/raid1/www/Hosts/bankrupt/TCREUR_Public/200423.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Thursday, April 23, 2020, Vol. 21, No. 82
Headlines
A R M E N I A
ACBA-CREDIT AGRICOLE: Fitch Alters Outlook on 'B+' LT IDR to Neg.
A Z E R B A I J A N
MORTGAGE AND CREDIT: Fitch Affirms BB+ IDRs, Alters Outlook to Neg.
B E L G I U M
LSF9 BALTA: Moody's Cuts CFR to B3, Outlook Negative
B U L G A R I A
BUSINESS PARK SOFIA: Bank Debt Trades at 16% Discount
F R A N C E
ALVEST SASU: Bank Debt Trades at 16% Discount
DRY MIX SOLUTIONS: Bank Debt Trades at 16% Discount
EUROPCAR MOBILITY: S&P Lowers Long-Term ICR to 'B-', On Watch Neg.
GYMSPA SAS: EUR10-Mil. Bank Debt Trades at 16% Discount
GYMSPA SAS: EUR13-Mil. Bank Debt Trades at 16% Discount
MALTEM CONSULTING: Bank Debt Trades at 16% Discount
SOCIETE EDITRICE DU MONDE SA: Bank Debt Trades at 16% Discount
G E R M A N Y
NORDEX SE: Moody's Affirms B3 CFR, Alters Outlook to Negative
OEP TRAFO: Bank Debt Trades at 55% Discount
TELE COLUMBUS: S&P Places 'B-' Rating On Watch Neg.
I C E L A N D
LBI EHF: Bank Debt Trades at 82% Discount
I T A L Y
AMPLIFON SPA: S&P Alters Outlook to Negative & Affirms 'BB+' ICR
ASR MEDIA: S&P Cuts LT Bond Rating to 'B+', On Watch Neg.
INTER MEDIA: S&P Cuts Bonds Rating to 'B+', On Watch Neg.
ITALIAONLINE SPA: Bank Debt Trades at 98.4% Discount
MOBY SPA: Moody's Cuts CFR to C on Missed Interest Payment
PIAGGIO AEROSPACE: Postpones Bid Deadline for Second Time
L U X E M B O U R G
ASTON FINCO SARL: Bank Debt Trades at 16% Discount
EVERGREEN SKILLS: Bank Debt Trades at 83% Discount
TRAVELPORT FINANCE: Bank Debt Trades at 62% Discount
N E T H E R L A N D S
BRIGHT BIDCO: Bank Debt Trades at 66% Discount
FUGRO NV: Fitch Withdraws 'B(EXP)' LT IDR on Cancelled Refinancing
UPC HOLDING: Fitch Affirms LT IDR at 'BB-', Outlook Negative
R U S S I A
LEXGARANT INSURANCE: S&P Affirms B+ ICR, Outlook Revised to Stable
O1 PROPERTIES: S&P Downgrades ICR to 'D' on Missed Coupon Payment
S P A I N
CIRSA ENTERPRISES: S&P Lowers ICR to 'B-', Outlook Negative
DEOLEO SA: Bank Debt Trades at 62% Discount
DEOLEO SA: Bank Debt Trades at 98.3% Discount
DURO FELGUERA: Bank Debt Trades at 66% Discount
S W E D E N
MVV INTERNATIONAL: Coronavirus Impact Prompts Bankruptcy Filing
S W I T Z E R L A N D
VERISURE HOLDING: Moody's Rates EUR150MM Sr. Secured Notes 'B1'
T U R K E Y
TURKIYE PETROL: Fitch Affirms 'BB-' LT IDR, Alters Outlook to Neg.
U N I T E D K I N G D O M
AI CONVOY: S&P Assigns 'B' Issuer Credit Rating, Outlook Negative
AI LADDER: S&P Alters Outlook to Negative & Affirms 'B' LT ICR
CIEP EPOCH: Bank Debt Trades at 82% Discount
DUNDROD AND DISTRICT: Motorcycle Club Faces Wind Up Petition
EAGLE BIDCO LTD: Bank Debt Trades at 16% Discount
MCLAREN GROUP: S&P Cuts Issuer Rating to 'CCC' on Weak Liquidity
MILLER HOMES: S&P Alters Outlook to Negative & Affirms 'B+' Rating
NMC HEALTH: KBBO Weighs Strategic Options for Business
PETRA DIAMONDS: Moody's Cuts CFR to Caa2, Outlook Negative
RUBIX GROUP: S&P Downgrades ICR to 'B-' on Weaker Credit Metrics
SEA VIEW: Enters Administration, Begbies Traynor Appointed
VALARIS PLC: Prepares to Start Bankruptcy Talks with Creditors
[*] UK: 32 Construction Companies Entered Administration in March
[*] UK: Some Charities Will Be Insolvent Within Weeks, MPs Say
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A R M E N I A
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ACBA-CREDIT AGRICOLE: Fitch Alters Outlook on 'B+' LT IDR to Neg.
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Fitch Ratings has revised the Outlooks on ACBA-Credit Agricole
CJSC's and Ardshinbank CJSC's Long-Term Issuer Default Ratings to
Negative from Stable and affirmed the IDRs at 'B+'.
The rating actions reflect the significant deterioration in the
outlook for Armenia's economy since Fitch affirmed the banks'
ratings with Stable Outlooks on March 19, 2020. Under Fitch's
baseline scenario, GDP growth will slow significantly in 2020 to
0.5%, compared with 7.5% in 2019, before recovering in 2021.
Government subsidies to priority segments and co-financing under
the coronavirus response package (equivalent to 2.3% of GDP) will
soften the economic shock, but uncertainty about the extent and the
duration of the health crisis implies material downside risks to
its baseline forecasts. Fitch recently revised the Outlook on the
sovereign rating in light of the anticipated adverse impacts of the
coronavirus outbreak.
Fitch has revised the sector outlook for Armenian banks to negative
from stable as Fitch expects that weaker business activity, lower
household incomes (due to higher unemployment and lower
remittances) and potentially greater currency volatility will
increase performance pressures and risks to banks' financial
profiles. Fitch expects regulatory forbearance measures to help
banks manage problem assets and solvency metrics in local accounts,
reducing the risk of capital breaches. However, Fitch believes
Armenian banks generally have limited flexibility to cope with the
current economic challenges given vulnerable asset quality, limited
earnings resilience and moderate regulatory capital buffers.
KEY RATING DRIVERS
Unless noted, the key rating drivers for the both banks' ratings
are those outlined in its rating action commentary published on 19
March, 2020.
The banks' IDRs are driven by their intrinsic strength, as captured
by their 'b+' Viability Ratings. The revision of the Outlooks to
Negative reflects its view of near-term pressures on the banks'
financial profiles from the economic downturn and operating
challenges resulting from the coronavirus crisis.
Fitch expects asset quality to deteriorate, in particular in the
most vulnerable lending segments such as SMEs and households, to
which both banks have sizeable exposures (a combined 75% of loans
at ACBA and 54% at Ardshin at end-2019). Government assistance to
the private sector, including SMEs and some households, will
cushion the negative impact on banks' asset quality to an extent
but not eliminate it. The depreciation of the dram has been limited
so far (by 1.2% year-to-date). However, both banks' large shares of
foreign-currency lending (30% and 50% of loans, respectively at
end-2019) heighten credit risks. Fitch expects profitability to be
constrained by slower lending, reduced client activity and higher
impairment charges, related in particular to recent retail growth
and legacy corporate exposures and foreclosed assets (the latter
notably at Ardshin). A depreciation-driven rise in risk-weighted
assets would exert additional pressure on capital.
Fitch has affirmed both banks' IDRs as Fitch assesses they have
moderate headroom to absorb some financial deterioration at their
ratings. This reflects their currently moderate levels of impaired
loans (3.5% of loans at ACBA and 6% at Ardshin at end-2019),
better-than-sector average profitability (operating profit/average
assets ratios of 2.2% and 1.9% in 2019, respectively), available
capital buffers (regulatory total capital ratios of 14.6% and
15.4%, respectively, at end-2019), and sizeable liquid assets
(equal to 26% and 45% of customer accounts, respectively, at
end-1Q20). Deposits have proven sticky, upcoming wholesale funding
maturities are manageable and the authorities have also announced
emergency liquidity support to the wider sector, in case of need.
RATING SENSITIVITIES
Unless noted, the rating sensitivities listed in the rating action
commentary referenced above continue to apply.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Both banks' ratings are most sensitive to the severity and duration
of Armenia's economic downturn that is resulting from the
coronavirus pandemic. The Negative Outlooks indicate that Fitch
would likely downgrade the banks' ratings if the sharp economic
adjustment and a delayed recovery in Armenia results in sustained
deterioration in asset quality and earnings, resulting in weaker
solvency.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Fitch would likely to revise the Outlooks to Stable if the health
crisis is contained quickly, Armenia's economy recovers sharply and
the banks are able to withstand rating pressures by maintaining
reasonable financial metrics.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
ACBA-Credit Agricole Bank CJSC
- LT IDR B+; Affirmed
- ST IDR B; Affirmed
- Viability b+; Affirmed
- Support 5; Affirmed
- Support Floor NF; Affirmed
- Senior unsecured; LT B+; Affirmed
Ardshinbank CJSC
- LT IDR B+; Affirmed
- ST IDR B; Affirmed
- Viability b+; Affirmed
- Support 5; Affirmed
- Support Floor NF; Affirmed
Dilijan Finance B.V.
- Senior unsecured; LT B+; Affirmed
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A Z E R B A I J A N
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MORTGAGE AND CREDIT: Fitch Affirms BB+ IDRs, Alters Outlook to Neg.
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Fitch Rating has revised the Outlook on Mortgage and Credit
Guarantee Fund of the Republic of Azerbaijan's Long-Term Foreign-
and Local-Currency Issuer Default Ratings to Negative from Stable
and affirmed the IDRs at 'BB+'.
The rating actions follow the revision of Azerbaijan's Outlook to
Negative from Stable, underpinned by the expected negative impact
of the combined shock from the slump in oil prices and the
coronavirus pandemic on Azerbaijan's economy.
KEY RATING DRIVERS
The revision of the fund's Outlook to Negative follows the revision
of the Outlook on the sovereign, as the fund's ratings remain
equalised with the Republic of Azerbaijan, unchanged since its last
review on February 26, 2020.
Fitch rates the fund using its Government Related Entities
criteria, applying a top-down approach, which results in the
ratings being equalised with the sovereign. This is based on its
assessment of the strength of linkage and incentive to support by
the government, which reflects the high ability and willingness of
Azerbaijan to provide support to the fund.
DERIVATION SUMMARY
The fund has a score of 50 points under GRE criteria, which
irrespective of its Standalone Credit Profile, leads to the rating
equalisation with those of the Republic of Azerbaijan.
RATING SENSITIVITIES
The main factors that could, individually or collectively, lead to
negative rating action/downgrade:
- Any further negative rating action on the Republic of
Azerbaijan will be mirrored on the fund's ratings.
- A significant dilution of the linkage with the sovereign
leading to ratings being notched down from the sovereigns could
result in downgrade.
The main factors that could, individually or collectively, lead to
positive rating action/upgrade are:
- A revision of the sovereign's Outlook back to Stable will lead
to the same rating action on the fund's ratings provided its
linkage with the sovereign remains unchanged.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Public Finance issuers have a
best-case rating upgrade scenario (defined as the 99th percentile
of rating transitions, measured in a positive direction) of three
notches over a three-year rating horizon; and a worst-case rating
downgrade scenario (defined as the 99th percentile of rating
transitions, measured in a negative direction) of three notches
over three years. The complete span of best- and worst-case
scenario credit ratings for all rating categories ranges from 'AAA'
to 'D'. Best- and worst-case scenario credit ratings are based on
historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The fund's IDRs are directly linked to the Republic of Azerbaijan's
IDRs according to Fitch's GRE rating criteria. A change in Fitch's
assessment of the credit quality of Azerbaijan would automatically
result in a change in the fund's IDRs.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
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B E L G I U M
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LSF9 BALTA: Moody's Cuts CFR to B3, Outlook Negative
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Moody's Investors Service downgraded the corporate family rating of
LSF9 Balta Issuer S.a r.l. to B3 from B2 and the probability of
default rating to B3-PD from B2-PD. At the same time, Moody's
downgraded the senior secured notes issued by Balta to Caa1 from
B2, reflecting the change in the mix of debt and the subordination
of these notes to the fully drawn senior secured revolving credit
facilities. The outlook on all ratings was maintained at negative.
Balta was already weakly positioning in the previous B2 rating
category and the operational challenges that the company will face
over the next few months due to the coronavirus outbreak will have
a significant negative impact on its financial metrics. The
negative outlook, reflects the uncertainties regarding the length
and severity of the outbreak and the challenges that Balta may face
in refinancing its near-term debt maturities.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The consumer
durables sector has been one of the sectors most significantly
affected by the shock given its sensitivity to consumer demand and
sentiment. More specifically, the weaknesses in Balta's credit
profile, including its exposure to discretionary products, have
left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions' action reflects the impact on
Balta of the breadth and severity of the shock, and the broad
deterioration in credit quality it has triggered.
Balta' credit quality was already negatively affected in 2019 from
the challenges faced in its rug segment. While this was partially
offset by the strong performance in its commercial and residential
segments, the company's profitability continued to decline. This
was largely due to unfavorable mix effects in the rugs business,
higher costs incurred in the US e-commerce segment and investments
made in its NEXT program. As a consequence, Balta's adjusted EBITDA
on a like-for-like basis declined by 7.4% despite an organic
revenue growth of 2.6%.
The current market environment is expected to result in a sharp
decline in Balta's revenue in at least the next three months due to
demand disruptions caused by the outbreak. Job losses as a result
of the coronavirus crisis could also lead to cutbacks in
discretionary consumer spending, which could lower the demand even
after the stabilization of the outbreak. The rapid decline in
revenue is expected to have a significant impact on Balta's
profitability in Q2, increasing the risk of a covenant breach in
the near term. Moody's recognizes that the company is taking
extensive measures to reduce the impact on its earnings and
liquidity. The company temporarily closed five of its production
plants and is reducing its fixed costs and capital spending. It is
difficult to assess the full impact that the current pandemic will
have on Balta performance in 2020 due to the high uncertainty of
the length and severity of the spread. It assumed a revenue decline
of around 25% in 2020 with Moody's-adjusted gross leverage expected
to increase to around 10x from 5.6x in 2019.
The B3 rating is also constrained by the company's (i) relatively
small scale and limited product and end-market diversification;
(ii) exposure to the cyclical new construction market, with
generally low revenues visibility; and (iii) some geographic and
customer concentration.
These constraints are partially offset by Balta's (i) market
leading positions in most of its products, particularly in its key
markets in Germany, UK and France; (ii) high share of renovation
and redecoration business, which tends to be less cyclical compared
to new construction; (3) long-standing relationships with its key
customers; and (4) solid manufacturing and distribution footprint,
enabling customer proximity and limiting transportation costs.
ESG CONSIDERATIONS
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Balta's operating performance is expected to be
materially impacted by the pandemic.
LIQUIDITY PROFILE
Moody's considers Balta's liquidity profile to be adequate,
although it is expected to weaken due to the disruption caused by
the outbreak. The company has access to around EUR90 million of
cash on balance sheet at the end of March 2020, including fully
drawn RCFs of $18 million and EUR61 million. The latter has one
springing net leverage covenant tested when the RCF is drawn by
more than 30%. The company also has access to non-recourse
factoring lines. Moody's believes that these sources of liquidity
should cover the seasonality of working capital and capex needs.
However, Moody's expects that the company may need to obtain an
amendment for its springing covenant in 2020. The near-term debt
maturities also pose significant risks to its liquidity profile.
Moody's expects that the company will proactively address these
upcoming maturities.
STRUCTURAL CONSIDERATIONS
Balta's debt capital structure comprises (i) outstanding EUR235
million senior secured notes due in September 2022, (ii) a EUR61
million super senior secured RCF due in September 2021, which
benefits from the same guarantor and collateral package as the
notes, and (iii) a $18 million legacy borrowing base facility in
favor of BPS Parent, Inc., the indirect parent company of Bentley,
due in January 2022. The B3-PD is at the same level as the CFR,
reflecting the use of a 50% recovery rate as is typical for
transactions including both bonds and bank debt. The senior secured
notes rated Caa1 are contractually subordinated to the RCFs (not
rated). The EUR35 million senior term loan facilities due in
September 2020 have been fully repaid in January 2020 following the
sale and leaseback of two of Balta's Belgium production plants.
RATING OUTLOOK
The negative outlook reflects the increased refinancing risks of
Balta's near-term debt maturities in a challenging market
environment and the uncertainties regarding the length and severity
of the outbreak.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be further downgraded if (i) a resolution of
upcoming debt maturities reduces its available liquidity, or
results in a distressed exchange of debt; (ii) the company's
operating performance remains under pressure with Moody's adjusted
EBIT margin sustainably below 5%; (iii) Moody's-adjusted
debt/EBITDA would sustainably exceed 6.5x; and (iv) free cash flow
remains negative for a prolonged period.
Albeit unlikely in the near term, the ratings could be upgraded if
the company (i) improves its operating performance with Moody's
adjusted EBIT margin increasing sustainably above 5%; (ii) reduces
Moody's-adjusted debt/EBITDA to below 5.5x on a sustainable basis;
and (iii) shows a track record of positive free cash flow
generation. The successful refinancing of its 2021 and 2022 debt
maturities could also put positive pressure on the ratings.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
COMPANY PROFILE
Headquartered in Sint-Baafs-Vijve, Belgium, Balta is one of the
leading manufacturers of soft-flooring products, including rugs for
the consumer home furnishing market, as well as broadloom and
carpet tiles for both the residential and commercial construction
markets. In 2019, Balta generated around EUR671 million in revenue
and EUR74 million of company adjusted EBITDA.
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B U L G A R I A
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BUSINESS PARK SOFIA: Bank Debt Trades at 16% Discount
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Participations in a syndicated loan under which Business Park Sofia
is a borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR133 million term loan is scheduled to mature on August 2,
2027. As of April 17, 2020, the full amount is drawn and
outstanding.
Business Park Sofia is the largest office park in Central and
Eastern Europe and the first of its kind in Bulgaria.
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F R A N C E
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ALVEST SASU: Bank Debt Trades at 16% Discount
---------------------------------------------
Participations in a syndicated loan under which Alvest SASU is a
borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD235 million term loan is scheduled to mature on October 26,
2024. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is France.
DRY MIX SOLUTIONS: Bank Debt Trades at 16% Discount
---------------------------------------------------
Participations in a syndicated loan under which Dry Mix Solutions
Investissements SAS is a borrower were trading in the secondary
market around 84 cents-on-the-dollar during the week ended Fri.,
April 17, 2020, according to Bloomberg's Evaluated Pricing service
data.
The EUR865 million term loan is scheduled to mature on March 15,
2024. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is France.
EUROPCAR MOBILITY: S&P Lowers Long-Term ICR to 'B-', On Watch Neg.
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S&P Global Ratings placed on CreditWatch negative its 'A (sf)'
rating on FCT Sinople Finance's senior notes. The securitization
finances Europcar's rental fleets in France, Germany, Italy, and
Spain.
On April 3, 2020, S&P lowered to 'B-' from 'BB-' and placed on
CreditWatch negative its long-term issuer credit rating (ICR) on
Europcar Mobility Group (Europcar). The CreditWatch placement
reflects the significant uncertainty arising from the potential
effects of COVID-19 on S&P's fleet liquidation assumptions and the
deterioration of Europcar's credit quality.
All of the vehicles securitized in FCT Sinople Finance are leased
to Europcar's rental car subsidiaries in France, Germany, Italy,
and Spain. These rental car subsidiaries act as both sole obligors
of the transaction and servicers of the fleets. To address the risk
of a potential obligor default under the operating leases, our
rating scenario contemplates the bankruptcy of the rental car
company and the liquidation of the fleets as the primary source of
repayment for the senior notes. In this scenario, the vehicles
continue to depreciate during and after a legal stay period until
the vehicles can be repossessed and liquidated.
S&P said, "The length of the legal stay and liquidation periods
that we consider in our rating scenario are based in part on legal
comfort provided by issuer's counsel, which we then stress to
arrive at the assigned ratings. Our combined legal stay and
liquidation period assumptions are currently 7, 9, 8, and 7 months
for France, Germany, Italy, and Spain, respectively."
The extraordinary support measures that governments have put in
place in the various jurisdictions to protect companies against the
fallout of COVID-19 may negatively affect these original analyses.
Typically, in most jurisdictions, the governments suspended the
requirement for companies to file for insolvency and restricted
creditors' ability to petition companies during various protected
periods, which might delay any potential insolvency proceedings
related to Europcar.
Furthermore, lockdown measures ordered by governments have caused a
significant slowdown of judicial activity in the four
jurisdictions. S&P understands that legal civil proceedings are
typically restricted to urgent matters and that it might be
difficult--or even impossible in certain jurisdictions--to initiate
and move forward the insolvency and repossession proceedings needed
for the liquidation of the fleets. Additionally, once the lockdown
measures are lifted, S&P does not expect the courts to quickly
resume normal judicial activity.
S&P's view of the likely extension of the legal stay periods will
differ depending on the exact timing of Europcar´s potential
default--during the lockdown, after the lockdown but before the
resuming of normal courts operation, or afterwards.
Returning vehicles to carmakers under the buyback agreements
included in the transaction constitutes a logistical challenge in a
lockdown situation. For "at risk cars", those not covered by a
buyback agreement, S&P understands that the European used car
market has almost shut down. Consequently, S&P's view on the
relevant liquidation periods might also be negatively impacted and,
as for its legal stay analysis, any revision of its conclusions
would depend on the timing of the potential default of the rental
car company.
S&P said, "Any revisions of our legal stay and liquidations
assumptions might in turn change our view on the collateral
cumulative depreciation while in the rental car company's
possession and our liquidity analysis. Regarding the latter, we
note that the transaction benefits from a liquid source of credit
enhancement, in the form of a cash reserve amounting to 3.5% of the
asset balance, which was originally sized to cover servicing fees
and interest on the rated notes during the legal stay and
liquidation period outlined above.
"Finally, the residual-value haircuts that we apply in our 'A'
rating scenario to the fleet's net book value at the expiry of the
legal stay and liquidation period--22.0% and 15.5% for highest risk
and intermediate risk vehicles, respectively--might also be
affected by the fallout of COVID-19.
"In our view, the transaction's credit quality might have declined
due to operational disruption resulting from COVID-19. We believe
this might limit the cash flows available to FCT Sinople Finance.
The CreditWatch negative placement of our rating on the senior
notes reflects the combination of Europcar's deteriorating
creditworthiness, as reflected by its lower ICR, with the
significant uncertainty arising from COVID-19 regarding the various
legal and credit assumptions that we consider in our stressed
liquidation scenario.
"Under our rental fleet methodology, should the rental car company
actually default and depending on the circumstances at that time,
we may lower the then-current ratings on the transaction by more
than one category. We expect to resolve the CreditWatch placement
once we learn more about the severity and duration of COVID-19's
effects on our legal, credit, market value, and liquidity analyses,
and the developments regarding Europcar's creditworthiness. On this
basis, we will evaluate the need to revise certain of our
assumptions."
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P said,
"Some government authorities estimate the pandemic will peak around
midyear, and we are using this assumption in assessing the economic
and credit implications. In our view, the measures adopted to
contain COVID-19 have pushed the global economy into recession. As
the situation evolves, we will update our assumptions and estimates
accordingly."
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
GYMSPA SAS: EUR10-Mil. Bank Debt Trades at 16% Discount
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Participations in a syndicated loan under which Gymspa SAS is a
borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR10 million term loan is scheduled to mature on October 20,
2023. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is France.
GYMSPA SAS: EUR13-Mil. Bank Debt Trades at 16% Discount
-------------------------------------------------------
Participations in a syndicated loan under which Gymspa SAS is a
borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR13 million term loan is scheduled to mature on October 20,
2023. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is France.
MALTEM CONSULTING: Bank Debt Trades at 16% Discount
---------------------------------------------------
Participations in a syndicated loan under which Maltem Consulting
Group SAS is a borrower were trading in the secondary market around
84 cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR6 million term loan is scheduled to mature on December 21,
2024. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is France.
SOCIETE EDITRICE DU MONDE SA: Bank Debt Trades at 16% Discount
--------------------------------------------------------------
Participations in a syndicated loan under which Societe Editrice du
Monde SA is a borrower were trading in the secondary market around
84 cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR20 million term loan is scheduled to mature on November 30,
2023. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is France.
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G E R M A N Y
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NORDEX SE: Moody's Affirms B3 CFR, Alters Outlook to Negative
-------------------------------------------------------------
Moody's Investors Service affirmed the B3 corporate family rating
and the B3-PD probability of default rating of Nordex SE.
Concurrently, Moody's affirmed the B3 ratings of the company's
EUR275 million senior unsecured notes maturing in 2023. The outlook
on all ratings has been changed to negative from stable.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The manufacturing
industry has been one of the sectors most significantly affected by
the shock given its sensitivity to consumer demand and sentiment.
More specifically, the weaknesses in Nordex' credit profile,
including its low profitability and negative free cash flow have
left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions and Nordex remains vulnerable to
the outbreak continuing to spread. Moody's regards the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety's action
reflects the impact on Nordex of the breadth and severity of the
shock, and the broad deterioration in credit quality it has
triggered.
The rating action was triggered by Moody's expectation that Nordex
-- given its weak positioning in the B3 category throughout FY 2019
-- might be challenged to improve credit metrics and restore free
cash flow generation into the requirements for the B3 rating
category in the next 12 -- 18 months. A severe contraction of
operating performance against the company's guidance for 2020 which
has been given excluding the coronavirus impact leading to
continuing negative free cash flow generation could result in a
negative rating action over the next few months.
The B3 CFR is constrained by (1) the limited product
diversification and some geographical concentration on Europe in
the volatile wind industry; (2) the weak operating performance and
EUR200 million of negative free cash flow seen since 2017,
reflecting fierce price pressure from previous 2017-2018 orders in
the industry; (3) some degree of uncertainty over the sufficiency
of the measures taken to restore profitability; and (4) the low
pricing power as the products are mainly undifferentiated, which
allowed Nordex to generate only modest profitability historically
compared with that of its other manufacturing peers.
At the same time, Nordex's CFR is supported by (1) the company's
improved scale, geographical footprint and product portfolio,
enhanced since its merger with Acciona Wind Power in 2016, although
in a consolidating and intensively competitive environment; (2) the
solid cash position on its balance sheet (EUR510 million as of
December 31, 2019); (3) its service business representing around
12% of total revenue (2019), providing good visibility, more
stability and typically higher margins; and (4) the positive
prospects for the longer term growth of the global wind industry.
LIQUIDITY
Moody's expects Nordex's liquidity over the next 12 months to be
adequate, although weakening. Assuming that part of the EUR510
million of cash shown as of December 2019 is trapped overseas,
Moody's estimates that around EUR450 million of cash is available
for the group's liquidity needs. Together with funds from
operations these sources should be sufficient to cover the group's
liquidity needs of around EUR280 million, including capital
spending, working capital needs, debt maturities and working cash
required to run the business. On the back of weak FFO generation
and assuming reduced advance payments leading to an outflow of
working capital, Moody's expects Nordex to be FCF negative in 2020.
Nevertheless, it acknowledges the fact that there is an element of
unpredictability and volatility in its cash flow, considering the
large size and long lead times of projects and different advance
payment terms in different end-markets.
Nordex does not have any committed revolving cash credit facility
but retains a syndicated committed guarantee facility of EUR1.21
billion, of which up to EUR100 million can be drawn as cash via
ancillary facilities. The facility, which has been recently renewed
to mature in April 2023, is subject to three covenants (leverage,
interest coverage and an equity ratio). The covenants, which are
becoming increasingly demanding until maturity, provide the group
with initially adequate flexibility.
STRUCTURAL CONSIDERATIONS
The B3 rating to the company's EUR275 million senior unsecured
notes is at the same level as the CFR, which reflects the
straightforward capital structure of the group. Nordex, the
ultimate holding company, acts as a financing vehicle and is the
borrower of most of the financial debt, including the EUR275
million senior unsecured notes and private placement notes
(Schuldscheindarlehen), of which about EUR240.5 million were
outstanding as of December 2019. In addition, Nordex is the
borrower under a EUR1.21 billion multicurrency guarantee facility
agreement (MGF), which it does not include in its Loss Given
Default (LGD) assessment, as this refers predominantly to non-cash
performance and advance payment bonds.
While the private placement notes benefit from a guarantee of
Nordex Energy GmbH only, the notes and the MGF benefit from
upstream guarantees from operating subsidiaries representing more
than 90% of aggregated revenue, EBITDA and net assets. Beyond that,
Nordex Energy GmbH has borrowed EUR53.1 million under a loan from
the European Investment Bank and Nordex has borrowed EUR22 million
via foreign operating subsidiaries under ancillary facilities to
the EUR1.21 billion MGF. In its LGD assessment, Moody's has ranked
all debt instruments at rank 1, except for the private placement
notes, which it views to be in a slightly weaker position because
of the absence of upstream guarantees from operating subsidiaries.
OUTLOOK
The rating is currently weakly positioned. The negative outlook
mirrors the challenge for Nordex to sustainably strengthen
profitability and thus to reduce leverage from the current level of
6.6x debt / EBITDA and 1.8x net debt / EBITDA. Over the next 3-6
months Moody's will closely monitor the further development in
particular with regard to order intake and potential cancellations
of orders, the company's ability to strengthen profitability and to
generate positive free cash flow as well as to reduce leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be downgraded if Nordex fails to grow its top-line
and improve its operating performance in the near term as expected.
For a stable B3 rating Moody's expects Nordex to sustainably
improve its Moody's-adjusted EBITA margin well above 1.0% and to
manage Moody's-adjusted gross leverage below 6.5x Debt / EBITDA and
net leverage well below 2.0x net debt / EBITDA. Likewise, negative
free cash flow or tightening covenant headroom could increase
downward pressure on the rating.
Upward potential would develop if Nordex is able to build on the
new turbine generation and the strong order book indicated by (1)
Moody's-adjusted EBITA margin exceeding 2.0%, (2) Moody's-adjusted
gross leverage declining below 5.0x debt / EBITDA and net leverage
well below 1.0x net debt / EBITDA on a sustained basis in
combination with material positive free cash flow generation and a
solid liquidity profile.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
COMPANY PROFILE
Headquartered in Hamburg, Germany, Nordex SE (Nordex) is one of the
leading manufacturers of onshore wind turbine generators (WTGs),
holding a top four position globally (excluding Chinese companies).
Nordex has production sites in Germany, Spain, Argentina, Brazil,
Mexico, India and the US (mothballed). The group generated revenue
of EUR3.3 billion during 2019, with a cumulated installed base of
more than 28 gigawatts. The company generates around 88% of its
revenue from the sale of turbines, while the rest comes from its
service business, which involves providing maintenance, efficiency
upgrades of turbines and repair services to its installed base.
Nordex is occasionally also active in the area of project
development. The company's stock has been listed on the Frankfurt
Stock Exchange since 2001 and is included in the TecDax and SDax
indexes. In 2016, the company merged with former AWP. The parent
company of AWP, Acciona S.A., is the main shareholder of Nordex,
with a share of 36.41%. Acciona is an infrastructure and energy
company, with sales of EUR7.2 billion in 2019. Acciona is also one
of Nordex's top 10 customers.
OEP TRAFO: Bank Debt Trades at 55% Discount
-------------------------------------------
Participations in a syndicated loan under which OEP Trafo BidCo
GmbH is a borrower were trading in the secondary market around 45
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR360 million term loan is scheduled to mature on July 18,
2024. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Germany.
TELE COLUMBUS: S&P Places 'B-' Rating On Watch Neg.
---------------------------------------------------
S&P Global Ratings placed its 'B-' rating on Tele Columbus AG on
CreditWatch with negative implications.
Near-term maturity of RCF leads to tight liquidity over the next 12
months. S&P said, "Without the RCF backup facilities, we think
Tele Columbus' liquidity is extremely tight. The current recessive
economic environment and limited activity in speculative-grade debt
markets will likely complicate access to new funding for firms with
highly leveraged capital structures. We also note that Tele
Columbus' EUR650 million senior secured notes trade at an about 15%
discount of their face value. In our view, to maintain a sufficient
liquidity buffer without the RCF, Tele Columbus would have to
significantly scale back on its existing capital expenditure
(capex) plans of EUR140 million-EUR150 million."
The impact of COVID-19 on Tele Columbus' operations is likely to be
limited, and the company is otherwise on track for recovery. In
2019, Tele Columbus demonstrated operational improvement in terms
of internet user growth and lower cash burn on the back of
declining nonrecurring costs. S&P said, "We expect this will
broadly continue from 2020, but anticipate a potential user growth
slowdown on the back of COVID-19-related store closures. In our
view, the telecommunications industry is largely insulated from
economic and credit implications stemming from the COVID-19
outbreak because of rising demand for connectivity. We also think
the pandemic could have a temporary positive impact in terms of
reduced churn and reduced decline in video customers, but will
likely slow the company's growth in new internet revenue generating
units."
S&P said, "The CreditWatch negative placement reflects the
possibility that we could lower the rating over the next three
months if Tele Columbus is unable to bolster its liquidity, for
example, by renewing its RCF maturing in January 2021. We expect
the company's cash flow generation will be limited at less than
EUR15 million in 2020, while potential setbacks in executing its
business plan could cause free operating cash flow (FOCF) to remain
negative or minimal.
"We could lower the rating by one notch if there is no material
improvement in Tele Columbus' liquidity, that is, it does not renew
its RCF, but goes ahead with its capex plans.
"Although we view this possibility as remote, we could lower the
ratings by multiple notches if we see a material risk that Tele
Columbus is unable to cover its liquidity needs over the next 12
months without the availability of backup facilities.
"We could remove the ratings from CreditWatch if Tele Columbus
successfully refinances its RCF, significantly outperforms our base
case with net cash generation of more than EUR50 million, or
decides to scale back on its capex plan by at least EUR20 million
until it secures additional liquidity sources."
=============
I C E L A N D
=============
LBI EHF: Bank Debt Trades at 82% Discount
-----------------------------------------
Participations in a syndicated loan under which LBI ehf is a
borrower were trading in the secondary market around 18
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR450 million term loan is scheduled to mature on July 26,
2009. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Iceland.
=========
I T A L Y
=========
AMPLIFON SPA: S&P Alters Outlook to Negative & Affirms 'BB+' ICR
----------------------------------------------------------------
S&P Global Ratings revised the outlook on Amplifon SpA to negative
and affirmed its 'BB+' issuer credit rating on the group.
The COVID-19 pandemic and shop closures in 2020 will harm
Amplifon's revenue and EBITDA generation. These closures,
although not mandatory, have taken place in a number of the group's
key countries of operation--Italy, Spain, France, and the
U.S.--following countrywide regulations such as quarantines and
social-distancing measures leading to sharply reducing footfall.
This will lead to a significant loss of revenue until the
restrictive measures loosen, since the group has few online sales
and typically relies on consumers going into shops to receive
personalized advice from audiologists.
Amplifon aims to adapt its cost structure to make it more flexible.
It will do so by taking advantage of some government schemes such
as postponing rent payments for closed shops, reducing labor costs,
and following marketing plans in 2020.
Although the group might preserve its margins, we think the loss in
sales volumes will translate into a significant absolute EBITDA
decline.
The group is also preparing to preserve its cash flow generation by
cutting its capital expenditure (capex) plans in 2020, canceling
any dividend payments for the year, and postponing merger and
acquisition (M&A) plans after the EUR34 million acquisition of
Attune Hearing Pty Ltd. in Q1 2020.
S&P said, "We think Amplifon will be able to recover in 2021 thanks
to the nature of its product offering, and it has ample liquidity
sources. Since the group offers hearing aid devices and care, we
view its product and service offering as less discretionary than
other nonfood retailers. The medical nature of its product offering
translates into more resilient demand from potential product users.
Therefore, although potential customers will have to delay their
purchase of hearing aid devices, we think it is more likely that
they will return to the shops when possible. We therefore
anticipate a significant rebound in sales volumes in 2021."
However, S&P notes that the decision to buy hearing aids can be
discretionary in certain contexts. This is due to two main
factors:
-- The degree and severity of the hearing loss, since users with
low levels of hearing loss are less likely to consider the purchase
essential; and
-- The decision to buy for the first time (less discretionary) or
upgrade to a newer or better product (a decision that the consumer
can postpone relatively easily).
S&P notes positively that Amplifon had significant cash balances of
EUR135 million as of Dec. 31, 2019. In addition, the group is in
the process of extending the maturity of existing credit lines and
securing additional credit lines to withstand the period of
volatility ahead. This should allow the group to largely cover any
potential liquidity uses in the next 12 months.
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. Some
government authorities estimate the pandemic will peak between June
and August, and we are using this assumption in assessing the
economic and credit implications. We believe the measures adopted
to contain COVID-19 have pushed the global economy into recession.
As the situation evolves, S&P will update its assumptions and
estimates accordingly.
S&P said, "We estimate in our base case that revenue and EBITDA
generation will come close to 2019 levels by 2021. However, it is
possible that the drop in EBITDA will be more severe in 2020, and
recovery might be slower in 2021, which would lead to credit
metrics remaining weak for a prolonged period. Furthermore,
Amplifon's target consumer group comprises people over 75 years
old, the age group most at risk from the COVID-19 pandemic.
Therefore, even as governments gradually lift containment measures,
the group's target consumers may stay at home. That said, these
consumers are less at risk of losing disposable income in the
context of an economic recession, considering the majority are
pensioners. If Amplifon's adjusted debt to EBITDA remains above 3x
on a sustained basis, or its EBITDAR coverage ratio remains below
3x on a sustained basis, we could lower our ratings.
"Our adjusted debt of EUR1.3 billion for 2019 includes reported
debt of EUR915 million, a factoring line, about EUR18 million
linked to pension liabilities and EUR24 million related to
earn-outs for business acquisitions, and a deduction of about
EUR135 million of cash available.
"Our adjusted EBITDA of EUR387 million in 2019 includes EUR16.5
million for stock compensation exchange.
"The negative outlook reflects our view that the group may face a
more severe drop in EBITDA in 2020, and it may recover more slowly
than initially anticipated, with EBITDA taking longer to return to
previous levels. We currently expect the group's S&P Global
Ratings-adjusted debt to EBITDA will be above 3x in 2020 before
returning below 3x in 2021, with an EBITDAR ratio below 3x in 2020
before returning above 3x in 2021.
"We could lower our ratings if the group's S&P Global
Ratings-adjusted debt to EBITDA remained above 3x on a sustained
basis, or its EBITDAR coverage ratio remained below 3x on a
sustained basis. This could happen if shops remained closed for
longer than anticipated, or if the recovery in 2021 were slower
than expected. We could also lower our ratings if the group's
covenant headroom dropped below than 15%.
"We could revise our outlook to stable if Amplifon's S&P Global
Ratings-adjusted debt to EBITDA returned below 3x and EBITDAR
coverage returned above 3x in the next 12 months. This would most
likely happen if group is able to adapt its cost base such that its
EBITDA base does not drop as much as we currently anticipate, and
if it is able to quickly build up lost volumes after its shops
reopen."
ASR MEDIA: S&P Cuts LT Bond Rating to 'B+', On Watch Neg.
---------------------------------------------------------
S&P Global Ratings lowered its long-term issue ratings on ASR Media
and Sponsorship S.p.A's (MediaCo) bonds to 'B+' from 'BB-' and
placing them on CreditWatch with negative implications.
Italy-based ASR Media and Sponsorship S.p.A (MediaCo) is A.S.
Roma's (TeamCo's) main financing vehicle. MediaCo services its
EUR275 million of bonds due August 2024 through media and
sponsorship contracts receivables. TeamCo, in turn, relies on the
distributions it receives from MediaCo to fund part of its
operations.
MediaCo's structure provides some creditor protection against the
risk associated with TeamCo's operating and financial performance,
but it does not eliminate it, in S&P's view. MediaCo's liabilities
have a structurally senior position with respect to the majority of
A.S. Roma's financial and operational expenses, including players'
salaries. Nevertheless, MediaCo's cash inflows are dependent on
TeamCo's operations and ongoing participation in Serie A, Italian
football's top division. Therefore, MediaCo's credit standing is
dependent on that of TeamCo.
The COVID-19 pandemic poses a threat to large audience sporting
events and their main actors. Serie A, similar to other domestic
and international European leagues, is facing one of the most
critical challenges in its modern history. As part of measures
taken by the Italian government to limit the spread of COVID-19,
teams have not played competitive matches in more than a month and
they are currently forbidden from training together. The suspension
of all competitions puts financial pressure on football clubs'
balance sheets. In turn, the absence of live sport exposes
broadcasters that rely on such events to substantial disruption,
with risk of frustrating advertisers and customers due to the lack
of content.
The financial damage to TeamCo's business over the short term is
dependent in part on whether the 2019/2020 Serie A season restarts
and in which shape or form. This, in turn, is largely dependent
on how long the pandemic lasts and the severity of countermeasures.
Either way, S&P views it unlikely that authorities will allow large
gatherings in stadiums during the current season. Therefore, S&P
anticipates that TeamCo will lose match day revenue--including
tickets and hospitality. In addition, if any remaining home games
are not open to the public, season ticket holders may claim
compensation for lost games.
The curtailment or permanent suspension of the 2019/2020 season,
may have a direct effect on MediaCo and TeamCo in the financial
year ending June 30, 2020. S&P said, "We understand that all
payments due to date on the broadcasting contracts for the
2019/2020 season have been received. The last payment was due and
paid in March, the next is contractually due in May although no
official game has been broadcast since March 8. MediaCo could be
exposed to commercial revenue losses in connection with any
sponsorship rights not fully delivered, and should any partners
invoke so far untested legal and contractual clauses. Since TeamCo
played 26 of 38 Serie A matches, we do not expect any potential
loss of broadcasting and sponsorship revenue to pose a threat to
MediaCo's ability to service its upcoming interest and principal
payments." Nevertheless, lower MediaCo revenue will mean reduced
cash for TeamCo. The latter relies on cash distributed by MediaCo
to service its largely fixed operating costs, mainly represented by
players' and management's salaries. The lower distributions
received from MediaCo would therefore add to already-lower match
day revenue, placing TeamCo in a weaker financial position absent
cost-saving measures such as the widely reported but not yet agreed
negotiation regarding players' wages.
Serie A's current broadcasting contract will expire at the end of
the 2020/2021 season and renegotiation risk is now higher than pre
COVID-19. S&P said, "In our view, COVID-19 may affect football
market dynamics beyond the 2019/2020 season. We believe that
measures adopted to contain the pandemic have pushed the global
economy into recession, with Italy expected to see a 9.9% GDP
decline in 2020." A rise in unemployment, coupled with lower
disposable income and depressed corporate marketing budgets, may
dent the profitability of broadcasting contracts. In combination
with the direct effects suffered during the lockdown, this may lead
broadcasters to re-evaluate future audiovisual rights contracts and
their terms. In addition, in a global recession we see heightened
risk that actual or potential sponsors may cut spending. Although
MediaCo's main commercial contracts do not expire until 2021, we
have less confidence that future contract renewals will take place
at similar terms.
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. Some
government authorities estimate the pandemic will peak about
midyear, and we are using this assumption in assessing the economic
and credit implications.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
S&P said, "The negative CreditWatch placement indicates that we
could lower the issue ratings by one or more notches if we consider
the effects of the pandemic may result in permanent operational and
financial damage to Italian football. This could happen if we
expect a significant repricing of key contracts, or if any key
stakeholders--including broadcasters, sponsors, TeamCo's personnel,
or government authorities--take steps that demonstrate an elevated
risk to TeamCo's business model.
"We aim to resolve the CreditWatch placement over the next
three-to-six months, once there is more visibility on the effects
of the pandemic on European or Italian football market dynamics,
associated government countermeasures, and any ongoing negotiations
between key stakeholders."
INTER MEDIA: S&P Cuts Bonds Rating to 'B+', On Watch Neg.
---------------------------------------------------------
S&P Global Ratings lowered its long-term issue ratings on Inter
Media and Communication SpA's (MediaCo) bonds to 'B+' from 'BB-'
and placed them on CreditWatch with negative implications.
Italy-based Inter Media and Communication SpA (MediaCo) is F.C.
Internazionale's (TeamCo's) main financing vehicle. MediaCo
services its EUR300 million of bonds due December 2022 through
media and sponsorship contracts receivables. TeamCo, in turn,
relies on the distributions it receives from MediaCo to fund part
of its operations.
MediaCo's structure provides some creditor protection against the
risk associated with TeamCo's operating and financial performance,
but it does not eliminate it, in our view. MediaCo's liabilities
have a structurally senior position with respect to most of F.C.
Internazionale's financial and operational expenses, including
players' salaries. Nevertheless, MediaCo's cash inflows are
dependent on TeamCo's operations and ongoing participation in Serie
A, Italian football's top division. Therefore, MediaCo's credit
standing is dependent on that of TeamCo.
The COVID-19 pandemic poses a threat to large audience sporting
events and their main actors. Serie A, similar to other domestic
and international European leagues, is facing one of the most
critical challenges in its modern history. As part of measures
taken by the Italian government to limit the spread of COVID-19,
teams have not played competitive matches in more than a month and
they are currently forbidden from training together. The suspension
of all competitions puts financial pressure on football clubs'
balance sheets. In turn, the absence of live sport exposes
broadcasters that rely on such events to substantial disruption,
and carries a risk of frustrating advertisers and customers due to
the lack of content.
The financial damage to TeamCo's business over the short term
depends in part on when and whether the 2019/2020 Serie A season
restarts, and in which shape or form. This, in turn, is largely
dependent on how long the pandemic lasts and the severity of
countermeasures. Either way, S&P considers it unlikely that
authorities will allow large gatherings in stadiums during the
current season. Therefore, S&P anticipates that TeamCo will lose
match day revenue--including tickets and hospitality. In addition,
if any remaining home-games are not open to the public, season
ticket holders may claim compensation for lost games.
The curtailment or permanent suspension of the 2019/2020 season,
may have a direct effect on MediaCo and TeamCo in the financial
year ending June 30, 2020. S&P said, "We understand that all
payments due to date on the broadcasting contracts for the
2019/2020 season have been received. The last payment was due and
paid in March, the next is contractually due in May, although no
official game has been broadcast since March 8. MediaCo could be
exposed to commercial revenue losses in connection with any
sponsorship rights not fully delivered, and should any partners
invoke so far untested legal and contractual clauses. Since TeamCo
played 25 of 38 Serie A matches, we do not expect any potential
loss of broadcasting and sponsorship revenue to pose a threat to
MediaCo's ability to service its upcoming interest and principal
payments." Nevertheless, lower MediaCo revenue will mean reduced
cash for TeamCo. The latter relies on cash distributed by MediaCo
to service its largely fixed operating costs, mainly represented by
players' and management's salaries. The lower distributions
received from MediaCo would therefore add to already-lower match
day revenue, placing TeamCo in a weaker financial position absent
cost-saving measures, such as the widely reported, but not yet
agreed negotiation regarding players' wages.
Serie A's current broadcasting contract will expire at the end of
the 2020/2021 season and renegotiation risk is now higher than
pre-COVID-19. In our view, COVID-19 may affect football market
dynamics beyond the 2019/2020 season. S&P said, "We believe that
measures adopted to contain the pandemic have pushed the global
economy into recession, with Italy expected to see a 9.9% GDP
decline in 2020. A rise in unemployment, coupled with lower
disposable income and depressed corporate marketing budgets, may
dent the profitability of broadcasting contracts. Combined with the
direct effects suffered during the lockdown, this may lead
broadcasters to re-evaluate future audiovisual rights' contracts
and their terms. In addition, in a global recession we see
heightened risk that actual or potential sponsors may cut spending.
Although the contracts with a number of premium and official
partners mature in June 2020, MediaCo's main commercial contracts
do not expire until 2021. We are now less confident that future
contract renewals will take place at similar terms."
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P said,
"Some government authorities estimate the pandemic will peak about
midyear, and we are using this assumption in assessing the economic
and credit implications. See our macroeconomic and credit updates
here: www.spglobal.com/ratings. As the situation evolves, we will
update our assumptions and estimates accordingly."
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
S&P said, "The CreditWatch placement indicates that we could lower
the issue ratings by one or more notches if we consider the effects
of the pandemic may result in permanent operational and financial
damage to Italian football. This could happen if we expect a
significant repricing of key contracts, or if any key
stakeholders--including broadcasters, sponsors, TeamCo's personnel,
or government authorities--take steps that demonstrate an elevated
risk to TeamCo's business model. We could also lower the rating if
we see incremental risk associated with MediaCo's ability to
refinance its balloon debt repayment in December 2022.
"We aim to resolve the CreditWatch placement over the next
three-to-six months, once there is more clarity regarding the
effects of the pandemic on European or Italian football market
dynamics, associated government countermeasures, and any ongoing
negotiations between key stakeholders."
ITALIAONLINE SPA: Bank Debt Trades at 98.4% Discount
----------------------------------------------------
Participations in a syndicated loan under which Italiaonline SpA is
a borrower were trading in the secondary market around 1.59
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR90 million rev loan was scheduled to mature on December 28,
2015. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Italy.
MOBY SPA: Moody's Cuts CFR to C on Missed Interest Payment
----------------------------------------------------------
Moody's Investors Service has downgraded to C-PD/LD from Ca-PD the
probability of default rating of Italian ferry operator Moby
S.p.A.'s. Concurrently, Moody's has downgraded the group's
corporate family rating to C from Ca and the instrument rating on
the backed EUR300 million senior secured notes due 2023 to Ca from
Caa3. The outlook remains negative.
The limited default "LD" designation attached to Moby's PDR
reflects the missed interest payment on the senior secured notes
which constitutes a default under Moody's definition. The LD
designation will remain until the group resolves the missed
payment.
RATINGS RATIONALE
The downgrade reflects Moby's failure to make the interest payment
on its 7.75% EUR300 million senior unsecured notes and the
scheduled amortization payment due under the EUR260 million term
and revolving Senior Facilities Agreement after the end of the
grace period has expired. In addition, the downgrade of the CFR to
C and the instrument rating on the senior unsecured notes to Ca is
based on Moody's current recovery expectations following a
potential restructuring of the company, which are lower in light of
the recent macroeconomic environment and CoVid-19 related
transportation restrictions. On February 11, 2020, the company
announced it has entered into a standstill agreement with
bondholders under the EUR300 million senior secured notes due 2023
and a further standstill request to SFA lenders.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be further downgraded should the group default on
other elements of its capital structure or pursue a formal
reorganization of its debt, or if Moody's were to revisit its
recovery expectations on Moby's debt instruments to lower than
currently estimated.
An upgrade of Moby's ratings appears unlikely before its
indebtedness is reduced to more sustainable levels.
OUTLOOK
The negative outlook reflects Moody's view that Moby may have
difficulty refinancing its debt without restructuring or impairment
to creditors.
RATING METHODOLOGY
The principal methodology used in these ratings was Shipping
Industry published in December 2017.
COMPANY PROFILE
Domiciled in Milan, Italy, Moby S.p.A. is a maritime transportation
operator focusing primarily on passengers and freight
transportation services in the Tyrrhenian Sea, mainly between
continental Italy and Sardinia. Through Moby and its main
subsidiary Tirrenia-CIN, the company operates a fleet of 64 ships,
of which 47 are ferries and 17 tugboats. In 2018, the company
recorded revenues of EUR584 million and EBITDA of EUR47.5 million.
PIAGGIO AEROSPACE: Postpones Bid Deadline for Second Time
---------------------------------------------------------
Elisa Anzolin at Reuters reports that Italy's Piaggio Aerospace
said on April 21 it would postpone for the second time in less than
a month the deadline to submit expressions of interest for the
company, due to the ongoing coronavirus crisis.
According to Reuters, the private jet maker, which sought
protection from creditors in late 2018 and then launched a call for
international bidders at the end of February, said bids could now
be filed until May 29.
===================
L U X E M B O U R G
===================
ASTON FINCO SARL: Bank Debt Trades at 16% Discount
--------------------------------------------------
Participations in a syndicated loan under which Aston Finco Sarl is
a borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The GBP285 million term loan is scheduled to mature on October 9,
2026. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Luxembourg.
EVERGREEN SKILLS: Bank Debt Trades at 83% Discount
--------------------------------------------------
Participations in a syndicated loan under which Evergreen Skills
Lux Sarl is a borrower were trading in the secondary market around
17 cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD670 million term loan is scheduled to mature on April 28,
2022. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Luxembourg.
TRAVELPORT FINANCE: Bank Debt Trades at 62% Discount
----------------------------------------------------
Participations in a syndicated loan under which Travelport Finance
Luxembourg Sarl is a borrower were trading in the secondary market
around 38 cents-on-the-dollar during the week ended Fri., April 17,
2020, according to Bloomberg's Evaluated Pricing service data.
The USD500 million term loan is scheduled to mature on May 30,
2027. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Luxembourg.
=====================
N E T H E R L A N D S
=====================
BRIGHT BIDCO: Bank Debt Trades at 66% Discount
----------------------------------------------
Participations in a syndicated loan under which Bright Bidco BV is
a borrower were trading in the secondary market around 34
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The USD1683 million term loan is scheduled to mature on June 30,
2024. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Netherlands.
FUGRO NV: Fitch Withdraws 'B(EXP)' LT IDR on Cancelled Refinancing
------------------------------------------------------------------
Fitch Ratings has withdrawn Fugro N.V.'s expected Long-Term Issuer
Default Rating of 'B(EXP)', with Stable Outlook. The rating is no
longer expected to convert to a final rating.
The rating has been withdrawn after the contemplated refinancing
has been cancelled.
KEY RATING DRIVERS
Not applicable as the rating has been withdrawn.
RATING SENSITIVITIES
Not applicable
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
INTERCEMENT PARTICIPACOES: Fitch Cuts LT FC IDRs to 'CCC-'
----------------------------------------------------------
NETH
Fitch Downgrades InterCement to 'CCC-'
Thu 16 Apr, 2020 - 3:03 PM ET
Fitch Ratings - Chicago - 16 Apr 2020:
Fitch Ratings has downgraded InterCement Participacoes S.A.'s
Long-Term Foreign and Local Currency Issuer Default Ratings to
'CCC-' from 'B-', as well as the company's Long-Term National Scale
Rating to 'CCC- (bra)' from 'BB+ (bra)'. Fitch also downgraded
InterCement Financial Operations BV's unsecured notes due 2024 to
'CCC-'/'RR4' from 'B-'/'RR4'.
Sharp recessions expected in Argentina and Brazil will lead to
InterCement to generate significantly weaker cash flow than
previously anticipated by Fitch. EBITDA from Brazil has been
stagnant at a level below EUR70 million since 2016 due to the sharp
economic contraction in Brazil compared with EUR413 million
generated at the peak in 2013. The stability of the company's
credit profile largely depends on Brazil becoming a more important
cash flow driver during 2020-2022. However, the economic effects
from coronavirus will forestall Brazil's nascent recovery and defer
meaningfully any positive contribution to EBITDA from these
operations at least during the next two years.
The coronavirus pandemic worsens Fitch's expectations of a decline
in the purchasing power of the company's clients in the Argentine
market due to high inflation, which along with weak investment will
result in drastic reductions in cement demand. Argentine cement
consumption was already on a downward trend declining 3% in 2018
and 7% in 2019. So far in 2020 consumption has dropped by almost
30%. Argentina accounts for approximately 60% of InterCement's
EBITDA.
InterCement faces debt amortizations of EUR355 million in 2020 and
EUR333 million in 2021. The company is in the midst of refinancing
EUR900 million of debt it holds with Brazilian banks. However, the
refinancing has taken longer than anticipated, and although Fitch
believes the banks at minimum will continue to extend amortizations
by 90 days, the ability of the company to service its debt in both
principal and interest will be diminished as a result of the
coronavirus lockdown and its economic effects on the company's
markets.
KEY RATING DRIVERS
Brazil's Recovery Halts: Output in Brazil's cement market fell to
52 million tons from a high of 72 million tons during its economic
downturn of 2015-2018. A rebound in consumption to 54 million tons
of cement in this market in 2019 will likely be erased in 2020 as
cement sales decline sharply. The country's GDP is now projected to
decline 2.5% in 2020 with forecasts firmly biased to the downside.
The company is likely to face tough competition and pricing
weakness as capacity utilization rates decline throughout the
industry.
Argentina to Remain Challenging: InterCement's Argentine
subsidiary, which is currently the company's primary cash flow
generator, is likely to see plummeting cement demand in 2020. Loma
Negra C.I.A.S.A. generated EUR178 million of reported EBITDA in
2019. This figure benefited from an official exchange rate whose
volatility has been reduced due to strict capital controls, and
would likely be lower should the country lift controls. Cement
demand in the country contracted close to 30% during the first
three months of the year, and the lockdowns are expected to lead to
an even more profound recession, which will reduce construction
activity.
FX Exposure is Meaningful: Foreign Exchange (FX) mismatch risk is
significant, as 69% of total debt of EUR1.7 billion as of YE 2019
was either U.S dollar or Euro denominated and the company does not
generate hard currency revenue. InterCement mainly relies on its
pricing strategy to offset U.S. dollar cost inflation and revenue
weakness resulting from currency depreciation.
Solid Business in Depressed Markets: InterCement is the
second-largest cement producer in Brazil, which is one of the
world's largest cement markets, and the leading cement producer in
Argentina with close to 50% market share. The company also operates
in Mozambique, where it is the largest producer with a 50% market
share, as well as in Egypt, South Africa and Paraguay.
InterCement's businesses in Argentina and Paraguay are operated
through its 51%-owned subsidiary Loma Negra. InterCement's sales
are relatively balanced among Brazil (30%), Argentina and Paraguay
(41%) and its African subsidiaries.
InterCement has an Environmental, Social and Governance Relevance
Score of '4' for Governance Structure due to limited board
independence through ownership by key shareholder, Mover
Participacoes S.A. For all other factors, unless otherwise
disclosed in this section, the highest level of ESG credit
relevance is a score of '3'. ESG issues are credit neutral or have
only a minimal credit impact on the entity, either due to their
nature or the way in which they are being managed by the entity.
DERIVATION SUMMARY
InterCement's 'CCC-' rating reflects substantial weakening of
EBITDA expectations resulting from depressed cement demand in
Argentina and significantly weaker sales volumes for the rest of
InterCement's markets as a result of the coronavirus pandemic.
Prior expectations of a recovery in Brazil, which is the company's
main market in terms of volume and which has seen stagnant cement
consumption since 2016, have been set back due to economic
recession resulting from the coronavirus. InterCement's net
leverage, which is projected to rise in 2020, was 5.9x in 2019
which is consistent with leverage of ratings in the 'CCC'
category.
InterCement has been extending amortizations to preserve cash.
However, its ability to service its debt will be diminished as a
result of recessionary economic conditions in its main markets.
Local currency across InterCement's business units, particularly in
the Brazilian real and Argentine peso is also factored into the
ratings. The company has a strong business position in these
markets. Business scale is an important driver for cement
industries, given its capital-intensive operations and high fixed
costs. Despite its scale, InterCement's cash flow has varied
greatly as it operates in highly volatile markets such as Brazil,
Argentina, Paraguay, Egypt, Mozambique and South Africa.
KEY ASSUMPTIONS
-- Brazil volumes decline about 15% in 2020 and rebound by close
to 15% in 2021;
-- Argentine volumes decline approximately 25% in 2020 and
rebound by about 20% in 2021;
-- Operating EBITDA of EUR170 million in 2020 and EUR200 million
in 2021;
-- Capex levels around EUR120 million in 2020 and EUR100 million
in 2021;
-- Continued access to bank lending.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
-- Additional proactive steps by the company to materially
bolster its capital structure in the absence of high operating cash
flow;
-- Leverage below 6.0x on a sustained basis, and consistent
positive FCF generation to pay down gross debt levels.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
-- Deterioration in InterCement's liquidity profile or
difficulties to progress on refinancing strategy.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Weak Liquidity: InterCement's liquidity is weak as the company
faces debt maturities of EUR355 million in 2020 and EUR335 million
in 2021, which compares with EUR314 million of cash and short-term
investments as of YE 2019. In addition to upcoming debt maturities,
Fitch estimates that InterCement will generate negative FCF of
approximately EUR120 million in 2020 and EUR70 million in 2021,
which reflects weak cash flow generation in the company's main
markets due to the steep recessions expected in most markets. They
also reflect EUR70 million of capex to complete the expansion of
Loma Negra's L'Amali plant and that other capex is significantly
curtailed. The negative FCF is expected to be funded primarily
through local bank debt.
The company aims to refinance EUR900 million of debt with Brazilian
banks in a structure that would require no amortizations over the
next three years. Pro forma with this refinancing, the company
would face near-term debt maturities of EUR171 million in 2020 and
EUR108 million in 2021, mostly of debt held at the subsidiaries.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
UPC HOLDING: Fitch Affirms LT IDR at 'BB-', Outlook Negative
------------------------------------------------------------
Fitch Ratings has affirmed UPC Holding Group BV's Long-Term Issuer
Default Rating at 'BB-' with a Negative Outlook. Fitch has also
affirmed the group's Senior secured notes at 'BB+', Senior
unsecured notes at 'B' and removed the IDR and instrument ratings
from Rating Watch Positive.
The rating actions follow the cessation of the proposed acquisition
of UPC's Swiss operations by Sunrise Communications AG (BB+/Stable)
and the publication of the company's audited FY19 results. The
ratings take into account the increased proportion of cash flows
and increased risk concentration deriving from UPC's Swiss
operations following disposals over the past two years, the
pressures that continue to be felt within the Swiss business, a
weakened cash flow profile and high leverage. The rating also takes
into account a highly competitive Swiss telecoms market where the
incumbent's position is unusually strong, alongside a solidly
performing Sunrise and the presence of an aggressive convergent
challenger in Salt Mobile.
The Negative Outlook reflects its expectation that funds from
operations net leverage will remain above the downgrade threshold
of 5.0x in 2020, for the second year running.
KEY RATING DRIVERS
Swiss Operational Performance: The cancellation of the sale of
UPC's Swiss cable business to Sunrise Communications leaves the
company with the Swiss operations and cable businesses in Poland
and Slovakia. Switzerland accounted for around 75% of 2019 EBITDA
and is therefore a key focus for the rating. The Swiss telecoms
market remains intensely competitive and one in which UPC has been
losing broadband and video customers. Financial pressure driven by
Swiss operational weakness and high leverage are the key drivers of
the Negative Outlook.
In 2019, UPC in Switzerland lost roughly 39,000 broadband customers
and 71,000 video customers. As the incumbent cable TV provider,
video customer losses in a mature market are to be expected.
Broadband losses are more concerning given that the cable operator
might more typically be expected to take market share from the
incumbent telecom.
Mobile Business Contribution: UPC's Swiss mobile virtual network
operator (MVNO) business offset fixed line weakness to some extent,
growing mobile customers by 37% in 2019, helping the company
against competitors offering converged fixed-mobile services.
However, at 200,000 its subscriber base remains small - Fitch
estimates it has a 2% mobile market share.
2019 Finance Performance Softened: Financial performance in 2019
continued to soften. The Swiss business reported a rebased
operating cash flow (OCF; a proxy for EBITDA) decline of 10.3% and
the group's consolidated OCF was down 8.3%. An OCF margin of 48.4%
was 3.3pp down on the previous year and Fitch-defined net
debt/EBITDA was 5.1x (2018: 6.2x).
Management's efforts to stabilise revenues are having some effect,
although Swiss rebased revenue was down 3.5% in 4Q19 and rebased
group revenues down 1.9% for FY19. Liberty Global's (LG; UPC's
parent company) management has a good track record of turning
businesses around. Fitch envisages EBITDA gradually stabilising,
although its rating case assumes further downward pressure in
2020.
Swiss Consolidation Event Risk: The Swiss market is characterised
by the incumbent, Swisscom, retaining a very strong market position
as a leader in both fixed and mobile markets. The potential
combination of the mobile market number two (Sunrise) and number
two in broadband and TV continues to make strategic sense.
Fitch estimates a merger would give the combined business a
broadband market share (by subscribers) of between 35% and 40%; and
a mobile share approaching 30%. Over the medium term, Fitch
believes a merger could give rise to a more rational pricing
environment. With UPC's parent, LG, currently maintaining a cash
position of USD8 billion, Fitch believes event risk of a possible
combination remains.
Competitive Swiss Market: Switzerland is an advanced telecom
market. The consumer market competed effectively by four convergent
players -- the country's three mobile network operators (MNOs),
plus UPC, which offers mobile services via its MVNO agreement with
Swisscom. Fixed line services are competitive but dominated by
Swisscom, the incumbent telecom which retains an unusually high
share of the market. Fitch estimates Swisscom accounted for close
to 70% of market revenues (fixed and mobile) in 2019 and a similar
share of market EBITDA (more typically incumbent telecoms would be
expected to have a domestic revenue share below 50%).
Swisscom's strong broadband position. Fitch estimates it had a
subscriber share approaching 60% in both mobile and fixed broadband
markets at 4Q19, despite the competitive environment, which
includes the presence of an aggressive convergent challenger in
Salt Mobile. Fitch believes this success is driven by Swisscom's
network and service quality. Fitch estimates UPC accounted for
approximately 12% of 2019 market EBITDA compared with Sunrise at
around 11% and Salt at 8%.
Operating Profile Supports Rating: Once stabilised, Fitch views
UPC's operating profile as sufficiently broad to support the 'BB-'
rating. The company enjoys strong market position in Switzerland's
fixed broadband and video markets and is growing its mobile base,
albeit from a low base. The businesses in Poland and Slovakia,
although smaller, are positioned well in markets that remain more
fragmented than more developed western European markets. Fitch
regards these markets as offering the potential for consolidation,
although Fitch views Switzerland as the market where management are
might look for potential inorganic growth.
Fitch believes a revenue scale of EUR1.5 billion and an EBITDA
margin in the high 40s to be sustainable and subject to leverage,
supportive of the 'BB-' rating.
Cable's Technological Advantage: With consumers concerned as much
by speed and service quality as price, Fitch considers UPC's cable
network enjoys network superiority. Swisscom's network is a
combination of fibre to the curb and fibre to the premise, with a
strategic plan including a target to cover 30%-40% of Swiss homes
with speeds up to 300-500 Mbps by 2025. By contrast, UPC's DOCSIS
3.1 network is already capable of delivering 1Gbps speeds across
the network, and has been marketing these capabilities since 3Q19.
Wholesale fibre access is available, with Salt promoting 10 Gbps
speeds. Full fibre roll-out is limited and evidence of the take-up
of these services patchy. (In mobile Salt had a subscriber share of
around 17% at YE19; down 1pp, having lost 75,000 net customers in
the year).
Leverage and Cash Flow: Fitch assumes ongoing cash flow pressure in
2020 and that leverage will remain high. Fitch-defined net debt /
EBITDA closed 2019 at 5.1x and funds from operations at 5.3x. Its
rating case assumes FFO net leverage will remain above the
downgrade threshold of 5.0x through 2020. LG has a policy of
managing net debt / EBITDA across its cable assets at around 5x and
used disposal proceeds to pay down USD1.6 billion of bank debt at
UPC in 2019.
Fitch considers UPC's leverage to be high for its 'BB-' rating and
that reduced leverage would help mitigate current operational
pressures in the business. Both operational stability and lower
leverage are important factors for the Outlook to be revised to
Stable.
Coronavirus Impact: Quarantine and self-isolation measures are
testing the capacity of telecoms infrastructure generally. Fitch
expects recurring telecom revenues limit negative pressures in the
near term for UPC and across the European peer group, upcoming
quarterly results may reveal short-term cost pressures from the
crisis. Long-term effects are likely to be linked to broader
macroeconomic developments. So far telecoms operators are reporting
heightened voice and data traffic. The use of home WiFi networks by
customers should help mobile operators manage peak usage.
DERIVATION SUMMARY
UPC's rating is positioned solidly within the leveraged telecom
peer group. Its most obvious peers are the other LG cable
operations - Virgin Media Inc. and Telenet Group Holding (both
BB-/Stable). VodafoneZiggo Group B.V (B+/Stable) of the
Netherlands, a joint venture between LG and Vodafone is a further
benchmark. Relative to the peer group, UPC is smaller with the
concentration in Switzerland, a very competitive market, and the
business delivering weaker free cash flow. Those factors have
historically been mitigated by more cautious leverage than some LG
cable operators, although the metric is somewhat high at present.
Nevertheless, Fitch has set UPC's downgrade threshold marginally
tighter than the peer group to reflect these constraints.
KEY ASSUMPTIONS
- Low single digit revenue decline in 2020 before stabilising to
less than 1% growth in 2021-2023
- Operating cash flow margin of 47.4% in 2020 gradually
increasing to 49.3% by 2023
- Capex to revenue of 35% in 2020-2023
- Positive working capital of about 3% of revenue per year
- Scale down of vendor financing by EUR200 million in 2020
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- FFO net leverage of 4.3x or below on a sustained basis.
- Significant improvement in pre-dividend FCF.
Developments That May, Individually or Collectively, Lead to a
Revision of the Outlook to Stable
- Stabilization of declining revenue and EBITDA, especially in
Switzerland
- FFO net leverage below 5.0x on a sustained basis
Developments That May, Individually or Collectively, Lead to
Negative Rating Action/Downgrade:
- FFO net leverage above 5.0x on a sustained basis.
- Material deterioration of competitive position in key markets.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: At end-2019, UPC had a cash balance of EUR22
million. Fitch expects the business to generate marginally positive
FCF with a FCF margin of 2%-3% in 2020-2023. Its liquidity is
further provided by the fully undrawn revolving credit facility of
EUR500 million due 2026. Following the recent refinancing, UPC has
no debt maturity before 2027.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
===========
R U S S I A
===========
LEXGARANT INSURANCE: S&P Affirms B+ ICR, Outlook Revised to Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long term insurer financial
strength and issuer credit ratings on Russia-based insurers
Rosgosstrakh PSJC and Energogarant PJSIC. The outlooks are
positive.
At the same time, S&P revised its outlook on Lexgarant Insurance
Co. Ltd (Lexgarant) to stable from positive, and affirmed the
ratings on the insurer at 'B+'.
The economic and financial consequences of the coronavirus
outbreak, coupled with decreased oil prices and capital market
volatility, will put pressure on Russian property/casualty (P/C)
insurers' performance. S&P said, "However, under our base-case
scenario, we expect our rated Russian insurers will remain largely
resilient to the consequences of the pandemic, which are negative
for the sector overall. We expect P/C insurance gross premiums
written will decline in 2020. We anticipate rated Russian P/C
insurers' combined (loss and expense) ratios are likely to increase
closer to 100%, and return on equity will decline to about 10%,
compared with our previous expectations of 95%-98% and 15%
respectively."
S&P said, "We have lowered our base case GDP growth forecast for
Russia, and now expect the economy will contract in 2020,
reflecting the hit to external demand, compounded by the shock to
domestic demand from COVID-19-related containment measures. We
expect consumption and investment will fall in 2020. This follows
our downward revision of the average Brent oil price in 2020 to $30
per barrel from $60 previously, as well as our expectation for a
global recession in 2020. We believe that the Russian economy will
absorb the current shocks and will likely recover in 2021, in line
with recovering oil prices and the global economy. Nevertheless,
risks to our baseline forecast remain, because the full economic
effects of the COVID-19 pandemic continue to be unclear and could
be worse than we assume." The speed of the recovery in the P/C
insurance sector will also depend on policy measures to cushion the
blow of the outbreak, limit economic dislocation, and support
households and the overall economy.
That said, S&P believes rated Russian insurers are in good shape to
face these challenging times. For example, most of them have
accumulated significant capital cushions, their investment
portfolios include a low percentage of equities, and they are
generally very liquid.
Rosgosstrakh PJSC
Rosgosstrakh has demonstrated a sound underwriting performance,
with a net combined ratio of 99% under Internationl Financial
Reporting Standards in 2019. S&P said, "We expect the insurer will
maintain profitability in the next two years, despite the
challenging operating environment and financial turmoil. We
anticipate Rosgosstrakh's overall creditworthiness with strengthen
on the back of stable underwriting performance and maintenance of
strong capitalization through profit retention. This is supported
by our understanding that the company will not pay dividends in the
coming 12-18 months. We also understand that the dividend policy of
Rosgosstrakh's parent, Bank Otkritie Financial Corporation (BOFC),
will remain balanced, and will not impede Rosgosstrakh's capital
adequacy. Furthermore, we continue to believe the insurer is
operationally separate from its parent, and therefore assess BOFC
as having limited influence on Rosgosstrakh's credit quality."
S&P said, "We expect Rosgosstrakh will continue to operate with a
combined ratio close to 100%, which is in line with the expected
market average. We believe its investment profits will support the
bottom line in 2020-2021, despite negative revaluation of the
insurers bond portfolio in first-quarter 2020."
Outlook
S&P said, "The positive outlook reflects our expectation that
Rosgosstrakh will maintain strong capital over the next 12-18
months through profit retention, and will not make any dividend
payments over the same period. We expect business growth will
continue in 2021, but that 2020 growth will remain subdued."
Upside scenario
A positive rating action on Rosgosstrakh is possible in the next
12-18 months if the insurer proves resilient to the effects of the
pandemic, continuing premium growth while maintaining a solid
underwriting performance in 2020-2021, as well as a solid capital
cushion.
An upgrade would also depend on BOFC maintaining at least stable
creditworthiness and Rosgosstrakh remaining operationally separate
from its parent. S&P would also require more clarity regarding
BOFC's ultimate dividend plans.
Downside scenario
S&P said, "We could revise the outlook to stable if Rosgosstrakh's
underwriting performance is significantly weaker than expected, or
its capital adequacy deteriorates unexpectedly due to a sizable
dividend to BOFC, for example. We could also revise the outlook or
even lower the ratings if BOFC group's credit quality deteriorates
materially beyond our base-case scenario."
Energogarant PJSIC
S&P said, "The ratings affirmation reflects our view that
Energogarant has demonstrated a sound underwriting performance,
with a net combined ratio of 96% under local standards in 2019. We
expect it will be able to maintain sound profitability in the next
two years, despite the challenging operating environment and
financial turmoil, allowing it to strengthen its financial risk
profile. We understand Energogarant has created sufficient reserves
to fully cover tax claims related to the tax inspection finalized
at the end of 2018. These amount to about Russian ruble (RUB) 1.6
billion, and 32% of the company's equity capital. We note, however,
that Energogarant continues to dispute the results of the tax
inspection in courts. In the case of a favorable decision, the
release of related reserves could have a positive impact on its
bottom-line results.
"In our base-case scenario, we assume Energogarant's premium growth
will stagnate in 2020 and increase by 5% in the next two years, in
line with our expectations for the Russian P/C sector. We forecast
the company's net combined ratio at about 99% in the next two
years, and its net investment yield at about 4%, similar to the
level reported in 2019. We expect the insurer will pay only
moderate dividends not exceeding RUB10 million in the next two
years.
"We believe Energogarant will ensure a smooth transition of CEO
functions from Mr. Sergey Vasiliev, who has headed the company
since 2015, to new CEO Mr. Alexander Davydenko, who has sufficient
experience in the Russian insurance sector. We expect no other
changes to Energogarant's key management personnel."
Outlook
The outlook on Energogarant remains positive, reflecting S&P's view
that the company will be able to maintain favourable profitability,
with a combined ratio of about 99% and a good investment
performance in the next two years. This, coupled with only moderate
dividend payments, should allow the company improve its capital
position.
Upside scenario
S&P could raise its rating on Energogarant by one notch within the
next 12 months if the company's capital improves sustainably via
retained earnings. This could happen if the insurer continues to
demonstrate a sound underwriting performance and investment
profitability in the challenging operating environment for P/C
insurers in Russia, taking into account COVID-19-related lockdown
measures and financial market turmoil.
Downside scenario
S&P said, "We could revise the outlook to stable if a weak
operating performance or higher dividend payments affects the
insurer's capital adequacy. We could also revise the outlook to
stable if the company's risk exposure significantly increases,
namely as a result of higher investment risk."
Lexgarant Insurance Co. Ltd.
S&P said, "The outlook revision from positive to stable reflects
our view that Lexgarant's premium volumes will come under pressure
in 2020. This is due to significant business concentration in
aviation risk and travelers insurance, which are likely to be hit
by the expected aviation-industry decline following the
introduction of measures to restrict the spread of COVID-19. At the
same time, we expect Lexgarant will partially weather the negative
consequences of the pandemic and related financial market
turbulence thanks to its geographic diversification and given that
part of its aviation portfolio relates to cargo aviation.
"Although we anticipate Lexgarant will not experience premium
growth in 2020, we note that growth in 2019 was sound, and that
Lexgarant achieved a record-low net combined ratio of 61%. In our
view, positive foreign-exchange revaluation will support net income
in 2020, with the net combined ratio remaining below 100%. However,
it is likely to deteriorate versus 2019.
"Lexgarant continues to enjoy an extremely strong risk-adjusted
capital adequacy, according to our model, sustained by prudent
underwriting, low net risk retention, and a liquid investment
portfolio. However, we note the company's capital is small, at
about $15 million, as is its insurance portfolio, and fixed costs
are relatively high. Furthermore, Lexgarant's core business,
aviation insurance, is characterized by low-frequency but
high-severity claims.
"In our view, Lexgarant's small capitalization and aviation focus
exposes it to large claims in gross terms." Net risk retention is
conservative, however, because Lexgarant cedes more than 50% of its
total premiums to a high-quality reinsurance panel, which provides
substantial capacity. This allows the company to compete on the
aviation insurance market with significantly larger and stronger
players, but makes it dependent on the availability of reinsurance
protection.
Lexgarant benefits from having a liquid investment portfolio,
comprising mostly cash and cash equivalents in current accounts
with Russian subsidiaries of foreign banks, and largely placed in
foreign currency. S&P notes that Lexgarant posted significant
foreign exchange gains for first-quarter 2020 due to Russian ruble
depreciation.
Outlook
S&P said, "The stable outlook on Lexgarant reflects our view that
the insurer is well positioned to weather the negative consequences
of the COVID-19 pandemic, which poses significant risk to aviation
insurance premium growth. We believe that, despite expected premium
decline in 2020, Lexgarant will maintain its niche in the aviation
insurance, as well as its superior reinsurance protection. We
believe it is therefore well positioned to resume premium growth in
2021-2022. We expect Lexgarant's technical results will continue to
be volatile in 2020, with some increase of expense ratio due to a
reduction in its premium base, but supported by positive
revaluation of investments."
Upside scenario
S&P sees a positive rating action as possible in the next 12 month
if the company proves resilient to the consequences of the COVID-19
pandemic, resuming premium growth in 2021-2022 while maintaining
current capital and liquidity levels.
Downside scenario
S&P said, "We would consider lowering the rating in the next 12
months if the decline in Lexgarant's premium base is more
significant than we expect, and its operating performance
deteriorates. We could also consider a negative rating action if
Lexgarant's financial risk position significantly worsens, due to,
for example, unexpected substantial losses or weakening liquidity,
or if we believe Lexgarant cannot maintain its aviation reinsurance
protection, which we currently view as a rating strength."
Ratings Score Snapshot
Rosgosstrakh
Business risk profile Weak
Competitive position Satisfactory
IICRA High risk
Financial risk profile Fair
Capital and earnings Strong
Risk exposure High
Funding structure Neutral
Anchor bb-
Modifiers
Governance Neutral
Liquidity Adequate
Comparable ratings analysis 0
Financial strength rating BB-
Energogarant PJSIC
Business risk profile Weak
Competitive position Satisfactory
IICRA High risk
Financial risk profile Fair
Capital and earnings Satisfactory
Risk exposure Moderately high
Funding structure Neutral
Anchor* bb-
Modifiers
Governance Neutral
Liquidity Adequate
Comparable ratings analysis 0
Financial strength rating BB-
Lexgarant
Business risk profile Weak
Competitive position Fair
IICRA Moderately high risk
Financial risk profile Marginal
Capital and earnings Satisfactory
Risk exposure High
Funding structure Neutral
Anchor b+
Modifiers
Governance Neutral
Liquidity Adequate
Comparable ratings analysis 0
Financial strength rating B+
*This is influenced by S&P's view of Energogarant's underwriting
performance track record compared with peers.
IICRA--Insurance Industry And Country Risk Assessment.
Ratings List
LEXGARANT Insurance Co. Ltd.
Ratings Affirmed; Outlook Action
To From
LEXGARANT Insurance Co. Ltd.
Issuer Credit Rating B+/Stable/-- B+/Positive/--
Financial Strength Rating B+/Stable/-- B+/Positive/--
Rosgosstrakh PJSC
Ratings Affirmed
Rosgosstrakh PJSC
Issuer Credit Rating BB-/Positive/--
Financial Strength Rating BB-/Positive/--
Energogarant PJSIC
Ratings Affirmed
Energogarant PJSIC
Issuer Credit Rating BB-/Positive/--
Financial Strength Rating BB-/Positive/--
O1 PROPERTIES: S&P Downgrades ICR to 'D' on Missed Coupon Payment
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on O1
Properties Ltd. (O1) to 'D' from 'CC' and the issue rating on its
senior unsecured bonds to 'D' from 'C'.
S&P said, "We lowered the issuer and issue ratings to 'D' because
O1 did not pay the coupon, due March 27, 2020, for its $350 million
senior secured notes maturing in 2021. The downgrade is also
because we believe the company will not make this payment. We base
our opinion on the company's weak liquidity position, with assumed
very low cash levels and the absence of committed lines. We
previously said O1's default on its mezzanine loan and cross
default on most of its secured debt was a virtual certainty.
Subsequently, we consider the nonpayment a general default and we
believe the company will not be able to pay for most of its
obligations as they come due."
=========
S P A I N
=========
CIRSA ENTERPRISES: S&P Lowers ICR to 'B-', Outlook Negative
-----------------------------------------------------------
S&P Global Ratings said that it has taken the following rating
actions on three European gaming operators:
-- S&P lowered its long-term issuer credit rating on Cirsa
Enterprises S.L.U. by one notch to 'B-', and assigned a negative
outlook.
-- S&P lowered its long-term issuer credit rating on Sazka Group
a.s. by one notch to 'B+' and assigned a negative outlook.
-- S&P lowered its long-term issuer credit rating on OPAP S.A. by
one notch to 'B+' and assigned a negative outlook.
S&P expects earnings and cash flow to weaken materially in 2020 due
to the temporary closure of gaming sites. The negative rating
actions on Cirsa, Sazka Group, and OPAP reflect the companies'
exposure to COVID-19-related disruptions, notably through the
temporary closure of most of their gaming sites. S&P Global Ratings
acknowledges a high degree of uncertainty about the rate of spread
and peak of the coronavirus outbreak. Some government authorities
estimate the pandemic will peak about midyear 2020, and we are
using this assumption in assessing the economic and credit
implications. Under this scenario S&P assumes that gaming sites
will be closed for three months, until the end of June, and that
the ramp-up will progress through the rest of 2020, leading to a
material earnings and cash-flow decline.
S&P expects gaming operators will takes measures to protect
earnings, cash flow, and liquidity through 2020. S&P understands
that gaming operators are working toward minimizing costs to
mitigate revenue loss, with initiatives targeting marketing, labor,
and rental expenses, and a freeze of nonessential maintenance and
development capital expenditure (capex). In addition, several
governments globally have announced efforts to alleviate the
pressure on companies affected by the health emergency, such as
contributions for salaries and the deferral of social and fiscal
charges.
S&P said, "Our ratings on Cirsa, Sazka, and OPAP factor in our
expectation that these companies will maintain adequate liquidity
positions in the next 12 months. We believe these three gaming
operators do not face any imminent liquidity risk over the next 12
months, however a prolonged shutdown could place substantial
pressure on their credit quality. We estimate their available
liquidity will be sufficient to cover likely liquidity needs
related to fixed charges, maintenance capex, dividends, and working
capital swings in the next 12 months.
"A relaxation of confinement measures following COVID-19's peak in
mid-2020, as per our base case, may not result in an immediate
bounce-back in demand. It is possible that, even after the virus
peaks, governments could continue with lockdowns, social
distancing, or containment measures to manage the capacity response
in their healthcare systems. As the situation evolves, we will
update our assumptions and estimates accordingly."
DEOLEO SA: Bank Debt Trades at 62% Discount
-------------------------------------------
Participations in a syndicated loan under which Deoleo SA is a
borrower were trading in the secondary market around 38
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR460 million term loan is scheduled to mature on June 12,
2021. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Spain.
DEOLEO SA: Bank Debt Trades at 98.3% Discount
---------------------------------------------
Participations in a syndicated loan under which Deoleo SA is a
borrower were trading in the secondary market around 1.75
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR55 million term loan is scheduled to mature on June 13,
2022. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Spain.
DURO FELGUERA: Bank Debt Trades at 66% Discount
-----------------------------------------------
Participations in a syndicated loan under which Duro Felguera SA is
a borrower were trading in the secondary market around 34
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR85 million term loan is scheduled to mature on July 27,
2023. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is Spain.
===========
S W E D E N
===========
MVV INTERNATIONAL: Coronavirus Impact Prompts Bankruptcy Filing
---------------------------------------------------------------
Reuters reports that H&D Wireless on April 20 said MVV
International AB, the company within HDW Group, applied for
bankruptcy as a consequence of the coronavirus.
MVV International AB was founded in 1990. The company's line of
business includes providing professional engineering services. It
is headquartered in Vara, Sweden.
=====================
S W I T Z E R L A N D
=====================
VERISURE HOLDING: Moody's Rates EUR150MM Sr. Secured Notes 'B1'
---------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the proposed
senior secured EUR150 million floating rate notes due 2025 issued
by Verisure Holding AB, a wholly owned subsidiary of Verisure
Midholding AB. Verisure's B2 Corporate Family Rating, B2-PD
Probability of Default Rating and senior unsecured notes ratings
remain unchanged. The ratings of the existing senior secured notes
issued by Verisure Holding AB also remain unchanged. The outlook
remains stable.
RATINGS RATIONALE
The B1 rating of the proposed notes is in line with the existing
senior secured debt. Proceeds from the proposed issuance will be
used to repay drawings under the EUR300 million revolving credit
facility that stood at EUR178 million as of April 13, 2020. The
largely leverage neutral transaction will strengthen Verisure's
liquidity.
The company's stable and resilient business model of providing home
alarm systems and monitoring for mostly residential customers will
help it cushion the impact of the coronavirus outbreak. The main
effect of the outbreak on the company has been a greatly reduced
ability to acquire new customers. Moody's understands that there
has been no spike in the cancellation rate from the 3.4 million
customers who provide the company with a stable source of recurring
monthly revenues. Nonetheless, Moody's forecasts are under constant
review to assess the impact of the coronavirus pandemic on the
company's trading performance, liquidity, and leverage.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.
Governance risks taken into consideration in Verisure's credit
profile include its ownership by private equity sponsors, who tend
to have aggressive financial policies favoring high leverage,
shareholder-friendly policies such as dividend recapitalizations
and the pursuit of acquisitive growth.
STRUCTURAL CONSIDERATIONS
The proposed EUR150 million notes will rank pari passu with the
existing senior secured debt and share the same security package.
The B1 ratings of the senior secured debt instruments reflect the
loss absorption buffer from the unsecured debt instruments rated
Caa1. As of December 31, 2019, there was EUR3.72 billion of
outstanding senior secured debt and EUR1.24 billion of unsecured
debt instruments.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive rating pressure could develop if Verisure reduces its
Moody's-adjusted gross debt/recurring monthly revenue (RMR) to
below 35x and increases FCF (before growth spending)/debt to 10%,
with FCF (after growth spending) turning positive. Along with these
metrics, for an upgrade, Moody's would also require at least stable
cancellation rates and customer acquisition costs, and limited
requirements for additional debt financing and dividend payments.
Downward rating pressure could develop if Verisure's
Moody's-adjusted gross debt/RMR remains above 42x for a prolonged
period or steady-state cash flow generation trends towards zero, or
if liquidity concerns were to arise.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Assignments:
Issuer: Verisure Holding AB
Senior Secured Regular Bond/Debenture, Assigned B1
PROFILE
Headquartered in Versoix, Switzerland, Verisure Midholding AB
(Verisure) is a leading provider of monitored alarm solutions
operating under the Securitas Direct and Verisure brand names. It
designs, sells and installs alarms, and provides ongoing monitoring
services to residential and small businesses across 16 countries in
Europe and Latin America. The customer base consists of around 3.4
million subscribers as of February 2020. The company had 17,144
employees and reported revenues of EUR1.9 billion as of year-end
2019. The company was founded in 1988 as a unit of Securitas AB and
is currently majority owned by the private equity firm Hellman &
Friedman.
===========
T U R K E Y
===========
TURKIYE PETROL: Fitch Affirms 'BB-' LT IDR, Alters Outlook to Neg.
------------------------------------------------------------------
Fitch Ratings has revised Turkiye Petrol Rafinerileri A.S.'s
Outlook to Negative from Stable, while affirming the refinery
company's Long-Term Foreign- and Local-Currency Issuer Default
Ratings at 'BB-'.
The revision of the Outlook results from a forecast increase in
leverage due to lower demand for fuels caused by
coronavirus-related lockdowns. Fitch expects Tupras's funds from
operations net leverage to increase to 5.8x in 2020 from an already
elevated 4.0x in 2019, before falling from 2021.
Tupras's rating is supported by the company's leadership in the
Turkish refined product market, operation of some of the most
complex set of refineries in EMEA and an ability to access and
process cheaper, heavier and sour crudes from a number of
suppliers. Similar to other Turkish corporates, Tupras is reliant
on uninterrupted access to local bank funding to support its
liquidity.
KEY RATING DRIVERS
Lower Demand due to Pandemic: The market for fuels in 2Q20 is
highly challenging. European refiners are reporting a 50%-60%
reduction in demand at retail stations due to restricted movement
of people and closure of businesses aimed at curbing the spread of
the coronavirus and Fitch expects a similar level of decline to hit
Tupras in its core domestic market. Some European, the US and
Indian refiners have already announced reduction in capacity
utilisation of 30% to 50%.
Recovery Expected in 2H20: Fitch assumes a gradual recovery in
demand in 2H20 and no second wave of lockdowns. This should help
more complex European refiners, such as Tupras, defend margins in
2H20. Nevertheless, Fitch expects Tupras's EBITDA to decrease 49%
yoy in 2020.
Healthy Margins in 1Q20: Tupras and its more complex European
Fitch-rated peers have reported fairly strong margins in YTD2020.
In January and February margins were on average stronger than a
year ago when imports from the US had been particularly high in the
Mediterranean region. In March 2020 the drop in oil prices lifted
refining margins, which further strengthened in the second half of
the month on lower competition as the US and Asian refiners reduced
capacity utilisation following lockdowns in their domestic markets.
Industrial consumption of fuels has been affected less than sales
to retail customers. Correspondingly, diesel crack spreads were
fairly strong while gasoline margins weak.
Difficult Year Ahead: Fitch expects the overall impact of the
pandemic will be materially negative for the sector due to a severe
drop in demand. However, supply-and-demand imbalances in the market
for fuels and the overcapacity in the oil market widening the
differentials between heavy crude oil and Brent may, to a limited
extent, help European refiners navigate market difficulties in
2020. The expected wider heavy crude differentials is especially
important for Tupras, which can benefit from access to a variety
crude oil types being located on the Bosphorus Strait, an important
transportation route for crude oil to Europe.
Low Capex, No Dividends: Following the spike in capex in 2013-2015
due to investment in the residuum- upgrading project, Tupras's
capex requirements are small at around USD200 million annually.
Tupras has a policy of distributing large dividends, but in light
of the weaker results Fitch does not expect the company to pay
dividends in 2020 and 2021. Despite the lower capital intensity and
shareholder distributions, Fitch expects Tupras to report elevated
leverage metrics in 2020.
Higher Leverage: EBITDA in 2019 decreased 41% yoy to TRY3.7
billion, while FFO net leverage increased to 4.0x from 2.4x mainly
due to lower refining margins and narrower differentials between
heavier crude oil and Brent. Based on Fitch's assumptions for
refining margins and fuel demand, Fitch expects net leverage to
spike to 5.8x in 2020, which may result in Tupras breaching its
covenant. Should this happen, Fitch would expect banks to grant
Tupras waivers due to the temporary character of the breach as
Fitch expects its net leverage metrics to strengthen to 2.8x in
2021 with further deleveraging thereafter.
Operational Risks on the Rise: Tupras has a robust record in health
and safety standards and implemented a number of measures to
counter the risk of coronavirus spread among its employees.
However, the pandemic may put additional pressure on operations of
oil and gas companies. Limits to the transfer of people between
countries and business interruption risk at refineries due to
health-related concerns are an increasing risk for the industry.
FX Risk Managed: Tupras's debt and costs are predominantly in US
dollars, while the majority of sales are denominated in Turkish
lira. The resulting FX risks are mitigated by the natural hedge in
the company's prices for refined oil products being ultimately US
dollar-linked, albeit with a time lag. Any negative effects on
Tupras's leverage ratios from FX changes should be temporary and
are most likely to occur if there is significant lira weakening
around the year-end. To further mitigate the effects of FX
volatility Tupras maintains ample liquidity in US dollar- and
euro-denominated deposits.
Sovereign Rating a Constraint: Fitch does not view Tupras's
Long-term Local-Currency IDR being above Turkey's Long-Term Local
Currency IDR due to domestic operations and a policy of holding
cash in Turkish banks. Weaker lira, lower growth and weaker
domestic demand have had a limited impact on Tupras's results so
far, but the spike in interest rates in 2019 significantly
increased interest costs. A material, prolonged economic slowdown
could have negative consequences on industrial activity and depress
demand for fuels beyond what is currently expected from the
pandemic. Weakening of the credit profiles of Turkish banks could
also affect Tupras's access to liquidity sources.
High Complexity, Low Integration: Tupras maintains a leading
position in the Turkish oil refining market and operates some of
the most complex set of refineries in EMEA. Tupras remains focused
on refining and has little vertical integration compared with MOL
and PKN ORLEN, which are diversified into upstream, petrochemicals
and retail. Tupras's 40% stake in Opet, Turkey's second-largest
fuel retailer, partly mitigates this lack of integration, but
increases Tupras's earnings volatility through the cycle.
DERIVATION SUMMARY
Tupras' closest EMEA peers are Polski Koncern Naftowy ORLEN S.A.
(PKN, BBB-/Stable) and MOL Hungarian Oil and Gas Company
(BBB-/Stable). PKN's 689 mbbl/d downstream capacity exceeds
Tupras's (564 mbbl/d). Moreover, PKN ORLEN benefits from an
integrated petrochemical segment, a large retail network and some
exposure to upstream. MOL's downstream capacity (417 mbbl/d) is
smaller than Tupras's, but the company's credit profile is stronger
due to an integrated business profile with a 100 mbbl/d of upstream
production that tends to provide countercyclical cash flows.
Unlike MOL and PKN ORLEN, Tupras operates in a deficit fuels market
under normal market conditions, while the coastal location of its
two principal refineries allows it to actively manage crude
feedstock supplies. Tupras's leverage is higher than that of MOL
and PKN ORLEN due to high historical and projected dividends, but
the company has lower capital intensity than its peers.
KEY ASSUMPTIONS
- Fitch oil price assumption of USD35/bbl in 2020, USD45/bbl in
2021, USD53/bbl in 2022, and USD55/bbl thereafter.
- Volume to fall around 20% yoy in 2020, then by 5% in 2021
compared with 2019.
- Capex in line with management guidance.
- No dividend in 2020 and 2021.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Negative Rating Action/Downgrade:
- FFO net leverage consistently above 4.0x and/or FFO gross
leverage above 5.0x on a sustained basis
- A downgrade of Turkey's sovereign rating, or a worsening
operating environment in the country
- Slower-than-expected recovery in demand for fuels following the
lockdowns.
The rating is on a Negative Outlook; therefore, a positive rating
action is unlikely in the short term.
Developments That May, Individually or Collectively, Lead to
Positive Rating Action/Upgrade:
- FFO net leverage consistently below 4.0x and/or FFO gross
leverage below 5.0x assuming Turkey's sovereign rating remains at
'BB-', which would lead to the Outlook being revised to Stable.
- FFO net leverage consistently below 3.5x and/or FFO gross
leverage consistently below 4.5x along with a positive rating
action on Turkey sovereign rating, which could lead to an upgrade.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Subject to Bank Funding: As of end-2019 reported cash and
cash equivalents of TRY8.8 billion (net of restricted cash) covered
short-term debt of TRY7.2 billion, adjusted for factoring of TRY2.1
billion. Combined with Tupras's debt maturity profile over the next
24 months, the company's liquidity is therefore contingent on
continued access to domestic banks. This is not uncommon among
Turkish corporates but exposes the company to systemic liquidity
risk. Tupras also keeps large deposits at a related-party bank Yapi
ve Kredi Bankasi (B+/Negative), which amounted to TRY2 billion at
end-2019. Fitch also uses gross leverage metrics as a rating
sensitivity to reflect exposure to local banks and related-party
bank.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
ESG issues are credit neutral or have only a minimal credit impact
on the entity(ies), either due to their nature or the way in which
they are being managed by the entity(ies).
===========================
U N I T E D K I N G D O M
===========================
AI CONVOY: S&P Assigns 'B' Issuer Credit Rating, Outlook Negative
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issuer credit and
issue ratings to U.K.-based and Luxembourg-incorporated AI Convoy
(Luxembourg) S.a.r.l. (Cobham) and its first-lien debt. The
recovery rating on the first-lien debt is '3'.
The acquisition of Cobham by U.S.-based financial sponsor Advent
has resulted in a highly leveraged capital structure, but will help
Cobham to bid for U.S. contracts from which it would historically
have been excluded. AI Convoy (Luxembourg) S.a.r.l (Cobham) has
been acquired by private-equity firm Advent and raised $2.847
billion of new term debt as part of the transaction. This debt
comprises a $350 million revolving credit facility (RCF), $2.175
billion of first-lien debt (comprising an EUR885 million
euro-denominated first-lien term loan B and a $1.188 billion
U.S.-dollar-denominated tranche of first-lien debt), and a $672
million U.S.-dollar-denominated second-lien loan. S&P also notes
the presence in the group structure of $690 million equivalent
sterling denominated payment-in-kind (PIK) preference shares held
by minority co-investor Blackstone (that S&P views as debt-like)
and $1.025 billion of interest-free preferred equity certificates
(IFPECs) held by Advent and Blackstone (that we also view as
debt-like).
Post transaction, S&P Global Ratings-adjusted leverage for
full-year 2020 is forecast to be about 10x including the $690
million equivalent sterling-denominated preference shares and
GBP1.025 billion IFPECs, and about 6.5x excluding them, making
Cobham one of the more highly leveraged issuers in the Europe,
Middle East, and Africa aerospace and defense portfolio. However,
S&P forecasts that the company will exhibit adjusted margins of
about 18%, and robust free operating cash flow (FOCF) generation,
with good cash interest coverage and adequate liquidity.
The majority of Cobham's sales are to U.S. defense/security firms
(38% of 2018 revenue), major commercial aviation companies (36%),
and U.K./rest of the world defense/security (26%) firms. Cobham is
present on many of the large household name defense and commercial
aviation platforms (providing good product and service diversity).
S&P said, "Therefore, we consider Cobham to benefit from exposure
to end markets that are exhibiting robust demand and growth
prospects, coupled with good contract visibility and longevity. In
our view, Cobham is a leading incumbent in its core air-to-air,
oxygen supply, and other mission critical businesses, with a strong
advantage and market position having produced sought-after
equipment for decades. We view barriers to entry as high once
Cobham is on a platform/has already won a contract. This is the
case across most divisions and especially on sole source programs,
for example air-to-air refueling. Product development can take up
to five years on average for design and certification. Therefore,
given the high qualification costs, switching entrenched suppliers
is expensive and unappealing to many prime firms. Cobham's
acquisition by a U.S.-based owner will likely help it to bid for
U.S. defense contracts from which it may have been excluded in the
past. However, at this stage, we do not include material upside
from this potential opportunity in our forecasts."
Cobham exhibits high geographic concentration and a recent history
of volatile profitability (versus peers), but operational
challenges seem to be consigned to the past and are fully
provisioned for going forward. S&P considers Cobham's position as
a Tier 2/3 supplier, with high geographic concentration and a
recent history of volatile profitability (versus many rated peers)
an anchor to the fair business risk profile. Despite producing and
distributing in many countries and regions around the globe, nearly
52% of group revenue is generated in the U.S, which together with
the U.K. and Australia accounts for nearly three-quarters of sales.
Overall, group revenue has not increased significantly over the
past decade (full-year 2009 revenue was GBP1.88 billion versus
full-year 2019 expected revenue of GBP2.05 billion). This reflects
a period of opportunistic but not entirely successful mergers and
acquisitions (M&A) and disposals, including the challenging
acquisition and integration of Aeroflex in 2014. This acquisition
and integration was followed by certification problems and late
deliveries for equipment supplied to the Boeing KC-46 Tanker
program from 2016 through 2018, on which Cobham is the sole source
supplier for the hose and drogue refueling system, wing pods, fuel
tanks, and communications equipment. Cobham booked a GBP150 million
provision in 2016 and a further GBP200 million provision in 2018
relating to this program.
These operational challenges and unexpected costs have seen
Cobham's profitability fluctuate greatly in the past few years when
compared with its rated peers. Although a costly experience, we
understand that the difficulties with the KC-46 contract are now
largely over, with the certification of primary systems complete
and the first delivery accepted by the U.S. Department of Defense
in late 2018.
As airlines delay taking delivery of new aircraft, Airbus and
Boeing could potentially lower their production rates. As
Airbus and Boeing are important customers for Cobham, any reduction
in these companies' production rates would also potentially affect
Cobham's production volumes, revenues, and absolute EBITDA, which
could put pressure on the company's S&P Global Ratings-adjusted
credit metrics. However, S&P believes that Cobham's management is
well prepared to adapt the business quickly and preserve margins.
S&P said, "As governments attempt to halt the spread of the
COVID-19 pandemic, with most global and regional air travel shut
down, we note that the majority of airlines have grounded most or
all of their fleets. We currently expect a likely fall of about 30%
in airline flying hours in 2019. We expect many airlines to push
hard to delay taking delivery of new planes until at least the end
of the summer 2020. This, coupled with the potential for COVID-19
to cause future temporary production facility shutdowns, will
likely affect delivery and therefore production rates at Airbus and
Boeing.
"We therefore expect that Airbus and Boeing will likely lower
delivery and production rates in 2020, which will have a knock-on
effect further down their supply chains.
"We note that Boeing recently temporarily halted production of the
KC-46, which may (if the shutdown is repeated) result in
lower-than-anticipated revenues and cash flows coming from this
contract in 2020. We previously assumed in our base case that this
project was about to enter full production and as such we were
expecting contract-related margins to increase. So in this regard
there is some downside sensitivity to our base case if Boeing does
not fully meet assumed production rates in 2020. If it does, we
anticipate that the related provisions Cobham previously took will
unwind over 2019 and 2020 and be complete by 2021. We include the
expected cash outflows relating to this provision to unwind in our
forecasts, along with the scheduled controlled foreign corporation
(CFC) tax settlement payment(s).
"We assess Cobham as a financial sponsor-related entity given its
ownership by Advent and Blackstone, following the acquisition.
Co-investor Blackstone participates in several tranches of Cobham's
debt, holding all of the $690 million equivalent
sterling-denominated preference shares, half of the second-lien,
and a tranche of the first-lien. Although an equity sponsor's
participation in the debt indicates its strong commitment toward
the investment, it could also present unforeseen obstacles to other
lenders if Cobham were in a distressed situation. We also note that
there are no transfer restrictions (to third parties of the
preference shares or IFPECS). We therefore treat these instruments
as debt. When calculating adjusted debt, we consider Cobham's new
debt facilities and then adjust for operating leases,
pension-related obligations, and the preference shares and IFPECS.
We apply a 100% cash haircut and also consider that Cobham may
follow a shareholder-friendly dividend policy.
"We assess Cobham's management and governance as fair, reflecting
its clear strategic planning process and good depth and breadth of
management." However, Cobham has been delisted from the London
Stock Exchange and taken private under new ownership by a
private-equity sponsor. Management will need to steer the business
through a period of transformation under the new ownership and also
navigate uncertainty caused by the COVID-19 pandemic, establishing
a new track record in the process.
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak.
S&P said, "Some government authorities estimate the pandemic will
peak about midyear, and we are using this assumption in assessing
the economic and credit implications. We believe the measures
adopted to contain COVID-19 have pushed the global economy into
recession. As the situation evolves, we will update our assumptions
and estimates accordingly."
The negative outlook reflects the risk of workplace shutdowns and
potential reduced productivity as a result of measures taken by
governments across the world to halt the spread of the COVID-19
pandemic and protect workers. S&P now sees some risk that Cobham
might not maintain credit metrics commensurate with the rating,
specifically adjusted EBITDA margins of about 18%, adjusted debt to
EBITDA of 10x including preference share instruments (that we treat
as debt-like), or about 6.5x excluding them, robust FOCF
generation, and FFO cash interest cover of more than 2.5x.
S&P said, "We could lower the rating on Cobham if its EBITDA
margins were to weaken materially or leverage were to rise further
than our current base case. We could also lower the ratings if FFO
cash interest coverage decreases to below 2.5x because of
operational setbacks or a debt-financed financial policy or
acquisitions. We could also take a negative rating action if
adjusted FOCF were to materially weaken, because in our view this
would lead to an unsustainable capital structure. We could also
lower the rating if the ratio of liquidity sources to uses were to
decrease to less than 1.2x
"We could revise the outlook to stable if COVID-19-related risks
were to abate and Cobham were to continue to maintain its margins
at around 18% or more, generate robust FOCF, maintain adequate
liquidity, and exhibit FFO cash interest cover of more than 2.5x."
AI LADDER: S&P Alters Outlook to Negative & Affirms 'B' LT ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on U.K.-based technology
company AI Ladder (Laird) to negative and affirmed the 'B'
long-term issuer credit rating on the company.
S&P said, "We expect the COVID-19 pandemic to weigh on revenue in
2020, and see downside risk to our forecast in case of a protracted
recession. We think the economic damage caused by the COVID-19
pandemic--which we reflect in our macroeconomic forecast for a
global recession in 2020--will harm Laird's topline this year. We
expect the pandemic will particularly affect Laird's orders from
the automotive sector and lead to lower demand for a range of
applications related to industrial and consumer goods-related end
markets, which together represented about 49% of Laird's revenue in
2019. We now forecast a 3%-5% revenue decline from continuing
operations in 2020, compared with our previous expectation of 3%-5%
growth. That said, we note that Laird has diversified end-market
exposure, which should offer some downside protection. In
particular, the company generates about 27% of revenue from telecom
and other network equipment, which we consider to be fairly
resilient, and about 10% from the medical end-market, which may
benefit from increased demand from healthcare clients. However, the
outlook revision also reflects the high level of uncertainty
regarding the intensity and duration of the COVID-19 pandemic. We
currently predict the spread of the pandemic to peak mid-year 2020,
before economic activity recovers in the second half of 2020.
Lockdown extensions in key economies could trigger prolonged
production stoppages or weaker demand in Laird's end markets, so
there are some downside risks to our revised forecast.
"The weaker topline will likely delay the credit metric improvement
that we previously expected would take place in 2020, but we still
foresee adjusted EBITDA growth. We think the lower revenue base
makes it less likely that Laird will meet our previous expectation
of a return to meaningfully positive FOCF in 2020 from negative $37
million in 2019. We also forecast Laird's adjusted debt to EBITDA
will remain near our downside trigger of 7.0x this year. This is
mainly due to the knock-on effect of lower revenue on EBITDA and
FOCF, which we expect to be $25 million-$40 million lower than in
our previous base case in 2020. However, we still expect the
company to achieve 8%-10% adjusted EBITDA growth in 2020,
equivalent to a margin expansion of about 2 percentage points. This
is primarily due to lower nonrecurring costs that we forecast to
decrease to less than $20 million in 2020 from more than $50
million in 2019, and expansion in the underlying profitability
compared with previous years. In 2019, Laird undertook an extensive
transformation program that followed the divestment of about half
of its revenue base, which included the sale of the less cash
generative connected vehicle division and the shutdown of its
low-margin handset business. The transformation also included an
overhaul of the company's operating model that is now almost
complete. We think Laird's FOCF could benefit from the suspension
of expansion-related capital expenditure (capex) and from cash
interest savings thanks to lower LIBOR base rates on its U.S.
dollar-denominated debt.
"The negative outlook reflects that we could lower the rating if
the economic downturn resulting from the COVID-19 pandemic harms
Laird's revenue, EBITDA, and FOCF more severely than we currently
expect.
"We would downgrade Laird if the economic impact from COVID-19
disruptions caused adjusted debt to EBITDA to stay above 7x and
unadjusted FOCF to remain significantly negative in 2020.
"We could revise the outlook to stable if Laird manages to contain
the effect of COVID-19 on its credit metrics, maintaining adjusted
debt to EBITDA of about 7.0x and achieving breakeven unadjusted
FOCF in 2020. Additionally, an outlook revision to stable would
depend on our expectation that adjusted FOCF to debt would approach
5% in 2021, along with EBITDA interest coverage of at least 2.0x.
"We assess Laird's liquidity as adequate, based on our estimate
that liquidity sources will cover uses by more than 1.5x over the
12 months from Jan. 1, 2020. The company had $58 million cash
available as of Dec. 31, 2019, before drawing its $133 million
revolving credit facility (RCF) in March 2020 as a precautionary
measure, and the company has no sizable debt maturities until
2025.
"We estimate that even in a stress scenario involving a 30% haircut
to our revised EBITDA forecast, and higher-than-expected working
capital outflows--related to receivables collection issues that may
occur as the crisis unfolds, for example--we think the company
should have sufficient funds for the next 12 months.
"That said, we do not regard Laird's liquidity as strong. This is
mainly because the company lacks a track record of debt issuance in
capital markets under its private-equity owners."
S&P expects principal liquidity sources for the 12 months from Jan.
1, 2020 will include:
-- About $191 million of cash, comprising $58 million balance
sheet cash as of Dec. 31, 2019 and the March 2020 usage of the $133
million RCF due 2024; and
-- Up to $20 million funds from operations.
S&P expects the principal liquidity uses for the same period will
include:
-- Annual amortization of $7.5 million under the first-lien term
loan;
-- Intra-year working capital outflows of up to $50 million; and
-- S&P's estimate of $25 million-$35 million of capex, including
capitalized development costs.
Except 1% annual amortization under the first-lien term loan, the
company has no upcoming maturities until the first-lien term loan,
under which $430 million was outstanding as of Dec. 31, 2019,
matures in 2025. The $143 million second-lien term loan matures in
2026.
The only maintenance covenant is a springing 7.85x senior secured
net leverage test for the RCF, which is tested if at least 40% of
the facility is drawn. Covenant secured net debt, as defined in the
documentation, excludes the second-lien debt. Covenant EBITDA is
before nonrecurring items and includes certain run-rate adjustments
for cost savings. S&P anticipates ample headroom of more than 40%
for this covenant in the next 12 months.
CIEP EPOCH: Bank Debt Trades at 82% Discount
--------------------------------------------
Participations in a syndicated loan under which CIEP Epoch Bidco
Ltd is a borrower were trading in the secondary market around 18
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The GBP200 million term loan is scheduled to mature on December 18,
2024. As of April 17, 2020, the full amount is drawn and
outstanding.
The Company's country of domicile is United Kingdom.
DUNDROD AND DISTRICT: Motorcycle Club Faces Wind Up Petition
------------------------------------------------------------
Kyle White at News Letter reports that a winding up petition has
been issued against the Dundrod and District Motorcycle Club.
The development is another setback for the future of the Ulster
Grand Prix road races and comes after confirmation last month that
the event had been cancelled, the report says.
With outstanding liabilities in the region of GBP295,000 and assets
amounting to only a modest cash balance, the Dundrod Club is
insolvent and is set to be forced into liquidation, according the
News Letter.
It is understood the directors of the club are likely to propose
voluntary liquidation after the winding up petition was issued by
the Department of Finance Land and Property Services, the report
relates.
A letter sent to creditors by insolvency practitioners Rachel
Fowler Advisory -- seen by the News Letter -- said the case was due
to be heard in Belfast High Court on April 23. However, the hearing
is set to be adjourned until a later date until restrictions
implemented as a result of the coronavirus pandemic are lifted.
"The Club is clearly insolvent in that its assets are valued at
much less than the money owed to creditors. In addition the
uncertainty around future races means that deficit will not be
recovered in the short-term. In the absence of significant
investment unfortunately the Club will be forced into Liquidation,"
the letter said, notes the report. "A winding up petition has been
issued against the Club by the Land and Property Service. Whilst
the matter is due to be heard on April 23, 2020 due to the Covid-19
pandemic the case will be adjourned until restrictions are
lifted."
A poor turnout at Dundrod in 2019 -- blamed on an inclement weather
forecast -- placed extra financial strain on the organising club,
the report notes.
Last month, the organisers confirmed that the race would not take
place in 2020 after months of speculation regarding the future of
the event, the News Letter recalls.
It was also revealed last month that Noel Johnston, Clerk of the
Course at the Ulster Grand Prix, had stepped down from the role
after 18 years, the report adds.
EAGLE BIDCO LTD: Bank Debt Trades at 16% Discount
-------------------------------------------------
Participations in a syndicated loan under which Eagle Bidco Ltd is
a borrower were trading in the secondary market around 84
cents-on-the-dollar during the week ended Fri., April 17, 2020,
according to Bloomberg's Evaluated Pricing service data.
The EUR50 million term loan is scheduled to mature on May 12, 2022.
As of April 17, 2020, the full amount is drawn and outstanding.
The Company's country of domicile is Great Britain.
MCLAREN GROUP: S&P Cuts Issuer Rating to 'CCC' on Weak Liquidity
----------------------------------------------------------------
S&P Global Ratings lowered its issuer and issue ratings on
U.K.-based luxury sports car manufacturer McLaren group Ltd.
(McLaren) to 'CCC' from 'B'. The recovery rating on the senior
secured notes is also moved to 'CCC', with a recovery rating of
'3'. S&P's rating on the revolving credit facility (RCF) is 'B-'
with a recovery rating of '1'.
The effect of COVID-19 on the luxury sports car market will see
McLaren's sales volumes severely diminish in 2020, resulting in
much weaker revenues, S&P Global Ratings-adjusted EBITDA, cash
flows, and credit metrics than we previously expected. Although
the scale is difficult to gauge at this stage, COVID-19 will
undoubtedly weigh on sales in McLaren's automotive division in
fiscal 2020 (84% of year-to-date third-quarter 2019 revenues) as
the economic fallout from the pandemic gathers pace. This will
weigh on core model sales through the summer if the pandemic
continues to escalate. Where management had already guided the
market to McLaren reducing production to about 4,000 cars in 2020
(from about 4,700 in 2019), in our base case we now assume that
McLaren will be able to produce about 2,700 cars at most in 2020.
S&P said, "We base our assumption on about 300 cars in the first
quarter, about 150 in the second quarter (including a one-month
total-production shut down), before swiftly ramping up to 1,000
cars in the third quarter and hitting production of about 1,250
cars in the fourth quarter. If the pandemic causes a
longer-than-expected production shut down then this 2,700 figure
could be lower. In the absence of new information to the contrary,
we assume pricing conditions and reported EBITDA margins will be
broadly the same as in 2019, resulting in total revenues for fiscal
2020 will be 40% to 50% lower than 2019. We also expense R&D
whereas McLaren capitalizes R&D so our S&P Global Ratings-adjusted
EBITDA is not meaningful for 2020."
The F1 racing calendar has been suspended with uncertainty around
the schedule. This will affect prize money as well as, potentially,
sponsorship revenue. S&P notes positively that McLaren is able to
freeze development costs for this year's car to use for next year's
season, so there is no meaningful cost inflation in this regard.
The McLaren Applied business is expected to remain fairly stable,
but it has a low absolute revenue and EBITDA base so does not
meaningfully influence overall group financial results.
McLaren has a global supply chain and sources about 50% of its
parts from the EU, some of which are critical to the production and
assembly of its cars in its U.K. plant. S&P believes that, at this
stage, McLaren has not come close to running out of critical parts;
it has decided to close its Woking plant until the end of April to
protect workers and react--as many auto OEMS have--to the economic
uncertainty and expected sudden drop in demand caused by the spread
of COVID-19.
Liquidity will become critical for all companies affected by the
economic disruption caused by COVID-19. However, McLaren's
liquidity is already weak and the company will likely need to seek
a waiver for its June 2020 covenant test. S&P said, "We estimate
that McLaren currently has about GBP100 million of cash on balance
sheet with no headroom remaining under a fully drawn RCF. We also
note that a portion of this cash relates to contractually
refundable customer deposits, so could be considered restricted
cash. The RCF has a springing consolidated net leverage ratio
covenant that will be tested in June because the senior secured RCF
is more than 35% drawn. McLaren also has access to an additional
GBP40 million of ancillary lines, which we do not consider a source
of liquidity because they are not fully committed and/or more than
12 months in maturity. Even if McLaren's lenders agree to waive the
June covenant, if the pandemic accelerates then we believe that
McLaren could find it challenging to ramp production back up again
with such low cash on balance sheet, and may need further support
from its shareholders."
Some of McLaren's costs will be reduced through participation in
government schemes, but the material reduction in revenues, S&P
Global Ratings-adjusted EBITDA, and cash flows, as well as an
increase in debt levels in 2019 after the issuance of new notes,
effectively leaves FFO cash interest coverage at zero. S&P expects
that, absent a return to production levels in line with our base
case, McLaren will need to pay its August 2020 bond coupon from
cash on balance sheet (rather than operational cash flows generated
from the business).
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P
said, "Some government authorities estimate the pandemic will peak
about midyear, and we are using this assumption in assessing the
economic and credit implications. We believe the measures adopted
to contain COVID-19 have pushed the global economy into recession.
As the situation evolves, we will update our assumptions and
estimates accordingly."
The negative outlook indicates that the COVID-19 pandemic is
expected to materially affect McLaren's sales, revenues,
profitability, and credit metrics through 2020. It also reflects
that McLaren's liquidity is weak and the company will likely need
to seek a waiver for its June 2020 covenant test.
S&P said, "We would lower the ratings if we thought the effect of
the COVID-19 pandemic on McLaren's core markets was going to become
more severe than we currently assume, with further downward
revisions to our base case for volumes in 2020. We could lower the
ratings on McLaren if further plant shutdowns were to occur, or if
the company's liquidity position were to weaken. Finally, we could
lower the ratings if McLaren's banks did not agree to waive its
covenant, to be tested in June.
"We could revise the outlook to stable if McLaren improves its
performance in line with our expectations and the risks relating to
the industry from COVID-19 become less imminent. We could also
revise the outlook to stable if, along with supportive
macroeconomic conditions, McLaren's banks were to waive the June
covenant test and/or McLaren's shareholders were to inject new
equity into the business."
MILLER HOMES: S&P Alters Outlook to Negative & Affirms 'B+' Rating
------------------------------------------------------------------
S&P Global Ratings revised its outlook on U.K.-Based homebuilder
Miller Homes Group Holdings plc to negative from stable and
affirmed its 'B+' rating.
The shutdown of the company's development sites will significantly
affect its overall sales volume for 2020. Over the past three
weeks, as COVID-19 has rapidly spread across the U.K., the British
government has published guidelines to help prevent the spread of
the novel coronavirus. The majority of homebuilders and developers,
including Miller Homes, followed the government's guidance and
closed most of construction sites and sales and marketing suites.
S&P believes the closure of sites may continue through the second
quarter of 2020. Hence, sales rates and the average selling price
will likely decline and cancellations may pick up, cutting into the
company's operational performance this year. In addition, U.K.
mortgage lenders have become more conservative and are imposing
stricter conditions for obtaining a mortgage or have halted new
mortgage lending altogether. The pandemic has also put jobs and
households' income at risk, which will pressure affordability and
possibly decrease demand for homes.
S&P said, "In our revised base case, we anticipate a drop of about
20%- 25% in revenue for 2020 with a gradual recovery the following
year. We have revised our base case for homebuilders in light of
the COVID-19 spread. In our base case for Miller Homes we
previously anticipated overall revenue growth of about 5% in the
next 12-24 months, supported by the company's strong 2019 results
and its expansion strategy. However, we now forecast a drop of
about 20%-25% in overall 2020 revenue, as a result of significantly
lower sales volumes in the second quarter in 2020, as well as some
drop in the average selling price, with a gradual recovery in 2021.
We incorporate in our base case our view that Miller Homes'
construction sites will likely remain closed for the next two to
three months and only a limited number of completions will occur
during that period. We also believe that the company is able to
reduce overhead costs and will postpone any discretionary spending
in the next couple of months. As a result, we currently anticipate
margins will drop by 100 to 150 basis points this year, recovering
slowly in 2021. Our base-case also incorporates the revolving
credit facility (RCF) being drawn down only during 2020. We now
forecast our adjusted ratio of gross debt to EBITDA will be around
5x in 2020 (2.5x in 2019), improving to below 4x 2021. We expect
EBITDA interest coverage to drop to about 3x for the same period
(5.2x in 2019), but remain above 3x over our forecast period
through 2021."
Miller Homes' funding and liquidity profile remains robust. The
company maintains adequate liquidity, which is supported by the
company's cash balance of roughly GBP240 million as of March 31,
2020, including about GBP130 million cash from the RCF, which S&P
understands Miller Homes has drawn only as a prudent step. In
addition, the company has no debt maturities in the next 24 months
and does not pay any dividends. S&P expects its covenant headroom,
at greater than 10%, to remain adequate.
S&P said, "The outlook is negative because we could downgrade
Miller Homes if its performance and credit ratios were to
deteriorate more than we currently anticipate, cutting the
company's developments, sales, or demand for its homes.
"We could lower the rating if Miller Homes' operating performance
weakens more than we currently anticipate because of a prolonged
shutdown of its development sites or a strong decline in demand for
its homes, even after the lockdown period, such that the company's
FOCF decreases significantly, or debt to EBITDA increases to well
above 4x and EBITDA interest coverage declines to 3x or less, on a
sustainable basis.
"We could revise the outlook to stable if Miller Homes can offset
the period of shutdown of its development sites and sales pick up
to normalized levels once the company reopens the sites. This could
happen if the company manages to continue sales online during the
shutdown while being able to adjust operational costs, and
maintains a solid operational performance throughout 2020,
supporting an adjusted debt-to-EBITDA ratio of below 4x and EBITDA
interest coverage of more than 3x."
NMC HEALTH: KBBO Weighs Strategic Options for Business
------------------------------------------------------
Nicolas Parasie, Archana Narayanan and Matthew Martin at Bloomberg
News report that Abu Dhabi-based KBBO Group, once one of NMC Health
Plc's biggest shareholders, plans to restructure its debt and is
weighing strategic options for the business, people familiar with
the matter said.
According to Bloomberg, the people said KPMG LLP is advising the
privately-held investment firm on the asset review along with ways
to address the company's debt load.
Bloomberg notes that one of the people said the company plans to
negotiate with its creditors under a process supervised by the
United Arab Emirates' Financial Restructuring Committee, which was
set up in 2018 to oversee out-of-court financial restructurings.
It's not immediately clear how much debt KBBO is looking to
restructure, Bloomberg states.
KBBO Chairman Khalifa Bin Butti Omeir Al Muhairi stepped down as
vice-chairman of embattled NMC in February amid confusion over the
exact size of his stake in the hospital operator, which is being
run by administrators Alvarez & Marsal Inc. after it succumbed to
creditor demands, Bloomberg recounts.
Mr. Al Muhairi had pledged NMC shares as collateral against loans,
Bloomberg relays, citing a December 2017 filing. He sold a
combined 15% stake in the company along with former director Saeed
Mohamed Butti Mohamed Khalfan Al Qebaisi in January, Bloomberg
states.
The people, as cited by Bloomberg, said deliberations over the debt
restructuring are at an early stage, and no final decisions have
been made on what actions will be taken.
NMC shares plunged since mid-December before being suspended amid
allegations of fraud, Bloomberg notes. KBBO and some of NMC's
other major shareholders also held a significant stake in financial
services firm Finablr Plc, which has also been suspended, according
to Bloomberg.
PETRA DIAMONDS: Moody's Cuts CFR to Caa2, Outlook Negative
----------------------------------------------------------
Moody's Investors Service has downgraded Petra Diamonds Limited's
corporate family rating to Caa2 from Caa1 and its probability of
default rating to Caa2-PD from Caa1-PD. Moody's has also downgraded
to Caa3 from Caa1 the rating on the $650 million guaranteed senior
secured second lien notes due in May 2022 issued by Petra Diamonds
US$ Treasury Plc, a wholly owned subsidiary of Petra. The outlook
is negative.
RATINGS RATIONALE
Its rating action reflects Moody's view that Petra's credit metrics
and liquidity profile will deteriorate over the coming 12-18
months, contrary to the rating agency's previous expectation of a
modest and gradual improvement. The rapid and widening spread of
the coronavirus outbreak, deteriorating global economic outlook,
falling oil prices, and asset price declines are creating a severe
and extensive credit shock across many sectors, regions and
markets, including the mining sector. More specifically, the
weaknesses in Petra's credit profile, including its exposure to
diamond prices, has left it vulnerable to shifts in market
sentiment in these unprecedented operating conditions. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety.
The Government of South Africa in response to the pandemic
initiated a 21-day lockdown effective March 27, which has now been
extended by an additional two weeks up until the end of April. As a
result, Petra's mines in South Africa are operating at
significantly scaled down levels while its Williamson mine in
Tanzania is being placed under care and maintenance from the middle
of April. The depressed diamond market conditions and production
disruptions significantly heightens refinancing risk for Petra and
increases the likelihood of a distressed exchange ahead of its $650
million notes which mature in May 2022.
Rough diamond prices have continued to be under pressure with the
coronavirus creating a headwind against a potential recovery.
Moody's expects global consumer demand for diamond jewelry will
fall in 2020, leading to a drop in demand for rough diamonds from
cutters and polishers, which may in turn force miners to cut prices
or further reduce production. There are currently significant
disruptions in the diamond value chain, with government imposed
restrictions on movement causing suspension of mining activities,
cancellation of sales at diamond trading hubs, a halt in demand
from polishers and cutters (ca.90% of which are located in India),
and closure of jewelry shops in key markets such as China and the
US.
LIQUIDITY
Petra's liquidity profile is weak in light of the significant
uncertainties in the market and as the $650 million May 2022 bond
comes closer to maturity. As at December 31, 2019, the company had
unrestricted cash balances of $40 million and ZAR1.5 billion in
undrawn credit facilities. The latter comprises of a ZAR1 billion
revolving credit facility that matures in October 2021 and a ZAR500
million working capital facility that is renewed annually.
The company has fully drawn down on its working capital facility
and is in discussions with its lenders to access the RCF. Moody's
forecasts that Petra will be unable to meet the financial covenant
requirements under both of its credit facilities. While there is a
track record of covenant amendments given Petra's strong
relationship with domestic lenders, the latest being a waiver
received for the December 31, 2019 test date, the current
environment increases the uncertainty on the reliable access to
these facilities and the terms and conditions could become more
stringent.
STRUCTURAL CONSIDERATIONS
Petra's $650 million senior secured second lien notes rank behind
the ZAR1.5 billion senior secured first lien credit facilities and
the $49.3 million BEE loan guarantee obligation which is part of
the first lien creditor class.
Moody's previously forecasted that the undrawn credit facilities
will unlikely be used considering the expected free cash flow
generation over the next several years. However, with operating
conditions further deteriorating, Petra is likely to rely on its
bank facilities for liquidity support. Moody's has therefore
notched down the rating of the notes relative to the CFR to reflect
bond holders ranking behind bank and BEE debt.
RATIONALE FOR NEGATIVE OUTLOOK
The negative outlook reflects the very weak diamond market and
pressure on liquidity which has been exacerbated by the temporary
suspension of mine operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require Petra addressing refinancing risk
associated with its May 2022 notes, an overall reduction in gross
leverage, and an improvement in its liquidity position. Positive
pressure would also require (1) an assessment of Petra's medium to
long-term investment and funding requirements to extend the life of
its mines; and (2) EBIT/interest expense being sustainably above
1.0x.
The ratings could be downgraded if (1) the likelihood of a
distressed exchange becomes evident; or (2) there is a further
deterioration in Petra's liquidity position.
LIST OF AFFECTED RATINGS
Downgrades:
Issuer: Petra Diamonds Limited
Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD
Corporate Family Rating, Downgraded to Caa2 from Caa1
Issuer: Petra Diamonds US$ Treasury Plc
BACKED Senior Secured Regular Bond/Debenture, Downgraded to Caa3
from Caa1
Outlook Actions:
Issuer: Petra Diamonds Limited
Outlook, Changed to Negative from Stable
Issuer: Petra Diamonds US$ Treasury Plc
Outlook, Changed to Negative from Stable
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Mining
published in September 2018.
COMPANY PROFILE
Petra is a rough diamond producer listed on the London Stock
Exchange, registered in Bermuda and with its group management
office domiciled in the United Kingdom. The company's primary
assets are the Cullinan, Finsch and Koffiefontein underground mines
in South Africa and Williamson open pit mine in Tanzania. For the
last twelve months ended December 31, 2019, Petra produced 3.9
million carats of diamonds and reported $450 million in revenues.
RUBIX GROUP: S&P Downgrades ICR to 'B-' on Weaker Credit Metrics
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S&P Global Ratings lowered its long-term issuer rating on
U.K.-based Rubix Group to 'B-' from 'B'. The outlook is negative.
The effect of COVID-19 on Rubix's customer base could harm its
short-term financial results and pressure credit quality in 2020.
In reaction to the spread of COVID-19, particularly in Europe,
governments have been locking down entire cities or countries. As a
result of these measures, some of Rubix's customers are having to
temporarily close their work sites. S&P said, "As a result, we
expect that revenues and cash flows will be down--at least in the
short term--until the pandemic abates. We do note that Rubix has a
broad exposure to a variety of end-markets, not all of which will
be equally affected by COVID-19 and that management is actively
taking steps to preserve cash and liquidity."
Weaker-than-expected credit metrics in fiscal 2019 left Rubix very
little ratings headroom before COVID-19 disrupted many of its core
European markets. Rubix continues to restructure its operations
and integrate bolt-on M&A. S&P said, "We were previously expecting
Rubix to deleverage as a result of cost-saving measures and
M&A-related EBITDA accretion, but one-off costs continued to weigh
on its S&P Global Ratings-adjusted EBITDA. This, coupled with
higher-than-expected gross debt resulted in S&P Global
Ratings-adjusted debt to EBITDA weakening to more than 12x at the
end of fiscal 2019 (including preference shares that we treat as
debt-like), versus our previous expectation of about 7.5x. Given
the COVID-19-related disruptions to many of Rubix's core markets,
we now expect leverage to remain more than 12x in 2020 (versus our
previous expectation that it would reduce to about 6.0x or less
this year). Over the same period, FFO cash interest cover has also
weakened. We previously forecasted FFO cash interest cover of more
than 3.0x for 2019 and 2020 but it was about 1.6x in 2019 and we
expect this key metric to be about 1.4x–1.6x in 2020."
Rubix's ability to reduce costs to preserve its liquidity will be
crucial to weathering the pandemic. S&P expects Rubix will cut
costs and protect cash as much as possible during this period of
subdued demand, including furloughing staff, reducing inventories,
and reducing logistics costs quickly if end-customers shut their
production sites. New M&A activity has now been halted and, as of
March 2020, Rubix had about EUR110 million unrestricted cash on its
balance sheet after fully drawing down the remaining headroom under
its EUR135 million revolving credit facility (RCF).
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. S&P
said, "Some government authorities estimate the pandemic will peak
about midyear, and we are using this assumption in assessing the
economic and credit implications. We believe the measures adopted
to contain COVID-19 have pushed the global economy into recession.
As the situation evolves, we will update our assumptions and
estimates accordingly."
The negative outlook reflects the risk of prolonged workplace
shutdowns and reduced productivity as a result of measures taken by
governments across Europe to halt the spread of COVID-19 and
protect workers. We see a risk that Rubix's financial results and
credit metrics could be weaker than we currently forecast,
depending on how long it is until the pandemic abates.
S&P said, "We could lower our ratings if COVID-19 affected Rubix
worse than we currently forecast. More specifically, we could
downgrade Rubix if its leverage were to continue to rise and FFO
cash interest cover continue to weaken to less than 1.5x with
little prospect of a swift improvement. Weakening liquidity,
including covenant breach risks, could also lead us to take a
negative rating action.
"We could revise the outlook to stable once the COVID-19 pandemic
abates and/or if Rubix were to outperform our base case, with
leverage starting to reduce and FFO cash interest cover in excess
of 1.5x on a sustained basis, supported by adequate liquidity and
ample covenant headroom."
SEA VIEW: Enters Administration, Begbies Traynor Appointed
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Darren Slade at Daily Echo reports that the long-established
transport business Sea View Coaches has gone into administration.
The company, based in Fancy Road, Poole, had licenses to operate 25
vehicles, Daily Echo discloses.
A public notice announced the appointment of joint administrators
from insolvency firm Begbies Traynor in Bath, Daily Echo relates.
According to Daily Echo, trade publication Coach & Bus Week
reported that Sea View Coaches' fleet of Beulas and Neoplan coaches
were leased and some were now available from the Bus and Coach
Centre in Oxford, with the rest at an auction house in
Lincolnshire.
VALARIS PLC: Prepares to Start Bankruptcy Talks with Creditors
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Mike Spector and David French at Reuters report that offshore oil
driller Valaris PLC is preparing to start talks with creditors to
see if they can agree on terms for a possible bankruptcy filing, as
it grapples with a US$6.5 billion debt burden and an unprecedented
plunge in U.S. crude prices, people familiar with the matter said
on April 21.
Reuters reported last month that the London-based company was
working with debt restructuring advisers as it struggled to cope
with a rig accident and falling energy prices.
Since then, U.S. crude futures have traded in negative territory
for the first time in history amid a supply glut and a collapse in
demand brought about by the coronavirus outbreak, putting further
pressure on the company's customers, which are mainly large oil
companies, Reuters discloses.
The sources said Valaris, which employs about 5,800 people
worldwide, in recent weeks hired corporate restructuring experts at
turnaround firm Alvarez & Marsal, Reuters notes.
The sources, as cited by Reuters, said Valaris, formed a year ago
through the merger of Ensco and Rowan Companies, plans to attempt
negotiations with creditors to gain support for a restructuring
plan before a bankruptcy filing.
The sources added known in restructuring circles as a prearranged
or prepackaged bankruptcy, such a deal could limit the time Valaris
spends navigating court proceedings, Reuters relays.
The sources said any bankruptcy filing is still weeks or months
away, according to Reuters. One of the sources added Valaris could
also try to restructure its debt outside of court proceedings and
avoid bankruptcy, though corralling enough creditors to do so would
be challenging, Reuters notes.
Debt restructuring experts at law firm Kirkland & Ellis LLP and
investment bank Lazard Ltd have also been advising Valaris, Reuters
previously reported.
[*] UK: 32 Construction Companies Entered Administration in March
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Megan Kelly at Construction News reports that a total of 32
construction companies fell into administration in March.
In the first quarter of 2020, 90 companies fell into
administration, Construction News relays, citing data provided by
Creditsafe. In January, 22 construction companies entered
administration, and in February there were 36 collapses,
Construction News discloses.
The figures relate to the period immediately prior to the
coronavirus crisis taking hold, and a senior industry economist has
warned that the industry will see the number rise significantly in
May and June, Construction News notes.
The Creditsafe data takes into account any formal documents filed
within the month related to a first-time administration event, and
covers firms of all sizes registered as working in the construction
sector as either their primary or secondary business activity,
Construction News states.
[*] UK: Some Charities Will Be Insolvent Within Weeks, MPs Say
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Russell Hargrave at Civil Society News reports that the government
needs to provide charities with urgent financial aid, a
parliamentary committee has told the chancellor.
According to the report, Julian Knight, Conservative MP and chair
of the Digital, Culture, Media and Digital Committee, has written
to the chancellor to demand emergency funding for charities on the
frontline of the fight against the coronavirus, as well as a
"stabilisation fund" to support the sector as a whole.
Without government action, Mr. Knight said, some charities "will be
insolvent within weeks," Civil Society News relates.
Civil Society News notes that the committee heard evidence from
charity leaders earlier this month. At the hearing Karl Wilding,
chief executive of NCVO, warned MPs that charities faced a
financial shortfall of more than GBP4 billion over the next three
months as the coronavirus crisis started to hit the sector's
income, the report relates.
Mr. Knight's letter also outlines why the committee believes
measures already rolled out to help private businesses are not
sufficient to help charities, the report says.
"Charities are unable to furlough workers under the Coronavirus Job
Retention Scheme at a time when staff are needed the most, while
the restrictions on organisations that receive public funds
accessing the scheme present a further barrier", the report quotes
Mr. Knight as saying.
"Similarly, the Business Interruption Loan Scheme will not apply to
charities that receive less than 50% of their income from trading,
and charities claiming charitable rate relief are not eligible for
the small business grant.
"The committee fully understands the constraints that the
government are working under. Yet the situation facing charities
demands an urgent response: without action, some will be insolvent
within weeks, and even large charities will find their reserves
depleted and their work curtailed."
Mr. Knight does not put a figure on the financial support the
Treasury should provide to charities, the report notes.
According to Civil Society News, Mr. Knight also asked the
government to amend some existing schemes to make them better
suited to charities. This includes a request that staff furloughed
by charities can return to that charity as a volunteer, an
exemption for charities who need business loans but make less than
50% of their income from trading, and making sure that
organisations claiming charitable rate relief are not excluded from
small business grants.
Civil Society News adds that Mr. Knight's letter is the latest in a
series of demands from across the political spectrum asking the
government to provide charities with greater financial assistance.
On April 7, the former charities minister Tracey Crouch added her
voice to calls for an emergency fund. Three of Crouch's
predecessors in the job, Rob Wilson, Nick Hurd and Kevin Brennan,
have also spoken out, the report relays.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.
Copyright 2020. All rights reserved. ISSN 1529-2754.
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