/raid1/www/Hosts/bankrupt/TCREUR_Public/160720.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
Wednesday, July 20, 2016, Vol. 17, No. 142
Headlines
B E L A R U S
BPS-SBERBANK: Fitch Affirms 'B-' Long-Term IDR, Outlook Stable
B U L G A R I A
BULGARIAN ENERGY: Moody's Assigns (P)Ba2 Rating to Proposed Bonds
G E R M A N Y
COHERENT HOLDING: Moody's Assigns Ba2 CFR, Outlook Stable
UNISTER HOLDING: Files for Insolvency Following Founder's Death
I R E L A N D
EATON VANCE CDO VII: Moody's Affirms Ba1 Ratings on Two Notes
HARVEST CLO XVI: Moody's Assigns (P)B2 Rating to Class F Notes
I T A L Y
F-E GOLD: Moody's Raises Rating on Class C Notes to Ba2
GAMENET GROUP: Moody's Assigns B1 Corporate Family Rating
MODA 2014: Fitch Affirms 'Bsf' Rating on Class E Notes
MONTE DEI PASCHI: Moody's Puts B2 Rating on Review for Downgrade
N E T H E R L A N D S
FAB CBO 2003-1: Moody's Raises Rating on Cl. A-3E Notes to Ba3
JUBILEE CLO 2016-XVII: Moody's Rates EUR10.7MM Cl. F Notes (P)B2
UNITED GROUP: Moody's Assigns B2 Rating to EUR125MM Notes
UNITED GROUP: S&P Affirms 'B' Corp. Credit Rating, Outlook Stable
R O M A N I A
* ROMANIA: Had Biggest Drop in Insolvencies in CEE Region
R U S S I A
ARXBANK JSC: Placed Under Provisional Administration
VENTRELT HOLDINGS: Fitch Affirms 'BB-' FC Issuer Default Rating
S L O V E N I A
* SLOVENIA: EU's Highest Court Backs 2013 Bank Bailout
S P A I N
ABENGOA SA: U.S. Unit Hires Ocean Park to Sell Ethanol Plant
CATALONIA: Fitch Affirms 'BB' Long-Term Issuer Default Ratings
T U R K E Y
BANK ASYA: Turkey Halts Operations Following Failed Coup Attempt
U N I T E D K I N G D O M
ARQIVA BROADCAST: Fitch Affirms 'B-' High-Yield Bonds Rating
BAY TV: Proposes CVA Following Financial Woes, Aug. 4 Vote Set
ECO-ENERGY CORP: High Court Closes Down Oil Investment Firm
EUROPEAN PENSIONS: Suffolk Life Buys Insolvent SIPP Provider
ITHACA ENERGY: Moody's Affirms B3 CFR & Changes Outlook to Stable
LOWCOSTTRAVELGROUP: Liquidation Likely to Start This Week
SCOTSMAN HOTEL: Goes Into Liquidation
STORE TWENTY ONE: To Shut Down Outlet in Carmathen
* UK: Scottish Corporate Insolvencies Up in 2nd Quarter 2016
*********
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B E L A R U S
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BPS-SBERBANK: Fitch Affirms 'B-' Long-Term IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed BPS-Sberbank's (BPS), Bank BelVEB's
and Belgazprombank's (BGPB) the Long-term Issuer Default Ratings
at 'B-' with Stable Outlooks.
KEY RATING DRIVERS
IDRS AND SUPPORT RATINGS
The three banks' IDRs and Support Ratings factor in the
likelihood of support they may receive from their Russian
shareholders. BPS is 98.4%-owned by Sberbank of Russia
(BBB-/Negative), BelVEB 97.5%-owned by Vnesheconombank,
(VEB; BBB-/Negative), and BGPB is jointly owned by OAO Gazprom
(BBB-/Negative) and Gazprombank; (BB+/Negative), which each hold
a 49.7% stake.
Fitch's view of potential support is based on the majority
ownership, continued strong commitment of the Russian owners to
the Belarus market, common branding (implying high reputational
risks in case of a subsidiary default), parent-subsidiary
integration (including board representation and operational
controls), the track record of support to date and the low cost
of any support required (given that each subsidiary accounts for
a small part of parent entities' consolidated assets).
The banks' 'B-' Long-Term IDRs reflect the constraint of Belarus'
Country Ceiling (B-), which captures transfer and convertibility
risks and limits the extent to which support from the foreign
shareholders of these banks can be factored into the ratings.
The Stable Outlooks on the banks' Long-Term IDRs are in line with
that on Belarus' sovereign.
Capital support was made available by the foreign owners in 2015-
1Q16 (BGPB, BPS) and Fitch believes it will remain available for
all three banks, in case of need. Asset growth is not a priority
for the banks in the current difficult economic environment.
BGPB in 1Q15 received a RUB9.9 bil. subordinated loan from its
shareholders, which was equal to 77% of end-2014 regulatory
capital. BPS's capital ratios benefitted from risk-sharing
arrangements with the parent group during 2014-2015, resulting in
significant capital relief (transferred exposures were equal to
3.7x of the bank's end-1Q16 Fitch Core Capital, FCC). In 1Q16,
BPS also received from its owner EUR15 mil. subordinated debt
(equivalent to 6% of end-2015 regulatory capital). No new equity
injections have been made for BelVEB recently or are planned in
2016, but capital ratios are currently reasonable, and capital
measures would be considered should the need arise.
Funding support, mostly in foreign currency, has been forthcoming
to date, with parents contributing 16%-31% of subsidiary
liabilities at end-2015. Other external refinancing is
constrained by western sanctions on parent banks and their
subsidiaries (except for BGPB).
VRs
The banks' VRs factor in the risks from the challenging operating
environment, and the linkage between the banks' credit profiles
and that of the Belarusian sovereign due to the large direct
exposure of the banks to the authorities and, more generally, the
public sector, and the dependence of bank credit quality on the
ability of the authorities to support macroeconomic stability and
public sector companies.
Direct exposure (including claims on the government and the
National Bank) relative to FCC was 2.5x at BPS (end-1Q16), 1.6x
at BelVEB (end-2015), and 1.8x at BGPB (end-2015). Loans issued
to public sector corporates contributed a further 1.9x at BPS,
2.8x at BelVEB and 0.7x at BGPB. These banks are not involved in
new government program lending (although BPS has a residual
exposure at around 8% of gross loans), in contrast with Belarus
state-owned banks.
Credit metrics have deteriorated at all three banks since 2014
(albeit to varying degrees), and we expect this trend to continue
through 2016 as credit risks have heightened in the recessionary
environment. Borrower performance is also affected by external
pressures, generally significant leverage in the corporate
segment and loan dollarization (ranging from 74% to 84% for these
banks at end-2015), and the share of effectively hedged borrowers
is limited.
BPS reported a sharp deterioration in asset quality in 1H16, with
non-performing loans (NPLs, more than 90 days overdue) rising to
24.8% of end-1H16 loans from 10% at end-2015 (end-2014: 2.4%),
largely driven by the construction and real estate, agro and
retail trade segments. These ratios are after the exchange of
selected NPLs (equal to 3.7% of end-2014 loans, related to legacy
government program lending) for long-term FX-denominated MinFin
bonds, which was arranged by the authorities as a sector balance
sheet clean-up in 2015. In addition to NPLs, BPS has identified
a further 36% of end-1H16 loans (2.7x end-1Q16 FCC) of higher-
risk exposures (these are 'red' and 'black' zone loans net of
NPLs), which could be a source of additional asset quality
problems in the near term. Reserve coverage of existing NPLs was
moderate at 66% at end-1H16 (local GAAP).
At end-2015, reported NPLs at the two other banks were more
moderate at 2.8% (BGPB; end-2014: 0.5%) and 2% (BelVEB; end-2014:
1.2%), while restructured exposures contributed a further 3.9%
and 11.9% of gross loans, respectively. Loan impairment reserves
were sufficient to cover a reasonable 89% of problem exposures
(NPLs and restructured) at BGPB, but a more moderate 57% at
BelVEB.
Direct market risks have increased due to increases in economic
open currency positions (OCP), which exposes banks to revaluation
losses in case of sharp BYR devaluation. This has been driven by
regulatory changes in 4Q15, which removed certain foreign
currency loan impairment reserves from the OCP calculation. At
end-2015, BPS reported a sizeable short economic OCP equal to 36%
of equity. However, BGPB reported a moderate short position equal
to 7% of equity, and BelVEB reported a small long OCP.
Fitch views regulatory capital ratios (CARs; end-1H16: BPS:
13.2%; BGPB: 17.8%; BelVEB: 14.5%) as only moderate in light of
the banks' risk profiles. Pre-impairment operating profits (on a
cash basis) remained reasonable in 2015, at 7% of average gross
loans (BPS), 12% (BGPB) and 6.6% (BelVEB), although underpinned
by sizeable one-off gains from derivatives (6% of average gross
loans at BPS and 4.6% at BGPB). Sharply higher loan impairment
charges (at 96% of pre-impairment profit at BPS, 49% at BGPB and
85% at BelVEB) affected profitability in 2015. The banks may
rely on parental support should asset quality deteriorate
sharply.
Refinancing risks are moderate given the availability of funding
support from shareholders, while third-party external liabilities
were moderate at 7% of non-equity funding at BPS, 11% at BGPB and
visible more significant 15.6% at BelVEB. Customer funding (49%-
70% of liabilities) is highly dollarized and retail deposits
(between 25% and 47% of liabilities) could show volatility at
times of stress. At end-1Q16, liquidity cushions (cash and
equivalents, net short interbank exposures, securities eligible
for refinancing with the central bank and unused credit lines
from parents) accounted for 48% of customer funding at BPS, 32%
at BGPB and 33% at BelVEB.
RATING SENSITIVITIES
IDRS AND SUPPORT RATINGS
The ratings are dependent on the level of the Belarus' Country
Ceiling. The IDRs could be upgraded or downgraded if a change in
Belarus's sovereign ratings results in a change in the Country
Ceiling.
VRs
The VRs could be downgraded in case of capital erosion due to a
marked deterioration in asset quality, without sufficient support
being made available by shareholders. The potential for positive
rating actions on VRs is limited, given that these are already at
the same level as the sovereign rating.
The rating actions are:
BPS, BelVEB, BGPB
Long-term IDR affirmed at 'B-'; Outlook Stable
Short-term IDR affirmed at 'B'
Viability Rating affirmed at 'b-'
Support Rating affirmed at '5'
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B U L G A R I A
===============
BULGARIAN ENERGY: Moody's Assigns (P)Ba2 Rating to Proposed Bonds
-----------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Ba2
senior unsecured rating to Bulgarian Energy Holding EAD's (BEH)
proposed bond issuance (Bonds), with a loss given default
assessment of LGD5. At the same time Moody's has affirmed BEH's
(P)Ba1 corporate family rating. The rating outlook is stable.
Moody's issues provisional ratings in advance of the final sale
of securities and these ratings reflect Moody's preliminary
credit opinion regarding the transaction only. Upon a conclusive
review of the final documentation, Moody's will endeavor to
assign a definitive rating to the Bonds. A definitive rating may
differ from a provisional rating.
A CFR is an opinion of the BEH group's ability to honor its
financial obligations and is assigned to BEH as if it had a
single class of debt and a single consolidated legal structure.
The (P)Ba2 senior unsecured rating is positioned one notch below
the CFR, reflecting the structural subordination of the creditors
at the holding company to those in the operating subsidiaries.
RATINGS RATIONALE
BEH's (P)Ba1 corporate family rating reflects (1) the group's
dominant position within the electricity generation industry in
Bulgaria, which is an exporter of power to the wider Balkan
region; (2) its improving financial profile as a result of tariff
deficit reduction measures put in place in August 2015 and
expectation that these will continue to support the company's
cash flows at least until the market becomes liberalized; and (3)
its ownership of Bulgaria's main gas transit and transmission and
electricity transmission assets.
However, the rating is constrained by (1) the volatile earnings
profile of the group which limits cash flow visibility; (2) the
uncertainty with respect to full liberalization of the wholesale
power market in Bulgaria and its impact on BEH; (3) the
relatively un-transparent nature of the regulation of the gas and
electricity transmission assets and the gas transit contracts;
and (4) a weak liquidity management policy.
The rating incorporates three notches of uplift to BEH's
standalone credit quality, expressed as a baseline credit
assessment (BCA) of (P)b1, to reflect the high likelihood that
the Government of Bulgaria (Baa2 stable), BEH's 100% owner, would
step in with timely support to avoid a payment default of BEH if
this became necessary. BEH's BCA is considered weakly positioned
at the (P)b1 level.
BEH's strategy is to consolidate debt at the holding company
level and after the proposed bond issuance this is expected to
account for over 70% of total group debt. Holding company debt
service is predominantly reliant on dividends being upstreamed,
ensured through BEH's operating subsidiaries being required to
distribute half of their net profits after certain allocations to
retained earnings and reserves. Nevertheless, unsecured holding
company creditors would be legally or structurally subordinated
to claims of existing senior secured lenders and unsecured
lenders/trade creditors of the subsidiaries.
Moody's cautions that BEH's liquidity is currently weak and is
fully reliant on internal cash flow generation. The provisional
rating is thus based on the assumption that the proposed bond
issuance will substantially cover its short term debt maturities,
mainly consisting of the EUR535 million bridge to bond facility
due in April 2017. In this regard the successful issuance of the
Bonds and the size of the issuance is key to the assigned rating
as it will enable the company to remove near term refinancing
risk and create financial flexibility to more comfortably
accommodate potential cash flow volatility.
RATIONALE FOR STABLE OUTLOOK
The stable outlook reflects the fact that, while BEH's standalone
credit profile may be pressured over the short to medium term,
the strategic role of the company in the Bulgarian energy sector
and the oversight and support given by the Government would be
supportive of BEH's overall financial status. Moody's notes the
letter of support that the Bulgarian Government has provided to
the holders of the Bonds as outlined in the Bonds prospectus.
The (P)b1 BCA of BEH could be downgraded if BEH were to make
significant payments under a recent arbitration award without
receiving compensating amounts that had the effect of materially
weakening its financial profile. The International Court of
Arbitration recently judged that Natsionalna Eletricheska
Kompania (a BEH subsidiary) should be required to pay EUR550
million plus accruing interest to Atomstroyexport (ASE) with
respect to nuclear equipment manufactured by the latter for the
cancelled Belene project in Bulgaria. The stable outlook
reflects Moody's view that a one notch downgrade of the BCA may
not result in a downgrade of the final rating.
WHAT COULD CHANGE THE RATING UP/DOWN
Currently, there is limited upward rating potential in light of
the uncertainties over the settlement of the Belene arbitration
award and the timing and nature of the full liberalization of the
wholesale electricity market and its impact on BEH.
Downward rating pressure may develop if (1) BEH does not receive
timely support from the Government if such were needed, including
for potential payments to ASE; or (2) Moody's were to reassess
the estimate of high support from the Government of Bulgaria; or
(3) the Government's rating were to be lowered.
Moody's would expect BEH to maintain FFO/debt of at least in the
high teens in percentage terms to maintain the existing (P)b1
BCA. Downward pressure could be exerted on the BCA if (1) the
positive regulatory changes implemented in 2015 were to be
reversed as a result of market liberalization or other reasons,
and this were to cause further deficits incurred by BEH; and (2)
changes in BEH's operating environment, including due to market
liberalization, led to a significant deterioration in its
financial profile.
The methodologies used in this rating were Regulated Electric and
Gas Utilities published in December 2013, and Government-Related
Issuers published in October 2014.
Bulgarian Energy Holding EAD is the incumbent 100% state owned
electricity and gas utility in Bulgaria. It owns around 50% of
the electricity generation facilities in the country, including
the 2,000MW nuclear power plant, 2,713 MW of hydro plants, as
well as a lignite plant, the input fuel for which is sourced at
BEH-owned mining facilities. Through its subsidiary Natsionalna
Elektricheska Kompania EAD, it is the single trader on the
regulated wholesale power market. It also owns and operates the
high voltage electricity transmission grid and the gas
transmission and transit networks in Bulgaria, and is also the
main regulated wholesale gas supplier. In 2015, BEH group
generated BGN675 million of EBITDA (around EUR345 million).
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G E R M A N Y
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COHERENT HOLDING: Moody's Assigns Ba2 CFR, Outlook Stable
---------------------------------------------------------
Moody's Investors Service assigned a Ba2 Corporate Family Rating
and Ba2-PD Probability of Default Rating to Coherent Holding
GmbH, an operating subsidiary of parent company Coherent, Inc.
Concurrently, Moody's assigned a Ba2 rating to Coherent GmbH's
proposed senior secured bank credit facility and assigned a
Speculative Grade Liquidity rating of SGL-2. The bank credit
facility will consist of a $750 million term loan (Euro
denominated) and a $100 million revolving credit facility (multi-
currency). The proceeds of the new debt financing will be used
principally to fund the pending acquisition of Rofin-Sinar
Technologies, Inc., a leading supplier of high-performance laser-
based solutions, for an enterprise value of approximately
$840 million. The ratings assume that the Rofin acquisition will
be completed by the calendar year ending 2016. The ratings
outlook is stable.
Moody's assigned these ratings:
Issuer: Coherent Holding GmbH ("Coherent GmbH"):
Corporate Family Rating- Ba2
Probability of Default Rating- Ba2-PD
$750 million Senior Secured Term Loan B (Euro denominated) due
2023 -- Ba2 (LGD-4)
$100 million Senior Secured Revolving Credit Facility (multi-
currency) due 2021 -- Ba2 (LGD-4)
Speculative Grade Liquidity Rating -- SGL-2
Outlook is Stable
RATINGS RATIONALE
The Ba2 CFR reflects Coherent's leveraged capital structure with
trailing pro forma debt to EBITDA (Moody's adjusted for pensions
and operating leases) of approximately 3.7x as of March 31, 2016,
as well as the company's significant exposure to cyclical end
markets and concentration risk with over 30% of the combined
entity's sales targeting the flat panel display sector. The
ratings are also constrained by considerable integration risk
relating to the sizable Rofin acquisition which will increase
Coherent's revenue base by more than 60%. The ratings are
supported by Coherent's longstanding client relationships and
strong market position as a global provider of lasers and laser-
based technology for customers in the FPD, semiconductor capital
equipment, industrial, and scientific end markets. The ratings
are also supported by the company's healthy cash flow generation
and good liquidity.
Moody's expects Coherent to generate pro forma free cash flow of
approximately $92 million in FY'17 (ending September 2017). The
company's healthy profitability margins and modest capital-
expenditures should support free cash flow to debt of nearly 10%
during this period. However, Coherent is expected to incur
higher than normal capital expenditures in the year to support
expanded shipments into the FPD sector which is in the early
stages of a product cycle transition from LCD to OLED displays.
The company's solid free cash flow, coupled with approximately
$263 million in pro forma cash on Coherent's balance sheet as of
March 31, 2016, and an undrawn $100 million revolving credit
facility, support the company's good liquidity position and the
SGL-2 rating. The term loan is not subject to any financial
maintenance covenants while Coherent's revolving credit facility
will have a financial covenant that is not expected to be
breached over the next 12-18 months given sizeable cushion from
current leverage metrics.
The stable ratings outlook reflects Moody's projection for a
significant increase in pro forma annual revenue and EBITDA in
FY'17 with more moderate gains in the following year. Moody's
expects adjusted debt/EBITDA will fall to the mid 2x level over
the next 12-18 months as operating leverage and the realization
of acquisition-related cost synergies drive margin expansion.
What Could Change the Rating - Up
The ratings could be upgraded if Coherent reduces debt leverage,
diversifies its customer and end market exposure, increases
scale, and adheres to disciplined financial policies.
What Could Change the Rating - Down
The ratings could face downward pressure if Coherent's revenue
contracts from current levels, the company experiences material
business disruptions arising from the Rofin integration, leverage
exceeds 3.5x on a sustained basis, or if the company adopts more
aggressive financial policies.
The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.
Coherent designs, manufactures, services, and markets lasers and
related accessories for a diverse group of customers in the FPD,
semiconductor capital equipment, industrial, and scientific end
markets. Coherent is in the process of acquiring Rofin, a
leading supplier of high-performance laser-based solutions.
UNISTER HOLDING: Files for Insolvency Following Founder's Death
---------------------------------------------------------------
Stefan Nicola at Bloomberg News reports that Unister Holding GmbH
filed for preliminary insolvency proceedings after its managing
director died in a plane crash.
According to Bloomberg, the company said on July 18 in a
statement that Unister, known for hiring celebrities including
soccer star Michael Ballack to woo users to portals such as
holiday-booking service ab-in-den-urlaub.de, filed with a Leipzig
court.
The proceedings ensure Unister can pay wages and remains "fully
functionable," Lucas Floether, who has been appointed the
company's preliminary administrator, as cited by Bloomberg, said
in the statement. The company said Unister's websites aren't
affected by the proceedings, Bloomberg notes.
Unister's founder and managing director Thomas Wagner, 38, died
July 14 in Slovenia when his plane crashed en route from Venice
to Leipzig, Bloomberg discloses.
Unister Holding GmbH is a German operator of travel, e-commerce
and news websites. The Leipzig-based company operates more than
40 websites and employs about 1,100 people.
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I R E L A N D
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EATON VANCE CDO VII: Moody's Affirms Ba1 Ratings on Two Notes
-------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on these notes
issued by Eaton Vance CDO VII PLC:
EUR10.8 mil. Class C-1 Third Priority Deferrable Secured
Floating Rate Notes, Upgraded to Aaa (sf); previously on
Jan. 11, 2016, Upgraded to Aa1 (sf)
US$13.1 mil. Class C-2 Third Priority Deferrable Secured
Floating Rate Notes, Upgraded to Aaa (sf); previously on
Jan. 11, 2016, Upgraded to Aa1 (sf)
EUR14.2 mil. Class D-1 Fourth Priority Deferrable Secured
Floating Rate Notes, Upgraded to A3 (sf); previously on
Jan. 11, 2016, Upgraded to Baa1 (sf)
US$17.2 mil. Class D-2 Fourth Priority Deferrable Secured
Floating Rate Notes, Upgraded to A3 (sf); previously on
Jan. 11, 2016, Upgraded to Baa1 (sf)
Moody's affirmed the ratings on these notes issued by Eaton Vance
CDO VII PLC.:
EUR120 mil. (Current Balance: EUR50.9 million) First Priority
Senior Secured Floating Rate Variable Funding Note, Affirmed
Aaa (sf); previously on Jan. 11, 2016, Affirmed Aaa (sf)
EUR74 mil. (Current Balance: EUR6.71 million) Class A-1 First
Priority Senior Secured Floating Rate Notes, Affirmed
Aaa (sf); previously on Jan. 11, 2016, Affirmed Aaa (sf)
US$89.9 mil. (Current Balance: USD39.60 million) Class A-2
First Priority Senior Secured Floating Rate Notes, Affirmed
Aaa (sf); previously on Jan. 11, 2016, Affirmed Aaa (sf)
EUR13.4 mil. Class B-1 Second Priority Secured Floating Rate
Notes, Affirmed Aaa (sf); previously on Jan. 11, 2016,
Upgraded to Aaa (sf)
US$16.3 mil. Class B-2 Second Priority Secured Floating Rate
Notes, Affirmed Aaa (sf); previously on Jan. 11, 2016,
Upgraded to Aaa (sf)
EUR8 mil. (Current Balance: EUR3.88 million) Class E-1 Fifth
Priority Deferrable Secured Floating Rate Notes, Affirmed
Ba1 (sf); previously on Jan. 11, 2016, Upgraded to Ba1 (sf)
US$9.7 mil. (Current Balance: USD4.71 million) Class E-2 Fifth
Priority Deferrable Secured Floating Rate Notes, Affirmed
Ba1 (sf); previously on Jan. 11, 2016, Upgraded to Ba1 (sf)
Eaton Vance CDO VII PLC, issued in April 2006, is a
Collateralised Loan Obligation backed by a portfolio of high
yield US and European loans. The portfolio is managed by Eaton
Vance Management. The transaction's reinvestment period ended on
25 June 2013.
RATINGS RATIONALE
The rating upgrades of the notes are primarily a result of the
significant deleveraging of the senior notes on the March and
June 2016 payment dates following amortization of the underlying
portfolio since the last rating action in January 2016.
The Variable Funding Notes, Class A-1 and Class A-2 notes were
paid in total by approximately EUR 11.8 million, or 4.3% of their
original aggregate balance, on the March 2016 payment date and
approximately EUR22.5 million, or 8.2% of their original
aggregate balance, on the June 2016 payment date.
As a result of the deleveraging, over-collateralization (OC) has
increased. According to the trustee report dated June 2016 the
Class A/B, Class C, Class D and Class E OC ratios are reported at
157.89%, 136.39%, 115.69% and 110.93% compared to December 2015
levels 147.44%,130.60%, 113.56% and 109.22%, respectively. The
June 2016 trustee reported OC levels are calculated prior to
distribution of cash to the senior notes.
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
performing par of EUR59.2 million and USD159.9 million, defaulted
par of USD3.4 million, a weighted average default probability of
15% (consistent with a WARF of 2,478 over 3.58 years), a weighted
average recovery rate upon default of 47.15% for a Aaa liability
target rating, a diversity score of 47 and a weighted average
spread of 3.24%.
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 lower weighted average recovery rate for the
portfolio. Moody's ran a model in which it reduced the weighted
average recovery rate by 5%; the model generated outputs that
were within one notch of the base-case results.
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 because of 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 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.
2) 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.
3) Foreign currency exposure: The deal has an exposure to non-
EUR denominated asset. Volatility in foreign exchange rates
will have a direct impact on interest and principal proceeds
available to the transaction, which can affect the expected
loss of rated tranches.
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 XVI: Moody's Assigns (P)B2 Rating to Class F Notes
--------------------------------------------------------------
Moody's Investors Service announced that it has assigned these
provisional ratings to notes to be issued by Harvest CLO XVI DAC:
EUR 235,000,000 Class A Senior Secured Floating Rate Notes due
2029, Assigned (P)Aaa (sf)
EUR60,000,000 Class B Senior Secured Floating Rate Notes due
2029, Assigned (P)Aa2 (sf)
EUR23,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)A2 (sf)
EUR21,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)Baa2 (sf)
EUR21,000,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)Ba2 (sf)
EUR10,000,000 Class F Senior Secured Deferrable Floating Rate
Notes due 2029, Assigned (P)B2 (sf)
Moody's issues provisional ratings in advance of the final sale
of financial instruments, but these ratings only represent
Moody's preliminary credit opinions. Upon a conclusive review of
a transaction and associated documentation, Moody's will
endeavour to assign definitive ratings. A definitive rating (if
any) may differ from a provisional rating.
RATINGS RATIONALE
Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by legal final maturity of the
notes in 2029. The provisional ratings reflect the risks due to
defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, 3i Debt Management
Investments Limited, has sufficient experience and operational
capacity and is capable of managing this CLO.
Harvest CLO XVI DAC is a managed cash flow CLO. At least 96% of
the portfolio must consist of secured senior obligations and up
to 4% of the portfolio may consist of unsecured senior loans,
second lien loans, mezzanine obligations, high yield bonds and/or
partial PIK obligations. The portfolio is expected to be
approximately 75% ramped up as of the closing date and to be
comprised predominantly of corporate loans to obligors domiciled
in Western Europe. The remainder of the portfolio will be
acquired during the six month ramp-up period in compliance with
the portfolio guidelines.
3i DM will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
impaired obligations, and are subject to certain restrictions.
In addition to the six classes of notes rated by Moody's, the
Issuer will issue EUR 41,000,000 of subordinated notes. Moody's
will not assign a rating to this class of notes.
The transaction incorporates interest and par coverage tests
which, if triggered, will divert interest and principal proceeds
to pay down the notes in order of seniority.
Factors that would lead to an upgrade or downgrade of the
ratings:
The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. 3i DM's investment decisions
and management of the transaction will also affect the notes'
performance.
Loss and Cash Flow Analysis:
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
December 2015. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche.
Moody's used these base-case modeling assumptions:
Par Amount: EUR 400,000,000
Diversity Score: 39
Weighted Average Rating Factor (WARF): 2750
Weighted Average Spread (WAS): 4.20%
Weighted Average Coupon (WAC): 6.25%
Weighted Average Recovery Rate (WARR): 45.0%
Weighted Average Life (WAL): 8 years
Stress Scenarios:
Together with the set of modelling assumptions above, Moody's
conducted an additional sensitivity analysis, which was an
important component in determining the rating assigned to the
rated notes. This sensitivity analysis includes increased
default probability relative to the base case. Below is a
summary of the impact of an increase in default probability
(expressed in terms of WARF level) on each of the rated notes
(shown in terms of the number of notch difference versus the
current model output, whereby a negative difference corresponds
to higher expected losses), holding all other factors equal:
Percentage Change in WARF: WARF + 15% (to 3163 from 2750)
Ratings Impact in Rating Notches:
Class A Senior Secured Floating Rate Notes: 0
Class B Senior Secured Floating Rate Notes: -1
Class C Senior Secured Deferrable Floating Rate Notes: -2
Class D Senior Secured Deferrable Floating Rate Notes: -2
Class E Senior Secured Deferrable Floating Rate Notes: 0
Class F Senior Secured Deferrable Floating Rate Notes: 0
Percentage Change in WARF: WARF +30% (to 3575 from 2750)
Ratings Impact in Rating Notches:
Class A Senior Secured Floating Rate Notes: -0
Class B Senior Secured Floating Rate Notes: -3
Class C Senior Secured Deferrable Floating Rate Notes: -3
Class D Senior Secured Deferrable Floating Rate Notes: -2
Class E Senior Secured Deferrable Floating Rate Notes: -1
Class F Senior Secured Deferrable Floating Rate Notes: -1
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.
=========
I T A L Y
=========
F-E GOLD: Moody's Raises Rating on Class C Notes to Ba2
-------------------------------------------------------
Moody's Investors Service has upgraded these three notes issued
by F-E Gold S.r.l. (F-E Gold):
EUR749 mil. A2 Notes, Upgraded to Aa2 (sf); previously on
Feb. 24, 2015, Upgraded to A2 (sf)
EUR56 mil. B Notes, Upgraded to Baa2 (sf); previously on
Feb. 24, 2015, Upgraded to Ba1 (sf)
EUR10.2 mil. C Notes, Upgraded to Ba2 (sf); previously on
Feb. 24, 2015, Upgraded to B2 (sf)
F-E Gold is a cash securitization of real estate, auto and
equipment lease contracts extended to small and medium-sized
enterprises (SMEs) and individual entrepreneurs domiciled in
Italy. It is currently serviced by UniCredit Leasing S.p.A.
(initially by Fineco Leasing S.p.A., before the merger in April
2014).
RATINGS RATIONALE
The upgrades reflect the transaction's deleveraging, and the
subsequent build-up of credit enhancement for the affected notes
since Moody's previous rating action in February 2015.
-- INCREASED CREDIT ENHANCEMENT
The sequential amortization and non-amortizing reserve fund lead
to the increase in the credit enhancement (CE) available in this
transaction. For instance, the CE for the class A2 notes has
increased to 50.04% as of April 2016 from 33.25% since Moody's
last rating action in February 2015. At the same time, the CE
for the class B notes has increased to 24.44% from 15.41%, and
for the class C notes to 19.78% from 12.16%.
Credit enhancement takes the form of subordination and reserve
funds, which are all funded at their target levels.
-- REVISION OF KEY COLLATERAL ASSUMPTIONS
As part of the rating action, Moody's reassessed its default
probability (DP) and recovery rate assumption for the portfolio
reflecting the portfolio composition and collateral performance
to date. Currently, the transaction pool factor has reduced to
7.62% of the initial pool balance. The total delinquencies have
increased in the past year, currently standing at 16.21% of the
current pool balance. The reported cumulative gross default rate
currently stand at 9.03% of total securitized pool (original pool
balance plus replenishments). Moody's kept the expected DP at
18.00% of the current portfolio balance, translating into a lower
DP assumption of 10.10% of the original balance, compared to
10.40% in the last review. Moody's left the recovery rate
assumption unchanged at 45% and the coefficient of variation
unchanged at 46%, corresponding to a portfolio credit enhancement
of 28%.
-- EXPOSURE TO COUNTERPARTY RISK
Moody's has reviewed the counterparty risk, which is consistent
with the Aa2(sf) assigned to the senior notes Class A2.
UniCredit Leasing S.p.A. (un-rated) acts as the current servicer,
which is fully owned by UniCredit SpA (Baa1(cr); Baa1/P-2,
stable). The operational risk arising from the servicer risk of
default is mitigated by the very high probability of support from
parent company UniCredit SpA. In addition, the transaction
benefits from a fully funded reserve fund that can be used as
liquidity and support payments in the event of a servicer
disruption. This reserve fund represents 19.8% of the rated
notes as of April 2016.
Moody's has also reviewed the counterparty risk to issuer account
bank and swap counterparty. The related counterparty exposure
does not constrain any of the updates.
METHODOLOGY
The principal methodology used in these ratings was "Moody's
Approach to Rating ABS Backed by Equipment Leases and Loans"
published in December 2015.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE
RATINGS:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected; (2) deleveraging of the capital
structure; (3) improvements in the credit quality of the
transaction's counterparties; and (4) a decrease in sovereign
risk.
Factors or circumstances that could lead to a downgrade of the
ratings are (1) an increase in sovereign risk (2) worse-than-
expected performance of the underlying collateral; (3)
deterioration in the notes' available CE; and (4) deterioration
in the credit quality of the transaction counterparties.
GAMENET GROUP: Moody's Assigns B1 Corporate Family Rating
---------------------------------------------------------
Moody's Investors Service has assigned a B1 corporate family
rating and B1-PD probability of default rating to Gamenet Group
S.p.A. Gamenet Group S.p.A. is a recently formed entity,
incorporated in June 2016 in connection with the Intralot Italia
acquisition and the new parent holding company of Gamenet S.p.A.
Concurrently, Moody's has assigned provisional (P)B1 rating to
the proposed EUR200 million senior secured notes due 2021 to be
issued by Gamenet Group S.p.A., and upgraded the rating on the
outstanding EUR200 senior secured notes due 2018 issued by
Gamenet S.p.A. to B1 from B2. The outlook on all the ratings is
stable.
The proceeds of the 2021 notes, will be used to refinance the
outstanding 2018 notes, which rating will be then withdrawn. The
refinancing transaction, expected to complete in August 2016,
follows the completion of the acquisition of Intralot Holding and
Service S.p.A. and its subsidiaries (Intralot Italia) on 27 June
2016 and the incorporation of Gamenet Group S.p.A. as new holding
company of the group.
Moody's has withdrawn the B2 CFR and B1-PD PDR of Gamenet S.p.A.
Moody's issues provisional ratings in advance of the final sale
of securities. Upon closing of the transaction and a conclusive
review of the final documentation, Moody's will endeavor to
assign definitive ratings. A definitive rating may differ from a
provisional rating.
RATINGS RATIONALE
The action reflects Moody's view that the acquisition of Intralot
Italia in connection with the refinancing of the 2018 notes is
credit positive for Gamenet as (1) it increases the group's
revenues size by approximately EUR473 million and EBITDA before
synergies by EUR4 million (based on FY2015 figures under the
Italian GAAP) and potentially more once expected synergies will
be achieved; (2) diversifies the group's business activities into
retail and online betting and strengthen its market shares in
these two segments; and (3) improves the group's credit metrics
and liquidity by pushing ahead the debt maturity, reducing the
interest costs and putting in place a new EUR30 million revolving
credit facility to fund intra quarter capital swings. Gamenet's
debt/EBITDA, pro forma for Intralot Italia's acquisition, remains
moderate and expected to fall around 3.0x at the end of fiscal
year (FY) 2016 from 3.2x at the end of March 2016 excluding the
impact of the acquisition.
These positives are counterbalanced by (1) the risk associated
with the integration of the loss-making Intralot Italia and
potential delay in achieving the expected EUR8.4 million
synergies; (2) the reduced profitability for the group and
potential for pressured cash flow in conjunction with the renewal
of the betting licenses which could occur in 2016 or 2017; and
(3) the increased operating risk as betting pay-outs are not
fixed but subject to the outcome of sports results and therefore
more volatile.
The ratings also continue to reflect (1) Gamenet's geographic
concentration in Italy, exposing the group to the country's
challenging macroeconomic environment and to its evolving
gambling regulatory and fiscal regime; (2) the presence in mature
and competitive market segments which limit organic growth
prospects; and (3) the lack of historical growth track record for
Gamenet standalone since Moody's assigned its first-time rating,
although negatively affected by tax increases year on year.
Liquidity Profile
Gamenet's liquidity position is viewed as adequate to meet its
intra quarter needs and other requirements, including concession-
related payments and the gradual replacement of AWPs. Moody's
also understands that the group may consider smaller add-on
acquisitions, but the rating does not factor in any material
debt-funded acquisition, and will not distribute dividends to
minorities. At close, Moody's expects Gamenet to have around
EUR55 million of cash and access to the EUR30 million super
senior revolving credit facility (RCF). The next debt maturity
will be the RCF in 2021, six months earlier than the new notes.
There is a single financial maintenance covenant under the RCF, a
minimum EBITDA of EUR55 million (EUR60 million after Dec. 31,
2018,) to be tested quarterly.
Structural Consideration
Gamenet's PDR is in line with the CFR, reflecting Moody's
assumption of a 50% family recovery rate as is customary for
capital structure including bonds and bank debt. The (P)B1
rating on the new senior secured notes due 2021, secured by share
pledges and rights on proceeds loan, are also in line with the
CFR. The structure include a EUR30 million super senior RCF,
which shares similar security and guarantees, and has priority in
case of an enforcement.
RATIONALE FOR STABLE OUTLOOK
The stable rating outlook reflects Moody's expectation that
Gamenet's credit metrics should remain stable over the next 12 to
18 months and the profitability will gradually improve despite
some uncertainty on concession renewals due in 2016-17.
WHAT COULD CHANGE THE RATING -- UP/DOWN
Upwards rating pressure could develop over time if Gamenet's
scale, business diversity and operating performance substantially
improve and Moody's-adjusted leverage falls sustainably below
2.5x whilst achieving visible and sustained positive free cash
flow, and maintaining good liquidity.
Conversely, negative pressure would be exerted on the ratings if
Gamenet's performance weakens or is negatively impacted by a
changing regulatory and fiscal regime. Quantitatively, Moody's
would consider downgrading Gamenet's ratings if Moody's-adjusted
leverage raises sustainably above 3.5x, free cash flow turns
negative (excluding one-off capex required to renew betting
licences), or liquidity weakens.
LIST OF AFFECTED RATINGS:
Assignments:
Issuer: Gamenet Group S.p.A.
Backed Senior Secured Regular Bond/Debenture, Assigned (P)B1
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Upgrades:
Issuer: Gamenet S.p.A.
Senior Secured Regular Bond/Debenture, Upgraded to B1 from B2
Withdrawals:
Issuer: Gamenet S.p.A.
Corporate Family Rating, Withdrawn, previously rated B2
Probability of Default Rating, Withdrawn, previously rated
B1-PD
Outlook Actions:
Issuer: Gamenet Group S.p.A.
Outlook, Assigned Stable
Issuer: Gamenet S.p.A.
Outlook, Remains Stable
The principal methodology used in these ratings was Global Gaming
Industry published in June 2014.
Headquartered in Italy, Gamenet Group S.p.A is the new parent
holding company of Italian gaming company Gamenet S.p.A.
Headquartered in Italy, and operating with legal concessions from
Italy's national gaming regulator, Gamenet, proforma for the
acquisition of Intralot Italia, is the fourth-largest
concessionaire of gaming machines in Italy by amount of bets, the
fifth largest sports betting operator with 13% share, and the
second largest operator of gaming halls.
As of March 2016, the company operated 8,200 video lottery
terminals (VLTs) and 50,000 amusement with price machines (AWPs)
with concessions expiring in 2022. Along with VLTs and AWPs, the
company is present in the betting and online games segment, with
750 point of sales, which licenses expiry in 2016 and dedicated
websites. Gamenet also manages 65 gaming halls.
For the 12-month period ending March 2016, Gamenet's pro forma
revenues totalled EUR1 billion and EBITDA EUR67 million. All the
company's earnings were generated in Italy (Baa2 stable).
Gamenet Group S.p.A. is ultimately controlled by private equity
firm Trilantic Capital Partners (79.2%), Intralot Global Holdings
B.V. (20%) and the founder of Billions Italia S.r.l. (0.8%).
MODA 2014: Fitch Affirms 'Bsf' Rating on Class E Notes
------------------------------------------------------
Fitch Ratings has affirmed Moda 2014 S.r.l.'s floating rate notes
due 2026 as follows:
EUR143.7 million Class A (IT0005039075) affirmed at 'A+sf';
Outlook Stable
EUR14.5 million Class B (IT0005039083) affirmed at 'Asf'; Outlook
Stable
EUR17.5 million Class C (IT0005039182) affirmed at 'BBB-sf';
Outlook Stable
EUR3.8 million Class D (IT0005039257) affirmed at 'BB+sf';
Outlook Stable
EUR16.9 million Class E (IT0005039265) affirmed at 'Bsf'; Outlook
Stable
The transaction closed in 2014 and was a securitization of two
commercial mortgage loans totalling EUR198.2 million. The loans
were granted by Goldman Sachs International Bank to six Italian
limited liability companies to finance the acquisition
of/refinance certain Italian retail assets. In May 2016, one loan
remained, secured on a fashion outlet village; a shopping centre;
and two retail galleries. All the real estate is located in Italy
and owned by borrowers sponsored by Blackstone.
KEY RATING DRIVERS
The affirmations reflect the full prepayment of the EUR76.7
million Franciacorta loan in May 2016, with proceeds being used
to pay off the notes' principal on a modified pro rata basis,
improving the available credit enhancement for the senior notes.
Despite this deleveraging and stable collateral performance,
risks remain from the secondary quality property comprising part
of the collateral and challenges in working out Italian loans.
Fitch applies a 'Asf' category rating cap to reflect these
challenges.
The EUR118.1m Vanguard loan continues to perform in line with
Fitch's expectations. The loan to value ratio improved slightly
to 61.3% in May 2016 from 63.8% one year previously, due to
amortization and portfolio revaluation. All four underlying
centers report rising sales figures and stable/improving
occupancy, with the weighted-average occupancy reported as 86.6%,
up from 83.8% 12 months ago. While passing rent has also remained
broadly stable, the portfolio has seen a rise in reported
irrecoverable costs, reducing the level of net rent available to
service debt.
Fitch considers the La Scaglia property to be the worst in the
Vanguard portfolio, raising the risk of adverse selection as a
result of asset disposals. However, a voluntary sale of any
property (with the exception of La Scaglia) necessitates payment
of a 15% release premium in addition to the allocated loan
amount. The effect of this is that selling higher quality
properties should have a greater deleveraging effect on the
Vanguard loan taken as a whole (although selling La Scaglia would
modestly increase leverage), improving its exit position in 2019.
Fitch expects a full repayment in a 'Bsf' stress.
RATING SENSITIVITIES
A deterioration in the performance of the income profile of the
portfolio or a downturn in the Italian retail sector could result
in downgrades.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation
to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that were
material to this analysis. Fitch has not reviewed the results of
any third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
Fitch did not undertake a review of the information provided
about the underlying asset pool ahead of the transaction's
initial closing. The subsequent performance of the transaction
over the years is consistent with the agency's expectations given
the operating environment and Fitch is therefore satisfied that
the asset pool information relied upon for its initial rating
analysis was adequately reliable.
Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information below was used in the analysis.
-- Transaction reporting provided by Securitisation Services
S.p.A. as at end-May 2016
MONTE DEI PASCHI: Moody's Puts B2 Rating on Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade
Banca Monte dei Paschi di Siena S.p.A.'s (Montepaschi) B2 long-
term deposit rating and B3 long-term senior unsecured ratings.
This reflects the rating agency's view of the increasing
likelihood that the bank will require external support. While
Moody's believes that any support will be designed to benefit
senior debt and deposits, this is still subject to significant
uncertainty, and the gradual run-off of the bank's senior
unsecured bonds may expose them to greater loss over time.
The rating agency has also downgraded Montepaschi's standalone
baseline credit assessment (BCA) by two notches to ca from caa2.
This also reflects the high probability that the bank will need
external support in order to meet minimum prudential requirements
while complying with the stated intention of the European Central
Bank (ECB) to request a reduction in the bank's stock of problem
loans.
Moody's has also downgraded Montepaschi's subordinate and junior
subordinate ratings to Ca and Ca(hyb) respectively, from Caa3 and
Caa3(hyb), reflecting the agency's view that these securities
will likely be subject to significant loss in the event of the
bank receiving external support, absent any dispensation from
current EU rules.
RATINGS RATIONALE
--- LOWER BCA REFLECTS HIGHER NEED FOR EXTERNAL SUPPORT
Moody's said that the two-notch downgrade of Montepaschi's BCA to
ca from caa2 was driven by an increased probability that the bank
will require external support to comply with the ECB's intended
request for a reduction in the bank's stock of problem loans.
On July 4, 2016, Montepaschi announced that the ECB had notified
the bank of its intention to request a reduction in the bank's
stock of problem loans; Montepaschi's press release does not
contain any information regarding the consequences for the bank
if it did not meet the targets set by the ECB.
The ECB's notification envisaged that the bank reduce its current
stock of problem loans (EUR47.2 billion as of March 2016) to a
maximum of EUR43.4 billion by December 2016, EUR38.9 billion by
December 2017, and EUR32.6 billion by December 2018. The ECB's
notification also implies that Montepaschi will need to increase
its coverage of problem loans to 55% in 2018 from 49% at present.
The ECB also requested Montepaschi to submit by 3 October 2016 a
plan to reduce its problem loan stock to a maximum of 20% of
total gross loans by 2020, from 34.4% at present. These targets
are more demanding than Montepaschi's current business plan, in
which the bank stated its aim to reduce its problem loan ratio to
26% by 2018.
The impact on capital resulting from the reduction in the bank's
large stock of problem loans depends on the price to which the
assets will be written down or sold. While the secondary market
for problem loans has recently picked up in Italy, Moody's
considers that it is not large enough to absorb Montepaschi's
problem loans, and prices therefore remain uncertain. Moody's
estimates that the disposal of problem loans would lead to a
capital shortfall that could be in the range of EUR2 billion to
EUR5 billion.
Given current market volatility, in Moody's view Montepaschi has
little capacity to raise private capital without external
support.
-- INCREASED PROBABILITY OF BURDEN-SHARING WITH SUBORDINATED
BONDHOLDERS
Moody's notes that the press has widely reported that the Italian
government seems to be working on a public sector solution that
would avoid bailing-in senior creditors. Any potential support
will need to fit within the recently-approved resolution
framework (Bank Recovery and Resolution Directive, or BRRD) as
well as with the European Commission's (EC) state aid guidelines.
These rules leave some room for interpretation, but nonetheless
constrain national governments' ability to extend aid without
conditions.
In the meantime, the private-sector bank rescue fund (Atlante)
may not be able to provide the level of support that Montepaschi
potentially requires, given that Atlante's remaining resources
are now limited to less than EUR2 billion. This means that
Montepaschi may need to resort to state aid, but the EC's
framework published in 2013 anticipates the imposition of losses
on subordinated bondholders in return for any such support. For
this reason, these bondholders now face a very high level of
risk, leading Moody's to downgrade dated subordinated and junior
subordinated debt to Ca and Ca(hyb) respectively, from Caa3 and
Caa3(hyb). The bank's total subordinated debt amounts to about
EUR5 billion, including EUR0.6 billion of Additional Tier 1
instrument, as of March 2016.
-- RISK FOR JUNIOR DEPOSITORS AND SENIOR BONDHOLDERS WILL
DEPEND ON THE FORM OF SUPPORT THAT THEY WILL RECEIVE, AND
THE FUTURE STOCK OF BAIL-IN-ABLE DEBT
Moody's said that, on the other hand, Montepaschi's senior
bondholders and depositors are likely to benefit from a
combination of the loss absorption provided by subordinated debt,
and any external support. For these reasons, the senior long-
term debt and deposit ratings now incorporate a high likelihood
of government support, resulting in two notches of uplift, on top
of two and three notches of uplift respectively in view of their
very low and extremely low loss-given-failure. Nevertheless,
Moody's placed these ratings on review for downgrade, given the
high degree of uncertainty relating to the provision of this
support, and the expected reduction in the stock of the bank's
bail-in-able debt over the coming quarters. This reflects in
turn the limited appetite of Italian retail investors to continue
to purchase bank bonds, and the low likelihood of more risk-
sensitive wholesale investors subscribing to any new bond issues
by Montepaschi. These factors will likely result in increased
risk for these instruments over time.
FACTORS THAT COULD LEAD TO AN UPGRADE/DOWNGRADE
An upgrade in the BCA could arise in the event of the bank
significantly increasing its capital and/or reducing its bad
loans, mostly likely as a result of external support. A further
downgrade in the BCA to c is unlikely unless the bank were likely
to be placed in liquidation. Any change in the BCA would likely
lead to changes in ratings, depending on the expected treatment
of each instrument as a result of external support.
The ratings on subordinated debt could be upgraded if the bank
received external support without being required to write down
these securities, but Moody's considers this unlikely. The
ratings on long-term senior unsecured debt and deposits are
unlikely to be upgraded given the agency's review for downgrade,
but could be affirmed in the event of the bank receiving external
support without impacting these instruments. The ratings on
long-term senior unsecured debt and deposits could be downgraded
should any external support leave these instruments more exposed
to loss than previously, e.g. were the bank's balance sheet to
remain relatively weak and loss-absorbing debt to reduce.
LIST OF AFFECTED RATINGS
Issuer: Banca Monte dei Paschi di Siena S.p.A.
Downgrades:
Baseline Credit Assessment, downgraded to ca from caa2
Adjusted Baseline Credit Assessment, downgraded to ca from caa2
Subordinate Regular Bond/Debenture, downgraded to Ca from Caa3
Subordinate Medium-Term Note Program, downgraded to (P)Ca from
(P)Caa3
Junior Subordinated Regular Bond/Debenture, downgraded to
Ca(hyb) from Caa3(hyb)
Placed on Review for Downgrade:
Long-Term Bank Deposits, currently B2, outlook changed to
Rating
under Review from Negative
Senior Unsecured Regular Bond/Debenture, currently B3, outlook
changed to Rating under Review from Negative
Senior Unsecured Medium-Term Note Program, currently (P)B3
Long-term Counterparty Risk Assessment, currently B2(cr)
Affirmations:
Short-term Bank Deposits, affirmed NP
Other Short Term, affirmed (P)NP
Short-term Counterparty Risk Assessment, affirmed NP(cr)
Outlook Actions:
Outlook changed to Rating under Review from Negative
Issuer: MPS Capital Services
Downgrades:
Baseline Credit Assessment, downgraded to ca from caa2
Adjusted Baseline Credit Assessment, downgraded to ca from caa2
Placed on Review for Downgrade:
Long-term Bank Deposits, currently B2, outlook changed to
Rating under Review from Negative
Long-term Counterparty Risk Assessment , currently B2(cr)
Affirmations:
Short-term Bank Deposits, affirmed NP
Short-term Counterparty Risk Assessment, affirmed NP(cr)
Outlook Actions:
Outlook changed to Rating under Review from Negative
Issuer: MPS Capital Trust I
Affirmations:
Backed Pref. Stock Non-cumulative, affirmed C(hyb)
Outlook Actions:
No Outlook
Issuer: Banca Monte dei Paschi di Siena, London
Placed on Review for Downgrade:
Long-term Counterparty Risk Assessment, currently B2(cr)
Affirmations:
Short-term Deposit Note/CD Program, affirmed NP
Short-term Counterparty Risk Assessment, affirmed NP(cr)
Outlook Actions:
No Outlook
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
published in January 2016.
=====================
N E T H E R L A N D S
=====================
FAB CBO 2003-1: Moody's Raises Rating on Cl. A-3E Notes to Ba3
--------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on these notes
issued by F.A.B. CBO 2003-1 B.V.:
EUR10.5 mil. (current outstanding balance of EUR9.8 mil.)
Class A-2aE Floating Rate Notes, Upgraded to Aa1 (sf);
previously on Feb. 2, 2016, Upgraded to Aa2 (sf)
EUR12.9 mil. (current outstanding balance of EUR12.0 mil.)
Class A-2bE Floating Rate Notes, Upgraded to Aa1 (sf);
previously on Feb. 2, 2016, Upgraded to Aa2 (sf)
EUR6.6 mil. (current outstanding balance of EUR6.2 mil.)
Class A-2F Fixed Rate Notes, Upgraded to Aa1 (sf); previously
on Feb. 2, 2016, Upgraded to Aa2 (sf)
EUR14.5 mil. Class A-3E Floating Rate Notes, Upgraded to
Ba3 (sf); previously on Feb. 2, 2016, Upgraded to B1 (sf)
EUR8 mil. Class A-3F Fixed Rate Notes, Upgraded to Ba3 (sf);
previously on Feb. 2, 2016, Upgraded to B1 (sf)
EUR15 mil. (current outstanding balance of EUR7.5 mil.)
Class S2 Combination Notes, Upgraded to Aa1 (sf); previously
on Feb. 2, 2016, Upgraded to Aa2 (sf)
EUR5 mil. (current outstanding balance of EUR1.4 mil.)
Class S3 Combination Notes, Upgraded to Aa1 (sf); previously
on Feb. 2, 2016, Upgraded to Aa2 (sf)
Moody's also affirmed the ratings on these notes:
EUR8 mil. (current outstanding balance of EUR8.3 mil.) Class BE
Floating Rate Notes, Affirmed Ca (sf); previously on Feb. 2,
2016, Affirmed Ca (sf)
EUR7 mil. (current outstanding balance of EUR7.6 mil.) Class BF
Fixed Rate Notes, Affirmed Ca (sf); previously on Feb. 2,
2016, Affirmed Ca (sf)
This transaction is a structured finance collateralized debt
obligation backed by a portfolio of European SF assets composed
primarily of RMBS.
RATINGS RATIONALE
The rating actions on the notes are a result of the deleveraging
of the notes and the improvement in the credit quality of the
collateral. Since the last rating action, Class A-1 notes have
been redeemed in full and Class A-2 notes have paid down by
EUR9.2 mil. As per the May 2016 trustee report, Class A coverage
test is reported at 123.6% compared to 120.2% as per the December
2015 trustee report.
Since the last rating action in February 2016, 27.3% of the
assets in the portfolio have been upgraded and, on average, the
magnitude of the upgrades was 2.0 notches.
The ratings of the Combination Notes address the repayment of the
Rated Balance on or before the legal final maturity. For classes
S2 and S3, the 'Rated Balance' is equal at any time to the
principal amount of the combination notes on the issue date minus
the aggregate of all payments made from the issue date, either
through interest or principal payments. The Rated Balance may
not necessarily correspond to the outstanding notional amount
reported by the trustee.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating SF CDOs" published in July 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:
Defaulted all Caa Referenced Entities - Moody's considered a
model run where the Caa assets in the portfolio were assumed to
be defaulted. The model outputs for these runs are within one
notch from the base case results.
This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
notes, in light of 1) uncertainty about credit conditions in the
general economy 2) divergence in the legal interpretation of CDO
documentation by different transactional parties due to or
because of embedded ambiguities.
Additional uncertainty about performance is due to:
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 prepayment levels or collateral sales by the collateral
manager. 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.
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.
JUBILEE CLO 2016-XVII: Moody's Rates EUR10.7MM Cl. F Notes (P)B2
----------------------------------------------------------------
Moody's Investors Service announced that it has assigned these
provisional ratings to notes to be issued by Jubilee CLO 2016-
XVII B.V.:
EUR244,000,000 Class A Senior Secured Floating Rate Notes due
2029, Assigned (P)Aaa (sf)
EUR43,500,000 Class B Senior Secured Floating Rate Notes due
2029, Assigned (P)Aa2 (sf)
EUR25,800,000 Class C Deferrable Mezzanine Floating Rate Notes
due 2029, Assigned (P)A2 (sf)
EUR17,200,000 Class D Deferrable Mezzanine Floating Rate Notes
due 2029, Assigned (P)Baa2 (sf)
EUR28,300,000 Class E Deferrable Junior Floating Rate Notes due
2029, Assigned (P)Ba2 (sf)
EUR10,700,000 Class F Deferrable Junior Floating Rate Notes due
2029, Assigned (P)B2 (sf)
Moody's issues provisional ratings in advance of the final sale
of financial instruments, but these ratings only represent
Moody's preliminary credit opinions. Upon a conclusive review of
a transaction and associated documentation, Moody's will endeavor
to assign definitive ratings. A definitive rating (if any) may
differ from a provisional rating.
RATINGS RATIONALE
Moody's provisional rating of the rated notes addresses the
expected loss posed to noteholders by the legal final maturity of
the notes in 2029. The provisional ratings reflect the risks due
to defaults on the underlying portfolio of loans given the
characteristics and eligibility criteria of the constituent
assets, the relevant portfolio tests and covenants as well as the
transaction's capital and legal structure. Furthermore, Moody's
is of the opinion that the collateral manager, Alcentra Limited,
has sufficient experience and operational capacity and is capable
of managing this CLO.
Jubilee CLO XVII is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured loans and senior secured
floating rate notes and up to 10% of the portfolio may consist of
unsecured loans, second-lien loans, mezzanine obligations and
high yield bonds. The bond bucket gives the flexibility to
Jubilee CLO XVII to hold bonds if Volcker Rule is changed. The
portfolio is expected to be 70% ramped up as of the closing date
and to be comprised predominantly of corporate loans to obligors
domiciled in Western Europe.
Alcentra will manage the CLO. It will direct the selection,
acquisition and disposition of collateral on behalf of the Issuer
and may engage in trading activity, including discretionary
trading, during the transaction's four-year reinvestment period.
Thereafter, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk and credit improved obligations, and are subject to certain
restrictions.
In addition to the six classes of notes rated by Moody's, the
Issuer will issue EUR 45m of subordinated notes, which will not
be rated.
The transaction incorporates interest and par coverage tests
which, if triggered, divert interest and principal proceeds to
pay down the notes in order of seniority.
Loss and Cash Flow Analysis:
Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in
Section 2.3.2.1 of the "Moody's Global Approach to Rating
Collateralized Loan Obligations" rating methodology published in
December 2015. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario and (ii) the loss derived from the cash flow
model in each default scenario for each tranche. As such,
Moody's encompasses the assessment of stressed scenarios.
Moody's used these base-case modeling assumptions:
Par amount: EUR 400,000,000
Diversity Score: 37
Weighted Average Rating Factor (WARF): 2750
Weighted Average Spread (WAS): 4.15%
Weighted Average Recovery Rate (WARR): 42%
Weighted Average Life (WAL): 8 years
As part of the base case, Moody's has addressed the potential
exposure to obligors domiciled in countries with local currency
country risk ceiling (LCC) of A1 or below. Following the
effective date, and given the portfolio constraints and the
current sovereign ratings in Europe, such exposure may not exceed
10% of the total portfolio. As a result and in conjunction with
the current foreign government bond ratings of the eligible
countries, as a worst case scenario, a maximum 5% of the pool
would be domiciled in countries with A3 and a maximum of 5% of
the pool would be domiciled in countries with Baa3 local currency
country ceiling each. The remainder of the pool will be
domiciled in countries which currently have a local or foreign
currency country ceiling of Aaa or Aa1 to Aa3. Given this
portfolio composition, the model was run with different target
par amounts depending on the target rating of each class as
further described in the methodology. The portfolio haircuts are
a function of the exposure size to countries with a LCC of A1 or
below and the target ratings of the rated notes and amount to
0.75% for the Class A notes, 0.50% for the Class B notes, 0.375%
for the Class C notes and 0% for Classes D, E and F.
Stress Scenarios:
Together with the set of modeling assumptions above, Moody's
conducted additional sensitivity analysis, which was an important
component in determining the provisional rating assigned to the
rated notes. This sensitivity analysis includes increased
default probability relative to the base case. Below is a
summary of the impact of an increase in default probability
(expressed in terms of WARF level) on each of the rated notes
(shown in terms of the number of notch difference versus the
current model output, whereby a negative difference corresponds
to higher expected losses), holding all other factors equal:
Percentage Change in WARF: WARF + 15% (to 3163 from 2750)
Ratings Impact in Rating Notches:
Class A Senior Secured Floating Rate Notes: 0
Class B Senior Secured Floating Rate Notes: -2
Class C Deferrable Mezzanine Floating Rate Notes: -2
Class D Deferrable Mezzanine Floating Rate Notes: -2
Class E Deferrable Junior Floating Rate Notes: -1
Class F Deferrable Junior Floating Rate Notes: -1
Percentage Change in WARF: WARF +30% (to 3575 from 2750)
Ratings Impact in Rating Notches:
Class A Senior Secured Floating Rate Notes: -1
Class B Senior Secured Floating Rate Notes: -3
Class C Deferrable Mezzanine Floating Rate Notes: -4
Class D Deferrable Mezzanine Floating Rate Notes: -2
Class E Deferrable Junior Floating Rate Notes: -2
Class F Deferrable Junior Floating Rate Notes: -2
Given that the transaction allows for corporate rescue loans
which do not bear a Moody's rating or Credit Estimate, Moody's
has also tested the sensitivity of the ratings of the notes to
changes in the recovery rate assumption for corporate rescue
loans within the portfolio (up to 5% in aggregate). This
analysis includes haircuts to the 50% base recovery rate which
Moody's assume for corporate rescue loans if they satisfy certain
criteria, including having a Moody's rating or Credit Estimate.
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:
The rated notes' performance is subject to uncertainty. The
notes' performance is sensitive to the performance of the
underlying portfolio, which in turn depends on economic and
credit conditions that may change. Alcentra's investment
decisions and management of the transaction will also affect the
notes' performance.
UNITED GROUP: Moody's Assigns B2 Rating to EUR125MM Notes
---------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the
additional EUR125 million Senior Secured Notes (due 2020) issued
by United Group B.V., a subsidiary of Adria Midco B.V. At the
same time, the agency has affirmed the B2 corporate family rating
and the B1-PD probability of default rating of Adria Midco B.V as
well as the B2 rating of the existing EUR625 million (due 2020)
worth of Senior Secured Notes issued by United Group B.V. The
outlook for all ratings is stable.
The B2 rating for the additional Senior Secured Notes is in line
with the B2 rating for the EUR625 million existing Notes, as the
tap is issued under the same indenture. The majority of proceeds
will be used to repay drawings under the revolving credit
facility (RCF) and local credit lines, while EUR4 million will be
used to fund the recently agreed acquisition of Maxtel. The
company has recently financed the acquisition of Mkabl by drawing
EUR13 million under its RCF.
"The affirmation of Adria's B2 ratings reflects our expectation
that despite the marginal increase in leverage as a result of the
tap issuance, the company will continue to consistently grow its
revenues and EBITDA in 2016 and beyond and focus on de-leveraging
over the coming quarters prior to considering further bolt-on
acquisitions," says Gunjan Dixit, a Moody's Vice President --
Senior Analyst, and lead analyst for Adria.
RATINGS RATIONALE
Adria's leverage has remained high notwithstanding continued good
growth in EBITDA. This is due to ongoing significant acquisition
activity, including Tusmobil for EUR 110 million (including EUR
26 million of deferred payments) and six Bosnian cable operators
for EUR 30 million in 2015. In Q1 2016, Adria agreed to acquire
Maxtel, a dark fibre B2B operator in Slovenia, and Mkabl, a cable
operator in Montengro. The RCF has already been drawn to pay the
estimated EUR13 million acquisition consideration for Mkabl while
Maxtel will be funded via the proceeds from the additional notes
issuance.
Adria's pro-forma gross debt/ EBITDA (Moody's definition -
including adjustments for operating leases and programming
amortization) assuming this transaction and recent acquisitions
would increase marginally to around 4.9x as of March 31, 2016,
(using EBITDA for the last two quarters, on an annualized basis)
compared to 4.8x prior to the transaction. While leverage
remains at the high end of the ratio guidance for the B2 rating
category, Moody's expects that Adria will focus on achieving some
de-leveraging over the coming quarters before engaging in further
acquisition activity. The de-leveraging will remain a function
of continued strong EBITDA growth.
Adria is increasing the committed amount of its existing Super
Senior RCF by EUR35 million to EUR135 million. While this
strengthens the liquidity cushion, it also implies added
flexibility for further add-on acquisitions. Should the company
engage in significant add-on acquisitions in the near term such
that its leverage is sustained at or above 5.0x (Moody's
adjusted), negative ratings pressure will likely develop.
The B2 CFR further reflects (1) Adria's limited scale of
operations and geographical concentration within the ex-Yugoslav
region -- mainly in Serbia (B1 Positive), Slovenia (Baa3 Stable),
and Bosnia & Herzegovina (B3 Stable); (2) the absence of material
free cash flow (FCF) generation before 2017; (3) the potential
for cash distributions to service holdco debt over time; (4) the
company's ongoing acquisition activity; and (5) foreign exchange
risk due to the historical depreciation of the Serbian dinar
(RSD).
However, the B2 rating also acknowledges (1) the company's well
established market position in all its core countries of
operation and good brand recognition; (2) the access to premium
content from its own productions and as a distributor; (3) the
acquisition of Tusmobil, which has strengthened its product
offering in Slovenia, its second largest market; (4) its track
record of strong revenue and EBITDA growth, potential from cross-
selling products in relatively recently liberalized markets and
from up-selling opportunities; (5) its established pan-region
programming position with significant elements of exclusivity;
and (6) the company's technologically advanced DOCSIS 3.0 cable
infrastructure with limited network overbuild.
RATIONALE FOR STABLE OUTLOOK
The stable outlook reflects our expectation that Adria will
continue to deliver strong underlying revenue and EBITDA growth,
while slowing down its pace of M&A activity until it regains some
headroom in the rating.
WHAT COULD CHANGE THE RATING UP/DOWN
Upward rating pressure could develop if the company reduces its
leverage such that its Debt/EBITDA ratio (Moody's definition)
falls below 4.0x and demonstrates capacity to generate FCF/debt
of above 5%, both on a sustainable basis.
Conversely, negative rating pressure could develop if leverage is
not managed so that a Debt/EBITDA ratio (Moody's definition) at
or below 5.0x is maintained.
The principal methodology used in these ratings was Global Pay
Television - Cable and Direct-to-Home Satellite Operators
published in April 2013.
Adria Midco B.V operates a pan-regional distribution platform of
cable and satellite pay TV, broadband internet and telephony
services in Serbia, Slovenia and Bosnia and Herzegovina and other
countries of the former Yugoslav region. For the twelve months
ended March 2016, the company achieved revenues of EUR407 million
and reported a EBITDA of EUR182 million (on a last two quarters
annualized basis and adjusted by Adria for exceptional items).
UNITED GROUP: S&P Affirms 'B' Corp. Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'B' long-term
corporate credit rating on Netherlands-based telecom and cable
investment holding company United Group B.V. The outlook is
stable. At the same time, S&P affirmed the 'B' rating on the
company's senior secured notes.
The affirmation follows United Group's announcement of its plan
to raise EUR125 million of senior secured notes through a tap
issuance. S&P understands that funds raised will primarily be
used to repay outstanding borrowings under the revolving credit
facility (RCF) and small bolt-on acquisitions. The tap issuance
and somewhat weaker than previously anticipated free cash flows
do not result in meaningful leverage reduction under S&P's
base-case scenario for 2016 -- contrary to its previous
expectations. However, the current rating is supported by
continued over-performance of the group's organic growth,
relatively solid cash interest coverage of about 3x, and strong
leverage reduction capabilities excluding growth related
operating and capital expenditures.
S&P's debt calculation is adjusted for the EUR175 million
payment-in-kind loan at a top holding company, operating lease
liabilities, and deferred acquisition consideration.
S&P's base case assumes:
-- Organic revenue growth of about 6% in 2016, resulting from
continued revenue growth units growth and mobile market
share growth at Tusmobil, somewhat offset by pricing
pressures pushing down the prices of broadband and
telephony packages;
-- Slightly increasing margins due to synergies and scale
impact to about 40% (reported), from about 38% in 2015;
-- A declining, though still high capital expenditure (capex)-
to-sales ratio of 25%-27% in 2016 due to continued network
expansion including Tusmobil's 4G network, and a high
degree of customer premises equipment; and
-- Continued bolt-on acquisitions of about EUR20 million a
year.
Based on these assumptions, S&P arrives at these adjusted credit
measures in 2016-2017:
-- Debt to EBITDA of about 6x in 2016, and about 5.5x in 2017
compared with 6.3x in 2015;
-- Funds from operations (FFO) cash interest coverage of about
3x; and
-- Negative free operating cash flow (FOCF) of EUR10 million-
EUR15 million in 2016 and about breakeven in 2017.
The stable outlook reflects S&P's anticipation that United Group
will continue to deliver solid organic growth over the next two
years, improved FOCF, and cash interest coverage of comfortably
more than 2x.
S&P may lower the rating if the company meaningfully under-
performs compared with our current growth assumptions, limiting
its ability to approach breakeven FOCF by 2017.
S&P could also lower the rating if EBITDA cash interest coverage
fell below 2x.
S&P is unlikely to raise the rating over the next two years given
its view of the company's limited size, country-related risks,
and its view that the capital structure will likely remain highly
leveraged due to the group's aggressive financial policy.
Additionally, the rating will likely remain constrained by the
company's limited free cash flow generation due to its ambitious
growth appetite, which S&P anticipates will result in continued
high capex and bolt-on acquisitions.
=============
R O M A N I A
=============
* ROMANIA: Had Biggest Drop in Insolvencies in CEE Region
---------------------------------------------------------
Romania Insider reports that Romania had the highest decrease in
the number of insolvencies in Central and Eastern Europe (CEE)
last year, according to a Coface survey.
The country recorded a drop of 50% in the number of insolvencies,
due to significant tax incentives, the report says. Ukraine, on
the other side, saw a 20.8% increase in the number of companies
that entered insolvency, during another recession year and amid
ongoing conflict with Russia, Romania Insider relates.
According to Romania Insider, the construction sector benefitted
from projects cofinanced by the European Union, but the payment
behavior was still weak, and construction companies remain
present in insolvency statistics.
Last year, almost 1% of the companies active in the CEE region
filed for insolvency, the report notes.
===========
R U S S I A
===========
ARXBANK JSC: Placed Under Provisional Administration
----------------------------------------------------
The Bank of Russia, by its Order No. OD-2288, dated July 19,
2016, revoked a banking license of the Moscow-based credit
institution JSC Arxbank from July 19, 2016.
The Bank of Russia took such an extreme measure -- revocation of
the banking license -- due to the credit institution's failure to
comply with federal banking laws and Bank of Russia regulations,
the application of measures envisaged by the Federal Law "On the
Central Bank of the Russian Federation (Bank of Russia)", and
considering the existence of a real threat to the interests of
its creditors and depositors.
JSC Arxbank activities were aimed at attracting public funds and
their placing in poor quality assets. At the same time, the
credit institution did not create loan loss provisions adequate
to the risks assumed. Regardless of limitations introduced by
the supervisor for the attraction of household funds, JSC Arxbank
pursued its aggressive policy to attract deposits. Under these
circumstances the Bank of Russia took a decision to revoke the
banking license of JSC Arxbank.
The Bank of Russia, by its Order No. OD-2289, dated July 19,
2016, has appointed a provisional administration to JSC Arxbank
for the period until the appointment of a receiver pursuant to
the Federal Law "On the 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.
JSC Arxbank 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 legislation. The said
Federal Law provides for the payment of indemnities to the bank's
depositors, including individual entrepreneurs, in the amount of
100% of the balance of funds but not more than RUR1.4 million per
depositor.
According to reporting data, as of July 1, 2016, JSC Arxbank
ranked 286th in the Russian banking system in terms of assets.
VENTRELT HOLDINGS: Fitch Affirms 'BB-' FC Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has affirmed Russia-based Ventrelt Holdings Ltd's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with Stable Outlook.
The affirmation reflects Ventrelt's stable operations as water
and waste water operator, the company's long-term leasing and
concession agreements with municipalities, solid credit metrics
over the rating horizon, bond refinancing in 2015 and a
comfortable debt maturity and liquidity profile. However,
Ventrelt's ratings are constrained by its limited size and
diversification relative to larger peers and 'BB' rated Russian
companies, as well as the evolving regulatory framework for
tariff-setting. In addition, its capex relative to cash flow is
sizeable and results in negative free cash flow (FCF) for 2016-
2017.
KEY RATING DRIVERS
Improved Financial Profile
Ventrelt reported better than expected 2015 financial results,
mainly driven by cost cutting. At the same time, the company has
spent the necessary capex as per the concession agreements. Staff
costs have increased at a rate significantly lower than
inflation. The EBITDA margin increased to around 21% in 2015 from
an average 17% over 2012-2014. Improved profitability helped
reduce leverage. To better capture operational performance, Fitch
calculates net debt/connection fee adjusted EBITDA (deducting
connection fees -- the capital element included in EBITDA) that
decreased to 1.2x at end-2015 from 2.7x on average over 2012-
2014.
Fitch said, "Our forecasts of Ventrelt's 2016-2019 EBITDA are
based on our expectations that tariffs will be capped by CPI,
which is on average 200bp below annual approved tariffs growth
rate. Fitch forecasts the EBITDA margin to slightly deteriorate
to 18% on average over 2016-2019 due to expected decreased water
supply and drainage volumes as well as our assumption that fixed
operating costs will be inflated at a rate slightly outpacing
water supply and drainage tariffs growth.
Tariffs Capped by Inflation
"Fitch expects the pre-election period in Russia and economic
slowdown might affect the company's performance and favorable
tariff-setting. Despite the fact that the regulator approved
long-term tariffs for all Ventrelt's water channels until 2019,
the company expects the 2017-2019 tariffs to be capped by
inflation. In our base case, we forecast tariffs to grow slightly
below inflation. Ventrelt provides services mainly to households,
which are heavily affected by the downturn. However, the
company's cash collection rates remained at historical levels of
around 98% as of end-2015 and do not materially impact working
capital.
Equity Injection Received
"At 10 June 2016, Ventrelt had received $US16.2 million (RUB1
billion) equity injection from its key shareholder Alfa Group to
repay an existing loan at the Ventrelt Holding Ltd level within
the de-offshorization law signed by the president at end-2014,
i.e. an EBRD loan of RUB375 million, as of June 30, 2016 as well
as a RUB580 million loan at UK Rosvodokanal from Raiffeisenbank
and EBRD loan of RUB23 million at Tver Vodokanal LLC. We believe
the equity injection could improve the Ventrelt's credit metrics.
We estimate this equity injection will reduce net debt/connection
fee-adjusted EBITDA to around 1.0x on average for 2016-2019,
which would be sufficient to ensure credit metrics remaining
within our rating guidelines, even with substantial capex needs.
Decreased Cost of Debt
"At the beginning of July 2016, Ventrelt refinanced its remaining
EBRD loans of RUB814 mil. at Barnaul Vodokanal, RVK Voronezh and
Orenburg Vodokanal levels (around 14% from company's total debt
as of end-1H16), maturing in 2021-2024 with a floating rate of
MosPrime3M+margin with a loan from Rosbank (BBB-/Negative) at a
fixed interest rate of 12.1% maturing in five years. This results
in a more favorable cost of debt for the whole group. According
to the company, the existing upstream and cross-sureties under
the EBRD loan remain in place for the new loan, with an exception
of sureties from Tver Vodokanal. We note that a lower level of
upstream and cross-sureties would likely weaken the links between
operating and holding companies within the group, which may
result in reconsidering our rating approach to Ventrelt. However,
we do not expect this to materialize in the rating horizon.
Sufficient Liquidity
"At June 30, 2016, Ventrelt had adequate liquidity of RUB4.1
billion cash and cash equivalents (including RUB1 billion cash
from equity injection), which accompanied by unused credit
facilities of RUB5.6 billion from multiple banks, including Alfa-
Bank (BB+/Negative), Vnesheconombank (BBB-/Negative) and AO
Raiffeisenbank (BBB-/Negative) comfortably covered the company's
short-term maturities of RUB1 billion. We note that a major part
of outstanding debt is represented by RUB3 billion 13.5% bonds
maturing in December 2020. Fitch expects Ventrelt to continue
generating solid cash flows from operation. However, FCF is
likely to be negative in 2016-2017 due to capex needs. At end-
2015 outstanding loans were rouble-denominated."
Refinanced Bond Benefits From Sureties
At end-2015, RVK-Finance (a wholly-owned indirect subsidiary of
Ventrelt) issued a RUB3 billion local bond to repay RUB3 billion
loans, which were raised to redeem the RUB3 billion November 2015
bond. The bond benefits from sureties totaling RUB3 billion
provided on a several basis by RVK-Invest LLC, Krasnodar
Vodokanal LLC, Tyumen Vodokanal LLC, Barnaul Vodokanal LLC and
Voronezh Vodokanal LLC, which are all wholly-owned indirect
subsidiaries of the group. The senior unsecured rating is equal
to Ventrelt's Long-Term Local Currency IDR, reflecting that the
level of prior-ranking debt is below Fitch's threshold of 2.0x-
2.5x EBITDA. In addition, the combined EBITDA of subsidiaries
providing sureties for the bonds comprised 60% of the group's
1Q16 EBITDA.
Expansion Strategy
Fitch said, "Ventrelt remains Russia's leading private water and
wastewater operator operating under the name of Rosvodokanal,
serving about 5.1 million customers in Russia, operating about
15,000km of water and sewerage pipelines and supplying over 580
million cubic metres of water annually. Its strategy envisages
further expansion into Russian cities with at least 350,000
residents. It plans to participate in most of the available
tender for concession agreements, although the company intends to
remain focused on profitability according to management. We view
this as an aggressive target, given potential investment needs
and considering that most Russian water utilities continue to be
owned by municipalities."
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Domestic GDP decline of 0.7% and inflation of 8.2% in 2016
-- Tariffs to increase slightly below inflation over 2017-2019
-- Capital expenditure in line with management's forecasts
-- Equity injection of RUB1bn in 2016 with simulations repayment
of respective debt
-- Absence of dividend payments over the rating horizon
RATING SENSITIVITIES
Positive: Future developments that may, individually or
collectively, lead to positive rating action, include:
-- Increased revenue and earnings visibility following the
implementation of long-term tariffs.
-- Sustainable positive FCF generation.
Negative: Future developments that may, individually or
collectively, lead to negative rating action, include:
-- An increase in leverage above 4x net debt/connection-fee
adjusted EBITDA to fund additional capital expenditure or
acquisitions.
-- A sustained reduction in cash generation through a worsening
operating performance or deteriorating cash collection.
FULL LIST OF RATING ACTIONS
Ventrelt Holdings Ltd
Long-Term Foreign and Local Currency IDRs affirmed at 'BB-';
Stable Outlook
National Long-Term rating affirmed at 'A+(rus)'; Stable Outlook
RVK-Finance LLC (wholly-owned indirect subsidiary of Ventrelt
Holdings Ltd)
Local currency senior unsecured rating affirmed at 'BB-'
National senior unsecured rating affirmed at 'A+(rus)'
===============
S L O V E N I A
===============
* SLOVENIA: EU's Highest Court Backs 2013 Bank Bailout
------------------------------------------------------
Boris Cerni and Stephanie Bodoni at Bloomberg News report that
the European Union's highest court issued a ruling that endorsed
Slovenia's 2013 bank bailout that wiped out about EUR600 million
(US$664 million) of debt held by junior bondholders in so-called
"burden sharing" linked to state aid.
The ruling is a potential boon for the country's central bank,
led by Governor Bostjan Jazbec, after it was raided by Slovenian
police earlier this month on suspicion of wrongdoing during the
government's bank rescue three years ago, Bloomberg states.
The EUR3.2 billion bailout was engineered during the European
sovereign debt crisis by Jazbec and then Prime Minister
Alenka Bratusek's cabinet to save the Adriatic nation from having
to ask for an international aid lifeline like those taken by
Greece and Ireland, Bloomberg discloses.
"Burden-sharing by shareholders and subordinated creditors as a
prerequisite for the authorization, by the commission, of state
aid to a bank with a shortfall is not contrary to EU law,"
Bloomberg quotes the Luxembourg-based EU Court of Justice as
saying in the ruling on July 19. The case was prompted by a 2014
request from Slovenia's Constitutional Court to clarify rules on
state aid after the subordinated debt holders filed a motion in a
bid to recoup their holdings, Bloomberg relays.
Having received the European Court's ruling, Slovenia's top
judiciary body will give its own verdict as soon as this year,
Bloomberg notes.
=========
S P A I N
=========
ABENGOA SA: U.S. Unit Hires Ocean Park to Sell Ethanol Plant
------------------------------------------------------------
Dan Voorhis at The Wichita Eagle reports that Abengoa Bioenergy
Biomass of Kansas, a unit of bankrupt Spanish alternative energy
giant Abengoa SA, has hired Ocean Park Advisors to find a buyer
or investor for its cellulosic ethanol plant in Hugoton.
The Hugoton plant produced ethanol from plant fibers and was
supposed to be a technological advance over producing ethanol
from corn or other grain, The Wichita Eagle notes. It operated
for about a year before being shut down about nine months ago,
The Wichita Eagle relates.
Abengoa Bioenergy Biomass of Kansas is among the first large-
scale, second-generation cellulosic ethanol plants in the
country, The Wichita Eagle discloses.
About Abengoa S.A.
Spanish energy giant Abengoa S.A. is an engineering and
clean technology company with operations in more than 50
countries worldwide that provides innovative solutions for a
diverse range of customers in the energy and environmental
sectors. Abengoa is one of the world's top builders of power
lines transporting energy across Latin America and a top
engineering and construction business, making massive renewable-
energy power plants worldwide.
As of the end of 2015, Abengoa, S.A. was the parent company of
687 other companies around the world, including 577 subsidiaries,
78 associates, 31 joint ventures, and 211 Spanish partnerships.
Additionally, the Abengoa Group held a number of other interests
of less than 20% in other entities.
On Nov. 25, 2015 in Spain, Abengoa S.A. announced its intention
to seek protection under Article 5bis of Spanish insolvency law,
a pre-insolvency statute that permits a company to enter into
negotiations with certain creditors for restricting of its
financial affairs. The Spanish company is facing a March 28,
2016, deadline to agree on a viability plan or restructuring plan
with its banks and bondholders, without which it could be forced
to declare bankruptcy.
On March 16, 2016, Abengoa presented its Business Plan and
Financial Restructuring Plan in Madrid to all of its
stakeholders.
U.S. Bankruptcies
Abengoa, S.A., and 24 of its subsidiaries filed Chapter 15
petitions (Bankr. D. Del. Case Nos. 16-10754 to 16-10778) on
March 28, 2016, to seek U.S. recognition of its restructuring
proceedings in Spain. Christopher Morris signed the petitions as
foreign representative. DLA Piper LLP (US) represents the
Debtors as counsel.
Gavilon Grain, LLC, et al., on Feb. 1, 2016, filed an involuntary
Chapter 7 petition for Abengoa Bioenergy of Nebraska, LLC
("ABNE") and on Feb. 11, 2016, filed an involuntary Chapter 7
petition for Abengoa Bioenergy Company, LLC ("ABC"). ABC's
involuntary Chapter 7 case is Bankr. D. Kan. Case No. 16-20178.
ABNE's involuntary case is Bankr. D. Neb. Case No. 16-80141. An
order for relief has not been entered, and no interim Chapter 7
trustee has been appointed in the Involuntary Cases. The
petitioning creditors are represented by McGrath, North, Mullin &
Kratz, P.C.
On Feb. 24, 2016, Abengoa Bioenergy US Holding, LLC and 5 five
other U.S. units of Abengoa S.A., which collectively own,
operate, and/or service four ethanol plants in Ravenna, York,
Colwich, and Portales, each filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Eastern District of
Missouri. The cases are pending before the Honorable Kathy A.
Surratt-States and are jointly administered under Case No. 16-
41161.
Abeinsa Holding Inc., and 12 other affiliates, which are energy,
engineering and environmental companies and indirect subsidiaries
of Abengoa, filed Chapter 11 bankruptcy petitions (Bankr. D. Del.
Proposed Lead Case No. 16-10790) on March 29, 2016.
CATALONIA: Fitch Affirms 'BB' Long-Term Issuer Default Ratings
--------------------------------------------------------------
Fitch Ratings has affirmed the Autonomous Community of
Catalonia's (Catalonia) Long-Term Foreign and Local Currency
Issuer Default Ratings (IDRs) at 'BB' with Negative Outlooks.
Fitch has also affirmed the Short-Term Foreign Currency IDR at
'B'. The ratings on the senior unsecured outstanding bonds have
been affirmed at 'BB'.
The affirmation reflects continued political uncertainty in light
of the provisional executive power in Spain and Catalonia. Fitch
assumes the Regional Liquidity Fund (FLA) will continue to
support Catalonia's debt obligations in 2016. The Negative
Outlook reflects the potential outcome of either an abrupt
separation from Spain or the withdrawal of state support over the
medium term, as well as Catalonia's weak budgetary performance,
growing debt and liquidity risk.
KEY RATING DRIVERS
Political Tension Unresolved
Political uncertainty continues to prevail over the region, after
the President of Catalonia called for a motion of confidence next
September, following the rejection by CUP, a far left wing party,
of the budget presented by the new ruling party Junts Pel Si
(JxS, centre-right wing).
At the national level, a fragmented parliament resulting from the
June 2016 general elections means further delays in forming a new
executive. Fitch believes that the process for Catalonia's
independence is likely to remain uncertain until stable national
and regional governments have been formed.
Catalonia's regional parliament in November 2015 passed a
resolution to formally start the process for independence from
the rest of Spain, which the Constitutional Court subsequently
suspended at the request of the central government.
Debt Redemption Supported
Fitch is monitoring the assistance the central government is
providing Catalonia through the FLA in the region's redemption of
EUR5,921 million long-term debt in 2016. This includes EUR2,863
million from state liquidity mechanisms. Fitch assumes these
obligations will be serviced willingly by Catalonia and on a
timely basis. An additional EUR4,627 million in short-term debt
will fall due in 2016, which will be rolled-over by Catalonia
under the oversight of the Ministry of Finance and Public
Administration (MinHap). Fitch believes MinHap's monitoring, the
availability of treasury advances and the coverage of these
maturities by FLA as a last resort mitigate the liquidity risk.
However, evidence of weakening state support may result in a
negative rating action.
Catalonia is a major recipient of state liquidity support. Fitch
estimates Catalonia will borrow at least EUR8 billion from the
FLA in 2016, so that borrowing from the central government will
amount to around EUR45 billion, close to 70% of Catalonia's
expected total debt.
Weaker-than- Expected Performance
Catalonia's budgetary performance has been weak, with negative
current balances since 2009. The region's 2015 preliminary
results showed a negative current margin of 21.6%, which is below
Fitch's expectations. Deficit before debt was EUR6.7 billion,
worse than Fitch's expectations of EUR5 billion, mostly driven by
the recognition of EUR1.3 billion of public-private partnership
obligations from previous years after a change to the accounting
rules by MinHap. Catalonia breached the 0.7% fiscal deficit goal
in 2015, posting a 2.7% deficit.
Following the roll-over of the 2015 budget, authorized
expenditure in 2015 is prevented from increasing in 2016. We
expect budgetary performance to improve in 2016, due to higher
revenues from the funding system in 2016 (EUR2 billion), higher
expected tax collection, and lower interest expenses (by EUR0.9
billion) after the restructuring of the state loans. However,
Catalonia is unlikely to meet the 0.7% fiscal deficit target in
2016, and volatile performance is possible given the region's
recent budgetary track record.
Fitch said, "We expect debt growth to slow slightly on the back
of higher revenues, with debt representing 300% of current
revenue at end-2016, down from 308% in 2015."
Regional Economy Growing
Catalonia has an above-average economic profile, and is
recovering more quickly than the national economy. Nominal GDP
grew 3.9% against 3.8% nationally in 2015, and the unemployment
rate was 17.4% in the 1Q16, versus 21% in Spain. Moreover, the
total number of unemployed in Catalonia decreased 12.9% yoy in
1Q16, versus a 12% decline nationwide. Although the economic
recovery has not been affected by the current political
uncertainty, a unilateral independence of Catalonia is likely to
result in economic shock.
RATING SENSITIVITIES
Fitch will continue to monitor developments in Catalonia and may
take negative rating action if state liquidity support weakens.
If the political environment normalizes, Fitch may reinstate the
Support Rating Floor of 'BBB-' for Catalonia.
KEY ASSUMPTIONS
Fitch assumes that the region will continue to have access to
state support for debt servicing over the medium term.
===========
T U R K E Y
===========
BANK ASYA: Turkey Halts Operations Following Failed Coup Attempt
----------------------------------------------------------------
Isobel Finkel at Bloomberg News reports that Turkey halted the
operations of Bank Asya, an Islamic lender linked to exiled
preacher Fethullah Gulen, as the government widened a purge after
a failed coup attempt this weekend.
The ruling came from Turkey's Savings Deposit Insurance Fund and
trading in the lender's shares will remain suspended, Bloomberg
relays, citing a stock exchange statement on July 18.
The bank was founded by followers of the cleric, who President
Recep Tayyip Erdogan blames for instigating the July 15 attempt
to overthrow him, and has been embroiled in the feud between the
two men since 2013, Bloomberg relates. The government seized the
Istanbul-based lender last year, citing its "unclear ownership
structure," and in March said that it would be liquidated by the
end of May unless a buyer could be found, Bloomberg recounts.
Asya's asset base has shrunk from its height of TRY28.4 billion
in 2013 (then US$13.2 billion) -- the year when the two became
enemies after Mr. Erdogan said Mr. Gulen was behind a corruption
scandal which he saw as an attempt to depose him, Bloomberg
discloses.
Bank Asya was established in October 24, 1996 with its head
office in Istanbul, as the sixth private finance house of Turkey.
===========================
U N I T E D K I N G D O M
===========================
ARQIVA BROADCAST: Fitch Affirms 'B-' High-Yield Bonds Rating
------------------------------------------------------------
Fitch Ratings has affirmed Arqiva Financing plc and Arqiva PP
Financing's whole business securitisation (WBS) bonds at 'BBB',
and Arqiva Broadcast Finance plc's high-yield (HY) bonds at 'B-'.
Fitch has revised the Outlook on the HY bonds to Negative from
Stable. The Outlook on the WBS bonds is Negative.
Fitch said, "The affirmation of the WBS bonds mainly reflects
their expected gradual deleveraging, in line with their largely
contracted revenue profile and solid resilience to RPI and Libor
sensitivities. We expect net senior debt-to-EBITDA under Fitch's
base case to fall to around 3.0x in FY25 (financial year ending
June) from 5.8x in FY16 and to close to 0x in FY30. This is
broadly in line with our previous reviews. The deleveraging
profile of the HY bonds is consistent with previous reviews,
falling to 6.4x in FY20 at maturity from 7.1x in FY16."
The Negative Outlooks reflect the remaining uncertainty from
Arqiva's strategic overhaul, together with the recent operational
restructuring and departures of key personnel such as, in 2015,
the CEO, CTO and MD of Digital Platforms and, in 2016, the CFO
(already replaced in May with an experienced executive). However,
Fitch understands from Arqiva that it aims to increase its focus
on more core infrastructure assets, which could be credit
positive.
Fitch understands that a refinancing plan for the remaining
GBP353 million of finco term loan B (TLB) outstanding is
currently in progress. Until it is completed, the TLB will
benefit from a 75% cash sweep from June 2017. The HY notes need
the TLB to be refinanced relatively soon, as from March 2018, the
cash sweep will increase to 100%, thereby disallowing any
dividends to be paid out to service their debt service.
Fitch said, "We could revise the Outlook to Stable once we
receive in FY17 further clarifications of both the group's
strategy over the longer term with additional confirmation of the
cost-savings sustainability and the refinancing of the TLB."
Arqiva's financial performance was in line with Fitch's base case
with FY16 EBITDA expected to grow by over 1%, in line with the
company guidance of GBP425 million, thereby marginally
outperforming Fitch's base case by 1%. The operational
transformation plan initiated last year with the appointment of a
Chief Transformation Officer has resulted in cost savings in
FY16, which management expects to reach over GBP30 million on an
annual run-rate basis. Arqiva's order book remains strong at
GBP6.2 billion. Fitch's base case free cash flow synthetic debt
service coverage ratios (FCF DSCRs) between FY16 and FY33, are at
around 1.5x.
KEY RATING DRIVERS
Fitch has assigned the following attributes to the three key
rating drivers (and relevant sub-KRDs) as per Fitch's UK WBS
criteria.
Industry Profile: 'Stronger'
(Operating Environment: 'Stronger')
Arqiva is the sole UK national provider of network access and
managed transmission services (regulated by Ofcom) for
terrestrial television and radio broadcasting. The company owns
and operates all television and 90% of the radio transmission
towers used for digital terrestrial television (DTT) and
terrestrial radio broadcasting in the UK. Arqiva has long-term
contracts with public service broadcaster customers who depend on
Arqiva to meet the obligations under their licenses to provide
coverage to 98.5% of the UK population as well as with commercial
broadcasters. Arqiva also owns two of the three main national DTT
commercial multiplexes (out of a total of six) plus two new (HD-
compatible) DTT multiplexes. Similarly, Arqiva owns one national
commercial digital radio multiplex and, since March 2015, 40% of
the second.
Arqiva is also the largest independent provider of wireless tower
sites in the UK, which are licensed to the mobile networks
operators (MNOs) and other wireless network operators, with
approximately 25% of the total active licensed macrocell site
market (as of end-March 2015).
Fitch said, "Embedded in its industry nature, Arqiva is not
exposed to discretionary spending and we do not view its sector
as cyclical."
(Barriers to Entry: 'Stronger')
The industry's barriers to entry are viewed as high, notably due
to the stringent regulatory framework and the industry's capital-
intensive nature.
(Sustainability: 'Midrange')
Arqiva is exposed to potential changes in technology in the
medium to longterm with, for instance, the emergence of new means
for content delivery (e.g. IPTV), which may affect pricing, in
particular in the DP and satellite and media divisions (each
representing over 15% of Arqiva's revenues).
Company Profile: 'Midrange'
(Financial Performance: 'Midrange')
Arqiva's trading history has been strong overall with past
reductions in revenues typically having been compensated by gains
in margins. Since FY08, EBITDA, in particular, had grown strongly
at a CAGR of 7.7% until FY13, when performance turned subdued,
CAGR dropping to 0.8%. The EBITDA margin is also expected to
decline marginally to 49% in FY16 from a peak of 50.8% in FY13.
(Company Operations: 'Midrange')
Fitch views positively the company's operations, as Arqiva has
constantly met its various key contract operating obligations.
Over half of Arqiva's revenues are generated from long-term
contracts (typically RPI-linked with no or little volume risk)
with counterparties with strong credit ratings such as the BBC,
large MNOs and utilities companies.
Arqiva's sponsors are large and experienced infrastructure funds
with a long-term view. However, the company has seen some recent
significant changes in management with the departures of the CEO,
CTO and the MD of DP in 2015 and the CFO in 2016. The board also
previously added a management board position of Chief
Transformation Officer December 2015 to drive the business
transformation program. This corporate restructuring adds some
short-term uncertainty, which Fitch will closely monitor.
(Transparency: 'Midrange')
Good insight into the financials and operations of Arqiva is
balanced by the inherent complexity of the operations, which
hampers its transparency.
(Dependence on Operator: 'Weaker')
Given the specialised and complex nature of Arqiva's operations,
there are only a few alternative operators capable of running its
secured assets, which diminishes the value of administrative
receivership.
(Asset Quality: 'Midrange')
Assets of this nature are very infrequently traded and there are
no alternative values, but assets can be disposed of on an
individual basis or on a going-concern basis. Maintenance capex
is generally well defined but timing and exact funding amount
could be uncertain.
WBS Bonds - Debt Structure: 'Midrange'
(Debt Profile: 'Midrange', Security Package: 'Stronger',
Structural Features: 'Midrange')
The senior debt is fully amortizing by either cash sweep or
following a fixed schedule. There are many large swaps present
due to legacy positions, notably super senior index-linked (IL)
swaps and index-linked swaps overlays and other interest rate
(IR) and FX swaps, which adds to the complexity of the debt
structure. These IR and IL swaps essentially slow down any
deleveraging due to either potentially incurred IR swap breakage
cost following cash sweeps or IL RPI accretion paydowns, which
occur every three years until 2027.
Some senior loans are also exposed to some interest rate risk
past their expected maturities. The senior debt also contains
many prolonged interest-only periods, which is credit negative.
Fitch said, "The senior debt benefits from a typical WBS security
package, namely, first ranking security over freehold/long
leasehold sites with the possibility of appointing an
administrative receiver. The senior debt benefits also from a
comprehensive set of covenants and cash lockup triggers set at
moderate levels. The issuer liquidity facility covers only 12
months of debt service. The issuer is not an orphan SPV. However,
we deem the potential conflicts of interest due to the non-orphan
status of the SPVs and their directors also being directors of
other group companies remote and consistent with the notes'
ratings, given the structural protections in the transaction's
legal documentation."
HY Bonds - Debt Structure: 'Weaker'
(Debt Profile: 'Weaker', Security Package: 'Weaker', Structural
Features: 'Weaker')
Fitch said, "The HY bonds are bullet. They are deeply
structurally subordinated and would default if dividends pay-out
from the WBS group is disrupted for more than six months. We view
their security package as weak as it consists of share pledges
over holding companies with no second lien security over the WBS
security package. The covenants and lockup triggers are
comprehensive but are set at low levels. The issuer's liquidity
cash reserve account covers only six months of interest
payments."
RATING SENSITIVITIES
Downgrade:
Under Fitch's base case, if net debt to EBITDA is substantially
above 3x in FY25 and 0x in FY32, this could result in a downgrade
of the senior debt. The HY notes could be downgraded if their
refinancing risk increases or if the full cash sweep features
embedded in some of the senior debt is close to be triggered.
Arqiva's future cash flow could be curtailed following
unfavorable and unforeseen significant changes in regulation by
Ofcom with regard to any changes in its pricing formulas, notably
for future DTT or radio broadcasting contracts, licensing costs
(e.g. administrative incentive pricing) or even spectrum
allocations. The risk of alternative and emerging technologies
such as IPTV could also threaten Arqiva's revenues, either
through technology obsolescence risk and/or lower ad-pool
available to linear TV content providers. This risk is currently
mitigated by the potentially rapid deleveraging of the
transaction assuming cash sweep amortization and the long-term
contracts securing significant revenues.
Upgrade:
Under Fitch's base case, if net debt to EBITDA is substantially
below 3x in FY25 and 0x in FY30, this could result in an upgrade
of the senior debt. The HY notes are unlikely to be upgraded.
Arqiva's future cash flow could be revised up if, for instance,
the company signs new long-term contracts or if renewals of
existing contracts are renegotiated on better terms than
expected.
SUMMARY OF CREDIT
The transactions are the refinancing of senior and junior bank
debt of Arqiva Financing No.1 and No. 2 Limited through the
issuance of around GBP1,612.5 million of WBS notes, GBP180
million of ITL and GBP190 million of EIB loan, plus around
GBP353.5 million of Finco term loans (the underlying WBS
issuer/senior borrower loans ranking pari-passu with the
underlying secured Finco/senior borrower loans, the ITL and EIB
loan), and GBP600 million of structurally subordinated HY notes.
The remaining Finco term loans are expected to be refinanced
under the WBS program.
The rating actions are as follows:
Arqiva Financing plc (WBS issuer):
GBP164 million 5.34% Series 2014-1 notes due 2037: affirmed at
'BBB'; Negative Outlook
GBP350 million 4.04% Series 2013-1a notes due 2035: affirmed at
'BBB'; Negative Outlook
GBP400 million 4.882% Series 2013-1b notes due 2032: affirmed at
'BBB'; Negative Outlook
Arqiva PP Financing plc (WBS issuer - US Private Placement
(USPP)):
$US358 million (GBP235.5 million equivalent) Series 1 guaranteed
secured senior notes (WBS) due 2025: affirmed at 'BBB'; Negative
Outlook
GBP163 million Series 2 guaranteed secured senior notes (WBS) due
2025: affirmed at 'BBB'; Negative Outlook
GBP300 million Series 3 guaranteed secured senior notes (WBS)
bonds due 2029: assigned 'BBB', Negative Outlook
Arqiva Broadcast Finance plc (HY issuer):
GBP600m 9.5% senior notes due 2020: affirmed at 'B-'; Outlook
revised to Negative from Stable
BAY TV: Proposes CVA Following Financial Woes, Aug. 4 Vote Set
--------------------------------------------------------------
Luke Traynor at Liverpool Echo reports that Liverpool's Bay TV is
seeking a deal with creditors to enable it to continue despite
owing almost half a million pounds.
The local television station has suffered recent financial
difficulties, which has now emerged ahead of meeting with
creditors in August, Liverpool Echo relates.
According to Liverpool Echo, Bay TV owes a total of GBP451,575,
with a debt to Revenue and Customs outstanding at GBP 145,187,
individual shareholder loans debts to the value of GBP 133,800,
and other "trade and expense creditors" to the sum of GBP
152,488.
On Aug. 4, a "Company Voluntary Arrangement" will take place, at
the offices of Refresh Recovery in Skelmersdale, Liverpool Echo
discloses.
At the meeting, proposals will be drawn up to reimburse Bay TV's
creditors for a percentage of the debt they are owed, Liverpool
Echo says.
The arrangement is not a liquidation, Bay TV, as cited by
Liverpool Echo, said, and the station will continue to operate.
The "Company Voluntary Arrangement" will be voted upon by
creditors, Liverpool Echo relays.
Exactly what percentage of the total debt amounts will be repaid
remains unclear, Liverpool Echo notes.
ECO-ENERGY CORP: High Court Closes Down Oil Investment Firm
-----------------------------------------------------------
Two companies that sold dubious oil investment products to
members of the public in the UK have been wound-up in the High
Court.
Winding-up orders were made against Eco-Energy Corp (Eco -
incorporated in Belize) and Sturgeon Estates Limited (Sturgeon),
on June 8 on the petition of the Secretary of State for Business,
Innovation and Skills, following investigations by Company
Investigations, part of the Insolvency Service.
The investigation found Eco acted as the contracting party and
received customers' money through an account with a firm of UK
solicitors. Payments supposedly entitled investors to a
percentage interest in the profits made by a number of oil wells
in Texas, USA. Customers had no way to independently corroborate
that their investments were in fact genuine, or being properly
handled.
Sales were 'introduced' by a network of mostly UK companies,
including Sturgeon, a company which previously sold Carbon
Credits to the public as an investment product. Carbon Credits
are widely acknowledged to have been wholly unsuitable for retail
investors.
The High Court found that both Eco and Sturgeon had traded with a
lack of transparency/stewardship and a 'lack of commercial
probity'. Although there had been a failure in both companies to
maintain adequate books and records, the investigation found that
at least GBP943,000 and GBP630,000 had been received by Eco and
Sturgeon respectively.
The High Court also heard how a number of payments were made to
customers in the guise of returns on their investments, but were
in fact funded by monies paid in by other investors.
Commenting on the case, David Hill a chief investigator said:
"Oil production is a risky business, but, whereas investing in a
company listed on a recognised Stock Exchange should ensure that
the corporate side of business is properly handled, Eco and
Sturgeon's customers were wholly let down in this regard.
"The risks involved in investing were multiplied many times by
those companies' failures to attend to even basic principles of
record keeping, corporate governance, and due diligence.
"The concern is that these failures mask the true intentions of
those behind the companies. Investors should be wary of any
products which they hear about through cold calling, and even
more so of products held in offshore jurisdictions with poor
transparency and track records as regards corporate governance."
Eco-Energy Corp. is a Belize International Business Company
Registration Number 142,486, and was incorporated on 11 February
2014. Its registered office address is 21 Regent Street, Belize
City, Belize. Sturgeon Estates Ltd, formerly Eco Commodities Ltd,
is a UK limited company Registration Number 08187296. Its
registered office is Peek House, 20 Eastcheap, London EC3M 1EB.
The petitions to wind-up both Eco-Energy Corp. and Sturgeon
Estates Ltd were presented under s124A of the Insolvency Act 1986
on March 21, 2016. The companies were wound up on June 8, 2016
and the Official Receiver has been appointed as liquidator.
EUROPEAN PENSIONS: Suffolk Life Buys Insolvent SIPP Provider
------------------------------------------------------------
Professional Adviser reports that Suffolk Life has bought
troubled self-invested personal pension (SIPP) provider European
Pensions Management Ltd. (EPML) which went into administration in
June.
EPML, established in 2001, went into the special administration
regime insolvency proceedings on June 21 this year.
Suffolk Life, itself acquired by rival Curtis Banks Group in
January, has bought EPM's book of business totalling 5,000 SIPPs
with a value of about GBP630 million, the report says.
According to the report, the deal comes as the deadline for SIPP
provider's to comply with strict capital adequacy rules
approaches. The rules, which could prompt more consolidation in
the SIPP market, are due to come into force in September.
"This acquisition, coming shortly after Suffolk Life joined the
Curtis Banks Group, delivers a statement of the group's
commitment to grow our position in the independent SIPP market,
and demonstrates our capability to support advisers and investors
in sections of the market that many other SIPP operators have
retreated from," the report quotes Suffolk Life managing director
Will Self as saying. "Suffolk Life remained comfortably
capitalised following the acquisition".
Suffolk Life now runs more than 30,000 SIPPs with assets under
administration approaching GBP10 billion, the report notes.
About EPML
European Pensions Management (EPML) is a Trustee and SIPP
Administrator established in 2001 by Francis Moore. EPM offers a
lifetime SIPP solution starting with SIPPS4Kids through to
flexible retirement options.
EPML formally entered into special administration regime (SAR)
insolvency proceedings on 21 June 2016.
The Financial Conduct Authority said: "Having reached an
assessment that it was no longer solvent, EPML made an
application to the court to formally initiate insolvency
proceedings under SAR.
EPML has approximately 6,000 customers.
The joint special administrators are Adam Stephens, Finbarr
O'Connell, Henry Shinners and Gregory Palfrey of Smith &
Williamson LLP.
ITHACA ENERGY: Moody's Affirms B3 CFR & Changes Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service has affirmed Ithaca Energy Inc.'s B3
Corporate Family Rating, B3-PD probability of default rating
(PDR) and Caa2 senior unsecured notes rating. The notes are
guaranteed on a senior subordinated basis by certain Ithaca
subsidiaries. The outlook on all ratings is changed to stable
from negative.
RATINGS RATIONALE
The change of outlook to stable takes into account reduced
capital and execution risk as Ithaca has completed virtually all
of the development spending on its key Greater Stella Area (GSA)
project, with the FPF-1 floating production facility expected to
sail from the yard to the field in late July 2016, after
completion of the final marine system trials. The production is
expected to come onstream approximately three months after sail
away of FPF-1. Timely completion of the GSA project with ramp up
to its full production capacity of 16,000 BOE/day net to Ithaca,
which will enable the company to more than double its current
average daily production, will be key to the company's production
and cash flow growth in 2017.
Moody's expects 2016 production to be in line with last year
between 12,000 -13,000 BOE/day considering the guidance from the
company at 9,000 BOE/day from existing assets and 2-3 months of
Stella production. Moody's expects leverage ratio (adjusted
debt/EBITDA) to peak in 2016 at around 4.6x from 3.0x in 2015 --
this will then fall back to below 2.5x in 2017. The company's
capex spending is expected to reduce materially to around $50
million in 2016-2017, from $400 million in 2014 and $165 million
in 2015, after the ramp-up of the GSA project to its full
capacity. This coupled with improved oil prices and existing
hedging on a sizeable share of its production through mid-2017 at
$60-62/BOE will result in increased free cash flow (FCF)
generation. Moody's expects the company to generate FCF of
around $50 million in 2016 and $150 million in 2017.
Ithaca's availability under its RBL facility tightened following
its borrowing base redetermination in April 2016 to $430 million
from $515 million, but remains adequate with $78 million undrawn
as of March 31, 2016. This coupled with cash balance of $22
million at the end of March 2016 and Moody's expectation that the
company will generate positive FCF in 2016-2017 demonstrates a
good liquidity profile.
Moody's believes that Ithaca's business profile remains
constrained due to its small scale and highly concentrated
reserves base with 57 million BOE of 2P reserves at the end of
2015 versus 9.1 million BOE of expected annual production after
the ramp up of GSA. Future production growth is highly dependent
on the successful completion of the GSA development which will
enable Ithaca to more than double its production capacity to
25,000 BOE/day. However, Stella, like many other North Sea
fields, will have a fairly high decline rate and Ithaca will need
to develop other nearby fields in 2018 and beyond to maintain and
grow production, for example, development of the follow-up
Harrier field which is part of the joint Stella/Harrier Field
Development Plan.
Rating Outlook
The stable outlook factors lower execution risk on the GSA
project and is expected to be completed in line with prevailing
guidance with ramp up to full production capacity by the end of
2016, while maintaining a good liquidity profile.
What Could Change the Rating - Down
Further significant delays in Stella field start-up, a tightening
of the $430 million borrowing base on re-determination in October
2016 or thereafter or declining free cash flow generation,
resulting in weaker liquidity profile could cause a rating
downgrade, particularly if adjusted Debt/EBITDA does not trend
down from peak expected levels of around 4.6x in 2016.
What Could Change the Rating - Up
Timely Stella ramp-up, sustainable production of 25,000 BOE/day,
further debt reduction from free cash flow with RCF/Total Debt
rising above 35% and sustained investment in new development
projects to increase their reserve base could support an upgrade.
The principal methodology used in these ratings was Global
Independent Exploration and Production Industry published in
December 2011.
Ithaca Energy Inc. is a Canadian-based independent exploration
and production company with almost all of its assets and
production in the United Kingdom Continental Shelf (UKCS) region
of the North Sea. The company has pursued growth via
acquisitions of producing field interests with a focus on
appraising and developing assets that have potential for step
outs in contiguous areas. As of year-end 2015, Ithaca held 2P
reserves of 57 million BOE with production averaging 12,100
BOE/day in 2015.
LOWCOSTTRAVELGROUP: Liquidation Likely to Start This Week
---------------------------------------------------------
ttgmedia.com reports that the Lowcosttravelgroup looks set to
formally liquidate its B2C main holiday business as early as this
week, although it could still sell some of its smaller assets,
according to weekend reports.
It comes after TTG revealed that administrators had been called
in following the collapse of the group, according to
ttgmedia.com.
Directors had previously been in talks to sell the group's two
main assets, Lowcostbeds and Lowcostholidays, however the deal is
understood to have fallen through on July 11, with Brexit blamed
for making investors wary, the report notes.
All 450 employees, including 120 who were based at Gatwick, have
been made redundant, the report relays.
Since news of the collapse emerged, thousands of holidaymakers
have been left thousands of pounds out of pocket, the report
notes. Some 27,000 customers were in resort at the time of the
collapse, while a further 110,000 were due to travel, the report
says.
Many said they did not believe their travel insurance would cover
them, the report discloses. Abta also said that "most standard
travel insurance policies do not include travel organiser
failure, however we would recommend you check your insurance
policy along with contacting your credit or debit card company,
if that is how you paid," the report relays.
It added: "If in any doubt, we recommend that you contact your
local Citizens Advice or Trading Standards Department (see your
local telephone directory)."
SCOTSMAN HOTEL: Goes Into Liquidation
-------------------------------------
The Caterer reports that the Scotsman -- the five-AA-star, 69 --
bedroom hotel, which opened in the former headquarters of the
newspaper of the same name 15 years ago -- has gone into
liquidation.
Edinburgh Sheriff Court appointed accountant French Duncan as the
liquidator after Her Majesty's Revenue and Customs filed for a
winding-up order after the hotel failed to pay its debts,
according to The Caterer.
Eileen Blackburn -- blackburn@frenchduncan.co.uk -- partner and
head of business recovery and insolvency at French Duncan, said:
"The Scotsman Hotel is continuing to trade and there are no plans
for that to stop. French Duncan is working with the hotel's
senior management team to ensure that trading continues and to
find a long term sustainable solution."
The Scotsman, which had been operated by the 16-strong JJW Hotels
and Resorts group, part of MBI International, was known to have
been suffering from trading difficulties for more than a year,
the report notes. In April 2015, The Caterer reported that staff
had not been paid on time and that there would be possible
redundancies, the report relays.
A spokesperson for JJW Hotels and Resorts said there was "a
differential" between the amount of tax that the company and HMRC
believed was due, the report discloses.
"JJW Hotels met with the liquidator with a view to resolving
matters. JJW are fully co-operating with the liquidator in
relation to this unfortunate miscommunication and JJW are
confident of being able to resolve the position from its
substantial resources, the report relays.
"There will be no redundancies, the hotel is trading well and
looking forward to the extra business that comes with the
Edinburgh Festival, the report notes.
"We expect the legal process to be positively resolved shortly
and staff and creditors to be paid on time. Rather than making
redundancies, the Scotsman will in fact be seeking to fill a
number of new roles, the report relays.
"JJW is a substantial and robust group, with operations across
Europe, including France, Portugal, France and Austria as well as
the UK".
The property has had a chequered history since being opened as a
hotel under the ownership of the Scotsman Hotel Group headed by
Jonathan Wix to join sister hotel, the Calls in Leeds, the report
relays. In 2006, the group, which by then had grown to three
properties to include Hotel de la Tremoille in Paris, was sold to
MBI International, the report recalls.
Five years later, the Scotsman Hotel Group was put into
administration by Lloyds TSB as a result of being owed GBP50
million by the company, the report notes. Sheikh Mohamed Bin
Issa Al Jaber, the Saudi businessman who heads MBI International,
blamed the seizure of his UK hotels on Standard Bank's global
freezing order, which he told a London court has lost him $1.6
billion, the report relays.
Within two months JJW Group regained control over the Scotsman
Hotel Group after Sheikh Mohamed Bin Issa Al Jaber settled his
court battle with Standard Bank, the report says.
At the time of the liquidation, the Scotsman Edinburgh (Company)
Ltd was registered as a UK business under the ownership of Maples
Corporate Services in the British Virgin Islands, the report
adds.
STORE TWENTY ONE: To Shut Down Outlet in Carmathen
--------------------------------------------------
Carmarthen Journal reports that Store Twenty One clothing store
in Merlin's Walk in Carmathen has closing down posters plastered
over its windows as a bid continues to save it and the other 201
branches and more than 1,000 jobs across the UK.
The owner of budget fashion brand Store Twenty One has tabled a
proposal for a company voluntary arrangement which could involve
closing some stores and rent cuts on others, Carmarthen Journal
relates.
Store Twenty One operates 202 stores and employs more than 1,000
people across the UK.
* UK: Scottish Corporate Insolvencies Up in 2nd Quarter 2016
------------------------------------------------------------
The Herald reports that Scottish corporate insolvencies in the
latest quarter were up on the same period of last year, the
latest statistics show, and the Brexit vote is forecast to have a
detrimental impact in terms of future company failure levels.
According to The Herald, the figures, published by accountancy
firm KPMG, show there were 269 corporate insolvencies in the
three months to June, up by 3% on the second quarter of 2015.
The number of corporate insolvencies in the quarter to June,
comprising 245 liquidation and 24 administration appointments,
was up by 30% on the opening three months of this year, The
Herald discloses.
KPMG cited the impact of the oil and gas downturn, The Herald
relates.
The number of liquidation appointments in the three months to
June was up by 4% on the same period of last year, The Herald
states. The number of administration appointments, which tend to
relate to larger businesses, dipped to 24 in the quarter to June
from 27 in the same period of 2015, The Herald relays.
*********
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
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Information contained herein is obtained from sources believed to
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or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000 or Nina Novak at
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