The bank’s failure last year — the biggest bankruptcy in U.S. history — left tens of billions of dollars of prime brokerage assets stuck in limbo, triggering a string of London court cases as clients and administrators seek court approval to unwind the bank’s holdings.

Administrator PricewaterhouseCoopers (PwC) said on Friday its new “contractual solution” to returning assets will be formally launched in the coming weeks. PwC first detailed the plan on October 5 after a High Court ruling blocked a “scheme of arrangement” proposal.

PwC appealed against that decision but it was upheld by the Court of Appeal on Friday.

“I am disappointed by this ruling as it restricts the options available to the administrators for the return of client assets,” said Steven Pearson of PwC.

The scheme of arrangment had been opposed by the investment banks’ trade body, LIBA, which argued that trust assets could not be treated in the same way as debts owed to creditors.

“This important (appeal court) judgment prevents what could have been far-reaching and damaging implications for assets held on trust,” said Simon Orton of law firm Freshfields, which advised LIBA.

PwC’s Pearson said the alternative plan only binds clients that sign up to the proposals.

“In order to benefit from these arrangements it is vital that affected clients take the time to understand what is now being proposed and, by the end of the year, sign up to their terms,” Pearson said.

PwC said it had already returned more than $13 billion to Lehman’s European clients on a bilateral basis.

(Editing by Greg Mahlich)

Private equity firms, convenience store operators, rival
off-licence chains and retailers are all poring over First
Quench’s stores, which include Threshers and other chains, as
its administrator KPMG looks to secure a speedy sale, the people
said.

R Capital, the owner of Little Chef, the roadside restaurant
chain that called in Michelin-starred chef Heston Blumenthal to
revitalise the menu at the chain, is looking at the business, as
is private equity firm Rutland Partners, sources said.

Hilco and Endless, which also specialise in turning around
distressed companies, are interested in all or parts of First
Quench’s network, sources said.

The firms declined to comment.

KPMG said on Thursday that it planned to close 373
loss-making First Quench stores, out of its 1,200 store network,
at a cost of about 1,700 jobs. [ID:nN05429445]

The stores, which include the Wine Rack, Victoria Wine,
Bottoms Up and The Local brands, have been losing around 20
million pounds ($33.2 million) a year, hit by competition from
large retailers and small convenience stores.

“We have had a range of interested parties considering
everything from one store through to a very large number of
stores,” said Ian Corfield, a joint administrator at KPMG.

Indicative offers are due by Nov. 13 with KPMG hoping to sew
up the process by Nov. 26.

RETAIL INTEREST

Large multiple retailers are also on the list of parties
requesting further information, though First Quench’s stores are
viewed as too small for the likes of Tesco <TSCO.L>, Asda
<WMT.N> and Sainsbury’s <SBRY.L>, one source said.

Convenience store chain Costcutter and rival off-licence
Bargain Booze are also considering offers, but their franchise
model makes them more likely to be interested in First Quench’s
small franchise arm, numbering some 86 stores, the source said.

“The franchise business may well be a very attractive
proposition for somebody to take on as a unit; we are certainly
exploring with various parties whether that will be of
interest,” said Corfield, though he declined to comment on
individual interested parties.

Costcutter’s majority owner Bibby Line Group and Bargain
Booze’s private equity owner ECI Partners both declined to
comment.

KPMG’s preferred option is to find a buyer for a large part
of the business but it may consider offers for individual brands
or even individual stores, Corfield said.

But carving out a brand could present difficulties in
separating the business’ supply chain, back office function,
logistics and IT, one source said.

“It’s not beyond the wit of man, but it’s not the easiest
option either,” the source said.
($1=.6025 Pound)
(Editing by Karen Foster)

Beating off a rival restructuring bid from a group of
subordinated bondholders, as well as a last-minute approach
from PPF Partners, Weather Investments has secured agreement
from a majority of senior lenders for their deal, Wind Hellas
said.

The news came alongside bleak third-quarter results for
Wind Hellas, showing falling revenues, earnings and subscriber
numbers.

“We look forward to taking our proposals to the noteholders
and thereafter providing the necessary support to ensure that
the Wind Hellas Group can drive its business forward once
again,” said Weather Investments’ Aldo Mareuse.

Weather Investments, majority-owned by Egyptian tycoon
Naguib Sawiris, will inject about 125 million euros ($185.6
million) into the company as part of the debt restructuring
deal.

Weather Investments has owned the company since 2007, when
it bought it from private equity firms Apax Partners and TPG
[TPG.UL].

Weather and Wind Hellas’ parent Hellas II will launch a
process to secure the full backing of debtholders for the
restructuring in the next few days, Weather said.

LIQUIDITY SQUEEZE

Wind Hellas first sought restructuring offers at the end of
August as the company began to run out of cash. The company
then suspended interest payments to subordinated bondholders in
October.

As part of Weather’s successful offer, senior bondholders
will see interest rates rise on their debts.

The restructuring deal is likely to cut Wind Hellas’s 3.2
billion euro debt substantially. Subordinated bondholders, owed
about 1.1 billion euros, have said they fear their investments
will be completely wiped out.

Wind Hellas said it had lost a further 209,000 mobile
subscribers in the third quarter of 2009 in the face of stiff
competition from rivals OTE <OTEr.AT> and Vodafone <VOD.L>.

Revenues in the third quarter were 17 percent lower than
the same period in 2008 while adjusted earnings before
interest, taxes, depreciation and amortisation (EBITDA) dropped
26 percent, to 98 million euros. EBITDA in the fourth quarter
is expected to total just 59-64 million euros, Wind Hellas
said.

Revenues are likely to decline further in 2010 before
returning to growth in 2011, the company added.
(Editing by David Cowell and Tim Dobbyn)
($1=.6734 Euro)

The deal to refinance 4 billion pounds ($6.57 billion) in
debts gives Yell the go-ahead for a 500 million pound rights
issue.

Investors have been hoping that the company will find a long
term solution to its financial problems and the funds from the
equity raising will be used to cut its debt.

Yell — hit by the advertising downturn and a shift towards
the Internet — needed 95 percent of its lenders to approve the
deal, but was forced to extend a deadline three times before it
got the acceptance. [ID:nLU549243].

At 1045 GMT, Yell shares were trading up 6 percent at 54.4
pence in a slightly higher overall market, after rising as high
as 61.4 pence earlier in the day.

Yell’s earlier difficulties getting lenders to back the
refinancing are unlikely to jeopardise the planned rights issue,
said Sam Hart, an analyst at Charles Stanley.

“If Yell proceeds with the rights issue then they should get
the money they want,” Hart said. “The window is open for rights
issues at the moment, with the market up about 50 percent and
investors optimistic about outlook.”

However, Yell is one of the “higher risk situations” in the
market and there remain longer-term concerns about the
directories business model, Hart said.

Following the deal with lenders, Yell will now approach its
major shareholders and announce details of the equity issue as
soon as practicable, the company said in a statement.

The company’s refinancing deal amends the terms of the
company’s debt, extends the maturity of its loans to 2014 and
relaxes covenants on its debts. In exchange, lenders will
receive higher interest rates.
($1=.6090 Pound)
(Editing by Karen Foster)

Yell said on Thursday it had given lenders an extra day to
sign up to amendments to its 3.9 billion pound bank loan, and may
otherwise begin court proceedings to clinch a deal via a scheme
of arrangement, which would take several weeks to arrange.

“Most probably we will go down the scheme of arrangement
route and we won’t be able to do a capital raising until 2010,”
a banker close to the deal said.

Simon Whittington, an analyst at UBS, said in a note the
lender approval process could run into the new year, delaying
the equity issuance.

About 90 percent of lenders by value supported the
proposals, Yell said, short of the 95 percent required.

The extension, to 1700 GMT on Thursday, is the third Yell
has offered its lenders, who need to approve changes to the loan
so the company can issue shares and reduce its debt.

Shares in Yell, battling an advertising slump and a
structural shift from print to online publishing, have fallen
more than 20 percent this week, and at 1141 GMT were trading at
45 pence, almost 3 percent lower than the opening price.

Under a scheme, which would need to be approved by a London
judge, lenders would be asked to vote again but the company
would require approvals from only 50 percent by number and 75
percent by value of those that vote.

“We are now very near the point where the board may have to
draw a line under the current process and move to a scheme of
arrangement,” John Davis, chief financial officer of Yell, said
in a statement.

Yell would also have to seek a loan waiver to avoid an event
of default, several bankers said.

Debt-laden listed companies, such as Ladbrokes <LAD.L> and
Barratt Developments <BDEV.L>, have sought hundreds of millions
from equity investors in recent weeks. However, there are doubts
about how long the flow of money will last. [ID:nLN606717]

CORRAL CREDITORS

Yell has a large group of creditors, comprising about 300
different banks and funds.

Some funds have rules that prevent them from recommitting
capital, meaning they cannot agree certain amendments to loan
terms.

Yell said on Thursday about 3 percent of its lenders could
not agree to the proposed loan changes.

A scheme of arrangement is one way Yell can overcome these
“hold outs”, restructuring experts say.

“Schemes are a well established and powerful restructuring
tool,” said Richard Tett, a restructuring partner at Freshfields
Bruckhaus Deringer. “The downside is that the process involves
court hearings and lengthy documents, so it typically takes two
to three months and can be quite expensive.”

“Where there is a diverse lending group it can be difficult
to corral creditors into a deal,” said Phil Bowers, a
restructuring partner at accountancy firm Deloitte.

Bowers said options such as a scheme of arrangement — or,
in more extreme circumstances, a company voluntary arrangement
or pre-pack administration, — can be used to encourage lenders
to back a deal.

“A consensual solution is the aim but a robust ‘plan B’ can
be useful to help such a deal come about,” he said.
($1=.6107 Pound)
(Editing by Rupert Winchester)

A report from investment bank Houlihan Lokey suggests
boom-year mergers and acquisitions (M&A) destroyed value for
many acquirers, who now face hefty goodwill impairment charges
for their 2009 accounts.
Houlihan found the book value of equity for a fifth of DJ
Stoxx 600 <.STOXX> companies significantly outstripped the
stock-market valuation of those companis at the end of June.

“Companies cannot postpone their impairments for much longer
– the only question is how much they will have to book,” Marc
Hayn of Houlihan Lokey told Reuters.

Hayn said despite the recent stock market boom, impairments
may total hundreds of billions of euros.

The most at-risk sectors were autos, metals, property,
banks, insurers and other financial institutions, where more
than 40 percent of companies had a book value well above their
market value. Yet companies in almost every sector will be
affected, the only exception being healthcare, the report said.

However, companies may avoid charges if accountants judge
the “value in use” of an asset is higher than the value at which
it is held on a company’s books.

Much will depend on how strict auditors decide to be when
reviewing companies’ business plans for next year.

“Auditors will press companies to take these impairments,”
said Timothy Smith, a co-author of the report. “The financial
crisis has made auditors more jumpy — many are now keen to show
their independence (from) companies.”

From 2005 to March 2009, companies in the DJ Stoxx 600 spent
1.8 trillion euros on takeovers, Houlihan said, but took only
200 billion in goodwill impairment charges.

After the last takeover boom, many companies took big
writedowns on the value of assets. In 2006 Vodafone Plc <VOD.L>
for instance recorded a 15 billion pound loss, due to a 24
billion writedown following the purchase of Germany’s Mannesmann
in 2000.

Many of the goodwill writedowns taken in the past year have
been in the financial sector, with Royal Bank of Scotland
<RBS.L> taking the largest single hit — a 16 billion pound
($26.3 billion) writedown in February following its acquisition
of ABN AMRO.

Earlier this year Deutsche Telekom AG <DTEGn.DE> took a 1.8
billion euro writedown on its British unit T-Mobile, which it is
seeking to merge with France Telecom SA’s <FTE.PA> Orange.
[ID:nL8139973]
(Editing by David Holmes)
($1=.6718 Euro)
($1=.6091 Pound)

Without an agreement on the restructuring, the company may
face a disorderly work-out of the debt, two of the sources said,
which could further harm the value of the company.

Almatis declined to comment.

The company, acquired by Dubai International Capital
[DUBAHP.UL] via a leveraged buyout in 2007, has been in
restructuring talks for several months as it seeks to cope with
debts of almost $1 billion.

With operations in several European countries, as well as
the United States, advisers have explored options including a
Chapter 11 bankruptcy protection filing, sources said.

“There is a big game of bluff going on but if we can’t agree
a deal in the next few weeks then a contested Chapter 11 process
may be inevitable,” said one of the sources.

DIC and a group of junior lenders — including Alcentra,
Babson Capital, North Western Mutual and Permira [PERM.UL] –
tabled an offer that would see $250 million of the mezzanine
debt turned into equity.

The proposal competes with a rival offer from senior
lenders, including distressed debt investor Oaktree Capital,
which are pushing for a deeper balance sheet restructuring.

The rival offers need to win over a wider group of senior
lenders, with two-thirds of them needed to agree any debt deal.

STAND-OFF VS STANDSTILL

Almatis has breached terms on its loan covenants but its
different groups of lenders have so far been unable to agree a
standstill deal, meaning Almatis has little protection from
creditors seeking immediate repayment of their debts.

“It is a standoff rather than a standstill,” one of the
sources said.

The offer from Oaktree Capital — which has formed a block
with two other investors — would see all of the junior debt and
part of the senior debt written off.

Leaving the senior debt “whole” would appeal to many of the
senior debt holders, which include Middle East banks, German
banks and loan funds, the sources said.

Almatis, which was hit hard by falling worldwide demand for
metals, has seen performance improve recently to generate
monthly earnings before interest, tax, depreciation and
amortisation (EBITDA) of between $8-10 million, two of the
sources said.
(Reporting by Tom Freke and Zaida Espana; Editing by Douwe
Miedema and Karen Foster)

Gala’s board of directors is meeting on Friday to discuss a
proposal from a group of mezzanine lenders, led by Intermediate
Capital Group <ICP.L> and Park Square Capital, who have offered
to cut their debt in exchange for a stake in the company and
representation on the board. [ID:nLL292065]

Neil Goulden, group chairman, said on Thursday that Gala’s
recent performance will help to secure a debt deal in the coming
months.

“The combination of solid trading and strong cash flows will
allow us to lead a successful restructuring and ease the current
constraints on business growth,” he said in a statement that was
emailed to the press.

The company generates about 300 million pounds in free cash
flow, he also said.

For Neil Unmack’s column on Gala Coral, click on
[ID:nLN339117]

The company’s present owners — private equity companies
Candover <CDI.L>, Cinven [CINV.UL] and Permira [PERM.UL] — have
not fully agreed to the lender proposals, sources have said.

However, the sides have moved closer to agreement in the
last few days.

Gala Coral owes lower-ranked mezzanine lenders just over 500
million pounds and senior debt holders about 2 billion pounds.

The senior lenders need to approve the proposals and will be
approached after there is agreement between mezzanine investors
and the company’s present owners, sources have said.

A banker said on Friday the senior lenders are likely to be
supportive of the mezzanine’s plans. [ID:nL7575569]

“The proposals are likely to be accepted with some tweaks
like increased margins or tighter covenants,” the lender said.

Loan traders said investors are looking to buy stakes in
Gala’s mezzanine debt in expectation of a deal. The value of the
mezzanine loan has risen 2.9 percent over the last week to 53
percent of face value, according to Thomson Reuters LPC data.

The price of Gala’s most actively quoted senior debt
tranche, the term loan B, also rose slightly in the last week,
and is now priced at 85.8 percent of face value.
($1=.6006 Pound)
(Editing by Jon Loades-Carter)