/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/150730.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, July 30, 2015, Vol. 15, No. 149 Headlines G E R M A N Y MINIMAX VIKING: S&P Raises CCR to 'BB-', Outlook Stable G R E E C E GREECE: Tsipras Threatens Dissenters with Snap Greek Ballot I R E L A N D LADBROKES IRELAND: High Court Okays Rescue Plan; 700 Jobs Secured I T A L Y PARMA CALCIO: Gets Greenlight to Compete in Series D P O L A N D PERSONAL FINANCE: Fitch Affirms 'BB+' LT Issuer Default Rating R U S S I A ASKO-ZHIZN LLC: Bank of Russia Ends Provisional Administration S L O V E N I A NOVA LJUBLJANSKA: S&P Affirms 'BB-/B' Counterparty Credit Ratings U N I T E D K I N G D O M 888 HOLDINGS: S&P Assigns Prelim. 'B+' CCR, Outlook Stable COGNITA BONDCO: S&P Assigns Prelim. 'B' CCR, Outlook Stable CORY ENVIRONMENTAL: Gets Order to Commence Debt Restructuring FIRST CHOICE: Court Orders Firm Into Liquidation LONMIN PLC: Mulls 6,000 Job Cuts Following Platinum Price Dip NORTHERN ROCK: Bad Bank Won't Have to Compensate Borrowers RMPA SERVICES: S&P Lowers Rating on GBP680MM Bonds to 'BB+' VIVAT TRUST: In the Brink of Liquidation YOUNG'S SEAFOOD: May Retain 250 Jobs at Fraserburgh Site * UK: Number of Corporate Insolvencies Down to 3,908 * UK: Profit Warnings Fall to Two-Year Low in Q2 2015 ********* ============= G E R M A N Y ============= MINIMAX VIKING: S&P Raises CCR to 'BB-', Outlook Stable ------------------------------------------------------- Standard & Poor's Ratings Services said that it had raised its long-term corporate credit rating on Germany-based fire- protection technology provider, Minimax Viking GmbH (Minimax, and collectively with its subsidiaries "the group") to 'BB-' from 'B+'. The outlook is stable. At the same time, S&P raised its issue rating on the group's senior secured debt to 'BB-' from 'B+'. The recovery rating on this debt remains at '3', indicating S&P's expectation of meaningful recovery prospects for lenders in the event of a payment default, in the lower half of the 50%-70% range. The upgrade reflects S&P's expectation that Minimax's credit metrics will likely strengthen further in 2015-2016 as a result of continued solid revenue growth, improving operating margins, and significant free cash flow generation. S&P now sees Standard & Poor's-adjusted debt to EBITDA staying sustainably and significantly below 4.5x and funds from operations (FFO) to debt of 14%-16%, metrics that S&P sees comfortably in line with its "aggressive" financial risk profile category. S&P has therefore changed its comparable rating analysis to "neutral" from "negative." S&P applied the negative assessment previously to reflect its view of Minimax's weak positioning within the "aggressive" financial risk profile category. In 2014, Minimax reported debt to EBITDA of about 5x (in line with 2013 levels), which was somewhat higher than anticipated, owing to the appreciation of its U.S. dollar-denominated debt. On the other hand, FFO to debt improved to about 12% from about 8% a year earlier, mainly thanks to the reduced interest expense following the refinancing that occurred in 2013 and improved earnings generation. In May 2015, Minimax successfully launched a repricing of its loan facilities and repaid about EUR44 million of loans, which will further support metrics through a reduction of interest expenses of about EUR4 million annually and lower debt levels, while S&P also expects earnings to continue to improve. S&P continues to view Minimax's business risk profile as "fair," mainly because it is constrained by the group's limited business diversification and scope; as well as its operation in an industry where it competes with large international companies. On the other hand, the business risk profile benefits from the group's strong position in Germany's fire-protection market and its solid position in U.S. regulatory requirements and certification processes, as well as an installed base of equipment. The stable outlook reflects S&P's view that Minimax will sustain its resilient operating performance and achieve stable to slightly improving credit measures, underpinned by a high share of recurring business. It also incorporates S&P's view that the high cash balances provide some room for the group to step up organic and inorganic growth opportunities without deteriorating credit metrics. For Minimax, S&P considers ratios of adjusted debt to EBITDA of less than 4.5x and FFO to debt of about 15% to be consistent with a 'BB-' rating. S&P does not envisage raising the rating in the next 12 months, but could do so if Minimax demonstrated a prudent financial policy and continued to reduce financial leverage, and if S&P believed that its ratio of adjusted debt to EBITDA would remain sustainably below 4x, with FFO to debt sustainably above 20%. S&P does not envisage lowering the rating in the next 12 months, but a downgrade could stem from an unexpected aggressive debt- funded acquisition or shareholder returns, or from an unforeseen significant setback in operating performance, which could materially weaken Minimax's credit measures or liquidity, for example with the ratio of adjusted debt to EBITDA increasing substantially above 4.5x or FFO to debt dropping to significantly below 15% on a sustained basis. =========== G R E E C E =========== GREECE: Tsipras Threatens Dissenters with Snap Greek Ballot ----------------------------------------------------------- Nikos Chrysoloras, Eleni Chrepa, and Christos Ziotis at Bloomberg News report that Greek Prime Minister Alexis Tsipras took on dissenters within his own party, warning he'll call an election unless backbenchers who oppose his deal with creditors fall into line or give up their seats. "I'm the last person who would want elections," Bloomberg quotes the 41-year-old premier as saying in an interview on July 29 with Sto Kokkino, a radio station linked to his party. "If I don't have a parliamentary majority, though, we will be forced to head to a snap vote." After five years of austerity, two bailouts, and the deepest recession in more than half a century, the premier is asking voters and lawmakers to extend the budget restrictions that he himself had pledged to end when he came to power in January, Bloomberg relates. Mr. Tsipras, as cited by Bloomberg, said Greece has no other viable option to but to accept the demands of its creditors. According to Bloomberg, Mr. Tsipras said the final decision on an election will depend on developments within his party, Syriza. The group's central committee will meet today, July 30, to decide the timing and logistics of an emergency congress, after about a quarter of its lawmakers refused to back the prime minister's agreement with Greece's creditors in two successive votes this month, Bloomberg discloses. Two government officials said the congress could take place as early as this weekend, while Mr. Tsipras said his preference would be for the party to convene at the beginning of September, Bloomberg notes. The officials, who asked not to be named, said elections may take place either after the congress or once creditors have made an assessment of progress in implementing the required economic reforms, paving the way for debt relief. Bloomberg relays. The officials, as cited by Bloomberg, said there's no chance for a snap poll before the new loan facility from the euro area and the International Monetary Fund is finalized. ============= I R E L A N D ============= LADBROKES IRELAND: High Court Okays Rescue Plan; 700 Jobs Secured ----------------------------------------------------------------- Fiona Reddan at The Irish Times reports that bookmaker Ladbrokes is to retain 144 shops nationwide and continue to employ over 700 people in Ireland following the High Court's approval of its rescue plan on July 28. According to The Irish Times, the UK bookmaker, which entered the examinership process in April in order to restructure the business, will now close 52 of its 196 outlets while about 90 people will leave the business as a result of a voluntary redundancy scheme. Ladbrokes expects the examinership process for its Irish trading subsidiaries -- Ladbroke (Ireland) Limited, Ladbroke Leisure (Ireland) Limited and Dara Properties Limited (Ladbrokes Ireland) -- to be completed shortly, The Irish Times discloses. Ladbrokes is a London-listed bookmaker. ========= I T A L Y ========= PARMA CALCIO: Gets Greenlight to Compete in Series D ---------------------------------------------------- Mark Baber at Inside Football World reports that Parma Calcio 1913, a new club backed by pasta maker Guido Barilla with ex- coach Nevio Scala as president, has been given the go-ahead by the Italian Football Federation (FIGC) to compete in Italy's Serie D following the bankruptcy of the old club. Parma, which went bankrupt in March, had a glorious history including winning two UEFA Cups, the European Super Cup, European Cup Winners' Cup, three Coppa Italias and an Italian Super Cup between 1992 and 2002, according to Inside Football World. However, the club fell on bad times after the collapse of the Parmalat food and dairy firm which had bankrolled the club, the report notes. The report relates that due to financial mismanagement the club's debts amounted to more than EUR200 million ($220 million) when it collapsed, a sum which put off potential saviors of the club. The new club has been named Parma Calcio 1913 after the founding year of the original team, and was chosen in preference to a rival bid led by Giuseppe Corrado, who runs a national cinema chain, the report notes. The Barilla group is the world's leading pasta maker with 40-45% of the Italian market and 25% of the US market as well as being a leading seller of bakery products in Italy and, through its acquisition of the Swedish company Wasa, the world's leading producer of flatbread, the report relays. =========== P O L A N D =========== PERSONAL FINANCE: Fitch Affirms 'BB+' LT Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has affirmed International Personal Finance Plc's (IPF) Long-term Issuer Default Rating (IDR) at 'BB+', Short-term IDR at 'B' and senior unsecured debt at 'BB+'. The Outlook on the IDR is Stable. The affirmation follows the recent announcement of an amendment to draft legislation in Poland, IPF's largest single market, which would place a cap on all non-interest loan costs. The previous expectation had been that only mandatory non-interest costs would be capped. In Fitch's opinion, the amendment demonstrates the inherent susceptibility of IPF's business to shifts in legislation and regulatory opinion within its key countries of operation. At the same time, Fitch recognizes management's track record in responding to changes as they have arisen, and adjusting its model to suit diverse markets. KEY RATING DRIVERS IDRS AND SENIOR DEBT IPF has operated its home-collected lending business successfully over the economic cycle, supported by its strong capitalization and modest leverage. So far, these factors have afforded the group a degree of buffer against the high credit, regulatory and operational risks of conducting unsecured lending in emerging market countries, in some of which it as yet has only modest business scale. Significant arrears are a feature of IPF's business model, but in Fitch's opinion are adequately provided for. If the draft legislation is passed in its current form, Fitch anticipates that previous headroom at the 'BB+' rating will largely be eroded, in particular reflecting heightened business risk but also some weakening of the near-term financial profile. The Stable Outlook assumes that management will nevertheless be able to mitigate at least part of the negative impact of the proposed legislation. RATING SENSITIVITIES IDRS AND SENIOR DEBT The high-cost credit business and associated issues of consumer protection remain subject to heightened regulatory scrutiny and political focus in many countries. Should the final version of the anticipated Polish law contain further more stringent provisions than those already proposed, or similarly restrictive legislation follow in other countries in which IPF operates, it could result in a downgrade. Management is developing an alternative product structure to mitigate any adverse financial impact of the new Polish law to the greatest extent possible. However, if this proves more difficult than anticipated to implement, or if its execution is accompanied by a deterioration in impairment that suggests that the revised structure has materially increased the risk profile of the business model, this could also place pressure on the ratings. Upside potential to the IDRs remains limited in the short to medium term, in view of the limited diversification of IPF's funding, as well as the need to demonstrate successful adaptation to the pending regulatory change in Poland. However, the rating could benefit from successful geographical diversification, depending on market dynamics. The senior debt rating is driven by IPF's Long-term IDR and is sensitive to any change in it. =========== R U S S I A =========== ASKO-ZHIZN LLC: Bank of Russia Ends Provisional Administration -------------------------------------------------------------- The Bank of Russia, by its Order No. OD-1751 dated July 23, 2015, took a decision to terminate the activity of the provisional administration of Tatarstan-based Insurance Company ASKO-Zhizn. The company's provisional administration was appointed by Bank of Russia Order No. OD-1306 for a term of six months. It was headed by Vladimir P. Smagin, receiver, member of the non-profit partnership Interregional Self-Regulatory Organisation of Professional Receivers. The decision on early termination of the activity of the provisional administration was taken after the accomplishment of its tasks. =============== S L O V E N I A =============== NOVA LJUBLJANSKA: S&P Affirms 'BB-/B' Counterparty Credit Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'BB-' long-term and 'B' short-term counterparty credit ratings on Slovenia-based Nova Ljubljanska Banka D.D. (NLB). The outlook is negative. S&P's long- and short-term counterparty credit ratings on SID Bank are unchanged at 'A-/A-2'. The outlook remains positive. The rating actions follow S&P's review of economic and industry risks for Slovenian banks and the revision of S&P's outlook on Slovenia to positive on June 19, 2015. In S&P's view, the ongoing economic recovery in Slovenia will continue, benefiting fiscal outcomes. S&P now believes that Slovenia's real GDP will likely rise by about 2.1% per year on average during 2015-2018, about 0.6 percentage points higher than S&P projected after its last review in December 2014, fueled increasingly by domestic demand. In 2014, real GDP grew by 2.6% compared with our forecast of 1.4%, driven by stronger exports than expected and EU-financed public investment. During the first quarter of 2015, seasonally adjusted real GDP growth was 3% on an annual basis. During 2014, employment growth and rising disposable incomes, thanks to low inflation and lower oil prices, enabled private consumption growth for the first time in three years. Therefore, S&P expects domestic demand to play a greater role in the recovery in the future In view of these factors, S&P considers that economic risk for Slovenian banks has reduced, according to S&P's Banking Industry Country Risk Assessment (BICRA) methodology. As a result, S&P has reclassified Slovenia's banking industry to group '7' from group '8' (with group '1' denoting the lowest-risk banking systems). In turn, this led S&P to revise the anchor that starts its bank ratings in Slovenia to 'bb' from 'bb-'. "We still see a positive trend for economic risks in Slovenia because the impact of the correction phase is diminishing, leading to decreasing credit losses for banks. However, despite the transfer of a large portion of problem loans to a government- funded workout unit in December 2013, the stock of problem loans in the banking system remains high, although adequately provisioned. Generating new healthy loans is difficult, given high leverage in the corporate sector and the depressed property market. The banking system has been reporting losses since 2010, due to large credit losses, which were particularly high in 2013 (EUR3.5 billion) because of one-time costs from transferring nonperforming loans (NPLs; loans more than 90 days overdue). Systemwide losses were much lower in 2014, at EUR67.5 million in 2014, and we expect a profit in 2015, indicating that the recovery, albeit very gradual, is underway. We believe the banking system's performance will gradually improve, but remain subdued over the next two years due to ongoing provisioning costs, limited new lending volumes, and low interest rates," S&P said. NOVA LJUBLJANSKA BANKA D.D. S&P affirmed its ratings on NLB because the higher anchor of 'bb' counterbalances S&P's assessment that NLB's asset quality compares unfavorably with that of peers in the new BICRA group. S&P now regards NLB's risk position as "weak" rather than "moderate," as defined in S&P's criteria. NLB continues to wrestle with a large amount of legacy problem loans, especially in the highly leveraged corporate sector. S&P views positively NLB's progress with its state-supported restructuring, which included the transfer of a large portion of mainly irrecoverable problem loans totaling EUR2.2 billion to a government-funded workout unit in December 2013. However, this has only partly alleviated the risks posed by NPLs, in S&P's view. As of Dec. 31, 2014, NLB's reported problem loans comprised a still high 25.7% of the loan book, compared with the peak of 31.1% in the second quarter of 2013. The negative outlook on NLB indicates the possibility of a downgrade if S&P considers that potential extraordinary government support for Slovenian banks will likely decrease as resolution frameworks are put into place. S&P could therefore lower the long-term rating on NLB by one notch if it removed the uplift for potential extraordinary government support currently incorporated in the rating. This would most likely occur shortly before the January 2016 introduction of the EU's Bank Recovery and Resolution Directive, which would allow the bail-in of senior unsecured liabilities. The negative outlook also reflects the possibility that S&P's expectations for NLB's restructuring in Slovenia's fragile economic and operating environment might not materialize. For example, S&P could lower the ratings on the bank if new NPLs accelerated in 2015, or if NLB's capitalization were to deteriorate substantially, causing its risk-adjusted capital ratio before diversification to fall below 5%. S&P could revise the outlook to stable if it considered that potential extraordinary government support for NLB's senior unsecured creditors will be provided, despite the introduction of bail-in powers and international efforts to increase banks' resolvability. Similar action could also follow if S&P believed that other rating factors--such as a stronger stand-alone credit profile or a large buffer of subordinated instruments--fully offset increased bail-in risks. SID BANK S&P equalizes its ratings on state-owned SID Bank with those on Slovenia, reflecting S&P's view of an "almost certain" likelihood that the bank would receive timely and sufficient extraordinary support from the Slovenian government in the event of financial distress. Nevertheless, S&P considers that, like NLB, SID Bank's relative risk position lags that of peers in the new BICRA group. As a result, S&P has revised its assessment of its risk position to "weak" from "moderate." At the same time, the revision of the anchor to 'bb', due to reduced economic risk in Slovenia, offsets the risk position. SID Bank has remained profitable, albeit on a modest scale, with the annual return on equity (ROE) averaging approximately 2% over the past five years. This low ROE is unsurprising given the bank's public policy mandates, and is comparable with that of other development banks. Small profits have also ensured that SID Bank's capital base has remained stable. The positive outlook on SID Bank reflects that on Slovenia. Consequently, any future outlook revision or rating action on the sovereign would result in a corresponding action on SID Bank. Apart from a sovereign rating action, however, S&P could lower the ratings on SID Bank if S&P believed that the bank's role for or link with the government were weakening. This could occur if S&P perceived that the bank's mission had become less important, or if there were adverse statutory changes to SID Bank's operating framework or the financial support mechanisms currently in place. BICRA SCORE SNAPSHOT* Slovenia To From BICRA Group 7 8 Economic risk 7 8 Economic resilience 3 4 Economic imbalances 5 5 Credit risk in the economy 5 5 Trend Positive Positive Industry risk 7 7 Institutional framework 5 5 Competitive dynamics 4 4 Systemwide funding 4 4 Trend Stable Stable *Banking Industry Country Risk Assessment. RATINGS LIST Rating Affirmed Nova Ljubljanska Banka D.D. Counterparty Credit Rating BB-/Negative/B Senior Unsecured BB- Rating Unaffected SID Bank Issuer Credit Rating A-/Positive/A-2 =========================== U N I T E D K I N G D O M =========================== 888 HOLDINGS: S&P Assigns Prelim. 'B+' CCR, Outlook Stable ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' long-term corporate credit rating to 888 Holdings PLC (888). The outlook is stable. At the same time, S&P assigned its preliminary 'B+' issue rating to 888's proposed $600 million equivalent senior secured term loan B due 2021 and issued by 888's financing subsidiary 888 Financing LLC. 888 plans to acquire online gaming company bwin.party digital entertainment plc (bwin.party). S&P's preliminary rating on 888 reflects its assessment of its post-transaction business risk profile as "weak" and financial risk profile as "significant." The rating also incorporates S&P's negative comparable rating analysis modifier, which reflects a range of potential near-term business risks S&P foresees. These include execution risks associated with the acquisition and integration of a larger software based company, the combined group's below average profitability when compared with rated peers, and the declining operating performance of bwin.party in recent years. S&P also notes that 888 has some exposure to currency-exchange risks; it reports in U.S. dollars while receiving the bulk of its revenues in British pounds sterling and euros; S&P recognizes, however, that management has historically managed some of this risk through its hedging policy. S&P views the execution risks associated with an acquisition of this complexity and scale as a key rating constraint. The transaction will involve seamlessly migrating bwin.party's Poker and Casino customers by 3Q16 and integrate bwin.party's sports business by 2H17 (Bingo will continue operating on 888 platform) with limited customer losses and acquisition and retention costs. S&P assess these challenges in light of its perception of bwin.party's weakening brand and operating performance in recent years, and the challenge for 888's management to convince existing and potential clients to continue using its platforms and services or switch to its own branded platforms and services. S&P understands that 888 will use cash and equities to finance the approximately US$1.4 billion acquisition of bwin.party by placing US$600 million in senior secured term loans, including one tranche in euros (expected to be up to EUR250 million) and another tranche in U.S. dollars (expected to be US$350 million). Additionally, the new capital structure will include a US$50 million senior secured revolving credit facility, which would have the same seniority as the term loan. S&P adds to the amount of reported debt about US$45 million for its standard adjustment for operating leases, which S&P estimates on a pro forma basis for the combined company. Also, due to S&P's "weak" assessment of 888's business risk profile, S&P do not deduct surplus cash in calculating Standard & Poor's-adjusted debt. S&P's EBITDA adjustments include an estimate of about US$15 million relating to capitalized development costs, which S&P subtracts from its calculation, and about US$8 million relating to operating lease which S&P adds to its EBITDA calculation. S&P estimates that the group will report Standard & Poor's-adjusted debt to EBITDA of about 4.0x at the close of the transaction, reducing toward 3.0x over the next two years as a result of EBITDA growth and free operating cash flow generation, with management committing to voluntary debt repayments consistent with its deleveraging strategy of 1x over the medium term for 888. S&P's risk-weighted financial risk analysis reflects its forecast metrics for 2016 and 2017, in light of the transformative nature of the acquisition. The combined company will become one of the largest online betting and gaming companies, with operations mainly in the U.K. and continental Europe, but also in the Americas, including the U.S. In S&P's view, 888's business risk profile is primarily constrained by the recent difficulties in bwin.party's operations; concentration in the online and mobile segment and the resulting modest share of the overall gaming market; and S&P's assessment of 888's profitability as "weak." S&P's profitability assessment reflects a sharp decline in the Standard & Poor's-adjusted EBITDA margin to about 15%-16% after the introduction of point-of-consumption tax in the U.K. at the end of 2014, and new VAT rules in the EU in 2015. S&P sees further regulatory risks for 888 -- typically meaning higher taxes -- because only about 60% of 888's revenues are generated in already-regulated markets. "We see the online gaming environment as a competitive market space, with weaker barriers to entry than the traditional retail model. For example, unlike in the traditional gaming segment, the number of licenses for online operations is unlimited. We also believe that both online and offline represent one single market space where existing high street gaming companies can effectively push their retail market power into online space. We estimate that 888 will have a combined market share of below 5% in the combined online and offline space in each its core markets," S&P said. 888's business risk profile benefits from its efficient CRM systems and technology platforms, as well as its portfolio of strong brands in a variety of products. S&P believes that 888 has shown the success of its CRM systems and marketing efforts via solid revenue growth in the last few years, underpinned by growing numbers of unique active players and generally growing revenues per player. S&P also notes that an already considerable and expanding share of 888's revenues come from the fast-growing mobile segment. S&P believes that the combined company can achieve considerable cost synergies if the integration goes as planned. Under S&P's base case, it assumes: -- 888 will acquire bwin.party by end-2015 with a combination of shares and equities, which will not materially differ in terms and amounts from what the company has recently announced. -- The U.K. economy to grow by 2.6% in 2015, 2.8% in 2016, and 2.7% in 2017. -- A more moderate pace of growth of in the eurozone of 1.6% in 2015, 1.9% in 2016, and 1.7% in 2017. -- Mid-single-digit growth for the online gaming industry globally. -- Pro-forma revenues to decline by about 2.5%-3.0% in 2015, primarily due to the adverse impact of the point-of- consumption tax, followed by a recovery of 2.0%-2.5% in 2016 and moderate growth of 1%-2% in 2017. -- Integration costs of about $20 million in 2016 and 2017, partly offset by the expected cost synergies. -- EBITDA margins to decline by 200-300 bps on a pro forma basis following the introduction of new taxation in Europe and the U.K. in 2015. -- Working capital outflows of about US$22 million in 2016 and US$2 million in 2017 related to deferred considerations at bwin.party and considered to be one-off. -- Annual capital expenditure of about $50 million in 2016 and US$40 million in 2017. -- Dividend payments at the level of 50% of accounting profit from 2016. -- Voluntary debt repayments from post-dividend surplus cash of US$10 million in 2016 and US$25 million in 2017. Based on these assumptions, S&P arrives at these credit measures: -- An EBITDA margin of about 14.5%-15.5% in 2015-2016 -- Standard & Poor's adjusted debt to EBITDA of 3.3x-3.8x in financial 2016, declining to about 2.8x?3.3x by the end of 2017. -- Standard & Poor's adjusted FFO to debt of about 20%-25%. The stable outlook reflects S&P's base-case expectation that 888 will successfully acquire bwin.party at the end of 2015 and achieve moderate revenue growth for the combined business. S&P also expects that 888 will be able to withstand higher tax pressures by improving its operating efficiency, in part via cost synergies with bwin.party's business. The outlook also reflects S&P's expectation that any surplus cash left after paying the forecast dividends will be used to voluntarily repay debt. S&P would consider a positive rating action if it believed that the integration of bwin.party had been successful, such that substantial synergies and revenue growth resulted in significantly improved margins. S&P is currently most likely to consider an upgrade if it has case to remove the comparable rating analysis modifier. Any upgrade would also be contingent on adjusted debt to EBITDA sustainably falling below 3x, and FFO to debt approaching 30%. S&P would also expect discretionary cash flow to be positive. S&P could lower the rating if 888's earnings become significantly weaker than S&P assumes in its base case. This could happen if there are unexpected restructuring costs stemming from the bwin.party acquisition, unfavorable changes in regulation, or intensified competition. S&P could also take a negative rating action if 888's FFO to debt were to fall significantly below 20% or its leverage exceeded 4x. S&P could also take a negative action if EBITDA margin were to fall and stay consistently below 14% level. COGNITA BONDCO: S&P Assigns Prelim. 'B' CCR, Outlook Stable ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B' long-term corporate credit rating to U.K.-based independent school operator Cognita Bondco Parent Ltd. The outlook is stable. At the same time, S&P assigned its preliminary 'BB-' issue rating to Cognita's proposed GBP60 million revolving credit facility RCF) and preliminary 'B' issue rating to the company's proposed GBP280 million senior secured notes. The preliminary recovery rating on the RCF is '1', indicating S&P's expectation of very high (90%-100%) recovery prospects. The preliminary recovery rating on the senior secured notes is '4', reflecting S&P's expectation of average recovery for creditors in the event of a payment default, in the lower half of the 30%-50% range. The ratings are subject to successful issuance and S&P's review of the final documentation. If Standard & Poor's does not receive the final documentation within a reasonable time frame, or if the final documentation differs from the materials S&P has already reviewed, it reserves the right to withdraw or change its ratings. The ratings reflect S&P's view of Cognita's scale of operations across seven countries in Europe, Asia, and Latin America, its fast expansion in Asia, and good visibility on revenues. S&P also incorporates the group's high leverage and its private equity ownership since 2004. S&P's "fair" business risk assessment for Cognita takes into consideration the group's strong retention rates of pupils (about 85%) and high visibility on revenues, with almost 90% of enrollments for fiscal 2016 (year ending Aug. 31) already secured as of June 2015. S&P's assessment also reflects favorable market dynamics for markets where Cognita operates, and the group's solid capacity utilization and broad diversification. Cognita is a private junior and senior schools operator of 66 schools, with more than 30,000 full-time-equivalent pupils in the U.K., Spain, Singapore, Vietnam, Thailand, Chile, and Brazil, and offers diversified curricula, including British, American, and Australian curricula, as well as a national curriculum combined with English in Chile and Brazil, and the International Baccalaureate. Lastly, S&P views positively the group's lack of exposure to government funding, since parents pay the tuition fees. Although Cognita is a leading private school operator, its business risk profile is constrained, in S&P's view, by its relatively small share in a highly fragmented private education market. S&P regards the group's profitability as average and view favorably Cognita's track record of raising tuition fees. For instance, the group increased fees by at least 4% over fiscals 2012-2015. However, S&P still views Cognita's profitability as somewhat lower than that of rated peers. S&P notes that, despite price increases, average revenue per pupil decreased in 2014, after the group acquired schools in Latin America in 2013. S&P's assessment of Cognita's financial risk profile as "highly leveraged" is constrained by the group's high indebtedness, financial sponsor ownership, and acquisitive strategy because Cognita operates in a highly fragmented market. Cognita is jointly owned by two private equity sponsors, Bregal Capital since 2004 and KKR since 2013. After the proposed refinancing and anticipated transformation of deep discount loans and loan notes of shareholders into equity, S&P calculates credit ratios of adjusted leverage (debt to EBITDA) of 6.4x and funds from operations (FFO) to debt (both weighted averages over fiscals 2016-2017) at below 7%, which is commensurate with a "highly leveraged" financial risk profile. S&P expects Cognita's ratio of EBITDA interest coverage will be about 2.2x over the same time period. S&P expects that Cognita's credit metrics will remain in the "highly leveraged" category over the next couple of years, with the debt-to-EBITDA ratio slightly improving. Owing to capacity expansion projects in Singapore, S&P anticipates that the group's free operating cash flow (FOCF) will remain negative over 2015- 2017, which further constrains S&P's assessment of the financial risk profile. However, S&P understands that Cognita has some flexibility relating to development capital expenditures (capex) that are not fully committed over 2016-2017. Additionally, S&P thinks execution risks with regard to capacity expansion projects are partially offset by management's track record with similar projects. Under S&P's base case, it assumes: -- GDP growth in the U.K. and Singapore (which account for approximately 45% and 29% of revenues, respectively), of about 2.6%-2.8% in 2015, and 3.0%-3.5% in 2017; -- Annual revenue growth of about 9% on average in 2015-2017. S&P anticipates that revenue growth will stem from good enrollment, tuition fee increases, and further strong demand; -- An improving adjusted EBITDA margin of about 18% in 2015- 2017, owing to stronger operating leverage and high capacity utilization; -- Significant capex, including annual maintenance capex of GBP17 million-GBP18 million and development capex of about GBP30 million-GBP60 million per year in 2015-2017, related to capacity expansion projects, primarily in Singapore; -- Working capital inflows of about GBP10 million on average in 2015-2017; -- Acquisition-related payments of about GBP12 million on average in 2015-2017; and -- No shareholder remuneration. Based on these assumptions, S&P arrives at these credit metrics for Cognita over the next 12-18 months: -- High adjusted leverage, with a debt-to-EBITDA ratio at approximately 6.4x; and -- A ratio of EBITDA interest coverage of about 2.2x. The stable outlook reflects S&P's expectation that Cognita will achieve high-single-digit percentage growth in revenues in 2015-2017, owing to increases in tuition fees and improving utilization of existing capacity. S&P also anticipates some EBITDA margin improvement to 18% on average, thanks to revenue growth outpacing operating cost growth. The stable outlook also takes into account management's track record, which to some extent mitigates execution risks related to capacity extension projects in Singapore. Additionally, S&P understands that management has some flexibility on an uncommitted part of development capex related to the capacity extension projects. S&P expects adjusted leverage of around 6.5x and EBITDA interest coverage remaining above 2.0x. The stable outlook also incorporates S&P's expectation that the group's liquidity, post refinancing, will remain "adequate," with sufficient headroom under its covenants. S&P could consider lowering the rating on Cognita if management's growth and investment plan does not translate into profit growth, resulting in EBITDA interest coverage weakening to below 2x. Moreover, a negative rating action could follow if execution risks related to capacity extension projects in Singapore were to increase, and persistently high capex--and therefore negative FOCF--cause the liquidity position to weaken. A more aggressive financial policy could also lead S&P to downgrade Cognita, for example, as a result of shareholder remuneration or a large acquisition. At this stage, an upgrade is remote, as S&P already factors in satisfactory execution of management's growth plan and EBITDA growth in S&P's base-case scenario. However, S&P could consider an upgrade if Cognita's leverage ratio improved to below 5x and FOCF turned positive on a sustainable basis. CORY ENVIRONMENTAL: Gets Order to Commence Debt Restructuring ------------------------------------------------------------- Luca Casiraghi at Bloomberg News, citing a London court ruling on July 21, reports that Cory Environmental obtained an order to start scheme-of-arrangement process to restructure around GBP350 million of loans. According to Bloomberg, more than 90% of each class already agreed to the restructuring. At least 75% approval from each class is required by the court, Bloomberg notes. A sanction hearing is scheduled for Aug. 17, Bloomberg discloses. Cory Environmental is a UK-based waste management company. FIRST CHOICE: Court Orders Firm Into Liquidation ------------------------------------------------ WiredGov reports that First Choice Properties MGT Ltd, a London property investment company, has been ordered into liquidation in the public interest following an investigation by the Insolvency Service. The investigation found that the company had called unsuspecting members of the public promoting the purchase of plots of land in Brazil, Cyprus, Egypt and Thailand as investment opportunities, according to WiredGov. The company targeted vulnerable and unsuspecting individuals using high-pressure sales tactics, the report relates. The report discloses that the company's former Web site, http://www.firtschoiceinproperties.com, promised to bring the overseas property market to the doorstep of both new and experienced UK investors with the company boasting 50 years of experience in international land and property enabling it to pin point the best investment opportunities and to make valuable real estate a reality for individuals disappointed with the performance of the stock market. Members of the public are understood to have invested overall at least GBP63,000 and possibly up to a total of GBP840,000 with the company, the report says. The company's only presence in the UK was through a serviced office address and its sole director is resident in Costa Rica and has not responded to the investigation, the report adds. First Choice Properties MGT Ltd (06872386) was incorporated on April 7, 2009 in the name Real Estate Consultancy & Marketing Limited. The name of the company was changed to its present style on January 15, 2013. The registered office of the company from January 16, 2013 was 60 Cannon Street, London, EC4N 6JP. The sole recorded director and secretary from January 11, 2013 was Alexis Jimenez. The report notes that the company was inactive while under the control of the company formation agent and dormant company accounts were filed for the periods ended April 30, 2010, 2011, and 2012. No accounts were filed for the period the company operated under the directorship of Mr. Jimenez. LONMIN PLC: Mulls 6,000 Job Cuts Following Platinum Price Dip ------------------------------------------------------------- Andrew England and James Wilson at The Financial Times report that Lonmin plc is making 6,000 job cuts, closing operations and considering whether to raise capital, underlining the problems for the platinum miner in one of the most beleaguered divisions of the industry. In one of the biggest restructurings announced by a platinum company, Lonmin, as cited by the FT, said it would close its Hossy and Newman mine shafts and mothball three others. The London-listed group said it was lossmaking at current prices and will extend its job cuts from the 3,500 announced in May, as it seeks to reduce costs amid depressed platinum prices, the FT relates. The platinum price has plummeted to levels last seen in 2009 as it has dipped below US$1,000 an ounce, the FT notes. According to the FT, Lonmin, which employs about 38,000 people, including 9,000 contractors, said that at the current price the company was making a loss before interest, taxes, depreciation, and amortization. The group hinted at a need to raise capital, saying it was reviewing the appropriate capital structure for the company, the FT relays. "The board is considering the full range of options available to secure long-term capital and expects to update the market by the time of our full-year results in November 2015," the FT quotes Lonmin as saying. Lonmin Plc is a United Kingdom-based company. The principal activities of the Company during the fiscal year ended September 30, 2011 (fiscal 2011), were mining, refining and marketing of Platinum Group Metals (PGM). The Company has three operating segments: PGM Operations, Evaluation and Exploration. It runs a vertically integrated operational structure from mine to market. Its Mining operations extract ore, which its process division converts into refined PGMs, for delivery to its customers. NORTHERN ROCK: Bad Bank Won't Have to Compensate Borrowers ---------------------------------------------------------- Jane Croft at The Financial Times reports that Northern Rock Asset Management will no longer have to compensate thousands of people who borrowed from the taxpayer-owned lender after it successfully appealed a court decision. The High Court had ruled in December that GBP261 million could be handed back to about 41,000 borrowers who took out Northern Rock loans worth more than GBP25,000 as part of its "Together" mortgage product, which comprised a loan and a mortgage, the FT recounts. NRAM, the "bad" part of the bank that was nationalized in 2008, had brought the test case against itself after receiving 277 complaints that its former Together mortgage documents were incorrectly worded, the FT relays. Customers had complained that their statements showed the balance but did not reveal the original loan amount, which is required under the 1974 Consumer Credit Act, the FT relates. NRAM appealed the High Court decision, which was overturned on July 23, the FT discloses. The decision by the Court of Appeal spares NRAM having to pay compensation amounting to about GBP6,000 to each borrower, the FT notes. NRAM is part of UK Asset Resolution, established by the government in 2010 to manage the closed mortgage books of Bradford & Bingley and NRAM, the FT states. According to the FT, Richard Banks, UKAR's chief executive officer, said the court decision had confirmed that customers who took out unsecured loans of more than GBP25,000 under agreements that incorrectly stated these loans were regulated under the Act were not entitled to the same rights and remedies as those who took out loans that were regulated under the Act. The company, the FT says, is expected to release a provision which had been set aside for the payments. RMPA SERVICES: S&P Lowers Rating on GBP680MM Bonds to 'BB+' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'BB+' from 'BBB-' its long-term issue rating on the GBP680 million 5.337% bonds (including GBP100 million variation bonds) due Sept. 30, 2038, issued by RMPA Services PLC (ProjectCo). The GBP100 million variation bonds were not drawn and were subsequently cancelled as they were not required. The bonds' proceeds were used to finance the construction of Colchester Garrison near Colchester, in southeast England, for the U.K. Ministry of Defence (MoD) under a 35-year private finance initiative (PFI) concession agreement. The outlook on the rating is stable. S&P has also assigned a '2' recovery rating to the project bonds issued by RMPA Services PLC. A recovery rating of '2' indicates S&P's expectation of substantial (70%-90%) recovery prospects in the event of a payment default. S&P's recovery expectations are in the upper half of the 70%-90% range. To date, however, there has been limited experience regarding default or loss in this sector. The downgrade reflects S&P's view that ProjectCo will pursue a more aggressive financial policy demonstrated by the distribution of unspent life cycle funds -- albeit the reduction of the required life cycle reserve has been advised by the independent maintenance contractor and agreed with the TA. ProjectCo distributed forecast life cycle cost savings to its shareholders following the reduction of estimated life cycle costs until 2019. It also distributed the savings from reduced subordinated debt interest payments. This earlier repayment of subordinated debt leads to an earlier tax liability due to reduced debt interest payments. Therefore, it reduces annual debt service coverage ratios (ADSCRs). ProjectCo is currently working on an updated operating model that will be independently audited for approval by the controlling creditor, Ambac. The rating does not reflect the likely utilization of the consortium tax relief by ProjectCo's shareholders in future years. ProjectCo has established a notional tax reserve to maintain DSCRs at contractually required minimum levels, as stipulated under the collateral deed. However, S&P understands that the funding of the tax reserve is not a contractual requirement under the collateral deed since it is created only when certain conditions related to the surrender or disposal of tax losses have been met. Since ProjectCo has not crystallized any tax losses until now; the funding of the tax reserve to date has been discretionary. S&P has assumed that such transfers to the tax reserve are not made while calculating the Standard & Poor's base-case DSCRs. This leads to Standard & Poor's minimum and average DSCRs of 1.03x and 1.19x, respectively, under its base case. This assumes the full amount of forecast distributions could still be made under the collateral deed. Assuming the distribution restrictions under the collateral deed are met, the minimum and average DSCRs would be 1.12x and 1.30x, respectively. ProjectCo's board may decide to make further distributions to its shareholders in September 2015 from the proceeds of the sale of tax losses as part of the normal half-yearly distributions review process. The sale of tax losses to its previous shareholders resulted in a payment of GBP13.7 million to ProjectCo. This sale occurred over many years to the previous shareholders and it was agreed during ProjectCo's change of shareholding that these amounts should be settled to reduce the credit risk to RMPA. The previous shareholders therefore paid cash for these losses. ProjectCo has stated that any release of this cash will be within the parameters of the collateral deed and with a view to maintaining an investment-grade rating. However, S&P's rating assumes this amount could be distributed by end-September 2015. OPERATIONS PHASE Operations continue to function well with low deductions and positive relationships among all parties. The TA believes that the buildings are being appropriately maintained and that the future life cycle budget is sufficient to meet ProjectCo's likely requirements. However, S&P understands that the life cycle plan currently being used is that of financial close and therefore requires revalidation. ProjectCo plans to commence a full project-life operational-model review including life cycle, which will give a better picture of the longer-term life cycle requirements and ensure better management of the life cycle fund. Counterparty. Given the irreplaceable and material nature of the revenue counterparty -- the MoD, which is part of the U.K. government -- S&P assigns to it a counterparty dependency assessment (CDA) of 'aaa', equal to the sovereign credit rating on the U.K. S&P assigns a CDA to the operations counterparty, Sodexo Ltd. (A- /Stable/A-2). S&P also considers that the project does not have sufficient liquidity to replace its facilities maintenance contractors if required. This leads S&P to apply a CDA of 'a-' to the rating of Sodexo Ltd. This caps the rating on the ProjectCo. ProjectCo's account bank is Bank of Scotland PLC. This does not currently constrain the issue rating on the bonds due to the replacement language and limited exposure. MODIFIERS Full Credit Guarantee. Senior debt is guaranteed by Ambac Assurance U.K. Ltd. (Ambac), which is currently not rated. According to S&P's criteria, it assesses the project's liquidity as neutral. Liquidity is provided by a slightly stronger-than- average debt service reserve account, which is funded to meet the next nine months of senior debt service. Additional liquidity is provided by a three-year forward-looking major maintenance reserve. The outlook reflects S&P's view that the project's operational performance will remain stable and that service delivery will continue to meet the necessary standards. S&P expects the financial profile to continue to be supported by transfers from a notional tax reserve account, albeit recognizing such transfers are discretionary in nature. S&P considers an upgrade unlikely at present because of the project's relatively weak financial profile. S&P could lower the rating if the project's ADSCRs were to weaken further. In S&P's opinion, weakened credit metrics are most likely to occur as a result of unexpected increases in life cycle spending. S&P could also lower the rating if the continued distribution of unspent life cycle funds were to weaken the project's liquidity or if the project's ADSCRs were to reduce due to higher taxes that cannot now be offset following the early sale of tax losses. VIVAT TRUST: In the Brink of Liquidation ---------------------------------------- Shopshire Star reports that a charity, which let out historic properties to holidaymakers, including one in Shropshire, is on the brink of going into liquidation. The Vivat Trust, which let out properties including The Temple at Badger Dingle, between Bridgnorth and Albrighton, has appointed insolvency practitioners Begbies Traynor, according to Shopshire Star. The report notes that customers, who can pay up to GBP2,000 per week to stay in historic properties managed by the Hereford-based charity, have now had their holidays cancelled. They will now have to wait to hear from liquidators for the trust -- which rescued neglected and dilapidated listed buildings -- to find whether they will get their money back, the report relays. A statement on the charity's website said Mary Currie-Smith and Louise Baxter of Begbies Traynor had been instructed to place both The Vivat Trust Ltd and its sister company Vivat Management Services Ltd in liquidation on August 6, the report discloses. It said a number of customers had either paid for their holidays in full, or had left up-front deposits, the report relays. "Once appointed, the liquidators will investigate whether or not the deposits were held in a trust account and, if appropriate, look into the possibility of returning monies paid," the statement added, the report relays. The Vivat Trust is a registered charity, and was established in 1981 in order to rescue derelict historic buildings and sensitively restore them into short stay self-catering holiday homes, the report relays. The report adds that the trust's Web site said: "This approach to conserving the nation's heritage allows people to experience a living piece of history, while the lettings income helps fund future maintenance." YOUNG'S SEAFOOD: May Retain 250 Jobs at Fraserburgh Site -------------------------------------------------------- The Scotsman reports that almost 250 jobs could be saved at an under-threat seafood factory after talks over its future. Young's Seafood announced earlier this month that more than 900 jobs could be lost at two of its sites in Fraserburgh, Aberdeenshire, and Grantown on Spey in the Highlands, The Scotsman relates. According to The Scotsman, the company had proposed moving work from the factories to its other manufacturing sites in Grimsby, Livingston and Annan after the loss of a major contract to supply salmon to supermarket chain Sainsbury's. At a meeting led by Scottish Government ministers, the firm said it is now considering maintaining production at Fraserburgh on a reduced scale while closing the Grantown on Spey site, The Scotsman relays. The move would see 250 staff retained at Fraserburgh -- about half the current number, The Scotsman states. The company is seeking a buyer for Grantown on Spey, The Scotsman discloses. * UK: Number of Corporate Insolvencies Down to 3,908 ---------------------------------------------------- The Business Debt Advisor on July 29 disclosed that the number of corporate insolvencies peaked at 25,633 in 2009 and, since then, have steadily declined to a total figure at the end of 2014 of 17,118. Bev Budsworth explained: "The figures show the total number of corporate insolvencies were 3,908, down mainly due to a reduction in compulsory liquidations. When compared to the first quarter total of 4,052, it's likely that corporate insolvencies will continue to decline this year to around 16,000. The decline can be attributed, in most part, to the recovering economy, however, there is an increasing number of companies with debts that are dissolved each year. "Considering that there are more than 580,000 new companies set up each year and that companies have an average life span of two- and-a-half years, the number of formal insolvencies is very low. "It is estimated that just short of 369,500 companies are dissolved each year. However, dissolution is only relevant for companies that have no debt and have not traded or changed their name in the last three months. There has been an unhealthy growth in directors applying to strike off companies in debt. Companies House provides a step by step guide to the striking off process and failure to follow this process, which includes sending notification to shareholders, employees and creditors, can mean a fine or possible prosecution." * UK: Profit Warnings Fall to Two-Year Low in Q2 2015 ----------------------------------------------------- Ernst & Young on July 28 disclosed that UK profit warnings fell to a near two-year low in Q2 this 2015, with UK quoted companies issuing just 57 warnings, six fewer than the same period of 2014 and a drop of 26% compared to the previous quarter. An unexpected decisive General Election result provided greater certainty for businesses by the end of the period, while rising disposable incomes, low interest rates and a buoyant housing market provided sufficient economic momentum for listed businesses, according to EY's latest Profit Warnings report. Overall, 4% of UK quoted companies issued profit warnings in Q2 of this year, making this the lowest number and percentage of companies warning since Q3 2013. The Main Market saw a significant drop in warnings; however, profit warnings from AIM companies remained steady at 35 (4.2%) against 37 (4.4%) in Q1 2015. The FTSE sectors leading profit warnings in Q2 were Software & Computer Services (10) Support Services (7), Electronic & Electrical Equipment (7), Media (5) and General Retailers (5). Improving landscape but expectations could rebound too fast Profit warnings normally tail off during the summer, but this is an especially dramatic fall in warnings given the post-crisis highs recorded in previous quarters. Alan Hudson, EY's head of restructuring for UK & Ireland, says, "This period was a quarter of two halves. In April, UK profit warnings again hit a seven-year high; however in May an improving global economic outlook and an unexpectedly decisive General Election result appeared to set the ball rolling on many contracts and investment decisions. This helped companies meet lowered forecasts and feel more confident about the future. "The danger is -- as ever -- that expectations rebound too fast. Summer has brought renewed uncertainties and challenges. Even with helpful economic winds, there are obviously deep and enduring issues dragging on profits. Rising competition, disruptive new entrants and trends -- combined with overcapacity and 'noflation' -- provide tough conditions in which to raise prices and forecast accurately. Companies need to actively rejig their portfolios and focus on operational and capital resilience to thrive and meet rising investor expectations in this volatile environment." Software & Computer Services sector issues highest number of warnings Companies in the FTSE Software & Computer Services sector issued 17 profit warnings in the first half of 2015, the most of any FTSE sector. The UK quoted sector is one of the largest and covers a diverse range of businesses. However, this volume of warnings now means that a quarter of the sector has warned in the last 12 months and recurring themes suggest that many companies in the sector lack the resilience needed to make the most of the significant opportunities that lie ahead. The sectors' strong international focus brings geographical and currency challenges into play. The strong dollar has dented the growth prospects of several markets, especially emerging economies. The weak euro hurts UK companies exposed to the region -- and ongoing Eurozone uncertainty adds a further unsettling element. However, 'disruptive' areas like cloud computing, big data, smart mobility, social networking and the 'Internet of Things' are growing at considerably faster rates, while also being the key drivers for new system and application growth. Tech winners & losers Simon Pearson, EY technology transaction partner comments, "As in every period of rapid and significant change, some companies emerge as winners and others get left behind. A number of large technology businesses, who previously dominated their sector, have fallen by the way side in recent years. Indeed, dominance and size can be a hindrance if vested interests and over reliance and attachment to old models blinker management and inhibit their ability to adapt." Smaller companies should be more nimble, but many fast growing companies have heighted expectations and they are naturally vulnerable to problems with a single dominant contract. The UK profit warning data shows just that, with all but one of the 17 warnings issued this year coming from companies with a turnover below GBP200 million. Continuing, Pearson says, "Companies can't afford to stand still in this sector. Where possible they should think about broadening their client base by market and geography, but beyond that it's vital to apply best practice in understanding and managing risk across the contract lifecycle. This includes building in flexibility to counteract the risk from wage inflation and volatile exchange rates and also effective and regular monitoring of contract performance to ensure management receives early warning of any issues. Companies should also be applying robust cash forecasting across projects and divisions in order to ensure adequate liquidity and working capital." Swings and roundabouts for retail FTSE General Retailers issued five profit warnings in Q2 this year, taking the first half total to 11 -- the highest since 2011. The recent macro-economic environment appears to offer every advantage but this hasn't been enough to cushion some retailers against a costly battle to keep pace with changing consumer behavior and the equally constant demand for low prices. The profit warning data suggests sector health remains mixed, with over 25% of General Retailers warning in the last year. By sub-sector, apparel is by far and away the sector under most stress -- representing half of all FTSE General Retailers warnings issued this year. Jessica Clayton, EY transaction advisory services partner and retail specialist, comments, "What's preventing the macro picture from translating into a healthier sector? In many cases, it is the continuing price-investment conundrum. Consumers are sticking to behaviors adopted during the recession -- they have become comfortable with shopping with the discounters and diverting any spare cash to treats. Consumer spending on eating out has risen and the high street has serious competition for the consumer pound." This focus on price has made consumers no less demanding, they are still looking for value and for seamless service across all channels. Keeping up with the latest shifts in technology and related changes in behavior is placing increasing demands on investment, working capital and on the finance and buying functions. These strains -- and need for additional investment -- become especially apparent in the long run into Christmas, starting with the peak of Black Friday. Ms. Clayton adds, "Retail as a whole has become a much fitter and leaner sector in the last seven years. Companies with operational and capital flexibility -- and the ingenuity -- to adapt should still be able to thrive by harnessing new opportunities. New technologies, new partnerships and changing store profiles will offer new ways to interact with consumers. However, some retailers won't have the ability or capacity to reinvent themselves fast enough. The strains of under-investment and financial inflexibility become particularly apparent as buying patterns display more pronounced peaks and troughs. The next six months could further sort the resilient from the vulnerable." Economic outlook Alan Hudson, concludes, "This is a year of contrasts and contradictions. Stronger growth and rising deal activity stand in sharp contrast to the Eurozone's growing existential crisis and rising emerging market concerns. The contrast between these narratives, combined with heightened monetary policy speculation, has increased market volatility and clouded the outlook for the second half of 2015. "A rebound in growth and deal activity should remain the dominant theme for 2015. But the recovery will have less speed and stability if uncertainties continue and create a more testing period for UK companies and their earnings forecasts. But for UK earnings the macro environment is only part of the story. Whatever fair and foul economic winds are blowing, many companies are also still contending with dizzying change within their own sector, as disruptive entrants and technologies continue to challenge pricing and old models. Change always brings opportunity, but only for those resilient enough to take advantage." ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2014. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. * * * End of Transmission * * *