Daily Insolvency News Headlines

Mon., March 2, 2015

Mon., March 2, 2015

Hours after China's central bank cut interest rates to battle slowing growth and rising deflationary risk, an official survey showed on Sunday that activity in China's factory sector contracted for a second straight month in February, the International New York Times reported. The official Purchasing Managers' Index (PMI) inched up to 49.9 in February from January's 49.8, a whisker below the 50-point level separating growth from contraction on a monthly basis, but nevertheless above more pessimistic analyst forecasts for a 49.7 reading. The new reading ended a four-month streak of declining numbers, and the National Bureau of Statistics (NBS) said the rise should be viewed more positively as it occurred despite the week-long Lunar New Year holiday, during which PMI usually contracts. This year, the holiday was in February. "In the context of stabilising macroeconomic policies including recent tax cuts and increased infrastructure spending, market demand rose and business confidence strengthened," the NBS said, adding that stabilising crude oil and raw material prices were also important factors. Read more. (Subscription required.)

Mon., March 2, 2015

Greece’s cash-strapped government suggested in the past week that it might default on some of the debt it owes the International Monetary Fund in March, which would make it the first advanced economy in the institution’s seven-decade history to fall into protracted arrears with the fund, The Wall Street Journal reported. It would also put the new Athens government on a par with a small group of mostly conflict-ravaged debtors that have stiffed the IMF—a list that includes Afghanistan’s Taliban, Zimbabwe strongman Robert Mugabe and coup-stricken Haiti. Few expect Greece to shirk its debts to the IMF, but the suggestion alone highlights the deepening standoff between the fund and Athens over the country’s finances. It also underscores the increasingly precarious cash position of the government and signals that coming negotiations between Greece and its creditors are likely to be rocky. Read more. (Subscription required.)

Mon., March 2, 2015

Russia sharply raised the amount it plans to draw from its reserve fund to support this year’s budget, as revenues fall along with oil prices and Western sanctions cut the country off from international financing, The Wall Street Journal reported. In addition to tapping the fund—money the government put aside in the years when oil prices were high—spending by ministries and departments will be cut 10% to keep the deficit from growing too much, Finance Minister Anton Siluanov said Friday. President Vladimir Putin has also cut salaries for workers in the Kremlin by 10%, Interfax news agency reported, citing presidential spokesman Dmitry Peskov. And in another sign of how strained relations with the U.S. and Europe over Ukraine are reverberating in the economy, Russia signaled it would consider allowing Chinese investors to take majority stakes its strategic oil and natural gas fields, reversing years of opposition. First Deputy Finance Minister Tatiana Nesterenko said that the authorization for tapping the reserve fund—the first in six years—would have to be raised to 3.2 trillion rubles ($52.3 billion), or more than half its value. The original expectation in mid-January was for 500 billion rubles. Read more.

Mon., March 2, 2015

A company that obtained a €2.8 million judgment against Joseph Sheehan and John Flynn, two of the main shareholders in Dublin’s Blackrock Clinic, has secured interim charging orders over Mr Sheehan’s shares in a firm that owns a half share of the private Galway Clinic. Mr Justice Brian McGovern granted the interim orders on the ex parte application (one side only represented) by Bernard Dunleavy SC, for Talos Capital Ltd, at the Commercial Court. The matter will return before the court next week when Mr Sheehan will have an opportunity to challenge the orders. In January, Mr Justice Sean Ryan ruled Talos was entitled to €2.8 million judgment against Mr Flynn and Mr Sheehan. A six-month stay applies on execution of that judgment order pending appeal. Talos sought summary judgment over alleged “material” default on a loan agreement under which it advanced €2.4 million for a proposed transaction, which ultimately did not proceed, under which the defendants were to acquire their loans relating to the Blackrock Clinic and the associated security from Irish Bank Resolution Corporation. The defendants disputed Talos’ claims but Mr Justice Ryan ruled Talos was entitled to summary judgment for €2.78 million, plus costs, with execution of the judgment order to be stayed for six months. Read more.

Mon., March 2, 2015

President Dilma Rousseff ’s administration, fearful of a potential loss of Brazil’s investment-grade debt rating, is stepping up austerity measures, angering supporters and exacerbating an already painful economic slowdown, The Wall Street Journal reported. The government on Thursday announced a cap on government spending and investment, as well as additional tax increases for businesses, moves aimed at shoring up Brasília’s deteriorating finances. The new measures will limit federal spending to 75 billion Brazilian reais ($26.3 billion) from Jan. 1 to April 30, compared with 85 billion reais spent in the period last year. Those reductions follow a number of program cuts and tax increases to hit consumers and businesses since the beginning of the year. The levies have raised prices for basics like electricity, bus fares and gasoline, and helped pushed annualized inflation to 7.1%, well above official target of 4.5%. This past week’s measures come just days after Moody’s Investors Service downgraded to junk status the debt of state-controlled Petróleo Brasileiro SA, which is reeling from a massive corruption scandal. The company’s financial woes are stoking fears that Brasília might have to prop up the troubled oil giant, further straining the nation’s public accounts and increasing the risk that Brazil could lose the investment-grade rating on its sovereign debt. Read more. (Subscription required.)

Mon., March 2, 2015

African Minerals said on Friday its Chinese partner in its sole asset, the Tonkolili iron ore project in Sierra Leone, has taken on some of its multi-million dollar debt and is demanding repayment, Reuters reported. The loan is secured against certain assets of the borrower and by taking ownership of the debt, Shandong is in a position that could allow it to take control of the project. "The borrowers and guarantors do not have sufficient funds available to make the payment demanded," African Minerals said in a statement on Friday. A group of banks including Standard Chartered and Citi, had lent African Minerals $250 million as pre-export finance (PXF), and have transferred their interest to Shandong Steel Hong Kong Zengli Limited, a subsidiary of Shandong Iron and Steel Group, which owns a quarter of the Tonkolili project. The loan, which has an outstanding amount of $166.7 million has been in default since November and Shandong wants immediate repayment, London-listed African Minerals said. The company, which owns 75 percent of Tonkolili, has been battered by higher costs related to the Ebola outbreak in West Africa and a rout in iron ore prices in the last year. It was forced to shut down its operation in Sierra Leone in late November for lack of working capital after failing to agree with Shandong on the release of funds that were previously earmarked for the next phase of expansion of Tonkolili. Read more.

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