/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/220415.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, April 15, 2022, Vol. 23, No. 70 Headlines G E R M A N Y GAZPROM GERMANIA: Energy Regulator to Ensure Ongoing Operations I R E L A N D HARVEST CLO XXVIII: Moody's Assigns B3 Rating to EUR12.2MM F Notes I T A L Y BANCA POPOLARE: Fitch Affirms 'BB+' LT IDR, Outlook Now Stable BANCO DI DESIO: Fitch Affirms 'BB+' LT IDR, Outlook Stable K A Z A K H S T A N SB ALFA-BANK: S&P Keeps 'B' ICR on Watch Neg. Then Withdraws Rating N E T H E R L A N D S VEON: S&P Affirms 'CCC+' Ratings Then Withdraws Ratings on EU Ban S P A I N BAHIA DE LAS ISLETAS: Moody's Puts 'Ca' CFR on Review for Upgrade PYMES SANTANDER 15: Moody's Hikes EUR600MM B Notes Rating to Caa1 U K R A I N E [*] UKRAINE: Seeks Seizure, Sale of Russian Assets U N I T E D K I N G D O M ANGEL CONTRACTING: Director Faces Six-Year Disqualification EVRAZ PLC: S&P Lowers Long-Term Issuer Credit Rating to 'CC' LITA GROUP: Files for Administration with High Court MORRISONS: Moody's Downgrades Rating to 'B1', Outlook Stable PETROPAVLOVSK PLC: Mulls Sale Following Sanctions Against Russia PINE DEVELOPMENTS: Former Pontins Holiday Camp Put Up for Sale PIPELINE ENGINEERING: Enters Administration, 83 Jobs Affected STUDIO TRI: Clogau Left Out of Pocket Following Administration WILLIAM MASON: Director Faces 10-Year Disqualification X X X X X X X X [*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace - - - - - ============= G E R M A N Y ============= GAZPROM GERMANIA: Energy Regulator to Ensure Ongoing Operations --------------------------------------------------------------- Tom Kackenhoff and Vera Eckert at Reuters report that Germany's energy network regulator on April 8 said it would ensure ongoing operations at Gazprom Germania, a trading, storage and transmission business abandoned by Russia's Gazprom, and called on market operators not to cut ties. With assets and subsidiaries in Germany, Britain, Switzerland, Belgium, the Czech Republic and outside Europe, the firm's activities are essential for the European gas market and its supply to industry and households. Russia's Gazprom previously said it was quitting its business in Germany, at a moment of crisis in energy ties between the two countries following Russia's invasion of Ukraine, Reuters recounts. It gave no explanation. "The Bundesnetzagentur will ensure that all payments of Gazprom Germania GmbH may only be made to maintain business operations and will thus prevent an uncontrolled outflow of funds," the German regulator said in a letter to operators connected with Gazprom Germania and seen by Reuters. Spokespeople for the authority confirmed the letter had been posted. "It will also ensure that the company can, and will, meet its payment obligations to continue its business operations," it added. Gazprom Germania GmbH was taken into the regulator's control on April 4 as the Economy Ministry sought to stave off a possible acquisition by JSC Palmary and Gazprom Export Business Services LLC, both of Russia, the Economy Ministry said at the time, Reuters relates. The regulator, in its letter addressed to banks, business partners, services providers and customers, said the company needed to procure gas and have the means to pay for it, avoiding insolvency, Reuters notes. "The consequences (of an insolvency) for the energy supply system, not only in Germany but in Europe as well, would be severe," Reuters quotes the regulator as saying. It said trading firms could collapse, transport would be disrupted, and underground storage caverns would remain unfilled, Reuters relays. The April 4 move by the authority means it can remove executives, hire staff and direct management, as well as guarding against an outflow of finances, Reuters states. ============= I R E L A N D ============= HARVEST CLO XXVIII: Moody's Assigns B3 Rating to EUR12.2MM F Notes ------------------------------------------------------------------ Moody's Investors Service announced that it has assigned the following definitive ratings to notes issued by Harvest CLO XXVIII Designated Activity Company (the "Issuer"): EUR2,500,000 Class X Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aaa (sf) EUR224,500,000 Class A-1 Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aaa (sf) EUR50,000,000 Class A-2 Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aaa (sf) EUR47,300,000 Class B Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aa2 (sf) EUR23,900,000 Class C Senior Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned A2 (sf) EUR30,900,000 Class D Senior Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned Baa3 (sf) EUR25,600,000 Class E Senior Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned Ba3 (sf) EUR12,200,000 Class F Senior Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned B3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. The Issuer is a managed cash flow CLO. At least 90% of the portfolio must consist of secured senior loans or senior secured bonds and up to 10% of the portfolio may consist of unsecured senior loans, second-lien loans, high yield bonds and mezzanine loans. The portfolio is expected to be 80% ramped up as of the closing date and to comprise of predominantly corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the 6 months ramp-up period in compliance with the portfolio guidelines. Investcorp Credit Management EU Limited ("Investcorp") will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's four-and-a-half-year reinvestment period. Thereafter, subject to certain restrictions, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations and credit improved obligations. Interest and principal amortisation amounts due to the Class X Notes are paid pro rata with payments to the Class A-1 Notes and Class A-2 Notes. The Class X Notes amortise by 12.5% or EUR312,500 over eight payment dates starting on the second payment date. In addition to the eight classes of notes rated by Moody's, the Issuer will issue EUR625,000 of Class Z Notes due 2034 and EUR34,400,000 of Subordinated Notes due 2034 which are not rated. The Class Z Notes accrue interest in an amount equivalent to a certain proportion of the subordinated management fees and its notes' payment is pari passu with the payment of the subordinated management fee. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. 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. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2021. Moody's used the following base-case modeling assumptions: Target Par Amount: EUR450,000,000 Diversity Score: 47 Weighted Average Rating Factor (WARF): 3036 Weighted Average Spread (WAS): 3.88% Weighted Average Coupon (WAC): 4.75% Weighted Average Recovery Rate (WARR): 43.4% Weighted Average Life (WAL): 7.5 years ========= I T A L Y ========= BANCA POPOLARE: Fitch Affirms 'BB+' LT IDR, Outlook Now Stable -------------------------------------------------------------- Fitch Ratings has revised Banca Popolare dell'Alto Adige's (Volksbank) Outlook to Stable from Negative, while affirming its Long-Term Issuer Default Rating (IDR) at 'BB+' and Viability Rating (VR) at 'bb+'. The revision of the Outlook reflects Fitch's view that risks to the bank's asset quality from the pandemic have eased, due to the solid economic recovery of Volksbank's home province of Bolzano and strong repayment of loans that were previously under moratoriums. Profitability prospects also improved, as fee income rebounded above pre-pandemic levels and loan impairment charges (LICs) started to normalise. Fitch has withdrawn Volksbank's Support Rating of '5' and Support Rating Floor of 'No Floor' as they are no longer relevant to the agency's coverage following the publication of its updated Bank Rating Criteria on 12 November 2021. In line with the updated criteria, Fitch has assigned Volksbank a Government Support Rating (GSR) of 'No Support' (ns). KEY RATING DRIVERS Small Bank in Wealthy Region: Volksbank's IDRs and VR reflect its ample capital buffers relative to regulatory minimum requirements, despite its small equity size, and adequate funding from a stable deposit franchise. They also reflect a geographically concentrated franchise in the wealthy province of Bolzano, in northern Italy, and a less diversified business model than higher-rated peers', resulting in below-average profitability and cost efficiency. While improving, asset quality remains a rating weakness. Average Asset Quality Metrics: Volksbank's gross impaired loans/gross loans of 5.8% at end-2021 is slightly above the domestic industry average and remains high internationally. However, impaired loans coverage of 74% is stronger than in the past and compares well with peers'. Asset Quality Resilient to Risks: Fitch expects Volksbank's impaired loan ratio to reduce only slightly in the coming years, as the bank's target is somewhat less ambitious than higher-rated peers'. Volksbank's concentration in some of Italy's wealthiest areas should however result in resilient asset-quality metrics to downside risks. Moderate Risk Profile: Volksbank's credit underwriting standards are conservative and in line with domestic industry practices. Investment guidelines result in a large own sovereign risk exposure. Risk controls may still lack depth and sophistication relative to higher-rated peers', although Fitch acknowledges the bank's ongoing plan to strengthen them. Modest Profitability: Volksbank's revenue generation has been under pressure in recent years from a still fairly undiversified business model, low interest rates and intense competition. Costs remain under control but are structurally high relative to revenue, as the bank's small size makes it difficult to achieve material economies of scale. Positive Profitability Prospects: Fitch believes that Volksbank's operating profitability could structurally improve as the bank's strategy to grow fee-based activities is starting to pay off and LICs should normalise well below historical levels. However, Fitch believes that execution risk remains, especially if Italy's GDP growth slows more than currently envisaged. Capitalisation Commensurate with VR: Capitalisation is scored at 'bb+', reflecting that the common equity tier 1 (CET1) ratio of 15.7% at end-2021 had ample buffer over regulatory requirements and capital was no longer encumbered by large amounts of unreserved impaired loans. Fitch expects capital ratios to remain broadly stable, as improved profitability should allow the bank to meet its capital distribution targets while also outpacing risk-weighted assets (RWAs) growth. Small Capital Base, Concentration Risk: The small size of the bank's equity base results in a negative adjustment to Fitch's implied capitalisation and leverage score of 'bbb', as it increases vulnerability to concentration risk arising from its large holdings of Italian government bonds (389% of CET1 capital at end-2021) and potential asset-quality deterioration from weaker macroeconomic conditions. Largely Deposit-Funded: Volksbank's funding relies mainly on a stable and growing base of deposits from loyal local customers. Funding is less diversified, absent of the need to build resolution buffers, and the ability to access the debt market at times of volatility is more uncertain than at larger domestic peers. Manageable Central Bank Financing: Volksbank's use of ECB funding is high but similar to domestic peers', and mainly opportunistically motivated by its very favourable pricing rather than liquidity needs. Refinancing risk is manageable, as the bank maintains a healthy buffer of liquid assets. No Support: Volksbank's GSR of 'ns' reflects Fitch's view that although external extraordinary sovereign support is possible, it cannot be relied on. Volksbank's GSR of 'ns' reflects that senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank becomes non-viable. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses, if necessary, instead of or ahead of a bank receiving sovereign support. RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Fitch could downgrade the ratings if the impaired loans ratio rises above 8% without prospects of reversing in the short term, resulting in capital encumbrance by unreserved impaired loans rising substantially on a sustained basis. Fitch could also downgrade the ratings if operating profitability deteriorates materially, falling below 0.5% of RWAs for a prolonged period, showing structural weaknesses. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Volksbank's moderate business profile means Fitch sees limited scope for an upgrade unless the bank generates significantly larger and more diversified revenue, and improves operating profitability above 1.5% of RWAs. An upgrade would also require an impaired loans ratio structurally below 4% and the maintenance of its current capitalisation profile. -- An upward revision of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS DEPOSIT RATINGS Volksbank's long-term deposits rating of 'BB+' is in line with the bank's Long-Term IDR. This is because Volksbank has no binding resolution requirement in excess of its ordinary capital requirements and unsecured debt buffers that are junior to customer deposits at end-2021 were below the 10% of RWAs required to grant an uplift above the Long-Term IDR under Fitch's criteria. The rating also reflects that the bank is unlikely to reach the required quantum of debt buffers, particularly since it is not bound by regulatory requirements. The short-term deposit rating of 'B' is in line with the bank's 'BB+' long-term deposit rating under Fitch's rating correspondence table. SUBORDINATED DEBT Volksbank's subordinated debt is rated two notches below the VR for loss severity to reflect poor recovery prospects. No notching is applied for incremental non-performance risk because write-down of the notes will only occur once the point of non-viability is reached and there is no coupon flexibility before non-viability. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The deposit and subordinated debt ratings could be downgraded if Volksbank's IDRs and VR are downgraded. -- The subordinated debt is also sensitive to an adverse change in the notes' notching, which could arise if Fitch changes its assessment of their non-performance relative to the risk captured in the VR. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The deposit and subordinated debt ratings could be upgraded if Volksbank's IDRs and VR are upgraded. -- The deposit ratings could also be upgraded if the buffers of unsecured senior and junior debt increase and are maintained above 10% of RWAs, or if the bank receives and maintains compliance with binding resolution buffers in excess of regulatory capital requirements. VR ADJUSTMENTS The capitalisation and leverage score of 'bb+' is below the 'bbb' category implied score due to the following adjustment reason: size of capital base (negative). The funding and liquidity score of 'bb+' is below the 'bbb' category implied score due to the following adjustment reason: non-deposit funding (negative). 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. DEBT RATING PRIOR ---- ------ ----- Banca Popolare dell'Alto Adige S.p.A. LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Viability bb+ Affirmed bb+ Support WD Withdrawn 5 Support Floor WD Withdrawn NF Government Support ns New Rating long-term deposits LTB B+ Affirmed BB+ Subordinated LT BB- Affirmed BB- short-term deposits ST B Affirmed B BANCO DI DESIO: Fitch Affirms 'BB+' LT IDR, Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed Banco di Desio e della Brianza S.p.A.'s (Desio) Long-Term Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook and Viability Rating (VR) at 'bb+'. A full list of rating actions is below. Fitch has withdrawn Desio's Support Rating of '5' and Support Rating Floor of 'No Floor' as they are no longer relevant to the agency's coverage following the publication of its updated Bank Rating Criteria on 12 November 2021. In line with the updated criteria, Fitch has assigned Desio a Government Support Rating (GSR) of 'No Support' (ns). KEY RATING DRIVERS Small Commercial Bank in Wealthy Region: Desio's IDRs and VR reflect its improved risk profile, helped by the strengthening of its risk governance framework, which resulted in improved asset quality metrics, sound capitalisation and adequate funding and liquidity profile. The ratings also reflect a concentrated franchise and a business model that lags higher-rated peers in terms of revenue diversification despite recent improvements, resulting in modest profitability levels. Moderate Risk Profile: Desio's risk profile benefits from operating mostly in the wealthy region of Lombardy, resulting in its large exposure to SMEs and companies being well diversified by sector and individual borrower. Investment guidelines result in sizeable sovereign exposure. Risk-taking and control processes are aligned with market standards. De-risking Complete: The impaired loan ratio of 4% at end-2021 derives from a combination of ongoing small impaired loan sales and conservative underwriting resulting in low default rates. Fitch expects small impaired loan disposals to continue and compensate for asset quality pressures from the indirect effects of the Russian/Ukraine conflict (such as rising energy prices, higher inflation, weaker domestic GDP growth), allowing the bank to achieve its impaired loan target of 3.7% by 2023. Positive Profitability Prospects: Over the past four years, fees from the sale of assets under management and insurance products have been increasing, contributing to revenue growth, in turn helping to improve cost efficiency. Fitch expects this trend to continue and the bank's operating profitability to increase at about 1.4% of risk-weighted assets (RWAs) by 2023. This is despite inflationary pressure affecting cost management and loan impairment charges (LICs) remaining high. Conservative Provisioning Approach: LICs grew by 18% in 2021, eroding a high 54% of pre-impairment operating profitability. Fitch expects LICs to remain substantial, reflecting the bank's conservative stance as asset quality deterioration will be contained. Capitalisation Commensurate with VR: Capitalisation is scored at 'bb+' reflecting that Desio's common equity Tier 1 (CET1) ratio of 15.6% at end-2021 had an ample buffer over regulatory requirements and low capital encumbrance by unreserved impaired loans. Fitch expects capital ratios to remain broadly stable, as positive profitability prospects should translate into improved internal capital generation, supporting the bank's capitalisation, while offsetting risks from an uncertain operating environment. Large Sovereign Risk: The relatively small size of the bank's equity base represents a negative adjustment to Fitch's implied capitalisation and leverage score of 'bbb', as it increases vulnerability to concentration risk arising from its large holdings of Italian government bonds (2.5x CET1 capital at end-2021) and potential asset quality deterioration from weaker macroeconomic conditions. Stable Funding and Liquidity: The bank's funding is supported by a loyal, stable and granular customer deposit base accounting for a robust 66% of total funding at end-2021. ECB funding is substantial at 23% of the total but similar to other domestic banks, utilisation is opportunistic to support interest income. Diversification into wholesale funding sources is limited and largely in the form of covered bonds. No Support: Desio's GSR of 'ns' reflects Fitch's view that although external extraordinary sovereign support is possible, it cannot be relied upon. The 'ns' GSR reflects that senior creditors can no longer expect to receive full extraordinary support from the sovereign in the event that the bank becomes non-viable. The EU's Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism (SRM) for eurozone banks provide a framework for resolving banks that requires senior creditors participating in losses, if necessary, instead of or ahead of a bank receiving sovereign support. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The ratings could be downgraded if Desio increases its risk appetite, for example due to a loosening of underwriting standards to pursue business growth, leading to a material deterioration in its asset quality and causing significant capital erosion, including through higher-than expected capital encumbrance from unreserved impaired loans. -- In particular, the ratings could be downgraded if the impaired loans ratio increases above 8% and the CET1 ratio falls below 13% without prospects of reversing in the short term. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Given its business profile, rating upside is currently limited. However, positive rating action would be contingent on an improvement in medium-term profitability prospects, supported by a more diversified business model and strengthened franchise. Operating profit sustained above 1.5% of RWAs would support internal capital generation, which combined with maintenance of current capitalisation levels would be supportive of an upgrade. These factors would have to be accompanied by an impaired loan ratio below 4% on a sustained basis. -- An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support the bank. In Fitch's view, this is highly unlikely, although not impossible. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Desio's long-term deposit rating is in line with the Long-Term IDR. Desio does not meet the conditions under Fitch's criteria to allow for a rating uplift given depositor preference in Italy and that the outstanding amount of qualifying subordinated and senior debt is below 10% of RWAs threshold that is required for an uplift in Fitch's criteria and Fitch does not expect this to change. This is because Desio has no binding resolution requirement in excess of its regulatory capital requirements and its funding strategy prioritises long-term secured debt issuance, which are not loss-absorbing. The short-term deposit rating of 'B' is in line with Fitch's rating correspondence table for banks with 'BB+' long-term deposit ratings. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Factor that could, individually or collectively, lead to negative rating action/downgrade: -- The long-term deposit rating would be downgraded if the bank's Long-Term IDR was downgraded. Factor that could, individually or collectively, lead to positive rating action/upgrade: -- The long-term deposit rating would be upgraded if the bank's Long-Term IDR was upgraded. It is also sensitive to an increase in the buffers of senior and junior debt, if for example binding resolution buffers were imposed and maintained by the bank. VR ADJUSTMENTS The Capitalisation and Leverage score of 'bb+' has been assigned below the 'bbb' category implied score due to the following adjustment reason: Size of capital base (negative). The Funding and Liquidity score of 'bb+' has been assigned below the 'bbb' category implied score due to the following adjustment reason: Non-deposit funding (negative). 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. 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 The highest level of ESG credit relevance for Desio 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 to the way in which they are being managed by the entity. DEBT RATING PRIOR ---- ------ ----- Banco di Desio e della Brianza S.p.A. LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Viability bb+ Affirmed bb+ Support WD Withdrawn 5 Support Floor WD Withdrawn NF Government Support ns New Rating long-term deposits LT BB+ Affirmed BB+ short-term deposits ST B Affirmed B =================== K A Z A K H S T A N =================== SB ALFA-BANK: S&P Keeps 'B' ICR on Watch Neg. Then Withdraws Rating ------------------------------------------------------------------- S&P Global Ratings said that its long- and short-term issuer credit ratings on the financial institutions listed, which have links to Russia, remain on CreditWatch with negative implications. Subsequently, S&P withdrew the ratings on the entities. The entities affected are: -- Cyprus-based nonoperating holding company (NOHC) FG BCS Ltd. and its operating subsidiaries BrokerCreditService (Cyprus) Ltd., BrokerCreditService Structured Products PLC, and BCS Prime Brokerage Ltd. (all rated CCC-/Watch Neg/C); -- QIWI PLC (CCC-/Watch Neg/C); and -- Kazakhstan-based SB Alfa-Bank JSC (B/Watch Neg/B and kzBB+/Watch Neg/--). S&P said, "The CreditWatch placement at the time of withdrawal reflected our view that we could have lowered the ratings further once we had more clarity on the issuers' technical ability and willingness to honor their obligations in full and on time. "Following the EU's decision on March 15, 2022, to ban the provision of credit ratings to legal persons, entities, or bodies established in Russia, we withdrew our outstanding ratings on financial institutions incorporated in Russia. "We have now decided to also withdraw our ratings on FG BCS and its operating subsidiaries and on QIWI PLC, due to their strong links to Russia. Despite being incorporated outside Russia, FG BCS and QIWI PLC operate predominantly in Russia, where most of their employees and clients are located and they derive most of their revenues from Russian business. "Additionally, we have also withdrawn our ratings on SB Alfa-Bank JSC due to U.S. and U.K. full blocking sanctions introduced in March and April 2022 on Alfa Bank and its subsidiaries, including SB Alfa-Bank JSC." FG BCS And Operating Subsidiaries S&P said, "Prior to the withdrawal, our 'CCC-/C' ratings on Cyprus-based NOHC FG BCS Ltd. and its Cyprus-based operating subsidiaries BrokerCreditService (Cyprus) Ltd., BrokerCreditService Structured Products PLC, and U.K.-based BCS Prime Brokerage Ltd. reflected our view of the bleak prospects of the group's global markets investment banking business in 2022, and the restrictions on moving capital and liquidity from its Russian and foreign subsidiaries to the rest of the group due to capital controls by the Central Bank of Russia. In addition, we expect a steep downward revaluation of the group's trading portfolio of Russian equities and bonds, which accounted for about 40% of the consolidated group's equity at year-end 2021: 50% of this portfolio accounts for bonds that the group can hold to maturity, and 12% of equity is hedged by structured products." Qiwi PLC S&P siad, "Prior to the withdrawal, our 'CCC-/C' ratings on Qiwi, a Cyprus-based holding company, reflected constraints the company faces to meet its short-term financial obligations with investors, following deteriorated operating conditions in Russia and the imposition of capital controls. We note that the holding company relies on dividends being upstreamed from its Russian subsidiaries." These dividends are now subject to capital controls and significant currency devaluation, which might ultimately impair Qiwi PLC's ability to meet its financial obligations. SB Alfa-Bank JSC S&P said, "Prior to the withdrawal, our 'B/B' global scale ratings on Kazakhstan-based SB Alfa-Bank JSC (ABK), a subsidiary of Russia-based Alfa Banking Group, reflected our expectations that the deterioration in Alfa Banking Group's overall creditworthiness would adversely affect ABK. Although we have analytically delinked the ratings on ABK from those on Alfa Banking Group, we still believe that the high credit stress on the parent could have a material impact on ABK." Ratings List REMAIN ON CREDITWATCH BCS PRIME BROKERAGE LTD. FG BCS LTD. BROKERCREDITSERVICE STRUCTURED PRODUCTS PLC BROKERCREDITSERVICE (CYPRUS) LTD. Issuer Credit Rating CCC-/Watch Neg/C REMAIN ON CREDITWATCH QIWI PLC Issuer Credit Rating CCC-/Watch Neg/C REMAIN ON CREDITWATCH SB ALFA-BANK JSC Issuer Credit Rating B/Watch Neg/B Kazakhstan National Scale kzBB+/Watch Neg/-- RATINGS SUBSEQUENTLY WITHDRAWN BCS PRIME BROKERAGE LTD. FG BCS LTD. BROKERCREDITSERVICE STRUCTURED PRODUCTS PLC BROKERCREDITSERVICE (CYPRUS) LTD. Issuer Credit Rating NR RATINGS SUBSEQUENTLY WITHDRAWN QIWI PLC Issuer Credit Rating NR RATINGS SUBSEQUENTLY WITHDRAWN SB ALFA-BANK JSC Issuer Credit Rating NR Kazakhstan National Scale NR NR--Not rated. ===================== N E T H E R L A N D S ===================== VEON: S&P Affirms 'CCC+' Ratings Then Withdraws Ratings on EU Ban ----------------------------------------------------------------- S&P Global Ratings affirmed its 'CCC+' long-term ratings on telecom operator VEON and almost all its subsidiaries. S&P said, "We lowered our unsolicited foreign currency sovereign ratings on Russia to 'SD/SD' from 'CC/C' and withdrew all ratings on April 8, 2022, after the downgrade to 'CC/C' from 'CCC-/C' on March 17, 2022; the local currency ratings were on CreditWatch negative and the transfer and convertibility (T&C) assessment at 'CC' before the withdrawal. "Since VEON's subsidiary PJSC VimpelCom is based in Russia and generates all of its revenue in Russia, we cap our rating on it at the level of our T&C assessment on Russia. As such, we lowered our rating on VimpelCom to 'CC'. All ratings remain on CreditWatch negative. "We subsequently withdraw our ratings on VEON and all its subsidiaries following the decision of the European Union (EU) to ban the provision of credit ratings to legal persons, entities, and bodies established in Russia. "The rating affirmation reflects our view that the downgrade of Russia and revision of our T&C assessment to 'CC' does not have a direct impact on VEON's creditworthiness, since the Netherlands-based parent company has an ample liquidity buffer. However, we lowered our rating on VimpelCom, VEON's Russian subsidiary, to 'CC' due to its exposure to Russia. All ratings remain on CreditWatch negative, consistent with our T&C assessment on Russia. "The rating actions follow the lowering on March 17, 2022, of our unsolicited ratings on Russia to 'CC/C' from 'CCC-/C' and downward revision of our T&C assessment to 'CC' from 'CCC-'. We subsequently again lowered on April 8, 2022, our foreign currency ratings on Russia to 'SD/SD' (selective default) from 'CC/C', with the local currency ratings remaining on CreditWatch with negative implications and the T&C assessment at 'CC'. "We withdraw our ratings on VEON and all its subsidiaries following the EU's decision to ban the provision of credit ratings to legal persons, entities, and bodies established in Russia." ========= S P A I N ========= BAHIA DE LAS ISLETAS: Moody's Puts 'Ca' CFR on Review for Upgrade ----------------------------------------------------------------- Moody's Investors Service has placed the Ca corporate family rating of Bahia De Las Isletas, S.L. (Naviera or Bahia De Las Isletas) on review for upgrade. This also includes the Ca-PD probability of default rating (PDR). Concurrently, the limited default (LD) designation has been removed. The outlook has been changed to ratings under review from negative. RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating action reflects a high likelihood that the company's rating will be upgraded during the next three to six months as visibility on current and future financial performance, capital structure and liquidity becomes more clear. Following the distressed exchange that took place in January this year, the company's debt load was reduced by 42% compared with the capital structure in place at the time of the default in December 2020. Given limited information on the company's financial performance during 2021 and during the first quarter of 2022, there is still a risk that the new capital structure proves to be too leveraged. This lack of visibility has thus been factored in and remain a credit constraint on the company's rating. That being said, the company's new management is focused on stabilizing the business and improve financial performance. Bahia De Las Isletas' debt restructuring was initiated December 2020, approved by the Commercial Court of Las Palmas de Gran Canaria in December 2021 and executed in January this year. The terms included a debt to equity swap, where the holders of the EUR582 million worth of backed senior secured debt (EUR627 million including accrued but not paid interest) exchanged its holdings for EUR376 million worth of new senior secured floating rate notes maturing on March 31, 2026. The remaining 40% of its claim on the company was capitalized into equity in the form of 43.35% of the capital (A-shares) and 57.50% of the votes (B-shares) of the company. As part of the restructuring, the two largest creditor shareholders were entitled to appoint 2 independent non-executive board members out of 5 in total. Furthermore, a new CEO and a new CFO were appointed. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Shipping published in June 2021. PROFILE Headquartered in Las Palmas, Naviera is a Spanish ferry operator. The company provides passenger and freight maritime transportation services mainly in the Canary Islands (between islands and to/from the Iberian peninsula) and the route Spain - Morocco. As of September 30, 2020, Naviera operated a fleet of 26 vessels, of which 17 are owned and the remainder leased. The company also operates the largest land transportation business in Spain with a fleet of more than 500 trucks. In 2020 the company reported revenue of EUR427 million and EBIT of negative EUR147 million. PYMES SANTANDER 15: Moody's Hikes EUR600MM B Notes Rating to Caa1 ----------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Serie A and Serie B notes in FONDO DE TITULIZACION PYMES SANTANDER 15. The rating action reflects that the transaction has reached the end of the reinvestment period: EUR2400M Serie A Notes, Upgraded to Aa1 (sf); previously on Dec 6, 2021 Upgraded to Aa3 (sf) EUR600M Serie B Notes, Upgraded to Caa1 (sf); previously on Dec 6, 2021 Upgraded to Caa2 (sf) Moody's affirmed the rating of the Class C notes that had sufficient credit enhancement to maintain their current rating: EUR150M Serie C Notes, Affirmed Ca (sf); previously on Dec 6, 2021 Affirmed Ca (sf) FONDO DE TITULIZACION PYMES SANTANDER 15 is a cash securitisations of standard loans and credit lines granted by Banco Santander S.A. (Spain) ("Santander", LT Deposit Rating: A2 / ST Deposit Rating: P-1) to small and medium-sized enterprises ("SMEs") and self-employed individuals located in Spain. Maximum achievable rating is Aa1 (sf) for structured finance transactions in Spain, driven by the corresponding local currency country ceiling of the country. RATINGS RATIONALE The rating action is prompted by the transaction having reached the end of the reinvestment period in January 2022. Revision of Key Collateral Assumptions: As part of the rating action, Moody's reassessed its default probability and recovery rate assumptions for the portfolio reflecting the collateral performance to date. The performance of the transaction has continued during the last year. Total delinquencies have increased in the past year, with 90 days plus arrears currently standing at 0.36% of current pool balance. Cumulative defaults currently stand at 0.36% of original pool balance up from 0.10% a year earlier. For FONDO DE TITULIZACION PYMES SANTANDER 15, the current default probability is 9% of the current portfolio balance and the assumption for the fixed recovery rate is 30%. Moody's has maintained the CoV at 46.3%, which, combined with the revised key collateral assumptions, corresponds to a portfolio credit enhancement of 23%. End of reinvestment period: The transaction reached the end of the reinvestment period in January 2022. Moody's has assumed that the deal will benefit from a shorter amortization profile. Increase in Available Credit Enhancement since closing: Sequential amortization led to the increase in the credit enhancement available in this transaction. For instance, the credit enhancement for the most senior tranche affected by today's rating action increased to 26.8% from 25% since closing. Serie B credit enhancement has increased to 5.4% from 5% in the same period. Counterparty Exposure The rating actions took into consideration the notes' exposure to relevant counterparties, such as servicer or account bank. 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 and (4) a decrease in sovereign risk. 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. ============= U K R A I N E ============= [*] UKRAINE: Seeks Seizure, Sale of Russian Assets -------------------------------------------------- Benjamin Robertson at Bloomberg News reports that Ukraine is pushing allied countries to seize and sell Russian assets including oil tankers, so that the proceeds can be used to pay for the rebuilding of destroyed cities and infrastructure. According to Bloomberg, Oleg Ustenko, chief economic adviser to Ukrainian President Volodymyr Zelenskiy, said negotiations are under way with various countries for the seizure and sale of the assets. He declined to identify which countries he and his team have engaged, adding that several allied governments are preparing a "mass attack on all major assets." Mr. Ustenko said in a telephone interview Ukraine has suffered more than US$1 trillion in physical damage since the invasion by Russian forces began in February, Bloomberg relates. International sanctions directed at Moscow have frozen about US$300 billion in Russian central bank assets, he said, noting that Russian state officials and senior businessmen have upwards of US$1.5 trillion held overseas, according to Bloomberg. "We do believe we can arrest their assets abroad," Bloomberg quotes Mr. Ustenko as saying. This includes Russia's fleet of oil tankers, which he estimated has a value of around US$5 billion. "We know it is possible to find these assets hidden all over the world." Most countries haven't banned shipments of Russian crude, but many companies have been wary about buying the country's oil, Bloomberg discloses. European Union diplomats last week signed off on a sanctions package that, among other things, prevents most Russian ships from entering the bloc, Bloomberg recounts. While the U.S., U.K., EU and others have ramped up sanctions against Russia, any effort to then sell seized assets and hand the money to Ukraine will likely run into lengthy legal challenges, Bloomberg notes. It could also risk retaliatory seizures of multinational-owned businesses in Russia, Bloomberg states. =========================== U N I T E D K I N G D O M =========================== ANGEL CONTRACTING: Director Faces Six-Year Disqualification ----------------------------------------------------------- The Insolvency Service on April 14 disclosed that Stephen Joseph John Mason, 45, from Edinburgh has been disqualified as a director for six years. He was director of Angel Contracting Ltd, a recruitment agency specialising in providing contractors to the construction industry. The company was incorporated in 2017 but went into liquidation two years later. At this point, the Insolvency Practitioner made repeated requests for the company's accounts and other records, in order to carry out their statutory duties to determine whether there was any misconduct that had led to the company's failure and debts. The records were not forthcoming and the subsequent Insolvency Service investigation therefore could not determine whether expenditure of nearly GBP5.5 million from the company's bank account was legitimate business spending. The investigation identified £16,500 paid to an unknown individual, cash withdrawals totalling nearly GBP6,000 and GBP3,000 in cheque payments. Similarly, it was not possible to confirm that the income, also of nearly GBP5.5 million, recorded in the company's bank account, was from genuine business sales. The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Mr. Mason after he accepted failing to maintain or preserve adequate accounting records. His ban commences on April 4, 2022. The disqualification undertaking prevents him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court. Rob Clarke, Chief Investigator at The Insolvency Service said: "Companies are under a legal duty to account for their income and expenditure and fulfilling that duty is a key component of the role of a director; there is no place in the corporate arena for those who neglect their responsibilities in this area. "All too often the lack of records to explain transactions is used to cover up other, more serious misconduct and we cannot determine whether that was the case at Angel Contracting, a fact which is reflected in the lengthy ban now in place." EVRAZ PLC: S&P Lowers Long-Term Issuer Credit Rating to 'CC' ------------------------------------------------------------ S&P Global Ratings lowered its long-term issuer credit ratings on the following five corporate entities, to 'CC' from 'CCC-': -- Borets International Ltd. -- Eurasia Drilling Company Ltd. -- Evraz PLC. -- X5 Retail Group N.V. -- Yandex N.V. All ratings remained on CreditWatch with negative implications and were subsequently withdrawn. S&P said, "The downgrades of the five entities incorporated outside Russia follow recent actions on Russia. First, we lowered on March 17, 2022, our ratings on the sovereign to 'CC/C' from 'CCC-/C' and revised downward our T&C to 'CC' from 'CCC-'. Second, we lowered on April 8, 2022, our foreign currency ratings on Russia to 'SD/SD' (selective default) from 'CC/C', with the local currency ratings remaining on CreditWatch with negative implications and the T&C assessment at 'CC'. "We used the same analytical approach for the five corporates as that for other companies incorporated in Russia. A country T&C assessment reflects S&P Global Ratings' view of the likelihood of a sovereign restricting nonsovereign access to foreign exchange needed to satisfy the nonsovereign's debt service obligations. "We lowered our foreign currency ratings on the five companies in line with our T&C assessment, given the numerous currency restrictions that were imposed by the Central Bank of Russia. This reflects the increasing reported difficulties of companies meeting debt-service payments to their bondholders in foreign currency. The payment difficulties stem from international sanctions that reduce Russia's available foreign exchange reserves and restrict its access to the global financial system, markets, and infrastructure. They also follow the series of measures rolled out by the Russian authorities aimed at shielding the ruble while preserving remaining usable reserve buffers. All these measures have restricted the ability of nonresident domestic and foreign currency bondholders to receive interest, principal payments, or both, on time and in full. Although the five companies are incorporated outside Russia, they may in our view face the same payment difficulties as peers incorporated in Russia, since most of their operations are in that country. "We also lowered our local currency issuer credit ratings on the five companies because we believe that their capacity to service obligations in rubles may also be significantly disrupted in case of a default on foreign currency obligations. In addition, our ratings on Russia-based banks were 'CC', and on CreditWatch negative, before their withdrawal on March 31, 2022. This indicates high vulnerability to nonpayment from the local banking sector, on which domestic corporates--even those with no market debt or foreign currency liabilities outstanding--rely for day-to-day business activities. "Our 'CC/C' ratings reflect our expectation that a default is a virtual certainty, regardless of the time to default. The CreditWatch negative status on the long- and short-term ratings indicates that we could lower the foreign currency issuer credit ratings to 'SD' (selective default) if a company fails to make a debt-service payment in accordance with the terms of an obligation, and if we do not expect such payment to be made within an applicable grace period. In addition, we would lower the local currency ratings to 'SD' if we were to assess that some nonresident bondholders are unable to access debt-service payments on local bond/bank debts within an applicable grace period. "Following the EU's decision on March 15, 2022, to ban the provision of credit ratings to legal persons, entities, or bodies established in Russia, we withdrew our outstanding ratings on corporate entities incorporated in Russia. "We have now also withdrawn our ratings on five corporate entities with large exposure to Russia. Despite being incorporated outside Russia, these companies operate predominantly in Russia, where most of their manufacturing/production facilities, employees, and/or clients are located. We are also withdrawing our ratings on these companies' Russian subsidiaries or financing vehicles, where relevant." Ratings List DOWNGRADED; RATINGS WITHDRAWN FINAL TO FROM BORETS INTERNATIONAL LTD. BORETS FINANCE DAC Issuer Credit Rating NR CC/Watch Neg/-- CCC-/Watch Neg/-- EURASIA DRILLING CO. LTD. Issuer Credit Rating NR CC/Watch Neg/C CCC-/Watch Neg/C EVRAZ PLC EVRAZHOLDING FINANCE LLC Issuer Credit Rating NR CC/Watch Neg/-- CCC-/Watch Neg/-- X5 RETAIL GROUP N.V. X5 FINANCE OOO Issuer Credit Rating NR CC/Watch Neg/-- CCC-/Watch Neg/-- YANDEX N.V. Issuer Credit Rating NR CC/Watch Neg/-- CCC-/Watch Neg/-- LITA GROUP: Files for Administration with High Court ---------------------------------------------------- Haydn Lewis at The Press reports that cleaning staff at a top York school are facing an uncertain future after their employer went in to administration. Lita Group Facilities Management employ cleaners on contract at Fulford School in York. The firm, which has its office base in London, has filed for administration with the High Court leaving employees facing uncertainty, The Press relates. The union Unison, which represents some of the employees, said cleaners at other city schools may also be affected, The Press notes. According to The Press, a spokesman said: "It's shocking news that Lita Group FM has gone into administration and our members at Fulford School are owed eight weeks' wages." "We have urged the school to do the right thing and make sure they are paid." But the school say they have paid the company the wages in good faith. Steve Lewis is the CEO at South York Multi-Academy Trust, which runs the school. He said: "We are saddened to hear that the Lita Group has gone into administration. "We are aware that two fortnightly wage payments have been up to two weeks late. "Throughout this difficult time for their staff at the school we have been in regular contact with Lita and made very clear advocacy for their staff to be paid. "We have kept in daily contact with their cleaning staff at Fulford School and supported them in the best way we can. "The cleaning staff are an integral part of the school community and we expect their employer to pay them on time. "Our contract is with Lita Group. "We have paid all monies owed to them on time with a full and reasonable expectation that they will pay their employees. "Following the announcement of Lita's administration we are urgently looking at a way forward that best supports the school and Lita's cleaning staff." MORRISONS: Moody's Downgrades Rating to 'B1', Outlook Stable ------------------------------------------------------------ Moody's Investors Service has assigned a corporate family rating of B1 and B1-PD probability of default rating to Market Holdco 3 Limited, a holding company formed to effect the acquisition of Wm Morrison Supermarkets plc (Morrisons), the UK's fourth largest grocery retailer by revenue, by Clayton Dubilier & Rice, LLC (CD&R). This rating action concludes the review for downgrade initiated on July 07, 2021 and downgraded and further extended on December 13, 2021. The outlook on all ratings, except on Safeway Limited's ratings which have been withdrawn, is stable. The effective downgrade of Morrisons' rating to B1 from Ba1 was triggered by the completion of review for downgrade following the acquisition of the entirety of the company by CD&R for an enterprise value of GBP9.8 billion. The acquisition was financed through a combination of equity capital, including ordinary and preference shares, and bridge debt facilities that are expected to be refinanced through long term debt. As part of the same rating action, Moody's withdraws the Ba1 CFR and Ba1-PD PDR of Wm Morrison Supermarkets plc as well as the (P)Ba1 backed senior unsecured MTN programme of Safeway Limited. Moody's has also downgraded to (P)B1 from the (P)Ba1 backed senior unsecured MTN programme, and to B1 from the Ba1 backed senior unsecured ratings of all the bonds issued under the programme by Wm Morrison Supermarkets plc. The Rating Agency understands that around GBP82 million of the bonds remain outstanding following the completion of a tender offer launched by CD&R. The B1 rating of these notes is based on the successful completion of the envisaged refinancing. The Transaction is subject to approvals by the Competition and Markets Authority (CMA) and by the Financial Conduct Authority (FCA) with expected closing in the first half of 2022. The rating actions reflect: An initial estimated leverage of 7.9x as of January 31, 2022 on a Moody's-adjusted basis pro-forma for the completion of the acquisition, with expectations of de-leveraging by around 2x over the next two fiscal years through EBITDA improvements driven by the lower pandemic related costs, the recovery of lost profits (cafeterias and food-to-go), ongoing efficiency measures (automation, digital platform and McColl's conversions), and public listing savings Morrisons' established market position in the stable UK grocery sector, its significant scale and significant freehold property ownership The very competitive nature of the UK grocery market and risks related to the execution of the planned efficiency programmes RATINGS RATIONALE The B1 CFR of Market Holdco 3 Limited reflects its entrenched market position in the stable, albeit competitive, UK grocery sector, its relatively greater exposure to stable food sales compared to peers, and its experienced management team. It also considers the company's relatively smaller scale and market share compared to the other three "Big Four" UK grocers and to the challenges posed by the continued, albeit slower, growth of the discounters in the UK grocery sector. The company's performance since the beginning of the pandemic has been resilient but the exceptional costs incurred to protect customers and staff as well as the lost revenues during the lockdown months have significantly affected its profits. Morrisons has grown its revenues in fiscal 2021 and fiscal 2022 (ended February 1), particularly online, demonstrating the resilience of its food business and relatively limited exposure to general merchandise and clothing which have been more severely affected by the coronavirus pandemic. However, the exceptional costs and the lost profits incurred during the last 12 months have depressed the company's EBITDA, which has remained well below normal levels leading to increased leverage. The total debt financing requirement for the acquisition of Morrisons is around GBP7.0 billion, including outstanding debt and lease liabilities, which represents 7.9x Moody's adjusted pro forma EBITDA for the fiscal 2022 ended February 1. This leverage is set to improve below 6x over the next 12-18 months in Moody's base case. The improvement will be driven by EBITDA growth as a result of lower pandemic related costs including the recovery of lost profits (cafeterias and food-to-go) and by ongoing margin improvement initiatives. The latter include increased manufacturing automation, online store picking improvements, McColls/Morrisons Daily conversions and other synergies. The company's trading outlook is stable, with ongoing competitive pressures in an increasingly inflationary environment. Market share shifts in the UK grocery sector will be limited over the next 12-18 months, with the online and convenience formats likely to grow further. Morrisons has been recently catching up in both formats and its strategy is geared towards continued expansion into these segments. Moody's does not view Morrisons' corporate governance structure under the new ownership as a major risk factor as the company has a history of complying with financial, legal and regulatory requirements as a listed entity. However, governance risks considered in Morrisons' credit profile include financial policies which are likely to maintain relatively high leverage. LIQUIDITY Moody's considers Morrisons' liquidity profile to be good, supported by an undrawn GBP1.0 billion RCF and still material unencumbered assets upon completion of the envisaged refinancing, and a pro forma cash balance of GBP249 million as at January 31, 2022. The company is expected to generate significant positive cash flows after debt service costs before dividend distributions on an annual basis. STRUCTURAL CONSIDERATIONS The outstanding notes are rated in line with the CFR reflecting their pari passu ranking with the secured debt in the envisaged capital structure. Secured debt ranks ahead of GBP1.2 billion backed senior unsecured private notes, the amount which is not sufficient to rate the secured debt above the CFR. OUTLOOK The stable outlook reflects Moody's expectations that Morrisons will gradually reduce Moody's-adjusted leverage over the next 12-18 months from its high initial level. In addition, the stable outlook also assumes adequate liquidity and no meaningful sale and lease back transactions that could negatively impact on leverage. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Moody's-adjusted leverage reduces sustainably below 5.75x, with a clear financial policy in line with lower leverage. An upgrade would also require a material increase in free cash flow, with free cash flow to debt of in mid single-digits in percentage terms. An upgrade would also require meaningful like-for-like revenue and EBITDA growth and adequate liquidity. The ratings could be downgraded if leverage fails to reduce below 6.5x on a Moody's-adjusted basis over the next 12-18 months, or if the company generates negative free cash flows. A downgrade could ensue also in case of material execution issues or if liquidity concerns arise or in case of significant operational underperformance. LIST OF AFFECTED RATINGS Downgrades, previously placed on review for downgrade: Issuer: Wm Morrison Supermarkets plc BACKED Senior Unsecured MTN programme, Downgraded to (P)B1 from (P)Ba1 BACKED Senior Unsecured Regular Bond/Debenture, Downgraded to B1 from Ba1 Assignments: Issuer: Market Bidco Finco Plc BACKED Senior Secured Regular Bond/Debenture, Assigned B1 Issuer: Market Bidco Limited BACKED Senior Secured Bank Credit Facility, Assigned B1 Issuer: Market Holdco 3 Limited Probability of Default Rating, Assigned B1-PD LT Corporate Family Rating, Assigned B1 Issuer: Market Parent Finco Plc BACKED Senior Unsecured Regular Bond/Debenture, Assigned B3 Confirmations, previously placed on review for downgrade: Issuer: Wm Morrison Supermarkets plc BACKED Other Short Term, Confirmed at (P)NP Withdrawals, previously placed on review for downgrade: Issuer: Safeway Limited BACKED Senior Unsecured MTN programme, Withdrawn , previously rated (P)Ba1 Issuer: Wm Morrison Supermarkets plc Probability of Default Rating, Withdrawn, previously rated Ba1-PD LT Corporate Family Rating, Withdrawn, previously rated Ba1 Outlook Actions: Issuer: Safeway Limited Outlook, Changed To Ratings Withdrawn From Ratings Under Review Issuer: Wm Morrison Supermarkets plc Outlook, Changed To Stable From Ratings Under Review Issuer: Market Holdco 3 Limited Outlook, Assigned Stable Issuer: Market Bidco Finco Plc Outlook, Assigned Stable Issuer: Market Bidco Limited Outlook, Assigned Stable Issuer: Market Parent Finco Plc Outlook, Assigned Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Retail published in November 2021. COMPANY PROFILE Morrisons is the fourth-largest grocer by sales in the UK, behind Tesco Plc (Baa3 stable), J Sainsbury plc and Bellis Finco PLC (Asda, Ba3 stable). The company is focused on fresh food at affordable prices, and this positioning is supported by its significant manufacturing capabilities. The company generated revenue of GBP18.6 billion in the last twelve months ended August 1, 2021, of which GBP3.7 billion or around 20% of total related to fuel sales. PETROPAVLOVSK PLC: Mulls Sale Following Sanctions Against Russia ---------------------------------------------------------------- Neil Hume at The Financial Times reports that Russian gold producer Petropavlovsk PLC has warned investors that they could be wiped out as the wave of sanctions against Moscow leaves the group struggling to refinance its debt. According to the FT, the company said on April 14 that it was considering putting itself up for sale because "in the present circumstance" it would be "very challenging" to pay off a US$304 million convertible bond due in November. "The group has limited cash reserves outside Russia. There are legal restrictions in place in Russia which limit the group's ability to transfer cash out of Russia," the FT quotes the company as saying in a statement. As pressures on the company mount, Petropavlovsk said it had appointed restructuring specialist AlixPartners to examine options including the sale of its "entire interests in its operating subsidiaries as soon as practically possible", the FT relates. "It is not currently clear what return, if any, may be secured for shareholders or the holders of the bonds or notes as a result of this process," the company warned. Petropavlovsk, which mines gold in Russia's Far East region, cautioned last month that it had been prevented from making a loan interest payment to its main lender Gazprombank, which has been targeted by UK sanctions, the FT recounts. The miner revealed on April 14 that US$9.5 million of debt due on another credit facility with Gazprombank had not been paid "as a consequence of the regulations", the FT discloses. At the turn of the year, the company had almost US$600 million of outstanding debt, the FT notes. The company is one of the few Russian groups with shares still trading in London. It was once one of the biggest gold miners listed in London, and until recently was a member of the FTSE 250 index. PINE DEVELOPMENTS: Former Pontins Holiday Camp Put Up for Sale -------------------------------------------------------------- Liz Coates at Great Yarmouth Mercury reports that a former Pontins holiday camp is up for sale on property website Rightmove after the business behind its redevelopment floundered. The sale comes after Pine Developments collapsed into administration blaming the failure of a lending company, Great Yarmouth Mercury notes. The prominent site in Beach Road, Hemsby, is being marketed as a commercial development comprising 188 homes and 88 holiday cottages, a shop, leisure centre, gym, and spa, Great Yarmouth Mercury discloses. It is described as being level and broadly rectangular by London-based agent Lambert Smith Hampton on behalf of joint administrators FRP Advisory, Great Yarmouth Mercury states. Pine Developments, headed by businessman Graham Avery, purchased the former Pontins site on February 19, 2019, for GBP4,000,000, Great Yarmouth Mercury recounts. Mr. Avery, as cited by Great Yarmouth Mercury, said the company's collapse revolved around the failure of a lender it had borrowed money from. The 22-acre site was closed and made secure at the end of last month, Great Yarmouth Mercury relays. Some local contractors still had unpaid invoices and equipment they could not access, according to Great Yarmouth Mercury. PIPELINE ENGINEERING: Enters Administration, 83 Jobs Affected ------------------------------------------------------------- Tom Keighley at Business Live reports that a North Yorkshire supplier of pipeline maintenance services to the global oil and gas sector has fallen into administration with the loss of 83 jobs. According to Business Live, administrators from Kroll were appointed to Catterick-based Pipeline Engineering & Supply Co. Limited after its parent company Circor International Ltd failed to find a buyer for the business, which it says had seen "accounting irregularities". Circor announced it wanted to exit the Pipeline Engineering & Supply Co business in March after finding the irregularities -- which it said appeared to account for balance sheet and income statement entries in the range of GBP26.7 million (US$35 million) to GBP34.3 million (US$45 million) of pre-tax income on a cumulative basis over a period of at least five years, Business Live relates. A review of the irregularities had been carried out by an outside law firm and a forensic accounting firm with oversight from the New York Stock Exchange-listed firm's audit committee, Business Live discloses. The administration does not impact the remainder of Circor's operations in the UK, Business Live notes. "The business was loss making as its cost base and infrastructure were not aligned to revenues," Business Live quotes Jimmy Saunders, joint administrator at Kroll, as saying. "The group has made substantial investment into the company but together with the current economic uncertainty and cost inflation in manufacturing the group was unfortunately unable to continue to provide financial support." Pipeline Engineering accounted for about 3% of Circor's revenue in 2020 and has ceased trading with immediate effect, and the administrators said they were providing support to affected employees. The latest set of accounts for Pipeline Engineering at Companies House show it made a pre-tax loss of GBP2 million in 2019, on turnover of GBP16.5 million. STUDIO TRI: Clogau Left Out of Pocket Following Administration -------------------------------------------------------------- Owen Hughes at Business Live reports that the boss of Clogau -- the famous Welsh gold jewellery brand -- says he is "saddened" after a Twitter post from a band saying they had been left out of pocket following an advertising campaign. Art rock group HMS Morris recorded "Dawel Nos" for the Clogau Christmas advert in a campaign last year organised by Cardiff based Studio Tri Ltd, trading as S3 Advertising, Business Live discloses. But after being hit hard by the pandemic Studio Tri went into administration in December, Business Live recounts. Leonard Curtis were appointed as administrator and released a statement of affairs saying it is "unlikely" there will be sufficient funds to pay unsecured creditors, Business Live relates. Clogau said they had paid their bill for the campaign, Business Live notes. Business Live contacted Clogau and boss Ben Roberts said: "We're aware and saddened by social media posts relating to past marketing campaigns that we've run in conjunction with S3 Advertising. Currently, we're waiting for the proper legal process to conclude to understand the full impact of S3's administration and throughout this period we're maintaining dialogue with various suppliers that have been negatively impacted. Our upcoming summer campaign will feature content that has been created by some of these organisations as we continue to work with them wherever possible." WILLIAM MASON: Director Faces 10-Year Disqualification ------------------------------------------------------ The Insolvency Service on April 11 disclosed that wine investor from Wymondham, Norfolk, has been disqualified from being a director after he abused more than GBP445,000 of investors' money. William Mason Fine Wines Limited was incorporated in March 1997 and traded as an alcohol wholesaler from premises on Church Street, in Great Ellingham, Norfolk. William Geoffrey Mason (54) was the director of the company before the alcohol wholesaler entered into liquidation and was wound-up in November 2020. The company's liquidation, however, triggered an investigation by the Insolvency Service, which found that for more than 18 years, Mr. Mason caused the alcohol wholesaler to trade with a lack of commercial probity. Investigators uncovered that William Mason Fine Wines operated a wine investment scheme, purchasing and storing wines on behalf of the company's clients. Between 2001 and 2019, investors made payments worth GBP445,000 and Mr. Mason corresponded with investors, providing stock certificates and in some cases arranging partial return of their wine or funds. Investigators, however, found that in a majority of cases, Mr. Mason caused the company not to purchase the wines and where wine was purchased, the company disposed of the alcohol without the agreement of the investors. At the point of liquidation, William Mason Fine Wines Limited held no wine in stock. Mr. Mason's ban became effective on February 22, 2022 and the disqualification prevents him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court. David Argyle, Deputy Head of Insolvent Investigations, said: "Several of the investors that have lost their investments were good friends with William Mason and it was this friendship that made them believe they could trust him. "10 years is a significant disqualification and sends a stark warning to directors who think they can abuse their investors that we will pursue the strictest restrictions and remove them from the corporate arena." =============== X X X X X X X X =============== [*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace ------------------------------------------------------------- Author: Warren E. Agin Publisher: Bowne Publishing Co. List price: $225.00 Review by Gail Owens Hoelscher Red Hat Inc. finds itself with a high of 151 5/8 and low of 20 over the last 12 months! Microstrategy Inc. has roller-coasted from a high of 333 to a low of 7 over the same period! Just when the IPO boom is imploding and high-technology companies are running out of cash, Warren Agin comes out with a guide to the legal issues of the cyberage. The word "cyberspace" did not appear in the Merriam-Webster Dictionary until 1986, defined as "the on-line world of computer networks." The word "Internet" showed up that year as well, as "an electronic communications network that connects computer networks and organizational computer facilities around the world." Cyberspace has been leading a kaleidoscopic parade ever since, with the legal profession striding smartly in rhythm. There is no definition for the word "cyberassets" in the current Merriam-Webster. Fortunately, Bankruptcy and Secured Lending in Cyberspace tells us what cyberassets are and lays out in meticulous detail how to address them, not only for troubled technology companies, but for all companies with websites and domain names. Cyberassets are primarily websites and domain names, but also include technology contracts and licenses. There are four types of assets embodied in a website: content, hardware, the Internet connection, and software. The website's content is its fundamental asset and may include databases, text, pictures, and video and sound clips. The value of a website depends largely on the traffic it generates. A domain name provides the mechanism to reach the information provided by a company on its website, or find the products or services the company is selling over the Internet. Examples are Amazon.com, bankrupt.com, and "swiggartagin.com." Determining the value of a domain name is comparable to valuing trademark rights. Domain names can come at a high price! Compaq Computer Corp. paid Alta Vista Technology Inc. more than $3 million for "Altavista.com" when it developed its AltaVista search engine. The subject matter covered in this book falls into three groups: the Internet's effect on the practice of bankruptcy law; the ways substantive bankruptcy law handles the impact of cyberspace on basic concepts and procedures; and issues related to cyberassets as secured lending collateral. The book includes point-by-point treatment of the effect of cyberassets on venue and jurisdiction in bankruptcy proceedings; electronic filing and access to official records and pleadings in bankruptcy cases; using the Internet for communications and noticing in bankruptcy cases; administration of bankruptcy estates with cyberassets; selling bankruptcy estate assets over the Internet; trading in bankruptcy claims over the Internet; and technology contracts and licenses under the bankruptcy codes. The chapters on secured lending detail technology escrow agreements for cyberassets; obtaining and perfecting security interests for cyberassets; enforcing rights against collateral for cyberassets; and bankruptcy concerns for the secured lender with regard to cyberassets. The book concludes with chapters on Y2K and bankruptcy; revisions in the Uniform Commercial Code in the electronic age; and a compendium of bankruptcy and secured lending resources on the Internet. The appendix consists of a comprehensive set of forms for cyberspace-related bankruptcy issues and cyberasset lending transactions. The forms include bankruptcy orders authorizing a domain name sale; forms for electronic filing of documents; bankruptcy motions related to domain names; and security agreements for Web sites. Bankruptcy and Secured Lending in Cyberspace is a well-written, succinct, and comprehensive reference for lending against cyberassets and treating cyberassets in bankruptcy cases. ********* 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *