Daily Insolvency News Headlines

Thu., April 23, 2015

Thu., April 23, 2015

Brazilian engineering conglomerate Grupo OAS expects revenue to shrink more than 50 percent by 2017 as it sells operations and refocuses on civil construction after filing for bankruptcy protection due to a bribery scandal at a state-run oil company, Reuters reported. The filing by OAS, the third-biggest builder in Brazil last year, was the highest-profile bankruptcy filing to follow a sweeping police investigation of a price-fixing and kickback scheme at state-controlled Petroleo Brasileiro SA, or Petrobras. In a restructuring plan presented to journalists on Wednesday, OAS executives said the group's net revenue would plunge to around 3.133 billion reais ($1.04 billion) in 2017 from 7.151 billion reais in 2014. They said OAS hopes to start talks by the end of the month with creditors on how to restructure the 8 billion reais that the group owes to banks, suppliers and bondholders. Brazilian police raided OAS headquarters in São Paulo late last year and arrested several executives, including the head of its main construction division, as part of a far-reaching investigation known in Brazil as "Operation Car Wash". The Petrobras scandal made it harder for the company to refinance debt and borrow new cash, triggering a liquidity squeeze that led to its bankruptcy filing. Early this year, OAS failed to pay interest on $400 million of global bonds and on 100 million reais of debt. Read more.

Thu., April 23, 2015

Deutsche Bank said on Wednesday that it would incur 1.5 billion euros, or $1.6 billion, in costs from legal proceedings as reports surfaced that the bank was set to accept a record penalty for its involvement in a plan to rig the benchmark rates used to set trillions of dollars in interest rates, the International New York Times DealBook blog reported. A Deutsche Bank spokesman declined to confirm that the costs, which will be deducted from first-quarter earnings, were related to an investigation by United States and British authorities into banks suspected of manipulating the London interbank offered rate, or Libor. But the charge comes as Deutsche Bank, one of the last European banks with a significant presence on Wall Street, is in talks to pay the record penalty and accept a criminal guilty plea, according to people briefed on the case. Authorities are aiming to announce the settlement on Thursday, these people said, though last-minute negotiations are continuing. The Deutsche Bank fine would be the largest in the long-running investigation into whether banks colluded to set Libor at levels favorable to themselves. The previous record was set by the Swiss bank UBS, which paid $1.5 billion in 2012 to settle accusations related to its involvement. Read more. (Subscription required.)

Thu., April 23, 2015

The National Treasury Management Agency (NTMA), which manages Ireland’s national debt, was not consulted by the government about the September 2008 bank guarantee, despite two of its most senior officials being in Government Buildings on the night the decision was made. This emerged in evidence given to the Oireachtas banking inquiry by Brendan McDonagh, the current chief executive of Nama, the National Asset Management Agency. Mr McDonagh was the NTMA’s director of finance at the time of the guarantee. He told the committee he was summoned to Government Buildings at 7.45pm on September 29th, 2008 and spent four hours in a side room while the decision to guarantee the banks’ liabilities was debated by senior ministers and a number of bank executives. “We were never consulted or asked any questions until about 1am, when we were told that the government had made a decision to guarantee the banks,” he said. Read more.

Thu., April 23, 2015

Britain’s biggest retailer Tesco posted the worst annual loss in its 96-year history on Wednesday after writing down the value of its stores by £4.7 billion, the Irish Times reported. Also hurt by an accounting scandal and sliding sales due to pressure from discounters and a brutal price war the supermarket made a statutory pre-tax loss of £6.38 billion (€8.9bn) in the year to February 28th. The grocer, which was recently overtaken by Supervalu as the largest supermarket in Ireland, announced a 6.3 per cent fall in sales here over this period, with full-year sales falling to €2.6bn. Tesco’s trading profit was £1.4 billion, in line with company guidance but less than half of the £3.3 billion made the year before and a third straight year of decline. The firm also revealed it had net debt of £8.5 billion pounds and a net pension deficit of £3.9 billion. Read more. (Subscription required.)

Thu., April 23, 2015

ANA Holdings Inc said it has agreed to acquire a stake of up to 19.9 percent in bankrupt budget carrier Skymark Airlines Inc, gaining access to highly coveted landing slots and strengthening its lead over rival Japan Airlines Co., Reuters reported. Under the deal, Japanese private equity firm Integral Corp, which has provided funds to keep Skymark in business since its bankruptcy in January, will hold just over 50 percent. An ambitious expansion programme, including plans to fly Airbus A380 superjumbos on overseas routes, stretched Skymark's finances, leaving it vulnerable to competition. Unable to keep up with payments for the A380s, Skymark opted for bankruptcy after Airbus scrapped the sale and demanded a cancellation fee. ANA's stake has been kept at less than 20 percent so that it will not be forced by Japanese regulators to surrender some of its landing rights at Tokyo's Haneda airport, sources have said. Read more.

Thu., April 23, 2015

Argentina’s thirst for dollars has been temporarily quenched by a $1.4bn bond sale but a state visit to Russia this week is unlikely to yield significant support for its languishing economy, the Financial Times reported. Hindered from issuing debt in international capital markets by a long-running dispute with a group of holdout hedge funds, Argentina succeeded in issuing dollar-denominated debt under local law on Tuesday to bolster precariously low foreign exchange reserves. Having struggled to raise funds since defaulting on its debt last year, the initial $500m offer was more than three times subscribed, mostly by foreign investors whose optimism that Argentina’s struggling economy will rebound under a new administration next year has fuelled a sustained rally in bond prices. Argentina has been forced to seek innovative ways to prop up its dollar-starved economy, turning to countries such as China and Russia to make up for its exclusion from traditional sources of funding and investment since its economic collapse in 2001. Read more. (Subscription required.)

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