UPDATE 2-Finnish court agrees Talvivaara restructuring

Fri Nov 29, 2013 9:00am EST

* Parent company given go-ahead for reorganisation

* Court asks for more information on subsidiary

* Shares up 71 pct (Adds analyst comment, background)

By Jussi Rosendahl

HELSINKI, Nov 29 (Reuters) - Finnish nickel miner Talvivaara won court approval on Friday to begin a restructuring process aimed at fending off bankruptcy, sending its shares up 71 percent as investors hoped the undertaking would set the company back on its feet.

Talvivaara, hurt by falling nickel prices and chronic production problems, halted operations earlier this month after failing to raise the funds it needed to keep going.

Espoo district court on Friday said Talvivaara's listed parent company could begin restructuring, but asked for more information about subsidiary Talvivaara Sotkamo Ltd - which includes the actual mining assets - before it would decide whether to include its debt in the restructuring process too.

Chief Financial Officer Saila Miettinen-Lahde said the court's decision was nevertheless an important one given that the parent company had bonds worth more than 300 million euros that it is no longer able to repay and will now be able to renegotiate with investors.

However, she added, bankruptcy could still be a possibility if the company's mining operations were not included in the proceedings.

"I can't speculate on what would happen then, but one should note there is considerable debt in the parent company alone," she told Reuters.

Talvivaara Sotkamo was given three weeks to provide an auditor's statement for the Espoo court.

Shares in the company rose 71 percent, or 3 euro cents, to about 7 cents.

NEED FOR FUNDS

Analysts said Friday's announcement did not remove Talvivaara's need for more capital. The company has said it will have cash in the first quarter of 2014, but needs some of that for the court proceedings.

Talvivaara has tried to negotiate new funding with investors and creditors such as the Finnish state, its biggest owner with 17 percent of the shares, and zinc producer Nyrstar, but so far the talks have failed.

"Uncertainty may have decreased only slightly. They still need more capital and there's a lot of work to be done at the site, so basically we don't have any clarity at all about their future as yet," said analyst Markus Liimatainen from FIM brokerage.

Finland's government has said it will only help bail out the company if private investors participate in at least 50 percent of the deal.

Talvivaara's mine is a major employer in the rural Kainuu region of northeast Finland. Once hailed as a pioneer in cost-efficient mining, it ran into a series of production problems last year, including a toxic leak that pushed up uranium levels in nearby lakes and rivers.

The cost of cleaning up and halting production forced the company to go to shareholders with a cash call in March. It has also suffered from a drop of more than fifth in the price of nickel this year. (Reporting By Jussi Rosendahl; Editing by Sophie Walker)

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REFILE-Nationwide blurs market boundaries with equity-like capital

Fri Nov 29, 2013 9:19am EST

* UK mutuals eye rule change to allow CCDS issuance

* Fixed income and equity investors put faith in Nationwide's future

* New capital instrument proves more risky than Additional Tier 1

By Helene Durand and Aimee Donnellan

LONDON, Nov 29 (IFR) - Nationwide Building Society did what many thought impossible this week and placed high risk equity-like capital with fixed income funds - a move that showed just how far traditional investors can be stretched to get a double digit payout.

The UK's largest building society sold GBP500m of Core Capital Deferred Shares that offered investors a 10.25% distribution.

"This is a true perpetual and a deal people said couldn't be done," said Andy Townsend, treasurer at Nationwide.

A banker involved in the deal said it would provide the UK regulator with a blueprint for funding the mutual sector, and Nationwide's success will encourage other UK mutuals to do what is necessary to allow the issuance of such deals.

"I suspect that most building societies will be changing their rules at their next AGMs so they have the option to raise this kind of capital," said Chris Parrish, head of group treasury at Yorkshire Building Society.

Investors have grown accustomed to ever riskier structures being sold by banks throughout this year as the Additional Tier 1 market has developed, but Nationwide took the market a step further.

Unlike the new breed of hybrids sold by banks in 2013, where coupons are fixed and there is a call option, CCDS are truly perpetual and distributions are variable and completely discretionary. So while the 10.25% pricing looks attractive, there is no guarantee that investors will get this level - or, indeed, anything at all - in the future.

This makes the instrument much more akin to equity, and yet it does not confer proportionate voting rights, while distributions are capped at 15%, limiting the potential upside.

"In the last six to 12 months, investors have had to think in a different way as banks started to sell Additional Tier 1 instruments and investors have come a long way," said Townsend.

"It wasn't an especially large step for them to go from Additional Tier 1 to CCDS."

The GBP1.6bn order book, which was heavily skewed towards real-money accounts, suggests there is a market for these securities, and potentially even more aggressive structures.

TEMPTATION

With UK banks' dividend yields hovering in 5% to 6% territory, it is not hard to see why many would be tempted.

At the onset of the exercise it was expected that Nationwide's instrument would largely end up with equity funds. But that proved not to be the case.

"We ended up selling this overwhelmingly to the usual suspects and there was an enormous overlap with the investors we sell senior and covered bonds to," said Townsend.

Yet, even more than with Additional Tier 1, investors are relying on the issuer to keep its promise on distributions.

"This has the potential to be volatile but you go into this with your eyes open," said Fiona Dickinson, an investment director at Standard Life Investments. "They aim to have stable distributions, but there is no guarantee that will happen."

Joint leads were Bank of America Merrill Lynch, Barclays, JP Morgan Cazenove and UBS, while Rothschild was structuring and financial adviser.

FINDING A HOME

Real-money investors may have dominated the order book but the leads had to work hard to find a home for the instruments.

"We bought it but for one fund only, our Strategic Bond Fund, which is where we have flexibility," said Daniel McKernan, head of sterling investment grade credit at Standard Life. "We couldn't justify it for our other bond funds as they exclude equity and this is effectively equity."

He added that a limited number of issuers would be able to do this type of trade. "For investors to buy, you have to be comfortable with management, the fundamentals of the credit and the governance."

For some fixed income investors, this was a step too far.

"This is categorically not a fixed income instrument. It's plain ordinary equity without the voting rights," said Robert Kendrick, a FIG analyst at L&G. "There is no way you can dress it as a bond."

Moves among mutuals to replicate the trade, in fact, have already been set in train, with Coventry Building Society, one of Britain's biggest mutually owned financial companies, changing its mutual rules, and announcing the changes in July. This will give the issuer the option to sell this kind of instrument despite the fact it is very well capitalised.

"Nationwide has been three years in the pipeline and now that it has arrived, attracted such an impressive order book and traded up in the secondary market. It definitely looks a good deal for them," said Lorne Williams, Treasurer at Coventry Building Society.

Skipton Building Society is also interested in the structure. "We will watch with interest to see how the market develops for this innovative instrument," said Jeremy Helme, Skipton's head of capital markets.

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Saab to restart 9-3 sedan production two years after bankruptcy

Fri Nov 29, 2013 2:19pm EST

Nov 29 (Reuters) - The new owners of Swedish car maker Saab, National Electric Vehicle Sweden AB, will restart production of the 9-3 sedan on Monday at the Trollhattan factory in Sweden, a NEVS spokesman said on Friday.

The 9-3 sedan will be powered by a turbocharged gasoline engine and built in "small and humble numbers" for China and Sweden, NEVS spokesman Mikael Ostlund said.

The move comes almost two years after Saab, which had made cars since 1947, filed for bankruptcy at the end of 2011. Saab was previously owned by General Motors Co, which sold it to Dutch sports car group Spyker in 2010.

NEVS, which is 22 percent owned by the Chinese city of Qingdao through the city's investment company, bought most of the assets of Saab last year. Ostlund reiterated that an electric 9-3 sedan is expected to launch in China next year.

Since NEVS acquired the assets, it has reached new agreements with the 400 suppliers for the 9-3, Ostlund said.

The vehicle that will begin production Monday will look similar to the last 9-3s that rolled off the line in Trollhattan in 2011. But Ostlund said NEVS may revamp the 9-3 when it is launched as an electric sedan next year in China.

About 600 people work at Saab's assembly plant in Trollhatten now, Ostlund said. The plant's workforce was around 3,500 at the time of Saab's bankruptcy, he added.

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UPDATE 2-Alitalia raises less than two-thirds of emergency cash

Thu Nov 28, 2013 2:06pm EST

* Raises 173 mln euros out of 300 mln

* Expects to cover remainder by Dec. 10 deadline

* Still needs partner to stay afloat (Adds details, background, analyst)

By Agnieszka Flak

MILAN, Nov 28 (Reuters) - Loss-making Alitalia has yet to raise all of the 300 million euros ($407 million) it was seeking in an emergency cash call, piling more pressure on the Italian airline and find a strategic investor to keep it flying.

Alitalia said on Thursday it had received 173 million euros by a deadline for existing shareholders to subscribe to its cash call via pledges and bank guarantees and expected to raise the rest from the state-owned postal service and other investors.

Top shareholder Air France-KLM, with a 25 percent stake, refused to take up its share of the cash call, saying Alitalia's new business plan pledging severe cost cuts was not enough to save the stricken Italian carrier without its creditors writing off some of its huge debts.

The Franco-Dutch group has so far been seen as the most suitable carrier to come to Alitalia's rescue.

The emergency cash, part of a bigger rescue package engineered by the government to keep Alitalia's aircraft in the air, is seen as a stopgap measure giving the airline a few more months to find a partner to help revamp the group.

But with 700,000 euros of daily losses and net debt of 800 million euros Alitalia could soon have to ground its planes.

The failure to fully cover the capital increase illustrates that some of Alitalia's existing investors have doubts that the carrier, which has made a profit only sporadically in its 67-year history, can be turned around.

"Not even Alitalia's own shareholders believe that the company can be rescued," said Andrea Giuricin, a transport analyst at Milan's Bicocca University, who has written a book on the airline. "Even if they get to 300 million euros, Alitalia remains very weak and this cash will only give it maximum six months."

Alitalia said on Thursday it had received the 173 million euros by the Nov. 27 deadline in pledges from current shareholders and guarantee payments by Italy's top two banks Intesa Sanpaolo and UniCredit.

The airline expects to sell remaining unsubscribed shares in a second phase of the cash call that ends on Dec. 10.

Italy's postal service, which the government brought into the rescue plan last month, has said it would invest 75 million euros and the airline hopes to convince other investors to stump up the remainder.

"Given the information received to date and taking into account subscription commitments already made, the company believes that the conditions exist for the capital increase to be fully covered," Alitalia said.

Air France-KLM said earlier this month Alitalia's cost-cutting plans were not enough to save the stricken carrier without its creditors writing off some of its debts.

Alitalia has some attractive assets: Europe's fourth-largest travel market, 24 million passengers a year and competitive airport slots that allow travellers to fly back and forth to Italian cities at convenient times of the day.

But the inclusion of the postal service and banks, which the government convinced to guarantee up to 100 million euros, will leave Alitalia with shareholders who have little knowledge of how to operate an airline successfully, Giuricin said.

Analysts said Air France-KLM could still revive its interest in Alitalia via a takeover offer next year, but only if Alitalia manages to offload some debt.

Italian media have mentioned Germany's Lufthansa, Russia's Aeroflot or Abu Dhabi-based Etihad Airways as other possible investors in Alitalia, but all three have distanced themselves from the troubled carrier for now.

Apart from Air France-KLM, Alitalia is owned by a disparate group of 21 investors including Intesa and highway operator Atlantia. ($1 = 0.7367 euros) (Reporting by Agnieszka Flak; Editing by Erica Billingham and Jane Merriman)

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REFILE-UPDATE 2-Alitalia raises less than two-thirds of emergency cash

Fri Nov 29, 2013 2:06am EST

(Replaces "and" with "to" in lead)

* Raises 173 mln euros out of 300 mln

* Expects to cover remainder by Dec. 10 deadline

* Still needs partner to stay afloat

By Agnieszka Flak

MILAN, Nov 28 (Reuters) - Loss-making Alitalia has yet to raise all of the 300 million euros ($407 million) it was seeking in an emergency cash call, piling more pressure on the Italian airline to find a strategic investor to keep it flying.

Alitalia said on Thursday it had received 173 million euros by a deadline for existing shareholders to subscribe to its cash call via pledges and bank guarantees and expected to raise the rest from the state-owned postal service and other investors.

Top shareholder Air France-KLM, with a 25 percent stake, refused to take up its share of the cash call, saying Alitalia's new business plan pledging severe cost cuts was not enough to save the stricken Italian carrier without its creditors writing off some of its huge debts.

The Franco-Dutch group has so far been seen as the most suitable carrier to come to Alitalia's rescue.

The emergency cash, part of a bigger rescue package engineered by the government to keep Alitalia's aircraft in the air, is seen as a stopgap measure giving the airline a few more months to find a partner to help revamp the group.

But with 700,000 euros of daily losses and net debt of 800 million euros Alitalia could soon have to ground its planes.

The failure to fully cover the capital increase illustrates that some of Alitalia's existing investors have doubts that the carrier, which has made a profit only sporadically in its 67-year history, can be turned around.

"Not even Alitalia's own shareholders believe that the company can be rescued," said Andrea Giuricin, a transport analyst at Milan's Bicocca University, who has written a book on the airline. "Even if they get to 300 million euros, Alitalia remains very weak and this cash will only give it maximum six months."

Alitalia said on Thursday it had received the 173 million euros by the Nov. 27 deadline in pledges from current shareholders and guarantee payments by Italy's top two banks Intesa Sanpaolo and UniCredit.

The airline expects to sell remaining unsubscribed shares in a second phase of the cash call that ends on Dec. 10.

Italy's postal service, which the government brought into the rescue plan last month, has said it would invest 75 million euros and the airline hopes to convince other investors to stump up the remainder.

"Given the information received to date and taking into account subscription commitments already made, the company believes that the conditions exist for the capital increase to be fully covered," Alitalia said.

Air France-KLM said earlier this month Alitalia's cost-cutting plans were not enough to save the stricken carrier without its creditors writing off some of its debts.

Alitalia has some attractive assets: Europe's fourth-largest travel market, 24 million passengers a year and competitive airport slots that allow travellers to fly back and forth to Italian cities at convenient times of the day.

But the inclusion of the postal service and banks, which the government convinced to guarantee up to 100 million euros, will leave Alitalia with shareholders who have little knowledge of how to operate an airline successfully, Giuricin said.

Analysts said Air France-KLM could still revive its interest in Alitalia via a takeover offer next year, but only if Alitalia manages to offload some debt.

Italian media have mentioned Germany's Lufthansa, Russia's Aeroflot or Abu Dhabi-based Etihad Airways as other possible investors in Alitalia, but all three have distanced themselves from the troubled carrier for now.

Apart from Air France-KLM, Alitalia is owned by a disparate group of 21 investors including Intesa and highway operator Atlantia. ($1 = 0.7367 euros) (Reporting by Agnieszka Flak; Editing by Erica Billingham and Jane Merriman)

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Finland's Talvivaara accepted for court-supervised restructuring

HELSINKI Fri Nov 29, 2013 3:30am EST

HELSINKI Nov 29 (Reuters) - Finnish nickel miner Talvivaara's application for a court-supervised reorganisation to help it to avoid bankruptcy has been accepted, the company said on Friday.

Talvivaara, hurt by falling nickel prices and chronic production problems, halted operations this month and sought the court-supervised restructuring process after failing to raise more funds.

It said last week that it has enough cash to last through the first quarter of 2014 but admitted that bankruptcy is a possibility. (Reporting By Jussi Rosendahl; Editing by David Goodman)

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Detroit lighting decision put off due to possible attorney conflict

DETROIT Wed Nov 27, 2013 2:31pm EST

DETROIT Nov 27 (Reuters) - The judge overseeing Detroit's bankruptcy case on Wednesday postponed deciding whether the city can redirect utility tax revenue to help fix its broken street lights, citing a potential conflict of interest among attorneys representing the city's Public Lighting Authority.

Law firm Miller Canfield represents the lighting authority, but also represents Detroit in other matters in the city's bankruptcy proceedings.

U.S. Bankruptcy Judge Steven Rhodes asked attorneys from all parties involved to submit briefs by Dec. 4 to address the potential conflict of interest and whether Miller Canfield should be disqualified from representing the Public Lighting Authority. He said he will subsequently issue a written ruling.

The potential conflict came to light when attorney Jonathan Green, a lawyer for Miller Canfield who represented the lighting authority in proceedings before Judge Rhodes on Wednesday morning, introduced himself in court.

"It was most unfortunate that this issue came to the court's attention in the way that it did because it's going to result in an unnecessary delay," Rhodes said.

Green said Miller Canfield was not representing the city in this particular transaction.

Detroit wants to use $12.5 million in utility tax revenue to back $153 million in bonds to be issued by the Detroit Public Lighting Authority to finance upgrades to the public lighting system in the city. The Public Lighting Authority also proposes a short-term $60 million loan to precede the sale of the bonds, which would be issued through a state agency.

About 40 percent of all the street lights in Detroit do not work, and Detroit Emergency Manager Kevyn Orr has said one of his priorities is to improve public services in the city.

Attorneys for the bond insurers and banks objecting to the transaction asked Rhodes to allow them to collect more information on the potential transaction before he made a decision. William Arnault, who represents bond insurer Syncora Guarantee Inc., asked for a two-week discovery period, noting that the objectors were "in the dark" about the details of the proposed deal.

"Of course the dark you're in does not compare to the dark that the citizens of Detroit are in day in and day out," Rhodes responded.

Vincent Marriott, representing Detroit creditors Hypothekenbank Frankfurt AG, Hypothekenbank Frankfurt International S.A. and Erste Europäische Pfandbrief-und Kommunalkreditbank Aktiengesellschaft in Luxemburg S.A, asked Rhodes to put off the lighting financing issue until the city submits a plan to the court to readjust its debt.

He said the city should not spend money in bits and pieces and should instead address its infrastructure improvements at once in its plan of adjustment.

"It's a mistake, and it will not be in the long-term interests of the city," Marriott said.

But Rhodes responded by asking what will become of the "hundreds of thousands of people who are going to be victims of crime as we wait?"

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UPDATE 1-OCZ gets offer from Toshiba to buy assets in bankruptcy sale

Wed Nov 27, 2013 4:13pm EST

By Soham Chatterjee

Nov 27 (Reuters) - Solid-state hard drive maker OCZ Technology Group Inc said it had received an offer from Toshiba Corp to buy the company in a planned bankruptcy proceeding.

OCZ shares tumbled as much as 80 percent on Wednesday after trading of the stock resumed on the Nasdaq. The stock had fallen 69 percent so far this year through Tuesday's close.

OCZ, which has a market capitalization of $43 million, said it had "substantially completed" negotiations with Toshiba on an asset purchase agreement.

The company said it expected to file a petition for bankruptcy shortly after completing final documentation with Toshiba and Hercules Technology Growth Capital Inc, one of its lenders.

OCZ, which has not posted an annual profit in five years, said if it failed to agree on a deal with Toshiba it would immediately file for bankruptcy and liquidate.

The company has been battling a shortage of NAND flash memory chips, used in solid state drives, for about a year.

Supply of NAND memory chips - used for general storage and data transfer in memory cards and solid-state drives (SSDs) - has failed to keep pace with a boom in demand from mobile device makers.

"The filing is not surprising. We had estimated that OCZ had cash for a quarter or so and didn't see any natural buyers," said Longbow Research analyst Joseph Wittine in an email to Reuters.

"(We) assumed in any asset sale or capital infusion ... shareholders would be substantially diluted at best and, very possibly, left with nothing."

The company said in August it had retained Deutsche Bank AG to help it evaluate strategic options. OCZ had also said it would amend its loan and security agreement with Hercules as the company did not meet certain covenants.

OCZ said on Wednesday it had received notices that Hercules had taken control of its depository accounts at Silicon Valley Bank and Wells Fargo Bank, National Association.

OCZ has long been considered to be a takeover target for hard drive makers such as Seagate Technology Plc and Western Digital Corp and flash memory maker Micron Technology Inc, who have been battling for a piece of the fast-growing market for solid-state drives used in servers.

Toshiba, Japan's largest chipmaker, had said earlier this year it was considering investing $200-300 million on new equipment to manufacture NAND flash memory chips.

Western Digital bought troubled SSD maker Stec Inc for $340 million in June to become one of the top players in the flash drive market.

OCZ was also hit by an investigation by U.S. regulators into its accounting practices last year.

Shares of San Jose, California-based OCZ were down 73 percent at $0.17 in late afternoon trade.

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UPDATE 1-Batista's OGX lost $912 mln in Q3; debt talks resume

Wed Nov 27, 2013 9:57pm EST

* Loss comes as OGX moves to start offshore oil output

* OGX losses boosted by write-offs, new field investments

By Jeb Blount and Guillermo Parra-Bernal

RIO DE JANEIRO, Nov 27 (Reuters) - Brazilian tycoon Eike Batista's oil company, OGX, lost 2.12 billion reais ($912 million) in the third quarter as it scrambled to start output from an offshore oil field that represents one of its last chances to remain afloat.

The results were announced by the company, formally known as OGX Petróleo e Gas Participações SA, on Wednesday, when it also resumed talks with holders of more than half its $3.6 billion of bonds. OGX is seeking to cut that obligation as part of a court-supervised restructuring plan.

OGX, based in Rio de Janeiro, filed for bankruptcy protection with a Brazilian court on Oct. 30, the largest ever bankruptcy case in Latin America.

"Management understands that, given the current economic and financial situation, the request for judicial recovery is the most appropriate measure to preserve the continuity of its business and protect the interests of the stakeholders," OGX said in its earnings statement.

OGX also reported net sales, or total sales minus sales taxes, of 172 million reais in the quarter. Earnings before interest, taxes, depreciation and amortization, or EBITDA, a measure of the ability to generate cash profit from operations, was 4 million reais.

OGX had $85 million of available free cash at the end of the quarter. Losses were also driven by the need to write off the value of money-losing and underperforming assets, the statement said.

FIELD'S 1ST OIL IN DECEMBER

OGX missed a $45 million bond payment in October and faces another $100 million installment next month. Its failure to pay caused the largest high-yield corporate bond default in the world this year, according to Eric Rosenthal, senior director of Fitch Ratings in New York

Instead of paying debt, the company spent $815 million on capital expenses, much of it to start hooking up the OSX-3 oil production ship owned by sister shipbuilder OSX Brasil SA to wells in the Tubarao Martelo offshore field northeast of Rio de Janeiro.

The first of six wells in Tubarao Martelo is already connected to the ship and output is expected to start in early December, several weeks behind the latest forecast date. Production still awaits an environmental license.

OGX expects to produce an average of about 17,000 barrels a day of oil from the field in 2014, generating about $645 million in gross oil sales revenue, based on an oil certification report by Dallas-based hydrocarbon-resource certification company Degolyer & MacNaughton.

Attempts to get bondholders to agree to a swap of their debt for Batista's shares in the company have so far been unsuccessful, with some investors complaining that the company's investments were throwing money that could be used to pay debt into projects with little chance of return.

Others questioned payments to OSX Brasil SA, part of Batista's EBX group, which owns the oil-production vessels leased by OGX.

OGX, though, now has nearly six months to deliver a restructuring plan to a Rio de Janeiro judge.

TALKS TO CONTINUE

Negotiations "will continue until a definitive agreement is reached," after which creditors will have the opportunity to approve or reject the accord, the filing added.

The company, which tycoon Batista founded in 2007 and at its peak was valued at around $30 billion, has spent more than 10 billion reais on exploration and production activities since 2007.

OSX, the Batista-controlled company, also sought court protection from creditors in the wake of OGX's bankruptcy filing. OSX depends on OGX for nearly all its current and future income.

Pacific Investment Management Co, or Pimco, the world's largest bond fund, and half a dozen money management companies are among bondholders that stand to lose millions if OGX fails to emerge from bankruptcy proceedings.

Investors also worry that a lengthy legal battle is on the horizon in Brazil, where recent debt restructuring and bankruptcy proceedings have turned out badly for them.

A committee formed by Pimco and the other investment funds picked investment banking firm Rothschild in August as its adviser on the matter, two sources told Reuters at the time. Law firms Cleary Gottlieb Steen & Hamilton LLP and Pinheiro Neto Advogados were also hired, both sources added.

The selection process followed a decision by OGX in late July to hire Blackstone Group LP and Lazard Ltd to help the company review its capital structure. OGX's main financial adviser is Rio de Janeiro-based Angra Partners.

OGX faces the December interest coupon payment on about $2.5 billion bonds due in 2018. The price of the 8.5 percent bond was at about 9 cents on the dollar on Wednesday, according to Thomson Reuters data.

Shares in OGX, which have fallen 97 percent over the past year, rose 7.1 percent to 0.15 reais on Wednesday in São Paulo.

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Brazil judge accepts bankruptcy protection for Batista's OSX

RIO DE JANEIRO Mon Nov 25, 2013 4:41pm EST

RIO DE JANEIRO Nov 25 (Reuters) - A judge in Rio de Janeiro on Monday accepted a bankruptcy-protection request made earlier this month by OSX Brasil SA, the shipbuilder controlled by Brazilian tycoon Eike Batista, giving OSX 180 days to prepare a restructuring plan.

The judge, Gilberto Clovis Farias Matos, said the request by OSX and two of its three non-traded subsidiaries, OSX Construção Naval Ltda and OSX Serviços Operacionais Ltda, met the criteria of Brazil's corporate legislation, according to a statement issued by the press office of the Justice Tribunal of Rio de Janeiro state.

As such, the statement said, the court has the authority to shield them from creditors. In his decision to accept the bankruptcy petition, Farias Matos wrote that the companies "cover a market niche with heavy investments from international creditors, hundreds of jobs, suppliers and service providers that carry out an important function in the economy."

In the meantime OSX and the two units, one which owns the OSX shipyard north of Rio de Janeiro and the other which provides ship and vessel-operations services, will each have to develop its own individual recovery plan and its own unique creditor list. The requirement, the judge ruled, is necessary even if the plans are considered by the group to be interdependent or identical.

The case is before the 4th Corporate Division of the Rio de Janeiro State Justice Tribunal in Rio de Janeiro, case number 0392571-55.2013.8.19.0001. (Reporting by Jeb Blount and Sabrina Lorenzi; editing by Andrew Hay)

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Once giant FX Concepts' assets now just $2 mln-court filings

By Gertrude Chavez-Dreyfuss

NEW YORK Mon Nov 25, 2013 5:03pm EST

NEW YORK Nov 25 (Reuters) - FX Concepts, once the largest currency hedge fund in the world, has less than $2 million in assets now and $79 million in liabilities, according to the latest court filings on Monday.

The fund filed for bankruptcy protection more than a month ago as its assets dwindled due to market losses and redemptions from major clients.

At its peak in 2007, the $14 billion that FX Concepts had in assets under management made it the largest currency hedge fund in the world.

The latest court filings showed FX Concepts has $1.62 million in assets and about $79.2 million in liabilities. The biggest part of those assets is a $1.61 million loan note from FX Concepts Chairman and Chief Investment Officer John Taylor.

The filings on Monday also stated FX Concepts' income for the past three years were $173,651.68 in 2011, $1.13 million in 2012, and $35,785.47 from January to September 30, 2013.

The fund's biggest debt is a $34 million unsecured note to Asset Management Finance (AMF), which is majority-owned by Credit Suisse and provides flexible capital to investment firms.

Court documents showed that AMF provided $40 million in financing to FX Concepts in 2006 and 2010 through two revenue-sharing agreements. In December 2012, as returns dwindled in the FX market, Taylor renegotiated the financing package. AMF then agreed to defer eight quarterly revenue-sharing payments and in return Taylor personally guaranteed those obligations.

At the beginning of the year, the company paid $749,309 to company insiders, described as "shareholder distribution."

The biggest payment was made to Taylor and his trust, totalling $376,433. Taylor and his trust own roughly 41 percent of the company.

FX Concepts suffered from poor returns due to the weak performance of its systematic trading business. About 90 percent of the fund's trading is done through the systematic approach, which involves the use of computer models in trading.

This approach has not worked in 2013. As returns dwindled, investors withdrew. The final blow came in early September when the San Francisco Employee Retirement System gave notice that it was redeeming its investment in full. That investment accounted for 66 percent of FX Concepts' total assets under management at that point. (Editing by Kenneth Barry)

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UPDATE 2-Judge to rule on Detroit bankruptcy petition on Dec. 3

Mon Nov 25, 2013 5:52pm EST

By Joseph Lichterman

DETROIT Nov 25 (Reuters) - The judge overseeing Detroit's historic bankruptcy petition set Dec. 3 as the date for issuing his decision on whether the cash-strapped city qualifies as bankrupt under federal law, according to a court filing posted Monday.

U.S. Judge Steven Rhodes will hand down his ruling in federal bankruptcy court in Detroit at 9 a.m. EST on that day. A written decision will be available shortly afterward, the court filing said.

No matter how Rhodes rules, it is expected that his decision will be appealed. Rhodes also is considering a request from one of the objectors, the American Federation of State, County and Municipal Employees, Detroit's largest union, which asked the judge earlier this month to allow any appeal to go directly to the U.S. 6th Circuit Court of Appeals, bypassing the U.S. District Court in Detroit.

Rhodes' ruling will cap months of anticipation, since Detroit filed its bankruptcy petition on July 18. During a nine-day trial that wrapped up on Nov. 8, Detroit sought to prove that it is bankrupt.

Under Chapter 9 of the federal bankruptcy code, it is Detroit's burden to prove it is insolvent, it had proper approval to file for bankruptcy and that it negotiated in good faith with creditors or that negotiations were impractical.

The city's unions, public-sector retirees and two pension funds have objected to Detroit's bankruptcy filing, arguing that Kevyn Orr, Detroit's state-appointed emergency manager, purposely drove the city into bankruptcy court and did not negotiate with creditors for an out-of-court settlement.

The trial included a rare appearance from a sitting governor on the witness stand as Michigan Governor Rick Snyder, who approved the city's bankruptcy filing, testified. Orr also testified along with a long line of other government officials, consultants and union leaders.

City lawyers argued during the eligibility trial that Detroit acted in good faith prior to the bankruptcy filing, but that negotiations were impractical because of the large number of creditors and an unwillingness on the part of union, retiree and pension fund negotiators to make concessions.

Bruce Bennett, one of the city's lead bankruptcy attorneys, said in his closing arguments earlier this month that the city recognized it would be nearly impossible to negotiate with creditors, but decided to try anyway.

"You absolutely can believe in your head that this is never going to work, but try anyway," he said. "And I think that is the situation in this case."

With $18.5 billion in debt and liabilities, Detroit is the largest U.S. city to file for bankruptcy. Its liabilities include $5.7 billion for healthcare and other obligations, and $3.5 billion involving pensions, the city says.

The unions, retirees and pension funds have argued that Michigan's constitution protects city pensions from being cut, but Orr has said pensions are likely to be reduced as part of the city's restructuring.

Bankruptcy opponents also argued Detroit rushed into court without providing enough time or information to facilitate negotiations between the city's release of its initial proposal to creditors on June 14 and when it filed for bankruptcy in July.

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UPDATE 2-Fisker files Chapter 11 as investor group buys company

Fri Nov 22, 2013 6:42pm EST

By Deepa Seetharaman and Timothy Gardner

DETROIT Nov 22 (Reuters) - Fisker Automotive, the moribund maker of the Karma plug-in hybrid sports cars that was backed with a loan by the U.S. government, filed for Chapter 11 bankruptcy protection on Friday after lengthy efforts by investors to salvage the company.

The filing comes after the Anaheim, California-based company agreed to sell itself to an investor group, Hybrid Technology LLC. The group bought a loan extended by the U.S. Department of Energy, originally worth $168 million, for $25 million.

In all, the DOE has recouped about $53 million on its $192 million investment in Fisker.

In a statement, Hybrid Technology said the purchase of the government loan was the first step toward eventually restarting production and sale of the Karma, which Fisker has not built in about 18 months, and the development of other hybrid-electric vehicles.

"As we continue to examine Fisker's opportunities, we will be making decisions about the structure and footprint of the new business," a spokeswoman for Hybrid Technology, Caroline Langdale, said in a statement.

Although the design of the Karma drew rave reviews, it had many quality problems that hurt the company's image and drained its cash. In April, Fisker fired most of its staff to save cash following an unsuccessful search for a buyer.

Its financial woes left Fisker unable to repay millions in outstanding bills to suppliers, the DOE and others. The DOE put the loan up for auction in mid-October.

A subsidiary of Hybrid Technology, Hybrid Tech Holdings LLC, is purchasing Fisker's assets and will provide $8 million in debtor-in-possession financing.

Fisker won a $529 million loan in 2009 as part of the Obama administration's effort to boost advanced vehicle development in the United States.

But the DOE froze Fisker's credit line in mid-2011 after the company missed certain performance targets. Fisker's struggles also fueled Republican criticism of the DOE's role in promoting green cars.

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BRIEF-Furniture Brands says court declares KPS capital Partners' affiliate as winning bidder of co

Fri Nov 22, 2013 7:06pm EST

Nov 22 (Reuters) - Furniture Brands International Inc : * Announces results of court-supervised sales process * Bankruptcy court declared affiliate of KPS capital partners lp as winning

bidder to acquire substantially all of co's assets * Says co and KPS expect to complete the transaction in the next several business days * Source text for Eikon * Further company coverage

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Chrysler IPO could raise $1.5 bln-$2 bln - WSJ

Mon Nov 25, 2013 3:25am EST

Nov 25 (Reuters) - Chrysler Group LLC expects to set a price range for its initial public offering as early as this week to raise $1.5 billion to $2 billion, the Wall Street Journal reported, citing people familiar with the matter.

The U.S. automaker expects to complete the offering in the first half of December in an effort to beat the IPO market slowdown around the holidays, the Journal said. ()

Reuters reported last week that Chrysler had added four banks to help underwrite the IPO and that the automaker was looking to launch the deal as soon as early December.

Chrysler, which is majority owned by Italian automaker Fiat SpA, filed paperwork to go public in late September after Fiat was unable to reach a buyout deal with Chrysler's second-largest shareholder, a retiree healthcare trust affiliated with the United Auto Workers union.

Fiat, which owns 58.5 percent of Chrysler, wants to take full control and buy out the rest of the stock owned by the trust, a voluntary employee beneficiary association (VEBA), but has balked at the more than $5 billion being demanded.

In response, the trust exercised a right enshrined in Chrysler's 2009 government-financed bankruptcy to go forward with an initial public offering, stepping up pressure on Sergio Marchionne, chief executive of both automakers, to reach a deal.

The expected price range would imply a total value for Chrysler of between $9 billion and $12 billion, based on the 16.6 percent stake that the trust has demanded the company register for the IPO, the Journal said.

At the proposed IPO price, the trust's stake will be valued at between $3.7 billion and $5 billion. It had valued its ownership stake in Chrysler at $3.6 billion at the end of 2012, according to a filing with the U.S. Department of Labor.

Chrysler and Fiat could not immediately be reached for comment outside of regular U.S. business hours.

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CORRECTED-Fisker files Chapter 11, U.S. recoups $25 mln in loan sale

Fri Nov 22, 2013 5:34pm EST

WASHINGTON/DETROIT Nov 22 (Reuters) - The U.S. Department of Energy sold its green-technology loan in Fisker Automotive to an investor group for $25 million, a spokesman for Tennessee Republican Marsha Blackburn said on Friday.

Fisker, the dormant California-based maker of hybrid-electric sports cars, also filed for Chapter 11 bankruptcy protection Friday as part of a restructuring effort.

Hybrid Tech Holdings LLC is purchasing Fisker's assets and will provide $8 million in debtor-in-possession financing to fund the sale and restructuring.

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UPDATE 2-Fisker files Chapter 11 as investor group buys company

Fri Nov 22, 2013 6:42pm EST

By Deepa Seetharaman and Timothy Gardner

DETROIT Nov 22 (Reuters) - Fisker Automotive, the moribund maker of the Karma plug-in hybrid sports cars that was backed with a loan by the U.S. government, filed for Chapter 11 bankruptcy protection on Friday after lengthy efforts by investors to salvage the company.

The filing comes after the Anaheim, California-based company agreed to sell itself to an investor group, Hybrid Technology LLC. The group bought a loan extended by the U.S. Department of Energy, originally worth $168 million, for $25 million.

In all, the DOE has recouped about $53 million on its $192 million investment in Fisker.

In a statement, Hybrid Technology said the purchase of the government loan was the first step toward eventually restarting production and sale of the Karma, which Fisker has not built in about 18 months, and the development of other hybrid-electric vehicles.

"As we continue to examine Fisker's opportunities, we will be making decisions about the structure and footprint of the new business," a spokeswoman for Hybrid Technology, Caroline Langdale, said in a statement.

Although the design of the Karma drew rave reviews, it had many quality problems that hurt the company's image and drained its cash. In April, Fisker fired most of its staff to save cash following an unsuccessful search for a buyer.

Its financial woes left Fisker unable to repay millions in outstanding bills to suppliers, the DOE and others. The DOE put the loan up for auction in mid-October.

A subsidiary of Hybrid Technology, Hybrid Tech Holdings LLC, is purchasing Fisker's assets and will provide $8 million in debtor-in-possession financing.

Fisker won a $529 million loan in 2009 as part of the Obama administration's effort to boost advanced vehicle development in the United States.

But the DOE froze Fisker's credit line in mid-2011 after the company missed certain performance targets. Fisker's struggles also fueled Republican criticism of the DOE's role in promoting green cars.

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BRIEF-Furniture Brands says court declares KPS capital Partners' affiliate as winning bidder of co

Fri Nov 22, 2013 7:06pm EST

Nov 22 (Reuters) - Furniture Brands International Inc : * Announces results of court-supervised sales process * Bankruptcy court declared affiliate of KPS capital partners lp as winning

bidder to acquire substantially all of co's assets * Says co and KPS expect to complete the transaction in the next several business days * Source text for Eikon * Further company coverage

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UPDATE 2-Judge denies bankruptcy protection for OGX foreign units

Thu Nov 21, 2013 6:20pm EST

(Adds judge ruling and context))

By Sabrina Lorenzi

RIO DE JANEIRO Nov 21 (Reuters) - A Brazilian judge on Thursday denied bankruptcy protection for the foreign subsidiaries of OGX in a decision that may complicate the recovery of the oil company, which is controlled by former billionaire Eike Batista.

Rio de Janeiro Judge Gilberto Matos did, however, accept bankruptcy protection for company's Brazil-based units OGX Petróleo e Gás SA and OGX Petróleo e Gas Participações SA.

OGX sought court protection from creditors on Oct. 30 after it failed to convince them to refinance more than $5.1 billion in obligations, in Latin America's largest-ever corporate bankruptcy filing.

Marcio Costa, a lawyer for OGX, told Reuters that the judge's decision would complicate the recovery process, adding that the company plans to appeal the ruling.

"This decision disrupts the judicial recovery process, allowing some lenders to seek debt payments in Brazil and Austria," Costa said. "Those funds were raised abroad to be used in Brazil. The judge didn't take that into consideration."

OGX has two foreign subsidiaries, OGX Internacional and OGX Austria. The judge denied the request for those units on the grounds that bankruptcy protection should be decided in the countries where they are based, according to a copy of the judge's decision.

For the Brazilian operations, the judge's decision gives OGX 60 days to come up with a restructuring plan. OGX creditors including California-based bond fund Pacific Investment Management Co (PIMCO) and New York-based investment fund BlackRock Inc will then have 30 days to endorse or reject the plan.

OGX's sister company shipbuilder OSX Brasil SA filed for bankruptcy protection on Nov 11. The company is expected to get court protection from creditors.

Batista, 56, a dealmaker who once boasted he would become the world's richest man, has seen his personal fortune plunge by more than $30 billion in the last 18 months as investors punished the share price of his listed companies.

The collapse of his empire stems from the failure of OGX to meet its ambitious oil production targets despite repeatedly reassuring investors that copious amounts of oil would soon flow.

The downward spiral forced Batista to start breaking up his Grupo EBX conglomerate, which also included port, mining and energy interests. (For a FACTBOX on the unraveling of EBX, see )

Next week OGX's board is expected to change the name of the company to remove the trademark letter X that stood for "multiplication of wealth" and branded all the companies in Batista's now-crumbling industrial empire.

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UPDATE 3-Judge leaves OGX foreign units out of bankruptcy protection

Thu Nov 21, 2013 7:05pm EST

By Sabrina Lorenzi

RIO DE JANEIRO Nov 21 (Reuters) - A Brazilian judge on Thursday accepted a request for bankruptcy protection from former billionaire Eike Batista's oil company, OGX, but denied the same protection for two small foreign subsidiaries in a potential setback for the company.

Rio de Janeiro Judge Gilberto Matos granted bankruptcy protection for the company's Brazil-based units OGX Petróleo e Gás SA and OGX Petróleo e Gas Participações SA.

OGX sought court protection from creditors on Oct. 30 after it failed to convince them to refinance more than $5.1 billion in obligations, in Latin America's largest-ever corporate bankruptcy filing.

Marcio Costa, a lawyer for OGX, told Reuters the decision to deny protection for two foreign units would complicate the recovery process, adding that the company plans to appeal the ruling.

"This decision disrupts the judicial recovery process, allowing some lenders to seek debt payments in Brazil and Austria," Costa said. "Those funds were raised abroad to be used in Brazil. The judge didn't take that into consideration."

OGX has two foreign subsidiaries, OGX Internacional and OGX Austria. The judge denied the request for those units on grounds bankruptcy protection should be decided in the countries where they are based, according to a copy of the judge's decision.

"This would have created legal uncertainty for international creditors who would have not been allowed to go on trial for their credits under our legislation," Matos said.

For the Brazilian operations, the judge's decision gives OGX 60 days to come up with a restructuring plan. OGX creditors including California-based bond fund Pacific Investment Management Co (PIMCO) and New York-based investment fund BlackRock Inc will then have 30 days to endorse or reject the plan.

OGX's sister company shipbuilder OSX Brasil SA filed for bankruptcy protection on Nov 11. The company is also expected to get court protection from creditors.

Batista, 56, a dealmaker who once boasted he would become the world's richest man, has seen his personal fortune plunge by more than $30 billion in the last 18 months as investors punished the share price of his listed companies.

The collapse of his empire stems from the failure of OGX to meet its ambitious oil production targets despite repeatedly reassuring investors that copious amounts of oil would soon flow.

The downward spiral forced Batista to start breaking up his Grupo EBX conglomerate, which also included port, mining and energy interests. (For a FACTBOX on the unraveling of EBX, see )

Next week OGX's board is expected to change the name of the company to remove the trademark letter X that stood for "multiplication of wealth" and branded all the companies in Batista's now-crumbling industrial empire.

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Settlement talks between Madoff trustee, investor collapse -WSJ

Thu Nov 21, 2013 7:30pm EST

Nov 21 (Reuters) - A planned $800 million settlement between Kingate Management, one of the largest investors in Bernard Madoff's fraud, and a court-appointed trustee recouping money for the swindler's victims has broken down, The Wall Street Journal said on Thursday, citing people familiar with the matter.

The breakdown followed Monday's announcement by the U.S. Department of Justice of a plan to exclude Kingate and other "feeder funds" that sent money to Madoff from participating in a separate $2.35 billion Madoff Victim Fund, the newspaper said, citing the people.

According to the newspaper, a settlement between Kingate and Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, depended on Kingate receiving money from the victim fund, and sharing it with sums that Picard collects.

Picard has not allowed people who invested indirectly with Madoff through third parties such as Kingate to recover for their losses.

Such investors may for the first time recover by going through the victim fund, which is overseen by Richard Breeden, a former U.S. Securities and Exchange Commission chairman.

Picard filed more than 1,000 lawsuits to recover sums linked to Madoff, including a lawsuit against Kingate in 2009.

According to the Journal, Picard and Kingate came close to a settlement earlier this year in which Kingate would have returned about $800 million to the trustee and retained a claim against him.

But the newspaper said that accord assumed that Breeden would follow an approach similar to Picard's, and he has not.

Amanda Remus, a spokeswoman for Picard, said the trustee does not comment on settlement talks. Susheel Kirpalani, a lawyer for Kingate, also declined to comment.

Picard has said he has recovered about $9.5 billion for Madoff's victims, and returned more than half of this sum.

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Talvivaara says failed to raise funds for debt restructuring

HELSINKI Thu Nov 21, 2013 2:22am EST

HELSINKI Nov 21 (Reuters) - Finnish miner Talvivaara said it failed to raise additional funds from a group of shareholders to restructure its debt and repeated it may face bankruptcy if it was not admitted to the court-supervised overhaul.

The company said it is assessing other funding options and could use its own cash for the overhaul process. It said it had enough cash to last until the first quarter of 2014.

Talvivaara, hurt by falling nickel prices and production problems, last week said it would seek a court-supervised overhaul. (Reporting by Jussi Rosendahl; Editing by David Holmes)

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UPDATE 1-Talvivaara says fails to raise funds for debt restructuring

Thu Nov 21, 2013 3:07am EST

* Fails to raise 40 mln euros for debt restructuring

* Says cash enough to last until Q1 next year (Adds background, detail)

By Jussi Rosendahl

HELSINKI, Nov 21 (Reuters) - Finnish miner Talvivaara said it had failed to raise additional funds from a group of shareholders to restructure its debt and repeated it may face bankruptcy unless it finds new sources of finance.

The company said it is assessing other funding options and could use its own cash for the overhaul process. It said it had enough cash to last until the first quarter of 2014.

Talvivaara, hurt by falling nickel prices and production problems, last week said it would seek a court-supervised overhaul. It also said it is shutting its metals recovery plant for about a month and discontinuing ore production for around six months to cut costs.

It had sought an additional 40 million euros ($54 million) to restructure its debt, but the group of stakeholders late on Wednesday said they were unable to offer the funding, Talvivaara said.

"Talvivaara ... would expect to file for bankruptcy proceedings unless other alternatives have materialised by that time (the first quarter of next year)," in case it was not admitted to the overhaul or such an overhaul fails, the company said.

Talvivaara's biggest shareholder is the Finnish state and the company is a major employer in the rural Kainuu region of northeast Finland.

However, the government has said it would not bear the main responsibility of bailing out the company. (Editing by David Holmes)

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Portugal's BES marketing Tier 2 capital bond

By John Geddie

Thu Nov 21, 2013 3:47am EST

LONDON, Nov 21 (IFR) - Banco Espirito Santo has set initial price thoughts on its new 10-year non-call five Tier 2 euro-denominated bond at low to mid 7%, bankers managing the deal said on Thursday.

BES is rated Ba3/BB- (Moody's/S&P) at the senior level, but the debt capital instrument is rated B2/B. Portuguese banks have not raised subordinated debt capital in the past four years.

Bank of America Merrill Lynch, Citi, Espirito Santo Investment Bank and Morgan Stanley are handling the deal, and expect to price the bonds later on Thursday. (Reporting by John Geddie; editing by Alex Chambers)

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Detroit could pay higher loan rate, unsealed letter shows

By Tom Hals and Karen Pierog

Mon Nov 18, 2013 8:41pm EST

Nov 18 (Reuters) - Detroit could end up paying almost twice as much in interest as previously disclosed on a $350 million loan arranged by Barclays Capital, according to a fee letter made public on Monday after a judge ordered it unsealed last week.

U.S. Judge Steven Rhodes on Thursday thwarted efforts to keep the cost of a debtor-in-possession (DIP) financing under wraps, noting the so-called fee letter was subject to Michigan's Freedom of Information Act.

The letter disclosed that Barclays would collect 1.25 percent of the loan, but not less than $750,000, for committing to a controversial financing deal with Detroit.

The city and Barclays Capital had requested the fees be kept a secret because the details are commercially sensitive and might raise the price of the loan.

Barclays declined to comment and the spokesman for the city state-appointed emergency manager did not immediately respond to a request for comment.

One financial adviser who specializes in restructuring work said opponents of Detroit's proposed bankruptcy could object to the "market flex" provision of the fee letter.

"In Detroit you'll see objections to everything. I wouldn't be surprised if you see this market flex become a bigger part of the discussion," he said. He said the fees were "not all that egregious" for the size of the loan.

Opponents to Detroit's bankruptcy could try to make the argument that the flex provision essentially allows the interest on the loan to be raised to 6.5 percent from the 3.5 percent previously cited by the city.

Barclays is allowed raise the rate within 90 days of the closing of the loan if the bank is unable to find investors to buy up to half the loan, according to the unsealed fee letter.

Detroit reached the loan agreement with Barclays, a unit of Britain's Barclay's Plc, in October, but the deal still must be approved by the judge. About $230 million of the proceeds would be used to end interest-rate swaps contracts that the city has with Bank of America Corp's Merrill Lynch Capital Services and UBS AG. The swaps were related to pension debt sold by Detroit.

About $120 million of the DIP financing would be used to improve city services. The financing would be largely secured with a pledge of Detroit's income tax and casino tax revenue. The city has said the financing will carry a rate of the London Interbank Offered Rate (LIBOR) plus 2.5 percent, subject to market fluctuations, the city said in October. The loan terms set the LIBOR at no lower than 1 percent, which is well above its current rate.

Bond insurers and others have objected to Detroit's proposal to pay off its swap counterparties ahead of other creditors.

Rhodes, who is overseeing the historic municipal bankruptcy case Detroit filed in July, has scheduled a hearing beginning Dec. 10 to decide whether or not to approve the financing.

The Barclays financing was arranged after considering proposals from 16 potential lenders.

The financial adviser said those that lost out on the opportunity to lend to the city might now present alternatives to the judge with the argument that the "market flex" rates could make Barclays loan less competitive.

Detroit is the first large U.S. city to seek DIP financing after filing for the biggest Chapter 9 municipal bankruptcy in U.S. history. Rhodes can rule at any time on whether the city meets eligibility requirements for bankruptcy, which include insolvency and good-faith negotiations with creditors ahead of the filing.

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BRIEF- KPN reaches tentative agreement on settlement of KPNQwest

AMSTERDAM Tue Nov 19, 2013 2:42am EST

AMSTERDAM Nov 19 (Reuters) - Koninklijke KPN NV : * Tentative deal on terms of potential settlement on litigation initiated by bankruptcy trustees of KPNQwest * Potential settlement will be 50 mln euros * Total claim of the trustees amounts to approximately euros 2.2 bln * To waive certain claims against the bankruptcy estate, which have been contested by the trustees * KPN, CenturyLink, trustees reached tentative agreement for total potential settlement of EUR 260 mln

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KPN reaches tentative settlement over KPNQwest bankruptcy

BRUSSELS Tue Nov 19, 2013 3:06am EST

BRUSSELS Nov 19 (Reuters) - Dutch telecoms group KPN said on Tuesday that it had reached a tentative agreement to pay 50 million euros ($67.6 million) to settle litigation related to the bankruptcy of its former joint venture KPNQwest.

KPNQwest, a wholesale fibre-optic telecoms venture between U.S. phone carrier Qwest, since acquired by CenturyLink, and KPN for corporate customers, was listed in 1999 but went bankrupt in 2002 after the telecoms and technology bubble burst.

The trustees accused KPNQwest of mismanagement and held its shareholders liable for damages. It had been seeking 2.2 billion euros.

KPN said in a statement on Tuesday that it, CenturyLink and the trustees had reached a tentative agreement for a potential total settlement of 260 million euros, towards which KPN would contribute 50 million euros.

The tentative agreement is subject to several conditions, including the approval of the Dutch bankruptcy court.

Assuming a definitive settlement is agreed, litigation will end and KPN will waive certain claims against the bankruptcy estate.

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Judge rules against ResCap noteholders, knocks legal tactics

Fri Nov 15, 2013 2:51pm EST

* Judge calls noteholder tactics "unfortunate"

* Judge describes ruling as a split decision

* Disputes to spill into Tuesday's confirmation hearing

By Tom Hals

Nov 15 (Reuters) - Residential Capital LLC, a bankrupt mortgage lender, won a court ruling on Friday that it does not owe approximately $340 million in interest claimed by junior secured noteholders.

The ruling sets the stage for hearings next week on ResCap's plan to exit bankruptcy. U.S. Bankruptcy Judge Martin Glenn also criticized the legal tactics of the noteholders, who are virtually alone in opposing that plan.

Glenn ruled that the holders of the junior secured notes are undersecured, which prevents them from collecting interest that accumulated since ResCap filed for bankruptcy in May 2012.

Glenn, in New York, described his 119-page opinion, which covered a range of disputes, as a split decision. He ended it by saying that the noteholders have chosen to "contest everything and concede nothing (even when the court has questioned whether they were acting in good faith)."

He said their conduct led to drawn-out proceedings that have reduced the money available for other creditors.

"This is unfortunate!" Glenn wrote.

Aurelius Capital Management and Marathon Asset Management, two of the largest holders of the notes, did not immediately respond to requests for comment. Another investment firm holding a large amount of the notes, Davidson Kempner Capital Management, declined to comment.

Lewis Kruger, the chief restructuring officer for ResCap, declined to comment.

ResCap sought court protection on May 14, 2012, to address soaring mortgage liabilities. It had serviced about $374 billion of U.S. residential mortgage loans before its bankruptcy.

The dispute stems from a proposal to repay creditors that was backed by ResCap and its committee of unsecured creditors and funded with a $2.1 billion payment by parent Ally Financial Inc.

The proposed plan would pay junior secured noteholders $2.2 billion, which is their entire principal and the interest that was due prior to the bankruptcy.

However, the investment funds disputed that their notes were undersecured, and a trial on the issue began in October.

In his ruling on Friday, Glenn found the noteholders' collateral is worth $1.9 billion, less than the value of the securities and therefore leaving the notes undersecured.

Glenn wrote that he expected the noteholders to continue their give-no-ground approach in a hearing on ResCap's plan of reorganization, which is scheduled to begin on Tuesday.

U.S. taxpayers own roughly three-quarters of Ally, which was once part of General Motors Corp and which did not file for bankruptcy protection. Ally is focusing on auto lending, and trying to repay billions of dollars it still owes the government.

The case is In re Residential Capital LLC, U.S. Bankruptcy Court for the Southern District of New York, No. 12-12020.

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UPDATE 1-Max Bahr to enter liquidation after sale talks fail

Fri Nov 15, 2013 10:10am EST

* Talks with peer Hellweg fail over demands from RBS

* Hellweg unwilling to grant RBS a full guarantee

* Max Bahr to be sold off piecemeal, 3,600 jobs at risk (Adds statement from administrator)

By Arno Schuetze and Alexander Hübner

FRANKFURT, Nov 15 (Reuters) - Insolvent German home improvement store chain Max Bahr is to enter liquidation after talks to sell the retailer to rival Hellweg failed, its administrator said on Friday.

Max Bahr's parent Praktiker is already being liquidated after the administrator failed to find a buyer for the whole group.

The Max Bahr negotiations were at an advanced stage but collapsed over demands from Royal Bank of Scotland, owner of 66 of the chain's 73 buildings, the administrator said. He added that 3,600 jobs are now at risk.

Hellweg had teamed up with former Max Bahr chief Dirk Moehrle to make an offer of more than 100 million euros ($134 million), sources told Reuters last month.

But Hellweg declined to grant RBS a guarantee that would have enabled the bank to hold it accountable if Max Bahr ran into financial trouble, the administrator said. No-one at Hellweg was available for comment.

RBS, which declined comment on the matter, is now looking to rent out the Max Bahr sites. OBI, Rewe/Toom and Hagebau have expressed interest in about half the sites, two people familiar with the situation said.

RBS also turned down a bid from German DIY group Globus, which had offered to buy 60 Max Bahr outlets, after RBS had already turned down an earlier offer from Globus to rent stores, albeit at lower prices, another source said.

Praktiker, whose blue and yellow branded stores selling paints, tools and gardening products are a familiar sight in Germany's out-of-town shopping centres and which employed around 20,000 full- and part-time staff, filed for insolvency in July after talks with creditors failed.

The creditors had hoped that a sale of Max Bahr could help them recover some of their losses, but those hopes died when Max Bahr also filed for insolvency.

The Praktiker stores have already started a clearance sale and the same will now shortly happen in Max Bahr stores.

($1 = 0.7430 euros) (Editing by David Goodman and David Holmes)

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LightSquared lodges claims against Ergen, Dish

By Billy Cheung and Amanda Becker

NEW YORK Sun Nov 17, 2013 2:00pm EST

NEW YORK Nov 17 (Reuters) - Bankrupt wireless communications firm LightSquared Inc has filed a lawsuit accusing Dish Network Corp and its chairman, Charles Ergen, of improperly trying to take control of LightSquared's broadband spectrum.

The lawsuit, filed in the U.S. bankruptcy court in New York late on Friday, is an effort to revive an earlier case by LightSquared's controlling stakeholder, Phil Falcone's Harbinger Capital Partners, that was thrown out last month.

LightSquared alleges that Dish, Ergen, and other Ergen-controlled entities made improper trades and violated a key credit agreement in order to become LightSquared's largest creditor, with the intention of taking control of LightSquared's spectrum, the airwaves used for wireless communications.

A spokesman for Dish called the allegations a "desperate measure" by LightSquared to avoid selling its assets.

The lawsuit is the latest front in an ongoing battle between Ergen and Falcone for control of LightSquared.

LightSquared filed for Chapter 11 in May 2012 after the Federal Communications Commission tentatively blocked it from building a wireless network amid concerns that the signal from the network could interfere with the global positioning satellite industry.

In its lawsuit on Friday, LightSquared alleged that an Ergen entity surreptitiously amassed a controlling block of LightSquared loans. It said this entity delayed the closing of a number of large loan trades to hide the identity of the buyer, namely Ergen, and derail negotiations with creditors as LightSquared neared the end of a deadline to file a restructuring plan.

The cumulative effect was to provide Dish with substantial leverage over an auction of LightSquared's spectrum, which is set to be held in December, the lawsuit said.

The lawsuit seeks to disallow Ergen's claims in the bankruptcy process that result from the debt purchases and subordinate those claims behind other creditors. It is also seeking punitive and compensatory damages.

"This elaborate distraction seems designed to shift attention from years of LightSquared mismanagement leading to bankruptcy," Dish spokesman Bob Toevs wrote in an email.

ONGOING LITIGATION

LightSquared's complaint on Friday was styled as a "complaint-in-intervention," meaning LightSquared is essentially trying to step in as a plaintiff in an earlier lawsuit.

The lawsuit was originally filed in August by Harbinger, which owns about 80 percent of LightSquared. U.S. Bankruptcy Judge Shelley Chapman, who is overseeing LightSquared's restructuring, last month granted Ergen's request to dismiss the case, but said other LightSquared entities were not barred from bringing the allegations.

Harbinger and LightSquared's lenders have proposed competing plans for how to restructure LightSquared. Lenders are pushing for an auction while Harbinger has contended that it can pay back creditors and still retain ownership. Creditors are currently voting on the proposals, and the auction is ultimately expected to take place.

In separate litigation, LightSquared has sued members of the GPS industry, alleging they raised no concerns about interference until after LightSquared had pumped millions of dollars into its network. The defendants in that case, which include Deere & Co, on Friday sought to have the case moved to federal court from bankruptcy court.

The case is LightSquared Inc et al. v. Ergen et al., U.S. Bankruptcy Court for the Southern District of New York, No. 13-1390.

The bankruptcy is: In re LightSquared Inc., in the same court, No. 12-12080.

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Barclays finds home for riskiest CoCos yet

Fri Nov 15, 2013 8:21am EST

* UK bank attracts US$10bn of orders for Additional Tier 1 bond

* European issuers look to put dent in EUR600bn capital pile

* Market praises Barclays for careful execution

By Aimee Donnellan

LONDON, Nov 15 (IFR) - A high-risk jumbo CoCo sold by Barclays this week has revealed the deep pockets of the US investor base and opened the door for other European banks to begin tackling the EUR600bn capital pile that needs to be raised in the coming years.

The first Additional Tier 1 bond to target the US investor base had a lot riding on it. Barclays needs to raise a further US$1.25bn before June next year, European banks are coming under increasing pressure to boost their leverage ratios, and placing these instruments in the US market remains the cheapest option.

The market for these new-style hybrid bonds could grow to at least EUR450-600bn in Europe and US$400-500bn in the US, according to estimates by Citigroup.

"This is a very important trade for Barclays and other UK banks as it highlights the demand for equity convertible structures from the US investor base," said Peter Jurdjevic, head of balance sheet solutions at Barclays.

Barclays' own syndicate team, along with Citigroup, Deutsche Bank, Goldman Sachs, SMBC Nikko, UBS and Wells Fargo sold the SEC-registered deal mainly to US accounts.

Investors will receive an 8.25% coupon as a reward for the risks, which include being converted into equity should the bank's fully-loaded Core Tier 1 ratio fall below 7%, as well as coupons not being paid at all and being lost forever.

The 7% fully-loaded trigger excludes Barclays' GBP7.6bn loss-absorbing cushion of goodwill capital and is more aggressive than previous CoCo trades.

The deal's pricing and USD10bn order book should encourage other potential issuers into the market, which has already seen AT1 dollar bonds from Societe Generale and BBVA in Reg S format and a euro trade from Banco Popular Espanol.

"The fact that we have had a range of deals including a Spanish bank issue in the AT1 market, and now Barclays with a fully loaded high trigger instrument, shows the development of the market and will provide important pricing references for others seeking to access the space," said Mark Geller, head of European financial institutions syndicate at Barclays.

RAISE THOSE RATIOS

Global regulators have taken a more aggressive approach to force banks to clamp down on leverage - a measure of risk that regulators have recently brought into focus - and are allowing issuers to use Additional Tier 1 bonds to meet some of those requirements.

In the case of Barclays, the bank has been set a 3% leverage ratio target by the UK regulator which it needs to hit by June 2014. That ratio remained at 2.2% in the third quarter, even though the bank shed more than EUR100bn of assets and completed a GBP5.95bn rights issue.

Luckily for Barclays and other issuers of deeply subordinated debt, the market backdrop is incredibly supportive.

Yields have been falling across the bank capital spectrum in recent months, pushing investors into riskier securities.

Added to that, the cost of insuring subordinated bank debt has tightened throughout the course of the year, which in turn has driven down the coupons banks have to pay on these instruments.

But despite optimal market conditions, Additional Tier 1 is far from an easy sell. Coupon deferrals and a fully loaded high trigger are just some of the features Barclays had to include in its latest transaction to meet the UK's Prudential Regulation Authority and CRD IV requirements.

"The big worry for this transaction and ones like it is the coupon deferral risk," said Dierk Brandenburg, a senior bank credit analyst at Fidelity.

"The coupons are subordinated to the previous CoCos, but in this case you are slightly better off because you are getting equity instead of being written down to nothing if Barclays hits its trigger."

But US fund managers showed up in force - evidence, bankers say, that the market is maturing.

"Barclays has taken the whole market a step further with this transaction," said Simon McGeary, head of new products, EMEA, at Citigroup.

"They had grown up conversations with a new investor base, clearly set out the risks and mitigants for investors and have been rewarded for their efforts."

Barclays decided not to tighten pricing from initial thoughts in the low 8% range, setting final terms at 8.25% for what was a modestly sized USD2bn deal given the hefty level of orders.

"We deliberately determined to price the security to perform in the secondary market as a quid pro quo for the trust and loyalty showed by our principal investors who are vital in ensuring the development of this important asset class," said Steven Penketh, managing director at Barclays Bank.

The deal's success - bonds have traded up two points - should help the bank's next issue, and other borrowers' offerings too.

"The placement of this bond with a mixture of US, European and Asian real money accounts with a bit of hedge fund support will assist its liquidity and stability in the future and show other issuers the kinds of investors they can sell these instruments to," said Alexandra MacMahon, head of EMEA FIG debt capital markets at Citigroup.

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UPDATE 1-Max Bahr to enter liquidation after sale talks fail

Fri Nov 15, 2013 10:10am EST

* Talks with peer Hellweg fail over demands from RBS

* Hellweg unwilling to grant RBS a full guarantee

* Max Bahr to be sold off piecemeal, 3,600 jobs at risk (Adds statement from administrator)

By Arno Schuetze and Alexander Hübner

FRANKFURT, Nov 15 (Reuters) - Insolvent German home improvement store chain Max Bahr is to enter liquidation after talks to sell the retailer to rival Hellweg failed, its administrator said on Friday.

Max Bahr's parent Praktiker is already being liquidated after the administrator failed to find a buyer for the whole group.

The Max Bahr negotiations were at an advanced stage but collapsed over demands from Royal Bank of Scotland, owner of 66 of the chain's 73 buildings, the administrator said. He added that 3,600 jobs are now at risk.

Hellweg had teamed up with former Max Bahr chief Dirk Moehrle to make an offer of more than 100 million euros ($134 million), sources told Reuters last month.

But Hellweg declined to grant RBS a guarantee that would have enabled the bank to hold it accountable if Max Bahr ran into financial trouble, the administrator said. No-one at Hellweg was available for comment.

RBS, which declined comment on the matter, is now looking to rent out the Max Bahr sites. OBI, Rewe/Toom and Hagebau have expressed interest in about half the sites, two people familiar with the situation said.

RBS also turned down a bid from German DIY group Globus, which had offered to buy 60 Max Bahr outlets, after RBS had already turned down an earlier offer from Globus to rent stores, albeit at lower prices, another source said.

Praktiker, whose blue and yellow branded stores selling paints, tools and gardening products are a familiar sight in Germany's out-of-town shopping centres and which employed around 20,000 full- and part-time staff, filed for insolvency in July after talks with creditors failed.

The creditors had hoped that a sale of Max Bahr could help them recover some of their losses, but those hopes died when Max Bahr also filed for insolvency.

The Praktiker stores have already started a clearance sale and the same will now shortly happen in Max Bahr stores.

($1 = 0.7430 euros) (Editing by David Goodman and David Holmes)

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