/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/180814.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 Tuesday, August 14, 2018, Vol. 19, No. 160 Headlines F R A N C E ALTICE FRANCE: $900MM Bank Debt Trades at 4% Off ALTICE FRANCE: $910MM Bank Debt Trades at 3% Off G E R M A N Y CHEPLAPHARM ARZNEIMITTEL: S&P Assigns 'B' ICR, Outlook Stable G R E E C E GREECE: Fitch Hikes Long-Term FC IDR to 'BB-', Outlook Stable I R E L A N D BRADLEY PHARMACY: High Court Appoints Interim Examiner CVC CORDATUS VII: Fitch Rates Class F-R Debt 'B-(EXP)sf' HALCYON LOAN 2018-1: Moody's Assigns B2 Rating to Class F Notes N E T H E R L A N D S STEINHOFF: Standard Chartered, Commerzbank Named as Defendants VEON HOLDINGS: S&P Withdraws 'BB' Long-Term Issuer Credit Rating R U S S I A LENTA LLC: Fitch Affirms 'BB' Long-Term IDRs, Outlook Stable RUSSIAN REINSURANCE: A.M. Best Assigns B (Fair) FS Rating S E R B I A DUNAV RE: A.M. Best Assigns B (Fair) Financial Strength Rating U N I T E D K I N G D O M GAUCHO: Bidders Circle Business Following Administration HOUSE OF FRASER: Sports Direct Acquires Business for GBP90 Mil. PHONES4U: PwC Retained GBP130MM Cash Reserves to Fund Claims ********* =========== F R A N C E =========== ALTICE FRANCE: $900MM Bank Debt Trades at 4% Off ------------------------------------------------ Participations in a syndicated loan under which Altice France Est [Altice Blue One SAS] is a borrower traded in the secondary market at 96.31 cents-on-the-dollar during the week ended Friday, July 27, 2018, according to data compiled by LSTA/Thomson Reuters MTM Pricing. This represents a decrease of 1.57 percentage points from the previous week. Altice France pays 275 basis points above LIBOR to borrow under the $900 million facility. The bank loan matures on January 31, 2026. Moody's rates the loan 'B1' and Standard & Poor's gave a 'B+' rating to the loan. The loan is one of the biggest gainers and losers among 247 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday, July 27. Altice France provides cable and telecommunication services. The Company offers mobile, telephone, Internet, tablet, cable network, fiber box, prepaid cards, and accessories, as well as refunding, insurance, and recovery services. Altice France serves customers in France. ALTICE FRANCE: $910MM Bank Debt Trades at 3% Off ------------------------------------------------ Participations in a syndicated loan under which Altice France Est [Altice Blue One SAS] is a borrower traded in the secondary market at 96.55 cents-on-the-dollar during the week ended Friday, July 27, 2018, according to data compiled by LSTA/Thomson Reuters MTM Pricing. This represents an increase of 0.84 percentage points from the previous week. Altice France pays 275 basis points above LIBOR to borrow under the $910 million facility. The bank loan matures on June 21, 2025. Moody's rates the loan 'B1' and Standard & Poor's gave a 'B+' rating to the loan. The loan is one of the biggest gainers and losers among 247 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday, July 27. Altice France provides cable and telecommunication services. The Company offers mobile, telephone, Internet, tablet, cable network, fiber box, prepaid cards, and accessories, as well as refunding, insurance, and recovery services. Altice France serves customers in France. ============= G E R M A N Y ============= CHEPLAPHARM ARZNEIMITTEL: S&P Assigns 'B' ICR, Outlook Stable ------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating to the Germany-based branded pharmaceuticals company Cheplapharm Arzneimittel GmbH. The outlook is stable. At the same time, S&P assigned its 'B' issue-level rating and '3' recovery rating to the company's EUR530 million term loan B due 2025, with indicative recovery prospects of 50%-70% (rounded estimate: 50%). Founded in 1998, Cheplapharm is a Germany-based off-patent branded pharma company. It reported revenues and EBITDA of about EUR226 million and about EUR134 million, respectively, in 2017. The company mainly acquires intellectual property (IP) rights from pharmaceutical companies after the respective products have run out of patent protection and show relatively stable revenues. Cheplapharm operates with an asset-light business model focused on a buy-and-build strategy. Primarily, the company identifies the right target, outsources manufacturing by utilizing a network of contract manufacturing organizations (CMOs), outsourcing distribution and marketing to external networks, and implementing its experienced life-cycle management activities to optimize the process. Cheplapharm's portfolio spans different therapeutic areas such as obesity (about 21% of total 2018 forecast sales), cardiology (about 20%) and virology (about 11%), geographically marketed in more than 100 countries via its global distribution network. The company operates in Europe (about 54% of total 2018 forecast sales), Asia-Pacific (about 31%), North America (about 5%), Latin America, and Africa. S&P said, "We view the transaction as positive for Cheplapharm's refinancing risk. The final transaction includes a EUR530 million term loan B1 and upsized EUR310 million (from EUR250 million) revolving credit facility (RCF) to finance acquisitions in the second half of 2018. The proposed launch of the EUR300 million term loan B2 tranche was discontinued. However, Cheplapharm might decide to tap the market again to repay the RCF at closing of current acquisitions, drawn for about EUR290 million to finance recently signed acquisitions such as Atacand, a legacy product for high blood pressure sourced from AstraZeneca (expected closing by the end of September) and Questran, a cholesterol reducer acquired from Bristol-Myers Squid (closed end of July). "Under our base case we assume that the company will pursue a strategy of continued, carefully selected bolt-on acquisitions to complement its organically eroding top-line. On the back of recent acquisitions we assume that its revenues should increase to about EUR380 million-EUR390 million by 2019 from a reported EUR226 million in 2017, while strong margins should lead to EBITDA of about EUR145 million-EUR150 million in 2018 and increase to about EUR175 million-EUR180 million in 2019, including the acquisitions that will be closed in the second half of 2018. "We forecast a cash interest cost of approximately EUR25 million- EUR28 million in 2018, which results in S&P Global Ratings- adjusted EBITDA interest coverage of above 5x." Cheplapharm's limited capex, low working capital requirements, and no dividends translate into a projected robust free operating cash flow (FOCF) and discretionary cash flow of about EUR130 million-140 million in 2019. S&P projects that leverage will likely be at the upper end of 4.5x-4.8x in 2019-2020. The company relies on externally sourced products to generate revenue and EBITDA growth and it is subject to the availability of target products in the market. S&P said, "Our assessment of Cheplapharm's business risk profile is constrained primarily by its relatively small size compared with other global generics-focused pharmaceutical companies. Additionally, its portfolio primarily comprises niche and older legacy products that have lost patent protection, which are exposed to price erosion and are experiencing gradual revenue decline. The company also lacks in-house research and development (R&D) capabilities, focusing rather on acquisition of assets and corresponding IPs from the larger pharmaceutical companies, for which these products are either too small or have become less attractive in terms of returns. "We view the European generics market as fragmented and price- competitive, with growth trends driven by volume as a result of governments trying to reduce health care spending. We expect the market to grow at a compound annual rate of about 4% in 2017- 2022, driven by new molecule launches and low price erosion, benefiting from aging populations, and an increasing prevalence of chronic diseases, with a stable regulatory environment. Specifically in the off-patent branded industry, we can see there will be more acquisition opportunities given the growing number of drugs the patents for which expire in 2018-2022." However, there is some uncertainty about the price of these off-patent drugs given the increase in competition in that space. Despite its growing size (projected to reach about EUR300 million in revenues in 2018), Cheplapharm remains small compared with other generic players such as Teva with revenues of about EUR22 billion and Mylan at about EUR12 billion. Cheplapharm ranks outside the top 10 generics pharmaceutical companies. However, these larger players compete mainly on price, deriving cost savings from scale and operating efficiencies covering a broad range of products. Cheplapharm, on the other hand, focuses on small niche drugs, with limited or no competition, that have been on the market and off-patent for some time, benefiting from a good stance with prescribers and patients. This is an important factor as a high portion of the company's products are subject to patients co-payments or are fully paid out of pocket. The company's strategy to focus on small products with limited competition, and not to participate in price-driven tenders in markets such as Germany, offers a certain degree of revenue protection. This is further supported by its high degree of geographical diversification, with no country representing more than 15% of revenues. This is important as governments often change reimbursement mechanisms in their efforts to curb costs. Cheplapharm's biggest-selling drugs are Xenical for treating obesity, the cardiology drug Dilatrend, and the virology drug Cymevene. Together these account for nearly 50% of the company's revenues. Although this product concentration is relatively high, it is mitigated by good geographical diversity as the top three countries by sales (Italy, France, and Japan) are forecast to represent about 31% of Cheplapharm's total revenues in 2018. As Cheplapharm's portfolio mainly comprises niche and old legacy products that have been on the market for some time, their revenues are naturally declining by 3%-6% per year and as such need to be replaced for the company to maintain top-line growth. As Cheplapharm's business model is solely focused on sourcing assets from outside, it exposes the company to a potential lack of suitable assets and requires sufficient liquidity to finance these acquisitions. The main strengths of the company are its established track record of careful product selection, with good relationships with potential sellers, which are usually large pharmaceutical companies; and its ability to integrate its products into its outsourced supply chain and marketing and selling organizations worldwide. Another key strength within its life-cycle management activities is the active management of the newly acquired products to reduce overhead, complexity, and production costs, coupled with a proactive price strategy that allows the company to generate additional value from these products. Additionally, marketing is not necessary as the products are well known to prescribers. With limited R&D expenses, outsourced production and distribution, and price stability, the company has been able to generate average EBITDA margins of about 55%. The negative comparable rating analysis modifier reflects the fact that Cheplapharm is relatively new in the capital markets and operates with a business model that relies solely on the acquisitions of new drugs to deliver future growth. This could lead to the company overspending on acquisitions and increasing leverage above our base case. S&P's base case assumes: -- EBITDA of EUR145 million-EUR150 million in 2018 and an increase to about EUR175 million-EUR180 million in 2019 including the acquisitions that will be closed in the second half 2018. Cheplapharm will be able maintain its profitability metrics, supported by management's focus on lifecycle management activities. -- Annual capex is likely to be about EUR5 million-EUR7 million over the next two years. -- No annual acquisitions assumed. -- No dividends payments. Based on these assumptions, S&P arrives at the following credit measures: -- Adjusted debt to EBITDA of about 4.5x-4.8x in 2019 and 2020. -- Adjusted fixed charge coverage of about 5.0x-5.5x in 2018- 2019. -- Reported FOCF generation comfortably above EUR130 million- EUR140 million. S&P said, "The stable outlook reflects our view that Cheplapharm's geographically diversified portfolio and presence in niche markets will protect it to certain extent from price erosion, enabling it to generate low-single-digit organic revenues growth coupled with stable profitability, with an expected reported EBITDA margin of about 40% over the next 12-18 months. We also anticipate the company's adjusted debt-to-EBITDA ratio will remain at about 5.0x and FOCF will remain positive at above EUR60 million, which should help the company to build resources to acquire assets that would support future growth and replenish lost sales from the existing product portfolio. "We could lower the rating if the group's ability to generate at least EUR50 million-EUR60 million of FOCF per year diminishes. 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; increasing competition for its products that would put pressure on prices; or lower cost synergies, leading to deterioration of the top line and profitability. Alternatively, the inability to replace declining revenues with newly acquired products, the purchase of products that we deem higher risk, or overpayment for such products that would lead so a substantial increase in leverage above 5x could also lead to a downgrade. "We could consider a positive rating action if the company demonstrates a sound track record of adjusted debt to EBITDA consistently below 5x, supported by the ability to achieve revenue growth in the low single digits, while maintaining profitability of about 35%-40% and cash flow generation of above EUR50 million." =========== G R E E C E =========== GREECE: Fitch Hikes Long-Term FC IDR to 'BB-', Outlook Stable ------------------------------------------------------------- Fitch Ratings has upgraded Greece's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB-' from 'B'. The Outlook is Stable. KEY RATING DRIVERS The upgrade of Greece's IDRs reflects the following key rating drivers and their relative weights: High The completion of the final review of the Greece's European Stability Mechanism (ESM) programme paves the way for a successful exit from the ESM programme on 20 August 2018. The accompanying debt measures improve general government debt sustainability. Fitch believes that debt sustainability is also underpinned by a track record of general government primary surpluses, its expectation of sustained GDP growth; additional fiscal measures legislated to take effect through 2020 and somewhat reduced political risks. The debt relief measures agreed at the June 21 Eurogroup are substantial. The agreement envisages an upfront (not subject to policy conditionality) deferral on interest and maturity payments on EUR96.4 billion of EFSF loans. Debt and interest payments on EFSF loans will be postponed to 2033 (from 2023 previously). The average maturity of Greek debt (19 years, excluding T-bills and repos) is already among the longest across all Fitch-rated sovereigns. The extension is set to lengthen average maturity further. On August 6 the ESM disbursed the final tranche of EUR15 billion, gross financing needs are moderate and Greece will exit the programme with a sizeable cash buffer. Of the final disbursement, EUR5.5 billion will be used for debt servicing and EUR9.5 billion will contribute to the deposit buffer. Greece is thus set to exit the ESM programme with a deposit buffer of EUR24.1 billion (13% of GDP). According to the Eurogroup, this buffer will cover sovereign financing needs for 22 months (to mid-2020). Its estimates indicate that Greece could be fully funded until 2022, providing a significant backstop against any financing risks for a prolonged period. This should in turn support market confidence and post-programme market access. Public finances continue to improve. In 2017 Greece posted a headline budget surplus of 0.8% of GDP, up from 0.6% a year earlier and the primary surplus was 4% of GDP. This was a significant fiscal outperformance. Fitch had estimated a 2017 primary surplus of 1.9% of GDP, itself higher than the ESM programme target of 1.75% of GDP, due to higher than budgeted revenues and expenditure restraint. Fitch expects fiscal performance to remain sound over the post- programme period. Fitch forecasts continued primary surpluses averaging 2.7% of GDP over 2018-30. Assuming nominal GDP growth of 3.4%, general government gross debt is forecast to fall to 123.3% of GDP by 2030 from 182.7% in 2018. Fitch expects primary surpluses to stay marginally below 3.5% of GDP (the ESM official target until 2022) until 2023 and to drop below 3% from 2024. Medium In its view, the domestic political backdrop has become somewhat more stable and the working relationship between Greece and European creditors has substantially improved, lowering the risk of a future government sharply reversing policy measures adopted under the ESM programme. Nevertheless, future Greek governments are required to maintain primary surpluses for an exceptionally long time and this may pose political challenges. There may be some partial policy reversals in the future, or fiscal targets may be relaxed, as dialogue continues between Greece and its official creditors. Greece's IDRs also reflect the following key rating drivers: The ratings are underpinned by high income per capita levels, which far exceed 'BB' and 'B' medians. While Greece's financial crisis and recession exposed shortcomings in government effectiveness and put acute pressures on political and social stability, governance is still significantly stronger than in most sub-investment-grade peers. Fitch estimates gross financing needs (GFN) of 9% of GDP on average for 2019-30. This is well below 15% of GDP, the target for medium-term debt sustainability adopted by the Eurogroup. The concessional nature of Greece's public debt implies that debt servicing costs are low, average maturity is long and GFN are low, despite the high stock of public debt. The amortisation schedule is benign. Fitch expects the Greek authorities to partly use the cash buffer to "buy back" more expensive portions of the debt stock (e.g IMF). This would lower debt servicing costs further. Interest payments to revenue at 6.5% are well below the historical 'BB' median of 9.4%. The effective interest rate on Greece's public debt stock, at 1.8%, is well below that of most eurozone peers. Other parts of the medium-term debt relief package are subject to policy conditionality, for example, the abolition of the step-up interest rate margin related to the debt buy-back tranche of the second Greek programme as of 2018 and the transfer of profits on Greek bonds made by the ECB from the 2010 Securities Market Programme, including profits made by other eurozone central banks (ANFA holdings). The transfers (EUR4 billion; 2.3% of GDP), will be in semi-annual instalments from 2018 until June 2022. The proceeds will be used to reduce GFN or to finance other investment, in agreement with the European creditors. The Eurogroup agreement includes some flexibility. It mentions the possibility of further debt re-profiling in "an unexpectedly more adverse scenario". The Eurogroup said it will review in 2032 whether additional debt measures are needed to meet GFN targets, assuming that Greece complies with EU fiscal targets. GDP growth is gathering momentum. The Greek economy has grown for five consecutive quarters, and 1Q18 real GDP grew by 0.8% q-o-q (2.3% y-o-y). Fitch expects growth of 2% in 2018 and 2.3% in 2019. Pent-up investment demand, a declining unemployment rate and the complete clearance of government arrears are set to support domestic demand. Net trade contribution is likely to remain small, due to robust import growth. Investment remains import-intensive. Fitch expects both private and government consumption to recover gradually as fiscal policy will be less tight than in 2015-18. The Greek economy continues to face challenges, which the policy commitments under the post-programme framework aim to address. Monitoring will be particularly focussed on financial stability. Tackling nonperforming exposures (NPE), which remain high at 48.5% of total exposures in March, remains a key challenge, and further provisions are likely to be needed before they can be written off. Greek banks have committed to ambitious plans to reduce NPEs to around 35% by end-2019 and have achieved their interim targets. Fitch expects asset quality to continue to improve, but Fitch believes that execution risks are still significant. Confidence in the banking sector is improving. None of the four Greek systemically important banks were required to submit a capital plan as a result of the ECB stress tests in May 2018. On July 26, the ECB lowered the Emergency Liquidity Assistance (ELA) ceiling for Greek banks to EUR8.4 billion from its peak of EUR90 billion in July 2015, reflecting positive developments in liquidity conditions. Dependence on the Eurosystem for liquidity continues to decline. In the six months to end-June, total Eurosystem funding stood at EUR16.3 billion (EUR9.0 billion from the ECB), from EUR33.7 billion at end-2017. Moreover, the Greek government has announced a further relaxation in capital controls in June 2018. Depositor confidence continues to gradually improve. Private- sector deposits grew by EUR4.7 billion (3.7%) in the five months to end-June, reflecting reduced uncertainty around the exit from the ESM programme and a strong tourism season. Fitch expects deposit growth to continue as confidence in the banking system strengthens, although return of deposits will continue to be hampered by the high fiscal burden. The recent deal between Greece and the Former Yugoslav Republic of Macedonia has caused tensions between Syriza and its junior partner in government, ANEL. There is a risk of near-term snap elections once the deal is presented to parliament. Fitch does not expect early elections would markedly disrupt post-programme fiscal and economic outturns. Based on recent polls, Syriza trails the centre-right New Democracy party by 15pp. New Democracy is committed to continue implementation of the programme and has historically shown less ideological opposition than Syriza to the reform agenda underpinning the ESM programme. Fitch has revised the Country Ceiling to 'BBB-' from 'BB-'. It is now three notches above the Long-Term Foreign-Currency IDR from two previously. In June 2018 the authorities took additional steps to relax capital controls. Limits on cash withdrawals were more than doubled, restrictions on opening of new accounts were eliminated and restrictions on transfers abroad relaxed. This is partly a result of improved confidence in the Greek economy, improved access to international capital markets by the banks and the sovereign and a stronger liquidity position of the Greek banks. SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Greece a score equivalent to a rating of 'BB+' on the Long-Term Foreign Currency IDR scale, a 1- notch upward revision from the previous review. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to peers, as follows: - External finances: -1 notch, to reflect Greece's high net external debt which is not captured in the SRM. - Structural Features: -1 notch, to reflect: a) weakness in the banking sector, including a very high level of NPLs, which represent a contingent liability for the sovereign. Capital controls are still in place. b) Political risks related to post- programme implementation of pre-legislated fiscal measures. The improvement in public debt sustainability and the recent strong fiscal performance has warranted a removal of the -1 notch under the Public Finances since the previous review. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign Currency IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable or not fully reflected in the SRM. RATING SENSITIVITIES Future developments that could, individually or collectively, result in positive rating action include: - Track record of achieving further primary surpluses and greater confidence that the economic recovery will be sustained over time. - Policy continuity after Greece's exit from the ESM programme, underpinned by an orderly working relationship between with official sector creditors and a stable political environment. - Lower risks of crystallisation of banking sector risks on the sovereign balance sheet. Future developments that could, individually or collectively, result in negative rating action include: - A loosening of fiscal policy and/or a reversal of the policies legislated under the ESM programme. - Adverse developments in the banking sector increasing risks to the real economy and the public finances. - Re-emergence of sustained current account deficits, further weakening the net external position. KEY ASSUMPTIONS Its long-run general government debt sustainability calculations are assumptions of average primary surplus of 2.7% of GDP over 2018-30, real GDP growth that averages 1.6% over the same period and GDP deflator converging towards 2%. Under these assumptions, public debt declines steadily to 123.3% of GDP by 2030 from 182.7% of GDP in 2018. The full list of rating actions is as follows: Long-Term Foreign-Currency IDR upgraded to 'BB-' from 'B'; Outlook Stable Long-Term Local-Currency IDR upgraded to 'BB-' from 'B'; Outlook Stable Short-Term Foreign-Currency IDR affirmed at 'B' Short-Term Local-Currency IDR affirmed at 'B' Country Ceiling revised to 'BBB-' from 'BB-' Issue ratings on long-term senior-unsecured bonds upgraded to 'BB-' from 'B' Issue ratings on short-term senior-unsecured bonds affirmed at 'B' ============= I R E L A N D ============= BRADLEY PHARMACY: High Court Appoints Interim Examiner ------------------------------------------------------ Aodhan O'Faolain and Ray Managh at The Irish Times report that the High Court has appointed an interim examiner to the Bradley Pharmacy Group, which has debts of approximately EUR24 million. According to The Irish Times, the company says its current difficulties are due to factors including a historical debt owed to Bank of Ireland and a decision by its former main supplier United Drug to change its credit terms from payment from 120 days of delivery to 90 days of delivery had a negative impact on the group's cashflow. At the High Court on Aug. 3, Ms. Justice Aileen Donnelly, as cited by The Irish Times, said she was satisfied to appoint insolvency practitioner Mr. Ken Tyrell of PricewaterhouseCoopers as the interim examiner to a group of related companies which form the Bradley Pharmacy Group. The application for an examiner was made by one of the companies in the group Pagni Pharmacies Ltd., The Irish Times notes. Lyndon MacCann SC for Pagni said the application for the protection of the courts was being sought in order to allow the examiner to engage with potential investors and put together a scheme that if approved by the High Court would ensure the group's survival as a going concern, The Irish Times relays. Counsel said that in the event of a successful examinership, the group would have an excess of liabilities over assets of EUR9.1 million, The Irish Times notes. If the group went into liquidation, the deficit increases to EUR21.4 million, The Irish Times states. Counsel said the group's banking debts would need to be restructured, and the group has been working closely with Bank of Ireland, according to The Irish Times. The Judge, after appointing Mr. Tyrell as interim examiner, adjourned the matter to Aug. 20, The Irish Times says. Bradley Pharmacy Group employs 139 people operates a number of pharmacies in counties Louth, Meath, Monaghan, Dublin, Wicklow and Kerry. CVC CORDATUS VII: Fitch Rates Class F-R Debt 'B-(EXP)sf' -------------------------------------------------------- Fitch Ratings has assigned CVC Cordatus Loan Fund VII DAC expected ratings, as follows: Class X: 'AAA(EXP)sf'; Outlook Stable Class A-R: 'AAA(EXP)sf'; Outlook Stable Class B-1-R: 'AA(EXP)sf'; Outlook Stable Class B-2-R: 'AA(EXP)sf'; Outlook Stable Class C-R: 'A(EXP)sf'; Outlook Stable Class D-R: 'BBB-(EXP)sf'; Outlook Stable Class E-R: 'BB-(EXP)sf'; Outlook Stable Class F-R: 'B-(EXP)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. CVC Cordatus Loan Fund VII DAC is a securitisation of mainly senior secured loans (at least 90%) with a component of senior unsecured, mezzanine, and second-lien loans. Net proceeds of EUR412.2 million from the notes are being used to redeem the old notes (excluding subordinated notes), with a new identified portfolio comprising the existing portfolio, as modified by sales and purchases conducted by the manager. The subordinated notes were issued on the original issue date and are not being offered again. The portfolio will be actively managed by CVC Credit Partners Group Limited. The CLO envisages a further 4.5-year reinvestment period and an 8.5-year weighted average life (WAL). KEY RATING DRIVERS 'B' Portfolio Credit Quality Fitch Ratings places the average credit quality of obligors in the 'B' category. The Fitch-weighted average rating factor (WARF) of the identified portfolio is 32.06. 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 (WARR) of the identified portfolio is 64.36%. Diversified Asset Portfolio The covenanted maximum exposure to the top 10 obligors for assigning the expected ratings is 20% of the portfolio balance. The transaction also includes limits on maximum industry exposure based on Fitch's industry definitions. The maximum exposure to the three largest (Fitch-defined) industries in the portfolio is covenanted at 39%, comprising 15% for the top industry, and 12% each for the second- and third-largest industries. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management The transaction features a 4.5-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Analysis Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls and the various structural features of the transaction, and to assess their effectiveness, including the structural protection provided by excess spread diverted through the par value and interest coverage tests. The modelled waterfall has been standardised so that both interest and deferred interest for a given class are paid prior to the corresponding coverage test. This differs slightly from the transaction waterfall where deferred interests are paid after the corresponding coverage test. However, the waterfall difference was found to be immaterial. RATING SENSITIVITIES A 125% default multiplier applied to the portfolio's mean default rate, and with this increase added to all rating default 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 four notches for 'BB' rating level and two notches for other rated notes. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. HALCYON LOAN 2018-1: Moody's Assigns B2 Rating to Class F Notes --------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following definitive ratings to notes issued by Halcyon Loan Advisors European Funding 2018-1 Designated Activity Company: EUR206,500,000 Class A-1 Senior Secured Floating Rate Notes due 2031, Definitive Rating Assigned Aaa (sf) EUR9,500,000 Class A-2 Senior Secured Floating Rate Notes due 2031, Definitive Rating Assigned Aaa (sf) EUR16,500,000 Class B-1 Senior Secured Floating Rate Notes due 2031, Definitive Rating Assigned Aa2 (sf) EUR15,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2031, Definitive Rating Assigned Aa2 (sf) EUR25,250,000 Class C Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned A2 (sf) EUR22,000,000 Class D Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned Baa3 (sf) EUR20,250,000 Class E Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned Ba2 (sf) EUR10,500,000 Class F Senior Secured Deferrable Floating Rate Notes due 2031, Definitive Rating Assigned B2 (sf) RATINGS RATIONALE Moody's definitive rating of the rated notes addresses the expected loss posed to noteholders by legal final maturity of the notes in 2031. 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, Halcyon Loan Advisors (UK) LLP, has sufficient experience and operational capacity and is capable of managing this CLO. Halcyon Loan Advisors European Funding 2018-1 Designated Activity Company is a managed cash flow CLO. At least 90% of the portfolio must consist of senior secured obligations and up to 10% of the portfolio may consist of senior unsecured obligations, second- lien loans, mezzanine obligations and high yield bonds. The portfolio is expected to be 90% ramped up as of the closing date and to be comprised predominantly of corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the six month ramp-up period in compliance with the portfolio guidelines. Halcyon will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's four-year reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations or credit improved obligations, and are subject to certain restrictions. In addition to the eight classes of notes rated by Moody's, the Issuer will issue EUR 35,900,000 of subordinated notes which will not be rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. 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. Halcyon's investment decisions and management of the transaction will also affect the notes' performance. 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. Moody's used the following base-case modeling assumptions: Par amount: EUR 350,000,000 Diversity Score: 44 Weighted Average Rating Factor (WARF): 2800 Weighted Average Spread (WAS): 3.40% Weighted Average Recovery Rate (WARR): 43% Weighted Average Life (WAL): 8.5 years. As part of the base case, Moody's has addressed the potential exposure to obligors domiciled in countries with local currency country risk ceiling (LCC) of A1 or below. As per the portfolio constraints, exposures to countries with local currency country risk ceiling rating of A1 or below cannot exceed 10%, with exposures to countries local currency country risk ceiling rating of Baa1 to Baa3 further limited to 5%. Following the effective date, and given these portfolio constraints and the current sovereign ratings of eligible countries, the total exposure to countries with a LCC of A1 or below may not exceed 10% of the total portfolio. As a worst case scenario, a maximum 5% of the pool would be domiciled in countries with LCC of A3 and 5% in countries with LCC of Baa3. The remainder of the pool will be domiciled in countries which currently have a LCC of Aa3 and above. Given this portfolio composition, the model was run with different target par amounts depending on the target rating of each class of notes as further described in the methodology. The portfolio haircuts are a function of the exposure size to countries with a LCC of A1 or below and the target ratings of the rated notes and amount to 0.75% for the Class A-1 and A-2 notes, 0.50% for the Class B-1 and B-2 notes, 0.375% for the Class C notes and 0% for Classes D, E and F. Together with the set of modeling assumptions, Moody's conducted additional sensitivity analysis, which was an important component in determining the definitive ratings assigned to the rated notes. This sensitivity analysis includes increased default probability relative to the base case. Here 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. Change in WARF: WARF + 15% (to 3220 from 2800) Ratings Impact in Rating Notches: Class A-1 Senior Secured Floating Rate Notes: 0 Class A-2 Senior Secured Floating Rate Notes: -1 Class B-1 Senior Secured Floating Rate Notes: -1 Class B-2 Senior Secured Fixed Rate Notes: -1 Class C Senior Secured Deferrable Floating Rate Notes: -2 Class D Senior Secured Deferrable Floating Rate Notes: -1 Class E Senior Secured Deferrable Floating Rate Notes: -1 Class F Senior Secured Deferrable Floating Rate Notes: -1 Percentage Change in WARF: WARF +30% (to 3640 from 2800) Ratings Impact in Rating Notches: Class A-1 Senior Secured Floating Rate Notes: -1 Class A-2 Senior Secured Floating Rate Notes: -3 Class B-1 Senior Secured Floating Rate Notes: -3 Class B-2 Senior Secured Fixed Rate Notes: -3 Class C Senior Secured Deferrable Floating Rate Notes: -4 Class D Senior Secured Deferrable Floating Rate Notes: -2 Class E Senior Secured Deferrable Floating Rate Notes: -2 Class F Senior Secured Deferrable Floating Rate Notes: -3 ===================== N E T H E R L A N D S ===================== STEINHOFF: Standard Chartered, Commerzbank Named as Defendants -------------------------------------------------------------- Karin Matussek at Bloomberg News reports that Standard Chartered Plc and Commerzbank AG are among companies targeted by investors suing Steinhoff International Holdings NV to recover as much as EUR12 billion (US$13.8 billion) they claim they lost because of accounting irregularities at the retail giant. According to Bloomberg, South African law firm LHL Attorneys said in an emailed statement the suit was filed in Johannesburg and seeks class-action status to cover shareholders who bought Steinhoff stock from June 26, 2013 to December 5, 2017. Other businesses with links to Steinhoff including ABSA Bank, auditors Deloitte and Roedl & Partner were also named as co- defendants as the shareholders seek to recoup their money, Bloomberg notes. Individuals targeted include former Steinhoff Chief Executive Officer Markus Jooste, ex-Chairman Christo Wiese and former Chief Financial Officer Ben la Grange, Bloomberg states. Furniture retailer Steinhoff plunged more than 90% in December after it said it couldn't release its financial results and was trying to figure out if there was a EUR6 billion hole in the balance sheet, Bloomberg recounts. The company in July won support from creditors to restructure EUR9.4 billion of debt, Bloomberg relates. Auditors at PricewaterhouseCoopers LLC are investigating the accounts and aim to publish a report by the end of the year, Bloomberg discloses. A spokesman for Steinhoff, as cited by Bloomberg, said the company hasn't received any court papers in the matter. Steinhoff International Holdings NV's registered office is located in Amsterdam, Netherlands. VEON HOLDINGS: S&P Withdraws 'BB' Long-Term Issuer Credit Rating ---------------------------------------------------------------- S&P Global Ratings withdrew its 'BB' long-term issuer credit rating on VEON Holdings B.V. at the issuer's request. VEON Holdings B.V. is a subholding and core subsidiary of VEON Ltd. S&P's ratings on VEON Ltd. (BB/Watch Pos/--) and its Russia-based core subsidiary PJSC Vimpel-Communications (BB/Watch Pos/--) are unchanged. The withdrawal does not affect the existing 'BB' rating on Veon Holdings' debt, including the US$1 billion notes due in 2022 (outstanding amount: US$628 million) guaranteed by PJSC Vimpel- Communications, which remain on CreditWatch with positive implications. Neither does the withdrawal affect the 'BB' rating on GTH Finance B.V.'s US$1.2 billion notes guaranteed by VEON Holdings B.V., which also remain on CreditWatch with positive implications. =========== R U S S I A =========== LENTA LLC: Fitch Affirms 'BB' Long-Term IDRs, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Lenta LLC's (Lenta) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and senior unsecured bonds at 'BB'. The Outlooks on the IDRs are Stable. The rating affirmation reflects its expectation that Lenta will be able to continue to build on its position as one of the top Russian food retailers and to enlarge business scale by successfully implementing its growth strategy over the next four years. The ratings are supported by Lenta's moderate leverage and strong fixed charge coverage relative to close sector peers'. Fitch believes Lenta's healthy credit metrics will be maintained over the medium term, despite its expectation of weakening profitability and heightened competition. KEY RATING DRIVERS Consistent Market Share Gains: The ratings of Lenta are supported by its strong implementation of its expansion strategy and track record of consistent market share gains. In 2017 the company has become the third-largest food retailer in Russia by sales, up from being the fifth-largest in 2016. Lenta is also the largest hypermarket operator in Russia as measured by 2017 sales. Fitch expects the company to maintain its market position and grow its EBITDAR up to USD1 billion over the next fits years. This will position Lenta's rating firmly in the 'BB' category. Limited Upside from Consumer Confidence: Fitch expects a gradual improvement in consumer purchasing power over the medium-term. After three years of contraction, real disposable incomes in Russia resumed growth in February 2018, paving the way for a recovery in consumer sentiment. Nevertheless, Fitch does not project a material growth in Lenta's like-for-like (LfL) sales as competition remains intense among food retailers and as the market environment is characterised by high promotional activity. Deflation in certain product categories also constrains growth in the average shopping basket. Decreasing but Strong Profitability: Fitch expects Lenta's EBITDA margin to decline to 9.3% in 2018 from 9.8% in 2017, due to the impact from salary indexations in October 2017 and higher operating lease expenses related to a high share of new rented space added during 2017. Fitch projects further gradual reduction in EBITDA margin over 2019-2021, on the back of rising operating lease expenses and gross margin sacrifices to withstand competition. Nevertheless, Fitch expects Lenta's profitability to remain strong compared with Russian and European food retail peers'. Limited Format Diversification: The ratings take into account Lenta's limited diversification outside the core hypermarket format as supermarkets made up only 5% of the company's sales in 2017. Fitch projects this share to grow to only around 15% by 2021, despite Lenta's accelerated expansion under the format. Fitch also expects Lenta to continue its success in implementing measures to improve its supermarkets' performance, as already evidenced by a 0.5% growth in LfL sales in 2Q18 after a 4% fall in 1Q18. Moderate Leverage: Fitch projects Lenta's funds from operations (FFO) adjusted leverage at 3.5x-3.7x over the next four years (2017: 3.3x), which is conservative for the 'BB' category rating in the food retail industry. Its forecast assumes Lenta will continue expanding its store footprint organically or through bolt-on M&A to capture growth opportunities arising from the fragmented nature of Russian food retail market. At the same time, the rating takes into account the ability of Lenta to manage its leverage by being flexible, in case of need, on the timing of its store roll-out programme, Strong Fixed Charge Coverage: Among Fitch-rated Russian food retailers, Lenta has the strongest FFO fixed charge coverage (2017: 2.7x) due to strong store ownership. Fitch projects the fixed charge cover metric to remain broadly stable over 2018- 2021, although Fitch factors in a growing share of leasehold stores. Average Recoveries for Unsecured Bondholders: Fitch rates Lenta's rouble bonds in line with the company's IDR of 'BB' as the bonds rank pari passu with unsecured bank loans and there is no prior- ranking debt. The bonds' rating reflects its view of average recovery expectations in case of default. DERIVATION SUMMARY Compared with Fitch-rated Russian food retail peers, Lenta has a similar financial risk profile to Russia's largest food retailer X5 Retail Group N.V. (BB+/Stable), characterised by comparable leverage metrics. Lenta, however, displays a weaker business risk profile than X5, being smaller in size and market position and less diversified in retail formats. This drives the one-notch rating differential between Lenta and X5. Both Lenta and X5 have stronger business risk profiles and credit metrics than Russia's seventh-largest food retailer O'KEY Group S.A. (B+/Stable). Compared with UK food retailer Tesco PLC (BB+/Stable) and France's Carrefour SA (BBB+/Stable), Lenta enjoys structurally higher profitability, in line with most Russian food retailers', predominantly a result of lower wages and a moderate standalone financial risk profile. However, smaller business scale and the focus on one market, with a less mature industry structure, weighs on the ratings of Russian food retailers. The lower maturity and higher fragmentation in Russian food retail, however, also offer growth opportunities and the prospect of further industry consolidation over time. Lenta's ratings take into consideration the higher-than-average systemic risks associated with the Russian business and jurisdictional environment. No Country Ceiling constraint or parent/ subsidiary linkage aspects were in effect for these ratings. KEY ASSUMPTIONS Fitch's Key Assumptions within its Rating Case for the Issuer - Around 15% revenue CAGR over 2017-2021, driven primarily by an increase in selling space - Gradually decreasing EBITDA margin - Capex at around 7.5% of revenue - Bolt-on M&A of RUB5 billion per year over 2019-2021 - No external dividends paid by parent Lenta Ltd and funded by cash upstreamed from Lenta LLC RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Successful implantation of Lenta's expansion plan and healthy LfL sales growth relative to peers', resulting in growing market share and EBITDAR - Maintenance of strong FFO margin and improving free cash flow (FCF) margin towards neutral to positive territory, indicating maturity of existing business - FFO-adjusted gross leverage below 3.5x on a sustained basis, coupled with conservative financial policy - FFO fixed charge coverage around 2.5x on a sustained basis (2017: 2.7x) Developments That May, Individually or Collectively, Lead to Negative Rating Action - A contraction in LfL sales growth relative to close peers' along with material failure in implementing the expansion plan - FFO margin erosion to below 4.5% (2017: 7.1%) - FFO-adjusted gross leverage above 4.5x on a sustained basis - FFO fixed charge cover significantly below 2.5x - Material deterioration of FCF margin as a result of weakened operating cash flow or high capex LIQUIDITY Adequate Liquidity: As at July 1, 2018, Lenta's cash of RUB4.9 billion and available undrawn committed credit lines of RUB2.3 billion were insufficient to cover expected negative FCF and RUB23.8 billion short-term debt. Nevertheless, Fitch believes that the company's liquidity position is supported by capex scalability and Lenta's good access to bank loans and capital markets as evidenced by recent refinancing activities. Moreover, as at July 1, 2018 Lenta had RUB45.3 billion of undrawn uncommitted credit lines maturing in more than 12 months. Reliance on uncommitted credit lines is standard practice for Russian corporates. RUSSIAN REINSURANCE: A.M. Best Assigns B (Fair) FS Rating --------------------------------------------------------- A.M. Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of "bb+" to Russian Reinsurance Company JSC (Russian Re) (Russia). The outlook assigned to these Credit Ratings (ratings) is stable. The ratings reflect Russian Re's balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. The company's balance sheet strength is underpinned by risk- adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), and good quality retrocession panel. Offsetting these positive rating factors is the relatively low liquidity of Russian Re's investment portfolio, with over a third of invested assets held in real estate. Additionally, the company reported adverse reserve development in the past, prior to implementing a revised reserving approach from 2015, which incorporates a more appropriate classification of risks. Russian Re's operating performance is marginal, with the company reporting a five-year weighted average combined ratio of 106.2% and return on equity of 5.1% (2013-2017). Technical losses were reported in the four years prior to 2016, due to a combination of factors, including poor underwriting experience in the Middle East and North Africa region, economic challenges in the domestic market and a relatively high expense ratio due to the company's lack of scale. Positive underwriting results were achieved in 2016, 2017 and the first half of 2018, with the combined ratio maintained below 90%. The improvement was achieved through corrective measures taken by the management, including exiting unprofitable territories and tightening underwriting controls. Given the historical volatility, uncertainty exists as to whether the improvements in Russian Re's performance will be sustained over a longer term. The company's investment results also have been subject to fluctuations, particularly due to foreign exchange movements, but have been positive in most years. A.M. Best's assessment of Russian Re's business profile as limited stems from its relatively small size, with gross written premiums (GWP) of approximately USD 15 million in 2017, and limited geographical diversification, with approximately 75% of GWP sourced from Russia. The company maintains a 3% share in the local reinsurance market, and has yet to demonstrate a successful strategy of consistent and profitable international expansion. The company's medium-term plans include further growth in Asia Pacific (where South Korea accounts for over half of Russian Re's premium volumes) and entering the Latin American market. =========== S E R B I A =========== DUNAV RE: A.M. Best Assigns B (Fair) Financial Strength Rating -------------------------------------------------------------- A.M. Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of "bb+" to Dunav Re Company a.d.o. Belgrade (Dunav Re) (Serbia), a subsidiary of Dunav Insurance Company j.s.c. Belgrade. (Dunav), a multi-line insurer operating in Serbia. The outlook assigned to these Credit Ratings (ratings) is stable. The ratings reflect Dunav Re's balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. Dunav Re's credit profile is negatively affected by the financial strength of its parent company. Since its incorporation in 1977, Dunav Re has developed its profile as a reinsurer for its parent company, and increasingly for third party cedants. Dunav Re's risk-adjusted capitalization is assessed at the strongest level, as measured by Best's Capital Adequacy Ratio, and is expected to remain at this level, with internal capital generation supporting the company's moderate growth plans. Offsetting factors in the balance sheet strength assessment include Dunav Re's asset concentration towards Serbian government bonds, the small size of the company's capital base, and its high dependence on reinsurance. This latter factor is mitigated partly by the good credit quality of Dunav Re's retrocession panel. Dunav Re has a track record of improving, albeit volatile, underwriting profitability. In 2017, the company reported a combined ratio of 69%, significantly lower than its five-year average combined ratio (2013-2017) of 100.5%, with the longer- term average combined ratio negatively impacted by catastrophe losses in 2013 and 2014. The company's profit before tax was RSD 162 million in 2017, down from RSD 208 million in the prior year, as exchange losses impaired the company's investment returns. Prospectively, A.M. Best expects Dunav Re to achieve good but highly volatile underwriting results, and to report return on equity of approximately 10%, in line with 2017. Dunav Re generates its business primarily in Serbia, with Dunav being its main cedant. The company is also active in the former Yugoslav region and to a minor extent, in central Europe. Dunav Re's profile is limited in terms of business volumes, with potential increasing competition from international players over the longer term, although the reinsurer currently has a dominant position in its core market of Serbia. =========================== U N I T E D K I N G D O M =========================== GAUCHO: Bidders Circle Business Following Administration -------------------------------------------------------- City A.M. reports that bidders are circling collapsed restaurant chain Gaucho. The group, which is still operating its Gaucho brand but has closed all its Cau restaurants, is seeking a new owner after it appointed administrators, City A.M. discloses. Potential buyers who have previously been linked to the process include founder Zeev Godik, restaurateur Hugh Osmond and M Restaurants founder Martin Williams, City A.M. notes. City A.M. understands that private equity houses have also looked at the business, City A.M. relates. According to City A.M., Gaucho's former owner Equistone is thought to have put forward a number of bids to lenders prior to the business's collapse but these were not accepted. It is understood that the private equity firm is not putting in another bid for Gaucho at this stage, City A.M. states. The beleaguered restaurant company first showed signs of distress earlier this year, when it hired advisers to look into restructuring options, City A.M. recounts. HOUSE OF FRASER: Sports Direct Acquires Business for GBP90 Mil. --------------------------------------------------------------- James Davey at Reuters reports that Sports Direct, the British sportswear retailer controlled by tycoon Mike Ashley, has snapped up House of Fraser from the department store group's administrators for GBP90 million (US$115 million). Billionaire Ashley, who also owns English Premier League soccer club Newcastle United, said on Aug. 10 his ambition was to transform House of Fraser "into the Harrods of the High Street" -- a reference to the Qatari-owned luxury department store in London that was once owned by House of Fraser, Reuters relates. Sports Direct bought House of Fraser's 58 UK stores, its brand and all its stock, Reuters discloses. But it did not take on responsibility for the retailer's historic pension obligations, Reuters notes. "We will do our best to keep as many stores open as possible," Reuters quotes Mr. Ashley as saying in a statement, making no mention of his plans for the workforce -- over 5,900 direct employees and 10,100 who work for concession partners. "This is a massive step forward and further enhances our strategy." Earlier on Aug. 10, House of Fraser appointed Ernst and Young as administrators after talks with investors and creditors failed to find "a solvent solution" for the business, Reuters recounts. PHONES4U: PwC Retained GBP130MM Cash Reserves to Fund Claims ------------------------------------------------------------ Christopher Williams at The Telegraph reports that the administrators of Phones 4U have built up a GBP130-million war chest to fund a legal assault on mobile operators accused of colluding to trigger the retailer's collapse. According to The Telegraph, a progress report reveals that PwC has "purposefully retained significant cash reserves to fund any litigation that may be required in respect of these claims". The administrators have GBP130 million in current accounts for companies that were part of Phones 4U and have told creditors much of this "is held as a reserve to fund the claims", The Telegraph discloses. Phones 4U, owned by the private equity firm BC Partners, went under four years ago after O2, Vodafone and EE all pulled out of the chain, leaving it without handsets or contracts to sell, The Telegraph relates. ********* 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. 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. * * * End of Transmission * * *