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       T R O U B L E D   C O M P A N Y   R E P O R T E R

                          E U R O P E

          Wednesday, October 16, 2019, Vol. 20, No. 207

                           Headlines



C Y P R U S

AXION HOLDING: S&P Affirms 'B' ICR on Solid Operating Performance


F R A N C E

NOVAFIVES SAS: S&P Lowers ICR to 'B' on Continued Underperformance


G E R M A N Y

HORNBACH BAUMARK: Moody's Rates Proposed Sr. Unsec. Notes Ba2
RED & BLACK 6: Moody's Gives (P)Ba1 Rating on EUR10MM Cl. D Notes


G R E E C E

FOLLI FOLLIE: Two Bondholders File Bankruptcy Application


N E T H E R L A N D S

AFFIDEA BV: S&P Assigns Preliminary 'B+' ICR, Outlook Stable
SCHOELLER PACKAGING: Fitch Assigns B(EXP) LT IDR, Outlook Stable
SCHOELLER PACKAGING: Moody's Assigns B2 CFR, Outlok Negative
SCHOELLER PACKAGING: S&P Assigns B ICR on Refinancing Announcement


R U S S I A

AUTOTORGBANK: Moody's Withdraws B2 Deposit Ratings, Outlook Stable
NORD GOLD: Fitch Rates $400MM Unsec. Guaranteed Notes 'BB'
ROSGOSSTRAKH PJSC: S&P Alters Outlook to Pos. & Affirms 'BB-' ICR
TINKOFF BANK: Fitch Raise LongTerm IDR to BB, Outlook Stable


S L O V E N I A

ADRIA AIRWAYS: Nov. 10 Bid Submission Deadline for Airline


S P A I N

CODERE APUESTOS: S&P Lowers ICR to 'B-', Outlook Negative


T U R K E Y

EMLAK KONUT: Fitch Affirms BB- LongTerm IDRs, Outlook Negative
GLOBAL LIMAN: Fitch Lowers Rating on $250MM Sr. Unsec. Notes to B+


U N I T E D   K I N G D O M

MOTO VENTURES: Fitch Affirms 'B' Issuer Default Rating
NEPTUNE ENERGY: Fitch Assigns BB(EXP) Rating to New Unsec. Notes
NEPTUNE ENERGY: Moody's Hikes Rating on $550MM Unsec. Notes to B1
NEPTUNE ENERGY: S&P Affirms 'BB-' ICR on Announced Acquisitions
PREMIER FOODS: Fitch Withdraws 'B' LongTerm Issuer Default Rating

RESIDENTIAL MORTGAGE 31: S&P Assigns 'CCC' Rating on X1 Notes
THOMAS COOK: Former Chief Executive Defends Record Pay
WEWORK: May Run Out of Cash, Softbank Seeks Control
WOODFORD EQUITY: Link Solutions Opts to Wind Up Fund
WRIGHTBUS: Rescue Deal Reached "In Principle" with Jo Bamford


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C Y P R U S
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AXION HOLDING: S&P Affirms 'B' ICR on Solid Operating Performance
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S&P Global Ratings affirmed its 'B' long-term rating on Axion
Holding Cyprus Ltd.

S&P said, "We believe that Axion's weaker liquidity position is
offset by the company's good operating performance and reduced
leverage, with S&P Global Ratings-adjusted debt to EBITDA
strengthening to below 4x in the coming two years.

"We consider that refinancing and liquidity risks related to
Axion's debt portfolio remain elevated, and we view the company's
liquidity as less than adequate since its sources barely cover its
uses. Axion's short-term debt obligations increased to $115 million
by end-June 2019 due to the seasonal peak in working capital having
been funded mostly by bilateral bank lines. Short-term debt also
included Russian ruble (RUB) 1.35 billion (about $21 million) in a
domestic bond maturing in June 2020.

"Furthermore, a RUB1.35 billion bond matures in December 2020, and
a RUB1.0 billion bond matures in December 2021. We understand Axion
is considering several options to tackle upcoming maturities in
advance, depending on market conditions. Axion benefits from $67
million of cash and liquid assets and $36 million of undrawn
committed lines.

However, Axion's increasing market share in its areas of operation
and continued expansion into more marginal cloud business
translates into decreasing leverage. S&P said, "The company's S&P
Global Ratings-adjusted debt to EBITDA dropped materially to 4.4x
in 2018 from a peak of 6.6x in 2017, and we project further
improvement in the coming years. In the financial year ended March
30, 2019, the company's S&P Global Ratings-adjusted EBITDA rose
substantially to about $36 million from $24 million in financial
year 2017. In our adjusted EBITDA calculation, we add back $9
million of operating leases expenses and deduct $4 million of
capitalized development costs. Our adjusted debt calculation
includes $38 million of operating leases, which we will review when
the company adopts International Financial Reporting Standards 16,
and $15 million of preferred stock, which we add to debt because it
can be redeemed for cash under certain conditions. We net the
company's investment in 10% of Norwegian Crayon listed shares with
a book value of $15 million (although we are mindful that the
market value is currently higher) against Axion's debt, since we
believe these assets to be liquid and accessible for debt
repayment. However, we don't net Axion's cash balances against its
debt because we believe it is tied into the company's working
capital."

S&P said, "We incorporate in our business risk assessment our view
that Axion remains markedly smaller than its global peers, and has
a very low market share in a globally fragmented and highly
competitive IT market. We also factor in Axion's high reliance on
Microsoft as a key supplier, representing about 50% of Axion's
consolidated turnover globally and 40% in Russia."

Axion's EBITDA margin, at about 4%, is below average for the
sector, about 8%. This stems from Axion's low value-added reseller
business model, price pressure due to tough competition with other
IT products resellers, and exchange rate volatility in Russia.

S&P said, "Furthermore, we factor in high regulatory risks and
exposure to Russian country risk, since most of Axion's EBITDA is
generated in Russia. We are mindful of the heightened substitution
risk due to the Russian government's imports replacement policies,
notably those policies regarding the software supplied to Russian
government-related entities, which we understand represents about
10% of Axion's portfolio. Nevertheless, we believe that the
substitution threat is moderate over the medium term due to the
lack of suitable local substitutes, in particular for Microsoft
products.

"The stable outlook reflects our expectation that Axion will
refinance its upcoming debt maturities while restoring its adjusted
debt to EBITDA to comfortably below 4x in the financial year ending
March 31, 2020. Our view is supported by our assumption that Axion
will maintain its competitive position in the software licensing
segment. We also expect Axion to continue diversifying its activity
through expanding its cloud business, which should allow it
gradually reduce the concentration on Microsoft.

"We could take a negative rating action if liquidity risk
heightened due to untimely refinancing, which could result in
liquidity sources being materially lower than liquidity uses over
the next 12 months. A downgrade might also follow if Axion's
leverage remains materially above 4.0x protractedly, or its FOCF
remains negative for protracted period of time. We think this could
be the case if it loses its position as a key provider of Microsoft
licensing solutions.

"We might consider an upgrade if Axion widens its geographic
footprint, reducing the share of revenues generated from Russia to
below 50%, alongside a gradual improvement in margins and
sustainable positive FOCF generation. A higher rating would also
hinge on adjusted debt to EBITDA sustainably below 3.0x and
adequate liquidity, without refinancing and liquidity risks."




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F R A N C E
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NOVAFIVES SAS: S&P Lowers ICR to 'B' on Continued Underperformance
------------------------------------------------------------------
S&P Global Ratings lowered its ratings on France-based industrial
engineer Novafives S.A.S. and its term debt to 'B' from 'B+' and
its rating on the super senior revolving credit facility (RCF) to
'BB-' from 'BB'.

S&P said, "The downgrade reflects our view of Novafives' continued
underperformance. In light of weaker economic conditions, we
believe it will take some time for the group's recently weak credit
metrics to recover.

"Economic conditions have worsened in recent months because of the
downturn in global trade expected to continue in 2020. Although
Novafives' performance improved in first-half 2019, with an
increase in sales by 3% to EUR947 million and in EBITDA by 86% to
EUR43.5 million, we estimate the group will be unable to reach our
previous FOCF forecast. We have therefore revised downward our
forecasts for 2019 and 2020, and now expect S&P Global
Ratings-adjusted debt to EBITDA of 7.5x-6.0x and FFO to debt of
7.0%-10.0% in 2019-2020. Consequently, we revised downward our
assessment of the group's financial risk profile. Nevertheless, we
recognize that the group's restructuring measures have started to
bear fruit.

"Assuming no further significant setbacks compared with 2018, we
forecast Novafives will report EBITDA (excluding restructuring
costs) of about EUR120 million-EUR130 million in 2019, which marks
a significant improvement compared with EUR93 million in 2018. This
will translate into an S&P Global Ratings-adjusted EBITDA margin of
about 5.5%-6.5%, which we consider significantly below industry
average. Given the company's operating inefficiencies, including
high working capital fluctuations and project execution
difficulties, over the past quarters Q4 2017-Q3 2018, we have
revised downward our assessment of the group's business risk
profile, and do not expect a significant improvement in the medium
term.

"We expect the company's free cash flow will remain weak in 2019,
given the WC consumption and the restructuration costs affecting
the profitability. Nevertheless, Novafives plans to reduce
restructuring costs to less than EUR4 million in 2020, down from
expected EUR12 million in 2019. We note that positive free cash
flow for 2019 also depends on a release of working capital (we
assume a EUR20 million outflow given the group's intensified orders
in the logistics segment).

"Overall, we see the group's performance on an improving trajectory
due to restructuring measures taken and traction on the group's
technology from the logistics market. However, execution risks
related to existing contracts remain in our view.

"The negative outlook reflects the possibility of a downgrade over
the next 12 months if Novafives' EBITDA margin does not improve
toward 7% in 2020, from a low of 4%-5% in 2018 and if adjusted debt
to EBITDA remains above 6x. We would also lower the rating if FFO
interest coverage is weaker than anticipated, below 2.5x, or
Novafives does not generate positive free cash flow. Such a
scenario could materialize if high restructuring costs,
unprofitable contract execution, or loss of market shares prevent
an improvement in profitability and cause meaningful cash outflows.
We currently see no headroom for Novafives' credit metrics at the
'B' rating level.

"We could revise the outlook to stable if Novafives' restructuring
measures help to restore profitability and credit metrics. This
would include an EBITDA margin around 7%, adjusted debt to EBITDA
ratio below 6x, and positive free cash flow."

Novafives is a France-based industrial engineering group that
designs and supplies specialized machines, process equipment, and
production lines for large industrial groups in the aluminum,
steel, glass, automotive, aerospace, logistics, cement, and energy
sectors. The group also provides services and aftermarket support.
The company currently has operations in over 30 countries with
around 8,300 employees.

In 2018, Novafives reported EUR2.0 billion of revenue (versus
EUR1.9 billion in 2017) and EUR93 million of EBITDA (EUR134 million
in 2017). We expect reported figures for 2019 in line with last
year and EUR120-EUR130 million of EBITDA.




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G E R M A N Y
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HORNBACH BAUMARK: Moody's Rates Proposed Sr. Unsec. Notes Ba2
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Moody's Investors Service assigned a Ba2 rating to the proposed
senior unsecured notes to be issued by Hornbach Baumarkt AG, the
German DIY-store chain. The proposed notes will be fully and
unconditionally guaranteed by Hornbach International GmbH. The
proceeds of the EUR-denominated notes, expected to be a maximum
EUR250 million, will be used to refinance the existing EUR250
million senior unsecured notes due February 2020 and for general
corporate purposes. The proposed notes will rank equal to
Hornbach's existing senior unsecured notes.

The company's Ba3 corporate family rating and Ba3-PD probability of
default rating remain unchanged. The Ba2 rating on Hornbach's
existing EUR250 million of notes due 2020 is also unchanged. The
outlook on the ratings is negative reflecting Moody's expectations
that the company's leverage will increase to around 5.5x in fiscal
2019, which weakly positions Hornbach in the Ba3 rating category.

RATINGS RATIONALE

The Ba2 rating assigned on the proposed notes is one notch higher
than Hornbach's Ba3 CFR because the notes benefit from senior
guarantees from Hornbach's operating subsidiaries, while the
company's exiting promissory notes are not guaranteed by Hornbach's
operating subsidiaries and therefore subordinated to the senior
unsecured notes.

Hornbach proposed issuance constitutes a proactive step in managing
the company's upcoming bond maturity of EUR250 million due in
February 2020. Moody's will withdraw the rating on the existing
notes once they have been fully repaid.

The company's plan to refinance its existing notes is credit
neutral because Moody's already anticipated that the company would
issue additional debt during the August 2019 downgrade of the CFR
to Ba3 from Ba2.

The Ba3 CFR is supported by (1) the company's strong position in
its domestic market and good geographical diversification across
Europe; (2) positive underlying growth, as reflected by Hornbach's
ability to outperform the market; and (3) a good liquidity profile,
which is underpinned by the company's commitment to maintain a
conservative financial policy.

However, Hornbach's Ba3 CFR is constrained by (1) the company's low
margins due to intense competition in the do-it-yourself (DIY)
industry in Germany and the high level of digitalisation costs; (2)
its relatively small size compared with other European retailers;
and (3) the high level of capital spending associated with new
store openings, which leads to negative free cash flow (FCF)
generation.

The negative outlook reflects Moody's expectations that the
company's leverage will increase to around 5.5x in fiscal 2019 and
that that the company will need to sustainability grow its revenues
and earnings over the next 12 to 18 months to reduce leverage
towards 5.0x, a level which is commensurate with the current Ba3
CFR.

The outlook could be stabilized if the company shows evidence that
Moody's adjusted debt/EBITDA will trend towards 5.0x driven by an
ongoing and sustainable increase in earnings and improvement in the
company's FCF and interest cover, which are currently weak.

WHAT COULD CHANGE THE RATING UP/DOWN

The company is weakly positioned in the Ba3 rating category and as
such, an upgrade is unlikely in the short term. Upward pressure on
the ratings in the medium term could be exerted as a result of
Hornbach's financial leverage decreasing below 4.5x on a sustained
basis. A higher rating would also require the company to strengthen
its Moody's adjusted EBIT margin above 4% on a sustained basis and
the generation of positive FCF.

Conversely, downward pressure could be exerted on the ratings as a
result of Hornbach's financial leverage failing to trend towards
5.0x supported by growing underlying revenues and profits. Downward
pressure could also be exerted if interest cover decreases below
1.5x, if FCF remains negative and if the company's liquidity
deteriorates.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Retail Industry
published in May 2018.

CORPORATE PROFILE

Hornbach Baumarkt AG is a mid-sized DIY retailer mainly operating
in Germany, with 97 stores as of the end of fiscal 2018, and other
European countries, including Austria (14), the Netherlands (14),
the Czech Republic (10), Switzerland (7), Romania (6) Sweden (6),
Slovakia (3) and Luxembourg (1). The company reported sales of
EUR4.1 billion as of the end of fiscal 2018.

Hornbach's shares are listed on the Frankfurt Stock Exchange.
Hornbach's parent company, Hornbach Holding AG & Co. KGaA, owns
76.4% of Hornbach's share capital, while independent investors own
23.6%. In turn, the Hornbach family owns 37.5% of Hornbach
Holding's total share capital, and the remaining 62.5% are free
float.


RED & BLACK 6: Moody's Gives (P)Ba1 Rating on EUR10MM Cl. D Notes
-----------------------------------------------------------------
Moody's Investors Service assigned the following provisional
ratings to Notes to be issued by Red & Black Auto Germany 6 UG:

  EUR[930.0] million Class A Asset Backed Floating Rate Notes
  due October 2028, Assigned (P) Aaa (sf)

  EUR[40.0] million Class B Asset Backed Floating Rate Notes due
  October 2028, Assigned (P) A1 (sf)

  EUR[15.0] million Class C Asset Backed Floating Rate Notes due
  October 2028, Assigned (P) Baa2 (sf)

  EUR[10.0] million Class D Asset Backed Floating Rate Notes due
  October 2028, Assigned (P) Ba1 (sf)

Moody's has not assigned ratings to the EUR [5.0]M issuance of
Class E Asset Backed Fixed Rate Notes due October 2028.

RATINGS RATIONALE

The Notes are backed by a static pool of German auto loans
originated by Bank Deutsches Kraftfahrzeuggewerbe GmbH (BDK, NR).
This represents the sixth issuance out of the Red & Black Auto
Germany programme. The originator is ultimately owned by Societe
Generale (A1/P-1; A1(cr)/P-1(cr)). The originator also acts as the
servicer of the portfolio. A back-up servicer facilitator
(Wilmington Trust SP Services (Frankfurt) GmbH (NR)) is appointed
at closing and a back-up servicer will be appointed should the
long-term rating of the ultimate majority owner of the servicer,
Societe Generale (A1/P-1; A1(cr)/P-1(cr)), fall below Baa3.

The provisional portfolio of underlying assets consists of auto
loans originated through car dealerships in Germany. These loans
relate mainly to the financing of used cars. As of the September
2019 cut-off date, circa [37.9]% of total portfolio balance are
comprised by used cars, whereby [41.1]% of total portfolio are
newly used cars that are less than 18 months old. The portfolio
includes amortising loans, for which a customer has to repay
monthly fixed instalments, and balloon loans ([58.8]%), for which
the customer has to repay monthly fixed instalments plus a
significantly higher final balloon instalment. The portfolio
consists of [84,611] loans to [83,592] borrowers. Approximately
[86.8]% of the loans were originated in the last 24 months, and the
weighted average seasoning of the entire pool is [12.9] months as
of the cut-off date.

The ratings are primarily based on the credit quality of the
portfolio, the structural features of the transaction and its legal
integrity.

According to Moody's, the transaction benefits from various credit
strengths such as a granular portfolio, principal to pay interest
mechanism and an amortising liquidity reserve sized at [0.50]% as
of the Rated Notes' initial principal balance. In addition, the
transaction features an interest deferral mechanism for Classes B,
C and D which is breached if the respective PDL ledgers is above
25.0% of Class B, C and D outstanding note balance. Following an
interest deferral event, the interest payments will be diverted to
cure the PDL ledger first which positively impacts the then most
senior outstanding notes. However, Moody's notes that the
transaction features some credit weaknesses such as (i) an unrated
servicer and (ii) a structure which allows for periods of pro rata
payments under certain scenarios. Various mitigants have been
included in the transaction structure such as a back-up servicer
facilitator which is obliged to appoint a back-up servicer if
certain triggers are breached, as well as a performance trigger
which will switch back the principal payment waterfall to
sequential if the cumulative net loss ratio surpasses [1.10]%.

Moody's analysis focused, among other factors, on (i) an evaluation
of the underlying portfolio of receivables; (ii) historical
performance on defaults and recoveries from Q1 2012 to Q1 2019;
(iii) the credit enhancement provided by subordination and
liquidity reserve; (iv) the liquidity support available in the
transaction by way of principal to pay interest and excess spread,
and (v) the legal and structural aspects of the transaction.

MAIN MODEL ASSUMPTIONS:

Moody's determined the portfolio lifetime expected defaults of
[2.20]%, expected recoveries of [40.0]% and [Aaa] portfolio credit
enhancement of [10.0]% related to borrower receivables. The
expected defaults and recoveries capture its expectations of
performance considering the current economic outlook, while the PCE
captures the loss Moody's expects the portfolio to suffer in the
event of a severe recession scenario. Expected defaults and PCE are
parameters used by Moody's to calibrate its lognormal portfolio
loss distribution curve and to associate a probability with each
potential future loss scenario in the cash flow model to rate Auto
ABS.

Portfolio expected defaults of [2.2]% are in line with the German
auto loan ABS average and is based on Moody's assessment of the
lifetime expectation for the pool.

Moody's primarily based its analysis on the historical cohort
performance data that the originator provided for a portfolio that
is representative of the securitised portfolio. Moody's also
evaluated (1) the general German market trend, (2) benchmark loans
transactions, and (3) other qualitative considerations. Moody's
stressed the results from the historical data analysis to account
for (1) the expected outlook for the German economy in the medium
term, and (2) other qualitative considerations.

Portfolio expected recoveries of [40.0]% are in line with the
German auto loan ABS average and is based on Moody's assessment of
the average lifetime recovery rate expectation for the pool.

Moody's has made assumptions for recoveries on the basis of (1)
historical recovery vintages received for this transaction; and (2)
benchmarking against other transactions in the German auto loan
market.

The PCE of [10.0]% is in line with the German auto loan average.
The PCE has been defined following analysis of the data
variability, as well as by benchmarking this portfolio with past
and similar transactions. Factors that affect the potential
variability of a pool's credit losses are: (i) historical data
variability, (ii) quantity, quality and relevance of historical
performance data, (iii) originator quality and servicer quality,
and (iv) certain pool characteristics, such as asset concentration.
The PCE level of [10.0]% results in an implied coefficient of
variation ("CoV") of [60.9]%.

AUTO SECTOR TRANSFORMATION:

The automotive sector is undergoing a technology-driven
transformation which will have credit implications for auto finance
portfolios. Technological obsolescence, shifts in demand patterns
and changes in government policy will result in some segments
experiencing greater volatility in the level of recoveries compared
to that seen historically. For example Diesel engines have declined
in popularity and older engine types face restrictions in certain
metropolitan areas and although Alternative Fuel Vehicles (AFVs)
are rising in popularity, their future price trends also face
uncertainty as technology, battery costs and government incentives
continue to evolve. Additional scenario analysis has been factored
into its rating assumptions for these segments.

METHODOLOGY:

The principal methodology used in these ratings was 'Moody's Global
Approach to Rating Auto Loan- and Lease-Backed ABS', published in
March 2019.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

Factors that may cause a downgrade of the ratings of the Notes
include a decline in the overall performance of the pool and a
significant deterioration of the credit profile of the originator
and servicer.

Factors that may cause an upgrade of the ratings of the Class B - D
Notes include a significantly better than expected performance of
the pool together with an increase in credit enhancement of Notes.




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FOLLI FOLLIE: Two Bondholders File Bankruptcy Application
---------------------------------------------------------
Sotiris Nikas at Bloomberg News reports that two Folli Follie
bondholders, holding 0.87% of the company's total loan obligations,
filed a bankruptcy application for the Company on Oct. 3 in Athens,
according to Athens stock exchange filing.

The hearing of the application is set for October 16, 2019,
Bloomberg discloses.

The bondholders also asked for the prohibition of the disposal of
any asset of the company, along with a request to issue provisional
order, Bloomberg notes.

According to Bloomberg, Folli Follie says these bondholders "do not
express the greater portion of bondholders, with whom the company
is in negotiations for the finalization and signature of a
restructuring agreement," many of whom have opposed said action in
writing.

"The company considers that the filed applications lack any grounds
and reserves all its rights.

"The above isolated action does not obstruct company's negotiations
with its creditors or its efforts for the achievement of a viable
restructuring agreement."




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AFFIDEA BV: S&P Assigns Preliminary 'B+' ICR, Outlook Stable
------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B+' long-term issuer
credit rating to Affidea B.V. S&P also assigned its preliminary
'B+' issue rating, with a '3' recovery rating, to the proposed term
loan B.

S&P said, "Our preliminary rating on Affidea reflects its good
geographic diversity, with its top three countries--Italy,
Portugal, and Poland--accounting for about 40%-50% of group revenue
and EBITDA in the 12 months to June 2019. The rating also takes
into account the group's strong positions across most of its end
markets, and its sound profitability, with S&P Global
Ratings-adjusted EBITDA margins of about 20%. It also reflects the
supportive ownership by the Bertarelli family, which became a
shareholder in the group in 2008 before taking full ownership in
2014.

"That said, the relatively high adjusted debt to EBITDA of close to
5.0x post the transaction's closing (which we expect to complete in
the fourth quarter of 2019), FFO to debt of about 15%-16% in 2019,
and our forecasts that these figures will remain largely unchanged
over the next 12-24 months, all constrain the ratings. Our ratings
also take into account the effect of rising medical salary costs
owing to a shortage of skilled radiologists that is damaging the
overall sector, Affidea's relatively small scale, and the group's
current expansion as it continues to consolidate the wider European
advanced diagnostics imaging market.

"The final ratings will depend on our receipt and satisfactory
review of all final transaction documentation. Accordingly, the
preliminary ratings should not be construed as evidence of final
ratings. If S&P Global Ratings does not receive final documentation
within a reasonable timeframe or if final documentation departs
from materials reviewed, it reserves the right to withdraw or
revise the ratings. Potential changes include, but are not limited
to, the use of loan proceeds, maturity, size and conditions of the
loans, financial and other covenants, security, and ranking."

Founded in 1991 as a one-center diagnostics imaging company,
Affidea has expanded by primarily adopting a buy-and-build strategy
under successive ownership structures. Under the Bertarelli family
and the previous private equity co-owners, Montagu Partners,
Affidea has become a prominent player in the consolidation of the
advanced diagnostics European market, with the total number of
centers almost doubling to 260 (as at August 2019) since 2014,
while also expanding its geographical reach to Spain (2017) and
Serbia (2016). S&P said, "We think that this expansion will
continue, albeit likely at a slightly reduced pace over the next
12-18 months. We estimate Affidea's addressable markets in
Europe--advanced diagnostics and cancer care--at about EUR5 billion
combined in 2016, and these segments are projected to expand by
about 4% and 8%, respectively, until at least 2022. We think this
expansion will stem from the continued mismatch of demand for, and
provision of, services by public hospitals across key markets,
which presents ample expansion opportunities. Although we think the
buy-and-build strategy could expose Affidea to integration risks,
the group employs a selective approach to acquisitions. There are
extensive due diligence procedures in place and senior management
has a good knowledge of the local healthcare sectors. We also note
the lack of loss-making contracts and absence of aggressive
tendering for new ones, as reflected in the relative stability of
operating margins."

S&P said, "We see Affidea's strong market positions and extensive
referral network of doctors as key strengths. We think that Affidea
plays a crucial role in bridging the gap between growing demand for
healthcare services and inadequate supply from public hospitals.
These hospitals generally struggle to fulfill unmet demand, with
waiting lists increasing, and they also suffer from chronic
underinvestment in assets. Private providers such as Affidea,
therefore, increasingly benefit from positive outsourcing trends,
which we think supports the group's organic growth prospects.
Moreover, Affidea has a well-entrenched market position in the
expanding and underpenetrated Central and Eastern European region,
which should provide it with a competitive advantage over late
entrants. There is generally good earnings visibility, with
contracts in place stipulating minimum reimbursement tariffs
(typically subject to annual review following national healthcare
budget reviews) and/or quotas (for volume of patients). In
countries such as Poland, Italy, and, to a certain extent,
Romania--together comprising about 35%-45% of revenue and EBITDA
for the 12 months to June 2019--the group benefits from increased
over-quota allocations with no pressure on reimbursement rates due
to increased pressure on public sector hospitals.

"However, we also note rising staff costs that are linked primarily
to the ongoing shortage of skilled staff (radiologists), a problem
that is also present across the global health care services
industry. We view this as one of Affidea's key business challenges.
We note that medical salaries at Affidea have risen to 40.9% of
revenue in the first half of 2019 from about 37% of revenue in
2016. We also see potential challenges from pressured reimbursement
tariffs owing to constrained national budgets, particularly in
Western Europe (about 60% of revenue for the 12 months to June
2019). Therefore, it is essential that Affidea continually invests
in its asset base in order to maintain operating efficiency and
stay competitive in the market. Management is taking steps to
alleviate such pressures by capturing benefits from increased
tele-radiology trends (remote reading of scans and reports), and
gradually shifting toward a more variable-based pay system (based
on volumes). It is also continually investing in its flagship MRI
Excellence Program (the largest of its kind globally and present in
11 countries since its introduction in 2017), aimed at
standardizing data and reducing examination time, thereby allowing
for better staff scheduling. We understand that Affidea adjusts its
strategy according to local market conditions, shifting toward more
profitable segments such as servicing private insurance in certain
underpenetrated markets such as Greece and Hungary. We think that
this has allowed the group to maintain relatively stable
profitability of about 20% on an adjusted basis over 2016-2018,
despite registering a decline since 2013.

"Over our forecast horizon, we anticipate the group should be able
to maintain adjusted debt to EBITDA of 4.5x-5.0x, supported by the
positive effect of synergies linked to recent acquisitions and
associated reduced integration and restructuring costs. In our
adjusted leverage figures, we include the EUR450 million term loan
B, EUR100 million of operating lease adjustments, EUR9.9 million of
postretirement and pension obligations, EUR8.8 million of finance
leases, and EUR8 million of deferred considerations related to
recent merger and acquisition activity (assuming the EBITDA
performance condition is reached and triggers the respective
payouts). We do not deduct from debt approximately EUR30 million of
cash, because this reflects the minimum balance needed for the
day-to-day running of the business. We see the group's low working
capital profile, reducing capital expenditure (capex) needs (owing
to a gradual shift toward an operating leasing model in the
future), and the supportive ownership structure, with lack of
dividends, as key supportive factors for the contained leverage
metrics over our forecast horizon. However, in the near to medium
term, we think ongoing pressure from rising staff costs and
reimbursement tariffs in Western Europe will likely prevent Affidea
from reducing debt to EBITDA closer to 4.0x.

"Our preliminary 'B+' ratings on Affidea also reflect our view that
although we have factored in smaller bolt-on acquisitions funded
via cash on the balance sheet, we do not rule out the potential for
a more sizable debt-funded acquisition or a series of smaller ones,
in the event that such targets become available.

"The stable outlook reflects our assumption that, despite continued
pressure from tariff reimbursement rates, mainly in Western Europe,
and rising staff costs, we anticipate that Affidea will be able to
generate positive revenue expansion while maintaining adjusted
EBITDA margins of about 20%. These margins will most likely stem
from Affidea's prudent cost control and smooth integration of
recently acquired clinics. We also assume that the group will
manage its working capital and capex such that it generates
positive free operating cash flow (FOCF).

"The stable outlook also reflects our assumption that, should the
group continue pursuing external growth opportunities, it will
remain disciplined so that adjusted debt to EBITDA will remain
comfortably in the 4.5x-5.5x range.

"We could lower the ratings on Affidea if, contrary to our
base-case expectations, we observed operational setbacks leading to
material weakening in operating margins, such that FOCF turns
negative and fixed charge cover falls below 2.2x for a sustained
period. In our view, this would most likely come from an inability
to contain staff cost pressure, combined with more pronounced
tariff reimbursement cuts, particularly in Western Europe.

"Alternatively, we could also lower the ratings if the group were
to undertake a more sizable debt-funded acquisition, or a series of
smaller ones, such that adjusted debt to EBITDA increases
materially above 5.5x, with little prospects for rapid leverage
reduction.

"Rating upside is limited in the near term given the relatively
high opening adjusted debt leverage and the group's appetite to
continue consolidating the European advanced diagnostics market.
Nevertheless, we could consider raising the ratings on Affidea if
we observed material improvement in profitability, likely stemming
from higher-than-anticipated synergies from recent acquisitions and
savings from the shift to variable-based pay for medical staff.
Under such a scenario, we would likely see adjusted debt to EBITDA
falling closer to 4.0x and the fixed charge rising above 2.5x. In
our view, this should come with a clear commitment to maintain
metrics at such levels on a sustained basis."


SCHOELLER PACKAGING: Fitch Assigns B(EXP) LT IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings assigned Schoeller Packaging B.V., the European
market leader in returnable transit packaging, an expected
Long-Term Issuer Default Rating of 'B(EXP)' with Stable Outlook.
Fitch has also assigned an expected instrument rating of
'B(EXP)'/'RR4'/31%-50% to the company's proposed EUR250 million
senior secured notes.

The ratings of Schoeller are constrained by its small scale and
lower free cash flow (FCF) generation in comparison with its
peers', and expected high leverage with limited deleveraging
capacity. The ratings also reflect its leading position in its
niche market, its diversified end-market exposure and products, an
extended geographical presence across Europe, its successful
long-term cooperation with customers and substantial technology
investment that acts as significant barriers to entry.

Final ratings are subject to the completion of the bond issue in
line with the terms already reviewed and receipt of final
documentation.

KEY RATING DRIVERS

Limited Deleveraging Capacity: Fitch expects Schoeller's funds from
operations (FFO) adjusted gross leverage to be 5.8x in 2019, which
is high and constrains the rating to the 'B' category. High capex
in 2019-2021 and the lack of amortisation are expected to keep FFO
adjusted gross leverage at around 5.5x by 2021, in line with a 'B'
rating. However, its historically low FFO fixed charge cover, due
to high cash interest payments, should benefit from lower interest
costs post-refinancing. Fitch's expectation of improving
profitability should support deleveraging in the medium- to
long-term.

Capex to Pressure Cash Flow: Innovation leading to development of
new products is key to maintaining competitiveness in the RTP
industry. In the last three years, Schoeller has been investing
heavily with capex at between 4.1% and 6.5% of sales, resulting in
negative FCF generation. Fitch forecasts capex to peak at 7% of
sales in 2019, following the last stage of the development of the
group's new 'Big 3' products, and thereafter to decrease to around
6%. Despite continuously high investments Fitch forecasts FCF to
turn positive in 2021, albeit at modest levels, in line with the
rating, until 2022 when Fitch expects to see a further
strengthening.

Adequate Business Profile: Fitch views the business profile of
Schoeller as solid and commensurate with a 'BB' rating based on its
European market-leading position within its niche, which includes
manufacturing of plastic containers and RTP. Despite an estimated
market share of about 20% in Europe, the rating is somewhat
constrained by the group's modest scale with revenue of about
EUR520 million in 2018. This is, however, partly mitigated by its
operations in some 24 countries, providing healthy geographic
diversification within Europe, coupled with an ambition to grow its
limited presence in US.

Strong Customer Relationship: The business profile is strengthened
by a broad customer base with limited concentration risk in
combination with a leading product range consisting of above 1,000
customisable products. Fitch views Schoeller as having a good
track-record of customer retention, as the majority of its top-100
customers are recurring with relationships often exceeding 15
years.

Environmentally Driven Growth Opportunities: Fitch believes that
reusable plastic containers are set for growth, supported by
automation, supply chain efficiency, environmental awareness and
e-commerce development that will drive the conversion to reusable
packaging from single-use packaging. Fitch expects growing demand
for a circular economy, environmental regulation and cost
improvement to encourage companies to use more efficient logistics
with reusable packaging. This development should benefit
Schoeller's products as they are 100% recyclable and have a long
lifespan with an average of 15-20 years, which makes them
sustainable.

Some Cyclical Exposure: About one third of Schoeller's revenue is
generated from cyclical industries such as automotive and
industrial manufacturing and Fitch believes that these industries
are likely to be affected by an expected economic downturn. The
effect on Schoeller should be mitigated by its broad range of
end-markets, which to a high degree include less cyclical
industries such as beverage and food, and food processing.

Modest Margin Improvement Expected: Schoeller's profitability is
generally lower than that of peers in the packaging industry, which
to some extent could be explained by Schoeller being a more
manufacturing- intensive company. During the last three years,
profitability has been negatively affected by high investments and
a number of one-off items related to, for example, the change of
ownership, commercial settlements and litigations. As these items
drop out while several operational improvements are implemented
leading to less transportation and shorter production time, Fitch
expects a strengthening of the EBIT margin up to 6% by 2019, which
is somewhat stronger than levels compatible with the rating.

DERIVATION SUMMARY

Fitch compares Schoeller to a number of manufacturing companies and
packaging-related companies which are also rated 'B'. Schoeller is
analysed as a diversified manufacturer, although Fitch believes
that packaging companies are to some extent exposed to similar
aspects such as raw material, environmental impact, logistic,
similar end-of markets and customers and low FCF generation. The
market remains highly fragmented but Schoeller is number one in
bulk containers in Europe and number two in some other markets with
20% markets shares in Europe. Its plant locations across Europe
allows Schoeller to be more competitive and to operate at lower
transportation costs versus peers (which usually operate
domestically).

Fitch-rated packaging peers are generally consumer products
(bottles, jars, small packages) such as Amcor Limited (BBB+/Stable)
and offer a wider range of products (different
material/shapes/colour/marketing), or single-use secondary
packaging (Stora Enso Oyj (BBB-/Stable) and Smurfit Kappa Group plc
(BB+/Stable). Schoeller seeks to replace business-to-business use
of fibre board and metal transportation, in addition to its ability
to make precision containers for high-tech storage solutions. Like
Schoeller, these competitors are exposed to a broad range of
end-markets (retail, food, industrial etc.) but are usually more
cyclical and more affected by market trends that are subject to
customers' spending/preferences.

Schoeller compares well against Fitch-rated mid-sized companies in
niche markets with similar FFO adjusted leverage but slightly
stronger FCF, such as manufacturing companies AI Alpine AT Bidco
GmbH (B/Stable) and Alpha AB Bidco BV (B/Stable). Both companies
have higher FFO gross leverage than Schoeller, but are expected by
Fitch to have better FCF generation and deleveraging capacity. The
higher rating of IREL Bidco s.a.r.l (B+/Stable), owner of
Schoeller's customer IFCO, reflects its very high EBITDA margins
and long-term contractual flows, despite similar leverage.

RECOVERY RATING ASSUMPTIONS

Bond's Average Recovery: Fitch expects average recoveries of
'B(EXP)'/'RR4'/31%-50% for Schoeller's planned EUR250 million
senior secured notes, which will be subordinated to the group's
revolving credit facility of EUR30 million.

Fitch estimates under its bespoke recovery analysis that a
going-concern approach will lead to higher recoveries for
creditors, given the group's long-term track-record and sustainable
business, good and long-term relationship with customers and
suppliers, and existing barriers to entry in the market. Its
going-concern value is estimated at around EUR148 million, assuming
a post-reorganisation EBITDA of about EUR47 million with a multiple
of 4.5x and adjusting the value for potential factoring drawdown of
about EUR47.7 million (as per Fitch Criteria, the highest amount
drawn in the last 12 months).

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - Revenues to grow by 4.7% CAGR (2019-2022), driven by organic
    growth and additional sales of Big3 products

  - EBITDA margin to expand towards 10.7% over 2019-2022 as a
    result of cost savings and new products with high margins
    (pre-IFRS 16 impact)

  - Other non-operating items amount to EUR9 million in 2019,
    including transaction fees (EUR3.3 million), call premium
    (EUR4 million) and other items

  - Minimal working capital outflow at around -1% of sales

  - Capex spikes in 2019 to around 7% of sales due to
    breakthrough projects and big3 products before easing
    towards 4% by 2022

  - Cash taxes at around 15% of EBIT

  - EUR36 million of factoring each year

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - FFO adjusted gross leverage sustainably below 5.0x

  - FCF positive on sustained basis

  - Significant growth in size with evidence of strengthening
    of the business model through revenue growth and continued
    EBITDA margin improvements toward 12%

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - FFO adjusted gross leverage consistently above 6.0x

  - Negative FCF on a sustained basis, compromising liquidity
  
  - EBITDA margin below 9% (including IFRS 16 impact)

  - Loss of market share or key customers such as IFCO

LIQUIDITY AND DEBT STRUCTURE

Satisfactory Liquidity: Schoeller's FCF is forecasted to be neutral
to positive. Fitch sees liquidity as satisfactory, supported by the
non-amortising nature of the group's debt with no material debt
maturity before 2024-2026. Financial flexibility is enhanced by an
undrawn EUR30 million RCF and access to non-recourse factoring of
EUR70 million. Furthermore, working capital swings during the year
are estimated at a negative EUR15 million. Fitch also believes that
the group can comfortably cover its interest payments with an FFO
interest cover above 3.5x beyond 2019.

Concentrated Debt Maturity: The debt structure is not diversified
as nearly all its gross debt is the group's EUR250 million notes.
The maturity is therefore concentrated in 2024-2026. Liquidity
needs can be covered by an undrawn EUR30 million RCF and factoring
of EUR70 million. Usually the group utilises around EUR36 million
of factoring but it has drawn EUR47.7 million in June 2019 (the
highest amount in the last 12 months) as IFCO has been added to
their factoring.


SCHOELLER PACKAGING: Moody's Assigns B2 CFR, Outlok Negative
------------------------------------------------------------
Moody's Investors Service assigned a B2 corporate family rating and
a B2-PD probability of default rating to Schoeller Packaging B.V.,
the new parent company of the Dutch returnable transit plastic
packaging manufacturer Schoeller Allibert. Concurrently, Moody's
has assigned B2 rating to the proposed EUR250 million senior
secured notes due 2024 to be issued by Schoeller Packaging B.V..
The outlook on all ratings is negative.

At the same time, Moody's has withdrawn the B2 CFR and the B2-PD
PDR of Schoeller Allibert Group B.V., the former parent company of
the group.

Proceeds from the new notes will be used to repay the 2021 notes,
which rating will be withdrawn upon their redemption, to repay the
drawings under the existing RCF and to pay the transaction fees. At
close, Moody's expects the company to have EUR15 million of cash on
the balance sheet and EUR28 million availability under its new
super senior revolving credit facility (RCF).

"While the proposed refinancing will improve the liquidity profile
of the company in a broadly leverage neutral transaction, the
ability to de-lever and generate positive free cash flow is largely
dependent on the successful execution of the management growth
strategy in the context of a subdued macro environment. This risk
is reflected in the negative outlook", says Donatella Maso, Moody's
analyst and lead analyst for Schoeller Allibert.

RATINGS RATIONALE

With the proposed refinancing, the company will improve its
liquidity profile by postponing the current debt maturity wall to
2024, and by reducing the interest costs, in a leverage neutral
transaction.

Pro forma for the transaction, gross leverage will remain high at
around 5.7x based on last twelve months ending June 30, 2019 EBITDA
which has been adjusted to reflect the exceptional costs related to
the exit process of JP Morgan and commercial settlements. The high
leverage is a result of lower than expected growth in Q4 2018 and
Q1 2019 and increased use of non-recourse factoring and the
revolver. Moody's expects Schoeller Allibert to gradually de-lever
towards 5.2x by the end of 2020. Furthermore, Moody's expects the
company to turn its free cash flow generation positive in 2020
driven by interest savings, assuming a successful refinancing,
lower capital spending and the lack of large one off items such the
Swedish tax liability and the JP Morgan exit fees.

However, the prospective improvement in EBITDA and cash flow
generation over the next 12 to 18 months remains largely contingent
to the success of the "Big 3" products as well as the launch of
other new products, the volume recovery with its largest client
IFCO, which contract has now been extended by two years to 2024,
and achievement of the EUR3 million synergies from operational
improvements, in the context of a subdued macro environment.
Furthermore, a potential non-deal Brexit may lead to an economic
downturn in the United Kingdom and the European Union which could
result in a deterioration of the company's customers' and
suppliers' operations.

The B2 rating also reflects (1) the relatively small size of the
company relatively to other rated packaging manufacturers; (2) its
exposure to the cyclicality as the purchase of Schoeller Allibert's
products is typically seen as a capital investment, and is
therefore subject to deferral during periods of a severe downturn,
intense competition; (3) the highly competitive industry in the
context of the commoditised nature of the company's products
resulting in pricing pressure; (4) some concentration with its
largest client representing 16% of revenue in 2018; and (5) the
required investments in new products and customised moulds in order
to support future growth. Additionally, a degree of seasonality and
the project nature of some of the business could introduce
intra-year volatility to financial metrics.

Conversely, the B2 rating is positively supported by (1) Schoeller
Allibert's leading market position in the Returnable Transit
Packaging (RTP) sector in Europe with an estimated 20% share; (2)
its innovation capabilities enabling the company to benefit from
the continuous positive trends in the sector; and (3) a degree of
geographic and end-market diversity.

Moody's would like to draw attention to certain governance
considerations with respect to Schoeller Allibert, which is owned
by private equity firm Brookfield. As is often the case in highly
levered, private equity sponsored deals, owners have a high
tolerance for leverage/risk and this has been factored into its
assessment of the credit risk associated with Schoeller Allibert.

LIQUIDITY

Moody's views Schoeller Allibert's liquidity profile as adequate.
It is underpinned by EUR15 million cash on balance sheet at close,
EUR28 million availability under its super senior revolving credit
facility (RCF) due 2024 and several factoring arrangements, which
are to be renewed in order to manage intra-year fluctuations in
receivables, and lack of material debt maturity until 2024. The
company also benefits from a EUR65 million committed stand-by
facility in the form a subordinated shareholders' loan provided by
Brookfield Business Partners, currently drawn for EUR7.8 million
and treated as equity under Moody's hybrid methodology.

These sources are deemed sufficient to support the company growth
strategy in terms of capital investments, and intra year
fluctuations in working capital. In this context, Moody's notes
that lower interest costs following the refinancing will support
stronger cash flow generation.

The super senior RCF has a financial covenant, which is tested on a
quarterly basis, where net drawn super senior leverage must not
exceed 1.0x of the company's EBITDA. Moody's expects the company to
continue to comply with this covenant.

STRUCTURAL CONSIDERATIONS

Using Moody's Loss Given Default (LGD) methodology, the B2-PD PDR
is aligned to the B2 CFR. This is based on a 50% recovery rate at
family level, as is typical for transactions including both bonds
and bank debt. Both the notes and the super senior RCF share the
same security and guarantees but the notes ranks junior to the RCF
upon enforcement under the provisions of the intercreditor
agreement. Security includes pledges over shares, bank accounts,
receivables, and certain UK assets. Material subsidiaries which
guarantee the notes represent at least 83% of the group EBITDA or
81% total assets.

RATIONALE FOR THE NEGATIVE OUTLOOK

The negative outlook reflects the risk of Schoeller Allibert of not
being able to improve its credit metrics and its free cash flow
generation over the next 12 to 18 months in the context of subdued
macro conditions. To stabilize the outlook Schoeller Allibert
should demonstrate a steady deleveraging trajectory towards 5.0x
and the ability to generate positive free cash flow. The outlook
also incorporates Moody's assumption that the company will not lose
any material customer and it will not engage in material
debt-funded acquisitions.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive pressure on the ratings is unlikely in the near term.
However it could develop if Schoeller Allibert's credit metrics
were to improve as a result of a stronger-than-expected operational
performance, leading to Moody's adjusted debt/EBITDA ratio below
4.0x, and positive free cash flow (as defined by Moody's), both on
a sustainable basis.

Negative pressure on the ratings could arise if Schoeller
Allibert's operating profitability deteriorates, Moody's adjusted
leverage remains sustainably above 5.0x; free cash flow continues
to be negative in 2020; and liquidity deteriorates.

The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass, and Plastic Containers published in
May 2018.

LIST OF AFFECTED RATINGS:

Assignments:

Issuer: Schoeller Packaging BV

LT Corporate Family Rating, Assigned at B2

Probability of Default Rating, Assigned at B2-PD

Senior secured notes, Assigned at B2

Outlook Actions:

Issuer: Schoeller Packaging BV

Outlook, Assigned Negative

Withdrawals:

Issuer: Schoeller Allibert Group BV

LT Corporate Family Rating, Previously rated B2

Probability of Default Rating, Previously rated B2-PD

Headquartered in the Netherlands, Schoeller Allibert is a
returnable transit plastic packaging manufacturer operating
primarily in Europe and the US, employing approximately 2,000
people. For the last twelve months to June 30, 2019, the company
generated revenue of EUR521 million and EBITDA of EUR63 million as
adjusted by Moody's.

The company is the result of the August 2013 legal integration
between the Schoeller Arca Systems Group and the Linpac Allibert
Group, the returnable transport packaging business of Linpac Group.
Since May 2018, Schoeller Allibert is 70% owned by the private
equity Brookfield Business Partners L.P. and 30% by the Schoeller
Industries B.V., a family-owned business with a broad focus on
packaging, transport and logistics systems.


SCHOELLER PACKAGING: S&P Assigns B ICR on Refinancing Announcement
------------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Schoeller Packaging. S&P also assigned its 'B' issue rating and '4'
recovery rating to the proposed EUR250 million senior secured
notes.

Schoeller Packaging has announced the refinancing of its EUR210
million senior secured notes due 2021 and EUR30 million RCF
borrowed by Schoeller Allibert Group B V. Once the refinancing
successfully completes, S&P will withdraw its issuer credit rating
on Schoeller Allibert Group B.V. and its issue ratings on the
EUR210 million senior secured notes, because they will have been
repaid.

Schoeller Packaging is proposing to issue EUR250 million senior
secured notes and to raise a EUR30 million RCF. The proceeds from
the proposed debt issuances will repay the outstanding EUR210
million notes, EUR24.8 million drawings under the RCF and EUR3.3
million in transaction fees. This transaction would increase cash
on balance sheet by EUR7.3 million.

S&P expects the new EUR30 million RCF to be undrawn after the
transaction closes.

This refinancing will lengthen Schoeller's debt maturity profile
and lower its interest expenses, as the margins on the proposed
debt instruments are well below those on the current debt.

S&P said, "We now expect debt to EBITDA of 5.9x for year-end 2019,
compared with our previous expectation of 5.2x. The higher leverage
estimate reflects the higher senior secured note quantum
(post-refinancing) and additional drawdowns under factoring
facilities.

"The stable outlook reflects our expectation that over the next 12
months Schoeller Packaging will post at least stable operating
results as its new product program ramps up, despite difficult
organic growth opportunities in some end-markets.

"We expect the company to fund its growth investments from
internally generated funds. We expect Schoeller Packaging funds
from operations (FFO) cash interest coverage will remain above
2.0x.

"We could lower the ratings if FOCF remains negative in 2020 or S&P
Global Ratings-adjusted debt to EBITDA increases above 7.0x. We
could also lower the rating if we expected weaker liquidity (for
instance if the proposed refinancing does not complete) or FFO cash
interest coverage fell below 1.5x. The ratings could also come
under pressure if financial policy decisions weakened its financial
profile or caused financial metrics to deviate from our
expectations.

"We could raise the ratings if the company showed a
higher-than-expected improvement in profitability, leading to
stronger credit metrics in line with what we view as commensurate
with an aggressive financial risk profile over a sustained period.
Specifically, this would include a ratio of adjusted FFO to debt of
more than 15% and debt to EBITDA of less than 4.5x, on a sustained
basis, supported by the group's owners committing to a financial
policy commensurate with these metrics."




===========
R U S S I A
===========

AUTOTORGBANK: Moody's Withdraws B2 Deposit Ratings, Outlook Stable
------------------------------------------------------------------
Moody's Investors Service withdrawn the following ratings of
Autotorgbank:

  - Long-term bank deposit ratings of B2

  - Short-term bank deposit ratings of Not Prime

  - Long-term Counterparty Risk Ratings of B1

  - Short-term Counterparty Risk Ratings of Not Prime

  - Long-term Counterparty Risk Assessment of B1(cr)

  - Short-term Counterparty Risk Assessment of Not Prime(cr)

  - Baseline Credit Assessment (BCA) of b2, and

  - Adjusted BCA of b2

At the time of the withdrawal, the bank's long-term deposit ratings
carried a stable outlook.

Autotorgbank is a small Russian bank, ranking 201 among Russian
banks by total assets as of June 30, 2019. As of year-end 2018, 85%
of ATB's share capital was controlled by Pavel Abrosimov via Major
Autoservice, part of Major Group, which is a leading Russian car
dealer. As of June 30, 2019, the bank reported total IFRS assets of
RUB7.6 billion and total equity of RUB2.8 billion. The bank's net
IFRS profit for the first half of 2019 amounted to RUB374million.

RATINGS RATIONALE

Moody's has decided to withdraw the ratings for its own business
reasons.


NORD GOLD: Fitch Rates $400MM Unsec. Guaranteed Notes 'BB'
----------------------------------------------------------
Fitch Ratings assigned Nord Gold SE's (BB/Stable) USD400 million
guaranteed notes a final senior unsecured rating of 'BB'.

The rating of the notes, which will be issued by Ireland-based
Celtic Resources Holdings DAC, is in line with Nord Gold's Issuer
Default Rating as the notes are ranked pari passu at the level of
the Finco, which holds all of the group's financial indebtedness
(excluding reverse factoring). The guaranteed notes have a
five-year term, a bullet repayment and a fixed coupon of 4.125%.
Nord Gold is using the proceeds to repay some of its indebtedness
and for general corporate purposes.

KEY RATING DRIVERS

Guaranteed Notes Rank Pari Passu: The notes are guaranteed
unconditionally and irrevocably on a joint and several basis by
Nord Gold's main operating entities, which together represent more
than 90% of assets and revenues. Noteholders also benefit from
certain financial covenants, including the incurrence based net
debt to EBITDA ratio of 3.5x.

Mid-Size Diversified Gold Miner: Nord Gold is a mid-sized
Russian-owned gold miner with producing mines in Burkina Faso,
Russia, Guinea and Kazakhstan and exploration and development
projects in French Guiana (Montagne d'Or), Russia (Uryakh and
Tokkinsky),Canada (Pistol Bay) and Guyana (Arakaka). Its 2018 gold
production totalled 907,000 oz. Nord Gold has JORC reserves of 15.1
million oz, with a mine life of about 15 years. In 2018, the
company launched Gross, its third greenfield mine commissioned
since 2013.

Gross Mine Ramps Up: Commissioned in September 2018, Gross is an
all-season open pit, heap leach operation located in Yakutia in
Russia's eastern Siberia. Management estimates that Gross's large
resource base is sufficient to maintain average production at
around 200,000 oz for about 19 years. In 2Q19, Gross's performance
exceeded the group's expectations, producing 62,200 oz. With Gross
ramping up to full capacity in 2019, Fitch estimates that Nord
Gold's total annual gold production will exceed 1 million oz.

Cash Costs Improving: In 2Q19 Nord Gold's all-in sustaining costs
(AISC) decreased 7% to USD1,038/oz on 1Q19 due to lower cash costs
at its mines as well as lower capitalised stripping at Taparko and
maintenance capex at Lefa. In 2019-2022, Fitch expects Nord Gold to
maintain flat average AISC of around USD950/oz. This is due to the
ramp-up of relatively low-cost Gross production, which would help
the group control the overall cost per ounce.

Deleveraging in 2019: Fitch expects Nord Gold's total funds from
operations (FFO) gross leverage to average 1.8x in 2019, achieving
positive free cash flow (FCF) of USD90 million due to lower capital
intensity, stronger production and pricing. Over the forecast
horizon Fitch expects FFO gross leverage to average 1.9x due to
higher production and lower AISC, mainly driven by the launch of
Gross.

Capex Peaked in 2018: Nord Gold's capital intensity (capex/revenue)
peaked in 2018 and reached almost 44% with total capex of around
USD500 million, mainly due to the development of Gross and large
stripping works at Bissa-Bouly, Taparko and Berezitovy to prepare
the mines for higher production volumes in 2019. In 2019, capex
intensity is likely to fall towards 30% and then to 28% from 2020.
Fitch expects the company to maintain leverage within the rating
guidance as the group invests in existing mines and new projects.

New Project Pipeline: Nord Gold has a number of new projects in its
pipeline. Two major current development and exploration projects
are Montagne d'Or in French Guiana and Pistol Bay in Canada,
respectively. Its base case currently excludes these projects as
visibility on their likelihood and timing remains low. In addition,
there are development projects at existing mines, where exploration
works resulted in the discovery of a number of satellite deposits,
thus extending the life of existing mines.

Diverse Country Risk Exposure: Nord Gold has operations in Burkina
Faso (40% of total output in 2018), Russia (BBB/Positive, 30%),
Guinea (21%) and Kazakhstan (BBB/Stable, 9%). Following the launch
of Gross in September 2018, Fitch expects the share of Russian
production in Nord Gold's total gold output to reach 40% by
end-2020.

Less-developed economies such as these can be less favourable for
mining companies due to a number of factors, eg poor roads and
other infrastructure, uncertainty in the application and/or
enforceability of taxation, mining and other laws, and less stable
governmental finances. In this regard Fitch views Nord Gold's
operational diversification as a mitigating factor against the risk
from disruption in one of the countries in which the group
operates

DERIVATION SUMMARY

Nord Gold is significantly smaller than Kinross Gold Corporation
(BBB-/Stable) and PJSC Polyus (BB/Stable) by production and
revenue, while its AISC are higher. Kinross has a higher proportion
of mines located in stable countries but also has a number of mines
in Russia and West Africa, where Nord Gold's mines are located.
Yamana Gold Inc. (Yamana, BBB-/Stable) is similar to Nord Gold in
scale and also has a majority of assets located in emerging
economies (South America).

In terms of leverage, Nord Gold compares well with Goldcorp and
Polyus, but lags behind Kinross and Yamana.

Operating environment has a moderate impact on the ratings due to
higher-than-average systemic risks associated with Russia's legal
and business environment.

KEY ASSUMPTIONS

  - Fitch gold price deck of USD1,200/oz for the rest of 2019 and
    in 2020-2022

  - Total refined gold production at 1,000,000 oz in 2019 and
    slightly above 1,000,000 oz in 2020-2022

  - Capex at USD400 million in 2019 and average USD350 million a
    year in 2020-2022

  - Discretionary dividends

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - Further improvement in the operational profile beyond the
    successful commissioning and ramp-up of Gross and other
    projects in the pipeline

  - Conservative financial profile, e.g. FFO adjusted gross
   leverage below 1.5x on a sustained basis (2018: 2.3x)

  - EBITDA margin above 40% (2018: 41%) and positive FCF
    on a sustained basis

  - One-year liquidity ratio sustained above 1.25x

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - EBITDA margin below 30% on a sustained basis

  - Failure to deleverage in line with Fitch's expectations,
    resulting in FFO gross leverage above 2.5x on a sustained
    basis

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity: As at June 30, 2019, Nord Gold had maturities
of USD320 million (including factoring arrangements) by June 2020.
The group reported cash in hand of USD126 million, in addition it
has USD15 million undrawn under a USD75 million committed revolving
credit facility (RCF) from a major international bank due in April
2021. Further sources of liquidity consist of uncommitted RCFs from
major Russian state-owned banks for a total USD115 million and
projected FCF of USD149 million over 2019-2020. Fitch assumes that
Nord Gold will continue to have access to financial markets.

The issuance of the notes will be used to partially repay
indebtedness as well as for general corporate purposes, which
improves Nord Gold's liquidity profile. The five year tenor of the
guaranteed notes improves Nord Gold's maturity profile.


ROSGOSSTRAKH PJSC: S&P Alters Outlook to Pos. & Affirms 'BB-' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on Russia-based insurer
Rosgosstrakh PJSC (RGS) to positive from stable, and affirmed its
financial strength and issuer credit ratings at 'BB-'.

S&P said, "We anticipate a strengthening in RGS' overall
creditworthiness on the back of expected improvements in the
insurer's capitalization through profit retention. This is
supported by our understanding that the company will not pay
dividends in the coming three years. Furthermore, we acknowledge
that the insurer is operationally separate from its parent, Bank
Otkritie Financial Corporation (BOFC), leading us to assume that
BOFC has less influence on RGS' credit quality. The outlook
revision is not directly related to the implementation of our
revised "Group Rating Methodology," and "Insurers Rating
Methodology," published July 1, 2019.

"We also understand that, following the coming three years without
dividends, BOFC's dividend policy will likely remain balanced. We
note that RGS keeps posting positive underwriting results,
reporting a net combined (loss and expense) ratio of 98% for the
first half of 2019, versus over 130% in 2016-2017. We expect RGS
will continue to operate with a combined ratio of below 100%,
underpinned by improved underwriting, better claim settlement
practices, reduced court expenses, decreased administration costs,
somewhat less pronounced risk in its motor third-party liability
insurance business line, and recent legislative changes. That said,
we note RGS has a limited track record of sustainably improved
capital and operating results (maintained only over the past 1.5
years).

"Our current rating on RGS continues to be supported by our view of
the insurer's business risk profile, notably resumed growth in its
premium base. By the end of June 2019, the company ranked No. 8 in
terms of gross premium written overall and No. 5 in obligatory
motor third-party liability segment. We do not expect any shifts in
the insurer's strategy following the August-September 2019
appointment of a new management team, which transitioned from VTB.
We also believe that changes in management should give RGS more
momentum in the corporate segment, where RGS lost some business
over the past two years. Moreover, we expect the company to
moderately grow its premium base.

"We believe that RGS' financial risk profile is supported by
improved capitalization. It is weighed down, however, by the
concentrated investment portfolio. That said, we do not expect any
one-off impairments in investments.

"We note that the portfolio's exposure to investment-grade bonds
issued by Russia was about 43% of the total investment portfolio as
of July 1, 2019. Concentration on BOFC through bank deposits is
also still high, at about 23% of all investments. However, this is
an improvement from 65% as of June 30, 2018, and we expect it to
decline to 10% over the next 24 months.

"We still believe RGS will continue to benefit from its ownership
by BOFC and its ultimate shareholder, the Central Bank of Russia.
This ownership structure leads us to view the insurer as a
government-related entity, but we do not add any additional notches
of support to the ratings. We do not anticipate RGS will require
any additional financial support in 2020-2021.

"We believe that RGS operates separately from BOFC, and its
financial performance and funding are highly independent from its
parents. RGS doesn't have any significant operational dependence on
the other group entities either, and it maintains its own records
and funding arrangements and does not commingle funds, assets, or
cash flows with BOFC. There is a strong economic basis for BOFC and
the central bank to preserve RGS' credit strength.

"We do not expect BOFC's operational results--even if negative--to
significantly affect RGS' performance, even considering currently
high investment concentration on BOFC. We note that the 2017
introduction of temporary administration in BOFC did not affect
RGS's credit standing.

"The positive outlook reflects our expectation that RGS will
continue to maintain strong capital levels over the next 12-18
months through profit retention and will not make any dividend
payments in the next three years, while more stringent underwriting
practices will gradually reduce earnings volatility and allow
capital to build up. We expect business growth in 2019-2020, and
asset allocation will remain mostly unchanged over the same
period."

A positive rating action on RGS is possible in the next 12-18
months on the back of a balanced dividend policy going forward, a
more established management team, and a sustained operating
performance. An upgrade would also depend on BOFC maintaining its
credit standing at least stable, while RGS remains operationally
separated from it.

An outlook revision to stable would stem from a significantly
weaker-than-expected underwriting performance or an unexpected
deterioration of capital adequacy due to a sizable dividend to
BOFC, for example. S&P could revise the outlook or even lower the
rating if BOFC group's credit quality were to deteriorate.


TINKOFF BANK: Fitch Raise LongTerm IDR to BB, Outlook Stable
------------------------------------------------------------
Fitch Ratings upgraded Tinkoff Bank's Long-Term Issuer-Default
Ratings to 'BB' from 'BB-'. The agency has also affirmed the
Long-Term IDRs of Joint Stock Company OTP Bank at 'BB+' and Home
Credit & Finance Bank Limited Liability Company at 'BB-'. The
Outlooks are Stable.

KEY RATING DRIVERS

IDRS, VIABILITY RATINGS, SUPPORT RATINGS AND SUPPORT RATING FLOORS

The IDRs of Tinkoff and Homecredit are driven by their Viability
Ratings (VRs). OTP's IDR of 'BB+' is higher than its VR of 'bb-'
reflecting its assessment of potential support from the parent,
Hungary-based OTP Bank Plc due to majority ownership (98%), a high
level of integration, common branding and reputational damage from
a potential default of the subsidiary.

The upgrade of Tinkoff's ratings reflects the bank's extended
record of exceptionally strong performance, supported by the
ongoing diversification of the bank's business model and growing
franchise. It also reflects improved capitalisation after the
recent secondary public offering (SPO), which together with strong
pre-impairment profitability results in a greater ability to absorb
losses in case of stress relative to its peers.

The affirmation of Homecredit's and OTP's 'bb-' VRs, one notch
lower than that of Tinkoff, mostly reflects their weaker
profitability, less diversified business models, narrower
franchises and somewhat tighter liquidity (in case of Homecredit).

The three banks are significantly exposed to the Russian unsecured
consumer lending market, and their VRs continue to capture the
segment's volatile nature. Fitch sees risks of overheating in
Russian consumer lending as overall retail loan growth has
significantly outpaced that of personal incomes in the last several
years, increasing households' already high leverage. To address
this risk, the Central Bank of Russia (CBR) has been gradually
increasing regulatory risk-weights on unsecured consumer loans,
especially for loans extended at higher-than-average rates and,
starting from October 1, 2019, to more leveraged borrowers.
However, Fitch estimates, these measures will only have a moderate
impact and thus may not be sufficient on their own to bring the
very rapid growth of unsecured retail lending (22% in 2018, 13% in
7M19) to more sustainable single-digit levels. However, a slow-down
in growth is now more likely as some banks have recently been
tightening underwriting standards in response to the weakened
average credit profile of loan applicants.

Asset quality at all three banks can be volatile given their
unsecured consumer lending exposure (retail loans net of allowance
made up 41% of end-1H19 assets at OTP, 58% at Tinkoff and 78% at
Homecredit). Average NPL origination (a proxy for credit losses,
defined as increase in loans overdue by over 90 days plus
write-offs, divided by average performing loans) remained broadly
stable at 4% at Homecredit and at 7% at Tinkoff in 2018-1H19. They
increased at OTP to 7% in 2018-1H19 from 5.7% in 2017 mainly due to
some deterioration in the cash loans portfolio.

At end-1H19, accumulated impaired retail loans made up a moderate
4% of the retail loan book at Homecredit, 9% at Tinkoff and a
higher 17% at OTP due to its larger share of legacy problem
exposures. The coverage of Stage 3 loans by specific loan loss
allowances was reasonable at about 70% at Tinkoff and Homecredit,
and a higher 94% at OTP.

Homecredit and OTP showed almost zero loan growth in 1H19 and Fitch
does not expect them to grow more rapidly than the sector. In
contrast, Tinkoff's loans grew by a high 42% in 1H19 and according
to management will grow by a further 15% in 2H19. However, this is
likely to moderate in 2020. In Fitch's view, the bank's strong
earnings, suspended dividend payments and the recent capital
increase should help alleviate pressures on capitalisation stemming
from rapid loan growth, and provide a buffer against potential
asset quality risks.

So far moderate credit losses supported the banks' profitability.
Homecredit demonstrated strong results with return on average
equity (ROAE) of 27% in 1H19 helped by low loan impairment charges
(LICs; below 2% of average loans in 1H19) due to recoveries on
written off loans, which Fitch does not consider to be sustainable.
ROAE at OTP stood at a lower 11% due to higher LICs (5% of average
loans, annualised) and weaker cost-to-income at over 60%. OTP's
weaker cost efficiency partly reflects operating expenses borne by
the bank in relation to loans that are booked on the balance sheet
of the sister microfinance company, OTP Finance.

Fitch considers Tinkoff's profitability as its rating strength. The
bank recorded ROAE of 64% in 1H19 and 75% in 2018. Tinkoff's
results were driven by its wide net interest margin (22% in 1H19
compared with 14% at Homecredit and 11% at OTP) and growing
non-interest income (net fee and insurance income, which made up
23% of 1H19 operating income). Fitch estimated that the bank's
pre-impairment profit was sufficient to withstand an increase in
annual credit losses to over 20% before break even, compared with
around 10% at Homecredit and OTP.

The regulatory consolidated CET1 ratio stood at a reasonable 10.7%
at Homecredit, 12.5% at OTP and a lower 8.3% at Tinkoff. Its
assessment of Tinkoff's capitalisation takes into account the
bank's strong profitability, which allows it to generate
significant amounts of capital internally. Additionally, in July
2019 TCS Group Holding, Tinkoff's holding company listed on the
London Stock Exchange, raised USD300 million (RUB20 billion
equivalent) of equity in an SPO. This will increase the bank
regulatory capital ratios by about 130bps, when proceeds from the
SPO are invested by TCS Group Holding into the bank (by end-2019,
according to the management).

Fitch estimates that the introduced higher risk-weights for retail
loans will largely be offset by internal capital generation at all
three banks. OTP additionally benefits from its solid capital
buffers over regulatory minimums.

There are some contingent risks at Homecredit stemming from a
sizeable 1.5x double leverage at the holding company level (Home
Credit Group B.V.) at end-1H19 (defined as the equity investments
in subsidiaries divided by holdco equity), which may decrease if
the holding company manages to raise new capital via planned
initial public offering. Additionally, Fitch believes the risks are
moderate as Homecredit's holdco seems to have good market access
and is likely to be able to refinance the debt without needing to
upstream liquidity/capital from the bank.

OTP's capital position is somewhat undermined by a sizeable RUB5.5
billion (0.2x FCC) unsecured exposure to OTP Finance. Fitch also
takes into consideration the contingent risk of capital and
liquidity being upstreamed from the bank to support this company,
as their parent, OTP Bank Plc, sees both entities as a single
business unit.

The three banks' reasonable funding and liquidity positions are
underpinned by low reliance on wholesale debt, comfortable
liquidity (at Tinkoff and OTP) and the benefits of ordinary support
(at OTP). All banks are mainly funded by retail customer accounts
(ranging from 55% of liabilities at OTP to 91% at Homecredit at
end-1H19), which are in its view price sensitive, but have proven
to be relatively sticky through the cycle, as they are mostly
covered by the deposit insurance system. Liquidity buffers are
sound at Tinkoff and OTP, covering 33% and 28% of their customer
accounts at end-1H19. OTP's liquidity position is additionally
supported by an unused credit line from the parent (RUB8 billion at
end-1H19, 8% of total customer accounts). Homecredit's liquidity is
tighter, with a liquidity buffer equal to just 16% of customer
accounts.

Tinkoff's and Homecredit's Support Ratings of '5' and Support
Rating Floors of 'No Floor' reflect Fitch's view that support from
either the banks' shareholders or the Russian authorities, although
possible, could not be relied upon in all circumstances due to the
banks' small sizes and lack of overall systemic importance.

SENIOR UNSECURED AND SUBORDINATED DEBT RATINGS

Tinkoff's senior unsecured debt is rated in line with its Long-Term
Local Currency IDR reflecting Fitch's view of average recovery
prospects, in case of default.

Tinkoff's perpetual additional Tier 1 notes are rated at 'B-', four
notches below the bank's VR. The notching reflects (i) higher loss
severity relative to senior unsecured creditors; and (ii)
non-performance risk due to the option to cancel coupon payments at
Tinkoff's discretion. The latter is more likely if the capital
ratios fall in the capital buffer zone, although this risk is
reasonably mitigated by Tinkoff's stable financial profile and
general policy of maintaining decent headroom over minimum capital
ratios.

RATING SENSITIVITIES

A further upgrade of Tinkoff's ratings is unlikely due to its
sizable exposure to the vulnerable unsecured consumer lending.
Upside for Homecredit's ratings and OTP's VR is currently limited
and would require a prolonged record of low credit losses through
the cycle and stable profitability, while maintaining adequate
capital buffers. Diversification of the banks' business models and
earnings structure would also be credit positive.

All banks' VRs may come under pressure if there is renewed pressure
on banks' asset quality and profitability, leading to capital
erosion.

OTP's IDRs are sensitive to changes in Fitch's assessment of OTP
Bank Plc's propensity and ability to provide support to the Russian
subsidiary.

Tinkoff's senior unsecured debt ratings will likely move in tandem
with the bank's Long-Term Local-Currency IDR. A change in Tinkoff's
VR will not automatically trigger a change in the rating of
additional Tier 1 notes, which will depend on Fitch's assessment of
loss severity and the notes' non-performance risk relative to the
VR at that point.




===============
S L O V E N I A
===============

ADRIA AIRWAYS: Nov. 10 Bid Submission Deadline for Airline
----------------------------------------------------------
Iskra Pavlova at SeeNews reports that the bankruptcy trustee of
Slovenia's flag carrier Adria Airways, Janez Pustaticnik, said on
Oct. 10 he launched a tender for the sale of the company's property
and property rights.

According to SeeNews, Mr. Pustaticnik said in a public invitation
interested bidders can submit their bids by Nov. 10, indicating the
price they are offering for the assets and the terms of payment.

Bidders can file offers for all or part of the company's assets,
SeeNews states.

                        About Adria Airways

Adria Airways d.o.o. was the flag carrier of Slovenia operating
scheduled and charter services to European destinations.  The
airline was founded in 1961.  It became Slovenia's national air
carrier in 1992, which made the government the major shareholder.
In 2016, the airline was privatized, and about 96% of its shares
were acquired by a Luxembourg-based restructuring fund 4K Invest.

In recent years, Adria Airways has been affected overcapacity,
harsh competition, and high fuel prices.  In early 2019, the
airline shut down operations from Germany to London, Vienna and
Zurich.  By the last week of September, it grounded more flights
due to lack of funds.

On October 2, 2019, the commercial court in the Slovenian city of
Kranj launched bankruptcy proceedings at Adria Airways, acting on a
Sept. 30 motion filed by the airline's management.  The court
appointed Janez Pustaticnik as bankruptcy receiver.  Creditors
should declare their claims against the airline by January 3,
2020.




=========
S P A I N
=========

CODERE APUESTOS: S&P Lowers ICR to 'B-', Outlook Negative
---------------------------------------------------------
S&P Global Ratings placed Spanish gaming company Codere Apuestos on
CreditWatch with negative implications on potential refinancing
difficulties resulting from the devaluation of the Argentine peso
and developments regarding government policy and capital controls.

S&P is now lowering to 'B-' from 'B' its issuer credit rating on
Codere as well as the issue ratings on its EUR500 million and $300
million senior secured notes.

The downgrade follows Codere's recent announcement that it has
found reporting inconsistencies at some of its Latin American
subsidiaries, predominantly in Mexico.

S&P said, "We believe this heightens the uncertainty regarding
Codere's future operating performance and therefore the risks
around refinancing its EUR500 million and $300 million senior
secured facilities, which mature on Nov. 1, 2021. Although we
understand that the company aims to start the refinancing process
no later than when it reports its audited full-year results in Q1
2020, we see a risk that this process will take longer than we
first anticipated. As a result, we have revised our capital
structure assessment on Codere to negative from neutral.

"In order to reflect the reporting irregularities, we have also
revised down our management and governance assessment for Codere to
weak from fair. That said, we note that the irregularities have
been identified by internal control procedures and the company has
appointed an independent external advisor to undertake forensic
analysis and expects an outcome in the next eight-to-10 weeks. The
company aims to identify the source of the inconsistencies and
ensure these remain an isolated case. At the current level this
revision does not change our rating on Codere.

"Our base case is that Codere will report about EUR205
million-EUR215 million of unadjusted EBITDA in 2019, causing our
adjusted leverage to remain at around 4.2x. Our EBITDA forecast is
about EUR20 million lower than previously anticipated due to the
reporting correction, in line with the company's preliminary
expectation.

"We expect operating cash flows will be negative in 2019 and 2020
because of weakening economic conditions, further peso
depreciation, capital controls and limitations on cash flow
repatriation for foreign companies in Argentina, and the weaker
results in Mexico. In 2018, Codere generated EUR45 million in
unleveraged free operating cash flow (FOCF) in Argentina and it
estimates that it will generate EUR25 million-EUR30 million in
2019, both on a company reported basis. We understand that the
company has undertaken some transactions to repatriate cash to
Europe, however in our forecast we conservatively estimate that
Codere will face limitations repatriating cash. In our base case,
we assume that the company will not be able to repatriate
Argentinean cash flows in Q4 2019 and 2020. Instead, it will use
the cash in Argentina to extend licenses extensions in 2020 and pay
for other operating needs.

"Our rating on Codere incorporates the current lack of hedging
against the risk of currency fluctuations stemming from its
exposure to Latin American markets. Even though it has a solid
liquidity cushion of about EUR70 million in cash (of which EUR5
million-EUR6 million is held in Argentine banks) and a EUR63
million undrawn revolving credit facility (RCF), the lack of
hedging puts pressure on our profitability and cash flow generation
forecasts.

"We could lower the ratings in the next 12 months if Codere does
not refinance its November 2021 notes or if liquidity comes under
pressure.

"We could downgrade Codere if the recent negative news and the
adverse macroeconomic conditions in Argentina prevent the company
from refinancing its notes in the next 12 months. We could also
lower the ratings if profitability materially deteriorates as a
result of further reporting inconsistencies or operational
setbacks, leading to sustainably negative FOCF. In such a scenario,
we may reconsider the sustainability of Codere's capital
structure.

"We could revise the outlook stable if Codere refinances its 2021
notes in the next 12 months and FOCF generation is about neutral."

An upgrade would depend on Codere's ability to offset the drop in
EBITDA and cash flows from Argentina by improving performance in
the other countries in which it operates, while ensuring that its
financial reporting complies with accounting standards. This would
result in S&P Global Ratings-adjusted debt to EBITDA remaining
below 4x and enable Codere to generate positive FOCF.




===========
T U R K E Y
===========

EMLAK KONUT: Fitch Affirms BB- LongTerm IDRs, Outlook Negative
--------------------------------------------------------------
Fitch Ratings affirmed Turkish residential developer Emlak Konut
Gayrimenkul Yatirim Ortakligi A.S.'s Long-Term Foreign- and
Local-Currency Issuer Default Ratings at 'BB-'. The Outlooks are
Negative, reflecting that on Turkey's sovereign IDR of
'BB-'/Negative.

The affirmation reflects Emlak Konut's revenue-sharing model (RSM),
which generates guaranteed income and a share of upside gains and
passes nearly all design, building, financing and marketing risks
to developers. Emlak Konut holds a competitive advantage owing to
links to its controlling shareholder, Housing Development
Administration of Turkey, known as TOKI.

In addition, the company holds a substantial land bank, mainly in
Turkey's largest city, Istanbul, and maintains relatively
conservative financial metrics. The company is exposed to volatile
housing demand and prices, as well as regulatory and political
risks.

KEY RATING DRIVERS

Deteriorating Operating Environment: Fitch downgraded Turkey's
Long-Term Foreign Currency IDR in July 2019. This led to the
downgrade of Emlak Konut's IDR, reflecting the company's direct and
indirect links to TOKI and exposure to the challenging operating
environment of Turkey. The sovereign downgrade largely related to
concerns over the dismissal of the central bank governor, which
increased doubts about the government's tolerance for a period of
slow growth and disinflation that Fitch considers consistent with a
rebalancing and stabilisation of the economy. Significant
uncertainties remain, particularly around economic recovery and
policy implementation, as well as inflation.

RSM Secures Revenue: Emlak Konut generates most of its EBITDA
through its low-risk RSM, which passes virtually all project
development risk - including design, build, finance, marketing and
sales - to contractors. Emlak Konut only contributes land to
projects. The contractor must provide Emlak Konut a minimum revenue
that must equal or exceed the value of the land and must be paid
even if returns fall below expectations. If the project revenue
exceeds the minimum revenue amount, which is typically the case,
the surplus is shared by a ratio agreed at the time of the tender.

Emlak Konut supervises projects and collects and distributes all
project cash flows, including the contractor's revenue share at
defined milestones.

Weak Housing Market: Economic weakness is weighing on the housing
market as sales in Turkey fell more than 25% year on year in the
first seven months of 2019. In Istanbul, the fall was 18%. Building
permits were also down sharply. The RSM shields Emlak Konut from
much of this market volatility, at least in the short term, and
Emlak Konut can use such incentives as instalment payment
programmes and discounts to continue to entice buyers. The
government has also shown a willingness to support the sector.

While these help stabilise cash flows, the weak market is beginning
to affect operations as some projects have been cancelled or
delayed, which will reduce projected revenues and profits over time
and could make it more difficult to attract contractors to bid on
projects.

Turnkey Projects Expected to Decrease. The company sometimes
develops its own projects, only passing building risk to
contractors. These turnkey projects, which are lower margin, are
usually carried out outside Istanbul in an effort to boost demand
in a developing area, which will enable Emlak Konut to use its RSM
in the future. While RSM typically generates the majority of Emlak
Konut's income, turnkey projects are expected to generate about 38%
of revenue in 2019. From 2020, however, turnkey revenue will be
limited. EBITDA margins should then return to above 50%.

Relations with TOKI Paramount: Emlak Konut's access to large,
attractive parcels of land provides a significant advantage over
other developers, particularly in Istanbul, where housing demand is
high and significant land plots are limited and expensive. A
deterioration in relations with TOKI could significantly affect
company operations, but the mutually beneficial arrangement
minimises this risk. Emlak Konut's access to land sustains the
company's business model, while dividend payments and land receipts
help TOKI, which does not receive any public money, fund its own
development programme.

Significant Land Bank: The land bank remains significant with 25
plots covering about three million square metres with a value of
about TRY3.9 billion as at end-1H19. More than 90% of the land by
value is in and around Istanbul. The land bank ensures the company
will continue to have the ability to develop projects to sustain
operations. The favourable locations mean demand for Emlak Konut's
projects from contractors and consumers should remain. Emlak Konut
is under no obligation to buy any land and can return any plots to
TOKI for an updated value at any point.

Exposure to Contractor Performance: Contractors hold virtually all
development risks under Emlak Konut's RSM, which exposes the
company to contractor failure. The company mitigates this risk
through a two-stage bidding process that is designed to ensure that
only financially viable companies win tenders. Bidders must meet
financial and technical requirements to move to the second round of
bids, at which point they must propose estimated project values and
revenue-sharing. The preferred bidder must provide a down payment
of about 10% of the minimum revenue and a guarantee of about 6% of
Emlak Konut's guaranteed revenue. There have been no project
failures to date.

Increased Leverage: As expected, Emlak Konut's funds from operation
(FFO) gross leverage increased to 2.3x in 2018 from 1.1x in 2017,
as the company used short-term term debt to finance land
acquisitions. Fitch expects the company to further increase debt in
the coming years with Fitch-calculated gross leverage to peak at
about 3.4x in by 2020. Liquidity remains a concern owing to
significant swings in working capital, and the short-term nature of
debt and dividend payments, which, after a hiatus in 2017, were
TRY644 million in 2018.

DERIVATION SUMMARY

Although registered as a real estate and investment trust, Emlak
Konut operates more like a homebuilder. Nevertheless, its business
model differs from rated homebuilders. The majority of the
company's revenue is typically generated through its RSM, which
passes nearly all development, marketing and sales risks to private
contractors, whereas homebuilders normally pass only construction
risk to contractors. Emlak Konut also receives guaranteed minimum
revenue, regardless of the success of the project, as well as a
defined share of any upside gains. Emlak Konut does not fund any
building costs, only contributing land to projects, which it
purchases from TOKI. It is responsible for overseeing the projects
and controlling project cash flow.

The company's relationship with TOKI is unique. While a competitive
advantage, material changes in the relationship with TOKI would
significantly alter Emlak Konut's business model and competitive
position. Nevertheless, the company could become a typical home
developer using its turnkey model and exploiting its land bank.

Emlak Konut has noticeably higher EBITDA margins of 37%, although
margins are historically above 50%, than Miller Homes Group
Holdings plc (BB-/Stable; 19%) and CONSUS Real Estate AG (B/Stable;
27%). FFO adjusted gross leverage of 2.3x is better than Russian
homebuilder PJSC LSR Group (B+/Stable) with 3.7x as at end-2018 and
much lower than the 6.0x for Germany-based CONSUS, but is weaker
than 1.6x of Russia's PJSC PIK Group (BB-/Stable).

KEY ASSUMPTIONS

  - Sustainable EBITDA margin above 30% for the forecasted period.

  - Fitch adjusted leverage expected to slightly increase to 2.4x
on average.

  - Continued negative free cash flow (FCF).

  - Stable dividend policy averaging 50% of net income.

RATING SENSITIVITIES

Developments that May, Individually or Collectively, Lead to
Positive Rating Action

  -- Business and geographical diversification reducing the
     inherent risk of the Turkish housing market.

  -- Consistently strong GDP growth, along with political
     stabilisation.

  -- Unless the developments take place, Fitch does not expect an
     upgrade to the rating, as Emlak Konut's operations are
     exclusively in Turkey and that both the Turkish sovereign
     rating of 'BB-' and the domestic operating environment
     will constrain the rating.

Developments that May, Individually or Collectively, Lead to
Negative Rating Action

  -- Deterioration of the operating environment and downgrade
     of the sovereign rating.

  -- Negative rating actions may be considered if there is
     sustained erosion of profit due either to weak housing
     activity, meaningful and continued loss of market share,
     and/or land, resulting in margin contraction and weakened
     credit metrics, including net debt to capitalisation above
     50% on a sustained basis (YTD 2019: 65%).

-- FFO adjusted gross leverage above 3.5x on a sustained basis

-- Gross debt-to-work-in-progress (WIP) ratio consistently
    above 50% (end-2018: 47%).

-- Any material change in the relationship with TOKI causing
    deterioration in the financial profile and financial
    flexibility of Emlak Konut.

-- Deterioration in liquidity profile over a sustained period.

-- Order backlog to WIP below 150% over a sustained period
    (end-2018: 2x).

-- EBITDA margin below 30% for a sustained period (YE2018: 37%).

LIQUIDITY AND DEBT STRUCTURE

Emlak Konut increased its debt in 2018, mainly by issuing one-year
rent certificates in the second half of the year totalling TRY587
million. The certificates are short-term, asset-based sukuk
instruments that are listed on the Istanbul exchange and can be
traded in the secondary market. The certificates have tax
advantages, diversify the investor base and were issued at
competitive rates, the most recent at about 15%. The company issued
another TRY778 million in the first half of the year.

Emlak Konut's debt maturity profile is short-term, reflecting the
challenges of the domestic banking market. The availability of
long-term financing is increasingly limited and expensive. This is
common among Turkish corporates but exposes the company to systemic
liquidity risk and results in a weak liquidity ratio of below 1.0x,
with available cash of TRY494 million as at YE2018, against
Fitch-adjusted short-term debt of about TRY1 billion and forecast
negative FCF. The company has access to liquidity lines, but these
are not formally committed, which is typical of the Turkish
market.


GLOBAL LIMAN: Fitch Lowers Rating on $250MM Sr. Unsec. Notes to B+
------------------------------------------------------------------
Fitch Ratings downgraded Global Liman Isletmeleri A.S.'s USD250
million senior unsecured notes due 2021 to 'B+' from 'BB-'/Negative
and placed them on Rating Watch Negative.

RATING RATIONALE

The downgrade considers the higher-than-expected leverage profile
of the group, which comprises GLI and its parent company Global
Ports Holding (GPH), in a context of increasing capex plan, large
bullet maturity with associated refinancing risk and limited
visibility on future capital structure due to significant risks of
M&A activity in 2019/2020.

The RWN reflects uncertainty about the impact on consolidated
leverage stemming from the addition to the group portfolio of
Nassau Cruise Terminal that was announced on October 10, 2019. The
management plans to invest USD250 million over the next two years
to expand capacity and make other enhancements at Nassau terminal
in partnership with the Bahamanian Investment Fund.

In July 2019, GPH announced a strategic review of its portfolio of
commercial and cruise ports, including the potential sale of
certain assets as well as strategic investments and partnerships.
Fitch will monitor this possible refocus of the business and any
change in its capital structure to assess the impact it may have on
the group's credit profile.

GPH operates 16 cruise ports and two commercial ports in nine
countries. The rating analysis focuses on the consolidated credit
profile of the group.

KEY RATING DRIVERS

GLI's rating reflects structural exposure to two business segments:
the commercial segment (about 60% of 2018 segmental EBITDA) with
significant exposure to the containerised export of marble from
Akdeniz, and the cruise segment (about 40% of EBITDA). Fitch views
the Turkish commercial segment as sensitive to business cycles and
the cruise segment as sensitive to geopolitical events and
discretionary spending.

Concentration Risk, Volatile Business - Revenue Risk (Volume):
Weaker

Port Akdeniz, an export-driven port with exposure to containerised
marble exports to China, accounts for about 54% of total EBITDA.
Most of the port's volume is export-driven, though GPH is working
to diversify revenue at this port. The cruise segment is driven by
tourism, a sector which is sensitive to business cycles.

Some Flexibility, Low Visibility - Revenue Risk (Price): Midrange

GPH's Turkish ports benefit from full pricing flexibility, in both
the commercial and cruise segments. Turkish laws, including those
by the Turkish Competition Authority, only prevent 'excessive and
discriminatory pricing', for which there is no history of
enforcement. GPH's management typically favours short-term
contracts with its customers, including incentives at times.

Sufficient Capacity - Infrastructure Development and Renewal:
Stronger

Most of the ports within GPH's portfolio have sufficient capacity
headroom to deliver the expected throughput. Significant capex is
expected at Nassau, although not yet included in its forecast.
Otherwise, capex requirements tend to be moderate. In its view,
GPH's investment plan is adequate, and the group has a record of
delivering capex in its port network.

Bullet Debt, Refinancing Risk - Debt Structure: Weaker

Rated debt consists of a USD250 million senior unsecured
corporate-style bond issued by GLI, maturing in 2021. GLI's
concentrated maturity profile creates refinancing risk.
Furthermore, this bond does not benefit from significant covenant
protection, apart from the restrictions imposed on the raising of
additional indebtedness if gross debt/EBITDA exceeds 5x and the
limitation of distributions at 50% of cumulated net income. There
are no current limitations on acquisitions at GPH.

Financial Profile

Fitch's five-year forecast rating case net debt/EBITDAR averages
3.8x, rising above 4.0x in 2020 and remaining at 3.8x in 2021 ahead
of the refinancing date of the bullet maturity. The rating case has
more conservative assumptions on revenue and EBITDA growth compared
with the management forecast, and it includes some assumed M&A in
2019 and 2020. The higher leverage is also due to weaker
performance in the commercial segment in 1H19 not being fully
offset by the growing cruise segment, and slightly higher
consolidated group debt.

Fitch rates GLI's bonds based on GPH's consolidated credit profile.
This approach considers GPH's extensive strategic, operational and
financial control over its subsidiaries, lack of tight ring fencing
features in most of its operating companies (except the Creuers
ports that are funded with project finance-like debt).

PEER GROUP

Mersin Uluslararasi Liman Isletmeciligi (Mersin International Port
- MIP; BB-/Negative) is a Turkish peer, with an unsecured corporate
debt structure, but lacking M&A risk and lower leverage (Gross debt
to EBITDA averages about 2.2x). MIP has a more diversified
commercial revenue than GLI and a strong operational sponsor,
though it is also exposed to refinance risk. MIP is capped at
Turkey's Country Ceiling.

Global Ports Investments PLC (BB+/Stable) has a midrange debt
structure with less volume concentration and similar leverage with
an average rating case forecast of 3.1x. It also has a dominant
position in the region, which is more comparable to that of MIP
than GPH.

LLC DeloPort (BB-/Stable) is also a close peer as it also has a
'weaker' volume risk assessment, although GPH has arguably more
volume concentration than DeloPorts, at least in its commercial
segment. DeloPorts has a relatively low leverage but it is exposed
to market risk and, like GPH, has concentrated exposure to one
commodity (grain).

RATING SENSITIVITIES

Its analysis to solve the RWN will focus on group re-leveraging
following the Nassau acquisition. Fitch-adjusted leverage
consistently above 4.5x under the Fitch rating case could be rating
negative.

Furthermore:

Future Developments That May, Individually or Collectively, Lead to
Negative Rating Action:

Failure to prefund GPH's debt well in advance of its maturity or
make substantial progress towards refinancing the 2021 bullet
maturity

Future Developments That May, Individually or Collectively, Lead to
Positive Rating Action

Fitch-adjusted leverage consistently below 3.5x under the Fitch
rating case

Refinancing of the bullet maturity

Significant changes to GLI's asset portfolio, substantially
reducing dependence on its Turkish assets

TRANSACTION SUMMARY

GPH operates 16 cruise ports and two commercial ports in nine
countries. Three of these ports are based in Turkey (Port Akdeniz,
Ege Ports and Bodrum). Over 60% of group EBITDA was generated in
Turkey in 2018 and 1H19.

CREDIT UPDATE

1H19:

Group performance in 1H19 was marginally weaker than the same
period last year, with group revenue down by 3.4% to USD54.6
million (1H18: USD56.6 million) and adjusted EBITDA down by 3.5% to
USD34.8 million (1H18: USD36.1 million) with underlying profit
falling by 92.4% to USD0.9 million and a loss after tax of USD15.8
million, the latter was driven largely by negative FX movements.
Segmental EBITDA was down by 3.1% to USD39.1 million. Strong Cruise
EBITDA growth of 14.3% to USD16.8 million was offset by a decline
in Commercial EBITDA of 13.1% to USD22.3 million.

In the cruise segment, Ege Port and Valletta grew particularly
strongly. In the commercial segment, Port Akdeniz was affected by
global macro-economic factors in the period, leading, in
particular, to a decline in marble and cement volumes.

FY18:

Group revenue increased by 7.2% in FY18 to USD124.8 million. The
increase was driven by the revenue performance at both GPH's cruise
and commercial segments, as well as the favourable foreign-exchange
moves in the year. Commercial operations performed well in the
year, delivering revenue growth of 5.8% to USD69.9 million. This
revenue growth came despite a 9.2% decline in general & bulk cargo
volumes and a 5.1% decline in container volumes in the year.

Cruise: The cruise business reported an increase in consolidated
and managed portfolio passenger volumes of 8.8% to 4.4 million
passengers. Cruise revenue grew by 9.2% in the year to USD54.9
million from USD50.3 million in 2017. This growth was primarily
driven by the strong performance at Creuers (Barcelona and Malaga).
Creuers reported a 5.1% growth in passenger volumes, with a
favourable passenger mix between turnaround and transit, driving a
15.3% increase in revenue in the year. Cruise revenue was also
bolstered by the first time contribution of GPH's management
agreement in Havana.

FINANCIAL ANALYSIS

Fitch's base case assumes revenue and EBITDA CAGR growth of 4.4%
and 3.9% in 2019-2023, respectively. In the rating case, Fitch
forecasts a revenue and EBITDA CAGR of 3.2% and 2.3%, respectively,
with stronger growth expected from the cruise segment than the
commercial segment. Capex is assumed to be in line with management
case and does not yet include the full impact of the Nassau
acquisition. The projected Fitch-adjusted five-year average
leverage is 3.4x in Fitch's base case and 3.8x in Fitch's rating
case.

Additional bids not yet closed may add to the portfolio in 2020.
Fitch has not included transactions that have not closed in its
forecast, though Fitch has assumed some moderate M&A activity.




===========================
U N I T E D   K I N G D O M
===========================

MOTO VENTURES: Fitch Affirms 'B' Issuer Default Rating
------------------------------------------------------
Fitch Ratings has affirmed UK-based operator of motorway service
areas Moto Ventures Limited's Issuer Default Rating at 'B' with a
Stable Outlook. Fitch has affirmed the rating for the GBP150
million Second Lien Secured Bonds issued by Moto Finance plc at
'B+'/'RR3'.

The rating affirmation reflects Moto's stable operations evidenced
in steady earnings and operating cash flow, supported by the
management's strong execution skills with high budgeting accuracy
reinforcing its assumptions of sensibly revised performance targets
and effective cost-control measures. The rating headroom, however,
is limited, due to Moto's high leverage and high shareholder
remuneration policy. Overall Fitch expects the balance between the
business and financial risk factors to remain steady, translating
into FFO adjusted leverage at or below 7.5x between 2019 and 2022.

KEY RATING DRIVERS

Stable Operations: The 'B' IDR is fundamentally supported by Moto's
intrinsically stable business model, given its exposure to less
discretionary motorway travel retail - although still linked to GDP
and traffic volumes; the largest national network of MSAs;
favourable regulatory environment; and well-managed franchise
portfolio. The stable operating risk profile is evident in the
history of steadily improving EBITDA and margins and its
expectations of an accelerating Fitch-defined EBITDA margin
improving to 14.6% by 2022 from 13.1% in 2018, supported by the
medium-term asset-development plan around existing and new sites.

Fuel Volumes Fall: Fitch does not expect any improvement in
aggregate fuel volumes in 2020, but believes Moto will be able to
marginally increase margin per litre and should be able to broadly
preserve fuel gross margin. While fuel gross margin (26% of total
gross profit) has been maintained in 2019 due to increased margin
per litre, fuel volumes have fallen by around 5%. This is due to a
combination of factors including increased vehicle fuel efficiency,
hybridisation, careful consumer spending and Brexit-related
uncertainty.

Moto's gross margin improvement should come from its growing
investment in catering amenities, which it operates under
franchises from retailers, such as Greggs, Burger King, WH Smith.
Fitch thinks gross margin improvement should be achievable due to
better labour scheduling, despite growing wage inflation in the
UK.

Moderate Execution Risks: Fitch regards the execution risks
embedded in the current medium-term corporate development plans as
moderate. To date, the company's management has delivered on its
targets with high budgeting accuracy allowing us to evaluate its
medium-term performance goals as overall defensible and
deliverable. Moto is exposed to sales cannibalisation from new
catering business on other food retail operators on its sites, yet
the evidence to date suggests that management's prediction of sales
cannibalisation has been adequate.

In addition, Fitch expects non-fuel revenue growth in the period
ending December 2019 (FY19) to be in low single-digits, driven by
catering and amusements, and compensated by weaker revenue from the
M&S franchise and other retail sales; however, the better mix and
continued effort in productivity improvement are contributing to
steady profitability. Fitch has slightly lowered its forecast for
Moto's long-term sales growth (after 2020) and earnings because of
Moto's inability to obtain planning approval for a new site in
Doncaster, England, along with other already delayed investment
projects on other sites, such as Rugby.

Persistently High Leverage: Fitch forecasts that leverage will rise
to 7.5x in 2020 when capex spending will peak, and then reduce to
below 7x by end-2021. In its rating case, Fitch has allowed for
expansion capex related to the development of the Rugby site. Other
delayed investment projects, together with fuel volume decreases,
would compress free cash flow (FCF) generation, resulting in
leverage staying high over the rating horizon.

Despite the projected two years of high leverage and tight leverage
headroom, Fitch maintains the Stable Outlook in the context of
Moto's overall balanced approach between investments in asset
productivity and financial debt incurrence. The management's
reasonable planning and return on investment expectations should
reduce the risk of deeper or prolonged higher leverage. However,
leverage will remain among the most critical drivers for the
rating.

High Shareholder Remuneration: As long as the company is not
deprived of capital to implement its medium-term development plan
and is not otherwise liquidity constrained, Fitch would not view
regular dividend payments as a fundamental negative rating factor.
However, Fitch regards high shareholder distributions of GBP40
million-GBP60 million a year, back-stopped by the lock-up tests, as
credit-dilutive, leading to permanently negative FCF ranging
between GBP20 million and GBP30 million a year. However, dividend
pay-outs could be slowed or stopped if Moto's performance weakens
or stagnates, despite the implementation of the group's development
capex.

Quasi-Infrastructure Asset: Fitch continues to view Moto's business
model as characterised by its intrinsically stable operating cash
flow generation and low underlying capital maintenance needs, which
support the group's credit profile. Meanwhile, capital expenditure
will be covered by drawdowns under the capex facility, which Fitch
projects could be almost fully drawn by March 2022 when this
facility matures.

DERIVATION SUMMARY

Moto's rating of 'B'/Stable reflects an infrastructure-like
business profile and operations in a regulated market with high
barriers to entry and limited competitive pressures. Moto's
performance was resilient through the cycle, reflecting the
less-discretionary nature of motorway customers.

Moto operates a differentiated business model compared to petrol
station operator EG Group Limited (B/Stable). EG Group is, however,
more exposed than Moto to fuel volume declines for its key European
markets. Both companies rely on their non-fuel operations to drive
margin improvement. The financial profiles of both groups have
similar high leverage over the rating horizon. Moto is positioned
on more strategic (and protected) motorway locations, but its
rating is constrained by its smaller scale and concentrated
geographic footprint with a UK-only presence. Both groups have
pursued aggressive financial policies that influence their ratings;
in the case of Moto this is reflected in regular dividend
distributions (albeit allowed by the lock-up mechanism in debt
documentation and partly covered by FCF), whereas EG Group has
followed an aggressive debt-funded M&A strategy that relies on
synergies' realisation to ensure long-term deleveraging.

KEY ASSUMPTIONS

  - Revenue growth of between 1% and 2% a year between 2020 and
2022

  - EBITDA margin gradually improving to above 14.5% by 2021,
driven by capital investments

  - Capex in line with the investment programme (adjusted for the
aborted new site at Doncaster), supported by drawdowns under the
capex facility

  - Shareholder distributions aligned with lock-up testsFitch's Key
Assumptions for the Recovery Analysis:

According to its bespoke recovery analysis, higher recoveries would
be realised using a going-concern approach, despite Moto's strong
asset backing. Better recovery expectations by preserving the
business model, as opposed to liquidating its balance sheet,
reflect Moto's structurally cash-generative business and
well-managed franchise portfolio. Fitch has assumed a 10%
administrative claim.

Fitch applies an EBITDA discount of 18% to its expected FY19 EBITDA
(previously 15%) leading to a post-distress EBITDA estimate of
around GBP87 million, unchanged from its previous analysis. The
unchanged post-distress EBITDA reflects the fairly stable
through-the-cycle nature of the business. Fitch maintains the 7.5x
EV/EBITDA multiple in distress given the infrastructure-like,
regulated nature of Moto's business.

The notes rank behind a sizeable amount of GBP510 million of
first-lien bank debt - this includes GBP450 million term loan B,
Moto's GBP10 million RCF assumed fully drawn and around GBP50
million assumed drawn under its capex facility (versus GBP31
million drawn by FYE18). Its waterfall analysis generated a ranked
recovery in the 'RR3' band, indicating a 'B+' instrument rating for
the GBP150 million second lien notes. The waterfall analysis output
percentage on current assumptions remains unchanged at 51% in the
low-end of the RR3 category (51%-70%).

The output percentage and hence recovery rating on the second lien
debt is sensitive to even small movements in the assumptions
related to underlying going concern EBITDA estimate and changes in
first-lien drawn debt.

In accordance with Fitch's policies the issuer appealed and
provided additional information to Fitch that resulted in a rating
action that is different than the original rating committee
outcome.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - Positive and sustained post-dividend FCF generation supported
by steadily improving profitability and earnings-accretive
expansion programme;

  - Decline in FFO adjusted leverage to 6.0x or below on a
sustained basis;

  - FFO fixed-charge coverage of 3.0x or higher on a sustained
basis.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - Weak implementation of the capital investment programme and
higher reduction in gross margins reflected in stagnant or
declining EBITDA of GBP100 million or less on a sustained basis;

  - An increasingly aggressive financial policy translating into
FFO adjusted leverage increasing to above 7.5x on a sustained
basis;

  - FFO fixed-charge coverage weakening to below 2.0x on a
sustained basis.

LIQUIDITY AND DEBT STRUCTURE

Satisfactory Liquidity: After shareholder distributions, Fitch
estimates Moto's unrestricted cash balance at GBP20 million-GBP30
million. Fitch views such liquidity levels as satisfactory for the
company to execute its business plan as it has access to the
undrawn portion of its GBP100 million capex facility. Fitch
excludes GBP5 million as restricted cash in transit and tills.
Fitch projects the committed RCF of GBP10 million to remain undrawn
throughout the forecast period to 2022.

SUMMARY OF FINANCIAL ADJUSTMENTS

  - GBP5 million deducted from reported cash treated as restricted
cash kept in transit and tills

  - Operating leases capitalised at 8x (given the company's
location in the UK)


NEPTUNE ENERGY: Fitch Assigns BB(EXP) Rating to New Unsec. Notes
----------------------------------------------------------------
Fitch Ratings assigned Neptune Energy Bondco Plc's upcoming notes
an expected senior unsecured 'BB(EXP)' rating. The final rating is
contingent upon the receipt of final documentation conforming
materially to information already received and details regarding
the amount and tenor.

The issuer is a direct subsidiary of Neptune Energy Group Midco
Limited (Neptune; BB/Stable), which will guarantee the notes on a
senior unsecured basis.

Neptune is a private, medium-scale exploration and production (E&P)
oil and gas producer. The company's portfolio is predominantly
natural gas, including the production of LNG, with assets mainly in
Europe as well as Indonesia, Algeria and Egypt. It is domiciled in
the UK and the core of its asset base is upstream assets that were
disposed of by Engie S.A. (A/Stable) in early 2018 (ENGIE E&P
International S.A., or EPI).

KEY RATING DRIVERS

Recent Acquisitions Credit-Positive: Neptune's announced
acquisition of Edison E&P's UK and Norwegian upstream assets for
USD250 million and earlier announced acquisitions in Indonesia for
USD177 million should enable it to increase production relative to
its previous base case and will help improve its reserve life.
Fitch expects Neptune's credit metrics to remain comfortably below
its guidance for negative rating action; overall Fitch views the
transactions as credit-positive. Fitch assumes that Neptune will
continue to resort to selective bolt-on acquisitions to maintain
its production profile and to increase reserves.

Reserve Life Lower than Peers: Neptune's 1P reserve life improved
to seven years in 2018 from six years in 2017 on organic additions
and acquisitions. Its 2P reserve life improved to 11 years from
nine years. However, even taking into account the recent
acquisitions, its reserve life is likely to remain lower than many
of its peers (median 1P reserve life for Fitch-rated 'B' and 'BB'
names is 11 years). At an absolute level, Neptune's proved reserves
correspond to the lower range of the interval Fitch views as
appropriate for producers in the 'BB' rating category. This is
mitigated by Neptune's low leverage, which gives it the flexibility
to intensify exploration, capex and resort to acquisitions without
putting its financial profile under stress.

Diversified Asset Base: Fitch assesses the company's reserve base
as fairly diversified and in line with the 'BB' rating. In 2018,
its largest project (Gjoa & Vega fields in Norway) contributed 20%
of total production, and its three largest assets accounted for
45%. Neptune's diversification across assets and countries
decreases its exposure to potential technical issues and country
risks.

Conservative Financial Policies: Fitch views Neptune's financial
policy as conservative. In line with the shareholder agreement, the
company aims to maintain net debt to EBITDA below 1.5x, with
temporary deviations allowed to accommodate possible acquisitions.
According to its base case, Neptune's funds from operations (FFO)
adjusted net leverage will average 2.0x in 2019-2021, a fairly
conservative level and lower than that of Kosmos Energy Ltd
(B+/Stable) and Southwestern Energy Company (BB/Stable).

Decommissioning Obligations Tax-Deductible: Neptune's
decommissioning obligations are relatively high at USD1.5 billion,
or USD3.7/boe of 1P reserves. This compares with Kosmos's
USD0.9/boe. However, most of Neptune's decommissioning obligations
are long-term and are in Norway, where they are tax-deductible at
78%. Fitch expects that Neptune's decommissioning expenses will be
moderate and will only have a limited impact on the company's cash
flow generation. Fitch includes expenses associated with
decommissioning obligations (USD50 million a year) in its rating
case by deducting them from FFO.

Weak Natural Gas Prices: Since the beginning of 2019, natural gas
prices in Europe have declined significantly to USD4.7/mcf in 9M19
from USD8.1/mcf in 9M18. This has mainly been the result of
green-field LNG plants ramping up in the US, Russia and elsewhere
and slower-than-expected demand growth in China. Fitch believes
that natural gas prices in Europe are likely remain depressed in
the next one to two years, but the market should gradually
re-balance as incremental demand in China, India and other
countries will absorb the growing LNG production.

Neptune's revenue is reasonably diversified by pricing mechanisms
as some of its gas sales are pegged to oil. The share of natural
gas, including LNG, is around 70% of Neptune's portfolio, but its
revenue is broadly 50/50 exposed to spot oil and natural gas
prices. However, consistently weak European natural gas prices
(e.g. significantly below USD5/mcf - which is not its base case
scenario) could weaken the company's financial profile.

Tax Payer in Norway: The company's effective tax rate was high at
71% in 2018. This was the result of its tax-paying position in
Norway, where the marginal tax rate for oil companies is 78%. While
the Norwegian tax system allows for generous deductions (e.g. for
exploration and decommissioning), Fitch assumes that Neptune will
continue to pay significant taxes, and these accounts for most of
the difference between the company's EBITDA and its operating cash
flow.

Standalone Rating: Fitch rates Neptune on a standalone basis and do
not incorporate any support potentially available from the
company's shareholders, state-owned China Investment Corporation
(49%), The Carlyle Group (30%) and CVC Capital Partners (20%). At
the same time, Fitch believes that the presence of strong
shareholders with good access to funding and stated commitment to
Neptune's conservative financial policies supports the rating.

DERIVATION SUMMARY

Neptune's level of production (162 thousand barrels of oil
equivalent a day (kboepd) in 2018) is comparable to that of Murphy
Oil Corporation (BB+/Stable; 172kboepd) and higher than that of
Kosmos (51kboepd). The company's proved reserve life (seven years)
is lower than that of its peers, although this is mitigated by
Neptune's conservative financial leverage. Fitch expects Neptune's
FFO adjusted net leverage to average 2.0x in 2019-2022, lower than
that of Kosmos and broadly in line with that of Murphy Oil.
Neptune's 'BB' rating is also supported by its focus on countries
with strong operating environments.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - Oil price deck: USD65/bbl in 2019, USD62.5/bbl in 2020,
USD60/bbl in 2021, and USD57.5/bbl in 2022

  - NBP natural gas prices: USD4.75/mcf in 2019, USD5.5/mcf in
2020, USD6.0/mcf in 2021 and USD6.5/mcf in 2022

  - Upstream production averaging around 165kboepd over 2019-2022
plus around 15kboepd coming from the Touat project (accounted for
as an equity affiliate)

  - Capex averaging USD800 million in 2019-2022

  - Dividends averaging USD200 million in 2019-2022

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - Improvement in the business profile, including the proved
reserve life sustained above eight years, coupled with maintaining
a conservative financial profile (FFO adjusted net leverage below
2.5x)

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - FFO adjusted net leverage consistently above 3.5x (average for
2019-2022: 2.0x)

  - Large debt-funded acquisitions

  - Falling 1P reserve life and/or absolute level of proved
reserves

  - Consistently negative FCF after dividends

  - Delays at the largest projects leading to cost overruns and
falling production

  - Prior-ranking debt to FFO consistently above 2x may indicate
worsened recovery prospects for senior unsecured creditors and
could trigger a downgrade of the senior unsecured rating. Fitch
expects this ratio to remain below 1.5x based on its projects.

LIQUIDITY AND DEBT STRUCTURE

Strong Liquidity: At June 30, 2019, Neptune had USD1,581 million of
balance sheet debt. The company's only scheduled maturity over the
next five years is the USD200 million Touat project finance debt
and the USD100 million shareholder loan, both due in 2024. At June
30, 2019, Neptune had approximately USD1.4 billion of liquidity,
which is more than sufficient to pay for the announced acquisitions
(around USD425 million in total). The upcoming bond should further
improve Neptune's liquidity position.


NEPTUNE ENERGY: Moody's Hikes Rating on $550MM Unsec. Notes to B1
-----------------------------------------------------------------
Moody's Investors Service, upgraded the rating assigned to Neptune
Energy Bondco Plc's $550 million senior unsecured notes due 2025 to
B1 from B2 and assigned a B1 rating to its proposed issuance of
$500 million senior unsecured notes due 2026. Concurrently, Moody's
affirmed the Ba3 Corporate Family Rating and Ba3-PD Probability of
Default Rating of Neptune Energy Group Midco Limited. The outlook
remains positive.

RATINGS RATIONALE

The upgrade of the rating assigned to Neptune Energy Bondco Plc's
senior unsecured notes to B1 from B2 and narrowing of the rating
differential between the notes and the CFR to one notch compared
with two notches previously reflects the fact that following the
issuance of the new $500 million senior unsecured notes, the
priority claim held by the RBL lenders will reduce in proportion to
the group's enlarged asset base and total financial liabilities.

However, the B1 rating assigned to Neptune Energy Bondco Plc's
senior unsecured notes (including the proposed issuance), which are
guaranteed by some of the operating subsidiaries, continues to
reflect that the notes are subordinated to all existing and future
senior obligations of those guarantors, including their obligations
under the RBL facility. In addition, the notes are structurally
subordinated to all existing and future obligations and other
liabilities (including trade payables) of Neptune's subsidiaries
that are not guarantors.

The Ba3 CFR reflects the robust operating track-record established
by Neptune since its $3.3 billion acquisition of the oil and gas
(EPI) business of ENGIE SA (A3 stable) in February 2018, as well as
Moody's expectation that the group's financial leverage will remain
moderate following the completion of the acquisition it recently
announced in Indonesia and the acquisition announcement of Edison
E&P's UK and Norwegian assets the North Sea.

Since the EPI acquisition, Neptune has markedly strengthened its
reserve position with 2P reserves of 638 mmboe at the end of 2018
compared to 555 mmboe at the end of 2017. In addition, Moody's
expects that supported by the recent acquisitions, Neptune's 2P
reserves will increase further.

Following the EPI acquisition in February 2018, Neptune has
generated annualised Moody's adjusted EBITDA of around $1.95
billion, producing around 157 thousand barrels of oil equivalent
per day (kboepd) on average during the period. Moody's estimates
that between February 15, 2018 and the end of 2019, the group will
have generated a cumulative free cash flow (FCF) of around $200
million after capex of $1.3 billion and dividends of $580 million.
Driven by the recent announcements, Moody's now expects Neptune to
increase its production to around 200 thousand barrels of oil
equivalent in 2020 from 148.5 thousand barrels in H1 2019.

Despite spending around $1 billion in 2019 (including 2019 capex
for recent Indonesia and North Sea deals) and high capital
expenditures of around $1.1 billion in 2020, Moody's estimates that
the Moody's adjusted gross leverage pro forma recent acquisitions
will remain relatively low at around 2.0x at the end of 2019 and
2.6x at the end of 2020 compared with 1.1x in the last twelve
months to June 2019.

RATING OUTLOOK

The positive outlook reflects the improved business profile
following the recently announced acquisition with a material
improvement in reserves life and production scale. Despite higher
Moody's adjusted gross leverage of 2.6x forecasted in 2020 as a
result of the cash consideration for the acquisitions and
associated higher capital expenditures, Neptune is well positioned
to improve its financial profile in 2021 thereby potentially
meeting Moody's quantitative upgrade guidance for a Ba2 rating.

ESG CONSIDERATIONS

Environmental considerations are a material factor in this rating
action. However, given the relatively early-cycle asset portfolio
of Neptune, Moody's does not expect environmental issues (including
decommissioning liabilities) to have a significant adverse effect
on the operating and financial performance in the next few years.
While cash outlays related to decommissioning obligations are
projected to increase going into the mid-2020, this should be
partly offset in the UK by $1.2 billion in tax relief.

Neptune is owned by three main shareholders China Investment
Corporation (49%), Carlyle Group (31%) and CVC Capital Partners
(20%), which contributed combined equity of $2 billion towards the
financing of the EPI acquisition in February 2018. The shareholders
agreement sets a conservative long-term leverage target for
reported net debt to EBITDA not to exceed 1.5x. On the back of
strong operating results, Neptune paid a $380 million dividend to
its shareholders in late 2018.

LIQUIDITY

Neptune has an adequate liquidity profile. At the end of June 2019,
it had unrestricted cash balances of $138 million and
availabilities of around $1.3 billion under its RBL facility with a
borrowing base amount of $1.99 billion following the March 2019
redetermination.

Pro-forma recent acquisitions and the proposed issuance of a $500
million bond, Moody's estimates that the group will have available
liquidity of around $1.0 billion at the end of 2019, including
around $670 million under the RBL facility. However, owing to high
capital expenditures next year, Moody's expects the group to be FCF
negative at around $400 million in 2020 which will lower Neptune's
available liquidity and could require the company to draw more
under its RBL facility.

STRUCTURAL CONSIDERATIONS

The B1 rating assigned to Neptune Energy Bondco Plc's senior
unsecured notes (including the proposed issuance), which is
guaranteed by some of the operating subsidiaries, reflects the fact
that the notes are senior subordinated obligations of the
respective guarantors and subordinated to all existing and future
senior obligations of those guarantors, including their obligations
under the RBL facility. In addition, the notes are structurally
subordinated to all existing and future obligations and other
liabilities (including trade payables) of Neptune's subsidiaries
that are not guarantors. The narrowing of the rating differential
between the notes and the CFR to one notch against two notches
previously reflects the smaller priority claim held by the RBL
lenders in proportion to the group's enlarged asset base.

However, there is a risk of higher subordination should Neptune
upsize the RBL (the RBL has an accordion feature for an increased
to up to $4bn) but Moody's doesn't expect the company to materially
upsize the RBL although Neptune could increase the RBL drawdown
slightly in 2020 due to the expected negative FCF.

WHAT COULD CHANGE THE RATING - UP

The ratings could be upgraded if the company delivers the expected
improvement in terms of its production profile and 2P reserve life,
while lowering adjusted total debt to EBITDA below 2.5x and
retained cash flow (RCF) to total debt above 30% on a sustainable
basis.

WHAT COULD CHANGE THE RATING - DOWN

The ratings could be downgraded should the production profile
and/or reserve life of the company significantly deteriorate. The
rating would also come under pressure should the group generate
sustained negative FCF leading to adjusted total debt to EBITDA
rising above 3.5x and/or RCF to total debt falling below 20%.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.

CORPORATE PROFILE

Headquartered in London (UK), Neptune Energy Group Midco Ltd.
(Neptune) is the holding company of a medium-sized independent
exploration and production oil and gas group, with hydrocarbon
resources located mainly in the Norwegian, UK and Dutch sectors of
the North Sea (70% of total 2P reserves of 638 mmboe) as well as in
Germany, North Africa (Egypt and Algeria) and the Asia Pacific
region (Indonesia, Australia).

In the twelve months to June 30, 2019, Neptune reported average
production of 153.8 kboepd split between natural gas (including
LNG) for 71% and liquids for 29%. It generated revenues of $2.7
billion and EBITDAX of $2.0 billion.


NEPTUNE ENERGY: S&P Affirms 'BB-' ICR on Announced Acquisitions
---------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' issuer credit rating on
Neptune Energy Group Midco Ltd. (Neptune) and the 'BB-' issue
rating on its $550 million notes. S&P also assigned its 'BB-'
rating to the proposed $500 million notes due 2026.

The affirmation follows the company's recent announcements of
several acquisitions, including assets in the North Sea, Indonesia,
and Germany. These acquisitions should increase proved and probable
(2P) reserves, extending the reserve life and providing organic
expansion opportunities in the future. Although these will
strengthen the business, credit metrics will weaken such that the
company's reported net debt to EBITDA could increase above 1.5x in
2020, translating into S&P Global Ratings-adjusted FFO to debt of
below 25%.

The increased reserve base should support increasing production in
the next few years, such that it moves closer to Neptune's target
of about 200,000 barrels of oil per day (boepd) by 2022. In the
first half (H1) of 2019, production was about 150,000 boepd and S&P
expects about 150,000-155,000 for 2019. This should translate into
adjusted EBITDA (before subtracting exploration expenses) of $1.6
billion-$1.7 billion and free operating cash flow (FOCF) close to
$150 million-$250 million. That said, S&P expects lower realized
prices in 2020, which will likely cause a drop in EBITDA, while
substantial capex plans (including acquisitions-related capex) will
push FOCF into negative territory.

S&P expects substantial capex will help to maintain reserves thanks
to organic additions. Neptune already has a successful track record
of converting its resources into reserves: in 2018, the company's
organic reserve additions exceeded its yearly production. Although
S&P expects a more muted organic expansion this year, it forecasts
that Neptune's continuous focus on capital expenditure (capex) and
exploration will likely result in further organic reserve expansion
in the next few years.

Neptune plans to fund the announced acquisitions and related capex
with debt, which could push net debt to EBITDA above the financial
policy's 1.5x guidance (equivalent to our adjusted FFO-to-debt
ratio decreasing below 25%) in 2020. This compares to a
debt-to-EBITDA ratio of about 0.75x at H1 2019. That said, the
company has the ability to decrease dividends and capex to bring
leverage back within the financial policy guidance. The company has
preserved leverage below this level in the past, although this is
not a requirement for any of its debt instruments. In addition, the
company continues to hedge production, with 50%/30%/15% of
production hedged for 12/24/36 months ahead. This would provide
certain cash flow protection if prices were to decline.

Neptune plans to issue a $500 million bond to support funding of
the acquisitions. This will help to preserve access to liquidity
through the $2 billion reserve based lending (RBL) facility. The
capital structure will therefore comprise the following
instruments:

  -- $2 billion RBL facility due 2024 (S&P expects at least $600
     million of availability after the acquisitions);

   -- $550 million senior notes due 2025;

   -- Proposed $500 senior notes due 2026;

   -- $111 million vendor loan note from Engie due 2024; and

   -- $233 million project finance facility for the Touat gas
      project in Algeria.

S&P said, "We add approximately $1.5 billion of adjustments,
including asset retirement obligations, pensions, and leases. Our
adjusted debt is also on a gross basis, before cash deduction, in
line with our approach for companies owned by financial sponsors.
We expect adjusted debt of about $4 billion-$4.1 billion in 2019,
increasing to $4.2 billion-$4.4 billion in 2020.

"At the same time, our financial policy assessment constrains
Neptune's financial risk profile. This stems from the partial
ownership by financial sponsors, which we normally view as being
more aggressive than other types of investors. Thanks to strong
historical FOCF, the company has paid dividends, and we understand
it plans to do so again in the future to demonstrate track record
to equity markets before a potential initial public offering. That
said, we continue to expect dividend reductions during times of
stress to preserve low leverage. Further financial risk upside will
depend on the evolution of the shareholder base toward at least
partial public ownership.

"The positive outlook reflects the likelihood of an upgrade, which
could materialize if Neptune demonstrates commitment to its
financial policy of net debt to EBITDA of below 1.5x. In our base
case, we forecast a temporary weakening in credit metrics above
this level in 2020, although the company can flex its dividends and
capex such that reported net debt to EBITDA does not go materially
above 1.5x, in accordance with the shareholder agreement. We expect
FFO to debt of about 20%-25% in 2020, which should remain
commensurate with the current rating; a higher rating would be
dependent upon stronger metrics.

"We could upgrade Neptune in the coming six to 12 months if the
company continues to strengthen its business through a combination
of organic projects and merger and acquisition activity that does
not result in steeply increased debt (such that FFO to debt remains
comfortably above 25%). An upgrade to 'BB' would also likely depend
on Neptune's proved (1P) reserve life index increasing closer to 10
years, with the company demonstrating strong commitment to its
financial policy.

"We could revise the outlook to stable in the coming 12 months if
Neptune deviates from its financial policy and increases leverage
so that FFO to debt remains at about 20%. A major economic shock,
lowering demand for natural gas in Europe and resulting in
sustainably lower prices, could also lead us to revise the outlook
to stable."


PREMIER FOODS: Fitch Withdraws 'B' LongTerm Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings affirmed Premier Foods plc's Long-Term Issuer Default
Rating at 'B' with Stable Outlook and senior unsecured rating of
Premier Foods Finance plc at 'B'/RR4. Fitch has also simultaneously
withdrawn the ratings and will no longer provide ratings or
analytical coverage of the company.

The rating reflects the company's high leverage, small scale
relative to global packaged food companies and limited
diversification by customer and geography. However, the rating is
supported by Premier Foods' good market position in its key product
categories in the UK and innovation efforts, which in its view will
support growth in sales of its brands over the medium term.

The Stable Outlook is based on its expectation that Premier Foods
will improve its rating headroom over FY20-FY23 (year ending March)
due to generation of positive free cash flow (FCF) and focus on
deleveraging. Brexit remains a risk factor and the robustness of
the company's contingency plan is yet to be proven if this risk
materialises.

Fitch has chosen to withdraw the ratings of Premier Foods for
commercial reasons.

KEY RATING DRIVERS

Innovation Critical for Sales Growth: Premier Foods' business model
remains sustainable, as expressed by the company's market
leadership in its product categories and high brand awareness among
UK households. Innovation and marketing are essential to keep
Premier Foods' products appealing to consumers as the UK packaged
food market is being shaped by increasing demand for healthy and
nutritious products, convenience of consumption and gastronomic
indulgences. Fitch believes that the company should be able to
support growth of its brand portfolio through new product launches
and repositioning, as proven by the rejuvenation of its major brand
Mr. Kipling in FY19, resulting in 12% growth in its sales.

Brexit Risks: Premier Foods primarily supplies the UK market (FY19:
93.5% of sales), which exposes it to the risks connected to Brexit,
including weakening of consumer sentiment, supply chain disruptions
and input cost increases. The company has developed a contingency
plan, built up stocks of raw materials and finished goods, and made
minor amendments to its internal trading model in Europe
(principally the Republic of Ireland), but these measures may be
insufficient to fully isolate it from potential business
disruptions.

Conservative EBITDA Margin Assumptions: Fitch conservatively
assumes Premier Foods' EBITDA margin will deteriorate to below 16%
by FY23 after improving to 17.3% in FY19 (FY18: 16.8%). Its
forecast takes into account higher marketing expenses to support
sales of the group's core brands and leaves some room for potential
adverse consequences of UK leaving the EU on 31 October 2019.

Expected Deleveraging: Fitch projects a reduction of funds from
operations (FFO) adjusted net leverage towards 5.0x by FY23 after
it temporarily increased to 6.0x in FY19, touching the level of its
negative rating sensitivity, due to one-off charges related to
logistics transformation. In the absence of major restructuring
programmes and thanks to stable operating cash flows, Fitch expects
Premier Foods to continue reducing its net debt and improve
headroom under its 'B' rating. Fitch also assumes no dividends and
M&A in the medium term as the company is focused on deleveraging.

High Customer Concentration: The rating takes into account customer
concentration risks as Premier Foods generates more than half of
its sales (FY19: 58%) from the four largest retailers in the UK:
Tesco PLC (BBB-/Stable), Asda, Sainsbury's and Morrisons. These
retailers exercise considerable bargaining power over suppliers,
including Premier Foods, and may shift the burden of margin
pressure to them if consumer sentiment deteriorates and competition
in UK food retail were to intensify. At the same time, the blocked
merger between Sainsbury's and Asda is positive for Premier Foods
as it helped avoid a further increase in customer concentration.

Large Pension Liabilities: Premier Foods maintains large
liabilities under its pension schemes relative to the scale of its
business. Sizeable annual pension contributions negatively impact
FFO adjusted net leverage and constrain the company's FCF
generation. Increase in pension contributions above its current
estimate of GBP45 million-GBP50 million (FY19: GBP41.9 million) per
year could slow down the projected deleveraging pace, while any
hypothetical increase in RHM pension scheme's share in security
package (currently GBP450 million) could worsen recovery prospects
for senior secured creditors.

Unclear Outcome of the Strategic Review: In February 2019, Premier
Foods decided to conduct a review of its strategic options
following pressure from activist investors. The rating does not
incorporate any potential changes in Premier Foods' strategy as
Fitch would considers their impact on the company's credit profile
only after the strategic review is completed. In its view,
disposals of low-growth brands are the most likely way to increase
shareholder value but the business transformation could be
complicated by unattractive valuations of these assets and Premier
Foods' large pension liabilities.

DERIVATION SUMMARY

Premier Foods is substantially smaller and less diversified by
product and geography than global packaged food companies, such as
Nestle SA (AA-/Negative), Mondelez International, Inc.
(BBB/Stable/F2) and The Kraft Heinz Company (BBB-/Negative). Its
rating is one notch lower that of international margarine leader
Sigma HoldCo BV (B+/Stable), previously owned by Unilever NV/PLC,
which is more diversified by geography and has a higher operating
margin but also has negative FCF generation (even though Fitch
expects FCF to turn positive and grow over time) and is largely
concentrated in one product category.

No Country Ceiling, parent-subsidiary linkage or operating
environment aspects were in effect for Premier Foods' ratings.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - Top line growth of 1.7% in FY20, 2.4% per year from FY21 to
FY23.

  - EBITDA margin progressively deteriorating from 17.3% in FY19
to
    15.8% in FY23 due to higher marketing expenses in order to
sustain
    innovation efforts.

  - Pension contributions not exceeding GBP45 million-GBP50
million
    per year

  - Restructuring charges not exceeding GBP3 million per year

  - Capex stable at GBP25 million per year

  - No M&A

  - No dividends

  - No payment from Hovis Holdings Limited under the loan note

KEY RECOVERY RATING ASSUMPTIONS

The recovery analysis assumes that Premier Foods would be
considered a going-concern in bankruptcy and that the company would
be reorganised rather than liquidated. Fitch has assumed a 10%
administrative claim.

Premier Foods' going-concern EBITDA of GBP100 million is 30% below
FY19 EBITDA of GBP143 million and reflects Fitch's view of a
sustainable, post-reorganisation EBITDA level, upon which Fitch
bases the valuation of the company. This EBITDA discount reflects
challenging conditions in the UK, the company's reliance on a
single country and customer concentration risks, which are
partially offset by a portfolio of well-known brands. An EV/EBITDA
multiple of 5x is used to calculate a post-reorganisation valuation
and reflects a mid-cycle multiple.

In the debt waterfall, Fitch includes GBP30 million drawn under the
group's receivables financing agreement, ranking senior to the rest
of the debt. GBP177 million revolving credit facility is assumed to
be fully drawn upon default. The debt waterfall also includes RHM
pension scheme's share in security package of GBP450 million
ranking equally with GBP300 million fixed and GBP210 million
floating senior secured notes.

Its waterfall analysis generates a ranked recovery for the senior
secured notes in the 'RR4' band, indicating a 'B' instrument rating
for the issued bonds. The waterfall analysis output percentage on
current metrics and assumptions is 38%. The senior secured notes
are therefore rated in line with Premier Foods' IDR of 'B'.

RATING SENSITIVITIES

Not applicable as the rating has been withdrawn.

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity: At FYE19, Premier Foods' liquidity was
supported by Fitch-adjusted unrestricted cash balances of GBP13
million, GBP177 million undrawn committed revolving credit facility
(RCF) due in 2022 and expected positive FCF in FY20. This was
sufficient to cover Fitch-adjusted short-term debt, which included
GBP30 million drawn under the receivables financing agreement (even
though this debt self-liquidates with factored receivables). As
Premier Foods' floating and fixed notes are only due in 2022-2023
and the group maintains adequate headroom under its covenants,
Fitch assesses the liquidity as comfortable and refinancing risk as
manageable.


RESIDENTIAL MORTGAGE 31: S&P Assigns 'CCC' Rating on X1 Notes
-------------------------------------------------------------
S&P Global Ratings raised its credit ratings on Residential
Mortgage Securities 31 PLC's (RMS 31) class D-Dfrd, and E-Dfrd
notes. At the same time, S&P has affirmed its ratings on all other
classes of notes.

S&P said, "The rating actions follow the implementation of our
revised criteria for assessing pools of residential loans. They
also reflect our full analysis of the most recent transaction
information that we have received and the transaction's structural
features as of August 2019.

"Upon republishing our global RMBS criteria following the extension
of the criteria's scope to include the U.K., we placed our ratings
on the class B-Dfrd to F1-Dfrd notes under criteria observation.
Following our review of the transaction's performance and the
application of our republished global RMBS criteria, our ratings on
these notes are no longer under criteria observation.

"After applying our updated residential loans criteria, the overall
effect in our credit analysis results is a decrease in the
weighted-average foreclosure frequency (WAFF) at high rating levels
due to the higher seasoning benefit, and the loan-to-value (LTV)
ratio we used for our foreclosure frequency analysis, which now
reflects 80% of the original LTV ratio and 20% of the current LTV
ratio. The WAFF has increased at lower rating levels due to our
arrears adjustment and because we now apply the originator
adjustment at the pool level as opposed to the loan level. Both of
these elements have a stronger negative effect at lower rating
levels under our updated criteria.

"Our weighted-average loss severity assumptions have decreased at
all rating levels due to a reduction in the current LTV ratio and
our revised jumbo valuation thresholds."

  WAFF And WALS Analysis
  Rating level   WAFF (%)   WALS (%)   Expected credit loss (%)
  AAA            47.23      30.09      14.21
  AA             41.77      22.41      9.36
  A              38.29      11.12      4.26
  BBB            34.37      6.32       2.17
  BB             30.16      4.04       1.22
  B              29.09      2.61       0.76

The lower expected losses combined with a slight increase in
available credit enhancement allows the class C-Dfrd, D-Dfrd, and
E-Dfrd notes to pass our stresses at higher rating levels compared
to closing. S&P said, "We have not given full benefit to the
modeling results in our rating decision to account for the
transaction performing worse than our U.K. nonconforming index in a
stable economic environment and for the high proportion (65%) of
interest-only loans. Interest-only loans expose the transaction to
back-loaded risks to which junior tranches would be most
sensitive."

S&P said, "Following our credit and cash flow analysis, we have
affirmed our ratings on the class A, B-Dfrd, C-Dfrd, and F1-dfrd
notes at 'AAA (sf)', 'AA+ (sf)', 'AA (sf)', and 'BB (sf)',
respectively. Although the B-Dfrd notes achieve a higher rating
output under our cash flow analysis, the presence of the interest
deferral mechanism is not commensurate with an extremely strong
capacity for the issuer to meet its financial obligations in line
with our 'AAA' rating definition.

"We have also affirmed our 'CCC (sf)' rating on the X1-Dfrd notes.
These notes are not supported by any subordination or the general
reserve fund and rely entirely on excess spread. In our analysis,
they are unable to withstand the stresses we apply at our 'B'
rating level. Consequently, we consider that the notes have a
one-in-two chance of default and that they rely on favorable
business conditions to redeem. We have therefore affirmed our 'CCC
(sf)' rating on this class of notes.

"Finally, we have upgraded the class D-Dfrd notes to 'AA- (sf)',
and the class E-Dfrd notes to 'A (sf)'. Although these notes
achieve a higher output under our cash flow analysis, we have
considered their lower credit enhancement compared with the senior
notes and their sensitivity to the factors mentioned previously."

Since closing, performance has remained stable, albeit with
persistent high levels of delinquencies compared to peer
transactions. Total and severe delinquencies (including
repossessions) are 31.08% and 20.04%, respectively. This compares
with 12% (total delinquencies) and 6.1% (greater than 90 days past
due) for S&P's U.K. nonconforming index.

S&P's credit stability analysis indicated that the maximum
projected deterioration that it would expect at each rating level
over one- and three-year periods, under moderate stress conditions,
is in line with our credit stability criteria.

The transaction bank account (Citibank N.A., London Branch), and
the collection bank account (Barclays Bank UK PLC)are in line with
our counterparty criteria.

RMS 31 is a securitization of a pool of buy-to-let and
owner-occupied residential mortgage loans to nonconforming
borrowers, secured on properties in England, Scotland, Wales, and
Northern Ireland.

  Ratings List

  Residential Mortgage Securities 31 PLC

  Class     Rating to     Rating from
  A         AAA (sf)      AAA (sf)
  B-Dfrd    AA+ (sf)      AA+ (sf)
  C-Dfrd    AA (sf)       AA (sf)
  D-Dfrd    AA- (sf)      A+ (sf)
  E-Dfrd    A (sf)        BBB+ (sf)
  F1-Dfrd   BB (sf)       BB (sf)
  X1-Dfrd   CCC (sf)      CCC (sf)


THOMAS COOK: Former Chief Executive Defends Record Pay
------------------------------------------------------
Alistair Smout at Reuters reports that Peter Fankhauser, the former
chief executive of bankrupt travel firm Thomas Cook, on Oct. 15
said he understood public anger over his pay but defended his
record, saying he had worked tirelessly to try and save the
company.

Appearing before a British parliamentary committee, Mr. Fankhauser
again apologized to customers, staff and suppliers for the firm's
collapse but did not say if he would hand back any of his pay,
Reuters relates.

Asked about his salary, Mr. Fankhauser, as cited by Reuters, said
he did not set his own pay or decide his bonus.

According to Reuters, he told the committee "I fully understand the
sentiment in the public. However, what I can say to that is that I
worked tirelessly for the success of this company and I'm deeply
sorry that I was not able to secure the deal."

He said that a GBP750,000 (US$949,950) bonus he was paid in 2017
could theoretically be clawed back, but 30% was paid in shares
which were now worthless, Reuters notes.

Mr. Fankhauser said that his efforts to transform the company on
his appointment in 2014 had been constrained by its debts, and that
responsibility for the collapse was shared between multiple parties
who tried, and failed, to agree a restructuring plan, Reuters
relates.

                  About Thomas Cook Group

Thomas Cook Group Plc is the ultimate holding company of direct and
indirect subsidiaries, which operate the Thomas Cook leisure travel
business around the world.  TCG was formed in 2007 following the
merger between Thomas Cook AG and MyTravel Group plc.
Headquartered in London, the Group's key markets are the UK,
Germany and Northern Europe.  The Group serves 22 million customers
each year.

The Group operates from 16 countries, with a combined fleet of over
100 aircraft through five entities holding air operator
certificates in the UK, Germany, Denmark and Spain.  The Group has
2,800 owned and franchised retail outlets (including 555 shops in
the UK) and operates 199 own-brand hotels across the world.

As of Dec. 31, 2018, the Group had 21,263 employees, including
9,000 in the U.S.

The travel agent originally proposed a restructuring.  It was
scheduled to ask creditors Sept. 27, 2019, for approval of a scheme
of arrangement that involves (a) substantially deleveraging the
Group by converting GBP1.67 billion of RCF and Notes debt currently
outstanding into new shares (15%) and a subordinated PIK note (at
least GBP81 million) to be issued by the recapitalized Group in
proportions still to be agreed; and (b) the transfer of at least a
75% interest in the Group Tour Operator and an interest of up to
25% in the Group Airline to Chinese investor Fosun Tourism Group.

Representatives of the company filed a Chapter 15 petition in New
York on Sept. 16, 2019, to seek U.S. recognition of the UK
proceedings as foreign main proceeding.  The Chapter 15 case is In
re Thomas Cook Group Plc (Bankr. S.D.N.Y. Case No. 19-12984).
Latham & Watkins, LLP is the counsel.

But after last-ditch rescue talks failed, on Sept. 23, 2019, Thomas
Cook UK Plc and associated UK entities announced that they have
entered Compulsory Liquidation and are now under the control of the
Official receiver.  The UK business has ceased trading with
immediate effect and all future flights and holidays are cancelled.
All holidays and flights provided by Thomas Cook Airlines have
been cancelled and are no longer operating.  All Thomas Cook's
retail shops have also closed.  

Separate from the parent company, Thomas Cook's Indian, Chinese,
German and Nordic subsidiaries will continue to trade as normal.


WEWORK: May Run Out of Cash, Softbank Seeks Control
---------------------------------------------------
Olivia Rudgard and Hasan Chowdhury at The Telegraph report that
WeWork could run out of cash before the end of the year as it
continues to invest into new leases, risking an imminent takeover
from SoftBank that would further wrest power from former chief
executive and founder Adam Neumann.

The beleaguered office space company has been looking to secure its
future after a plan for a multi-billion dollar flotation on the
public market collapsed last month, The Telegraph discloses.

According to The Telegraph, investors had shunned the firm's
proposals to go public, raising concerns about a business model
that has seen WeWork burn through cash, as well as a corporate
governance structure that placed an unusually large amount of power
in the hands of Mr. Neumann.

WeWork, which has had its valuation slashed from US$47 billion to
US$10 billion, saw net losses for the first six months of 2019
climb to US$904 million, The Telegraph discloses.  Its British
subsidiary has more than GBP3.2 billion in lease obligations, The
Telegraph relays, citing Companies House filings.

According to The Telegraph, the Wall Street Journal reported that
the move from Japanese technology conglomerate SoftBank, which
would involve several billion dollars of new investment, is one
alternative to another proposal to raise funds through JP Morgan.

Masayoshi Son, SoftBank's enigmatic founder, has claimed to be
disappointed by the track record of his portfolio investments, but
the move to up the stake in WeWork would aim to put greater control
of the company in the Japanese firm's hands, Telegraph states.

SoftBank's Vision Fund, which roughly owns a third of the firm at
present, was one of the key backers to reportedly put pressure on
the company to shelve its initial public offering, Telegraph notes.


According to The Telegraph, a person familiar with the matter told
Reuters the loss-making operation is in need of cash if it is to
see operations continue through to next year.

The company has already missed out on a fresh injection of cash,
having lost a US$6 billion credit line arranged with banks, which
was set to be received upon the completion of a public listing, The
Telegraph relays.

A spokeswoman for WeWork said: "WeWork has retained a major Wall
Street financial institution to arrange a financing.

"Approximately 60 financing sources have signed confidentiality
agreements and are meeting with the company's management and its
bankers over the course of this past week and this coming week."

Mr. Neumann was forced to resign as chief executive after the
flotation collapsed, but he retains the role of chairman and is
still the largest individual shareholder, The Telegraph recounts.

Concerns were raised over some aspects of his management, including
borrowing more than US$700 million against his stock in the
company, and a deal that it would pay him $6 million for the use of
the word "We", an arrangement that was cancelled last month, The
Telegraph relays.

He also owns shares which have up to three times the voting power
of those owned by others, giving him outsize control over the
company, The Telegraph notes.

The proposed SoftBank deal would mean a large amount of his voting
power would shift to the Japanese firm, The Telegraph  relays,
citing the Journal.


WOODFORD EQUITY: Link Solutions Opts to Wind Up Fund
----------------------------------------------------
BBC News reports that Neil Woodford's flagship fund, Woodford
Equity Income Fund, is to be shut down -- in a major humiliation
for the UK's best-known stockpicker.

According to BBC, Mr. Woodford has also been removed as investment
manager of the fund, which will be renamed.

But investors will not get any money back until mid-January at the
earliest, BBC notes.

Withdrawals from the Woodford Equity Income Fund have been frozen
since early June, after rising numbers of investors asked for their
money to be returned, BBC recounts.

There has been criticism that in the meantime, Mr. Woodford
continued to charge management fees to customers, BBC states.

At its peak, the fund had more than GBP10 billion of people's money
in it, BBC discloses.

According to BBC, Link Fund Solutions, which runs the fund on Mr.
Woodford's behalf, said: "After careful consideration, the decision
has now been taken not to reopen the fund and instead to wind it up
as soon as practicable.  This is with a view to returning cash to
investors at the earliest opportunity."

It said attempts to sell off Mr. Woodford's investments in unlisted
businesses had "not been sufficient to allow reasonable certainty"
for when the fund would reopen, BBC relays.

Mr. Woodford, as cited by BBC, said: "This was Link's decision and
one I cannot accept, nor believe is in the long-term interests of
LF Woodford Equity Income fund investors."

The winding-up is expected to begin on Jan. 17 next year, because
rules state that there must be a notice period of at least three
months, BBC relays.


WRIGHTBUS: Rescue Deal Reached "In Principle" with Jo Bamford
-------------------------------------------------------------
Mark Sweney at The Guardian reports that Wrightbus, the Northern
Irish maker of the revived Routemaster London bus, is close to
being rescued after last-ditch talks with a suitor for the business
produced a breakthrough.

The Ballymena-based business went into administration last month
with the loss of 1,200 jobs but it was announced on Oct. 11 that a
deal had been reached "in principle" between the firm's founding
family and the industrialist Jo Bamford, The Guardian recounts.

The Wright family owns the Wrightbus factory and nearby farmland
and a failure to agree a deal for those assets had been the main
sticking point over a rescue, The Guardian notes.  According to The
Guardian, talks are ongoing between Mr. Bamford and the firm's
administrators, Deloitte.  Wrightbus had been due to go into
liquidation on Friday, Oct. 11, The Guardian notes.

"We are still to conclude a deal with the administrators but are
pleased to report this important step in the right direction. I
would like to thank Ian Paisley MP for his hard work and diligence
in helping to mediate what has at times been a tricky negotiation,"
The Guardian quotes Mr. Bamford, who is making the acquisition
through his Ryse Hydrogen company, as saying.

According to The Guardian, Mr. Paisley, the Democratic Unionist
party MP for North Antrim, said Mr. Bamford was "concluding the
final arrangements with the administrator".

Farmland close to the factory premises had been the main block in
talks between Jeff Wright, the son of the company's founder, Sir
William Wright, and Mr. Bamford, The Guardian discloses.

Mr. Wright, as cited by The Guardian, said as part of the deal he
had agreed to gift the farmland to Mid and East Antrim council to
acknowledge the contribution of Ballymena people to the Wrightbus
brand over 70 years.

                       About Wrightbus

Established in 1946 by Robert and William Wright, Wrightbus was a
Northern Ireland coachbuilder and pioneer of the low-floor bus.  

On Sept. 25, 2019, Wrightbus entered into administration with the
loss of 1,300 jobs at their factory. Among other things, Wrightbus
suffered from slow down of the UK bus market. The Ballymena-based
engineering company opted for administration when rescue talks
failed to materialize.

Deloitte UK has been appointed as administrators to the company,
along with other businesses within the group like Wrights Group,
Wright En-Drive, Wright Composites and Metallix.  Deloitte's
Michael Magnay is a joint administrator.

Wrightbus' collapse is the second significant UK insolvency in
recent weeks, following the demise of holiday group Thomas Cook.



                           *********


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-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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