/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/160825.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, August 25, 2016, Vol. 17, No. 168 Headlines A U S T R I A HETA ASSET: Inquiry Prompts Call for Provincial Insolvency Law F I N L A N D STORA ENSO: S&P Affirms 'BB/B' CCRs & Revises Outlook to Positive G R E E C E OCEAN RIG: S&P Lowers CCR to 'CCC-' on Potential Debt Restructure I R E L A N D DEBENHAMS RETAIL: Exits Examinership, Limerick Store to Stay Open I T A L Y ASTALDI SPA: S&P Maintains 'B' CCR on CreditWatch Negative N E T H E R L A N D S MAXEDA DIY: S&P Lowers Corporate Credit Rating to 'B-' R O M A N I A OLTCHIM SA: Returns to Profit, Creditors Put Business Up for Sale S P A I N ABENGOA SA: Sells Five U.S. Ethanol Plants for US$357 Million CAJA LABORAL: Moody's Withdraws Ba1 Deposit Ratings U N I T E D K I N G D O M FOUR SEASONS: In Talks with Lenders to Resolve Long-Term Future INNOVIA GROUP: S&P Affirms 'B' CCR & Revises Outlook to Positive MASCOTT CONSTRUCTION: Gareth Loye Acquires Assets & Equipment TRAVELPORT LIMITED: Moody's Affirms B2 CFR; Outlook Now Positive ********* ============= A U S T R I A ============= HETA ASSET: Inquiry Prompts Call for Provincial Insolvency Law -------------------------------------------------------------- Alexander Weber at Bloomberg News reports that the Austrian parliamentary committee digging into the failure of Hypo Alpe- Adria-Bank International AG is set to call for a law that allows provinces to go insolvent, saying this would stop regional governments from running up too much debt or outsize guarantees. Hypo Alpe, now turned into bad bank Heta Asset Resolution AG, was nationalized in 2009 after bad loans in the former Yugoslavia brought it to the brink of collapse, Bloomberg recounts. Its wind-down was complicated by the fact that the province of Carinthia had issued guarantees for Heta's debt that peaked at more than ten times its annual revenue, Bloomberg notes. Austria should introduce an insolvency law for provinces and municipalities to stop misconduct by local authorities and keep investors from thinking that the tab will ultimately be picked up by the federal government, according to the commission's draft final report seen by Bloomberg. The rules should only be introduced after Carinthia's Heta obligations have phased out, Bloomberg relays, citing the 507-page document. Lawmakers in Vienna questioned more than 120 witnesses including bankers, politicians and regulators after taxpayers pumped at least EUR5.5 billion (US$6.2 billion) into Heta, Bloomberg discloses. The final report was drafted by the judge who led the committee's investigation and has yet to be approved by committee members, Bloomberg states. According to Bloomberg, the amount of guarantees that provinces and other local governments are allowed to issue should be kept at a "justifiable" relation to their economic capacity, according to the draft recommendations. Heta Asset Resolution AG is a wind-down company owned by the Republic of Austria. Its statutory task is to dispose of the non-performing portion of Hypo Alpe Adria, nationalized in 2009, as effectively as possible while preserving value. ============= F I N L A N D ============= STORA ENSO: S&P Affirms 'BB/B' CCRs & Revises Outlook to Positive ----------------------------------------------------------------- S&P Global Ratings revised its outlook on Finland-based forest and paper products company Stora Enso Oyj to positive from stable. At the same time, S&P affirmed the 'BB/B' long- and short-term corporate credit ratings and the 'K-4' short-term Nordic regional scale rating on the company. S&P also affirmed its 'BB' issue rating on Stora Enso's senior unsecured debt. The '4' recovery rating indicates S&P's expectation of average recovery (30%-50%; lower half) in the event of a payment default. The outlook revision follows a period of improved profitability and structural changes to Stora Enso's business portfolio that S&P believes could result in a permanent strengthening of its business risk profile. S&P Global Ratings' adjusted EBITDA margin for Stora Enso over the 12 months ended June 30, 2016, was 15.7%, marking an improvement over the 11.9% annual average seen in 2010-2014. The main drivers behind the improvement have been the introduction of new profitable growth investments, such as the Montes del Plata pulp mill in Uruguay, and stronger performance in the paper segment due to cost cutting and the disposal of low-performing assets. S&P views positively the completion of the Beihai paperboard mill in China, which was on time and on budget and started production in May 2016. S&P thinks the mill's ramp-up mitigates concerns around execution and timing risks, although it will take two years until it is fully up and running. "We think that Stora Enso's clear strategy to steer its business portfolio away from declining paper and toward growing segments such as consumer paperboard and containerboard makes sense, because these segments enjoy healthy growth prospects at least in line with GDP growth in its countries of operation. We also consider as a strength Stora Enso's targeting of higher-end products, as evidenced by the completed conversion of the Varkaus paper mill into containerboard, the conversion of the Skutskar pulp mill into fluff pulp, and investments in the sawn timber division. We anticipate that these measures, teamed with continued stringent cost control in the paper segment, could lead to a business portfolio that is less cyclical and less exposed to structurally declining segments, while continuing to enjoy solid growth prospects," S&P noted. That said, S&P views the operating environment in the coming 12 months as potentially challenging for Stora Enso. This is based on our expectation of a sustained period of lower pulp prices and possible price pressure for paperboard and containerboard in Europe due to new capacity coming online (including Stora Enso's kraftliner volumes from its Varkaus mill) causing temporary overcapacity. In addition, in light of an uncertain economic outlook in Europe, S&P sees potential for an accelerated decline in paper demand and renewed pricing pressure. Despite these potential downside scenarios, S&P sees a fair likelihood that Stora Enso's recent positive momentum could lead S&P to favorably reassess the company's business risk profile in 2017. Stora Enso's financial profile has strengthened in tandem with its operational performance in the past 12 months, with a ratio of funds from operations (FFO) to debt currently around 25% versus approximately 20% in 2012-2014. S&P views positively the company's clearly stated financial target to maintain reported net debt to EBITDA below 3.0x (which is equivalent to about 3.8x including S&P's adjustments) as this limits downside to the financial risk profile, in S&P's view. S&P thinks that any further improvements in credit metrics hinge on Stora Enso's growth strategy and the extent in which it will enter any new large scale investments, for example by investing into additional containerboard capacity at the Ostroleka mill in Poland or by investing into a large-scale pulp mill next to the paperboard mill in China. In S&P's base case, it assumes: -- Eurozone GDP growth of 1.7% in 2016, declining to 1.3% in 2017. Stronger growth in Eastern Europe, where Stora Enso is exposed through its paper packaging operations. Paper volumes to fall by about 10% in 2016 following disposals and structural demand decline and continuing to fall in 2017-2018. S&P expects a structural demand decline of 3%- 5% per year in Europe. S&P assumes a slight price increase on average in 2016, followed by stable to slightly declining prices and that the company's ability to control costs will determine profitability. -- Price pressure for pulp to lead to lower sales and earnings in the biomaterials business segment but EBITDA margins to remain above 24%. New volumes from the Varkaus containerboard mill to boost sales in the packaging business but some price pressure to weaken margins. -- Possible price pressure in consumer paperboard due to temporary overcapacity in Europe. -- Overall group sales to weaken slightly in 2016 and increase slightly from 2017 and onwards. -- EBITDA margins to remain steady in 2016 and improve slightly in 2017 following declining paper contribution and growth in higher margin businesses. -- Lower capital expenditures of about EUR750 million in 2016, dropping to EUR650 million per year over 2017-2020 as the company is now through its large investment phase. -- Dividends to rise in line with dividend policy. Based on these assumptions, S&P arrives at these credit measures: -- FFO to debt to remain at around 25% in 2016, followed by slight improvements from 2017. -- Adjusted debt to EBITDA of about 3.0x. -- Free operating cash flow (FOCF; cash flow after investments) to debt of above 10%. The positive outlook indicates S&P's view of at least a one-in three likelihood of upgrading Stora Enso to 'BB+' in the coming 12 months if S&P was to assess that its business risk profile has strengthened sustainably. S&P expects Stora Enso to maintain a ratio of FFO to debt of above 20% at all times. S&P could revise the outlook to stable if Stora Enso's operational performance weakened, for example due to severe pricing pressure for pulp and paperboard and the Beihai paperboard mill not performing in line with expectations due to slowing economic growth in China. S&P could also revise the outlook to stable if Stora Enso's financial risk profile deteriorated, for example due to large acquisitions or a marked increase in shareholder remuneration, although S&P sees such a scenario as unlikely in the coming two to three years. S&P could raise the rating if Stora Enso establishes a track record of sustained profitability improvement with group EBITDA margins of about 15% going forward. A successful ramp-up of the Beihai paperboard mill and contained downside risk in the paper segment are also factors we consider important for an upgrade. Furthermore, S&P would expect Stora Enso to contain project and execution risks in future expansion projects compared with recent large-scale investments. An upgrade will also hinge on continued cautious dividend policy and maintenance of its stated leverage target. =========== G R E E C E =========== OCEAN RIG: S&P Lowers CCR to 'CCC-' on Potential Debt Restructure ----------------------------------------------------------------- S&P Global Ratings said that it lowered its long-term corporate credit rating on Marshall Islands-domiciled drilling company Ocean Rig UDW Inc. to 'CCC-' from 'CCC+'. The outlook is negative. At the same time, S&P lowered its issue ratings on: -- Drillships Ocean Ventures Inc.'s $1.3 billion term loan B facility to 'CCC-' from 'CCC+'. The '3' recovery rating reflects recovery expectations in the higher half of the 50%-70% range. Drill Rigs Holdings Inc.'s $800 million senior secured notes to 'CCC-' from 'CCC+'. The '3' recovery rating is unchanged, with recovery expectations in the lower half of the 50%-70% range. -- Drillships Financing Holding Inc.'s $1.9 billion term loan B1 facility to 'CCC-' from 'CCC+'. The '3' recovery rating reflects recovery expectations in the higher half of the 50%-70% range. Ocean Rig's $500 million senior unsecured notes due in 2019 to 'CC' from 'CCC-'. The '6' recovery rating is unchanged. The downgrade follows the company's intention to pursue changes in the current capital structure. According to management, the very weak demand for drilling rigs and the current net debt position (as of June 30, 2016 the reported net debt was $3.2 billion), rendered the capital structure unsustainable. S&P understands that some of the alternatives to reduce the overall debt level include reorganization under U.S. bankruptcy laws. Under S&P's criteria, it views a distressed exchange offer as tantamount to default, which will ultimately lead S&P to lower the rating on Ocean Rig to 'SD' (selective default). This would be the case if lenders received less than the original value of the loan--for example, if the tenor were extended without appropriate compensation (maybe through an amendment fee or an adequate interest rate increase), or if the interest or principal were reduced. S&P understands that the company has started the discussions with debt holders. As a result, S&P views a high probability of it lowering the rating to 'SD' in the coming quarters. On the back of the liability management exercise, Ocean Rig recently concluded an agreement with Korean shipyard, Samsung Heavy Industry. Under this agreement, the delivery of the two new drilling rigs (Ocean Rig Santorini and Ocean Rig Crete) will be delayed to June 2018 and January 2019 in return for an immediate payment of about $200 million. As part of the agreement, the parent company will not guarantee future payments, and effectively the delivery of the two drilling rigs would be subject to future market conditions. After the agreement, the company's maintenance will drop to $20 million-$30 million in the coming 12 months, allowing it to generate positive free operating cash flows. In S&P's view, the agreement should allow Ocean Rig to meet all its financial obligations in the coming 12 months, supporting S&P's current less-than-adequate liquidity assessment. S&P has also revised its management and government assessment to weak, reflecting a number of opportunistic transactions that diluted Ocean Rig's cash balance over the last few quarters (including acquiring a rig for $65 million and the buy back of notes maturing in 2019). The negative outlook reflects the risk of Ocean Rig defaulting in the coming months, if it reaches an agreement with its lenders to restructure its debt or filed for Chapter 11. S&P understands that negotiations with some debt holders are undergoing. Moreover, over the long-term, S&P could also consider the company to have defaulted if it breaches its financial covenants, resulting in an acceleration of the debt, or if the company does not secure new contracts while need to meeting its $530 million maturity in the second half of 2017. S&P would likely lower the ratings to 'SD' if Ocean Rig reached an agreement with the lending banks, resulting in a distressed exchange offer. After the completion of such an exchange, S&P would raise the rating on Ocean Rig, taking into account the improved liquidity and more comfortable debt maturity. S&P could take a positive rating action if the outlook for the drilling sector improved and the company decided to cease the discussions over its capital structure. In S&P's view, this scenario should be supported by an improvement in the liquidity position, including sufficient headroom under the covenants to absorb shocks in the market. ============= I R E L A N D ============= DEBENHAMS RETAIL: Exits Examinership, Limerick Store to Stay Open ----------------------------------------------------------------- Nick Rabbitts at Limerick Leader reports that Limerick's branch of Debenhams is set to remain open after its parent company's exit from examinership was approved by the High Court. There were fears for dozens of local jobs in May after an interim examiner was appointed to Debenhams Retail (Ireland), a wholly- owned subsidiary of Debenhams, Limerick Leader notes. But now a scheme, put together by examiner Kieran Wallace of KPMG and agreed by the majority of Debenhams' creditors, was formally approved by Justice Caroline Costello at the High Court in Dublin, Limerick Leader relates. The company was to formally exit examinership Aug. 24, Limerick Leader discloses. Debenhams agreed terms with the US fund Marathon Asset Management, which paved the way for the firm's exit from examinership, Limerick Leader relays. Debenhams Retail (Ireland) Ltd. directly employs 1,400 staff. ========= I T A L Y ========= ASTALDI SPA: S&P Maintains 'B' CCR on CreditWatch Negative ---------------------------------------------------------- S&P Global Ratings maintained its CreditWatch with negative implications on the 'B' long-term corporate credit rating on incorporated civil engineering and construction company Astaldi SpA. The 'B' issue rating on Astaldi's EUR750 million senior unsecured notes remains on CreditWatch negative. The recovery rating on this debt remains unchanged at '4'. S&P's decision to keep Astaldi's ratings on CreditWatch with negative implications follows a continued outflow of working capital in the second quarter of 2016, contrary to S&P's previous expectations that the position would improve. In S&P's view, Astaldi's liquidity remains vulnerable to cash outflows and could further deteriorate over the short term, unless the working capital position improves in the third quarter. At the same time, S&P notes that in July the company successfully reset its financial covenants to a more comfortable level. In the six months to June 2016, net working capital increased by about EUR320 million, because Astaldi invested in several current projects -- including the third bridge over Turkey's Bosphorus, motorways in Russia and Poland, in the absence of higher advance payments under new contracts. "We expect the situation will improve in the second half of the year in line with the seasonal working capital cycle -- a release of funds usually happens in the third and fourth quarters -- and due to expected higher advance payments for a railway tunnel project in Italy. We also assume that working capital management will improve on the back of management's effort to enhance financial discipline and reduce leverage in line with the medium-term business plan that was presented in May 2016. Moreover, in the third quarter Astaldi is due to receive the EUR110 million of cash for the sale of its shares in A4 Holding, an Italian motorway concessions operator, which it closed in May 2016. We understand these funds will go toward repaying short- term debt. As a result, we estimate that at the end of 2016 gross debt and leverage will remain broadly the same as at end- 2015, at about EUR1.95 billion and with adjusted debt to EBITDA of about 5.7x," S&P said. In July, Astaldi agreed with its banks to reset leverage covenants on its EUR500 million revolving credit facility (RCF) to higher thresholds until the final maturity of this line in 2019. S&P forecasts that, at least for the next 12 months, Astaldi will have adequate headroom under these covenants, which in S&P's view has somewhat diminished immediate pressure on the liquidity position. In the first half of 2016, Astaldi continued to grow its backlog by winning about EUR2 billion in new contracts. It also gradually improved profitability by achieving EBITDA margins somewhat above 2015, and completed several important projects in Turkey and Italy on time and on budget. It also signed a bridge agreement with Nalcor Energy regarding the construction of the Muskrat Falls hydroelectric plant in Canada, which has recently experienced some technical difficulties, delays, and cost overruns. The agreement will allow Astaldi to continue work on the project until the end of 2016, when S&P expects the contract cost and timeframe will be reassessed, and a more permanent agreement signed between the parties. S&P don't forecast any further negative impact on Astaldi's profitability or additional working capital outflows in respect of this project. The ratings continue to reflect Astaldi's operations in the cyclical engineering and construction industry; its moderate size by global standards; and its exposure to country risks in emerging markets. Moreover, the company is subject to operating and contract risks and potential execution issues stemming from large projects within its portfolio, as well as from a relatively high proportion of fixed-price contracts in its construction business which account for about half of total contracts, and reduce flexibility. Nevertheless, S&P's view of Astaldi's business risk profile is supported by its solid market position in the transportation infrastructure industry and proven ability to deliver large and technically complex projects, good visibility on revenues thanks to a sizable order backlog in execution (about EUR19 billion in execution as of June 30, 2016), and relatively sound and stable profit margins. "We forecast that Astaldi's financial profile will likely remain highly leveraged over the next couple of years, although we expect credit metrics will gradually improve following management's efforts to increase cash flow generation and working capital discipline and reduce gross debt. We forecast that 2016 free operating cash flow (FOCF) will still be negative due to substantial investment in working capital and concession projects. From 2017, however, we expect it to become at least break-even. Astaldi is also continuing with its plans to focus on construction activity and reduce its involvement in the concession business, which require large capital investment. Apart from the share in A4 Holding that it sold in May, Astaldi plans to dispose of other concession assets in Chile, Italy, and Turkey in 2017-2019 for a total estimated value of about EUR600 million-EUR700 million, and to use the proceeds to repay debt. We currently do not factor these transactions into our base case because the exact timing and the amounts are uncertain and, in our view, remain subject to execution risks," S&P said. S&P's base-case scenario assumes: -- Revenues to increase by about 3.5% in 2016 and 5.0%-5.5% per year in 2017-2018, on the back of the existing backlog and new order intake; -- Adjusted EBITDA margin to gradually improve to about 10.5% in 2016-2017, compared with 10.2% in 2015; -- A nonseasonal outflow of working capital of about EUR110 million in 2016 due to investment into new projects, followed by some release of funds in 2017, as the company implements its plans to improve working capital management; -- Capital expenditure (capex) and investments in concessions totaling about EUR110 million-EUR160 million per year; -- Dividends of about EUR20 million per year; and -- EUR110 million to be received in the second half of 2016 for the sale of A4 Holding. Based on these assumptions, S&P arrives at these credit measures: -- Negative FOCF in 2016, before breakeven in 2017; -- Weighted-average funds from operations (FFO) to debt of about 7.5%; and -- Adjusted debt to EBITDA of about 5.3x. The CreditWatch negative placement reflects a one-in-two probability that S&P may lower the rating by one or more notches if the company does not restore its working capital position in the third quarter of 2016. S&P aims to resolve the CreditWatch once S&P reviews the third-quarter financial results and reassess the company's liquidity position. S&P could lower the rating by one or more notches if the net working capital position does not improve, leading to a material deficit of liquidity sources versus uses and increased exposure to short-term refinancing risks. Any deterioration in borrowing terms on the local market, or increasing uncertainty regarding payments on any of its contracts, especially in the light of geopolitical risks in Turkey, could also lead S&P to downgrade Astaldi. S&P could remove the CreditWatch negative placement and affirm the rating if S&P observed a cash inflow from collection of due contract payments and advances on new projects, as well as the cash-in for the A4 Holding sale. ===================== N E T H E R L A N D S ===================== MAXEDA DIY: S&P Lowers Corporate Credit Rating to 'B-' ------------------------------------------------------ S&P Global Ratings lowered to 'B-' from 'B' its corporate credit rating on Netherlands-based do-it-yourself (DIY) retailer Maxeda DIY B.V., which operates across the Benelux region. At the same time, S&P also lowered the issue rating to 'B-' from 'B' on Maxeda's senior secured term facilities, which comprise a EUR20 million revolving credit facility (RCF) and EUR484 million of term loans. The recovery rating on the debt is unchanged at '4', indicating S&P's expectations of recovery prospects in the higher half of the 30%-50% range. The downgrades reflect S&P's view that the prospect of Maxeda experiencing a quick recovery, which S&P had factored into the previous rating, has diminished due to S&P's expectations of a more prolonged period of soft operating conditions. S&P now expects management's turnaround plan to deliver a slower recovery, and have therefore revised S&P's assessment of Maxeda's business risk profile to weak from fair, albeit at the higher end of the category. S&P anticipates that Maxeda will maintain its position as the leading DIY retailer in Belgium and No. 2 in The Netherlands. That said, S&P expects competition will remain heightened and will be exacerbated by the continued consumer shift to online. As a result, S&P expects margins to remain under pressure over the next two years, during which Maxeda will face continued additional cash flow pressure from business restructuring costs and elevated capital expenditure (capex). At the same time, S&P do not expect the company to derive the full benefit of the operational efficiencies created by management's turnaround plan in the near term. Maxeda's modest overall scale and limited diversity also weigh on S&P's assessment of its business risk. "We continue to view Maxeda's financial risk profile as highly leveraged. In the past 12 months, the company successfully completed an extension of its senior loan facilities and reset its financial covenants. During the period, all subordinated debt was converted to equity, such that subordinated lenders became controlling shareholders in Maxeda's indirect parent, Maxeda DIY Group B.V. We expect credit measures will improve in the fiscal year ending Jan. 31, 2017, with adjusted debt to EBITDA of about 5.5x and funds from operations (FFO) to debt of about 10%. However, in our view, Maxeda's financial risk profile will continue to be burdened by negative free operating cash flow (FOCF) stemming from continued market pressures coupled with cost inflation, ongoing restructuring costs, and elevated capex," S&P said. In addition, S&P forecasts that Maxeda's EBITDAR (EBITDA before rent costs) coverage will remain at about 1.3x in fiscal 2017, which places Maxeda at the weaker end of peers with a highly leveraged financial risk profile. S&P's base case also anticipates tightening covenant headroom against step-down covenants, particularly from June 2017. S&P's base-case scenario assumes: -- Declining GDP growth in both Belgium and the Netherlands, with its forecast GDP of 1.4% in 2016 and 1.1% in 2017 for Belgium; and 1.8% in 2016 and 1.4% in 2017 for The Netherlands; -- Relatively flat revenue growth in 2017 and 2018 of 1%-2%, supported by selective store expansion in existing markets; -- EBITDA margin expansion of 50-100 basis points over the next two years, fueled by continued realization of cost improvements together with declining restructuring, transformation, and exceptional costs; and -- Capex of EUR35 million-EUR45 million per year. Based on these assumptions, and following the expected completion of the refinancing transaction, S&P arrives at these credit measures over 2016 and 2017: -- FFO to debt of 7%-12%; -- Adjusted debt to EBITDA of between 5.0x-5.5x; -- EBITDAR coverage (which we use as the key supplementary ratio) of 1.2x-1.4x; and -- FOCF to remain negative in the near term. The stable outlook reflects S&P's view that the company will continue to execute its turnaround plan, albeit over a prolonged recovery period. It also reflects S&P's expectation that Maxeda will appropriately manage tightening covenant headroom and maintain its current sufficient cash position despite the challenging trading environment. S&P could lower the ratings if the company's liquidity were to deteriorate, which is likely to be reflected in an accelerated reduction of its cash balance. This scenario could occur as a result of a prolonged period of weak trading conditions and could be evidenced by the company's EBITDAR coverage ratio falling below 1x. Any tightening covenant pressure, or if S&P was to believe the company's capital structure were to become unsustainable, S&P would also likely place further pressure on the rating. For S&P to raise the rating, it would need to see a material improvement in business conditions that led to sustainably stronger financial metrics and positive FOCF, with Maxeda maintaining adequate liquidity. This could be evidenced by the strengthening of the EBITDAR coverage ratio toward 1.5x. A meaningful reduction in the company's debt would also support the likelihood of an upgrade. ============= R O M A N I A ============= OLTCHIM SA: Returns to Profit, Creditors Put Business Up for Sale ----------------------------------------------------------------- Andrew Noel at Bloomberg News reports that Oltchim SA's creditors are putting Romania's largest chemical maker up for sale after the company refinanced debt and returned to profit. According to Bloomberg, a statement said the company is forecasting adjusted earnings before interest, taxes, depreciation and amortization of EUR23.9 million (US$27 million) this year, compared with EUR17.7 million in 2015. AT Kearney is advising on the sale, Bloomberg discloses. After years of losses and slipping into insolvency in 2013, Oltchim had to reinvent itself, Bloomberg recounts. It mothballed sites for petrochemical and polyvinyl-chloride plastic, or PVC, and switched to propylene-based chemicals -- used in everything from lubricants and brake fluid to antifreeze -- where demand and margins are more resilient, Bloomberg relays. Oltchim ran into financial difficulty in late 2008, when its source of ethylene abruptly ended with the closure of a nearby refinery, Bloomberg notes. "Operating a business under insolvency is not overly attractive for customers," Bloomberg quotes Joachim von Hoyningen-Huene, who oversees AT Kearney's chemical practice, as saying in an emailed response to questions on Aug. 24. "Under new ownership I see win-win opportunities to improve the commercial arrangements with customers with better payment terms at improved margins. Also I expect a new strategic owner to quickly identify operational streamlining opportunities." According to Bloomberg, people with knowledge of the situation said on Aug. 23 potential bidders have until Sept. 30 to express an interest in all or part of the company, and a sale could be completed by year-end. Insolvency administrators BDO and Rominsolv currently help operate the company alongside its management team, Bloomberg relays. As well as BASF and Covestro, the asset may attract Asian competitors and private equity firms looking to further streamline the company, Bloomberg states. Oltchim SA is a Romanian chemical producer. Romania owns 54.8% of the company. ========= S P A I N ========= ABENGOA SA: Sells Five U.S. Ethanol Plants for US$357 Million ------------------------------------------------------------- Patrick Fitzgerald at The Wall Street Journal reports that Abengoa SA has sold five of its Midwestern U.S. ethanol plants for US$357 million as the company looks to stave off what would be Spain's largest-ever corporate bankruptcy. Green Plains Inc. of Omaha, Neb., which operates 14 plants and has an ethanol-marketing unit, is paying US$200 million for Abengoa plants in Mount Vernon, Ind., and Madison, Ill., the Journal relays, citing papers filed in U.S. Bankruptcy Court in St. Louis. Green Plains also topped Houston-based BioUrja Trading LLC, an ethanol-marketing firm that doesn't have production operations, for Abengoa's York, Neb. plant with a $37.4 million bid at bankruptcy auction on Aug. 22, the Journal discloses. According to the Journal, an affiliate of plant operator KAAPA Ethanol LLC of Minden, Neb., is paying US$115 million for Abengoa's Ravenna, Neb. plant. And ICM Inc. is picking up Abengoa's shuttered plant in Colwich, Kan., for US$3.15 million, the Journal states. The renewable energy company will seek U.S. court approval of the sales at an Aug. 29 hearing in St. Louis, the Journal says. Abengoa has been negotiating with creditors since November to avoid becoming Spain's largest bankruptcy, the Journal relays. 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. CAJA LABORAL: Moody's Withdraws Ba1 Deposit Ratings --------------------------------------------------- Moody's Investors Service has withdrawn the Ba1/Not-Prime long- term and short-term deposit ratings of Caja Laboral Popular Coop. de Credito. At the same time, Moody's has withdrawn: (1) the bank's baseline credit assessment (BCA) and adjusted BCA of ba1; and (2) the bank's long-term and short-term counterparty risk assessment of Baa2(cr)/P-2(cr). At the time of withdrawal, the long-term deposit ratings carried a stable outlook. RATINGS RATIONALE Moody's has withdrawn the rating for its own business reasons. =========================== U N I T E D K I N G D O M =========================== FOUR SEASONS: In Talks with Lenders to Resolve Long-Term Future --------------------------------------------------------------- Gill Plimmer at The Financial Times reports that Four Seasons, the troubled private equity-owned care home group, is holding talks with lenders as it aims to resolve the long-term future of the business by December. In its second-quarter results, Britain's biggest care homeowner, which houses 20,000 mostly elderly residents, said earnings before interest, tax, and depreciation rose 25% to GBP13.6 million, its best quarterly performance since 2014, the FT relates. A pre-tax loss of GBP25 million in the three months to the end of June narrowed by GBP4 million from the prior quarter, the FT notes. However, the group remains weighed down by loan repayments after net debt grew from GBP510 million in the last quarter to GBP527.2 million in June, the FT states. According to the FT, the group has annual interest payments of GBP50 million, meaning it is making less money than it needs to service bondholders after being bought in a debt-fuelled GBP825 million deal by Guy Hands' Terra Firma in 2012. The interest is due in two tranches in June and December, the FT discloses. Despite the operational improvements, Nick Hood, analyst at consultancy Opus, as cited by the FT, said it was hard to see how Four Seasons could "avoid ending up in the hands of its lenders". "This is a business that is drowning in debt, nowhere near covering the interest burden and will need the mother of all restructurings very soon," the FT quotes Mr. Hood as saying. Robbie Barr, chairman of Four Seasons, said the group continues to have "sufficient financing for the medium term", the FT relates. But the company is in negotiations with "stakeholders, noteholders and landlords" to resolve the long-term future of the business, he added, and hopes to reach an agreement by the "end of the calendar year", the FT notes. INNOVIA GROUP: S&P Affirms 'B' CCR & Revises Outlook to Positive ---------------------------------------------------------------- S&P Global Ratings said it has revised the outlook on U.K.-based polymer film and banknote substrate manufacturer Innovia Group (Holding 3) Ltd. to positive from stable. At the same time, S&P affirmed its 'B' long-term corporate credit rating and 'B' issue rating on the group's senior secured notes, with the recovery rating unchanged at '4'. The outlook revision follows Innovia's announcement that it is redeeming EUR80 million of its senior secured notes, which is expected to be completed on Aug. 26, 2016. The redemption was triggered by the sale of its cellophane business for EUR75 million. S&P views the decision to use the proceeds to repay debt as positive with regards to financial policy, given the limited take-up of the mandatory notes offer. S&P also views the sale of the cellophane business as broadly positive for business risk because, following the sale, S&P forecasts that fully S&P Global Ratings-adjusted EBITDA margins will markedly improve to about 19% from 12% in 2015 and, to a more limited extent, improved cash flow generation. Further supporting S&P's rating is the very strong performance the group recorded in the first half of 2016. While S&P forecasts slightly lower earnings in the second half of the year as seasonality and raw material pass-through mechanisms have an impact, S&P has nevertheless revised upward its earnings forecasts. Looking further forward, S&P expects the utilization of recent new capacity additions, as well as new banknote contracts to provide further incremental earnings, while reduced one-off costs and capital expenditure (capex) should contribute to a steady improvement in credit metrics. As a result, S&P now forecasts S&P Global Ratings-adjusted leverage to drop toward 4.4x over the next 12-24 months from 6.7x in 2015, with further improvements thereafter. S&P sees the evolution of both financial policy and operating performance as important contributing factors to the potential for an upgrade over the next few quarters. S&P views the decision to pre-emptively pay down debt as positive with regards to financial policy, and recent comments made during the company's second quarter results about targeting further deleveraging provide S&P with some testament that the risk of releveraging over 5x could be low. Nevertheless, in the absence of a clearly communicated financial policy target, S&P would look toward some track record of maintaining lower leverage in order to raise the ratings. Any potential upgrade would also require evidence that recent improvements in operating performance and credit metrics can be sustained. Innovia's earnings profile to date has been characterized by a relatively high degree of volatility due to the group's small absolute size, the lumpy nature of banknote contracts, volatile input costs, and lags in being able to pass these costs onto customers. That said, management argues that a healthy order book and operational improvements should result in a reduced level of volatility going forward, of which there is some evidence in recent quarters. Innovia's fair business risk profile continues to reflect the group's relatively volatile profitability in polymer film products, and limited size compared to its rated peers -- with revenues of about EUR400 million following the sale of its cellophane business. Innovia's strong competitive positions in niche, fragmented markets, and relatively stable end markets, partly mitigate these weaknesses. A high proportion of the group's contracts with its end users include clauses that enable it to pass through any increase in the cost of raw materials, providing it with some protection from volatile input costs. S&P also recognizes Innovia's relatively strong product and geographic diversity as the group is present in over 100 countries. In S&P's base case, it assumes: -- Revenues reducing by 10%-13% in 2016 and 2017, due predominantly to the sale of the cellophane business on June 30, 2016, and lower raw material costs that are expected to be passed through via reduced prices. S&P forecasts underlying organic volume growth in low-single digits until significant new security contracts ramp up in 2018. -- Significant improvements in margins as a result of operating improvements, fewer one-off costs, and the sale of the low margin (4.6%) cellophane division. S&P forecasts adjusted EBITDA margins to be sustained at about 19% going forward. -- Capex reducing to EUR15 million-EUR20 million per year from EUR42 million in 2015 following the completion of capacity expansion projects. Based on these assumptions, S&P arrives at these credit measures: -- Adjusted leverage to drop to about 4.4x over the next 12-24 months from 6.7x in 2015. -- Funds from operations (FFO) to debt improving to about 16% in 2016 and 2017, up from 7.1% in 2015. The positive outlook reflects S&P's view that S&P could raise the ratings by one notch over the next 6-12 months if S&P believes that Innovia will maintain permanently reduced leverage, and that the risk of releveraging is low. S&P could upgrade Innovia to 'B+' if the company is able to demonstrate sustainably reduced leverage at comfortably less than 5x, and an FFO-to-debt ratio of above 12% -- through improved operating performance and reduced earnings volatility -- while supported by less aggressive financial policies that target further deleveraging. S&P could revise the outlook to stable if it is no longer convinced that Innovia's shareholders are targeting a less aggressive capital structure, or if weaker or more volatile earnings resulted in credit metrics returning to those consistent with a highly leveraged financial risk profile. MASCOTT CONSTRUCTION: Gareth Loye Acquires Assets & Equipment ------------------------------------------------------------- Margaret Canning at Belfast Telegraph reports that entrepreneur Gareth Loye has snapped up the assets and equipment of insolvent building firm Mascott Construction Ltd. It's understood his firm, M&M Contractors, paid a "substantial" sum to buy parts of the Belfast-based Mascott business, which went into administration earlier this month with the loss of around 30 jobs, Belfast Telegraph relates. M&M, based in Belfast, offers telecommunication and electrical infrastructures in civil engineering and construction projects, Belfast Telegraph discloses. Mascott Construction remains in administration, with the deal relating only to assets and equipment, Belfast Telegraph states. Mr. Loye had set up new company, Mascott Construction Europe, in the days after administrators EY were appointed by a lender to run the firm -- suggesting the name could be revived under his ownership, Belfast Telegraph relays. According to Belfast Telegraph, a spokesman for M&M said on Aug. 23 it had bought "a portion of Mascott Construction Ltd's assets and equipment". "The company is also pleased to have secured the assignment of some of the company's existing contracts and looks forward to completing these projects in the coming months/years," Belfast Telegraph quotes the spokesman as saying. But the firm would not say which contracts had been assigned, Belfast Telegraph notes. Mascott Construction was set up in 1998. TRAVELPORT LIMITED: Moody's Affirms B2 CFR; Outlook Now Positive ---------------------------------------------------------------- Moody's Investors Service has changed the outlook on the ratings of UK-based travel commerce platform business Travelport Limited to positive from stable. The change in outlook takes into account these factors: -- Financial policies targeting debt reduction -- Substantial deleveraging in 2016 and expectations that Moody's-adjusted leverage will reduce towards 5x in the next 12-18 months -- Growth momentum driven by a stable air travel base and growth from airline merchandising solutions, hotel and other travel and payments services -- Solid cash generation At the same time, Moody's has affirmed Travelport's corporate family rating (CFR) of B2, and the B2 instrument ratings on the USD2.3 billion senior secured term loan maturing in 2021 and USD125 million senior secured revolving credit facility maturing in 2019, issued by Travelport Finance (Luxembourg) S.a.r.l. In addition Moody's has affirmed Travelport's probability of default rating (PDR) of B3-PD. RATINGS RATIONALE Travelport operates a global distribution system (GDS) for the travel industry and is the third largest of the main three global operators measured by share of global air bookings, alongside Amadeus IT Holding, S.A. (Amadeus - Baa2, stable) and Sabre Holdings Corporation (Sabre - Ba2, stable). Whilst its core business is in air travel this provides a solid platform for the sale of merchandising solutions, hotels and other travel inventory and other services to travel providers, through which the company has a solid track record of revenue growth. Recent trading is strong as the effect of adverse changes in the legacy Orbitz contract unwinds and the underlying business demonstrates solid growth momentum. In addition the company has a financial policy in place focused on deleveraging with limited acquisitions and no material deviations in historical dividend distributions levels are expected. As a result Moody's expects leverage to reduce towards 5.0x on a Moody's-adjusted basis within the next 12-18 months. Counter-balancing these positive characteristics, Travelport operates in a competitive market and it has gradually lost market share in air travel, principally to Amadeus. More recently this has been due mainly to the multi-GDS renewal of a previously sole-source legacy agreement with Orbitz Worldwide in 2014. This has affected market share in the United States, whilst non-US air share, representing over 70% of travel commerce platform revenues, has remained more stable. Travelport does not have the same high level of resilient airline technology services revenues as Sabre or Amadeus and relies to a greater extent on its ability to upsell additional products and services. In addition the industry is at risk of disintermediation through new technologies or through travellers' use of airlines' own websites. However the pace of market change has been slow with high airline retention rates and Travelport has maintained broadly flat air travel volumes as gradual market share declines are offset by underlying market growth. Rating Outlook The positive outlook reflects Moody's expectations that Travelport will continue to grow its revenues and EBITDA, with positive cash generation and debt repayments, leading to continued deleveraging. What Could Change the Rating - Up The rating could be upgraded if Travelport succeeds in bringing leverage down sustainably below 5.0x Moody's-adjusted debt/EBITDA, whilst generating positive free cash flow. What Could Change the Rating - Down Negative pressure would likely be exerted on the rating should leverage increase sustainably above 6.0x debt/EBITDA on a Moody's-adjusted basis, if cash flows were to trend towards zero or if any liquidity concerns arise. List of affected ratings: Affirmations: Issuer: Travelport Limited Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B3-PD Issuer: Travelport Finance (Luxembourg) S.a.r.l. BACKED Senior Secured Bank Credit Facility, Affirmed B2 Outlook Actions: Issuer: Travelport Limited Outlook, Changed To Positive From Stable Issuer: Travelport Finance (Luxembourg) S.a.r.l. Outlook, Changed To Positive From Stable The principal methodology used in these ratings was Business and Consumer Service Industry published in December 2014. ********* 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, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2016. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. * * * End of Transmission * * *