/raid1/www/Hosts/bankrupt/TCREUR_Public/201202.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                          E U R O P E

          Wednesday, December 2, 2020, Vol. 21, No. 241

                           Headlines



G E R M A N Y

WIRECARD AG: Apas Says EY Partners Aware of Inaccurate Audit


I R E L A N D

CARLYLE EURO 2020-2: S&P Assigns Prelim 'B-' Rating to Cl. E Notes


K A Z A K H S T A N

FREEDOM FINANCE: S&P Alters Outlook to Pos., Affirms 'B-/B' Ratings


N O R W A Y

BORR DRILLING: Talks with Creditors to Improve Liquidity Ongoing


S W I T Z E R L A N D

SPORTRADAR AG: S&P Assigns 'B' Long-Term ICR, Outlook Stable


U N I T E D   K I N G D O M

ARCADIA GROUP: Enters Administration, Over 13,000 Jobs at Risk
DEBENHAMS PLC: Faces Liquidation, 12,000 Jobs at Risk
SEADRILL PARTNERS: Files Voluntary Chapter 11 Bankruptcy Petition
THAME AND LONDON: S&P Affirms 'CCC+' ICR, Outlook Negative


X X X X X X X X

[*] EUROPE: Corporate Default Rates to Surge to 8.5% Next Year
[*] EUROPE: ESM Bailout Fund Treaty Changes Set to Be Ratified

                           - - - - -


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G E R M A N Y
=============

WIRECARD AG: Apas Says EY Partners Aware of Inaccurate Audit
------------------------------------------------------------
Olaf Storbeck at The Financial Times reports that Germany's audit
watchdog suspects EY partners knew they were issuing a "factually
inaccurate" audit for Wirecard in 2017, according to four people
familiar with the matter.

According to the FT, Apas, the Berlin-based audit oversight body,
has reported EY to prosecutors, telling them that the firm may have
acted criminally during its work for Wirecard, which collapsed into
insolvency earlier this year in one of Europe's largest fraud
scandals.

Wirecard, a once high-flying German payments company, was audited
by EY for more than a decade and until 2019 always received
unqualified audits, the FT discloses.

However, in 2017 EY was just days away from denying Wirecard the
crucial all-clear, according to documents reviewed by Apas, the FT
recounts.  On March 29 of that year, EY warned Wirecard that a
qualified audit was imminent and shared a draft version of a
qualified opinion with its client, people familiar with the
documents told the FT.

One of the sticking points raised by EY were protracted delays to a
forensic audit by EY's anti-fraud team into alleged accounting
manipulations at a Wirecard subsidiary in India, which was being
stonewalled by Wirecard executives, the FT states.

Just days later, the auditors changed their minds, the FT relays.
On April 5, they signed an audit opinion that stated: "Our audit
has not led to any reservations."

Apas found that it was unreasonable to believe that the issues
could have been resolved within a few days, the FT relays, citing
people familiar with the matter.  The watchdog told prosecutors
that therefore EY's unqualified audit was "factually inaccurate",
the FT discloses.

Munich prosecutors are evaluating the evidence sent by Apas and
have not decided whether to open a criminal investigation of EY
partners, according to the FT.




=============
I R E L A N D
=============

CARLYLE EURO 2020-2: S&P Assigns Prelim 'B-' Rating to Cl. E Notes
------------------------------------------------------------------
S&P Global Ratings assigned preliminary credit ratings to the class
X to E European cash flow CLO notes issued by Carlyle Euro CLO
2020-2 DAC. At closing, the issuer will issue unrated subordinated
notes.

The preliminary ratings reflect S&P's assessment of:

-- The diversified collateral pool, which consists primarily of
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.

-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.

-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.

-- The transaction's legal structure, which is expected to be
bankruptcy remote.

-- The transaction's counterparty risks, which S&P expects to be
in line with its counterparty rating framework.

Under the transaction documents, the rated notes will pay quarterly
interest unless a frequency switch event occurs. Following this,
the notes will permanently switch to semi-annual payments. The
portfolio's reinvestment period will end approximately four years
after closing.

S&P said, "We understand that at closing, the portfolio will be
well-diversified, primarily comprising broadly syndicated
speculative-grade senior secured term loans and senior secured
bonds. Therefore, we have conducted our credit and cash flow
analysis by applying our criteria for corporate cash flow CDOs.

"In our cash flow analysis, we used the EUR400 million target par
amount, the covenanted weighted-average spread (3.80%), the
reference weighted-average coupon (3.75%), and the covenanted
weighted-average recovery rates (WARR) at the 'AAA' rating levels
and actual WARR generated on the portfolio for all rating levels
below 'AAA'. We applied various cash flow stress scenarios, using
four different default patterns, in conjunction with different
interest rate stress scenarios for each liability rating category.

"Under our structured finance ratings above the sovereign criteria,
we consider that the transaction's exposure to country risk is
sufficiently mitigated at the assigned preliminary rating levels."

Until the end of the reinvestment period on Jan. 15, 2025, the
collateral manager is allowed to substitute assets in the portfolio
for so long as our CDO Monitor test is maintained or improved in
relation to the initial ratings on the notes. This test looks at
the total amount of losses that the transaction can sustain as
established by the initial cash flows for each rating, and compares
that with the default potential of the current portfolio plus par
losses to date. As a result, until the end of the reinvestment
period, the collateral manager can, through trading, deteriorate
the transaction's current risk profile, as long as the initial
ratings are maintained.

S&P said, "At closing, we expect that the transaction's documented
counterparty replacement and remedy mechanisms will adequately
mitigate its exposure to counterparty risk under our current
counterparty criteria.

"We expect the transaction's legal structure to be bankruptcy
remote, in line with our legal criteria.

"Taking into account the above-mentioned factors and following our
analysis of the credit, cash flow, counterparty, operational, and
legal risks, we believe our preliminary ratings are commensurate
with the available credit enhancement for each class of notes."

The transaction securitizes a portfolio of primarily senior secured
leveraged loans and bonds, and will be managed by CELF Advisors
LLP, a wholly owned subsidiary of Carlyle Investment Management
LLC, which is a Delaware limited liability company, indirectly
owned by The Carlyle Group L.P.

S&P said, "In addition to our standard analysis, to provide an
indication of how rising pressures among speculative-grade
corporates could affect our ratings on European CLO transactions,
we have also included the sensitivity of the ratings on the class A
to E notes to five of the 10 hypothetical scenarios we looked at in
our recent publication.

"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F notes."

S&P Global Ratings believes there remains a high degree of
uncertainty about the evolution of the coronavirus pandemic.
Reports that at least one experimental vaccine is highly effective
and might gain initial approval by the end of the year are
promising, but this is merely the first step toward a return to
social and economic normality; equally critical is the widespread
availability of effective immunization, which could come by the
middle of next year. S&P said, "We use this assumption in assessing
the economic and credit implications associated with the pandemic.
As the situation evolves, we will update our assumptions and
estimates accordingly."

  Ratings List

  Class   Prelim. rating  Credit enhancement (%)
   X         AAA (sf)         N/A
   A-1       AAA (sf)        39.00
   A2-A       AA (sf)        28.38
   A-2B       AA (sf)        28.38
   B           A (sf)        21.50
   C         BBB (sf)        15.25
   D         BB- (sf)        10.00
   E          B-              7.50
   Sub notes  NR               N/A

   NR--Not rated.
   N/A--Not applicable.




===================
K A Z A K H S T A N
===================

FREEDOM FINANCE: S&P Alters Outlook to Pos., Affirms 'B-/B' Ratings
-------------------------------------------------------------------
S&P Global Ratings revised the outlook on IC Freedom Finance LLC
and Freedom Finance JSC to positive from stable. At the same time,
S&P affirmed the 'B-/B' long- and short-term ratings on both
entities.

S&P also raised its Kazakh national scale ratings on Freedom
Finance JSC to 'kzBB' from 'kzBB-'.

The outlook revision is largely based on the significant
improvement of Freedom Holding's earnings capacity in 2020, thanks
to higher business volumes. Stronger retail interest in financial
markets, in particular in Russia, and closer interaction with FFIN
Brokerage Services Ltd., a party under common control, have
resulted in a material increase in commissions or the group. As
result, in the first half of fiscal 2021 (ending March 31, 2021),
the group achieved a return on equity exceeding 60%. Consequently,
group's core earnings may exceed 200 basis points of S&P Global
Ratings' risk-weighted assets on a three-year average basis, a
level S&P would consider strong.

At this stage, the group is largely reliant on continued
transactions with its Belize-based sister company, FFIN Brokerage
Services Ltd., via its subsidiaries based in Cyprus and countries
in the Commonwealth of Independent States. For the first half of
fiscal 2021 (as of Sept. 30, 2020), operations with Belize
contributed 70% of fees earned by the group, and were also a major
counterparty for margin loans. S&P said, "We believe that
operations in Belize are less transparent than those in the group's
domestic jurisdictions, which can contribute to compliance risks.
We note that Freedom Finance gradually onboards existing clients in
onshore jurisdictions, which results in a lower contribution of
related parties revenue to the bottom line."

S&P said, "We project group's capitalization will remain adequate
in the medium term, despite a busy acquisition pipeline, which
includes among others Kassa Nova Bank in Kazakhstan as well as
sister insurance companies, Freedom Finance Insurance and Freedom
Finance Life. We expect that these transactions will cumulatively
result in the group's risk-adjusted capital ratio declining
modestly to 7.25%-7.75% from the 8.7% observed on Sept. 30, 2020.
Under our assumptions, we do not expect the group to materially
build its proprietary position in equities, and do not expect the
acquisitions to materially weaken group's liquidity, given that in
some cases advances have already been extended.

"The positive outlook on Freedom Finance JSC and IC Freedom Finance
LLC reflects our expectations that the group will gradually build
up its commission income, thanks to increased retail interest in
the stock markets in Russia and Kazakhstan, while maintaining good
capitalization despite its M&A pipeline.

"A positive rating action is likely to come from sustained earnings
capacity supported by expanding retail clientele. We may also take
a positive rating action if we see that, despite a pronounced M&A
pipeline, the group's capitalization improves, with the RAC ratio
sustainably exceeding 10%." Any positive rating action will depend
on successful completion of the acquisition pipeline and
substantial progress in bringing group's existing clientele within
the perimeter of Freedom Holding Corp.

S&P said, "We may revise the outlook to stable if the group's
ability to generate steady fee income is undermined by intense
competition, including that from the banking sector. Material
pressure on capital adequacy from new proprietary positions in
equities or sizeable M&A activities, or failure to transfer
clientele to onshore jurisdictions may also lead to an outlook
revision."




===========
N O R W A Y
===========

BORR DRILLING: Talks with Creditors to Improve Liquidity Ongoing
----------------------------------------------------------------
Nerijus Adomaitis at Reuters reports that Borr Drilling, a
Norwegian contractor of shallow water drilling rigs, warned on Nov.
30 that the company continued to face a "very challenging"
financial situation after reporting US$61.9 million in net loss for
the third quarter.

According to Reuters, the company said it continued talks with its
creditors to improve its liquidity and it was ready to take part in
the industry's consolidation as a number of its peers filed for
bankruptcy protection after the latest oil market crash.

"As a result of this difficult market environment, combined with
payment delays in Mexico, a large amount of debt and significant
newbuild obligations, the company continues to face a very
challenging financial situation in the fourth quarter and going
into 2021," Reuters quotes Borr as saying in its quarterly report.

The company said its Mexican operations, the largest contributor to
the quarterly results, has recently experienced a slowdown in
payments from Mexican national oil company Pemex, causing
operational challenges, Reuters relates.

Borr added the quarterly results were also negatively affected by
US$7.6 million costs directly related to the COVID-19 pandemic and
US$2.2 million severance costs due to staff reduction, Reuters
notes.




=====================
S W I T Z E R L A N D
=====================

SPORTRADAR AG: S&P Assigns 'B' Long-Term ICR, Outlook Stable
------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issuer credit rating
to Switzerland-Based sports data and content company Sportradar AG
and its 'B' issue rating to the group's EUR420 million first-lien
term loan.

The stable outlook assumes Sportradar will report solid
year-on-year organic revenue growth of around 10% in 2021 after a
low-single-digit decline in 2020, while maintaining S&P Global
Ratings-adjusted EBITDA margins of 16%-20%. As a result, and taking
in account the completion of the contemplated acquisition, S&P
expects pro forma S&P Global Ratings-adjusted debt to EBITDA to
remain close to but below 6.5x and S&P Global Ratings-adjusted FOCF
to debt at around 10% in 2020.

Sportradar is one of the main players in sports data and content,
where there are some barriers to entry, and its high customer
retention rate offers some visibility on earnings and cash flows.

It is the market leader in global sports betting data and odds,
with around 40% market share. It is also the second-largest player
in the sports audiovisual (AV) market with around 28% market share.
Sportradar’s business is based on monetizing content and software
products to betting operators, media companies and sports leagues.
These products are built on data that is collected in real-time
from thousands of sporting events globally. For monetizing specific
content like audio-visuals, the company pays hefty license fees to
sports franchises. These license fees also relate to investments in
the US market. Its 19 years of historical sports data and
proprietary technology act as a barrier to entry for new entrants.
It has entrenched relationships with its key customers as
demonstrated by the fact that 38% of revenues in 2019 is sourced
from customers that were signed in 2008. Sportradar's services
represent a relatively modest cost for a betting or media company
and the rate of customer churn has been low over the years
(2%-3%).

Sportradar has a solid track record of year-on-year organic revenue
growth of 18%, 28%, and 34% in 2019, 2018, and 2017.  This has been
driven by expansion in the core betting business, an acceleration
in managed trading services while bookmakers continue to shift to
outsourced platforms, and high growth in the U.S. market following
the legalization of sports betting in some states. Future growth
will depend on new industry characteristics and technology
advancements such as:

-- Changing viewing habits in the fragmenting media and betting
landscape, with a younger, technologically savvy population fueling
demand for data; and

-- The potential legalization of sports betting across the U.S.,
which could significantly boost the group's future growth. S&P
understands that sports betting has been legalized in 19 states,
and four more have passed, but not yet implemented, a sports
betting bill.

Nonetheless, future business growth could suffer if a potential
second wave of the pandemic further disrupts sports activity or
subdues consumption.

Sportradar operates in a niche market that has limited scale, but
it has adopted organic and inorganic growth strategies.  S&P said,
"We estimate that Sportradar's S&P Global Ratings-adjusted EBITDA
for full-year 2020 (including the contemplated acquisition) will be
about EUR70 million-EUR75 million, which is fairly modest in terms
of scale of operations. The company is exposed to moderate
end-market concentration. With its main focus on betting, the
company is exposed to the industry’s strengths and weaknesses
including indirect regulatory exposure. We understand that
Sportradar is in advanced discussions to complete an acquisition.
While we do not know who the target is, we understand that there
are significant revenue synergies with the target and it is of
considerable size, with an estimated annual EBITDA of EUR20
million-EUR25 million. While we think the 'B' issuer credit rating
will encompass this acquisition, if we see higher-than-expected
integration risk--or if the transaction does not go ahead and is
replaced by a more aggressive transaction--we would review our
rating."

COVID-19-related disruptions affected operating performance but not
as badly as expected.  The second quarter of 2020 saw most global
sporting events either cancelled or postponed. As such, Sportradar
reported a revenue decline of 10% year-on-year in the second
quarter. The decline was not as severe as expected because the
company was able to source live sports content not severely
affected by lockdowns, such as ping pong and volleyball, as well as
alternative digital content like virtual sports tournaments. Almost
50% of revenue generated in the second quarter was driven by
alternative content. After a solid first quarter, the year-on-year
revenue decline for the first half of this year was only 1%. S&P
said, "We expect the third and fourth quarter results to be
stronger than the second quarter given that most sporting activity
resumed during the third quarter. As such, we estimate a
low-single-digit revenue decline for the whole of 2020, although we
acknowledge downside risk to our base case from a potential second
wave of COVID-19 that could see sporting events suspended
again--and when the company's leverage will be substantial."

Sportradar's issuance of the term loan results in a highly
leveraged capital structure but with solid FOCF generation.  
Sportradar issued a senior secured term loan B of EUR420 million
along with a EUR110 million RCF. Part of the proceeds from the term
loan will be used to refinance the existing EUR125 million of
existing bank debt facilities. The remainder will fund a near-term
acquisition. The RCF will remain undrawn at the closing of the
transaction. The contemplated acquisition will likely be completed
by year-end 2020 and so our base case includes the EBITDA
contribution from the acquisition in 2020, on a pro forma basis.
Pro forma, S&P expects adjusted debt to EBITDA to reach close to
6.5x in 2020 and revert to below 6.0x in 2021, resulting in a
highly leveraged capital structure. That said, the company's
ability to generate solid FOCF supports our rating with estimated
S&P Global Ratings-adjusted FOCF to debt of about 10% in 2020 and
2021."

The stable outlook assumes the company will report solid
year-on-year organic revenue growth of around 10% in 2021 after a
low-single-digit decline in 2020, while maintaining S&P Global
Ratings-adjusted EBITDA margins of 16%-20%. As a result, and
following the completion of the contemplated acquisition, S&P
expects S&P Global Ratings-adjusted debt to EBITDA to remain close
to but below 6.5x and S&P Global Ratings-adjusted FOCF to debt at
around 10% in 2020.

S&P could lower the rating if:

-- S&P Global Ratings-adjusted debt to EBITDA increases above
6.5x; or

-- FOCF to debt falls below 5% for a sustained period.

This could occur if the company fails to close the contemplated
acquisition under the terms represented by management or it
undertakes a larger and more expensive transaction than expected.
The above credit metrics could also materialize if Sportradar's
operating performance was weaker than S&P's base case due either to
difficulties integrating the contemplated acquisition or a
potential second wave of COVID-19 resulting in lower-than-expected
consumption.

S&P sees an upgrade as unlikely over the next 12 months, given
Sportradar’s highly leveraged capital structure. S&P could raise
the rating over the longer term if Sportradar reduced its S&P
Global Ratings-adjusted debt to EBITDA to below 5.0x and achieved
FOCF to debt of close to 10%.




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

ARCADIA GROUP: Enters Administration, Over 13,000 Jobs at Risk
--------------------------------------------------------------
James Davey at Reuters reports that British tycoon Philip Green's
Arcadia fashion group has collapsed into administration, putting
over 13,000 jobs at risk and becoming the country's biggest
corporate casualty of the COVID-19 pandemic so far.

Deloitte said late on Nov. 30 it had been appointed Arcadia's
administrator and would seek buyers for the group's brands:
Topshop, Topman, Dorothy Perkins, Wallis, Miss Selfridge, Evans,
Burton and Outfit, Reuters relates.

The group trades from 444 leased sites in the United Kingdom and 22
overseas, Reuters discloses.

According to Reuters, Deloitte said Arcadia's stores would continue
to trade, its online platforms would remain operational and
supplies to concession partners would continue.

It said no redundancies were being immediately announced, Reuters
notes.

"We will be rapidly seeking expressions of interest and expect to
identify one or more buyers to ensure the future success of the
businesses," Reuters quotes Matt Smith, Deloitte's joint
administrator, as saying.

While COVID-19 lockdowns pushed Arcadia over the edge, it has
struggled in recent years, underinvesting and failing to keep pace
with competitors in an increasingly online retail sector, Reuters
relays.

Its brands were squeezed between the likes of Inditex's Zara, H&M,
and Primark and online-only players ASOS and Boohoo, Reuters
states.

A restructuring deal was approved by creditors last year, cutting
rents and closing stores, but proved only a temporary respite,
Reuters recounts.

Arcadia's workforce also faces uncertainty over a deficit in the
company's pension fund, estimated by analysts at about GBP350
million, Reuters notes.

Britain's Business minister, Alok Sharma, said the administrators
had three months to file a report on the conduct of Arcadia's
directors with The Insolvency Service which will determine whether
a full investigation is required, Reuters relates.


DEBENHAMS PLC: Faces Liquidation, 12,000 Jobs at Risk
-----------------------------------------------------
James Davey at Reuters reports that British department store group
Debenhams is to be liquidated with the potential loss of 12,000
jobs, the country's second major corporate failure in as many days,
as the COVID-19 pandemic pushes struggling retailers over the
edge.

The decision to wind down Debenhams, which traces its history back
to 1778, comes after Philip Green's Arcadia fashion group collapsed
into administration late on Nov. 30, threatening 13,000 jobs,
Reuters notes.

Arcadia, Reuters says, is the biggest concession operator in
Debenhams, accounting for about 5% of Debenhams' sales, and its
collapse made a sale of Debenhams more difficult.

Administrators FRP Advisory said on Dec. 1 that Debenhams would be
wound down after it failed to find a buyer, Reuters relates.

Sportswear and clothing retailer JD Sports Fashion had been seen as
Debenhams' last hope for a rescue deal but it confirmed on Dec. 1
that it had ended takeover talks with Debenhams, which trades from
124 UK stores, Reuters discloses.

Debenhams has struggled for years and was placed in administration
for the second time in a year in April by its owners led by U.S.
hedge fund Silver Point Capital, Reuters recounts.

"Given the current trading environment and the likely prolonged
effects of the COVID-19 pandemic, the outlook for a restructured
operation is highly uncertain," Reuters quotes FRP as saying.

"The administrators have therefore regretfully concluded that they
should commence a wind-down of Debenhams UK, whilst continuing to
seek offers for all or parts of the business."

The administrators will continue to trade Debenhams' stores and
online business to clear its current and contracted stocks, Reuters
states.

"On conclusion of this process, if no alternative offers have been
received, the UK operations will close," FRP said.


SEADRILL PARTNERS: Files Voluntary Chapter 11 Bankruptcy Petition
-----------------------------------------------------------------
Seadrill Partners LLC (the "Company") has been in negotiations with
an ad hoc group of lenders under the Company's Term Loan B credit
facility (the "TLB") regarding a consensual reorganization of the
Company's balance sheet.  In consultation with - and with the
support of - the ad hoc group, the Company has filed voluntary
petitions under chapter 11 of the Bankruptcy Code to preserve value
and to continue the operation and marketing its assets.  The
Company intends to use the bankruptcy process to ensure that all
customer, vendor and employee obligations are met without
interruption and to complete a consensual restructuring of its
debt.

                      About Seadrill Ltd.

Seadrill Limited (OSE:SDRL, OTCQX:SDRLF) --
http://www.seapdrill.com/-- is a deepwater drilling contractor
providing drilling services to the oil and gas industry.  As of
March 31, 2018, it had a fleet of over 35 offshore drilling units
that include 12 semi-submersible rigs, 7 drillships, and 16 jack-up
rigs.

On Sept. 12, 2017, Seadrill Limited sought Chapter 11 protection
after reaching terms of a reorganization plan that would
restructure $8 billion of funded debt.  It emerged from bankruptcy
in July 2018.

Demand for exploration and drilling has fallen further during the
COVID-19 pandemic as oil firms seek to preserve cash, idling more
rigs and leading to additional overcapacity among companies serving
the industry.

In June 2020, Seadrill wrote down the value of its rigs by $1.2
billion and said it planned to scrap 10 rigs.

Seadrill is presently in talks with lenders on a restructuring of
its $5.7 billion bank debt.


THAME AND LONDON: S&P Affirms 'CCC+' ICR, Outlook Negative
----------------------------------------------------------
S&P Global Ratings affirmed its issuer credit rating on U.K.-Based
Thame and London (Travelodge) and its issue rating on its GBP440
million senior secured notes at 'CCC+'. S&P has removed the
CreditWatch, and assigned a negative outlook.

Recently announced stricter localized restrictions further delays
Travelodge's recovery.

Since reopening from the first national lockdown, Travelodge traded
at about 50% below 2019 levels in August-October. Although weak on
a stand-alone basis, this compares well to wider trends within U.K.
lodging. Demand quickly recovered among Travelodge's blue-collared
customers (particularly in construction and power) and in coastal
and rural locations.

On Nov. 5 2020, the U.K. returned to a second national lockdown,
which saw a slump in leisure demand (about 50% of Travelodge's
customers). Although the national lockdown ends on Dec. 2, 2020, we
do not expect any material recovery in the leisure demand toward
the end of the year. The proposed restrictions will further delay
the U.K.'s economic recovery and will subdue growth in the first
half of 2021 (typically a quiet time for Travelodge anyway, as it
generates about 50% of its EBITDA from June to September each
year).

S&P Global Ratings believes there remains a high degree of
uncertainty about the evolution of the coronavirus pandemic.
Reports that at least one experimental vaccine is highly effective
and might gain initial approval by the end of the year are
promising, but this is merely the first step toward a return to
social and economic normality; equally critical is the widespread
availability of effective immunization, which could come by the
middle of next year. S&P said, "We use this assumption in assessing
the economic and credit implications associated with the pandemic.
As the situation evolves, we will update our assumptions and
estimates accordingly."

Rent reductions strategy position the group in a relatively better
place than at the start of the pandemic.  Travelodge has a large
fixed cost base, with its property costs (47% of total costs)
determined under its 25-35 year lease contracts. Very early in the
pandemic, management aggressively pushed through rent reduction via
a Company Voluntary Arrangement (CVA) process. This reduced rent
costs by about GBP85 million in 2020 and about GBP55 million in
2021. Rent payments revert to original lease terms from 2022. Given
the uncertainty around the timing of economic recovery, it isn't
clear yet whether the agreed rent reductions are sufficient.
However, it positions the group better than at the start of the
crisis. Also, it gave sponsors the confidence to inject additional
cash into the business. Under the terms of the CVA, affected
landlords representing assets contributing 55% of Travelodge's 2019
hotel EBITDA (as defined by the company) had the option to exercise
the break clause and remove the property from the Travelodge
franchise. However, almost all the affected landlords opted to stay
as lessors and bear the short-term rent reductions. This reflects
the underlying strength of the brand and the lack of credible
alternatives that could provide landlords with a higher return.

Travelodge recently announced that CEO Peter Gowers will step down
at the end of 2020. Mr. Gowers has held this role for the last
seven years during which Travelodge has rebuilt and repositioned
itself as a credible challenger to Premier Inn.

An additional GBP60 million of new cash will provide the group with
some liquidity cushion for the next few months.  Travelodge's
sponsors and funds affiliated with the sponsors have agreed to
inject GBP60 million by Dec. 2, 2020. This new cash contribution is
in addition to GBP40 million already invested.

The GBP100 million is structured as a GBP60 million super senior
term facility (SSTL) and a GBP40 million investor loan. The SSFL
ranks pari passu with the existing revolving credit facility (RCF)
and matures in June 2024 . The investor loan of GBP40 million is
subordinated to the GBP440 million senior secured notes due 2025.
Pro forma the additional contribution, the cash balance will be
GBP122 million and will provide the group with a buffer for the
next few months. This assessment reflects that Travelodge had an
effective cash burn of about GBP10 million per month based on
actual cash burn from Jan. 1, 2020 to Nov. 18 2020, (excluding the
RCF drawings and new funds raised).

Environmental, social, and governance (ESG) credit factors for this
credit rating change:

-- Health and safety

The negative outlook reflects S&P's view that there is still much
uncertainty as to when and by how much the U.K.'s economy will
recovery in the next 12 months, which exposes the group to further
cash burn during times of sub-optimal demand.

S&P could lower the rating on Travelodge if:

-- S&P considers events such as debt restructuring, interest
deferrals, distressed debt exchange, or default to be likely within
the next 12 months;

-- The risk of potential covenant breach isn't addressed in a
timely manner;

-- U.K. local restrictions or further lockdowns are longer than
anticipated; or

-- Trading performance is materially weaker than S&P's base case
forecast, resulting in material cash burn causing liquidity
concerns.

An outlook revision to stable would depend on:

-- A steady improvement in the U.K. economy including GDP and
unemployment levels, and a recovery in consumer spending on leisure
activities;

-- Limited risks of further COVID-19-related restrictions on
leisure activities, non-essential travel, and overnight stays; and

-- Travelodge trades for a sustained period at levels that enable
it to achieve breakeven free operating cash flow (FOCF) after lease
payments.




===============
X X X X X X X X
===============

[*] EUROPE: Corporate Default Rates to Surge to 8.5% Next Year
--------------------------------------------------------------
Dhara Ranasinghe at Reuters reports that Russell Investments' CIO
for fixed income and EMEA said on Nov. 30 corporate defaults are a
growing risk for next year, although central bank stimulus and a
COVID-19 vaccine will provide support.

"You've got the vaccine news, you've got the stimulus in the
background, you've got low interest rates," Gerard Fitzpatrick told
the Reuters Global Investment Outlook Summit.

"On the flip side, there is definitely a rising risk relating to
default risk. We're not out of the woods relating to COVID.  It's
clearly having an impact on the economy and some sectors."

According to Reuters, the coronavirus shock will more than double
company default rates across the United States and Europe over the
next 9 months, ratings agency S&P Global said last month,
predicting U.S. corporate default rates at 12.5%.  It said Europe's
rate would surge to 8.5% from 3.8%, Reuters notes.


[*] EUROPE: ESM Bailout Fund Treaty Changes Set to Be Ratified
--------------------------------------------------------------
Jan Strupczewski and Michael Nienaber at Reuters report that euro
zone finance ministers agreed on Nov. 30 to move ahead with stalled
changes to their ESM bailout fund to strengthen the resilience of
the common currency area as the COVID-19 pandemic increases risks
of future economic trouble.

According to Reuters, after almost a year since their agreement "in
principle" on widening the responsibilities of the European
Stability Mechanism (ESM), ministers from the 19 countries sharing
the euro currency gave the deal a final go-ahead for ratification.

The International Monetary Fund warned earlier that governments and
the European Central Bank may need to provide more fiscal and
monetary support than initially expected because of the second wave
of the COVID-19 pandemic, Reuters recounts.

"The ESM reform strengthens the euro and the entire European
banking sector because we are making the euro zone even more robust
against attacks by speculators," Reuters quotes German Finance
Minister Olaf Scholz as saying after the ministerial meeting.

Changes to the ESM treaty will reduce the risk of investors holding
out for a better deal in a sovereign debt restructuring and give
the bailout fund room to mediate between the sovereign and
investors, Reuters discloses.

They will also allow the ESM to lend to the euro zone's bank
resolution fund to wind down failing banks if, in a banking crisis,
the fund runs out of its own money, Reuters states.

Several countries had made their consent to the new role for the
bailout fund conditional on a lowering of risks in the euro zone
banking system and a report from the European Central Bank showed
all risk indicators have improved, Reuters notes.

But the pandemic was likely to make things more difficult,
according to Reuters.

"The COVID crisis is likely to temporarily interrupt or slow down
the favourable trends observed over recent years," Reuters quotes
the euro zone ministers as saying in a statement.

Euro zone governments will now sign the ESM treaty changes in
January and national parliaments will ratify them in 2021 so that
the amended treaty enters into force in 2022, Reuters states.



                           *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2020.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
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