/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/220504.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, May 4, 2022, Vol. 23, No. 83 Headlines F R A N C E VALEO: Egan-Jones Keeps BB- Senior Unsecured Ratings G E R M A N Y TECHEM VERWALTUNGSGESELLSCHAFT: Fitch Affirms 'B' IDR WIRECARD AG: EY Germany to Cut Workloads Amid Audit Investigation G R E E C E EUROBANK ERGASIAS: Fitch Assigns 'B+' IDR, Outlook Stable PUBLIC POWER: S&P Ups Long-Term Rating to 'BB-', Outlook Stable I R E L A N D [*] IRELAND: Needs to Deal with Zombie Companies, Law Firm Says N E T H E R L A N D S KONINKLIJKE KPN: Egan-Jones Keeps BB Senior Unsecured Ratings S P A I N TDA 26-MIXTO: Fitch Affirms CCC Rating on Class 1-D Debt TELEFONICA SA: Egan-Jones Keeps BB- Senior Unsecured Ratings U K R A I N E DTEK ENERGY: Fitch Upgrades Issuer Default Ratings to 'CC' U N I T E D K I N G D O M AVRO: Ofgem Probes Whether Octopus Should Pay Credit to Consumers BEMACO STEEL: FXSteel Buys Business Out of Administration INTERNATIONAL GAME: Egan-Jones Hikes Senior Unsecured Ratings to B PAPERCHASE: Put Up for Sale Following Pre-Pack Administration SIG PLC: Egan-Jones Keeps B+ Senior Unsecured Ratings SUBSEA 7: Egan-Jones Keeps BB+ Senior Unsecured Ratings [*] Sonya Van de Graaff Joins Katten UK's Insolvency Practice [*] UK: Construction Sector Insolvencies Up 142% in 2022 - - - - - =========== F R A N C E =========== VALEO: Egan-Jones Keeps BB- Senior Unsecured Ratings ---------------------------------------------------- Egan-Jones Ratings Company on April 21, 2022, maintained its 'BB-' foreign currency and local currency senior unsecured ratings on debt issued by Valeo. Headquartered in Paris, France, Valeo designs and manufactures automobile components. ============= G E R M A N Y ============= TECHEM VERWALTUNGSGESELLSCHAFT: Fitch Affirms 'B' IDR ----------------------------------------------------- Fitch Ratings has revised Germany-based heat and water sub-metering services operator Techem Verwaltungsgesellschaft 674 mbH's Outlook to Stable from Negative. Fitch has also affirmed its Long-Term Issuer Default Rating at 'B' and affirmed the senior secured instruments ratings at 'B+'/'RR3'. The Outlook revision reflects a faster-than-forecast reduction in leverage. This is paired with the proven resilience of Techem's business model. Fitch expects funds from operations (FFO) gross leverage to ease at the threshold of Fitch's sensitivity for a 'B' rating during the financial year to end-September 2022 (FY22) and to slowly decline thereafter. Stable to improving EBITDA margins, steady tax rates and the recent gross debt prepayments support Fitch's expectations. Fitch expects Techem's free cash flow (FCF) to be positive through the cycle, supported by Fitch's projected reduction in non-recurring expenses over the next 12 to 18 months. Fitch projects a significant increase in capex to take advantage of new business opportunities, ultimately supporting revenue growth. This is strongly linked to Techem's shareholders value proposition, which links value creation to the expansion of the company's sub-metering activity in Germany and the rest of Europe. KEY RATING DRIVERS High but Stabilised Leverage: Techem's leverage remains high but Fitch expects it to converge back into Fitch's sensitivities for a 'B' rating by FY22. FFO gross leverage is 8.6x in FY21, compared to Fitch's previous expectations of 9.6x by March 2021. After Fitch's previous review, Techem changed its financial year end to September from March. Fitch now forecasts FFO gross leverage at about 8.0x for FY22, declining to about 7.5x by FY24. Stable operating performance, debt prepayments and a lower recourse to revolving credit facility (RCF) drawdowns contributed to the stabilisation. Higher drawdowns under the RCF, including to finance capex plans, and shocks on margins may put the company's leverage back under pressure. Moderate EBITDA Growth Expected: Techem's sub-metering activity has high barriers to entry, although the German market is close to saturation and the rest of Europe is adopting billing services slowly. Future increases in Techem's EBITDA and profitability are linked to product expansion, M&A and cost-efficiencies, the latter two generating execution costs in the short term. Fitch projects an EBITDA CAGR of about 5% for FY21-FY24, led by growth in billing services out of Germany and to growing cost-efficiencies. Fitch's forecasts on contracting revenue provide for minimal growth, due to the adverse impact of increasing energy prices, and forecast low M&A-led growth. Steady Operating Performance: Techem's revenue has grown moderately since a leveraged buyout (LBO) in 2018, led by its energy sub-metering business. The expansion takes place in rest of Europe in particular, followed by Germany, where the market is very mature. Fitch-defined EBITDA has been broadly stable over the past two years at about EUR360 million. Margins on standalone energy services have improved, but are more volatile on Techem's contracting business. An increase in operating expenses reduced EBITDA margin to 44.6% by FYE21 from 46.5% at FYE20 (March 2020). Non-Recurring Items: Fitch has adjusted Techem's FY21 EBITDA adding back about EUR29 million. As before, Fitch recognises around EUR25 million as non-recurring under the Energize-T and Operational Excellence efficiency and margin improvement programmes. Fitch expects this amount to decline by half by FY24. In addition, Fitch has adjusted for one-off pandemic-related costs of about EUR4 million. Due to Fitch's conservative stance on the contracting business, Fitch does not add back to Fitch-defined-EBITDA a related extraordinary EUR5.8 million negative change in accruals of revenue and costs. Fitch excludes about EUR70 million of one-off tax expenses from Fitch's FFO calculations. Infrastructure-Driven Value Proposition: Fitch expects the company's medium-term strategy to target a wider coverage of dwellings in Germany and abroad. Together with technological upgrades to readers, this may lead to higher cost-efficiencies and to products expansion, potentially up to the coverage of the full energy value chain for homes. Fitch understands that Techem's shareholders value enhancement proposition is linked to infrastructure development, rather than to the maximisation of the cash flow generation in the short term. Capex Weighs on Cash Flows: Fitch forecasts Techem's FCF margins on average at 5.6% over the next four years, lower than Fitch's initial post-LBO projections in 2018. Fitch expects material increases in capex for FY22/FY24, up to a total of about EUR550 million. These will finance the new fleet of heat and water meters, and new investments in energy contracting. However, Fitch does not expect peaks in the outflow from working capital and taxes. In particular, the actual tax rate is higher than the one indicated in 2018 due to a different regime of tax losses. The extraordinary component of tax payments ended in FY21. Favourable Operating Environment: The adoption of sub-metering is supported by the EU Energy Efficiency Directive. However, the adoption by member states is slow and affects the timing of revenue expansion for Techem. Recent adopters are Spain (2020) and Poland (2021). Challenges include potentially tighter market regulations and the Russia-Ukraine war. Stricter market regulations may require additional investment to install inter-operable devices. The tensions from the Ukraine war could move the policymakers focus from energy efficiency to containment in energy prices. Despite the risks, Fitch views Techem's operating environment as stable to positive in the medium term. DERIVATION SUMMARY Techem's business profile has proximities with infrastructural and utility-like peers, and stands in the 'BBB' category. It has proved resilient through the pandemic and has clearly shown stability features. It is constrained by high gross leverage with moderate deleveraging prospects in the short term. Compared with smaller sub-metering peers within Fitch's private rating coverage, Techem has a stronger business profile and cash flow generation but also higher gross total indebtedness. The company's focus on the expansion of its smart readers network suggest a comparison with pure-play telecommunication networks, such as Cellnex Telecom S.A. and Infrastrutture Wireless Italiane S.p.A. (both 'BBB-'/Stable). These entities have comparable leverage levels and their high capex is demand-driven as is most of Techem's. However, their sector, scale and tenants' stability provide for a higher debt capacity. Techem is also comparable with highly leveraged business services operators, such as Nexi S.p.A. (BB/Stable) and Hurricane Bidco Limited (Paymentsense, B/Stable), which share a similar billing model on a wide portfolio of customers in a favourable competitive environment. Fitch believes Nexi's secular growth prospects are stronger than Techem's. Nexi also has lower leverage and higher FCF conversion. KEY ASSUMPTIONS -- Revenue growth CAGR of 4.7% for FY21-FY24. -- EBITDA margins, adjusted for non-recurring expenses, averaging about 45% to FY24. -- Capex on average at about 20% of revenue a year up to FY24. -- M&A plan averaging around EUR50 million a year up to FY24. -- No dividend paid, in line with stated financial policy. Key recovery assumptions The recovery analysis assumes that Techem would be reorganised as a going concern in bankruptcy rather than liquidated, based on its strong cash flow generation and asset-light operations. Its installed base and contractual portfolio are key, intangible assets of the business, which are likely to be operated post-bankruptcy by competitors with higher cost-efficiency. Fitch has assumed a 10% administrative claim. Fitch estimated a going-concern EBITDA of about EUR230 million, unchanged from Fitch's previous analysis. Fitch assumes that at this level of EBITDA, after corrective measures have been undertaken, Techem would generate moderately positive FCF. Fitch also assumed a distressed multiple of 7x, considering the stable business profile of Techem and comparing it with similarly cash-generative peers with infrastructure and utility-like business models. Fitch's debt waterfall includes a fully drawn RCF of EUR275 million and the updated term loan B and senior secured notes amounts, resulting in a final recovery of 'RR3'/56%, broadly unchanged from Fitch's previous analysis. The senior unsecured notes have a 'RR6' rating. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Reduction of FFO gross leverage to below 7.0x or total debt with equity credit/operating EBITDA below 6.0x on a sustained basis; -- FFO interest coverage greater than 3.0x or operating EBITDA/interest paid trending to or above 3.5x; and -- Ongoing commitment to current financial policy of zero dividend distribution and/or debt-funded M&A activity. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO gross leverage sustainably at or above 8.0x or total debt with equity credit/operating EBITDA above 7.0x with no sign of deleveraging; -- FFO interest coverage below 2.0x or operating EBITDA/interest paid trending to or below 2.5x on a sustained basis; -- Departure from financial policy of debt reduction and zero dividend distribution and/or debt-funded M&A activity; and -- FCF margin declining sustainably below 5%. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Satisfactory Liquidity: Fitch estimates over EUR220 million of minimum undrawn RCF commitments between FY22 and FY25, indicating a satisfactory liquidity profile, reinforced by positive FCF generation. Techem had cash on balance of about EUR50 million at end-2021 and no material upcoming debt maturities. Fitch restricts Techem's cash by EUR20 million, the estimated level of minimum operating cash. ISSUER PROFILE Techem is a Germany-based heat and water sub-metering services operator active in sub-metering installation and services in Europe. The company also has a presence in energy contracting. DEBT RATING RECOVERY PRIOR --- ------ -------- ----- Techem Verwaltungsgesellschaft 674 mbH LT IDR B Affirmed B senior unsecured LT CCC+ Affirmed RR6 CCC+ Techem Verwaltungsgesellschaft 675 mbH senior secured LT B+ Affirmed RR3 B+ WIRECARD AG: EY Germany to Cut Workloads Amid Audit Investigation ----------------------------------------------------------------- Olaf Storbeck at The Financial Times reports that EY Germany is planning to cut workloads as it overhauls its auditing practices following the failure to spot that half of Wirecard's revenues and billions of corporate cash did not exist. According to the FT, the German arm of the Big Four accounting firm on April 28 promised staff "an improvement of working conditions" after receiving the recommendations of an independent advisory commission tasked with improving internal governance in the wake of the Wirecard scandal. In a briefing document for staff, which was seen by the FT, the firm said it would address "permanent occupational stress and overburdening" among its audit staff, in part by hiring more people and trying to limit after-hours work. EY has come under massive legal and political pressure because of its work for the disgraced German payments company, which in 2020 crashed into insolvency after disclosing large-scale accounting fraud, the FT relates. In the decade leading to the collapse, Wirecard received unqualified audits from EY in spite of repeated questions over its accounts from journalists and critical investors, the FT notes. Last year, an investigation by audit firm Rodl & Partner into EY's Wirecard work found it had failed to scrutinise the operations in Asia that lay at the heart of the fraud. It also concluded that the audits potentially violated international reporting standards as they disclosed too little information about the size and nature of the Asian business, the FT recounts. According to the FT, Germany's audit watchdog Apas and public prosecutors in Munich are investigating potential violations of professional duties, and shareholders have filed an avalanche of lawsuits against the firm. "In view of the collapse of Wirecard and the subsequent public and political debate, we at EY Germany are working hard to regain the trust of our clients and other stakeholders," the firm told employees on April 28. It added that the quality of its audit work was more important than its profitability. "Quality overrides margin", the document seen by the FT states. The Wirecard scandal happened after years of aggressive growth at EY Germany, which in the three years running up to the payment's processor's collapse doubled its market share among German blue-chips, prising prestigious clients from KPMG and PwC, the FT relays. =========== G R E E C E =========== EUROBANK ERGASIAS: Fitch Assigns 'B+' IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has assigned Eurobank Ergasias Services and Holdings S.A. a Long-Term Issuer Default Rating (IDR) of 'B+' with a Stable Outlook. KEY RATING DRIVERS IDRs, VR Eurobank Ergasias Services and Holdings S.A. (HoldCo) is the full owner and holding company of Eurobank S.A. (Eurobank), the group's main operating company and core bank. The ratings of HoldCo and Eurobank are equalised as Fitch believes the holding company will not build up significant double leverage beyond 120% and because Fitch views liquidity management at HoldCo as prudent with appropriate contingency plans. The group is regulated on a consolidated basis and capital and liquidity are managed centrally. Fitch assesses Eurobank and HoldCo on a consolidated basis as the banking operations are managed in a highly integrated manner. The ratings of HoldCo and Eurobank reflect the group's improved asset quality and capitalisation, although these remain weaker than European averages. The ratings also factor in the group's restored ability to generate recurring earnings after the completion of the bulk of its asset de-risking and strengthened funding and liquidity. HoldCo's Short-Term IDR of 'B' is the only short-term rating that maps to a 'B+' Long-Term IDR under Fitch's rating correspondence table. GSR HoldCo's Government Support Rating (GSR) of 'No Support' is aligned with that of Eurobank and reflects Fitch's view that although external extraordinary sovereign support is possible it cannot be relied upon, both at bank and holding company level. 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 Factors that could, individually or collectively, lead to negative rating action/downgrade: HoldCo's ratings are primarily sensitive to changes in Eurobank's ratings. A downgrade of Eurobank's ratings is likely to result in a similar downgrade for HoldCo. Eurobank's ratings are likely to be downgraded if Greece's economic recovery prospects materially weaken, resulting in asset-quality pressures, with Eurobank reaching an impaired loan ratio of above 10%, larger-than-expected credit losses reducing the operating profit/risk-weighted assets (RWAs) ratio below 1% on a sustained basis or material weakening of capitalisation. HoldCo's ratings could also be downgraded by at least one notch below those of the operating bank in case of a significant build-up of double leverage at HoldCo, changes in regulation scope, or more onerous restrictions on fungibility of capital and liquidity between the two entities, which Fitch does not expect. Factors that could, individually or collectively, lead to positive rating action/upgrade: An upgrade in Eurobank's ratings is likely to result in a similar upgrade of HoldCo's ratings. An upgrade of Eurobank's ratings would depend on a further improvement of the operating environment and a continued reduction of Eurobank's asset-encumbrance from unreserved problem assets (impaired loan ratio below 5%, provided that the common equity Tier 1 ratio is maintained at about 14%). Operating profit/RWAs above 1.25% on a sustained basis would also be rating-positive. An upward revision of HoldCo's GSR would be contingent on a positive change in the sovereign's propensity to support the group, which Fitch deems highly unlikely. VR ADJUSTMENTS The Operating Environment score has been assigned below the implied score due to the following adjustment reason: Sovereign Rating (negative). The Business Profile score has been assigned below the implied score due to the following adjustment reason: Business Model (negative). The Capitalisation & Leverage score has been assigned below the implied score due to the following adjustment reason: Reserve Coverage and Asset Valuation (negative). The Funding & Liquidity score has been assigned below the implied score due to the following adjustment reason: Liquidity Access and Ordinary Support (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 ---- ------ ----- Eurobank Ergasias Services and Holdings S.A. LT IDR B+ New Rating WD ST IDR B New Rating WD Viability b+ New Rating WD Government Support ns New Rating PUBLIC POWER: S&P Ups Long-Term Rating to 'BB-', Outlook Stable --------------------------------------------------------------- S&P Global Ratings raised its long-term ratings on Greece-based power utility Public Power Corp. S.A. (PPC) to 'BB-' from B+'. S&P said, "The stable outlook indicates that we expect PPC will continue to deliver its transformation plan, with solid liquidity, improved margins, and high investments resulting in funds from operations (FFO) to debt of about 30% and debt to EBITDA close to 3x over 2022-2023. "The Greek government's ability to provide support to PPC has increased. The upgrade of PPC follows our upgrade of Greece on April 22, 2022. We believe that Greece now has an increased capacity to provide timely and sufficient support to PPC in the event of financial distress. This is because of Greece's improved credit quality, given further progress on government implementation of structural reforms and budgetary consolidation supporting the downward path of debt to GDP. "We continue to believe that there is a moderately high likelihood that PPC would receive timely and sufficient extraordinary support from the government. PPC is the dominant Greek power generator and supplier, and the monopoly power distributor in the country. In our view, the Greek government would support PPC if needed, based on its 34% ownership of the company, the importance of the company for the Greek economy, and the strategic alignment between PPC and Greece's energy transition policy. While we observe reduced influence from the Greek state over the company's ongoing decisions and day-to-day management, the state maintains control over key strategic decisions for which a large majority vote is required. Furthermore, the government continues to guarantee around EUR1.4 billion debt at 51%-owned distribution company HEDNO. We continue to believe that there is a moderately high likelihood that PPC would receive timely and sufficient extraordinary support from the government. In addition, we view the realized structural reforms to improve the business environment as beneficial to PPC's operations within the country and the implementation of its new strategic plan. Our rating on PPC now includes one notch of uplift for extraordinary support relative to PPC's stand-alone credit profile of 'b+'. "PPC reported 2021 EBITDA in line with 2020, with constant operating performance and steep deleveraging. Results for 2021 are in line with our expectations, resulting in preliminary S&P Global Ratings-adjusted ratios of 23.0% FFO to debt and 3.9x debt to EBITDA (see "Greek Public Power Corp. Affirmed At 'B+' On Capital Increase, HEDNO Stake Sale; Outlook Remains Positive," published Nov. 22, 2021). In 2021, FFO is inflated by EUR100.3 million of tax refund for overstated revenue in 2015 and 2016. PPC reported recurring EBITDA of EUR871 million, and we expect its adjusted EBITDA will continue this positive trend and increase to about EUR1 billion in 2023 from EUR845 million in 2020. Adjusted net debt at year-end 2021 reached close to EUR3.2 billion, benefitting from the EUR1.3 billion capital increase done in second-half 2021, but excluding the EUR1.3 billion of proceeds from HEDNO's 49% stake sale cashed in during first-quarter 2022. We expect net debt to be about EUR3.3 billion in 2023, on the back of accelerated investments starting next year, with capital expenditure on tangible assets (capex) reaching more than EUR2 billion per year from EUR435 million in 2021. The investment program will focus on renewables, digitalization of the network, and expansion in adjacent markets in southeastern Europe. This would lead to stabilization of our forecast FFO to debt ratio at 18%-25% at the end of 2023, compared with 13.2% in 2020, and decline of adjusted debt to EBITDA to about 3x-4x in 2023, from 5.9x in 2020. Reported leverage at year-end 2021 was low, at 2.2x, in line with company's publicly stated financial policy target of 3.0x-3.5x reported net debt to EBITDA with no dividend distribution expected over 2021-2023. "Solid liquidity and improved business fundamentals should protect the company's credit quality against fallout from the Russia-Ukraine conflict. Following receipt in February 2022 of the EUR1.3 billion proceeds from the 49% sale of HEDNO, as well as 2021's EUR1.35 billion share capital increase and the EUR1.275 billion notes issuance, we view PPC's liquidity as solid. In 2022, we expect PPC will remain relatively shielded from the steep increase in energy prices that already started in 2021, due to its integrated position and its hedging policy. Any negative impact on the retail side is offset by the generation business (mainly thermal and hydro), with an increase of the latter's revenue and profit margin. This additional profit from the generation activities is partly used to support customers on the retail side. Increased commodity prices and CO2 emission rights, and the resulting increase in electricity market prices, could reduce profitability of the retail business, should PPC fail to fully index the tariff to the price increase or implement customer support measures like those in 2021. The company has significant pricing power, being the leading supplier in Greece with an objective of reducing its market share below 50% as set by EU Commission. Indirect effects of increased energy costs and inflation may arise, due to customers' reduced disposable income. For this reason, we will continue to monitor closely the evolution of client receivables and bad debt. Trade receivables slightly increased in 2021 due to support measures to customers, however with a lower rate of expected credit losses than 2020, which we see as a positive. In 2021, the generation and retail businesses were positively affected by hedging transactions to offset the volatility risk of electricity, gas, and CO2 prices and we expect this will continue in 2022. On the downside, working capital needs could increase due to electricity and CO2 insurance margins on hedges as in 2021 (about EUR800 million increase) due to high power and CO2 prices. The government could also introduce regulatory measures that would affect PPC, but the company's margins in retail seem too low to be significantly exposed to a windfall tax. "The stable outlook reflects our view that PPC will gradually advance on its strategic plan over the next two years and show contained leverage below 5x and FFO to debt above 15% with no liquidity pressure." Upside scenario S&P could raise the long-term rating by one notch if it revised up its assessment of PPC's stand-alone credit profile (SACP) by two notches to 'bb', other factors remaining equal. A one notch uplift of the SACP to 'bb-', which would ultimately not affect the rating, would depend on: -- Consistent solid performance in all of its business lines, -- Strong credit metrics, such as FFO to debt staying sustainably above 19% and debt to EBITDA below 5x, -- The successful delivery of its transformation plan without operating issues and; -- Demonstrated improvement of its business model with an improved competitive position in its merchant business. All else being equal, a one-notch upgrade of S&P's rating on Greece (BB+/Stable/B) would not trigger a direct change in the rating on PPC. Downside scenario For the time being S&P doesn't see meaningful downside risk, however its could lower the rating on PPC if: -- The company's credit metrics deteriorate materially, with FFO to debt below 15% or debt to EBITDA above 5x. This could be the result of weaker-than-expected operating performance in the retail segment, with difficulties improving payment collection, or a slower transformation of its generation mix, with delays in the closure of its lignite plants and renewables development. -- The Russia-Ukraine conflict fallout is more severe than S&P anticipates, for example with a higher-than-expected level of bad debt from PPC's retail activities and lower electricity volumes consumed, or regulatory measures affecting PPC's margins or liquidity. S&P took the same action on Greece or it observed less willingness and ability from Greece to support the company, for example if it sold its 34.1% share in PPC. ============= I R E L A N D ============= [*] IRELAND: Needs to Deal with Zombie Companies, Law Firm Says --------------------------------------------------------------- Dominic Coyle at The Irish Times reports that Ireland needs to sort out a group of zombie companies that have survived on Government support during the pandemic, leading law firm McCann Fitzgerald says. And other "viable but broken" businesses that have built up debt through forbearance need to act now to protect their operations, The Irish Times states. According to The Irish Times, David O'Dea, a restructuring and insolvency partner at the Big Five law firm McCann Fitzgerald, says insolvency business in Ireland will return to normal levels after two years when company failure numbers fall back to the easy-credit Celtic Tiger era. "Companies have been living in suspended animation over the past two years, if I'm honest," The Irish Times quotes Mr. O'Dea as saying. "But now support arrangements are being pulled back, and creditors are looking at the situation where trading is returning to pre-pandemic levels. Forbearance arrangements with banks, landlords, creditors and the Revenue have to run out at some stage: the money has to be paid back." The issue of zombie companies is fairly straightforward, he said. They won't survive and just need to be wound down, The Irish Times notes. "It is artificial: it doesn't make sense at the moment. I think we will get back to 2018/19 levels of insolvencies, but there will be an onslaught. "I couldn't put a figure on it but you would have to suspect that, of the 4,500 business saved [by Covid supports], there are a fair chunk of those that fall into the first bucket -- zombie companies. And out of the remaining batch, there are going to be ones that fail. But there are viable businesses there that can be saved. "There are an awful lot of businesses with a broken balance sheet. It needs to be repaired because you need a healthy balance sheet to raise new debt, to grow, expand and to avoid the insolvency zone." He acknowledged that soaring inflation and energy costs are putting huge pressure on Irish businesses just as they are getting back on their feet and trying to organise repayment of debt built up over the Covid pandemic, The Irish Times relates. The issue is particularly acute for businesses in sectors worst hit by Covid -- tourism and hospitality, aviation, live events and retail, The Irish Times discloses. But he also sees problems looming for manufacturers, many of which will have weathered Covid comfortably, The Irish Times notes. Supply chain issues have been exacerbated by the current zero-Covid strategy in Asia from which, he says, we still import significant amount of material, The Irish Times relays. He urges companies not to fear formal restructuring arrangements such as examinership which, he says, gives any viable business "a new lease of life", The Irish Times discloses. ===================== N E T H E R L A N D S ===================== KONINKLIJKE KPN: Egan-Jones Keeps BB Senior Unsecured Ratings ------------------------------------------------------------- Egan-Jones Ratings Company on April 21, 2022, maintained its 'BB' foreign currency and local currency senior unsecured ratings on debt issued by Koninklijke KPN N.V. Headquartered in Rotterdam, Netherlands, Koninklijke KPN N.V. is a telecommunications and IT provider in the Netherlands, serving both consumer and business customers with its fixed and mobile networks for telephony, broadband and television. ========= S P A I N ========= TDA 26-MIXTO: Fitch Affirms CCC Rating on Class 1-D Debt -------------------------------------------------------- Fitch Ratings has upgraded TDA 26-Mixto, FTA - Series 2 (TDA 26-2) class B notes' rating and affirmed the others. Fitch has also affirmed all tranches of TDA 26-Mixto, FTA - Series 1 (TDA 26-1). The Outlooks on all tranches are Stable. DEBT RATING PRIOR ---- ------ ----- TDA 26-Mixto, FTA - Series 1 Class 1-A2 ES0377953015 LT AAAsf Affirmed AAAsf Class 1-B ES0377953023 LT AAAsf Affirmed AAAsf Class 1-C ES0377953031 LT Asf Affirmed Asf Class 1-D ES0377953049 LT CCCsf Affirmed CCCsf TDA 26-Mixto, FTA - Series 2 Class 2-A ES0377953056 LT A+sf Affirmed A+sf Class 2-B ES0377953064 LT Asf Upgrade A-sf Class 2-C ES0377953072 LT CCCsf Affirmed CCCsf TRANSACTION SUMMARY The transactions comprise fully amortising Spanish residential mortgages originated and serviced by Banco de Sabadell, S.A. (BBB-/Stable/F3) and Banca March (not rated). KEY RATING DRIVERS Stable Performance Expectation: The rating actions reflect Fitch's broadly stable asset performance expectation for the securitised portfolios, supported by a low share of loans in arrears over 90 days (below 0.3% of the current portfolio balance as of the latest reporting dates in both cases), a very high portfolio seasoning of more than 17 years and low current loan-to-value ratios. Payment Interruption Risk Constraints in TDA 26-2: TDA 26-2 remains exposed to Payment Interruption Risk (PIR) in the event of a servicer disruption, as Fitch deems the available structural mitigants (a cash reserve fund) to be insufficient to cover stressed senior fees, net swap payments and senior note interest due amounts while an alternative servicer arrangement was implemented. This assessment takes into consideration the very low borrower count left in the pool of about 270. This exposes the transaction to added volatility if a few borrowers were to default as the cash reserve fund can also be used to cover for credit losses. As a result, Fitch continues to cap the notes' at 'A+sf'. Excessive Counterparty Exposure: TDA 26-1's class C notes and TDA 26-2's class B notes are capped at 'Asf', equivalent to the transaction account bank (TAB) provider's Long-Term Deposit Rating (DR, Societe Generale S.A (SG); 'A'). The cap reflects the excessive counterparty dependency on the TAB holding the cash reserves, as credit enhancement (CE) held at the TAB represents more than half of the CE available for the notes, and the sudden loss of these funds would imply a downgrade of 10 or more notches in accordance with Fitch's criteria. Credit Enhancement Trends: Fitch expects TDA 26-1's CE ratios to continue increasing driven by the sequential amortisation of the notes and the non-amortising reserve fund. As the portfolio factor is now below 10%, a mandatory sequential paydown of the liabilities will continue until the final maturity date in line with transaction documentation. On the other hand, all the necessary conditions for the pro-rata amortisation of the notes are met for TDA 26-2. As a result, the available CE is expected to remain broadly stable or marginally increase as the reserve fund is already at its absolute floor. ESG Considerations - Governance: TDA 26-2 has an Environmental, Social and Governance (ESG) Relevance Score of '5' for Transaction & Collateral Structure due to payment interruption risk, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in a change to the rating of at least one category. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- For the class A and B notes of TDA 26-1, a downgrade of Spain's Long-Term Issuer Default Rating (IDR) could lead to negative rating action. This because the notes are rated at 'AAAsf', the maximum achievable rating in Spain, six notches above the sovereign's IDR; -- For TDA 26-1's class C and TDA 26-2's class B, a downgrade of SG's Long-Term DR could decrease the maximum achievable rating, as the notes' rating is capped at the counterparty rating; -- Long-term asset performance deterioration such as increased delinquencies or larger defaults, which could be driven by adverse changes to macroeconomic conditions, interest-rate increases or borrower behaviour. Higher inflation, larger unemployment and lower economic growth than Fitch's forecast in the Global Economic Outlook - March 2022 could reduce borrowers' ability to pay their mortgage debt. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- TDA 26-1's class A and B notes are rated at 'AAAsf' - the highest level on Fitch's scale - and therefore cannot be upgraded; -- CE ratios increase as the transactions deleverage, able to fully compensate the credit losses and cash flow stresses commensurate with higher rating scenarios; -- For TDA 26-1's class C and TDA 26-2's class B, an upgrade of SG's Long-Term DR could increase the maximum achievable rating, as the notes' rating is capped at the counterparty rating; -- For TDA 26-2's senior notes, improved liquidity protection against a servicer disruption event. This is because the ratings are capped at 'A+sf' due to unmitigated PIR. 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. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. 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 monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transaction's initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. 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. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS TDA 26-1's class C and TDA 26-2's class B notes' rating is directly linked to SG's Long-Term DR due to excessive counterparty dependency. ESG CONSIDERATIONS TDA 26-Mixto, FTA - Series 2 has an ESG Relevance Score of '5' for Transaction & Collateral Structure due to the unmitigated exposure to PIR, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in an implicitly lower rating. 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. TELEFONICA SA: Egan-Jones Keeps BB- Senior Unsecured Ratings ------------------------------------------------------------ Egan-Jones Ratings Company on April 21, 2022, maintained its 'BB-' foreign currency and local currency senior unsecured ratings on debt issued by Telefonica SA. Headquartered in Madrid, Spain, Telefonica SA operates as a telecommunications company. ============= U K R A I N E ============= DTEK ENERGY: Fitch Upgrades Issuer Default Ratings to 'CC' ---------------------------------------------------------- Fitch Ratings has downgraded DTEK Energy B.V.'s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'Restricted Default' (RD) from 'C' following the company's disclosure of the result of its consent solicitation related to changes in the notes' documentation. Fitch views this as a distressed debt exchange (DDE). Fitch has simultaneously upgraded the IDR to 'CC' reflecting DTEK Energy's post-restructuring profile as default risk remains high, in Fitch's view. Fitch has also affirmed DTEK Energy's senior unsecured rating and the rating on its outstanding bonds at 'C' with a Recovery Rating of 'RR5'. DTEK Energy is a Netherlands-based company with operating assets in Ukraine. DTEK Energy's IDR of 'CC' reflects its tight liquidity situation, which follows the severe operational disruptions resulting from Russia's invasion of Ukraine. KEY RATING DRIVERS Completion of Change in Terms: On April 8, 2022, DTEK Energy announced that the bondholders consented to a change of terms regarding its USD1,645 million 7%-7.5% senior secured payment-in-kind (PIK) toggle notes due 2027. The restriction on making PIK payments in consecutive quarters and the requirements on prior notice of the intention to pay PIK interests has been waived for the coupon payments scheduled on March 31, 2022 and June 30, 2022. DTEK Energy made interest payments under the new terms of the notes on April 11, 2022, with USD14.7 million being paid in cash and USD16.8 million as PIK. Distressed Debt Exchange: Fitch views the change in notes' terms as a DDE under Fitch's criteria and downgraded the IDR to 'RD' (Restricted Default) upon completion of the change. This is because, in Fitch's view, the change in terms imposed a material reduction in the terms of the notes compared with the original contractual terms. In addition, in Fitch's view, the consent solicitation was to avoid a payment default given that, on 31 March 2022, which was the coupon due date, the company announced its intention to pay the 7.5% coupon 3.5% in cash and the remaining 4% in the form of PIK interest, whilst the original terms were for payment fully in cash. Fitch recognises the incrementally positive impact that the successful change of terms has had on the group's liquidity and ability to service its debt. Limited Liquidity, Operating Activity Distorted: DTEK Energy's post-DDE rating reflects its tight liquidity situation, which follows the severe operational disruptions resulting from Russia's invasion of Ukraine. Fitch view the risk of further material disruptions in the company's operations as high, which may prevent DTEK Energy from generating sufficient free cash flow to pay its interest and debt obligations scheduled for the remainder of 2022. DTEK Energy's upcoming debt maturities are low, with USD10 million notes repayment in June 2022 and USD10 million in December 2022. The interest payments will average USD32 million every quarter, with the June 2022 interest payments being paid in cash for USD15 million and in PIK for USD17 million. This option could be also used in the remaining quarters of the year, if needed, as the notes documentation allows the PIK option to be used up to four times under the lifespan of the notes. Priority in Energy Production: DTEK Energy announced that there is no certainty that the company will have sufficient funds to conduct necessary operations during 2Q22 and 3Q22. This is due to the conflict in Ukraine that has resulted in low electricity demand and production together with low domestic prices, significantly reduced payment collections, increased critical repairs, mandatory fixed costs, and a shortage of personnel and logistical interruptions. These factors have resulted in negative operating cash flows, which are likely to continue in 2Q22 and beyond. DTEK Energy's main priority is to ensure supplies of electricity and heat to industrial and residential consumers, thereby supporting the energy security of Ukraine. Severe Operational Disruptions: Russia continues to lead missile, ground and sea operations across multiple fronts, including in the areas where DTEK Energy's assets are located. There is high uncertainty about the extent of Russia's ultimate objectives, the length, breadth and intensity of the war, and its aftermath. However, multiple infrastructure and industrial facilities have already been damaged and the risk to employee wellbeing, as well as the risk of severe disruption to operations or plants and equipment, remains high. Moratorium on Foreign-Currency Payments: The National Bank of Ukraine has introduced a moratorium on cross-border foreign-currency payments, potentially limiting issuers' ability to service their foreign-currency obligations. Exceptions can be made to this moratorium but it is unclear how these will be applied in practice, particular with disruption caused by the ongoing conflict and martial law in the country. DERIVATION SUMMARY Fitch deems the company's liquidity metrics to be in lines with the 'CC' category, which indicates very high levels of credit risk. KEY ASSUMPTIONS KEY RECOVERY RATING ASSUMPTIONS -- The recovery analysis assumes that DTEK Energy would be a going concern in bankruptcy and that the company would be reorganised rather than liquidated; -- A 10% administrative claim; Going-Concern Approach -- The going-concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganisation EBITDA level, upon which Fitch has based the valuation of the company; -- The going-concern EBITDA of UAH2 billion reflects the potential pressure resulting from the sustained invasion of Ukraine; -- Debt is based on Fitch's estimate of post-restructuring debt; -- An enterprise value multiple of 3.0x; -- Eurobonds, bank loans and other debt are ranked pari passu. Fitch's waterfall analysis generated a waterfall generated recovery computation for the notes in the 'RR5' band, indicating a 'C' instrument rating. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Ending of military operations, and resumption of normal business operations with the stabilisation of cash flow and an improved liquidity position. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Non-payment of the coupon or debt obligations, or steps towards further debt restructuring; -- The IDR will be downgraded to 'D' if DTEK Energy enters into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedures, or ceases business. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Tight Liquidity: As of end-2021, DTEK Energy had a cash balance of almost USD170 million against short-term debt of USD65 million. However, DTEK Energy has had negative cash flow after the war started. Additionally, bank lines are not currently available due to liquidity constraints on Ukraine's banking system. The company has adopted all protective measures to ensure sufficient funding for operational needs in the current circumstances. ISSUER PROFILE DTEK Energy is the largest private power-generating company in Ukraine. Its market share of electricity production fell to 18%-19% in 2019-2020 from about 25% in 2016, mainly on the back of stagnant electricity consumption and active development of renewable energy, which is higher in the merit order. 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 ---- ------ ----- DTEK Finance plc senior unsecured LT C Affirmed RR5 C DTEK Energy B.V. LT IDR RD Downgrade C LT IDR CC Upgrade RD ST IDR RD Downgrade C ST IDR C Upgrade RD LC LT IDR RD Downgrade C LC LT IDR CC Upgrade RD LC ST IDR RD Downgrade C LC ST IDR C Upgrade RD Natl LT RD(ukr) Downgrade C(ukr) Natl LT CCC(ukr) Upgrade RD(ukr) senior unsecured LT C Affirmed RR5 C =========================== U N I T E D K I N G D O M =========================== AVRO: Ofgem Probes Whether Octopus Should Pay Credit to Consumers ----------------------------------------------------------------- Grace Gausden at iNews reports that consumers who were midway through a switch to Avro when it went into administration could find they have to wait even longer for their credit. According to iNews, Ofgem is currently investigating accounts like this to decide whether Octopus is allowed to pay consumers back their credit, or if it should fall to Avro's administrators. It comes at a time when hundreds of ex-Avro customers are still waiting for their credit balances to be restored, iNews notes. More than half a million consumers were moved to Octopus Energy, under Ofgem's Supplier of Last Resort process, after Avro was one of the first -- and largest -- suppliers to collapse in September 2021, iNews recounts. More than half of the providers in the market have gone bust since August last year after soaring wholesale costs, iNews states. While many were moved under the Supplier of Last Resort process and received their credit, many ex-Avro customers have complained about the long wait for their credit to be returned, iNews relays. Octopus previously said the vast majority of consumers had their credit restored but there were around 2% that are experiencing more complex data or billing issues, iNews notes. As time goes on customers are more frustrated about the lack of movement, especially as the cost of living continues to rise, iNews discloses. However, Octopus has confirmed it would in fact offer full refunds to these customers despite Ofgem's investigation, iNews states. Ofgem, as cited by iNews, said if a consumer had a credit balance with Avro at the time of the Supply of Last Resort process, then their credit balance is protected and they should speak to Octopus in the first instance to reclaim these funds. Those whose energy provider has ceased trading are automatically moved to a new provider by Ofgem under the Supplier of Last Resort process, iNews relates. Suppliers of Last Resort work with administrators to determine the final credit balances of customers of failed suppliers and these will be communicated to customers, iNews notes. This process also assures that all credit balances are protected, iNews states. BEMACO STEEL: FXSteel Buys Business Out of Administration --------------------------------------------------------- Consultancy.uk reports that the work of administrators from FRP Advisory has helped preserve the employment of 20 people across Wales. Bemaco Steel fell into administration in April 2022, but the consultants found a buyer immediately, in FXSteel, Consultancy.uk recounts. Bemaco Steel was founded in 1987. Operating from the Cardiff Docks, the well-established manufacturer and distributor of steel products operates in the UK and Spain, and has been trading profitably for many years. Also specialising in laser cutting tubular products for the construction sector, it achieved revenues of GBP40 million in 2019. However, as has been the case with many manufacturing and construction firms, the past two years have been a struggle for the company, Consultancy.uk notes. Becamo's turnover was subsequently impacted by the pandemic, and a ruling against the firm in a contractual case in March 2022 further wounded the business -- leaving it unable to continue as a going concern, Consultancy.uk discloses. When the firm fell into administration the following month, the news jeopardised 20 jobs in Wales. Fortunately, joint administrators Andrew Sheridan and Jonathan Dunn -- of consultancy FRP Advisory -- were able to immediately secure a pre-pack sale of the company to FXSteel, Consultancy.uk states. According to Consultancy.uk, the deal, for which Simon Bamford at Gordon Brothers and Nigel Boobier of Osborne Clarke also provided valuation and legal advice, is reportedly worth GBP4.6 million, and will preserve all the firm's occupations. "This deal ensures that all 20 employees will transfer across to FXSteel and secures the future of the business . . . We wish the team at FXSteel every success as they take the business forward," Consultancy.uk quotes Andrew Sheridan, a Partner with FRP, as saying. According to Consultancy.uk, Mr. Sheridan said there was substantial interest in the business, in spite of the challenges facing the steel industry, due to its historic profitability. Under the deal, the business will continue to be led by Bulent Unal, previously the sole Director of the Bemaco Steel, alongside fellow Directors, Murat Unal and Mark Halley, Consultancy.uk discloses. INTERNATIONAL GAME: Egan-Jones Hikes Senior Unsecured Ratings to B ------------------------------------------------------------------ Egan-Jones Ratings Company on April 18, 2022, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by International Game Technology PLC to B from B-. Headquartered in London, United Kingdom, International Game Technology PLC designs, develops, manufactures, and distributes computerized gaming equipment, software, and network systems. PAPERCHASE: Put Up for Sale Following Pre-Pack Administration ------------------------------------------------------------- Mark Kleinman at Sky News reports that the high street stationery chain Paperchase is being put up for sale 15 months after it became one of the myriad retail casualties of the pandemic. Sky News has learnt that Permira Credit, which has controlled Paperchase since a pre-pack administration in January 2021, has appointed advisers to oversee a sale following a number of unsolicited enquiries from potential buyers. The approaches for the retailer come after an improvement in its financial and operating performance, aided by the closure of a number of stores as part of last year's insolvency process, Sky News notes. According to Sky News, people close to the company said its new owners had invested in Paperchase's digital offering as well as new shop openings and executive recruitment since its brush with administration. PricewaterhouseCoopers, which handled the pre-pack process, is understood to have been hired to oversee the auction, Sky News discloses. At the time of its financial collapse, Paperchase employed nearly 1,300 people, and traded from more than 125 sites across the UK. Its outlets included concessions at House of Fraser, Selfridges and a number of Next stores. Permira Credit, which is affiliated to Permira, the global private equity firm, had supported Paperchase for several years as a lender, but took a controlling stake last year through a vehicle called Aspen Phoenix NewCo, Sky News recounts. A source said that it would seek a long-term owner with extensive retail industry expertise to facilitate the chain's ongoing growth, Sky News notes. SIG PLC: Egan-Jones Keeps B+ Senior Unsecured Ratings ----------------------------------------------------- Egan-Jones Ratings Company on April 21, 2022, maintained its 'B+' foreign currency and local currency senior unsecured ratings on debt issued by SIG plc. Headquartered in Sheffield, United Kingdom, SIG plc distributes specialty building products. SUBSEA 7: Egan-Jones Keeps BB+ Senior Unsecured Ratings ------------------------------------------------------- Egan-Jones Ratings Company on April 18, 2022, maintained its 'BB+' foreign currency and local currency senior unsecured ratings on debt issued by Subsea 7 S.A. Headquartered in Sutton, United Kingdom, Subsea 7 S.A. offers oilfield services. [*] Sonya Van de Graaff Joins Katten UK's Insolvency Practice ------------------------------------------------------------- Katten Muchin Rosenman UK LLP has announced the appointment of partner Sonya Van de Graaff to the firm's growing Insolvency and Restructuring practice in London. She joins Katten from Avonhurst, where she was a partner. Previously, Ms. Van de Graaff spent a number of years as a partner at Morrison & Foerster (London) and, in the years leading up to the global financial crisis of 2008, she was a Managing Director at investment banking giant Bear Stearns where she focused on a broad range of business areas, including special situations investments and structured products. Ms. Van de Graaff has broad-based UK and cross-border contentious and non-contentious restructuring and insolvency experience including advising creditors, debtors and boards of directors navigating financial distress, as well as replacement trustees parachuted into a restructuring transaction. Her expertise includes corporate credits and structured products, advising financial institutions and sovereign-related entities. She also regularly advises on enforcement strategies. She has been involved in a number of market-leading transactions and brings a collaborative and commercial approach to resolving disparate interests amongst divergent stakeholders. Commenting on Ms. Van de Graaff's appointment, Christopher Hitchins, Katten's London managing partner, said: "We are thrilled to have Sonya join and help us to grow our Insolvency and Restructuring practice here in London. She is a well-known restructuring specialist with a particular focus on funds clients which fits seamlessly with our other practice groups. "Her strong background in contentious and non-contentious restructuring matters, and her time spent in-house give her the strong commercial viewpoint and deep understanding of our clients' needs which is exactly what we look for in our lawyers." Ms. Van de Graaff added: "I am excited to be joining the Katten team in London and helping to grow the practice group. The London office has ambitious growth strategies in the pipeline that I am delighted to be part of." Katten Muchin Rosenman UK LLP -- http://www.katten.com-- is the London affiliate of Katten Muchin Rosenman LLP, a full-service law firm with nearly 700 attorneys in locations across the United States and in London and Shanghai. Clients seeking sophisticated, high-value legal services turn to Katten for counsel locally, nationally and internationally. The firm's core areas of practice include corporate, financial markets and funds, insolvency and restructuring, intellectual property, litigation, real estate, structured finance and securitisation, transactional tax planning, private credit and private wealth. Katten represents public and private companies in numerous industries, as well as a number of government and nonprofit organisations and individuals. The London team has a wide range of experience covering financial services and regulatory, mergers and acquisitions, general corporate and commercial, finance, insolvency and restructuring, real estate, employment, tax and litigation. The firm's London attorneys work seamlessly with colleagues in other offices located in New York, Chicago, Dallas, Los Angeles, Washington, DC and North Carolina. They offer skilled, integrated legal advice, and are particularly well-placed to service the needs of clients undertaking transatlantic business. [*] UK: Construction Sector Insolvencies Up 142% in 2022 -------------------------------------------------------- Daniel Gayne at Building reports that rising costs see 142% increase in firms going out of business compared with last year -- and warnings of more to come. The number of construction companies going into administration has more than doubled within a year, as firms feel the pressure of rising costs and covid loan repayments, Building discloses. There were 307 insolvencies in the construction sector in February 2022, a 142% increase on the 127 insolvencies in the same month last year and a 6% increase on the monthly average for the last quarter of 2021, Building relays, citing the Insolvency Service. The biggest name to fold in February was 46-year-old contractor Midas, which made more than 300 redundant as it collapsed into administration, Building recounts. The coming months could see the figures rise even higher, with Begbies Traynor's latest red flag alert report warning of a rise in construction sector firms in financial trouble, Building states. According to the insolvency specialist's report, the number of firms in the sector in critical financial distress in the first quarter of 2022 was 51% higher than the same period the previous year -- a rise which is significantly above the 19% economy-wide increase, Building discloses. Across the whole UK economy, county court judgments -- a warning sign of future insolvencies -- grew by 157% in the first three months of the year, compared with Q1 2021, Building notes. According to Building, Paul Atkinson, partner at restructuring specialist FRP Advisory, said labour shortages resulting from Brexit, along with rapid energy price inflation, had exacerbated construction's traditional struggles with low margins and skill shortages, pushing some firms over the edge. Mr. Atkinson added that many smaller firms were feeling the impact of the end to covid-era support from the government, such as bounce-back loans and deferrals for payment of VAT, Building relates. John Bell, founder and director of insolvency firm Clarke Bell, said the latest figures were unsurprising given the economic climate, Building recounts. Like Mr. Atkinson, he attributed the significant year-on-year rise in insolvency numbers to the end of government supports. Sector insolvency numbers were highest for firms involved in the construction of buildings, with figures for February 2022 rising on the previous month (11%), the previous quarter (19%) and on the same month last year (176%), Building states. Meanwhile, civil engineering insolvencies dropped compared with the previous month (-23%) and quarter (-27%) but were up 42% on February 2021, Building notes. Begbies Traynor partner Julie Palmer predicted a "wave of insolvencies" unless there was action to help businesses mitigate economic pressures, Building discloses. "It's just a case of when the dam holding it back finally bursts," she said. Mr. Palmer said the government could ease pressures by taking a lenient approach to the repayment of pandemic funding, Building notes. ********* 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 * * *