/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160310.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, March 10, 2016, Vol. 17, No. 049 Headlines A U S T R I A HETA ASSET: Creditors Refuse to Lift Lock-Up Agreement G R E E C E GREECE: Creditors Return to Athens to Discuss Bailout Issues I R E L A N D CELF LOAN III: Moody's Affirms B1 Rating on Class E Notes HARVEST CLO III: Moody's Affirms 'Ba2' Rating on Cl. E-1 Notes I T A L Y IDI: Catholic Priest Faces Indictment in Bankruptcy Probe N E T H E R L A N D S WOOD STREET 1: Moody's Affirms B1 Ratings on 2 Note Classes N O R W A Y NORSKE SKOG: Obtains Favorable Ruling in Debt Exchange Dispute R U S S I A BANK SOVETSKY: DIA to Oversee Financial Rehabilitation CB ROSAVTOBANK: Placed Under Provisional Administration ECONOMBANK JSC: DIA to Oversee Financial Rehabilitation S P A I N OBRASCON HUARTE: Moody's Lowers CFR to B2, Outlook Stable T U R K E Y ZAMAN: European Union Calls on Turkey to Respect Media Freedom U K R A I N E AVANT-BANK PJSC: NBU Revokes Licenses, Starts Liquidation U N I T E D K I N G D O M BL9 WEEKENDER: Goes Into Liquidation, Still Owes Music Fans BROAD OAK: Staff Left in The Dark About Liquidation FABRIC WAREHOUSE: In Liquidation, 50 Workers Still Upaid JPMAM: Wins BlueCrest Cash After Investors Reject Liquidation RANGERS FOOTBALL: Liquidators Can Appeal "Big Tax Case" Ruling SOHO HOUSE: S&P Lowers CCR to 'CCC', Outlook Stable X X X X X X X X * Ba1 & Ba2-Rated EMEA Cos. Show Signs of Default, Moody's Says ********* ============= A U S T R I A ============= HETA ASSET: Creditors Refuse to Lift Lock-Up Agreement ------------------------------------------------------ Alexander Weber at Bloomberg News reports that Heta Asset Resolution AG's creditors rebuffed Austrian demands to lift a lock-up agreement, increasing the likelihood that a discounted offer for EUR10.8 billion (US$12 billion) of the bad bank's debt will fail as the March 11 deadline nears. Austria and the province of Carinthia, a former owner of Heta which still guarantees its liabilities, "would be well advised to meet their obligations and fulfill their liabilities, instead of calling on the creditors to terminate binding contracts," Bloomberg quotes the group as saying in a statement. The creditors allied in the umbrella group control more than EUR5 billion of Heta's debt, enough to block a tender offer launched by Carinthia in January, Bloomberg discloses. On March 8, Mr. Schelling called on creditors to terminate the lock-up agreement preventing their members from accepting the offer, warning they may violate cartel rules, Bloomberg relates. According to Bloomberg, the creditors, which include Commerzbank AG, Pacific Investment Management Co. and Dexia SA's German unit, reiterated that the pact conforms to "legally approved" standards and that it won't be lifted. While Austrian officials have said that there will be no second offer for Heta's debt if the first one fails, creditors renewed their demand for negotiations in order to settle the dispute, Bloomberg notes. Heta Asset Resolution AG is a wind-down company owned by the Republic of Austria. Its statutory task is to dispose of the non-performing portion of Hypo Alpe Adria, nationalized in 2009, as effectively as possible while preserving value. =========== G R E E C E =========== GREECE: Creditors Return to Athens to Discuss Bailout Issues ------------------------------------------------------------ Philip Chrysopoulos at Greek Reporter reports that Greece's creditors arrived in Athens on March 8 in order to start the evaluation of the implementation of the bailout program with several issues still open. According to Greek Reporter, the heads of the creditors' missions -- Declan Costello of the European Commission, Nicola Giammarioli of the European Stability Mechanism, Rasmus Rueffer of the European Central Bank and Delia Velculescu of the International Monetary Fund -- were scheduled to meet on March 9 with Finance Minister Euclid Tsakalotos and Economy Minister Giorgos Stathakis to negotiate the issues that still remain open. It is expected that talks will last until the end of April or early May, Greek Reporter discloses. The pending issues are several and they are a prerequisite for starting negotiations on Greek debt easing, Greek Reporter says. The EUR1.8-billion fiscal gap in the 2016 budget and the 3.5% primary surplus for 2018 are issues that remain pending and Greece has not presented a credible proposal yet, Greek Reporter states. The selling of bad loans to distress funds and the change in management of Greek banks are also under negotiation with the Greek side trying to block selling of small business loans to distress funds and protect low income families from foreclosures of primary residences, Greek Reporter relays. Also, creditors insist on the quick establishment of an independent privatization fund that should be managed by non- political persons, Greek Reporter notes. ============= I R E L A N D ============= CELF LOAN III: Moody's Affirms B1 Rating on Class E Notes --------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by CELF Loan Partners III plc: EUR28 mil. Class B-1 Senior Secured Deferrable Floating Rate Notes due Nov. 1, 2023, Upgraded to Aaa (sf); previously on Sept. 21, 2015, Upgraded to Aa1 (sf) EUR8 mil. Class B-2 Senior Secured Deferrable Fixed Rate Notes due Nov. 1, 2023, Upgraded to Aaa (sf); previously on Sept 21, 2015, Upgraded to Aa1 (sf) EUR31.5 mil. Class C Senior Secured Deferrable Floating Rate Notes due Nov. 1, 2023, Upgraded to Aa2 (sf); previously on Sept. 21, 2015, Upgraded to A2 (sf) EUR29 mil. Class D Senior Secured Deferrable Floating Rate Notes due Nov. 1, 2023, Upgraded to Baa3 (sf); previously on Sept. 21, 2015, Affirmed Ba1 (sf) EUR11 mil. (current outstanding balance of EUR7,604,393.19) Class R Combination Notes due Nov. 1, 2023, Upgraded to Aaa (sf); previously on Sept. 21, 2015, Upgraded to Aa1 (sf) Moody's also has affirmed the ratings on these notes: EUR293 mil. (current outstanding balance of EUR74,633,117.36) Class A-1 Senior Secured Floating Rate Notes due Nov. 1, 2023, Affirmed Aaa (sf); previously on Sept. 21, 2015, Affirmed Aaa (sf) EUR52 mil. Class A-2 Senior Secured Floating Rate Notes due Nov. 1, 2023, Affirmed Aaa (sf); previously on Sept. 21, 2015, Affirmed Aaa (sf) EUR19.5 mil. Class E Senior Secured Deferrable Floating Rate Notes due Nov.1, 2023, Affirmed B1 (sf); previously on Sept. 21, 2015, Affirmed B1 (sf) CELF Loan Partners III plc, issued in October 2006, is a single currency Collateralised Loan Obligation backed by a portfolio of mostly high yield European loans. The portfolio is managed by CELF Advisors LLP. This transaction passed its reinvestment period in November 2013. RATINGS RATIONALE The upgrade of the notes is primarily a result of deleveraging in November 2015. As a result, the class A1 notes have paid down approximately EUR45.5 million (16% of initial balance) resulting in increases in over-collateralization levels. As of the January 2016 trustee report, the Class A, B, C, D and E overcollateralization ratios are reported at 199.23%, 155.13%, 129.96%, 113.07% and 103.98% respectively compared with 170.74%, 141.20%, 122.63%, 109.39 and 101.98% in October 2015. The ratings of the combination notes address the repayment of the rated balance on or before the legal final maturity. For the Class R Combination notes, the 'rated balance' at any time is equal to the principal amount of the combination note on the issue date times a rated coupon of 1.5% per annum accrued on the rated balance on the preceding payment date, minus the sum of all payments made from the issue date to such date, either interest or principal. The rated balance will not necessarily correspond to the outstanding notional amount reported by the trustee. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool as having performing par and principal proceeds balance of EUR241.4 million, a defaulted par of EUR12.8 million, a weighted average default probability of 20.39% (consistent with a WARF of 2830 over a weighted average life of 4.54 years), a weighted average recovery rate upon default of 45.81% for a Aaa liability target rating, a diversity score of 28 and a weighted average spread of 3.61%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. Moody's generally applies recovery rates for CLO securities as published in "Moody's Approach to Rating SF CDOs". In some cases, alternative recovery assumptions may be considered based on the specifics of the analysis of the CLO transaction. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2015. Factors that would lead to an upgrade or downgrade of the ratings: In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it assumed a lower weighted average recovery rate in the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs that were one notch lower than the base-case results for classes C, D and E. Classes A and B were not significantly impacted. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Additional uncertainty about performance is due to: 1) Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. 2) Recoveries on defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modeled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. HARVEST CLO III: Moody's Affirms 'Ba2' Rating on Cl. E-1 Notes -------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of these notes issued by Harvest CLO III plc: EUR30,750,000 Class C-1 Senior Subordinated Deferrable Floating Rate Notes due 2021, Upgraded to Aaa (sf); previously on May 7, 2015, Upgraded to Aa1 (sf) EUR12,000,000 Class C-2 Senior Subordinated Deferrable Fixed Rate Notes due 2021, Upgraded to Aaa (sf); previously on May 7, 2015, Upgraded to Aa1 (sf) EUR16,750,000 Class D-1 Senior Subordinated Deferrable Floating Rate Notes due 2021, Upgraded to A2 (sf); previously on May 7, 2015, Upgraded to Baa1 (sf) EUR9,250,000 Class D-2 Senior Subordinated Deferrable Fixed Rate Notes due 2021, Upgraded to A2 (sf); previously on May 7, 2015, Upgraded to Baa1 (sf) Moody's has also affirmed the ratings on these notes: EUR77,000,000 (current outstanding balance Euro 51.8 mil.) Class B Senior Floating Rate Notes due 2021, Affirmed Aaa (sf); previously on May 7, 2015, Upgraded to Aaa (sf) EUR15,750,000 Class E-1 Senior Subordinated Deferrable Floating Rate Notes due 2021, Affirmed Ba2 (sf); previously on May 7, 2015, Affirmed Ba2 (sf) EUR3,000,000 Class E-2 Senior Subordinated Deferrable Fixed Rate Notes due 2021, Affirmed Ba2 (sf); previously on May 7, 2015, Affirmed Ba2 (sf) Harvest CLO III plc, issued in April 2006, is a collateralized loan obligation backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by 3i Debt Management Investments Limited. The transaction's reinvestment period ended in June 2013. The collateral assets that are not denominated in Euro are hedged by perfect asset swaps or a macro swap. RATINGS RATIONALE The upgrade of the notes is primarily a result of deleveraging since the last two payment dates in June 2015 & December 2015. As a result; the Class A notes have been redeemed in full, the Class B notes have amortized by approximately EUR25.2 million or 33% of its original outstanding balance, resulting in increases in over-collateralization levels. As of the January 2016 trustee report, the Class B, Class C, Class D and Class E over- collateralization ratios are reported at 302.88%, 165.99%, 130.20% and 112.68% % respectively compared with 157.21%, 128.32%, 115.42 and 107.62% in May 2015. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool as having performing par and principal proceeds balance of EUR149.77 million and GBP1.00 million, a defaulted par of EUR 11.66 million and GBP1.20 million, a weighted average default probability of 18.92% (consistent with a WARF of 2767 over a weighted average life of 4.17 years), a weighted average recovery rate upon default of 46.53% for a Aaa liability target rating, a diversity score of 19 and a weighted average spread of 3.75%. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2015. Factors that would lead to an upgrade or downgrade of the ratings: In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it assumed a lower weighted average recovery rate in the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs that were unchanged for Classes B, C-1 and C-2 within one notch of the base-case results for Classes D-1, D-2, E-1 and E-2. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties due to embedded ambiguities. Additional uncertainty about performance is due to: 1) Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. 2) Recoveries on defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. 3) Around 12% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. As part of its base case, Moody's has stressed large concentrations of single obligors bearing a credit estimate as described in "Updated Approach to the Usage of Credit Estimates in Rated Transactions," published in October 2009 and available at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461 In addition to the quantitative factors that Moody's explicitly modeled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. ========= I T A L Y ========= IDI: Catholic Priest Faces Indictment in Bankruptcy Probe --------------------------------------------------------- ANSA reports that a Catholic priest on the board of Rome skin hospital IDI was among 40 people prosecutors asked to indict on March 7 in a probe into a Church-run healthcare group. Father Franco Decaminada was head of its health sector until December 2011, ANSA discloses. The case involves the multi-million-euro crack-up of a religious body that ran the Rome hospital and two clinics, ANSA relays. According to ANSA, the 40 are threatened with indictment on 144 counts of bankruptcy fraud, money laundering and embezzlement in what prosecutors said was the 2007-2012 "despoiling" of the religious entity, called the Italian Province of the Congregation of the Sons of the Immaculate Conception (Picfic). Complaints by IDI employees that they were not getting their paychecks sparked the probe, which led to the seizure of EUR6 million in assets from Decaminada and Temperini, ANSA states. Finance police discovered IDI was EUR845 million in the red and EUR450 million in tax evasion while EUR82 million had been diverted and EUR6 million in public funds embezzled, ANSA relates. Picfic declared bankruptcy and went into receivership in May 2013, ANSA recounts. ===================== N E T H E R L A N D S ===================== WOOD STREET 1: Moody's Affirms B1 Ratings on 2 Note Classes ----------------------------------------------------------- Moody's Investors Service has upgraded the ratings on these notes issued by Wood Street CLO 1 B.V.: EUR29.9 mil. Class C Senior Secured Deferrable Floating Rate Notes, Upgraded to Aaa (sf); previously on July 31, 2015, Upgraded to Aa2 (sf) EUR27.8 mil. Class D1 Senior Secured Deferrable Floating Rate Notes, Upgraded to Baa2 (sf); previously on July 31, 2015, Affirmed Ba1 (sf) EUR1.5 mil. Class D2 Senior Secured Deferrable Floating Rate Notes, Upgraded to Baa2 (sf); previously on July 31, 2015, Affirmed Ba1 (sf) Moody's also affirmed these notes issued by Wood Street CLO 1 B.V.: EUR310.5 mil. (outstanding balance of EUR 31,877,546.21) Class A Senior Secured Floating Rate Notes, Affirmed Aaa (sf); previously on July 31, 2015, Affirmed Aaa (sf) EUR36 mil. Class B Senior Secured Floating Rate Notes, Affirmed Aaa (sf); previously on July 31, 2015 Affirmed Aaa (sf) EUR10.6 mil. Class E Senior Secured Deferrable Floating Rate Notes, Affirmed B1 (sf); previously on July 31, 2015, Upgraded to B1 (sf) EUR5 mil. Class Z Combination Notes, Affirmed B1 (sf); previously on July 31, 2015, Upgraded to B1 (sf) Wood Street CLO 1 B.V., issued in September 2005, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Alcentra Limited. The transaction's reinvestment period ended in November 2011. RATINGS RATIONALE The rating upgrades of the notes are primarily a result of the deleveraging of senior notes and subsequent increases of the overcollateralization ratios of the remaining classes of notes. Moody's notes that the class A notes partially redeemed by approximately EUR21.5 million at the November 2015 payment date. As a result of the deleveraging the OC ratios of the notes have increased significantly. According to the January 2016 trustee report, the classes A/B, C, D and E OC ratios are 227.80%, 158.10%, 121.70% and 112.35% respectively compared to levels just prior to the payment date in November 2015 of 198.26%, 148.54%, 119.30% and 111.38% respectively. The rating of the combination notes address the repayment of the rated balance on or before the legal final maturity. For the class Z notes, the rated balance is equal at any time to the principal amount of the combination note on the issue date minus the aggregate of all payments made from the issue date to such date, either through interest or principal payments. The rated balance may not necessarily correspond to the outstanding notional amount reported by the trustee. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's analyzed the underlying collateral pool as having a cash and performing par balance of EUR155.9 million, a weighted average default probability of 24.91% (consistent with a WARF of 3546 and a weighted average life of 4.16 years), a weighted average recovery rate upon default of 48.24% for a Aaa liability target rating and a diversity score of 17. The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analyzing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2015. Factors that would lead to an upgrade or downgrade of the ratings: In addition to the base-case analysis, Moody's conducted sensitivity analyses on the key parameters for the rated notes, for which it lowered the weighted average recovery rate by 5 percentage points; the model generated outputs that were in line with the base-case results for classes A and B and within with two notches for classes C, D and E. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the note, in light of uncertainty about credit conditions in the general economy. CLO notes' performance may also be impacted either positively or negatively by 1) the manager's investment strategy and behavior and 2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Portfolio amortization: The main source of uncertainty in this transaction is the pace of amortization of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortization could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend- and-extend restructurings. Fast amortization would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over- collateralization levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analyzed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. Around 19.23% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. As part of its base case, Moody's has stressed large concentrations of single obligors bearing a credit estimate as described in "Updated Approach to the Usage of Credit Estimates in Rated Transactions," published in October 2009 and available at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461 Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that, at transaction maturity, the liquidation value of such an asset will depend on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. Liquidation values higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modeled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. =========== N O R W A Y =========== NORSKE SKOG: Obtains Favorable Ruling in Debt Exchange Dispute -------------------------------------------------------------- Luca Casiraghi at Bloomberg News reports that Norske Skogindustrier ASA, the distressed Norwegian paper maker backed by Blackstone Group LP's credit arm, won a court ruling in a dispute over a debt exchange it says is needed to avoid bankruptcy. U.S. District Judge Richard Sullivan denied a request by a group of bondholders that would block the plan, Bloomberg relays, citing a court ruling on March 8. According to Bloomberg, while the judge said the arguments put forward against the exchange weren't sufficient to stop it, he said the proposed plan is prohibited by existing bond documents. Norske Skog's debt-swap plan has divided investors, with opposition from a group of secured bondholders including BlueCrest Capital Management, New York-based Marathon Asset Management and Finnish insurer Sampo Oyj, Bloomberg discloses. The company said in a statement on March 9 it will review the details of the ruling with its legal advisers and consider any effects on the exchange offer, Bloomberg relates. The exchange was temporarily blocked by a New York state judge and Norske Skog extended the deadline to March 11, Bloomberg notes. The judge, as cited by Bloomberg, said Norske Skog still has to respond to an amended complaint by the group. About Norske Skog Norske Skogindustrier ASA or Norske Skog, which translates as Norwegian Forest Industries, is a Norwegian pulp and paper company based in Oslo, Norway and established in 1962. As reported by the Troubled Company Reporter-Europe in mid- November 2015, Moody's Investors Service downgraded Norske Skogindustrier ASA's (Norske Skog) Corporate Family Rating ("CFR") to Caa3 from Caa2 and its Probability of Default Rating (PDR) to Ca-PD from Caa2-PD. Standard & Poor's Ratings Service also downgraded the Company's long-term corporate credit rating to CC from CCC. =========== R U S S I A =========== BANK SOVETSKY: DIA to Oversee Financial Rehabilitation ------------------------------------------------------ The Bank of Russia has approved amendments to the Plan for Participation of the State Corporation Deposit Insurance Agency in Bankruptcy Prevention of JSC Bank Sovetsky. As a result of the bankruptcy prevention, tender held by the Agency PJSC Tatfondbank with the most favorable bankruptcy prevention offering for the Bank has been selected as an investor. The bankruptcy prevention measures for JSC Bank Sovetsky are aimed at reaching its compliance with the Bank of Russia requirements for financial stability of credit institutions. CB ROSAVTOBANK: Placed Under Provisional Administration ------------------------------------------------------- The Bank of Russia, by its Order No. OD-766, dated March 4, 2016, revoked the banking license of Moscow-based credit institution Commercial Bank Regional Sectoral Specialised Automotive Industry Bank, LLC (LLC CB ROSAVTOBANK) from March 4, 2016. The Bank of Russia took such an extreme measure -- revocation of the banking license -- because of the credit institution's failure to comply with federal banking laws and Bank of Russia regulations, repeated violations within one year of Bank of Russia requirements stipulated by Articles 6, 7 (excluding Clause 3 of Article 7) of the Federal Law "On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism", equity capital adequacy ratios below 2 per cent, decrease in bank equity capital below the minimum value of the authorized capital established by the Bank of Russia as of the date of the state registration of the credit institution, due to repeated application within a year of measures envisaged by the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)", considering a real threat to the creditors' and depositors' interests. LLC CB ROSAVTOBANK implemented high-risk lending policy and failed to create loan loss provisions adequate to the risks assumed. Due credit risk assessment resulted in a full loss of the bank's equity capital. Besides, Bank LLC CB ROSAVTOBANK failed to meet the Bank of Russia regulations on countering the legalization (laundering) of criminally obtained incomes and the financing of terrorism, including, but not limited to, the timely notification of the authorized body about operations subject to obligatory control. Moreover, the bank was involved in dubious transit operations. The management and owners of the credit institution did not take effective measures to normalize its activities. Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking license from the credit institution in accordance with Article 20 of the Federal Law 'On Banks and Banking Activities.' The Bank of Russia, by its Order No. OD-767, dated March 4, 2016, appointed a provisional administration to LLC CB ROSAVTOBANK for the period until the appointment of a receiver pursuant to the Federal Law "On Insolvency (Bankruptcy)" or a liquidator under Article 23.1 of the Federal Law "On Banks and Banking Activities". In accordance with federal laws, the powers of the credit institution's executive bodies are suspended. LLC CB ROSAVTOBANK is a member of the deposit insurance system. The revocation of the banking license is an insured event as stipulated by Federal Law No. 177-FZ "On the Insurance of Household Deposits with Russian Banks" in respect of the bank's retail deposit obligations, as defined by law. The said Federal Law stipulates the insurance premium as 100% reimbursement of the balance of funds to bank depositors, including individual entrepreneurs, but not more than 1.4 million in aggregate per depositor. According to the financial statements, as of February 1, 2016, LLC CB ROSAVTOBANK ranked 254th by assets in the Russian banking system. ECONOMBANK JSC: DIA to Oversee Financial Rehabilitation ------------------------------------------------------- The Bank of Russia has approved amendments to the Plan for Participation of the State Corporation Deposit Insurance Agency in bankruptcy prevention of Joint-stock Commercial Bank of Reconstruction and Development Econombank (JSC Econombank). As a result of the bankruptcy prevention, tender PJSC METCOMBANK with the most favorable bankruptcy prevention offering for the Bank has been selected. As part of the Participation Plan the Agency is vested with the authority of a provisional administration of JSC Econombank from March 9, 2016. The powers of the Bank's shareholders related to their participation in the authorized capital, including the right to call a general shareholders' meeting, as well as the powers of its executive bodies have been suspended. The Participation Plan stipulates acquisition by the Investor of shares in the Bank in the amount sufficient for the overall decision-making. ========= S P A I N ========= OBRASCON HUARTE: Moody's Lowers CFR to B2, Outlook Stable --------------------------------------------------------- Moody's Investors Service has downgraded to B2 from B1 the corporate family rating of Spanish multinational construction and civil engineering company Obrascon Huarte Lain S.A. (OHL) and the ratings on the group's senior unsecured debt instruments. "The downgrade is driven principally by the slump in earnings at OHL's Engineering and Construction division in 2015 and the limited prospects for recovery in 2016, both of which have pushed leverage to levels that can no longer sustain a B1 rating," says Matthias Heck, a Moody's Vice President -- Senior Analyst. Concurrently, the rating agency downgraded OHL's probability of default rating (PDR) to B2-PD from B1-PD. The outlook on the ratings is stable. RATINGS RATIONALE The rating downgrade primarily reflects the company's deteriorated operating performance within its recourse activities in 2015, and the dim prospects for material improvements in 2016, only partially offset by the EUR1 billion rights issue that was conducted in October 2015. As a result, OHL's financial leverage, measured as recourse debt/recourse EBITDA, remains too high for the previous rating level and is rather commensurate with a B2 rating. In 2015, OHL's recourse activities have performed very weakly, with a 27% EBITDA decline in its construction division (to EUR150 million, from EUR206 million in 2014), as well as a shrinking order book (book-to-bill ratio of 0.7x in 2015). OHL's other recourse activities recorded a combined slightly negative EBITDA, including another EBITDA loss of EUR20 million at its industrial activities division. As a result, OHL's recourse EBITDA totaled to EUR147 million in 2015, excluding dividends from OHL Concesiones. Moody's does not include these dividends, because they do not result in a cash inflow for OHL as they are used to offset the existing intercompany loan of EUR530 million (EUR1.08 billion as per December 2014). Moody's expects this loan to be redeemed within the next 18 months. Thereafter, however, Moody's believes that OHL Concesiones' capacity to pay cash dividends remains very limited, given the sizeable debt of EUR3.5 billion sitting at OHL Concesiones. OHL's Construction division had an implied EBITDA margin of 4.6% in 2015, weakening from 7.4% in 2014. The margin weakness reflects a regional shift by the company towards more developed economies with lower margins, and a more conservative estimate of final construction targets for various projects. While Construction margins may not necessarily continue their weakness in 2016, a material recovery towards historically higher levels appears unlikely, given the shrunken order book and the generally lower margin level in some of OHL's core regions. In addition, securing additional construction contracts in its core markets might be more challenging going forward. In 2015, OHL's gross recourse debt remained high at EUR1.2 billion. This leaves gross recourse debt/recourse EBITDA at a very high level of 8.4x in 2015, compared to Moody's rating trigger of 4.5-5.5x to maintain the B1 rating. OHL has historically maintained a rather high cash balance, which the rating agency assumes is necessary to run its business. Even if Moody's assumed part of that cash to be applied to debt reduction, this would keep the leverage of OHL above 6x. In addition, the majority (55%) of OHL's consolidated EBITDA (which includes profits from its concession subsidiaries) of EUR967 million remained non-cash in 2015, given the capitalization of expected returns on its Mexican concessions. As a result, the consolidated leverage, calculated as net debt/cash EBITDA, amounted to very high 9.6x in 2015. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects the expectation that the company continues its efforts to reduce leverage, both on a recourse and consolidated basis. This is evidenced by the company's successful capital increase of EUR1.0 billion executed in October 2015, proceeds of which are largely used to reduce debt, as reflected by the tender offer for the bond maturing in 2020. After the tender offer, the remaining outstanding volume amounts to EUR230 million. The complete buyback would reduce gross debt to slightly below EUR1.0 billion and reduce gross leverage to 6.6x. The stable outlook also reflects the expectation that the company will modestly grow its operating profits, leading to an improvement in recourse EBITDA, compared to depressed 2015 levels. Such an EBITDA improvement, in combination with a reduction of outstanding debt, would further bring gross recourse leverage down into Moody's new ratio guidance of 5.5-6.5x, which Moody's expects for the B2 rating level. The stable outlook also reflects the company's improved liquidity situation which is now at adequate levels on the back of (1) proceeds from the abovementioned capital increase, (2) the settlement of some litigation claims, (3) the reduction of margin loans at the level of OHL Concesiones, as well as (4) several asset disposals (75% of the EUR250 million target achieved already). Moody's understands that the target for asset disposals could be even overachieved, with a positive impact on liquidity and net financial leverage. WHAT COULD CHANGE THE RATING UP/DOWN Positive pressure could develop if OHL's credit metrics improved on a sustainable basis such that gross recourse debt/recourse EBITDA falls to well below 5.5x, with the maintenance of a solid liquidity profile, including the generation of positive free cash flow. Conversely, there could be negative rating pressure if the company were to fail to de-lever as expected, with gross recourse debt/recourse EBITDA remaining above 6.5x. Negative rating pressure could also emerge if (1) OHL's performance does not enable a return to positive free cash flow generation on a recourse and consolidated basis and (2) recourse EBITDA were to deteriorate further from currently already low levels. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Construction Industry published in November 2014. Headquartered in Madrid, OHL is one of Spain's leading construction/concessions groups. The company owns a 56.14% equity stake in OHL Mexico, a large concessions operator in Mexico, and a 13.93% equity stake in Spanish infrastructure operator Abertis. In 2015, OHL reported sales of EUR4.4 billion and EBITDA of EUR967 million. =========== T U R K E Y =========== ZAMAN: European Union Calls on Turkey to Respect Media Freedom -------------------------------------------------------------- PTI reports that the European Union on March 5 asked Turkey to respect media freedom after Turkish police seized top-selling opposition newspaper Zaman. "The EU has repeatedly stressed that Turkey, as a candidate country, needs to respect and promote high democratic standards and practices, including freedom of the media," PTI quotes the EU's diplomatic service as saying in a statement. Zaman newspaper published a defiant edition on March 5 warning of the "darkest days" in the history of the press after authorities seized control of its headquarters in a dramatic late-night raid by riot police, PTI relays. As reported by the Troubled Company Reporter-Europe on March 7, 2016, The Telegraph related that Zaman, linked to a US-based preacher who is the arch-foe of the Turkish president, was ordered into administration by an Istanbul court on March 4 after a request from state prosecutors. The newspaper has been strongly critical of Recep Tayyip Erdogan, the Turkish president, and his government, The Telegraph noted. The newspaper has a readership of more than 630,000, and its sister Today's Zaman is one of a few newspapers printed in English on paper and online, according to The Telegraph. ============= U K R A I N E ============= AVANT-BANK PJSC: NBU Revokes Licenses, Starts Liquidation --------------------------------------------------------- According to Interfax-Ukraine, the National Bank of Ukraine has decided to revoke the banking license and liquidate Avant-Bank PJSC. The bank was classified as problem in the beginning of December 2015, Interfax-Ukraine relays, citing NBU's report. "At the end of the year the liquidity of PJSC Avant-Bank deteriorated significantly. At the same time, we've started receiving complaints from individuals and legal entities with respect to the bank's non-fulfillment of its obligations. The regulator explained the decision was made on the basis of the bank shareholders' having no clear plans for the restoration of the bank's liquidity and the failure to perform customers' operations in the period established by the legislation," Interfax-Ukraine quotes the NBU report as saying. Avant-Bank PJSC is based in Kyiv. =========================== U N I T E D K I N G D O M =========================== BL9 WEEKENDER: Goes Into Liquidation, Still Owes Music Fans ------------------------------------------------------------ manchestereveningnews.co.uk reports that the company behind the failed BL9 Weekender music festival has called in the liquidators. Some ticket holders are still owed refunds after the event was relocated, then postponed and later called off last summer, according to manchestereveningnews.co.uk. Andrew Brooks, director of organisers BL9 Media, told the M.E.N. the company had been hit with heavy losses as a result and said he was considering legal action against Bury Council for not allowing it to go ahead at the original venue, the report notes. "We did our best but unfortunately we had some big losses due to the cancellation and trying to reschedule," the report quoted Mr. Brooks as saying. "We are just deciding whether there is any course of action to be taken against the council and are reviewing with our legal team," Mr. Brooks added. The event was due to be headlined by Happy Mondays and Razorlight at Bury FC's Gigg Lane stadium on June 13 and 14 last year. But council bosses would not allow it to go ahead at the ground, citing 'serious concerns about public safety,' the report notes. Organisers said it gave them no choice but to find a new venue so it could go ahead on the same dates and moved it to EventCity in Trafford, the report relays. But later, they announced it would be postponed until 'later in the summer', claiming the relocation left them without enough time to plan it properly, the report discloses. A spokesman for the council said: "We refused to grant the BL9 organisers a special safety certificate for the proposed Gigg Lane concert because we had serious concerns for public safety. Ticket holders were told they could get a full refund or use their tickets for the rescheduled event, the report notes. But the M.E.N. has been contacted by several music fans who are still waiting for their money back nearly nine months on, the report relays. BROAD OAK: Staff Left in The Dark About Liquidation --------------------------------------------------- The Gazette reports that employees said they had no idea what was going on at Broad Oak Toiletries until they lost their jobs on Friday. A handful of staff made redundant four days ago said the company didn't bother to inform staff what was happening, according to The Gazette. The report notes that this comes after it was announced that Broad Oak Toiletries Ltd had ceased trading after failing to secure a buyer. The company has now gone into administration leaving 214 members of staff redundant and without pay for January, the report relays. The Gazette was told some employees learned their fate from the Job Centre Plus. A former employee has said he believed that management was not telling the staff the full story, the report discloses. The Gazette has attempted to contact Broad Oak Toiletries but has not received response. Broad Oak Toiletries Ltd was a leading UK manufacturer of toiletries and health and beauty products. It made products for high-end brands such as Jo Malone and Jack Wills. It was announced that BDO LLP was appointed to oversee the administration process on Friday, February 5, the report relays. Simon Girling -- simon.girling@bdo.co.uk -- one of the administrators for the company, has been contacted for comment. In a statement issued to the Gazette, Mr. Girling said: "Broad Oak had significantly developed its customer base over the last 18 months, but this led to capacity issues at its Tiverton manufacturing plant which put insurmountable pressures on its working capital. "The company exhausted all possible options to continue to trade and, ultimately, in the absence of a buyer of the business as a going concern, it was forced to cease to trade and unfortunately all employees have been made redundant. "The joint administrators will seek purchasers of the specialist assets and interest in the significant leasehold properties in Tiverton and Burlescombe and, going forward, will seek to maximise recoveries for the benefit of all creditors. "We would urge staff and creditors with any concerns to contact the Joint Administrators via BRNOTICE@bdo.co.uk." FABRIC WAREHOUSE: In Liquidation, 50 Workers Still Upaid -------------------------------------------------------- Insider Media Limited reports that Fabric Warehouse, a retail chain owned by a former Liverpool mayoral candidate, has reportedly gone into liquidation. The report, citing Liverpool Echo, relates that Fabric Warehouse, a division of Prescot-based Caldeira Holdings, has shut its doors and approximately 50 staff who work for it have not yet been paid for January. Caldeira Holdings is owned by Tony Caldeira, who was the Conservative candidate for the position of first elected mayor of Liverpool in 2012, the report recalls. The contest was eventually won by Joe Anderson. Fabric Warehouse went into administration in 2008 and Caldeira Retail Ltd subsequently rescued 14 of the 40 stores, the report notes. However, its store count has since fallen to seven, the report says. Kerry Bailey -- kerry.bailey@bdo.co.uk -- of BDO has been appointed as liquidator of the business. JPMAM: Wins BlueCrest Cash After Investors Reject Liquidation ------------------------------------------------------------- Sean Butters at citywire.co.uk reports that JP Morgan Asset Management (JPMAM) has won the mandate for the BlueCrest AllBlue Fund investment trust, ending a period of uncertainty for trust shareholders. The deal sees GBP262 million of assets -- out of an initial GBP713 million -- brought under the remit of JPMAM's $29 billion multi-strategy alternative investment arm, Highbridge Capital Management, according to citywire.co.uk. The announcement comes following a period of speculation over the future of the trust, with the Bluecrest board having at one point considered liquidating the portfolio, the report notes. JPM said that a shareholder declaration of support in favour of continuing to run the portfolio prompted an about-turn, the report relays. Management of the fund will be spread across the Highbridge investment team, which offers 12 risk-adjusted strategies led by chief investment officer Mark Vanacore, the report discloses. It will target investment opportunities across the asset class spectrum, including equity, credit convertibles and capital structure, in North American, European and Asian markets, the report notes. Bluecrest All Blue Fund IT will subsequently be renamed Highbridge Multi-Strategy Fund to reflect the change, the report says. Simon Crinage, head of JPMAM's investment trust business, outlined the firm's intention to continue broadening its footprint in the alternative assets space following the mandate win, the report notes. "This allows us to diversify away from equity-focused strategies and move into alternative asset classes," the report quoted Mr. Crinage as saying. "This is particularly important in the current market environment, where investors are seeking sources of return that are less correlated to traditional markets," Mr. Crinage added. "Given 2016 has got off to a choppy start and market turmoil is unlikely to dissipate anytime soon, we expect to see increased appetite for alternative assets in the investment trust sector as professional investors increasingly seek out investment strategies which offer lower risk for their clients," the report notes. At market-close on February 24, the BlueCrest AllBlue Fund was trading at a 6.3% discount to net asset value of GBP761.9 million, the report relays. In the five years to January 31, the trust returned 10.26% versus the FTSE World's 46.64% in the same time-frame, the report adds. RANGERS FOOTBALL: Liquidators Can Appeal "Big Tax Case" Ruling -------------------------------------------------------------- Hilary Duncanson at Press Association reports that the liquidators of the Rangers Football Club have been given permission to take an appeal over the so-called "big tax case" to the UK's highest civil court. Three judges at the Court of Session in Edinburgh have granted BDO's request to bring an appeal against an earlier legal ruling to the Supreme Court in London, Press Association relates. No date has been set for the hearing but cases are generally heard by the London court around six to 12 months after leave to appeal is granted, Press Association notes. The judges four months ago decided any income derived from employees' services is classed as earnings and subject to income tax, Press Association recounts. The decision was in relation to Murray Group companies, including the liquidated company now called RFC 2012 plc, and does not affect the current regime at Ibrox, Press Association discloses. "We are ready to contest the appeal in the Supreme Court," Press Association quotes an HMRC spokesman as saying. About Rangers Football Club Rangers Football Club PLC -- http://www.rangers.premiumtv.co.uk/ -- is a United Kingdom-based company engaged in the operation of a professional football club. The Company has launched its own Internet television station, RANGERSTV.tv. The station combines the use of Internet television programming alongside traditional Web-based services. Services offered include the streaming of home matches and on-demand streaming of domestic and European games, which include dedicated pre-match, half-time and post- match commentary. The Company will produce dedicated news magazine and feature programs, while the fans can also access a library of classic European, Old Firm and Scottish Premier League (SPL) action. Its own dedicated television studio at Ibrox provides onsite production, editing and encoding facilities to produce content for distribution on all media platforms. SOHO HOUSE: S&P Lowers CCR to 'CCC', Outlook Stable --------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on U.K.-based private membership club and restaurant operator Soho House & Co. Ltd. (Soho House, formerly Soho House Group Ltd.) to 'CCC' from 'B-'. The outlook is stable. As a consequence, S&P also lowered its issue rating on Soho House's GBP152.5 million senior secured notes to 'CCC' from 'B-'. The recovery rating is unchanged at '4', indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. At the same time, S&P lowered its issue rating on the group's super senior RCF to 'B-' from 'B+'. The recovery rating is unchanged at '1', indicating S&P's expectation of very high (90%- 100%) recovery in the event of a payment default. S&P also withdrew its issue and recovery ratings on the group's previously proposed GBP200 million senior secured notes, which were not executed. The downgrade reflects S&P's view that, despite rapid new club house openings and robust revenue growth, Soho House's aggressive debt-funded expansion strategy has weakened the group's overall EBITDA margin. Combined with weak liquidity, elevated leverage, and negative cash flows, S&P views the group's capital structure as unsustainable. S&P estimates that Standard and Poor's-adjusted debt to EBITDA could reach 14.6x in financial year (FY) 2015, while the EBITDAR cash interest coverage (defined as unadjusted EBITDA before deducting rent over cash interest plus rent) will be about 0.8x in FY2015. This reflects S&P's view that the group's profits will not grow sufficiently to service its high debt and interest costs, resulting in S&P's highly leveraged financial risk profile assessment. Due to substantial costs and working capital investments required for rapid new site construction and openings, S&P expects the majority of the RCF will be drawn, leading to weak liquidity. The group's high capex has therefore been largely funded by additional debt. However, management has indicated that the group has the flexibility to rein in expansionary capex if it does not receive sufficient equity contribution. Soho House plans to continue opening various new sites and restaurants including in Amsterdam, Tokyo, and Hong Kong. Although newly opened sites attract additional members and spending, driving strong revenue growth, they contribute lower earnings during the early stages of the maturity cycle. Moreover, Soho House is increasingly involved in the construction activities of its club houses, which exhibit minimal gross margin. Consequently, rapid expansion significantly dilutes the group's overall profitability, which S&P now assess as below average. As the group continues to accelerate its growth plans, S&P forecasts that the group's overall EBITDA margin will remain subdued over the next three years. S&P therefore revised Soho House's business risk profile to weak. At the same time, S&P removed its negative comparable rating analysis modifier, which previously resulted in S&P adjusting the corporate credit rating downward by one notch. Nevertheless, S&P considers that Soho House benefits from its exclusive brand, premium offerings, and a very strong and growing membership base of 57,000 existing members, with a long waiting list of 30,000 potential members and a very low attrition rate of 3%. S&P's base case assumes: -- Very strong group revenue growth of 26% in 2016, reflecting resilient growth in the group's membership base and spending in several major new openings, as well as its significant involvement in constructing new club houses. -- Adjusted EBITDA margin of about 11% in 2016, mainly as a result of substantial costs associated with club house development, construction, and opening activities and relatively weak margins in newly opened clubs that dilute the group's overall profitability. S&P do not expect profitability to materially improve in the meantime, considering Soho House's expansion plan. -- Increased planned capex of GBP59 million in 2016 on the back of equity injection, primarily funding new openings in the U.K., the U.S., and Barcelona, as well as refurbishments and maintenance. S&P understands that the new club houses in Barcelona, Ludlow, and downtown Los Angeles have been fully funded. -- In accordance with management's commitment, capex would reduce to about GBP25 million in 2016 if the group does not receive common equity injections of about GBP34 million to fund those projects. Based on these assumptions, S&P arrives at these credit measures: -- Adjusted debt to EBITDA (after having reached about 14.6x in 2015) could moderate toward 12.9x in 2016 as newly opened clubs progress through their maturity cycle, contributing to EBITDA growth. EBITDAR cash interest coverage will be about 0.8x-0.9x in 2016, reflecting S&P's expectation that earnings may not grow sufficiently in line with interest costs in light of accelerated expansion. -- Negative reported operating cash flow of GBP5 million-GBP10 million. However, this could turn positive if the group scales back its expansion plan. The stable outlook on S&P's 'CCC' corporate credit rating reflects its view that unless Soho House scales back its growth projects, funds its expansionary capex and related cash needs with common equity, or reduces debt, the group could face difficulties in servicing its high debt level, leading to the risk of a liquidity shortfall or a potential distressed exchange offer. S&P could consider a downgrade if a liquidity shortfall, a distressed exchange offer, or violation of financial covenants appears inevitable within the next six months. S&P would view a distressed exchange offer as tantamount to a default. However, as far as S&P knows, Soho House is currently not taking any tangible steps in this direction. S&P could consider raising the ratings if Soho House substantially reins in capex and focuses on improving EBITDA margins in its existing operations, such that its free operating cash flow generation significantly improves. S&P could also take a positive rating action if the group meaningfully reduces its debt level through asset disposal and common equity contribution, resulting in EBITDAR cash interest coverage rising toward 1.0x a sustainable basis. =============== X X X X X X X X =============== * Ba1 & Ba2-Rated EMEA Cos. Show Signs of Default, Moody's Says --------------------------------------------------------------- While early warning signs of default are most prevalent among B3- rated EMEA high-yield companies, a number of fallen angels in the Ba1 and Ba2 rating band are also showing warning signs, says Moody's Investors Service today in a new report. Fallen angels are companies that have lost their investment grade rating. 20% of Ba1-rated companies were riskier issuers, rising to 21.6% for Ba2s then falling to 13% for Ba3s and 7.1% for B1s. This report assesses the entire Moody's rated universe of high- yield companies in EMEA using a set of 17 quantitative and qualitative early warning signs of default. It marks the first time that such an assessment of the more than 500 public and non- public high-yield entities has been aggregated into one report. "While we might expect Ba-rated companies to show fewer early warning signs than B-rated companies, the frequency of these signs at the Ba1 and Ba2 level can be linked to the high concentration of fallen angels at this level," says Gianmarco Migliavacca, a Moody's Vice President -- Senior Credit Officer and author of the report. Such companies are often positioned at the higher end of the speculative-grade spectrum because they still benefit from some of the characteristics reflected in their previous investment- grade status, such as large size or strong business profile. However often the factors behind their downgrade persist and now constitute early warning signs. Moody's report shows that quantitative early warning signs, such as excessive leverage or weak liquidity, are clustered around the B3 rating band. On the other hand, most qualitative signs, such as exposure to a declining sector or high product concentration, tend to be spread more evenly along the rating scale. Companies showing multiple warning signs are more common in sectors with a negative Moody's outlook or high intrinsic sector risk. These include mining, energy oilfield services, steel and manufacturing. However, many companies displaying warning signs are also present in sectors with a stable outlook but characterized by a higher concentration of LBOs, such as retail or consumer packaged goods. ********* 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. 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 2016. 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 * * *