/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/220823.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 Tuesday, August 23, 2022, Vol. 23, No. 162 Headlines I R E L A N D CVC CORDATUS XXIV: Fitch Assigns 'B-(EXP)' Rating to Class F Debt TIKEHAU CLO VII: S&P Assigns Prelim B- (sf) Rating to F Notes K A Z A K H S T A N TURKMENISTAN: Fitch Affirms 'B+' LongTerm Foreign Currency IDR L U X E M B O U R G ATENTO LUXCO 1: Fitch Affirms 'B+' LT Foreign Currency IDR ENDO LUXEMBOURG I: Moody's Lowers PDR to D-PD Amid Ch. 11 Filing R U S S I A RUSSIA: Derivatives Committee to Hold Auction to Settle CDS S L O V E N I A MERKUR: Alfi PE Plans to Acquire Real Estate Unit U K R A I N E UKRAINE: Debt Freeze Triggers Restructuring Event, Panel Says UKRAINE: Fitch Lowers LongTerm Foreign Currecy IDR to 'RD' UKRAINE: S&P Raises SCR to 'CCC+/C' on Completed Debt Restructuring U N I T E D K I N G D O M BULB: Bailout Cost Expected to Soar to More Than GBP4BB by Spring CINEWORLD GROUP: Plans to File for Bankruptcy in U.S. EVOLVE: easyCapital Acquires easyProperty Brand After Collapse SCOTT COMMERCIALS: Soaring Fuel Costs Prompt Liquidation - - - - - ============= I R E L A N D ============= CVC CORDATUS XXIV: Fitch Assigns 'B-(EXP)' Rating to Class F Debt ----------------------------------------------------------------- Fitch Ratings has assigned CVC Cordatus Loan Fund XXIV DAC expected ratings. The assignment of final ratings is contingent on the receipt of final documentation conforming to information already reviewed. RATING ACTIONS ENTITY/DEBT RATING ----------- ------ CVC Cordatus Loan Fund XXIV DAC A LT AAA(EXP)sf Expected Rating B-1 LT AA(EXP)sf Expected Rating B-2 LT AA(EXP)sf Expected Rating C LT A(EXP)sf Expected Rating D LT BBB-(EXP)sf Expected Rating E LT BB-(EXP)sf Expected Rating F LT B-(EXP)sf Expected Rating Subordinated LT NR(EXP)sf ßExpected Rating Notes TRANSACTION SUMMARY CVC Cordatus Loan Fund XXIV DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds will be used to purchase a portfolio with a target par of EUR355 million. The portfolio is actively managed by CVC Credit Partners Investment Management Limited (CVC). The collateralised loan obligation (CLO) has an approximately one-year reinvestment period and a seven-and-a-half-year weighted average life (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'/'B-'. The Fitch-calculated weighted average rating factor (WARF) of the identified portfolio is 25.5. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate (WARR) of the identified portfolio is 61.3%. Diversified Portfolio (Positive): The transaction includes one Fitch matrix effective at closing. This corresponds to a top 10 obligor concentration limit at 20%, a fixed-rate asset limit of 15%, and an 7.5-year WAL. The transaction also includes various concentration limits, including the maximum exposure to the three-largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has an approximately one-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the transaction's matrix and stressed-case portfolio analysis is 12 months less than the WAL covenant at the issue date. This accounts for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include, among others, passing the coverage and Fitch-calculated WARF tests, together with a progressively decreasing WAL covenant. These conditions, in the agency's opinion, reduces the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings would result in downgrades of up to four notches. -- Downgrades may occur if the build-up of credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- A 25% reduction of the RDR across all ratings and a 25% increase in the RRR across all ratings would result in upgrades of up to three notches across the structure except for 'AAAsf' rated notes, which are already at the highest rating on Fitch's scale and cannot be upgraded. -- After the end of the reinvestment period, upgrades may occur on better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. DATA ADEQUACY The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. TIKEHAU CLO VII: S&P Assigns Prelim B- (sf) Rating to F Notes ------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Tikehau CLO VII DAC's class A to F European cash flow CLO notes (which includes the class A loan). At closing, the issuer will issue unrated subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.6 years after closing, while the non-call period will end two years after closing. The preliminary ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior-secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio Benchmarks CURRENT S&P weighted-average rating factor 2,857.09 Default rate dispersion 412.80 Weighted-average life (years) 5.18 Obligor diversity measure 116.25 Industry diversity measure 17.34 Regional diversity measure 1.35 Transaction Key Metrics CURRENT Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.50 'AAA' weighted-average recovery (%) 36.53 Floating-rate assets (%) 91.4 Weighted-average spread (net of floors; %) 4.14 S&P said, "The current portfolio contains a larger proportion of assets that have yet to be ramped up compared to what we would typically see in other European CLO transactions at pricing. By closing, we expect ramped up assets to be more in line with what is commonly seen in European CLO transactions. We understand that at closing the portfolio will be well-diversified, primarily comprising broadly syndicated speculative-grade senior-secured term loans and senior-secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (4.13%), and the covenanted weighted-average coupon (4.50%) as indicated by the collateral manager. We have assumed weighted-average recovery rates, at all rating levels, in line with the recovery rates of the actual portfolio presented to us. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Our credit and cash flow analysis show that the class B-1, B-2, C, D, and E notes benefit from break-even default rate (BDR) and scenario default rate cushions that we would typically consider to be in line with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings on the notes. The class A and F notes can withstand stresses commensurate with the assigned preliminary ratings. "Until the end of the reinvestment period on April 20, 2027, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned preliminary ratings. "At closing, we expect that the transaction's documented counterparty replacement and remedy mechanisms will adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for the class A to F notes (including the class A loan). "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A to E notes to five of the 10 hypothetical scenarios we looked at in our publication, "How Credit Distress Due To COVID-19 Could Affect European CLO Ratings," published on April 2, 2020. " Environmental, social, and governance (ESG) factors S&P said, "We regard the exposure to ESG credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to the following industries: controversial weapons; nuclear weapon programs; illegal drugs or narcotics; carbon intensive electrical utilities; pornography; prostitution; payday lending; and gambling and gaming companies." Specifically, the documents prohibit assets from: -- Any obligor involved in the development, product, maintenance of weapons of mass destruction. -- Any obligor that is involved in the trade of illegal drugs or narcotics, including recreational cannabis. -- Any obligor that generates any revenues from manufacture or trade in pornographic materials or content, or prostitution-related activities. -- Any obligor that generates any revenue from payday lending. -- Any obligor which is an electrical utility where carbon intensity exceeds [100]gCO2/kWh, or where carbon intensity is not disclosed, it generates more than (i) [1]% of its electricity from thermal coal, (ii) [10]% of its electricity from liquid fuels (oils), (iii) [50]% of its electricity from natural gas, or (iv) [0]% of its electricity from nuclear generation. Any utilities with expansion plans that would increase their negative environmental impact are also excluded. -- Any obligor that generates more than [5]% of revenues from (i) sale or extraction of thermal coal or coal based power generation; (ii) sale or extraction of oil sands; or (iii) extraction of fossil fuels from unconventional sources (including Artic drilling, shale oil, and shale gas--or other fracking activities). -- Any obligor that generates more than [10]% of revenues from the sale or production of civilian firearms. -- Any obligor that generates more than [5]% of revenues from the sale or manufacture of tobacco or tobacco products, including e-cigarettes, or any obligor that is classified as "tobacco" by S&PGlobal Ratings. -- Any obligor that generates more than [50]% of its revenue from trade in, production or marketing of opioid manufacturing and distribution. Accordingly, since the exclusion of assets from these industries and areas does not result in material differences between the transaction and our ESG benchmark for the sector, S&P has made no specific adjustments in its rating analysis to account for any ESG-related risks or opportunities. Ratings List CLASS PRELIM. BALANCE SUB (%) INTEREST RATE** RATING* (MIL. EUR) A AAA (sf) 118.00 40.00 Three/six-month EURIBOR plus a margin A loan AAA (sf) 122.00 40.00 Three/six-month EURIBOR plus a margin B-1 AA (sf) 29.00 30.25 Three/six-month EURIBOR plus a margin B-2 AA (sf) 10.00 30.25 Fixed rate C A (sf) 24.00 24.25 Three/six-month EURIBOR plus a margin D BBB- (sf) 26.00 17.75 Three/six-month EURIBOR plus a margin E BB- (sf) 16.00 13.75 Three/six-month EURIBOR plus a margin F B- (sf) 15.00 10.00 Three/six-month EURIBOR plus a margin Sub. notes NR 37.70 N/A N/A *The preliminary ratings assigned to the class A and B address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C, D, E, and F address ultimate interest and principal payments. **The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A—-Not applicable. =================== K A Z A K H S T A N =================== TURKMENISTAN: Fitch Affirms 'B+' LongTerm Foreign Currency IDR -------------------------------------------------------------- Fitch Ratings has affirmed Turkmenistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. KEY RATING DRIVERS Structural Challenges; Strong Balance Sheets: Turkmenistan's ratings balance a low governance ranking (as measured by the World Bank), unconventional economic policies, high commodity dependence and export market concentration (70% of gas exports to China), a challenging business environment and a largely state-controlled economy against strong and growing public and external balance sheets underpinned by large gas reserves. There is a large divergence between official and parallel market exchange rates, which distorts key credit metrics. The Stable Outlook reflects near-term gains from gas revenues against persistent structural challenges and uncertainty over the economic policy direction. Bumper Gas Revenues: Higher gas prices are strengthening the sovereign and external balance sheets. Customs data covering 1H22 shows a 50% increase in the value of total exports and an 86% rise in the trade surplus, despite broadly stable gas production. The current account surplus was 3.3% of 2022 GDP in 1Q. The lagged pass-through embedded in gas export contracts means exports should rise further this year and remain robust in 2023. Fitch forecasts current account surpluses of close to 8% of GDP in 2022 and 2023, dropping to 1.7% in 2024 as imports rise and energy prices ease. Sovereign net foreign assets are forecast at 60% of GDP at end-2024 compared with a projected 'B' median of -23%. Budget Returns to Surplus: Fitch expects high energy revenues to return the state budget to a surplus in 2022 (of 1.4% of GDP based on Fitch's presentation) for the first time since 2014. A surplus of 0.1% of 2022 GDP was recorded in 1H, with hydrocarbon revenues underpinning a 39% yoy rise in total revenues. Expenditure also jumped in 1H22, although some of this was attributable to a one-time transfer to the state pension fund. The gas pricing lag will ensure a further increase in revenues over the remainder of this year and into 2023, with the authorities likely to respond through higher spending. A forecast decline in energy prices will pull the budget from a forecast surplus of 1.8% of GDP in 2023 to a deficit of 0.2% in 2024. Domestic Debt Repaid: All sovereign domestic debt (3.6% of GDP at end-2021) was repaid in January in a transaction largely financed by an injection from an off-budget fund. Total government debt, which is now entirely foreign-currency denominated, is projected at 6.6% of GDP at end-2022, the second-lowest of all Fitch-rated sovereigns. At present, this is offset by liquid assets of the fiscal reserve fund (Turkmenistan Stabilisation Fund; 6.7% of 2021 GDP at end-June 2022). Fitch expects debt/GDP to start to rise from 2024 given the prospect of investment in increasing gas production capacity. Fitch have not assumed any new domestic debt issuance. Policy Uncertainties: Fiscal policy has been conservative since the mid-2010s and government spending/GDP, at 13.4% in 2021, is the lowest of all Fitch-rated sovereigns. Capital spending is set to rise, with indications from the authorities that this will be focussed on the energy sector. However, prospects for spending from the large and opaque off-budget spending are unclear. Similarly, it is not clear whether additional foreign exchange revenues will be used to tackle the parallel market exchange rate and associated economic distortions. Vast Gas Resources: Turkmenistan's possession of the world's fourth-largest gas reserves positions it strongly for changing energy market dynamics. However, it has not yet been able to take advantage of developments in European gas market as all exports are currently made under long-term contracts and there are no spot market sales. Major new supply commitments would require new production and pipeline facilities. Plans are progressing on the construction of a fourth pipeline to China that would increase gas supply capacity to the country to 70bcm from 40bcm. Solid Growth: Fitch forecasts economic growth to slow in 2022 to 3.3% after the sharp rebound in gas production (reflecting higher Chinese demand) in 2021, but expects it to remain stronger than in recent years due to post-pandemic reopening and higher production of downstream energy products. The investment trajectory is important for growth and Fitch projects higher capital spending to drive above-trend growth in 2023 and 2024. Sanctions against Russia have had little economic impact on Turkmenistan. Bilateral trade is dominated by Russia's imports of gas, which have not been disrupted by sanctions. Russia is not involved in any of Turkmenistan's major energy projects. Inflation High but Easing: Inflation is likely to remain in double digits, but appears to be easing from the end-2021 level of 21%. Price controls are extensive and administered prices, including fuel and energy products, have not been changed this year. Food prices were adjusted sharply upwards in 2021, so the base effect would also slow inflation. The fixed official exchange rate and some appreciation of the parallel market rate also appear to be moderating imported inflation, while rising import substitution is also reducing external pressures. Monetary policy is underdeveloped relative to peers, with credit targeting the main policy tool. New President: A new president, Serdar Berdimuhamedov, the son of the previous president, was elected after polls in March. This is the first dynastic succession in Turkmenistan and there has not been a discernable change in policy direction, with the two key new policy documents emphasising the opening and diversification of the economy over the medium term. ESG - Governance: Turkmenistan has an ESG Relevance Score (RS) of '5' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model. Turkmenistan has a low WBGI ranking at 11, reflecting the reflecting the centralisation of power, and a low World Bank assessment of voice and accountability, regulatory quality, rule of law and control of corruption. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Public/External Finances: A significant deterioration in the public and external balance sheets driven, for example, by lower energy prices, disruption to key export contracts or crystallisation of contingent liabilities. -- Structural: Destabilising political or geopolitical developments that have an adverse impact on the economy and sovereign balance sheet. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Macro: An improvement in the credibility and consistency of economic policy that reduces macroeconomic distortions and enhances the capacity of the economy to absorb shocks. -- Structural: An improvement in governance standards, the business environment and the availability and reliability of key official economic data, likely underpinned by policies to open the economy. -- Public/External Finances: A sustained further strengthening of the public and external balance sheet, potentially reflecting persistently higher prices of key hydrocarbon exports or greater export capacity. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Turkmenistan a score equivalent to a rating of 'BB' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows: -- Public Finances: -1 notch, to reflect the distortion of key public debt ratios by the official exchange rate, the large and highly interconnected public sector, revenue and expenditure rigidities, and uncertainty over the size and remit of off- budget funds. -- External Finances: -1 notch, to reflect the inconsistency between large FX reserves and FX rationing in the domestic economy and the heavy reliance on exports of a single commodity to a single customer. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM. RATING ACTIONS ENTITY/DEBT RATING PRIOR ----------- ------ -------- Turkmenistan LT IDR B+ Affirmed B+ ST IDR B Affirmed B LC LT IDR B+ Affirmed B+ LC ST IDR B Affirmed B Country B+ Affirmed B+ Ceiling =================== L U X E M B O U R G =================== ATENTO LUXCO 1: Fitch Affirms 'B+' LT Foreign Currency IDR ---------------------------------------------------------- Fitch Ratings has affirmed Atento Luxco 1 S.A.'s (Atento) Long-Term Foreign Currency Issuer Default Rating at 'B+'. In addition, Fitch has affirmed Atento's USD500 million senior secured notes due 2026 at 'B+'/'RR4' and Atento Brasil S.A.'s long-term national scale rating at 'A-(bra)'. The Rating Outlook has been revised to Negative from Stable. The Negative Outlook reflects the uncertainty surrounding Atento's ability to deleverage below the 4.5x negative sensitivity considering the need to recoup profitability and lost revenue from last year's cyberattack, and make up about USD60 million of cash burnt during 1H22. This in light of decelerating economic conditions in several markets, high inflation, and competition that could result in more challenging conditions to grow revenue and sustain benefits from cost-cutting initiatives. Atento's ratings incorporate the potential impacts from ongoing structural changes of the customer relationship management (CRM) and business process outsourcing (BPO) sector that is moving from traditional voice services to next generation and digital ones. The moderate to high-risk industry profile with intrinsic client concentration, lack of minimum volumes in contracts and the intense competition was also factored in the analysis. Atento's wholly owned subsidiary Atento Brasil has a similar credit profile to Atento due to its important market position in Brazil and limited leverage. KEY RATING DRIVERS Pressured Cash Flow: Atento's ability to generate neutral to positive FCF has diminished with the sharp rise in Brazilian interest rates, which have climbed to 13.75% from 2% in April 2021. At current levels, cash interest obligations will be around USD80 million driven by cross currency swap rates. This compares with forecast EBITDA of around USD110 million in 2023. An inability to post a solid recovery trend in line with this expectation would lead to downgrades. Swap rates will impact CFFO by about USD20 million in 2H22 and potentially double that amount in 2023. High Leverage: Fitch projects that Atento's net debt/EBITDA, will peak at slightly above 5x in 2022 and decline to 4.8x in 2023 largely driven by operational improvements and cost-cutting measures. This compares with 5.1x in 2021 when EBITDA declined to USD88 million in 2021 and with USD113 million before the pandemic due to lost revenue and related costs resulting from a cyberattack in 4Q21. The attack affected reported EBITDA by around USD46 million, which largely contributed to negative USD60 million of FCF during 1Q22. Medium-to High-Risk Sector: The CRM/BPO segment has medium to high risks. Competition is intense, clients tend to diversify outsourcing providers and participants have high customer concentration, especially among large financial institutions and telecom carriers. Most contracts have no minimum volumes, which increases volatility. The industry has high operating leverage, driven by salaries and rent costs. A permanent reduction in volumes that requires capacity adjustments usually results in heavy labor-and rent-related severance payments. Overcapacity Driving More Competition: Work from home should continue to result in intense competition in the CRM/BPO industry. A higher portion of employees working from home has resulted in cost savings for operators, but also in workstation overcapacity which in turn has led to increased price competition as companies fight to fill-up available capacity. Spare capacity is estimated in the 20%-25% range, and Brazilian and Spanish markets in particular are seeing fierce competition. Diverse Geographies, Concentrated Client Base: Atento's generated 39% of consolidated EBITDA in the LTM ended June 30, 2022 from Brazil, followed by the Americas with 43% and EMEA with 18%. Atento's top 15 client groups account for 66% of consolidated revenues. The Americas segment should gradually increase its share of hard-currency revenue through nearshore and onshore operations servicing the U.S. Sales to Telefonica S.A. (BBB/Stable) and its Latin American subsidiaries represent approximately 32% of Atento's revenue. DERIVATION SUMMARY Atento is the largest CRM/BPO provider in Latin America, with around 15% market share. The ratings are tempered by intrinsic client concentration in telecommunications and the financial sector, no minimum volumes and limited ability to collect fines from large clients. The rating also reflects the challenges Atento faces to replace declining traditional voice revenues with more value-added services. Atento's EBITDA margins in the last three years were below those of other CRM/BPO companies, such as Teleperformance S.A., Sykes Enterprises Inc. and TTEC Holdings, Inc., all at 10%-20%. The CRM/BPO market is very competitive and fragmented. Atento faces competition from CRM/BPO companies and from IT services companies, among these are financially strong players with diversified businesses and technological expertise such as Wipro Limited (A-/Stable) and DXC Technology Company (BBB/Stable) as well as many smaller dedicated domestic competitors. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: -- Workstations total approximately 80,000 in 2022 and 2023; -- Revenue per workstation rises 7% in 2022 and 2% in 2022; -- Fitch-defined EBITDA margins in the 7% to 8% range; -- Capex of around USD50 million over rating horizon; -- No dividends in the rating case. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Increasing revenue diversification; -- Stabilization of sector risks and expansion of value-added solutions that lead to better consolidated margins and higher switching costs for clients; -- Net leverage sustainably below 3.0x; -- An increase in hard currency revenues, preserving a manageable liquidity position. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Increase in net leverage above 4.5x on a sustained basis; -- Liquidity profile deterioration; -- EBITDA margins sustained below 8%. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Atento's liquidity is adequate, the company had cash and marketable securities of USD103 million as of June 30, 2022, compared with short-term financial debt maturities of USD13.6 million in 2022 and USD64.6 million in 2023. Atento has USD50 million in committed credit facilities, of which USD44 million has been withdrawn. The company's total financial debt consisted primarily of the USD500 million senior notes due 2026 and bank debt of around USD80 million. ISSUER PROFILE Atento Luxco 1 S.A. is fully controlled by Atento S.A. (Atento), which is the largest provider of CRM/BPO services in Latin America. RATING ACTIONS ENTITY/DEBT RATING RECOVERY PRIOR ----------- ------ -------- ----- Atento Brasil S.A. Natl LT A-(bra) Affirmed A-(bra) Atento Luxco 1 S.A. LT IDR B+ Affirmed B+ senior secured LT B+ Affirmed RR4 B+ ENDO LUXEMBOURG I: Moody's Lowers PDR to D-PD Amid Ch. 11 Filing ---------------------------------------------------------------- Moody's Investors Service downgraded Endo Luxembourg Finance I Company S.a.r.l., and other subsidiaries of Endo International plc (together, "Endo") Probability of Default Rating to D-PD from Ca-PD following company's filing for protection under Chapter 11 of the US Bankruptcy Code on August 16. Moody's affirmed Endo's all other ratings including the Corporate Family Rating at Caa3, the company's senior secured debt at Caa2, the secured 2nd Lien Regular Bond/Debenture at Ca, and the unsecured ratings at C. Concurrently, Moody's downgraded Speculative Grade Liquidity Rating to SGL-4 from SGL-3. The outlook remains stable. Governance and social risk considerations are material to the rating action. The company operates with aggressive financial policies reflected in very high debt levels of more than $8 billion, resulting in very high financial leverage and a capital structure that is untenable. At current levels of performance, with significant erosion in Vasostrict franchise, ongoing cash outflows related to various legal proceedings, and exposure to material opioid-related litigation claims, the company entered into a restructuring support agreement ("RSA") with Endo's first lien debt holders to reduce outstanding indebtedness. As part of the RSA, the stalking horse bidder (the initial bidder on Endo's assets) will establish voluntary trusts to be funded with $550 million over 10 years, with future proceeds set aside for certain opioid claims. The stable outlook reflects Moody's view that the current ratings adequately reflect Endo's recovery prospects. Downgrades: Issuer: Endo Luxembourg Finance I Company S.a.r.l. Probability of Default Rating, Downgraded to D-PD from Ca-PD Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Affirmations: Issuer: Endo Finance LLC Senior Secured 2nd Lien Global Notes, Affirmed Ca (LGD4) Senior Secured Global Notes, Affirmed Caa2 (LGD2) Senior Unsecured Global Notes, Affirmed C (LGD5) Issuer: Endo Luxembourg Finance I Company S.a.r.l. Corporate Family Rating, Affirmed Caa3 Senior Secured Bank Credit Facilities, Affirmed Caa2 (LGD2) Senior Secured 1st Lien Global Notes, Affirmed Caa2 (LGD2) Issuer: Par Pharmaceutical Inc. Senior Secured Global Notes, Affirmed Caa2 (LGD2) Outlook Actions: Issuer: Endo Finance LLC Outlook, Remains Stable Issuer: Endo Luxembourg Finance I Company S.a.r.l. Outlook, Remains Stable Issuer: Par Pharmaceutical Inc. Outlook, Remains Stable RATINGS RATIONALE Endo's Chapter 11 filing resulted in the downgrade of its Probability of Default Rating to D-PD. The rating action reflects Endo's social and corporate governance risks, specifically significant litigation related to opioids which contributed to its bankruptcy filing and will result in meaningful cash outflows once it emerges. Subsequent to the rating action, Moody's will withdraw all the ratings of Endo Luxembourg Finance I Company S.a.r.l., and other subsidiaries of Endo International plc (together, "Endo"). Headquartered in Luxembourg, Endo Luxembourg Finance I Company S.a.r.l. is a subsidiary of Endo International plc, which is headquartered in Dublin, Ireland. Endo is a specialty healthcare company offering branded and generic pharmaceuticals. Endo's reported revenue for the twelve months ended June 30, 2022 was approximately $2.8 billion. The principal methodology used in these ratings was Pharmaceuticals published in November 2021. =========== R U S S I A =========== RUSSIA: Derivatives Committee to Hold Auction to Settle CDS ----------------------------------------------------------- Rodrigo Campos at Reuters reports that a panel of investors said on Aug. 19 that it expects to hold an auction to settle credit default swaps (CDS) related to Russia's defaulted debt in the first half of September, as it continues to work on the auction setup. The Credit Derivatives Determinations Committee (CDDC) said the exact date is yet to be determined, Reuters relays, citing a statement on its website. The auction, a usual way to settle CDS, was thrown into chaos in June when Washington said its sanctions on Russia imposed a total ban on U.S. entities buying Moscow's debt, Reuters relates. But a July waiver from the Treasury's Office of Foreign Assets Control (OFAC) gave a green flag for the CDS settlement to proceed, allowing for trading to be held two business days prior to the auction date and eight business days after its conclusion, Reuters states. The committee said on Aug. 19 it continues to assess the potential impact of settlement restrictions and will publish another update ahead of the auction, Reuters notes. It also provided different options for ways to participate in the settlement, and requested feedback on the participants' preferred way of doing so, which will be considered until Aug. 24, Reuters discloses. =============== S L O V E N I A =============== MERKUR: Alfi PE Plans to Acquire Real Estate Unit ------------------------------------------------- Radomir Ralev at SeeNews reports that Slovenian private equity fund Alfi PE plans to acquire Merkur Nepremicnine, the real estate unit of local insolvent home products and appliances group Merkur. Alfi will pay more than EUR10 million (US$10 million) for Merkur Nepremicnine but has not yet signed agreement for the purchase of the company with the owner of 62% of its equity capital, the Bank Assets Management Company (DUTB), Slovenian daily Delo reported on Aug. 19, SeeNews relates. According to SeeNews, Merkur Nepremicnine said the transaction will include the acquisition of EUR13 million of receivables, with Alfi becoming the sole financial creditor of the company with about EUR21 million of debt. In April, Alfi completed the acquisition of Merkur Trgovina, the retail unit of Merkur for EUR50 million (US$54.1 million), SeeNews recounts. US investment firm HPS Investment Partners bought Merkur Trgovina for EUR28.56 million in July 2017, SeeNews states. Merkur went bankrupt in November 2014 and its activities were separated into two new firms -- the retail unit Merkur Trgovina and Merkur Nepremicnine, which is in charge of real estate assets, SeeNews discloses. ============= U K R A I N E ============= UKRAINE: Debt Freeze Triggers Restructuring Event, Panel Says ------------------------------------------------------------- Jorgelina do Rosario at Reuters reports that a panel of investors on Aug. 19 determined Ukraine had triggered a restructuring event after a two-year sovereign debt freeze, and a default insurance known as Credit Default Swap (CDS) should be payed. The Credit Derivatives Determinations Committee (CDDC) said that its members voted "yes" to a question to determine whether a "Restructuring Credit Event" occurred with respect to Ukraine and that a CDS auction should be held, Reuters relays, citing a statement on its website. The committee still hasn't decided on the timing of the auction, Reuters discloses. There are just over US$220 million worth of CDS contracts linked to Ukraine's debt, according to Depository Trust & Clearing Corporation (DTCC) data, Reuters notes. The country's international creditors earlier backed Kyiv's request for a two-year freeze on almost US$20 billion of its sovereign debt, Reuters recounts. UKRAINE: Fitch Lowers LongTerm Foreign Currecy IDR to 'RD' ---------------------------------------------------------- Fitch Ratings has downgraded Ukraine's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to 'RD' (restricted default) from 'C'. Fitch typically does not assign Outlooks for sovereigns with a rating of 'CCC+', or below. EU CALENDAR DEVIATION DISCLOSURE Under EU credit rating agency (CRA) regulation, the publication of sovereign reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing it to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that Fitch believes makes it inappropriate for Fitch to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next expected review date would have been six months from Ukraine's previous sovereign review completed on July 22, 2022 but Fitch believes that developments in the country warrant such a deviation from the calendar and Fitch rationale for this is set out in the High weight factors of the Key Rating Drivers section below. KEY RATING DRIVERS The downgrade reflects the following key rating drivers and their relative weights: HIGH Consent Solicitation Agreed: Consent solicitation to defer Ukraine's external debt repayments for two years was agreed by the requisite share of bondholders and became effective on 11 August. Fitch deems this completion of a distressed debt exchange (DDE) and has therefore downgraded the LTFC IDR to 'RD' and the affected instruments to 'D', both from 'C'. According to Fitch's Sovereign Criteria, a commercial debt restructuring that entails a material reduction in terms, such as the deferral of interest or principal, and is necessary to avoid a traditional payment default constitutes a DDE. Fitch have upgraded the local-law foreign-currency issuance due 2023 that was not included in the exchange to 'CCC-' following completion of the DDE. Fitch will shortly upgrade Ukraine's FC IDRs to a level appropriate for its debt service payment prospects on a forward-looking basis. Fitch has affirmed Ukraine's Long-Term Local-Currency IDR at 'CCC-', Short-Term IDRs at 'C' and Country Ceiling at 'B-'. ESG - Governance: Ukraine has an ESG Relevance Score (RS) of '5' for both political stability and rights and for the rule of law, institutional and regulatory quality and control of corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in Fitch's proprietary Sovereign Rating Model (SRM). Ukraine has a low WBGI ranking at the 32nd percentile, reflecting the Russian-Ukrainian conflict, weak institutional capacity, uneven application of the rule of law and a high level of corruption. ESG - Creditor Rights: Ukraine has an ESG Relevance Score of '5' for creditor rights as willingness to service and repay debt is highly relevant to the rating and is a key rating driver for Ukraine, given the consent solicitation. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The Long-Term Local-Currency IDR will be downgraded to 'CC' if Fitch assesses that default of some kind on local-currency debt appears probable, or to 'C' on announcing restructuring plans that materially reduce the terms of local-currency debt to avoid a traditional payment default. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- As Fitch deems that the consent solicitation becoming effective constitutes the conclusion of a DDE, Fitch will shortly upgrade Ukraine's FC IDRs to a level appropriate for its debt service payment prospects on a forward-looking basis. SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Ukraine a score equivalent to a rating of 'CCC+' on the LTFC IDR scale. However, in accordance with its rating criteria, Fitch's sovereign rating committee has not utilised the SRM and QO to explain the ratings in this instance. Ratings of 'CCC+' and below are instead guided by Fitch's rating definitions. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM. RATING ACTIONS ENTITY/DEBT RATING PRIOR ----------- ------ ----- Ukraine LT IDR RD Downgrade C ST IDR C Affirmed C LC LT IDR CCC- Affirmed CCC- LC ST IDR C Affirmed C Country B- Affirmed B- Ceiling senior unsecured LT CCC- Affirmed CCC- senior unsecured LT D Downgrade C senior unsecured LT CCC- Upgrade C UKRAINE: S&P Raises SCR to 'CCC+/C' on Completed Debt Restructuring ------------------------------------------------------------------- On Aug. 19, 2022, S&P Global Ratings raised its foreign currency long- and short-term sovereign credit ratings on Ukraine to 'CCC+/C' from 'SD/SD' and the long-term issue rating on the restructured foreign currency bonds to 'CCC+' from 'D'. At the same time, S&P affirmed our local currency sovereign ratings at 'CCC+/C' and raised the national scale rating to 'uaBB' from 'uaBB-'. In addition, S&P kept its transfer and convertibility assessment at 'CCC+'. The outlook on the long-term ratings is stable. As "sovereign ratings" (as defined in EU CRA Regulation 1060/2009 "EU CRA Regulation"), the ratings on Ukraine are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, including publication in accordance with a pre-established calendar. Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasons for the deviation. In this case, the reason for the deviation is the completion of the government of Ukraine's debt restructuring. The next scheduled publication on the Ukraine sovereign rating is Sept. 9, 2022. Outlook The stable outlook balances S&P's view of the reduction in Ukraine's government debt service requirements and its expectation of steady international financial support against risks to Ukraine's economy, external balances, public finances, and financial stability stemming from the ongoing war. Downside scenario S&P said, "We could lower the ratings in the next 12 months should the security outlook deteriorate, putting further pressure on Ukraine's foreign exchange reserve position or the government's administrative capacity, or resulting in much higher government gross financing needs than we currently anticipate. Absent an escalation of the conflict, material delays in foreign donor support could also lead to a downgrade." Upside scenario S&P could raise the ratings if Ukraine's security environment and medium-term economic outlook significantly improve. Rationale The rating action follows the completion of Ukraine's Eurobond restructuring. The government restructured the equivalent of $22.6 billion in sovereign Eurobonds and about $1.5 billion of state-guaranteed Eurobonds after receiving consent from the required majority of bondholders to postpone interest and principal payments on the debt for 24 months. The government has amended the respective bond terms and conditions and they have become legally effective. S&P said, "The 'CCC+' ratings on Ukraine reflect our forward-looking opinion on Ukraine's creditworthiness, following the recent debt restructuring. In our view, Ukraine's debt servicing capacity remains vulnerable and dependent upon favorable financial and economic conditions to meet its financial commitments. "Our rating action reflects strong committed international financial support to Ukraine, coupled with eroding, albeit still relatively high, foreign exchange reserves. At the same time, the completed debt reprofiling has significantly eased Ukraine's government debt service needs until September 2024, when the payments on the amended Eurobonds will resume. As a result, Ukraine's foreign-currency debt repayments have declined by roughly 40% over 2022-2024 to about $10 billion from $16 billion before the restructuring. Repayments now primarily comprise payments on official debt--mostly owed to the IMF and the International Bank for Reconstruction and Development--and foreign-currency domestic-law bonds, held primarily domestically, including by state-owned banks. As a result, the near-term risks to the government's liquidity position and, more broadly, its capacity to honor commercial debt, including in foreign currency, appear manageable. Our sovereign ratings reflect our view of an issuer's ability and willingness to meet its commercial, nonofficial financial obligations in full and on time." That said, given the ongoing conflict with Russia, Ukraine's ability to stay current on its debt is highly dependent on factors largely outside of government control. The first six months of the war have taken a severe toll on the economy and society. About one-fifth of Ukraine's productive capacity and most of its seaports are now located in areas occupied or blockaded by the Russian military. There is a large degree of uncertainty regarding how the conflict might develop, but at present we see limited prospects for resolution. S&P estimates Ukraine's real GDP will contract by 40% in 2022 on the back of collapsing exports, consumption, and investment. Given substantial damage to physical and human capital, Ukraine's medium-term growth prospects are uncertain and hinge on regaining a level of territorial integrity and access to the Black Sea, alongside sizable reconstruction efforts. The severe war-related shock to the economy and the tax base, coupled with increasing emergency and defense spending, have significantly undermined the government's fiscal position. The authorities estimate the resulting gross financing needs at close to $5 billion (or 2.5% of pre-war GDP) a month. In S&P's latest projections, the 2022 fiscal deficit will be at least 20% of GDP, compared with 3.5% before the conflict. Given limited access to the capital markets, the government has focused on attracting donor financial support. Of the $30 billion of financial aid pledged by the international community since the beginning of the war, about 45% has been disbursed. Almost half of government funding needs have been covered by domestic issuance, largely purchased by Ukraine's central bank (NBU), amplifying already high inflationary and exchange rate pressures. One of the key assumptions behind our rating is that donor fund disbursements, primarily from the U.S. and EU, will continue in the coming months. Apart from meeting budget funding needs, these inflows should also help stabilize Ukraine's international reserves. These decreased by one-fifth from February to July 2022, to $22.4 billion. S&P also understands the government is considering a new IMF financing and policy program arrangement. Although the timing and details of the new program remain to be seen, if approved it could further ease government financing pressures, and support confidence and macroeconomic stability. At the beginning of the war, the NBU fixed the hryvnia exchange rate and introduced extensive exchange restrictions in an effort to contain risks to financial stability. In June-July, given exchange rate pressures, the NBU hiked its key policy rate by 15 percentage points to 25% and devalued the currency against the U.S. dollar by 25%. Still, S&P expects the currency to weaken further, adding to inflationary pressures. Ukraine's banking system entered the war with adequate liquidity and capital buffers, which together with the NBU's regulatory easing has helped it absorb the immediate war-induced shocks. That said, given the substantial fallout of the war on the private sector, the outlook for asset quality is challenging. S&P Global Ratings notes a high degree of uncertainty about the extent, outcome, and consequences of the Russia-Ukraine war. Irrespective of the duration of military hostilities, related risks are likely to remain in place for some time. As the situation evolves, S&P will update its assumptions and estimates accordingly. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee's assessment of the key rating factors is reflected in the Ratings Score Snapshot above. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. Ratings List UPGRADED TO FROM UKRAINE Sovereign Credit Rating Foreign Currency CCC+/Stable/C SD/--/SD Ukraine National Scale uaBB/--/-- uaBB-/--/-- Senior Unsecured CCC+ D STATE ROAD AGENCY OF UKRAINE (UKRAVTODOR) Senior Unsecured CCC+ D RATINGS AFFIRMED; OUTLOOK ACTION TO FROM UKRAINE Sovereign Credit Rating Local Currency CCC+/Stable/C CCC+/Negative/ RATINGS AFFIRMED UKRAINE Transfer & Convertibility Assessment CCC+ Senior Unsecured D =========================== U N I T E D K I N G D O M =========================== BULB: Bailout Cost Expected to Soar to More Than GBP4BB by Spring ----------------------------------------------------------------- Gill Plimmer and David Sheppard at The Financial Times report that the cost to UK households of bailing out nationalised energy retailer Bulb is expected to soar to more than GBP4 billion by the spring unless the government achieves a sale, saddling every home with an additional GBP150 or more on its bills next year. The new forecast from energy consultancy Auxilione illustrates the spiralling costs of supporting Bulb's 1.4 million customers as wholesale gas and electricity prices surge, the FT discloses. The company's administrators are hamstrung by government rules that restrict hedging against rising energy prices, the FT states. The bailout of Bulb, which collapsed in November last year, is expected to be the most expensive since the rescue of RBS during the financial crisis, the FT notes. Unlike 2008, the government plans to make households absorb the cost through higher energy bills rather than funding the rescue through general taxation as it is doing currently, the FT relays. The decision is politically charged as households are already braced for much higher energy bills because of the record price of gas and electricity, with forecasts they could reach GBP5,000 for the typical home by the spring -- more than four times the level a year ago, according to the FT. Although most customers of failed suppliers have been transferred to larger competitors, Bulb was considered too big so it was instead nationalised, the FT states. Households are already paying about GBP94 a year to cover the lossmaking customers transferred to other suppliers, but the total could be far higher once Bulb is included, according to the FT. The government's failure to agree a deal with potential buyers has caused costs to mount as Bulb's administrators have not been able to hedge the rising price of wholesale energy, the FT disclsoes. Auxilione's estimate is based on forecasts for losses made under the price cap, chiefly the rising wholesale price of gas and greater use by customers over the winter. In March, the Office for Budget Responsibility estimated that the Bulb bailout would cost GBP2.2 billion over two years, but wholesale gas prices have more than doubled since June after Russia slashed supplies to Europe, the FT recounts. Auxilione expects additional losses under the price cap will be about GBP420 million between March and October when energy use is lower, and more than GBP1.6 billion over the winter months, the FT notes. Gas prices are now more than 10 times the level they averaged over the past decade, and could increase further if Russia severs supplies or it is a particularly cold winter, the FT states. According to the FT, Tony Jordan, director at Auxilione, said the government "was paying a high price for the lack of hedging, and costs could rise even higher if gas prices continue to soar". Octopus Energy, the UK's fourth-biggest supplier, has offered to take over Bulb's customers on the condition that the government starts buying the gas and electricity for them in advance at a cost of about GBP1 billion, the FT relays, citing two people familiar with the matter. It has also offered a profit share arrangement should the customers turn profitable in the future, the FT states. Bulb, which was established in 2015 and never made a profit, collapsed with GBP326 million debt as a result of soaring natural gas prices and a failure to raise new money, the FT recounts. CINEWORLD GROUP: Plans to File for Bankruptcy in U.S. ----------------------------------------------------- Madeleine Speed and Oliver Barnes at The Financial Times report that Cineworld has insisted that its operations will be unaffected by its planned restructuring as it confirmed it was drawing up plans to file for bankruptcy in the US. The world's second-largest cinema chain said on Aug. 22 that options to rescue the debt-laden business "include a possible voluntary Chapter 11 filing" in the US, along with similar proceedings in other countries where it operates, the FT relates. According to the FT, the group, which also owns the US-based Regal Cinemas brand, said it would maintain operations over the longer term with "no significant" impact to its 28,000 employees worldwide. "Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members," the FT quotes a statement on Aug. 22 as saying. More than two-thirds of Cineworld's 751 sites are in the US where it owns Regal Cinemas. It also runs Cineworld and Picturehouse in the UK, along with several brands in eastern Europe. Cineworld's share price tumbled last week after the company said admissions were "below expectations" and it revealed plans to "potentially restructure its balance sheet through a comprehensive deleveraging transaction", the FT recounts. Shares fell further on Friday, Aug. 19, after the Wall Street Journal reported that a Chapter 11 filing was under consideration, the FT relays. The law firm Kirkland & Ellis, along with restructuring consultancy AlixPartners and corporate advisory firm PJT Partners, are working on the restructuring, the FT discloses. The cinema industry was battered by the pandemic and Cineworld has narrowly avoided bankruptcy twice in the past two years after struggling with mounting debts, the FT states. At the end of December, its net debt amounted to almost US$4.9 billion and lease liabilities were US$4 billion, according to the FT. Its current market capitalisation is GBP39 million, the FT notes. It also faces a potential US$1 billion payout to Canadian rival Cineplex in compensation for a botched acquisition, which it pulled out of in June 2020, the FT says. Cineworld is appealing against the decision in the Canadian courts, the FT states. EVOLVE: easyCapital Acquires easyProperty Brand After Collapse -------------------------------------------------------------- Marc da Silva at Property Industry Eye reports that the easyProperty brand and platform easyProperty.com has returned to easyGroup following the collapse of Evolve last week. According to Property Industry Eye, the hybrid agency's software and client database has been acquired by the owner of easyCapital, Charles Hancock. The property services company was placed into administration, as debts at Evolve continued to mount, Property Industry Eye relates. The directors of the company filed for creditors' voluntary liquidation on Aug. 17, Property Industry Eye recounts. Staff at Evolve are believed to be in line for statutory government compensation although easyGroup says it will pay each qualifying member GBP2,000 as a gesture of goodwill, Property Industry Eye states. Evolve acquired easyProperty from the eProp Services Group three years ago, Property Industry Eye relays. Established in 2007, Evolve has long provided a wide range of services to the property industry, which are also available to the current easyProperty licensees and their clients. This includes photography products, floor plans, viewings, EPCs, inventories, check ins & check outs and Home Reports. SCOTT COMMERCIALS: Soaring Fuel Costs Prompt Liquidation -------------------------------------------------------- Sion Barry at BusinessLive reports that an Ebbw Vale haulier business has collapsed due to soaring fuel costs. According to BusinessLive, the winding up of Scott Commercials has resulted in the loss of 10 jobs with insolvency firm Begbies Traynor appointed liquidators. Established in 2013, Scott Commercials provided road haulage services to transport operators across the UK. The liquidation is being handled by Bristol-based partner Paul Wood and Cardiff-based partner Huw Powell. They said that recent rises in PAYE, fuel, ad-blue (fuel additive) and tyres had created significant cash flow issues for the business, BusinessLive discloses. Its fuel bills rose by nearly GBP5,000 net per week in June prior to its collapse, BusinessLive notes. Mr. Wood, as cited by BusinessLive, said fuel price inflation had created immense pressures for many in the transport sector. He added: "The last 12 months has been an incredibly difficult time for hauliers, who have seen their overheads increase dramatically and rapidly. Despite efforts to reduce the impact, these challenging trading conditions proved untenable for Scott Commercials, and we will be working with the director to wind up the business and recover any assets on behalf of creditors. "The rapid rising costs of raw materials does illustrate the need for business owners and directors to seek advice at an early stage if they are experiencing financial challenges. There are sometimes steps that can be taken which will help to place a company on a more secure footing -- and reduce the risk of liquidation." Scott Commercials has estimated total assets of GBP82,000 for preferential creditors, but an estimated GBP285,000 deficit for non-preferential creditors, BusinessLive relays, citing a statement of affairs on Companies House. Creditors include HMRC which is owed GBP91,000 and Funding Circle Focal Point Lending, with GBP151,000, BusinessLive states. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 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 * * *