BTA Bank Debt Plan, Solon Units, AMR’s U.K. House: Bankruptcy

Kazakhstan’s BTA Bank (BTAS) may ask shareholders and creditors to consider its second debt restructuring before year-end, according to two people familiar with the matter.

The people didn’t give details of the plan and declined to be identified because the information isn’t public. Lazard Freres & Co., which acted as an adviser to BTA during its debt reorganization in 2009, assessed the cost of another restructuring last month, two people with direct knowledge of the matter said last week.

Kazakh sovereign-wealth fund Samruk-Kazyna took over BTA in February 2009, two months before the nation’s largest lender at the time defaulted on $12 billion of debt. The state holds an 81.5 percent stake in BTA, which won 92 percent creditor approval for a restructuring plan in May 2010. The bank said in September it has a $150 million coupon payment due in January.

BTA had its credit rating downgraded at Moody’s Investors Service. The move reflected “a lack of a return to profitability, a capital deficit and a possible further debt restructuring,” according to a statement released Dec. 7.

Fitch Ratings lowered BTA’s debt score one step to CCC from B- on Nov. 14 because of the “increased probability of BTA’s default in the near to medium term” and Standard & Poor’s withdrew the bank’s ratings four days earlier.

The lender faced a capital shortage of 162 billion tenge ($1.1 billion) under international accounting standards as of Nov. 1 after it set aside more money to cover souring loans, according to a Nov. 28 statement. The bank has a total of $5.2 billion of debt, according to data compiled by Bloomberg.

Solon’s Non-German Units Are Spared From Solar Firm’s Insolvency

Solon SE’s insolvency, the first of a publicly traded solar company in Germany, won’t affect its units in Italy, France and the U.S.

The insolvency is for now confined to the holding company and its German units with 532 of a total 800 employees, said Moeller PR, which represents the administrator Ruediger Wienberg of law firm HWW Wienberg Wilhelm. Wienberg will contact customers and suppliers to maintain production and order processing, it said. Wages are secured through February.

“We will use the next days to stabilize business operations,” Wienberg said in an e-mailed statement. “We will then thoroughly analyze the company’s financial situation and check all available options.”

Talks between Solon, lenders and investors on extending a year-end deadline to repay a 275 million-euro ($359 million) loan to Deutsche Bank AG and other German banks failed Dec. 13, prompting the company to file for insolvency.

AMR’s Luxury London Townhouse May Go in Airline Bankruptcy Sale

American Airlines parent AMR Corp. (AMR), seeking to cut labor costs and shed aircraft leases in bankruptcy court, is also weighing the sale of a luxury London townhouse used by executives.

The townhouse at 16 Cottesmore Gardens in London’s affluent Kensington neighborhood is used by the airline’s head of international business and for events, said Sean Collins, a company spokesman. AMR bought the property in 1992, according to U.K. Land Registry documents. It was listed among $24.7 billion in company-owned assets in AMR’s Chapter 11 filing in New York.

Cottesmore Gardens is the 10th most expensive street in the U.K. with an average home value of 6.3 million pounds ($9.8 million), property website Zoopla.com said in June. The townhouse was renovated by interior designer Nina Campbell, who has worked for Rod Stewart and Prince Andrew, according to newspaper reports. American paid 2.85 million pounds for the house in 1992, the Evening Standard newspaper reported at the time. The property is about a half-mile from Kensington Palace, where Prince William and Kate Middleton live.

“The townhouse is a lot like the corporate jets that the executives at GM and Chrysler were forced to give up during their reorganizations,” said Richard Tilton, a director of real-estate auctioneer Sheldon Good & Co. and a lawyer specializing in bankruptcy sales for 30 years. “Symbols of corporate suite excess are not likely to survive a Chapter 11 reorganization that is supposed to be fair and equitable.”

AMR singled out industry-leading labor costs as one reason for the company’s bankruptcy. The airline, based in Fort Worth, Texas, is expected to alter labor contracts to reduce expenses and boost productivity, shed aircraft leases, drop routes and possibly terminate its employee retirement plans and turn them over to a U.S. pension agency during the reorganization, analysts and bankruptcy attorneys have said. The airline may also sell the townhouse, according to Collins.

Zeeland Aluminium Co. Bankruptcy Granted by Netherlands Court

Zeeland Aluminium Co. was granted bankruptcy by the court of Middelburg, according to a statement on the website of the Dutch Judiciary and the Supreme Court of Netherlands.

Zalco is based in Vlissingen, owned by Klesch & Co. and produces 230,000 metric tons of aluminum products a year, according to its website.

Eircom Said to Face $2.3 Billion Debt Cut Under Owner STT’s Plan

Eircom Group Ltd. owner Singapore Technologies Telemedia Pte. asked lenders to cancel 1.75 billion euros of the Irish phone company’s 3.75 billion euros of debt, according to two people with direct knowledge of the plan.

Under a restructuring plan presented this week, the Singaporean state-owned firm will seek a writedown of 13 percent from first-lien lenders, or 307 million euros of their 2.36 billion euros of loans, said the people, who didn’t want to be identified because the talks are private. Junior lenders and noteholders would recover almost none of the 1.3 billion euros they are owed, the people said.

Ireland’s largest phone company is restructuring its obligations after five owners in the past 12 years loaded it with debt to pay for their takeovers. The company said Dec. 12 it’s weighing STT’s proposal alongside one from its first-lien lenders and another from its second-lien creditors. STT has missed two previous proposal deadlines, citing economic uncertainty in the euro zone.

STT plans to invest 200 million euros in Eircom in two stages, two people said. STT said Dec. 12 it is in talks with an Eircom employee trust, which owns a further 35 percent of the company, to co-invest.

STT would also pay back 250 million euros of additional first-lien debt using cash from Eircom’s reserves, said the people. Senior lenders would also get a 25 percent equity stake in the company, though it would be diluted as Eircom management and staff are being offered as much as 10 percent of the company, the people said.

TFL Creditors to Proceed With Auction of Company in January

TFL Holding GmbH’s creditors plan to begin seeking bids for the leather-chemicals supplier from early next year, according to the trustee overseeing the sale.

Creditors of the company and adviser Leonardo & Co. will begin the auction in January, according to lawyer Andreas Ziegenhagen.

Efforts to consolidate among European suppliers of leather chemicals have been hampered by low valuations. BASF SE (BAS) abandoned the sale of its leather and textile unit in March after offers fell short of the company’s valuation. Competition from low-cost producers in Asia is coinciding with a slowdown in demand in some markets for leather bags and shoes.

TFL has attracted interest from financial sponsors and difficulty in raising debt may lead to bids of less than 200 million euros if markets don’t improve, said a person familiar with the transaction, who declined to be named because the information isn’t public.

Leonardo already sent out a memo detailing the forthcoming auction of TFL, which stands for Together For Leather. The supplier of chemicals for car leather and handbags is being sold on behalf of creditors seeking debt repayments taken on under the ownership of private equity firm Odewald & Cie.

Other leather-chemical makers in Europe include Clariant AG (CLN), Lanxess AG (LXS) and Stahl, owned by French buyout firm Wendel SA. Lanxess, which in July started work on a 30 million-euro leather chemicals plant in Changzhou, China, is an unlikely buyer now as it already has had ample opportunity to target TFL, two people said.

TFL, based in Weil am Rhein, is suffering after Odewald saddled it with 65 million euros in debt, leading the company to break covenants in 2008, two people familiar with the matter said in September. Odewald bought TFL, which has annual sales of about 240 million euros, from Permira Advisers LLP in 2003 for an undisclosed price.

Olympus Takes $1.3 Billion Balance Sheet Hit to Dodge Delisting

Olympus Corp. (7733)’s revision of earnings forced a $1.3 billion cut in net assets that now threatens its ability to recover from an accounting scandal that has wiped half the value from the company’s stock.

The Japanese camera maker yesterday filed corrected financial statements for more than five years to avoid the immediate threat of delisting from the Tokyo Stock Exchange. In doing so, Olympus revealed a weakened balance sheet that sparked a downgrade of its debt to one level above junk.

Olympus has been reeling since Michael Woodford questioned inflated fees and takeover costs after he was fired as chief executive officer in October. Having admitted to a 13-year scheme to hide losses, and after it purged senior executives, Olympus still faces criminal probes, a battle for management control and a TSE review that may yet see it ejected from the world’s second-biggest bourse.

“Even if we can assume they’ve put their problems behind them and will stay listed, the instability will likely continue amid questions about who runs the company, whether new management can pull things together, and its finances,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “They avoided insolvency but their capital ratio fell as low as 5 percent, which is a weak financial base.”

Saab Auto Seeks Longer Reorganization, Swedish Court Says

Saab Automobile has asked for its protection against creditors to be extended, the Vaenersborg District Court in Sweden said on its website. The court will hold a hearing on Saab’s court-administered reorganization on Dec. 19, it said.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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