/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/190116.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, January 16, 2019, Vol. 20, No. 011 Headlines F R A N C E TECHNICOLOR SA: Moody's Lowers CFR to B2, Outlook Negative I T A L Y BANCA CARIGE: Moody's Puts Caa3 Issuer Rating Under Review MONTE DEI PASCHI: Faces Concerns About Capital, Profitability P O L A N D BANK OCHRONY: Fitch Raises Long-Term IDR to BB-, Outlook Stable R U S S I A ECONOMBANK JSC: Amendments to DIA's Role in Bankruptcy Approved KRASNODAR REGIONAL: Amendments to DIA's Role in Bankruptcy Okayed S P A I N ABANCA CORP: Fitch Assigns BB(EXP) Rating to Subordinated Notes U N I T E D K I N G D O M FRONERI INTERNATIONAL: Moody's Assigns Ba3 CFR, Outlook Stable HAWK PLANT: Enters Administration Following Cash Flow Issues HIGHER EDUCATION: Fitch Affirms CCsf Ratings on 2 Note Classes MARKS & SPENCER: Names 17 Shops for Closure, 1,405 Jobs Affected ********* =========== F R A N C E =========== TECHNICOLOR SA: Moody's Lowers CFR to B2, Outlook Negative ---------------------------------------------------------- Moody's Investors Service has downgraded to B2 from B1 the corporate family rating and to B2-PD from B1-PD the probability of default rating of French media, communication and entertainment services provider Technicolor S.A. Concurrently Moody's downgraded to B2 from B1 the ratings on the group's senior secured term loans maturing 2023. The outlook on all ratings is negative. RATINGS RATIONALE The downgrade to B2 was prompted by Technicolor's announcement of weaker than expected results for the full year 2018 and lower than expected debt repayments. As a consequence, the actual as well as the expected credit metrics over the next two years are significantly weaker than required for the B1 rating category. Moody's notes that Technicolor has implemented a number of measures to address the operational challenges, however a timely translation of these measures into operating performance and credit metrics improvements, while preserving its good liquidity profile, is required to improve Technicolor's credit quality. On December 21, 2018, Technicolor announced that it is now expecting 2018 company-adjusted EBITDA in a range of EUR265-275 million at constant exchange rates vs. 2017. This compares to Technicolor's previous guidance of broadly stable EBITDA compared to 2017 (EUR291 million) at constant exchange rates. Technicolor mentioned a difficult year-end for its DVD business as the main reason for cutting its guidance. Also the impact of higher memory prices had a strongly negative impact on 2018 earnings (EUR-28 million at the EBITDA level after six months) although softening in the course of H2 when Technicolor started to pass the higher costs on to customers. Moody's-adjusted EBITDA also includes restructuring charges which were higher than previously expected, mainly due to the Connected Home transformation plan announced in July 2018. As a result, Moody's now estimates that Moody's- adjusted EBITDA declined in 2018 from EUR262 million in 2017. Previously Moody's projected a broadly stable EBITDA, which was one requirement for the stabilization of the rating outlook on the previous B1 rating. Furthermore, the company announced that it repaid its EUR90 million European Investment Bank (EIB) loan before year-end 2018, whereas Moody's had expected a more significant reduction of the company's debt in the course of 2018 (from the entire USD150 million upfront proceeds from the Patent Licensing disposal, additional available cash and free cash flows). As a consequence of the lower EBITDA and limited debt reductions, Technicolor's leverage was at approximately 8x Moody's-adjusted debt/EBITDA at the end of 2018, well above Moody's previous forecast of <6x and the requirement for a B1 rating of <5x. Moody's now expects Technicolor to reduce its leverage to around 6x only by year-end 2019. This deleveraging will be driven by EBITDA improvements, as memory prices cease to burden Technicolor's profitability and cost savings from the Connected Home transformation show effect. More positively though, Technicolor remains committed to a conservative financial policy, as illustrated by the decision to refrain from dividend payments in 2018. Also for 2019, Moody's does not expect any dividends or material acquisitions. RATING OUTLOOK The negative outlook reflects uncertainty around Technicolor's ability to return to organic topline growth and solid earnings improvements in 2019, also considering more pronounced restructuring charges than originally expected. The negative outlook indicates the risk of a downgrade, should leverage not improve to 6x debt/EBITDA over the next 12-18 months and free cash flow not move towards break-even. WHAT COULD CHANGE THE RATING UP / DOWN Downward pressure on the ratings would evolve, if (1) Technicolor was unable to reduce its Moody's-adjusted debt/EBITDA towards 6x by year-end 2019, (2) Moody's-adjusted EBITA/interest expense remained persistently below 1.0x, or (3) free cash flow was negative or the liquidity profile weakened. Upward pressure on the ratings would build, if (1) leverage reduced sustainably below 5x Moody's-adjusted debt/EBITDA, (2) Moody's-adjusted EBITA/interest expense improved towards 2x, and (3) free cash flow generation strengthened, translating into mid- single-digit Moody's-adjusted FCF/debt ratios. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. ========= I T A L Y ========= BANCA CARIGE: Moody's Puts Caa3 Issuer Rating Under Review ---------------------------------------------------------- Moody's Investors Service placed the Caa3 long-term issuer rating and Caa1 long-term deposit ratings of Banca Carige S.p.A under review, direction uncertain, and affirmed the standalone baseline credit assessment and adjusted BCA of ca. The rating action follows recent market events, including decisions from the European Central Bank and the Italian government, which in Moody's view are likely to materially influence the risks for senior creditors. Possible scenarios include a sale to a stronger partner, a nationalisation, or a regulatory intervention: these could be either positive or negative for creditors depending on how any transaction were structured. RATINGS RATIONALE Carige's Caa3 long-term issuer rating and Caa1 long-term deposit ratings are driven by the bank's BCA of ca, high loss-given- failure and moderate loss-given failure respectively under Moody's Loss Given Failure (LGF) analysis, and two notches and three notches respectively of uplift to reflect the benefit of further potential external support for these creditors. Carige's long-term ratings were placed under review uncertain following: (1) the decision of the ECB of January 2, 2019 to place Carige under special administration after Carige's Extraordinary General Assembly of December 22, 2018 rejected the capital increase envisaged under its capital conservation plan, which also prompted the resignation of the majority of Carige's board members; and (2) the approval from the Italian government on January 7, 2019 of a law decree through which it granted state guarantees on new liabilities issued by Carige and set aside EUR1 billion for a potential precautionary recapitalization of the bank which would likely lead to the bank's nationalization. The decision taken by the ECB is an "early intervention measure" as defined by article 27 of the Bank Recovery and Resolution Directive (BRRD). The ECB has stated that the measure is aimed to allow the bank to pursue the objectives of its strategic plan, which includes a reduction in non-performing loans, improved capitalization, a renewed business model, and a potential sale of the bank. These steps should be positive for senior creditors, but inability to raise equity at the extraordinary general meeting (EGM) of December to replace subordinated debt issued in November places a material strain on the bank's earnings, while the potential for a precautionary recapitalization or nationalization as stated by the government does not exclude the possibility of burden-sharing measures resulting in losses for senior creditors beyond those anticipated by the current ratings. The review with direction uncertain reflects the potential for these diverse scenarios to affect ratings in either a positive or negative sense. Carige's BCA was affirmed at ca to reflect Moody's view that the bank will likely require further external support to ensure its viability. This is also evidenced by the Italian government's intervention to provide guarantees on the issuance of new liabilities to support the bank's funding. Carige now meets its total capital requirement of 13.125% set by the ECB solvency following the underwriting of EUR320 million of subordinated debt on November 30, 2018, of which EUR318.2 million was underwritten by the Voluntary Intervention Scheme (VIS) of the Italian Interbank Deposit Protection Fund (FITD). These measures, as well as the bank's pursuit of strategic alliances, demonstrate the bank's need for external support. WHAT COULD CHANGE THE RATINGS UP An upgrade of Carige's BCA is currently unlikely and would require stronger equity capitalization, comfortably above regulatory requirements; a recovery in profitability; and materially reduced asset risk. Carige's ratings could be upgraded in the event of further government support to the benefit of creditors, or a takeover by a stronger bank. WHAT COULD CHANGE THE RATINGS DOWN Carige's ratings could be downgraded should the Italian government's propensity to support the bank diminish and the likelihood of burden-sharing affecting Carige's senior creditors were to increase. LIST OF AFFECTED RATINGS Issuer: Banca Carige S.p.A. Placed on Review Direction Uncertain: Long-term Counterparty Risk Ratings, placed on Review Direction Uncertain, currently B3 Long-term Bank Deposit Ratings, placed on Review Direction Uncertain, currently Caa1, outlook changed to Rating under Review from Stable Long-term Counterparty Risk Assessment, placed on Review Direction Uncertain, currently B2(cr) Long-term Issuer Rating, placed on Review Direction Uncertain, currently Caa3, outlook changed to Rating under Review from Stable Affirmations: Short-term Counterparty Risk Ratings, affirmed NP Short-term Bank Deposit Ratings, affirmed NP Short-term Counterparty Risk Assessment, affirmed NP(cr) Baseline Credit Assessment, affirmed ca Adjusted Baseline Credit Assessment, affirmed ca Outlook Action: Outlook changed to Rating Under Review from Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in August 2018. MONTE DEI PASCHI: Faces Concerns About Capital, Profitability ------------------------------------------------------------- Sonia Sirletti at Bloomberg News reports that Banca Monte dei Paschi di Siena SpA just can't seem to put its troubles behind it. After more than a year of digging itself out from a collapse that ended in a state takeover, the Tuscan lender faces renewed concerns about its capital and profitability, Bloomberg relates. Shares of the world's oldest bank dropped in Milan trading after the European Central Bank highlighted weaknesses in the Italian lender's capital and profitability, Bloomberg discloses. The ECB told the bank that its inability to issue the second tranche of a junior bond last year hurt its capital position, Monte Paschi, as cited by Bloomberg, said in a statement on Jan. 11. And Monte Paschi faces another test of its ability to issue debt, with a covered bond sale which, people familiar with the matter said, it will start contacting investors about this week, Bloomberg notes. Chief Executive Officer Marco Morelli is seeking to turn around the rescued lender by cutting costs, selling non-performing loans and curbing risk, Bloomberg discloses. The ECB highlighted weaknesses that the bank needs to address, including profitability, which it said is "underperforming" a restructuring plan reached with European and Italian officials, Bloomberg relates. The stock has lost about 69% of its value since it returned to trading as a state-controlled company in October 2017, Bloomberg states. The Italian government owns about 68% of the bank, according to Bloomberg. "No matter how many rescue interventions, the problems of the past keep coming back again and again," Bloomberg quotes Jacopo Ceccatelli, chief executive officer of Marzotto SIM SpA, a Milan-based broker-dealer, as saying. "That is true both for Monte Paschi in particular and generally for the Italian banking sector." The ECB said in its letter Monte Paschi faces significant funding challenges, given the current turbulence in the Italian markets, Bloomberg relays. Regarding non-performing loans, the ECB recommended that Monte Paschi gradually increase coverage levels of the existing stock of non-performing loans over the next several years, Bloomberg says. Banca Monte dei Paschi di Siena SpA -- http://www.mps.it/-- is an Italy-based company engaged in the banking sector. It provides traditional banking services, asset management and private banking, including life insurance, pension funds and investment trusts. In addition, it offers investment banking, including project finance, merchant banking and financial advisory services. The Company comprises more than 3,000 branches, and a structure of channels of distribution. Banca Monte dei Paschi di Siena Group has subsidiaries located throughout Italy, Europe, America, Asia and North Africa. It has numerous subsidiaries, including Mps Sim SpA, MPS Capital Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA. In February 2017, Italy's lower house of parliament approved a government bid to increase public debt by up to EUR20 billion (about US$21.3 billion) to fund a rescue package for Monte dei Paschi di Siena (MPS) and other ailing banks. The move comes after the European Union approved in December 2016 the Italian government's move to rescue MPS, the country's third- largest lender and the world's oldest bank. =========== P O L A N D =========== BANK OCHRONY: Fitch Raises Long-Term IDR to BB-, Outlook Stable --------------------------------------------------------------- Fitch Ratings has upgraded Bank Ochrony Srodowiska's (BOS) Long- Term Issuer Default Rating (IDR) to 'BB-' from 'B+', National Long-Term Rating to 'BBB-(pol)' from 'BB+(pol)' and Viability Rating (VR) to 'bb-' from 'b+'. The Outlooks on the IDR and National Rating are Stable. The upgrades mainly reflect BOS's strengthened capitalisation, management and strategy, and reduced risk of further credit losses in the bank's large exposure to wind farms. KEY RATING DRIVERS IDRS, NATIONAL RATINGS AND SENIOR DEBT BOS's IDRs, National Ratings and senior debt ratings are driven by the bank's standalone credit strength, as reflected in its VR. The Stable Outlook reflects the broadly balanced risks related to its credit profile. SUPPORT RATING (SR) AND SUPPORT RATING FLOOR (SRF) BOS's SR and SRF reflect Fitch's view that there is a limited probability of support from the Polish sovereign. The Polish bank resolution framework constrains sovereign support for troubled banks, as do EU state aid rules. At the same time, Fitch believes that the state would endeavour to act pre-emptively to avoid BOS breaching regulatory capital adequacy requirements due to the state's indirect ownership of the bank and BOS's niche role financing Poland's environmental protection projects. BOS is controlled by the state-owned National Fund for Environment Protection and Water Resource Management (the Fund). Fitch believes that it would be difficult for the Fund to increase capital at BOS, without triggering state aid and bail-in considerations, if private shareholders demonstrate that they are unwilling to support the bank. BOS raised about PLN300 million of new capital in July 2018 and the Fund participated in this to the extent of its shareholding. At end-3Q18, state-related entities held about a 72% stake in BOS (the Fund held 58%). SUBORDINATED DEBT The National Long-Term Rating of BOS's subordinated debt is notched down once from the bank's National Rating for loss severity to reflect below-average recovery prospects. No notching is applied for incremental non-performance risk because write- down of the notes will only occur once the point of non-viability is reached and there is no coupon flexibility before non- viability. VR BOS's VR of 'bb-' reflects its weak market franchise, less stable business model than peers, still high exposure to impaired and risky loans and subdued, albeit improving, profitability. Positively, the VR is supported by a reduced risk appetite, strengthened capitalisation and a gradually improving funding profile. The bank is small and controls a 1% market share. Its expertise and strategic focus lies in financing environmental protection. However, the bank's business model has suffered from frequent shifts in strategic objectives in the past coupled with somewhat relaxed risk controls and underwriting standards, which negatively impacted its results. its assessment is that performance will improve under the current management team, although this will be a lengthy and challenging process. BOS's asset quality is a rating weakness. The bank's impaired loans (Stage 3 loans under IFRS 9) had reduced to 18.4% at end- 3Q18 (end-2017: 21.3%), which is approximately three times higher than the sector average. The coverage of impaired loans by all loan loss allowances had risen to 42% at end-3Q18 (end-2017: 23%) mainly due to IFRS9 implementation and reduced stock of impaired loans. Single name concentration and tail risk in the bank's exposure to wind farms (89% of Fitch Core Capital, FCC) and foreign currency (FC) mortgages (85% of FCC) weigh on its assessment of asset quality. FC mortgages have generally performed worse than at peers, but Fitch does not expect any rapid deterioration, assuming no economic stress. The risk of further credit losses in the wind farm portfolio decreased in 2018 due to sustainable improvement in revenues and relaxed tax legislation. At end-3Q18, 45% loans in the wind farm portfolio were classified as impaired (end-2017: 70%), but the share of non-performing loans was below 1%. Fitch expects a gradual improvement in BOS's profitability due to reducing funding costs, contained credit losses and better control of overheads. BOS does not pay a special bank levy because it is under a rehabilitation programme to be completed by 2021. The operating profit/risk-weighted assets ratio was low at 0.8% in 9M18. Capitalisation improved following the injection of fresh capital and lowered unreserved impaired loans as a percentage of FCC. At end-3Q18 BOS's FCC ratio reached 14.5% (end-2017: 12%). In its assessment of the bank's capitalisation Fitch also factors in the reduced risk of unexpected credit losses in the wind farm portfolio and BOS's reasonable capital buffers over regulatory minimums. BOS's funding and liquidity positions are generally stable and reflects the bank's reasonable loans/deposits ratio (93% at end- 3Q18), manageable FC refinancing needs and reasonable coverage of short-term liabilities by liquid assets. In 2018, the bank prepaid some costly wholesale funding and plans to rely on customer deposits in the medium term. At end-3Q18 customer deposits accounted for 86% of total funding. Liquidity buffers are solid and equalled about 19% of assets and about 26% of customer deposits at end-3Q18. RATING SENSITIVITIES IDRS, NATIONAL RATINGS AND SENIOR DEBT The IDRs, National Ratings and senior debt ratings are sensitive to changes in BOS's VR. SUPPORT RATING AND SUPPORT RATING FLOOR Domestic resolution legislation limits the potential for upgrading the bank's SR and revising the SRF upwards. BOS's SR and SRF could be downgraded and revised to 'No Floor', respectively, if its assessment is that the sovereign's propensity to support the bank weakens. SUBORDINATED DEBT The National Long-Term Rating of BOS's subordinated debt is primarily sensitive to changes in the bank's National Long-Term Rating from which it is notched. The rating is also sensitive to changes in its notching framework which could arise if Fitch changes its assessment of expected loss severity. VR An upgrade of BOS's VR would require a broadening of its franchise coupled with a longer record of profitable operation under the current business model and improvements in its overall credit risk profile. A marked and prolonged weakening in the Polish economy (not Fitch's base scenario) that materially affects the banks' asset quality, capitalisation and profitability could lead to the VR being downgraded. The rating actions are as follows: Long-Term Foreign-Currency IDR: upgraded to 'BB-' from 'B+', Outlook Stable Short-Term Foreign-Currency IDR: affirmed at 'B' National Long-Term Rating: upgraded to 'BBB-(pol)' from 'BB+(pol)', Outlook Stable National Short-Term Rating: upgraded to 'F3(pol)' from 'B(pol)' Viability Rating: upgraded to 'bb-' from 'b+' Support Rating: affirmed at '4' Support Rating Floor: affirmed at 'B' PLN2 billion long-term senior unsecured bond programme: upgraded to 'BBB-(pol)' from 'BB+(pol)' PLN2 billion short-term senior unsecured bond programme: upgraded to 'F3(pol)' from 'B(pol)' PLN83 million subordinated debt: upgraded to 'BB+(pol)' from 'BB- (pol)' =========== R U S S I A =========== ECONOMBANK JSC: Amendments to DIA's Role in Bankruptcy Approved --------------------------------------------------------------- On December 14, 2018, the Bank of Russia has approved amendments to the Plan for Participation of the State Corporation Deposit Insurance Agency (hereinafter, the Agency) in Bankruptcy Prevention Measures for Joint-stock Commercial Bank for Reconstruction and Development Econombank (investor is PJSC Metkombank), which include the financial rehabilitation plan. According to the financial model envisaged by the financial rehabilitation plan, the bank will step up lending to legal entities and shaping a portfolio of securities. The plan also stipulates a set of measures to reduce problem debts of JSC Econombank. As a result of bankruptcy prevention measures, the bank's performance indicators will recover to the respective regulation values. The investor also plans to merge with JSC Econombank. The current development of the bank's status has been detailed in a press statement released by the Bank of Russia. KRASNODAR REGIONAL: Amendments to DIA's Role in Bankruptcy Okayed ----------------------------------------------------------------- The Bank of Russia has approved amendments to the plan for the State Corporation Deposit Insurance Agency (hereinafter, the Agency) to participate in bankruptcy prevention measures for Public Joint-stock Company Krasnodar Regional Investment Bank (hereinafter, the Bank), including the plan for the Bank's financial resolution. Together with RNCB Bank (PJSC) (hereinafter, the Investor) the Bank has planned to increase lending to small and medium-sized enterprises, as well as mortgage lending in the main region of the Bank's operations. The Bank also expects that customer funds (primarily, household deposits) will post moderate growth. According to the financial model stipulated in the financial resolution plan, the value of the Bank's equity capital will have become positive by mid-2023. The participation plan also provides for a merger of the Bank with the Investor in 2023. After the reorganization, the joint bank will comply with all Bank of Russia required ratios. The current development of the bank's status has been detailed in a press statement released by the Bank of Russia. ========= S P A I N ========= ABANCA CORP: Fitch Assigns BB(EXP) Rating to Subordinated Notes --------------------------------------------------------------- Fitch Ratings has assigned ABANCA Corporacion Bancaria, S.A.'s (Abanca) subordinated notes due 2028 an expected rating of 'BB(EXP)'. The assignment of the final rating is contingent on the receipt of final documents conforming to the information already received. KEY RATING DRIVERS The subordinated notes are notched down once from Abanca's 'bb+' Viability Rating (VR). The notching reflects the notes' greater expected loss severity relative to senior unsecured debt. These securities are subordinated to all senior unsecured creditors. Fitch did not apply additional notching for incremental non- performance risk relative to the VR given that, contractually, any write-down would only occur once the bank reaches the point of non-viability (e.g. an insolvency procedure, winding-up or dissolution of the bank). RATING SENSITIVITIES The subordinated notes' rating is sensitive to changes in Abanca's VR. The rating is also sensitive to a widening of notching if the probability of non-performance on the bank's subordinated debt relative to the probability of the group failing, as measured by its VR, increases or if Fitch's view of recovery prospects changes adversely. =========================== U N I T E D K I N G D O M =========================== FRONERI INTERNATIONAL: Moody's Assigns Ba3 CFR, Outlook Stable -------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 corporate family rating and a Ba3-PD probability of default rating to Froneri International Limited, one of the largest ice cream manufacturers globally. The outlook is stable. At the same time Moody's has withdrawn all ratings of Riviera MidCo SA including its Ba3 corporate family rating and its Ba3-PD probability of default rating and its stable rating outlook. The senior secured rating of Ba3 on Froneri's existing bank facility (consisting of around equivalent EUR1.6 billion term loan and a EUR220 million revolving credit facility) remains unchanged. The shift of ratings from Riviera MidCo to Froneri International Limited follows a reorganization of the broader Froneri group and Moody's understanding that Riviera MidCo is in the process of being liquidated and will cease to exist. RATINGS RATIONALE The Ba3 rating assigned to Froneri reflects the company's sound business profile in light of its strong market position as the second-largest ice cream provider in Europe and the third largest globally, with a well-diversified presence in both mature and emerging markets and a strong portfolio of brands and innovation capabilities. The rating also reflects a degree of support from Nestle S.A.'s (Nestle, Aa2 negative) ownership as the Swiss food producer owns a little under 50%, of the company. These strengths compensate for the company's business concentration on a highly seasonal product and the fact that its bottom line and cash generation are currently depressed by the significant restructuring costs required for the integration of the Joint Venture (JV), which, since October 2016, combines the former R&R Ice Cream (R&R)'s business and the Nestle ice cream and frozen food business (predominantly in Europe). The lower profitability of Nestle's ice cream business than that of R&R creates opportunities for some margin enhancement through substantial cost savings. However, the company will still incur significant restructuring costs in 2019 in order to achieve such savings. Beyond 2019, however, Moody's expects a reduction in restructuring costs and incremental cost savings to result in significant financial leverage improvements. The rating does not assume any further dividend distribution to serve or repay the remaining shareholders loan sitting at Froneri Limited. In early 2018, Froneri upsized its bank facility and up- streamed proceeds outside of the restricted group to repay a EUR800 million shareholder loan provided by Nestle. Despite the repayment of the EUR800 million shareholder loan, there is another shareholders loan, outside of the restricted group, of around EUR1.1 billion provided by PAI and Nestle in equal measure, and maturing in 2026. To monitor Froneri International Limited's financial performance Moody's relies on the audited accounts filed by Froneri Limited, parent company of Froneri International Limited, for which Moody's understands accounts are similar save for the remaining shareholder's loan that is at Froneri Limited level and outside of the restricted group. STABLE OUTLOOK The stable outlook reflects Moody's expectation of a gradual deleveraging through EBITDA growth, lower restructuring costs and cost savings and synergies. The stable outlook also assumes no further dividend payments, no significant debt financed acquisitions and no reduction in Nestle's stake in the JV. WHAT COULD CHANGE THE RATING UP/DOWN Positive rating pressure could develop if the company (1) successfully achieves its cost savings programme while pursuing a financial policy that balances the interests of its shareholders and those of its creditors; (2) significantly reduces its restructuring costs and its EBIT margin increases to double digits in percentage terms; and (3) reduces its Moody's-adjusted debt/EBITDA towards 3.5x. Conversely, downward rating pressure could develop if (1) the company's Moody's-adjusted leverage increases significantly above 4.5x on a sustained basis; (2) its free cash flow remains negative beyond 2018; or (3) its liquidity deteriorates. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Global Packaged Goods published in January 2017. HAWK PLANT: Enters Administration Following Cash Flow Issues ------------------------------------------------------------ Business Sale reports that Hawk Plant (UK) has gone into administration. Sam Woodward -- swoodward@uk.ey.com -- Alex Williams and Hunter Kelly -- hkelly@uk.ey.com -- of Ernst & Young have been appointed as administrators of the business and its subsidiaries Hawk Plant Hire, Hawk Hire, Safety and Training, Hawk Plant, and Hawk Plant Sales, Business Sale relates. With over 40 years of operation, the turnover of Hawk Plant (UK) was GBP93.5 million in the financial year of 2017, Business Sale discloses. However, the cashflow of the group has been significantly impacted by delays in the commencement of anticipated projects and a number of historically problematic contracts, Business Sale states. According to Business Sale, joint administrator, Mr. Woodward said: ". . . the group's funding structure, with significant hire purchase and finance lease commitments put pressure on the cashflow at a time that asset utilization was comparatively low. "We will now begin the process of seeking to find a suitable buyer for Hawk, to ensure the best possible outcome for all of the group's stakeholders. "In the meantime, we will seek to minimize the impact on the customer base by keeping assets on hire and maintaining service levels." HIGHER EDUCATION: Fitch Affirms CCsf Ratings on 2 Note Classes -------------------------------------------------------------- Fitch Ratings has affirmed The Higher Education Securitised Investment No.1 Plc (Thesis) notes as follows: Class A3 notes: affirmed at 'CCsf'; Recovery Estimate (RE) 60% Class A4 notes: affirmed at 'CCsf'; Recovery Estimate (RE) 60% Thesis is a securitisation of income contingent floating-rate student loan receivables, originated in the UK by the government- owned Student Loan Company Limited. The transaction originally closed in 1998 and final legal maturity of the notes is in April 2028. KEY RATING DRIVERS Weak Asset Performance, Increasing PDL Defaulted loans (24+ months in arrears) have increased by GBP3 million over the last year and the principal deficiency ledger (PDL) rose to GBP66.9 million, further reducing available credit enhancement for the rated notes. The portfolio largely comprises deferred loans that are not in arrears (81.3%), while loans deferred with arrears count for 3.8% of the pool. The latter are not eligible for government cancellation. Cancellation payments are expected to increase in the coming years, but Fitch sees default as probable as a substantial portion of principal funds is expected to be used to repay the unrated accrual facility note. Negative Excess Spread Probable In Fitch's view the transaction is in negative excess spread, indicating that some principal collections are used to pay senior fees and interests accrued on the accrual facility and on remaining notes. According to Fitch's calculations, excess spread was minus 0.9% per year as of November 2018. Revised Performance Assumptions Fitch uses its proprietary Granular Asset Loss Analyser model to support its analysis of mortgage-style UK student loans such as those of Thesis. Fitch has derived a remaining life default expectation of 16.1% (increased from 13.4% at the last rating action) and has confirmed its recovery assumption at 20%. The agency has stressed the delinquent balance and incorporated tail- end risk. The default multiple and the recovery haircut applied are 4x and 40% respectively, both at 'AAAsf' level. In addition, the portfolio of loans in deferment status is assumed to exit deferment (reinstate) at an annual rate of 5.5%, up from 3.5%. The reinstatement assumption is reduced linearly year on year. RATING SENSITIVITIES A change in the default or recovery rates is unlikely to impact the ratings given the high probability of default. 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 Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that affected the rating analysis. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. MARKS & SPENCER: Names 17 Shops for Closure, 1,405 Jobs Affected ---------------------------------------------------------------- The Telegraph reports that Marks & Spencer has named the next 17 shops set to close in a move that puts 1,045 more jobs at risk as part of its ongoing turnaround plan. The former high street stalwart announced last year its plans to shut more than 100 shops as it grapples with the rapid rise of online shopping and spiralling property costs, The Telegraph relates. According to The Telegraph, M&S has proposed closures in Ashford, Barrow, Bedford, Boston, Buxton, Cwmbran, Deal, Felixstowe, Huddersfield, Hull, Junction One Antrim Outlet, Luton Arndale, Newark, Northwich, Rotherham, Sutton Coldfield and Weston Super Mare. ********* 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 * * *