Buyer found for troubled NZ retailer Postie Plus

WELLINGTON, June 4 Tue Jun 3, 2014 11:59pm EDT

WELLINGTON, June 4 (Reuters) - The administrators of troubled New Zealand clothing retailer Postie Plus Group Ltd said on Wednesday they have found a likely buyer for the company.

The struggling company called in administrators from PricewaterhouseCoopers on Tuesday after its bank refused to back the retail chain which has been racking up losses and losing market share for the past two years.

The company's 82 shops were open for business as usual, but Postie Plus shares have been suspended from trading on the NZ stock exchange pending clarification of its future. The stock last traded at 7.3 NZ cents a share, valuing the company at NZ$2.9 million ($2.45 million).

An unnamed international retail group has agreed to buy Postie Plus as a going concern subject to due diligence, which is expected to take about a month.

"This 'going concern sale' of the Postie Plus business is in the best interests of the company's stakeholders, including its secured creditors, trade suppliers and other creditors, landlords as well as the company's more than 600 staff," the administrators said in a statement.

The company said in April it had bank debt of NZ$12.1 million, with total liabilities of NZ$24.7 million and assets worth NZ$29.6 million.

($1 = 1.1860 New Zealand dollars) (Reporting by Gyles Beckford; Editing by Matt Driskill)

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Bankrupt Energy Future and creditors to clash over loans, value

By Tom Hals and Nick Brown

June 4 Wed Jun 4, 2014 6:30pm EDT

June 4 (Reuters) - Texas power giant Energy Future Holdings will square off against creditors in bankruptcy court on Thursday over a key question: will borrowing billions of dollars prop up the business or deepen its insolvency?

On Thursday, Energy Future will ask Delaware Bankruptcy Judge Christopher Sontchi to allow one of its two main units to borrow an interim $2.7 billion, and to access cash that is now subject to creditor liens. A group of junior creditors objected to the financing, saying in court papers Energy Future is worth more than it admits, which could pave the way for other borrowing arrangements.

Even if the judge approves the financing on Thursday, the junior creditors are likely to carry on a fierce courtroom fight about the company's value as they seek more than the 3 cents on the dollar proposed in the company's restructuring.

Energy Future has said it needs to borrow the money to pay vendors, satisfy regulators and make payroll at its TCEH generating and retail utility business.

Under Energy Future's proposed restructuring, Apollo Global Management and other first-lien lenders holding $24.4 billion in debt would take control of TCEH. Junior creditors would have to settle for around $200 million of the $7.7 billion they are owed.

Those creditors want to prove the company is worth more, and one creditor faction led by Wilmington Savings Fund Society has sought a hearing on the matter as early as June 30.

The junior creditors are likely to argue that rising natural gas prices and changes in energy pricing methods in Texas, among other factors, could add value. Energy Future wants to postpone the valuation debate until much later in its Chapter 11 case.

The company's April bankruptcy is one of the largest-ever Chapter 11 cases.

Its bankruptcy exit plan would cut a large portion of its $42 billion debt, much of which was run up in the 2007 leveraged buyout of TXU Corp that created the company.

Led by KKR & Co, TPG and the private equity arm of Goldman Sachs, the buyout was an ill-timed bet on natural gas prices, which began to plummet after the deal closed.

The proposed turnaround plan would transfer ownership of the regulated side of the company's business, which includes the Oncor power line unit, to unsecured creditors of Oncor's parent.

The parent, Energy Future Intermediate Holdings, will seek permission on Thursday to borrow $5.4 billion. Objections to that loan, which is separate from the $2.7 billion TCEH loan, are over borrowing procedures and how the money will be used.

The EFIH loan would refinance that unit's senior creditors, but drama may unfold there, as well: the creditors argue they are entitled not only to full payback but to an additional early redemption fee, known as a make-whole, a point EFIH disputes. A trial on that question has been scheduled for September. (Reporting by Tom Hals in Wilmington, Delaware and Nick Brown in New York)

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In last day of trial, Stockton, Calif., argues for end to bankruptcy

By Robin Respaut

June 4 Wed Jun 4, 2014 10:13pm EDT

June 4 (Reuters) - In the final day of a trial to determine if Stockton, California, is ready to end its two-year pilgrimage through Chapter 9 bankruptcy protection, the city argued its plan to handle its liabilities to creditors, public workers and the state's pension fund was fair and equitable.

The trial's proceedings on Wednesday, plus the four days of hearings in May, mainly focused on the Northern California city's holdout creditor - two funds managed by Franklin Templeton Investments - which the city has proposed to offer less than a penny on the dollar.

But the $3.7 trillion municipal bond market is closely watching this trial for an additional reason: to see how the court handles the treatment of pension obligations, which the city has proposed to leave untouched.

Last month, U.S. Bankruptcy Court Judge Christopher Klein said he would venture into largely untrodden territory to determine whether the country's largest pension fund, the California Public Employees' Retirement System, could be forced to take a loss as other creditors do in municipal bankruptcies.

On Wednesday, the city, its retirees and Calpers presented a united front in urging the judge to leave pension obligations alone in his ruling.

"The bottom line is this: The city has made a business judgment to honor its Calpers commitment," said Stockton attorney Norman Hile. "If Calpers were to terminate the city's contract, the city could not possibility pay that enormous liability."

Calpers has calculated that if Stockton's contract with the $285.2 billion pension fund were to end, Stockton would face an unprecedented $1.6 billion termination fee. It would also ensure that "the parties in this case are involved in expensive litigation," said Calpers attorney Michael Gearin. "I think that would be unfortunate."

Facing a severe haircut on its $35 million loan, Franklin described Stockton's plan in closing arguments as a "true hardball cramdown" in which the city decided "to forgo its one opportunity to adjust pension liability and actually do something about the problem that put it in this bankruptcy case in the first place," said James Johnston, attorney for Franklin.

Franklin's attorneys also argued the city had proposed an overly conservative long-range financial plan that built up reserve funds while leaving "nothing left over for Franklin."

Judge Klein's first step in ruling on Stockton's proposed "exit plan" is scheduled for July 8, when he expects to address the city's valuation of Franklin's collateral, including two golf courses and a park.

The city has argued that the collateral is worthless, in part because the golf courses lost $3 million over the past six years and require millions more in repairs. Franklin's attorneys tried to debunk that idea during the hearing in May with an expert witness who said the golf courses could be sold at a profit. (Reporting By Robin Respaut; Editing by Ken Wills)

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Brazil's Oleo e Gas expects Atlanta field first oil in late 2015

RIO DE JANEIRO, June 2 Mon Jun 2, 2014 9:53am EDT

RIO DE JANEIRO, June 2 (Reuters) - Bankrupt Brazilian oil company Oleo e Gas Participacoes SA expects to produce its first oil from the Atlanta offshore field in the BS-4 block in the Santos Basin in late 2015 or early 2016, company executives said on a conference call on Monday.

Oleo e Gas owns 40 percent of an estimated 147 million barrels of proven, or "1P", oil reserves, and 56 million cubic meters of natural gas in the Atlanta field, according to a statement released with the conference call.

The neighboring Oliva field holds 65 million barrels of recoverable oil and equivalent natural gas with first oil expected in 2021, the statement said. (Reporting by Jeb Blount)

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UPDATE 1-Brazil's Oleo e Gas expects first Atlanta field oil in late 2015

Mon Jun 2, 2014 11:53am EDT

(Adds details from conference call, Oleo e Gas share price, ownership of Atlanta and Oliva)

RIO DE JANEIRO, June 2 (Reuters) - Bankrupt Brazilian oil company Oleo e Gas Participacoes SA expects to produce its first oil from the Atlanta offshore field in the BS-4 block in the Santos Basin in late 2015 or early 2016, company executives said on a conference call on Monday.

Oleo e Gas owns 40 percent of an estimated 147 million barrels of proven, or "1P," oil reserves, and 56 million cubic meters of natural gas in the Atlanta field, according to a statement released with the conference call.

The neighboring Oliva field holds 65 million barrels of recoverable oil and equivalent natural gas, with first oil expected in 2021, the statement said.

Oleo e Gas is controlled by Brazilian tycoon Eike Batista. Formerly known as OGX Petroleo e Gas Participacoes SA, it filed Latin America's largest-ever bankruptcy protection petition on Oct. 30. Creditors plan to vote Tuesday on a plan to restructure about 11.2 billion reais ($5.1 billion at the time of the filing) in debt.

Oleo e Gas shares were up 5.3 percent in early afternoon trading on Monday at 0.20 real in Sao Paulo.

If the reconstruction is approved by creditors, Oleo e Gas will be able to continue operating and develop its main oil and gas properties, Chief Executive Paulo Amaral told investors and analysts on the call.

Under a restructuring plan ownership of the company will pass to leading creditors including holders of $3.8 billion in Oleo e Gas bonds.

The plan, revised last week, updates a preliminary plan approved in December.

Amaral said better-than-expected output during well tests in Atlanta could help the company exceed expectations under the restructuring plan.

Atlanta and Oliva are operated by Brazil's QGEP Participacoes SA, which owns 30 percent of BS-4. Brazil's Barra Energia also owns 30 percent. (Reporting by Jeb Blount; editing by Matthew Lewis)

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UPDATE 1-NZ's Postie Plus put in administration, shares suspended

Mon Jun 2, 2014 5:50pm EDT

* Postie Plus calls in administrators

* Company's bank refuses to keep financing losses

* No new capital, shareholders found (Recasts, adds administrators, NZX suspension, background)

WELLINGTON, June 3 (Reuters) - New Zealand clothing retailer Postie Plus Ltd was put into voluntary administration on Tuesday after its bank said it would not keep financing its losses and the company could not find any source of significant new capital.

Postie Plus, which had been on a trading halt, said it had appointed PricewaterhouseCoopers as administrators to run the company while looking to either sell the company as a whole or in parts.

"The board has not been able to find a party to immediately inject a substantial amount of new capital. The board has therefore determined that the company cannot continue to carry on its business," the directors said in a statement.

Postie Plus has been struggling with weak sales and reduced market share, as well as added costs from a business restructuring, which has seen it in breach of its banking agreements.

"The company's bank has been supportive through this period, but has decided it cannot extend its facilities further to cover ongoing losses," it said.

No estimates have been given of the company's capital needs.

The administrators said the company's 82 shops would stay open and trade normally while options were considered.

The NZ stock exchange said the company would be suspended from trading until further notice. Its shares last traded at 7.3 NZ cents before it was put on a trading halt last week.

In April, the company reported an increased first half loss on lower sales as it looked to cut its costs, and it was forecasting a full year loss.

Postie Plus had already sold a school uniforms business and used the proceeds to repay debt, but needed to renegotiate its banking arrangements by the end of July. (Gyles Beckford)

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CORRECTED-Swiss, Austrian groups leading offers for Hediard -source

Fri May 30, 2014 12:06pm EDT

(Corrects Do & Co to Ledunfly in graph 6 and Ledunfly to Do & Co in graph 7.)

PARIS May 30 (Reuters) - Swiss fund Ledunfly and Austria's Do & Co Restaurants & Catering AG are best placed among groups working on offers to buy Hediard, the French chain of luxury food shops that filed for insolvency in October, a source close to the matter said.

The Paris commercial court is set to review offers to buy Hediard on June 4, including one from French restaurant group Le Duff, owner of La Brioche Doree food chain.

"Ledunfly and Do & Co are really in the race and can still improve their offers. Duff's offer is more limited," the source told Reuters on Friday.

Candidates have until midnight to make their final offers.

Le Duff and Ledunfly could not be immediately reached for comment while Do & Co had no immediate comment.

Ledunfly is offering 2 million euros ($2.72 million) to buy loss-making Hediard and keep its staff of 134 while it would also inject a further 15 million euros to help the group expand, the source said.

Do & Co is offering 15 million euros and would keep about 100 people. It plans to invest a further 6 million in Hediard's flagship store on the chic La Madeleine square in Paris, opposite rival luxury food group Fauchon.

So far, Russian tycoon Sergei Pugachev, who bought Hediard in 2007, has not made any offer. He could still submit a plan by midnight that would allow the company to keep operating.

"It's possible but unlikely," the source said.

Hediard, which is present in 30 countries, opened in Paris in 1854 as a small shop specialising in exotic foods.

It operates five stores in Paris, including La Madeleine flagship store, and has 250 selling points worldwide, of which 70 are in France.

The Luxadvor group, controlled by Pugachev, bought the chain in 2007 in a deal designed to help it expand abroad, but Hediard has lost money for the past six years.

Hediard posted a net loss of 6 million euros on revenue of 17.5 million in the 2013/14 financial year ended March 31.

($1 = 0.7345 Euros) (Reporting by Pascale Denis, Dominique Vidalon; Additional reporting by Alice Baghdjian in Zurich, Georgina Prodhan in Vienna; Editing by Jean-Michel Belot and Erica Billingham)

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Hypo Alpe-Adria to open new chapter for Europe bank debt bail-in

Fri May 30, 2014 11:16am EDT

* Potential HAA sub debt bail-in seen as aggressive

* Bail-in cost to outweigh any financial gain

* Legislation to be used as threat for discounted buy-back

By Helene Durand

LONDON, May 30 (IFR) - A dangerous precedent could be set by Austria if its government goes ahead with a potential bail-in of Hypo Alpe-Adria's guaranteed subordinated debt, market participants said this week.

This small Austrian lender could be another test case for European authorities. Bail-in of bank subordinated debt has become commonplace over the last two years, but no country has retroactively removed a guarantee before.

"The cost benefit of going down that route would be poor," said one analyst. "The money Austria gained would only make a small contribution to the wind-down of the bank but the damage it could have on other guarantees could be far-reaching and substantial."

Some debt bankers said that imposing haircuts on guaranteed debt would set a dangerous precedent, especially for countries like Austria and Germany where those guarantees are such a fundamental part of the funding arrangements for a large number of financial institutions.

But it appears that a legislative proposal could be put in front of Parliament very soon which would remove the deficiency guarantee previously given by the Austrian state of Carinthia on that debt.

According to Barclays research, there is 50.5bn of outstanding legacy bank debt guaranteed by sub-sovereigns in Austria, combined with 18.6bn of other guarantee commitments of Austrian regions. The latter is mainly used for the support of bank loans to public and private enterprises, with Carinthia being the biggest sub-sovereign guarantee provider.

Barclays analysts added that any challenge to the validity of the underlying guarantees could lead to doubts regarding the solvency of the whole sector.

Way back in 2010, authorities in Ireland used subordinated debt to help resolve failing banks. The Netherlands followed suit last year. But these were not guaranteed.

On May 23, Moody's downgraded HAA's guaranteed subordinated debt to Ba3 from Baa3, saying it thought the prospect for the government to successfully pursue legislation to bypass the statutory deficiency guarantee was reasonable.

The agency also downgraded the bank's senior guaranteed debt to Ba1, saying that while it was at a lower risk of loss, any bail-in of the subordinated debt would set an important precedent.

"Given the amount of sub-sovereign guaranteed debt there is in Europe, this sounds like a really stupid idea to me," a senior DCM banker said.

A BASKET CASE

However, not everyone agrees that retroactive removal of the guarantee would have such widespread effects.

"It's a fairly isolated and peculiar case," said another senior FIG DCM banker. "The worst case of Austria bailing-in senior guaranteed debt has been avoided, which would have had a broad-based impact. While this would not be a pretty situation, this legacy subordinated debt is an exceptional case, it is not something you would see today."

Not only is the size of what would be impacted small, at just 900m, but the guarantee was from a sub-sovereign, not from the Austrian federal government.

Some argue that Austria could potentially use the threat of introducing the legislation as a stick to make bondholders participate in a deeply discounted bond buy-back.

If this is the case, it already appears to have had an impact. Although illiquid, the bonds have dropped to a cash price of high 50s/low 60s, according to bankers, having been trading as high as 80 just a few weeks ago. (Reporting by Helene Durand, editing by Alex Chambers, Julian Baker)

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Minority creditors of Brazil's Oleo e Gas sue Deutsche Bank

SAO PAULO Fri May 30, 2014 9:26pm EDT

SAO PAULO May 30 (Reuters) - Minority bondholders of bankrupt Brazilian oil company Oleo e Gas Participações SA filed suit in New York state court on Friday against Deutsche Bank AG, which is the trustee for $3.6 billion of principal of defaulted notes.

The bonds were issued by an Austrian subsidiary of Oleo e Gas, a company formerly known as OGX that filed for Latin America's largest-ever bankruptcy in October.

The minority bondholder plaintiffs allege that Deutsche Bank and affiliates "have made or will make grossly disproportionate distributions" to majority bondholders, according to a statement from the plaintiff's firm, Brown Rudnick LLP on Friday.

The plaintiffs believe majority bondholders will receive recovery at a rate 3.5 times over those of minority bondholders, in violation of Deutsche Bank's duty as trustee to "ensure that all holders of the notes are treated equally," the statement said.

Plaintiffs include Capital Ventures International of the Cayman Islands, GLG Partners LP of London, Brennus Asset Management and VR Global Partners L.P. (Reporting by Caroline Stauffer; Editing by Lisa Shumaker)

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Hypo Alpe-Adria to open new chapter for Europe bank debt bail-in

Fri May 30, 2014 11:16am EDT

* Potential HAA sub debt bail-in seen as aggressive

* Bail-in cost to outweigh any financial gain

* Legislation to be used as threat for discounted buy-back

By Helene Durand

LONDON, May 30 (IFR) - A dangerous precedent could be set by Austria if its government goes ahead with a potential bail-in of Hypo Alpe-Adria's guaranteed subordinated debt, market participants said this week.

This small Austrian lender could be another test case for European authorities. Bail-in of bank subordinated debt has become commonplace over the last two years, but no country has retroactively removed a guarantee before.

"The cost benefit of going down that route would be poor," said one analyst. "The money Austria gained would only make a small contribution to the wind-down of the bank but the damage it could have on other guarantees could be far-reaching and substantial."

Some debt bankers said that imposing haircuts on guaranteed debt would set a dangerous precedent, especially for countries like Austria and Germany where those guarantees are such a fundamental part of the funding arrangements for a large number of financial institutions.

But it appears that a legislative proposal could be put in front of Parliament very soon which would remove the deficiency guarantee previously given by the Austrian state of Carinthia on that debt.

According to Barclays research, there is 50.5bn of outstanding legacy bank debt guaranteed by sub-sovereigns in Austria, combined with 18.6bn of other guarantee commitments of Austrian regions. The latter is mainly used for the support of bank loans to public and private enterprises, with Carinthia being the biggest sub-sovereign guarantee provider.

Barclays analysts added that any challenge to the validity of the underlying guarantees could lead to doubts regarding the solvency of the whole sector.

Way back in 2010, authorities in Ireland used subordinated debt to help resolve failing banks. The Netherlands followed suit last year. But these were not guaranteed.

On May 23, Moody's downgraded HAA's guaranteed subordinated debt to Ba3 from Baa3, saying it thought the prospect for the government to successfully pursue legislation to bypass the statutory deficiency guarantee was reasonable.

The agency also downgraded the bank's senior guaranteed debt to Ba1, saying that while it was at a lower risk of loss, any bail-in of the subordinated debt would set an important precedent.

"Given the amount of sub-sovereign guaranteed debt there is in Europe, this sounds like a really stupid idea to me," a senior DCM banker said.

A BASKET CASE

However, not everyone agrees that retroactive removal of the guarantee would have such widespread effects.

"It's a fairly isolated and peculiar case," said another senior FIG DCM banker. "The worst case of Austria bailing-in senior guaranteed debt has been avoided, which would have had a broad-based impact. While this would not be a pretty situation, this legacy subordinated debt is an exceptional case, it is not something you would see today."

Not only is the size of what would be impacted small, at just 900m, but the guarantee was from a sub-sovereign, not from the Austrian federal government.

Some argue that Austria could potentially use the threat of introducing the legislation as a stick to make bondholders participate in a deeply discounted bond buy-back.

If this is the case, it already appears to have had an impact. Although illiquid, the bonds have dropped to a cash price of high 50s/low 60s, according to bankers, having been trading as high as 80 just a few weeks ago. (Reporting by Helene Durand, editing by Alex Chambers, Julian Baker)

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