 'RD'


* IRELAND: Insolvencies Down in Sectors Worst Hit by Recession


* POLAND: Number of Bankrupt Companies Down to 62 in August 2014


BANCO ESPIRITO: KPMG Refuses to Approve First-Half Report
BANCO ESPIRITO: Goldman Lent More Than GBP500MM Prior to Bail-Out


KOKS GROUP: Fitch Assigns 'B' Issuer Default Ratings


ILCI HOLDING: Seeks Bankruptcy Protection for Two Units


DTEK HOLDINGS: Closes Three Mines Due to Military Conflict
UKRAINE: Economic Turmoil May Deepen if Armed Conflict Lingers
UKRAINE: Fitch Says Weakening Economy to Hit Corporates
UKRAINIAN RAILWAYS: Needs UAH400MM to Restore Damaged Facilities



NYRSTAR NV: Moody's Assigns '(P)B3' Corporate Family Rating
Moody's Investors Service has assigned a provisional (P)B3
corporate family rating (CFR) to Nyrstar NV and provisional
(P)B3/LGD 4 (55%) to the proposed c.EUR350 million senior
unsecured guaranteed notes to be issued by its subsidiary Nyrstar
Netherlands (Holdings) B.V.

The assignment of the provisional ratings is prospective of the
placement of c. EUR250 million in new equity and c. EUR350
million in new debt securities launched by Nyrstar under the
comprehensive strategic financing initiative announced on
September 1, 2014. The corporate family rating and the rating of
the senior unsecured notes are provisional, as they are based on
the review of draft documentation. Definitive ratings will be
assigned upon satisfactory review of final documentation and upon
the successful closing of the transaction. A definitive rating
may differ from a provisional rating.

Ratings Rationale

Nyrstar's provisional (P)B3 CFR reflects Nyrstar's high operating
and financial risks over the next three years when the company
will execute a transforming asset redevelopment program.
Nyrstar's multi-year EUR265 million strategic asset redevelopment
program offers attractive financial returns (as estimated by the
company at current zinc prices), although the program is very
sizable, relative to Nyrstar's current market capitalization, and
entails both high operating and financial execution risks. In
parallel to this program, Nyrstar also plans to execute a EUR338
million redevelopment of its smelter facility in Port Pirie
(Australia), that will be financed by the subsidiary separately
introducing execution and financial risks for that project over
the next two-three years.

The successful implementation of these measures will enable
Nyrstar to achieve the required improvement in profitability and
cash flow generation. The measures will also aid the necessary
replacement of Nyrstar's largest supplier of zinc concentrate
(its key raw material) and ensure a sustained level of production
of zinc when this supplier closes its mine in 2015.

At present, Nyrstar's weak profitability and low cash conversion
rates undercut the potential credit benefits allowed by the
company's substantial zinc smelting capacity, vertical
integration and ownership of several multi-ore mines and by its
good operating diversification. At the end of 2013 and as of LTM
1H 2014, Nyrstar generated negative EBIT margin (as per Moody's
calculation) of -3.9% and -1.3%, respectively (on Moody's

The provisional (P)B3 CFR assumes that both investment programs
will be fully funded in 2014-15 and that the company will execute
the key projects on time and on budget, reducing the risk of
material capital calls in the next 2-3 years. In particular,
Moody's expect that Nyrstar will raise c. EUR600 million in debt
and equity placements and then will also raise around EUR270
million in funding for its Port Pirie project.

Finally, Nyrstar's low cash flow coverage of debt restricts its
CFR in the medium term. Nyrstar's cash flow coverage of debt is
projected to remain weak and consistent with a Caa rating
category, with (CFO-dividend)/debt around 10% in 2014-15. Taking
into account high operating and execution risks and the fairly
weak cash flow generation capacity at the start of the project,
Nyrstar's (P)B3 rating will remain weakly positioned in the
medium term, supported by the company's adequate liquidity and
pre-funding provisions.

Rating Outlook

The stable outlook on all ratings is underpinned by Moody's
expectation that Nyrstar will continue to proactively manage its
liquidity and refinancing needs.

Liquidity Profile

Nyrstar plans to use part of the proceeds from the announced
c.EUR600 million funding to address its refinancing requirements,
targeting repurchase of its EUR220 million 2015 bonds and
approximately EUR100 million of EUR515 million 2016 bonds. The
company also maintains full availability under its EUR400 million
senior secured bank facility (structured commodity trade finance
facility) where it can borrow short term to support working
capital requirements. At closing, Nyrstar will also have a
further EUR63 million availability under its EUR100 million
bilateral working capital facility.

Structural Considerations

The provisional (P) B3 LGD 4 (55%) ratings assigned to the
proposed c.EUR350 million senior unsecured guaranteed notes
reflect the relative positioning of the new instrument behind the
undrawn senior secured EUR400 million facility and ahead of other
senior unsecured obligations of the group, raised at the level of
various holding companies and not benefitting from the guarantees
of the operating subsidiaries. The new instrument will benefit
from the senior unsecured guarantees by operating companies. As
of and for the six months ended June 30, 2014, the issuer and the
guarantors represented 72.3% of Nyrstar's total underlying EBITDA
and 82.7% of Nyrstar's total assets.

In addition to the c.EUR600 million debt and equity funding
Nyrstar is in the process of arranging EUR270 million external
funding to support its EUR338 million asset redevelopment project
at its Port Pirie smelter in Australia. The funding is expected
to comprise EUR191 million facility to be raised via a special
purpose vehicle from third party investors. On current
assumptions, the holders of the proposed Australian securities
are not expected to have a claim on the assets of the rated
group, other than on the Port Pirie project assets, and,
therefore, Moody's  do not include these securities in the LGD
waterfall analysis. The company will also raise approximately
EUR79 million under a senior unsecured 5-year metal forward sales
facility to be issued by the rated group.

Drivers of Rating Change

Pending the conclusion of the strategic redevelopment program,
Moody's do not expect to upgrade Nyrstar's provisional (P)B3

The provisional (P)B3 rating is materially underpinned by the
assumption that the company will maintain solid liquidity and
will be able to fully pre-fund its investment needs for 2014-16
as part of its EUR600 million debt and equity placement as well
as EUR270 million placements to support the redevelopment of the
Port Pirie asset. The rating may come under pressure if Nyrstar
faces delays in the implementation of its complex strategic
project and/or higher investment costs, or generates weaker-than-
expected operating cash flow, that would upset the projected
liquidity balance and make capital structure unsustainable.

Nyrstar NV is a medium-sized smelting and mining company,
operating nine mines and six smelters. Nyrstar is listed on
Euronext Brussels exchange and reported 2013 revenues and EBITDA
of EUR2,824 million and EUR185 million, respectively.

The principal methodology used in these ratings was Global Mining
Industry published in August 2014. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.

NYRSTAR NV: S&P Assigns Prelim. 'B-' CCR; Outlook Stable
Standard & Poor's Ratings Services said that it had assigned its
preliminary 'B-' long-term corporate credit rating to Belgium-
based integrated zinc producer Nyrstar N.V.  The outlook is

At the same time, S&P assigned its preliminary 'B-' issue rating
to the company's proposed about EUR350 million senior unsecured
notes, to be issued by Nyrstar Netherlands (Holdings) B.V., with
a preliminary recovery rating of '4', indicating S&P's
expectation of average (30%-50%) recovery in the event of a
payment default.

Final ratings will depend on company's ability to issue about
EUR350 million of senior unsecured notes and carry out about
EUR250 million rights issue.  Ratings will also depend on S&P's
receipt and satisfactory review of all final transaction
documentation.  Accordingly, the preliminary ratings should not
be construed as evidence of final ratings.  If the proposed
transactions don't go through within a reasonable time frame, or
if final bond documentation departs from materials reviewed, S&P
reserves the right to withdraw or revise its ratings.  Potential
changes include, but are not limited to, size of equity and bond
issuance, utilization of proceeds, maturity, terms and conditions
of the bonds, financial and other covenants, security, and

The preliminary ratings reflect S&P's view of Nyrstar's business
risk profile as "weak" and its financial risk profile as "highly
leveraged," as S&P's criteria define these terms.

S&P's assessment of Nyrstar's business risk profile reflects its
position in a fragmented and volatile zinc-refining industry that
suffers from overcapacity.  In addition, the company has a
limited ability to differentiate itself from peers, given the
commodity nature of the product.  S&P's assessment is constrained
by the company's relatively small scale in the context of the
global metals and mining industry, as well as by very low and
volatile profitability.

S&P's assessment of Nyrstar's financial risk profile reflects its
expectation that the company's adjusted gross debt-to-EBITDA
ratio will be above 5x in 2014 and above 6x in 2015 and that free
operating cash flow (FOCF) will remain significantly negative as
the company implements its strategic capital expenditure program
over the next two years.

The stable outlook reflects Nyrstar's improved operating
performance in 2014, together with S&P's assessment of the
company's "adequate" liquidity, following the proposed
transactions.  S&P expects the increased cash balances and the
structured commodity trade financing facility to cover
substantial negative FOCF in the coming years resulting from the
strategic capital expenditure plan.  It also factors in S&P's
base-case expectation that zinc prices won't weaken in the next
couple of years; zinc prices recently rose well above S&P's

S&P may lower the rating if the company's liquidity materially
weakens.  This could stem from its inability to strengthen
liquidity (including extending borrowing base facility
maturities) well ahead of the large May 2016 EUR0.5 billion bond
maturity.  S&P believes this refinancing risk would be
exacerbated if accompanied by an unexpected downturn in the
industry and therefore lower EBITDA and more negative FOCF than
what S&P currently assumes.

An upgrade is unlikely in the near term, EBITDA upside remains
uncertain, but could ultimately be driven by the finalization of
the capital expenditure program and improvement of FOCF in 2016.
At a higher rating level, S&P would most likely also expect
adjusted debt to EBITDA to have sustainably fallen, to below 5x.

STANDARD INT'L: Fitch Lowers Issuer Default Ratings to 'RD'
Fitch Ratings has downgraded Ideal Standard International SA's
Long- and Short-term Issuer Default Ratings (IDR) to 'RD'
(Restricted Default) from 'C', before upgrading them to 'CCC' and
'C' respectively.

The downgrade to 'RD' follows the settlement of a distressed debt
exchange and the expiry of flip-back options. The flip-back
options formed part of the exchange offer and allowed the
reversal of the debt exchange under certain conditions. The
exchange offer constituted a distressed debt exchange under
Fitch's criteria, because investors faced a reduction in terms
and the offer was effectively coercive, given that the issuer had
required additional liquidity.

The upgrade reflects Ideal Standard's improved liquidity and debt
maturity profile, following the successful debt exchange that
included the issue of EUR50 million in new super senior AA notes.
The company's new PIK capital structure, following the exchange,
will facilitate positive FCF from 2015, based on our assumption
of a recovery in the group's key European end-markets, including
the UK and Germany. Leverage constrains the ratings, with funds
from operations (FFO) adjusted leverage in the double-digits over
a four-year forecast horizon.

Key Rating Drivers

Distressed Debt Exchange

The distressed debt exchange offer was launched on March 20,
2014. Alternative options were limited and failure to raise
additional liquidity could have led to insolvency proceedings.
Fitch recognizes the positive impact that the successful exchange
has had on the group's liquidity and debt service, given
EUR50 million in new super senior AA notes and the PIK capital

Unsustainably High Leverage

Leverage constrains the ratings and remains unsustainably high.
Fitch forecasts FFO adjusted leverage firmly in the double-digits
over a four-year horizon. The group's new PIK structure will
facilitate FCF generation from 2015, as this year will be
burdened by one-off restructuring and transaction costs. However,
the group also remains exposed to substantial refinancing risks,
as it will not generate sufficient cash to materially repay debt
before the senior secured notes are due in 2018.

Below-Average Profitability

The group's earnings generation has historically lagged behind
peers, partially due to sluggish construction end-markets in
Italy over the past few years. However, Fitch expects a return to
growth and stabilized earnings in 2014, due to a nascent recovery
in key European and MENA markets. Germany, the UK and the MENA
region account for around 55% of total revenues and have been
growing at healthy rates, although Italy remains challenging. In
addition, cost and capacity cuts should support fundamental
profitability in the long-term.

Leading Market Positions

Ideal Standard benefits from its leadership position in Europe,
where it ranks first or second in various markets in bathroom
ceramics and fittings. The group owns a comprehensive portfolio
of well-known brands covering a wide spectrum of market segments
from entry level to luxury products.

Rating Sensitivities

Negative: Future developments that could lead to negative rating
action include:

-- Deterioration in liquidity, inability to service interest or
    principal in 2018, or further debt restructuring measures.

Positive: Future developments that could lead to positive rating
action include:

-- A significant improvement in margins, coupled with
    sustainable positive FCF generation and/or a material
    reduction in leverage.


Liquidity is adequate. Following the completion of the exchange
offer, the group had EUR66 million in liquidity at end-2Q14,
comprising EUR43 million in unadjusted cash, a EUR15 million
undrawn super senior revolving credit facility (RCF), a
EUR4 million RCF provided by Ideal Standard International Topco
SCA and around EUR5 million in undrawn local credit lines. This
is sufficient to cover around EUR20 million in intra-year working
capital swings, given that the company has no debt maturities
until 2018 when its senior secured notes are due (assuming the
roll-over of local credit facilities). For the calculation of net
debt ratios, Fitch adjusts cash by EUR10 million for intra-year
working capital swings, as net working capital in the building
products sector tends to be lowest at financial year-ends.

Full List of Rating Actions

Ideal Standard International SA

-- Long-term IDR: Downgraded to 'RD' from 'C' and subsequently
    upgraded to 'CCC'

-- Short-term IDR: Downgraded to 'RD' from 'C' and subsequently
    upgraded to 'C'

-- Original senior secured notes' rating: withdrawn at 'C'/'RR4'

-- New super senior AA notes' rating: assigned at 'B-'/'RR2'

-- New senior secured A notes' rating: assigned at 'CC'/'RR6'

-- New senior secured B notes' rating: assigned at 'CC'/'RR6'


* IRELAND: Insolvencies Down in Sectors Worst Hit by Recession
Donal O'Donovan at Irish Independent, citing research by
Vision-net, a company that provides credit and business
information and analysis to industry, reports that industries
worst hit by the recession, including manufacturing and motoring,
are beginning to recover with rates of insolvency in decline.

Based on documents filed with the Companies Registration Office
(CRO), the data shows industries most hard hit by the economic
downturn have shown continued signs of improvement in August
2014, Irish Independent relates.

According to Irish Independent, manufacturing suffered 50% fewer
insolvencies in August 2014 compared to last year -- with five
companies shutting their doors.

In the motor industry there were no insolvencies during August,
Irish Independent says, citing the research.

However, across all sector the overall number of company
insolvencies actually increased by almost a fifth -- rising to
108 in August 2014 compared to 91 a year earlier, Irish
Independent relays.

Dublin was home to 45% of insolvencies, followed by Cork with 19%
and Galway at 6%, Irish Independent discloses.

There are still signs of deep financial distress across the
economy however, Irish Independent notes.  There were 390 bad
debt judgments in July, with combined debts of EUR33 million,
Irish Independent states.


* POLAND: Number of Bankrupt Companies Down to 62 in August 2014
Warsaw Business Journal reports that Allianz Group member Euler
Hermes said on Tuesday that in August 2014, about 62 companies
went bankrupt, in comparison to 66 in August 2013.

According to WBJ, the data were provided by the Court and
Commercial Gazette (Monitor Sadowy i Gospodarczy), an official
Polish publication.

The companies' last known turnover amounted to PLN500 million in
total, WBJ notes.


BANCO ESPIRITO: KPMG Refuses to Approve First-Half Report
Andrei Khalip at Reuters reports that auditor KPMG has refused to
approve bailed-out Banco Espirito Santo's first-half report and
accounts, published on Monday, citing the bank's failure to
provide adequate information on its financial position and also
warned of possible further losses.

According to Reuters, BES's consolidated report confirmed a loss
of nearly EUR3.6 billion (US$4.73 billion), first revealed on
July 30, largely due to its exposure to its founding Espirito
Santo family's crumbling business empire.

The losses forced the Bank of Portugal to step in on Aug. 3 with
a EUR4.9 billion rescue plan for the country's biggest bank,
using public funds, Reuters recounts.

Regulators also decided to put BES's healthy assets into a new
entity, Novo Banco, while BES's exposures to the troubled
Espirito Santo business empire as well as its Angolan subsidiary
will move into a "bad bank", Reuters relays.

KPMG, which had been hired to audit the results, said in a report
published alongside BES's accounts that these did not provide any
adjustments and additional information required as a result of
the rescue, Reuters relates.  KPMG said this meant the BES report
no longer provided adequate information on BES' financial
position and operations, Reuters notes.

". . . it was not possible to obtain sufficient and appropriate
proof to form a basis for the present report on half-year
review," Reuters quotes KPMG as saying.

According to Reuters, the accounting firm said "the
classification, recoverability and realization of assets as well
as repayment of its debts registered in the financial results as
of June 30 is uncertain."  KPMG also said the criteria of
evaluation of BES assets transferred to Novo Banco were still not
clear, Reuters relays.

KPMG also said provisions set aside by BES to deal with Espirito
Santo group's debt sold to its retail clients may not be enough
as it risks having to make further contingencies, which so far
have not been specified, Reuters notes.

The accounting firm, as cited by Reuters, said that senior bonds
with maturities going out as far as 2022 issued by BES worth
EUR2.7 billion, already recognized in BES' liabilities, could
incur unspecified further losses for BES if it were forced to buy
them back.

KPMG also pointed out that it was impossible to quantify the
impact from the Angolan state's intervention in BES' Angolan arm
BESA, which led to the revoking of a state guarantee issued for
up to US$5.7 billion, or 70% of BESA's loan book, Reuters relays.

The National Bank of Angola announced the intervention on Aug. 4
and the BES first-half report failed to reflect that, Reuters
relates.  The BES report stated that the state guarantee remained
in place, Reuters notes.

According to Reuters, KPMG said it had tried to obtain a written
confirmation from the BES board that would acknowledge these new
developments as well as assume the responsibility for the balance
sheet's accuracy.  KPMG, as cited by Reuters, said no such
confirmation was provided, "which constitutes a significant
limitation in our work."

                   About Banco Espirito Santo

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

In August 2014, Banco Espirito Santo had been split into "good"
and "bad" banks as part of a EUR4.9 billion rescue of the
distressed Portuguese lender that protects taxpayers and senior
creditors but leaves shareholders and junior bondholders holding
only toxic assets.  A total of EUR4.9 billion in fresh capital is
being injected into this "good bank", which will subsequently be
offered for sale.  It has been renamed "Novo Banco", meaning new
bank, and will include all BES's branches, workers, deposits and
healthy credit portfolios.

In August 2014, Espirito Santo Financial Portugal, a unit fully
owned by Espirito Santo Financial Group, filed under Portuguese
corporate insolvency and recovery code.

Also in August 2014, Espirito Santo Financiere SA, another entity
of troubled Portuguese conglomerate Espirito Santo International
SA, filed for creditor protection in Luxembourg.

In July 2014, Portuguese conglomerate Espirito Santo
International SA filed for creditor protection in a Luxembourg
court, saying it is unable to meet its debt obligations.

BANCO ESPIRITO: Goldman Lent More Than GBP500MM Prior to Bail-Out
James Titcomb at The Telegraph reports that Goldman Sachs lent
over GBP500 million to Banco Espirito Santo just a month before
the Portuguese government was forced to bail out the crisis-hit

According to The Telegraph, the Wall Street bank bought up US$835
million (GBP503 million) worth of the Portuguese lender's bonds
in July through a special investment vehicle, with the intention
of selling on the debt at a profit.  However, Goldman failed to
shift the debt, and stands to make a loss on the transaction, The
Telegraph notes.

Banco Espirito Santo, Portugal's second largest bank, came close
to collapse over the summer due to its exposure to bad debts at a
holding company controlled by the Espirito Santo family, The
Telegraph relates.  This forced the country's government into a
EUR4.9 billion bail-out that will see the company split into a
so-called "good bank" and "bad bank", while investors are nursing
billions in losses, The Telegraph recounts.

In the weeks leading up to the rescue, BES began to lose investor
confidence, making it difficult for the bank to borrow on the
public markets, The Telegraph discloses.  Goldman set up a
Luxembourg-based vehicle, Oak Finance, through which it hoped to
buy and sell the bank's debt, The Telegraph relays.

However, as the situation at the Portuguese bank worsened, it
struggled to pass on some of the debt, and is now believed to be
sitting on significant losses, with the bonds having lost their
value, The Telegraph states.

                   About Banco Espirito Santo

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

In August 2014, Banco Espirito Santo had been split into "good"
and "bad" banks as part of a EUR4.9 billion rescue of the
distressed Portuguese lender that protects taxpayers and senior
creditors but leaves shareholders and junior bondholders holding
only toxic assets.  A total of EUR4.9 billion in fresh capital is
being injected into this "good bank", which will subsequently be
offered for sale.  It has been renamed "Novo Banco", meaning new
bank, and will include all BES's branches, workers, deposits and
healthy credit portfolios.

In August 2014, Espirito Santo Financial Portugal, a unit fully
owned by Espirito Santo Financial Group, filed under Portuguese
corporate insolvency and recovery code.

In August 2014, Espirito Santo Financiere SA, another entity of
troubled Portuguese conglomerate Espirito Santo International SA,
filed for creditor protection in Luxembourg.

In July 2014, Portuguese conglomerate Espirito Santo
International SA filed for creditor protection in a Luxembourg
court, saying it is unable to meet its debt obligations.


KOKS GROUP: Fitch Assigns 'B' Issuer Default Ratings
Fitch Ratings has assigned Russian pig iron company OAO KOKS
Group (KOKS) Long- and Short-term Issuer Default Ratings (IDR) of
'B' respectively. The Outlook is Stable.

Fitch has also assigned KOKS Finance Limited's loan participation
notes a senior unsecured rating of 'B-' with a Recovery Rating of

The rating reflects KOKS's small size, limited operational
diversification and fairly high leverage. Positively they also
reflect the company's strong market position in pig iron and
coke, two key components of steel production. Partial vertical
integration in raw materials to the pig iron production chain
provides KOKS with reasonably high profit margins and insulation
from sharp price swings in coal and iron ore.

KOKS is a vertically integrated metallurgical group with four
business segments: coal, coke, iron ore/pig iron and powder
metallurgy. Its main production facilities are situated in
Kemerovo, Belgorod and Tula regions. KOKS generated RUB6.6
billion of EBITDA (by Fitch's definition) in 2013 and we expect
this to rise to over RUB8 billion in FY14.

Key Rating Drivers

Small Size

KOKS is a fairly small sized pig iron producer compared with
major Russian steel companies. Its production chain is limited to
pig iron production whereas such majors as NLMK (BBB-/Negative)
and Severstal (BB+/Stable) are producing high quality steel end
products, such as hot deep galvanized steel (HDG), transformer
steel, and long steel products, etc. KOKS is also limited in
operational diversification with Tulachermet being the only pig
iron production site within the group.

Strong Market Position in its Niche

KOKS is the world's largest exporter of merchant pig iron and top
producer of merchant coke in Russia. In 2013 it controlled 16% of
the world's pig iron exports and 43% of total Russian pig iron
sales. KOKS accounted for 29% of total coke sales in Russia. The
company is geographically diversified in its pig iron sales with
a strong presence in markets such as the Americas, Europe, Turkey
and The Middle East.

Partial Vertical Integration

KOKS aims to raise the level of vertical integration of its
business by increasing production at its mining divisions (coal
and iron ore). Currently, it is 42% self-sufficient in coking
coal and 65% in iron ore. With the commissioning of Tikhova mine
in in the period between 2016 and 2018 and further production
ramp-up at recently commissioned Butovskaya mine, KOKS expects to
achieve 100% self-sufficiency in coking coal by 2018 and 75%
self-sufficiency in iron ore by 2022.

Strong Reserve Base

As of September 30, 2010, proved and probable reserves under JORC
standards amounted to 115mt of coal and 285mt of iron ore with
33% of Fe content. At current production levels, this implies
almost 70 years of remaining operating life for coal production
and 60 years for iron ore production.

Exposure to Steel

Along with two partners, Slovenian Steel Group and OOO Steel,
KOKS is planning to develop a RUB30 billion steel project in Tula
region. A 2mtpa steel plant is expected to be commissioned in
2017. As the plant will be fed with pig iron produced by
Tulachermet, a KOKS subsidiary, the steel project should
integrate seamlessly into KOKS's business model and raise value
creation. The steel plant is expected to produce construction and
high quality specialty steel. Seventy per cent of the project
will be funded by project finance and the remaining 30% on a pro
rata basis by the partners and KOKS (via equity).

Strong Powder Metallurgy Division

JSC POLEMA, a subsidiary of KOKS, is one of the largest producers
in the world of electrolytic refined chromium and high purity
chromium sputtering targets, rolled metal and molybdenum and
tungsten products, and heavy-current contact materials. The plant
has an annual capacity of 3ktpa and is capable of producing more
than 200 grade marks of powders based on nickel, cobalt,
molybdenum, chromium, titan, cuprum, zinc and powdered alloy

Solid Financial Performance

Despite a weak price environment for metals in 2013, KOKS's
financial performance was reasonably solid. The company reported
an EBITDA (Fitch's definition) margin of 15.3%, 2.2pp higher than
in 2012. This was due to effective cost control measures and
favorable prices of major raw materials. Over 2014-2017, we
expect a further improvement of EBITDA margin to 18% due to
increased vertical integration, RUB depreciation and more
efficient pig iron production. Free cash flow over this period
is, however, expected to be consistently negative, due to an
increase in capital spending. As a result funds from operations
(FFO) gross leverage should remain at around 4x in FY16, before
falling in 2017.

Average Corporate Governance

Fitch assesses KOKS's corporate governance as average compared
with other Russian corporates; the country's overall poor
standards of governance and lack of legal safeguards are
constraints on the ratings.

Liquidity and Debt Structure

KOKS's liquidity is weak. At end-1H14 it had RUB255 million (USD7
million) in cash compared with USD92 million of short-term debt.
This deficit is made up by RUB18.6 billion (USD530 million) of
available undrawn facilities with Russian banks.  "We believe
these facilities represent commitments to lend by the banks, and
should be reliable for on-going debt rollover and refinancing.
However, it is typical for such lines to include more options for
lenders to avoid additional drawings, especially in the event of
a downturn in the company's fortunes, than similar arrangements
with international banks. Therefore we factor in these lines as
only 50% drawn in our recovery analysis," Fitch said.

Rating Sensitiveness

Positive: Future developments that may, individually or
collectively, lead to positive rating action include:

-- Further increase in vertical integration

-- Positive FCF across the cycle

-- FFO-adjusted gross leverage below 3x on a sustained basis

-- FFO fixed charge cover above 6x on a sustained basis (2.98x
    expected by end-2014)

-- Successful implementation of steel project, without delay or
    cost overruns

-- Improved liquidity in the form of consistently higher cash
    balances or an improved maturity profile

Negative: Future developments that may, individually or
collectively, lead to negative rating action include:

-- Capital spending overrun causing further leverage increase,
    i.e. FFO-adjusted gross leverage remaining above 4x after

-- Significant deterioration of business operations caused by
    adverse market conditions

-- Loss of access to a material portion of the RUB18.6 billion
    (USD530 million) of available undrawn facilities


ILCI HOLDING: Seeks Bankruptcy Protection for Two Units
Ercan Ersoy at Bloomberg News, citing Hurriyet, reports that Ilci
Holding is seeking bankruptcy protection for two of its units
after the Iraqi government delays payment of US$120 million to
the company.

The units are Ilci Insaat and Ilsan Insaat, Bloomberg discloses.

According to Bloomberg, the projects in Iraq including roads,
hospitals, housing are worth US$700 million.

Ilci Holding is based in Ankara, Turkey.


DTEK HOLDINGS: Closes Three Mines Due to Military Conflict
Maciej Martewicz at Bloomberg News reports that DTEK Holdings BV
said on Aug. 27 that three of its 31 mines in Ukraine are closed
because of military conflict.

According to Bloomberg, Ukraine's army is fighting pro-Russian
insurgents who've sought to break off the Donetsk and Luhansk
regions in the nation's east.

Ukrainian Prime Minister Arseniy Yatsenyuk said on Aug. 22 that
the insurgents seek to disrupt coal supplies to heating plants,
Bloomberg relates.

DTEK Holdings BV is Ukraine's biggest utility.

                         *     *     *

As reported by the Troubled Company Reporter-Europe on Aug. 5,
2014, Fitch Ratings downgraded Ukraine-based DTEK Holdings B.V.'s
Long-term local currency Issuer Default Rating (IDR) to 'CCC'
from 'B-' and affirmed its Long-term foreign currency IDR at
'CCC'.  The downgrade of DTEK's Long-term local currency IDR
reflects Fitch's view that its standalone rating is commensurate
with 'CCC', Fitch said.  This is due to the company's exposure to
political and economic instability and uncertainty, which is
likely to adversely affect its credit metrics, refinancing risk
and high FX risk, according to Fitch.

UKRAINE: Economic Turmoil May Deepen if Armed Conflict Lingers
Robin Wigglesworth and Roman Olearchyk at The Financial Times
report that while the international focus in recent months has
been on the armed strife in eastern Ukraine and the geopolitical
stand-off with Moscow, another dilemma is looming large for Kiev
and its western backers: Ukraine's economy is in tatters.

At best, the International Monetary Fund and other western
backers are likely to have to step in with more loans to help the
government staunch its fiscal deficit, the FT says.  At worst,
the US$17 billion IMF program signed in April could fall apart,
possibly forcing the country to default and restructure its
debts, the FT notes.  That would further deepen the economic
turmoil in Ukraine and stain the reputation and credibility of
the fund in the wake of its problematic Greek program, the FT

"If the conflict lingers for another several months in its
current form the cost for the Ukrainian economy would be huge,"
the FT quotes Vitaliy Vavryshchuk, analyst at Kiev-based SP
Advisors, as saying.

IMF officials based their bailout on the initial assumption that
Ukraine's economy would shrink 5% this year before bouncing back
in 2015, the FT discloses.

The IMF last month adjusted its economic forecast to a more
realistic 6.5% shrinkage for 2014, the FT recounts.

To add to the worries, the Ukrainian currency is endangering the
banking sector, the FT relays.  The IMF's own risk assessment
warns that if the hryvnia falls to UAH12.5 to the dollar then the
stresses on bank balance sheets would require a bailout of at
least 5% of GDP, according to the FT.  The hryvnia is now even
weaker, at about UAH13, the FT notes.

The economic reforms required for the IMF to disburse aid are
also a risk, the FT states.  Arseniy Yatseniuk, the prime
minister, threatened to resign after failing to push through
several laws it needed to pass, the FT relays.

UKRAINE: Fitch Says Weakening Economy to Hit Corporates
Fitch Ratings says in a new report that Ukrainian corporates are
expected to be adversely affected by a weakening domestic
economy, armed rebellion and the lingering dispute with Russia.

The fallout from these factors will hit corporate cash flows and
liquidity -- notably for issuers focused primarily on the
domestic market, eroding their debt capacity and financial
flexibility. Exporters, such as metals and mining companies, are
however better-placed and less exposed to FX volatility.

The report discusses the challenges faced by corporates in the
food, beverage & tobacco, metals & mining and utilities sectors,
as well as the likelihood and capability of the domestic banking
sector stepping in to breach a potential funding gap.

UKRAINIAN RAILWAYS: Needs UAH400MM to Restore Damaged Facilities
Itar-Tass reports that Ukraine will need millions of dollars to
restore its ruined railway infrastructure.

According to Itar-Tass, Ukrainian Railways Company said that 187
railway facilities had been either damaged or destroyed.

According to minimal estimates, Ukrainian Railways will need at
least UAH400 million (US$30 million) to restore the damaged
railways; the repairs of contact systems and power installations
are valued at UAH200 million (US$15 million) while the
restoration of railway bridges and other engineering facilities
will cost another UAH90 million (US$6.5 million),
Itar-Tas discloses.

The company's executives have already found a source to finance
the restoration works and have set the deadline for the
restoration, Itar-Tass relates.

Ukrzaliznytsia, also known as Ukrainian Railways, is the State
Administration of Railroad Transportation in Ukraine, a monopoly
that controls vast majority of the railroad transportation in the

                         *     *     *

As reported by the Troubled Company Reporter-Europe on Aug. 6,
2014, Standard & Poor's Ratings Services affirmed its 'CCC' long-
term corporate credit rating on Ukrainian railway company The
State Administration of Railways Transport of Ukraine (Ukrainian
Railways).  The outlook is negative.

At the same time, S&P affirmed its 'CCC' issue rating on the loan
participation notes issued by Shortline PLC and on-lent to
Ukrainian Railways.

The geopolitical risks in Ukraine, together with deepening
economic recession are putting pressure on Ukrainian Railways
ability to generate cash while local financial markets remain
very vulnerable.  This has elevated liquidity risk for the
company, which faces significant debt maturities over the next 12


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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