/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/140904.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, September 4, 2014, Vol. 15, No. 175 Headlines B U L G A R I A BDZ: Owes BGN600 Million to Creditors; Negotiations Expected HUVEPHARMA INT'L: Moody's Assigns 'B1' Corporate Family Rating G E R M A N Y COMMERZBANK CAPITAL: S&P Raises Sr. Sub. Debt Rating to 'BB+' DECO 10: Fitch Raises Rating on Class B Notes to 'B+sf' I C E L A N D KAUPTHING SINGER: Sept. 10 Proofs of Debt Submission Deadline Set I R E L A N D O'BRIEN AND O'FLYNN: Faces Liquidation Over EUR71 Million Debt I T A L Y BLUE PANORAMA: September 30 Deadline Set for Binding Offers L U X E M B O U R G GOL LUXCO: S&P Assigns 'B-' Rating to New Sr. Unsecured Notes N E T H E R L A N D S CARLSON TRAVEL: Moody's Assigns 'B2' Corporate Family Rating S W E D E N NATIONAL ELECTRIC VEHICLE: L.E. Gustafsson Named Administrator T U R K E Y ARCELIK AS: Fitch Assigns 'BB+(EXP)' Rating to EUR500MM Notes U K R A I N E UKRAINE: May Face US$3.5-Bil. Funding Gap if Fighting Continues U N I T E D K I N G D O M CORNERSTONE TITAN 2005-2: S&P Cuts Ratings on 2 Notes to 'CC' GYG EXCHANGE: Put Into Creditors' Voluntary Liquidation JAGUAR LAND: S&P Revises Outlook to Pos. & Affirms 'BB' CCR MANCON LOGOATRUVA: Goes to Voluntary Liquidation NUTRAFEED: In Administration; 17 Jobs Affected WEEWORLD: In Liquidation; 19 Jobs Affected ********* =============== B U L G A R I A =============== BDZ: Owes BGN600 Million to Creditors; Negotiations Expected ------------------------------------------------------------ FOCUS News Agency reports that Bulgarian Interim Minister of Transport, Information Technologies and Communications Nikolina Anelkova said Bulgarian State Railways (BDZ) owes BGN600 million to creditors and shareholders. Mr. Angelkova explained that there would be negotiations with the creditors, FOCUS News relates. "It is important to continue the active dialogue with them so as to defer the payments. A small sum of money is provided under the budget for the payment of the capital and the interests. The BDZ has to pay BGN3 million a month until the end of the year. The money is highly insufficient." "We now expect a notification from the European Commission (EC) for a state aid of BGN172 million, which should be provided in the budget and concern old debts of the BDZ until 2007, mostly to the German creditors," FOCUS News quotes the interim minister as saying. Established in 1885, The Bulgarian State Railways, commonly known as BDZ, is Bulgaria's state railway company and the largest railway carrier in the country. The company's headquarters is located in the capital Sofia. HUVEPHARMA INT'L: Moody's Assigns 'B1' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service assigned a definitive B1 corporate family rating (CFR) to Huvepharma International BV (Huvepharma), a parent company of Huvepharma AD. Concurrently, Moody's has also assigned a B2-PD probability of default rating (PDR) to the company and a definitive B1 rating with a loss given default (LGD) assessment of LGD3/35% to the EUR75 million senior secured term loan A, EUR180 million senior secured term loan B and EUR20 million senior secured revolving credit facility. The outlook on the ratings is positive. Ratings Rationale Moody's assigned definitive ratings upon a conclusive review of the loans documentation with the final terms of the Loans Agreement being mostly in line with the drafts reviewed to assign the provisional ratings. Moody's definitive ratings are in line with the provisional ratings assigned on July 24, 2014. Moody's rating rationale was set out in a press release on that date. The PDR at B2-PD reflects a higher-than-average family recovery rate (65%) given the all-bank debt capital structure upon the completion of the buyback of a 37% share currently held by TRG (unrated). Following the transaction, Huvepharma's debt capital will mainly comprise an amortizing EUR75 million senior secured Term Loan A due maturing in 2019, EUR180 million senior secured Term Loan B due in 2020 and EUR20 million senior secured revolving credit facility due in 2019. Rationale for Positive Outlook The positive outlook on the ratings reflects the potential for the upgrade of Huvepharma's ratings by early 2016 based on Moody's expectation that the company will continue to deliver on its growth strategy as planned while maintaining robust operating performance and a solid liquidity profile which should allow the company to quickly deleverage, with adjusted debt/EBITDA reducing to below 4.0x at year-end 2015. The prospects of an upgrade will also however remain constrained by potential impact on operating performance from potential regulatory changes. What Could Change the Rating Up/Down Moody's would consider upgrading Huvepharma's rating if the company were to (1) continue demonstrating robust operational performance; (2) with a clear trajectory for leverage (measured as adjusted debt/EBITDA) towards below 4.0x while sustaining retained cash flow to net debt at above 15%; and (3) maintain a solid liquidity profile and positive free cash flow generation. Conversely, Moody's would consider downgrading the ratings, though currently unlikely, in the event of a material deterioration in Huvepharma competitive position within its core product lines, negative impact on operating performance from the increasing regulatory risks or other related developments, which may delay the company's deleveraging process with adjusted debt/EBITDA remaining around 5x and retained cash flow to net debt below 12% on a sustained basis. Principal Methodology The principal methodology used in this rating was Global Manufacturing Companies published in July 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. Headquartered in Sofia, Bulgaria, Huvepharma AD is a vertically integrated developer, manufacturer and distributor of a wide range of animal health products to livestock animals, with a focus on poultry and swine markets. Huvepharma sells over 95 products in more than 95 countries, with Europe and North America being its key markets. In 2013, the company generated around EUR200 million of revenues. ============= G E R M A N Y ============= COMMERZBANK CAPITAL: S&P Raises Sr. Sub. Debt Rating to 'BB+' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has raised its rating on debt issued by Commerzbank Capital Funding Trust I (Commerzbank FT I) to 'BB+' from 'B+'. The rating action follows the debt issue's conversion into senior subordinated debt through changes in the documentation. In S&P's view, the instrument will now rank pari passu with other lower Tier 2 capital instruments in a liquidation scenario. In addition, S&P believes that coupon payments on this instrument are no longer subject to a profit trigger. The instrument no longer qualifies as regulatory Tier 1 capital, but S&P expects it to qualify as regulatory lower Tier 2 capital with the revised terms, which, in S&P's view, are now similar to those of other senior subordinated instruments issued by Commerzbank AG (A-/Negative/A-2). S&P considers this conversion to be unusual but consistent with the Chancery Court ruling of the State of Delaware on July 16, 2013. Among other things, this ruling required Commerzbank to elevate Commerzbank FT II's debt to the same lower Tier 2 capital class as the debt of another member of the group, Dresdner Funding Trust IV. Commerzbank FT II converted its debt into senior subordinated debt instruments early in 2014, while Dresdner Funding Trust IV did so in 2010. DECO 10: Fitch Raises Rating on Class B Notes to 'B+sf' ------------------------------------------------------- Fitch Ratings has upgraded DECO 10 - Pan Europe 4 p.l.c's (DECO 10) class A2 and B notes and affirmed the others, as follows: EUR114.8 million class A2 (XS0276271375) upgraded to 'BB+sf' from 'BBsf'; Outlook Stable EUR31.9 million class B (XS0276272001) upgraded to 'B+sf' from 'B-sf'; Outlook Stable EUR31.9 million class C (XS0276273074) affirmed at 'CCsf'; Recovery Estimate (RE) 85% EUR18.9 million class D (XS0276273660) affirmed at 'Csf'; RE0% Deco 10 is a CMBS transaction secured by seven loans backed by commercial real estate assets in Germany (six loans, 75.8% of the pool) and the Netherlands (one loan, 24.2% of the pool). KEY RATING DRIVERS The upgrade of the class A2 and B notes is driven by the full repayment of the CHF138.3 million Emmen Wohncenter and the CHF74.3 million Swisscom loan at the interest payment dates (IPDs) in January and April 2014, respectively. Fitch believed these two previously-defaulted loans were vulnerable to loss. The strength of the Swiss franc meant that such an outcome would have caused noteholders to suffer more loss from the depletion of collateral used to make up for Swiss franc shortfalls under related currency swaps. Full repayment eliminated this risk. The repayment in full in April of the EUR65.8 million Dresdner Office loan (a 50% pari-passu syndicated loan participation secured by a portfolio of offices throughout Germany) may have seemed of greater importance, but this outcome was expected and reflected in the previous rating action. Despite these favorable developments, the portfolio still contains sources of risk, with all but one (German multifamily housing) loan considered by Fitch to be vulnerable to loss. The accumulation of idiosyncratic risks constrains the rating of the senior notes below investment grade. The largest loan, EUR89.4 million Treveria II (43.5% of the pool; a 50% participation), is secured by 43 retail warehouses located across western Germany and let to strong national retailers (the weighted average lease term is 4.2 years). The loan failed to repay at maturity in July 2011, and after a one-year extension entered special servicing. In this time, only five properties have been sold, which supports Fitch's expectation of a long workout characterized by piecemeal sales. Approximately five years remain until bond maturity. Sales to date imply a principal loss of 13% versus the allocated loan amount of the properties. Three additional assets that are notarized for sale imply a greater principal loss of 22%, a rate which giving account to possible negative selection, Fitch expects will apply broadly to the remainder of the pool. In its latest update, the special servicer Situs Asset Management anticipated disposals of three to four assets per quarter, citing "common land charges" as a reason for the protracted workout. The EUR49.7 million Rubicon Nike loan (24.2% of the pool) is secured by Nike's European headquarters, a purpose-built campus on the outskirts of Amsterdam. Nike is contracted for less than five years. With the loan maturing in October 2014, this lease income is valuable in allowing for cash trapping and some capex. However, with few operators likely to be interested in occupying the site if Nike were to leave, as the lease runs off, exposure to an uncertain terminal property value grows. Fitch expects the loan to suffer a loss. Of the other five loans, all but the German multifamily housing one have defaulted and been transferred to special servicing. DFK Portfolio loan (11.7%) defaulted as a result of a revaluation-led LTV breach, while Lubeck Retail, Edeka Retail and Toom DIY all failed to repay at maturity in October 2013. These defaulted loans are all credit challenged, with the prospects for the matured loans reliant on the motives of a handful of tenants in sum. RATING SENSITIVITIES With five years left until bond maturity, and similar lease terms in several cases, unless a key lease is re-geared ahead of time, the key rating sensitivity over the short term will likely relate to Treveria II or DFK. Both loans are secured on liquidating portfolios, with recoveries dependent on the recent rally in German secondary real estate markets being sustained. Fitch estimates 'Bsf' proceeds of approximately EUR161.4m. ============= I C E L A N D ============= KAUPTHING SINGER: Sept. 10 Proofs of Debt Submission Deadline Set ----------------------------------------------------------------- Michael Simpson, Joint Liquidator of Kaupthing Singer & Friedlander (Isle of Man) Limited, in liquidation, intends to declare a Ninth Dividend to unsecured non-preferential creditors of the Company. Creditors are required on or before September 10, 2014, to provide proof of debt to the joint liquidators of the Company, Michael Simpson and Peter Spratt, Sixty Circular Road, Douglas, Isle of Man, British Isles, 1M1 1SA, and, if so requested, to provide such further details, or produce such documentary or other evidence as may appear to the joint liquidators to be necessary. A creditor who has not proved his debt by September 10, 2014, will be excluded from the initial payment run in respect to the Ninth Dividend, but may be paid at a later date. It is intended to declare the Ninth Dividend within two months from August 19, 2014. ============= I R E L A N D ============= O'BRIEN AND O'FLYNN: Faces Liquidation Over EUR71 Million Debt -------------------------------------------------------------- BreakingNews.ie reports that O'Brien and O'Flynn Ltd. is to be wound up over a EUR71 million debt to the National Asset Management Agency. The High Court has approved the appointment of liquidators to the company which fought the petition, BreakingNews.ie relates. As reported in the Aug. 7, 2014 edition of The Troubled Company Reporter-Europe, Independent.ie related that NAMA subsidiary National Assets Loan Management Ltd (NALM) asked Mr. Justice Paul Gilligan to appoint joint provisional liquidators to ensure an orderly winding up of O'Brien and O'Flynn Ltd Building Contractors. The court heard the company owes the National Asset Management Company (NAMA) some EUR71.2 million with assets worth less than half that amount. The debt to NAMA arose after it took over loans advanced to the company by Bank of Ireland and AIB in 2010 and 2008, the report noted. According to the report, Mr. Justice Gilligan said he was satisfied to appoint John McStay and Tom Rogers of insolvency practitioners McStay Luby as provisional liquidators of the company. O'Brien and O'Flynn is a Cork building firm. The company directors are Dan and Denis O'Flynn. ========= I T A L Y ========= BLUE PANORAMA: September 30 Deadline Set for Binding Offers ----------------------------------------------------------- Giuseppe Leogrande, Extraordinary Commissioner of Blue Panorama Airlines S.pA., on Aug. 25 disclosed that interested parties have until 6:00 p.m. (Italian time) on September 30, 2014, to submit binding offers for the Company. On June 18, 2014, the Extraordinary Commission filed the Sale Program before the Ministry of Economic Development. On July 2, 2014, the Ministry of Economic Development authorized the implementation of the Program. On August 11, 2014, the Extraordinary Commissioner has been authorized by the Ministry of Economic Development to begin the procedure for the submission of binding offers in respect of the purchase of the business of the Company under Extraordinary Administration, according to the modalities, terms and conditions set forth under the call for the submission of binding offers. Any interested party is invited to review the long-form of the Call, which specifies the modalities, terms and conditions for the submission of binding offers, as well as documents to be enclosed to such offers. The long-form of the Call and documentation relating to the company's business are available at https://bluepanorama.firmex.com (username: guest, password: guest). For additional information, any interested party can contact: Laura Pierallini Gianluigi Ascenzi Studio Legale Pierallini Viale Liege no. 26 00198-Rome, Italy Telephone; +39 06-8841713 Fax: +39 06-8840249 E-mail: l.pierallini@pierallini.it g.ascenzi@pierallini.it Any resolution on the selected purchaser of the Company's business is conditional upon, and in any case subject to, the authorization by the Ministry of Economic Development pursuant to the applicable laws. =================== L U X E M B O U R G =================== GOL LUXCO: S&P Assigns 'B-' Rating to New Sr. Unsecured Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' global scale rating to Gol LuxCo S.A.'s proposed senior unsecured notes for up to $500 million, due 2022. Gol Linhas Aereas Inteligentes S.A. (Gol; B/Stable/--) will fully and unconditionally guarantee the notes. The company will use the proceeds primarily to purchase Gol's senior unsecured notes due 2017, 2020 and 2023, in connection with the company's recent tender offer. Any remaining portion of the proceeds will be used for general corporate purposes. S&P rates the proposed issuance one notch below the 'B' corporate credit rating on Gol, as the senior unsecured notes are structurally subordinated to the company's secured debt. Under S&P's criteria, operating and financial leases that carry aircraft as collateral would have priority of payment relative to unsecured debt. RATINGS LIST Gol Linhas Aereas Inteligentes S.A. Corporate credit rating B/Stable/-- Ratings Assigned Gol LuxCo S.A. Senior unsecured notes due 2022 B- ===================== N E T H E R L A N D S ===================== CARLSON TRAVEL: Moody's Assigns 'B2' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service has assigned a B2 corporate family rating (CFR) and B2-PD probability of default rating (PDR) to Carlson Travel Holdings, Inc., the parent entity of Carlson Wagonlit B.V. (CWT). In addition, Moody's has downgraded the USD100 million revolving credit facility (RCF) -- made available to Carlson Wagonlit UK Limited, CWT Beheermaatschappij B.V., and Carlson Wagonlit Travel, Inc. -- to Ba2 from Ba1. Concurrently, Moody's has also withdrawn Carlson Wagonlit B.V.'s B1 CFR and B1- PD PDR. Moody's has also assigned a definitive Caa1 rating to the USD360 million PIK toggle notes due 2019 issued by Carlson Travel Holdings, Inc. (CTH) and affirmed the existing B1-ratings on CWT's senior secured notes due 2019. The rating action follows the completion of the PIK notes offering and the completion of Carlson's (unrated) acquisition of the 45% stake in CWT it did not already own. The action concludes the review which was initiated on June 23, 2014. Ratings Rationale On August 19, CWT announced Carlson had completed the acquisition of the 45% equity stake in CWT it did not already own. CWT has also successfully completed a USD50 million tender offering for its outstanding senior secured notes. Moody's has moved the CFR to CTH to reflect that all of CWT's group debt including the PIK Toggle Notes should be considered in the consolidated metrics. Gross leverage (including the PIK notes) as adjusted by Moody's is expected to be around 5.7x at the transaction closing. As a consequence of the downgrade of the CFR to B2 from B1, Moody's has also downgraded the RCF to Ba2 from Ba1. The PIK Toggle Notes include a "pay if you can" mechanism of cash interest payments, subject to cash availability and the maximum amount of permitted dividends, distributions or restricted payments available for up-streaming. The affirmation of the B1 senior secured notes reflects Moody's view that negative pressure on ratings linked to the lower CFR under the new structure is offset, in the case of the senior secured notes, by an uplift resulting from the addition of the subordinated PIK Toggle Notes, now included in the LGD model. The definitive Caa1 rating assigned to the USD360 million PIK notes reflects their structural subordination to all other debt instruments within the capital structure. The notes are not guaranteed by any of CTH's subsidiaries including the existing senior secured bond group. Liquidity Profile Moody's anticipates that the company's liquidity profile will remain adequate following the transaction, supported by Moody's expectations of positive free cash flows and access to the USD100 million RCF. However, Moody's expects an ongoing cash leakage out of the restricted bond group in order to serve interest payments on the PIK toggle notes, and this may have an influence on the company's financial policies. Moody's also considers that the PIK notes at some point may add an additional layer of event risk to the structure should the PIK notes remain in place for a longer period of time and there would be a need for refinancing. Rationale for the Stable Outlook The stable outlook reflects Moody's expectations that CWT will maintain a stable operating performance with continued growth in EBITDA and positive free cash flows allowing for the company's leverage -- measured as debt/EBITDA -- to be comfortably positioned below 5.5x. What Could Change the Rating Up/Down Positive rating pressure could build if CWT decreases its debt/EBITDA ratio towards 4.5x. Equally, negative rating pressure could arise should CWT continue to operate with leverage above 5.5x for a sustained period of time or if Moody's becomes concerned about the company's liquidity. Principal Methodology The principal methodology used in these ratings was Global Business & Consumer Service Industry Rating Methodology published in October 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. Headquartered in the Netherlands, Carlson Wagonlit B.V. is a global leader in travel management, serving corporations of all sizes and government institutions. The company reported net revenues of USD1.7 billion and an EBITDA of USD196 million in FY2013. =========== S W E D E N =========== NATIONAL ELECTRIC VEHICLE: L.E. Gustafsson Named Administrator -------------------------------------------------------------- Motoring Research reports that the district court in Vanersborg, Sweden approved the application of National Electric Vehicle Sweden (NEVS) for reorganization. NEVS' preferred choice of administrator, Lars Eric Gustafsson, has also been appointed. NEVS, the company that was set up to revive the bankrupt Saab brand, has itself applied to go into voluntary administration to "create more time for negotiations" and delay threatened action from unpaid suppliers, according to Motoring Research. The firm said it made the application to the district court because discussions currently underway with potential key partners are taking longer than it expected. "The tripartite negotiations we have with two global vehicle manufacturers are still progressing, but are complex and have taken more time than we predicted," the report quoted NEVS President Mattias Bergman as saying. The firm does still "fully pay our debts to our suppliers," the report quoted Mr. Bergman as saying. It is pressure from some of these suppliers, revealed the firm, that has forced NEVS into making the voluntary administration application, the report adds. NEVS has 400 suppliers of direct materials and 50 suppliers of indirect materials. Most of these have agreed to wait for any outstanding payments while current negotiations with the two unnamed vehicle manufacturers are ongoing, Motoring Research discloses. Some creditors have, however, filed applications with the Swedish Enforcement Authority for an order to pay: this "may involve mandatory sale of assets that are supposed to be included in Nevs' agreement with above mentioned manufacturers," according to a statement obtained by Motoring Research. "Loss of such assets could obstruct finalizing a contract with them. To get more time to complete the negotiations, Nevs has filed for a reorganisation," the statement relayed. About NEVS National Electric Vehicle Sweden AB (NEVS) is a Swedish holding company. NEVS is majority owned by British Virgin Islands- registered, Hong Kong-based, National Modern Energy Holdings Ltd., an energy company with operations in China, Macau, and Hong Kong. NEVS bought bankrupt carmaker Saab in 2012. On Aug. 29, 2014, NEVS convinced a Swedish court to grant it creditor protection while it buys time to finalize negotiations for funding. =========== T U R K E Y =========== ARCELIK AS: Fitch Assigns 'BB+(EXP)' Rating to EUR500MM Notes ------------------------------------------------------------- Fitch Ratings has assigned Arcelik AS's prospective notes of up to EUR500 million an expected rating of 'BB+(EXP)'. The final rating of the bond is contingent upon Fitch receiving final documents conforming to information already received. The expected rating is in line with Arcelik's Issuer Default Rating (IDR) and senior unsecured rating of 'BB+', as the notes will be direct, unconditional, unsubordinated and unsecured obligations of Arcelik and rank parri passu with all other other outstanding unsecured and unsubordinated obligations of the company. The notes are expected to be used to refinance exisiting short- term debt and for general corporate purposes. The bonds include a negative pledge provision binding Arcelik, as well as financial reporting obligations, restrictions on certain corporate reorganizations, cross-acceleration and certain events related to bankruptcy and insolvency of the company or any other principal subsidiary, and a covenant limiting transactions with affiliates that do not comply with an arms-length principle. KEY RATING DRIVERS Stable Financial Performance Arcelik's 2Q14 financial results were broadly stable and within Fitch's expectations. A recent slowdown in the domestic economy was balanced by international revenue growth, supported by market share gains and depreciation in the Turkish lira. Free cash flow (FCF) remained negative in 2013 due to increasing working capital needs. Fitch expects muted revenue growth in the medium term as the domestic economy further slows down, and funds from operations (FFO) margins to be in line with historical averages. High Working Capital Needs Arcelik has a high working capital-to-sales ratio due to the Turkish market practice of the manufacturer providing financing for customer purchases. Working capital needs increased to 38% of sales as of end-2013 from 32% at end-2012, also due to the depreciation in the Turkish lira and political instability in 3Q13. Fitch believes that the scope for slowing cash drain will depend on inventory management and a focus on receivables. Effective working capital management remains key to returning Arcelik to positive FCF generation. Persistent negative FCF would place pressure on the ratings. Strong Growth in International Markets Arcelik has achieved strong top line growth in the past two years outside Turkey, taking advantage of both more price-conscious consumers in western Europe and its previous marketing and distribution network expansion efforts. Further growth in developed markets in the short- to medium-term is likely as the company continues to capitalize on its present momentum and current market trends, although this may place pressure on profitability as the company focuses on expanding market share. Although the company's geographic diversity is improving, Turkey still accounts for 37% of revenue, which remains a negative rating factor. Stable Adjusted Leverage Expected Arcelik's reported leverage is negatively affected by its higher- than-average working capital needs, as a significant portion of durable goods are sold on credit in Turkey. While this is partly financed by Arcelik, consumer credit risk is transferred to retailers while Arcelik's credit risk to retailers is covered by bank letters of credit. Fitch adjusts Arcelik's debt by netting off the debt portion of trade receivables above 60 days of revenues to enable a more accurate peer comparison. On this basis, Arcelik's FFO-adjusted leverage was 1.9x at end-2013 (down from 2.8x at end-2012). Fitch expects slower deleveraging in the next two years until political risk subsidies, but still forecasts FFO adjusted leverage slightly below 2.0x, supporting the current ratings. Increased Macroeconomic Risks A prolonged decline in the Turkish lira, together with other domestic shocks from the country's political crisis, poses a risk for Turkish corporate ratings in 2014. Although Arcelik's FX exposure is somewhat balanced by its export revenues and hedging, it is still vulnerable to a sharper-than-expected slowdown in the domestic market and any cost increases that could result from Turkish lira depreciation. RATING SENSITIVITIES Negative: Future developments that could lead to negative rating action include: -- Receivables-adjusted FFO gross leverage ratio above 2.0x -- FFO margin below 8% (FYE13: 10%) -- Consistently negative FCF -- Increase in the unhedged gap between foreign currency debt and receivables Positive: Future developments that could lead to positive rating actions include: -- Significant improvement in the business profile -- Reduced structural FX risks -- Receivable-adjusted FFO gross leverage ratio below 1x -- FFO margins consistently above 10% -- FCF margin above 2% on a sustained basis ============= U K R A I N E ============= UKRAINE: May Face US$3.5-Bil. Funding Gap if Fighting Continues --------------------------------------------------------------- Ian Tally at The Wall Street Journal reports that the International Monetary Fund said on Tuesday, Sept. 2, in its latest review of the emergency bailout that Ukraine is facing a US$3.5 billion funding gap and could need additional financing worth US$19 billion next year if fighting continues through 2015. The continuing conflict between Kiev's forces and pro-Russian separatists in the eastern region of Ukraine, where the country's manufacturing is centered, is forcing the economy deeper into recession and raising rescue costs, the Journal discloses. The IMF late last week approved the latest tranche of the fund's US$17 billion bailout, part of a larger, US$30 billion international financing package, the Journal recounts. IMF Managing Director Christine Lagarde, as cited by the Journal, said Friday that "downside risks to the program remain very high." "The program hinges crucially on the assumption that the conflict will begin to subside in the coming months," the Journal quotes IMF staff as saying in its review of the bailout. "Should active fighting continue well beyond that, the small buffers under the revised baseline would be quickly exhausted, requiring a new strategy, including additional external financing." The war has accelerated a near free fall in the Ukrainian currency's value, fueled inflation to nearly 20%, forced a 20% contraction in gross domestic product in the eastern region, siphoned off emergency cash reserves and cut government revenue even as military spending mushroomed, the Journal relates. According to the Journal, even if the conflict winds down by the end of the year, the IMF said Ukraine will need an additional US$3.5 billion by the end of next year to keep the bailout program afloat as the country's economic situation has deteriorated beyond the fund's original expectations. The government plans to raise roughly US$200 million from new bonds, the Journal says. But the rest may have to come from Europe, the U.S. and other international lenders, the Journal notes. Any intensification of the fighting or further escalation in the political or trade frictions with Russia would require a new bailout strategy, the IMF, as cited by the Journal, said, "supported by significant additional external assistance." =========================== U N I T E D K I N G D O M =========================== CORNERSTONE TITAN 2005-2: S&P Cuts Ratings on 2 Notes to 'CC' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'CC (sf)' from 'CCC- (sf)' its credit ratings on Cornerstone Titan 2005-2 PLC's class F and G notes. The rating actions reflect the repayment at a loss of the sole remaining loan in the transaction, the Bradford Retail loan. This loan was secured by a retail block in the center of Bradford. The asset sold for a gross sale price of GBP3.45 million and net proceeds were distributed by the issuer to the noteholders on the July 2014 note payment date. The issuer used some of the net proceeds to service the notes and applied the remaining GBP2.9 million to partially amortize the class F notes. The recovery proceeds were insufficient for the issuer to fully repay the outstanding principal on the class F and G notes. As a result, the issuer applied nonaccruing interest amounts to the class F and G notes. S&P understands that while the issuer is administrating the windup of the transaction, there is no prospect for additional recoveries that would enable the issuer to fully repay the class F and G notes' outstanding amount. Given the above, S&P believes that the class F and G notes will experience principal losses on their final note payment date in Oct. 2014 (the legal final maturity date). S&P has therefore lowered to 'CC (sf)' from 'CCC- (sf)' its ratings on the class F and G notes in accordance with its criteria. Cornerstone Titan 2005-2 is a U.K. commercial mortgage-backed securities (CMBS) transaction, which closed in July 2005. It was originally backed by a pool of seven loans secured against nine commercial properties in the U.K. RATINGS LIST Cornerstone Titan 2005-2 PLC GBP398.781 mil commercial mortgage-backed floating-rate notes Rating Class Identifier To From F 21924SAC1 CC (sf) CCC- (sf) G 21924SAD9 CC (sf) CCC- (sf) GYG EXCHANGE: Put Into Creditors' Voluntary Liquidation ------------------------------------------------------- Rupert Hall at WalesOnline reports that GYG Exchange Limited has been placed into liquidation. The board of directors convened meetings of shareholders and creditors to resolve to place the company into creditors' voluntary liquidation, WalesOnline relates. John Kelly -- john.kelly@begbies-traynor.com --, Nigel Price -- nigel.price@begbies-traynor.com -- and David Hill -- david.hill@begbies-traynor.com -- of business recovery and insolvency specialists Begbies Traynor were appointed as joint liquidators, WalesOnline discloses. According to WalesOnline, a spokesman for the directors of GYG Exchange Limited said: "There has been significant investment into this historic old building over many years. "Unfortunately, in difficult market conditions and due to increasing holding and maintenance costs, the company has been unable to complete a sale to facilitate the proposed redevelopment scheme of this iconic building. "The liabilities and contingent liabilities associated to the building continue to accrue and we were left with no alternative other than to liquidate the company." GYG Exchange Limited owns the Coal Exchange building in Cardiff Bay. JAGUAR LAND: S&P Revises Outlook to Pos. & Affirms 'BB' CCR ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on U.K.- based auto manufacturer Jaguar Land Rover Automotive PLC (JLR) to positive from stable. At the same time, S&P affirmed its 'BB' long-term corporate credit rating on JLR. S&P also affirmed its 'BB' issue ratings on the senior unsecured notes issued by the company. The recovery rating remains '3', indicating S&P's expectation of meaningful (50%-70%) recovery in the event of a payment default. The outlook revision on JLR follows that on its parent company Tata Motors Ltd., and reflects S&P's view that JLR will continue to generate strong operating cash flows over fiscal years 2015 and 2016 (year-end March 31). S&P sees at least a one-in-three chance that despite significant capital expenditures (capex) and potentially negative free operating cash flows (FOCF), JLR's leverage metrics will remain sufficiently strong to support a higher rating on Tata Motors during the next 12 months. S&P's base-case scenario takes a cautious view of JLR's future volume growth in fiscal years 2015 and 2016, which will include new products for both the Jaguar sports saloon and sports car brand, and the Land Rover premium/luxury sports utility vehicle brand. S&P estimates generally stable reported EBITDA margins in the 16%-17% range over the same period. Importantly, JLR is continuing to increase capex to fund new products, improve and develop existing assets, and to a lesser extent spend on capacity additions outside the U.K. For fiscal 2015, S&P forecasts capex of GBP3.5 billion-GBP3.7 billion, with continued heavy spending in fiscal 2016. S&P therefore sees a risk that operating cash flow may not be sufficient to fully meet expected capex, and thereby factor in negative FOCF during the next two years, causing JLR's adjusted debt (negligible as of March 31, 2014) to rise commensurately. S&P forecasts JLR will continue to pay only limited annual dividends to Tata Motors, consistent with the GBP150 million paid in respect of financial 2014, enabling JLR to largely retain its cash flows for funding capex. S&P recognizes that the additional debt would weaken adjusted credit metrics, but it expects JLR to maintain credit metrics which are strong for the ratings, with adjusted debt to EBITDA of no more than 1.0x by fiscal 2016, and funds from operations (FFO) to adjusted debt of not less than 50% by fiscal 2016. S&P continues to assess JLR's financial risk profile "intermediate," supported by the currently very strong leverage metrics due to very low adjusted debt, as well as significant operating cash flow generation. JLR also has sizable retained cash balances, which provide a potential source of financing and ongoing limited dividend payments to Tata Motors. S&P also factors in the possibility of higher cash flow volatility in the event of stress. An upgrade would likely require a revision of our financial risk profile assessment on JLR to "modest." As of March 31, 2014, adjusted debt was negligible at only GBP65 million. S&P makes analytical adjustments to reported gross debt of GBP2.0 billion, mainly by subtracting GBP2.6 billion for surplus cash (after applying a 25% haircut) and adding GBP0.6 billion for pensions. S&P's assessment of JLR's business risk profile remains "fair," supported by the group's well-established market position as a global premium auto manufacturer with well-recognized brands, particularly Range Rover. JLR also benefits from above-average growth rates in the premium segment, supported by demand in emerging markets -- notably China, which is the group's largest market by volume. The company has also shown improving profitability during fiscal 2014 and first-quarter fiscal 2015. JLR has a lengthening track-record of successful product extension and development, which continues to improve its competitive position. These strengths are partly offset by JLR's still-modest size and limited product range and scope compared with larger global peers. While S&P expects the Jaguar brand to continue to be supported by the roll-out of new products, (including the imminent launch of the new Jaguar XE), it sees the potential for execution risks in the roll-out of new models, and consider that the range of cars remains limited. Cyclical demand for premium and luxury cars is also a constraining factor in S&P's business risk profile assessment. S&P's base case assumes: -- Volume growth to continue in fiscal 2015 and 2016, assisted by growth in the premium segment ahead of the overall auto market, and supported by new product launches. -- Generally stable reported EBITDA margins in the range of 16%-17%. -- Sizable capex in fiscal 2015 of GBP3.5 billion-GBP3.7 billion, with continued heavy spending the following year. -- Negative free operating cash flows during fiscal 2015 and 2016. -- Limited annual dividend payments to Tata Motors, consistent with the GBP150 million paid for financial 2014. Based on these assumptions, S&P arrives at the following credit measures for fiscal 2015 and 2016: -- Adjusted debt to EBITDA of no more than 1x. -- FFO to adjusted debt of no less than 50%. JLR is a wholly owned subsidiary of India-based Tata Motors, and S&P applies its group rating methodology in its rating analysis. JLR is a significant part of the consolidated Tata Motors group, representing an increased 90% of group EBITDA for fiscal 2014 and S&P now classifies JLR as a "highly strategic" group entity, rather than "strategically important." This reflects S&P's view that JLR is unlikely to be sold, has a long-term commitment from Tata Motors, constitutes a significant proportion of the consolidated group, and shares a reputation with the parent. S&P also notes, however, that JLR is operationally separate from Tata Motors, and does not serve the same customer base. JLR's stand-alone credit profile is 'bb+'. The rating is one notch lower at 'BB', in line with the rating on Tata Motors. This reflects S&P's view of the risk that in a credit-stress scenario, Tata Motors could draw support from JLR. The positive outlook reflects that on JLR's parent company Tata Motors, and S&P's expectation that JLR's strong operating cash flow generation, if sustained, can result in stronger leverage metrics than S&P expects. This would lead to Tata Motors sustaining a ratio of FFO to debt above 30%, despite a significant increase in capex. S&P would raise its rating on JLR if it raises the rating on Tata Motors. S&P may raise its rating on Tata Motors if the strong operating cash flows of JLR partly offset the increased capex, such that the ratio of FFO to debt for Tata Motors is sustained above 30%. S&P may also upgrade Tata Motors if the successful positioning of the Jaguar range of vehicles improves the business risk profile. S&P may revise the outlook on JLR to stable if it do the same on Tata Motors. S&P may revise the outlook to stable on Tata Motors if the ratio of FFO to debt declines toward 25%. This may happen if operating performance weakens, for example due to lower demand for JLR's products in key markets like China, or due to new product launches, or if capex is higher than expected. MANCON LOGOATRUVA: Goes to Voluntary Liquidation ------------------------------------------------ Prolific North reports that ManCon logoAtruva Limited, the limited company behind the publication of the what's on web site Manchester Confidential, has gone into voluntary liquidation owing around GBP300,000. Atruva follows the failure of the previous four limited companies which have published ManCon, beginning with the liquidation of 2M Media in 2007, according to Prolific North. The web site still continues to trade and it's believed that the publisher, Mark Garner, who owns the url, will continue to publish the title as a sole trader rather through the protection of a limited company, the report notes. The related titles including Liverpool and Leeds also continue to publish. Last autumn, Mr. Garner was handed a 12-year disqualification as a director for running a business while being an undischarged bankrupt, the report recalls. Atruva's sole director and shareholder was Georgina Hague, Mr. Garner's daughter. The company was incorporated in 2012. Jon Mercer of the liquidators Leonard Curtis was unable to respond to any questions. NUTRAFEED: In Administration; 17 Jobs Affected ---------------------------------------------- Northamptonshire Telegraph reports that Nutrafeed has folded with the loss of 17 jobs. The company went into administration last Aug. 20, the report cites. Insolvency firm Duff & Phelps have been appointed administrators and will sell the company's assets, Northamptonshire Telegraph relates. Nutrafeed is a Corby food recycling company. The company, which also has a plant in Wrexham, north Wales, recycled food waste from supermarkets and food and drink manufacturers for use as animal feed. WEEWORLD: In Liquidation; 19 Jobs Affected ------------------------------------------ BBC News reports that WeeWorld has gone into liquidation with the loss of 19 jobs. Tom MacLennan -- tom.macLennan@frpadvisory.com -- and Iain Fraser -- iain.fraser@frpadvisory.com -- from FRP have been appointed as joint provisional liquidators of the firm, BBC relates. The liquidators said the company had encountered cash flow problems, BBC relates. According to the report, the Company said 11 of the 30 staff at its Blythswood Square headquarters had been retained while a buyer was sought. WeeWorld is Glasgow firm behind the "WeeMees" internet brand. It produces a social network site targeted towards teenagers and children, offering instant messaging and avatar-based chat. ********* 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 Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2014. All rights reserved. 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