/raid1/www/Hosts/bankrupt/TCREUR_Public/210924.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
Friday, September 24, 2021, Vol. 22, No. 186
Headlines
G E R M A N Y
MEDIAN BV: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
STANDARD PROFIL: S&P Assigns 'B-' ICR, Outlook Negative
I R E L A N D
BARINGS EURO 2021-2: S&P Assigns B- Rating on Cl. F Notes
CAIRN CLO XIV: S&P Assigns Preliminary B- Rating on Class F Notes
NORDIC AVIATION: Obtains Extension of Forbearance Agreement
OCP EURO 2020-4: S&P Assigns B- Rating on Class F Notes
R O M A N I A
CITY INSURANCE: Romania Changes Legislation Following Bankruptcy
U N I T E D K I N G D O M
AVACADE: Directors Gets Six-Year Directorship Disqualification
DERBY COUNTY FOOTBALL: Enters Administration, Faces 12-Pt Deduction
IGLOO ENERGY: May Go Bust Due to Surging Wholesale Gas Prices
KELHAM HALL: Set to Reopen Following Previous Owner's Liquidation
LANEBROOK MORTGAGE 2021-1: S&P Assigns BB Rating on X1 Notes
TWIN BRIDGES 2021-2: S&P Assigns BB Rating on Class X1 Notes
X X X X X X X X
[*] BOOK REVIEW: Hospitals, Health and People
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G E R M A N Y
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MEDIAN BV: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
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S&P Global Ratings assigned its 'B' long-term issuer credit rating
to Median B.V., and its 'B' issue-level rating and '3' recovery
rating to the proposed term loan B (TLB).
The stable outlook reflects S&P's view that Median B.V.'s increased
scale and operating model should enable it to maintain an EBITDA
margin of 20%-21% in the next 12 months and deleverage, along with
adjusted fixed-charge coverage of about 1.6x and positive FOCF.
Waterland Private Equity has announced its intention to create a
leading European rehabilitation and behavioral health services
provider by merging two companies in its portfolio, German based
MEDIAN, and U.K. based Priory Group, with the transaction closing
by October 2021.
The proposed merger and associated refinancing will result in high
starting adjusted leverage of 7.9x in 2021 (pro forma) improving to
7.5x in 2022, inflated by long-dated leases in Germany. Waterland
Private Equity is planning to combine leading German rehabilitation
provider MEDIAN with leading U.K. behavioral health care services
provider Priory Group, which it acquired in a separate deal in
January 2021. S&P said, "We assume the transaction will close in
October 2021. The combined group will generate revenue of EUR1,810
million-EUR1,820 million and S&P Global Ratings-adjusted EBITDA of
EUR365 million-EUR370 million in 2021. To support the transaction,
newly created holding company Median B.V. is planning to issue an
EUR800 million TLB and a EUR120 million RCF. We project these
issuances will lead to S&P Global Ratings-adjusted debt to EBITDA
of about 7.5x and fixed-charge coverage of 1.6x in 2022. A pure
equity injection from the sponsor, proceeds from the sale of
Priory's education business, as well as EUR138 million of cash on
the balance sheet will be used to finance the rest. We estimate
adjusted debt will amount to EUR2.9 billion, including the proposed
EUR800 TLB, EUR2.1 billion of lease commitments, and EUR5 million
of pension-related liabilities. The high starting leverage mainly
reflects the impact from our adjustment for lease obligations
(about EUR1.5 billion at MEDIAN and EUR0.6 billion at Priory pro
forma the sale-and-leaseback [SALB] transaction for 26 properties
that closed on June 30, 2021), but it is mitigated by our view that
lease-related debt displays a better maturity profile compared to
traditional financial debt. Most lease agreements in Germany have
long-dated terms of about 30 years on average, which is longer than
other geographies such as France and weighs on our discounted value
calculation. If we use multiples close to those of peers in other
geographies, at 6x-8x, adjusted leverage would be closer to 5x-6x,
which supports the 'B' ratings.
"The merger will improve the combined group's scale and the
diversification of its reimbursement profile, which we reflect in
our fair business risk profile assessment. The proposed merger will
create the leading provider of rehabilitation and behavioral
services in Europe, with 57% of pro-forma revenue coming from
Germany and 43% from the U.K. As such, it will improve Median
B.V.'s earnings resilience and stability by diversifying its payor
profile and reducing exposure to Germany. In terms of volumes, the
operating environment offers good demand visibility, thanks to an
ageing population, higher transition rates from acute to
rehabilitation due to a reduction in average length of stay in
hospitals, and a positive regulatory outlook. We assume higher
organic growth rates of 7.0%-7.5% in 2021 and 3.5%-4.0% in 2022 due
to the backlog of services during the pandemic and increased demand
for COVID-19 long-term rehabilitation and mental health
indications. In Germany, about 87% of revenue is derived from the
state (39% of revenue comes from public pension funds [DRV] and 30%
from statutory health insurance), which is broadly similar to the
U.K., where about 90% is derived from the state (33% is derived
from the National Health Service [NHS] and 57% from clinical
commissioning groups/local communities). Payors set contracts with
providers and negotiate prices annually, which does introduce some
cost pressure on the latter. In our view, this is mitigated by the
group's strong track record in negotiating fee increases due to its
large scale and strong relationships with payors. This is also
supported by the fact that, in Germany, reimbursement rate
increases are correlated with wage inflation (translating into a
2.6% average fee increase in the past), while, in the U.K., the
group has been mostly able to pass on price increases historically.
In the U.K., the NHS is more of a price taker compared to local
communities, and we view its contract structure as more favorable
due to block beds that are paid for regardless of occupancy levels.
That said, most of Priory's financing comes from local
commissioners, which is less favorable. However, we view as
positive the market's bed supply deficit versus demand and the
group's ability to retool its beds to provide additional services,
for which it can negotiate higher fees. Notably, Priory's exposure
to high acuity cases such as autism (29% of beds in the adult care
division) is also reimbursed at higher fees."
However, these improvements will be partly offset by execution
risks and a continued challenging operating environment in the
group's main markets. S&P believes it will likely be challenging
for the group to materially improve margins at Priory, as it did
with other bolt-on acquisitions in Germany. Priory has lower
adjusted margins (at 18%-19%), and they have declined over the past
three years (2018-2020), compared to MEDIAN stand-alone (at
21%-22%), which will dilute the combined group's profitability.
This is due to a combination of higher central costs and an
increase in staff costs from increased agency usage, exacerbated by
the nationwide shortage of qualified medical staff. The group's
strategic objective is to attract and retain employees to deliver
high-quality care and reduce agency-staff usage going forward,
especially given this is fundamental to assuring topline growth and
because staff and agency costs represent the bulk of its operating
expense (about 80% of the total). Even if staff turnover is broadly
consistent with the sector norm and the group is planning to focus
on staff retention, we continue to view increases in the national
living wage and inflationary pressure, ongoing extra costs linked
to the pandemic, and a decrease in the funding rate from the U.K.
government to local authorities as constraints to EBITDA growth in
the next 12 months. Similar inflationary pressures are observed in
the German market, although this is mitigated by the group
recruiting abroad and better personnel retention in rehabilitation
compared to acute indications.
S&P said, "We assume broadly stable margins of about 20%-21% over
the next 12 months, with exceptional and restructuring costs
contained compared to the past merger with AHG.S&P Global
Ratings-adjusted margins will marginally improve from 20.0%-20.5%
in 2021 to about 20.5%-21.0% in 2022. This will be supported by
gradual recovery of occupancy rates leading to better absorption of
fixed costs, tight cost control, improving sales mix, with a focus
on more attractive indications (acute), development of digital
health care, and optimization of central and agency costs at Priory
that should offset associated restructuring costs and staff cost
inflation. At June 30, 2021, occupancy rates reached 80% in Germany
and 84% in the U.K., still impacted by postponement of elective
procedures and lower referral rates. We assume a gradual
normalization toward mature rates of 90% and 88%-89% respectively
by year-end 2022, as elective surgery and referrals resume and
since Priory has completed most of its bed re-tooling initiative to
better align with local payors' demands, which led to a temporary
reduction in occupancy rates. We exclude the exceptional costs in
relation to the sale of Priory's education division as well as the
merger because we view this event as transformative. We assume
limited other one-off expenses in relation to the merger over the
forecast horizon, since we understand integration efforts will be
mainly toward information technology migration and SAP system
implementation, for which major costs are captured in capital
expenditure (capex). The existing structure will remain in place,
with Priory leveraging MEDIAN's best practices and existing tools
to drive quality of care. However, most synergies should come from
headcount reduction in support services and administrative roles
that could generate additional restructuring costs, denting
potential gains in the first two-to-three years of operations. We
note that the merger between MEDIAN and AHG in 2016 led to
substantial cash outflows in relation to restructuring and
integration for several years, due to restructuring of the entity
and closure of the head office. We assume smoother integration for
Priory.
"We assume working capital volatility in 2021, which should
normalize by 2022.We forecast flat to slightly negative FOCF (after
rent payments) in 2021, reflecting higher EBITDA offset by large
unfavorable working capital outflows of about EUR65 million-EUR70
million, most of which relate to the repayment of excess COVID-19
grants from the government. Excluding those movements, we assume
FOCF would be positive by EUR20 million. In 2022, we assume FOCF
after rent payments of EUR60 million-EUR70 million, hampered by
EUR70 million-EUR80 million of capex but supported by limited
working capital outflows. Underlying working capital changes are
limited in the industry due to broadly stable inventories,
receivables being paid relatively quickly by health insurance, and
stable payables. We assume capex of about 4% of sales over the next
two years, reflecting limited investments at MEDIAN and higher
capex needs at Priory due to refurbishment and development capex
toward retooling beds and creating additional beds at existing
sites.
"We do not factor large acquisitions or SALB transactions over the
next two years because we believe the group will focus on
integrating Priory. Median B.V.'s strategic plan focuses on growth
opportunities in new European geographies to strengthen its
position as an integrated European mental health provider. That
said, we assume the group will focus more on bolt-on acquisitions
over the next two years while it integrates Priory. We assume its
pipeline for small-size deals will remain strong in the next 12
months. This reflects additional opportunities following the
pandemic because less-financially sound operators could seek to
sell, as well as the highly fragmented nature of the market.
However, we assume such deals would be self-funded. We view as
supportive the fact that management intends to keep its leverage
(excluding leases) below 4.3x going forward. MEDIAN conducted
several SALB transactions in the past to finance M&A transactions.
It now operates under an almost 100% leasehold model in Germany. We
view this type of cost structure negatively as health care services
providers are price-takers and rents represent additional fixed
costs, which are already high after the inclusion of staff costs.
Priory remains freehold for 79% of the portfolio post the SALB that
closed in August 2021. Although we cannot rule out any future SALB
transactions, we understand they should be less frequent in the
U.K., due to the structure of the market and moderate size of the
facilities.
"The stable outlook reflects our view that Median B.V.'s
performance will remain resilient in the COVID-19 environment. This
reflects quick recovery of occupancy levels due to the essential
nature of services provided and backlogs created during the
pandemic, as well as the group's exposure to geographies with
positive underlying demand and favorable regulatory frameworks.
"We expect the group will continuously focus on delivering
efficiency gains and implementing synergies, mainly from staff
optimization, procurement, and reduction of agency use in the U.K.,
while maintaining its track record of incremental growth in fee
averages as it negotiates with payors.
"We anticipate that Median B.V.'s increased scale and operating
model should enable it to maintain an EBITDA margin of 20%-21% in
the next 12 months from transaction close, and deleverage, while
maintaining adjusted fixed-charge coverage of about 1.6x and
generating positive FOCF."
S&P could lower the rating if the group does not deliver on its
business plan, including one or more of the following factors:
-- A more aggressive financial policy, delaying the deleveraging
trajectory and/or causing adjusted debt to EBITDA to remain
persistently above 7.5x.
-- Failure to achieve forecast growth, operating efficiencies, and
productivity gains, resulting in pressure on profitability.
-- Substantial working capital outflows or higher-than-forecast
capex that causes FOCF to turn negative on a sustainable basis.
-- Material deterioration of fixed-charge coverage sustainably
below 1.5x due, for instance, to any material SALB transactions.
S&P said, "We could raise the ratings on Median B.V. if the company
significantly outperforms our base case, resulting in deleveraging
comfortably below 5x and a significant improvement in fixed-charge
coverage to above 2.2x. In our view, such an improvement would need
to be combined with a strong commitment from the financial sponsor
to maintain credit metrics at these levels on a sustained basis."
STANDARD PROFIL: S&P Assigns 'B-' ICR, Outlook Negative
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S&P Global Ratings assigned its 'B-' issuer credit rating to
Germany-headquartered automotive sealings producer Standard Profil
Automotive GmbH (Standard Profil) and its 'B-' issue rating to its
senior secured notes, in line with the preliminary ratings. S&P's
outlook on the ratings is negative, compared with our stable
outlook on the preliminary ratings.
The negative outlook reflects the risk of a downgrade if the
company's S&P Global Ratings-adjusted FOCF remains materially
negative and it fails to bolster its liquidity via a new RCF or
other long-term funding in the next six months, or if its FOCF
remains structurally negative beyond the next 12 months.
S&P said, "We now estimate that Standard Profil's earnings and FOCF
in 2021 will be materially weaker than we had initially
anticipated. The prolonged semiconductor shortage has resulted in
more order cancelations from original equipment manufacturers
(OEMs) than initially expected. We now project lower revenues of
about EUR340 million in 2021 compared with about EUR360 million in
our previous base case. In addition, Standard Profil is facing
problems with the production ramp-up at its growing Mexican
facility, and the recent sharp raw materials price inflation is
weighing on margins. We anticipate these challenges to weigh on
third-quarter and full-year earnings, with our revised S&P Global
Ratings-adjusted EBITDA projection for 2021 of EUR42 million-EUR47
million (12%-14% margin) compared to EUR60 million-EUR70 million
previously (17%-19% margin). We believe the weaker earnings will
also lead to a sizable adjusted FOCF burn of close to EUR20 million
in 2021 compared with the breakeven we previously assumed. In
first-half 2021, Standard Profil reported S&P Global
Ratings-adjusted EBITDA of EUR26 million and an FOCF deficit of
EUR9 million before working capital changes. While we expect the
company will progressively address its operating setbacks in Mexico
and partly recover higher raw materials costs from its OEM
customers, we believe the recovery in global auto production could
remain volatile in 2022, making the pace of Standard Profil's
earnings and FOCF recovery next year increasingly uncertain."
Standard Profil's refinancing was completed as expected, but
underperformance has weakened its liquidity position.The company
repaid most of its existing debt from its successful EUR275 million
secured notes issuance earlier this year, with only about EUR9
million of bank debt still due as of June 30, 2021. However, the
higher-than-anticipated FOCF burn has reduced the company's
liquidity cushion, which is also constrained by the lack of a
committed RCF. S&P said, "With our expectation of continued
negative FOCF and upcoming non-recourse factoring repayments of
about EUR10 million, we now anticipate Standard Profil's total cash
balance could fall close to EUR50 million by year-end from EUR84
million as of the second quarter. This offers limited capacity to
absorb additional operating headwinds, which is why we now assess
liquidity as less than adequate. In addition, we understand that
about EUR35 million of its EUR84 million second-quarter cash
balance remains located outside of its new German group parent at
the subsidiaries in Turkey, China, South Africa, Bulgaria, Spain,
and Mexico. Since Standard Profil does not have a cash pooling
system, in many cases this cash is not immediately accessible or
only with a delay. That said, Standard Profil continues to work on
repatriating some of the foreign cash not required for daily local
operations via inter-company loans and we anticipate these funds to
decrease to about EUR15 million by year-end."
Standard Profil is a small auto supplier focused on the
commoditized niche segment of sealing products. With 2020 revenue
of EUR288 million, the company's total revenue base is one of the
smallest among rated auto supplier peers globally. This primarily
reflects its narrow focus on sealing systems. S&P said, "We view
sealing products as relatively low-value-added components, because
end-product complexity is limited and other players offer close
substitutes. This is also reflected in Standard Profil's low annual
research and development (R&D) spending, excluding tooling costs,
of historically less than 0.5% of revenue. Despite some market
share gains prior to 2018 and in 2020, the company is not a
dominant player in its niche market. In Europe, we understand the
company holds the No. 3 position, with a market share of about 20%,
after global leader Cooper Standard with more than 30% and
SaarGummi with more than 25%. Standard Profil ranks fifth globally,
with about 6% market share. We think that this affords it limited
pricing power with its car OEM customers, and creates exposure to
possible adverse changes in its small sub-segment, for example
related to competitive dynamics or technological changes. Unlike
most peers, Standard Profil develops in-house tooling and molds for
sealing production. We believe this degree of vertical integration
may allow additional operational flexibility to address car OEMs'
evolving needs, with the company recently securing new contracts
thanks to shorter lead times."
Standard Profil is private-equity-owned, and we anticipate only
modest debt leverage reduction in the medium term. Standard Profil
has been owned by private equity firm Actera Group since 2013. S&P
said, "We estimate the company's adjusted debt to EBITDA will be
slightly below 7.0x in 2021, and we forecast leverage declining in
the low 5x area in 2022 as EBITDA progressively recovers. We do not
view Actera's financial policy stance as particularly aggressive
relative to other financial sponsors, and our adjusted leverage for
Standard Profil remained between 3.0x and 6.0x over 2017–2020.
That said, although we understand that there is limited appetite
for large debt-funded acquisitions or outsized shareholder returns,
we believe that any future FOCF generation could be allocated to
dividends (EUR34 million paid out in 2017) or bolt-on mergers or
acquisitions (M&A) as part of the company's international expansion
strategy, constraining material and sustainable longer term
deleveraging to materially below 5.0x. Given Actera's financial
sponsor ownership, we assess Standard Profil's leverage on a gross
debt basis. We estimate adjusted debt of about EUR305 million in
2021, including about EUR20 million of leases, and some small
pension liabilities. We treat about $95 million preference shares
issued by Standard Profil's direct parent, Luxembourg-based
intermediate holding company Sealing Technologies S.à r.l., as
equity under our criteria."
S&P said, "We think FOCF generation is a weakness for the rating
and will remain subdued in 2021-2022. Standard Profil's adjusted
FOCF turned negative in 2018 with a cash burn of about EUR26
million and was close to breakeven in 2019 and 2020. This is
primarily a function of the company's high capital expenditure
(capex) intensity of 10%-15% of sales historically. A material
share of Standard Profil's capex is directly linked to new
contracts given that it relates to the in-house development of
tooling before the start of production of new vehicle platforms, as
well as capacity adjustments. Considering our forecast for a sales
rebound in 2021 and 2022, albeit at a somewhat slower pace than
previously expected, we continue to estimate that capex will remain
high at 12%-14% of sales in the near term. We believe that such
requirements, combined with our weaker EBITDA projections for 2021
and 2022, could lead to a material FOCF deficit of close to EUR20
million this year and delay positive free cash flow generation to
beyond 2022. Overall, we think that the rating remains constrained
by the lack of a recent and extended track record of materially
positive FOCF during periods of slower growth.
"The company's competitive cost structure is a key strength and
supported margin and cash flow resilience during 2020. Despite
current operating challenges, which we view as temporary, Standard
Profil's track record of above-average S&P Global Ratings-adjusted
EBITDA margins of 15%-20% (after capitalization of tooling costs
which represents about 4% of EBITDA margins on average) and its
ability to maintain such levels through the cycle continue to
support the rating. This mainly reflects its production
footprint--primarily in low-cost countries (with major plants in
Turkey, Morocco, South Africa, Mexico, Bulgaria, and China)--paired
with the high labor intensity of sealing production. In 2020, its
entire workforce was employed in countries with a minimum wage that
is less than half the OECD average.
"We think an efficient cost structure represents an important
advantage in this segment, which mainly competes on cost and time
to delivery rather than differentiated products. Moreover, we view
Standard Profil's cost structure as flexible with about 50% of
total operating expenses related to variable items, in particular
materials (mainly rubber, plastics, metals, and black carbon),
direct labor, and scraps. This was evident during last year's
downturn when Standard Profil's revenue declined by 17%, while its
adjusted EBITDA margin slightly improved to about 18% (from 17% in
2019) and its FOCF deficit remained stable at about negative EUR1
million. Although helped by lower raw material prices and tooling
revenue growth, we think this underscores the company's margin
stability during weak market conditions. We believe that its
margins have benefited somewhat from the depreciation of emerging
market currencies in recent years, which could become a headwind if
currency movements reverse." This is mainly confined to labor costs
given that materials are typically priced in hard currency even if
used at the company's sites in low-cost countries.
Standard Profil's strong order book provides some visibility during
the bumpy market recovery in 2021-2022 and indicates its
medium-term growth potential. Standard Profil has secured sizable
new business even through the pandemic, with its 2020 order intake
increasing by 70% to EUR669 million from EUR392 million in 2019.
This was helped by major contract wins. Overall, Standard Profil's
healthy order book of EUR2.3 billion implies that the group's
revenues for 2021 and 2022 are nearly fully contracted, albeit
subject to the usual flexibility of OEMs to adjust volumes within
contractual limits as noticed in the first half of this year. S&P
said, "We also view positively the company's portfolio exposure to
newer platforms and the fast-growing battery electric vehicle (BEV)
market. About 50% of models to be supplied in 2021 have a start of
production after 2019 (such as Tesla Model Y, Toyota CH-R, Fiat
500e, and Ford Mach-E), and Standard Profil expects to generate an
increasing share of its revenue from BEV players. As such, we think
the company is well-placed to grow faster than global light vehicle
production over the next couple of years once near-term supply-side
related volatility subsides. Sealings are used in both internal
combustion engine vehicles and hybrid cars as well as BEVs, but we
think the electric vehicle transition and an increasing share of
SUVs could be tailwinds, since BEVs have higher noise cancellation
requirements and SUVs have higher sealing content."
At this stage, Standard Profil's activities are fairly concentrated
geographically and across customers, but diversification should
improve in the medium term. In S&P's view, the company's historical
focus on the European market and its high customer concentration
carry some risks. Europe accounted for about 85% of 2020 revenue,
and the top-three OEM brands represented close to 60% of revenue.
Notably, the end of production for two platforms caused
underperformance compared with overall market growth in 2018 and
2019, when Standard Profil's revenue declined by 4% and 12%. That
said, its current backlog shows increasing diversification in North
America and China, which could increase the combined share of
business from these markets to about 25%-30% by 2025.
The negative outlook reflects S&P's expectation that Standard
Profil's adjusted FOCF burn is likely to continue over the next
six-to-12 months as the company faces operating setbacks and
volatile market conditions, which may further deteriorate its
liquidity position.
Downside scenario
S&P said, "We could lower our ratings on Standard Profil if its
adjusted FOCF remains materially negative while failing to secure
RCF or other long-term funding in the next six months. We could
also lower the rating if we believe its FOCF generation will remain
structurally negative beyond 12 months due to continued operating
challenges or volatile market conditions. Such scenarios could lead
us to further reassess Standard Profil's liquidity position and our
view of the sustainability of its capital structure."
Upside scenario
S&P said, "We could revise our outlook on Standard Profil to stable
if faster-than-expected revenue growth and margin improvement
result in at least breakeven FOCF. A structural improvement in its
liquidity position from improved earnings or the issuance of new
long-term funding would be another key consideration.
"Although less likely in the near term, we could raise our ratings
on Standard Profil if it generates debt to EBITDA comfortably below
5x and FOCF to debt above 5% on a sustained basis." This could stem
from faster-than-anticipated EBITDA growth and market share gains,
or the company allocating its FOCF to debt repayment. Any upgrade
would be contingent upon a clear commitment to maintain credit
metrics commensurate with a higher rating.
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BARINGS EURO 2021-2: S&P Assigns B- Rating on Cl. F Notes
---------------------------------------------------------
S&P Global Ratings assigned credit ratings to Barings Euro CLO
2021-2 DAC's class A loan and class A, B-1, B-2, C, D, E, and F
notes. At closing, the issuer also issued unrated subordinated
notes.
The ratings reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
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 bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio Benchmarks
CURRENT
S&P weighted-average rating factor 2,995.63
Default rate dispersion 572.06
Weighted-average life (years) 5.30
Obligor diversity measure 102.31
Industry diversity measure 20.78
Regional diversity measure 1.37
Transaction Key Metrics
CURRENT
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 3.25
Covenanted 'AAA' weighted-average recovery (%) 36.00
Covenanted weighted-average spread (%) 3.80
Covenanted weighted-average coupon (%) 3.75
Under the transaction documents, the rated loan and notes will pay
quarterly interest unless a frequency switch event occurs.
Following this, the rated loan and notes will switch to semiannual
payments. The portfolio's reinvestment period will end
approximately four and a half years after closing.
S&P said, "We consider that the portfolio on the effective date
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 target minimum
'AAA' weighted-average recovery rate (36.00%) as indicated by the
collateral manager. 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 sovereign risk criteria, we consider
that the transaction's exposure to country risk is sufficiently
mitigated at the assigned ratings.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"We consider the transaction's legal structure and framework to be
bankruptcy remote, in line with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for the class A
loan, and class A, B-1, B-2, C, D, and E notes. Our credit and cash
flow analysis indicates that the available credit enhancement for
the class B-1, B-2, C, and D could withstand stresses commensurate
with the same or higher ratings than those we have assigned.
However, as the CLO will be in its reinvestment phase starting from
closing, during which the transaction's credit risk profile could
deteriorate, we have capped our ratings assigned to these notes.
"The class F notes' current break-even default rate (BDR) cushion
is negative at the 'B-' rating. Based on the portfolio's actual
characteristics and additional overlaying factors, including our
long-term corporate default rates and recent economic outlook, we
believe this class is able to sustain a steady-state scenario, in
accordance with our criteria." S&P's analysis reflects several
factors, including:
-- The class F notes' available credit enhancement is in the same
range as that of other CLOs we have rated and that have recently
been issued in Europe.
-- S&P's BDR at the 'B-' rating level is 26.82% versus a portfolio
default rate of 16.43% if it was to consider a long-term
sustainable default rate of 3.1% for a portfolio with a
weighted-average life of 5.30 years.
-- Whether the tranche is vulnerable to non-payment in the near
future.
-- If there is a one-in-two chance for this note to default.
-- If S&P envisions this tranche to default in the next 12-18
months.
Following this analysis, S&P considers that the available credit
enhancement for the class F notes is commensurate with a 'B- (sf)'
rating.
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
loan, and the class A to E notes to five of the 10 hypothetical
scenarios we looked at in our publication, see "How Credit Distress
Due To COVID-19 Could Affect European CLO Ratings," published on
April 2, 2020.
"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."
The transaction securitizes a portfolio of primarily senior-secured
leveraged loans and bonds, and it will be managed by Barings (U.K.)
Ltd.
Environmental, social, and governance (ESG) factors
S&P said, "We regard the exposure to ESG credit factors in the
transaction as being broadly in line with our benchmark for the
sector. Primarily due to the diversity of the assets within CLOs,
the exposure to environmental credit factors is viewed as below
average, social credit factors are below average, and governance
credit factors are average. For this transaction, the documents
prohibit assets from being related to the following industries:
production or distribution of biological, chemical, radiological
and nuclear weapons, assault weapons or firearms, pornography, coal
mining, oil sands and associated pipelines, food commodity
derivatives, tobacco, palm oil and palm fruit products, or payday
lending activities. Accordingly, since the exclusion of assets from
these industries does not result in material differences between
the transaction and our ESG benchmark for the sector, no specific
adjustments have been made in our rating analysis to account for
any ESG-related risks or opportunities."
Ratings List
CLASS RATING AMOUNT INTEREST RATE (%) CREDIT
(MIL. EUR) ENHANCEMENT(%)
A AAA (sf) 188.00 3mE + 0.98 38.00
A loan AAA (sf) 60.00 3mE + 0.98 38.00
B-1 AA (sf) 15.00 3mE + 1.75 28.00
B-2 AA (sf) 25.00 1.90 28.00
C A (sf) 25.00 3mE + 2.40 21.75
D BBB (sf) 27.80 3mE + 3.45 14.80
E BB- (sf) 19.20 3mE + 6.17 10.00
F B- (sf) 12.00 3mE + 8.99 7.00
Sub NR 33.60 N/A N/A
NR--Not rated.
N/A--Not applicable.
3mE--Three-month Euro Interbank Offered Rate.
CAIRN CLO XIV: S&P Assigns Preliminary B- Rating on Class F Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to Cairn
CLO XIV DAC's class A, B-1, B-2, C, D, E, and F notes. The issuer
also issued unrated subordinated notes.
This is a European cash flow CLO transaction, securitizing a pool
of primarily syndicated senior secured loans or bonds. The
portfolio's reinvestment period ends approximately four and a half
years after closing. Under the transaction documents, the rated
notes pay quarterly interest (starting in April 2022) unless there
is a frequency switch event. Following this, the notes will switch
to semiannual payment.
As of the closing date, the issuer will own over 80% of the target
effective date portfolio. S&P said, "We consider that the portfolio
on the effective date 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 collateralized debt obligations."
Portfolio Benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,662.68
Default rate dispersion 562.51
Weighted-average life (years) 5.51
Obligor diversity measure 101.52
Industry diversity measure 15.34
Regional diversity measure 1.24
Transaction Key Metrics
CURRENT
Total par amount (mil. EUR) 400
Defaulted assets (mil. EUR) 0
Number of performing obligors 114
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.50
Covenanted 'AAA' weighted-average recovery (%) 34,10
Weighted-average spread net of floors (%) 3.82
S&P said, "In our cash flow analysis, we modeled the EUR400 million
target par amount, a weighted-average spread of 3.65%, the
reference weighted-average coupon of 3.50%, and a covenanted
weighted-average recovery rates for the 'AAA' rated note of 34.10%.
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.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned preliminary ratings, as the exposure to
individual sovereigns does not exceed the diversification
thresholds outlined in our criteria.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-1 to E notes is commensurate
with typically higher rating levels than those we have assigned.
However, as the CLO will have a reinvestment period, during which
the transaction's credit risk profile could deteriorate, we have
capped our assigned preliminary ratings on the notes.
"Elavon Financial Services DAC will be the bank account provider
and custodian. Its documented downgrade remedies are in line with
our counterparty criteria.
"The issuer can purchase up to 20.0% of non-euro assets, subject to
entering into asset-specific swaps. J.P. Morgan AG will act as swap
counterparty. Its downgrade provisions are in line with our
counterparty criteria for liabilities rated up to 'AAA'.
"We consider that the transaction's legal structure is bankruptcy
remote, in line with our legal criteria.
"The CLO will be managed by Cairn Loan Investments II LLP. We
expect the manager to support a maximum potential rating on the
liabilities of 'AAA' under our "Global Framework For Assessing
Operational Risk In Structured Finance Transactions," published on
Oct. 9, 2014.
"Following our analysis of the credit, cash flow, counterparty, and
legal risks, we believe that our preliminary ratings are
commensurate with the available credit enhancement for the class A,
B-1, B-2, C, D, E, and F notes.
"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."
Cairn CLO XII is a European cash flow CLO securitization of a
revolving pool, comprising euro-denominated senior secured loans
and bonds issued mainly by sub-investment grade borrowers. Cairn
Loan Investments II will manage the transaction.
Environmental, social, and governance (ESG) factors
S&P said, "We regard the exposure to ESG credit factors in the
transaction as being broadly in line with our benchmark for the
sector. Primarily due to the diversity of the assets within CLOs,
the exposure to environmental credit factors is viewed as below
average, social credit factors are below average, and governance
credit factors are average. For this transaction, the documents
prohibit assets from being related to the following industries:
tobacco, weapons, thermal coal, fossil fuels, and production of
pornography or trade in prostitution. Accordingly, since the
exclusion of assets from these industries does not result in
material differences between the transaction and our ESG benchmark
for the sector, no specific adjustments have been made in our
rating analysis to account for any ESG-related risks or
opportunities."
Ratings List
CLASS PRELIM. PRELIM. INTEREST RATE* SUB (%)
RATING AMOUNT
(MIL. EUR)
A AAA (sf) 244.00 Three/six-month EURIBOR 39.00
plus 1.00%
B-1 AA (sf) 29.00 Three/six-month EURIBOR 28.00
plus 1.70%
B-2 AA (sf) 15.00 2.00% 28.00
C A (sf) 24.00 Three/six-month EURIBOR 22.00
plus 2.10%
D BBB (sf) 28.00 Three/six-month EURIBOR 15.00
plus 3.20%
E BB- (sf) 20.40 Three/six-month EURIBOR 9.90
plus 6.11%
F B- (sf) 11.60 Three/six-month EURIBOR 7.00
plus 8.64%
Subordinated NR 36.00 N/A N/A
*The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
NORDIC AVIATION: Obtains Extension of Forbearance Agreement
-----------------------------------------------------------
John Mulligan at Independent.ie reports that Limerick-based
aircraft leasing giant Nordic Aviation Capital has secured a
further extension to a forbearance agreement with lenders related
to US$6 billion (EUR5 billion) of debt.
A previous extension to the forbearance agreement that was inked
earlier this year expired on Sept. 20, Independent.ie recounts.
It's believed that the fresh extension secured this week expires on
Sept. 30, the report notes.
Nordic Aviation Capital (NAC) is the world's largest lessor of
regional aircraft and the fifth-largest aircraft lessor in the
world. It has been weighing options including a potential
examinership as it grapples with the lingering impact of the Covid
pandemic on the aviation sector, Independent.ie discloses.
Earlier this month, the lessor remained locked in talks with its
creditors in advance of the expiration on Sept. 20 of the previous
forbearance extension, Independent.ie relays.
The lessor, which is headed by former ATR boss Patrick de
Castelbajac, has about 100 creditors, Independent.ie states.
The forbearance extension was secured earlier this year as NAC
tried to arrive at a more permanent solution, Independent.ie notes.
Within the past few weeks, the ongoing talks were understood to be
productive, according to Independent.ie.
Despite that, NAC has lined up PwC executive Declan McDonald to
handle a possible examinership process in Ireland, Independent.ie
discloses.
OCP EURO 2020-4: S&P Assigns B- Rating on Class F Notes
-------------------------------------------------------
S&P Global Ratings assigned credit ratings to the class A to F
European cash flow CLO notes issued by OCP Euro CLO 2020-4 DAC. The
issuer also issued unrated subordinated notes.
The transaction is a reset of an existing transaction. The existing
classes of rated notes were redeemed with the proceeds from the
issuance of the replacement notes on the issuance date.
The 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 bankruptcy remote.
-- The transaction's counterparty risks, which is in line with our
counterparty rating framework.
Under the transaction documents, the rated notes pay quarterly
interest unless a frequency switch event occurs. Following this,
the notes will permanently switch to semiannual payments. The
portfolio's reinvestment period will end approximately 2.3 years
after closing.
S&P said, "The portfolio is granular in nature, and
well-diversified across obligors, industries, and asset
characteristics when compared to other CLO transactions we have
rated recently. Therefore, we have conducted our credit and cash
flow analysis by applying our criteria for corporate cash flow
CDOs."
Portfolio Benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,937.15
Default rate dispersion 446.60
Weighted-average life (years) 5.23
Obligor diversity measure 140.46
Industry diversity measure 21.49
Regional diversity measure 1.34
Transaction Key Metrics
CURRENT
Total par amount (mil. EUR) 403.67
Defaulted assets (mil. EUR) 0
Number of performing obligors 164
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 1.24
'AAA' weighted-average recovery (%) 35.53
Covenanted weighted-average spread (%) 3.85
S&P said, "For our cash flow analysis, we considered the EUR400
million target par amount, the covenanted weighted-average spread
(3.85%), and the actual recovery rate (35.53% at '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. Our credit and cash
flow analysis indicates that the available credit enhancement for
classes B to E could withstand stresses commensurate with higher
ratings than those we have assigned. However, as the CLO is still
in its reinvestment phase, during which the transaction's credit
risk profile could deteriorate, we have capped our ratings assigned
to the notes.
"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 rating levels.
"Until the end of the reinvestment period on Jan. 22, 2024, 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.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"The transaction's legal structure is bankruptcy remote, in line
with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for each class
of notes.
"The class F notes' current break-even default rate (BDR) cushion
is negative at the 'B-' rating level. Based on the portfolio's
actual characteristics and additional overlaying factors, including
our long-term corporate default rates and recent economic outlook,
we believe this class is able to sustain a steady-state scenario,
in accordance with our criteria." S&P's analysis reflects several
factors, including:
-- The class F notes' available credit enhancement is in the same
range as that of other CLOs S&P has rated and that has recently
been issued in Europe.
-- S&P's BDR at the 'B-' rating level is 28.04% versus a portfolio
default rate of 16.22% if it was to consider a long-term
sustainable default rate of 3.1% for a portfolio with a
weighted-average life of 5.23 years.
-- Whether the tranche is vulnerable to non-payment in the near
future.
-- If there is a one-in-two chance for this note to default.
-- If S&P envisions this tranche to default in the next 12-18
months.
-- Following this analysis, S&P considers that the available
credit enhancement for the class F notes is commensurate with a 'B-
(sf)' rating.
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 publication, "How Credit Distress Due To COVID-19 Could Affect
European CLO Ratings," published on April 2, 2020. The results
shown in the chart below are based on actual weighted-average
spread, coupon, and recoveries.
"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."
Environmental, social, and governance (ESG) factors
S&P said, "We regard the exposure to ESG credit factors in the
transaction as being broadly in line with our benchmark for the
sector. Primarily due to the diversity of the assets within CLOs,
the exposure to environmental credit factors is viewed as below
average, social credit factors are below average, and governance
credit factors are average. For this transaction, the documents
prohibit the manager from investing in activities related to United
Nations Global Compact (UNGC) violations, manufacture or marketing
of biological and chemical weapons, anti-personnel land mines or
cluster weapons, depleted uranium, nuclear weapons, white
phosphorus, manufacturing of civilian firearms, tobacco products,
mining or electrification of thermal coal, oil sand extraction, oil
exploration or storage facilities for oil, payday lending,
pornography or prostitution, opioids, hazardous chemicals,
pesticides and wastes, ozone-depleting substances or the extraction
of fossil fuels from unconventional sources, trades in endangered
or protected wildlife, and non-certified palm oil production. Since
the exclusion or limitation of assets related to these activities
does not result in material differences between the transaction and
our ESG benchmark for the sector, no specific adjustments have been
made in our rating analysis to account for any ESG-related risks or
opportunities."
Ratings List
CLASS RATING AMOUNT SUB (%) INTEREST RATE*
(MIL. EUR)
A AAA (sf) 244.00 39.00 Three/six-month EURIBOR
plus 0.88%
B-1 AA (sf) 22.00 28.00 Three/six-month EURIBOR
plus 1.70%
B-2 AA (sf) 22.00 28.00 2.10%
C A (sf) 29.00 20.75 Three/six-month EURIBOR
plus 2.20%
D BBB- (sf) 25.00 14.50 Three/six-month EURIBOR
plus 3.20%
E BB- (sf) 18.00 10.00 Three/six-month EURIBOR
plus 5.94%
F B- (sf) 13.00 6.75 Three/six-month EURIBOR
plus 8.64%
Sub notes NR 31.00 N/A N/A
*The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
NR--Not rated.
N/A--Not applicable.
=============
R O M A N I A
=============
CITY INSURANCE: Romania Changes Legislation Following Bankruptcy
----------------------------------------------------------------
Nicoleta Banila at SeeNews reports that Romania's government on
Sept. 22 issued an emergency decree changing legislation related to
the Policyholders Guarantee Fund (FGA) after the country's largest
insurer City Insurance went bankrupt, the finance ministry said.
According to SeeNews, the finance ministry said in a press release
FGA will be entitled to make payments to affected customers within
60 days from the date of publication in the Official Gazette of a
financial regulator's decision to withdraw an insurer's operating
license and begin insolvency procedures.
Until now, the fund could start paying customers only after the
court had declared an insurer bankrupt, SeeNews states.
The new legislation raises the maximum guarantee ceiling for an
insurance claim to RON500,000 (US$118,500/EUR101,020) from
RON450,000, SeeNews notes.
On Sept. 18, prime minister Florin Citu called for further
investigations into City Insurance's bankruptcy, SeeNews recounts.
On Sept. 17, the financial regulator, ASF, revoked City Insurance's
license and started bankruptcy procedures, saying its short-term
financing plan and its recovery plan are "obviously inadequate" and
do not ensure the restoration of the company's financial situation,
SeeNews relays.
On Sept. 8, ASF announced that Netherlands-based I3CP Holdings has
failed to cover a capital increase of City Insurance within the
legally prescribed period, SeeNews discloses.
===========================
U N I T E D K I N G D O M
===========================
AVACADE: Directors Gets Six-Year Directorship Disqualification
--------------------------------------------------------------
Ruby Hinchliffe at FTAdviser reports that the directors behind
Avacade have each received six-year directorship disqualifications
after the Insolvency Service found they had paid themselves GBP1.4
million during a tax investigation.
According to FTAdviser, Craig Lummis and his son, Lee Lummis, were
banned by Judge Halliwell in Manchester's High Court on Aug. 27,
due to the fact they repaid themselves GBP1.37 million despite
their company being under investigation by the tax authorities and
slipping into insolvency.
Avacade entered into liquidation back in November 2015, but had
ceased trading on August 1, 2014 when it was clear that it was, or
soon would be, insolvent, FTAdviser relays, citing the court.
Investigators discovered that between August 2014 and May 2015,
Avacade collected commissions worth more than GBP1.6 million,
FTAdviser discloses.
Of this, the directors received GBP647,000 each (GBP1.3 million) to
reduce their director's loan accounts, FTAdviser states.
They had also sold Avacade's client database to a connected company
for more than GBP150,000 of which GBP75,000 was used to pay down
their loan accounts, FTAdviser notes.
The Insolvency Service said during these transactions both
directors "were aware" of an investigation by tax authorities,
which was looking into a tax planning scheme Avacade's directors
"caused the company to enter into", FTAdviser recounts.
"It's clear that directors must treat all creditors fairly when
they know their company is insolvent," FTAdviser quotes Rob Clarke,
chief investigator of the Insolvency Service as saying.
"Craig and Lee Lummis totally disregarded their duties by ignoring
the ongoing investigation into the tax planning scheme and ensuring
they benefitted personally from Avacade's only assets.
"This failing led to them each being banned from acting as a
director for a significant period of time and should serve as a
warning to other directors who follow a similar path."
Avacade ceased trading in August 2014, FTAdviser discloses.
Manchester's high court ruled that at this point, it was clear the
company "was, or soon would be, insolvent", according to
FTAdviser.
DERBY COUNTY FOOTBALL: Enters Administration, Faces 12-Pt Deduction
-------------------------------------------------------------------
Tom Pegden at BusinessLive reports that the owners of Derby County
Football Club have appointed administrators to take over the
financial affairs of the business.
According to BusinessLive, the Championship club had been
struggling unsuccessfully to find investors for some time, with
owner Mel Morris previously saying he had no choice but to make the
"gut-wrenching" decision over its future.
A statement issued by the club said Andrew Hosking, Carl Jackson
and Andrew Andronikou, managing directors at business advisory firm
Quantuma, had been appointed joint administrators of the club as of
Wednesday, Sept. 22, BusinessLive relates.
Under the rules of the league, it means the club will be hit with a
12 point deduction, which could rise to 21, all-but-guaranteeing
relegation to League One, BusinessLive discloses.
In the statement, Andrew Hosking, Quantuma managing director and
joint administrator, as cited by BusinessLive, said: "I can confirm
that Andrew Andronikou, Carl Jackson and I were appointed joint
administrators of Derby County FC [Wednes]day.
"Covid-19 has had a significant impact on the finances of the club
and its long-term ability to continue in its current form.
"We recognize that with the commencement of the 2021/22 season last
month, this news will be of concern to stakeholders and fans, in
addition to the city of Derby and the wider football community.
"We are in the early stages of assessing the options available to
the club and would invite any interested parties to come forward.
"Our immediate objectives are to ensure the club completes all its
fixtures in the Championship this season and finding interested
parties to safeguard the club and its employees."
Interviewed at the weekend, Mr. Morris said he blamed both Covid
and failed takeovers for the financial problems.
He said he had invested GBP200 million since buying the club in
2015, but with problems starting to mount, Derby, which is
currently under a transfer embargo, were put up for sale only for
two takeover deals to collapse, BusinessLive notes.
IGLOO ENERGY: May Go Bust Due to Surging Wholesale Gas Prices
-------------------------------------------------------------
Rachael Davies at The Scotsman reports that energy suppliers across
the UK are going bust one after another, as wholesale gas prices
continue to rise.
According to The Scotsman, all eyes are on troubled companies like
Igloo Energy to see whether they might be the next to go bust.
As a result of the higher prices, customers of many smaller energy
suppliers are currently paying less than the companies are, The
Scotsman states. With no real profit coming in, these suppliers
are starting to feel the heat, The Scotsman notes.
Finance journalist Martin Lewis tweeted a warning on Sept. 22 about
Igloo Energy, suggesting that the losses felt across the energy
industry might affect Igloo in the near future, The Scotsman
recounts.
Demand will only continue to increase as we head into winter,
putting the strain on dozens of smaller energy suppliers, The
Scotsman states.
"Strong rumours that Igloo is appointing administrators," Mr. Lewis
wrote on Twitter. "Igloo is a big one. If you're a customer,
screen grab your status now and do a meter reading just in case."
According to The Scotsman, it looks like Igloo Energy could be in
the midst of insolvency discussions, but that's not confirmed right
now. The company is thought to be in talks with
Alvarez & Marsal, a consultancy company that is also currently
overseeing fellow struggling energy supplier, Green, The Scotsman
relays. Igloo has also stopped taking on new customers, The
Scotsman says.
Back on September 21st, Ofgem also issued a provisional order to
Igloo Energy for not paying GBP316,582 in Feed in Tariff payments,
which was due on Sept. 17, The Scotsman relays, citing Energy
Review.
At the moment, it's not confirmed that Igloo will go bust, The
Scotsman discloses. As Mr. Lewis goes on to clarify, "appointing
administrators doesn't automatically mean going bust (it can mean
that), it can also mean finding a route to the financing of a
rescue package."
A statement on the company website reassures customers that energy
supplies "are secure and all credit balances are protected", The
Scotsman notes.
Igloo Energy has 100,000 residential customers across the UK who
may be affected.
KELHAM HALL: Set to Reopen Following Previous Owner's Liquidation
-----------------------------------------------------------------
Lynette Pinchess at NottinghamshireLive reports that historic
Nottinghamshire venue Kelham Hall is set to reopen after its sudden
closure earlier this year left devastated brides-to-be in limbo.
According to NottinghamshireLive, the Grade I listed landmark, near
Newark, will return to business in December after being taken over
by a "new and experienced management team".
Investment, which is backed by private commercial finance provider
A Shade Greener Finance, will help to restore the hall to its
former glory after the previous owners fell into liquidation in
June, NottinghamshireLive discloses.
The Victorian stately home will relaunch with a glitz and glamour
theme in the run-up to Christmas, under its new name -- The
Renaissance at Kelham Hall, NottinghamshireLive states.
LANEBROOK MORTGAGE 2021-1: S&P Assigns BB Rating on X1 Notes
------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Lanebrook
Mortgage Transaction 2021-1 PLC's mortgage-backed notes.
Lanebrook Mortgage Transaction 2021-1 is an RMBS transaction that
securitizes a portfolio of GBP343 million buy-to-let (BTL) mortgage
loans secured on properties in the U.K.
S&P's ratings address timely payment of interest and ultimate
payment of principal on the class A notes, and they reflect
ultimate payment of interest and principal on the class B-Dfrd to
X1-Dfrd notes.
The loans in the pool were originated between 2020 and 2021 by The
Mortgage Lender Ltd., a nonbank specialist lender, under a forward
flow agreement with its parent Shawbrook Bank PLC.
The collateral comprises loans granted to BTL landlords, none of
whom have an adverse credit history.
The transaction benefits from liquidity support provided by a
liquidity facility, and principal can be used to pay senior fees
and interest on the most senior notes.
Credit enhancement for the rated notes consists of subordination
from the closing date and a reserve fund.
The transaction incorporates a swap to hedge the mismatch between
the notes, which pays a coupon based on compounded daily SONIA, and
the loans, which pay a fixed rate of interest until they revert to
a floating rate.
At closing, Lanebrook Mortgage Transaction 2021-1 PLC used the
proceeds of the notes to purchase and accept the assignment of the
seller's rights against the borrowers in the underlying portfolio
and to fund the reserves. The noteholders benefit from the security
granted in favor of the security trustee, Citicorp Trustee Co.
Ltd.
There are no rating constraints in the transaction under S&P's
counterparty, operational risk, or structured finance sovereign
risk criteria. It considers the issuer to be bankruptcy remote.
Ratings
CLASS RATING CLASS SIZE (MIL. GBP)
A AAA (sf) 301.840
B-Dfrd AA (sf) 15.435
C-Dfrd A (sf) 13.720
D-Dfrd BBB+ (sf) 8.575
E-Dfrd BBB- (sf) 3.430
X1-Dfrd BB (sf) 10.290
X2-Dfrd NR 5.145
RC1 Certs NR N/A
RC2 Certs NR N/A
NR--Not rated.
N/A--Not applicable.
TWIN BRIDGES 2021-2: S&P Assigns BB Rating on Class X1 Notes
------------------------------------------------------------
S&P Global Ratings assigned credit ratings to Twin Bridges 2021-2
PLC's (TB 2021-2) class A and B notes, and class C-Dfrd to X1-Dfrd
interest deferrable notes. At the same time, TB 2021-2 also issued
unrated class X2-Dfrd, X3-Dfrd, Z1-Dfrd, and Z2-Dfrd notes.
TB 2021-2 is a static RMBS transaction that securitizes a portfolio
of buy-to-let (BTL) mortgage loans secured on properties in the
U.K.
The loans in the pool were originated between 2016 and 2021 by
Paratus AMC Ltd., a non-bank specialist lender, under the brand of
Foundation Home Loans.
The collateral comprises first-lien U.K. BTL residential mortgage
loans made to both commercial and individual borrowers.
The first interest payment date will be in March 2022.
The transaction benefits from liquidity support provided by a
nonamortizing reserve fund (broken down into a liquidity reserve
fund and a credit reserve), and principal can also be used to pay
senior fees and interest on the notes, subject to certain
conditions.
Credit enhancement for the rated notes consists of subordination
and the credit reserve from the closing date and
overcollateralization following the step-up date. The
overcollateralization will result from the release of the excess
amount from the revenue priority of payments to the principal
priority of payments.
The transaction incorporates two swaps to hedge the mismatch
between the notes, which pay a coupon based on the compounded daily
Sterling Overnight Index Average (SONIA), and the loans, which
primarily pay a fixed-rate interest before reversion.
At closing, the issuer used the issuance proceeds to purchase the
full beneficial interest in the mortgage loans from the seller. The
issuer grants security over all of its assets in favor of the
security trustee.
S&P said, "Our ratings on the class A and B notes address the
timely payment of interest and ultimate payment of principal,
although the terms and conditions of the class B notes allow for
the deferral of interest until they are the most senior class
outstanding. Our ratings on the class C-Dfrd, D-Dfrd, and X1-Dfrd
notes address ultimate payment of principal and interest while they
are not the most senior class outstanding. No further interest will
accrue on the class X1-Dfrd notes after the optional redemption
date, in line with the notes' coupon. TB 2021-2 also issued unrated
class X2-Dfrd, X3-Dfrd, Z1-Dfrd and Z2-Dfrd notes.
"Our cash flow analysis indicates that the available credit
enhancement for the class X1-Dfrd is commensurate with a higher
rating than that currently assigned. The rating assigned to the
class X1-Dfrd notes reflects the sensitivity to higher prepayments,
their relative positions in the capital structure, and negative
interest rate scenario."
Repayment of interest and principal on the class X1-Dfrd, X2-Dfrd,
and X3-Dfrd notes relies on excess spread. Upon the optional
redemption date, excess spread will be diverted to the principal
priority of payments until the class D-Dfrd notes are fully
redeemed. Therefore, any remaining interest and principal on any of
the class X1-Dfrd notes will only be paid once the class A to
D-Dfrd notes have been fully redeemed. Upon redemption of the
unrated class Z1 and Z2 notes, principal inflows will also be used
to pay down interest and principal on class X notes.
There are no rating constraints in the transaction under our
counterparty, operational risk, or structured finance sovereign
risk criteria. S&P considers the issuer to be bankruptcy remote.
The key changes from the Twin Bridges 2021-1 PLC (TB 2021-1)
transaction are the removal of the prefunding feature and lower
levels of liquidity and credit reserve.
Ratings Assigned
CLASS RATING AMOUNT (MIL. GBP)
A AAA (sf) 459.338
B AA (sf) 36.053
C-Dfrd A (sf) 21.365
D-Dfrd BBB+ (sf) 16.023
X1-Dfrd BB (sf) 16.023
X2-Dfrd NR 10.682
X3-Dfrd NR 13.353
Z1-Dfrd NR 1.336
2-Dfrd NR 5.342
Certificates NR N/A
NR--Not rated.
N/A--Not applicable.
===============
X X X X X X X X
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[*] BOOK REVIEW: Hospitals, Health and People
---------------------------------------------
Author: Albert W. Snoke, M.D.
Publisher: Beard Books
Softcover: 232 pages
List Price: $34.95
Order your personal copy today at
http://www.beardbooks.com/beardbooks/hospitals_health_and_people.html
Hospitals, Health and People is an interesting and very readable
account of the career of a hospital administrator and physician
from the 1930's through the 1980's, the formative years of today's
health care system. Although much has changed in hospital
administration and health care since the book was first published
in 1987, Dr. Snoke's discussion of the evolution of the modern
hospital provides a unique and very valuable perspective for
readers who wish to better understand the forces at work in our
current health care system.
The first half of Hospitals, Health and People is devoted to the
functional parts of the hospital system, as observed by Dr. Snoke
between the late 1930's through 1969, when he served first as
assistant director of the Strong Memorial Hospital in Rochester,
New York, and then as the director of the Grace-New Haven Hospital
in Connecticut. In these first chapters, Dr. Snoke examines the
evolution and institutionalization of a number of aspects of the
hospital system, including the financial and community
responsibilities of the hospital administrator, education and
training in hospital administration, the role of the governing
board of a hospital, the dynamics between the hospital
administrator and the medical staff, and the unique role of the
teaching hospital.
The importance of Hospitals, Health and People for today's readers
is due in large part to the author's pivotal role in creating the
modern-day hospital. Dr. Snoke and others in similar positions
played a large part in advocating or forcing change in our hospital
system, particularly in recognizing the importance of the nursing
profession and the contributions of non-physician professionals,
such as psychologists, hearing and speech specialists, and social
workers, to the overall care of the patient. Throughout the first
chapters, there are also many observations on the factors that are
contributing to today's cost of care. Malpractice is just one
example. According to Dr. Snoke, "malpractice premiums were
negligible in the 1950's and 1960's. In 1970, Yale-New Haven's
annual malpractice premiums had mounted to about $150,000." By the
time of the first publication of the book, the hospital's premiums
were costing about $10 million a year.
In the second half of Hospitals, Health and People, Dr. Snoke
addresses the national health care system as we've come to know it,
including insurance and cost containment; the role of the
government in health care; health care for the elderly; home health
care; and the changing role of ethics in health care. It is
particularly interesting to note the role that Senator Wilbur Mills
from Arkansas played in the allocation of costs of hospital-based
specialty components under Part B rather than Part A of the
Medicare bill. Dr. Snoke comments: "This was considered a great
victory by the hospital-based specialists. I was disappointed
because I knew it would cause confusion in working relationships
between hospitals and specialists and among patients covered by
Medicare. I was also concerned about potential cost increases. My
fears were realized. Not only have health costs increased in
certain areas more than anticipated, but confusion is rampant among
the elderly patients and their families, as well as in hospital
business offices and among physicians' secretaries." This aspect of
Medicare caused such confusion that Congress amended Medicare in
1967 to provide that the professional components of radiological
and pathological in-hospital services be reimbursed as if they were
hospital services under Part A rather than part of the co-payment
provisions of Part B.
At the start of his book, Dr. Snoke refers to a small statue,
Discharged Cured, which was given to him in the late 1940's by a
fellow physician, Dr. Jack Masur. Dr. Snoke explains the
significance the statue held for him throughout his professional
career by quoting from an article by Dr. Masur: "The whole question
of the responsibility of the physician, of the hospital, of the
health agency, brings vividly to mind a small statue which I saw a
great many years ago.it is a pathetic little figure of a man, coat
collar turned up and shoulders hunched against the chill winds,
clutching his belongings in a paper bag-shaking, tremulous,
discouraged. He's clearly unfit for work-no employer would dare to
take a chance on hiring him. You know that he will need much more
help before he can face the world with shoulders back and
confidence in himself. The statuette epitomizes the task of medical
rehabilitation: to bridge the gap between the sick and a job."
It is clear that Dr. Snoke devoted his life to exactly that
purpose. Although there is much to criticize in our current
healthcare system, the wellness concept that we expect and accept
today as part of our medical care was almost nonexistent when Dr.
Snoke began his career in the 1930's. Throughout his 50 years in
hospital administration, Dr. Snoke frequently had to focus on the
big picture and the bottom line. He never forgot the importance of
Discharged Cured, however, and his book provides us with a great
appreciation of how compassionate administrators such as Dr. Snoke
have contributed to the state of patient care today.
Albert Waldo Snoke was director of the Grace-New Haven Hospital in
New Haven, Connecticut from 1946 until 1969. In New Haven, Dr.
Snoke also taught hospital administration at Yale University and
oversaw the development of the Yale-New Haven Hospital, serving as
its executive director from 1965-1968. From 1969-1973, Dr. Snoke
worked in Illinois as coordinator of health services in the Office
of the Governor and later as acting executive director of the
Illinois Comprehensive State Health Planning Agency. Dr. Snoke died
in April 1988.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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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 2021. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
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