/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/190702.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Tuesday, July 2, 2019, Vol. 20, No. 131 Headlines B U L G A R I A EUROHOLD BULGARIA: Fitch Puts B IDR on Watch Neg. Amid CEZ Deal E S T O N I A AS COAL TERMINAL: Harju County Court Commences Claim Proceedings F R A N C E SKTB ALUMINIUM: Goes Into Administration; 42 Jobs Axed G E O R G I A TBC BANK: Fitch Rates $300MM Unsec. Notes BB-, Outlook Stable I R E L A N D PROVIDUS III: Fitch Assigns B-(EXP) Rating on Class F Debt I T A L Y ALITALIA SPA: German Efromovich Eyes 30% Stake in Airline BANCA CARIGE: Fitch Maintains CCC LT IDR on Rating Watch Evolving GRUPPO MACCAFERRI: Starts Insolvency Process for 4 Businesses K A Z A K H S T A N KAZAKHTELECOM JSC: Fitch Affirms BB+ LT IDR, Outlook Positive R O M A N I A ROMCAB SA: Bongard Submits Bid to Buy Production Lines T U R K E Y FENERBAHCE: TBB to Move Forward with Debt Restructuring TURKIYE KALKINMA: Fitch Affirms BB LT IDR, Outlook Negative U N I T E D K I N G D O M BRITISH STEEL: Systra in Talks to Acquire TSP Projects CANTERBURY FINANCE 1: Fitch Assigns BB(EXP) Rating on Class E Debt CATTEN COLLEGE: Closes After Entering Insolvency MBI HAWTHORN: Investors File Application for Administration [*] UK: One in Three Closed Retail Shops to Never Reopen - - - - - =============== B U L G A R I A =============== EUROHOLD BULGARIA: Fitch Puts B IDR on Watch Neg. Amid CEZ Deal --------------------------------------------------------------- Fitch Ratings has placed Eurohold Bulgaria AD's Long-Term Issuer Default Rating and Insurance Company Euroins AD's, Euroins Romania Asigurare Reasigurare S.A.'s, and Insurance Company EIG Re AD's Insurer Financial Strength Ratings on Rating Watch Negative. The RWN follows the announcement that Eurohold plans to acquire the Bulgarian assets of the Czech power utility company CEZ a.s. for EUR335 million (BGN655 million). The completion of the transaction is subject to approvals from the Bulgarian Competition Authority and the Bulgarian energy regulator. KEY RATING DRIVERS The RWN reflects Fitch's view that the proposed acquisition of CEZ assets could give rise to financial risks due to the expected high debt proportion in the financing structure as well as integration and execution risks. The planned high debt proportion in the financing structure (minimum 75% of the acquisition price) could significantly reduce distributable earnings from CEZ assets especially in the initial period. However, power distribution, the largest and most profitable business in the transaction, is regulated and produces stable cash flows, and therefore the acquisition of CEZ assets should over time contribute to higher stability and predictability of Eurohold's earnings. This could contribute positively to the group's credit profile in the medium- to long-term. Eurohold lacks previous management experience in power utilities and will therefore rely on current management of CEZ assets to ensure smooth operations. Fitch understands from management that Eurohold aims to retain the existing management team of CEZ assets. Additionally, Eurohold has formed an advisory board of energy experts, which is supporting the company on the acquisition process and will oversee the integration of CEZ assets during and after transaction closing. However, Fitch expects the integration will also require significant management resources from Eurohold. As a predominantly financial investor, Eurohold is also likely to look for cost-saving opportunities to further improve its return on investment, which could give rise to additional execution risks. Fitch expects the transaction to be broadly neutral to Eurohold's insurance-related financial leverage ratio and capitalisation, which would exclude both the equity and debt financing relating to the acquisition of CEZ assets. Eurohold's capitalisation based on Fitch's Prism Factor Based Model was 'Weak' and the group's Fitch-calculated financial leverage stood at 65% at end-2018 (2017: 64%). However, Fitch expects the transaction to increase financial leverage at consolidated Eurohold level due to the highly leveraged nature of the transaction. Fitch also believes Eurohold would provide additional support to the financing structure (with or without a legal obligation) if necessary to protect its investment. Such a scenario could put additional pressure on Eurohold's capitalisation and/or financial leverage. Eurhold plans to issue EUR80 million (BGN156 million) preferred shares to partly fund the acquisition of CEZ assets. These shares would carry fixed dividends to be covered by Eurohold's net or retained earnings. Fitch expects this to be slightly negative for Eurohold's insurance-related fixed charge coverage ratio, which would have been 1.2x calculated on a pro-forma basis at end-2018 after inclusion of these expenses (end-2018 actual: 1.3x). Fitch expects interest costs arising from financial debt related to the transaction to be covered by revenues generated by CEZ assets. However, Fitch sees high execution risk associated with the debt servicing capability of CEZ assets. RATING SENSITIVITIES Fitch will resolve the RWN on the regulatory approvals of the transaction and after completing its assessment of the standalone credit profile of CEZ assets and the final financing structure. FULL LIST OF RATING ACTIONS Insurance Company Euroins AD -- IFS Rating 'BB-' placed on RWN Euroins Romania Asigurare Reasigurare S.A. -- IFS Rating 'BB-' placed on RWN Insurance Company EIG Re AD -- IFS Rating 'BB-' placed on RWN Eurohold Bulgaria AD -- Long-Term IDR 'B' placed on RWN -- Long-term senior debt 'B'/'RR4' rating placed on RWN ============= E S T O N I A ============= AS COAL TERMINAL: Harju County Court Commences Claim Proceedings ---------------------------------------------------------------- The Harju County Court, on June 21, 2019, stared the proceedings on the claim filed by AS Coal Terminal (in bankruptcy) and its bankruptcy trustees on May 20, 2019, against AS Tallinna Sadam applying for compensation of the market value of the former coal terminal buildings and equipment plus accrued interest in connection with the expiration of the right of superficies contracts in Muuga Harbour. The claim amounts to EUR22.4 million plus accrued interest. The bankruptcy of Coal Terminal, a long-term customer of Tallinna Sadam, was declared on May 2, 2017. As bankruptcy trustees refused to execute commitments under the right of superficies contracts, the contracts together with the assets erected on the plots covered by the right of superficies contracts were transferred back into the possession of Tallinna Sadam. Under the contracts, Tallinna Sadam has to compensate the value of buildings and equipment that form an essential part of the rights of superficies, the amount of which cannot be estimated reliably because the assets are special-purpose assets for which a regular market does not exist and there are contradictory views both among the experts and the parties of the dispute on the valuation methods that should be used. On July 6, 2018, the bankruptcy trustees submitted a claim to Tallinna Sadam for compensation of EUR22.4 million for the value of the assets, which Tallinna Sadam did not admit as such and the bankruptcy trustees then turned to court. Several assets transferred back to Tallinna Sadam were sold in 2018 and the proceeds from the sale of the assets totalled EUR2.6 million. In connection with the termination of contracts, Tallinna Sadam has submitted a counter-claim to Coal Terminal in amount of EUR11.7 million for compensation of the damages. The Management Board of Tallinna Sadam is of the opinion that the requests in the application of the claim are unjustified in this form. The final monetary impact to Tallinna Sadam from the bankruptcy proceedings of Coal Terminal depends on the combined effect of the outcomes of several parallel disputes, which monetary impact cannot be estimated reliably and there is also no certainty about the timing of the realization of the claims and liabilities. Thus, the Management Board has not recognised a provision for a possible claim. Tallinna Sadam will file the response to the application of the claim by the deadline fixed by the court. Tallinna Sadam is one of the largest cargo- and passenger port complexes in the Baltic Sea region, which in 2018 serviced 10.6 million passengers and 20.6 million tons of cargo. In addition to passenger and freight services, Tallinna Sadam group also operates in shipping business via its subsidiaries -- OU TS Laevad provides ferry services between the Estonian mainland and the largest islands, and OÜ TS Shipping charters its multifunctional vessel Botnica for icebreaking and construction services in Estonia and offshore projects abroad. Tallinna Sadam group is also a shareholder of an associate AS Green Marine, which provides waste management services. According to unaudited financial results, Tallinna Sadam group's sales in 2018 totaled EUR130.6 million, adjusted EBITDA EUR74.4 million and net profit EUR24.4 million. =========== F R A N C E =========== SKTB ALUMINIUM: Goes Into Administration; 42 Jobs Axed ------------------------------------------------------ Metal News reports that SKTB Aluminium, a French downstream aluminium producer, went into administration earlier last month after the local commercial court declared the company insolvent. Metal News says the closure of SKTB's factory in Gorcy in north-eastern France followed a failed last-minute attempt to secure a takeover by the British metals company Liberty House Group and resulted in the remaining 42 employees losing their jobs. According to the report, SKTB Aluminium closed down work for good after several attempts to restructure its business to solve its cash-flow problems, and a failure to find a potential buyer for its premises. Liberty House Group the buyer of Aluminium Dunkerque showed interest in purchasing the facility hoping to reconvert it into an aluminium-recycling centre. Metal News relates that the expected takeover failed due to environmental concerns. The local government did not wish to authorise the type of scrap that Liberty House wanted to recycle at the premises. Following the court's decision, the SKTB director Gilles Schmitt regretted "the dismissal of the remaining 42 employees, a loss of unique know-how in France, a loss of clients who will now go abroad, but also a loss of a very good manufacturing base," the report relays. The industrial commune of Gorcy has a long history of being home to France's steel furnaces and aluminium foundries dating back to 1832. Metal News notes that the closure of the company is another loss for the European industrial base, and specifically the European aluminium industry. ============= G E O R G I A ============= TBC BANK: Fitch Rates $300MM Unsec. Notes BB-, Outlook Stable ------------------------------------------------------------- Fitch Ratings has assigned JSC TBC Bank's USD300 million senior unsecured notes a final long-term rating of 'BB-'. KEY RATING DRIVERS The notes constitute unsecured and unsubordinated senior obligations and rank pari passu among themselves and with all other unsecured and unsubordinated obligations of TBC. The interest rate is fixed at 5.75% and the notes mature in five years. The issue rating is the same as TBC's Long-Term Issuer Default Rating of 'BB-', in line with Fitch's Bank Rating Criteria. TBC's Long-Term IDR is driven by the intrinsic strength of the bank, as reflected by its Viability Rating. The VR reflects TBC's high loan dollarisation and moderately concentrated balance sheet compared with some regional peers'. The rating also factors in the bank's strong pricing power given TBC's dominant position in the Georgian banking sector, good and stable financial profile metrics, and moderate liquidity. The Stable Outlook on TBC's ratings reflects Fitch's expectations of limited changes in the financial profile over the medium term, given sound asset quality metrics, while capitalisation is expected to remain broadly stable because of the bank's reasonable profitability and moderate growth plans. ============= I R E L A N D ============= PROVIDUS III: Fitch Assigns B-(EXP) Rating on Class F Debt ---------------------------------------------------------- Fitch Ratings has assigned Providus III DAC expected ratings, as follows: Class A: 'AAA(EXP)sf'; Outlook Stable Class B-1: 'AA(EXP)sf'; Outlook Stable Class B-2: 'AA(EXP)sf'; Outlook Stable Class C: 'A(EXP)sf'; Outlook Stable Class D: 'BBB-(EXP)sf'; Outlook Stable Class E: 'BB-(EXP)sf'; Outlook Stable Class F: 'B-(EXP)sf'; Outlook Stable Subordinated notes: 'NR(EXP)sf' Providus CLO III Designated Activity Company (the issuer) is a cash-flow securitisation of mainly senior secured obligations. Net proceeds from the notes are being used to fund a portfolio with a target par of EUR375 million. The portfolio is managed by Permira Debt Managers Group Holdings Limited. The CLO features a 4.5-year reinvestment period and an 8.5-year weighted average life (WAL). KEY RATING DRIVERS 'B' Portfolio Credit Quality: Fitch expects the average credit quality of obligors to be in the 'B' category. The weighted average rating factor (WARF) of the identified portfolio is 32.0. High Recovery Expectations: At least 90% of the portfolio comprises senior secured obligations. Recovery prospects for these assets are typically more favourable than for second-lien, unsecured and mezzanine assets. The weighted average recovery rating (WARR) of the identified portfolio is 67.4%. Diversified Asset Portfolio: The transaction will feature different Fitch test matrices with different allowances for exposure to the 10 largest obligors and fixed-rate assets. The manager can then interpolate between and within these matrices. As of pricing the top 10 obligor concentration is limited to 20% and fixed-rate assets limited to 10%. The transaction also includes various concentration limits, including the maximum exposure to the three largest (Fitch-defined) industries in the portfolio at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management: The transaction features a 4.5-year reinvestment period and includes reinvestment criteria similar to other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Analysis: Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls, and the various structural features of the transaction, as well as to assess their effectiveness, including the structural protection provided by excess spread diverted through the par value and interest coverage tests. OTHER CONSIDERATIONS Special Redemption: The notes will be subject to redemption in part by the issuer during the reinvestment period, if the manager believes that special redemption can avoid a downgrade of the notes, or if the manager is unable to identify collateral obligations within 20 business days that are deemed appropriate to permit the investment of all or a portfolio of the funds available for reinvestment. Regulatory Refinancing: The issuer may redeem in part on a pro rata basis the specified percentage of each class of notes in order to comply with the EU retention requirements and/or the US risk retention rules, subject to certain conditions being met. The new notes must have identical terms to the refinanced notes and rating agency confirmation is required. Investment Gains: The manager is permitted to reclassify up to 50% of the investment gains as interest proceeds and apply them to the interest priority of payments as long as, amongst other conditions, the class F par value ratio is at least equal to the class F initial ratio, collateral principal amount is greater than or equal to the reinvestment target par balance, and not more than 7.5% of the collateral principal amount are CCC obligations. ========= I T A L Y ========= ALITALIA SPA: German Efromovich Eyes 30% Stake in Airline --------------------------------------------------------- Daniele Lepido at Bloomberg News, citing financial daily Il Sole 24 Ore, reports that German Efromovich, the ousted chairman of Colombian airline Avianca, wants to buy a stake in the bankrupt Italian flag-carrier Alitalia SpA. "We wrote a letter to Ferrovie dello Stato and the adviser Mediobanca two weeks ago saying we can purchase up to 30% of Alitalia," Bloomberg quotes Mr. Efromovich, who was removed as the chairman of Avianca Holdings SA last month after a loan breach, as saying. "We want to join the company's management and I'd like to be the chief executive officer, at least at the start." According to Bloomberg, the newspaper said a 30% stake in Alitalia would require at least EUR240 million (US$273 million). Italian railways operator Ferrovie dello Stato Italiane SpA is leading talks for a possible rescue of Alitalia, which is under special administration, Bloomberg discloses. Earlier this month, the Italian government extended the deadline for binding bids to July 15 after potential partners such as EasyJet Plc dropped out of the discussions, Bloomberg recounts. Mr. Efromovich, who has signed a non-disclosure agreement with Alitalia's advisers, said he has the money needed for the investment and wouldn't have to borrow, Bloomberg notes. About Alitalia With headquarters in Fiumicino, Rome, Italy, Alitalia is the flag carrier of Italy. Its main hub is Leonardo da Vinci-Fiumicino Airport, Rome. On May 2, 2017, the airline went into administration. As previously reported by the Troubled Company Reporter - Europe, state-appointed administrators have been running Alitalia since 2017, after former shareholder Etihad Airways pulled the plug on funding and workers rejected a EUR2 billion recapitalization plan tied to 1,600 job cuts from a workforce of 12,500, Bloomberg News cited. BANCA CARIGE: Fitch Maintains CCC LT IDR on Rating Watch Evolving ----------------------------------------------------------------- Fitch Ratings has maintained Banca Carige S.p.A. - Cassa di Risparmio di Genova e Imperia's 'CCC' Long-Term Issuer Default Rating on Rating Watch Evolving. Fitch has affirmed Carige's Viability Rating at 'f'. Since Fitch placed Carige's ratings on RWE in January 2019 the bank's temporary administrators have presented a new strategic plan, which encompasses raising fresh capital to comply with its overall capital requirement, reducing impaired loans and revamping its franchise. The success of the capital increase remains highly uncertain. The administrators' negotiations with potential third-party financial or industrial investors in the bank have not yet led to tangible results. However, the bank announced on June 24, 2019 a proposal from Apollo Global Management to support the bank. The maintained RWE reflects Fitch's opinion that Carige's senior creditors might either avoid or incur losses depending on how successful the bank is in completing the strategic plan. At this stage, alongside the capital intervention of third-party investors, possible alternative scenarios include a (private) capital increase by the Italian Deposit Guarantee Scheme (which on June 24, 2019 announced its firm intention to intervene in the solution of the bank's crisis, provided the Italian banking sector agrees to it), or a precautionary recapitalisation by the state. Should these fail, Fitch believes that the bank is at risk of a regulatory action such as resolution or liquidation. KEY RATING DRIVERS IDRS, VR AND SENIOR DEBT Carige's Long-Term IDR is above its VR because Fitch believes that the probability of a default on the bank's senior obligations is less likely than what Fitch would consider a failure of the bank under its criteria. The Long-Term IDR reflects Fitch's view that the government's guarantee on the senior debt issued by Carige (with potential to issue additional EUR1 billion) has helped stabilise the bank's funding and liquidity profile. However, the latter remains at high risk without a solution to restore the bank's viability. In its view, senior creditors could still avoid losses if the bank manages to somehow raise equity (for example if some form of private sector intervention is organised) or if, in a liquidation scenario, its assets and liabilities are transferred to an acquiring group. The RWE on the Long-Term IDR reflects Fitch's view that the rating could be upgraded or downgraded depending on developments. Carige's 'f' VR reflects its view that the government's funding guarantee on EUR2 billion senior debt issued by the bank in January 2019 under the framework of a decree law and the additional available guarantees constitute extraordinary and bank-specific support on which the bank remains reliant from a liquidity standpoint. The VR also reflects its view that the bank's ability to generate new business is limited while it is under temporary administration, which makes it difficult for it to maintain its franchise and could further weaken its business model. Carige does not meet the regulatory definition of a bank that is failing or likely to fail, but according to its criteria the government funding guarantee constitutes an external, bank-specific, provision of extraordinary support, which in its opinion was required by the bank to stabilise its liquidity. This circumstance meets Fitch's definition of a 'f' VR. The business plan of the temporary administrators envisages a capital increase of EUR630 million, partly undertaken through the conversion or repayment of the outstanding EUR320 million Tier 2 notes. The capital raise would allow the bank to reach a total capital ratio of about 14% at end-2019 compared with an overall capital requirement of 13.75%. Carige's asset quality also remains weak, with a gross impaired loans ratio of about 22% at end-2018. However, Societa per la Gestione di Attivita SpA (SGA; BBB-/Negative), the debt servicer fully-owned by the Italian state, has in place a binding offer to Carige to acquire a large portion of its gross impaired loans. If Carige accepts the offer, its gross impaired loan ratio could reduce dramatically. Carige's senior unsecured debt rating is rated two notches below the Long-Term IDR based on an estimated Recovery Rating of 'RR6'. Poor recovery prospects for senior unsecured bond holders in a hypothetical liquidation are a consequence of the introduction of full depositor preference in Italy from January 1, 2019 and of the bank's liability structure, which relies heavily on customer deposits and secured or other forms of preferred funding. Carige has an ESG Relevance Score of 4 for Governance due to the appointment of temporary administrators, which, in its opinion, has a positive impact on the credit profile, and is relevant to the ratings in conjunction with other factors. DEPOSIT RATING Carige's Long-Term Deposit Rating is in line with the bank's Long-Term IDR. Fitch does not grant any Deposit Rating uplift because in its opinion, current debt buffers are not sustainable over time given significant reliance on senior state-guaranteed debt with reasonably short maturities, the bank's weak standalone credit profile and very uncertain access to the unsecured debt market. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating and Support Rating Floor reflect Fitch's view that although external support from the government is being provided and further support is possible, this cannot be relied upon in the longer term. Senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank is deemed to have become unviable, and external sovereign support in the form of a precautionary recapitalisation would not be available if the bank is not deemed solvent by the authorities. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for the resolution of banks that requires senior creditors to participate in losses, if necessary, instead of or ahead of a bank receiving sovereign support. RATING SENSITIVITIES IDRS, VR AND SENIOR DEBT Carige's Long-Term IDR and senior debt ratings could be upgraded if the bank is acquired by a higher-rated entity. The IDRs, VR and senior debt ratings could also be upgraded if the bank completes a capital increase, manages to strengthen its financial profile by reducing impaired loans and returns to sustainable profitability, the latter of which Fitch believes will be more challenging in the short term. Any upgrade of the VR would also require evidence that Carige's funding and liquidity have stabilised on a sustained basis without full reliance on government guarantees. The Long-Term IDR and senior debt rating would be downgraded if Fitch believes that the likelihood of senior creditors facing losses increases. This could be the case if, for example, a potential request for a precautionary recapitalisation is not granted by the EU authorities. In Fitch's opinion, a refusal would increase the risk of a further regulatory intervention, which could result in losses for senior creditors. Under the decree law approved in January 2019, Carige can request a precautionary recapitalisation of up to EUR1 billion. A precautionary recapitalisation would only be possible if the ECB confirms that Carige is solvent and would be subject to state aid approval by the European Commission. Junior creditors (the EUR320 million Tier 2 bondholders) would be subject to 'burden-sharing' under a precautionary recapitalisation. The senior debt rating could be upgraded and the Recovery Rating revised upwards if recovery prospects for senior unsecured bondholders in a hypothetical liquidation improve. This could be the case if the volume of junior or senior unsecured bonds increases significantly. DEPOSIT RATING The long-term Deposit Rating is primarily sensitive to changes in the bank's Long-Term IDR. The Deposit Rating is also sensitive to an increase in the buffers of senior and junior debt being maintained by the bank, and to a change in Fitch's opinion regarding their sustainability over time. SUPPORT RATING AND SUPPORT RATING FLOOR An upgrade of the Support Rating and upward revision of the Support Rating Floor would be contingent on a positive and sustainable change in the sovereign's propensity to support Carige. While not impossible, this is highly unlikely, in Fitch's view. The rating actions are as follows: Long-Term IDR: 'CCC' maintained on RWE Short-Term IDR: affirmed at 'C' Viability Rating: affirmed at 'f' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Long-Term Deposit Rating: 'CCC' maintained on RWE Senior unsecured notes (including EMTN): 'CC'/'RR6' maintained on RWE, short-term rating affirmed at 'C' GRUPPO MACCAFERRI: Starts Insolvency Process for 4 Businesses ------------------------------------------------------------- pv-magazine.com, citing Italian newspaper Il Resto del Carlino, reports that Italian conglomerate Gruppo Maccaferri has begun insolvency proceedings for its energy businesses Seci Holding, Seci Energia, Enerray, and Exergy, according to. pv-magazine.com relates that the companies, which together employ around 200 people, will have 60 to 120 days to present a restructuring plan following the appointment of an insolvency administrator. According to the report, the newspaper article said the energy business of Gruppo Maccaferri has suffered in recent years due to under performing investments. The Italian firm's PV projects in Brazil have struggled, as well hydro facilities in Serbia and geothermal investments in Turkey. In recent years, Enerray had expanded into the Middle East and North Africa region, in particular in Saudi Arabia, Turkey, Egypt and Jordan, as well as entering operations in Cameroon, Thailand, and Brazil, says pv-magazine.com. In 2017, Enerray acquired a 55% stake in Hong Kong-based Plug the Sun. The engineering, procurement and construction company is also active in off-grid markets including Argentina, the Philippines, Cambodia and Vietnam, pv-magazine.com adds. =================== K A Z A K H S T A N =================== KAZAKHTELECOM JSC: Fitch Affirms BB+ LT IDR, Outlook Positive ------------------------------------------------------------- Fitch Ratings has affirmed Kazakhtelecom JSC's Long-Term Issuer Default Rating at 'BB+'. The Outlook is Positive. All the ratings have been removed from Rating Watch Positive where they were placed on December 18, 2018 and maintained on June 17, 2019. The resolution of the RWP follows the completion of Kaztel's purchase of a 75% stake in Kcell JSC and successful placement by the company of KZT80 billion bonds to finance the purchase of the remaining 49% share in the joint venture with Tele2 (Tele2/Altel JV). Kaztel is the largest telecoms company in Kazakhstan, with leading positions in fixed-line voice, broadband and mobile segments and a strong position in pay-TV. The company's operating profile is potentially consistent with a low investment-grade rating. Kaztel's ratings reflect increased leverage and low liquidity as a result of the acquisition. KEY RATING DRIVERS Market Leadership: As a strong fixed-line incumbent, Kaztel dominates Kazakhstan's traditional telephony and fixed-line broadband markets. Following the purchase of Kcell, the second-largest mobile operator, and taking full ownership of Tele2/Altel JV, Kaztel became the unmatched market leader in the mobile segment with a subscriber market share above 60% and the widest network coverage. Eased Competition in Mobile Segment: The consolidation of the Kazakh telecom market in the last three years is likely to ease competitive pressures in the mobile segment. Although Kcell and Tele2/Altel JV will continue to be run as separate entities, legally and commercially, Fitch expects the competition to become more rational, allowing the companies to concentrate on efficiency and churn reduction. Leverage Spike: After the Kcell deal, Kaztel's funds from operations (FFO) adjusted net leverage increased to 1.8x at end-2018 calculated on a pro-forma basis. Fitch expects this leverage metric to spike to 2.7x in 2019 on a pro-forma basis as a result of payment to Tele2 AB for remaining 49% in Tele2/Altel JV share capital and settlement of an intercompany loan on behalf of Tele2/Altel JV. The pro-forma calculations for 2018 assume that Kaztel consolidates Kcell's profits and cash flows for 12 months in 2018. The pro-forma calculations for 2019 apart from Kcell also include projected cash flows of Tele2/Altel JV for the 12 months of 2019. Deleveraging Expected: Fitch expects Kaztel's FFO adjusted net leverage to gradually decline to 2.4x by end-2021 and then to 2.2x by end-2022, below the upgrade threshold of 2.5x. Deleveraging is supported by robust operating cash flow generation, with the EBITDA margin (pre-IFRS 16) projected in the 38%-40% range in the medium term. The pace of this deleveraging is subject to the company's capex programme and dividend payments. We assume capex to be about 21% of revenues in 2019 (22.5% in 2018) and then gradually decline to about 17% in 2022. As in the previous year, 2019 capex will mainly be driven by the VOLS PPP project initiated by the government to bring high-speed internet to rural areas. Synergy Opportunities, Execution Risk: The consolidated revenues on a pro-forma basis will double in 2019 compared with Kaztel's only revenues for 2018. Given the significantly larger scale of combined operations and duplication of certain functions, the company has high potential for profitability and cash flow generation improvement resulting from operating expenses and network optimisation. Kaztel already has experience in synergies implementation in the Tele2/Altel JV in partnership with Tele2 AB. Based on Tele2 AB financial reports, the EBITDA margin of Kazakh operations increased to 34.3% in 2018 from 10.3% in 2016. At the same time the size of a combined business of Kaztel, Kcell and Tele2/Altel JV significantly exceeds that of Tele2 and Altel, creating higher execution risks and requiring more time for synergy implementation. Strong Operating Performance: Fitch conservatively expects Kaztel to grow revenue organically by low single digit percentages in the forecast period with expanding mobile and fixed-broadband revenues offsetting declining fixed-line voice and interconnect revenues. Bundles are likely to become an important growth driver, as the company is keen to push its bundling competitive advantage. Fitch projects EBITDA margin (pre-IFRS 16) to increase to about 38% in 2019, up by 2pp yoy, representing mainly positive consolidation effect and intercompany balances eliminations. Fitch expects further gradual increase in EBITDA to be supported by cost optimisation. Weak Parent-Subsidiary Linkage: Kaztel's ratings reflect the company's credit profile on a standalone basis. Fitch assesses legal, operational and strategic ties between the company and its controlling shareholder (owns 51% of Kaztel shares), Sovereign Wealth Fund Samruk-Kazyna JSC (BBB/Stable), as weak. Indirect government control is a positive credit factor, but does not justify a rating uplift, in its view. DERIVATION SUMMARY Kaztel's ratings are driven by the company's dominant market positions in both fixed-line and mobile segments, robust free cash flow (FCF) generation, moderate leverage and a benign regulatory environment. Kaztel has broadly similar strong market positions in the fixed-line and broadband segments compared with its Russian peer fixed-line incumbent Rostelecom PJSC (BBB-/Stable), but has significantly smaller scale. Following acquisition of Kcell and the purchase of the 49% stake in its JV with Tele2 AB the company's mobile positions become stronger than positions of Russian mobile operators PJSC Mobile TeleSystems (BB+/Stable), PJSC Megafon (BB+/Stable) and PJSC Tattelecom (BB/Stable), a regional incumbent in the Republic of Tatarstan. Kazakhstan's weak domestic financial market results in limited funding options for Kaztel compared with its EMEA peers, leading to tighter leverage thresholds. KEY ASSUMPTIONS - Low single-digit revenue growth on a like-for-like basis - EBITDA margin of about 38% in 2019 gradually increasing to about 40% by end-2022 - Payment of dividends to minority shareholders of Kcell at prior year level - Capex at 21% of revenues in 2019 gradually declining to 17% in 2022 - Acquisition of 49% of share capital in Tele2/Altel JV and repayment of intercompany loan to Tele2 AB amounting to KZT80 billion in 2019 - Payment of a KZT14.5 billion fine to Kar-Tel LLP in 2019 for the termination of the network sharing agreement between Kcell and Kar-Tel LLP and receipt of 75% of this amount from Telia in 2019 - Dividend payments in line with dividend policy, calculated by Fitch at about KZT11 billion in 2019-2020, increasing to KZT18 billion - KZT24 billion in 2021-2022 RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Successful integration with the mobile segment following the Kcell acquisition and the purchase of the remaining 49% stake in the mobile JV - Maintaining sufficient liquidity diversified between external and internal sources - Consistently strong FCF generation with pre-dividend FCF margin in mid to high single digits - FFO-adjusted net leverage consistently trending to below 2.5x Developments That May, Individually or Collectively, Lead to Negative Rating Action - A protracted rise in FFO adjusted net leverage to above 3x - A material increase in refinancing risks driven by insufficient liquidity - Operating underperformance and significant market share erosion including in the mobile segment LIQUIDITY AND DEBT STRUCTURE Low Liquidity: Kaztel (excluding Kcell) is likely to have low liquidity after the acquisition of the 49% share in Tele2/Altel JV and repayment of the shareholder loan to Tele2 AB. The company has strong relationships with local banks. However, as of May 2019 the company did not have any unused revolving credit lines. Tight liquidity is mitigated by a well-spread debt maturity profile with the majority maturing after 2020. ============= R O M A N I A ============= ROMCAB SA: Bongard Submits Bid to Buy Production Lines ------------------------------------------------------ Romania Insider, citing Profit.ro, reports that Bongard, a German family-owned producer of equipment for the cable industry, wants to buy the production lines of Romcab, which went into insolvency in 2017. Bongard has submitted an offer for the assets, the report says. According to Romania Insider, Romcab turned to the LXM investment fund to analyze the company's situation and find investors to get involved in financing it. Romcab's insolvency is the largest by the volume of debts owed to creditors, some EUR223 million, the report notes. The company, which is listed on the local stock exchange and controlled by Romanian businessman Zoltan Prosszer, had big expansion plans and convinced several big local and international banks to finance it, the report says. At the end of 2018, the company had EUR71 million worth of loans to repay to its lenders, including state-owned Eximbank and CEC Bank, as well as Banca Transilvania, Piraeus Bank, Banca Feroviara, BCR and Moscow-based International Investment Bank (IIB). The total debts at the end of 2018 amounted to over EUR200 million over two times higher than the company's total assets, valued at EUR82 million, Romania Insider discloses. Romcab entered insolvency at its own request in February 2017. The securities exchange fined more officials of the company for irregularities in the financial statements submitted to the stock exchange. In 2018, the company recorded a turnover of EUR61 million and EUR67 million losses, due to the reevaluation of stocks, Romania Insider discloses citing the company's 2018 annual report. =========== T U R K E Y =========== FENERBAHCE: TBB to Move Forward with Debt Restructuring ------------------------------------------------------- Ebru Tuncay and Tuvan Gumrukcu at Reuters report that Turkey's banking association said on June 28 that the restructuring of the mounting debts of the country's top football clubs was moving forward, adding that the debts would be matured for five years, with two years without paying the principal on the loans. According to Reuters, in January, the Turkish Banking Association (TBB) said Turkey's top football clubs, such as Fenerbahce and Galatasaray, will have their debts restructured but not written off, in a move to ease their spiralling debts. In a statement on June 28, the TBB, as cited by Reuters, said there would be "no erasing of debts or pricing beyond market norms. The financial liabilities subject to restructuring will be matured for a total of five years, with two years of non-refundable principal." Like many Turkish businesses which took large foreign currency loans, clubs have also suffered from a currency crisis that saw Turkey's lira lose almost 30% of its value against the dollar in 2018, Reuters relates. The "Big Four" clubs -- which also include Besiktas and Trabzonspor -- have spent heavily to attract foreign stars, Reuters states. Poor domestic and international results have exacerbated the debts they have amassed, Reuters notes. They have racked debts of more than TRY10 billion (GBP1 billion), Reuters discloses. TURKIYE KALKINMA: Fitch Affirms BB LT IDR, Outlook Negative ----------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Foreign-Currency Issuer Default Ratings of Turkiye Kalkinma ve Yatirim Banksi A.S. at 'BB', Turkiye Ihracat Kredi Bankasi A.S. at 'BB-' and Turkiye Sinai Kalkinma Bankasi A.S. at 'B+', all with Negative Outlooks. At the same time, Fitch has affirmed TSKB's Viability Rating at 'b+'. As is usual for development banks, Fitch does not assign Viability Ratings to TKYB or Turk Eximbank. This is because their business models, in its view, are strongly dependent on support from the state. This is reflected in their dedicated policy and development roles. KEY RATING DRIVERS IDRS, SUPPORT RATINGS, SUPPORT RATING FLOORS, SENIOR DEBT RATINGS AND NATIONAL RATINGS The LTFC IDRs of TKYB and Turk Eximbank are at the same level as their Support Rating Floors (SRF) reflecting Fitch's view of a high government propensity to support the banks, in case of need based on their full state ownership and policy roles. The higher SRF and LTFC IDR of TKYB, in line with the sovereign rating BB/Negative), reflect its small size and very high, albeit declining, proportion of Turkish treasury-guaranteed funding. The SRF and LTFC IDR of Turk Eximbank are one notch below Turkey's sovereign rating. This reflects risks to the ability of the sovereign to provide support in FC in light of its moderate and volatile net FX reserves and the potential for increased stress on Turkey's external finances as well as Turk Eximbank's considerably larger balance sheet and volumes of foreign funding (relative to TKYB). The LTFC IDR of TSKB is driven by the bank's intrinsic creditworthiness, as expressed by a VR of 'b+', and underpinned by sovereign support, reflected in its SRF of 'B+'. The bank's SRF is two notches below Turkey's sovereign rating. This reflects, apart from the risks to the sovereign's ability to provide support, also its view of a somewhat weaker propensity of the Turkish authorities to provide support to TSKB given the bank's private ownership. The authorities have shown a strong commitment to support state-owned TKYB and Turk Eximbank, as evidenced by the EUR150 million of AT1 capital provided to both by the Turkish wealth fund in April 2019 (part of a broader EUR3.7 billion programme that also supported state-owned commercial banks). As this issuance was in euros it provides a partial hedge against lira depreciation. In 2H18, TKYB and Turk Eximbank also received capital increases in the form of Tier-2 from state entities of EUR56 million and TRY2.9 billion, respectively. TKYB, the smallest of the three banks, focuses on direct and apex lending (the latter channelled through commercial banks and leasing companies) largely in FC to Turkish SMEs and corporates, in sectors (eg. renewable energy) and regions deemed strategic by the government. The bank is funded mainly by IFIs. Turk Eximbank's policy role is well-established as the country's official credit export agency. It focuses on short-term trade finance for Turkish exporters, which it typically refinances with central bank facilities and under export credit insurance. Turk Eximbank's policy role is reinforced through regulatory privileges, whereby losses due to political risks are compensated by the Turkish treasury and the bank is exempt from corporate taxes and reserve requirements. Fitch believes TSKB is strategically important to the treasury, despite its majority private-ownership by Turkiye Is Bankasi Group (Isbank; B+/Negative), as it has a strong track record in delivering on its policy role and attracting long-term funding. TSKB performs a public mission, as defined by its development and investment bank status, and has built up significant expertise in development lending, particularly in the energy sector. Treasury-guaranteed funding (all from development financial institutions, (DFIs)) made up 83% and 52% of TKYB's and TSKB's respective total funding at end-1Q19, while central bank and treasury-guaranteed funding made up 63% of Turk Eximbank's total funding at end-4M19. TKYB has seen a decline in its share of treasury-guaranteed funding due to USD400 million of new funding (about 15% of total funding). Fitch calculates that central bank FX reserves net of banks' placements, reserve requirements and swap transactions are modest and fell to about USD20 billion at end-1Q19 (end-2018: USD27 billion) and that they have continued to fall in 2Q19. However, the sovereign's net FX reserves should be considered in light of Turkey's limited sovereign external debt requirements, while the government has also been able to raise FC debt since end-1H18. The sovereign's ongoing ability to tap external markets, if maintained, could support Turkey's ability to provide FC to the banks in case of need. The three banks' Long-Term Local Currency (LTLC) IDRs - which are rated above the banks' LTFC IDRs - are driven by state support and reflect the sovereign's relatively greater ability to provide support in local currency. The LTLC IDRs of TKYB and Turk Eximbank are equalised with the sovereign LTLC IDR, while that of TSKB is one notch below the sovereign, due to its private ownership and Fitch's view of the weaker propensity of the government to provide support than to its state-owned development bank peers. TSKB has only limited LC liabilities. The Negative Outlooks on the three banks' IDRs mirror those on the sovereign ratings. For TSKB it also reflects the potential for its VR to be downgraded in case of further deterioration in the operating environment, which could put greater pressure on the bank's financial metrics. VR OF TSKB The ratings of TSKB are driven by its VR, which reflects its small size and the concentration of its operations in the high-risk Turkish operating environment, which deteriorated significantly in 2018, as evidenced, among other things, by the lira depreciation (down 28% in 2018 and 9% YtD in 2019) and a weak growth outlook (2019 forecast: -1.1%). Market conditions in 2019 have remained a challenge, exacerbated by ongoing market volatility and political and geopolitical uncertainty. The ratings also reflect the bank's niche franchise and policy role in supporting the development of the Turkish economy in strategically important areas for the Turkish authorities. TSKB is a market leader in development finance in Turkey based on its long record, technical expertise and links with international development finance institutions from which it sources a large portion of its funding (under Turkish treasury guarantee). Asset-quality risks for the bank are significant and have increased due to the weaker growth outlook and lira depreciation (given that not all borrowers will be fully hedged). FC lending comprised a high 92% of gross loans at end-1Q19, significantly above the sector average. Unlike most Turkish banks, however, TSKB is less sensitive to credit risk resulting from the high lira interest rate environment due to its low share of LC lending. The bank's exposures to the troubled energy, and to a lesser extent, the construction and non-residential real estate sectors, are significant sources of risk. These have come under pressure from the weak growth outlook, market illiquidity (real estate), lira depreciation (the loans are frequently in FC while borrowers' revenues are in lira) and weak energy prices. Single-name risk is also very high largely due to lumpy project finance exposures. The latter - largely comprising FC-denominated loans collateralised by the projects themselves and sponsor or government guarantees - account for a material share of total FC exposure. However, energy sector lending (equal to nearly two-thirds of project finance) largely relates to renewable energy projects covered by a government-guaranteed tariff set in FC mitigating the credit risk. TSKB also reported fairly low impaired loans ratios in construction and real estate (each about 4%). In addition, as loans are largely long-term and slowly amortising, asset quality problems are likely to feed through only gradually. TSKB reduced its lending in 2018 (in USD terms) as it took a cautious approach to growth due to lira depreciation and low demand. Its non-performing loan (NPL) ratio has risen but remains fairly low (end-1Q19: 2.1%, broadly flat versus end-2018). New NPLs are possible given its exposure to the highly leveraged corporate segment and to some troubled sectors, and given the large short net FX position of many Turkish corporates. Stage 2 loans have also risen and are high (end-1Q19: 10.9%), which could be indicative of future asset quality problems. However, loan restructurings could delay recognition of problem loans, while potential sector-specific government support packages might also impact reported NPLs. TSKB's profitability remains reasonable but is likely to fall due to weaker growth, higher impairments and lower CPI-linked gains. Profitability could deteriorate significantly in case of a marked weakening of asset quality. As a result, the bank's internal capital generation could weaken. Performance has been underpinned by the bank's reasonable net interest margin - reflecting TSKB's access to low-cost funding - good cost control and manageable, but increasing, loan impairments. TSKB's net interest margin (NIM) is likely to be more stable than at commercial banks given the bank's limited exposure to volatile lira interest rates. Nevertheless, swap costs can weigh on its NIM. The bank's Fitch Core Capital (FCC) ratio and Tier 1 capital ratio have come under pressure from the lira depreciation (which inflates FC risk-weighted assets (RWAs)) and high lira interest rates (due to negative revaluations of bond portfolios through equity). Tier 1 capital provides only a moderate buffer against operating environment risks and asset-quality weakening, particularly given largely unreserved Stage 2 loans and single-name risk. Tier 1 capital could ultimately act as a constraint on growth. The total capital ratio is stronger due to FC-denominated tier 2 capital - which provides a partial hedge against lira depreciation. Pre-impairment operating profit (equal to about 5% of average loans in 2018) is solid and provides a buffer to absorb losses through the income statement. The bank is fully wholesale-funded, primarily in FX. A significant portion of its funding is treasury-guaranteed giving it access to long-term funding. TSKB typically prefunds itself two or more years in advance as a result of which it typically has funds available for drawdown to support its liquidity. FX liquidity consists mainly of deliverable FX swaps, interbank cash and placements and, to a small extent, FX liquidity held at the central bank under the reserve option mechanism. The bank would rely on both FX loan repayments and non-withdrawn DFI funding to cover short-term maturing FX wholesale borrowings up to one year in case of a complete market shutdown. NATIONAL RATINGS The affirmation of the three banks' respective National Ratings, on the basis of potential state support, reflects its view that their creditworthiness in LC relative to other Turkish issuers has not changed. SUBORDINATED DEBT RATING OF TSKB The subordinated notes rating of TSKB is one notch below its anchor rating (VR). The notching includes one notch for loss severity and zero notches for non-performance risk (relative to the anchor rating). RATING SENSITIVITIES IDRS, SRS, SRFS, NATIONAL RATINGS AND SENIOR DEBT The SRs of TKYB, Turk Eximbank and TSKB could be downgraded, and their SRFs revised downwards, if i) Fitch concludes that a stress in Turkey's external finances is sufficient to materially reduce the reliability of support for these banks in FC from the Turkish authorities; ii) Turkish sovereign is downgraded or iii) Fitch believes the sovereign's propensity to support the banks has reduced (not Fitch's base case). TKYB's LTFC IDR could be downgraded by one notch, to the level of Turk Eximbank, if its proportion of non-guaranteed funding increases materially or in case of a significant increase in the bank's balance sheet size. TSKB's SRF could also be revised downwards if a sharp fall in its level of treasury-guaranteed funding is indicative of a weakening in the bank's policy role. The ratings of all three banks are sensitive to a material reduction in their policy roles. Downward revision of the SRF of TSKB will only result in a downgrade of its LTFC IDR and FC senior debt rating if its VR is also downgraded. The introduction of bank resolution legislation in Turkey aimed at limiting sovereign support for failed banks could negatively affect Fitch's view of support, but Fitch does not expect this in the short term. VR OF TSKB The bank's VR could be downgraded on a marked deterioration in the operating environment, as reflected, in particular, in further negative developments to the lira exchange rate, interest rates, geopolitical tensions, economic growth prospects and external funding market access. In addition, bank-specific deterioration of asset quality, marked erosion of capital ratios, or a weakening of the bank's FC liquidity position - if not offset by shareholder support - that leads to pressure on the bank's liquidity and funding profile could result in a VR downgrade. A VR downgrade would only result in negative action on TSKB's LTFC IDR and FC senior debt rating if at the same time Fitch believes the ability or propensity of the Turkish authorities to provide support - as reflected in the bank's 'B+' SRF - has also weakened. SUBORDINATED DEBT OF TSKB TSKB's subordinated debt rating is primarily sensitive to a change in the bank's anchor rating VR. The rating is also sensitive to a change in notching from the anchor rating due to a revision in Fitch's assessment of the probability of the notes' non-performance risk or of loss severity in case of non-performance. Data Adjustment An adjustment has been made in Fitch's financial spreadsheets for TSKB that has impacted the agency's core and complimentary metrics. Fitch has taken a loan classified as a financial asset measured at fair value through profit and loss in the bank's financial statements and reclassified it under gross loans as Fitch believes this is the most appropriate line in Fitch spreadsheets to reflect this exposure. The rating actions are as follows: TSKB Long-Term Foreign-Currency IDR: affirmed at 'B+'; Outlook Negative Long-Term Local-Currency IDR: affirmed at 'BB'; Outlook Negative Short-Term Foreign-Currency IDR: affirmed 'B' Short-Term Local-Currency IDR: affirmed 'B' Support Rating: affirmed at '4' Support Rating Floor: affirmed at 'B+' National Long-Term Rating: affirmed at 'AA(tur)'; Stable Outlook Senior unsecured long-term debt: affirmed at 'B+' ; Recovery Rating of 'RR4' assigned Senior unsecured short-term debt: affirmed at 'B' Subordinated debt rating affirmed at 'B'/'RR5' Viability Rating: affirmed at 'b+' TKYB Long-Term Foreign-Currency IDR: affirmed at 'BB'; Outlook Negative Long-Term Local-Currency IDR: affirmed at 'BB+'; Outlook Negative Short-Term Foreign-Currency IDR: affirmed 'B' Short-Term Local-Currency IDR: affirmed 'B' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB' National Long-Term Rating: affirmed at 'AAA(tur)'; Stable Outlook Turk Eximbank Long-Term Foreign-Currency IDR: affirmed at 'BB-'; Outlook Negative Long-Term Local-Currency IDR: affirmed at 'BB+'; Outlook Negative Short-Term Foreign-Currency IDR: affirmed 'B' Short-Term Local-Currency IDR: affirmed 'B' Support Rating: affirmed at '3' Support Rating Floor: affirmed at 'BB-' National Long-Term Rating: affirmed at 'AAA(tur)'; Stable Outlook Senior unsecured long-term debt: affirmed at 'BB-' Senior unsecured short-term debt: affirmed at 'B' =========================== U N I T E D K I N G D O M =========================== BRITISH STEEL: Systra in Talks to Acquire TSP Projects ------------------------------------------------------ Mark Kleinman at Sky News reports that French engineering giant Systra has joined the battle for control of British Steel, the UK's second-biggest steel producer, with an approach to buy ‎part of the ailing company that is attracting scrutiny from pensions watchdogs. Sky News has learnt that Systra, a major international player in transport infrastructure, is trying to prise TSP Projects, a wholly owned subsidiary of British Steel, out of the stricken group. British Steel, which collapsed into insolvency last month and ‎whose survival is ultimately responsible for about 25,000 jobs, is now under the control of the Official Receiver, the report notes. Sky News relates that Ernst & Young, which is overseeing efforts to sell the Scunthorpe-based company as an adviser to the government, has asked potential bidders to table offers by the end of the month. While ministers boasted that scores of companies had signed non-disclosure agreements‎ as part of the sale process, few bids for the whole of British Steel are anticipated, Sky News states. According to Sky News, Whitehall sources has said that EY was resisting efforts to carve individual units out of British Steel for fear of undermining the wider objective of salvaging a future for the Scunthorpe plant. A decision to sell TSP Projects to Systra would pave the way for a full break-up of the business, they added, the report relays. On June 29, the Financial Times reported that Evraz, a Russian metals and mining group whose biggest shareholder is Roman Abramovich, the billionaire owner of Chelsea Football Club, was interested in British Steel's operations in France, according to SkyNews. Greybull Capital, which bought British Steel for GBP1 three years ago, is also interested in acquiring parts of the company in the UK and elsewhere out of the insolvency process, adds Sky News. Sky News adds that TSP Projects is said by people close to the insolvency process to be pushing for a sale to Systra or another party in order to remove the uncertainty over its future. As reported by the Troubled Company Reporter-Europe on May 23, 2019, BBC News related that British Steel was placed in compulsory liquidation, putting 5,000 jobs at risk and endangering 20,000 in the supply chain. The move follows a breakdown in rescue talks between the government and the company's owner, Greybull, BBC noted. According to BBC, the Government's Official Receiver has taken control of the company as part of the liquidation process. The search for a buyer for British Steel has already begun, BBC stated. In the meantime, it will trade normally, according to BBC. The Official Receiver, as cited by BBC, said British Steel Ltd had been wound up in the High Court and the immediate priority was to continue safe operation of the site. The company was transferred to the Official Receiver because British Steel, its shareholders and the government were not able to, or would not, support the business, BBC said. That meant the company did not have to funds to pay for an administration, BBC noted. CANTERBURY FINANCE 1: Fitch Assigns BB(EXP) Rating on Class E Debt ------------------------------------------------------------------ Fitch Ratings has assigned Canterbury Finance No.1 Plc's notes expected ratings as follows: Class A1: 'AAA(EXP)sf'; Outlook Stable Class A2: 'AAA(EXP)sf'; Outlook Stable Class B: 'AA(EXP)sf'; Outlook Stable Class C: 'A(EXP)sf'; Outlook Stable Class D: 'BBB(EXP)sf'; Outlook Stable Class E: 'BB(EXP)sf'; Outlook Stable Class F: 'BB(EXP)sf'; Outlook Stable Class X: 'B(EXP)sf'; Outlook Stable This transaction is a static securitisation of buy-to-let (BTL) mortgages that were originated by OneSavings Bank PLC (OSB), trading under its Kent Reliance brand, in England and Wales. The assignment of the final ratings is contingent on the receipt of final documents conforming to information already received. KEY RATING DRIVERS Positively Selected Pool The pool consists of UK BTL mortgage loans advanced to borrowers with no adverse credit history, full rental income verification and a full property valuation, and with a robust lending policy. The pool is positively selected from the post 2017 origination of the Kent Reliance. Fitch used its prime foreclosure frequency (FF) matrix. Borrower Affordability The majority of the pool contains loans advanced with an initial fixed period reverting to OSB's standard variable rate (SVR) at the end of the fixed-rate period. OSB's SVR is higher than peers'. Fitch's interest coverage ratio (ICR) calculation assesses the post-reversion interest payments using a stressed Libor plus a stabilised margin based on OSB's SVR. Due to the higher SVR, this pool has a lower calculated ICR of 89.5% than other BTL transactions. There is a high concentration of loans in Fitch's highest ICR bucket resulting in limited ICR discrimination. Fitch applied an upward lender adjustment of 1.2x to account for this risk, which could not be mitigated by the availability of extensive historical performance data. Fixed Hedging Schedule The issuer will enter into a swap at closing to mitigate the interest rate risk arising from the fixed-rate mortgages in the pool. The swap features a defined notional balance that was derived to reflect the interest rate reset dates of the mortgage portfolio. Product Switches If the originator agrees to a product switch on underlying loans, for example at the end of the fixed-rate period, then such loans must be repurchased from the issuer. CATTEN COLLEGE: Closes After Entering Insolvency ------------------------------------------------ Robbie Bryson at The Daily Gazette reports that a training centre which specialised in apprenticeships has closed after entering insolvency. Catten College, based in Challenge Way, Colchester, has stopped operating with its contracts being passed to other firms, the report says. The college, which ran Government-funded apprenticeship training in subjects including business administration, hairdressing and childcare, closed in May with staff being made redundant, the Gazette recounts. The Gazette says Bianca Catten, a director of Catten College, confirmed an insolvency practitioner was involved in the process. "We did have a contract with the Education Skills Funding Agency which we do not have anymore through no fault of our own. We cannot comment any further on anything which is ongoing. Training at the centre has stopped," the report quotes Ms. Catten as saying. "Staff will receive redundancy payments and we have found jobs for them." The college has been operating in the area for about 35 years and has worked with several schools in north Essex including St Helena School in Colchester and Harwich and Dovercourt High School, the report notes. The Gazette adds that Ms. Catten said: "I have been at the college for 25 years and we have trained thousands of people over the years in north Essex. We are devastated we will not be able to do so anymore. We would like to thank all the people who have worked with us over the years and all of the staff who have been incredibly supportive. Everyone has been found employment because we did not want anyone to be left in a difficult position. We are very sad and it is to do with Government funding regulations which caused us to close down. All we wanted to do was train people to help improve their lives and we have loved the opportunity to do that." MBI HAWTHORN: Investors File Application for Administration ----------------------------------------------------------- Simon Goodley at The Guardian reports that seven investors, who ploughed their savings into businesses owned by the embattled financier Gavin Woodhouse, have applied to the high court to have four of his companies taken into administration. The move comes a day after an undercover investigation by the Guardian and ITV News highlighted questions about the business interests of Mr. Woodhouse, who has raised millions of pounds from private investors but whose firms have a multimillion-pound "black hole", The Guardian notes. The filing also came as the Bear Grylls Survival Academy, Mr. Woodhouse's partner on his planned new GBP200 million Afan Valley adventure resort in south Wales, said it was "conducting a full internal review of the relationship", The Guardian states. Creditors to Mr. Woodhouse's businesses filed an application with the high court in London on June 27 requesting the appointment of Phil Duffy and Sarah Bell, directors of insolvency firm Duff & Phelps, as joint administrators, The Guardian relates. According to The Guardian, the court documents focus on MBI Hawthorn Care, MBI Clifton Moor and MBI Walsden Care, the three care home project companies through which Mr. Woodhouse raised millions of pounds from private investors, but has so far failed to build any facilities. The filing also requests that the Afan Valley adventure resort is included in the administration orders, The Guardian discloses. A hearing to decide the outcomes of the applications could be set in the coming weeks, The Guardian says. About five years ago, hundreds of investors used their savings to back four of Mr. Woodhouse's care home projects -- none of which are operational and three of which have not been built, The Guardian recounts. Mr. Woodhouse is now struggling to pay scheduled dividends, The Guardian relays. Some investors, who are expecting total investment profits of 125%, have complained that they have been given incorrect information about the status of the care home projects and that the financier has repeatedly failed to provide proof that their funds have been safeguarded, according to The Guardian. [*] UK: One in Three Closed Retail Shops to Never Reopen -------------------------------------------------------- Laura Onita at The Telegraph reports that one in three closed shops will never reopen as retail outlets given the brutal conditions on the high street that make it almost impossible to find another tenant. The new data lays bare the irrevocable changes engulfing the high street as some empty shops will be turned into hotels, gyms and restaurants, The Telegraph relays, citing new analysis by property group Colliers International. About 11% of Britain's high streets and neighbourhood shops are sitting empty, of which a third -- some 30m sq ft -- has been vacant for at least two years, The Telegraph discloses. ********* 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 * * *