/raid1/www/Hosts/bankrupt/TCREUR_Public/160311.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, March 11, 2016, Vol. 17, No. 050
Headlines
A U S T R I A
OSTREGION INVESTMENTGESELLSCHAFT: S&P Affirms B+ Sr. Debt Rating
A Z E R B A I J A N
INTERNATIONAL BANK: Fitch Affirms 'BB' IDR, Outlook Negative
F R A N C E
SOCIETE GENERALE 2014-104: S&P Lowers Rating on Notes to 'Bp'
G E R M A N Y
GERMAN PELLETS: Resumes Production in Wismar
WALSUM PAPIER: Finds New Owner, Operations Continues
I R E L A N D
ANGLO IRISH: Central Bank Sells EUR500MM of Legacy Debts
BLACK DIAMOND 2015-1: S&P Affirms B Rating on Class F Notes
BUSINESS MORTGAGE 3: Fitch Raises Rating on Cl. C Notes to 'BBsf'
EUROCREDIT CDO: Moody's Affirms B2(sf) Rating on Class E Notes
I T A L Y
STEFANA SPA: April 14 Deadline Set for Irrevocable Offers
L A T V I A
EXPOBANK AS: Moody's Puts 'B1' Rating on Review for Downgrade
P O L A N D
* POLAND: Fin-Min Dismissed Over "Toxic" Small Lenders Comment
P O R T U G A L
* Fitch Revises Outlooks on Portuguese SF Transactions to Stable
R U S S I A
AVTOVAZ: Chief Executive to Step Down This Month
LENTA LTD: Moody's Maintains Ba3 Corporate Family Rating
UC RUSAL: In Talks with Lenders Over Debt Covenants
* Moody's Reviews 12 Russian Utilities & Infrastructure GRI
* Moody's Reviews Ratings on 10 Russian Sub-Sovereigns
S P A I N
VIESGO GENERACION: S&P Revises Outlook to Stable & Affirms B+ CCR
U N I T E D K I N G D O M
ALKERMES PLC: S&P Lowers CCR to 'BB-', Outlook Stable
AVENDIS GLOBAL: April 1 Proof of Debt Deadline Set
BATTLE BUSINESS: Court Orders Six Bogus Cos. Into Liquidation
BHS GROUP: KPMG Prepares CVA Proposal, March 23 Vote Set
BIKERS MOTORCYCLES: PKF Seeks Buyers For Motorcycle Dealer
LA HAULAGE: Goes Into Liquidation, Owes GBP296,000
MIRANDA MEDIA: Goes Into Compulsory Liquidation Over Tax Debts
WINTERHILL LARGO: Goes Into Administration
* UK: HMRC Makes Insolvency Process Harder for Businesses
X X X X X X X X
* S&P Takes Rating Actions on 19 EU Synthetic CDO Tranches
* BOOK REVIEW: Transnational Mergers and Acquisitions
*********
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A U S T R I A
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OSTREGION INVESTMENTGESELLSCHAFT: S&P Affirms B+ Sr. Debt Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' underlying
rating (SPUR) on the senior debt of Ostregion
Investmentgesellschaft Nr. 1 S.A. (Ostregion), a special-purpose
vehicle for the financing of an Austrian road project. The
outlook is stable.
At the same time, S&P withdrew the '2' recovery rating on the
debt, which was erroneously assigned, owing to the lack of a
jurisdictional ranking of Austria.
The bonds and loan benefit from an unconditional and irrevocable
guarantee provided by Ambac Assurance U.K. Ltd. (Ambac; not rated)
of payment of scheduled interest and principal on the debt.
According to S&P's criteria, the rating on monoline-insured debt
reflects the higher of the rating on the monoline insurer, if any,
and the SPUR on the project debt. Accordingly, the 'B+' long-term
debt rating reflects the SPUR, given that S&P no longer maintains
a rating on Ambac.
Summary
The operations phase stand-alone credit profile (SACP) underpins
the rating, as there is currently no material construction risk.
Operations Phase
S&P assesses the issuer's SACP during the operations phase as
'b+'. This assessment is based on these factors:
-- The project's relatively straightforward operations and
maintenance requirements, with a small degree of complexity
due to three tunnels totaling seven kilometers (km) and
exposure to adverse winter weather conditions.
-- Predictable lifecycle requirements.
-- Limited market risk, since 70% of revenues are through
availability payments.
-- There has been no incidence of penalty points since 2014,
which suggests that the disputes with the granting
authority (Autobahnen- und Schnellstrassen-Finanzierungs-
Aktiengesellschaft; ASFINAG) have been managed
satisfactorily. However, they could generate renewed
tension in the future, in S&P's view.
-- A minimum annual debt service coverage ratio (ADSCR) of
0.98x and an average ADSCR of 1.02x under S&P's base-case
scenario.
-- A resilient downside scenario, as compared with the base
case, reflecting reduced market risk.
The project benefits from a fully funded six-month debt service
reserve account (DSRA), which remains unused to date. As of
Dec. 31, 2015, the DSRA balance was EUR24.5 million. Furthermore,
there is a contractual requirement to fund a major-maintenance
reserve account (MRA) covering 100% of the project budget for the
first six months of 2016, 60% of the six months thereafter, and
30% of the six months after that. As of Dec. 31, 2015, the MRA
balance was EUR420,000. Moreover, the project has a free cash
balance of EUR4.0 million as of Dec. 31, 2015.
In addition, the financial covenants offer adequate protection for
a project with these characteristics, in S&P's view. Dividend and
mezzanine debt service lockup occurs at a senior debt service
coverage ratio of 1.125x, increasing to 1.150x in the later stages
of the project. Because of the ongoing traffic underperformance,
these features have resulted in substantial cash becoming trapped
in the project. In S&P's base case, it expects further cash to
accumulate, as the project is expected to remain in lockup.
The stable outlook reflects S&P's view of the project's resilience
to further traffic decreases, as traffic levels are already in the
lower bands.
S&P could lower the rating by one or more notches if the project
requires the use of reserve accounts to cover the debt service,
high penalties due to underperformance, cost slippage, or if
latent defects emerge.
S&P does not expect to raise the rating in the next two years
because, in its opinion, it remains constrained by the project's
weak financial profile, as traffic performance is still
considerably below the sponsor's financial close forecasts.
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A Z E R B A I J A N
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INTERNATIONAL BANK: Fitch Affirms 'BB' IDR, Outlook Negative
------------------------------------------------------------
Fitch Ratings has affirmed International Bank of Azerbaijan's
(IBA) and Pasha Bank's Long-term Issuer Default Ratings (IDRs) at
'BB' and 'BB-', respectively. The agency has also downgraded the
Long-term IDR of Azerbaijan's AccessBank (AB) to 'BB+' from
'BBB-'. The Outlooks on all three banks are Negative.
The rating action follows the downgrade of Azerbaijan's IDRs and
Country Ceiling.
KEY RATING DRIVERS
IBA
The affirmation of IBA's Support Rating Floor (SRF) and Long-term
IDR at 'BB' balances the weaker ability of the authorities to
provide support to the bank, as reflected by the sovereign
downgrade with Fitch's view of a now stronger propensity of the
authorities to support, due to a considerable improvement in the
support track record. The latter is reflected in (i) the AZN3bn
clean-up of IBA's balance-sheet, executed through buy-outs of
impaired loans, which was finalized in January 2016; and (ii) a
planned AZN500m equity injection, which will support IBA's
solvency and also increase the Ministry of Finance's stake in the
bank to above 80%, from 51.1% at present.
Fitch's view of the improved propensity to support has resulted in
a reduction, to one notch from two, in the difference between
IBA's and the sovereign's Long-term IDRs. IBA's Long-term IDR has
been removed from Rating Watch Positive (RWP). The RWP had
reflected the potential for IBA to be upgraded if the problem loan
buy-out was completed and the sovereign rating remained at its
previous level. However, the sovereign downgrade meant that the
RWP was removed without an upgrade of IBA.
IBA's IDRs, SRF and the Support Rating of '3' continue to reflect
Fitch's view of a moderate probability of support from the
Azerbaijani authorities. In assessing the propensity, Fitch views
favorably, in addition to the improved track record, the following
factors: (i) IBA's high systemic importance, stemming from its
dominant market shares (the bank accounts for 35% of sector
assets) and substantial funding from state-owned entities (around
AZN1.5 bil. or 15% of end-1H15 liabilities); (ii) the bank's
majority state ownership; (iii) IBA's fairly small size relative
to the sovereign's available resources (IBA's equity and assets
equalled to less than 2% and 25% of GDP at end-2015,
respectively); and (iv) the potentially significant reputational
damage for the authorities in case of IBA's default.
The one notch differential between the sovereign and bank ratings
reflects (i) the still short track record of significant support
for the bank after a more extended period when sufficient support
was not forthcoming; (ii) moderate risk that, in case of extreme
sovereign stress, the authorities would cease to provide full
support to IBA and other quasi-sovereign entities ahead of a
sovereign default; and (iii) the authorities' stated intention to
ultimately privatize the bank.
The affirmation of IBA's 'b-' Viability Rating (VR) reflects (i)
IBA's fragile asset quality which, despite the AZN3bn problem loan
buy-out, will remain under pressure from high loan dollarization
(60% at end-2015) and still significant volumes of higher-risk
asset exposures; (ii) a still rather weak core capital position,
although this should be moderately strengthened by the expected
AZN500 million equity injection; (iii) weak profitability; and
(iv) high near-term refinancing risks, although planned capital
support may improve IBA's liquidity position.
Although IBA's non-performing loans (NPLs, 90 days overdue)
comprised a moderate 7% of end-2015 gross loans, Fitch views
underlying asset quality as vulnerable, at least based on a review
of IBA's largest loans. These loans remain concentrated (the 20
largest loan exposures equaled 3.8x regulatory capital at end-
2015) and high-risk. The risk of these loans stems from (i) the
generally long tenors/grace periods on principal repayments; (ii)
significant project finance exposures; and (iii) considerable
exposures to construction and real estate.
In addition to the largest loans, IBA's sizable exposure (AZN3bn
or 3.4x regulatory capital) mostly to start-ups/uncompleted real
estate projects in Russia, represents an additional drag on asset
quality. Positively, according to management, IBA is discussing
with the authorities possible further problem asset buy-outs on
top of the AZN3bn already completed.
Fitch estimates IBA's Fitch Core Capital (FCC) ratio at end-2015
at approximately 6%, as the positive (balance sheet reduction)
effect of the AZN3bn asset transfer was largely offset by the
devaluation of the manat in 4Q15, which resulted in significant
inflation of IBA's FX-denominated assets. FCC may increase to
about 10% after the expected AZN500m equity injection, assuming
only moderate new loan issuance, but could be further boosted in
case of an additional problem asset buy-out. Internal capital-
generating capacity is weak due to narrow margins, a high cost
base and elevated loan impairments. Fitch does not expect IBA's
profitability to improve in the near-term.
IBA's near-term refinancing needs are significant. According to
management, IBA's refinancing needs for the year amounted to
around AZN1.2 bil. at end-February 2016, while the liquidity
buffer was only AZN0.6 bil. However, the equity injection should
- and cash receipts from any further loan sale could - support
the bank's liquidity position.
Funding from corporate clients (33% of end-2015 liabilities) is
fairly sticky, but IBA faced a moderate 5%-10% retail funding
outflow in December 2015-January 2016. Funding dollarization was
a high 80% at end-2015 and IBA's short USD balance sheet position
was around 1x regulatory capital. According to management, this
was fully hedged with the Central Bank of Azerbaijan and other
counterparties, so IBA's bottom-line is protected from one-off
translation losses in case of further AZN devaluation.
AB
The downgrade of AB's Long-term IDR to 'BB+' from 'BBB-' and
Support Rating to '3' from '2' reflects the revision of
Azerbaijan's Country Ceiling to 'BB+' from 'BBB-'. This in turn
reflects Fitch's view of an increase in transfer and
convertibility risks -- in line with the weakening of the
sovereign credit profile -- which could constrain the ability of
AB to utilize support from its International Financial Institution
(IFI) shareholders to service its foreign currency obligations.
Fitch continues to view the propensity of the IFIs to provide
support to AB as high.
The support considerations take into account (i) the IFIs'
strategic commitment to microfinance lending in developing
markets; (ii) the IFIs' direct ownership of AB, stemming from
their participation as founding shareholders; (iii) the
significant integration of IFI guidelines into AB's risk
management; and (iv) Fitch's expectation that a full exit of the
IFIs from the bank in the next few years is unlikely. The
Negative Outlook on AB's IDRs reflects that on the sovereign.
The affirmation of AB's VR of 'bb-' reflects the bank's still
solid intrinsic creditworthiness in the highly cyclical and oil-
dependent Azerbaijani economy. The VR continues to factor in AB's
adequate asset quality, driven by robust underwriting standards
and risk controls, strong bottom-line performance, comfortable
capital position and the sound quality of management. However,
Fitch expects AB's financial profile to deteriorate over the next
12-18 months, which is likely to exert downward pressure on the
VR.
At end-2015, AB's loans 30 days overdue surged to 7.4% of gross
loans from 0.8% at end-2014. Restructured loans also increased
sharply to 28% from 0.5% at end-2014. According to management,
most of the restructured loans are FX-denominated loans, where AB
has extended maturities and reduced interest rates so that monthly
installments for borrowers in manat terms are unchanged following
the devaluation. Helping to mitigate the asset quality risks is
rather granular and mostly secured profile of the loan portfolio
so that at least moderate recoveries from overdue loans are
likely. However, pressure on asset quality may intensify in 2016,
due to high loan dollarization in AB (70% of its gross loans) and
the ongoing slowdown of the economy.
AB's loss absorption capacity is significant, as expressed by its
high 17% FCC ratio at end-2015. Fitch estimates that AB's
regulatory capital buffer is sufficient to withstand 8% of
additional credit losses. AB's robust pre-impairment profit in
2015 was equal to 5.5% of loans, also supporting the bank's loss
absorption capacity.
Near-term refinancing needs are significant, at around 30% of end-
2015 liabilities, but the available liquidity cushion at end-2015
(including committed credit lines of USD72 mil. from IFIs) was
equal to 90% of maturing facilities. Refinancing risks are
partially reduced by rapid loan turnover and access to parent
funding.
PB
PB's IDRs, SR and SRF are underpinned by the potential support
available to the bank from the Azerbaijan authorities, in case of
need. Fitch's view on support takes into account: (i) the
combined market shares of PB and its sister Kapital Bank (KB) in
considering systemic importance, as they are part of a single
group; (ii) the somewhat improved track record of sovereign
support for the banking sector in light of the ongoing financial
rehabilitation of IBA; and (iii) the benefits of the banks being
ultimately owned by a structure closely connected to the
Azerbaijani authorities, which at least in the near term should
make support more likely, in Fitch's view.
PB and KB, which are both owned by Pasha Holding, at end-1H15 had
combined market shares of 14.1% in deposits (6% KB; 8.1% PB) and
8.8% of loans (5.6% KB, 3.2% PB), making them comfortably the
second-largest banking group in Azerbaijan after IBA. In Fitch's
view, any sovereign support would likely be available to both of
the banks, in case of need, rather than one of the institutions in
isolation.
The Outlook on PB's IDR has been revised to Negative from Stable
to mirror that on the sovereign, while the differential between
the sovereign and bank ratings has narrowed to two notches from
three. The reduction in the rating differential reflects (i) the
improved recent track record of government support, given the
assistance to IBA (PB and KB themselves have not needed support
during the recent downturn); (ii) Fitch's view that the propensity
to provide support to PB remains strong, while the ability of the
sovereign to support has only reduced moderately given the small
size of PB and KB (combined balance sheets equal to just 6% of
GDP); and (iii) usually somewhat smaller notching at lower rating
levels between sovereign ratings and bank Support Rating Floors,
in accordance with Fitch's bank rating criteria.
KEY RATING DRIVERS AND SENSITIVITIES
IBA MOSCOW
The expected rating of IBA Moscow's senior debt issues is
equalized with that of its parent IBA. This reflects IBA's offer
to purchase the bonds in case of a default by IBA Moscow, which
represents an irrevocable undertaking and ranks equally with IBA's
other senior unsecured obligations. IBA Moscow's senior unsecured
debt rating is likely to move in tandem with IBA's senior debt
rating.
RATING SENSITIVITIES
IDRS, SRs AND SRFs
The Negative Outlooks on all three banks reflect that on the
sovereign. Accordingly, the support-driven IDRs on each of the
banks will likely be downgraded in case of the sovereign being
downgraded and the Country Ceiling lowered. Conversely, a
revision of the Outlook on the sovereign to Stable will likely
result in a similar action on the banks.
Downside pressure on the banks' IDRs could also result from a
potential weakening of the support stance of the sovereign (for
IBA and Pasha) or IFI shareholders (for AB), although Fitch views
this as unlikely in the near-term.
Upside rating potential for PB and IBA, implying a reduction of
the notching between the banks' ratings and that of the sovereign,
is limited at the moment. However, further improvements in the
track record of sovereign support for the banking sector as a
whole, and IBA in particular, would be credit-positive.
IBA's AND AB's VRS
IBA's VR could be upgraded if the positive impact on its credit
profile from the planned capital support and potential additional
problem asset transfer is sufficient to materially improve the
bank's solvency and is not offset by renewed asset quality
pressure. Downside pressure on IBA's VR could result from a
further intensification of asset quality and refinancing
pressures.
AB's VR could be downgraded if further loan impairment materially
erodes its profitability and eats into capital. AB's VR may be
affirmed if asset quality pressure reduces. Upside potential for
AB's VR is limited and would require an improvement in the broader
economic environment.
The rating actions are:
IBA
Long-term foreign currency IDR: affirmed at 'BB'; off RWP;
Outlook Negative
Short-term foreign currency IDR: affirmed at 'B'
Viability Rating: affirmed at 'b-', off Rating Watch Evolving
Support Rating: affirmed at '3'
Support Rating Floor: affirmed at 'BB', off RWP
Senior unsecured debt: affirmed at 'BB', off RWP
IBA-Moscow
Senior unsecured debt: affirmed at 'BB(EXP)', off RWP
AccessBank
Long-term IDR: downgraded to 'BB+' from 'BBB-'; Outlook
Negative
Short-term IDR: downgraded to 'B' from 'F3'
Viability Rating: affirmed at 'bb-'
Support Rating: downgraded to '3' from '2'
Pasha Bank
Long-term foreign-currency IDR: affirmed at 'BB-'; Outlook
revised to Negative from Stable
Short-term foreign-currency IDR: affirmed at 'B'
Viability Rating: 'b+'; unaffected
Support Rating: affirmed at '3'
Support Rating Floor: affirmed at 'BB-'
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F R A N C E
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SOCIETE GENERALE 2014-104: S&P Lowers Rating on Notes to 'Bp'
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'Bp' from 'B+p' its
credit rating on Societe Generale's series 2014-104 notes.
The downgrade follows S&P's Feb. 29, 2016 lowering to 'B' from
'B+' of S&P's long-term issuer credit rating on Avon Products Inc.
Under S&P's criteria for rating repackaged securities, it weak-
link its rating on Societe Generale's series 2014-104 notes to the
lowest of S&P's long-term ICR on:
-- Societe Generale, as the issuer;
-- Societe Generale, New York Branch as the guarantor; and
-- Avon Products as the reference entity.
Therefore, following S&P's recent downgrade of Avon Products, S&P
has consequently lowered to 'Bp' from 'B+p' its rating on Societe
Generale's series 2014-104 notes.
RATINGS LIST
Societe Generale
US$1.55 mil 10 year callable hybrid steepener credit-linked non-
principal protected notes series 2014-104
Rating Rating
Class Identifier To From
2014-104 Bp B+p
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G E R M A N Y
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GERMAN PELLETS: Resumes Production in Wismar
--------------------------------------------
IHB reports that the insolvent German Pellets has restarted
production in Wismar on March 4. IHB says the creditors'
committee had agreed on the start of production, in order that the
plant not to suffer more losses. The money for the resumption of
the production comes from the insolvency administrator itself, the
report notes.
"It is advisable to let the plant run to arouse interest of
potential buyers," IHB quotes Wolfgang Weber-Thedy, the spokesman
of the provisional insolvency administrator Bettina Schmudde, as
saying.
According to the report, Mr. Weber-Thedy said the production will
run on one of the two lines in Wismar. IHB notes that the primary
objective is the sale of the German Pellets Group as a whole. In
this respect, it seems that there are already numerous potential
acquirers. The German media mentioned 122 so far. If the sale as
whole fails, the second option would be the sale of parts of the
group.
German Pellets is a production company based in Wismar, Germany.
The company produces various kinds of wood pellets for pellet
heating and pellet ovens and animal hygiene products for horses,
large and small animals.
An insolvency court in Schwerin, Germany, in February appointed
Bettina Schmudde of Kanzlei White & Case, as the provisional
insolvency Administrator of the company.
WALSUM PAPIER: Finds New Owner, Operations Continues
----------------------------------------------------
EUWID Pulp and Paper reports that the financially troubled firm
Walsum Papier has a new owner.
EUWID relates that an as-yet-unnamed investor purchased the paper
mill, which had just started insolvency proceedings, and plans to
continue producing coated magazine paper LWC. The transfer of
operations took place on Feb. 19, 2016.
The local court in Duisburg had opened insolvency proceedings for
Walsum Papier, formerly known as Norske Skog Walsum GmbH, on
Feb. 15, 2016. Sebastian Henneke from the Duisburg law firm HRM
Henneke Ropke Partnerschaft Rechtsanwalte was appointed as
insolvency administrator. He had previously been the preliminary
insolvency administrator, the report notes.
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I R E L A N D
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ANGLO IRISH: Central Bank Sells EUR500MM of Legacy Debts
--------------------------------------------------------
Arthur Beesley at The Irish Times reports that the Central Bank
has sold another EUR500 million of the legacy debts of Anglo Irish
Bank, bringing total disposals so far to EUR3 billion.
Some EUR22 billion in government bonds remain outstanding from the
2013 deal to scrap the Anglo promissory note scheme, The Irish
Times discloses.
The 2041 floating rate government bonds were acquired on March 8
from the Central Bank and cancelled by the National Treasury
Management Agency, The Irish Times relates.
About Irish Bank Resolution
Irish Bank Resolution Corp., the liquidation vehicle for what was
once one of Ireland's largest banks, filed a Chapter 15 petition
(Bankr. D. Del. Case No. 13-12159) on Aug. 26, 2013, to protect
U.S. assets of the former Anglo Irish Bank Corp. from being
seized by creditors. Irish Bank Resolution sought assistance
from the U.S. court in liquidating Anglo Irish Bank Corp. and
Irish Nationwide Building Society. The two banks failed and were
merged into IBRC in July 2011. IBRC is tasked with winding them
down and liquidating their assets. In February, when Irish
lawmakers adopted the Irish Bank Resolution Corp., IBRC was
placed into a special liquidation in the Irish High Court to
complete liquidation and distribution of the two banks' assets.
IBRC's principal asset as of June 2012 was a loan portfolio
valued at some EUR25 billion (US$33.5 billion). About 70 percent
of the loans were to Irish borrowers. Some 5 percent of the
portfolio was under U.S. law, according to a court filing. Total
liabilities in June 2012 were about EUR50 billion, according
to a court filing.
Most assets in the U.S. have been sold already. IBRC is involved
in lawsuits in the U.S.
IBRC was granted protection under Chapter 15 of the U.S.
Bankruptcy Code in December 2013.
Kieran Wallace and Eamonn Richardson of KPMG have been named the
special liquidators.
About Anglo Irish
Anglo Irish Bank was an Irish bank headquartered in Dublin from
1964 to 2011. It went into wind-down mode after nationalization
in 2009. In July 2011, Anglo Irish merged with the Irish
Nationwide Building Society, with the new company being named the
Irish Bank Resolution Corporation (IBRC).
Standard & Poor's Ratings Services said that it lowered its long-
and short-term counterparty credit ratings on Irish Bank
Resolution Corp. Ltd. (IBRC) to 'D/D' from 'B-/C'. S&P also
lowered the senior unsecured ratings to 'D' from 'B-'. S&P then
withdrew the counterparty credit ratings, the senior unsecured
ratings, and the preferred stock ratings on IBRC. At the same
time, S&P affirmed its 'BBB+' issue rating on three government-
guaranteed debt issues.
The rating actions follow the Feb. 6, 2013, announcement that the
Irish government has liquidated IBRC.
The former Irish bank sought protection from creditors under
Chapter 15 of the U.S. Bankruptcy Code on Aug. 26, 2013 (Bankr.
D. Del., Case No. 13-12159). The former bank's Foreign
Representatives are Kieran Wallace and Eamonn Richardson. Its
U.S. bankruptcy counsel are Mark D. Collins, Esq., and Jason M.
Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington,
Delaware.
BLACK DIAMOND 2015-1: S&P Affirms B Rating on Class F Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its credit ratings on
Black Diamond CLO 2015-1 Designated Activity Company's class A-1,
A-2, B-1, B-2, C, D, E, and F notes following the transaction's
effective date as of Jan. 28, 2016.
Most European cash flow collateralized loan obligations (CLOs)
close before purchasing the full amount of their targeted level of
portfolio collateral. On the closing date, the collateral manager
typically covenants to purchase the remaining collateral within
the guidelines specified in the transaction documents to reach the
target level of portfolio collateral. Typically, the CLO
transaction documents specify a date by which the targeted level
of portfolio collateral must be reached. The "effective date" for
a CLO transaction is usually the earlier of the date on which the
transaction acquires the target level of portfolio collateral, or
the date defined in the transaction documents. Most transaction
documents contain provisions directing the trustee to request the
rating agencies that have issued ratings upon closing to affirm
the ratings issued on the closing date after reviewing the
effective date portfolio (typically referred to as an "effective
date rating affirmation").
An effective date rating affirmation reflects S&P's opinion that
the portfolio collateral purchased by the issuer, as reported to
us by the trustee and collateral manager, in combination with the
transaction's structure, provides sufficient credit support to
maintain the ratings that S&P assigned on the transaction's
closing date. The effective date reports provide a summary of
certain information that S&P used in its analysis and the results
of S&P's review based on the information presented to S&P
S&P believes the transaction may see some benefit from allowing a
window of time after the closing date for the collateral manager
to acquire the remaining assets for a CLO transaction. This
window of time is typically referred to as a "ramp-up period".
Because some CLO transactions may acquire most of their assets
from the new-issue leveraged loan market, the ramp-up period may
give collateral managers the flexibility to acquire a more diverse
portfolio of assets.
For a CLO that has not purchased its full target level of
portfolio collateral by the closing date, S&P's ratings on the
closing date and prior to its effective date review are generally
based on the application of S&P's criteria to a combination of
purchased collateral, collateral committed to be purchased, and
the indicative portfolio of assets provided to S&P by the
collateral manager, and may also reflect its assumptions about the
transaction's investment guidelines. This is because not all
assets in the portfolio have been purchased.
"When we receive a request to issue an effective date rating
affirmation, we perform quantitative and qualitative analysis of
the transaction in accordance with our criteria to assess whether
the initial ratings remain consistent with the credit enhancement
based on the effective date collateral portfolio. Our analysis
relies on the use of CDO Evaluator to estimate a scenario default
rate at each rating level based on the effective date portfolio,
cash flow modeling to determine the appropriate percentile break-
even default rate at each rating level, the application of our
supplemental tests, and the analytical judgment of a rating
committee," S&P said.
"In our published effective date report, we discuss our analysis
of the information provided by the transaction's trustee and
collateral manager in support of their request for effective date
rating affirmation. In most instances, we intend to publish an
effective date report each time we issue an effective date rating
affirmation on a publicly rated European cash flow CLO," S&P
noted.
On an ongoing basis after S&P issues an effective date rating
affirmation, it will periodically review whether, in its view, the
current ratings on the notes remain consistent with the credit
quality of the assets, the credit enhancement available to support
the notes, and other factors, and take rating actions as S&P deems
necessary.
RATINGS LIST
Black Diamond CLO 2015-1 Designated Activity Company
EUR337.4 mil, US$89.6 mil senior secured fixed-and floating-rate
deferrable notes and subordinated notes
Rating Rating
Class Identifier To From
A-1 XS1238903535 AAA (sf) AAA (sf)
A-2 09202RAB3 AAA (sf) AAA (sf)
B-1 XS1238905233 AA (sf) AA (sf)
B-2 XS1255412832 AA (sf) AA (sf)
C XS1238906470 A (sf) A (sf)
D XS1238907288 BBB (sf) BBB (sf)
E XS1238907791 BB (sf) BB (sf)
F XS1238907957 B (sf) B (sf)
BUSINESS MORTGAGE 3: Fitch Raises Rating on Cl. C Notes to 'BBsf'
-----------------------------------------------------------------
Fitch Ratings has upgraded nine and affirmed 21 tranches of the
Business Mortgage Finance (BMF) series.
The BMF transactions are securitizations of mortgages to small and
medium-sized enterprises and the owner-managed business community,
originated by Commercial First Mortgages Limited (CFML).
KEY RATING DRIVERS
Decreasing Arrears, Increasing Losses
The decreasing trend of late stage arrears continued in 2015. As
of November 2015, loans in arrears by three months or more, as a
percentage of the current portfolio balance, were down between
3.0pp (BMF 7) and 5.5pp (BMF 3) compared with 12 months ago. This
improving trend in late-stage arrears is reflected in the Stable
Outlooks across the series. However, Fitch recognizes that a
significant portion of the reduction is due to the sale of
properties taken into possession by CFML.
Over the same period, the cumulative balance of foreclosed
mortgages and cumulative loss values as a percentage of the
original portfolio balance, increased between 0.8pp (BMF 5) and
3.1pp (BMF4) and between 0.4pp (BMF 3) and 4.2pp (BMF 5),
respectively.
Stressed QSA Assumptions
Recovery rates across the series are lower than Fitch would expect
from the application of our standard criteria for typical non-
conforming RMBS. The weighted average recovery rates on
possession cases, where sales of underlying properties have
resulted in a loss for the issuer, span 35.0% (BMF 5) to 53.6%
(BMF 3). These observations imply a quick sale adjustment (QSA)
between 55% and 65%, compared with Fitch's criteria-defined QSA
assumptions of 25% for owner-occupied and 35% for buy-to-let
loans.
The agency believes that low recoveries are due to a combination
of originally overvalued properties, high foreclosure costs
incurred to prepare the property for sale and accrued interest due
at the time of sale. In its analysis, Fitch has increased its QSA
assumptions to reflect the level of actual recoveries across the
transactions.
Credit Enhancement Improves as Structures Deleverage
The five deals have deleveraged substantially and their current
notes' balance represent between 17% (BMF 3) and 55% (BMF 7) of
the total issuances. The resulting increase in credit enhancement
is the main driver of the upgrades of BFM 3 and the senior notes
in the rest of the series.
Weaker Performance of Later Vintages
The combination of high period losses and insufficient excess
spread has led to the full depletion of the reserve funds and to
increasing principal deficiency ledgers (PDL) in BMF 4, 5, 6 and
7. In particular, the outstanding PDLs exceed the balance of the
class C notes in BMF 5, 6 and 7 and have now reached 20%, 68% and
66% of the respective class B notes' balance.
Timely Interest on Class A Detachable Coupons (DAC)
The payments due on each of the class A DAC in BMF 5, 6 and 7 rank
pro rata and pari passu with the standard class A interest
payments (excluding step-up amounts). In Fitch's view, the fully-
funded and amortizing liquidity facility in each transaction is
adequate to cover potential shortfalls in senior fees and class A
and A DAC interest. For this reason, the DACs in the series have
been affirmed at 'AAAsf'.
RATING SENSITIVITIES
Lending standards for new SMEs loans have tightened since 2009,
reducing the possibility for financially distressed borrowers to
refinance at better terms. The easing of these rather
conservative lending policies could have a favorable effect on the
performance of the collateral as financially distressed borrowers
would have a better chance of refinancing out of the portfolio at
better economic conditions.
An increase in losses and increases in PDLs beyond Fitch's
stresses could lead to negative rating action, particularly on the
bottom end of the structures.
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
pools and the transactions. Information related to previous
county court judgment, residential properties for investment
purpose (buy-to-let) and re-mortgage loans was not included in the
loan by loan data received from CFML. The agency used the
information provided in the investor reports and applied the
foreclosure frequency adjustments as per criteria on an aggregate
basis. Fitch assumed that 50% of the re-mortgage loans were used
for debt-consolidation purpose. 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 pools ahead of the transactions' initial
closing. The subsequent performance of the transactions 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 and together with the assumptions referred to above,
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.
SOURCES OF INFORMATION
The information below was used in the analysis.
-- Loan-by-loan data provided by CFML as at November 2015
-- Transaction reporting provided by CFML as at November 2015
MODELS
The models below were used in the analysis. Click on the link for
a description of the model.
-- ResiEMEA
ResiEMEA.
-- EMEA RMBS Surveillance Model
EMEA RMBS Surveillance Model.
The rating actions are:
BMF3:
Class M notes (XS0223481838): upgraded to 'AAAsf' from 'AAsf';
off Rating Watch Positive (RWP); Outlook Stable
Class B1 notes (XS0223482307): upgraded to 'BBBsf' from 'BBsf';
off RWP; Outlook Stable
Class B2 notes (XS0223482729): upgraded to 'BBBsf' from 'BBsf';
off RWP; Outlook Stable
Class C notes (XS0223483024): upgraded to 'BBsf' from 'Bsf';
off RWP; Outlook Stable
BMF4:
Class M (XS0249508242): upgraded to 'BBBsf' from 'BBsf'; off
RWP; Outlook Stable
Class B (XS0249508754): affirmed at 'CCCsf'; off RWP; Recovery
Estimate (RE) revised to 100% from 95%
Class C (XS0249509133): affirmed at 'CCsf'; off RWP; RE revised
to 80% from 0%
BMF5:
Class A1 notes (XS0271320060): upgraded to 'AAsf' from 'A+sf';
off RWP; Outlook Stable
Detachable A1 coupon (XS0271321035): affirmed at 'AAAsf';
Outlook Stable
Class A2 notes (XS0271323163): upgraded to 'AAsf' from 'A+sf';
off RWP; Outlook Stable
Detachable A2 coupon (XS0271323676): affirmed at 'AAAsf';
Outlook Stable
Class M1 notes (XS0271324724): affirmed at 'CCCsf'; off RWP; RE
revised to 100% from 85%
Class M2 notes (XS0271324997): affirmed at 'CCCsf'; off RWP; RE
revised to 100% from 85%
Class B1 notes (XS0271325291): affirmed at 'CCsf'; off RWP; RE
revised to 70% from 0%
Class B2 notes (XS0271325614): affirmed at 'CCsf'; off RWP; RE
revised to 70% from 0%
Class C notes (XS0271326000): affirmed at 'Csf'; off RWP; RE 0%
BMF6:
Class A1 notes (XS0299445808): upgraded to 'Asf' from ' BBBsf';
off RWP; Outlook Stable
Detachable A1 coupon (XS0299535384): affirmed at 'AAAsf';
Outlook Stable
Class A2 notes (XS0299446103): upgraded to 'Asf' from ' BBBsf';
off RWP; Outlook Stable
Detachable A2 coupon (XS0299536515): affirmed at 'AAAsf':
Outlook Stable
Class M1 notes (XS0299446442): affirmed at 'CCCsf'; off RWP; RE
revised to 100% from 75%
Class M2 notes (XS0299446798): affirmed at 'CCCsf'; off RWP; RE
revised to 100% from 75%
Class B2 notes (XS0299447507): affirmed at 'CCsf'; off RWP; RE
revised to 10% from 0%
Class C notes (XS0299447846): affirmed at 'Csf'; off RWP; RE 0%
BMF7:
Class A1 notes (XS0330211359): affirmed at 'BBBsf'; off RWP;
Outlook Stable
Detachable A1 coupon (XS0330212597): affirmed at 'AAAsf';
Outlook Stable
Class M1 notes (XS0330220855): affirmed at 'CCCsf'; off RWP; RE
revised to 90% from 65%
Class M2 notes (XS0330222638): affirmed at 'CCCsf'; off RWP; RE
revised to 90% from 65%
Class B1 notes (XS0330228320): affirmed at 'CCsf'; off RWP; RE
0%
Class C notes (XS0330229138): affirmed at 'Csf'; off RWP; RE 0%
EUROCREDIT CDO: Moody's Affirms B2(sf) Rating on Class E Notes
--------------------------------------------------------------
Moody's Investors Service has upgraded the rating on the Class D
notes issued by Eurocredit CDO VIII Limited:
-- EUR29,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2020, Upgraded to A1 (sf); previously on Apr 21,
2015 Upgraded to Baa3 (sf)
Moody's has also affirmed the ratings on the following notes
issued by Eurocredit CDO VIII Limited:
-- EUR42,000,000 (Current balance outstanding: EUR10.67
million) Class C Senior Secured Deferrable Floating Rate
Notes due 2020, Affirmed Aaa (sf); previously on Apr 21, 2015
Upgraded to Aaa (sf)
-- EUR24,500,000 (Current balance outstanding: EUR12.4 million)
Class E Senior Secured Deferrable Floating Rate Notes due
2020, Affirmed B2 (sf); previously on Apr 21, 2015 Affirmed
B2 (sf)
Eurocredit CDO VIII Limited, issued in December 2007, is a multi
currency Collateralised Loan Obligation ("CLO") backed by a
portfolio of mostly high yield European senior secured loans. The
portfolio is managed by Intermediate Capital Managers Limited and
this transaction ended its reinvestment period in January 2011.
The issued liabilities are denominated in EUR, and collateral
assets are denominated in EUR and GBP, with the latter hedged by a
macro swap which has been modelled in Moody's analysis.
RATINGS RATIONALE
The upgrade to the rating on the Class D notes is primarily a
result of the improvement in Class D over-collateralization (OC)
ratio since the last rating action in April 2015. On January 2016
payment date, Class C notes were paid down by EUR17 million or 40%
of their original balance. As a result of this deleveraging, the
OC ratios have increased. According to the January 2016 trustee
report the OC ratios of Classes C, D and E are 558.36%, 150.13%
and 114.28% compared to 279.40%, 136.56%, and 112% respectively in
November 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
performing par of EUR50.1 million and GBP1.2 million, principal
proceeds balance of EUR1.3 million, EUR18 million of defaulted
assets, a weighted average default probability of 22.58%
(consistent with a WARF of 3,367 with a weighted average life of
3.83 years), a weighted average recovery rate upon default of
54.13% for a Aaa liability target rating, a diversity score of 6
and a weighted average spread of 3.68%.
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. 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.
=========
I T A L Y
=========
STEFANA SPA: April 14 Deadline Set for Irrevocable Offers
---------------------------------------------------------
The Judicial Liquidator, Dott. Pierfranco Aiardi of Stefana S.p.A.
under Composition with Creditors Procedure, with registered office
in Nave, via Bologna 19, invites the subjects interested in the
acquisition of the branch of business active in the production and
distribution of iron, steel and metallurgic products (boards,
beams, section bars, rounds, wire rods, nets and frameworks) and
in particular:
Ramo Ospitaletto, where are located the electric steel plant
and the SMS millwork plant for rounded for reinforced concrete
and where n. 196 persons are employed and composed of the
complex of assets and legal relationships organized for the
performance of such activities;
Ramo Montirone, where is located the electric steel plant and
where n. 71 persons are employed and composed of the complex of
assets and legal relationships organized for the performance of
such activities;
Ramo Nave, Via Brescia where are located the laboratories and
the millwork plant for special and mercantile profiles and
where n. 92 persons are employed and composed of the complex of
assets and legal relationships organized for the performance of
such activities;
to send irrevocable offers to purchase, which shall be received by
and no later than 12:00 p.m. of April 14, 2016, in compliance with
the provisions set out in the Regulation available (in Italian
language) on the web site www.stefana.it as well as the websites
www.astegiudiziarie.it and www.bresciaonline.it
The irrevocable offers shall be addressed to "STEFANA S.p.A. in
Concordato Preventivo", with registered office in Nave, Via
Bologna 19 and shall be received in a sealed envelope, which shall
not bear any identification mark, bearing the words "Offerta per
l'acquisto di rami d'azienda Stefana", at the office of the Notary
Mr. Mario Mistretta in Brescia, Via Malta, 7 C (telephone number
030-220320; fax 030-220786).
All the specifications related to each branch of business and all
the information on the same and their composition will be
available in the data room present in the website www.stefana.it
subject to prior execution of the "Confidentiality Agreement" to
which the indications for the consultation will follow.
For any information, the interested subjects can contact Mr. Mauro
Battistella, the lawyer of the Procedure, at the following number
+39 02-89283800 from Monday to Friday from 3:00 p.m. until
6:00 p.m.
===========
L A T V I A
===========
EXPOBANK AS: Moody's Puts 'B1' Rating on Review for Downgrade
-------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade the
B1 long-term deposit ratings, b1 baseline credit assessment (BCA)
and adjusted BCA, and Ba3(cr) long-term Counterparty Risk
Assessment of AS Expobank (Latvia), following the rating agency's
decision on March 4 to place Russia's sovereign ratings on review
for downgrade. The reduction of oil prices has triggered a
combination of fiscal pressure on the Russian government and
eroding economic conditions in the country, which Moody's
considers in Expobank's macro profile, as the majority of the
bank's deposit base originates from Russia.
Expobank's NP short term deposit rating and NP(cr) short-term CR
Assessment are unaffected by today's rating action.
RATINGS RATIONALE
The rating review reflects the fundamental shift in the credit
conditions of the global energy sector, which also underpinned
global rating actions on several oil-exporting sovereigns.
The review for downgrade of Expobank's b1 baseline credit
assessment and B1 deposit ratings takes into account: (i) the
bank's macro profile, which captures the broad operating
environment of the markets that determine the bank's business
volumes, (ii) the financial profile, which looks at the intrinsic
credit characteristics of the institution and, (iii) qualitative
adjustments reflecting non-financial factors that drive to the
soundness of the financial institution, including Moody's
assessments of the bank's business diversification and the opacity
and complexity of its business, given the high turnover of assets
and liabilities.
Expobank's macro profile of Weak+ reflects the variety of
countries from which the bank sources its business volumes. The
majority of the bank's deposits originate from Russia. During the
review period of Russia's sovereign rating, Moody's will reassess
Russia's macro profile of Weak+ and the extent to which pressure
will be exerted on Expobank's credit profile, including growth in
business volumes and top line income, overall asset risks, capital
retention capacity and strategy, and developments in funding and
liquidity. The review will include stress testing and analysis of
the bank's relative rating positioning against its global peers.
Expobank's b1 baseline credit assessment (BCA) is informed by its
macro profile, and reflects 1) the bank's high capitalization
which, while changing in value with a reported common equity
tier 1 (CET1) ratio of 44.08% at 31 December 2015 compared to
35.74% a year earlier, remains well above the 18% minimum set by
the Latvian regulator; 2) Moody's assessment of very low credit
and liquidity risk, balanced against 3) relatively unpredictable
earnings and profitability, as the bank's customer base is narrow,
consisting predominately of Russian companies with international
operations that use Expobank for such transactions as foreign
exchange, payments and money transfers. During the review Moody's
will assess the sustainability of Expobank's efforts to increase
business diversification and improve earnings stability by
introducing new products as well as expanding its customer base,
which improved profitability in 2015 with return on assets (ROA)
of 3.2% compared to 0.9% a year earlier.
WHAT COULD CHANGE THE BCA UP/DOWN
Given the review for downgrade, upward pressure on Expobank's
rating is currently limited. Over time, Moody's would consider
positioning Expobank's BCA at a higher level if the bank were to
(i) materially expand its active customer base, (ii) widen its
range of financial services, and/or (iii) diversify its ownership
structure.
Downward pressure on Expobank's BCA would likely arise from (i)
weakening of the bank's Macro Profile from current "Weak +", (ii)
heightened asset risks, iii) wider asset and liability mismatches,
and/or (iv) a reduction in the capital adequacy ratio towards the
18% minimum set by the Latvian regulator.
===========
P O L A N D
===========
* POLAND: Fin-Min Dismissed Over "Toxic" Small Lenders Comment
--------------------------------------------------------------
Pawel Sobczak at Reuters reports that Poland's prime minister has
dismissed Deputy Finance Minister Konrad Raczkowski, the finance
ministry said on March 9, over his comments that a few small
lenders were destined to fail.
"We can confirm that Raczkowski has been dismissed by the prime
minister," Reuters quotes the ministry's press office as saying.
Earlier this month, Mr. Raczkowski said that a few small Polish
lenders were "toxic" and would go bankrupt later this year,
Reuters recounts. In response, the financial regulator KNF said
the banking sector was stable and effective, Reuters relays.
===============
P O R T U G A L
===============
* Fitch Revises Outlooks on Portuguese SF Transactions to Stable
----------------------------------------------------------------
Fitch Ratings has revised the Outlook on these 18 tranches of 12
Portuguese structured finance (SF) transactions to Stable from
Positive:
-- Atlantes Mortgage No. 1 Plc, Class A notes (ISIN
XS0161394324)
-- Atlantes Mortgage No. 1 Plc, Class B notes (ISIN
XS0161394910)
-- Atlantes Mortgage No. 7 Plc, Class A notes, (ISIN
PTGAMAOM0014)
-- Gamma, STC S.A. / Atlantes Mortgage No. 3, Class A notes
(ISIN XS0395875999)
-- Gamma, STC S.A. / Atlantes Mortgages No. 4, Class A notes
(ISIN XS0412478199)
-- Lusitano Mortgage No. 1 Plc, Class A notes (ISIN
XS0159068807)
-- Lusitano Mortgage No. 1 Plc, Class B notes (ISIN
XS0159070456)
-- Lusitano Mortgage No. 2 Plc, Class A notes (ISIN
XS0178545421)
-- Lusitano Mortgage No. 2 Plc, Class B notes (ISIN
XS0178546742)
-- Pelican Mortgages No.1 Plc, Class A notes (ISIN:
XS0159861078)
-- Pelican Mortgages No.1 Plc, Class B notes (ISIN:
XS0159861409)
-- Pelican Mortgages No.2 Plc, Class A notes (ISIN:
XS0177081634)
-- Pelican Mortgages No.2 Plc, Class B notes (ISIN:
XS0177083259)
-- Sagres, STC S.A. / Douro SME No.2, Class A notes (ISIN:
PTSSCMOM0000)
-- Sagres, STC S.A. / Pelican SME No.2, Class A notes (ISIN:
PTSSCWOM0008)
-- Sagres, STC S.A. / Pelican Mortgages No.4, Class A notes
(ISIN XS0365137990)
-- Sagres, STC S.A. / Pelican Mortgages No.4, Class B notes
(ISIN XS0365138295)
-- Sagres, STC S.A. / Pelican Mortgages No.5, Class A notes
(ISIN XS0419743033)
KEY RATING DRIVERS
Sovereign Outlook
The outlook revisions follow the revision of the Outlook on
Portugal to Stable from Positive and affirmation of the sovereign
Issuer Default Rating (IDR) at 'BB+'.
Fitch maintains a six-notch differential between the sovereign IDR
and the highest achievable SF ratings. Therefore, the sovereign
Outlook revision to Stable implies a maximum achievable rating for
SF transactions in Portugal at 'A+'/Stable. This rating cap
reflects the risk of sovereign weaknesses increasing the
likelihood of extreme macro-economic events that could undermine
the performance of the securitizations.
Stable Credit Performance
The outlook revisions also reflect Fitch's expectations of stable
transaction performance and that the available credit enhancement
to the rated tranches remains compatible with the current ratings
of the notes.
RATING SENSITIVITIES
The ratings of these tranches remain principally exposed to the
sovereign and SF rating cap for transactions rated in Portugal.
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
pools and the transactions. 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 pools ahead of the transactions' initial
closing. The subsequent performance of the transactions 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.
===========
R U S S I A
===========
AVTOVAZ: Chief Executive to Step Down This Month
------------------------------------------------
Peter Campbell and Kathrin Hille at The Financial Times report
that AvtoVAZ will replace its Swedish chief executive as Russia's
largest carmaker seeks a restructuring amid falling sales and
mounting losses.
The group announced on March 7 that Bo Andersson, a former General
Motors executive who came out of retirement in 2013 to help turn
round the state-backed company, will step down later this month,
the FT relates.
According to the FT, the company said a successor, expected to be
one of the Alliance directors who already sit on AvtoVAZ's board,
would be announced following a board meeting on March 15.
Shareholders withdrew their support for Mr. Anderson as the
company prepares for its second bailout since 2009 amid pressure
to limit the fallout of its troubles for the local job market, the
FT discloses.
AvtoVAZ is the Russian automobile manufacturer formerly known as
VAZ: Volzhsky Avtomobilny Zavod, but better known to the world
under the trade name Lada.
LENTA LTD: Moody's Maintains Ba3 Corporate Family Rating
--------------------------------------------------------
Moody's Interfax Rating Agency has withdrawn the Aa3.ru national
scale corporate family rating (NSR) of Lenta Limited (Lenta).
Moody's Interfax is majority-owned by Moody's Investors Service
(MIS).
RATINGS RATIONALE
Moody's has withdrawn the rating for its own business reasons.
At the same time, MIS continues to maintain Lenta's global scale
ratings (GSR) including Ba3 corporate family rating and Ba3-PD
probability of default rating, all ratings with stable outlook.
Headquartered in St. Petersburg, Russia, Lenta is one of the
leading Russian food retailers operating a chain of hypermarkets
in Russia. Starting in 2013, the company has also been actively
developing supermarkets as its second format. In the 12-month
period ended June 2015, Lenta generated sales of approximately
$4.7 billion and adjusted EBITDA of around $558 million.
UC RUSAL: In Talks with Lenders Over Debt Covenants
---------------------------------------------------
Jack Farchy at The Financial Times reports that Rusal has
renegotiated its banking covenants and asked lenders to refinance
some of its US$8.4 billion debt pile, underlining the painful
impact of the rout in commodity prices.
The Russian aluminium group disclosed the move, which comes less
than two years after its most recent debt restructuring, in its
full-year financial statements on March 9, the FT relates.
Rusal has been battling hefty liabilities since the 2008 financial
crisis, the FT relays. In 2009, it underwent a US$17 billion
restructuring, but remained heavily indebted and was forced to
restructure its debt again in 2014, the FT recounts.
On March 9, Rusal revealed it was once again in talks with its
banks, the FT discloses. The company, as cited by the FT, said in
a note with its results statement that it had started negotiations
"to reset covenants to a sustainable level" due to "a massive
decline in LME aluminium price as well as the premiums".
It added that it had obtained consent from lenders to "reset"
covenant ratios last week, the FT relays. Rusal said it is also
"in discussion with its lenders on new refinancing facilities that
would cover most of the remaining debt repayments in 2016", the FT
notes. The company said in a presentation it has US$1.3 billion
of debt repayments due this year, according to the FT.
United Company RUSAL is the world's second-largest aluminium
producer by output.
* Moody's Reviews 12 Russian Utilities & Infrastructure GRI
-----------------------------------------------------------Moody's
Investors Service placed the ratings of 12 Russian utility and
infrastructure companies government-related issuers (GRIs) and
their subsidiaries on review for downgrade.
This action follows Moody's placement of Russia's Ba1 government
bond rating on review for downgrade on March 4, 2016.
RATINGS RATIONALE
The rating actions reflect Moody's view that a sustained sharp
fall in oil prices, which Moody's expects to remain low for
several years, will heighten risks for both Russia's economic
performance and the Russian government balance sheet in the coming
years, including the government financing options.
These developments will likely lead to further deterioration in
the operating environment for Russian utilities and infrastructure
companies, resulting in a deeper and more protracted decline in
domestic economic activity than previously anticipated.
FACTORS TO BE CONSIDERED IN THE RATING REVIEW
Moody's review for downgrade will assess each corporate's
resilience to the increased risk arising from the prevailing
negative operating conditions. In particular, Moody's will assess
the corporates' liquidity profiles in a limited domestic banking
system liquidity scenario and restricted access to foreign
finance.
In addition, Moody's will also consider the need for adjustments
of its assumptions regarding the Russian government's willingness
and ability to provide support to infrastructure and utility
companies in the event of need. While Russia's fiscal buffers
(including the government's savings funds) remain substantial,
these funds may be stretched in view of expected lower real
economic growth and potential growth of calls on these funds from,
in particular, the Central Bank to cover future external debt
payments and/or to support the banking industry. For regulated
utilities and infrastructure companies, Moody's will assess the
linkage among the government's tariffs decisions in the context of
prolonged low oil price environment and companies' investment
programs and profitability.
The rating review is expected to be completed within two months.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Moody's believes there is little likelihood of any upward rating
pressure for the utilities and infrastructure companies covered by
today's action, unless operating conditions improve materially.
Confirmation of ratings could be considered if the sovereign
rating of Russia is confirmed at Ba1 following the sovereign
review and there is no material deterioration in operating and
financial condition or companies-specific factors.
Conversely, negative pressure would be exerted on all the ratings
if (1) the sovereign rating review resulted in a downgrade of
Russia's sovereign rating; and/or (2) there are negative changes
in the probability of the Russian government providing
extraordinary support to issuers in the event of financial
distress.
In addition, downward pressure on individual companies' ratings
could develop for the following reasons:
The rating agency could downgrade Transneft's ratings if the
challenging operating environment in Russia were to lead to a
significantly weaker financial profile and increasing constraints
on liquidity.
Negative pressure on Atomenergoprom's ratings could develop if the
company's financial profile deteriorates, reflected in a
debt/EBITDA ratio above 3x, Funds From Operations (FFO) interest
coverage below 5.0x and Retained Cash Flow (RCF)/debt below 25%
materially on a continued basis. In addition, the lack of adequate
liquidity could put pressure on the company's rating, and downward
pressure could also develop if the company's key subsidiaries see
their share of external debt materially exceeding 20% of total
debt on a permanent basis.
Negative pressure on FGC's rating could result from (1) a
sustainable negative shift in the regulatory regime and
significantly deteriorating margins; (2) a failure of the company
to manage its investment program in line with the tariff
regulation and contain a deterioration of its financial profile,
with FFO interest coverage and FFO/net debt falling materially and
persistently below 3.5x and 25%, respectively; and (3) pressured
liquidity.
Downward pressure on RusHydro's ratings could rise if there is a
negative shift in the regulatory and market framework or if the
company fails to limit deterioration of its financial profile,
reflected in a debt-to-EBITDA ratio significantly above 3x and
funds from operations interest coverage significantly below 5x and
on sustained basis. The company's inability to maintain adequate
liquidity could also put pressure the rating.
Downward pressure on Inter RAO's ratings could develop if there
were a negative shift in the regulatory and market framework and
the company failed to limit a deterioration of its financial
profile, reflected in FFO interest coverage below 5.0x, RCF/debt
below 30% and debt/EBITDA above 3x significantly and on a
permanent basis. Furthermore, negative pressure could be exerted
on the rating if the company were unable to proactively address
its liquidity needs and maintain reasonable headroom under the
financial covenants of its bank agreements.
Downward pressure on ROSSETI's rating could result from (1) a
negative shift in regulatory regime without compensatory measures
by the state leading to significantly deteriorating EBITA margin
to below 10%; (2) pressured liquidity; and/or (3) a failure to
manage its investment program in line with the tariff regulation
and contain deterioration of its financial profiles, with FFO
interest coverage and FFO/net debt falling materially and
persistently below 3.0x and 20%.
The rating of NCSP is likely to be downgraded if (1) there is the
increasing likelihood of transformational changes to ownership and
business structure of NCSP with uncertain or negative consequences
for NCSP's credit quality; (2) NCSP's financial profile were to
deteriorate, with FFO interest cover and the ratio of FFO to debt
trending towards below 3x and 15%, respectively; (3) NCSP's
liquidity were to deteriorate.
Downward pressure on the ratings of MOESK's, Lenenergo's, IDGC of
Center and Volga Region's, IDGC of Urals', IDGC of Volga's could
result from (1) weakening support from state-related shareholder
ROSSETI; (2) a negative shift in the regulatory and market
framework; and (3) companies' failure to manage their investment
programs in line with the tariff decisions resulting in a
deterioration of their financial profile, margins and liquidity.
Downgrade pressure on MOESK and Lenenergo's rating could also
result from deterioration of their financial profiles, with FFO
interest coverage falling materially and persistently below 3.5x
and FFO/net debt falling below 20%.
Downward pressure on the ratings of IDGC of Center and Volga
Region, IDGC of Volga and IDGC of Urals could develop if their
financial profiles weaken going forward with total FFO interest
coverage falling materially and persistently below 4.0x and
FFO/net debt below the mid-twenties in percentage terms. Inability
to timely address liquidity needs could negatively influence the
rating as well.
LIST OF AFFECTED RATINGS
Atomenergoprom, JSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba1-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba1
Federal Grid Finance Limited
-- Senior Unsecured Medium-Term Note Program, Placed on Review
for Downgrade, currently (P)Ba1
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently Ba1
FGC UES, JSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba1-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba1
IDGC of Center and Volga Region, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
IDGC of Urals, JSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
IDGC of Volga, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
Inter RAO, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
Lenenergo, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
MOESK, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
Novorossiysk Commercial Sea Port, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba3-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba3
OAO AK Transneft
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba1-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba1
ROSSETI, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
RusHydro, PJSC
-- Probability of Default Rating, Placed on Review for
Downgrade, currently Ba2-PD
-- Corporate Family Rating, Placed on Review for Downgrade,
currently Ba2
TransCapitalInvest Limited
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently Ba1
Fully controlled by the Russian government (the latter owns 100%
of its voting shares), OAO AK Transneft (Transneft) is the largest
crude oil transportation company in the world. 2014 reported sales
reached around RUB611.3 billion, or $10.9 billion (net of revenues
from crude oil supplies to China, which are mirrored by the oil
purchase costs, under 2009-dated $10 billion, 20-year loan-for-oil
deal).
JSC Atomenergoprom (Atomenergoprom) is the holding company for
numerous subsidiaries which represent the civil Russian nuclear
industry. The group generated revenue of RUB498.8 billion (around
$8.9 billion) in 2014. 100% of Atomenergoprom's voting shares are
owned by the Russian government through the State Atomic Energy
Corporation Rosatom (Rosatom).
PJSC RusHydro (RusHydro) is Russia's largest and a world major
hydropower business, accounting for around a half of hydropower
output in Russia, majority (66.84% as of June 30, 2015) owned by
the Russian government. As of end-2014, RusHydro generates revenue
of RUB329.6 billion (around $5.9 billion).
PJSC Inter RAO (Inter RAO) is a Russian major electric utility
engaged in thermal electricity generation and retail electricity
sales in Russia, cross-border electricity trading and electric
utility operations abroad. Inter RAO generated revenue of RUB805.3
billion ($13.2 billion) in 2015. Inter RAO is controlled by the
Russian government through several state-controlled entities (own
over 50.00% of the company as of December 31, 2015).
JSC Federal Grid Company of Unified Energy System (FGC UES, or
FGC) is the monopoly electricity transmission system operator in
the Russian Federation. The company's revenues, amounted to
RUB173.4 billion (around $3.1 billion) in 2014 (other operating
income of RUB8.2 billion, primarily from non-core activities, is
not included). FGC is 80.13% owned by state-owned JSC ROSSETI.
PJSC ROSSETI (ROSSETI) is the holding company for the national
transmission grid (FGC UES) and 15 distribution grid subsidiaries
(including MOESK, PJSC; Lenenergo, PJSC; IDGC of Urals, JSC; IDGC
of Volga, PJSC; IDGC of Center and Volga Region, PJSC). As of 31
December 2015 Russian government owns a 86.32% of ordinary shares
and 7.01% of preferred shares in ROSSETI. As of the end-2014 the
company generates revenue of around RUB759.6 billion (around $13.5
billion).
PJSC Novorossiysk Commercial Sea Port (NCSP) and its subsidiaries
represent Russia's largest stevedore. NCSP is 50.1%-owned by
Novoport Holding Ltd. The Russian government owns a 20% stake in
NCSP and the "golden share". In 2014, NCSP generated revenue of
$955.6 million.
* Moody's Reviews Ratings on 10 Russian Sub-Sovereigns
------------------------------------------------------
Moody's Investors Service, placed on review for downgrade the
ratings of 8 Russian regional and local governments (RLGs) and 2
government-related issuers (GRIs). It has affirmed the ratings of
11 Russian regions and cities and will withdraw the ratings of 1
region.
These rating actions follow the potential weakening of Russia's
credit profile as captured by Moody's placement of Russia's Ba1
government bond rating on review for downgrade on March 4, 2016.
Specifically, Moody's has placed on review the ratings of the
cities of Moscow and St. Petersburg, SUE Vodokanal of St.
Petersburg, OJSC "Western High-Speed Diameter", Republic of
Bashkortostan, Republic of Tatarstan, Autonomous-Okrug (region) of
Khanty-Mansiysk, Oblast of Moscow, Oblast of Omsk and Republic of
Mordovia.
Concurrently, Moody's has affirmed the ratings with negative
outlooks of Oblast of Samara, Chuvashia Republic, Krasnoyarsk
Krai, Krasnodar Krai, Republic of Komi, Oblast of Nizhniy
Novgorod, City of Krasnodar, City of Volgograd, City of Omsk,
Oblast of Belgorod and Oblast of Vologda. Moody's will withdraw
the rating of Oblast of Vologda due to insufficient information.
RATINGS RATIONALE
-- RATIONALE FOR RATING REVIEW OF 8 RLGs' AND 2 GRIs' RATINGS
The rating review on the ratings of the City of Moscow and the
City of St. Petersburg follows the potential weakening of Russia's
credit profile. It reflects the strong linkages between the
Russian government and these RLGs through institutional, financial
and macroeconomic linkages as well as their lack of special
status, which prevents them from being rated above the sovereign.
The review on the ratings of Republic of Bashkortostan, Republic
of Tatarstan, Autonomous-Okrug (region) of Khanty-Mansiysk and
Oblast of Moscow reflects their susceptibility to an increase in
systemic pressures and a certain probability that in response to
the drop in oil prices the central government could adopt policy
changes which would negatively affect these regions (e.g. a
significant decline in transfers, change in the tax regime
affecting their key tax payers, a change in its stance on
government support).
The rating review on the ratings of Oblast of Omsk and Republic of
Mordovia reflects their significant susceptibility to an increase
in systemic pressures relative to their rating category. These
regions have: 1) significant dependence on federal government
financing (Republic of Mordovia) or 2) potential dependence on on-
going and extraordinary support (Oblast of Omsk) incorporated in
the ratings.
The review of the issuer ratings of SUE Vodokanal of St.
Petersburg and senior unsecured rating of OJSC Western High-Speed
Diameter reflects their status as GRIs fully owned by the St.
Petersburg government and their strong credit linkages with the
City of St. Petersburg.
The rating review of OJSC Western High-Speed Diameter's bond
rating reflects its link with the City of St. Petersburg and the
guarantee that the Russian government provides on its bond
principal payments.
-- RATIONALE FOR AFFIRMATION OF 8 REGIONS' AND 3 CITIES' RATINGS
WITH NEGATIVE OUTLOOKS
The affirmation of the ratings with negative outlooks of 11 RLGs
(Oblast of Samara, Chuvashia Republic, Republic of Komi, Krasnodar
Krai, Krasnoyarsk Krai, Oblast of Belgorod, Oblast of Nizhniy
Novgorod, Oblast of Vologda, City of Krasnodar, City of Omsk and
City of Volgograd) reflects their relative resilience to a modest
increase in systemic pressure, which will enable them to preserve
the credit standing adequate for their rating categories. Pressure
from refinancing risks has partially abated as soft loans from the
central government continue to ease the regions' refinancing
needs. Debt affordability remains adequate and is supported by
ongoing lending from state-owned banks.
At the same time, the negative outlooks continue to reflect
intensifying pressure on revenue growth for these entities, while
growing expenses (albeit at a slower pace) will make it
challenging to maintain balanced budgets, and will likely cause
their debt burdens to increase. Financial markets which lack
stability and higher borrowing costs expose regions to some
refinancing and liquidity risks.
-- RATIONALE FOR OBLAST OF VOLOGDA RATINGS WITHDRAWAL
Moody's will withdraw the ratings on Oblast of Vologda because of
inadequate information to monitor the rating, due to the issuer's
decision to cease participation in the rating process.
The regional government has not communicated any additional
information to Moody's since February 2015. At the same time, the
publicly available information is not sufficient to analyse the
refinancing risks and budgetary performance, and to make reliable
assumptions about future performance.
FOCUS OF THE REVIEW FOR DOWNGRADE FOR 8 RLGs AND 2 GRIs
The review will focus on the impact of growing systemic risks and
the deteriorating operating environment on Russian regions, as
reflected by the potential weakening of Russia's credit profile as
captured by the placement on review for downgrade of the sovereign
bond rating. The conclusion of the review would likely follow the
conclusion of the review at the sovereign level.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Given the review for downgrade on the ratings of 8 RLGs and 2
GRIs, an upgrade of their ratings is unlikely. If systemic
pressures abate, the ratings are likely to be confirmed, provided
the RLGs and the GRIs continue to maintain performances adequate
for their rating category.
A weakening in the sovereign's credit quality would exert a
downward pressure on the ratings of the issuers which have their
ratings under review, especially on the ratings of the City of
Moscow, the City of St. Petersburg, Oblast of Omsk and Republic of
Mordovia as well as for the two GRIs. Mounting pressure from
systemic risks would also negatively affect the ratings of another
4 regions whose ratings are on review for downgrade, especially if
accompanied by Russian government policy changes that negatively
affect their credit standing.
For regions with negative outlooks, upward rating pressure is
unlikely over the medium term. The outlooks could stabilize
following improvements in their performance leading to the
stabilization of their debt burden and a decline in refinancing
risks, absent an increase in systemic pressures. Deterioration in
their credit profiles reflected in weak budgetary performances,
growing debt and increasing refinancing risks could exert downward
pressure.
LIST OF AFFECTED RATINGS
-- THE RATINGS OF THE FOLLOWING 10 ISSUERS PLACED ON REVIEW FOR
DOWNGRADE
Moscow, City of: issuer rating and backed senior unsecured rating
of Ba1 placed on review for downgrade.
St. Petersburg, City of: issuer rating and senior unsecured rating
of Ba1 placed on review for downgrade.
SUE Vodokanal of St. Petersburg: issuer rating of Ba2 placed on
review for downgrade.
OJSC Western High-Speed Diameter: backed senior unsecured rating
of Ba3 placed on review for downgrade.
Bashkortostan, Republic of: issuer rating of Ba2 placed on review
for downgrade.
Tatarstan, Republic of: issuer rating of Ba2 placed on review for
downgrade.
Khanty-Mansiysk AO: issuer rating of Ba2 placed on review for
downgrade.
Moscow, Oblast of: issuer rating of Ba2 placed on review for
downgrade.
Omsk, Oblast of: issuer rating of Ba3 placed on review for
downgrade.
Mordovia, Republic of: issuer rating and senior unsecured rating
of B2 placed on review for downgrade.
-- THE RATINGS OF THE FOLLOWING 11 ISSUERS WERE AFFIRMED WITH
NEGATIVE OUTLOOK
Samara, Oblast of: issuer rating of Ba3 affirmed, outlook
negative.
Chuvashia, Republic of: issuer rating and senior unsecured rating
of Ba3 affirmed, outlook negative.
Komi, Republic of: issuer rating of B1 affirmed, outlook negative.
Krasnodar, Krai of: issuer rating and senior unsecured rating of
B1 affirmed, outlook negative.
Krasnoyarsk, Krai of: issuer rating of B1 affirmed, outlook
negative.
Belgorod, Oblast of: issuer rating and senior unsecured rating of
B1 affirmed, outlook negative.
Nizhniy Novgorod, Oblast of: issuer rating of B1 affirmed, outlook
negative.
Krasnodar, City of: issuer rating of B1 affirmed, outlook
negative.
Omsk, City of: issuer rating of B1 affirmed, outlook negative.
Vologda, Oblast of: issuer rating of B2 affirmed, outlook
negative. Ratings will be withdrawn.
Volgograd, City of: issuer rating of B2 affirmed, outlook
negative.
The specific economic indicators, as required by EU regulation,
are not available for these entities. The following national
economic indicators are relevant to the sovereign rating, which
was used as an input to this credit rating action.
Sovereign Issuer: Russia, Government of
GDP per capita (PPP basis, US$): 24,449 (2014 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): -3.7% (2015 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 13.5% (2015 Actual)
Gen. Gov. Financial Balance/GDP: -3.5% (2015 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: 5% (2015 Actual) (also known as
External Balance)
External debt/GDP: 39% (2015 Actual)
Level of economic development: Moderate level of economic
resilience
Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.
On March 4, 2016, a rating committee was called to discuss the
ratings of the Russian sub-sovereign entities. The main points
raised during the discussion were: The systemic risk in which the
issuers operate has materially increased.
=========
S P A I N
=========
VIESGO GENERACION: S&P Revises Outlook to Stable & Affirms B+ CCR
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on Spanish
power utility Viesgo Generacion SLU (formerly known as E.ON
Generacion) to stable from positive. S&P also affirmed its 'B+'
long-term corporate credit rating on the company.
At the same time, S&P affirmed its 'B+' issue rating on the
group's senior secured debt, comprising a EUR275 million loan and
a EUR40 million loan, which consists of a EUR20 million revolving
credit facility (RCF) and a EUR20 million guarantee facility. The
recovery rating remains '3', reflecting S&P's expectation of
meaningful recovery (in the lower half of the 30%-50% range) in
the event of a payment default.
The rating actions follow S&P's sector review of European non-
regulated utilities as a result of falling power prices since the
beginning of 2016. The outlook revision reflects S&P's view that
Viesgo Generacion's potential for debt reduction is weaker than
S&P previously expected. Although Spanish power prices are more
correlated with weather conditions than with commodity prices
compared to central Europe -- because of its specific geography
and the contribution of renewables to its energy mix -- S&P
expects Viesgo Generacion's EBITDA, once the benefit of the hedges
currently in place falls away, will decline markedly. The
affirmation reflects that S&P assess Viesgo Generacion's business
risk profile as weak and its financial risk profile as aggressive.
In S&P's opinion, Viesgo Generacion's weak business risk profile
reflects the group's limited size, with low market shares; its
asset concentration and related risks of unplanned outages (with
heavy reliance on two plants, accounting for about 80% of EBITDA
generation); its exposure to the challenging and oversupplied
Spanish power generation market; and the average-to-weak
positioning of its asset portfolio. S&P also factors in earnings
volatility that stems from the group's inherent exposure to
commodity prices and, to a lesser extent, hydrology risks, along
with its full exposure to merchant activities. In addition, one
of the two coal generation plants that is located in Puente Nuevo,
in the south of Spain, is relatively aged and due to be
decommissioned by 2019.
Mitigating these risks are the company's positive positioning and
track record of its hydro generation portfolio, the favorable
positioning of the Los Barrios coal plant, the group's prudent
hedging policy, and its balanced and diversified portfolio by fuel
mix that provides some hedging against fluctuating commodity
prices. S&P also considers that the high level of coal
inventories and pending receivables from both customers and the
Spanish power regulator will support the group's cash flows in the
next two to three years. Furthermore, S&P factors in Viesgo
Generacion's ability to source material cash flow streams from
ancillary services paid by the grid operator, which could partly
mitigate swings in earnings. At this stage, S&P do not factor
into its base case any reduction in the ancillary services income
received by the group, but S&P believes that a review of such
regulatory distribution could impair the group's cash flow
profile.
Viesgo Generacion's aggressive financial risk profile, in S&P's
view, incorporates the group's high debt, due to the pronounced
size of the shareholder loan, which S&P considers as debt. S&P
also adjusts group debt for pensions and asset retirement
obligations. This results in a Standard & Poor's-adjusted debt-
to-EBITDA ratio for the period 2016-2018 above 10x (above 1.5x
excluding the shareholder loan). However, S&P sees the cash flow
metrics, and notably cash interest cover metrics, as being in line
with S&P's expectations for an aggressive financial risk profile.
S&P notes that the loan documentation prevents any shareholder
distribution until the end of 2016. S&P also takes into account
Viesgo Generacion's positive free cash flow generation, as well as
S&P's anticipation of cash inflows from the supply activities (up
to EUR50 million as the supply business is an excluded subsidiary)
and decreasing coal inventories, which will support debt
reduction.
Moreover, S&P acknowledges the shareholders' investment policy of
having a long-term investment period on generation assets and
maintaining relatively low leverage (debt to EBITDA before
adjustments). S&P also understands there is little economic
incentive for the shareholders to separate the assets or to
increase debt going forward.
The stable outlook reflects S&P's view that overall low power
prices in Spain throughout our rating horizon will limit Viesgo
Generacion's potential for reducing debt, but that this is partly
mitigated by the group's fairly supportive shareholder
distribution policy, which includes cash interest paid on the
shareholder loan. S&P believes Viesgo Generacion will maintain an
FFO cash interest coverage ratio of above 2.0x and see this as
commensurate with the current rating.
S&P could lower the rating if it sees a delay in the payment of
CNMC receivables or if Viesgo Generacion's FFO cash interest
coverage ratio falls below 2.0x. This could happen, for example,
as a result of potential operational difficulties at one of its
key plants, adverse regulatory reforms affecting the payment of
ancillary services, or a further decrease in clean dark spreads
(the difference between the power price and the prices of coal and
carbon), combined with the still-weak environment for combined
cycle plants. S&P would also lower the rating as a result of
aggressive shareholder distribution policy.
S&P could upgrade Viesgo Generacion if S&P sees strengthening of
its cash coverage metrics, notably FFO cash interest coverage
sustainably well above 4.0x. An upgrade also hinges on
sustainable operating performance, notably with regards to EBITDA
generation, barring any negative developments on payment of
receivables, ancillary services, or as the group's currently
credit supportive financial policy.
===========================
U N I T E D K I N G D O M
===========================
ALKERMES PLC: S&P Lowers CCR to 'BB-', Outlook Stable
-----------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Alkermes PLC to 'BB-' from 'BB'. The outlook is stable.
At the same time, S&P lowered its issue-level rating on the
company's senior secured debt to 'BB' from 'BB+'. The recovery
rating on this debt remains '2', reflecting S&P's expectation for
substantial (70% to 90%, at the lower end of the range) recovery
in the event of default.
"The downgrade reflects our view that Alkermes' transition to a
more integrated pharmaceutical model is taking longer than we
expected and the potential scale of costs required to fully
complete the transition may be higher than we previously modeled.
It also reflects the uncertainty around Alkermes' ability to
handle these persistently elevated expenses, given the company's
limited experience at marketing its own products," said Standard &
Poor's credit analyst Maryna Kandrukhin.
At the same time, the rating continues to reflect the significant
cash balance that will cushion losses and cash outflows projected
over the next two years. However, management's willingness to
tolerate cash flow deficits for such prolonged period somewhat
weakens S&P's confidence in Alkermes' governance.
Several years ago, Alkermes began its transition toward a more
integrated pharmaceutical model under which the company would
market its own products instead of licensing them out to third
parties. S&P incorporated an expectation that SG&A and R&D costs
would temporarily increase during the transformative period to
help market Vivitrol and Aristada and advance Alkermes' late-stage
pipeline. At the same time, S&P projected that the costs would
start gradually decreasing in 2016 and stabilize at a lower level
in 2017, resulting in positive EBITDA, positive cash flow, and
leverage around 3.5x.
This transition is now taking longer and costs will likely remain
elevated over the next several years instead of going down as S&P
previously projected. S&P has revised down its base-case scenario
to reflect the increased costs resulting in negative EBITDA and
cash flows in 2016, to a lesser extent in 2017, and improving into
positive territory in 2018. S&P's base case also projects
leverage will improve to the mid-4.0x area in 2018, in contrast to
the previously projected leverage around 3.5x by the end of 2017.
S&P expects a further ramp up in Vivitrol, a treatment for alcohol
and opioid dependence, and Aristada, a treatment for
schizophrenia, combined with successful development and eventual
commercialization of Alkermes' other pipeline candidates to offset
the elevated costs by 2018. At the same time, S&P thinks there is
increased risk around the magnitude of these expenses and how
successful the pipeline will perform.
S&P's stable rating outlook on Alkermes PLC reflects S&P's
expectation that the company's 2016 revenue will grow in the
midteens area driven by continued growth in Vivitrol, Aristada and
Invega Sustenna sales. It also reflects S&P's view that Alkermes
will maintain its strong cash balance, despite S&P's expectation
of negative EBITDA stemming from increased R&D and SG&A costs.
AVENDIS GLOBAL: April 1 Proof of Debt Deadline Set
--------------------------------------------------
The Joint Official Liquidators of Avendis Global Fund Ltd. (in
Official Liquidation) intend to declare an interim dividend.
Any Creditor wishing to participate in the interim dividend must
lodge his proof of debt with the Joint Official Liquidators no
later than April 1, 2016. Failing to do so on the said date will
exclude one from the interim distribution but will not exclude one
from any subsequent distribution or the final distribution.
The Joint Official Liquidator can be reached at:
Malcolm Cohen
BDO LLP
55 Baker Street
London W1U 7EU, United Kingdom
Telephone: +44 (0) 7486 5888
BATTLE BUSINESS: Court Orders Six Bogus Cos. Into Liquidation
-------------------------------------------------------------
A network of phantom companies with reported combined assets of
over GBP13 million have been ordered into liquidation by the High
Court on grounds of public interest.
The reported assets supposedly included over GBP1.6 million in
cash, with the companies run solely as vehicles for fraud to
obtain credit by filing false accounts and other false
information.
The winding-up orders follow petitions presented by the Secretary
of State for Business, Innovation & Skills, issued following
confidential enquiries by Company Investigations, part of the
Insolvency Service.
The Court heard that all bar one of the companies were
incorporated by the same formation agent, a Jade Evans (who has
not been located), and her company, ABN Company Formations Ltd
(now dissolved). The Court also heard that over 50 other companies
had been formed by Jade Evans and utilised as part of an extensive
network of companies engaged in systematic fraud.
The investigation showed how the six companies before the Court
had common features such as inexplicable and dramatic increases in
their share capital, the appointment of fictitious officers,
identity theft, the filing of false accounts reporting significant
assets and trading, providing one another with favourable trade
references, ordering goods whatever the price quoted by the
supplier, creating websites with content usually taken from other
genuine sites, all to give the impression of a bona fide business.
The companies nevertheless had no presence at their registered
offices.
The companies targeted building trade suppliers, depriving them of
more than GBP300,000 of goods comprising cable and other
electrical goods, steel and reinforcing rods, ceramic tiles,
paint, flooring, artificial grass and computer and office
supplies.
The goods fraudulently obtained were delivered to common
addresses, one in Milton Keynes and two in Essex.
Welcoming the Court's winding up decisions, Chris Mayhew, Company
Investigations Supervisor at the Insolvency Service, said:
"The accounts and information presented by these companies
reporting them as substantial and credit-worthy businesses trading
profitably for a number of years was as false as the artificial
grass supplied to one of them.
"Each company was part of an organised operation and the goods
delivered to them without payment were swiftly collected and put
beyond reach for the benefit of those behind the companies and
those who ultimately utilised the goods stolen.
"Typically this type of fraud can inflict losses on legitimate
business of hundreds of thousands of pounds and in this instance
nearly caused a small supplier to go out of business himself
because of the loss inflicted.
"We work closely with a number of partners such as Companies House
to prevent the abuse of the corporate regime by such lack of
transparency and the Insolvency Service will investigate and bring
to a halt companies harming or about to harm legitimate business
by operating in this way."
Battle Business Services Ltd (company registration number
08529432) was incorporated on May 15, 2013. The registered office
of the company is Unit 9B Office 6, Ellough Industrial Estate,
Ellough, Beccles, Suffolk, NR34 7TD. The present sole recorded
director is a Sonny Wilson (described as a company director). No
accounts have been filed and are overdue since February 15, 2015.
The company was used as a trade referee for ostensibly unrelated
companies seeking credit.
Hydro Serv Ltd (company registration number 08408299) was
incorporated on February 18, 2013. The registered office of the
company is 20-22 Wenlock Road, London, N1 7GU (changed on 9
December 2014 from Unit 9B Office 6, Ellough Industrial Estate,
Ellough, Beccles, Suffolk, NR34 7TD). The present sole recorded
director is a Lucy Mary Masters (described as a company director).
The company's share capital on incorporation was GBP1. It was
subsequently increased to GBP80,001 comprising 80,001 ordinary
GBP1 shares all shown to be held by a Wayne Hulmes.
The company's filed accounts purport to show total assets as at
February 28, 2015 of GBP1,800,914 (including cash of GBP187,113)
and accumulated profits since incorporation of GBP1,137,802.
The company sought credit from suppliers and obtained goods of at
least GBP11,108 comprising cabling and other electrical supplies.
Neither company had permission to use the Ellough Industrial
Estate as their address.
A further company, Creative Communications (UK) Ltd (company
registration number 04834649), also shown to be based at Ellough
Industrial Estate (without permission and whose sole recorded
director from June 4, 2013 was once more shown to be a Sonny
Wilson), was ordered into liquidation on June 29, 2015 on the
petition of HMRC in respect of returned and assessed VAT and
interest totalling GBP115,403.
According to the accounts of Creative Communications (UK) Ltd,
filed after the appointment of the person calling himself Sonny
Wilson, the company's total assets as at July 31, 2013 were
reportedly GBP834,282 (previous year GBPnil) including cash of
GBP146,753 with a profit for the year of GBP219,853.
A further company, Midas People Ltd (company registration number
08380698), also shown to be based at Ellough Industrial Estate
without permission, was ordered into liquidation on 11 May 2015 on
the petition of an invoice financing company.
According to the accounts of Midas People Ltd, filed at a time
when the company had no recorded officers, the company's total
assets as at January 31, 2014 were reportedly GBP1,387,854
(including cash of GBP155,330) with a profit for the year of
GBP1,008,498.
Midas People Ltd sought credit from suppliers and obtained goods
of at least GBP132,717 comprising cabling and other electrical
supplies, flooring, ceramic tiles, steel and wire rods.
Winnington Marketing Ltd (company registration number 08369009)
was incorporated on January 21, 2013. The registered office of the
company is 1 Royal Exchange, Royal Exchange Avenue, London, EC3V
3LT. The present sole recorded director is a Patricia Williams
(described as retired).
The company's share capital on incorporation was GBP1. It was
subsequently increased to GBP250,000 comprising 250,000 ordinary
GBP1 shares all shown to be held by an Amie Mock.
The company's filed accounts purport to show total assets as at
January 31, 2014 of GBP2,942,962 (including cash GBP231,000) and a
profit for the year of GBP2,942,962.
The company operated a website, www.winnington-marketing.com
The company sought credit from suppliers and obtained goods of at
least GBP42,405 comprising cabling and other electrical supplies,
paint and timber.
Unique Wholesale Ltd (company registration number 08378144) was
incorporated on January 28, 2013. The registered office of the
company is 145-157 St Johns Street, London, WC1V 4PW. The present
sole recorded director is a Graham Flemming (described as a
company director).
The company's share capital on incorporation was GBP2. It was
subsequently increased to GBP49,000 comprising 49,000 ordinary
GBP1 shares all shown to be held by the person calling himself Mr.
Flemming.
The company's filed accounts purport to show total assets as at
January 31, 2014 of GBP1,459,136 (including cash of GBP279,123)
and a reported turnover of GBP3,658,301 and profit of GBP745,832.
The company sought credit from suppliers and obtained goods of at
least GBP40,562 for the supply of artificial grass and ceramic
tiles.
Zen IT Ltd (company registration number 08409473) was incorporated
on February 19, 2013. The registered office of the company is Unit
9B Office 6, Ellough Industrial Estate, Ellough, Beccles, Suffolk,
NR34 7TD. Again, the company did not have permission to use this
address.
The company's share capital on incorporation was GBP1. It was
subsequently increased to GBP75,000 divided into 75,000 ordinary
shares of GBP1 each all shown to be held by a Lester Phillip.
The present sole recorded directors are a Tommy McAvoy (described
as a company director) and a Lester Philip (described as a sales
director).
The company's filed accounts purport to show total assets as at
August 31, 2014 of GBP1,380,374 (up from GBP221,200 as at February
28, 2014), including cash of GBP289,657 and accumulated profits
since incorporation of GBP893,819.
The company operated a website, www.zen-it-ltd.com
The company sought credit from suppliers and obtained goods of at
least GBP27,141 for the supply of computer equipment and office
supplies.
3D Media Ltd (company registration number 08378872) was
incorporated on January 29, 2013. The registered office of the
company is 20-22 Wenlock Road, London, N1 7GU (changed on 28
October 2015 from Unit 21, Nobel Square, Burnt Mills, Basildon,
Essex, SS13 1DY). The present sole recorded director is a Nigel
Weekes (described as a company director).
The company's share capital on incorporation was GBP1. It was
subsequently increased to GBP10,000 comprising 10,000 ordinary
shares of GBP1 each all shown to be held by a Hardev Singh Degan.
The company's filed accounts purport to show total assets as at
June 30, 2015 of GBP3,415,689 (including cash GBP360,100) and a
reported turnover since incorporation of GBP8,492,978 with
accumulated profits of GBP2,507,926.
The company operated a website, www.3d-media-uk.com
The company sought credit from suppliers and obtained goods of at
least GBP49,089 for the supply of cable and other electrical
supplies.
The petitions to wind up the 6 companies in the public interest
were each presented on November 5, 2015. The petition issued
against Unique Wholesale Ltd was supported by a supplier of
artificial grass owed GBP31,034.
The public interest ground for winding up the 6 companies was
primarily that they were being used as vehicles for the commission
of fraud.
In ordering Battle Business Services Ltd, Hydro Serv Ltd,
Winnington Marketing Ltd, Unique Wholesale Ltd, Zen IT Ltd and 3D
Media Ltd into liquidation on grounds of public interest on
February 23, 2016, Mr. Registrar Briggs said:
" . . . all six companies before me are connected . . . all bar
one of the companies were formed by a Jade Evans and her former
company ABN Company Formations Ltd . . . the dealings by these
companies are essentially a fraud on the public . . . a company
was formed, soon after directors were appointed who could not be
located, minimal share capital was shown to then increase
substantially and accounts were filed showing substantial assets
and a very healthy financial and credit worthy position . . . one
of the companies, Battle Business Services, hasn't filed accounts
and its sole purpose was to provide references for the other
companies that they were credit worthy . . . those suppliers who
sought to trade with these companies were lulled into a falsehood
that they would be paid in the normal course of trading with a
credit worthy purchaser . . . the companies were not credit worthy
because of the manipulation of the accounts presented . . . credit
was falsely obtained and goods were supplied . . . once delivered
they have not been recovered and no payment has been made . . .
the investigation can only be described as thorough and has
enabled me to conclude that unless action is taken there is a risk
to the public from the activities of these companies . . . none of
the companies appears today and the allegations against them are
unopposed . . . the petition against one of the companies, Unique
Wholesale, is supported by a creditor owed some GBP31,000 . . .
Counsel for the supporting creditor has informed me that the goods
supplied comprised artificial grass . . . I am satisfied that the
companies demonstrate a complete lack of commercial probity and it
is in the public interest for these companies to be wound up . . .
it strikes me there is strong evidence of fraud . . . in my
judgment, it is just and equitable to wind up these companies and
I do so order."
After delivering his damning judgment, Mr. Registrar Briggs
commended the investigators Kenneth Grant and Joe Peacock for the
thoroughness of their investigation.
BHS GROUP: KPMG Prepares CVA Proposal, March 23 Vote Set
--------------------------------------------------------
Chris Warmoll at Accountancy Age reports that BHS is set to enter
into a company voluntary arrangement (CVA) in a bid to slash its
rent bill and save it from entering administration.
KPMG, recently engaged by the retailer to explore a number of
options to shrink its store empire over its "unsustainable" rents,
has now prepared a CVA proposal for BHS Limited and BHS Properties
Limited, Accountancy Age relates.
Will Wright -- will.wright@kpmg.co.uk -- restructuring partner at
KPMG and proposed "supervisor" of the CVA, as cited by Accountancy
Age, said: "For almost 90 years, BHS has been one of the most
iconic brands on the UK high street, but in recent years has seen
its profitability decline as it has sought to respond to changing
customer behaviors, increased competition and the rise in omni-
channel retailing.
"[Wednes]day's CVA proposals are one facet of a wider turnaround
plan, and specifically tackle one of the business' largest fixed
costs, the onerous lease arrangements across its UK-wide store
portfolio.
"While the company's store estate is located across favorable
retail locations, a number of these leases are unsustainable,
predicated on terms which were originally negotiated some decades
ago. With the support of its lenders, shareholders and landlords,
the company will be able to reshape its debt and operational
structure to a model more suited to today's multi-channel retail
environment. The company needs to secure at least 75% creditor
approval for these CVAs."
According to Accountancy Age, the CVA proposes to divides BHS's
164 store portfolio into three main categories, based on the
commercial viability and strategic importance of each site.
KPMG says it will spend the next three weeks locked in talks with
creditors to ensure they understand all the details of the
proposal, Accountancy Age relays. The creditors will be able to
vote on the CVA on March 23, 2016, Accountancy Age discloses.
Around 150 jobs from its 450-strong head office have been placed
into consultation, while some 200 management positions are
believed to be under review, Accountancy Age notes.
Collapse
According to Business Sale Report's Dominic Pollard, BHS has
warned creditors that they stand to lose as much as GBP1.3 billion
if the embattled retailer cannot find a solution to its spiralling
debts within three weeks.
In the BHS-proposed CVA filed at the High Court recently, it was
revealed that the distressed business has a pensions blackhole of
around GBP571 million, Business Sale Report relates.
BHS also owes around GBP517 million to the commercial property
landlords of its 164 stores up and down the country, Business Sale
Report discloses. The CVA document reveals that, if nothing
drastic happens, the retailer will not be able to trade beyond
March 25, 2016, when its rent payments are due, Business Sale
Report states.
The document also sets out three alternatives: acceptance of the
CVA, an administration period to recover some losses, or that the
company would enter liquidation with unpaid debts of GBP1.3
billion, Business Sale Report relays.
BHS is a department store chain.
BIKERS MOTORCYCLES: PKF Seeks Buyers For Motorcycle Dealer
----------------------------------------------------------
Insider Media reports that insolvency specialists are seeking a
buyer for a Derbyshire motorbike dealer which has gone into
administration due to working capital pressure.
Tyrone Courtman -- tyronec@pkfcooperparry.com -- and Lee
Brocklehurst -- leeb@pkfcooperparry.com -- of PKF Cooper Parry
have been appointed joint administrators and the company continues
to trade, the report discloses.
According to the report, Mr. Courtman said he is "confident" of
finding a buyer for Bikers.
"Bikers Motorcycles is an award-winning local company with a team
of trained and dedicated staff," the report quotes Mr. Courtman as
saying.
"This is a fantastic opportunity for someone to purchase a
business which has fallen on hard times, but has continued to
provide wonderful services to the large biking community in the
region.
"We have already received several expressions of interest in the
business which we are currently pursuing."
Family-owned Bikers Motorcycles Ltd has been trading for 15 years
and has dealerships in Swadlincote and Clay Cross.
LA HAULAGE: Goes Into Liquidation, Owes GBP296,000
--------------------------------------------------
Commercial Motor News reports that LA Haulage & Plant Hire, a West
Midlands haulier and construction equipment leasing firm, has
entered liquidation owing an estimated GBP296,000 to creditors.
LA Haulage & Plant Hire made an agreement to voluntarily close
when it met insolvency practitioners earlier this month, according
to Commercial Motor News.
It was incorporated in 2012 but encountered difficulties and
avoided a compulsory strike off from the official register, the
report relays.
In November 2015, Her Majesty's Revenue and Custom petitioned to
wind up the business at London's High Court, the report recalls.
The Office of the Traffic Commissioner records show it had an
O-license for six HGVs and one trailer under director Teresa
Hill's name, the report says.
Papers filed at Companies House show that an estimated GBP33,000
is owed to trade and expense creditors, the report adds.
MIRANDA MEDIA: Goes Into Compulsory Liquidation Over Tax Debts
--------------------------------------------------------------
Chris Warmoll at Accounting Age reports that Firebrand politician
George Galloway's company Miranda Media has gone into compulsory
liquidation with tax debts of GBP100,000.
Accounting Age relates that the London mayoral hopeful who founded
the company in 2007, used the firm to process his earnings from
London-based Iranian state TV channel, Press TV.
According to the report, Nick Nicholson --
nick.nicholson@haslers.com -- head of insolvency at Haslers, the
Loughton-based accountancy outfit, who specialises in the
identification and recovery of assets into insolvent estates, said
his firm had spent around GBP25,000 investigating the matter.
He confirmed a report in the Telegraph that Miranda Media had
entered into compulsory liquidation owing GBP100,284.76 to HMRC
and had taken the company to court over the matter, the report
says.
Citing documents filed at Companies House, Accounting Age says
that in May 2013, Mr. Galloway resigned as Miranda's director.
Accounting Age notes that the four-times married Scotsman, dubbed
"Gorgeous George", has briefed lawyers to negotiate with the
liquidators.
Mr. Galloway, who in 2005 -- on a Respect Party ticket -- defeated
Oona King, the incumbent Labour MP for Bethnal Green and Bow -- by
just 823 votes, disputes the GBP100,000 figure, suggesting the
amount is nearer GBP40,000, adds Accounting Age.
WINTERHILL LARGO: Goes Into Administration
------------------------------------------
Lindsey Cooper, Chris Ratten and Graham Bushby of RSM
Restructuring Advisory LLP have been appointed Joint
Administrators of asset valuation and debt recovery specialist
Winterhill Largo Ltd and several affiliates.
The appointment, which was made on February 26, covers the
following companies:
Winterhill Largo Ltd
Largo Collections Ltd
Winterhill Property Ltd
Winterhill Receivables and ABL Services Ltd
Winterhill Asset Ltd
Lindsey Cooper, RSM partner and one of the Joint Administrators
said: "We are currently working to find purchasers for the various
business streams in order to maximize returns to creditors."
Winterhill Largo, which is headquartered in Blackburn, was formed
in February 2010 as a result of the merger of the Winterhill and
Largo businesses. The company, which provides professional
services to banks, insolvency practitioners, asset based lenders
and other public and private funding organisations employs around
25 staff across the country including in its offices in Leeds,
Manchester and London.
* UK: HMRC Makes Insolvency Process Harder for Businesses
---------------------------------------------------------
Over half (54%) of insolvency practitioners believe that HMRC
makes it harder to rescue businesses than wind them up, according
to a survey of the insolvency profession by R3, the insolvency
trade body.
On top of that, nearly three-in-four (71%) insolvency
practitioners say that HMRC has made the insolvency process harder
to manage in the last few years. Only 10% said HMRC was "helpful"
when it comes to business rescue.
R3 believes recently announced planned changes to HMRC represent
an opportunity for reform.
Phillip Sykes, president of R3, says: "The government, as a
creditor, can do much more to help promote a business rescue
culture. At the moment, it can be responsible for lengthy
paperwork delays, and creates extra costs for itself, the
insolvency profession and other creditors, while its lack of
commercial decision-making capabilities undermines business and
job rescue proposals."
"The insolvency profession believes the government's behavior as a
creditor makes it harder to manage insolvency processes and rescue
businesses. It's one of the creditors the insolvency profession
looks forward to working with the least -- which is a problem
given how often the government is a creditor in insolvencies."
Mr. Sykes adds: "Like the rest of government, HMRC does have to
operate under tight budgetary constraints. These can limit the
time it can spend on a relatively small but highly technical and
very important area such as insolvency."
"The government has a great opportunity for reform with the
recently announced planned changes to HMRC's structure. The shift
to a smaller number of centers gives HMRC the opportunity to
create a specialist insolvency unit. A specialist unit would cut
duplicate post, have more consistency in its decisions, be more
accountable, and be far more efficient."
HMRC estimates that it loses up to รบ4bn a year as a result of
insolvent businesses and individuals being unable to pay tax
bills. This is equivalent to just over 10% of the total "tax gap".
Mr. Sykes says: "The better the government gets at working with
the insolvency profession when taxpayers' become insolvent, the
more chance it has of shrinking the tax gap."
"But it's not only the government's losses that are affected; it
would be ordinary creditors', too. Delays with post or paperwork
and intransigence on business rescue hurt other creditors as well.
The more efficient the government becomes the more money gets back
to other creditors."
"The insolvency profession finds dealing with the government hit-
and-miss. Insolvency practitioners are sometimes denied tax
information to which they are entitled as an Office Holder. HMRC's
approach to approving voluntary arrangements changes depending on
who the insolvency practitioner speaks to. Letters and forms can
go unanswered, requiring follow-ups, while insolvency
practitioners can wait months before HMRC responds to requests to
wrap-up cases."
The survey found that:
-- Insolvency practitioners estimate that 33% of the estimated
480,000 letters and forms they send to HMRC for a year's worth of
cases are duplicates of lost or ignored post, or are copies of
letters that have to be sent to multiple HMRC addresses. This is
the equivalent to approximately 160,000 excess forms and letters
for a year's worth of new cases.
-- Over 54% of insolvency practitioners had to wait over three
months for clearance from HMRC to close their last case; 25%
waited between six months and a year.
-- 50% of insolvency practitioners say that HMRC is one of the
creditors they look forward to working with the least; 8% say the
most.
-- 49% of insolvency practitioners had to wait longer than 15
minutes the last time they called HMRC before their call was
answered/cut off/they hung up; 25% waited over half an hour.
-- 43% of insolvency practitioners have had requests for
information from HMRC -- to which they were entitled as Office
Holders -- rejected.
347 R3 members were surveyed between the 12th and 19th of February
2016.
R3 is the trade body for Insolvency Professionals, and represents
the UK's Insolvency Practitioners.
===============
X X X X X X X X
===============
* S&P Takes Rating Actions on 19 EU Synthetic CDO Tranches
----------------------------------------------------------
Standard & Poor's Ratings Services, on March 9, 2016, took various
credit rating actions on 19 European synthetic collateralized debt
obligation (CDO) tranches.
Specifically, S&P has:
-- Placed on CreditWatch positive its ratings on eight
tranches;
-- Lowered its ratings on four tranches; and
-- Affirmed its ratings on seven tranches.
The rating actions are part of S&P's review of various European
synthetic CDOs. The actions reflect, among other things, the
effect of recent rating migration within reference portfolios and
recent credit events on referenced obligations. S&P has used its
SROC (synthetic rated overcollateralization.
WHERE S&P HAS PLACED ITS RATINGS ON CREDITWATCH POSITIVE
The tranche's current SROC exceeds 100%, which indicates to S&P
that the tranche's credit enhancement is greater than that
required to maintain the current rating. Additionally, S&P's
analysis indicates that the current SROC would be greater than
100% at a higher rating level than currently assigned.
WHERE S&P HAS AFFIRMED ITS RATINGS
S&P has affirmed its ratings on those tranches for which credit
enhancement is, in S&P's opinion, still at a level commensurate
with their current ratings.
WHERE S&P HAS LOWERED ITS RATINGS TO 'D'
S&P has lowered its ratings to 'D' where losses from credit events
in the underlying portfolio exceeded the available credit
enhancement, which caused the rated notes to incur an interest
shortfall or principal losses.
ANALYSIS
The rating actions follow the application of S&P's relevant
criteria.
S&P has used its CDO Evaluator model 6.3 to determine the amount
of net losses in each portfolio that S&P expects to occur in each
rating scenario.
S&P has also applied its top obligor and industry tests.
WHAT IS SROC?
One of the main steps in S&P's rating analysis is the review of
the credit quality of the portfolio referenced assets. SROC is
one of the tools S&P uses when surveilling its ratings on
synthetic CDO tranches with reference portfolios.
SROC is a measure of the degree by which the credit enhancement
(or attachment point) of a tranche exceeds the stressed loss rate
assumed for a given rating scenario. SROC helps capture what S&P
considers to be the major influences on portfolio performance:
Credit events, asset rating migration, asset amortization, and
time to maturity. It is a comparable measure across different
tranches of the same rating.
A list of the Affected Ratings is available at:
http://is.gd/PEVgBn
* BOOK REVIEW: Transnational Mergers and Acquisitions
-----------------------------------------------------
Author: Sarkis J. Khoury
Publisher: Beard Books
Softcover: 292 pages
List Price: $34.95
Review by Gail Owens Hoelscher
Order your personal copy today at http://is.gd/hl7cni
Transnational Mergers and Acquisitions in the United States will
appeal to a wide range of readers. Dr. Khoury's analysis is
valuable for managers involved in transnational acquisitions,
whether they are acquiring companies or being acquired themselves.
At the same time, he provides a comprehensive and large-scale look
at the industrial sector of the U.S. economy that proves very
useful for policy makers even today. With its nearly 100 tables of
data and numerous examples, Khoury provides a wealth of
information for business historians and researchers as well.
Until the late 1960s, we Americans were confident (some might say
smug) in our belief that U.S. direct investment abroad would
continue to grow as it had in the 1950s and 1960s, and that we
would dominate the other large world economies in foreign
investment for some time to come. And then came the 1970s, U.S.
investment abroad stood at $78 billion, in contrast to only $13
billion in foreign investment in the U.S. In 1978, however, only
eight years later, foreign investment in the U.S. had skyrocketed
to nearly #41 billion, about half of it in acquisition of U.S.
firms. Foreign acquisitions of U.S. companies grew from 20 in
1970 to 188 in 1978. The tables had turned an Americans were
worried. Acquisitions in the banking and insurance sectors were
increasing sharply, which in particular alarmed many analysts.
Thus, when it was first published in 1980, this book met a growing
need for analytical and empirical data on this rapidly increasing
flow of foreign investment money into the U.S., much of it in
acquisitions. Khoury answers many of the questions arising from
the situation as it stood in 1980, many of which are applicable
today: What are the motives for transnational acquisitions? How do
foreign firms plans, evaluate, and negotiate mergers in the U.S.?
What are the effects of these acquisitions on competition, money
and capital markets; relative technological position; balance of
payments and economic policy in the U.S.?
To begin to answer these questions, Khoury researched foreign
investment in the U.S. from 1790 to 1979. His historical review
includes foreign firms' industry preferences, choice of location
in the U.S., and methods for penetrating the U.S. market. He
notes the importance of foreign investment to growth in the U.S.,
particularly until the early 20th century, and that prior to the
1970s, foreign investment had grown steadily throughout U.S.
history, with lapses during and after the world wars.
Khoury found that rates of return to foreign companies were not
excessive. He determined that the effect on the U.S. economy was
generally positive and concluded that restricting the inflow of
direct and indirect foreign investment would hinder U.S. economic
growth both in the short term and long term. Further, he found no
compelling reason to restrict the activities of multinational
corporations in the U.S. from a policy perspective. Khoury's
research broke new ground and provided input for economic policy
at just the right time.
Sarkis J. Khoury holds a Ph.D. in International Finance from
Wharton. He teaches finance and international finance at the
University of California, Riverside, and serves as the Executive
Director of International Programs at the Anderson Graduate School
of Business.
*********
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
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Information contained herein is obtained from sources believed to
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The TCR Europe subscription rate is US$775 per half-year,
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* * * End of Transmission * * *