European Distressed Debt Market Outlook for 2007 Foresees Upswing In Restructurings

Launched this week by international law firm Cadwalader,
Wickersham & Taft LLP and investment banking group Rothschild, in
conjunction with Mergermarket's Debtwire, the third annual European
Distressed Debt Market Outlook provides a comprehensive and in-depth
report of the opinions and expectations of European and U.S. investors
regarding the outlook for the European distressed debt market in the
year ahead. For the first time, the 2007 report also features sections
on private equity sponsors and corporates who have been through a
restructuring in the last two years.

Among the noteworthy findings are: a resounding 83% of private
equity sponsors expect to play an active role in a restructuring in
2007, while 60% of private equity investors expect between 11% and 20%
of the 'typical' portfolio to be hit by covenant amendments or debt
restructurings.

Of particular note was the changing role of relationship banks and
hedge funds. Respondents report that they have found relationship
banks difficult to deal with in restructurings. Experience with hedge
funds was more mixed, with some respondents commenting that hedge
funds can be constructive, while others were negative. It is also
telling that companies' highlighted the importance of maintaining
support from other stakeholders, such as customers, suppliers,
employees and pension scheme trustees, to ensure a successful
restructuring.

Additional findings of the distressed investor survey include:

-- Almost two-fifths of respondents have increased their asset
allocation to distressed, reflecting a considerable increase
in confidence compared to last year.

-- The majority of respondents expect an increase in
restructurings to begin towards the end of 2007/early 2008,
following an extended period of high liquidity and bankers'
decisions to waive covenant breaches.

-- Respondents perceive significant growth potential in
restructuring situations from France and Italy.

-- Hedge funds and other active investors are looking up the debt
capital structure to second lien and mezzanine.

Commenting on the survey, Richard Millward, Managing Director,
Rothschild, said "The clear message from this survey is that the
restructuring wave is yet to break, but activity is definitely
intensifying. The impact of non-bank institutions as holders of debt
will make the next round of restructurings more complex."

Cadwalader Partner Richard Nevins added, "Opinions vary as to
precisely when restructuring activity will next surge, but market
participants agree that the volume and number of future distressed
situations must take into account the huge increase in highly levered
deals in recent years."

Cadwalader, Wickersham & Taft LLP, established in 1792, is one of
the world's leading international law firms, with offices in New York,
London, Charlotte, Washington and Beijing. Cadwalader serves a diverse
client base, including many of the world's top financial institutions,
undertaking business in more than 50 countries in six continents. The
firm offers legal expertise in antitrust, banking, business fraud,
corporate finance, corporate governance, environmental, healthcare,
insolvency, insurance and reinsurance, litigation, mergers and
acquisitions, private client, private equity, real estate, regulation,
securitisation, structured finance, and tax. More information about
Cadwalader can be found at www.cadwalader.com.

Rothschild is one of the world's leading independent investment
banking groups. The Group currently has over 30 offices operating in
20 countries, employing over 2,000 personnel worldwide. Rothschild is
a market leader in the investment banking industry in Europe,
particularly in the UK, France, Italy and Germany, and also in the US,
Asia and Latin America. Rothschild's Debt Capital Markets and
Restructuring Advisory business is the world's leading independent
debt advisory practice, with 75 professionals across the US, Europe
and Asia, of whom 30 are based in London with specialist banking,
capital markets, derivative, structured finance, pensions and
restructuring expertise. More information about Rothschild can be
found at www.rothschild.com.

Debtwire publishes real-time news and data for financial
professionals in the distressed debt and leveraged finance markets
around the world. With the largest network of dedicated event driven
journalists based in 53 locations across Europe, North America, Latin
America, Asia-Pacific, the Middle East & Africa, Debtwire offers the
most comprehensive leveraged finance news service available today.
Debtwire is part of the Mergermarket Group, a division of the
Financial Times Group. The FT Group is a division of Pearson plc, the
international media group. Visit www.debtwire.com.