/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/170112.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, January 12, 2017, Vol. 18, No. 009 Headlines C Z E C H R E P U B L I C OKD: Czech State Firm Bids to Take Over Coal Mining Company G E R M A N Y BREMER LANDESBANK: Moody's Raises Issuer Rating From Ba1 I R E L A N D AVOCA CAPITAL: Fitch Assigns Final 'B-' Rating to Cl. F-R Notes HARVEST CLO XII: S&P Affirms B- Rating on Class F Notes I T A L Y INTERBANCA: Moody's Extends Review on B2 Ratings for Downgrade INTESA SANPAOLO: S&P Assigns B+ Rating to EUR1.25BB Tier 1 Notes S L O V E N I A TELEKOM SLOVENIJE: S&P Assigns 'BB+' CCR on Solid Credit Metrics U K R A I N E BANK KHRESCHATYK: Repays UAH190.5MM Debt on NBU Refinancing Loan PLATINUM BANK: Declared Insolvent by Nat'l Bank of Ukraine U N I T E D K I N G D O M BHS GROUP: DLA Piper Earns GBP3 Million as Advisors, Report Shows COVPRESS: Liberty House Rescues Business Out of Administration FORMAL AFFAIR: In Administration; Shuts All Stores for Good SCHIVO NI: Duff & Phelps Appointed as Administrator TAL LTD: Enters Administration, 50 Jobs at Risk * UK: 2,679 Companies in Travel Sector in Significant Distress ********* =========================== C Z E C H R E P U B L I C =========================== OKD: Czech State Firm Bids to Take Over Coal Mining Company ----------------------------------------------------------- Chris Johnstone at radio.cz reports that the Czech state is in the running to buy up the country's sole hard coal, or coking coal, company, OKD, which is now under insolvency administration. A bid of CZK1.0 was submitted by the state company Diamo on Dec. 16, 2016. That was one of the main takeaways from a press conference by Minister of Industry and Trade Jan Mladek on Dec. 20 in response to the demand from OKD for a chunk of state aid, this time totalling CZK723 million, radio.cz relates. An operating loan of CZK700 million was already made in the middle of the year to keep the mining company going. radio.cz says Diamo is, apparently, one of around 10 bidders which has so far expressed interest in taking over OKD to the insolvency manager, Lee Louda. According to radio.cz, the business daily Hospodarske Noviny reported Dec. 21 that a series of Czech coal company bosses who previously expressed interest in a buy out are not among the list of 10 so far. Minister Mladek, and his stand was echoed by finance minister Andrej Babis, argued that Diamo's bid for OKD would cover the pay off costs of miners and the environmental costs of closing mines, the report says. The Paskov mine will be the first to close at the end of March this year with the loss of around 1,700 jobs, radio.cz notes. Any state financing in the meantime would just worsen Diamo's prospects in a possible takeover and improve the chances of a private investor, he added. radio.cz relates that the Czech state is supporting what it describes as a soft landing for the OKD mines in the far east of the country. It would like the remainder of them to stay operating until at least 2020 and hopefully for a few years longer until 2023 to buy time for the region to adapt to the loss of its biggest employer with around 12,000 direct jobs at the mines. According to radio.cz, OKD outlined in a letter to minister Mladek that around a third of the sought after CZK723 million is needed to meet the social costs of closing mines and laying off workers. The remaining CZK477 million will be needed for shutting down the mines themselves and avoiding the likelihood of environment risks and pollution. A total of CZK30 million is needed to be set aside every year for the conservation of the Frenstat mine where there are massive potential reserves of coal but no decision yet to exploit them, radio.cz discloses. OKD's current management would like to spin off both the Paskov and Frenstat mines into a separate company so that their costs would no longer impinge upon the operational mines, adds radio.cz. OKD is the only producer of hard coal (bituminous coal) in the Czech Republic. Its coal is mined in the southern part of the Upper-Silesian Coal Basin -- in the Ostrava-Karvina coal district. OKD is a subsidiary of New World Resources N.V. On May 3, 2016, OKD filed an insolvency petition with the Czech courts after failing to secure a vital cash injection needed to continue trading and pay its 13,000 workers, The Financial Time reported. ============= G E R M A N Y ============= BREMER LANDESBANK: Moody's Raises Issuer Rating From Ba1 -------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Bremer Landesbank Kreditanstalt Oldenburg GZ (BremerLB), including the bank's long-term deposit ratings to Baa1 from Baa3, its long-term senior unsecured debt and issuer ratings to Baa2 from Ba1, as well as its short-term debt programme and deposit ratings to P-2 from P-3. Concurrently, the rating agency upgraded BremerLB's Adjusted Baseline Credit Assessment (Adjusted BCA) to ba2 from b1. Moody's also upgraded the bank's Counterparty Risk (CR) Assessment to Baa1(cr)/P-2(cr) from Baa3(cr)/P-3(cr) and its subordinated medium-term note program rating to (P)Ba3 from (P)B2. The outlook on the bank's long-term ratings is now developing. BremerLB's BCA of caa2 was unaffected by today's rating actions. These rating actions were prompted by the effective full transfer of BremerLB's ownership to its parent Norddeutsche Landesbank GZ (NORD/LB; deposits A3 negative, senior debt Baa1 negative, BCA ba3), effective January 1, 2017, and by the rating agency's expectation that a control agreement with NORD/LB will, from 2017 onwards, ensure closer integration of BremerLB into the group, as well as the absorption of future potential losses of BremerLB by its parent. RATINGS RATIONALE UPGRADE OF BREMERLB'S ADJUSTED BCA AND LONG-TERM RATINGS Moody's has upgraded the long-term debt, issuer, and deposit ratings of BremerLB following the full ownership transfer to NORD/LB. The upgrade of BremerLB's Adjusted BCA to ba2 from b1 reflects Moody's view that BremerLB now benefits from "affiliate-backing" by its parent, including any potential support by the institutional protection scheme of Sparkassen- Finanzgruppe (Corporate Family Rating Aa2 stable, BCA a2). Moody's concept of "affiliate-backing" is the strongest form of affiliate support in the absence of a guarantee. The rating agency's assessment adds six notches of uplift to BremerLB's Adjusted BCA from its BCA. Other rating input factors, i.e., the result of Moody's Advanced Loss Given Failure (LGF) analysis and government support, remain unchanged, adding a combined three and four notches, respectively, to BremerLB's senior unsecured debt and deposit ratings. DEVELOPING OUTLOOK ON BREMERLB'S LONG-TERM RATINGS The developing outlook on BremerLB's long-term debt, issuer, and deposit ratings reflects the simultaneous presence of both possible upward and downward ratings pressures during a period of ongoing restructuring of the entity, aiming at addressing current solvency risks and a closer integration of the bank into NORD/LB group. Positive pressure reflects the benefits of this strategy. However, negative pressure on BremerLB's long-term ratings and Adjusted BCA are driven by a combination of the negative outlook on the long-term ratings of its parent and affiliate support provider NORD/LB as well as uncertainty at this stage how swiftly BremerLB's intrinsic challenges and a closer integration into the group can effectively be addressed. WHAT COULD CHANGE THE RATING - UP BremerLB's debt and deposit ratings, which carry a developing outlook, may be upgraded by one notch if the bank's BCA is upgraded, while the Adjusted BCA of NORD/LB remains at least at the current level of ba1. Upward pressure on BremerLB's BCA could result primarily from a sizable de-risking and/or recapitalisation of the bank that would minimise the risk of regulatory intervention. WHAT COULD CHANGE THE RATING - DOWN BremerLB's ratings may be downgraded if a recovery of the bank's standalone credit profile takes longer than currently anticipated, while NORD/LB's ba3 BCA and ba1 Adjusted BCA were downgraded by one notch, driven by further declining freight rates coupled with a lack of progress by NORD/LB in reducing its shipping exposures towards its medium-term target of EUR12-14 billion. Furthermore, the long-term debt and deposit ratings of NORD/LB and BremerLB may be downgraded if, at the group level, the amount of equal-ranking or subordinated debt for an individual debt class were to decline beyond current expectations, leading to a less favorable outcome under Moody's Advanced LGF analysis. LIST OF AFFECTED RATINGS Issuer: Bremer Landesbank Kreditanstalt Oldenburg GZ The following ratings were upgraded: Adjusted Baseline Credit Assessment, to ba2 from b1 LT Counterparty Risk Assessment, to Baa1(cr) from Baa3(cr) ST Counterparty Risk Assessment, to P-2(cr) from P-3(cr) LT Issuer Rating (Foreign), to Baa2 from Ba1, Outlook changed to Developing from Ratings under Review LT Bank Deposits (Local & Foreign), to Baa1 from Baa3, Outlook changed to Developing from Ratings under Review ST Banks Deposits Rating (Local & Foreign), to P-2 from P-3 Senior Unsecured (Local), to Baa2 from Ba1, Outlook changed to Developing from Ratings under Review Senior Unsecured MTN (Local), to (P)Baa2 from (P)Ba1 Subordinate MTN (Local), to (P)Ba3 from (P)B2 Other Short Term (Local), to (P)P-2 from (P)P-3 Commercial Paper (Local), to P-2 from P-3 Outlook action: Outlook changed to Developing from Ratings Under Review ============= I R E L A N D ============= AVOCA CAPITAL: Fitch Assigns Final 'B-' Rating to Cl. F-R Notes --------------------------------------------------------------- Fitch Ratings has assigned Avoca Capital CLO X DAC refinanced notes final ratings, as: Class A-R: 'AAAsf'; Outlook Stable Class B-R: 'AAsf'; Outlook Stable Class C-R: 'Asf'; Outlook Stable Class D-R: 'BBBsf'; Outlook Stable Class E-R: 'BBsf'; Outlook Stable Class F-R: 'B-sf'; Outlook Stable Subordinated notes: not rated The assignment of the final ratings is contingent on the receipt of final documents conforming to information already reviewed. Avoca Capital CLO X DAC is a cash flow collateralized loan obligation (CLO). The transaction closed in 2013 but was not rated by Fitch at the time. The notes were fully redeemed on Dec. 20, 2016, and on the same date new notes were issued (refinancing). The proceeds of this issuance were used to redeem the old notes. The refinanced CLO envisages a further four-year reinvestment period with a new identified portfolio that will mainly comprise the assets currently in the existing portfolio, as modified by sales and purchases made by the manager until the effective date in March 2017. The portfolio is managed by KKR Credit Advisors (Ireland). KEY RATING DRIVERS Sufficient Credit Enhancement: Available credit enhancement plus excess spread is sufficient to protect against portfolio default and recovery rate projections in the relevant rating stress scenario. For the class D and class F notes, the cash flow modeling indicates minor shortfalls in a few scenarios of Fitch's matrix. However, Fitch deems these immaterial. 'B+'/'B' Portfolio Credit Quality Fitch assesses the average credit quality of obligors in the 'B+'/'B' range. The agency has public ratings or credit opinions on all the obligors in the identified portfolio (outstanding portfolio at the latest payment date excluding identified sales and unidentified purchases before the effective date). The weighted average rating factor of the identified portfolio is 31.1. High Expected Recoveries At least 90% of the portfolio will comprise senior secured loans and bonds. The weighted average recovery rate of the identified portfolio is 70.6%. Payment Frequency Switch The notes pay quarterly, while the portfolio assets can be reset to semi-annual from quarterly or monthly. The transaction has an interest-smoothing account but no liquidity facility. A liquidity stress for the non-deferrable class A and B notes, stemming from a large proportion of assets potentially resetting to semi-annual in any one quarter, is addressed by switching the payment frequency of the notes to semi-annual in such a scenario, subject to certain conditions. Limited Interest Rate Risk Exposure Between 0% and 7.5% of the portfolio can be invested in fixed- rate assets, while all the liabilities pay a floating-rate coupon. Fitch modelled both 0% and 7.5% fixed-rate buckets and found that the rated notes can withstand the interest rate mismatch associated with each scenario. At closing the issuer purchased an interest rate cap to hedge the transaction again rising interest rates. The notional of the cap is EUR19 mil. (representing 6.3% of the target par amount) and the strike rate is 4%. The cap will expire in January 2023. Documentation Amendments The transaction documents may be amended subject to rating agency confirmation or noteholder approval. Where rating agency confirmation relates to risk factors, Fitch will analyze the proposed change and may provide a rating action commentary if the change has a negative impact on the ratings. Such amendments may delay the repayment of the notes as long as Fitch's analysis confirms the expected repayment of principal at the legal final maturity. If in the agency's opinion the amendment is risk-neutral from a rating perspective Fitch may decline to comment. Noteholders should be aware that the structure considers the confirmation to be given if Fitch declines to comment. RATING SENSITIVITIES A 25% increase in the obligor default probability would lead to a downgrade of up to two notches for the rated notes. A 25% reduction in expected recovery rates would lead to a downgrade of up to two notches for the rated notes. HARVEST CLO XII: S&P Affirms B- Rating on Class F Notes ------------------------------------------------------- S&P Global Ratings affirmed its credit ratings on Harvest CLO XII Ltd.'s class A-1, A-2, B-1, B-2, C, D, E, and F notes. The affirmations follow S&P's assessment of the transaction's performance using data from the November 2016 trustee report. S&P performed credit and cash flow analysis and applied its current counterparty criteria to assess the support that each participant provides to the transaction. Taking into account the scheduled end of the reinvestment period, S&P subjected the capital structure to a cash flow analysis to determine the break-even default rate (BDR) for each rated class of notes at each rating level. The BDR represents S&P's estimate of the maximum level of gross defaults, based on its stress assumptions, that a tranche can withstand and still pay interest and fully repay principal to the noteholders. In S&P's analysis, it used the reported portfolio balance that S&P considered to be performing (EUR402.96 million), the weighted-average spread (4.79%), and the weighted-average recovery rates for the portfolio. In S&P's analysis, it considered the increased credit enhancement available to the outstanding classes of notes. S&P's review of the transaction highlights that the available credit enhancement for all of the classes of notes has increased marginally since S&P's 2015 review. S&P incorporated various cash flow stress scenarios using its standard default patterns and timings for each rating category assumed for each class of notes, combined with different interest stress scenarios as outlined in S&P's corporate cash flow collateralized debt obligation (CDO) criteria. Following the application of S&P's structured finance ratings above the sovereign criteria, it considers the transaction's exposure to country risk to be limited at the assigned rating levels, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in S&P's criteria. S&P also applied our supplemental tests, as outlined in its corporate cash flow CDO criteria, and found that these did not constrain the modeled rating results for any tranche. Overall, the results of S&P's credit and cash flow analysis are commensurate with the currently assigned ratings. Harvest CLO XII is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans granted to primarily speculative-grade corporate firms. The transaction closed in August 2015, with the reinvestment period due to end in August 2019. RATINGS LIST Ratings Affirmed Harvest CLO XII Ltd. EUR413 Million Senior Secured Floating- And Fixed-Rate Deferrable Notes Class Rating A-1 AAA (sf) A-2 AAA (sf) B-1 AA (sf) B-2 AA (sf) C A (sf) D BBB (sf) E BB (sf) F B- (sf) ========= I T A L Y ========= INTERBANCA: Moody's Extends Review on B2 Ratings for Downgrade -------------------------------------------------------------- Moody's Investors Service has extended the review for downgrade on GE Capital Interbanca S.p.A.'s (Interbanca) B2 long-term deposit ratings, the review for upgrade of the caa1 baseline credit assessment (BCA) and adjusted BCA, and the review with direction uncertain of the bank's B1(cr) long-term Counterparty Risk Assessment (CR Assessment). The Not Prime short-term deposit rating, and the Not Prime(cr) short-term CR Assessment are not affected. RATINGS RATIONALE Moody's said that, during the extended review, it will continue analysing Interbanca's credit profile following the acquisition by Banca IFIS (unrated), which concluded on November 30, 2016. In particular, the rating agency will need to gather additional details on the funding structure of Interbanca and Banca IFIS following the acquisition. Interbanca's funding structure affects several aspects of Moody's analysis: profitability, affiliate support, and loss-given-failure analysis. The review on Interbanca's ratings initiated on September 6, 2016, following the announcement of the acquisition of Interbanca by Banca IFIS. FACTORS THAT COULD LEAD TO AN UPGRADE Interbanca's BCA could be upgraded following a substantial reduction of the very high stock of problem loans and a return to a sustainable level of profitability, provided that the bank's capitalisation were maintained. The adjusted BCA could be upgraded following an upgrade of the BCA; the adjusted BCA could also be upgraded if, following the acquisition by Banca IFIS, Moody's analysis shows that Banca IFIS has sufficient capacity and willingness to provide support to Interbanca in case of need. An upgrade of the long-term deposit ratings is unlikely at the moment, as indicated by the current review for downgrade. FACTORS THAT COULD LEAD TO A DOWNGRADE A downgrade of Interbanca's BCA and adjusted BCA is unlikely, as indicated by the current review for upgrade. Interbanca's long-term deposit rating could be downgraded if the planned liability structure results in increased loss-given- failure without offsetting factors such as a higher standalone rating and potential affiliate support from Banca IFIS. LIST OF RATINGS REMAINING ON REVIEW Issuer: GE Capital Interbanca S.p.A. Review for Downgrade: Long-term Deposit Ratings, currently B2, ratings under review Review for Upgrade: Adjusted Baseline Credit Assessment, currently caa1 Baseline Credit Assessment, currently caa1 Review Direction Uncertain: Long-term Counterparty Risk Assessment, currently B1(cr) INTESA SANPAOLO: S&P Assigns B+ Rating to EUR1.25BB Tier 1 Notes ---------------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term issue rating to the EUR1.25 billion perpetual additional Tier 1 (AT1) capital notes to be issued by Intesa Sanpaolo (BBB-/Stable/A-3). S&P understands from the terms and conditions that the AT1 notes will comply with the EU's latest capital requirements directive (CRD IV), which is the EU implementation of Basel III. S&P also understands that the notes will rank senior to ordinary shares, but will be subordinated to more senior debt, including Intesa Sanpaolo's Tier 2 debt. In accordance with S&P's methodology for rating hybrid capital, S&P is assigning the AT1 notes a 'B+' rating, four notches below the issuer credit rating (ICR) on Intesa Sanpaolo. S&P usually derive the hybrid rating for banks based in Italy by notching down from the bank's stand-alone credit profile (SACP). In this case, S&P notches down from the ICR on Intesa Sanpaolo because it is currently lower than its SACP. S&P calculates this four-notch difference as: -- One notch to reflect subordination risk. -- Two additional notches to take into account the risk of nonpayment at the full discretion of the issuer and the hybrid's likely inclusion in Tier 1 regulatory capital. -- One further notch because the instruments allow for full or partial temporary write-down. S&P does not apply any additional notching because it do not consider the 5.125% mandatory conversion trigger as a going- concern trigger. Compliance with the minimum regulatory capital requirements is necessary to avoid the risk of potential restrictions in the payment of coupons on AT1 notes. The minimum regulatory capital requirement (the aggregate of capital conservation buffers, Pillar 1 and Pillar 2) in terms of Common Equity Tier 1 (CET1) for 2017 that the European Central Bank set on Intesa Sanpaolo in the 2016 Supervisory Review and Evaluation Process (SREP) was 7.25%. S&P views the risk of this restriction being applied to Intesa Sanpaolo as limited at this stage. This is because the bank's CET1 ratio is well above the SREP level. As of end- September 2016, the fully loaded CET1 ratio was 13%, clearing the SREP requirement of 7.25%. In addition, the nonpayment risk for Intesa Sanpaolo is mitigated by S&P's expectation that the bank will maintain resilient profitability over the next two years. This will likely allow its capitalization to remain in line with the current level, despite the high dividends distribution (in the 80%-90% range). S&P intends to assign intermediate equity content to the notes, once the regulator approves them, for inclusion in the bank's regulatory Tier 1 capital. The instruments meet the conditions for intermediate equity content under S&P's criteria as they are perpetual, with a call date expected to be five or more years from issuance. In addition, they do not contain a coupon step up and have loss-absorption features on a going-concern basis due to the bank's flexibility to suspend the coupon at any time. =============== S L O V E N I A =============== TELEKOM SLOVENIJE: S&P Assigns 'BB+' CCR on Solid Credit Metrics ---------------------------------------------------------------- S&P Global Ratings said that it assigned its 'BB+' long-term corporate credit rating to Slovenian telecommunications operator Telekom Slovenije d.d. The outlook is stable. The rating reflects Telekom Slovenije's exposure to what S&P considers a challenging and highly competitive Slovenian market for fixed and mobile telecommunications, paired with S&P's expectations of Telekom Slovenije maintaining relatively solid credit metrics in 2017-2018. Telekom Slovenije's revenue has declined by a mid-single-digit percentage for a number of years in the domestic mobile segment, where competition is particularly intense, and fixed-line revenues remain pressured by the structural decline of classical fixed-line telephony. S&P expects any stabilization of market conditions will take place only very gradually, and, as a result, S&P projects that Telekom Slovenije's comparatively low S&P Global Ratings-adjusted EBITDA margins will continue to modestly weaken within the 26%-29% range in 2016-2018. Telekom Slovenije is attempting to develop new revenue streams, such as in IT services and the resale of electricity, but S&P expects that it will not be able to fully compensate for the EBITDA impact from the loss of high-margin telecom service revenues in the near term. S&P thinks that these operating headwinds are balanced by the company's moderate adjusted leverage of below 3x in S&P's forecast, and by its expectation of relatively benign free operating cash flow (FOCF) of more than 7% of adjusted debt, despite significant investments in its fiber network in the next two years. S&P's assessment of Telekom Slovenije's business risk captures the high level of competition in the market for telecoms services in Slovenia and S&P's view of the country's regulatory environment for the sector as fairly restrictive. In mobile, Telekom Slovenije competes with two other mobile network operators as well as mobile virtual network operators. Since 2013, Telekom Slovenije's mobile average revenue per user (ARPU) has declined by about 20%, and S&P expects ARPUs will continue to fall by about 4% annually in 2016 and 2017. Fixed-line competition is intense due to the presence of two alternative high-speed fixed-line networks with meaningful and partly overlapping coverage -- a feature that distinguishes Slovenia from many other European markets. Like Telekom Slovenije, its main rivals are able to offer a complete portfolio of fixed, mobile, and TV services, which is increasingly driving competition based on fixed-and-mobile "convergence" products. As an incumbent operator with significant market power, Telekom Slovenije is subject to a comprehensive set of regulatory obligations, including the obligation to provide fully unbundled as well as bitstream access to its copper and fiber-to-the-home (FTTH) networks. S&P thinks the current wholesale rates of EUR13.43 per month for unbundled fiber access are relatively low and potentially weaken the returns Telekom Slovenije can achieve on its FTTH-based high-speed services. In addition, S&P's view of Telekom Slovenije's business risk is constrained by its limited scale and geographic diversification, with about 85% of 2015 EBITDA generated in Slovenia, and the remainder mostly in Kosovo, plus from small operations in Bosnia. In spite of these challenges, Telekom Slovenije remains the leading domestic fixed and mobile operator, with a particularly high mobile subscriber market share of 48%, well ahead of the second-largest player si.mobil with about 31% and Telemach, which holds about 15% (all data according to the national regulatory authority AKOS and as of June 30, 2016). In fixed broadband, Telekom Slovenije leads with a share of 34%, followed by cable operator Telemach with 25%, and it is also the No. 2 player in the pay TV market with a share of about 27%, after leader Telemach with 31%-32%. Furthermore, Telekom Slovenije has made good progress upgrading its fixed and mobile networks, having achieved 97% population coverage with fourth-generation mobile technology as of the third quarter of 2016, and it is able to serve about 23% of Slovenian households with services based on FTTH. As part of its investment program, Telekom Slovenije is planning to increase FTTH coverage meaningfully in the next few years. Although S&P projects this will cause its capital expenditure (capex) to sales ratio, excluding spectrum license costs, to soar to 18%-21% in 2016 and 2017 from about 15% in 2015, S&P expects these measures to strengthen its market position in fixed broadband. S&P's view of Telekom Slovenije's financial risk profile is determined by its moderate leverage and good FOCF, partly offset by high shareholder remuneration under the influence of its 74% shareholder, the Republic of Slovenia. Based on S&P's forecast that Telekom Slovenije will succeed in gradually stabilizing operating performance, S&P expects relatively solid adjusted debt to EBITDA of 2x-3x and funds from operations (FFO) to debt well within the 30%-40% range in the next three years. S&P understands that the company wishes to play a role in market consolidation within the region, but S&P currently do not expect that potential transactions would cause significant deviations from S&P's leverage projections. Although dividends for 2015 were cut by 50% from the previous year, Telekom Slovenije has a track record of paying out its entire distributable profit, and S&P expects shareholder remuneration to revert to pre-2015 levels in the near to medium term. S&P's assessment also takes into account what it considers as Telekom Slovenije's good conversion of EBITDA to operating cash flow, which is boosted by low cash interest and taxes. In arriving at Telekom Slovenije's adjusted credit metrics, S&P treats certain program rights that are capitalized by the company as an expense, and S&P applies its adjustments for captive finance operations to Telekom Slovenije's wireless equipment installment program. S&P do not publish these adjustments, but in aggregate they improve S&P's forecast for adjusted debt to EBITDA by about 0.1x. In S&P's base case, it assumes: -- Revenue growth, excluding revenue from ONE Macedonia in 2015, of 0%-1% in 2016 and approximately flat revenues in 2017, excluding the revenue contribution from Antenna TV SL which is consolidated from Jan. 1, 2017. This reflects a mix of revenue declines in mobile and fixed telephone offset by new revenue streams such as IT services and the resale of electricity to residential customers, and in 2016 also by the first full-year revenue contribution of debitel. -- Adjusted EBITDA margins of about 28% in 2016, at the same level as in 2015, as cost efficiencies from earlier restructuring measures are balanced by Telekom Slovenije's revenue mix gradually shifting from high-margin telecom service revenues to lower-margin revenue sources. This also leads to slight deterioration of EBITDA margins to 27%-28% in 2017 and 26%-28% in 2018. -- Capex as a percentage of sales, excluding spectrum costs, of 18%-21% in 2016 and 19%-21% in 2017, as Telekom Slovenije makes substantial investments particularly to extend fiber coverage, gradually receding to 6%-18% in 2018. -- S&P also assumes moderate spectrum spending for frequencies in Kosovo in 2017 and for the auction of the 700 Mhz spectrum in Slovenia, which is planned for 2018. -- Dividend payments possibly rising back to historical levels of EUR60 million-EUR70 million from 2017, after EUR32.5 million in 2016. -- Receipt of significant proceeds for the disposal of the 45% minority stake in ONE Macedonia, which S&P expects for late 2017. -- Very low cash taxes due to significant tax loss carry forwards. -- Some spending on small, bolt-on acquisitions. Based on these assumptions, S&P arrives at these credit measures: -- Adjusted debt to EBITDA of 2.5x-2.6x at the end of 2016, after 2.3x in 2015, and 2.2x-2.3x in 2017, temporarily lower due to the cash inflow from the sale of the stake in ONE Macedonia, before reverting to 2.4x-2.7x in 2018 as a result of negative discretionary cash flow coupled with broadly flat adjusted EBITDA. -- Adjusted FFO to debt of about 35% in 2016, about 40% in 2017 (thanks to the cash inflow from the ONE Macedonia transaction), and 35%-37% in 2018. -- Adjusted FOCF to debt of about 9%-10% in 2016 and 2017, and 8%-12% in 2018, compared with 17% in 2015. -- Unadjusted discretionary cash flow between positive EUR10 million and negative EUR10 million in 2016, declining to below negative EUR10 million in 2017 and 2018. S&P regards Telekom Slovenije as a government-related entity, as the Republic of Slovenia directly and indirectly holds about 74% of the company. S&P's 'BB+' rating on Telekom Slovenije does not include any uplift for potential government support, as S&P sees a low likelihood of timely and sufficient extraordinary support from the Republic of Slovenia in the event of financial distress. This is because S&P thinks that, although the most recent attempt to privatize Telekom Slovenije in mid-2015 was terminated unsuccessfully, the sale process may resume over the near to medium term. S&P also takes into account its perception that there is no explicit commitment by the Slovenian government to support Telekom Slovenije in the event of financial distress. The stable outlook on Telekom Slovenije reflects S&P's expectation that the company will successfully defend its leading domestic market position in mobile and fixed broadband, supported also by the successful implementation of its network investment plans, and that new revenue streams will enable the company to avert significant declines of revenue and EBITDA from current levels. S&P also expects that shareholder remuneration will remain high, but will not materially exceed our forecasts. S&P thinks this will enable Telekom Slovenije to maintain adjusted debt to EBITDA between 2x and 3x and generate FOCF of 7%-12% of adjusted debt in 2017. S&P could lower the rating if it observed a material deterioration of Telekom Slovenije's position in the domestic market as a result of intense competition or a worsening regulatory environment. S&P could also lower the rating if excessive shareholder remuneration, operating underperformance, debt-funded acquisitions, or material litigation-related payments caused adjusted debt to EBITDA to exceed 3x or FOCF to fall to less than 7% of adjusted debt on a sustainable basis. Furthermore, a downgrade could result from a weakening of Telekom Slovenije's liquidity situation. S&P currently considers an upgrade in the next 12 months as unlikely given competitive conditions, Telekom Slovenije's small scale, and a track record of high shareholder distributions under the influence of the Slovenian government. S&P could, however, raise the rating if competitive conditions in the Slovenian telecoms market improved materially, allowing the company to return to sustainable revenue growth and stronger adjusted EBITDA margins of about 35%. Alternatively, an upgrade could be supported by adjusted debt to EBITDA of less than 2x and FOCF to debt of at least 15% on a sustainable basis, accompanied by a credible financial policy that commits to maintain leverage at this level. ============= U K R A I N E ============= BANK KHRESCHATYK: Repays UAH190.5MM Debt on NBU Refinancing Loan ---------------------------------------------------------------- Interfax-Ukraine reports that Bank Khreschatyk (Kyiv), being under liquidation, on December 19 under the decision of the Individuals' Deposit Guarantee Fund repaid a UAH190.457 debt on a refinancing loan received from the National Bank of Ukraine (NBU). According to Interfax-Ukraine, the creditor's claims were satisfied at the expense of funds received from the repayment of the Finance Ministry's government domestic loan bonds in foreign currency, property rights on which were pledged to the NBU for a refinancing loan on December 8, 2015. Bank Khreschatyk is based in Kyiv. The bank ranked 18th among 123 operating banks as of October 1, 2015, in terms of total assets worth UAH10.09 billion, according to the NBU. The Individuals' Deposit Guarantee Fund on the basis of NBU decision No. 46-RSh dated June 2, 2016 on revoking the banking license and liquidating insolvent Bank Khreschatyk started the procedure of liquidation of the financial institution. The procedure of liquidation was started on June 6 and will last until June 5, 2018. Interfax-Ukraine says the National Bank and Kyiv authorities said the main reason for the bank's insolvency was the reluctance of other shareholders to invest in its recapitalization, which was estimated at UAH1.25 billion until June 2017, including UAH600 million until May 1 this year. PLATINUM BANK: Declared Insolvent by Nat'l Bank of Ukraine ---------------------------------------------------------- Interfax-Ukraine reports that the Board of the National Bank of Ukraine (NBU) on Jan. 10 issued decision No. 14-rsh/BT on placing the PJSC Platinum Bank on the list of insolvent banks. "As of January 1, 2017, the bank did not reach the positive value of capital," Interfax-Ukraine quotes the regulator as saying. The NBU said as the result of banks stress testing in the first half of 2016, in June 2016 the necessary amount of additional capitalization was approved for all banks in the second twenty in order for them to reach the positive value of regulatory capital by January 1, 2017, Interfax-Ukraine relates. According to Interfax-Ukraine, the NBU said Platinum Bank submitted to the National Bank its restructuring plan, which included the implementation of a number of activities with the aim of additional capitalization of the bank. The National Bank said that 97% (197,000 people) of all the depositors of the Platinum Bank will get back their deposits in full, because their volume doesn't exceed UAH200,000 -- the maximum amount of individual deposits guaranteed by the Individual Deposit Guarantee Fund, Interfax-Ukraine discloses. All in all, the Fund will ensure payments of guaranteed amount of deposits to the tune of UAH4.8 billion, Interfax-Ukraine states. Kyiv-base dPlatinum Bank was established in 2005. According to the NBU, as of October 1, 2016, the bank ranked 22nd in terms of its assets (UAH7.277 billion) among 100 operating banks. =========================== U N I T E D K I N G D O M =========================== BHS GROUP: DLA Piper Earns GBP3 Million as Advisors, Report Shows ----------------------------------------------------------------- Chris Johnson at The Am Law Daily reports that DLA Piper continues to profit from its role advising the administrators on the collapse of British high street retailer BHS, with a leaked document revealing that professional advisors racked up another million pounds in fees in less than six weeks. According to The Am Law Daily, the latest report by joint administrators Duff & Phelps and FRP Advisory, which was circulated to creditors and seen by Sky News, showed that professional advisors earned an additional GBP1.125 million (US$1.39 million) between October 25 and December 2, bringing the total cost of BHS' administration to almost GBP3 million (US$3.7 million). BHS was put into administration in April in one of the U.K.'s largest ever corporate failures, The Am Law Daily recounts. More than 11,000 jobs were lost and 20,000 pensions (the U.K. equivalent of a 401k) put at risk after it emerged that the company, which had more than 160 stores across the U.K., had a pension deficit of GBP571 million (US$703 million), The Am Law Daily discloses. Sir Philip Green, a retail magnate with a net worth of more than US$5 billion, has been heavily criticized for his role in the collapse of BHS, The Am Law Daily relays. Mr. Green and other shareholders had taken around GBP580 million (US$714 million) out of the business before selling it for just GBP1 (US$1.23), The Am Law Daily notes. Linklaters acted for Green's Arcadia Group on the sale of the company to Retail Acquisitions, which was advised by London-based technology, media and telecoms specialist Olswang, The Am Law Daily states. Weil Gotshal & Manges and DLA then took the lead roles on the administration, acting for the company and administrators, respectively, while Jones Day was appointed by the administrators to investigate the actions of the company's former directors, The Am Law Daily relates. An earlier administrators' report, produced in November, revealed that Green's Arcadia Group, BHS's biggest secured creditor, has a GBP35 million (US$43 million) floating charge over the defunct company's assets, The Am Law Daily recounts. The money was transferred by Duff & Phelps to Linklaters, which held it in an escrow account, The Am Law Daily says, citing Sky News. According to The Am Law Daily, Sky News said the funds were returned to Duff & Phelps and subsequently transferred to FRP after Jones Day raised concerns over whether Arcadia is a so-called connected party and therefore may have to forfeit its sole right to the charge. The administrators have told BHS' 7,500 unsecured creditors, who have claims totaling GBP1.3 billion (US$1.6 billion), that they can expect returns of just 2-8%, The Am Law Daily discloses. COVPRESS: Liberty House Rescues Business Out of Administration -------------------------------------------------------------- Michael Pooler at The Financial Times reports that more than 700 manufacturing jobs have been saved in the West Midlands after Liberty House, the industrials group, took car parts supplier CovPress out of administration in a boost for a key sector of the region's economy. The deal offers a future for CovPress, a metal stamping and assembly specialist based in the Canley area of Coventry, with a history dating back over a century, the FT says. Funding problems led to the collapse of CovPress in September, three years after it was bought out by a Chinese-British consortium for GBP30 million, the FT recounts. The business employs 740 workers and makes components such as panels and fuel tank protectors, with customers including Jaguar Land Rover, Renault and GM, the FT discloses. CovPress was taken over by Shandong Yongtai of China and Shropshire's TIA Treadsetters in 2013, the FT relays. Its turnover doubled to roughly GBP100 million but significant investments in new machinery and a further UK acquisition by Yongtai led to cash flow problems, according to administrator documents, the FT notes. As part of the rescue deal, Liberty will retain responsibility for the company's retirement fund -- preventing it falling into the industry-backed safety net for the pensions of insolvent companies, which results in cuts for members yet to retire, the FT states. According to the FT, administrators at Grant Thornton said this was the first time that such an outcome had been achieved for a business in administration. No value was disclosed for the transaction, for which ABN Amro is providing finance, according to the FT. Consultants at Lane Clark & Peacock advised on pensions, the FT discloses. FORMAL AFFAIR: In Administration; Shuts All Stores for Good ----------------------------------------------------------- Sutton Coldfield Observer reports that Formal Affair, a longstanding wedding hire shop in Sutton Coldfield, has closed along with the firm's eight other branches after the business has gone into administration. Wedding dress and men's suit hire specialist Formal Affair Weddings Limited, which had a shop in Birmingham Road in the Royal Town ceased trading on December 20, and entered administration in the New Year, having closed all branches with 39 staff being made redundant, the report discloses. "Despite working so hard to restructure and support the business over the last couple of years, to make it competitive in light of changing consumer purchasing habits, it is with deep regret that I have had to make the unavoidable decision of closing all stores and making the staff redundant," the report quotes Director of Formal Affair Weddings Limited, Richard Cook, as saying. "I would like to take this opportunity to thank all staff members for their great service over the years as well as all of our brides and grooms for their valued custom." Sutton Coldfield Observer notes that the company, which was previously bought out of administration in 2014, following a winding-up petition being issued by HMRC, has struggled in recent times due to changing purchasing habits of customers regarding wedding fashions. Formal Affair has filed a notice to appoint administrators with partners Dean Nelson and Nick Lee of Midlands based Smith Cooper. Sutton Coldfield Observer quotes Mr. Nelson as saying that: "The management of Formal Affair Weddings Limited have continuously attempted to reduce costs and restructure the business in light of current fashion and purchasing trends, however this has proven challenging with the formal and wedding attire market changing considerably over the last couple of years. "We are currently in the process of assisting the company repatriate its stock to the head office with a view to a closing down sale being instigated in the New Year. Once appointed administrators, we will be in contact with creditors regarding the financial position of the company and dividend prospects." Headquartered in Tamworth, Formal Affair Weddings Limited specialised in formal wear for men and bridal ware and operated across nine branches, predominantly in the Midlands, with in addition to Sutton, branches in Tamworth, Newport, Birmingham, Solihull, Leicester, Nottingham, Chesterfield and Sheffield. All outlets have now been closed down by the company, the report discloses. SCHIVO NI: Duff & Phelps Appointed as Administrator --------------------------------------------------- Belfast Telegraph reports that Duff & Phelps has been appointed administrator of Schivo NI after the company became insolvent. Schivo NI has not filed full accounts but in January last year, a charge on its building and premises was registered by Allied Irish Banks (AIB), the report says. Belfast Telegraph relates that speaking in July 2015 when Schivo acquired Maydown Precision Engineering, its chief executive Seamus Kilgannon said the deal showed that it was "willing to invest in the long-term future of the company". Schivo NI makes precision components for aerospace giants such as Airbus and Boeing. It employs 83 people. The parent company of Schivo is based in Waterford in the Republic. TAL LTD: Enters Administration, 50 Jobs at Risk ----------------------------------------------- Julian O'Neill at BBC News reports that TAL Ltd. has gone into administration. Lisburn-based TAL Ltd, which was established in 1981, employs about 50 people directly, with other jobs linked to sub- contractors, BBC discloses. It hopes the posts can be saved as negotiations start into the future of the business, BBC relates. TAL Ltd carries out work in both the private and public sectors, BBC notes. TAL Ltd. is a County Antrim building firm with an annual turnover of about GBP20 million. * UK: 2,679 Companies in Travel Sector in Significant Distress -------------------------------------------------------------- Chris Johnson at Law.com reports that law firms in the U.K. could soon face a glut of insolvency and restructuring work, with data suggesting that thousands of companies in the travel sector are at risk of going bust. According to Law.com, insolvency consulting firm Begbies Traynor says that 2,679 U.K. travel industry businesses are in significant distress -- a rise of 10% over the past three months. More than a quarter of all U.K. travel agents and tour operators are currently listed as being at risk of insolvency by Company Watch, which assesses the financial health of companies, Law.com discloses. Companies are struggling due to rising costs and increased terrorism fears, which is causing travelers to stay away from traditionally popular vacation areas such as Egypt and Turkey, Law.com relays, citing City A.M. ********* 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 2017. 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 * * *