/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150102.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, January 2, 2015, Vol. 16, No. 1 Headlines G E R M A N Y DEUTSCHE FORFAIT: Unveils Details of Restructuring Plan K A Z A K H S T A N HALYK SAVINGS: Deregisters Securities Due to Liquidation N E T H E R L A N D S ZOO ABS II: S&P Lowers Rating on Class E Notes to 'CCC-' R U S S I A B&N BANK: S&P Affirms 'B' ICR; Outlook Remains Developing C.A.T. OIL: S&P Puts 'BB' CCR on CreditWatch Negative CREDIT BANK OF MOSCOW: Fitch Affirms 'BB' LT Currency IDRs HMS HYDRAULIC: S&P Maintains 'CCC' CCR on CreditWatch Negative MAGADAN OBLAST: S&P Assigns 'BB-' Rating to RUB1 Billion Bond S P A I N AYT DEUDA: S&P Lowers Ratings on Two Note Classes to 'D(sf)' MARTINSA-FADESA SA: Seeks Agreement Modification with Creditors U K R A I N E CREATIV GROUP: S&P Cuts LT Foreign Curr. Credit Rating to CCC- HF ASSETS: Eastern Caribbean Court Commences Liquidation METINVEST GROUP: Measures Debts at USD3 Billion, CEO Says * UKRAINE: Passes Bill to Facilitate Bank Restructuring U N I T E D K I N G D O M CITY LINK: Cuts 2,356 Jobs After Acquisition Talks Fail ENTERTAINMENT EXCHANGE: In Administration, Closes Shop HAPPY SHEEP: Owner Forced to Close Due to Spiraling Bills U Z B E K I S T A N RAVNAQ-BANK: S&P Affirms 'CCC' Counterparty Credit Ratings X X X X X X X X * BOOK REVIEW: The Rise and Fall of the Conglomerate Kings ********* ============= G E R M A N Y ============= DEUTSCHE FORFAIT: Unveils Details of Restructuring Plan ------------------------------------------------------- DF Deutsche Forfait AG has presented further details of its restructuring plan and is asking investors in its 2013/20 corporate bond to cast their written votes on its proposal. The invitation to participate in this "vote without a meeting" is being published on Dec. 30 in the Federal Gazette (Bundesanzeiger). These details essentially relate to the reduction in the nominal interest rate (coupon) of the corporate bond from 7.875% p.a. to 2% p.a. in return for a consideration to be given to bondholders as proposed in the ad hoc announcement of November 26. The company is proposing to amend the terms and conditions of the bond so that bondholders are granted options to acquire shares in the company. These option rights are to be inseparably tied to the 2013/20 DF bond issues. Those bondholders exercising their options will be entitled to acquire between 100 (minimum) and 113 (maximum) of new shares at a price of EUR1.25 ("strike price") per share for each bond with a nominal value of EUR1,000. This gives bondholders a chance to recoup part or all of the reduction of the interest rate if the shares trade at a premium to their strike price (XETRA closing price on December 23, 2014: EUR1.55). The exact number of options per bond of a nominal value of EUR1,000 will depend on whether collateral will have to be provided to the lending banks. If the ongoing negotiations with the banks arrive at this result, the bondholders will get a higher number of options in order to ensure economically equal treatment of all creditors. The appropriateness of the consideration based on the above parameters has been confirmed by an opinion letter from accountants Ebner Stolz; this letter can be downloaded from the company's Web site at: http://www.dfag.de/investor-relations/hauptversammlung According to the proposed plan, bondholders will be able to exercise their options between May 27, 2016 at the earliest and the maturity of the corporate bond on May 27, 2020 at the latest. More details are provided in the invitation to "vote without a meeting". Apart from this amendment, the company also proposes to amend the terms and conditions of the corporate bond to the effect that the creditors forgo any right to demand an early repayment of the bond until December 31, 2015, by which time the essential restructuring measures are expected to be concluded. A further item to be voted on is the company's proposal to appoint lawyer Klaus Nieding of Frankfurt as joint representative for all bondholders. All bondholders wishing to participate in the vote have to submit their written votes to the vote administrator, the notary public Dr. Klaus Pieler of Cologne between Tuesday, January 20, 2015, 0.00 h and Thursday, January 22, 2015, 24.00 h. Voting forms as well as further information are available from investors' depository banks as well as from the website of DF Deutsche Forfait AG at www.dfag.de/investor-relations/anleihe The proposed measures form part of a restructuring concept, which is the basis of an "IDW S6 Sanierungsgutachten" restructuring report. According to this report, the proposed reduction of funding costs and the strengthening of the company's equity base are vital prerequisites for maintaining the company's going concern status. The measures are still under the proviso that the Annual General Meeting approves the creation of the contingent and authorized capital required for the implementation of the restructuring measures. The Annual General Meeting will take place in Cologne on January 22, 2015. =================== K A Z A K H S T A N =================== HALYK SAVINGS: Deregisters Securities Due to Liquidation -------------------------------------------------------- Halyk Savings Bank of Kazakhstan JSC (Almaty), whose securities are officially listed on Kazakhstan Stock Exchange (KASE), has by an official letter informed KASE of the following: Based on the decision of the Board of Directors of Halyk Savings Bank of Kazakhstan JSC dated September 30, 2014 to voluntarily liquidate the Bank's subsidiary company HSBK (Europe) B.V. based in the Netherlands on December 23, 2014 HSBK (Europe) B.V. was removed from the register of the Netherlands Chamber of Commerce in connection with its voluntary liquidation (period of the liquidation process -- from October 9, 2014 to December 23, 2014). Headquartered in the city of Almaty, Kazakhstan, Halyk Bank reported -- as at June 30, 2014 -- total assets of KZT2.8 trillion (US$15.4 billion) and total equity of KZT438 billion (US$2.4 billion), according to Moody's Investors Service. ===================== N E T H E R L A N D S ===================== ZOO ABS II: S&P Lowers Rating on Class E Notes to 'CCC-' -------------------------------------------------------- Standard & Poor's Ratings Services took various credit rating actions in ZOO ABS II B.V. Specifically, S&P has: -- Raised its ratings on the class A-1, A-2, and B notes; -- Affirmed its ratings on the class X and C notes; and -- Lowered its ratings on the class D and E notes. The rating actions follow S&P's credit and cash flow analysis of the transaction using data from the transaction's trustee report and the application of its relevant criteria. The class X and class A-1 notes have partially amortized since S&P's previous review. However, further capitalization of interest on the class E deferrable notes has increased their outstanding balance. According to S&P's analysis, the portfolio's overall credit quality has deteriorated. For example, S&P's analysis shows that the proportion of 'CCC' rated assets (assets rated 'CCC+', 'CCC', and 'CCC-') has increased since S&P's previous review-- to EUR17.714 million (equivalent to 11.16% of the current performing portfolio balance) from EUR9.601 million (equivalent to 4.37% of the then performing portfolio balance). This has resulted in an increase in scenario default rates (SDRs; the level of defaults that S&P expects the transaction to incur at the respective rating levels). "We conducted our cash flow analysis to determine the break-even default rate (BDR) for each rated class of notes. The BDR represents our estimate of the maximum level of gross defaults, based on our stress assumptions, that a tranche can withstand and still fully repay the noteholders. We used the portfolio balance that we consider to be performing, the reported weighted-average spread, and the weighted-average recovery rates that we considered to be appropriate. We incorporated various cash flow stress scenarios using our shortened and additional default patterns and levels for each rating category assumed for each class of notes, combined with different interest stress scenarios as outlined in our criteria," S&P said. "Since our previous review, the class A-1 notes have amortized by approximately EUR59 million. According to our cash flow results, the deleveraging of the class A-1 notes has resulted in an increase in the available credit enhancement for all rated classes of notes," S&P added. S&P's analysis indicates that the available credit enhancement for the class A-1, A-2, and B notes is now commensurate with higher ratings than those previous assigned. S&P has therefore raised to 'BBB (sf)' from 'BBB- (sf)', to 'BB+ (sf)' from 'BB- (sf)', and to 'B+ (sf)' from 'B (sf)' its ratings on the class A- 1, A-2, and B notes, respectively. The available credit enhancement for the class C notes has also increased since S&P's previous review. However, S&P's credit and cash flow results indicate that the BDRs are unable to surpass the SDRs at a higher rating level than that currently assigned. As a result, S&P has affirmed its 'B (sf)' rating on the class C notes. In S&P's view, while the class D and E notes also have increased available credit enhancement, its analysis shows that current BDRs are unable to sustain SDRs at the current rating levels. S&P has therefore lowered to 'CCC (sf)' from 'CCC+ (sf)' and to 'CCC- (sf)' from 'CCC (sf)' its ratings on the class D and E notes, respectively. The class X notes have a very small outstanding balance with a significant amount of credit enhancement, which S&P considers to be commensurate with the assigned rating. Therefore, S&P has affirmed its 'AAA (sf)' rating on the class X notes. RATINGS LIST Class Rating Rating To From ZOO ABS II B.V. EUR255.5 Million Senior Delayed Drawdown and Deferrable-Interest Secured Floating-Rate Notes Ratings Raised A-1 BBB (sf) BBB- (sf) A-2 BB+ (sf) BB- (sf) B B+ (sf) B (sf) Ratings Affirmed X AAA (sf) C B (sf) Ratings Lowered D CCC (sf) CCC+ (sf) E CCC- (sf) CCC (sf) =========== R U S S I A =========== B&N BANK: S&P Affirms 'B' ICR; Outlook Remains Developing --------------------------------------------------------- Standard & Poor's Ratings Services said that it has affirmed its long- and short-term 'B/B' issuer credit ratings on Russia-based B&N Bank. The outlook remains developing. S&P also affirmed the bank's Russia national scale rating at 'ruA-'. The affirmation reflects S&P's opinion that, although B&N Bank's operational and execution risks have increased following the acquisition of Rost Bank Group (the Group), especially in the context of a weaker economic environment, S&P still believes that there is a potential upside due to possibly higher systemic importance and an enlarged franchise within the Russian banking system. S&P also affirmed the bank's Russia national scale rating at 'ruA-'. On Dec. 10, 2014, the Russian state Deposit Insurance Agency (DIA) announced that B&N Bank had been chosen as an investor in charge of the financial rehabilitation of component banks of the Rost Bank Group (OJSC ROST Bank, Commercial Bank KEDR, JSC Tveruniversalbank, OJSC SKA-Bank, and JSC AKKOBANK). As a part of the publicly announced financial rehabilitation plan, B&N Bank will receive a six-year loan from DIA amounting to Russian ruble (RUB) 17.5 billion at a below-market-average interest rate, which is likely to bolster B&N's capital in 2015 by an amount S&P estimates at about RUB10 billion. Although obtaining funding is conditional to the deal, S&P believes that B&N has some room to reverse the deal under certain conditions, although this is not S&P's current expectation. In addition, the DIA will loan RUB18.4 billion directly to OJSC ROST Bank, covering immediate capital and liquidity needs at the Group's level. Despite this immediate capital gain, S&P still believes that B&N Bank's capitalization is likely to be pressured by negative trends in the operating environment and potential operating losses arising from the deal, if integration risks materialize. S&P understands that B&N has not yet finalized the due diligence procedure on the acquired banks, potentially leaving some risks still to be identified during this process. B&N has agreed a guarantee with the former owners of the group to cover any higher-than-expected credit losses that arise from the Group's loan book, but S&P believes that the execution of this guarantee is uncertain at this stage. In December, the equity shares of the banks from this group were transferred to B&N's balance sheet for one ruble. B&N does not have full operational control over the Group yet, as DIA representatives are still performing temporary management functions at these banks until the financial rehabilitation plan is finally agreed by the end of 2014. S&P views the financial terms of this deal as favorable for B&N Bank. Nevertheless, S&P have doubts that all recently acquired entities will be supportive to the financial profile of the consolidated group over time. "We also note that the integration of the Group and the establishment of a diligent risk management system throughout the entire holding may become challenging given the size of the acquisition. The Group's assets amounted to roughly RUB116 billion on Nov. 1, 2014, which equals about 42% of B&N's assets on the same date. B&N is currently in the process of integrating B&N Bank Credit Cards (formerly Moscomprivatbank) and DNB Bank, which it acquired in the second quarter of 2014. The performance of the acquired businesses has been poor, with B&N Bank Credit Cards losing RUB690 million and DNB Bank losing RUB24 million in the third quarter of 2014, according to Russian accounting standards. We consider that this is partly linked with the current tough overall situation for banks in Russia, especially in the retail sector where B&N Bank Credit Cards operates, and partly with difficulties related to the transition period," S&P said. At the same time, S&P sees an opportunity for B&N Bank to become a systemically important entity within the Russian banking sector, as S&P's criteria define this. Should this happen, the bank could benefit from potential extraordinary government support, which S&P could factor into its ratings. The developing outlook means that positive and negative rating actions are both possible within the next 12-18 months, as B&N's systemic importance and enlarged franchise could potentially offset higher execution risks in the context of the less- supportive economic climate in Russia. S&P may lower the ratings on B&N if integration risks related to the various acquisitions materialize, or if S&P sees that the asset quality or capital position of B&N Bank is coming under greater pressure. S&P may also lower the ratings if it considers that there has been a material increase in banking industry and country risk for Russia. S&P could raise the ratings if it believes that B&N has become a systemically important bank, and the Russian government could provide extraordinary support to B&N in case of need. However, S&P anticipates that a positive rating action on B&N Bank would require the bank to strengthen revenues and diversification, not only increase its size. An upgrade would also depend on a substantial reduction of integration risks and B&N Bank's projected risk-adjusted capital (RAC) ratio staying sustainably in the range of 5%-6%. C.A.T. OIL: S&P Puts 'BB' CCR on CreditWatch Negative ----------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' long-term corporate credit rating and 'ruAA' Russia national scale rating on Austria-registered oilfield services provider C.A.T. oil AG (CAToil) on CreditWatch with negative implications. The CreditWatch placement reflects S&P's view that the potential acquisition of CAToil by Joma Industrial Source Corp. could lead to a deterioration in CAToil's credit metrics, driven by a potentially more aggressive capital structure and/or growth strategy. S&P understands that the potential acquirer's future strategy for CAToil remains uncertain at this stage, but could involve a more aggressive growth strategy--potentially in new markets. S&P also understands that the management board has terminated its contracts with effect from March 31, 2015, except for the company's Chief Operating Officer, Anna Brinkmann, whose resignation is immediate. This could have significant implications for our view of the company's management and governance. S&P aims to resolve the CreditWatch placement once it has more certainty regarding CAToil's future strategy and balance sheet. A key rating driver would be S&P's assessment of the group's financial risk and business risk profiles if the acquisition goes ahead. S&P will also assess the then new owner's operational strategy for the company. CREDIT BANK OF MOSCOW: Fitch Affirms 'BB' LT Currency IDRs ---------------------------------------------------------- Fitch Ratings has revised the Outlooks on 20 mid-sized and small Russian banks to Negative from Stable. The action reflects Fitch's expectation that the sharp deterioration in the Russian operating environment will negatively impact the banks' credit profiles in 2015. The banks are Credit Bank of Moscow (CBOM, BB), Bank Saint Petersburg OJSC (BSPB, BB-), Bank Zenit (Zenit, BB-), Chelindbank (Chelind, BB-), Rosevrobank (REB ,BB-), Locko-bank (Locko, B+), Primsotsbank (B+), Novosibirsk Social Commercial Bank Levoberezhny, OJSC (Levoberezhny ,B+), Sovcombank (SCB, B+), Tinkoff Credit Systems (Tinkoff, B+), JSC SDM-Bank (SDM, B+), JSC Asian-Pacific Bank (APB, B+), Absolut Bank (Absolut, B+), Evrofinance Mosnarbank (EMB, B+), JSC Bystrobank (Bystro, B), SKB-Bank (SKB, B), Expobank LLC (Expobank, B), JSC Spurt Bank (Spurt, B), Pervobank (PB, B), Uraltransbank (UTB, B-). At the same time, the agency has affirmed the Long-term Issuer Default Ratings of two Russian banks -- Novikombank and Russian Universal Bank -- at 'B' with Stable Outlooks, and withdrawn without affirmation the ratings of Promsvyazbank (PSB). Most rated Russian banks not covered in this commentary are already on Negative Outlook, either because their ratings are linked to those of the Russian sovereign (BBB/Negative) or because of bank-specific negative trends in their stand-alone credit profiles. KEY RATING DRIVERS AND SENSITIVITIES -- IDRS, VRs, National Long- term Ratings The revision of the banks' Outlooks to Negative reflects Fitch's expectation that economic recession, significantly increased funding costs, sharp rouble depreciation, closed wholesale funding markets, a challenging liquidity situation and rising inflation will weigh on the banks' credit profiles. At the same time, the affirmation of the banks' ratings reflects (i) their moderate resilience to the weaker operating environment, as financial metrics are for the most part currently reasonable; and (ii) sovereign support for the sector, in the form of regulatory forbearance, liquidity provision and potential capital injections, which should reduce near-term pressures. Asset quality is a key driver for all banks on Negative Outlook. Most of them had non-performing loan (NPL) ratios in single digits at end-1H14 (APB, Tinkoff, Bystro, SKB and UTB had higher ratios, reflecting their retail/small business focus), notwithstanding moderate growth in NPL ratios by 1-6 pct in 1H14, and these were well covered (at least by 80%) by reserves. However, economic recession (we forecast GDP to contract by 2.8% in 2015, and the downturn may be even more severe in the case of tightened sanctions, accelerated capital flight or a further fall in oil prices), higher interest rates and the weaker rouble are likely to lead to a more marked deterioration in corporate asset quality. Already large credit losses in retail-focused banks (Tinkoff, SCB, SKB, Bystro and APB) are also likely to further widen due to a reduction in real household incomes resulting from high inflation and rouble devaluation. Banks' generally moderate capitalization (although more solid at Tinkoff, Chelind and EMB) will be hit by sizable mark-to-market losses on bond portfolios, an upward revaluation of foreign currency risk-weighted assets and, over the long-term, by increased impairment charges, although regulatory forbearance will to varying degrees prevent these effects from being recognized in statutory accounts. The authorities have also announced planned recapitalization measures, including up to RUB1trn of non-cash subordinated loans and preference shares via Depository Insurance Agency, although it is not yet clear whether this will be available to all medium-sized and smaller banks and on what terms. Profitability has moderated in 2014 due to higher impairment charges and funding costs, and both are likely to significantly increase further, especially the latter after the recent Central Bank of Russia interest rate hike to 17% from 10.5%. Banks are likely to find it difficult to pass on higher funding costs to borrowers without compromising asset quality, in Fitch's view. Banks with a higher share of current accounts in their liabilities (REB, SDM, Spurt, PB) may be more resilient to funding cost increases, although it may be more difficult to retain such free funding in a higher rate environment. Liquidity risks have increased, as significant rouble devaluation has triggered a wave of deposit withdrawals/currency conversions. The reviewed banks on average experienced outflows (adjusted for exchange rate effects) equal to 5-6% (the lowest being 1% and the highest above 10% at some banks) of their customer funding in the first half of December, although they had sufficient liquidity buffers to cover these. Banks have already increased deposit rates and cut new lending to retain customers and preserve liquidity. The authorities also doubled the limit for insured deposits to RUB1.4 million from RUB0.7 million to restore customer confidence. The liquidity squeeze has eased somewhat in the last few days as the rouble stabilised, but remains potentially volatile. The CBR has relaxed collateral requirements for its secured loans and committed to provide liquidity facilities (including in FX) to support the sector, if needed. Refinancing risks are generally limited, as most of the reviewed banks are deposit-funded. Of those banks with substantial market borrowings (CBOM, 24% of total liabilities; Locko, 30%; Zenit, 14%; and Tinkoff, 40%) only Locko and Tinkoff have material repayments (around 25% of liabilities) in 2015 but which are mitigated by reasonable liquidity buffers and, in the case of Tinkoff, additionally by a rather short-term loan book. CBOM and Zenit have longer-term maturities with amount falling due in 2015 not exceeding 11% of liabilities. However, if access to wholesale funding is closed for a prolonged period of time and if banks need to deleverage to make repayments, this could have negative implications for profitability and asset quality. The banks on Negative Outlook could be downgraded if (i) the weaker operating environment translates into deterioration of their financial metrics; (ii) prospects for Russia's economy and macroeconomic stability continue to deteriorate significantly; or (iii) banks become considerably more dependent on regulatory forbearance or support from the Russian authorities. The affirmations of Novikombank and Russian Universal Bank with Stable Outlooks reflect their expected greater resilience to the more challenging operating environment. For Novikombank this is derived from the benefits of support from majority shareholder, state corporation Rostec, and for Russian Universal Bank from its large capital and liquidity buffers and niche franchise. The ratings of Novikombank could come under downward pressure from failure to receive timely support when required and in the case of Russian Universal Bank from its niche franchise being subject to regulatory pressure. Fitch has also withdrawn the ratings of PSB without affirmation, as the issuer has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings (or analytical coverage) for PSB. In Fitch's view, the bank is likely to face similar pressures on its stand-alone credit profile as other banks covered in this commentary. However, as a larger and systemically important institution, PSB may be more likely to benefit from government support, in case of need. KEY RATING DRIVERS AND SENSITIVITIES -- Senior and Subordinated Debt Ratings The banks' senior unsecured debt is rated in line with their Long-term IDRs and National Ratings (for domestic debt issues). The subordinated debt ratings of CBOM and BSPB are notched down one level from their VRs (the banks' VRs are in line with their Long-term IDRs), in line with Fitch's criteria for rating these instruments. Changes to the banks' Long-term IDRs, VRs and National Ratings would likely impact the ratings of both senior unsecured and subordinated debt. KEY RATING DRIVERS AND SENSITIVITIES -- Support Ratings and Support Rating Floor All banks' '5' Support Ratings reflect Fitch's view that support from their private shareholders cannot be relied upon. The Support Ratings and Support Rating Floors of 'No Floor' also reflect that support from the Russian authorities, although possible, is not factored into the ratings due to the banks' still small size and lack of overall systemic importance. The Support ratings may be upgraded if the banks are acquired by stronger institutional shareholders. The rating actions are as follows: Credit Bank of Moscow Long-term foreign and local currency IDRs: affirmed at 'BB', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'bb' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'AA-(rus)'; Outlook revised to Negative from Stable Senior unsecured debt (including that issued by CBOM Finance PLC (Ireland)): affirmed at 'BB' and 'BB(EXP)' Senior unsecured debt National Rating: affirmed at 'AA-(rus)' and 'AA-(rus)(EXP)' Subordinated debt (issued by CBOM Finance PLC (Ireland)): affirmed at 'BB-' Bank Saint Petersburg OJSC Long-term foreign and local currency IDRs: affirmed at 'BB-'; Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'bb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A+(rus)'; Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'BB-' Senior unsecured debt National Rating: affirmed at 'A+(rus)' Subordinated debt (issued by BSPB Finance plc): affirmed at 'B+' Bank Zenit Long-term foreign and local currency IDRs: affirmed at 'BB-', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'bb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A+(rus)', Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'BB-' Senior unsecured debt National Rating: affirmed at 'A+(rus)' Chelindbank Long-term foreign currency IDR: affirmed at 'BB-', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'bb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A+(rus)', Outlook revised to Negative from Stable Rosevrobank Long-term foreign and local currency IDRs: affirmed at 'BB-', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'bb-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A+(rus)', Outlook revised to Negative from Stable Locko-Bank Long-term foreign and local currency IDRs: affirmed at 'B+', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A-(rus)', Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'B+'/Recovery Rating 'RR4' and 'B+(EXP)'/Recovery Rating 'RR4(EXP)' Senior unsecured debt National Long-term Rating: affirmed at 'A- (rus)'/Recovery Rating 'RR4' and 'A- (rus)(EXP)'/Recovery Rating 'RR4(EXP)' Primsotsbank Long-Term foreign currency IDR affirmed at 'B+'; Outlooks revised to Negative from Stable Short-Term foreign currency IDR affirmed at 'B' Viability Rating affirmed at 'b+' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-Term Rating affirmed 'A-(rus)'; Outlook revised to Negative from Stable Novosibirsk Social Commercial Bank Levoberezhny, OJSC Long-Term foreign and local currency IDRs affirmed at 'B+'; Outlooks revised to Negative from Stable Short-Term foreign currency IDR affirmed at 'B' Viability Rating affirmed at 'b+' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-Term Rating affirmed 'A-(rus)'; Outlook revised to Negative from Stable Sovcombank Long-term foreign and local currency IDRs: affirmed at 'B+'; Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A(rus)'; Outlook revised to Negative from Stable Tinkoff Credit Systems Long-term foreign and local currency IDRs: affirmed at 'B+'; Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A(rus)'; Outlook revised to Negative from Stable Senior unsecured debt Long-term rating: affirmed at 'B+'/Recovery Rating 'RR4' Senior unsecured debt National Long-term Rating: affirmed at 'A(rus)' Subordinated debt (issued by TCS Finance Limited) Long-term rating: affirmed at 'B'/Recovery Rating 'RR5' JSC SDM-Bank Long-term foreign and local currency IDRs: affirmed at 'B+', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'A-(rus)', Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'B+'; Recovery Rating 'RR4' and 'B+(EXP)'/Recovery Rating 'RR4(EXP)' Senior unsecured debt National Long-term Rating: affirmed at 'A- (rus)'/Recovery Rating 'RR4' and 'A-(rus)(EXP)'/Recovery Rating 'RR4(EXP)' JSC Asian-Pacific Bank Long-term foreign and local currency IDRs: affirmed at 'B+'; Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-Term Rating: affirmed at 'A-(rus)'; Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'B+'/Recovery Rating 'RR4' Senior unsecured debt National Long-term Rating: affirmed at 'A- (rus)' Absolut Bank Long-term foreign and local currency IDRs: affirmed at 'B+'; Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating affirmed at 'b+' Support Rating affirmed at '5' Support Rating Floor: affirmed at 'No floor' National Long-Term Rating affirmed at 'A-(rus)'; Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'B+'/Recovery Rating 'RR4' Senior unsecured debt National Long-term Rating: affirmed at 'A- (rus) Evrofinance Mosnarbank Long-term foreign and local currency IDRs: affirmed at 'B+', Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b+' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-Term Rating: affirmed at 'A-(rus)', Outlook revised to Negative from Stable Senior unsecured debt: affirmed at 'B+(EXP)'/ Recovery Rating 'RR4(EXP)' Senior unsecured debt National Long-term Rating: affirmed at 'A- (rus)(EXP)' JSC Bystrobank Long-term foreign and local currency IDRs: affirmed at 'B'; Outlooks revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b' National Long-Term Rating: affirmed at 'BBB(rus)'; Outlook revised to Negative from Stable Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' SKB-Bank Long-term foreign currency IDR: affirmed at 'B', Outlook revised to Negative from Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Expobank LLC Long-Term foreign and local currency IDRs affirmed at 'B'; Outlooks revised to Negative from Stable Short-Term foreign currency IDR affirmed at 'B' Support Rating affirmed at '5' Viability Rating affirmed at 'b' Support Rating Floor affirmed at 'No Floor' National Long-Term Rating affirmed at 'BBB(rus)'; Outlook revised to Negative from Stable Senior unsecured debt affirmed at 'B'/Recovery Rating 'RR4' Senior unsecured debt National Long-term Rating affirmed at 'BBB(rus)' JSC Spurt Bank Long-term foreign currency IDR affirmed at 'B'; Outlook revised to Negative from Stable Short-term foreign currency IDR affirmed at 'B' Viability Rating affirmed at 'b' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-term Rating affirmed at 'BBB-(rus)'; Outlook revised to Negative from Stable Pervobank Long-Term foreign currency IDR affirmed at 'B'; Outlooks revised to Negative from Stable Short-Term foreign currency IDR affirmed at 'B' Viability Rating affirmed at 'b' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-Term Rating affirmed at 'BBB(rus)'; Outlook revised to Negative from Stable Senior unsecured debt affirmed at 'B'/Recovery Rating 'RR4' Senior unsecured debt National Long-term Rating: affirmed at 'BBB(rus)' Uraltransbank Long-term foreign currency IDR: affirmed at 'B-', Outlook revised to Negative from Stable Short-Term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'BB-(rus)', Outlook revised to Negative from Stable Novikom Long-term foreign and local currency IDRs affirmed at 'B'; Outlooks revised to Stable from Positive Short-term foreign-currency IDR affirmed at 'B' Viability Rating affirmed at 'b' Support Rating affirmed at '5' Support Rating Floor affirmed at 'No Floor' National Long-term Rating affirmed at 'BBB(rus)'; Outlook revised to Stable from Positive Senior unsecured debt affirmed at 'B'/Recovery Rating 'RR4' Senior unsecured debt National Long-term Rating: affirmed at 'BBB(rus)' Russian Universal Bank Long-term foreign and local currency IDRs: affirmed at 'B', Outlook Stable Short-term foreign currency IDR: affirmed at 'B' Viability Rating: affirmed at 'b' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' National Long-term Rating: affirmed at 'BBB-(rus)', Outlook Stable Promsvyazbank Long-term foreign and local currency IDRs: 'B+'/Stable; withdrawn Short-term foreign and local currency IDRs: 'B'; withdrawn Viability Rating: 'b+'; withdrawn Support Rating: '4'; withdrawn Support Rating Floor: 'B'; withdrawn National Long-term Rating: 'A(rus)'/Stable; withdrawn Senior unsecured debt rating (issued by PSB Finance SA): 'B+'/Recovery Rating 'RR4'; withdrawn Subordinated debt rating (issued by PSB Finance SA): 'B'/Recovery Rating 'RR5'; withdrawn HMS HYDRAULIC: S&P Maintains 'CCC' CCR on CreditWatch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services maintained its long-term 'CCC' corporate credit rating on Russia-based pump and oil and gas equipment manufacturer HMS Hydraulic Machines and Systems Group PLC (HMS) on CreditWatch with negative implications. At the same time, S&P has maintained its 'CCC-' issue rating on the Russian ruble (RUB) 5.1 billion currently outstanding notes issued by HMS' subsidiary CJSC Hydromashservice on CreditWatch negative. The recovery rating on the notes is unchanged at '5', indicating S&P's expectation of modest (10%-30%) recovery in the event of a payment default. S&P subsequently withdrew all of its ratings on the group, at the issuer's request. At the time of the withdrawal, S&P believed that HMS could face default within the next two months, unless the company is able to attract sufficient funds to redeem its RUB2.1 billion of senior unsecured bonds maturing in February 2015. S&P understands that HMS is actively taking measures to secure refinancing for its upcoming bond maturity. However, the company faces challenging financial market conditions in Russia, which S&P believes is leading to more-restricted access to bank and debt capital markets. Without additional bank support or other sources of liquidity such as inflows from working capital, S&P sees the risk that HMS will be unable to repay its coming bond maturity and will have little headroom to cover ongoing cash needs. The company remains highly reliant on the ability and willingness of banks to increase, renew, or extend bank lines. At the same time, potential delays in scheduled payments from HMS' customers could further limit liquidity. S&P understands that as of Dec. 1, 2014 the company had RUB1.1 billion of retained cash and access to undrawn committed credit lines of RUB0.8 billion. Refinancing risks are coupled with HMS' currently weak operating environment. Due to challenging market conditions in Russia's oil and gas sector, S&P anticipates that HMS' operating performance will remain under pressure over the rest of 2014 and in 2015. HMS' liquidity position remains "weak". In S&P's view, it sees the risk that there may be insufficient liquidity to meet the RUB2.1 billion bond maturity in February 2015. HMS has a net debt to EBITDA maintenance covenant of 4.5x with some of its key banks. The CreditWatch placement reflects S&P's view that HMS is vulnerable to default if it is unable to secure adequate funds for the refinancing of its senior unsecured bond. At the time of withdrawal, S&P was unable to resolve its CreditWatch placement as it didn't know whether the company would obtain sufficient liquidity to replay its bonds. S&P could have lowered the rating further if the company underwent a debt restructuring, which S&P would view as tantamount to a default under its criteria. S&P could have affirmed the ratings if HMS resolved its near-term refinancing needs and liquidity shortage. This could have stemmed from new bank financing or working capital inflows. MAGADAN OBLAST: S&P Assigns 'BB-' Rating to RUB1 Billion Bond ------------------------------------------------------------- Standard & Poor's Ratings Services said that it had assigned its 'BB-' long-term global scale rating and 'ruAA-' Russia national scale rating to the Russian ruble (RUB) 1 billion (about US$18 million) four-year amortizing senior unsecured bond to be issued by Russia's Magadan Oblast (BB-/Stable/--; ruAA-/--/--) by year- end 2014. The ratings on the bond mirror those on the oblast. The bond will have fixed-rate coupons and an amortizing repayment schedule. According to the planned redemption schedule, 30% of the bond is to be repaid in 2016, 30% in 2017, and the remaining 40% in 2018. The ratings on Magadan are constrained by S&P's view of Russia's volatile and unbalanced institutional framework, which contributes to Magadan's very weak budgetary flexibility. Owing to these system constraints, S&P views Magadan's financial management as weak in an international context, mirroring S&P's view for most Russian local and regional governments. Despite its wealth above the Russian average, Magadan's economy is weak, in S&P's view, because of its heavy concentration on mining precious metals. The oblast's weak budgetary performance also constrains the ratings. The ratings are supported by S&P's view of the oblast's adequate liquidity, low debt, and low contingent liabilities. The stable outlook reflects S&P's view that in 2014-2017, Magadan's budgetary performance will remain weak, but its debt burden will increase only gradually and stay low. Moreover, S&P thinks the oblast's liquidity will remain adequate, owing to the reliance on medium-term committed bank facilities. ========= S P A I N ========= AYT DEUDA: S&P Lowers Ratings on Two Note Classes to 'D(sf)' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its credit ratings on AyT Deuda Subordinada I Fondo de Titulizacion de Activos's class A, B, and C notes. AyT Deuda Subordinada I is a cash flow collateralized debt obligation (CDO) collateralized by subordinated debt that nine Spanish banks initially issued specifically for the purpose of this transaction. The downgrades follow S&P's review of the transaction's underlying portfolio and its current performance as of the most recent transaction information that S&P received as of August 2014. The portfolio concentration has increased since S&P's previous review. S&P has also observed that the transaction is undercollateralized, with EUR123 million of subordinated debt to service more than EUR200 million of rated debt. As there is no available credit enhancement for the most senior class of notes, due to undercollateralization, S&P has lowered to 'CCC (sf)' from 'BB+ (sf)' its rating on the class A notes. In S&P's view, the risk of nonpayment of principal on the class A notes has increased since its previous review. S&P's ratings on the class B and C notes address timely interest payments on each payment date and ultimate payment of principal by the maturity date. From the August 2014 investor report, S&P notes that these classes of notes have deferred the interest due. S&P has therefore lowered to 'D (sf)' from 'B (sf)' and 'B- (sf)' its ratings on the class B and C notes, respectively. RATINGS LIST Class Rating Rating To From AyT Deuda Subordinada I, Fondo de Titulizacion de Activos EUR298 Million Asset-Backed Floating-Rate Notes Ratings Lowered A CCC (sf) BB+ (sf) B D (sf) B (sf) C D (sf) B- (sf) MARTINSA-FADESA SA: Seeks Agreement Modification with Creditors --------------------------------------------------------------- Reuters reports that Martinsa-Fadesa SA has presented an application for Modification of Agreement to its creditors before the Commercial Court no. 1 in A Coruna. According to Reuters, the Modification of Agreement must be accepted by creditors involving 75% of ordinary claims and approved by the court. Headquartered in La Corun, Spain, Martinsa Fadesa SA -- http://www.martinsafadesa.com/-- develops residential and commercial property projects, including hotels, shopping centers and golf courses, as well as industrial projects, among others. The company also operates in Portugal, Romania, Hungary, Ireland, France, Bulgaria, Mexico, the Dominican Republic, the Czech Republic, Slovakia, and Poland. In January 2008, Martinsa sought voluntary creditor protection after it failed to obtain a EUR150 million loan to refinance debt, which had been syndicated to about 45 lenders. The company faces EUR3.6 billion in debt. It spent almost three years in creditor protection, known as concurso in Spanish bankruptcy law, before reaching an agreement with creditors in March 2011. It reported a loss of EUR568 million in 2013, giving it negative equity of EUR4.2 billion, compared with EUR3.6 billion in 2012. ============= U K R A I N E ============= CREATIV GROUP: S&P Cuts LT Foreign Curr. Credit Rating to CCC- -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term foreign currency credit ratings on the following Ukrainian agribusiness companies to 'CCC-' from 'CCC': -- Creativ Group OJSC; -- MHP S.A.; -- Ukrainian Agrarian Investments S.A. (UAI); and -- UkrLandFarming PLC. The outlooks on the ratings are negative. The downgrades of the aforementioned Ukrainian agribusiness companies follow S&P's downgrade of Ukraine on Dec. 19, 2014. At present, S&P do not expect to rate these companies above the sovereign, as it considers their liquidity positions are unlikely to become sufficiently solid to withstand the restrictions on foreign currency cross-border transfer and conversion, if the sovereign were to default. S&P's long-term 'CCC-' rating on Ukraine therefore caps its ratings on the affected Ukrainian agribusiness companies. The default could become inevitable in the next few months if circumstances do not change, for instance, if additional international financial support is not forthcoming. S&P considers that the companies' accessible liquidity sources under such a stress scenario would be insufficient to meet their liquidity needs, including their short-term debt and working capital financing requirements. At the same time, S&P notes that their stand-alone credit quality -- before taking into account potential negative sovereign intervention -- is higher than that of the sovereign. S&P's stand-alone credit profiles (SACPs) for the respective companies reflect this. S&P also equalizes its local currency ratings with the foreign currency ratings on the Ukrainian agribusiness companies. This is because S&P considers that they would not pass its stress tests on the local currency ratings under its hypothetical scenario of a Ukraine default. Creativ Group OJSC The 'CCC-' local and foreign currency corporate ratings on Creativ reflect S&P's long-term 'CCC-' foreign currency sovereign rating on Ukraine and its SACP of 'b'. S&P bases the SACP on the company's "vulnerable" business risk profile, which primarily reflects S&P's view of the very high country risk of operating in Ukraine. It also reflects its "significant" financial risk profile due to its improving leverage, and S&P's understanding that the company will maintain an adjusted debt-to-EBITDA ratio of less than 4x. S&P considers the company's stand-alone credit quality to be lower than that of its 'B+' rated peers. S&P adjusts the SACP downward by one notch, using its comparative rating analysis. S&P views Creativ Group's liquidity as being "less than adequate". MHP S.A. S&P's 'CCC-' local and foreign currency corporate ratings on MHP reflect S&P's long-term 'CCC-' foreign currency sovereign rating on Ukraine and the company's SACP of 'b'. S&P bases the SACP on the company's "vulnerable" business risk profile, which primarily reflects S&P's view of the very high risk of doing business in Ukraine. It also reflects S&P's assessment of its financial risk profile as being "intermediate." This is because S&P considers that leverage will be less than 3x the adjusted debt-to-EBITDA. S&P also considers that MHP's aggressive expansionist financial policy weighs on its SACP. S&P views MHP's liquidity as being "less than adequate". Ukrainian Agrarian Investments S.A. S&P's 'CCC-' local and foreign currency corporate ratings on UAI reflect S&P's long-term 'CCC-' foreign currency sovereign rating on Ukraine and its SACP of 'b-'. S&P bases the SACP on the company's "vulnerable" business risk profile, which primarily reflects S&P's view of the very high risk of doing business in Ukraine, as well as the group's substantial EBITDA decline in 2013. It also reflects the group's "aggressive" financial risk profile due to S&P's view that leverage levels will reach 4x to 5x of debt-to-EBITDA. S&P considered the group to be highly leveraged in 2013, after EBITDA declined sharply. Nevertheless, S&P expects its operating performance to rebound in 2014, even though the price of corn is expected to remain somewhat subdued. Given the company's short-term debt maturity profile, S&P applies a negative modifier for capital structure, thereby adjusting its SACP downward by one notch. S&P views UAI's liquidity as being "weak". UkrLandFarming PLC S&P's 'CCC-' local and foreign currency corporate ratings on UkrLandFarming reflect S&P's 'CCC-' foreign currency rating on Ukraine and its SACP of 'b-'. S&P bases the company's SACP on its "vulnerable" business risk profile, which primarily reflects S&P's view of the very high risk of doing business in Ukraine. It also reflects its "significant" financial risk profile, based on S&P's view that leverage will be about 3x and that EBITDA interest coverage will be in the range of 3x to 6x. The SACP also reflects S&P's two-notch downward adjustment to UkrLandFarming's anchor, based on S&P's assessments of the company's "negative" financial policy and "weak" liquidity. OUTLOOK The negative outlooks on the affected Ukrainian agribusiness companies mirror S&P's negative outlook on Ukraine. S&P could lower its ratings on these companies if they face tighter currency controls, more restrictions on the transfer of funds, or rising political, or fiscal pressures. S&P could also lower the ratings if the companies' liquidity were to deteriorate further. However, a downgrade of Ukraine or a downward revision of S&P's transfer and convertibility (T&C) assessment would not automatically result in a downgrade, if the individual companies were to demonstrate resilience to country-specific risks (such as stricter currency restrictions), and were able to continue to pay their respective debts upon a sovereign default. S&P would raise its ratings on these companies if conditions in Ukraine were to stabilize, and if S&P saw lower risk related to currency controls and repatriation requirements. Any rating upside would be closely linked to positive rating actions on the sovereign. However, S&P could also consider upgrading the individual companies if they were able to continue to pay their debt, despite the liquidity constraints stemming from the sovereign. RATINGS LIST Downgraded; CreditWatch/Outlook Action To From Creativ Group OJSC Corporate Credit Rating Foreign Currency CCC-/Neg/-- CCC/Stable/-- Local Currency CCC-/Neg/-- B-/Stable/-- MHP S.A. Corporate Credit Rating Foreign Currency CCC-/Neg/-- CCC/Stable/-- Local Currency CCC-/Neg/-- B-/Stable/-- Senior Unsecured CCC- CCC Ukrainian Agrarian Investments S.A. Corporate Credit Rating Foreign Currency CCC-/Neg/-- CCC/Stable/-- Local Currency CCC-/Neg/-- CCC/Stable/-- UkrLandFarming PLC Corporate Credit Rating Foreign Currency CCC-/Neg/-- CCC/Stable/-- Local Currency CCC-/Neg/-- CCC/Stable/-- Senior Unsecured CCC- CCC HF ASSETS: Eastern Caribbean Court Commences Liquidation -------------------------------------------------------- Interfax-Ukraine reports that the Eastern Caribbean Supreme Court on Dec. 15 began the liquidation of HF Assets Management Limited. Russell Crumpler has been appointed as liquidator, Interfax- Ukraine says, citing a company report in the Holos Ukrainy newspaper. A creditors' meeting is scheduled for January 5, 2015, Interfax- Ukraine discloses. Erste Group Bank AG appealed to the High Court of Justice of the British Virgin Islands to declare HF Assets Management Limited bankrupt, Interfax-Ukraine recounts. Negotiations between Mriya's management and its creditors were held on Dec. 16, Interfax-Ukraine relays. The agricultural holding said that during the meeting with bond holders and creditors' representatives, no constructive position was agreed on their part regarding debt restructuring, Interfax-Ukraine relates. Mriya's leaders, in turn, demanded the appointment of a manager for the company's debt restructuring process of their choosing, Interfax-Ukraine discloses. Shareholders rejected the agreed version of the restructuring process, significantly increasing the likelihood of the company going bankrupt, Interfax-Ukraine notes. HF Assets Management Limited is the majority shareholder of Mriya agricultural company. METINVEST GROUP: Measures Debts at USD3 Billion, CEO Says --------------------------------------------------------- According to Ukrainian News Agency, Metinvest Group Chief Executive Officer Yuriy Ryzhenkov said in an interview with Kapital newspaper that the company measures its debts to creditors at USD3 billion. Mr. Ryzhenkov said the Group's bank debt for 2015 stands at USD800 million, Ukrainian News Agency relates. Mr. Ryzhenkov said that Metinvest is in talks on prolongation of the debt or provision of any instrument for its restructuring. Besides, the Group still has USD100 million outstanding debt on the previously issued Eurobonds due in 2015, and USD100 million of borrowings for purchase of United Coal coalmines in the United States, Ukrainian News Agency discloses. Moreover, the Group has USD750 million of indebtedness on Eurobonds due in 2018 and USD300 million deferred Eurobonds due in 2015 and 2016, Ukrainian News Agency states. Metinvest issued USD289.7 million Eurobond in the course of restructuring of the previous USD500 million issue, Ukrainian News Agency notes. Metinvest B.V. is a Ukraine-based holding company of mining and steel assets. * * * As reported by the Troubled Company Reporter-Europe on December 10, 2014, Fitch Ratings has assigned Metinvest B.V.'s USD289.7 million 10.5% guaranteed amortizing bonds due 2017 a final 'CCC' senior unsecured rating with a Recovery Rating 'RR4'. The semi- annual interest and principal repayments are first due in May 2016. The new bonds were issued pursuant to an exchange offer in respect of Metinvest's existing USD500 million 2015 notes. Some USD386.4 million existing notes were exchanged and USD113.6 million remain outstanding. Cash consideration of USD250 per USD1,000 in the nominal amount of the existing notes was paid for the exchange. The bond rating is in line with Metinvest's Long-term Issuer Default Rating (IDR) of 'CCC', which remains constrained by the Ukrainian sovereign rating. * UKRAINE: Passes Bill to Facilitate Bank Restructuring ------------------------------------------------------- Interfax-Ukraine reports that Ukraine's Verkhovna Rada, in the early hours of Dec. 29, passed a bill on measures to facilitate the capitalization and restructuring of banks in Ukraine. Bill No. 1564 was supported by 273 MPs, Interfax-Ukraine discloses. "We propose that the bill allowing quick injections of money in banks and the Individuals' Deposit Guarantee Fund be immediately passed. Under current laws, these procedures could last for months," Interfax-Ukraine quotes Ukrainian Prime Minister Arseniy Yatseniuk as saying regarding the bill, while presenting it to parliament. He explained that the devaluation of the hryvnia had undermined public confidence in the banking system, which is connected with Russian military aggression, and this has led to the situation where millions of Ukrainians had withdrawn money from banks as they believed they might collapse, Interfax-Ukraine relates. The government has already capitalized Oschadbank with the use of government domestic loan bonds worth UAH11 billion, and is expected to capitalize another state-run bank -- Ukreximbank -- with UAH5 billion, Interfax-Ukraine relays. "We foresee UAH36 billion next year for the capitalization of the banks that meet the specified (in the bill) criteria and have been agreed with our international financial partners," Mr. Yatseniuk, as cited by Interfax-Ukraine, said. According to Interfax-Ukraine, Mr. Yatseniuk said these are "backbone banks" and banks that will become financially sustainable in the future. The premier also added that UAH20 billion more would be allocated from the state budget in 2015 to the Individuals' Deposit Guarantee Fund, Interfax-Ukraine notes. The bill also includes a provision to inform the public about the banks that receive NBU refinancing loans, about their amounts and types, Interfax-Ukraine states. =========================== U N I T E D K I N G D O M =========================== CITY LINK: Cuts 2,356 Jobs After Acquisition Talks Fail ------------------------------------------------------- BBC News reports that the administrators of City Link have announced 2,356 job losses after a bid to buy the company failed. The administrators, who took over City Link on Christmas Eve, said an unnamed consortium's offer was not acceptable, BBC relates. According to BBC, the administrators said the possible buyer "offered no money up front and significantly undervalued the assets to be acquired". Business Secretary Vince Cable said the government has put measures in place to help the affected staff find new jobs, BBC relays. The company was founded in 1969 and employed 2,727 people, but suffered years of losses, BBC notes. City Link was bought by Better Capital for GBP1 in April 2013 but the administrators from Ernst & Young say the GBP40 million the investment company put into the firm was not enough to turn it around, BBC recounts. Just over 370 City Link staff have been kept on to deal with the parcels that remain at depots and help run down the business, BBC states. The administrators, as cited by BBC, said they had proposed alternative purchase terms to the consortium "that would be acceptable and common in these situations. The consortium, despite attempts to make them reconsider, declined to amend their original offer". City Link is a Coventry-based delivery firm. ENTERTAINMENT EXCHANGE: In Administration, Closes Shop ------------------------------------------------------ The Gazette reports that the owner of Entertainment Exchange, a Tiverton store, has blamed poor footfall for the closure of his shop in December. Four members of staff have been made redundant following the closure of the Entertainment Exchange, and managing director Matthew Conridge told The Gazette that a 20 per cent drop in footfall since the shop opened 18 months ago forced his decision. The report notes that Mr. Conridge said: "Over the Christmas period we reviewed our companies as a whole and took the decision that Tiverton, Exmouth and Paignton would close, unfortunately." The former Tiverton Town Football Club Chairman said that he was particularly sad to close the Tiverton store on December 30, and the uncertainty of Market Walk?s future was another factor he had had to consider, the report relates. The report notes that Mr. Conridge said: "I have a fond connection with the town but footfall on the street is down by about 20 per cent on last year and that's not just Entertainment Exchange that's the town as a whole. It's also the uncertainty of the possible sale of the building to Mid Devon. It's too risky to invest.? Mr. Conridge opened the Entertainment Exchange on the corner of Bampton Street and Market Walk in August 2013. In October 2013, Mr. Conridge was outraged by a scheme which offered free rates to temporary pop-up shops in the town -- an offer he said should have been used to benefit the High Street as a whole, the report recalls. Labeling the scheme as shameful on social media site Twitter, the businessman wrote: "Whoever it was who decided to give commercial businesses in Tiverton free money with the rates relief should have actually asked the local businesses what they think the money should be spent on. And rates are still a concern for business owners in the town," the report adds. HAPPY SHEEP: Owner Forced to Close Due to Spiraling Bills ---------------------------------------------------------- The Gazette reports that Laura Sheepy, owner of the Happy Sheep cafe in Bampton Street, said that she may be forced to close because of spiralling bills which had left her out of pocket as well as the lack of people coming to the town. "The town has been very quiet over the last few months and business is down on where it should be. It is getting to the stage where it would be more cost-effective to close for half of the week," the report quoted Ms. Laura as saying. =================== U Z B E K I S T A N =================== RAVNAQ-BANK: S&P Affirms 'CCC' Counterparty Credit Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC/C' long- and short-term counterparty credit ratings on Uzbekistan-based Ravnaq-bank. At the same time, S&P revised the outlook on Ravnaq-bank to stable from positive. Ravnaq-bank did not obtain the foreign currency license or permission to open a new branch in Tashkent, the capital city of Uzbekistan, in 2014. The outlook revision largely reflects S&P's opinion that Ravnaq-bank may face additional difficulties in achieving these targets, and S&P considers these plans to be crucial for further development of the bank's business position. S&P's 'CCC' long-term ratings on Ravnaq-bank continue to reflect the bank's vulnerability to operating conditions in Uzbekistan. In the absence of regulatory approval, Ravnaq-bank managed to expand its franchise only marginally in 2014, with assets shrinking on the back of a large, albeit planned, withdrawal by one of the depositors and subdued earnings. S&P notes that Ravnaq-bank plans to attract a third-party investor, but S&P believes them to be contingent to the regulatory approval for a foreign currency license. S&P's current base-case scenario does not include any foreign currency license or new branches opening before the second half of 2015, contrary to the bank's more aspiring expectations. If the bank's inability to resolve the regulatory issues prolong beyond 2015, in S&P's opinion, shareholders may feel less inclined to support the bank. This is likely to complicate compliance with the growth requirements set by the Uzbekistani authorities, increasing already high regulatory risks for the entity. The stable outlook on Ravnaq-bank incorporates S&P's view that gaining a foreign currency license is uncertain, although not impossible, and without this license, any improvement of the business financial profile will be challenging. S&P might consider raising the rating if the bank obtained a foreign currency license, boosting its ties with clientele. If so, S&P expects the bank will diversify its funding profile and expand its business volumes and earnings. S&P also assumes that business expansion would not further erode the bank's adequate capitalization. S&P might consider a negative rating action if it sees that the shareholders' propensity to support the bank declined, resulting in a deterioration of the bank's business profile. An additional source of pressure on the bank's creditworthiness could come from a decline in liquidity or solvency, with the bank's risk-adjusted capital ratio falling below 7%. =============== X X X X X X X X =============== * BOOK REVIEW: The Rise and Fall of the Conglomerate Kings ---------------------------------------------------------- Author: Robert Sobel Publisher: Beard Books Softcover: 240 pages List Price: $34.95 Review by David Henderson Order your personal copy today at http://is.gd/1GZnJk The marvelous thing about capitalism is that you, too, can be a Master of the Universe. If you are of a certain age, you will recall that is the name commandeered by Wall Street bond traders in their Glory Days. Being one is a lot like surfing: you have to catch the crest of the wave just right or you get slammed into the drink, and even the ride never lasts forever. There are no Endless Summers in the market. This book is the behind-the-scenes story of the financial wizards and bare-knuckled businessmen who created the conglomerates, the glamorous multi-form companies that marked the high noon of postWorld War II American capitalism. Covering the period from the end of the war to 1983, the author explains why and how the conglomerate movement originated, how it mushroomed, and what caused its startling and rapid decline. Business historian Robert Sobel chronicles the rise and fall of the first Masters of the Universe in the U.S. and describes how the era gave rise to a cadre of imaginative, bold, and often ruthless entrepreneurs who took advantage of a buoyant stock market to create giant enterprises, often through the exchange of overvalued paper for real assets. He covers the likes of Royal Little (Textron), Text Thornton (Litton Industries), James Ling (Ling-Temco-Vought), Charles Bludhorn (Gulf & Western) and Harold Geneen (ITT). This is a good read to put the recent boom and bust in a better perspective. While these men had vastly different personalities and processes, they had a few things in common: ambition, the ability to seize opportunities that others were too risk-averse to take, willing bankers, and the expansive markets of the 1960s. There is something about an expansive market that attracts and creates Masters of the Universe. The Greek called it hubris. The author tells a good joke to illustrate the successes and failures of the period. It seems the young son of a Conglomerateur brings home a stray mongrel dog. His father asks, "How much do you think it's worth?" To which the boy replies, "At least $30,000." The father gently tries to explain the market for mongrel dogs, but the boy is undeterred and the next afternoon proudly announces that he has sold the dog for $50,000. The father is proudly flabbergasted, "You mean you found some fool with that much money who paid you for that dog?" "Not exactly," the son replies, "I traded it for two $25,000 cats." While it lasted, the conglomerate struggles were a great slugfest to watch: the heads of giant corporations battling each other for control of other corporations, and all of it free from the rubric of "synergy." Nobody could pretend there was any synergy between U.S. Steel and Marathon Oil. This was raw capitalist power at work, not a bunch of fluffy dot.commies pretending to defy market gravity. History repeats itself, endlessly, because so few people study history. The stagflation of the 1970s devalued the stock of conglomerates and made it useless a currency to keep the schemes afloat. The wave crashed and waiting on the horizon for the next big wave: the LBO Masters of the 1980s. Robert Sobel was born in 1931 and died in 1999. He was a prolific chronicler of American business life, writing or editing more than 50 books and hundreds of articles and corporate profiles. He was a professor of business history at Hofstra University for 43 years and he a Ph.D. from NYU. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2015. 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 202-362-8552. * * * End of Transmission * * *