/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150903.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 3, 2015, Vol. 16, No. 174 Headlines C R O A T I A * CROATIA: New Law to Push 19,646 Companies Into Bankruptcy G R E E C E GREECE: Gudmundsson Says Capital Controls to Help Prop Up Economy I R E L A N D KINTYRE CLO I: Moody's Raises Rating on Class E Notes to Ba2 N E T H E R L A N D S STORM 2015-II: Fitch Assigns 'BB(EXP)sf' Rating to Class E Notes P O L A N D ALFA STAR: To File for Liquidation R U S S I A AMB BANK: Liabilities Exceed Assets, Bank of Russia Says BANK ENO: Bank of Russia Ends Provisional Administration COMSOCBANK BUMERANG: Liabilities Exceed Assets, Probe Finds FEDERAL GRID: S&P Affirms 'BB+' Long-Term CCR, Outlook Negative INVESTTRADEBANK JSC: S&P Lowers Counterparty Ratings to 'R/R' SOGAZ OJSC: S&P Affirms 'BB+' IFS Rating, Outlook Stable TRANSAERO: Aeroflot Set to Secure Controlling Stake S E R B I A BEOGRADSKA INDUSTRIJA: Court to Commence Bankruptcy Proceedings S W E D E N SAAB AUTOMOBILE: Former Execs Accused of Falsifying Documents U N I T E D K I N G D O M FERGUSON MARINE: Named Preferred Bidder for GBP97MM Contract FINDUS PLEDGECO: Fitch Puts 'B-' IDR on Rating Watch Evolving GODFREYS: In Administration, Cuts 24 Jobs SARCON (NO. 177): In Administration, Owes GBP7.5 Million ********* ============= C R O A T I A ============= * CROATIA: New Law to Push 19,646 Companies Into Bankruptcy ----------------------------------------------------------- According to Xinhua, local media reported that a new Croatian law on bankruptcy came into effect on Sept. 1, sending 19,646 companies into bankruptcy. Croatian Minister of Justice Orsat Miljenic said that implementing the new law would speed up the bankruptcy procedure and remove companies that generate big insolvency from the market, Xinhua relates. The new law stipulates the companies whose assets have been blocked for more than 120 days will be pushed to bankruptcy, Xinhua says. Those companies that did not pay wages to its employees for three months will also risk entering the bankruptcy procedure, according to the new Bankruptcy Act, Xinhua notes. The report said the 19,646 companies owe debts of over HRK19.2 billion (US$2.8 billion), among them 15,001 companies, with no employees at all, have debts totaling around HRK14.5 billion (US$2.1 billion dollars), Xinhua relays. =========== G R E E C E =========== GREECE: Gudmundsson Says Capital Controls to Help Prop Up Economy ----------------------------------------------------------------- Jeff Black and Brendan Greeley at Bloomberg News report that Greece's capital controls can help the economy recover and don't have to be disruptive as long as they're managed fairly, according to the governor of the only other central bank in Europe with such restrictions in place. "It is very important that you have a kind of efficient government apparatus that puts the interests of everybody in view and is seen to be fair," Bloomberg quotes Central Bank of Iceland Governor Mar Gudmundsson as saying in an interview. While "you shouldn't use them lightly, they can work -- they worked in our case." The Atlantic island nation is aiming to remove all restrictions on the movement of money by 2017, nine years after they were introduced after a banking collapse in October 2008, Bloomberg says. Greece, which teetered on the edge of a euro exit this summer after disagreeing with creditors over aid conditions, limits the amount of cash citizens can withdraw from their bank accounts, Bloomberg discloses. "There are significant differences, because in Greece these are more controls on domestic residents taking out their money, whereas in our case we had very big bankruptcies of private banks," Mr. Gudmundsson, as cited by Bloomberg, said. "We were dealing with an overhang of foreign claims on the Icelandic private sector of maybe half of our" gross domestic product. Greece became the second country in the euro area, after Cyprus, to introduce such curbs, even though in principle European law guarantees the free movement of capital, Bloomberg notes. Mr. Gudmundsson said official attitudes on capital controls have changed completely, with creditor institutions such as the International Monetary Fund seeing them as a useful tool, Bloomberg relays. ============= I R E L A N D ============= KINTYRE CLO I: Moody's Raises Rating on Class E Notes to Ba2 ------------------------------------------------------------ Moody's Investors Service has upgraded the ratings of these notes issued by Kintyre CLO I P.L.C.: EUR19,950,000 Class D Senior Secured Deferrable Floating Rate Notes due 2023, Upgraded to A2 (sf); previously on March 23, 2015, Upgraded to Baa1 (sf) EUR11,550,000 Class E Senior Secured Deferrable Floating Rate Notes due 2023, Upgraded to Ba2 (sf); previously on March 23, 2015, Upgraded to Ba3 (sf) Moody's also affirmed EUR43.87 million notes: EUR239,750,000 (EUR1.87M outstanding balance) Class A Senior Secured Floating Rate Notes due 2023, Affirmed Aaa (sf); previously on March 23, 2015, Affirmed Aaa (sf) EUR20,300,000 Class B Senior Secured Deferrable Floating Rate Notes due 2023, Affirmed Aaa (sf); previously on March 23, 2015, Affirmed Aaa (sf) EUR21,700,000 Class C Senior Secured Deferrable Floating Rate Notes due 2023, Affirmed Aaa (sf); previously on March 23, 2015, Upgraded to Aaa (sf) Kintyre CLO I P.L.C., issued in March 2007, is a collateralized loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by BNP Paribas. The transaction's reinvestment period ended in December 2012. RATINGS RATIONALE The upgrades of the notes are primarily a result of deleveraging arising from the last payment date in June 2015. As a result, the class A note has paid down EUR25.08 million (10.46% of its initial balance) leading to significant increases in over- collateralization levels across the capital structure. As of the July 2015 trustee report, the Class A, B, C, D and E over- collateralization ratios are reported at 4788.26%, 404.87%, 204.63%, 140.67% and 119.11% respectively compared with 424.46%, 242.16%, 165.96%, 128.72% and 113.92% in January 2015. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool as having a EUR pool with performing par and principal proceeds balance of EUR93.15 million, a defaulted par of EUR9.90 million, a weighted average default probability of 41.12% (consistent with a WARF of 4111.84 over a weighted average life of 3.69 years), a weighted average recovery rate upon default of 47.97% for a Aaa liability target rating, a diversity score of 16 and a weighted average spread of 4.20%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. For a Aaa liability target rating, Moody's assumed that 94.20% of the portfolio exposed to senior secured corporate assets would recover 50% upon default, while the non first-lien loan corporate assets would recover 15%. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. Methodology Underlying the Rating Action: The principal methodology used in this rating was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in February 2014. Factors that would lead to an upgrade or downgrade of the rating: In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it assumed a lower weighted average recovery rate in the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs that were within one notch of the base-case results. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Additional uncertainty about performance is due to these: 1) Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. 2) Around 44% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. 3) Recoveries on defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modeled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. ===================== N E T H E R L A N D S ===================== STORM 2015-II: Fitch Assigns 'BB(EXP)sf' Rating to Class E Notes ---------------------------------------------------------------- Fitch Ratings has assigned STORM 2015-II B.V.'s notes expected ratings as follows: Class A floating-rate notes: 'AAA(EXP)sf'; Outlook Stable Class B floating-rate notes: 'AA(EXP)sf'; Outlook Stable Class C floating-rate notes: 'A-(EXP)sf'; Outlook Stable Class D floating-rate notes: 'BB(EXP)sf'; Outlook Stable Class E floating-rate notes: 'BB(EXP)sf'; Outlook Stable The transaction is a true sale securitization of prime Dutch residential mortgage loans originated and serviced by Obvion N.V. Since May 2012, Obvion has been 100% owned by Rabobank Group and has an established track record as a mortgage lender and issuer of securitizations in the Netherlands. The expected ratings address timely payment of interest, including the step-up margin accruing from the payment date falling in September 2021, and full repayment of principal by legal final maturity in accordance with the transaction documents. The final ratings are contingent upon the receipt of final documents and legal opinions conforming to the information already received. Credit enhancement (CE) for the class A notes will be 7.0% at closing, provided by the subordination of the junior notes and a non-amortizing cash reserve (1%), fully funded at closing through the class E notes. KEY RATING DRIVERS Market Average Portfolio The 46-month seasoned portfolio consists of prime residential mortgage loans, with a weighted average (WA) original loan-to- market-value of 90.7% and a WA debt-to-income ratio of 28.8%, both of which are typical for Fitch-rated Dutch RMBS transactions and in line with previous STORM transactions. NHG Loans 32.8% of the loans benefit from a Nationale Hypotheek Garantie (NHG) guarantee. Fitch received historical claims data to determine a compliance ratio assumption, which it deemed to be in line with the market average. Fitch did not apply a reduction in foreclosure frequency for the NHG loans, since historical data provided did not show a clear pattern of lower defaults for NHG loans. Fitch also tested the transaction without giving any credit to the NHG guarantee and found the ratings on the class A notes to be identical. Structure Unchanged CE will be provided by the subordination of junior notes and a non-amortizing reserve of 1%, funded through the class E notes. The transaction also contains a liquidity facility (2% of the notes, floored at 1.45%) and a margin-guaranteed total return swap, which is unchanged from previous Fitch-rated STORM transactions. Rabobank Main Counterparty The transaction relies strongly on the creditworthiness of Rabobank, which fulfils a number of roles. Fitch gave full credit to the structural features in place, including those mitigating construction deposit set-off and commingling risk embedded in the transaction. Robust Performance The past performance of transactions in the STORM series, as well as data received on Obvion's loan book, indicate good historical performance in terms of low arrears and losses. RATING SENSITIVITIES Material increases in the frequency of defaults and loss severity on defaulted receivables could produce losses larger than Fitch's base case expectations, which in turn may result in negative rating actions on the notes. Fitch's analysis revealed that a 30% increase in the WA foreclosure frequency, along with a 30% decrease in the WA recovery rate, would result in a model- implied-downgrade of the class A notes to 'Asf'. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY For its rating analysis, Fitch received a data template with all fields fully completed. Fitch reviewed the results of a third party assessment conducted on the asset portfolio information. Each year, an internationally recognized accounting firm conducts the report on a single eligible mortgage pool, which will be used for all transactions in the respective year. The report indicated no adverse findings material to the rating analysis. Overall and together with the assumptions referred to above, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. =========== P O L A N D =========== ALFA STAR: To File for Liquidation ---------------------------------- Reuters reports that Alfa Star will file for liquidation. The company said it lost its financial liquidity on Aug. 29, according to Reuters. The report notes that the company stopped travel services and started the procedure of guaranteeing clients' returns from holidays and providing them with other services, including reimbursement of incurred costs The report adds that it is preparing to file for bankruptcy, including the liquidation of the company's assets. =========== R U S S I A =========== AMB BANK: Liabilities Exceed Assets, Bank of Russia Says -------------------------------------------------------- The Bank of Russia, by its Orders Nos. OD-1770, OD-1772, OD-1774, dated July 24, 2015, and Order No. 1790, dated July 27, 2015, cancelled the banking licenses of AMB BANK (PJSC), M BANK (CJSC), ROSSIYSKIY KREDIT BANK (OJSC) and BANK TULSKII PROMYSHLENNIK (PJSC) (hereinafter, the group of banks) and appointed provisional administration to manage these banks. In the course of its examination of the quality of the assets of the group of banks and non-governmental pension funds associated with it, the Bank of Russia established that intra-group transactions carried out with the involvement of banks' management and owners were aimed at withholding information from the supervision body on the actual financial standing of the banks and non-governmental pension funds of the group of banks as well as on transactions made to move out the assets. The group of banks actually ignored core banking activity. The funds attracted were placed in the interests of the owners of the group of banks and related companies hence more than 50% of the credit portfolio of the group of banks is currently hard to recover. The analysis of the mortgage participation certificates on the balance sheet of the group of banks worth RUR10.5 billion showed that a fair value of land plots served as collateral is overstated at least twofold. Currently, the provisional administrations to manage these credit institutions are examining their financial standing with the preliminary results showing that liabilities of the group of banks worth RUR210.5 billion are well above the real value of their assets (RUR109.9 billion). The Bank of Russia submitted the information on financial transactions bearing the evidence of criminal offences conducted by the former management and owners of the group of banks to the Prosecutor General's office of the Russian Federation, the Russian Ministry of Internal Affairs and the Investigation Committee of the Russian Federation for consideration and procedural decision making. BANK ENO: Bank of Russia Ends Provisional Administration -------------------------------------------------------- Due to the August 14, 2015 ruling of the Court of Arbitration of the Krasnodar Territory on the forced liquidation of the credit institution Joint-Stock Commercial Bank Eno (Public Joint-Stock Company) and appointing a receiver in compliance with Clause 3 of Article 18927 of the Federal Law "On the Insolvency (Bankruptcy)", the Bank of Russia took a decision (Order No. OD- 2321, dated September 1, 2015) to terminate from September 2, 2015, the activity of the provisional administration of Commercial Bank Eno appointed by Bank of Russia Order No. OD- 1552, dated July 3, 2015, "On the Appointment of the Provisional Administration to the Krasnodar-based JOINT-STOCK COMMERCIAL BANK ENO (PJSC) Due to the Revocation of Its Banking License". COMSOCBANK BUMERANG: Liabilities Exceed Assets, Probe Finds ----------------------------------------------------------- The provisional administration of JSC ComSocbank Bumerang appointed by Bank of Russia Order No. OD-1110, dated May 20, 2015, due to the revocation of the banking license, in the course of examination of its financial standing has established the fact of withdrawal of assets over RUR1 billion worth through extending loans to companies with dubious creditworthiness. Besides, prior to the revocation of the banking license, while having creditworthiness problems the bank management performed operations to move out liquid assets through paying bonuses to the bank management and personnel in the amount that exceeded manifold their average monthly wages over the last year as well as extended loans to several legal entities with subsequent money transfer to account of the Chairman of the Board and paying him from the cash desk of the bank. As a result of the examination, the provisional administration established that the values of bank assets did not exceed RUR350 million while its liabilities to creditors amounted to RUR1,167.7 million. Given the situation, on July 2, 2015, the Court of Arbitration of the Vologda Region took a decision to declare ComSocbank Bumerang insolvent (bankrupt) and to initiate bankruptcy proceedings with the state corporation Deposit Insurance Agency appointed as a receiver. The Bank of Russia submitted the information on financial transactions bearing the evidence of the criminal offence conducted by the former management and owners of ComSocbank Bumerang to the Prosecutor General's office of the Russian Federation, the Russian Ministry of Internal Affairs and the Investigation Committee of the Russian Federation for consideration and procedural decision making. FEDERAL GRID: S&P Affirms 'BB+' Long-Term CCR, Outlook Negative --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' long-term corporate credit rating and 'ruAA+' long-term Russia national scale rating on Russian electricity transmission grid operator Federal Grid Co. of the Unified Energy System (FGC). The outlook is negative. The rating affirmation reflects S&P's view of FGC's unchanged stand-alone credit profile (SACP) of 'bb+' and S&P's assessment of a "very high" likelihood of timely and sufficient extraordinary state support from the government of Russia (foreign currency BB+/Negative/B) in case of need. "The company has negotiated a reduced investment program for the next regulatory period (2015-2019) with annual spending of about Russian ruble (RUB) 80 billion (US$1.2 billion); this compares with RUB60 billion-RUB150 billion per year in 2010-2014. We think that these investments will largely be covered by internal cash flows, with only moderate exposure to new borrowing. We also note that FGC plans to obtain access to the Russian National Wealth Fund through electricity grid modernization projects for the Baikal-Amur Mainline and TransSib rail routes. We expect this funding to be provided in a debt-like form to FGC, most likely via issuance of bonds on beneficial terms (extended maturities and relatively low rates, similar to infrastructure bonds)," S&P said. In accordance with S&P's criteria for rating government-related entities (GREs), its view of a "very high" likelihood of extraordinary government support is based on S&P's assessment of FGC's: -- "Very important" role, given the company's strategic importance to the Russian government as a monopoly provider of essential electricity infrastructure; and -- "Very strong" link with the Russian Federation, given the government's indirect majority ownership of the company (via a holding by transmission and distribution grid company Rosseti), strong track record of ongoing financial support, and the level of control over FGC's strategy and operations. As stipulated by law, the state's share in FGC (either direct or indirect) cannot fall below 50% plus one share. The negative outlook on FGC mirrors S&P's negative outlook on Russia. Given S&P's assessment of FGC's likelihood of extraordinary government support as "very high" and full exposure of the company's operations to Russian country risk, S&P do not expect to rate FGC higher than the foreign currency sovereign rating on Russia. Any lowering of the foreign currency rating on Russia is likely to lead to a similar rating action on FGC. Under S&P's GRE criteria, it could also lower the long-term rating on FGC if S&P revised its assessment of the company's SACP downward by three notches or more, assuming S&P's assessment of the "very high" likelihood of extraordinary government support and our long-term ratings on Russia remain unchanged. This might result from FGC adopting more aggressive financial policies than S&P currently anticipates. This would include any unanticipated weakening in the company's liquidity position, heavier reliance on short-term funding, or higher-than-expected debt leverage indicating a "highly leveraged" financial risk profile, with a debt-to-EBITDA ratio exceeding 5.0x and FFO to debt below 12% on a consistent basis. This is currently not a part of S&P's base case. S&P could revise its outlook on FGC to stable if S&P revised the outlook on Russia to stable. INVESTTRADEBANK JSC: S&P Lowers Counterparty Ratings to 'R/R' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long- and short- term counterparty credit ratings on Russia-based Investtradebank JSC to 'R/R' from 'B/B' and the Russia national scale ratings on Investtradebank to 'R' from 'ruBBB+'. S&P does not assign outlooks to regulatory supervision ratings. The downgrade reflects the regulatory risk related to the Central Bank of Russia's (CBR's) intervention and the Deposit Insurance Agency's (DIA's) involvement and possible -- though not certain -- introduction of a moratorium on some of Investtradebank's credit obligations. On Aug. 28, 2015, the CBR assigned the DIA to be temporary manager of Investtradebank and to develop a plan for its financial rehabilitation. S&P is not aware of any details of the rehabilitation plan as of this publication, although it is possible that the regulator will prioritize some of the bank's credit obligations over others. S&P therefore lowered its ratings on Investtradebank to 'R' (indicating the obligor is under regulatory supervision), as per S&P's criteria. In addition, S&P believes that the bank could breach the prudential capital and liquidity norms that the CBR has set. Since the beginning of 2015, Investtradebank has created additional provisions of Russian ruble (RUB) 2.3 billion (approximately US$34 million as of this publication), the major part of which was created over last two months at the CBR's request. As a result, as of Aug. 1, 2015, Investtradebank's regulatory capital had decreased to RUB14.4 billion and its regulatory capital adequacy ratio was 10.44% (very close to the regulatory minimum of 10%). Investtradebank's liquidity risks also increased in August when the information on the creation of additional provisions was made public. The bank faced problems in the Ivanovo region, where an outflow of deposits exceeded RUB2 billion and eroded the bank's liquidity cushion. Any further rating actions on Investtradebank will largely depend on the details of the rehabilitation procedure to be implemented by the DIA and on S&P's opinion of the bank's business and financial prospects once these details are available and after the financial rehabilitation plan has been implemented. There are several options that the DIA might chose to resolve the issues at Investtradebank, including: -- A total or partial sale to a strategic investor that is willing to take over the bank; -- Long-term management under the DIA rehabilitation plan if there is no investor interest; and -- A run-off of the bank's operations if it appears that its business model is not viable. SOGAZ OJSC: S&P Affirms 'BB+' IFS Rating, Outlook Stable -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' long-term insurer financial strength ratings and counterparty credit ratings on Russian insurer OJSC Sogaz and its core subsidiary CJSC Insurance Co. TRANSNEFT (IC TRANSNEFT). The outlook is stable. At the same time, S&P affirmed its 'ruAA+' Russia national scale rating on both companies. The affirmation reflects Sogaz's fair business risk profile, which is supported by its strong competitive position on the Russian insurance market. The ratings continue to incorporate the company's less-than-adequate financial risk profile, which is supported by strong capital and earnings and capped by the weighted average credit quality of the investment portfolio at 'BB'. "We equalize the rating on IC TRANSNEFT with that on Sogaz due to our view of its core status within the group. This indicates that we believe: IC TRANSNEFT is unlikely to be sold; its operations are integral to the overall group strategy; it has no ongoing performance problems; and it represents at least 5% of consolidated group capital. We expect that IC TRANSNEFT will be fully integrated within the group by end-2016 and closely linked to the group's reputation and risk management," S&P said. Sogaz has a strong competitive position in the Russian insurance market, in particular in commercial lines of business and voluntary medical insurance. In S&P's base-case scenario, the company's premium growth will largely depend on economic conditions in Russia and close ties maintained with Russian vertically integrated gas company Gazprom OAO and its related entities. Taking into account the current deceleration of the Russian economy and additional U.S. sanctions, S&P foresees a potential negative impact on the company's growth prospects and availability of the appropriate reinsurance protection provided by Western reinsurers. However, S&P expects annual premium growth will be at least 10% in 2015 and 2016, supported by the company's focus on the corporate sector. S&P expects Sogaz's earnings stream will remain stable in 2015 under S&P's base-case scenario, with net income of more than Russian ruble (RUB) 11 billion (about US$150 million) in 2015 and RUB12 billion in 2016. S&P believes that sufficient internal capital generation will enable the company to maintain stronger capital adequacy. S&P has therefore revised upward its assessment of the company's capital and earnings to strong from moderately strong. Also, improvements in capital adequacy are fueled by lower asset-risk charges stemming from investments in equities and property. After applying S&P's foreign-currency sovereign stress scenario, it considers that Sogaz would likely retain positive regulatory capital and maintain a liquidity ratio in excess of 100%. S&P believes that Sogaz is unlikely to default on its insurance liabilities under the scenario. Therefore, the ratings on Sogaz can be higher than S&P's 'BB+' long-term foreign currency rating on Russia, but are limited by the 'BBB-' long-term local currency rating on the sovereign. Currently, S&P would not rate Sogaz more than one notch above the foreign currency rating on Russia, owing to the company's substantial exposure to its Russia-based assets. The stable outlook reflects S&P's view that Sogaz will likely maintain its strong competitive position in the Russian insurance market, strong capital adequacy, and at least less-than-adequate investment quality under S&P's methodology over the next 12-18 months. S&P also thinks the company will continue to benefit from its strong ties with Gazprom. S&P would likely lower the ratings on Sogaz over the next 12-18 months if S&P lowered its local currency sovereign credit rating on Russia by two notches. S&P could also consider a negative rating action if it was to observe a weakening of Sogaz's close ties with Gazprom or if it were to pay higher-than-expected dividends or make large acquisitions of noncore assets. Should Sogaz's average credit quality deteriorate to weak from the current less-than-adequate level, S&P could also consider a negative rating action. In light of S&P's negative outlook on the local and foreign currency sovereign ratings on Russia, S&P currently views a positive rating action on Sogaz as remote. However, a positive rating action could follow if the average credit quality of Sogaz's investments improves to adequate and doesn't cap the financial risk profile at its current less-than- adequate level. TRANSAERO: Aeroflot Set to Secure Controlling Stake --------------------------------------------------- Courtney Weaver at The Financial Times reports that Russian state-controlled airline Aeroflot is set to secure a controlling stake in troubled carrier Transaero, as the country's economic crisis fuels consolidation in the transport industry and other sectors. The deal, announced during a meeting on Sept. 1 chaired by Igor Shuvalov, Russia's first deputy prime minister, will combine the country's two biggest airlines, the FT relates. As part of the deal, Aeroflot will pay a symbolic one rouble -- or about one US cent -- to take a 75% stake plus one share in heavily indebted Transaero, the FT relays, citing Russian news agencies. The government-backed deal has already been confirmed by privately held Transaero, and is expected to be approved by Aeroflot's board at its next meeting, the FT notes. According to the FT, a person involved in the Sept. 1 discussions said Aeroflot would take on all of Transaero's customers holding valid tickets. A merger with Aeroflot saves Transaero from bankruptcy, the FT says. It also averts any social upheaval from Transaero's thousands of employees losing their jobs, and safeguards the tickets held by tens of thousands of customers, according to the FT. It is less clear what the deal will mean for Aeroflot, which is expected to have to take on Transaero's debts, the FT relays. At the end of March, Transaero's net debt stood at RUR67.6 billion, the FT discloses. Last month, Russian lender Otkritie, a Transaero creditor, filed a RUR1.3 billion lawsuit against the carrier for late payments, the FT recounts. OJSC Transaero Airlines is a Russian airline with its head office in Saint Petersburg. It operates scheduled and charter flights to 103 domestic and international destinations. =========== S E R B I A =========== BEOGRADSKA INDUSTRIJA: Court to Commence Bankruptcy Proceedings --------------------------------------------------------------- SeeNews reports that the commercial court in Belgrade has ruled there are grounds to launch bankruptcy proceedings for indebted Serbian brewer Beogradska Industrija Piva. The request for the launch of bankruptcy proceedings was lodged by the country's tax administration to which the brewer owes some RSD782.6 million (US$7.3 million/EUR6.5 million), SeeNews relays, citing news daily Vecernje Novosti. In July, local media reported that an agreement for the sale of the brewery had been reached between Serbia's prime minister, the brewer's trade union, the economy minister and the director of the Privatisation Agency, SeeNews recounts. The Privatisation Agency was given three months to wrap up the sale deal, SeeNews relates. However, Novosti reported that despite talks of a sell-off, bankruptcy has been announced at the expense of minority shareholders who most likely won't see their share of the company's capital, SeeNews notes. Novosti, as cited by SeeNews, said small shareholders claim that the brewery had begun to repay its debts and could have avoided bankruptcy. BIP turned to a net loss of RSD550.8 million dinars in 2014 from a net profit of RSD186.9 million a year earlier, SeeNews discloses. =========== S W E D E N =========== SAAB AUTOMOBILE: Former Execs Accused of Falsifying Documents ------------------------------------------------------------- The Local.se reports that Swedish car maker Saab's former CEO Jan ke Jonsson and the firm's former head lawyer Kristina Geers have appeared in court in Vaenersborg in west Sweden, accused of falsifying financial documents shortly before the company went bankrupt in 2011. The pair is accused of falsifying the paperwork at the height of the Swedish company's financial difficulties at the start of the decade, The Local.se discloses. A third person -- who has not been named in the Swedish media -- is accused of assisting them by issuing false invoices adding up to a total of SEK30 million (US$3.55 million), The Local.se relates. The charges relate to the firm's business in Ukraine and the paperwork in question was signed just before former CEO Jan Ake Jonsson resigned, The Local.se relays, citing court documents. All three suspects deny all the charges against them, The Local.se discloses. Saab filed for bankruptcy at the end of 2011, after teetering on the edge of collapse for nearly two years, The Local.se recounts. Chief prosecutor Olof Sahlgren told the court in Vanersborg on Sept. 2 that the alleged crimes took place in March 2011, when Saab was briefly owned by the Dutch company Spyker Cars, The Local.se relates. It was eventually bought by National Electric Vehicle Sweden (Nevs), a Chinese-owned company after hundreds of staff lost their jobs, The Local.se relays. The car maker, which is based in west Sweden, has struggled to resolve serious financial difficulties by attracting new investors since the takeover, The Local.se states. About Saab Automobile Saab Automobile AB is a Swedish car manufacturer owned by Dutch automobile manufacturer Swedish Automobile NV, formerly Spyker Cars NV. Saab halted production in March 2011 when it ran out of cash to pay its component providers. On Dec. 19, 2011, Saab Automobile AB, Saab Automobile Tools AB and Saab Powertain AB filed for bankruptcy after running out of cash. Some of Saab's assets were sold to National Electric Vehicle Sweden AB, a Chinese-Japanese backed start-up that plans to make an electric car using Saab Automobile's former factory, tools and designs. On Jan. 30, 2012, more than 40 U.S.-based Saab dealerships filed an involuntary Chapter 11 petition for Saab Cars North America, Inc. (Bankr. D. Del. Case No. 12-10344). The petitioners, represented by Wilk Auslander LLP, assert claims totaling US$1.2 million on account of "unpaid warranty and incentive reimbursement and related obligations" or "parts and warranty reimbursement." Leonard A. Bellavia, Esq., at Bellavia Gentile & Associates, in New York, signed the Chapter 11 petition on behalf of the dealers. The dealers want the vehicle inventory and the parts business to be sold, free of liens from Ally Financial Inc. and Caterpillar Inc., and "to have an appropriate forum to address the claims of the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg News. Saab Cars N.A. is the U.S. sales and distribution unit of Swedish car maker Saab Automobile AB. Saab Cars N.A. named in December an outside administrator, McTevia & Associates, to run the company as part of a plan to avoid immediate liquidation following its parent company's bankruptcy filing. On Feb. 24, 2012, the Court granted Saab Cars NA relief under Chapter 11 of the Bankruptcy Code. Donlin, Recano & Company, Inc., was retained as claims and noticing agent to Saab Cars NA in the Chapter 11 case. On March 9, 2012, the U.S. Trustee formed an official Committee of Unsecured Creditors and appointed these members: Peter Mueller Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and Delaware Motor Sales, Inc. The Committee tapped Wilk Auslander LLP as general bankruptcy counsel, and Polsinelli Shughart as its Delaware counsel. The Troubled Company Reporter, on July 18, 2013, reported that the U.S. arm of Saab Automobile AB won approval of its Chapter 11 liquidation plan, marking the end of the road for Swedish auto maker's bankruptcy proceedings. =========================== U N I T E D K I N G D O M =========================== FERGUSON MARINE: Named Preferred Bidder for GBP97MM Contract ------------------------------------------------------------ Edd Gent at E&T reports that Ferguson Marine Engineering Ltd., the Scottish shipyard that went bust a year ago, has been named preferred bidder for a GBP97 million contract to build new ferries after being saved by a local entrepreneur. According to E&T, the Ferguson shipyard will build two 100m ferries built at its base in Port Glasgow, the largest new ferries on the Clyde since 2001, which can accommodate 127 cars or 16 HGVs or a combination of both and up to 1,000 passengers. The deal could secure more than 150 jobs at FMEL, which was taken over by Scottish billionaire and former independence supporter Jim McColl, who has said he plans to invest up to GBP65 million in the business, E&T discloses. The design and tendering of the ferries have been overseen by Caledonian Maritime Assets Limited and CalMac Ferries, both wholly owned by the Scottish Government, and the SNP said the contract is "just reward" for Mr. McColl's investment Mr. McColl and should act as a springboard for further contracts, E&T relates. Cash flow problems at the shipyard, which dates back to 1902 and is the last commercial shipbuilder on the River Clyde, saw it go into administration last August with the loss of 70 jobs, Mr. McColl's company Clyde Blowers Capital fought off four other bids to take control of the business, E&T recounts. FINDUS PLEDGECO: Fitch Puts 'B-' IDR on Rating Watch Evolving ------------------------------------------------------------- Fitch Ratings has placed Findus Pledgeco S.a.r.l's (Findus) 'B-' Long-term Issuer Default Rating (IDR) on Rating Watch Evolving (RWE). At the same time, the 'B+'/'RR2' rating on Findus BondCo S.A.'s senior secured notes have also been placed on RWE. In addition, Findus PIK S.C.A. (holdco)'s IDR of 'CCC' IDR and its EUR200 million 8.25%/9% senior PIK notes at 'CC'/'RR6' have been placed on RWE. The RWE reflects the range of possible outcomes of the announced option agreement under which Nomad Foods Limited (Nomad) will acquire Findus' continental European business for GBP500 million. The financial structure of the transaction is unclear at this stage, given the uncertainty on the application of the sale proceeds. It is currently unknown whether all or part of the proceeds will be used to refinance existing senior secured debt at the Findus Pledgeco restricted group level totaling GBP367 million as at June 27, 2015 (3Q15) and whether the GBP148.7 million PIK notes at holdco level would be refinanced into the restricted group level. The transaction will leave Findus with a smaller UK-only business in a challenging trading environment. If the transaction is completed without leaving the remaining UK business highly leveraged and is accompanied by a mildly improved financial profile the IDR may be affirmed. KEY RATING DRIVERS Pending Transaction Nomad has entered into a binding offer through an option agreement to acquire Findus' continental European business in Sweden, Norway, Finland, Denmark, France, Spain and Belgium. Nomad will pay GBP400 million in cash and GBP100 million in shares. The transaction is expected to be completed in 4Q15, subject to regulatory approvals. Findus will be left with an UK- only business with sales of GBP590.5 million and EBITDA of GBP38.8 million in 2014, around half the size of the business pre-disposal. Rating Affirmation Most Likely Fitch assumes the most likely scenario is for Findus to repay most or all of its debt at the Findus restricted group level and refinance the PIK notes as senior debt at the restricted group level. This level of debt, combined with a smaller funds from operations (FFO) generation from an UK-only business could result in a FFO adjusted gross leverage of 5.5x-6x. Such a leverage profile, combined with a strong UK business profile with leading market shares but constrained by high customer concentration, should continue to support a 'B-' IDR. Limited Upgrade Potential If the transaction is completed and most of the sales proceeds are used to repay most of the existing senior secured debt at the restricted group level this could result in an upgrade of Findus's IDR by one notch on the basis of potentially low financial leverage at Findus restricted group level. An upgrade is also subject to the underlying performance and growth prospects of the remaining UK business (particularly given its recent loss of the Sainsbury's chilled salmon contract) provided the PIK notes remain at holdco level and retain their equity-like characteristics or do not constrain Findus's financial flexibility if holdco elects to pay cash interest. Limited Downgrade Risk If however, the transaction completes with only partial or no meaningful debt reduction at Findus restricted group level, Findus' weakened financial and business profile stemming from the lack of geographical diversification and smaller size could result in a downgrade. Although possible, this scenario is unlikely given Findus' ambition to retain a clear leadership position in the UK, especially in a growing chilled market. High leverage would hinder the group's ambition and growth prospects. The RWE will be resolved once the financial structure of Findus is made known post transaction with details on the use of the sale proceeds. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: -- Completion of the disposal of Findus' continental European business no later than January 2016 -- All or part of the sales proceeds to be used to refinance existing senior secured debt at Findus restricted group -- All or part of the PIK notes to be refinanced into the restricted group level RATING SENSITIVITIES Negative: Future developments that could, individually or collectively, lead to negative rating actions include: -- The remaining UK business undermined by high execution risks and by highly volatile or constantly negative free cash flow (FCF) -- FFO adjusted gross leverage at or above 6x Positive: Future developments that could, individually or collectively, lead to positive rating actions include: -- The remaining UK business showing signs of sustainability with moderate execution risks and neutral to positive FCF -- FFO adjusted gross leverage at or below 4x GODFREYS: In Administration, Cuts 24 Jobs ----------------------------------------- itv.com reports that 24 jobs have been lost as administrators work to sell the struggling Lowestoft store Godfreys. Administrators Price Bailey LLP say they've managed to save 15 jobs and a clearance sale has helped to raise money, according to itv.com. Now the administrators are in talks with a number of companies interested in buying the business, the report notes. "We have been talking to potentially interested parties in the business and others who are looking at the building in Suffolk Road, Lowestoft. Unfortunately it has been necessary to make 24 members of staff redundant while 15 remain, but we wish to point out that some of those made redundant may return to work if we find a purchaser for some or all of the business," the report quoted Joint Administrator Stuart Morton as saying. Price Bailey said they hope the business will be sold within two weeks, the report adds. SARCON (NO. 177): In Administration, Owes GBP7.5 Million -------------------------------------------------------- BBC News reports that the company that developed the James Clow apartments close to Belfast docks has been put into administration. Bank of Ireland appointed the administrator to Sarcon (No. 177) Ltd, a firm controlled by the Cookstown builder Desmond Nugent. The apartments were completed in 2009 and the administrators report shows that 54 out of 135 have been sold, with the other 81 retained by the company, according to BBC News. Sarcon (No. 177) owes the bank almost GBP7.5 million. It is not yet clear how much of that it will get back, BBC News notes. Earlier this year, a group of up to 40 people who had agreed to buy apartments in the development won a case which meant they did not have to go through with the purchase, the report relays. It is not clear if that case prompted the bank's action -- the administrators report simply states that the firm "failed to meet the requirements" of the bank, the report discloses. The report also states that a Belfast law firm is owed an estimated GBP278,000 by Sarcon (No. 177), the report notes. The bank has also appointed an administrator to a related firm, Mangan Developments Ltd, the report says. Its assets are former council offices at the Square in Hillsborough, County Down and a four-acre site in Templepatrick, County Antrim, the report discloses. The bank is owed just over GBP3.4 million by the company, the report adds. ********* 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 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 * * *