/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/190103.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, January 3, 2019, Vol. 20, No. 002 Headlines F R A N C E EVEREST BIDCO: S&P Assigns B Rating to New EUR500MM 1st Lien Loan G R E E C E LARCO: PPC to Continue Supplying Electricity Until Jan. 11 I R E L A N D PROTEUS RMBS DAC: S&P Assigns B+ Rating to Cl. E Notes I T A L Y BANCA CARIGE: ECB Opts to Appoint Temporary Administrators K A Z A K H S T A N KAZAKHTELECOM: S&P Affirms BB+ ICR Amid K-Cell Acquisition U K R A I N E KYIV: Moody's Raises Issuer Rating to Caa1, Outlook Stable U N I T E D K I N G D O M AMIGO LOANS: S&P Affirms B+ Issuer Credit Rating, Outlook Stable AVON PRODUCTS: Egan-Jones Hikes Senior Unsecured Ratings to B DLG ACQUISITIONS: S&P Affirms 'B' Long-Term ICR, Outlook Stable MABLE COMMERCIAL: Jan. 10 Proof of Debt Submission Deadline Set MAHABIS: Enters Administration, Taps KRE Corporate Recovery NORTHERN TRUST: To Transfer Registered Office to Luxembourg SPIRIT ISSUER: S&P Affirms 'BB+' Rating on Class A Notes STRONGHOLD INSURANCE: Scheme Meetings Scheduled for Feb. 20 * UK: 20 Scottish Businesses Set to Fail Each Week in 2019 ********* =========== F R A N C E =========== EVEREST BIDCO: S&P Assigns B Rating to New EUR500MM 1st Lien Loan ----------------------------------------------------------------- S&P Global Ratings assigned its 'B' ratings to Everest Bidco and the group's proposed EUR500 million first-lien loan. The recovery rating is '3', indicating its expectation of meaningful recovery (rounded estimate: 65%) in the event of a payment default. S&P said, "These ratings are in line with the preliminary ratings we assigned on May 21, 2018, and reflect our expectation that the company will maintain high leverage under the control of its new financial sponsor owner, Permira. The rating is also constrained by EG's relatively limited scale and narrow product portfolio compared with those of larger rated peers, and by its dependence on a few vendors. A further constraint is EG's structurally low EBITDA margin, which is inherent to the distribution business, albeit higher than the average for larger competitors. "Theses weaknesses are mitigated by supportive industry fundamentals, EG's good track record, and our expectation of positive, although modest, free cash flow generation of EUR30 million-EUR35 million over 2018-2020, thanks to low capex and limited working capital requirements. We forecast that positive revenue and EBITDA growth will lead to adjusted gross debt to EBITDA gradually declining to about 5.2x in 2020 from 6.2x in 2018. "2018 results may be weaker than we originally forecast due to adverse operating conditions, including negative foreign exchange effects, as well as delays in some license and maintenance contract renewals following disruptive events across Europe (Brexit, riots in France) that affected the business climate and market deterioration resulting from ongoing international trade disputes. As result, leverage could potentially exceed our 6.5x threshold temporarily. If annual results and Q1 performance suggests this would be a prolonged trend through 2019, it could pressure the rating." EG was established in 2003 and has expanded very quickly both organically and externally. EG offers a full range of value-added cybersecurity solutions and services sourced mainly from U.S. vendors seeking distribution partners outside their home market in Europe and Asia-Pacific. EG benefits from a network of resellers, expertise in sourcing and selecting disruptive cybersecurity vendors, a go-to market strategy, supply chain management, training, technical support, and maintenance services. Generalist peers typically lack this expertise. In S&P's view, EG's business risk profile is constrained by its: -- Niche position in a fragmented and highly competitive enterprise IT security and datacenter market; -- Subsequent narrower revenue base than peers'; -- Strong reliance on a few vendors and therefore lack of product diversity; -- Concentration in Europe (particularly in the U.K., France, Germany, and the Netherlands); and -- Modest pricing power. EG addresses a small portion of the wider $180 billion enterprise IT security and datacenter markets. It is active mainly in infrastructure protection, network security equipment (NSE; $18 billion), and software-defined datacenter ($16 billion) markets. By comparison, the addressable markets and revenue bases of full- range, broadline distributors, such as Arrow Electronics Inc., Tech Data Corp., and Avnet Inc., are approximately 10 times larger. S&P said, "Furthermore, EG lacks diversity in our view, especially relative to larger broadline peers. EG's vendor base is substantially concentrated on a few vendors within the infrastructure protection and NSE subsegments, which -- combined with related support services -- account for 88% of total revenues. It derives 72% of its total revenues from its top 10 vendors, and 47% from its top two vendors. EG further derives 71% of its revenues from Europe (50% in four countries), despite recent diversification into Asia-Pacific in 2016 and the U.S. in 2017 to widen its geographic reach. "Moreover, we think that EG's pricing power remains limited by the market's structure, where vendors determine pricelists on which EG can only negotiate a discount. EG is also exposed to competition from regional specialists/value-added distributors that have established local market positions. We also see a risk of market disintermediation, given that EG competes directly with manufacturers and vendors that sell directly to resellers in certain countries, particularly the U.S. That said, we think this risk remains limited because of the market's significant fragmentation and the nature of the inventory and supply chain management business, which has low margins and is not core to vendors or resellers." S&P considers these weaknesses to be balanced by: -- Supportive industry fundamentals, including solid growth (8%- 10% annually for cybersecurity) and low commoditization risk; -- EG's successful business model and reseller network; -- EG's global reach, which is an advantage against local and other smaller regional value-added distributors; and -- Track record of addressing vendors' specifics needs and growth in new countries/regions, which support strong, mutually beneficial relationships with vendors and resellers and significantly higher barriers to entry, in S&P's view. EG also addresses a highly fragmented customer base consisting of an exclusive resellers network (more than 13,000) with both specialist value-added resellers (targeting small and midsize enterprises), and, more recently, generalist resellers targeting large corporate entities. Concentration is low, since no customer represented more than 3% of total gross sales in 2017 (with the top 10 resellers accounting for 18% of total gross sales, pro forma new acquisitions). EG's business model benefits from its deep integration in the vendor supply chain, its high contribution to vendors' revenues, revenue growth, and track record of accelerating vendors' growth in geographies where they are not present. EG contributes more than 50% on average of its top five vendors' revenue in Europe (84% for Nutanix, 72% for Paloalto, 62% for Fortinet, and 54% for Infoblox) and about 15% on average worldwide (24% for Fortinet, 17% for Nutanix, 15% for Infoblox, and 14% for Paloalto). These strengths translate into higher EBITDA margins (4.7% reported in 2017) than the broadline competitors' average and high recurring revenues (58%, due to license renewal and technical support for vendors' products), which is unusual for this type of business and not observable for key competitors. In addition, turnover of vendors and resellers is low, as shown by EG's long-standing relationships with Fortinet since 2004, Palo Alto since 2009, and f5 since 2004. S&P said, "We view this positioning as a positive factor, since EG generates positive free cash flow generation, which we forecast will exceed EUR20 million in 2018, after nonrecurring/exceptional items. This is supported by minimal capex requirements (0.1% of sales) and efficient working capital management (cash conversion cycle of 12 days), due to very little inventory compared with that of generalist distribution peers, which face large inventory risk. "Our view of financial risk reflects EG's high leverage and private equity ownership. Gross debt pro forma the proposed issuance amounts to EUR650 million, comprising the EUR500 million first-lien loan, GBP105 million of second-lien loans, about EUR30 million of local credit facilities and factoring, as well as an undrawn EUR90 million RCF. We add to EG's reported debt about EUR46 million of operating leases. Given that the group is controlled by a financial sponsor, we use its gross debt in calculating its credit metrics. "We determine the group credit profile at the level of Everest Bidco's parent company, AlexanderTopco (Lux). However, we base the analysis on the consolidated financial statements at the Everest Bidco level, which we understand are representative of the entire group, since there are no assets other than the stake at Everest Bidco or liabilities at AlexanderTopco." In S&P's base case for 2018-2020, it assumes: -- 8%-10% of average yearly growth for the global cybersecurity market, supported by the growth and fragmentation of IT infrastructure, rising number and complexity of cyber threats, strong cloud migration demand, and stricter regulation. -- A 16% annual growth rate, on average, for pro forma revenue over 2018-2020, based on continuous sales growth in existing areas and the geographic expansion of selected vendors. -- S&P has not included the recruitment or loss of vendors, external growth via mergers, acquisitions, or new geographies, or the benefits of scale on costs, due to the acquisitions in 2017. -- S&P Global Ratings-adjusted EBITDA margins of about 5.0%. -- Cash taxes of EUR20 million-EUR30 million. -- Working capital outflows of around EUR20 million per year. -- Capex of about EUR3 million over 2018-2020, corresponding to about 0.1% of net sales. -- Reported FOCF of around EUR30 million over 2018-2019, increasing to around EUR35 million in 2020. Based on these assumptions, S&P arrives at the following credit measures: -- An adjusted debt-to-EBITDA ratio of about 6.2x in 2018, declining to about 5.7x in 2019 and 5.2x in 2020, thanks to EBITDA growth; -- Adjusted funds from operations (FFO) to debt of about 9.3% in 2018, 8.3% in 2019, and 9.5% in 2020; and -- FOCF to debt of about 5.6% in 2018, 5.4% in 2019, and 6.3% in 2020. S&P said, "The stable outlook reflects our anticipation that EG will leverage on its positions in the expanding cybersecurity industry and consistently generate EBITDA growth and positive FOCF. We anticipate that its adjusted debt to EBITDA will remain between 5.5x and 6.5x and FOCF to debt above 3% in 2018-2019. "We could lower the rating if declining EBITDA margins prevented EG from gradually improving its credit metrics or if FOCF to debt declined below 3%. In our view, operating underperformance, increasing competition within existing geographies, or loss of key vendors, could lead to lost contracts and weakening of EG's EBITDA base. "Ratings upside is remote, given the company's private-equity ownership. We could raise the rating if pro rata adjusted leverage falls below 4.5x and pro rata FOCF to debt well exceeds 7%, and we are confident those levels would be sustained." =========== G R E E C E =========== LARCO: PPC to Continue Supplying Electricity Until Jan. 11 ---------------------------------------------------------- Angeliki Koutantou at Reuters reports that Greece's Public Power Corp. (PPC) will continue to supply debt-laden Larco, Europe's biggest nickel producer, with electricity until this month, extending a previous deadline which was set to expire on Dec. 31. Larco, which is 55% owned by the Greek state, owes about EUR280 million (US$319 million) in unpaid electricity bills to state- controlled power utility PPC, also a minority shareholder in the company, Reuters discloses. The Greek government has been working on a plan to avert a closure of Larco, asking the producer to cut its output to align itself with lower nickel prices and to reduce wage costs, Reuters relates. PPC warned Larco earlier in December it would pull the plug on Jan. 1, 2019, unless the company cut its production costs to meet its obligations, Reuters recounts. According to Reuters, PPC said on Dec. 31 that it will continue to supply Larco until Jan. 11, showing its goodwill since further talks are planned. It said it has decided to give Larco more time, although the company's proposals failed to meet conditions set by PPC, including the full payment of outstanding monthly bills, Reuters notes. Larco employs about 1,000 people in Greece. ============= I R E L A N D ============= PROTEUS RMBS DAC: S&P Assigns B+ Rating to Cl. E Notes ------------------------------------------------------ S&P Global Ratings has assigned its credit ratings to Proteus RMBS DAC's (Proteus) class A, B-Dfrd, C-Dfrd, D-Dfrd, and E-Dfrd notes. Proteus also issued unrated class F, Y notes, and X certificates. Proteus is a securitization of a pool of buy-to-let (BTL) and owner-occupied residential mortgage loans secured on properties in Ireland, other than 77 properties that are located outside Ireland, originated by Danske A/S. On Oct. 23, 2017, the seller, Proteus Funding DAC, agreed to purchase a portfolio of Irish residential mortgages from the vendor, Danske Bank A/S. On the Dec. 15, 2017 closing date, the issuer used the note issuance proceeds of the class A, B, C, X, and Y notes (original notes) to purchase the beneficial interest of the same portfolio from the seller. After the closing date, the legal title of the mortgages moved to the servicer, Pepper Finance Corporation (Ireland) DAC, (Pepper) from the vendor. The legal title remains with the servicer, unless a perfection trigger occurs. On the closing date, S&P did not rate the original notes. On the new issue date, Dec. 20, 2018, the issuer issued class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, F, Y notes, and X certificates (new notes), and will exchange the original notes with the new notes. The new notes are backed by the same collateral. At closing, the transaction did not benefit from external liquidity support. Protection to the noteholders was provided only by subordination and excess spread. On the new issue date, Proteus has two reserve funds. The rated notes' interest rate are based on an index of three- month Euro Interbank Offered Rate (EURIBOR). Within the mortgage pool, the loans are linked to either the European Central Bank (ECB) base rate, or a standard variable rate (SVR). There is no swap in the transaction to cover the interest rate mismatches between the assets and liabilities. S&P said, "Our ratings reflect our assessment of the transaction's payment structure, cash flow mechanics, and the results of our cash flow analysis to assess whether the notes would be repaid under stress test scenarios. Subordination and the general reserve fund provide credit enhancement to the rated notes. However, due to the stresses we apply in our analysis the general reserve never top up under our rated scenario. The notes amortize sequentially, and do not include a trigger to switch to pro rata amortization. Subject to certain documented conditions, principal can be used to pay interest and further liquidity is provided through the liquidity reserve fund. "Taking these factors into account, we consider the available credit enhancement for the rated notes to be commensurate with the ratings that we have assigned. Interest on the class B-Dfrd to E-Dfrd notes can be deferred, so our analysis of these notes addresses the ultimate payment of principal and the ultimate payment of interest. Once one of the mezzanine or junior notes become the most senior outstanding class of notes, interest cannot defer anymore, but previously unpaid interest shortfalls can be repaid by the transaction's legal maturity date. "Our ratings also reflect the application of our criteria for structured finance ratings above the sovereign. Our RAS criteria designate the country risk sensitivity for residential mortgage- backed securities (RMBS) as moderate. Under our RAS criteria, this transaction's notes can therefore be rated four notches above the sovereign rating, if they have sufficient credit enhancement to pass at least a severe stress. However, as all six of the conditions in paragraph 42 of the RAS criteria are met, we can assign ratings in this transaction up to a maximum of six notches (two additional notches of uplift for the most senior class of notes) above the sovereign rating, subject to credit enhancement being sufficient to pass an extreme stress. As our long-term sovereign rating on Ireland is 'A+', our RAS criteria do not currently constrain our ratings on any class of notes." RATINGS ASSIGNED Proteus RMBS DAC Class Rating Amount (EUR) A AAA (sf) 1,199,601,000 B-Dfrd AA- (sf) 86,812,000 C-Dfrd A- (sf) 63,137,000 D-Dfrd BBB- (sf) 47,353,000 E-Dfrd B+ (sf) 39,461,000 F NR 139,908,000 Y NR 2,000,000 X certificates NR 150,000 NR--Not rated. ========= I T A L Y ========= BANCA CARIGE: ECB Opts to Appoint Temporary Administrators ----------------------------------------------------------- Camilla Hodgson at The Financial Times reports that temporary administrators have been appointed to troubled Italian lender Banca Carige after a majority of its board members resigned on Jan. 2. The European Central Bank announced the decision to appoint three temporary administrators and a surveillance committee to replace Banca Carige's board of directors and "take charge" of the lender, after executives quit and the mid-sized lender missed a deadline to shore up its financial health, the FT relates. Last month, the lender failed to raise an emergency EUR400 million after the Malacalza family, the billionaire shareholders that hold nearly a third of Carige, abstained from a shareholder vote on the turnround plan, the FT recounts. The capital call had been an effort to keep the bank afloat after a fraud scandal hit its balance sheet, and the ECB gave it until the end of 2018 to either close a capital hole or find an acquirer, the FT notes. Fabio Innocenzi, Pietro Modiano and Raffaele Lener have been appointed as temporary administrators while Gianluca Brancadoro, Andrea Guaccero and Alessandro Zanotti have appointed as members of the surveillance committee, the FT discloses. * * * As reported by the Troubled Company Reporter-Europe on Oct. 12, 2018, Fitch Ratings downgraded Banca Carige's Long-Term Issuer Default Rating to 'CCC+' from 'B-' and the bank's Viability Rating to 'ccc+' from 'b-'. The ratings have been placed on Rating Watch Negative. The downgrade reflects Fitch's view that the bank's failure is a real possibility because Fitch believes that it will be challenging for the bank to strengthen its capital, which could ultimately lead to regulatory intervention. The bank currently does not meet its Pillar 2 requirement for total capital and plans to issue Tier 2 debt to reach it, which is likely to be difficult in the changed market conditions for Italian banks. Carige's largest shareholder has stated it would support the bank but has not made a firm commitment to subscribe to the entire EUR200 million of Tier 2 debt the bank plans to issue. =================== K A Z A K H S T A N =================== KAZAKHTELECOM: S&P Affirms BB+ ICR Amid K-Cell Acquisition ---------------------------------------------------------- S&P Global Ratings affirms its 'BB+' issuer credit and 'kzAA' Kazakhstan national scale ratings on Kazakhtelecom. On Dec. 12, 2018, Kazakhtelecom JSC signed an agreement to acquire 75% of telecom operator K-Cell for US$445 million in December 2018. And S&P expects Kazakhtelecom will acquire an additional 49% stake in its mobile joint venture (JV) from Tele2 in 2019. S&P said, "The affirmation reflects our view that the benefits from the acquisition of K-Cell will offset leverage temporarily just above our threshold for the rating. The enlarged group has a stronger market position, stemming from an increase in the mobile market share in Kazakhstan to about 64% from 28% (via the JV with Tele2); larger scale with added revenues on top of our previous 2019 estimate for Kazakhtelecom, which already included the revenue increase from the Tele2 JV. In addition, we expect the adjusted EBITDA margin to improve gradually, partly because K- Cell reports higher margins but also because we expect Kazakhtelecom to achieve cost synergies over time, and organic revenues growth. "In our view, these positive factors balance the increase in leverage stemming from the transaction. In 2019, we expect that leverage will be slightly above 2.0x and FOCF to debt slightly above 10% in 2019, before improving in 2020 to 1.8x and 17%-18%, respectively. These ratios are weaker than in our previous base case excluding K-Cell (1.4x and 21% in 2019) but commensurate with the 'BB+' rating, because we have revised our credit measure targets that we deem adequate for the rating; target debt to EBITDA is now 2x compared with 'below 1.5x' previously to reflect the benefits from K-Cell." Kazakhtelecom funded the transaction, a 51% stake in K-Cell from Fintur Holdings B.V. and 24% share in K-Cell from Telia (the remaining 25% are free float), with Kazakhstani tenge (KZT) 100 billion bonds and about KZT65 billion in cash on the balance sheet. S&P said, "Our rating on Kazakhtelecom remains constrained by the group's exposure to country risk, which we assess as high for Kazakhstan, where all of the group's revenues and assets are located. In our view, Kazakhtelecom's credit quality is also affected by its public policy role, which sometimes requires it to invest in projects with long payback periods. A recent example of such a project is the four-year KZT48.5 billion project Kazakhtelecom started in 2018 to provide high-speed internet access to rural areas. This will spur a hike in the company's capital expenditures (capex)-to-sales ratio to 18% in 2019 from 10% in 2016-2017. We believe that its FOCF will weaken only temporarily as the bulk of capex related to this project will occur in 2019. We project the capex-to-sales ratio will fall to 16% in 2020. Our rating also takes into account our view that Kazakhtelecom's immediate 51% owner, Kazakhstan's 100% state- owned investment fund Samruk-Kazyna, has weaker credit quality than Kazakhtelecom, with a 'b' stand-alone credit profile. Additionally, we also factor in potential integration risks from the consolidation of both the JV and K-Cell. "The stable outlook reflects our expectation of the successful integration of K-Cell. This should result in continued organic revenue growth and margin improvements with adjusted debt to EBITDA rapidly declining below 2x after a temporary peak at about 2.1x in 2019 and FOCF to debt remaining above 10%. "We could lower the rating if Kazakhtelecom's leverage remained above 2.0x for a longer period or if FOCF to debt declined below 10%, for example stemming from higher-than-expected integration costs from the K-Cell acquisition or higher-than-expected capex stemming from Kazakhtelecom's public policy role. "Rating upside is remote in the next 12 months. However, we could take a positive rating action if Kazakhtelecom's adjusted leverage declined sustainably to 1.5x or below, coupled with FOCF to debt at or above 20%." ============= U K R A I N E ============= KYIV: Moody's Raises Issuer Rating to Caa1, Outlook Stable ---------------------------------------------------------- Moody's Public Sector Europe has upgraded the City of Kyiv and the City of Kharkiv's issuer ratings to Caa1 from Caa2 and changed the ratings' outlook to stable from positive. This rating action follows Moody's decision to upgrade the Ukraine government bond rating to Caa1 from Caa2 and to change the outlook to stable from positive on December 21, 2018. RATINGS RATIONALE Moody's rating action on the Cities of Kyiv and Kharkiv reflects the improvement in the operating environment for Ukrainian sub- sovereigns, as captured in the rating action on the sovereign bond rating. The sovereign rating upgrade indicates a reduction in the systemic risk to which the Ukrainian local governments are exposed, given their close financial and operational linkages with the central government. In addition, the institutional linkages intensify the close ties between the two levels of government through the sovereign's ability to change the institutional framework under which Ukrainian local governments operate. Further, Ukrainian local governments depend on revenues that are linked to the sovereign's macroeconomic and fiscal performance. In particular, Kyiv derives approximately 62% of its operating revenue from shared taxes and additional 29% from state transfers, while Kharkiv derives approximately 55% of its operating revenue from shared taxes and an additional 40% from state transfers. The rating action on both cities also reflects Moody's view that the creditworthiness of the cities has materially improved setting the base for a greater resilience to external shocks. The improvement stemmed from tight cost control coupled with an expanded revenue base due to a change in central government tax entitlements, increased transfers and high inflation. Kyiv and Kharkiv have continued in pursuing positive financial results and debt reduction in a challenging economic environment. Moody's expects Kyiv's budgetary performance to stabilise in 2018-2019 with a high operating balance at around 30% of operating revenue after posting 33% in 2017, while Kharkiv's performance will remain sound with an operating margin at 21% of operating revenue over the same period (18% in 2017). Performance will be supported by tax revenue growth on the back of the continuation of the economic recovery and a steady inflow of current transfers from the central government. Kyiv's direct debt has gradually fallen to a moderate 39% of operating revenue in 2017 from 56% in 2016 and should further decline to 36% of operating revenue projected in 2018, while Kharkiv's conservative debt policy resulted in negligible debt levels of 5% of operating revenue at year-end 2017, expected to remain stable in 2018. However, Kyiv is exposed to foreign currency risk as its debt is fully denominated in US dollars. At present, the city's direct debt consists of $351 million obligations to Ukraine's Ministry of Finance and $115 million loan participation notes due in 2022. WHAT COULD MOVE THE RATING UP/DOWN An upgrade of Kyiv and Kharkiv's ratings would require a similar change in Ukraine's sovereign rating associated with a continuation of solid budgetary performance, adequate liquidity position and low-to-moderate debt levels. Moreover, any improvement in the local governments' expenditure flexibility and ability to raise additional own source revenues would be considered positively. Although unlikely given the recent sovereign upgrade, a deterioration of the sovereign credit strength would apply downward pressure on Kyiv and Kharkiv's ratings given the close financial, institutional and operational linkages between the two tiers of governments. Significant financial deterioration driven by reduced operating margins, an unexpected sharp increase in debt as well as the emergence of liquidity risks, would also exert downward pressure on the ratings. The specific economic indicators, as required by EU regulation, are not available for City of Kyiv and City of Kharkiv. The following national economic indicators are relevant to the sovereign rating, which was used as an input to this credit rating action. Sovereign Issuer: Ukraine, Government of GDP per capita (PPP basis, US$): 8,754 (2017 Actual) (also known as Per Capita Income) Real GDP growth (% change): 2.5% (2017 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 13.7% (2017 Actual) Gen. Gov. Financial Balance/GDP: -1.4% (2017 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -2.2% (2017 Actual) (also known as External Balance) External debt/GDP: [not available] Level of economic development: Very Low level of economic resilience Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On December 21, 2018, a rating committee was called to discuss the rating of the Kharkiv, City of; Kyiv, City of. The main points raised during the discussion were: The systemic risk in which the issuers operates has materially decreased. =========================== U N I T E D K I N G D O M =========================== AMIGO LOANS: S&P Affirms B+ Issuer Credit Rating, Outlook Stable ---------------------------------------------------------------- S&P Global Ratings said that it affirmed its 'B+' long-term issuer credit rating on U.K.-based guarantor lender Amigo Loans Ltd. (Amigo). The outlook is stable. S&P said, "At the same time, we affirmed our 'B+' issue rating and recovery rating of '4' on the senior secured notes issued by wholly owned subsidiary Amigo Luxembourg S.A. This indicates our expectation of average recovery (30%-50%; rounded estimate: 30%) in the event of payment default." The affirmation follows Amigo's recent decision to sign a GBP150 million securitization facility with RBC Europe Ltd. S&P understands that the facility will be used to repay the drawn amount under its existing revolving credit facility (RCF) and to support future profitability. At the same time, Amigo is continuing to fund originations using its strong cash flows from operations and existing funds from its senior secured notes. Following Amigo's capital structure revision, S&P's assessment of its financial risk profile remains significant, as S&P's base- case assumption already considered that Amigo might complete an approximate GBP100 million debt issuance during the financial year ending March 31, 2019 (FY2019). S&P now assesses Amigo's key ratios as: -- Gross debt to S&P Global Ratings-adjusted EBITDA of 3x-4x; -- Funds from operations (FFO) to total debt of 12%-20%; -- Gross debt to tangible equity of 2.0x-2.5x; and -- Adjusted EBITDA coverage of interest expense of 3x-6x. S&P said, "Our view of Amigo Loans weak business profile remains unchanged. Amigo has a narrow focus on a niche part of the U.K. non-standard lending market, which, combined with a lack of diversification, leads to ongoing regulatory, conduct, and operational risks. Amigo is also vulnerable to adverse changes in its operating environment. All these factors constrain the rating on the company. That said, the company's simple and clear strategy, above-average profitability, and good market position all offset the company's high pace of credit growth, and we factor this into the 'B+' issuer credit rating. "In the 12 months to Sept. 30, 2018, Amigo reported net loan book growth of 24% to GBP672 million. We expect the growth rate to slow over the next one to two years, as the company stabilizes. For example, Amigo is planning to slow down its pilot lending. This is already feeding through to its origination levels, which were at GBP221 million in the six months to Sept. 30, 2018, down from GBP238 million in the same period in 2017. We do not believe that Amigo has materially relaxed its lending standards, and we recognize that it is an expanding business, but we note that very high loan rates can be a precursor to eventual asset quality or operational pressures. We also consider that incremental debt issuances have funded much of its loan growth. "We apply a negative rating adjustment to the rating on Amigo Loans Ltd. to reflect our view that, compared with other consumer finance peers, the company's size, track record of profitability, and capital structure constrain the rating to a greater extent. Although we recognize that Amigo has taken positive steps to diversify its funding sources, it still lags behind some of its peers in the context of its business risk profile. "The stable outlook reflects our expectation that the company will maintain its good earnings performance and consistent strategic focus, and will slow down its pace of loan growth, which will support the stability of its credit ratios over the 12-month outlook horizon. "We could raise the ratings if Amigo were to successfully increase its revenue diversification, reducing its reliance on a specific end-customer base and supporting the stability of its through-the-cycle earnings. Alternatively, we could also consider raising the rating if Amigo's credit ratios were to improve substantially beyond our existing expectations." S&P could lower the rating if its internal cash generation capacity weakened, or if the company were to pursue a more aggressive growth strategy that put pressure on its credit ratios. For example, S&P would consider downgrading Amigo if it showed the following credit metrics: -- Gross debt to adjusted EBITDA above 4x; -- FFO to gross debt below 12%; -- Gross debt to tangible equity above 3x; and -- Adjusted EBITA to interest coverage below 3x. S&P could also lower the rating if it saw a material increase in impairments, or a rise in regulatory or operational risks, harming Amigo's debt-servicing capability or current business model. AVON PRODUCTS: Egan-Jones Hikes Senior Unsecured Ratings to B ------------------------------------------------------------- Egan-Jones Ratings Company, on December 27, 2018, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by Avon Products Inc. to B from B-. Headquartered in London, United Kingdom, Avon Products, Inc. known as Avon, founded by David H. McConnell in 1886 is a direct selling company in beauty, household, and personal care categories. Avon had annual sales of $5.7 billion worldwide in 2017. DLG ACQUISITIONS: S&P Affirms 'B' Long-Term ICR, Outlook Stable --------------------------------------------------------------- DLG Acquisitions Ltd., the parent of U.K.-based TV production company All3Media Group, continues to benefit from strong global demand for content and to deliver successful shows. At the same time, increasing numbers and costs of scripted drama productions requires higher investment, resulting in negative free operating cash flow (FOCF) generation and only gradual reduction in leverage, S&P Global Ratings related. S&P Global Ratings is affirming its long-term issuer credit rating on DLG Acquisitions at 'B'. The rating affirmation reflects S&P's view that All3 Media will continue to grow its business organically on the back of strong global demand for content and by targeted acquisitions that will be mainly financed by the group's shareholders. This will allow the group to maintain adjusted debt to EBITDA at about 6.5x in 2018-2019. At the same time, FOCF generation will remain weak due to higher investment in new scripted content, creative talent, and expanding digital and distribution business. The rating continues to reflect All3 Media's operations in the highly competitive and fragmented television program production and distribution market. The nature of the industry is volatile, and the group's operating performance and credit metrics are subject to the unpredictable tastes of TV audiences and potential delays in timing of show delivery and financing. The group's modest size compared with larger vertically integrated peers, such as ITV (owner of ITV studios) and RTL (owner of Freemantle), and independent studios such as Mediarena Acquisitions B.V. (Endemol) also constrains the ratings. Positively, All3 Media benefits from leading positions in its main markets in the U.K. and Germany, and is expanding its presence in the buoyant U.S. market. It has a balanced mix of scripted (about 30%) and non-scripted content across numerous genres, with the top-10 shows accounting for about 30% of total revenue. Over the past years, the customer mix has been shifting from traditional free-to-air broadcasters toward pay-TV and video-on-demand platforms such as Amazon and Netflix. While it helps grow and diversify the customer base, some deals have longer payment terms where cash is received later than revenues are recognized, which leads to higher working capital outflows. Despite increasing earnings, the group's capital structure will remain highly leveraged with adjusted debt to EBITDA of about 6.5x over the next two years. This reflects the high existing financial debt and negative FOCF that we forecast in 2018-2019. S&P also expects some variability of cash flows inherent in the volatility of studio business and the phasing of project delivery and payments. S&P sees this as a relative weakness compared with other companies that have similar--but more stable--credit metrics and cash flows. S&P said, "Our forecast credit metrics reflect our assumption that the group's main shareholders, Discovery Communications Inc. and Liberty Global PLC, will continue to support its strategic growth initiatives and will provide most of the financing for future acquisitions and earn out repayments, as was the case in 2016-2018. This will help the group gradually reduce leverage and maintain adequate liquidity. "Our rating also incorporates potential extraordinary support that All3Media is likely to receive from its strategic owners. We consider that both shareholders see their investment in the 50/50 joint venture as part of their strategy of increasing their presence in content production, and broadening their international reach. We believe that All3Media benefits from the expertise and industry connections of shareholders on the board of directors and from the owners' proven support in growth strategy, including equity contributions to finance acquisitions. We also take a positive view of the breadth and depth of the management talent pool that the company can potentially draw on. At the same time, potential for extraordinary support is limited because none of the shareholders exercise full control of the company, provide debt guarantees, have cross-default provisions, or explicitly commit to any form of support in the case of All3Media undergoing financial distress. "The stable outlook reflects our view that, over the next 12 months, All3 Media will continue to benefit from strong international demand for content and its adjusted EBITDA will increase to about GBP75 million in 2018. At the same time, we forecast negative FOCF due to working capital outflows and investment in new content production, hence adjusted leverage will remain at about 6.5x. The outlook also assumes that the group will maintain its adjusted EBITDA to interest coverage at about 2.0x and liquidity will remain adequate. "We could lower the rating if we perceived a decline in the likelihood of shareholder support, or if All3Media was unable to continue delivering successful shows and retain creative talent and market share in the face of increasing competition. This could lead us to view the capital structure as unsustainable over the long term due to weaker EBITDA, significantly negative FOCF for a sustained period, and higher adjusted debt. Weakening liquidity, including tighter covenant headroom due to higher leverage, could also put pressure on the ratings. "In our view, an upgrade is currently unlikely. Over the longer term, a positive rating action would depend on the group's ability and willingness to reduce leverage and maintain debt to EBITDA of less than 5x and EBITDA interest coverage ratio at least 2x on a sustainable basis. This could happen if the company generated sufficient EBITDA and meaningful FOCF that offered it the flexibility to self-finance strategic growth initiatives and investment in working capital. An upgrade would also require continued shareholder support and for the group's liquidity to remain at least adequate." MABLE COMMERCIAL: Jan. 10 Proof of Debt Submission Deadline Set --------------------------------------------------------------- Pursuant to Rule 14.29 of the Insolvency (England and Wales) Rules 2016 (the "Rules"), the Joint Administrators of Mable Commercial Funding Limited intend to declare a ninth interim dividend to unsecured non preferential creditors within two months from the last date of proving, being January 10, 2019. Such creditors are required on or before that date to submit their proofs of debt to the Joint Administrators, PricewaterhouseCoopers LLP, 7 More London Riverside, London SE1 2RT, United Kingdom, marked for the attention of Alison Lieberman or by email to mable.claims@uk.pwc.com. Persons so proving are required, if so requested, to provide such further details or produce such documents or other evidence as may appear to the Joint Administrators to be necessary. The Joint Administrators will not be obliged to deal with proofs lodged after the last date for proving but they may do so if they think fit. Creditors who wish to have dividend payments made to another person or who have assigned their entitlement to someone else are asked to provide formal notice to the Joint Administrators. For further information, contact details, and proof of debt forms, please visit https://www.pwc.co.uk/services/business- recovery/administrations/non-lbie-companies/mable-commercial- funding-limited-in-administration.html Alternatively, one may call Alison Lieberman on +44(0)20-7583 5000. Joint administrators' details: Dan Yoram Schwarzmann (IP no. 8912), Edward Macnamara (IP no. 9694), Russell Downs (IP no. 9372), Gillian Eleanor Bruce (IP no. 9120), all of PricewaterhouseCoopers LLP, 7 More London Riverside, London SE1 2RT, United Kingdom Date of administration appointment: September 23, 2008 MAHABIS: Enters Administration, Taps KRE Corporate Recovery ----------------------------------------------------------- Leila Abboud at The Financial Times reports that Mahabis, the maker of high-end slippers that gained brief fame by building a minimalist, Scandinavian-inspired brand through aggressive online marketing, has gone into administration. According to the FT, the exact reasons for Mahabis's collapse remain unknown, but its demise shows how the direct-to-consumer model, which bypasses the retailer, for everything from mattresses to razors can be difficult to sustain even if a brand shoots to notoriety quickly. Mahabis, whose tagline was "slippers reinvented", never reported any official revenue figures with Companies House since it was incorporated in May 2015, the FT notes. Its unaudited financial statements as of end of June 2017 showed that it had debts worth GBP2.6 million to creditors coming due within a year, the FT discloses. According to the filings, Ankur Shah was the sole owner and director of the company, the FT relays. The company, as cited by the FT, said it had been forced to call in administrators from KRE Corporate Recovery once it entered administration on Dec. 27. Mahabis contracted out the manufacturing of its slippers to a company in Portugal, according to its website, and had a staff of about 20 people in London who focused on online marketing, the FT states. NORTHERN TRUST: To Transfer Registered Office to Luxembourg ----------------------------------------------------------- Northern Trust Global Services SE ("NTGS SE") notified its creditors of its proposal to transfer its registered office from the United Kingdom to the Grand Duchy of Luxembourg in March 2019, subject to receipt of the necessary regulatory approvals. NTGS SE creditors have the right to examine the transfer proposal and the report drawn up by the NTGS SE management explaining and justifying the legal and economic aspects of the transfer and the implications of the transfer for shareholders, creditors and employees at the registered office of NTGS SE. They may also request copies of these documents free of charge or they can be downloaded from https://www.northerntrust.com/about-us/procurement NTGS SE creditors should contact NTGS SE at brexit@ntrs.com if they want further information on these options or the proposed transfer. SPIRIT ISSUER: S&P Affirms 'BB+' Rating on Class A Notes -------------------------------------------------------- S&P Global Ratings has today affirmed its 'BB+' credit ratings on Spirit Issuer PLC's class A notes. Spirit Issuer is a corporate securitization backed by operating cash flows generated by the borrowers, Spirit Pub Company (Leased) Ltd. and Spirit Pub Company (Managed) Ltd. (Spirit Pub, collectively). These operating cash flows are the primary source of repayment for an underlying issuer-borrower secured loan. Spirit Pub operates an estate of tenanted and managed pubs. The original transaction closed in November 2004, and was tapped in November 2013. The transaction features three classes of senior notes, the proceeds of which have been on-lent by the issuer to the borrowers, via issuer-borrower loans. The operating cash flows generated by the borrowers are available to repay its borrowings from the issuer that, in turn, uses those proceeds to service the notes. The transaction will likely qualify for the appointment of an administrative receiver under the U.K. insolvency regime, in S&P's view. An obligor default would allow the noteholders to gain substantial control over the charged assets before an administrator's appointment, without necessarily accelerating the secured debt, both at the issuer and borrower level. S&P said, "Following our review of Spirit Pub's performance, we have affirmed our 'BB+' ratings on Spirit Issuer's class A notes. Amid challenging operating conditions, characterized by significant competition and cost inflation, we have lowered our profitability forecasts, while our business risk assessment is unchanged at fair." RATINGS AFFIRMED Spirit Issuer PLC Class Rating A2 BB+ A4 BB+ A5 BB+ STRONGHOLD INSURANCE: Scheme Meetings Scheduled for Feb. 20 ----------------------------------------------------------- Scheme meetings will be convened in the matter of Stronghold Insurance Company Limited (the "Scheme Company") and the Companies Act 2006 (the Scheme). The High Court of Justice, Business and Property Courts of England and Wales has ordered should convene two meetings of Scheme Creditors to vote on the Scheme as follows: 1. a meeting of those Scheme Creditors in respect of Notified Outstanding Liabilities (as defined in the Scheme) (the "Notified Outstanding Scheme Meeting"); and 2. a meeting of those Scheme Creditors in respect of IBNR Liabilities (as defined in the Scheme) (the "IBNR Scheme Meeting") each individually a "Scheme Meeting" and together, the "Scheme Meetings". The Scheme Meetings will be held on February 20, 2019, at the offices of Clifford Chance LLP, located at 10 Upper Bank Street, London E14 5JJ as follows; 1. the Notified Outstanding Scheme Meeting shall commence at 10:00 a.m. (London time); and 2. the IBNR Scheme shall commence at the later of 10:10 a.m. (London time) or as soon as possible following the conclusion of the Notified Outstanding Sheme Meeting. Each Scheme Creditor or its proxy will be required to register its attendance at the relevant Scheme Meeting prior to its commence. Registration will commence at 9:30 a.m. (London time). Scheme Creditors may attend the Scheme Meetings either in person or by a proxy appointed by them. In order to enable Scheme Creditors to vote at the Scheme Meeting (whether in person or by proxy), Scheme Creditors are requested to complete and submit a Proxy Form in accordance with the procedures described in the Scheme Document, so as to be received by the Scheme Company, by no later than 5:00 p.m. (London time) on February 19, 2019, although if it is not submitted, it may be handed to the chairman of the relevant Scheme Meeting at the commencement of the Scheme Meeting. By the order, the High Court of Justice has appointed Dan Schwarzmann or failing him, Nigel Rackham, to act as chairman of the Scheme Meetings and has directed the chairman to report the result of the Scheme Meeting to the Court. The chairman of the Scheme Meeting will address Scheme Creditors generally on the Scheme and on the issues relevant to voting at the commencement of the Scheme Meetings. The Scheme will then be subject to the subsequent sanction of the Court. * UK: 20 Scottish Businesses Set to Fail Each Week in 2019 ---------------------------------------------------------- Hannah Burley at The Scotsman reports that around 20 Scottish businesses are set to fail each week in 2019, an industry expert has predicted, after corporate insolvencies were found to have risen "dramatically" in the past year. According to The Scotsman, accountancy and business advisory firm French Duncan said continued uncertainty surrounding Brexit, an increase in competition and a squeeze on prices in many sectors are all key factors. The Glasgow-headquartered company foresees continued difficulties for businesses after corporate failures rose "dramatically" in 2018, increasing by an estimated 25.8% compared with the previous year, and equating to the highest annual figure since 2012, The Scotsman discloses. Construction, retail and causal dining accounted for 41.6% of all corporate failures in the first three quarters of last year, which Eileen Blackburn -- e.blackburn@frenchduncan.co.uk -- head of restructuring and debt advisory at French Duncan, said highlighted "issues related to their specific markets", as well as concerns over the wider economy. Ms. Blackburn cited reduced lending to the construction sector and changing customer attitudes relating to retail and dining as resulting in many major closures, The Scotsman relates. "I believe that 2019 will continue to see serious problems in the high street impacting upon retailers and restaurants whilst construction will face more difficulties in an uncertain and volatile marketplace," The Scotsman quotes Ms. Blackburn as saying. ********* 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 2019. 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 * * *