Daily Insolvency News Headlines

Wed., September 17, 2014

Wed., September 17, 2014

Dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent corporations from gaming the international tax system, the Organization for Economic Cooperation and Development said in a report on Tuesday, the International New York Times reported. In a set of recommendations, the organization said the nations — which include the United States, the biggest countries in Europe and China — had agreed on a series of actions to ensure “the coherence of corporate income taxation at the international level” and to improve transparency for governments. “Our recommendations constitute the building blocks for an internationally agreed and coordinated response to corporate tax planning strategies that exploit the gaps and loopholes of the current system to artificially shift profits to locations where they are subject to more favorable tax treatment,” Angel Gurría, the O.E.C.D. secretary general, said in a statement. To lower their tax bills, multinational corporations move profits from high-tax to low-tax jurisdictions through subsidiaries and offshore companies using complex transactions including internal payments for interest, royalties, patents and fees. Such strategies are usually legal, but since the beginning of the current financial crisis there has been a clear recognition in Washington and in other capitals that corporate tax planning is distorting the world economy. Read more. (Subscription required.)

Wed., September 17, 2014

German property group IVG Immobilien has emerged from insolvency following a sweeping restructuring and a debt-for-equity swap and is now considering options for a merger or stock market listing, the company said on Tuesday, Reuters reported. A local German court declared the insolvency proceeding completed, the company said in a statement, after the co-owner of London's landmark "Gherkin" tower began proceedings in 2013. IVG later delisted its shares. "Following the complete financial and operating restructuring, the company is solid again and ready for the capital markets ... whether through an IPO, a merger or through any other possibilities," Hans-Joachim Ziems, the executive who led the restructuring, was quoted saying in newspaper Boersen-Zeitung. One of Germany's best known real estate firms, IVG amassed more than 4 billion euros ($5.2 billion) in debt during a rapid expansion when it financed a business and hotel complex located at Frankfurt airport called "The Squaire" which suffered from cost over-runs. It was also hit by a growing unwillingness among European banks to provide new loans, a consequence of the continent-wide credit crunch, and new regulations forcing lenders to cut their exposure to property. Read more.

Wed., September 17, 2014

Essar Steel Algoma Inc. will have sufficient liquidity to complete capital improvements and buy enough raw materials to get it through the winter after the Ontario Superior Court of Justice approved its restructuring plan, The Globe and Mail reported. “This plan provides for a comprehensive capital infusion, a substantial deleveraging of our balance sheet and the refinancing of all of Algoma’s senior secured debt,” Kalyan Ghosh, chief executive officer of the Sault Ste. Marie, Ont.-based company said in a statement. The restructuring plan was approved by about 92 per cent of the holders of the steel maker’s 9.875-per-cent senior notes. Essar Global Fund Ltd., part of the Essar group of India, which is the ultimate parent of Algoma, will provide a $100-million (U.S.) cash infusion to give the steel company enough liquidity to make the capital improvements and buy iron ore, coal and other raw materials necessary to make steel. Mr. Ghosh said Algoma’s order book is full and it is taking orders for November production. The company generated $30-million (Canadian) in earnings before interest, taxes depreciation and amortization in August and $22-million in July. Earlier this year, Algoma considered a third bankruptcy protection filing in a quarter-century as it faced debt of more than $1.2-billion and annual interest expenses of $133-million. Read more.

Wed., September 17, 2014

The Canadian unit of U.S. Steel Corp. filed for court protection from creditors to restructure its operations. The steelmaker applied to the Ontario Superior Court today for protection under Canada’s Companies’ Creditors Arrangement Act, U.S. Steel Canada said today in a statement obtained by Bloomberg News. U.S. Steel, the biggest U.S. steelmaker by volume, will provide C$185 million ($169 million) in debtor-in-possession financing to the Canadian unit during the restructuring. “Despite substantial efforts over the past several years to make U.S. Steel Canada profitable, it is clear that restructuring U.S. Steel Canada is critical to improving our long-term business outlook,” U.S. Steel Canada President Michael McQuade said in the statement. U.S. Steel acquired its Canadian operations in 2007 when it purchased Hamilton, Ontario-based Stelco Inc. for $1.1 billion. The Canadian government sued U.S. Steel after it said the company hadn’t complied with pledges it made on spending and output. The two sides settled in 2011. Read more.

Wed., September 17, 2014

PV group Solon has announced that two Germany-based units will file for insolvency, as its centre of gravity continues to shift away from Europe under parent company Microsol. Solon announced the start of insolvency proceedings in Berlin for its Solon Modules GmbH and Solon Energy GmbH subsidiaries, Recharge reported. The move came as the company appointed Rolando Gennari as its new European head, with a remit to reposition Solon “as a leading player on the continent”. UAE-based Microsol bought Solon – one of the pioneers of the German solar industry – in 2012 after the latter went bankrupt. Microsol quickly announced plans to move most of Solon’s production to Asia and in March said the German company’s iconic, solar-powered HQ in Germany would close with the loss of 230 jobs. Today’s statement said the insolvency proceedings for the two German units “are unpleasant, but necessary in order to position the group on a solid operating and financial base”, adding that they relate to manufacturing units that have been out of commission since April. Read more.

Wed., September 17, 2014

Some euro zone banks have insufficient liquidity and several will continue to require support from the European Central Bank after long-term funding help runs out at the start of next year, credit ratings agency S&P said, the Irish Times reported. S&P said refinancing risks were lessening for Europe’s banks as they improve their liquidity in the wake of the financial crisis, but they remains a considerable risk for some. Its annual assessment of funding and liquidity at Europe’s top 50 banks, based on end-2013 data, found it was a weakness for the credit ratings at seven banks, a neutral factor for 41 lenders, and a strength for two banks. “We believe that only a few banks have significant buffers to protect themselves against adverse market conditions,” S&P said in its report. It said liquidity and funding was a rating weakness for three banks in Greece - Alpha Bank, Piraeus and National Bank of Greece - and on Spain’s Bankia and Banco Popular Espanol, Dexia Credit Local and Portugal’s Banco Espirito Santo. Several of those banks have improved their liquidity and funding positions this year. BES, for example, has been overhauled, with healthy parts put into a new entity - Novo Banco - and recapitalised, with the aim of leaving the bank with strong enough capital ratios to fund itself. Read more.

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