Daily Insolvency News Headlines

Thu., November 13, 2014

Thu., November 13, 2014

Monte dei Paschi di Siena, Europe’s oldest bank and one of its most troubled, on Wednesday reported a loss of 797 million euros, or $991 million, in the third quarter after it drastically increased the amount of money set aside to cover problem loans, the International New York Times DealBook blog reported. The loss comes as Monte dei Paschi, which is based in Italy, is struggling to make up a capital shortfall exposed by the European Central Bank as part of a bank cleanup. Monte dei Paschi’s capital deficit of €2.1 billion, or $2.5 billion, was the largest of the 130 large banks subjected to E.C.B. tests of their ability to absorb unexpected losses. Last week, the bank’s board approved a plan to sell new shares to raise as much as €2.5 billion to satisfy E.C.B. demands that it bolster its capital cushion and to repay a government bailout. Monte dei Paschi, founded in 1472, has been weighed down by underperforming and bad loans and the fallout from its expansion before the financial crisis, including its acquisition of the Italian bank Antonveneta for €9 billion in 2008. The bank said Wednesday that after an E.C.B. review of its assets, it had increased the amount of money it set aside for bad loans by more than €900 million. In addition, the bank spent €300 million to close branches and lay off about 1,300 workers as it struggled to cut costs. Read more. (Subscription required.)

Thu., November 13, 2014

A flurry of firms have filed lawsuits against the Singapore units of bankrupt Danish shipping fuel trader OW Bunker, with claims totalling more than S$5 million, and traders say this is likely just the beginning of a wave of court actions. Court documents seen by Reuters showed that the overall amount of claims made against OW Bunker Far East and Dynamic Oil Trading, both Singapore-based subsidiaries of the Danish firm, over unpaid supplies now total around S$5.3 million ($4.11 million) made by nearly half a dozen companies. OW Bunker has blamed fraud by unnamed senior employees for losses of at least $125 million at Dynamic Oil, but has not revealed any details. Those losses forced the company to file for bankruptcy in Denmark last week. The firms that have so far made claims against OW Bunker or one of its subsidiaries in Singapore are: Hin Leong Trading, Golden Island Diesel Oil Trading Pte, Bunker House Petroleum Pte, Equatorial Marine Fuel Management Services Pte, Panoil Petroleum Pte. Traders said further claims were likely. Read more. (Subscription required.)

Thu., November 13, 2014

International bondholders advised by Rothschild are recommending a change in control at Ukrainian agricultural company Mriya Agro Holding Plc as the grower of crops from wheat to potatoes seeks to restructure about $1 billion of debt, Bloomberg News reported. Tensions have increased since Mriya said in August it missed payments on some of its obligations. Rothschild, which is representing a group of creditors including Ashmore Investment Management Ltd, T. Rowe Price Associates Inc. and CarVal Investors, said Ternopil, Ukraine-based Mriya proposed reducing its debt by about 66 percent when it met with stakeholders last month, while declining to provide financial statements. “The level of trust in Mriya’s current leadership is rather low and the company’s debt structure so unsustainable that a change in control would be probably beneficial to Mriya and all its stakeholders,” Giovanni Salvetti, who co-heads Rothschild’s Russia and Ukraine team in Moscow, said in an interview. “By asking creditors to write off two thirds of the debt, the company implicitly admits the current equity is wiped off.” The bondholder group asked Ukrainian authorities to investigate the company’s owners and facilitate a “fair and transparent restructuring” in a public letter last month. A unit of OTP Bank Nyrt., Hungary’s largest lender, said Nov. 10 it’s taking legal steps to repossess farming equipment after Mriya stopped making lease payments and blocked officials from recovering the assets. Read more.

Thu., November 13, 2014

No one expects Mexico to restructure its debt anytime soon. But if it ever does, so-called vulture investors like Mr. Singer’s Elliott Management will find it much harder to crash the debt restructuring party – as they have done so successfully in Argentina – thanks to tough new provisions written into the contracts of new bond issues for the country, the International New York Times DealBook blog reported. This week, the Mexican government made a United States securities filing for an issue of bonds that would include new, improved collective action clauses specifically written to keep holdout investors like Mr. Singer at bay. Vulture investors will be required to accumulate a much larger position in order to block a debt restructuring agreement by the majority, and the dreaded pari passu clause – which holds that all investors be treated equally – has been stripped of much of its power. Debt restructuring gurus are jumping for joy, with Anna Gelpern at Georgetown calling the foray by Mexico “the iPhone 6″ of debt restructuring contracts. Mr. Singer and other vulture investors were able to buy enough Argentine bonds over the years to make the case – in New York courts – that Argentina must make interest payments to them even though they did not participate in any of the debt restructuring agreements struck by the majority of investors. Read more. (Subscription required.)

Thu., November 13, 2014

Vivarte SAS’s loans tumbled to their lowest levels since the French retailer was taken over by creditors last month, according to three people familiar with the matter. The company’s 800 million euros ($997 million) of senior loans fell to 63 cents on the euro, down about 20 cents since the start of November, said the people, who asked not to be identified because the information is private. The loans are part of Vivarte’s remaining debt after lenders wrote off about 2 billion euros in a restructuring that completed on Oct. 29. The retailer, whose brands include fashion labels Kookai and Caroll, is being hurt by a stagnant French economy, with the nation’s gross domestic product showing almost no growth in the past three years. Paris-based Vivarte posted losses of 9.3 million euros in September, missing a target of 20 million euros in earnings before interest, taxes, depreciation and amortization, the people said. Read more.

Thu., November 13, 2014

South Africa's competition watchdog on Wednesday gave Lewis Group preliminary approval to purchase more than 60 stores from failed furniture firm Ellerine, paving the way for a $8 million deal that is expected to save nearly 400 jobs, Reuters reported. The Competition Commission said in a statement it would recommend that Lewis, which sells furniture and appliances to lower-income shoppers, be allowed to acquire 63 shops operating under the Beares brand as long as there were no job cuts. Approval from the commission is the first hurdle under South African law. The ultimate decision rests with the Competition Tribunal, which in most cases backs deals approved by the commission. Acquiring Beares will give Lewis greater exposure to higher income markets, Lewis' chief executive has said. The company plans to spend up to 90 million rand ($8 million) on the deal. Ellerine, the furniture unit of failed lender African Bank Investments (Abil), was forced into business rescue -- similar to Chapter 11 bankruptcy in the United States -- in August after Abil cut off funding. Days later, Abil itself was rescued by the central bank after it was toppled by surging bad debts. Read more. (Subscription required.)

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