/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/180321.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, March 21, 2018, Vol. 19, No. 057 Headlines A U S T R I A NIKI: Ryanair Agrees to Buy Majority Stake of LaudaMotion A Z E R B A I J A N SOUTHERN GAS: Fitch Affirms BB+ Senior Unsecured Eurobonds Rating C R O A T I A AGROKOR DD: Value After Restructuring Estimated at EUR3.8 Billion F R A N C E TECHNICOLOR SA: S&P Cuts ICR to 'B+', Outlook Stable I R E L A N D ARBOUR CLO III: Moody's Assigns B1 Rating to Class F-R Sr. Notes ARBOUR CLO III: Fitch Rates EUR11.75MM Class F-R Notes 'B-sf' I T A L Y CREDITO VALTELLINESE: DBRS Extends Review Period on BB Ratings PIETRA NERA: DBRS Assigns Prov. B Rating to Class E Notes L U X E M B O U R G ALTISOURCE SARL: S&P Puts 'B+' Rating to New Sr. Sec. Term Loan B PALLADIUM SECURITIES 1: DBRS Withdraws BB(high) Notes Rating N E T H E R L A N D S CIDRON OLLOPA: S&P Assigns B Issuer Credit Rating, Outlook Stable S P A I N AVINTIA PROYECTOS: DBRS Gives Prov. BB(low) Rating to 4% Notes PYMES SANTANDER 13: DBRS Finalizes Prov. C(sf) Rating on C Notes SANTANDER CONSUMER 2016-1: DBRS Ups Cl. D Notes Rating to BB(sf) SANTANDER EMPRESAS 3: S&P Affirms D (sf) Rating on Class F Notes U N I T E D K I N G D O M ASTON MARTIN: S&P Raises LT ICR to B; Outlook Stable CARPETRIGHT PLC: May Opt for Company Voluntary Arrangement KINGSWOOD MORTGAGES 2015-1: DBRS Ups E Notes Rating From BB(high) OYSTER YACHTS: Hadida Rescues Business Out of Administration ROY HOMES: Owed More Than GBP1MM to Creditors at Time of Collapse ********* ============= A U S T R I A ============= NIKI: Ryanair Agrees to Buy Majority Stake of LaudaMotion --------------------------------------------------------- Cat Rutter Pooley at The Financial Times reports that Ryanair has agreed to buy a majority stake in the airline founded by Niki Lauda -- two months after the former Formula One champion scuppered an attempt by British Airways' owner IAG to snap it up. According to the FT, the Irish carrier said on March 20 it will acquire 75% of Austria's LaudaMotion subject to EU competition approval. It will take a 24.9% stake until the all-clear is received, the FT states. British Airways' parent, IAG, had originally emerged as the successful bidder for the airline when it was sold under the insolvency of previous owner Air Berlin, the FT notes. The sale was overturned in January, however, when insolvency proceedings were moved from Germany to Austria, prompting a fresh round of bids that Mr. Lauda won, the FT recounts. Ryanair, as cited by the FT, said the cost of the 75% investment would be less than EUR50 million, although it would provide an additional EUR50 million for start-up and operating costs in the first year. Mr. Lauda will chair the board of the airline and "oversee the implementation of his strategy to build a successful Austrian low fares airline," the FT discloses. The Irish buyer will provide "financial and management support" to LaudaMotion as well as six aircraft under leases that include crew, maintenance and insurance, the FT says. About Air Berlin In operation since 1978, Air Berlin PLC & Co. Luftverkehrs KG is a global airline carrier that is headquartered in Germany and is the second largest airline in the country. In 2016, Air Berlin operated 139 aircraft with flights to destinations in Germany, Europe, and outside Europe, including the United States, and provided passenger service to 28.9 million passengers. Within the first seven months of 2017, the Debtor carried approximately 13.8 million passengers. It employs approximately 8,481 employees. Air Berlin is a member of the Oneworld alliance, participating with other member airlines in issuing tickets, code-share flights, mileage programs, and other similar services. Air Berlin has racked up losses of about EUR2 billion over the past six years, and has net debt of EUR1.2 billion. On Aug. 15, 2017, Air Berlin applied to the Local District Court of Berlin-Charlottenburg, Insolvency Court for commencement of an insolvency proceeding. On the same day, the German Court opened preliminary insolvency proceedings permitting the Debtor to proceed as a debtor-in-possession, appointed a preliminary custodian to oversee the Debtor during the preliminary insolvency proceedings, and prohibited any new, and stayed any pending, enforcement actions against the Debtor's movable assets. To seek recognition of the German proceedings, representatives of Air Berlin filed a Chapter 15 petition (Bankr. S.D.N.Y. Case No. 17-12282) on Aug. 18, 2017. The Hon. Michael E. Wiles is the case judge. Thomas Winkelmann and Frank Kebekus, as foreign representatives, signed the petition. Madlyn Gleich Primoff, Esq., at Freshfields Bruckhaus Deringer US LLP, is serving as counsel in the U.S. case. =================== A Z E R B A I J A N =================== SOUTHERN GAS: Fitch Affirms BB+ Senior Unsecured Eurobonds Rating ----------------------------------------------------------------- Fitch Ratings has affirmed Southern Gas Corridor CJSC's (SGC) senior unsecured Eurobonds' long-term foreign currency rating at 'BB+'. The affirmation reflects Fitch's unchanged view on SGC's USD2 billion Eurobonds maturing in 2026 fully guaranteed by the Republic of Azerbaijan (BB+/Stable). KEY RATING DRIVERS The rating reflects the unconditional, unsubordinated and irrevocable guarantee of full and timely repayment provided to noteholders by the Azerbaijan government. As a result, Fitch views the notes as equalised with the sovereign Foreign-Currency IDR. According to the deed of guarantee, Azerbaijan guarantees the noteholders the due and punctual payment of all sums payable by SGC under the notes. Noteholders can enforce their claims directly against Azerbaijan without being required to institute legal actions or proceedings against SGC first. The guarantee is governed by English law and would rank pari passu with all other unsecured external sovereign debt. The reserves for the guarantee coverage have been taken into account in Azerbaijan government's budget for 2018. According to management's forecast, SGC's net financial needs for operations and capex will be close to USD2.2 billion in 2018-2019 taking into account proceeds from the operation of Shah Deniz and South Caucasus Pipeline. Fitch expects SGC to raise loans from development institutions and tap debt capital markets for funding in the medium term, while bonds and loans could be supplemented by state capital injections should offered market terms be unacceptable. SGC's funding stems from a combination of debt and equity originated from the state; USD2.5 billion bonds issued in favour of State Oil Fund of the Republic of Azerbaijan at below market rates (LIBOR + 1%) and regular capital injections, which totalled USD2.4 billion as of end-2017. In addition, SGC placed sovereign- guaranteed bonds of USD2 billion via two tranches in March 2016 and March 2017. SGC acts as a financial vehicle and asset holding agent in the gas export sector of Azerbaijan with stakes in the Shah Deniz gas-condensate field and gas pipelines stretching to southern Europe via Georgia and Turkey. The entity is tightly controlled by Azerbaijan, i.e. it ultimately owns 100% in SGC via a 51% stake held by the Ministry of Economy and a 49% stake held by the State Oil Company of Azerbaijan Republic (SOCAR, BB+/Stable). The supervisory board is composed of high ranking government officials and regularly approves SGC's major financial and operational decisions. In Fitch's view, projects under SGC's development carry strategic importance for Azerbaijan's long-term macroeconomic stability, as it is highly dependent on hydrocarbons, which accounted for 64% of current account receipts in 2017. According to Fitch estimate, Azerbaijan will gradually shift its reliance on oil to gas as aging oilfields from the Soviet period push the government to develop new revenue sources. In 2017 oil production declined by 6% due to the natural depletion and compliance with the OPEC/non- OPEC production cut deal. Future growth is likely to be driven by stage 2 of Shah Deniz, which the BP-led consortium expects to become operational in late 2018 and produce up to an additional 16 bcma of natural gas and 105 thousand barrels of condensate per day. The strategic importance of SGC is further strengthened by the cross-border nature of its projects, involved intra-governmental commitments and political support from transit states, the EU and consumers. Most of the gas is already contracted up to 2045 by buyers from the EU and Turkey. In 2017 SGC also secured direct financing of its stakes in the projects from the following international financial institutions: USD0.4 billion from IBRD (part of World Bank group), USD0.6 billion from Asian Infrastructure and Investment Bank, USD1 billion from Asian Development Bank, USD0.5 billion from European Bank for Reconstruction and Development, all of which were fully guaranteed by the Republic of Azerbaijan. RATING SENSITIVITIES The rating of the senior unsecured notes is equalised with that of the Republic of Azerbaijan. Accordingly, any changes in the sovereign rating will be reflected in the notes' rating. Furthermore, any sign of the Republic of Azerbaijan's intention to non-honour or revoke the guarantee would be rating negative. ============= C R O A T I A ============= AGROKOR DD: Value After Restructuring Estimated at EUR3.8 Billion ----------------------------------------------------------------- Jasmina Kuzmanovic and Luca Casiraghi at Bloomberg News report that the value available to creditors after Agrokor d.d.'s restructuring may be as high as EUR3.8 billion (US$4.7 billion), the company said in a presentation, which retained the main features of the draft restructuring plan presented in December. The range of preliminary estimates calculated by the company and its advisers show a value for those eligible under a government- run restructuring of at least EUR1.8 billion, Bloomberg relays, citing materials distributed to reporters on March 14. According to Bloomberg, it said the total enterprise value of the group, including Slovenia-based retail arm Mercator Poslovni Sistem d.d., is estimated between EUR2.6 billion and EUR5 billion. It said the valuations are still subject to significant change amid potential disputes among creditors, Bloomberg relays. The restructuring process is designed to ensure losses are minimized and all value accrues to creditors, Bloomberg notes. The troubled Croatian retailer is seeking to reach an agreement between different groups of creditors and suppliers by July 10, when the period of government oversight is set to expire, Bloomberg discloses. Agrokor said in the presentation it wants to transfer the assets of the group to a new company, converting existing debt into equity and structurally subordinated instruments, Bloomberg relates. It said that under the plan, a EUR1.06 billion super senior facility, which helped Agrokor's businesses stabilize last year, would be refinanced at the level of the new Croatian holding company, according to Bloomberg. Claims by Sberbank PJSC, Agrokor's largest creditor, were included in the group tallies despite the company's move last year to strike the lender off the list, Bloomberg states. About Agrokor DD Founded in 1976 and based in Zagreb, Crotia, Agrokor DD is the biggest food producer and retailer in the Balkans, employing almost 60,000 people across the region with annual revenue of some HRK50 billion (US$7 billion). On April 10, 2017, the Zagreb Commercial Court allowed the initiation of the procedure for extraordinary administration over Agrokor and some of its affiliated or subsidiary companies. This comes on the heels of an April 7, 2017 proposal submitted by the management board of Agrokor Group for the administration proceedings for the Company pursuant to the Law of Extraordinary Administration for Companies with Systemic Importance for the Republic of Croatia. Mr. Ante Ramljak was simultaneously appointed extraordinary commissioner/trustee for Agrokor on April 10. In May 2017, Agrokor dd, in close cooperation with its advisors, established that as of March 31, 2017, it had total liabilities of HRK40.409 billion. The company racked up debts during a rapid expansion, notably in Croatia, Slovenia, Bosnia and Serbia, a Reuters report noted. On June 2, 2017, Moody's Investors Service downgraded Agrokor D.D.'s corporate family rating (CFR) to Ca from Caa2 and the probability of default rating (PDR) to D-PD from Ca-PD. The outlook on the company's ratings remains negative. Moody's also downgraded the senior unsecured rating assigned to the notes issued by Agrokor due in 2019 and 2020 to C from Caa2. The rating actions reflect Agrokor's decision not to pay the coupon scheduled on May 1, 2017 on its EUR300 million notes due May 2019 at the end of the 30-day grace period. It also factors in Moody's understanding that the company is not paying interest on any of the debt in place prior to Agrokor's decision in April 2017 to file for restructuring under Croatia's law for the Extraordinary Administration for Companies with Systemic Importance. On June 8, 2017, Agrokor's Agrarian Administration signed an agreement on a financial arrangement agreement worth EUR480 million, including EUR80 million of loans granted to Agrokor by domestic banks in April. In addition to this amount, additional buffers are also provided with additional EUR50 million of potential refinancing credit. The total loan arrangement amounts to EUR1,060 million, of which a new debt totaling EUR530 million and the remainder is intended to refinance old debt. =========== F R A N C E =========== TECHNICOLOR SA: S&P Cuts ICR to 'B+', Outlook Stable ---------------------------------------------------- S&P Global Ratings lowered to 'B+' from 'BB-' its long-term issuer credit rating on France-based technology company Technicolor S.A. The outlook is stable. At the same time, S&P affirmed its 'B' short-term issuer credit rating on the company. S&P said, "We also lowered our issue rating on the term loans issued by Technicolor to 'B+' from 'BB-'. The recovery rating remains at '3', indicating our expectation of meaningful recovery (50%-70%; rounded estimate: 60%) in the event of a default. "The downgrade reflects our revised base case for Technicolor's EBITDA and credit metrics. The base case takes into account lower results than we expected for 2017, continued high memory chip prices weighing on Connected Home's 2018 EBITDA, and the exclusion of Technicolor's patent licensing business after the group agreed to sell it to Interdigital in March 2018. At the same time, we think that the divestment of the high-margin patent business is neutral to the group's risk profile as it also removes risks related to its volatile revenue and cash flow." Technicolor's adjusted EBITDA almost halved in 2017 to about EUR287 million, from EUR548.5 million in 2016. This resulted from the significant and rapid increase in memory chip costs, combined with weaker demand in Europe (because of the end of life of some high-demand products and shipping delays to a large operator), as well as in Latin America on adverse macroeconomic conditions. Furthermore, in the Entertainment Services segment, the DVD business suffered the worst U.S. box office in 15 years and fewer games releases, while in Production Services some visual effects (VFX) projects were delayed from December 2017 to 2018. Finally, high-margin patent licensing operations are now discontinued and no longer contribute to the group's operations and cash flows as of year-end 2017. S&P said, "We expect high memory chip prices will continue to affect Connected Home's profitability and thus we forecast globally stable EBITDA for the segment in 2018. However, we believe that the group's EBITDA is likely to recover in 2019, assuming memory chip prices stabilize, Technicolor optimizes additional capacity in VFX and post-production, and margins benefit from its last-man-standing strategy in the DVD business." S&P said, "Our assessment of Technicolor business risk profile is not affected by the sale of the patent licensing business. We believe the loss of a segment with high margins averaging about 60% is largely offset by the removal of a highly volatile and difficult-to-predict business, subject to frequent litigation. Our assessment also factors in vulnerability of Connected Home to memory-chip-price increases that cannot be immediately passed through to customers, and potential volatility in customer capital spending for set-up boxes. We also expect a gradual structural decline in the DVD business, and modest volatility driven by reliance on box office receipts." These weaknesses are partly offset by Technicolor's No. 2 position worldwide in Connected Home, and the group's capacity to increase market share in North America following the acquisition of Cisco Connected Device in 2015. This translated into improved commercial activity throughout 2017, including new contracts based on higher memory chip prices that will start contributing to revenues and EBITDA from the beginning of 2019. Technicolor enjoys a good competitive position in the VFX and post-production business that should further strengthen through investments made to raise and optimize capacity. Finally, S&P believes that Technicolor's last-man-standing strategy in its DVD business, which now works with all major studios, will translate into sound cash flow generation, partly offsetting structural declines in this segment. S&P said, "We forecast weaker credit metrics compared with our previous base case because of lower adjusted EBITDA that will be only partly offset by debt reduction--we assume a significant reduction after cash proceeds from the sale of the patent licensing business and from its legal settlement with Samsung. In 2018, we thus anticipate ratios will temporarily weaken before rebounding in 2019 on improved Connected Home profitability, better product mix, and efficient management in the Entertainment segment, as well as cost-reduction measures. "The stable outlook reflects our expectation that despite the ongoing negative impact of high memory chip prices on EBITDA in 2018, EBITDA will grow thereafter on new, repriced Connected Home contracts and a better product mix, as well as a strong backlog in Entertainment Services. We therefore expect that, in 2019, Technicolor will reach adjusted debt to EBITDA in the 3.0x-4.0x range (after a temporary spike above 4x in 2018), FFO to debt above 15%, and FOCF to debt above 10% (after being slightly below these levels in 2018) "We could lower the rating further if Technicolor's credit metrics weakened protractedly from our base case, with adjusted debt to EBITDA consistently at or above 4.5x, FFO to debt below 15%, and FOCF to debt below 10%. This could result from EBITDA deterioration due to order cancelations in the Connected Home segment and high raw-material costs from even more expensive memory chips, higher-than-expected restructuring costs, or more pronounced volume decline in DVD than anticipated. "Rating upside is limited over the next 12 months, but we could raise the rating if Connected Home's revenue and profitability rebound when contracts signed in 2017 and based on higher memory- chip costs start contributing to revenues." This, combined with further profitability improvement on better mix in Entertainment Services, and lower restructuring costs would support stronger credit ratios, such as adjusted debt to EBITDA falling sustainably below 3.0x, FFO to debt of more than 25%, and FOCF to debt above 15%. ============= I R E L A N D ============= ARBOUR CLO III: Moody's Assigns B1 Rating to Class F-R Sr. Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following definitive ratings to notes issued by Arbour CLO III Designated Activity Company (the "Issuer" or "Arbour CLO III"): -- EUR10,000,000 Class A-1R Senior Secured Fixed Rate Notes due 2029, Definitive Rating Assigned Aaa (sf) -- EUR230,000,000 Class A-2R Senior Secured Floating Rate Notes due 2029, Definitive Rating Assigned Aaa (sf) -- EUR25,000,000 Class B-1R Senior Secured Fixed Rate Notes due 2029, Definitive Rating Assigned Aa2 (sf) -- EUR19,000,000 Class B-2R Senior Secured Floating Rate Notes due 2029, Definitive Rating Assigned Aa2 (sf) -- EUR23,000,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2029, Definitive Rating Assigned A2 (sf) -- EUR23,500,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2029, Definitive Rating Assigned Baa2 (sf) -- EUR27,500,000 Class E-R Senior Secured Deferrable Floating Rate Notes due 2029, Definitive Rating Assigned Ba2 (sf) -- EUR11,750,000 Class F-R Senior Secured Deferrable Floating Rate Notes due 2029, Definitive Rating Assigned B1 (sf) RATINGS RATIONALE Moody's definitive rating of the rated notes addresses the expected loss posed to noteholders by the legal final maturity of the notes in 2029. The definitive ratings reflect the risks due to defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's is of the opinion that the collateral manager, Oaktree Capital Management (UK) LLP ("Oaktree"), has sufficient experience and operational capacity and is capable of managing this CLO. Arbour CLO III is a managed cash flow CLO. At least 90% of the portfolio must consist of senior secured loans and senior secured floating rate notes and up to 10% of the portfolio may consist of unsecured loans, second-lien loans, mezzanine obligations and high yield bonds. The bond bucket gives the flexibility to Arbour CLO III to hold bonds. As this is a refinancing, the portfolio is expected to be 100% ramped up as of the closing date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. Oaktree will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's two-year reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk and credit improved obligations, and are subject to certain restrictions. In addition to the eight classes of notes rated by Moody's, the subordinated notes of EUR44.6m originally issued in February 2016 remain outstanding. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in August 2017. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. Oaktree's investment decisions and management of the transaction will also affect the notes' performance. Loss and Cash Flow Analysis: Moody's modeled the transaction using CDOEdge, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in August 2017. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the binomial distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders.Moody's used the following base-case modeling assumptions: Par amount: EUR400,000,000 Diversity Score: 35 Weighted Average Rating Factor (WARF): 2913 Weighted Average Spread (WAS): 3.30% Weighted Average Coupon (WAC): 4.00% Weighted Average Recovery Rate (WARR): 42% Weighted Average Life (WAL): 7.16 years. Stress Scenarios: Together with the set of modeling assumptions above, Moody's conducted additional sensitivity analysis, which was an important component in determining the definitive rating assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on each of the rated notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), holding all other factors equal: Percentage Change in WARF: WARF + 15% (to 3335 from 2913) Ratings Impact in Rating Notches: Class A-1R Senior Secured Fixed Rate Notes: 0 Class A-2R Senior Secured Floating Rate Notes: 0 Class B-1R Senior Secured Fixed Rate Notes: -2 Class B-2R Senior Secured Floating Rate Notes: -2 Class C-R Senior Secured Deferrable Floating Rate Notes: -2 Class D-R Senior Secured Deferrable Floating Rate Notes: -2 Class E-R Senior Secured Deferrable Floating Rate Notes: -1 Class F-R Senior Secured Deferrable Floating Rate Notes: 0 Percentage Change in WARF: WARF +30% (to 3575 from 2913) Class A-1R Senior Secured Fixed Rate Notes: -1 Class A-2R Senior Secured Floating Rate Notes: -1 Class B-1R Senior Secured Fixed Rate Notes: -3 Class B-2R Senior Secured Floating Rate Notes: -3 Class C-R Senior Secured Deferrable Floating Rate Notes: -3 Class D-R Senior Secured Deferrable Floating Rate Notes: -2 Class E-R Senior Secured Deferrable Floating Rate Notes: -2 Class F-R Senior Secured Deferrable Floating Rate Notes: -3 ARBOUR CLO III: Fitch Rates EUR11.75MM Class F-R Notes 'B-sf' ------------------------------------------------------------- Fitch Ratings has assigned Arbour CLO III DAC's refinancing notes final ratings: EUR10 million Class A-1-R: 'AAAsf'; Outlook Stable EUR230 million Class A-2-R: 'AAAsf'; Outlook Stable EUR25 million Class B-1-R: 'AAsf'; Outlook Stable EUR19 million Class B-2-R: 'AAsf'; Outlook Stable EUR23 million Class C-R: 'Asf'; Outlook Stable EUR23.5 million Class D-R: 'BBBsf'; Outlook Stable EUR27.5 million Class E-R: 'BBsf'; Outlook Stable EUR11.75 million Class F-R: 'B-sf'; Outlook Stable The transaction is a cash flow collateralised loan obligation securitising a portfolio of mainly European leveraged loans and bonds. The portfolio is managed by Oaktree Capital management (UK) LLP. Arbour CLO III DAC closed in February 2016 and is still in its reinvestment period, which is set to expire in March 2020. The issuer has issued new notes to refinance the original liabilities. The refinanced notes have been redeemed in full as a consequence of the refinancing. The refinancing notes bear interest at a lower margin than the notes being refinanced. In addition, the issuer has extended the weighted average life (WAL) covenant to 7.2 years from the refinancing date and has updated the Fitch test matrices. KEY RATING DRIVERS 'B' Portfolio Credit Quality Fitch places the average credit quality of obligors in the 'B' range. The Fitch weighted average rating factor (WARF) of the current portfolio is 30.7. High Recovery Expectations At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the current portfolio is 68.8%. Extended WAL covenant The WAL of the current portfolio is 5.79 years and the issuer will extend the WAL covenant to 7.2 years. Fitch has analysed the refinancing notes in line with the extended WAL covenant. Diversified Portfolio The transaction features different Fitch test matrices with different allowances for exposure to the 10 largest obligors (maximum 18% and 26.5%). The manager can then interpolate between these two matrices. This covenant ensures that the asset portfolio will not be exposed to excessive obligor concentration. Partial Interest Rate Hedge Between 5% and 15% of the portfolio may be invested in fixed- rate assets, while fixed-rate liabilities account for 8.75% of the target par amount. The collateral manager will not be able to buy floating-rate assets if the proportion of fixed- rate assets falls below 5%. RATING SENSITIVITIES A 125% default multiplier applied to the portfolio's mean default rate, and with this increase added to all rating levels, would lead to a downgrade of up to two notches for the rated notes. A 25% reduction in recovery rates would lead to a downgrade of up to three notches for the rated notes. ========= I T A L Y ========= CREDITO VALTELLINESE: DBRS Extends Review Period on BB Ratings -------------------------------------------------------------- DBRS Ratings Limited has extended its review period on Credito Valtellinese SpA's (Creval) Long-Term Issuer, Long-Term Senior Debt and Long-Term Deposits ratings of BB. These ratings remain under review with Negative Implications (URN). Concurrently, the Bank's Short-Term Issuer Rating was confirmed at R-4 with a stable trend. The extension of the review period takes into account the Bank's pending recapitalization. As part of its 2018-20 Strategic Plan announced on November 7, 2017, Creval is in the process of launching a rights issue of up to EUR 700 million. The capital strengthening is critical to improve the Bank's risk profile as well as its future profitability prospects. In YE 2017, Creval reported a net loss of EUR 332 million which was broadly in line with the loss reported in the previous year. The loss was mainly driven by an increase in cost of risk in Q2 and Q3 due to the disposal of an NPE portfolio of EUR 1.4 billion, as well as the adoption of more conservative credit policies as set out under the new business plan. In Q4 the Bank reported net income of EUR 71 million. Creval's gross NPE ratio improved to 21.7% (or 13.2% net of provisions) at YE 2017 from 27.3% (or 18.1%) at YE 2016. For 2018, the Bank expects to improve its gross and net NPE ratios to 10.5% and 5.5%, respectively, mainly via disposals. The improvement in asset quality is expected to be supported by the capital increase. At YE 2017, Creval reported a CET1 ratio, phased-in, of 10.6% from 9.4% at end-September 2017 and 11.8% at YE 2016. The capital increase, which was approved by an extraordinary shareholders meeting on December 19, 2017, is targeted for completion by the end of 1Q18. The transaction is currently supported by a pre-underwriting agreement with twelve leading investment banks. In addition, Creval's main shareholder, Mr. Denis Dumont, who currently holds approximately 5% of the Bank's share capital via DGFD S.A., expressed his intention to support the Bank's capital plan. Despite these recent developments, execution risks remain significant considering the size of the transaction which is approximately six times the Bank's current market capitalization, based on market data as of February 8, 2018. During the review period, which is expected to be resolved within the next 60 days, DBRS will continue to monitor any developments in the Bank's restructuring plan and recapitalization, including the final conditions of the rights issue to be set by the Board of Directors, regulatory approvals, as well as the final underwriting agreement and prospectus. Investor sentiment and market conditions will also be monitored during this period. RATING DRIVERS Positive rating pressure is unlikely, given the ratings are currently Under Review with Negative Implications. However, a successful rights issue could lead to a stabilization of the ratings at the current level. The ratings could be downgraded should Creval be unsuccessful in executing the current capital plan. PIETRA NERA: DBRS Assigns Prov. B Rating to Class E Notes --------------------------------------------------------- DBRS Ratings Limited assigned provisional ratings to the following classes of Commercial Mortgage-Backed Floating-Rate Notes Due May 2030 (collectively, the Notes) issued by Pietra Nera Uno S.R.L. (the Issuer): -- Class A Notes rated AA (low) (sf) -- Class B Notes rated A (low) (sf) -- Class C Notes rated BBB (low) (sf) -- Class D Notes rated BB (sf) -- Class E Notes rated B (high) (sf) All trends are Stable. Pietra Nera Uno S.R.L. is a securitization of three senior commercial real estate loans and two pari passu-ranking capital expenditure (capex) facilities advanced by Pietra Nera Uno S.R.L. (the Issuer) to three Italian borrowers: (1) Moma Fund, a regulated Italian real estate fund (the borrower under the Fashion District Loan), (2) Multi Veste Italy 4 S.R.L. (the borrower under the Palermo Loan) and (3) Valdichiana Propco S.R.L. (the borrower under the Valdichiana Loan). The three borrowers are ultimately owned by the Blackstone Group LP (the Sponsor). The aggregate initial balance of the securitized loans is EUR 403,810,000, including EUR 9,000,000 and EUR 6,500,000 pari passu-ranking capex facilities related to the Palermo Loan and the Fashion District Loan, respectively. Each loan has a two-year term with three one-year extension options, subject to certain conditions. The Fashion District Loan and the Valdichiana Loan will refinance loans currently securitized Taurus 2015-1 IT S.r.l. and Moda 2014 S.r.l, respectively. Each loan is limited in recourse to the borrower group and the underlying properties, with no additional recourse to the Sponsor. Also, there is no cross-collateralization, and the assets and guarantees securing the loans will only secure or guarantee the liabilities arising under the respective facility agreement. Each of the loan bears interest at a floating rate equal to three-month EURIBOR (subject to zero floor) plus a margin that is a function of the weighted-average (WA) of the aggregate interest amounts payable on the Notes. As such, there is no excess spread in the transaction, while ongoing costs and expenses incurred by the Issuer will be paid directly by the borrowers. To hedge against increases in the interest payable under the loans due to fluctuations in the three-month EURIBOR, within ten business days of the Issue Date each Borrower will enter into hedging arrangements satisfying different conditions, including: (1) an aggregate notional amount covering not less than 95% of the relevant outstanding loan, (2) the hedge counterparty having the requisite rating, (3) the term of the hedging being in line with the maturity date of the loan and (4) the projected interest coverage ratio (ICR) at the strike rate not being less than 200% at the date on which the relevant hedging transaction is contracted. To maintain compliance with applicable regulatory requirements, Blackstone, acting through its group company BRE Europe 7 NQ S.a.r.l., intends to retain an ongoing material economic interest of not less than 5% by subscribing an unrated and junior-ranking EUR 20.2 million Class Z. The collateral securing the loans consists of four Italian retail assets: three regional outlets and one dominant shopping centre, located respectively in Mantua (north of Italy), Valdichiana (centre of Italy), Molfetta and Palermo (south of Italy). Not considering the asset located in Molfetta, which is currently characterized by a relatively high vacancy rate of approximately 25% (including phase II, which is currently closed to the public), the portfolio benefits from a WA occupancy rate of over 95%. The rental income is contributed by over 360 tenants, predominantly well-known international retailers, with the largest tenant (UCI Cinemas) contributing 4.0% to the total gross rental income. The top ten tenants generate 18% of the total rent. In DBRS's view and based on the valuations instructed by the arranger, the loans (including the capex facilities) represent medium leverage financing with loan-to-value (LTV) ratios of 71.2% for Fashion District, 72.6% for Palermo and 67.2% for Valdichiana (the LTV figures are net of the 5%, or EUR20.2 million, material economic interest retained in the transaction by the Sponsor). The relatively high DBRS LTV is mitigated by the debt yield, as the collateral currently generates a Net Operating Income (NOI) of approximately EUR 36.4 million, translating into a day-one senior debt yield of 9.1%. Each loan has a two-year term with three one-year extension options, provided the following conditions have been met: (1) there is no payment default and (2) the transaction is compliant with the required hedging conditions. Assuming the exercise of the extension options by the Sponsor, two of the three loans, the Fashion District Loan and the Valdichiana Loan, will amortize 1.0% per annum starting from the second anniversary of the loan. The Palermo Loan will amortize 1.0% per annum starting from the first anniversary of the loan and 2.0% per annum in the last year. On the issue date, the Capex Facilities of the Fashion District Loan and the Palermo Loan will be fully drawn and the capex proceeds deposited on two different accounts under the control of the respective borrowers. The facility agreements provide the Sponsor with the opportunity to sell the borrower and respective property portfolio without repaying the loan if it is sold to a company owning (directly or indirectly) commercial real estate assets with an aggregate market value of (1) not less than EUR 2 billion in Europe, or (2) not less than EUR 5 billion worldwide. The loan structure does not include financial default covenants prior to a permitted change of control, but provides other standard events of default, including: (1) any missing payment, including failure to repay the loan at maturity date; (2) borrower insolvency; and (3) a loan default arising as a result of any creditors' process or cross-default. In DBRS's view, potential performance deteriorations would be captured and mitigated by the presence of the following cash trap covenants: (1) an LTV cash trap covenant set at: (a) 85% for the Fashion District Loan, (b) 86% for the Palermo Loan and (c) 81% for the Valdichiana Loan; and (2) a debt yield cash trap covenant set at: (a) 8.1% in years one to three and 8.6% in years four and five for the Fashion District Loan, (b) 7.4% in years one to three and 7.8% in years four and five for the Palermo Loan, and (c) 9.1% in in years one to three and 9.6% in years four and five for the Valdichiana Loan. The DBRS net cash flow (NCF) for the entire portfolio is EUR 30.0 million, which represents a 17.5% discount to the sponsor's NOI. DBRS applied a blended capitalization rate of 7.1% to the aggregate NCF to arrive at a DBRS stressed value of GBP 422.2 million, which represents a 22.0% haircut to the market value provided by CBRE's valuation completed in September 2017. The DBRS LTV of the transaction is 95.6%. The transaction is supported by a EUR 15.0 million liquidity reserve facility, which is provided by Deutsche Bank AG, London Branch. The liquidity reserve facility can be used by the Issuer to fund expense shortfalls (including any amounts owing to third- party creditors and service providers that rank senior to the Notes), property protection shortfalls and interest shortfalls (including with respect to deferred interest, but excluding default interest and exit payment amounts) in connection with interest due on the Class A Notes and Class B Notes. The liquidity reserve facility cannot be used to fund interest shortfalls on other classes of notes, including the Class Z Notes. At issuance, the liquidity reserve facility will be fully drawn and deposited on an account under the control of the Issuer at BNP Paribas Securities Services, Milan Branch. DBRS currently estimates that the commitment amount is equivalent to approximately 23 months of interest coverage on the covered notes. Potential interest shortfall on Class E and Class Z, due to loan prepayments or insufficient loan recovery proceeds, are subject to an Available Funds Cap. The final legal maturity of the Notes is in May 2030, seven years after the third one-year maturity extension option negotiated under the loans agreements. If necessary, DBRS believes this provides sufficient time, given the security structure and jurisdiction of the underlying loan, to enforce on the loan collateral and repay the bondholders. DBRS has analyzed the transaction with its European CMBS Rating and Surveillance Methodology published in January 2017. Earlier in 2018, DBRS published a request for comment, proposing certain changes to its European CMBS Rating and Surveillance Methodology. =================== L U X E M B O U R G =================== ALTISOURCE SARL: S&P Puts 'B+' Rating to New Sr. Sec. Term Loan B ----------------------------------------------------------------- S&P Global Ratings said it assigned its 'B+' issue rating on Altisource S.a.r.l.'s proposed senior secured term loan B due in 2024. S&P said, "We expect the issuance to be approximately $414 million. Ratings on Altisource Portfolio Solutions S.A. (B/Stable/--) are unaffected following the company's issuance. Altisource S.a.r.l is a wholly owned subsidiary of Altisource Portfolio Solutions S.A. We expect proceeds from the new issuance will be used to refinance the company's existing term loan B due in December 2020 that has $414 million currently outstanding. We expect that leverage, as measured by debt to adjusted EBITDA, will be 2.5x to 3.0x for 2018, which is consistent with our prior forecast." S&P's ratings on Altisource reflect the firm's concentration in serving the cyclical mortgage industry and customer concentration with respect to Ocwen and NRZ that provided the company with approximately 74% of its consolidated total service revenues for 2017. Offsetting factors include relatively stable earnings and a strategy of operating with minimal balance-sheet risk. RATINGS LIST Altisource Portfolio Solutions S.A. Issuer credit rating B/Stable/-- New Rating Altisource Solutions S.a.r.l. Senior Secured $414 mil Term loan B due 2024 B+ Recovery Rating 2(80%) PALLADIUM SECURITIES 1: DBRS Withdraws BB(high) Notes Rating ------------------------------------------------------------ DBRS Ratings Limited discontinued its rating on the Series 100 Notes issued by Palladium Securities 1 S.A. Acting in Relation to Compartment 100-2012-27 (the Issuer). The discontinuation reflects the payment in full of the Series 100 Notes at its scheduled maturity date on December 5, 2017. The remaining balance was EUR17,458,000 and the rating before the payment in full was BB(high)(sf). ===================== N E T H E R L A N D S ===================== CIDRON OLLOPA: S&P Assigns B Issuer Credit Rating, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating to wheelchair and mobility products company Cidron Ollopa Investment B.V. (trading as Sunrise Medical). The outlook is stable. S&P said, "At the same time, we assigned our 'B' issue rating to the proposed senior secured EUR445 million first-lien term loan maturing in March 2025. The recovery rating is '3', indicating our expectation of average (50%-70%, rounded estimate: 50%) recovery prospects in the event of default. "The rating will depend on our receipt and satisfactory review of all final transaction documentation. "The rating on Sunrise Medical reflects our view that its market share is generally stable within its addressable wheelchair market, which comprises the sale of complex and customized products (rehab power, adult manual, seating, and pediatric), which represent 80% of 2018 total sales ; and more standardized mobility products (rehab power, adult manual, seating, and pediatric), which constitute the remaining part." The group's revenues are well diversified; it operates in Europe (where it generates about 50% of total sales), North America (about 38% of total sales, mainly U.S.), and the rest of the world (about 13% of total sales). With a 12% market share, Sunrise Medical has a leading positon in the niche segment of medical supplies, together with other global players Invacare (13%) and Pride (12%) in a market worth about $3.8 billion-$4 billion that remains relatively fragmented. S&P expects that the market will continue to expand by about 4% compound annual growth rate (CAGR) between 2018-2020, driven by an increasing awareness of product availability; rising life expectancy due to advances in medicine; better availability and quality of health care; and a rise in chronic and lifestyle-related diseases such as diabetes, cardiovascular diseases, and obesity. Sunrise Medical has expanded significantly over the past few years, helped by the acquisition of Handicare Mobility in 2015. Nevertheless, the company remains a relatively modest player on a global scale, with reported revenues of about EUR470 million and adjusted EBITDA of about EUR70 million as of end-2017. S&P views Sunrise Medical's smaller scale at this stage as limiting, particularly in an industry that relies on scale to deliver and distribute less complex, lower cost products, while at the same time needs investments to develop high-end, value-added products. The company largely depends on the government reimbursement mechanism, which might constrain the demand for higher value added products. The market has relatively high barriers to entry, mainly coming from technological requirements, together with required investments, brand recognition, and loyalty. Sunrise is well positioned through its latest product launches within the power wheelchair higher margin category. The power wheelchair has three main brands: Quickie (adult-power), Zippie (pediatric-power), and Puma (adult-power). Quickie, which is a leading recognized brand for both manual and power wheelchairs within the rehab power range, offers several product ranges including rear, front, and mid- wheel drive chairs. For example, one of the newest products launched in the rehab power range is Jive M2 Sedeo Ergo, the mid-wheel power wheelchair within Quickie's product portfolio. This introduces new advanced features such as enhanced suspension, a new revolutionary seating system (enabling the customer to adjust the seat according to the position that the body should move), and interaction with household appliances via Bluetooth. Historically, the group has shown healthy growth in sales thanks to its product innovation. The company is planning to launch about 30 new products in 2018, and successfully launched 100 new products, upgrades, and innovations from financial year 2015 (FY2015, ending June 30, 2015) to FY2018, which underpin the company's capability to successfully execute a large number of launches. Sunrise Medical operates an asset-light business model as it focuses on design, development, and assembly, while it outsources parts manufacturing to mainly in Asia. Under our base-case scenario, S&P expects Sunrise Medical's S&P Global Ratings- adjusted EBITDA margin to improve and stabilize at around 17%, mainly thanks to a better product mix and further cost savings, especially around material costs. Apart from the standard rehabilitation market products, which may incur some pricing pressure from local players (especially in Spain, where the company loses some market shares to local players), the complex rehab subsector has proven resilient to the competition. This is thanks to advanced technology, the ability to quickly assemble a bespoke chair on demand, and the fact that all the wheelchairs are built on the same platform. A significant part of Sunrise Medical's revenues (70% of the total) depends on government reimbursement. Despite health care budgets being under pressure, the segment is proving relatively resilient to price cuts, supported by the necessity of the equipment to the end user and Sunrise Medical's well-developed expertise when dealing with regulators. The Nordic Capital-owned continuation vehicle is planning to move Sunrise Medical's Cidron Ollopa Investment from its existing fund, which has reached the end of its investment period. To finance the acquisition, the company is raising a EUR445 million first-lien term loan, EUR70 million revolving credit facility (RCF), and a pre-placed EUR123 million second-lien facility. S&P said, "We view negatively Sunrise Medical's increase in its S&P Global Ratings-adjusted leverage to 7.5x in 2018 from 6.0x in 2017 and 7.3x in 2016. However, we project that the company will increase its EBITDA to about EUR80 million-EUR90 million and generate positive free operating cash flow (FOCF) of about EUR15 million to EUR20 million in the next three years. This will enable Sunrise Medical to reduce the leverage to below 7.0x in 2019 and below 6.5x in 2020, while accumulating cash on balance sheet of about EUR30 million in 2018 and about EUR45 million in 2020. Our estimate of adjusted EBITDA of about EUR78 million in 2018 includes EUR4.5 million for capitalized research and development (R&D) costs and EUR7.2 million for operating lease expenses. Our adjusted debt figure of about EUR584 million includes about EUR567 million of financial debt and EUR17 million for operating leases. We don't deduct cash on balance sheet due to sponsor ownership. "In our view, the biggest risk to the rating would be if Sunrise Medical pursued a sizable debt-funded acquisition that could further increase leverage and depress cash generation." S&P's base case assumes: -- Annual revenue growth of about 4% over the next three years, in line with industry growth, and driven by the launch of new products (29 products expected to be launched in 2018) in the high-end margin category and to reflect the significant growth expected from rehab power in the U.S. -- An EBITDA margin of about 17%, reflecting the company's asset-light model driven by further cost saving and growth in higher margin products. -- R&D expenses forecast to increase by around 1.2%-1.5% year-on-year. -- Negative working capital of about EUR7 million-EUR8 million. -- Capital expenditure (capex) of around EUR15 million-EUR19 million. -- Limited bolt-on acquisitions. -- No dividends. Based on these assumptions, S&P arrives at the following credit measures: -- Adjusted debt to EBITDA of about 7.0x-7.5x for 2018 and 2019. -- Adjusted EBITDA interest cover of about 3.0x in 2018 and 2019. The combination of a weak business risk profile and highly leveraged financial risk profile leads to an anchor of either 'b' or 'b-'. S&P said, "We project that Sunrise Medical will be able to generate positive FOCF and reduce leverage, and we therefore choose the higher anchor of 'b'. There is no effect from the other modifiers, as Sunrise Medical should benefit from ample liquidity, has a financial policy focused on deleveraging (although we classify Sunrise as 'FS-6' due to its financial sponsor ownership), and we assess its management and governance as neutral." S&P said, "The stable outlook reflects our view that Sunrise Medical will further improve its operating performance as a result of management's focus on increasing the higher-margin rehabilitation segment and cost savings generated from products assembly, and the global procurement of a new common product platform roll-out. We expect the group will pursue product innovations, maintain strong customer relationships, and start to reduce leverage over the next 18-24 months. We also expect the group to maintain an EBITDA interest coverage ratio of above 2x and adequate liquidity. We assume S&P Global Ratings-adjusted leverage will reduce below 7.0x within 12 months after the transaction closing. "We could lower the rating if Sunrise Medical failed to improve its margins and increase EBITDA to levels that would enable it to reduce leverage below 7.0x by 2019, while generating negative FOCF and FFO cash interest coverage ratio below 2x. This could happen if the company suffered from an operational setback, either to the top line or to profitability from unexpected tightening of reimbursement terms, slower than expected uptake of its higher margin power product range, or lower cost synergies. Given the limited headroom under the current rating, we could also downgrade Sunrise Medical if it pursues a debt-funded acquisition that would lead to an increase in leverage. "We are unlikely to consider a positive rating action over the next 12-18 months as we project debt to EBITDA to remain above 5x and, therefore, in the highly leveraged category. However, we would likely take a positive rating action if the company sustained adjusted debt to EBITDA of less than 5x. In view of the amount of deleveraging required to achieve this, we consider it would most likely occur because of a change in financial policy or significant over-performance on our base case." ========= S P A I N ========= AVINTIA PROYECTOS: DBRS Gives Prov. BB(low) Rating to 4% Notes -------------------------------------------------------------- DBRS Limited assigned a provisional rating of BB (low) to the EUR50 million 4.00% Senior Secured Notes of Avintia Proyectos Y Construcciones, S.L.'s (Avintia PyC or the Company). The Notes are expected to have a maturity date of September 1, 2020. The Issuer Rating of Avintia PyC has also been confirmed at BB (low). The trends on both ratings are Stable. The Notes will be fully and unconditionally guaranteed by deeds of commitment to grant second ranking mortgages on three real estate properties held within related parties. Avintia PyC, Grupo Avintia, S.L. and its major subsidiaries have provided intercompany guarantees which are consistent with DBRS's Consolidated Credit approach. It is DBRS's understanding that the amount of debt secured by first mortgage positions on pledged assets will not be increased. Proceeds from the issuance are expected to be used toward general corporate and operating purposes. On a stand-alone basis, DBRS expects the issuance to weaken Avintia PyC's core credit metrics because of the increased level of debt. Forecast coverage ratios are expected to remain in the bottom range of acceptability for the current rating. On a consolidated basis, Grupo Avintia, S.L.'s financial metrics are expected to weaken in the short term, with gradual improvement to a level commensurate with the current rating by 2019. The consolidated structure also modestly enhances the Company's business risk profile, as the overall group's business model strengthens the Company's size and market position, as well as its diversification away from fixed-price construction contracts, specifically with a broader focus on property services and hotel management. Notes: All figures are in euros unless otherwise noted. PYMES SANTANDER 13: DBRS Finalizes Prov. C(sf) Rating on C Notes ---------------------------------------------------------------- DBRS Ratings Limited finalized its provisional ratings on the following notes to be issued by Fondo de Titulizacion PYMES SANTANDER 13 (FT PYMES Santander 13 or the Issuer): -- EUR 2,254.5 million Series A Notes at A (sf) (the Series A Notes) -- EUR 445.5 million Series B Notes at CCC (high) (sf) (the Series B Notes) -- EUR 135.0 million Series C Notes at C (sf) (the Series C Notes, together, the Notes) The transaction is a cash flow securitization collateralized by a portfolio of term loans and credit lines originated by Banco Santander, S.A. (Banco Santander or the Originator) to small- and medium-sized enterprises (SMEs) and self-employed individuals based in Spain. As of December 27, 2017, the transaction's provisional portfolio included 61,893 loans and credit lines to 52,938 obligors, totaling EUR 3,062.2 million. At closing, the Originator has selected the final portfolio of EUR 2,700 million from the provisional pool. The portfolio also contains loans and credit lines originated by Banesto and Banif prior to their integration into Banco Santander, completed in April 2014. The rating on the Series A Notes addresses the timely payment of interest and the ultimate repayment of principal payable on or before the Legal Maturity Date in May 2043. The ratings on the Series B and Series C Notes address the ultimate payment of interest and principal payable on or before the Legal Maturity Date in May 2043. The provisional pool has some exposure to the "Building & Development" industry, representing 19.9% of the outstanding balance. The "Business Equipment & Services" (11.0%) and "Farming/Agriculture" (9.3%) sectors have the second- and third- largest exposures based on the DBRS Industry classification. The provisional portfolio exhibits low obligor concentration. The top obligor and the largest ten obligor groups represent 0.9% and 4.6% of the outstanding balance, respectively. The top three regions for borrower concentration are Madrid, Catalonia and Andalusia, representing approximately 21.9%, 18.0% and 14.7% of the portfolio balance, respectively. The historical data provided by Santander reflects the portfolio composition which includes secured and unsecured loans as well as credit lines. DBRS assumed an annualized probability of default (PD) rate of 3.60% for this portfolio. At closing, the Series A Notes benefit from a total credit enhancement of 21.5%, which DBRS considers to be sufficient to support it's A (sf) rating. The Series B Notes benefit from a credit enhancement of 5%, which DBRS considers to be sufficient to support its CCC (high) (sf) rating. Credit enhancement is provided by subordination and the Reserve Fund. In addition, the Series A, Series B and Series C Notes benefit from available excess spread. The Series C Notes have been issued for the purpose of funding the EUR 135.0 million Reserve Fund. The Reserve Fund is allowed to amortize after the first two years if certain conditions related to the performance of the portfolio and deleveraging of the transaction are met. The Reserve Fund cannot amortize below EUR 67.5 million. The transaction also acquired the obligation to fund any future drawing requests by the borrowers under the credit lines. Any future drawings will be funded via available proceeds from principal and interest collections in the period. The transaction also benefits from a Liquidity Line provided by Banco Santander that can be used if available proceeds are insufficient to meet the drawings on the credit lines. The drawn balance on the credit lines is EUR 595.2 million (equivalent to 19.4% of the provisional portfolio balance) and a further EUR 155.2 million is currently undrawn. DBRS determined its ratings as per the principal methodology specified below and based them on the following analytical considerations: -- The PD for the Originator was determined using the historical performance information supplied. For this transaction, DBRS assumed an annualized PD of 3.60%. -- The assumed weighted-average life (WAL) of the portfolio was 2.91 years. -- The PD and WAL were used in the DBRS Diversity Model to generate the hurdle rates for the assigned ratings. -- The recovery rate was determined by considering the market value declines (MVDs) for Spain, the security level and type of the collateral. For the Series A Notes, DBRS applied a 69.28% recovery rate for secured loans and a 16.25% recovery rate for unsecured loans. For the Series B Notes, DBRS applied an 83.03% recovery rate for secured loans and a 21.5% recovery rate for unsecured loans. -- The break-even rates for the interest rate stresses and default timings were determined using the DBRS cash flow tool. -- The rating of the Series C Notes is based upon DBRS's review of the following considerations: -- The Series C Notes are in the first loss position and, as such, are highly likely to default. -- Given the characteristics of the Series C Notes as defined in the transaction documents, the default most likely would only be recognized at the maturity or early termination of the transaction. SANTANDER CONSUMER 2016-1: DBRS Ups Cl. D Notes Rating to BB(sf) ---------------------------------------------------------------- DBRS Ratings Limited took the following rating actions on the notes issued by FT Santander Consumer Spain Auto 2016-1 (the Issuer): -- Series A confirmed at AA (sf) -- Series B upgraded to A (high) (sf) from A (sf) -- Series C upgraded to BBB (high) (sf) from BBB (sf) -- Series D upgraded to BB (sf) from BB (low) (sf) The above-mentioned rating actions follow an annual review of the transaction and are based on the following analytical considerations, as described more fully below: -- The overall portfolio performance as of the January 2018 payment date, in particular with regard to low levels of cumulative net loss and delinquencies. -- The current levels of credit enhancement available to the notes to cover expected losses assumed in line with their respective rating levels. -- The transaction has not experienced any events terminating its revolving period. The rating of the Series A notes addresses the timely payment of interest and the ultimate repayment of principal on or before the Legal Maturity Date in April 2032. The ratings of the Series B, Series C and Series D notes address the ultimate payment of interest and repayment of principal on or before the Legal Maturity Date in April 2032. FT Santander Consumer Auto Spain 2016-1 is a securitization consisting of Spanish auto loan receivables granted by Santander Consumer E.F.C., S.A. (SC), a subsidiary of Santander Consumer Finance, S.A. (SCF). The EUR 765.0 million portfolio, as of the January 2018 payment date, consists of loans for both the purchase of new (78.7%) and used (21.3%) vehicles, underwritten to mostly retail (96.0%) and some commercial (4.0%) clients. The transaction closed on 16 March 2016 and envisaged an initial 40-month revolving period, due to mature on the July 2019 payment date. PORTFOLIO PERFORMANCE As of the January 2018 payment date, 30-day to 60-day arrears were 0.7% of the outstanding principal balance and 60-day to 90- day arrears were 0.4%, while arrears greater than 90 days were 0.6%. Loans more than 12 months in arrears or considered doubtful in their recovery were 0.1%. DBRS's current analysis gives credit to realized portfolio performance. CREDIT ENHANCEMENT Credit Enhancement (CE) is initially provided by the subordination of the respective junior obligations. As of January 2018, CE for the Series A notes has remained at 15.0% since closing, CE for the Series B notes has remained at 11.0% since closing, CE for the Series C notes has remained at 5.5% since closing and CE for the Series D notes has remained at 2.5% since closing. REVOLVING PERIOD As of the January 2018 payment date, no performance triggers have been breached, causing the revolving period to mature early. To further mitigate the deterioration of the pool, the transaction permits certain concentration limits on the additional portfolios purchased on each payment date. The "worst-case" portfolio composition was considered in the cash flow analysis. The non-amortizing cash reserve was funded from the issuance of the Series F notes. It is available to cover senior fees, expenses and the interest due on the Series A-E notes and has remained at its target of EUR 15.3 million since closing. To mitigate any disruptions in payments due to the replacement of the servicer or the risk that the Servicer fails to transfer the collections to the Issuer, the transaction documents envisage the provision of liquidity and commingling reserves. These were unfunded at closing and will only be funded if the DBRS rating of SC's parent company (SCF) falls below specific thresholds as defined in the legal documentation. These reserves continue to be unfunded, as none of the rating triggers have been breached to date. Set-off risk is considered minimal in this jurisdiction. Since both the receivables and the notes pay a fixed rate of interest, there is a natural hedge inherent in the transaction. SCF acts as the Account Bank for the transaction. DBRS's private rating of SCF complies with the minimum institution rating given the ratings assigned to the notes, as described in DBRS's "Legal Criteria for European Structured Finance Transactions" methodology. Notes: All figures are in euros unless otherwise noted. SANTANDER EMPRESAS 3: S&P Affirms D (sf) Rating on Class F Notes ---------------------------------------------------------------- S&P Global Ratings raised its credit ratings on Fondo de Titulizacion de Activos Santander Empresas 3's class C, D, and E notes. At the same time, S&P has affirmed its rating on the class F notes. S&P said, "In our analysis, we applied our European small and midsize enterprise (SME) collateralized loan obligation (CLO) criteria and our current counterparty criteria using loan level data from October 2017 and latest transaction information from the January 2018 quarterly investor report. "For ratings in this transaction that are above our rating on the sovereign, we have also applied our structured finance ratings above the sovereign criteria." Santander Empresas 3 is a single-jurisdiction cash flow CLO transaction backed by loans to Spanish SMEs. The transaction closed in May 2007 and is currently in its amortization phase. CREDIT ANALYSIS S&P said, "We have applied our European SME CLO criteria to determine the scenario default rate (SDR)--the minimum level of portfolio defaults that we expect each tranche to be able to withstand at a specific rating level using CDO Evaluator. "To determine the SDR, we adjusted the archetypical European SME average 'b+' credit quality to reflect two factors (country and originator, and portfolio selection adjustments). We rank the originator in the moderate category. Taking into account Spain's Banking Industry Country Risk Assessment score of '5' and the originator's average annual observed default frequency, we have applied a downward adjustment of one notch to the 'b+' archetypical average credit quality. To address potential differences in the creditworthiness of the securitized portfolio compared with the originator's entire loan book, we further adjusted the average credit quality by three notches. As a result of these adjustments, our average credit quality assessment of the portfolio was 'ccc', which we used to generate our 'AAA' SDRs. After determining the average portfolio quality, where an originator's internal SME scoring system is not used as a building block in our rating analysis, we use the same average portfolio quality for each performing asset in the portfolio for the purpose of inclusion in CDO Evaluator. "We have calculated the 'B' SDR, based primarily on our analysis of historical SME performance data and our projections of the transaction's future performance. We have reviewed the issuer's historical default data, and assessed market developments, macroeconomic factors, changes in country risk, and the way these factors are likely to affect the loan portfolio's creditworthiness. "We interpolated the SDRs for rating levels between 'B' and 'AAA' in accordance with our European SME CLO criteria." RECOVERY RATE ANALYSIS S&P applied a weighted-average recovery rate at each liability rating level by considering the asset type and its seniority, the country recovery grouping, and the observed historical recoveries in this transaction. COUNTRY RISK S&P's unsolicited foreign currency long-term rating on Spain is 'BBB+'. S&P's RAS criteria require the tranche to have sufficient credit enhancement to pass a minimum of a severe stress test to qualify to be rated above the sovereign. CASH FLOW ANALYSIS S&P said, "We used the reported portfolio balance that we considered to be performing, the principal cash balance, the current weighted-average spread, and the weighted-average recovery rates that we considered to be appropriate. We subjected the capital structure to various cash flow stress scenarios, incorporating different default patterns and timings and interest rate curves, to determine the rating level, based on the available credit enhancement for each class of notes under our European SME CLO criteria. "As the transaction employs excess spread, we applied our supplemental tests by running our cash flow modeling using the forward interest rate curve, including the highest of the losses from the largest obligor default test net of their respective recoveries. We deem the test to have passed if cash flows show that the tranche that is subject to the test receives timely interest (or full interest, if the tranche is deferrable) and ultimate principal payments." RATING RATIONALE The class A1, A2, A3, and B notes have fully amortized, and the class C notes are amortizing with a current note factor of 85.4%. As a result of this structural deleveraging, the credit enhancement has increased for all rated notes. Furthermore, the reserve fund amount is increasing since all principal deficiency ledgers (PDLs) have been cleared. S&P said, "The portfolio has amortized to 6.2% of the initial portfolio balance, and asset performance has improved since our previous review, with the cumulative defaults rate increasing at the slowest pace since closing to 3.50% from 3.42%. In this transaction, a loan is classified as defaulted if it is in arrears for more than 12 months. Gross defaults have also been stable, with the cumulative default rate currently at 3.50% of the initial balance compared with 3.42% at our previous review. Notwithstanding the low pool factor, the portfolio remains granular and well diversified. "Our credit and cash flow analysis indicates that the class C notes have sufficient available credit enhancement to withstand our stresses at the 'AA' rating. However, this class of notes cannot withstand our extreme stresses under our RAS criteria. Therefore, the application of our RAS criteria caps our rating on this class of notes at 'AA-', four notches above the sovereign rating on Spain. We have consequently raised to 'AA- (sf)' from 'BBB+ (sf)' our rating on the class C notes. "The class D notes do not pass the stresses we apply at the 'BBB-' rating. However, as the failure margin is immaterial, and taking into account the increased available credit enhancement and the transaction's current performance, we have raised to 'BBB- (sf)' from 'B- (sf)' our rating on the class D notes. "The class E notes are slightly overcollateralized since the PDLs have been cleared and the reserve fund amount increased to EUR6.6 million. Although the class E notes' available credit enhancement has increased since our previous review, in our view, interest payment on this class of notes is still dependent on a favorable environment. Therefore, we have raised to 'CCC (sf)' from 'CCC- (sf)' our rating on the class E notes, in line with our criteria for assigning 'CCC' category ratings. "Our ratings address timely interest and ultimate principal payment on the notes. As the class D notes have previously missed interest payments and are still deferring interest payment, we have affirmed our 'D (sf)' rating on the class F notes." RATINGS LIST Fondo de Titulizacion de Activos Santander Empresas 3 EUR3.546 Billion Floating-Rate Notes Class Rating To From Ratings Raised C AA- (sf) BBB+ (sf) D BBB- (sf) B- (sf) E CCC (sf) CCC- (sf) Rating Affirmed F D (sf) =========================== U N I T E D K I N G D O M =========================== ASTON MARTIN: S&P Raises LT ICR to B; Outlook Stable ---------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on U.K.-based auto-manufacturer Aston Martin Holdings (UK) Ltd. to 'B' from 'B-'. The outlook is stable. S&P said, "At the same time, we also raised our issue rating on the GBP285 million and $400 million senior secured notes issued by Aston Martin Capital Holdings Ltd. to 'B'. We revised the recovery rating to '3' from '4', indicating our expectation of 50% recovery prospects in the event of a payment default. "We raised our issuer credit rating on Aston Martin to 'B', as the company continues to deliver on the rollout of its new car models. This progress gives us more confidence in its business growth over the next 12-18 months. We now expect that Aston Martin will continue to post positive free operating cash flow (FOCF) in 2018 and that funds from operations (FFO) cash interest coverage ratio will improve toward 2.5x over the next 12 to 18 months." Aston Martin plans to upgrade and refresh its entire range of sports cars, and expand into new segments (sport utility vehicles [SUVs] and sedans), by 2022. The first new model to be successfully launched was the DB11 sports car in September 2016, followed by the new Vantage in 2017, a clear sign that Aston Martin can deliver on its strategy. Additional new models, including the DBX SUV, are planned for 2019. S&P said, "Over the next two to three years, we expect Aston Martin will continue to deliver on its strategy, although it requires continued high levels of investment in research and development (R&D) and capital expenditures (capex). We expect that these levels will peak in 2018. We forecast continuous positive FOCF generation in 2018. In our base-case scenario we also expect positive S&P Global Ratings-adjusted EBITDA in 2018 as a result of further improved operating performance, despite continued high R&D costs (we expense all R&D costs, whereas the company largely capitalizes them). For FFO, we forecast positive levels from 2018, despite high interest costs." The company's operating results for 2017 were significantly stronger year over year and better than we expected. Revenues increased by almost 50% and reported EBITDA stood at GBP230 million, while adjusted EBITDA remained slightly negative because of high R&D charges. The company was also able to generate positive FOCF one year earlier than expected. At the same time, with the acquisition of AM Brands Ltd., Aston Martin increased its outstanding senior secured notes by GBP55 million, leading to higher adjusted debt and interest charges. In S&P's base-case scenario for 2018 and 2019, it assumes: -- Continued volume growth in the luxury auto segment. This is on top of the 1%-3% we expect for the global auto market and is in line with global GDP growth. -- Much higher revenues for Aston Martin, supported by higher volumes, reflecting the success of the DB11 and new Vantage special limited edition models, as well as the Vanquish in 2018 and future new models. -- Continuous improvement in reported EBITDA of a low double- digit percentage in 2018, with a further increase in 2019. -- Capex (including capitalized R&D) in 2018 of GBP280 million- GBP320 million, falling to below GBP250 million in 2019. -- Positive FOCF after already turning slightly positive from neutral in 2017. -- No further debt-financed acquisitions or dividend payments. Based on these assumptions, S&P expects: -- Positive S&P Global Ratings-adjusted EBITDA in 2018 compared with slightly negative in 2017, improving further in 2019. -- S&P Global Ratings-adjusted FFO turning positive in 2018 and improving further 2019. -- S&P Global Ratings-adjusted debt to EBITDA of above 15x in 2018 and less than 7.0x in 2019 (excluding preference share from debt above 10x and less than 5x respectively). -- FFO cash interest coverage of 1x in 2018, improving to above 3.5x in 2019. S&P's assessment of Aston Martin's business risk profile remains constrained by the company's limited product range and operating diversity; still very sizable R&D expenses, weakening EBITDA and FFO; and the cyclical demand for luxury sports cars. Aston Martin also has a niche market position compared with larger and stronger peers. Mitigating factors include strong brand recognition, the introduction of a modular production platform, and above-average growth rates in the super-premium automotive segment. S&P said, "We also recognize the company's successful launch of the DB11 sports car, new Vantage, and other special edition cars, which demonstrate improving business prospects. We expect this will continue, further strengthening Aston Martin's competitive position, and lead to improved profitability in coming years. Aston Martin's agreement with German auto manufacturer Daimler AG to provide electronic architecture and engines is also a positive factor. "Our assessment of Aston Martin's financial risk profile remains constrained by the need for continued sizable R&D and capex, our forecast of positive but relatively low FFO and FOCF in 2018, and increasing adjusted debt stemming from payment-in-kind interest on its outstanding preferred equity certificates, which we view as debt." Furthermore, Aston Martin's financial risk profile is constrained by the company's ownership by financial sponsors, which might change over the medium term, as the company is considering an IPO as a strategic option. However, it remains uncertain if it will materialize and we are unaware of the structure or credit implication at this point. "Mitigating factors include an improving trend in profitability and cash generation in 2018, as we believe the peak investments in R&D and capex will be reached in 2018, and the lengthened debt maturity profile to April 2022. "The stable outlook reflects our view that Aston Martin will continue to successfully deliver on its business strategy and further improve its profitability, cash flow generation, and ultimately its credit ratios. In particular, we expect adjusted FFO and EBITDA will turn positive in 2018. We also expect that the FFO cash interest coverage ratios will improve toward 2.5x over the next 12 to 18 months and FOCF will remain positive. "We could downgrade Aston Martin if it experiences delays or production problems in delivering its planned volumes, if we believed that the company was unable to generate positive FOCF, or if FFO cash interest coverage ratios did not improve toward 2.5x over the next 12 to 18 months. Such a scenario could also occur if development costs were notably higher than currently expected. "We could raise the ratings if Aston Martin continues to strengthen its competitive position by refreshing, replacing, and extending its sports car range, generating positive FOCF, and reducing adjusted debt to EBITDA sustainably below 5x. However, we see such a scenario as unlikely in the near term, given the ongoing level of investments in new models." CARPETRIGHT PLC: May Opt for Company Voluntary Arrangement ---------------------------------------------------------- Ben Woods at Belfast Telegraph reports that Carpetright -- which has eight stores in Northern Ireland -- may close shops and axe jobs as it pieces together a rescue plan. According to Belfast Telegraph, it's understood the struggling retailer could go down the route of a company voluntary arrangement, which would allow it to shut loss-making stores and secure deep discounts on rental costs. Carpetright, which has 409 UK shops, said it was exploring "a range of options" to reboot the business and a final decision had not been made, Belfast Telegraph relates. Carpetright revealed earlier this month that it was set to swing to a full-year loss, Belfast Telegraph notes. Carpetright is the UK's largest retailer of carpets, flooring and beds. KINGSWOOD MORTGAGES 2015-1: DBRS Ups E Notes Rating From BB(high) ----------------------------------------------------------------- DBRS Ratings Limited took rating actions on the notes issued by Kingswood Mortgages 2015-1 PLC (Kingswood 2015-1) as follows: -- Class A confirmed at AAA (sf) -- Class B upgraded to AAA (sf) from AA (high) (sf) -- Class C upgraded to AAA (sf) from AA (low) (sf) -- Class D upgraded to AA (high) (sf) from A (low) (sf) -- Class E upgraded to AA (low) (sf) from BB (high) (sf) The rating actions follow a full review of the transaction and were prompted by the significant increase of Credit Enhancement (CE) to the rated notes after the fast pay down of the collateral assets and the following additional analytical considerations: -- Portfolio performance in terms of delinquencies, and defaults. -- Probability of default (PD), loss given default (LGD) rate and expected loss assumptions for the remaining collateral pool. Kingswood 2015-1, which closed in July 2015, is a securitization of a portfolio of German residential mortgages originated by Paratus AMC GmbH (formerly GMAC-RFC Bank GmbH) and initially securitized into E-MAC DE 2009-1 B.V. L2 B.V., wholly owned by Macquarie Bank Limited, London Branch (Macquarie Bank London), acquired the portfolio in 2014 and sold the performing part into Kingswood 2015-1. L2 B.V. acts as the Master Servicer of the portfolio and delegates the day-to-day servicing of the portfolio to the Sub-Servicer, Servicing Advisors Deutschland GmbH. PORTFOLIO PERFORMANCE AND ASSUMPTIONS The collateral pool has paid down quickly as the borrowers refinanced their mortgages without prepayment penalties at the expiration of the fixed rates period. The refinance rate has been higher than DBRS expected. As a result, the increase in CE to the rated notes is faster and the rate reset risks are lower than expected. DBRS expects the prepayment and refinancing activities to slow down until the next major group of loans are due for rate reset in 2022. The total arrears in the portfolio has increased since the last review in July 2017, mainly driven by the reduced size of the outstanding collateral pool. As of 31 December 2017, loans more than 90 days delinquent as a percentage of the outstanding collateral pool balance increased slightly to 1.34% from 1.26% at the last review. At the same time, loans more than 30 days delinquent increased significantly to 7.68% from 4.62%. DBRS does not expect the performance of the collateral pool to deteriorate further as the percentage of loans in arrears by more than 60 days has remained stable. The increase in the short-term arrears was most likely driven by the refinancing activities. The cumulative default rate as a percentage of the portfolio balance at the transaction closing doubled to 0.8% from 0.4% at the last review, and was within DBRS's expectations. DBRS has maintained the base-case PD and LGD assumptions for the remaining collateral pool at 9.0% and 48.4%, respectively. CREDIT ENHANCEMENT The CEs to all the rated notes have increased. As of the January 2018 payment date, the CEs to the Class A, B, C, D and E notes have increased to 102.1%, 71.0%, 59.0%, 50.4%, and 40.5%, respectively. The sources of CE are the subordinations, the Reserve Fund and the overcollateralization. Citibank N.A., London Branch is the Account Bank to the transaction, and its current DBRS private rating meets the Minimum Institution Rating criteria given the rating assigned to the Class A, B, and C notes, as described in DBRS's "Legal Criteria for European Structured Finance Transactions" methodology. Macquarie Bank London is the swap counterparty to the transaction. DBRS's Equivalent Rating of Macquarie Bank London complies with the first rating threshold given the rating assigned to the rated notes, as described in DBRS's "Derivative Criteria for European Structured Finance Transactions" methodology. Notes: All figures are in euros unless otherwise noted. OYSTER YACHTS: Hadida Rescues Business Out of Administration ------------------------------------------------------------ Alan Tovey at The Telegraph reports that Oyster Yachts has been bailed out of administration by gaming software entrepreneur Richard Hadida in a rescue which is hoped to save most of the company's staff. The Southampton-based builder of luxury sailing yachts ceased operations last month in a collapse caused by a combination of low margins and poor cost control, along with an insurance claim relating to the capsize of one its vessels in 2015, The Telegraph relates. KPMG was brought in as administrator to try to find a buyer for the business and Mr. Hadida has sailed to rescue in a move expected to see as many as possible of the company's 420 staff based in Hampshire and Norfolk re-employed, The Telegraph discloses. According to The Telegraph, the previous year's figures show the business suffered a GBP5.2 million hit from the sinking of the Polina Star III yacht, which dragged it to a GBP7.4 million loss for the year, leaving the company's finances foundering. Mr. Hadida's involvement will allow Oyster to resume construction on vessels and wider operations which had been paused following the company's failure, which resulted in all but a skeleton staff made redundant, The Telegraph states. ROY HOMES: Owed More Than GBP1MM to Creditors at Time of Collapse ----------------------------------------------------------------- Scottish Construction Now reports that collapsed Inverness housebuilder Roy Homes owed more than GBP1 million to creditors when it ceased trading in January 2017, it has emerged. The self-build home business and its sister company Roy Homes Timber Frame Ltd ceased trading last year with the loss of 17 jobs, Scottish Construction Now recounts. According to Scottish Construction Now, a progress report by administrator FRP Advisory, released by Companies House, shows that of the firm's total debt, a sum of GBP215,797 owed to the Bank of Scotland has been settled following the sale of the company's former headquarters, in Inverness' Lotland Street. The report also states that former employees, the firms' "preferential creditors", are expected to get a portion of the more than GBP18,000 they are owed relating to wage arrears, unpaid pension contributions and holiday pay, Scottish Construction Now discloses. FRP, as cited by Scottish Construction Now, said it was, "currently estimated there will be sufficient funds available to make a distribution to preferential creditors in due course", however, the exact amount would depend on total realisations. This being the case, the 84 unsecured creditors listed in the report remain in the dark about whether there will be enough money left at all for the restitution of debts totalling GBP806,863, Scottish Construction Now states. FRP added that six claims totalling GBP40,114 had also been made by unsecured creditors of sister firm Roy Homes Timber Frame, Scottish Construction Now notes. On these debts, the administrators said it was unlikely there would be sufficient funds available to pay them, Scottish Construction Now relays. Initially due to be completed last year, the period of administration for the two companies was extended by creditors and will now continue until next January, according to Scottish Construction Now. ********* 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. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2018. 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. 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