/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/190411.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, April 11, 2019, Vol. 20, No. 73 Headlines F R A N C E ALBEA BEAUTY: Moody's Assigns B2 CFR Amid Corporate Reconfiguration G E R M A N Y SENVION: German Court Approves Insolvency Application I T A L Y IMMOBILIARE GRANDE: Moody's Assigns Ba1 CFR, Outlook Stable N E T H E R L A N D S CARTESIAN RESIDENTIAL: DBRS Assigns (P)BB(high) Rating on E Notes P O R T U G A L BANCO MONTEPIO: DBRS Hikes Rating on LT Deposits to BB(high) T U R K E Y DOGUS OTOMOTIV: Fitch Lowers National LT Rating to 'BB(tur)' [*] TURKEY: Plans to Pump Fresh Capital into State-Owned Lenders U N I T E D K I N G D O M COMMITTED 2 COMMUNICATIONS: Enters Voluntary Administration DEBENHAMS PLC: Enters Administration, Lenders Take Control FONTAIN: Enters Into Company Voluntary Arrangement INDIVIOR: Faces Criminal Probe, Hefty Fine May Bankrupt Business SMALL BUSINESS 2019-1: DBRS Gives Prov. BB(low) Rating on D Notes - - - - - =========== F R A N C E =========== ALBEA BEAUTY: Moody's Assigns B2 CFR Amid Corporate Reconfiguration ------------------------------------------------------------------- Moody's Investors Service has assigned B2 Corporate Family Rating and B2-PD Probability of Default Rating to Albea Beauty Holdings S.A., parent of the beauty and personal care packaging company Albea and the entity at the top of the restricted banking group following the corporate reorganization completed in December 2018. The B2 CFR, B2-PD PDR and outlook of Twist Beauty International Holdings S.A. have also been withdrawn because it does no longer exist. Concurrently, Moody's has affirmed the B2 rating to the EUR385 million and USD408 million senior secured term loans B due April 2024 and to the USD105 million revolving credit facility (RCF) due April 2023, both borrowed or to be borrowed by Albea Beauty Holdings S.A. The outlook is stable. RATINGS RATIONALE The rating action was prompted by Albea's corporate reorganization completed in December 2018 resulting, among other things, in a change in the group's reporting entity to Albea Group S.A.S., a company which sits above the issuer of the 2024 pay-if-you-can (PIYC) notes. However, Moody's has assigned the CFR to Albea Beauty Holdings S.A., replacing Twist Beauty International Holdings S.A. as the top entity of the restricted banking group following the mergers of several Luxembourg companies on the basis that PIYC notes do not have any claims into the restricted group and that Moody's will continue to receive sufficient reporting of the operating and financial performance of Albea Beauty Holdings S.A. to enable adequate reconciliation with the reporting of Albea Group S.A.S. The assignment of the CFR to Albea Beauty Holdings S.A. is also on the premise that the preferred equity certificates (PECs) issued by PAI receive equity treatment in accordance with Moody's hybrid methodology relating to Shareholder Loans. Albea's revenues continued to perform strongly in the first nine months of 2018 growing by 7%, but EBITDA increased only by 2.2%, driven primarily by the cosmetic rigid packaging division in Europe, the recovery of Brazil and the acquisition of Covit, partially off-set by weaknesses in North America and China. However, Moody's adjusted leverage remained high at 5.8x and cash flow was negative, and will continue to constrain the rating over the next 12 to 18 months. Moody's expects revenue to increase by c.3% and EBITDA by c.2% going forward supported by continuing recovery of LatAm and growth in South East Asia with stable European markets and bolt-on acquisitions. Cash flow generation will remain subdued but improving as interest (excluding those relating to the cash component of the PIYC notes) and restructuring costs are expected to reduce. Albea's B2 rating continues to reflect the company's presence in an highly competitive operating environment with significant level of customer concentration (10 largest customers represented approximately 51% or revenues in 2017) resulting in pricing pressure particularly from larger accounts, partly mitigated by long-standing relationships with its blue-chip customers, as well as a global manufacturing base aligned to its customers' plants and innovative capacity. Albea remains also exposed to the volatility of input costs, despite 70% of contracts including pass-through clauses but with a lag, and to currency movements. More positively, the rating is supported by Albea's leading positions in the global beauty personal care packaging segment particularly in laminated tubes, mascara and lipsticks, with operations in 17 countries. Although Moody's views the beauty and personal care end markets as cyclical, Moody's also notes that company's broad geographic presence could mitigate fluctuations in the demand in some regions. The rating also incorporates the fact that Albea has largely completed its operational restructuring integrating six businesses, most notably Rexam Personal Care in 2012. LIQUIDITY Moody's expects Albea's liquidity profile as adequate for its near term requirements as cash and external sources will compensate for weak free cash flow due to ongoing restructuring costs (albeit reducing), working capital outflows, maintenance and project capex, upstream distributions intended to serve the PIYC notes cash interests and 0.25% quarterly debt amortization of the term loan B USD tranche. The liquidity is supported by (1) approximately USD92 million cash on balance sheet at the end of September 2018; (2) USD86 million availability under its USD105 million RCF due April 2023; (3) USD60 million committed North American ABL facility, (USD47.4 million utilized), and due October 2019 but expected to be renewed; (4) EUR115 million committed European receivables facility (factoring) of which USD24 million was utilised and recently upsized to EUR130 million; and (5) the presence of local facilities and other non-recourse factoring arrangements which are expected to be renewed on an ongoing basis. The RCF has one springing financial covenant (net senior secured leverage ratio), set with large headroom at 7.97x, to be tested on quarterly basis when the RCF is drawn by more than 40%. STRUCTURAL CONSIDERATIONS Albea's B2-PD PDR is aligned with the CFR, reflecting an assumed recovery rate of 50%, customary for capital structure comprising of bank debt but lacking maintenance financial covenants. The term loan B and the RCF, issued by Albea Beauty Holdings S.A., both rated B2, are secured on a first-priority basis by shares and certain assets, and on a second-priority basis by the assets securing the US ABL facility and other local facilities, and they are guaranteed by the material subsidiaries which represent at least 80% of the consolidated EBITDA and 80% of consolidated assets. Moody's also notes the presence of (1) EUR140 million PECs lent into the restricted banking group, which have been treated as equity on the premise that the executed documentation is in accordance with Moody's expectations; and (2) EUR150 million PIYC notes which, although issued outside of the restricted group, represent a liability which could over time negatively weigh on the rating of the restricted group. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's view that Albea will continue its positive trading and slowly deleveraging over the next 12 to 18 months. The stable outlook also assumes that the company will not lose any material customers and it will not engage in material debt-funded acquisitions or shareholder distributions. WHAT COULD CHANGE THE RATING UP/DOWN Although not expected in the near term, for upgrade pressure, Moody's would expect the company to continue to improve EBITDA margins resulting in a deleveraging measured by debt/EBITDA (as adjusted by Moody's) below 5x. Moody's would also expect the company to sustain its positive free cash flow. Downward pressure could occur if improvements in operating performance from growth opportunities and cost efficiencies fail to materialize, debt/EBITDA (as adjusted by Moody's) increases above 6.0x or if there is a sustained negative free cash flow or material deterioration in liquidity. Immediate negative rating pressure would also arise if the PECs no longer qualified for equity treatment by Moody's and/or the ring-fencing of the PIYC notes from the restricted group became compromised. The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass, and Plastic Containers published in May 2018. Headquartered in France, Albea is a leading producer of plastic packaging for the beauty and personal care market. The company benefits from a manufacturing footprint of 40 plants in 17 countries across Europe, the Americas and Asia, serving both large, developed markets such as Europe and North America and faster-growing, developing markets such as Brazil, Mexico, China, Indonesia, Russia and India. For the last twelve months to 30 September 2018, Albea generated $1.6 billion of revenues and reported $194 million of EBITDA., employing approximately 15,500 people. LIST OF NEW AND AFFECTED RATINGS: Assignments: Issuer: Albea Beauty Holdings S.A. Corporate Family Rating, Assigned B2 Probability of Default Rating, Assigned B2-PD Withdrawn: Issuer: Twist Beauty International Holdings S.A. Corporate Family Rating, Withdrawn Probability of Default Rating, Withdrawn Affirmations: Issuer: Albea Beauty Holdings S.A. Senior Secured Facilities, Affirmed at B2 Outlook Actions: Issuer: Twist Beauty International Holdings S.A. Outlook, Withdrawn Issuer: Albea Beauty Holdings S.A. Outlook, Remains Stable ============= G E R M A N Y ============= SENVION: German Court Approves Insolvency Application ----------------------------------------------------- Alexander Huebner and Michelle Martin at Reuters report that a German court on April 9 approved an application for insolvency from wind turbine manufacturer Senvion, although the company said it was also continuing to look at new funding options and various potential investors had shown interest. The Hamburg-based company, which has more than a billion euros of debt, said it had applied for preliminary self-administration proceedings because refinancing discussions with lenders had not yet been successful, Reuters relates. Senvion has faced delays and penalties related to big projects, while the wind industry as a whole has seen falling prices and increased competition as it moves away from governments guaranteeing generous fixed subsidized tariffs for power toward an auction-based system that favors the lowest bidders, Reuters discloses. Financial sources had told Reuters Senvion needed at least EUR100 million (US$112 million) in the short term to keep operating. "Lenders and major bond holders are currently continuing intensive discussions around a financing offer to secure the continuation of operations which may allow the company to successfully exit this process," Reuters quotes Senvion as saying in a statement. According to Reuters, the company said the preliminary self-administration proceedings affected Senvion GmbH and a subsidiary called Senvion Deutschland GmbH. It said Senvion S.A., Senvion Topco GmbH and Senvion Holding GmbH were expected to file for insolvency later this week, Reuters notes. ========= I T A L Y ========= IMMOBILIARE GRANDE: Moody's Assigns Ba1 CFR, Outlook Stable ----------------------------------------------------------- Moody's Investors Service has assigned a new corporate family rating of Ba1 to Bologna-based real-estate company Immobiliare Grande Distribuzione SiiQ S.p.A. Concurrently, the senior unsecured rating on its EUR 300 million notes maturing 2021 have been downgraded to Ba1 from Baa3. The outlook has been changed to stable from negative. Moody's has withdrawn IGD's issuer rating of Baa3 following its downgrade to Ba1, as per the rating agency's practice for corporates with non-investment-grade ratings. "The downgrade of IGD's ratings is driven by the overall challenging operating environment for the retail property sector and the weak growth prospects for the Italian economy, factors we expect to weigh more heavily on IGD's credit metrics over the next 12 to 18 months" says Ana Luz Silva, a Moody's Assistant Vice President - Analyst and lead analyst for IGD. Moody's also considered the weak financial profile of its main tenant and shareholder Coop Alleanza 3.0 (unrated) as a factor weighing on the rating. RATINGS RATIONALE The downgrade to Ba1 reflects the increasingly challenging operating environment for shopping centre landlords amid structural changes in the retail sector and a sluggish Italian economy. These factors are contributing to potential pressure on IGD's portfolio valuations and local funding environment going forward. It therefores expect Moody's-adjusted Gross Debt / Total Assets to remain above 45% over the next 12 to 18 months (46.4% as of 31 December 2018), and Moody's-Adjusted Net Debt/EBITDA towards 10x, up from 9.5x for the financial year ended December 2018. Those metrics are commensurate with a Ba1 corporate family rating. More positively, Moody's notes that operating performance during 2018 continued on a solid level, evidenced by the stability of rental income generation despite a challenging economic environment, a stronger coverage of fixed charges following recent refinancing measures and limited refinancing needs until 2021. Moody's also recognizes management's commitment to retain a solid financial profile, evidenced by over-equitizing recent acquisitions and continued focus on controlling leverage and maintaining rental income stability, for example by securing a long-term agreement with its major tenant Coop Alleanza. However, Moody's notes that Coop Alleanza remains an important anchor tenant driving footfall and contributing a substantial amount of rental income. Moody's estimates that Coop Alleanza's credit profile has remained weak throughout 2018 on the back of severe competition from hard discounters. Coop Alleanza 3.0 recently announced its 2019-2022 business plan, which intends to bring back EBITDA to positive territory from 2021 onwards. Additionally, Moody's understands that IGD strives to reduce the rental income concentration coming from hypermarkets, as indicated by its own strategic plan. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectation of resilient operating performance evidenced by stable footfall and at least stable tenant sales with sustained strong occupancy ratio, that will support fairly stable key financial ratios, including its debt/asset ratio between 46%-50%. Moody's also expects IGD to manage upcoming debt maturities well in advance of its due date. WHAT COULD CHANGE THE RATING UP/DOWN Positive rating pressure can develop in the case of: - Sustained positive operating performance reflected in growing footfall, tenant sales per sqm and tenant affordability ratio, with at least stable occupancy ratio. - Gross Debt/Total Assets is sustainably below 45% - Fixed charge coverage is well above 3x - Strong liquidity management - Successful reduction of tenant concentration Negative rating pressure could materialize if in any of the following conditions are met: - Weakening operating performance reflected in declining footfall, tenant sales per sqm and tenant affordability ratio, coupled with lower occupancy ratio. - Moody's adjusted leverage reaching levels above 50% - Fixed charge coverage falling below 2.0x - Failure to refinance its debt maturities well in advance. - Credit quality of Alleanza deteriorates further with contagion into IGD financial profile, such as through declining rents or other channels. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in September 2018. IGD SiiQ S.p.A. (IGD) is a retail property company based in Bologna, Italy, with gross assets of EUR2.4 billion generating net rental income of EUR124million in 2018. IGD's portfolio mainly includes 26 shopping malls as well as 25 hyper/ supermarkets in Italy. The company also has a small presence in Romania, where it owns 14 shopping centres. The Italian malls represent 65% of the total portfolio value and generated c. 67% of its rental income, the Italian hypermarkets 24% and 26%, respectively, and the Romanian malls c. 7% and 6%. Others represent 4% and 1% respectively. ===================== N E T H E R L A N D S ===================== CARTESIAN RESIDENTIAL: DBRS Assigns (P)BB(high) Rating on E Notes ----------------------------------------------------------------- DBRS Ratings Limited assigned the following provisional ratings to notes to be issued by Cartesian Residential Mortgages Blue S.A.: -- Class A Notes rated AAA (sf) -- Class B Notes rated AAA (sf) -- Class C Notes rated AA (sf) -- Class D Notes rated A (low) (sf) -- Class E Notes rated BB (high) (sf) Additionally, the Class C, Class D and Class E Notes were placed Under Review with Positive Implications (UR-Pos.). The UR-Pos. rating actions reflect the publication of DBRS's "European RMBS Insight: Dutch Addendum - Request for Comment" (the Updated Methodology) on March 6, 2019. The Updated Methodology presents the criteria with which Dutch residential mortgage-backed securities (RMBS) ratings and, where relevant, Dutch covered bond ratings are assigned. DBRS updated its house price indexation and market value decline rates to reflect data through Q3 2018. This update is considered to be material as the assumptions changed are deemed to be key assumption and the resulting positive rating changes may be significant. Following the end of the Request for Comment period and release of the final version of the Updated Methodology, DBRS expects to resolve the current UR-Pos. status on all affected ratings. The provisional ratings to the Class A and Class B Notes address timely payment of interest and ultimate payment of principal on or before the final maturity date. The Class C Notes' provisional rating addresses the timely payment of interest when they are the most senior notes after redemption of the Class A Notes and Class B Notes only and the ultimate payment of principal. The provisional ratings to the Class D and Class E Notes address the ultimate payment of interest and principal. An increased margin on the rated notes is payable from the step-up date falling in April 2024. Such additional interest amounts are payable at a subordinated level in the revenue waterfall and not rated by DBRS. The proceeds of the notes will be used to fund the purchase of Dutch residential mortgage loans secured over properties located in the Netherlands. The majority of the loans in Cartesian Blue are currently securitized under Cartesian Residential Mortgages 1 S.A. (Cartesian 1). The notes outstanding under Cartesian 1 will have the first optional redemption date in April 2019 and these outstanding notes will be redeemed via the fresh issuance under Cartesian Blue. The mortgage loans in the asset portfolio are all classified as owner-occupied and secured by a first-ranking or a first- and subsequently-ranking mortgage right. The mortgages were originated by three special-purpose vehicles: Quion 10 B.V., Ember Hypotheken 1 B.V. and Ember Hypotheken 2 B.V., the originators of the mortgage portfolio under Cartesian Blue. Almost all of the mortgage receivables were sold by GE Artesia Bank to a sponsor group led by Venn Partners LLP in December 2013 and the purchaser of the portfolio, Ember VRM S.a.r.l. (Ember VRM or the seller), sold the majority of the mortgage receivables to Cartesian 1. Ember VRM will continue to be the seller for Cartesian Blue. The loans have been serviced by Quion Services B.V. (Quion) since 2014. Quion is expected to continue as the delegate servicer in this transaction as per the servicing agreement in Cartesian Blue with Ember VRM, the seller. The mortgage portfolio is just over 14 years' seasoned on a weighted-average (WA) basis. The historical performance of the mortgage portfolio is largely comparable with mortgage portfolios under RMBS-rated transactions in the Netherlands in terms of loans in arrears. Approximately 0.6% of the loans in the mortgage portfolio are currently in arrears for one month or less. DBRS considers these to be technical arrears, which are not a material credit issue. Since 2014, the reported cumulative losses under Cartesian 1 were 0.37% and 0.14% cumulative net loss. The prepayment rate has been above 10% on average for the last four years. The WA original loan to value (WAOLTV) of the mortgage portfolio is 95.2% with 69.4% of the loans having an OLTV greater than 80%. The WA current LTV (CLTV; indexed) stands at 86.6% with approximately 61.0% of the loans with CLTVs (indexed) above 80%. Of the loans in the mortgage portfolio, 98% are paying on an interest-only basis, which indicates a rise in house prices affecting the CLTV (indexed) favorably. DBRS indexed the valuations of the properties to Q3 2016 per its "European RMBS Insight: Dutch Addendum". When indexed to a more-recent September 2018 date, the properties show a WACLTV (indexed) of 66.8%, which is primarily attributed to a rise in Dutch house prices. The proportion of loans with LTVs greater than 80% is lower at 31.8%. Credit support to the notes is provided in the form of subordination. Credit enhancement is 11.7% for the Class A Notes, 9.7% for the Class B Notes, 7.05% for the Class C Notes, 4.5% for the Class D Notes and 2.75% for the Class E Notes. The issuance structure includes several reserve funds: the senior reserve fund supporting the Class A and Class B Notes, a Class C reserve fund, a Class D reserve fund and a Class E reserve fund. Each reserve supports the interest payment on the respective notes in the event of a shortfall in revenue available funds. The reserve funds do not protect the notes against losses. Principal receipts can be used to support any shortfall in the payment of interest on the Class A and Class B Notes. Within the mortgage portfolio, 50.4% of the loans currently pay a fixed rate of interest with reset at frequent intervals ranging from 12 months to 240 months. In comparison, the notes pay a rate of interest linked to three-month Euribor, which resets on a quarterly basis. The Issuer is thus exposed to a fixed-floating interest rate risk and the degree of such exposure can change when the fixed-rate loans are reset onto a different interest rate on the reset date. The Issuer's fixed-floating risk exposure is hedged through a swap that references the aggregate current balance of the fixed-rate-paying loans in the portfolio and pays the Issuer the three-month Euribor rate payable on the notes. The Issuer will pay the swap rate on each such fixed-rate loan in return. On a reset date, the reset interest rate will be driven by the applicable swap rate plus a minimum margin (between 2.3% and 4.0%) plus an LTV-based margin. DBRS assumed a fixed-rate reset interest rate of 2.31% (a swap rate of [] plus the lower end of the minimum margin of 2.3%) on the reset dates with a fixed-rate reset period of ten years. DBRS's Long-Term Critical Obligations Rating of "A" on NatWest Markets plc is consistent with the First Rating Threshold as described in DBRS's "Derivative Criteria for European Structured Finance Transactions" methodology. The ratings are based on DBRS's review of the following analytical considerations: -- Transaction capital structure and form and sufficiency of available credit enhancement. -- The credit quality of the mortgage portfolio and the ability of the servicer to perform collection and resolution activities. DBRS calculated probability of default (PD), loss given default (LGD) and expected loss (EL) outputs on the mortgage portfolio, which are used as inputs into the cash flow tool. The mortgage portfolio was analyzed in accordance with DBRS's "Master European Residential Mortgage-Backed Securities Rating Methodology and Jurisdictional Addenda." -- The ability of the transaction to withstand stressed cash flow assumptions and repay the Class A, Class B, Class C, Class D and Class E Notes according to the terms of the transaction documents. The transaction structure was analyzed using Intex Dealmaker. -- DBRS's sovereign rating on the Kingdom of the Netherlands at AAA/R-1(high) with Stable trends as of the date of this press release. -- The legal structure and presence of legal opinions addressing the assignment of the assets to the Issuer and the consistency with DBRS's "Legal Criteria for European Structured Finance Transactions" methodology. Notes: All figures are in Euros unless otherwise noted. =============== P O R T U G A L =============== BANCO MONTEPIO: DBRS Hikes Rating on LT Deposits to BB(high) ------------------------------------------------------------ DBRS Ratings GmbH upgraded by one notch the Long-Term Deposit ratings of 4 Portuguese banks, specifically Banco Comercial Portugues, S.A; Caixa Economica Montepio Geral (Banco Montepio); Caixa Geral de Depositos, S.A. and Novo Banco, S.A. (or collectively "the Banks"). The Short-Term Deposit ratings of 3 banks were also upgraded. KEY RATING CONSIDERATIONS The rating action reflects the introduction in Portugal of full depositor preference in bank insolvency and resolution proceedings with the implementation of Portuguese Law No. 23/2019 from March 14, 2019. The Law also introduces a new class of debt, which is expected to be referred to as Senior Non-Preferred Debt. This new class of debt will rank below preferential categories of creditors and existing Senior debt, but above Subordinated debt. The Law No. 23/2019 amended the rules regarding creditor hierarchy in insolvency proceedings. In line with article 108 BRRD, preference is granted to insured deposits and non-insured deposits by individuals, micro-enterprises, and small and medium-sized enterprises (or SMEs). Furthermore, the Law 23/2019 establishes that from March 14, 2019, all other deposits, including Corporate and institutional deposits held in legal banking entities in Portugal, will rank senior to other unsecured debt, but junior to insured deposits, deposit guarantee schemes and the portion of uninsured deposits held by individuals and SMEs. Reflecting this full depositor preference scheme, and decreasing likelihood for deposits to absorb losses, DBRS upgraded by one notch the Long-Term Deposit ratings of 1) Banco Comercial Portugues, S.A and its branch, BCP Macao Branch, 2) Caixa Economica Montepio Geral (Banco Montepio), 3) Caixa Geral de Depositos, S.A. and its branch, CGD France Branch, 4) Novo Banco, S.A. and its branches, Novo Banco Cayman Islands Branch and Novo Banco Luxembourg. The Long-Term Deposit ratings are now positioned one notch above their Intrinsic Assessment (IA). DBRS had previously rated these Long-Term Deposits in line with the Banks' Long-Term Senior Debt, which is at the same level as the Banks' Intrinsic Assessment (IA). Concurrently, DBRS also upgraded the Short-Term Deposits of 1) Banco Comercial Portugues, S.A and its branch, BCP Macao Branch, 2) Caixa Economica Montepio Geral (Banco Montepio), 3) Caixa Geral de Depositos, S.A. and its branch, CGD France Branch. The Short-Term Deposit ratings of Novo Banco remained unchanged, in line with DBRS' Short-Term / Long-Term Mapping Table. The Trend on the Deposit ratings of Caixa Geral de Depositos, S.A. will change to Stable from Positive, as they are now positioned at the same level as the Portuguese Sovereign ratings (BBB / R-2 (high), Stable Trend). The Trend on the Short-Term Deposits of Caixa Economica Montepio Geral (Banco Montepio) is now Negative in line with DBRS' Short-Term / Long-Term Mapping Table. The Trend on all other Deposit ratings remains unchanged. The Deposit ratings of Banco Santander Totta S.A. are not affected by this rating action as the ratings of the Bank's Long-Term and Short-Term Deposits already incorporate rating uplift due to parental support from Banco Santander SA. The aim of the new category of liability instruments (Senior Non-Preferred) is to facilitate the implementation of bank resolution procedures. In DBRS's view, the issuance of Senior Non-Preferred bonds will increase the loss-absorbing capacity and support Portuguese banks in meeting their future MREL requirements. Typically, DBRS rates Senior Non-preferred instruments one notch below the Intrinsic Assessment. RATING DRIVERS The ratings of the Long-Term and Short-Term Deposits will generally be affected by changes in the IA of the individual banks. Furthermore, the ratings could also be affected by any further changes in the legal framework for bank resolution and/or creditor hierarchy. The Ratings are: Action Rating Trend Banco Comercial Portugues, S.A. Long Term Deposits Upgraded BBB(low) Pos. Short Term Deposits Upgraded R-2(middle) Pos. Caixa Geral de Depositos, S.A. Long Term Deposits Upgraded BBB Pos. Short Term Deposits Upgraded R-2(high) Pos. Caixa Economica Montepio Geral (Banco Montepio) Long Term Deposits Upgraded BB(high) Pos. Short Term Deposits Upgraded R-3 Pos. Novo Banco, S.A. Long Term Deposits Upgraded B(high) Pos. BCP Macao Branch Long Term Deposits Upgraded BBB(low) Pos. Short Term Deposits Upgraded R-2(middle) Pos. CGD France Branch Long Term Deposits Upgraded BBB Pos. Short Term Deposits Upgraded R-2(high) Pos. Novo Banco Cayman Islands Branch Long Term Deposits Upgraded B(high) Pos. Novo Banco Luxembourg Branch Long Term Deposits Upgraded B(high) Pos. Notes: All figures are in Euros unless otherwise noted. =========== T U R K E Y =========== DOGUS OTOMOTIV: Fitch Lowers National LT Rating to 'BB(tur)' ------------------------------------------------------------ Fitch Ratings has downgraded Turkish car importer Dogus Otomotiv ve Ticaret A.S.'s (Dogus) National Long-Term Rating to 'BB(tur)' from 'BB+(tur)'. The Outlook is Negative. Fitch has simultaneously withdrawn all of Dogus's ratings for commercial reasons. Accordingly, Fitch will no longer provide ratings or analytical coverage for Dogus. The downgrade reflects continuing weakness in the Turkish domestic market, coupled with Fitch's expectations of a prolonged stress on sales driving further deterioration in Dogus's financial profile compared with local peers'.The ratings are constrained by heightened liquidity and medium-term refinancing risks amid ongoing market volatility and currency weakness, coupled with Fitch's expectation that the prevailing environment in Turkey will not improve in the medium term. The Negative Outlook reflects potentially limited credit availability and the significantly increased refinancing risk of parent Dogus Holding (DH) AS. The ratings were withdrawn for commercial reasons. KEY RATING DRIVERS Continuously Weak Liquidity: Given negative free cash flow (FCF) and the absence of committed credit facilities for Dogus, which is common in Turkey, liquidity remains a key pressure on its credit profile, which is captured in its 'BB(tur)' rating. While Dogus had historically enjoyed large limits of uncommitted credit facilities (around TRY5 billion) from a wide range of banks, access to these undrawn cash limits has been revoked through 2018. As a result, Dogus's liquidity profile has weakened and is contingent on the continued successful rollover of drawn credit facilities. Heightened Risk of Credit Availability: Fitch believes that accessing credit facilities is becoming harder under the current macro-economic environment in Turkey. Although Dogus enjoys strong relationships with both local and international banks and to date has been able to regularly roll over these lines, it is exposed to an increasing risk of reduced availability of credit and renewal at more onerous conditions if the currency crisis worsens further and the impact on Turkish banks intensifies, notwithstanding slightly improving commercial interest rates during 1Q19. Stretched Financial Metrics: Due to the large adverse FX impact in the year-to-date on Dogus's cash interest costs, the utilisation of factoring to meet working capital requirements, coupled with its assumption of declining operational cash flow, Fitch projects funds from operations (FFO) adjusted net leverage to remain around 7.0x over 2019-2020 (2018: 6.1x), which is commensurate with the rating. Nonetheless, the company's 2018 EBITDA margin increased to 5.7% (2017: 4.3%) on the back of operational cost control, illustrating Dogus's mostly flexible cost structure. Slump in Turkish Automotive Sales: Automotive sales in Turkey have been hit significantly in 2018, showing a 37% decline compared with 2017, driven by large adverse FX impact and resulting spike in inflation. This led to higher vehicle prices, more onerous terms for auto financing and depressed consumer sentiment. Notably, Dogus's 2018 unit sales (-43%) contracted slightly more than the market, illustrating the company's high exposure to the domestic market. Fitch expects further contraction in automotive sales through 2019 and does not see any stabilisation before 2020. Manageable FX Risks: Car imports are entirely euro-denominated while Dogus's operations generate mostly Turkish lira-denominated revenue, creating a significant FX mismatch. However, pricing mechanisms with automotive manufacturers provide a balanced burden-sharing model over the long-term, smoothing out average currency volatility. Fitch views the absence of hard-currency denominated debt, which compares favourably with Turkish corporate peer Yasar Holding A.S. (B-/BB(tur)/Stable) and Georgia-based auto spare parts provider Tegeta Motors LLC as positive for Dogus's credit profile. Both peers have substantial unhedged foreign currency-denominated debt on their balance sheets, leading to an adverse FX-driven impact on leverage metrics. Standalone Rating Assessment: Fitch has applied its 'Parent and Subsidiary Rating Linkage' Criteria and assessed that the legal, operational and strategic linkage with DH was sufficiently weak to rate Dogus on a standalone basis. In particular, the absence of up- and down-stream guarantees, ring-fencing mechanisms and cross-default clauses underpins the separate financing of both entities, while a small management overlap and a broadly independent Board of Directors promote an autonomous management strategy with only marginal influence from DH. Fitch views the credit profiles of DH and Dogus as broadly similar. However, further deterioration of DH's credit profile could be negative for Dogus as Fitch believes that Dogus is unlikely to be rated more than one notch above its parent. Parent's Planned Refinancing Stalls: Fitch believes that Dogus 's financial profile is somewhat stressed by DH's tight liquidity profile and heightened refinancing risk, as it understands that refinancing talks are stalling. This is despite management's continued working assumption that Dogus will be exempted from the debt reorganisation at DH and Fitch's view that inter-linkages are weak. Following DH's disposal of its stake in Garanti Bank, Dogus has become the largest dividend source. DERIVATION SUMMARY Not applicable. KEY ASSUMPTIONS Fitch's Key Assumptions within its Rating Case for the Issuer - Revenue to decline by around 9% in 2019, as drop in Turkish new car sales (-37% in 2018 and -60% in January 2019 compared with prior year) are not fully offset by price increases. - Majority of existing drawn credit lines to be rolled over to ensure funding. - Normalisation of capex with annual investment spend slightly in excess of TRY200 million through 2019-2020. - Dividend payments suspended pending further notice. - No major acquisition or disposal over 2019-2021. - Rating predicated on current corporate structure remaining in place. RATING SENSITIVITIES Not applicable. LIQUIDITY AND DEBT STRUCTURE Thin Liquidity: Dogus's liquidity profile is weak results in a liquidity score significantly below 1.0x, owing to predominantly short-term funding. Readily available cash and cash equivalents was TRY381 million at end-2018, after adjusting for TRY100 million restricted cash and the inclusion of 20% of Dogus's stake in DH valued at TRY116 million. This does not cover TRY2.5 billion of short-term debt as at the same date and expected negative FCF for the coming 12 months. With access to previous uncommitted cash limits (roughly TRY3 billion) revoked, Dogus's liquidity is contingent on the continued rollover of drawn credit lines, while being exposed to an increasing risk of reduced availability of credit and renewal at more onerous conditions. [*] TURKEY: Plans to Pump Fresh Capital into State-Owned Lenders ---------------------------------------------------------------- Kerim Karakaya and Asli Kandemir at Bloomberg News report that Turkey plans to shore up its battered banks by injecting capital into the biggest state-owned lenders for the second time in six months, according to people with direct knowledge of the matter. According to Bloomberg, the people said seeking to sustain the flow of credit into the slumping economy, the treasury is considering buying bonds that will be issued mostly by TC Ziraat Bankasi AS and Turkiye Halk Bankasi AS. Fresh capital may be pumped into the lenders to back President Recep Tayyip Erdogan's efforts to prop up growth with cheap loans, Bloomberg discloses. The banks are being tasked with salvaging industries and helping consumers to pay off credit cards or get below-market rates on mortgages in the hope that private firms will follow, Bloomberg states. =========================== U N I T E D K I N G D O M =========================== COMMITTED 2 COMMUNICATIONS: Enters Voluntary Administration ----------------------------------------------------------- Business Sale reports that Committed 2 Communications Limited, a telephone fundraising agency, has gone into voluntary administration, citing a "major drop in the volume of traditional telephone fundraising campaigns" as the reason for its move. The company, trading as NTT Fundraising, has entered voluntary administration, with SFP Restructuring Limited appointed as the administrators of the company, Business Sale relates. According to Business Sale, the company, however, announced a restructure that would save the business via director appointment following professional support. The directors, Dave Clark and Natalie Bailey, securing investment and purchased the company assets and all 98 members of staff from the administrators to set up the new agency, NTT, Business Sale discloses. Although in voluntary administration, its trading activities and contracts will continue as normal in the new agency, Business Sale notes. DEBENHAMS PLC: Enters Administration, Lenders Take Control ---------------------------------------------------------- Business Sale reports that thought to be the largest department store in the UK, Debenhams plc has entered administration in the face of crippling debt and fierce competition on the high street. Entering a pre-pack administration, the business has been sold to its lenders and has passed on control, and now have access to GBP200 million worth of emergency funds, Business Sale relates. According to Business Sale, business advisory firm FTI Consulting has been called in to handle the administration process, with the administrators stating: "The group has been sold for a price which in our opinion is the best price reasonably obtainable at the time of sale." As a result of this transaction, Debenhams will be "immediately marketed for onward sale" to salvage funds in order to pay off the company's debts and cover its pension liabilities, Business Sale states. This action comes in response to Debenhams rejected a GBP200 million rescue deal from Sports Direct's Mike Ashley, who also wanted to take over as chief executive, Business Sale notes. However, under the company voluntary agreement (CVA), its debts will be reduced and will undergo a restructuring program, according to Business Sale. However, roughly 50 stores are earmarked for closure, but none before 2020, Business Sale discloses. In an attempt to further cut costs, the company, Business Sale says, will aim to renegotiate rent reductions with its landlords, which insolvency practitioner David Ereira from Paul Hastings law firm says may be met with resistance. Despite the complications, Debenhams will continue its trading operations as usual, according to Business Sale. FONTAIN: Enters Into Company Voluntary Arrangement -------------------------------------------------- Rhys Handley at PrintWeek reports that Fontain has entered a company voluntary arrangement (CVA) to pay back liabilities in excess of GBP1 million to creditors. A confirmation statement issued to Companies House on March 29 stated that Adam Stephens -- adam.stephens@smithandwilliamson.com -- and Henry Shinners -- henry.shinners@smithandwilliamson.com -- of Smith & Williamson had been appointed as joint supervisors for the CVA of the Bermondsey, south London-based commercial print outfit, PrintWeek relates. According to PrintWeek, with total liabilities equal to GBP4.2 million, the arrangement covers Fontain creditors collectively owed just over GBP1 million, who will receive an anticipated dividend of 82p in the pound. Creditors voted on Feb. 21 to approve the CVA, with 75% by value (GBP781,970.46) in favour, PrintWeek recounts. HMRC, which is owed GBP251,911 (25%), was the only party to vote against the arrangement, PrintWeek discloses. INDIVIOR: Faces Criminal Probe, Hefty Fine May Bankrupt Business ---------------------------------------------------------------- Julia Bradshaw at The Telegraph reports that shares in Indivior plunged 75% on April 10 after US prosecutors opened a criminal case against the UK pharmaceutical company over alleged fraud. Indivior, which has denied all charges, could face a fine of US$3 billion if found guilty, The Telegraph states. According to The Telegraph, some analysts said such a penalty, along with hefty legal fees, could bankrupt the FTSE 250 firm. The Department of Justice (DoJ) claims Indivior ran an illicit nationwide scheme to boost sales of its top-selling opioid-dependency drug, Suboxone Film, The Telegraph discloses. Most of the 28 charges relate to actions Indivior carried out before 2014, when it was still part of consumer goods giant Reckitt Benckiser, The Telegraph notes. SMALL BUSINESS 2019-1: DBRS Gives Prov. BB(low) Rating on D Notes ----------------------------------------------------------------- DBRS Ratings Limited assigned provisional ratings to the following notes to be issued by Small Business Origination Loan Trust 2019-1 DAC (SBOLT 2019-1 or the Issuer): -- Class A Notes at A (high) (sf) -- Class B Notes at A (low) (sf) -- Class C Notes at BBB (low) (sf) -- Class D Notes at BB (low) (sf) The Class A, Class B, Class C, and Class D Notes are together referred to as the Rated Notes. DBRS will not rate the Class E, Class X, and Class Z Notes. The above-mentioned ratings are provisional. The ratings will be finalized upon receipt of an execution version of the governing transaction documents. To the extent that the documents and information provided to DBRS as of this date differ from the executed version of the governing transaction documents, DBRS may assign different final ratings to the Rated Notes. The transaction is a cash flow securitization collateralized by a portfolio of term loans and originated through the Funding Circle Ltd lending platform (Funding Circle or Servicing and Collection Agent) to small and medium-sized enterprises (SMEs) and sole traders based in the United Kingdom (U.K.). All the loans are fully amortizing and unsecured. As of 31 January 2019, the transaction's provisional portfolio included 2,618 loans to 2,610 obligors, totaling GBP 186.9 million. The rating on the Class A Notes addresses the timely payment of interest and the ultimate repayment of principal payable on or before the Legal Maturity Date in December 2027. The ratings on Class B, Class C Notes and Class D Notes address the ultimate payment of interest and principal payable on or before the Legal Maturity Date in March 2027 in accordance with the transaction documentation. The provisional pool has some exposure to the "Business Equipment & Services" industry, representing 32.1% of the outstanding balance. The portfolio included loans with no industry classification (6.1%), for which DBRS assumed to be part of the largest industry concentration. The "Building & Development" (16.9%) and "Retailers (except food & drug)" (7.1%) sectors have the second- and third-largest exposures based on the DBRS Industry classification. The provisional portfolio exhibits low obligor concentration. The top obligor and the largest ten obligor groups represent 0.27% and 2.61% of the outstanding balance, respectively. The top three regions for borrower concentration are the South East, London and North West, representing approximately 23.8%, 17.1% and 13.7% of the portfolio balance, respectively. The historical data provided by Funding Circle reflects the portfolio composition which includes unsecured loans for which Funding Circle internally categorizes borrowers into six risk bands (A+, A, B, C, D, and E). DBRS assumed a weighted-average annualized probability of default (PD) rate of 6.9% for this portfolio. For the purpose of its analysis, DBRS calculated the PDs for each risk band in order to capture any negative or positive pool selection. The assumed PDs for A+, A, B, C, D and E risk bands are 2.9%, 5.1%, 8.1%, 9.4%, 15.9% and 24.7%, respectively. Funding Circle acts as the platform servicer. It is also responsible for the underwriting processes associated with originations. Whilst Funding Circle services the receivables, the loans themselves were funded by the seller P2P Global Investments PLC, which is an institutional investor. The transaction incorporates separate interest and principal waterfalls. The interest waterfall includes a principal deficiency ledger (PDL) concept for each class of notes. This PDL concept results, according to DBRS's cash flow analysis and the terms of the transaction documents, in the timely payment of interest for the Class A Notes and ultimate payment of interest for the Class B, Class C and Class D Notes in the respective rating stress scenarios. The transaction documents permit the deferral of interest on non-senior bonds and this is not considered an event of default. At closing, the Class A Notes will benefit from a total credit enhancement of 35.75%, the Class B Notes will benefit from a credit enhancement of 32.75%, Class C will benefit from a credit enhancement of 25.75%, and Class D from a credit enhancement of 15.25%. Credit enhancement is provided by subordination and the Cash Reserve Account (1.75% of the initial portfolio). The rating of the Notes is based on DBRS's review of the following items: -- The transaction includes a pro rata amortization unless certain sequential trigger amortization events are breached. -- The portfolio is static and consists of senior unsecured loans with a maturity between six months and five years. All loans are amortizing, contributing to a short weighted-average life (WAL) of 2.2 years. No adjustments were applied by DBRS as no permitted variations of the terms of the loans including maturity extensions are allowed. -- Despite Funding Circle having historical performance data going back to 2010, it does not capture downturn periods of an economic cycle. While it is not clear how Funding Circle borrowers would perform during adverse economic periods, DBRS used proxy data to estimate expected stressed performance during adverse periods of a cycle when determining its base case PDs for each of the six risk bands. -- Funding Circle originates loans for a broad range of borrower risk profiles and categorizes borrowers according to six internal risk bands: A+, A, B, C, D and E. The portfolio includes borrowers from all risk bands resulting in a DBRS WA PD of 6.9 % which is significantly higher than for a typical SME portfolio in the U.K. -- The transaction benefits from an interest rate cap which limits the interest rate risk between the floating-rate notes and the portfolio comprised solely of fixed-rate loans. -- The transaction benefits from a back-up servicer which reduces servicer continuity risk. DBRS determined its ratings as per the principal methodology specified below and based on the following analytical considerations: -- The PD for the portfolio was determined using the historical performance information supplied as well as stressed assumptions for adverse periods of a credit cycle. For this transaction, DBRS assumed an average annualized PD of 6.9 %. -- The weighted-average life (WAL) of the portfolio was 2.2 years. -- The PD and WAL were used in the DBRS Diversity Model to generate the hurdle rates for the assigned ratings. -- The recovery rate was determined to take into consideration that all loans in the portfolio are senior unsecured. For Class A and Class B Notes, DBRS applied a 23.44% recovery rate. For the Class C Notes, DBRS applied a 24.0% recovery rate and for Class D a 32.85% recovery rate. These are lower than those outlined in the principal methodology amid the uncertainty about the asset base of Funding Circle borrowers during adverse economic periods. -- The break-even rates for the interest rate stresses and default timings were determined using the DBRS cash flow tool. ********* 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 * * *