/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/220223.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, February 23, 2022, Vol. 23, No. 33 Headlines G E R M A N Y SCHUR FLEXIBLES: Moody's Puts B2 CFR Under Review for Downgrade I R E L A N D ADAGIO VII: Fitch Affirms B- Rating on Class F Notes BLACK DIAMOND 2015-1: S&P Raises Rating on Class F Notes to B BLUEMOUNTAIN EUR 2016-1: Moody's Affirms B2 Rating on Cl. F-R Notes TORO EUROPEAN 5: Moody's Affirms B2 Rating on EUR11.85MM F Notes L U X E M B O U R G ANACAP FINANCIAL: Moody's Affirms B2 CFR & Cuts Secured Debt to B3 S E R B I A FABRIKA ULJA: Assets Put Up for Sale for RSD166.8 Million MAKOVICA: Assets Put Up for Sale for RSD314 Million S W E D E N REN10 HOLDING: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable U N I T E D K I N G D O M BUSINESS MORTGAGE 4: Moody's Cuts Rating on GBP15MM B Notes to B2 M&A PHARMACHEM: Owed GBP16MM to Creditors at Time of Collapse ST PETER'S COURT: Private Landlord Set to Rescue Business TOYS 'R' US: Brand to Relaunch in UK Following Administration - - - - - ============= G E R M A N Y ============= SCHUR FLEXIBLES: Moody's Puts B2 CFR Under Review for Downgrade --------------------------------------------------------------- Moody's Investors Service has placed on review for downgrade the ratings of German flexible plastic packaging manufacturer Schur Flexibles GmbH ("Schur" or the "company"), including its B2 corporate family rating, its B2-PD probability of default rating, and the B2 ratings on the EUR475 million backed senior secured term loan B due 2028 and on the EUR100 million backed senior secured revolving credit facility (RCF) due 2027. The outlook on the ratings was changed to ratings under review from stable. "We have placed Schur's ratings on review for downgrade because of the sudden changes in the management team, including the CEO and CFO, which may have a potential negative impact on the company's credit profile," says Donatella Maso, a Moody's Vice President -- Senior Analyst, and lead analyst for Schur. Management credibility and track record is a governance consideration under Moody's General Principles for Assessing Environmental, Social and Governance Risks Methodology for assessing ESG risks. RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating action follows the company's announcement in January 2022[1] of the appointments of a new CEO in December 2021 and a new CFO in January 2022, following the sudden departure of the company's former CEO and CFO. Although not unusual in case of ownership changes, such as the one the Schur underwent in September 2021, the sudden and unexpected change in Schur's management team, could indicate potential concerns over the operating and financing profile of the company. The rating review process will focus on (1) the reasons for the sudden change in management team and any potential impact on the credit profile of Schur, (2) the 2021 financial results, and (3) the company's expected performance, strategy and liquidity management under the new management team. Moody's expects to conclude the review within the next three months, and the review may result in a multi-notch downgrade. Prior to the ratings review process, Moody's said positive pressure on the ratings is unlikely in the near term, however it could develop if (1) the company continues to improve its EBITDA margin, (2) its Moody's-adjusted debt/EBITDA trends towards 4.5x; (3) its free cash flow to debt rises above 5% on a sustainable basis, (4) while maintaining an adequate liquidity profile. Prior to the ratings review process, Moody's said that negative pressure on the ratings could arise if (1) the company's operating performance is strained, reflected in declining EBITDA margins; (2) the company fails to delever to around 6.0x by the end of 2022; and (3) liquidity materially deteriorates. Negative pressure could also arise in case of material debt-funded acquisitions. LIST OF AFFECTED RATINGS On Review for Downgrade: Issuer: Schur Flexibles GmbH Probability of Default Rating, Placed on Review for Downgrade, currently B2-PD LT Corporate Family Rating, Placed on Review for Downgrade, currently B2 BACKED Senior Secured Bank Credit Facility, Placed on Review for Downgrade, currently B2 Outlook Actions: Issuer: Schur Flexibles GmbH Outlook, Changed To Rating Under Review From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass and Plastic Containers published in December 2021. COMPANY PROFILE Schur Flexibles GmbH is the top entity of the restricted group for the Austrian based leading European manufacturer of flexible packaging products for specialty markets in consumer packaging. The company supplies its products to a broad customer base including food (66%), healthcare (11%), specialties (11%) and tobacco (12%) end market segments. It operates 23 production sites across 12 European countries with more than 2,000 employees. Schur's majority shareholder is B&C Group with 80% share while private equity firm Lindsay Goldberg Vogel GmbH retains a 20% share. ============= I R E L A N D ============= ADAGIO VII: Fitch Affirms B- Rating on Class F Notes ---------------------------------------------------- Fitch Ratings has removed Adagio VII CLO DAC's class B-1 to F notes from Under Criteria Observation (UCO), and affirmed all classes of notes with Stable Outlooks. DEBT RATING PRIOR ---- ------ ----- Adagio VII CLO DAC A XS1861326459 LT AAAsf Affirmed AAAsf B-1 XS1861326707 LT AAsf Affirmed AAsf B-2 XS1861327002 LT AAsf Affirmed AAsf C-1 XS1861327267 LT Asf Affirmed Asf C-2 XS1861327697 LT Asf Affirmed Asf D XS1861327853 LT BBBsf Affirmed BBBsf E XS1861325568 LT BBsf Affirmed BBsf F XS1861326293 LT B-sf Affirmed B-sf TRANSACTION SUMMARY Adagio VII CLO DAC is a cash flow CLO mostly comprising senior secured obligations. The transaction is actively managed by AXA Investment Managers, Inc., and will exit its reinvestment period on 10 January 2023. KEY RATING DRIVERS Fitch Test Matrix Update: The manager is in the process of updating the Fitch test matrix and the definition of 'Fitch Rating Factor' and 'Fitch Recovery Rate', in line with Fitch's updated CLOs and Corporate CDOs Rating Criteria published on 17 September 2021. The updated criteria, together with the stable performance of the transaction, have had a positive impact on the ratings. As a result of the matrix amendment the collateral-quality test for the weighted average recovery rate (WARR) will be lowered to be in line with the break-even WARR at which the current ratings would still pass. The manager is also in the process of extending the weighted average life covenant by one year. Fitch has performed a stressed portfolio analysis on the updated Fitch test matrix and the model-implied ratings are in line with the current ratings, leading to an affirmation of the notes. The stressed portfolio analysis was based on a weighted average life (WAL) of 12 months less than the extended WAL covenant floored at six years to account for structural and reinvestment conditions after the reinvestment period, including the over-collateralisation and Fitch 'CCC' limitation tests. In Fitch's opinion, these conditions reduce the effective risk horizon of the portfolio during stress periods. The Stable Outlook on the class A to F notes reflects Fitch's expectation of sufficient credit protection to withstand potential deterioration in the credit quality of the portfolio in stress scenarios commensurate with their ratings. Stable Asset Performance: The transaction's metrics indicate stable asset performance. As of the 31 December 2021 trustee report, the aggregate portfolio amount was 0.72% below the original target par amount. The transaction passed all collateral-quality, coverage and portfolio-profile tests. Exposure to assets with a Fitch-derived rating of 'CCC+' and below (excluding non-rated assets) is 2.13% as calculated by the trustee. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at the 'B'/'B-' level. Fitch calculates the weighted average rating factor (WARF) at 25.02 under its updated criteria. High Recovery Expectations: Senior secured obligations comprise 97.73% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top-10 obligor concentration is 12.46%, and no obligor represents more than 1.35% of the portfolio balance as calculated by Fitch. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- An increase of the default rate (RDR) at all rating levels by 25% of the mean RDR and a decrease of the recovery rate (RRR) by 25% at all rating levels in the stressed portfolio would result in downgrades of up to four notches, depending on the notes. -- Downgrades may occur if the build-up of the notes' credit enhancement (CE) following amortisation does not compensate for a larger loss expectation than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- A reduction of the RDR at all rating levels by 25% of the mean RDR and an increase in the RRR by 25% at all rating levels in the stressed portfolio would result in upgrades of up to five notches, depending on the notes. -- Except for the tranches rated at the highest 'AAAsf', upgrades may occur in case of better-than- expected portfolio credit quality and deal performance, and continued amortisation that leads to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. BLACK DIAMOND 2015-1: S&P Raises Rating on Class F Notes to B ------------------------------------------------------------- S&P Global Ratings raised its credit ratings on the class B-1-R, B-2-R, C-R, D-R, E-R, and F notes in Black Diamond CLO 2015-1 DAC. At the same time, S&P affirmed its ratings the class A-1-R and A-2-R notes. The rating actions follow the application of its global corporate CLO criteria and its credit and cash flow analysis of the transaction based on the December 2021 trustee report. S&P's ratings address timely payment of interest and ultimate payment of principal on the class A-1-R, A-2-R, B-1-R, B-2-R, and C-R notes, and the ultimate payment of interest and principal on the class D-R, E-R, and F notes. Since S&P's previous review in August 2020: -- The weighted-average rating of the portfolio remains at 'B'. -- The portfolio has become less diversified, as the obligors decreased to 97 from 150. -- The weighted-average life of the portfolio decreased to 3.52 years from 4.35 years. -- The percentage of 'CCC' rated assets has increased to 11.27% from 8.66%. -- The scenario default rate has decreased for all rating scenarios as the pool becomes more concentrated with continued deleveraging. Portfolio Benchmarks CURRENT PREVIOUS REVIEW SPWARF 3,023.23 2,951.75 Default rate dispersion (%) 812.95 707.50 Weighted-average life (years) 3.52 4.35 Obligor diversity measure 71.74 117.31 Industry diversity measure 18.14 19.17 Regional diversity measure 1.64 1.72 SPWARF--S&P Global Ratings weighted-average rating factor. On the cash flow side: -- The reinvestment period for the transaction ended in October 2019. -- The class A-1-R and A-2-R notes have continuously deleveraged. -- No class of notes is deferring interest. All coverage tests are passing as of the December 2021 trustee report. Transaction Key Metrics CURRENT PREVIOUS REVIEW Total collateral amount (mil. EUR)* 207.86 348.19 Defaulted assets (mil. EUR) 0 7.62 Number of performing obligors 97 153 Portfolio weighted-average rating B B 'CCC' assets (%) 11.27 8.6 'AAA' WARR (%) 37.49 38.01 USD assets (%) 14.26 15.76 *Performing assets plus cash and expected recoveries on defaulted assets. WARR--Weighted-average recovery rate. WAS--Weighted-average spread. S&P said, "Following these developments, our model results show that the class B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes benefit from a level of credit enhancement that is typically commensurate with higher rating levels than those previously assigned. We have therefore raised our ratings on these classes of notes. "On a standalone basis, the results of the cash flow analysis indicated a higher rating than that currently assigned for the class C-R notes. The transaction has continued to amortize since the end of the reinvestment period in 2019. That said, we have considered the limited break-even default ratio (BDR) cushion at higher rating levels, while noting that the manager may still reinvest unscheduled redemption proceeds and sale proceeds from credit-impaired and credit-improved assets. Such reinvestments (as opposed to repayment of the liabilities) may therefore prolong the note repayment profile for the most senior class of 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. Accordingly, since there are no material differences compared to 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 TO RATING FROM RATING A-1-R AAA (sf) AAA (sf) A-2-R AAA (sf) AAA (sf) B-1-R AAA (sf) AA+ (sf) B-2-R AAA (sf) AA+ (sf) C-R AA+ (sf) A+ (sf) D-R A+ (sf) BBB (sf) E-R BB+ (sf) B+ (sf) F B (sf) B- (sf) BLUEMOUNTAIN EUR 2016-1: Moody's Affirms B2 Rating on Cl. F-R Notes ------------------------------------------------------------------- Moody's Investors Service has upgraded the ratings on the following notes issued by BlueMountain EUR CLO 2016-1 Designated Activity Company: EUR50,000,000 Class B-R Senior Secured Floating Rate Notes due 2032, Upgraded to Aa1 (sf); previously on Apr 25, 2018 Definitive Rating Assigned Aa2 (sf) EUR26,400,000 Class C-R Deferrable Mezzanine Floating Rate Notes due 2032, Upgraded to A1 (sf); previously on Apr 25, 2018 Definitive Rating Assigned A2 (sf) EUR21,800,000 Class D-R Deferrable Mezzanine Floating Rate Notes due 2032, Upgraded to Baa1 (sf); previously on Apr 25, 2018 Definitive Rating Assigned Baa2 (sf) Moody's has also affirmed the ratings on the following notes: EUR235,200,000 Class A-R Senior Secured Floating Rate Notes due 2032, Affirmed Aaa (sf); previously on Apr 25, 2018 Definitive Rating Assigned Aaa (sf) EUR25,000,000 Class E-R Deferrable Junior Floating Rate Notes due 2032, Affirmed Ba2 (sf); previously on Apr 25, 2018 Definitive Rating Assigned Ba2 (sf) EUR11,200,000 Class F-R Deferrable Junior Floating Rate Notes due 2032, Affirmed B2 (sf); previously on Apr 25, 2018 Definitive Rating Assigned B2 (sf) BlueMountain EUR CLO 2016-1 Designated Activity Company, issued in April 2016 and refinanced in April 2018, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by BlueMountain Fuji Management, LLC. The transaction's reinvestment period will end in April 2022. RATINGS RATIONALE The rating upgrades on the Class B-R, C-R and D-R Notes are primarily a result of the benefit of the shorter period remaining before the end of the reinvestment period in April 2022. The rating affirmations on the Class A-R, E-R and F-R Notes reflect the expected losses of the notes continuing to remain consistent with their current ratings after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralization levels. In light of reinvestment restrictions during the amortisation period, and therefore the limited ability to effect significant changes to the current collateral pool, Moody's analysed the deal assuming a higher likelihood that the collateral pool characteristics would maintain an adequate buffer relative to certain covenant requirements. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR397.7m Defaulted Securities: EUR1.5m Diversity Score: 58 Weighted Average Rating Factor (WARF): 2866 Weighted Average Life (WAL): 4.5 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.5% Weighted Average Coupon (WAC): 4.5% Weighted Average Recovery Rate (WARR): 45.1% Par haircut in OC tests and interest diversion test: None The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2021. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance" published in May 2021. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. In particular, the length and severity of the economic and credit shock precipitated by the global coronavirus pandemic will have a significant impact on the performance of the securities. CLO notes' performance may also be impacted either positively or negatively by: (1) the manager's investment strategy and behavior; (2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Additional uncertainty about performance is due to the following: Portfolio amortisation: Once reaching the end of the reinvestment period in April 2022, the main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. Weighted average life: The notes' ratings are sensitive to the weighted average life assumption of the portfolio, which could lengthen as a result of the manager's decision to reinvest in new issue loans or other loans with longer maturities, or participate in amend-to-extend offerings. The effect on the ratings of extending the portfolio's weighted average life can be positive or negative depending on the notes' seniority. Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over-collateralisation levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analysed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. TORO EUROPEAN 5: Moody's Affirms B2 Rating on EUR11.85MM F Notes ---------------------------------------------------------------- Moody's Investors Service has upgraded the ratings on the following notes issued by Toro European CLO 5 Designated Activity Company: EUR34,000,000 Class B-1 Secured Floating Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Jun 19, 2020 Affirmed Aa2 (sf) EUR22,850,000 Class B-2 Secured Fixed Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Jun 19, 2020 Affirmed Aa2 (sf) EUR14,500,000 Class C-1 Secured Deferrable Floating Rate Notes due 2030, Upgraded to A1 (sf); previously on Dec 8, 2020 Upgraded to A2 (sf) EUR10,000,000 Class C-2 Secured Deferrable Floating Rate Notes due 2030, Upgraded to A1 (sf); previously on Dec 8, 2020 Upgraded to A2 (sf) Moody's has also affirmed the ratings on the following notes: EUR232,500,000 Class A Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Jun 19, 2020 Affirmed Aaa (sf) EUR21,720,000 Class D Secured Deferrable Floating Rate Notes due 2030, Affirmed Baa2 (sf); previously on Dec 8, 2020 Upgraded to Baa2 (sf) EUR23,450,000 Class E Secured Deferrable Floating Rate Notes due 2030, Affirmed Ba2 (sf); previously on Jun 19, 2020 Confirmed at Ba2 (sf) EUR11,850,000 Class F Secured Deferrable Floating Rate Notes due 2030, Affirmed B2 (sf); previously on Jun 19, 2020 Confirmed at B2 (sf) Toro European CLO 5 Designated Activity Company is a collateralised loan obligation (CLO) transaction issued in March 2018, and backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Chenavari Credit Partners LLP. The transaction's reinvestment period will end in April 2022. RATINGS RATIONALE The rating upgrades on the Class B-1, B-2, C-1 and C-2 Notes are primarily a result of the benefit of the shorter period of time remaining before the end of the reinvestment period in April 2022. The affirmations on the ratings on the Class A, D, E and F Notes are primarily a result of the expected losses on the notes remaining consistent with their current ratings after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralization (OC) levels. In light of reinvestment restrictions during the amortisation period, and therefore the limited ability to effect significant changes to the current collateral pool, Moody's analysed the deal assuming a higher likelihood that the collateral pool characteristics would maintain an adequate buffer relative to certain covenant requirements. In particular, Moody's assumed that the deal will benefit from a shorter amortisation profile than it had assumed at the last rating action in December 2020. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR395.5m Defaulted Securities: nil Diversity Score: 53 Weighted Average Rating Factor (WARF): 2891 Weighted Average Life (WAL): 4.7 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.7% Weighted Average Coupon (WAC): 3.5% Weighted Average Recovery Rate (WARR): 44.0% The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2021. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank and swap provider, using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance" published in May 2021. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the note, in light of uncertainty about credit conditions in the general economy. In particular, the length and severity of the economic and credit shock precipitated by the global coronavirus pandemic will have a significant impact on the performance of the securities. CLO notes' performance may also be impacted either positively or negatively by (1) the manager's investment strategy and behaviour and (2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Additional uncertainty about performance is due to the following: Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. =================== L U X E M B O U R G =================== ANACAP FINANCIAL: Moody's Affirms B2 CFR & Cuts Secured Debt to B3 ------------------------------------------------------------------ Moody's Investors Service downgraded Anacap Financial Europe S.A. SICAV-RAIF's (AFE) backed senior secured debt ratings to B3 from B2. In the same rating action, Moody's affirmed AFE's corporate family rating of B2. The outlook remains positive. The rating action follows AFE's announcement in relation to the postponement of its senior secured debt issuance, in the previously contemplated amount of EUR350 million with a maturity of 2027. RATINGS RATIONALE The downgrade of the backed senior secured debt rating to B3 from B2 reflects the change in Moody's assumptions with respect to AFE's future liability structure, following the postponement of the company's EUR350 million senior secured debt issuance, and the resulting loss-given-default (LGD) impact, based on the application of Moody's Loss Given Default for Speculative-Grade Companies methodology, published in December 2015. The affirmation of the B2 CFR continues to reflect AFE's historically elevated volatility of earnings and cash flows, given its small size and geographic concentrations. AFE has substantial exposure to Southern Europe (71% of AFE's 84-month estimated remaining collections (ERCs) as of September 30, 2021), which was particularly affected by the coronavirus pandemic. Partially mitigating the geographic concentration concern is the fact that over 80% of the ERCs are secured, which tend to be deferred rather than lost during unfavorable economic conditions. Further, AFE's continued expansion of its direct real estate investment business will diversify its income with the associated recurring revenues, likely reducing the volatility of earnings and cash flows that stems from delays in court approvals for secured collections. At the same time, the changing business model will also introduce new credit risks, if the direct real estate business continues to expand relative to AFE's core debt purchasing business. As of September 30, 2021, AFE's direct real estate investment business represented 25% of its 84-month ERCs as of September 30, 2021, up from 6% as of year-end 2020. The CFR also reflects AFE's debt maturity concentration, with its only non-securitised term debt issuance maturing in 2024. The positive outlook reflects AFE's substantially improved financial performance in 2021, after a pandemic-induced deterioration in 2020. AFE's collections demonstrated strong recovery in 2021, leading to stronger EBITDA, and as a result, meaningful improvement in the interest coverage and leverage ratios. Moody's estimates that AFE's Debt/EBITDA leverage declined to 4x by the end of 2021 from 6.8x at year-end 2020, while its interest coverage improved to 4.2x in 2021 from 2.4x in 2020. The year-over-year improvement in financial performance benefitted from collections of cash flows that had previously been deferred due to court closures in Southern Europe, resulting in the shift of collection curves from 2020 into future years. Moody's now expects that the company's profitability, leverage and interest coverage, having now normalised in line with pre-pandemic levels, will remain generally in-line with its current financial performance. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS AFE's CFR could be upgraded if the company's recently improved financial performance proves to be sustainable, particularly with respect to Debt/EBITDA leverage (not higher than 4x) and interest coverage (not lower than 3.5x). AFE's backed senior secured debt rating could be upgraded if the company's previously contemplated EUR350 million debt issuance is executed as planned. The outlook could return to stable if AFE's financial performance meaningfully weakens relative to its 2021 results. Although unlikely given the positive issuer outlook, AFE's CFR could nevertheless be downgraded if its financial performance deteriorates meaningfully, as evidenced by higher than expected earnings volatility, as well as materially increased Debt/EBITDA leverage and reduced interest coverage. A change in the CFR would lead to a similar upward or downward change of the backed senior secured debt rating. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. =========== S E R B I A =========== FABRIKA ULJA: Assets Put Up for Sale for RSD166.8 Million --------------------------------------------------------- Branislav Urosevic at SeeNews reports that Serbia's Deposit Insurance Agency said it is offering for sale the assets of bankrupt edible oil maker Fabrika Ulja Krusevac for RSD166.8 million (US$1.6 million/EUR1.42 million). According to SeeNews, the agency said in a statement on Feb. 18 the assets of the company offered for sale include land zoned for construction projects, as well as manufacturing facilities. The statement read the auction will take place on March 21, SeeNews discloses. In December, the agency attempted to sell the same assets for RSD278 million but failed, SeeNews notes. Fabrika Ulja Krusevac was declared bankrupt in 2015, SeeNews recounts. MAKOVICA: Assets Put Up for Sale for RSD314 Million --------------------------------------------------- Branislav Urosevic at SeeNews reports that Serbia's Bankruptcy Supervision Agency said on Feb. 22 it is offering for sale assets of bankrupt bread and pastry producer and wholesaler Makovica for RSD314.1 million (EUR2.7 million/US$3.03 million) at an auction scheduled for March 24. According to SeeNews, the agency said in a statement the assets offered for sale include, among other things, a 908 sq m office building, silos, a flour mill, animal feed plant and various pieces of equipment. Mladenovac-based Makovica went bankrupt in July 2020, SeeNews recounts. The Belgrade Stock Exchange suspended trading in the company's shares in July 2020 and delisted them in December 2020, SeeNews discloses. =========== S W E D E N =========== REN10 HOLDING: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has assigned Ren10 Holding AB (Ren10) a final Long-Term Issuer Default Rating (IDR) of 'B+' with a Stable Outlook. At the same time, a final rating of 'B+' has been assigned to its EUR350 million 4.375% senior secured floating rate notes due 2027. The final ratings are in line with the expected IDR and expected senior secured debt rating assigned on January 24, 2022. Ren10 is a recently established entity, set up to acquire equipment rental company Renta Group Oy (Renta). It is 89.4%-owned by funds managed by the private equity group, IK Partners, with the remainder owned by the company's employees. KEY RATING DRIVERS IDR The Long-Term IDR reflects the small but growing franchise of Renta in equipment rental in its core and newly entered markets, and its solid EBITDA margins but net loss at the pre-tax level. The rating also takes into account Renta's leverage post-debt issue and reliance on wholesale-market funding, as well as exposure to the construction sector. Renta was founded in 2016 as a greenfield operation in Finland, and has since grown both organically and via acquisitions to attain a market share of 11% in Finland, 5% in Sweden and 4% in Norway, and with a smaller presence in other markets. Renta's modest size and limited economies of scale are reflected in Fitch's assessment of the company profile, which Fitch has identified as a high-influence factor and is a rating constraint. SENIOR SECURED DEBT The notes rank pari passu with existing and future senior indebtedness of Ren10. Within 120 days of the acquisition's completion, they will be guaranteed by group subsidiaries that account for a substantial majority of Renta's consolidated assets, net sales and EBITDA. Fitch equalises the senior secured notes' rating with Ren10's Long-Term IDR, reflecting Fitch's view that the likelihood of default is materially similar between the notes and Ren10. Its 'RR4' Recovery Rating reflects average recovery expectations. RATING SENSITIVITIES IDR Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Material strengthening of the company's franchise, if in conjunction with scale benefits that feed into profitability; -- Gross debt-to-EBITDA below 3.5x on a sustained basis without deterioration in other financial metrics and in conjunction with a materially enlarged franchise. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A reduction in EBITDA that leads Fitch to expect a meaningful delay to Renta's currently anticipated deleveraging; for example if gross debt-to-EBITDA rises above 5x; -- Insufficient liquidity or access to funding to support the capex required to maintain an attractive fleet; -- Material erosion of earnings, due to fleet-valuation impairments or losses on the disposal of used equipment. SENIOR SECURED DEBT The senior secured debt rating is primarily sensitive to a change in Ren10's Long-Term IDR. Should the company introduce any debt ranking above rated instruments (or a subordinated tranche below them), Fitch could notch the debt ratings down (or up) from the Long-Term IDR, on the basis of weaker (or stronger) recovery prospects. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. =========================== U N I T E D K I N G D O M =========================== BUSINESS MORTGAGE 4: Moody's Cuts Rating on GBP15MM B Notes to B2 ----------------------------------------------------------------- Moody's Investors Service has downgraded the rating of the Class B Notes in Business Mortgage Finance 4 PLC (BMF 4). The rating action reflects concerns on future pool performance leading to an increase in the portfolio Expected Loss (EL) assumptions. Moody's affirmed the ratings of the Class M notes as there is sufficient credit enhancement to maintain the current ratings. GBP41.25M (current outstanding amount GBP7.3M) Class M Notes, Affirmed Aa2 (sf); previously on Jan 31, 2018 Affirmed Aa2 (sf) GBP15M Class B Notes, Downgraded to B2 (sf); previously on Jan 31, 2018 Affirmed B1 (sf) Business Mortgage Finance 4 PLC (BMF 4) is a securitisation of non-conforming commercial mortgage loans originated and brought to market in 2006. The loans were originated by Commercial First Mortgages Limited (CFML) and Commercial First Business Limited and are secured on commercial, quasi-commercial or, in limited cases, residential properties located throughout the UK. RATINGS RATIONALE The rating action on Class B Notes is prompted by a change in key collateral assumptions, namely the portfolio Expected Loss (EL) due to deteriorating collateral performance as well as a significant increase in servicing costs. As of November 2021, the annualized service costs was 4.3% of the pool balance compared to 2.2% in November 2020. Moody's affirmed the ratings of the Class M notes as there is sufficient credit enhancement to maintain current rating on the affected notes. The ratings of the Class M Notes are constrained at Aa2 (sf) due to Moody's assessment of the financial disruption risk present in the transaction. Revision of Key Collateral Assumptions: As part of the rating action, Moody's reassessed its expected loss (EL) assumptions for the portfolio, reflecting the collateral performance to date. Total delinquencies in the transaction have increased in the past year, with 90 days plus arrears standing at 13.2% of the collateral pool in November 2021 compared to 10.3% in November 2020. Deleveraging has improved the credit enhancement (CE) for Classes M and B. BMF 4 Class M CE now stands at 81.6% in November 2021 from 71.4% in November 2020, whilst for the Class B notes the CE now stands at 30.8% from 28.7%. The CEs for Class M and Class B reduce to 78.8% (2020: 68.5%) and 20.3% (2020: 18.8%) respectively when 90 days plus arrears loans that are also in litigation are excluded from the portfolio balance. Moody's has adjusted its EL assumption on the current pool balance upwards to 21.7% and maintained its EL on the original balance at 15.5%. The coefficient of variation (CoV) now stands at 19.9% with the PCE maintained at 40.0%. Counterparty Exposure: The rating actions took into consideration the Notes' exposure to relevant counterparties, such as servicer, account banks or swap providers. Moody's considered how the liquidity available in the transaction and other mitigants support continuity of note payments, in case of servicer default. The Servicer (Special Servicer) is unrated and is also acting as cash manager and calculation agent.The ratings of the Notes are constrained at Aa2 (sf) by the financial disruption risk. The assessment considered the likelihood of servicer disruption occurring, and the ease of transfer of duties such as servicer, cash manager and calculation agent. The action has considered how the coronavirus pandemic has reshaped UK's economic environment and the way its aftershocks will continue to reverberate and influence the performance of UK SME sector. Moody's expect the public health situation to improve as vaccinations against COVID-19 increase and societies continue to adapt to new protocols. But the virus will remain endemic, and economic prospects will vary -- starkly, in some cases -- by region and sector. Moody's regard the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating SME Balance Sheet Securitizations" published in July 2021. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement and (3) improvements in the credit quality of the transaction counterparties. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. M&A PHARMACHEM: Owed GBP16MM to Creditors at Time of Collapse ------------------------------------------------------------- Jon Robinson at BusinessLive reports that almost GBP16 million was owed by a medicine manufacturer when it collapsed into administration and made nearly 100 people redundant, a new document has revealed. Bolton-based M&A Pharmachem, which specialised in manufacturing and selling paracetamol and opiate medicines, entered administration towards the end of January, with more than 80 jobs being lost straight away, BusinessLive relates. The remaining employees lost their jobs on Feb. 1, BusinessLive recounts. Sale of the majority of the company's assets was completed on Feb. 1 to Crescent Pharma Group for GBP5.4 million, BusinessLive notes. According to a new report by administrator FRP, secured creditors were owed in the region of GBP14 million when the company entered administration, BusinessLive discloses. Maken Investments' outstanding indebtedness totalled approximately GBP8 million, which has since been reduced by GBP4.9 million after it provided a loan facility to Molin to buy the M&A Pharmachem's property, BusinessLive says. C.D Medical was owed GBP5.8 million, according to BusinessLive. The joint administrators said it is currently uncertain whether there are sufficient funds to return the money to both parties, BusinessLive relates. The report adds that it us currently estimated that preferential creditors are owed a total of GBP45,000 while HMRC is owed about GBP1.8 million, BusinessLive states. The joint administrators said it is anticipated that there will not be enough money to pay the secondary preferential creditors, BusinessLive notes. According to BusinessLive, the FRP report said: "The company had recently been funded by its parent company, via Yakub Patel, in order to fund continued operations. "It had also continued to dispose of residual stock, in some cases at a loss, to generate funds. "To obtain ongoing funding and cashflow, in February 2021, Lostock Pharmachem, an associated company by virtue of common ultimate beneficial ownership, purchased the company's marketing authorisation, for GBP845,000 pus VAT. "This was utilised to continue funding working capital, whilst legal title remained with the company. "During 2021, the business generated significant losses as production was limited to paracetamol pending the validation of other test batches and submission to the MHRA. "Progress in restarting production was slower than had been anticipated and the business had exhausted all of its cash and available funding. "In the weeks prior to the appointment of administrators, the company had effectively ceased to trade; the company had insufficient cash reserves to settle future liabilities, including wages." According to documents filed with Companies House, M&A Pharmachem's turnover fell from GBP15.5 million to GBP3 million in the 12 months to January 31, 2021, while its pre-tax losses widened from GBP3 million to GBP6 million, BusinessLive notes. ST PETER'S COURT: Private Landlord Set to Rescue Business --------------------------------------------------------- Patrick Gouldsbrough at The Northern Echo reports that an at-risk homeless shelter in County Durham that houses ex-servicemen could get a new lease of life after a private landlord has stepped in to try and save the accommodation. St Peter's Court in Sacriston, was put into administration over the weekend, after the charity that runs it, Shaid, entered financial difficulty, The Northern Echo relates. The homeless facility, which has serviced the area since 2011 with 16-self-contained flats, provides a place to stay for veterans that have fallen on hard times -- having cared for 156 referrals over the last 11 years with employment, outdoor activities, training, and counselling. As The Northern Echo reported on Feb. 21, St Peter's Court has appointed Ian Nairn and Mike Dillon, of Leonard Curtis Business Solutions Group, as joint administrators of the accommodation for ex-service personnel -- leading to the prospect of leaving dozens of veterans homeless. However, 24-hours after running the story, the future of the shelter is looking brighter, The Northern Echo notes. After being contacted by private landlord, Les Ojugbana, who has a track record of managing veteran facilities, St Peter's could soon have a new owner, The Northern Echo states. Mr. Ojugbana, who has five years' experience with Veterans in Crisis (Sunderland), has helped ex-military men in similar scenarios and now wants to contact the current operators of St Peter's Court to solve their problems, The Northern Echo relays. This includes buying the property and keeping the veterans in their home -- something that the landlord is keen to do to preserve the mental wellbeing of those currently staying there, The Northern Echo discloses. According to The Northern Echo, alongside Mr. Ojugbana's involvement in St Peter's Court, administrators, Leonard Curtis confirmed that they were continuing to work with Shaid and Durham County Council on a solution to rehome the veterans. TOYS 'R' US: Brand to Relaunch in UK Following Administration ------------------------------------------------------------- Emma Munbodh at Mirror reports that Toys 'R' Us is set to return to the UK within months, with the company already hiring a new UK team to oversee its high street comeback. The failed chain's Australian arm last year signed a licence agreement to bring its "digital and physical retail commerce" back to the UK, where Toys 'R' US closed all of its stores after it fell into administration in 2018, Mirror recounts. It has now ramped up its recruitment and plans to relaunch the brand in the next few months, Mirror discloses. Toys 'R' Us has hired senior buyer James Ford, who helped build Debenhams' toy arm, for the core Toys 'R' Us business, while Katie Ellis, who has worked for both Toys 'R' Us and Mothercare in the past, and Argos toys buyer Lukasz Jasinski have joined the Babies 'R' US UK team, Mirror relates. In 2017, the US parent company filed for bankruptcy after debts reached more than GBP3.5 billion, Mirror notes. A year later, the iconic toy chain collapsed, closing all of its 100 UK branches and triggering thousands of redundancies, Mirror relays. Last year, owner WHP Global signed an agreement with Toys 'R' Us Australia to lead the brand's revival in the UK, Mirror discloses. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. 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