/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160210.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, February 10, 2016, Vol. 17, No. 028 Headlines C Z E C H R E P U B L I C NEW WORLD: Must Go Bankrupt as Soon as Possible, Union Head Says G E R M A N Y MAPLE BANK: Defaults on Financial Obligations at LCH.Clearnet SINGULUS TECH: Publishes Info on Balance Sheet Restructuring I T A L Y SOPAF: INPGI Head Sent to Trial Over Bankruptcy N E T H E R L A N D S CELF LOAN: S&P Affirms 'B-' Rating on Class D Notes ECONCERN NV: PwC Settles Legal Dispute for EUR25 Million R O M A N I A SWAN OFFICE: CTP Invest Mulls Acquisition of Business R U S S I A BANK OBRAZOVANIE: S&P Affirms 'B-/C' Counterparty Credit Ratings GAZENERGOBANK: DIA's Administration Functions Terminated JUST BANK: Bank of Russia Halts Provisional Administration POLYUS GOLD: Fitch Downgrades LT Issuer Default Ratings to 'BB-' SOLIDARNOST BANK: DIA's Administration Functions Terminated SVYAZNOY BANK: Bank of Russia Halts Provisional Administration VITYAZ LTD: Bank of Russia Ends Provisional Administration U N I T E D K I N G D O M CYBG PLC: S&P Assigns 'B' Rating to Newly Issued AT1 Instruments DECO 6-UK: Fitch Lowers Rating on Class A2 Notes to 'Csf' DIALOG SEMICONDUCTOR: S&P Withdraws Preliminary 'BB' CCR HUMBERSIDE MOTOR: Shuts Down Business Following Administration ********* =========================== C Z E C H R E P U B L I C =========================== NEW WORLD: Must Go Bankrupt as Soon as Possible, Union Head Says ---------------------------------------------------------------- Ladka Bauerova at Bloomberg News reports that the bankruptcy of coal miner New World Resources Plc, subsequent closing of all operations, will cost the Czech government "tens of billions" of koruna over the long-term. According to Bloomberg, Josef Stredula, head of Czech umbrella trade union organization, said in interview, "It would be ideal if the company declared bankruptcy as soon as possible so parts of it could be salvaged". "The government won't give a single koruna" to NWR, Bloomberg notes. The shutdown of NWR mines will create "a huge social problem" with potential loss of more than 20,000 jobs in Ostrava region, Bloomberg discloses. New World Resources Plc is the largest Czech producer of coking coal. ============= G E R M A N Y ============= MAPLE BANK: Defaults on Financial Obligations at LCH.Clearnet ------------------------------------------------------------- Katy Burne at The Wall Street Journal reports that days after central banks initiated a stress test of two trade-plumbing firms in Europe, LCH.Clearnet Group Ltd. said Maple Bank GmbH had defaulted on its financial obligations at the clearinghouse operator. Martin Pluves, chief executive officer at LCH, declared Maple Bank to be a "defaulter" in a Feb. 8 notice posted to the clearinghouse's Web site, the Journal relates. Maple Bank, whose parent company Maple Financial Group Inc. is partly owned by National Bank of Canada and Ontario Teachers' Pension Plan, is a member of LCH's clearing service for repurchase agreements, the Journal discloses. The default by the member of LCH's repo service stems from moves by Germany's financial watchdog BaFin to close in on the Maple unit in the wake of a tax probe first disclosed in September last year, the Journal says. According to the Journal, a spokeswoman for BaFin said in an emailed statement the regulator banned Maple Bank from certain payments and disposals "due to the threat of balance-sheet over indebtedness." Maple Bank GmbH is based in Frankfurt. SINGULUS TECH: Publishes Info on Balance Sheet Restructuring ------------------------------------------------------------ The SINGULUS TECHNOLOGIES AG published comprehensive information about the balance sheet restructuring of the company including excerpts of the restructuring opinion. The information was published on the home page of www.singulus.de under the category "Credit Relations" under the section "Second bondholder meeting on February 15, 2016". SINGULUS TECHNOLOGIES invited the bondholders of the EUR60,000,000.00 7.75% bearer notes 2012/2017 to a second bondholder meeting in Frankfurt am Main. The meeting will take place at the HILTON FRANKFURT am Main, Hochstrasse 4, 60313 Frankfurt am Main, on February 15, 2016 at 11:00 a.m. (CET). The concept for the restructuring of the existing corporate bond is submitted for resolution. This restructuring concept, which has already been coordinated structurally with the joint representative of the bondholders in the previous year, fundamentally provides for the bondholders' exchange of their respective bearer notes into acquisition rights. These rights entitle the bondholders to acquire a certain number of shares of the SINGULUS TECHNOLOGIES AG as well as a certain number of notes of a secured bond, which will be issued by the company. In the course of the then following second bondholder meeting the Executive Board of SINGULUS TECHNOLOGIES will report on the current course of business activities and will present the restructuring concept. The Board will also provide details about the preliminary financial key figures for the business year 2015. Furthermore, the company has convened an Extraordinary General Meeting of the company at the HILTON Hotel Frankfurt, Hochstrasse, 4, 60313 Frankfurt am Main, for Tuesday, February 16, 2016 at 10:30 a.m. The agenda items of this Extraordinary General Meeting amongst others include the resolution with respect to the corporate actions required for the restructuring. The Executive Board of SINGULUS TECHNOLOGIES kindly asks all shareholders and bondholders to take part in the Extraordinary General Meeting and the second bondholder meeting, respectively, and to make use of their voting rights in any case. It is also possible to be represented by a representative or alternatively to authorize a proxy representative of the SINGULUS TECHNOLOGIES. Prototype forms can be found on the home page under www.singulus.de For the participation in the Extraordinary General Meeting a registration by February 9, 2016 at the latest is required. For the second bondholder meeting a registration by February 12, 2016 at the latest is required. The restructuring of the corporate bond is an essential prerequisite for the balance sheet restructuring of the company. Without this restructuring SINGULUS TECHNOLOGIES will from today's point of view neither be able to achieve a balance sheet restructuring nor to safeguard sufficient liquidity in the future. Therefore, according to the current assessment of the Executive Board, the implementation of these measures and the concurrent approval of the bondholders and shareholders is the only feasible way to prevent an otherwise imminent insolvency of the company. About SINGULUS TECHNOLOGIES SINGULUS TECHNOLOGIES develops technologies and machines for economical and resource-efficient production processes. The application areas include vacuum thin-film and plasma coating for wet-chemical processes as well as thermal process technologies. ========= I T A L Y ========= SOPAF: INPGI Head Sent to Trial Over Bankruptcy ----------------------------------------------- ANSA reports that Andrea Camporese, president of the Italian journalists' pension fund INPGI, was sent to trial on Feb. 4 in the bankruptcy of the Sopaf holding company. Mr. Camporese, who is accused of fraud and corruption, was sent to trial along with 12 others, ANSA discloses. The INPGI head, who denies wrongdoing, has been sent to trial with financiers Aldo and Andrea Magnoni, among others, ANSA relates. Sopaf is an Italian investment holding company. ===================== N E T H E R L A N D S ===================== CELF LOAN: S&P Affirms 'B-' Rating on Class D Notes --------------------------------------------------- Standard & Poor's Ratings Services affirmed its credit ratings on all classes of notes in CELF Loan Partners B.V. The affirmations follow S&P's assessment of the transaction's performance using data from the Jan. 18, 2015 payment date report. Upon publishing, S&P's updated corporate collateralized debt obligation (CDO) criteria, it placed those ratings that could potentially be affected under criteria observation. Following S&P's review of this transaction, its ratings that could potentially be affected by the criteria are no longer under criteria observation. S&P subjected the capital structure to a cash flow analysis to determine the break-even default rate (BDR) for each rated class at each rating level. The BDR represents S&P's estimate of the maximum level of gross defaults, based on its stress assumptions, that a tranche can withstand and still fully repay the noteholders. In S&P's analysis, it used the portfolio balance that it considers to be performing (EUR79,349,321), the current weighted-average spread (3.37%), and the weighted-average recovery rates calculated in line with S&P's corporate CDO criteria. S&P applied various cash flow stresses, using its standard default patterns, in conjunction with different interest rate and currency stress scenarios. Since S&P's Sept. 17, 2014 review, the aggregate collateral balance has decreased by EUR74.08 million to EUR79.35 million. The class A notes have fully redeemed, while the class B notes -- now the senior most classes of notes outstanding -- have amortized by EUR39.80 million and have a note factor of 26.30%. The available credit enhancement has increased for all of the rated classes of notes due to the transaction's structural deleveraging. The weighted-average recovery rates have increased since S&P's previous review at all rating levels, while the weighted-average spread earned on the underlying portfolio assets has decreased to 337 basis points (bps) from 395 bps. The portfolio's credit quality has remained stable since S&P's previous review, while the transaction's weighted-average life has marginally reduced to 3.7 years from 4.0 years. The issuer has entered into asset swap agreements with JPMorgan Chase Bank N.A. to hedge any resultant currency risk from non-euro denominated assets (12.12% of the portfolio balance). The documented downgrade provisions in these asset swap contracts do not fully comply with our current counterparty criteria. S&P has therefore applied currency stresses on these non-euro assets to test the effect on the class B ratings -- rated above the ratings on the counterparty -- if the counterparty failed to perform. S&P has also applied its non-sovereign ratings criteria. S&P has considered the transaction's exposure to sovereign risk because some of the portfolio's assets -- 14.1% of the transaction's total collateral balance -- are based in Spain and Italy. In 'AAA' rating scenarios, S&P has limited credit to 10% of the transaction's collateral balance, to correspond to assets based in these sovereigns in S&P's calculation of the aggregate collateral balance. The results of S&P's credit and cash flow analysis and the application of its current counterparty and non-sovereign ratings criteria indicate that the available credit enhancement for the class B notes is commensurate with the currently assigned rating. S&P has therefore affirmed its 'AAA (sf)' rating on this class of notes. S&P's ratings on the class C-1, C-2, and D notes are constrained by the application of the largest obligor default test, a supplemental stress test that S&P outlines in its corporate CDO criteria. This assesses whether a CDO tranche has sufficient credit enhancement to withstand specified combinations of underlying asset defaults, based on the ratings on the underlying assets. The test assumes a flat recovery of 5%. The obligor concentration risk has increased due to portfolio deleveraging, with only 22 performing obligors, down from 35 in S&P's previous review. Although S&P's cash flow analysis indicates that the class C-1, C-2, and D notes can support higher ratings than those currently assigned (due to increased available credit enhancement), the largest obligor default test caps S&P's ratings on these classes of notes. S&P has therefore affirmed its 'BB+ (sf)' ratings on the class C-1 and C-2 notes and 'B- (sf)' rating on the class D notes. CELF Loan Partners is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative- grade corporate firms. The transaction is managed by CELF Advisors LLP. RATINGS LIST Class Rating CELF Loan Partners B.V. EUR450 Million Secured Floating And Fixed-Rate Notes Ratings Affirmed B AAA (sf) C-1 BB+ (sf) C-2 BB+ (sf) D B- (sf) ECONCERN NV: PwC Settles Legal Dispute for EUR25 Million -------------------------------------------------------- DutchNews.nl reports that accountancy group PricewaterhouseCoopers (PwC) has paid EUR25 million into the inventory of bankrupt energy group Econcern in an out of court settlement. According to DutchNews.nl, the settlement ends PwC's legal fight against the accountancy sector's disciplinary board, which suspended two PwC accountants for one month for wrongly approving the accounts of the company in 2007. Details of the agreement are published in the 16th report on the bankruptcy published by the official receivers, DutchNews.nl discloses. Econcern went bust in 2009 owing EUR1 billion, DutchNews.nl recounts. It had started out as a small cooperative in Utrecht but had grown into an international concern with operations in 24 countries by the time it collapsed, DutchNews.nl relates. Headquartered in Utrecht, Netherlands, Econcern NV -- http://www.econcern.com/-- is the holding company of Ecofys, Evelop, Ecostream, OneCarbon and Ecoventures. Econcern, through its subsidiaries, engages in developing, constructing, and operating sustainable energy projects. It provides photovoltaic conversion and mounting systems, as well as inverters. The company offers sustainable energy solutions, as well as research, consultancy, and project development services in various fields, including solar energy, wind energy, bio energy, seawater air- conditioning, utility buildings, and hydrogen and fuel cell technology. Econcern was founded in 1984 and is based in Utrecht, the Netherlands. ============= R O M A N I A ============= SWAN OFFICE: CTP Invest Mulls Acquisition of Business ----------------------------------------------------- Bogdan Alecu at Ziarul Financiar, reports that Czech Republic's CTP Invest, one of the most active companies on the Romanian property market, is eyeing the Swan Office & Technology Park in Pipera-Tunari north of Bucharest. As reported by the Troubled Company Reporter-Europe on Oct. 20, 2014, Ziarul Financiar related that the insolvent office compound was set to be auctioned off again at a starting price lower by EUR9 million, to EUR22 million. The starting price was less than half the project's investment value of over EUR50 million, Ziarul Financiar disclosed. =========== R U S S I A =========== BANK OBRAZOVANIE: S&P Affirms 'B-/C' Counterparty Credit Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-/C' long- and short-term counterparty credit ratings and 'ruBBB-' Russia national scale rating on Russia-based Commercial Bank Obrazovanie. The outlook is negative. The rating affirmation reflects S&P's expectation that Bank Obrazovanie will restore its capitalization to a moderate level, supported by a shareholder capital injection of Russian ruble (RUB)1 billion (about $13 million) planned for 2016. S&P estimates that the bank's capitalization, as measured by its risk- adjusted capital (RAC) ratio, weakened to about 4.6%-4.9% at year- end 2015, from 7.5% at year-end 2014. This was because balance sheet growth was about 50% higher than originally budgeted by the bank due to new business generation and the effect of ruble depreciation. S&P's negative outlook on Bank Obrazovanie reflects pressure on the bank's capitalization, liquidity, and asset quality from negative trends in economic and industry risk in the Russian banking sector, which S&P expects will persist in 2016. S&P could lower the ratings in the next 12 months if the bank's planned RUB1 billion capital increase does not take place in 2016, which would result in material depletion of its capital buffers in view of modest internal capital generation and high growth rates. S&P may also lower the ratings if it observes a significant deterioration in the bank's liquidity position, given the importance of a few large depositors. A material increase in NPLs above the levels seen at other small rated banks in Russia or any other tangible evidence of default will also be viewed negatively. A substantial increase in economic and industry risks in the Russian banking sector would also warrant a negative rating action. All else being equal, S&P would consider revising the outlook to stable in the next 12 months if operating conditions for the Russian banking sector as a whole stabilize, notably with stable economic and industry risk trends, while the bank's capital buffers strengthen. GAZENERGOBANK: DIA's Administration Functions Terminated -------------------------------------------------------- Following a request of the state corporation Deposit Insurance Agency for an early termination of its functions of the provisional administration of Kaluga Gas and Energy Joint-Stock Bank Gazenergobank, the Bank of Russia took a decision (Order No. OD-411, dated February 8, 2016) to terminate from February 12, 2016, the functions of the provisional administration of Gazenergobank the state corporation Deposit Insurance Agency performs under Bank of Russia Order No. OD-2078, dated August 12, 2015, "On Appointing the State Corporation Deposit Insurance Agency to Perform the Functions of the Provisional Administration of the Kaluga-Based Kaluga Gas and Energy Joint- Stock Bank Gazenergobank (Open Joint-Stock Company), Gazenergobank." JUST BANK: Bank of Russia Halts Provisional Administration ---------------------------------------------------------- The Bank of Russia took a decision to terminate from February 3, 2016, the activity of the provisional administration of Just Bank LLC. The decision was made via Order No. OD-332, dated February 3, 2016. The Bank of Russia entered the decision due to the ruling of the Arbitration Court of the city of Moscow, Case No. A40-226060/15- 36-92B), dated January 22, 2016, on finding Just Bank insolvent and ordering the appointment of a liquidator. Previously, on November 2, 2015, by Order No. OD-2982, the Bank of Russia appointed provisional administration to manage Just Bank LLC and revoked the bank's license. POLYUS GOLD: Fitch Downgrades LT Issuer Default Ratings to 'BB-' ---------------------------------------------------------------- Fitch Ratings has downgraded Polyus Gold International's (PGIL) and PJSC Polyus Gold's (PJSC Polyus) Long-term Issuer Default Ratings (IDRs) to 'BB-' from 'BBB-', removed them from Rating Watch Negative (RWN) and assigned a Negative Outlook. The downgrades follow completion of the cash offer with regard to PGIL by a combination of Sacturino Limited and Wandle Holding - companies that are ultimate controlled by the Suleyman Kerimov Foundation and Said Kerimov. Following the cash offer, PGIL has been delisted from the London Stock Exchange and its Board of Directors dissolved. Fitch believes that the future corporate governance profile of the group will be weaker and that future credit metrics will be materially weaker than those historically recorded by the company. Fitch has assumed that proceeds from a recent US$2.5 billion seven-year loan attracted by PJSC Polyus are planned to be upstreamed to the shareholder level by way of a share buyback programme or dividend payment. In total we assume payments totalling US$2.5 billion or higher will be upstreamed to the shareholder level in 2016 to likely repay acquisition debt incurred at this level. Assuming payments at this level we do not anticipate that the company will exceed its net debt/EBITDA covenant of 3.5x included in bond and loan documentation. The Negative Outlook primarily reflects the risk that the level of cash upstreamed will be higher than currently assumed and/or business performance will be lower than we currently forecast. KEY RATING DRIVERS Corporate Governance Fitch had previously assessed PGIL/PJSC Polyus' corporate governance profile as strong compared with other Russian corporates. This in part reflected relationship agreements, signed between the company and its shareholders, which contributed to the independence of the company's board and reduced the potential for shareholder actions to negatively impact the company's financial profile and/or the position of creditors. Accordingly its ratings were notched down one notch from their standalone level, compared with the more usual two notches for Russian companies. Following the cash offer with regard to PGIL its Board of Directors has been dissolved and the company delisted. It is intended PJSC Polyus will become a listed entity in Moscow with appropriate independent director representation on its Board. Notwithstanding these plans we believe that overall corporate governance will be weaker than historically and have widened the notching for corporate governance to two notches, in line with other major Russian corporates. Material Increase in Leverage If, as expected, PGIL/PJSC Polyus upstreams in excess of US$2.5 billion of funds to the shareholder level in 2016, credit metrics will materially weaken. Under our base case, Fitch expects funds from operations (FFO) gross leverage to exceed 5.0x in 2016 and FFO net leverage approaching 4.0. Net debt/EBITDAR is expected to exceed 3.0x in 2016 compared with historical levels below 1.0x. With negative free cash flow expected in both 2016 and 2017, absolute debt levels will remain elevated until 2018 when expected production increases will start to have a positive impact on metrics (free cash flow (FCF) is post dividends and assumes a 30% payout ratio). For 2018, Fitch's base case expectation is for FFO gross leverage below 4.0x and FFO net leverage approaching 3.0x. Competitive Cost Position Operationally PGIL/PJSC Polyus remains a strong group with good quality gold reserves and large efficient open pit assets which place it in the first quartile of the global cost curve (total cash costs (TCC)). In 1H15, TCC declined to $US 436/oz -- a 34% decline year-on year. This was driven by local currency (RUB) devaluation as well as operational improvements which resulted in higher processing volumes and better recovery rates. Strong Production Results The group reported 4% year-on year production growth in 2015 to 1,763k oz of metal. This exceeded the upper end of the group's guidance range of 1,630k oz-1,710k oz set at the beginning of the year. The majority of the company's mines delivered higher processing volumes and better recoveries. The company's guidance for 2016 is 1,760k oz-1,800k oz. Natalka Development Project The Natalka project is the group's key development mine. A technical review of the project is expected to be finalized in 1Q16, with a ramp up of construction expected in spring 2016, and production to start in late 2017. Based upon expected production volumes, Natalka is expected to contribute to an approximate 15%- 20% year-on year increase in group gold production in 2018. As well as Natalka, the group intends to concentrate on streamlining and capacity improvement at key operational projects in order to attain annual production growth in the medium term. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: -- US$2.5 billion or higher cash upstreaming in 2016 by way of share buybacks and/or one-off dividend payment. -- Average gold price of US$1,050/oz in 2016 and US$1,000 afterwards (realised prices adjusted to reflect gold price hedging entered into by the company). -- Marginally negative FCF (post-dividends) in 2016/2017, returning to positive FCF generation in 2018 of approximately US$100 million. FCF forecasts assume a consistent 30% dividend payout ratio. -- US$/RUB exchange rate of 65 across 2016-2018. -- Natalka project to commence in 2H17. RATING SENSITIVITIES Negative: Future developments that could lead to negative rating action include: -- Higher than expected dividend payments or other shareholder distributions over 2016-2018 leading to weaker liquidity and sustained high leverage metrics. -- FFO gross leverage expected to be sustained above 4.0x by the end of FYE2018. -- Failure to return to positive FCF generation by 2018 as expected under our base rating case Positive: Future developments that could lead to positive rating action include: For Outlook stabilization -- FFO gross leverage below 3.5x. -- Sustained positive FCF generation. LIQUIDITY Polyus Gold's liquidity position is strong with $US 2 billion of cash and $US 0.6 billion of undrawn committed bank facilities as of end-2015, compared with only $US 38m of short-term borrowings. FULL LIST OF RATING ACTIONS Polyus Gold International Limited Foreign currency Long-term IDR: downgraded to 'BB-' from 'BBB-'; removed from RWN; Outlook Negative Foreign currency Short-term IDR: downgraded to 'B' from 'F3'; removed from RWN Foreign currency senior unsecured rating: downgraded to 'BB-' from 'BBB-'; removed from RWN PJSC Polyus Gold Foreign currency Long-term IDR: downgraded to 'BB-' from 'BBB-; removed from RWN; Outlook Negative Local currency senior unsecured rating: downgraded to 'B+ (RR5)' from 'BBB- (RR4)'; removed from RWN SOLIDARNOST BANK: DIA's Administration Functions Terminated ----------------------------------------------------------- The Bank of Russia, under Order No. OD-412 dated February 8, 2016, has terminated as of February 11, 2016, the functions of Deposit Insurance Agency (DIA) as provisional administrator of Bank Solidarnost. The Bank of Russia entered the order as per the request of DIA of an early termination of its role as administrator for Solidarnost. DIA was appointed as provisional administrator of Solidarnost by the Bank of Russia on August 12, 2015. SVYAZNOY BANK: Bank of Russia Halts Provisional Administration -------------------------------------------------------------- The Bank of Russia, under Order No. OD-333 dated February 3, 2016, terminated as of February 4, 2016 the activity of the provisional administration of Svyaznoy Bank JSC. The decision was entered due to the of the Arbitration court of the city of Moscow (case No. A40-231488/15-36-104B), dated January 22, 2016, on finding Svyaznoy Bank insolvent and ordering the appointment of a liquidator. Previously, on November 24, 2015, the Bank of Russia, by Order No. OD-3291, ordered the provisional administration of Svyaznoy Bank and revoked the bank's license. VITYAZ LTD: Bank of Russia Ends Provisional Administration ---------------------------------------------------------- The Bank of Russia, by virtue of Order No. OD-425 dated February 8, 2016, terminated as February 9, 2016, the activity of the provisional administration of COMMERCIAL BANK VITYAZ LTD. The Bank of Russia made the decision due to the ruling of the Court of Arbitration of the city of Moscow dated January 20, 2016, with regard to case No. A40-226041/15-88-422 "B" on recognizing that Vityaz is insolvent and ordering the appointment of a receiver. Previously, on November 16, 2015, the Bank of Russia, by Order No. OD-3185, appointed the provisional administration of VITYAZ LTD. following the revocation of the bank's license. =========================== U N I T E D K I N G D O M =========================== CYBG PLC: S&P Assigns 'B' Rating to Newly Issued AT1 Instruments ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BBB+/A-2' counterparty credit ratings on U.K.-based Clydesdale Bank PLC and its 'BBB/A-3' ratings on non-operating holding company (NOHC) CYB Investments Limited (CYBI). S&P removed these ratings from CreditWatch with negative implications, where they had been placed in May 2015. S&P then withdrew its ratings on CYBI, at the issuer's request. At the same time, S&P assigned its 'BBB-/A-3' ratings to Clydesdale's new NOHC, CYBG PLC, and assigned 'B' issue ratings to CYBG's newly issued additional Tier 1 (AT1) and 'BB' issue ratings to CYBG's newly issued nondeferrable Tier 2 instruments. The affirmation of S&P's ratings on Clydesdale reflects S&P's view that its financial and risk profiles (and consequently S&P's view of its 'bbb+' group credit profile [GCP]) will continue to be underpinned by post-transaction support agreements with National Australia Bank (NAB). S&P understands that NAB has agreed to provide an indemnity and contingent capital facility of up to GBP1.7 billion. The facility is effective retroactively, as of NAB's transaction announcement in May 2015, and GBP1.2 billion remains unutilized. It is part of a perpetual conduct risk mitigation package to cover potential future legacy conduct costs not covered by Clydesdale's existing unutilized provisions. In S&P's view, this indemnity package with NAB significantly reduces downside risks to the bank's capital position arising from future legacy conduct charges, which had previously been a key rating concern. Although S&P considers Clydesdale to be largely stand-alone from an operational perspective, S&P thinks the transitional service agreements that NAB will provide over an interim period mitigate Clydesdale's operational risks after the demerger. Accordingly, S&P is maintaining its positive notch of adjustment to reflect that the transitional arrangements provided by NAB will support Clydesdale's creditworthiness over S&P's 18-24 month ratings horizon. "Our ratings analysis currently assumes that Clydesdale will not be subject to a well-defined resolution process in case of nonviability. The Bank of England's December 2015 consultation on the minimum requirement for own funds and eligible liabilities (MREL) indicated that banks with balance sheets of GBP15 billion or more could be subject to a bail-in process in a resolution. If the final MREL regime is similar to the consultation document on this point, it may make Clydesdale eligible for a rating uplift under our additional loss-absorbing capacity (ALAC) criteria. We consider that this is likely enough to occur that we incorporate it into our analysis as the other key factor supporting the positive notch of adjustment. At the end of September 2015, we estimated that Clydesdale was close to our 5% threshold for one notch of ALAC uplift," S&P said. The ratings on Clydesdale were placed on CreditWatch with negative implications in May 2015, pending execution of the proposed IPO and demerger transaction from NAB. Clydesdale's U.K.-based NOHC CYBG is the demerger vehicle and listing entity. It commenced normal trading on the London Stock Exchange on Feb. 8, 2016. S&P understands that the demerger from NAB was implemented on the same day and that CYBG shares were transferred to NAB shareholders. Following the demerger, CYBG will over time become Clydesdale's immediate parent. As an NOHC, CYBG consolidates Clydesdale, which represents over 99% of its total assets. S&P calculated double leverage at end-2015 at about 101%. S&P expects CYBG's principal income streams to be dividends and interest income on debt issued by Clydesdale. S&P anticipates that the NOHC will downstream issued debt and equity capital to its operating subsidiaries and that, over time, it will become a key vehicle for the group's issuance of long-term instruments designed to absorb losses, whether on a going-concern or non-viability basis, in line with other U.K. banks. S&P does not assign a group status to the NOHC, as S&P would for an operating subsidiary. Rather, the starting point for the issuer credit rating on the NOHC is based on Clydesdale's unsupported GCP (that is, excluding the positive notch of adjustment), which S&P assess at 'bbb'. Although our ratings on CYBG are based on S&P's view of Clydesdale's intrinsic creditworthiness, they are constrained by the structural subordination of the U.K. NOHC's creditors. This explains the one-notch differential between the unsupported GCP of the operating bank and the long-term rating on the NOHC. The ratings on CYBG and Clydesdale do not benefit from extraordinary support from the U.K. government. At the same time as demerging from NAB, CYBG issued GBP450 million of 8% fixed-rate reset perpetual subordinated contingent convertible (AT1) notes and GBP475 million 5% fixed-rate reset callable subordinated Tier 2 notes. S&P is assigning its 'B' long-term issue rating to the AT1 securities and its 'BB' issue rating to the Tier 2 notes. The ratings are subject to S&P's review of the notes' final documentation. In accordance with S&P's January 2015 criteria for rating hybrid capital instruments, the issue ratings reflect S&P's analysis of the proposed instruments and its assessment of Clydesdale's unsupported GCP. The 'BB' issue rating stands three notches below the 'bbb' unsupported GCP of Clydesdale, reflecting one notch for subordination, one notch for being issued out of the NOHC, and one notch to reflect S&P's view that the regulatory framework creates the equivalent of a mandatory contingent capital clause leading to common equity conversion and/or a principal write-down. The 'B' issue rating stands six notches below the unsupported GCP of Clydesdale and reflects these: -- One notch for subordination. -- Two notches for nonpayment risk and its regulatory Tier 1 status. -- One notch to reflect the issue's mandatory contingent capital clause leading to common equity conversion and principal write-down. -- One notch for distance to the 7% regulatory, going-concern contingent trigger above 300 basis points. -- One final notch reflecting structural subordination as a holding company issue. S&P expects to assign intermediate equity content to the AT1 securities under S&P's criteria. This reflects S&P's view that they can absorb losses on a going-concern basis through discretionary coupon cancellation, they are perpetual, and there is no coupon step-up. The stable outlook on Clydesdale reflects S&P's view that its operating performance and business stability will perform in line with S&P's expectations within the coming 18-24 months. S&P could lower the rating on Clydesdale if S&P observed that: -- The bank's operating performance and risk appetite deviated materially from current management expectations, -- There were potential conduct issues not covered by the mitigation package, which weighed on profitability, or -- Risks related to the operational separation from NAB were not being managed adequately. An upgrade is not likely at this stage. The stable outlook on CYBG mirrors that on Clydesdale. DECO 6-UK: Fitch Lowers Rating on Class A2 Notes to 'Csf' --------------------------------------------------------- Fitch Ratings has downgraded DECO 6 - UK Large Loan 2 Plc's class A2 notes due 2017 and affirmed the others, as follows: GBP29.4 million class A2 (XS0235683223) downgraded to 'Csf' from 'CCsf'; Recovery Estimate (RE) 10% GBP34.4 million class B (XS0235683736) affirmed at 'Csf'; RE 0% GBP39.3 million class C (XS0235684114) affirmed to 'Csf'; RE 0% GBP24.1 million class D (XS0235684544) affirmed at 'Csf'; RE 0% DECO 6 - UK Large Loan 2 plc was originally the securitization of four commercial loans originated by Deutsche Bank AG (A/Stable/F1), which closed in December 2005. Two of the loans have since repaid in full and one resolved (pending a significant loss allocation to the class C and D). The remaining loan is secured on two UK office buildings. KEY RATING DRIVERS The downgrade of the class A2 notes reflects the inevitability of loss. The affirmation of the more junior tranches at 'Csf' reflects the unchanged expectation of a full write-down. Since the last rating action in February 2015, the Brunel Shopping Centre has been sold and recovery amounts of GBP65 million paid to the senior notes. Barring any late recoveries, the remaining loan balance of GBP34.4 million will be written off, with the recovery rate in line with Fitch's expectations. The only remaining loan, the GBP92.8 million Mapeley loan, entered special servicing in 2011 as the result of an uncured interest coverage ratio breach and was accelerated in 2012. Since then, 18 of the 20 properties have been sold. A significant drop in property values driven by rising vacancy and weak demand for tertiary properties has caused the LTV to rise over time, reaching over 1,900% in January. The remaining two offices located in Edinburgh and Northampton are likely to be sold in time for bond maturity in July 2017, with net proceeds being applied against senior note principal. Fitch estimates around 10% of the current GBP29.4 million balance will be recovered, with the remaining notes being written down. Fitch estimates 'Bsf' recoveries of approximately GBP3m. RATING SENSITIVITIES All tranches will be downgraded to 'Dsf' once the inevitable losses from Brunel Shopping Centre and Mapeley have been determined and allocated to the notes. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. DIALOG SEMICONDUCTOR: S&P Withdraws Preliminary 'BB' CCR -------------------------------------------------------- Standard & Poor's Ratings Services withdrew its preliminary 'BB' long-term corporate credit rating on U.K.-based semiconductor provider Dialog Semiconductor PLC (Dialog) at the issuer's request. At the time of the withdrawal, the outlook was stable. S&P also withdrew its preliminary 'BB' issue ratings and '3' recovery ratings on Dialog's proposed senior secured loans. On Jan. 14, 2016, Dialog announced that its board of directors had decided not to revise its proposal to acquire U.S.-based semiconductor provider Atmel Corp. As a result, S&P is withdrawing the preliminary 'BB' long-term corporate credit and issue ratings that it assigned on Nov. 30, 2015, at the issuer's request. HUMBERSIDE MOTOR: Shuts Down Business Following Administration -------------------------------------------------------------- Clare Burnett at TheBusinessDesk.com reports that The Humberside Motor Group, which owns dealerships in Hull and Grimsby, has ceased trading. Joint administrators Philip Pierce -- phil.pierce@frpadvisory.com -- and Russell Cash -- russell.cash@frpadvisory.com -- partners at business advisory group FRP Advisory, were appointed on Jan. 19, TheBusinessDesk.com relates. The Infiniti Hull and Renault Grimsby car dealerships under the Humberside Motor banner have been closed, TheBusinessDesk.com discloses. Administrators made redundancies among the 23 staff, TheBusinessDesk.com relays. According to TheBusinessDesk.com, owner of the family-run business, Terry Smith, told the Grimsby Telegraph: ""We built this business up from scratch. But losing Saab in 2012 was the major blow. At the time we were one of the top four dealers in the country, year after year. It's been a struggle since then." ********* 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 2016. 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 * * *