/raid1/www/Hosts/bankrupt/TCREUR_Public/220909.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, September 9, 2022, Vol. 23, No. 175
Headlines
I R E L A N D
BAIN CAPITAL 2022-2: S&P Assigns B- (sf) Rating on Class F Notes
COMMUNITY TRAINING: Goes Into Voluntary Liquidation
FIDELITY GRAND 2022-1: S&P Assigns Prelim B- Rating on F Notes
JUBILEE CLO 2014-XII: Fitch Affirms B+ Rating on Class F-R Notes
RICHMOND PARK: Fitch Affirms B+ Rating on Class F-RR Notes
[*] Fitch Takes Actions on Aircraft ABS Deals on Neg. Watch
K A Z A K H S T A N
KAZAKHSTAN ELECTRICITY: S&P Affirms 'BB+' LT ICR, Outlook Now Neg.
LONDON-ALMATY INSURANCE: S&P Lowers ICR to 'B+', Outlook Positive
R O M A N I A
BLUE AIR: Cancels Flights After Romania Freezes Bank Accounts
VIVRE: To Receive Add'l. EUR1MM Financing from Major Shareholder
S W I T Z E R L A N D
OBSEVA SA: Receives Nasdaq Non-Compliance Notice
SPORTRADAR GROUP: Moody's Hikes CFR to Ba3, Outlook Remains Stable
U K R A I N E
UKRAINE: EU Confirms EUR5 Billion in Macro-Financial Aid
U N I T E D K I N G D O M
AVONSIDE: Enters Administration, Seeks Buyer for Energy Division
CINEWORLD: Files for Bankruptcy Protection in U.S.
MICRO FOCUS: Fitch Puts 'BB-' LongTerm IDR on Watch Positive
PREMIER CARS: Driver Jobs, Operations Secured Despite Liquidation
SHANKLY HOTEL: Court Enters Liquidation Order
X X X X X X X X
[*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
- - - - -
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I R E L A N D
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BAIN CAPITAL 2022-2: S&P Assigns B- (sf) Rating on Class F Notes
----------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Bain Capital Euro
CLO 2022-2 DAC's class A, B-1, B-2, C, D, E, and F notes. At
closing, the issuer also issued unrated subordinated notes.
The ratings assigned to Bain Capital Euro CLO 2022-2's notes
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 issuer's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio Benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,839.44
Default rate dispersion 446.27
Weighted-average life (years) 4.78
Obligor diversity measure 143.91
Industry diversity measure 21.10
Regional diversity measure 1.27
Transaction Key Metrics
CURRENT
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.63
Covenanted 'AAA' weighted-average recovery (%) 34.52
Floating-rate assets 90.13
Weighted-average spread (net of floors; %) 4.02
Under the transaction documents, the rated notes will pay quarterly
interest unless there is a frequency switch event. Following this,
the notes will permanently switch to semiannual payment.
Delayed Draw Tranche
The class F notes is a delayed draw tranche. It is unfunded at
closing and has a maximum notional amount of EUR22.00 million and a
spread of three/six-month EURIBOR plus 9.00%. The class F notes can
only be issued once and only during the reinvestment period with an
issuance amount totaling EUR22.00 million. The issuer will use the
proceeds received from the issuance of the class F notes to redeem
the subordinated notes.
Upon issuance, the class F notes' spread could be higher (in
comparison to the issue date) subject to rating agency
confirmation.
Asset Priming Obligations And Uptier Priming Debt
Under the transaction documents, the issuer can purchase asset
priming (drop down) obligations and/or uptier priming debt to
address the risk, where a distressed obligor could either move
collateral outside the existing creditors' covenant group, or incur
new money debt senior to the existing creditors.
In this transaction, current pay obligations that comprise uptier
priming debt are limited to a bucket of 2.5%. Corporate rescue
loans and uptier priming debt that comprise defaulted obligations
are limited to 5%.
The portfolio's reinvestment period will end approximately 4.4
years after closing, and the portfolio's maximum average maturity
date will be 8.5 years after closing.
S&P said, "On the effective date, we expect that 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. As
such, we have not applied any additional scenario and sensitivity
analysis when assigning ratings to any classes of notes in this
transaction.
"In our cash flow analysis, we used the EUR400.00 million target
par, a weighted-average spread (3.90%), the reference
weighted-average coupon (4.00%), and the covenanted
weighted-average recovery rates as indicated by the issuer. We
applied various cash flow stress scenarios, using four different
default patterns, in conjunction with different interest rate
stress scenarios for each liability rating category. Our credit and
cash flow analysis indicates that the available credit enhancement
for the class B-1 to E notes could withstand stresses commensurate
with higher ratings than those we have assigned. However, as the
CLO will be in its reinvestment phase starting from closing, during
which the transaction's credit risk profile could deteriorate, we
have capped our ratings assigned to the notes.
"Under our structured finance ratings above the sovereign criteria,
we consider that the transaction's exposure to country risk will be
sufficiently mitigated at the assigned rating levels.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate the exposure to counterparty risk
under our current counterparty criteria.
"The issuer's legal structure is bankruptcy remote, in line with
our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for the class A
to F notes.
"For the class F notes, our credit and cash flow analysis indicates
that the available credit enhancement could withstand stresses that
are commensurate with a 'CCC' rating. Based on the portfolio's
actual characteristics and additional overlaying factors, including
our long-term corporate default rates and the class F notes' credit
enhancement, this class is able to sustain a steady-state scenario,
in accordance with our criteria. S&P's analysis further reflects
several factors, including:
-- The class F notes' available credit enhancement is in the same
range as that of other CLOs we have rated and that have recently
been issued in Europe.
-- S&P's model-generated portfolio default risk at the 'B-' rating
level is 23.21% (for a portfolio with a weighted-average life of
4.78 years) versus 14.82% if it was to consider a long-term
sustainable default rate of 3.1% for 4.78 years.
-- Whether the tranche is vulnerable to nonpayment soon.
-- If there is a one-in-two chance for this note to default.
-- If S&P envisions this tranche will default in the next 12-18
months.
S&P said, "In addition to our standard analysis, to provide an
indication of how rising pressures among speculative-grade
corporates could affect our ratings on European CLO transactions,
we have also included the sensitivity of the ratings on the class A
to E notes to five of the 10 hypothetical scenarios we looked at in
"How Credit Distress Due To COVID-19 Could Affect European CLO
Ratings," published on April 2, 2020. The results shown in the
chart below are based on the actual weighted-average spread,
coupon, and recoveries."
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
(non-exhaustive list): the manufacturing or marketing of
controversial weapons or thermal coal production. Accordingly,
since the exclusion of assets from these industries does not result
in material differences between the transaction and our ESG
benchmark for the sector, we have not made any specific adjustments
in our rating analysis to account for any ESG-related risks or
opportunities."
Ratings
CLASS RATING AMOUNT CREDIT INTEREST RATE*
(MIL. EUR) ENHANCEMENT (%)
A AAA (sf) 240.00 40.00 Three-month EURIBOR
plus 2.10%
B-1 AA (sf) 26.40 30.90 Three-month EURIBOR
plus 4.08%
B-2 AA (sf) 10.00 30.90 6.50%
C A (sf) 22.80 25.20 Three-month EURIBOR
plus 4.85%
D BBB- (sf) 25.20 18.90 Three-month EURIBOR
plus 6.26%
E BB- (sf) 15.60 15.00 Three-month EURIBOR
plus 8.19%
F B- (sf) 22.00 9.50 Three-month EURIBOR
plus 9.00%
Subordinated NR 45.50 N/A N/A
NR--Not rated.
N/A--Not applicable.
EURIBOR--Euro Interbank Offered Rate.
COMMUNITY TRAINING: Goes Into Voluntary Liquidation
---------------------------------------------------
Wexford reports that CTEC, the Community Training and Education
Centre, has gone into voluntary liquidation with immediate effect.
According to Wexford, speaking on Sept. 6, the directors of the
Wexford town based community training organisation said that
"unfortunately the unprecedented steps we have all had to take
because of Covid 19 over the past number of years has impacted very
abruptly in halting in-person classroom-based training.
"The effects of this are long lasting and many companies have had
to implement or expand online business to compensate for doing
business in person.
"As a direct result of this, CTEC has taken the decision to exit
from the training sector in a timely manner in order to protect all
creditors.
"It is a sad day for the organisation but the lasting legacy of
having contributed to the provision of quality adult education in
County Wexford and the significant positive impact we have made to
so many outstanding members of our community is something that we
are very proud of."
FIDELITY GRAND 2022-1: S&P Assigns Prelim B- Rating on F Notes
--------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Fidelity Grand Harbour CLO 2022-1 DAC's class A Loan and class A,
B-1, B-2, C, D, E, and F notes. At closing, the issuer will also
issue unrated subordinated notes.
The class F notes is a delayed draw tranche. It will be unfunded at
closing, has a maximum notional amount of EUR12 million, and a
spread of three/six-month Euro Interbank Offered Rate (EURIBOR)
plus 10.50%. The class F notes can only be issued once and only
during the reinvestment period with an issuance amount totaling
EUR12 million. The issuer will use the full proceeds received from
the sale of the class F notes to redeem the subordinated notes.
Upon issuance, the class F notes' spread could be subject to a
variation and, if higher, is subject to rating agency
confirmation.
Under the transaction documents, the rated notes will pay quarterly
interest unless there is a frequency switch event. Following this,
the notes will switch to semiannual payment.
This transaction has a 1.5 year non-call period and the portfolio's
reinvestment period will end approximately 4.5 years after
closing.
The preliminary ratings reflect S&P's assessment of:
-- The diversified collateral pool, which consists primarily of
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization (OC).
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
Portfolio Benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,793.16
Default rate dispersion 493.91
Weighted-average life (years) 5.26
Obligor diversity measure 104.08
Industry diversity measure 19.30
Regional diversity measure 1.31
Transaction Key Metrics
CURRENT
Total par amount (mil. EUR) 340.00
Defaulted assets (mil. EUR) 0
Number of performing obligors 114
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 1.86
'AAA' target portfolio weighted-average recovery (%) 36.57
Covenanted weighted-average spread (%) 4.13
Covenanted weighted-average coupon (%) 4.50
Rating rationale
S&P said, "Our preliminary ratings reflect our assessment of the
preliminary collateral portfolio's credit quality, which has a
weighted-average rating of 'B'. We consider that the portfolio will
primarily comprise broadly syndicated speculative-grade senior
secured term loans and senior secured bonds. Therefore, we
conducted our credit and cash flow analysis by applying our
criteria for corporate cash flow CDOs.
"In our cash flow analysis, we modelled the EUR340 million par
amount, the covenanted weighted-average spread of 4.13%, the
covenanted weighted-average coupon of 4.50%, and the covenanted
weighted-average recovery rates. 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.
"We expect that the transaction's documented counterparty
replacement and remedy mechanisms will adequately mitigate its
exposure to counterparty risk under our counterparty criteria.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned preliminary ratings, as the exposure to
individual sovereigns does not exceed the diversification
thresholds outlined in our criteria.
"At closing, we consider that the transaction's legal structure
will be bankruptcy remote, in line with our legal criteria.
"Our credit and cash flow analysis indicate that the available
credit enhancement for the class B-1 to E notes could withstand
stresses commensurate with higher rating levels than those we have
assigned. However, as the CLO is still in its reinvestment phase,
during which the transaction's credit risk profile could
deteriorate, we have capped our assigned preliminary ratings on
these notes. The class A Loan and class A and F notes can withstand
stresses commensurate with the assigned preliminary ratings.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe that our preliminary
ratings are commensurate with the available credit enhancement for
the class A Loan and class A, B-1, B-2, C, D, E, and F notes.
"In addition to our standard analysis, to provide an indication of
how rising pressures among speculative-grade corporates could
affect our ratings on European CLO transactions, we have also
included the sensitivity of the ratings on the class A to E notes
to five of the 10 hypothetical scenarios we looked at in our
publication. The results shown in the chart below are based on the
covenanted weighted-average spread, coupon, and recoveries.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F notes."
Environmental, social, and governance (ESG) factors
S&P said, "We regard the exposure to ESG credit factors in the
transaction as being broadly in line with our benchmark for the
sector. Primarily due to the diversity of the assets within CLOs,
the exposure to environmental credit factors is viewed as below
average, social credit factors are below average, and governance
credit factors are average. For this transaction, the documents
prohibit assets from being related to the following industries:
controversial weapons, conventional weapons, firearms, tobacco and
tobacco-related products, thermal coal extraction, unregulated
gaming industry, fraudulent and coercive loan origination and/or
highly speculative financial operations. Accordingly, since the
exclusion of assets from these industries does not result in
material differences between the transaction and our ESG benchmark
for the sector, no specific adjustments have been made in our
rating analysis to account for any ESG-related risks or
opportunities."
The manager will provide an ESG monthly report that will include:
-- The portfolio's average ESG score; and
-- The list of obligors that have been added or removed as a
result of material ESG factors or changes including disposals of
ESG ineligible obligations.
Fidelity Grand Harbour CLO 2022-1 DAC is a European cash flow CLO
securitization of a revolving pool, comprising euro-denominated
senior secured loans and bonds issued mainly by speculative-grade
borrowers. FIL Investments International will manage the
transaction.
Ratings List
CLASS PRELIM PRELIM AMOUNT SUB (%) INTEREST RATE*
RATING (MIL. EUR)
A AAA (sf) 151.50 40.74 Three/six-month EURIBOR
plus 2.10%
A Loan AAA (sf) 50.00 40.74 Three/six-month EURIBOR
plus 2.10%
B-1 AA (sf) 25.20 29.50 Three/six-month EURIBOR
plus 3.75%
B-2 AA (sf) 13.00 29.50 6.25%
C A (sf) 17.40 24.38 Three/six-month EURIBOR
plus 4.39%
D BBB- (sf) 22.00 17.91 Three/six-month EURIBOR
plus 6.03%
E BB- (sf) 13.70 13.88 Three/six-month EURIBOR
plus 7.08%
F** B- (sf) 12.00 10.35 Three/six-month EURIBOR
plus 10.50%
Sub NR 40.30 N/A N/A
*The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
**Class F is a delayed drawdown tranche, which is unfunded at
closing.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
JUBILEE CLO 2014-XII: Fitch Affirms B+ Rating on Class F-R Notes
----------------------------------------------------------------
Fitch Ratings has revised Jubilee CLO 2014- XII DAC class B to F
notes' Outlook to Stable from Positive while affirming its
ratings.
RATING ACTIONS
Jubilee CLO 2014-XII DAC
A-RRR XS2307737937 LT AAAsf Affirmed AAAsf
B-1-RR XS1672950299 LT AA+sf Affirmed AA+sf
B-2-RRR XS2307738158 LT AA+sf Affirmed AA+sf
C-R XS1672951180 LT A+sf Affirmed A+sf
D-R XS1672951776 LT BBB+sf Affirmed BBB+sf
E-R XS1672952154 LT BB+sf Affirmed BB+sf
F-R XS1672952667 LT B+sf Affirmed B+sf
TRANSACTION SUMMARY
Jubilee CLO 2014-XII DAC is a cash flow CLO comprising mostly
senior secured obligations. The transaction is actively managed by
Alcentra Ltd and exited its reinvestment period in October 2021.
KEY RATING DRIVERS
Transaction Outside Reinvestment Period: Despite having exited its
reinvestment period in October 2021 the manager can reinvest if its
weighted average life (WAL) test is maintained or improved. The
transaction is marginally failing its WAL test. The trade-date
principal cash balance was in deficit by EUR2.3 million as of its 3
August 2022 investor report and no repayments have occurred on the
rated notes.
Given the manager's ability to reinvest Fitch's analysis is based
on a stressed portfolio by testing the Fitch-calculated weighted
average rating factor (WARF), Fitch-calculated weighted average
recovery rate (WARR), weighted average spread and fixed asset share
to their covenanted limits. Fitch applied 1.5% haircut to the WARR
covenant to reflect the old recovery rate definition in the
transaction documents, which can result in on average a 1.5%
inflation of the WARR relative to Fitch's latest CLO Criteria. As
the current WAL is above the covenanted level, this has been left
unchanged.
Limited Deleveraging Prospects: The Stable Outlooks on all notes
reflect Fitch's expectation that deleveraging of the notes is not
expected since the deal may still reinvest. Even if the deal is
constrained from reinvesting deleveraging would remain limited in
the next 12-18 months by the small portion of assets maturing by
2023 and limited prepayment expectation in the current uncertain
macroeconomic environment.
Stable Asset Performance: The transaction's metrics indicate stable
asset performance. The transaction is below par by 1% and is
passing all coverage tests. Exposure to assets with a Fitch-derived
rating (FDR) of 'CCC+' and below is 5.2%, excluding non-rated
assets as calculated by Fitch.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the obligors at 'B'/'B-'. The Fitch-calculated weighted WARF of the
current portfolio is 25.13 (or 33.43 as reported by the trustee)
against a covenanted maximum of 35.5.
High Recovery Expectations: Senior secured obligations comprise
99.5% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated WARR of the current
portfolio reported by the trustee was at 65.01% as of 3 August 2022
compared with a covenanted minimum of 62.54%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration is 17.48%, and no obligor represents more than 1.97%
of the portfolio balance.
Cash Flow Modelling: Fitch used a customised proprietary cash flow
model to replicate the principal and interest waterfalls and the
various structural features of the transaction, and to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par- value and interest-coverage
tests.
Deviation from Model-implied Rating: The class B notes' rating of
'AA+sf' is one notch lower than their model-implied rating due to
limited cushion on the stressed portfolio at their MIR, a lack of
credit enhancement build-up since the end of the reinvestment
period and the absence of deleveraging.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
An increase of the default rate (RDR) at all rating levels by 25%
of the mean RDR and a decrease of the recovery rate (RRR) by 25% at
all rating levels of the current portfolio will result in
downgrades of the class E and F notes by three notches. While not
Fitch's base case, downgrades may occur if build-up of the notes'
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 reduction of the RDR at all rating levels by 25% of the mean RDR
and an increase in the RRR by 25% at all rating levels of the
stressed portfolio would result in upgrades of up to three notches
depending on the notes, except for the 'AAAsf' class A notes.
Upgrades may also occur, except for the 'AAAsf' notes, if the
portfolio's quality remains stable and the notes continue to
amortise, leading to higher credit enhancement across the
structure.
RICHMOND PARK: Fitch Affirms B+ Rating on Class F-RR Notes
----------------------------------------------------------
Fitch Ratings has upgraded Richmond Park CLO DAC's class B-1-RR,
B-2-RR, B-3-RR and D-RR notes, and revised the Outlooks on the
class C-RR, E-RR, and F-RR notes to Stable from Positive.
RATING ACTIONS
Rating Prior
------ -----
Richmond Park CLO DAC
A-RR XS1849529398 LT AAAsf Affirmed AAAsf
B-1-RR XS1849530057 LT AAAsf Upgrade AA+sf
B-2-RR XS1849530644 LT AAAsf Upgrade AA+sf
B-3-RR XS1854604441 LT AAAsf Upgrade AA+sf
C-1-RR XS1849531378 LT A+sf Affirmed A+sf
C-2-RR XS1854605760 LT A+sf Affirmed A+sf
D-RR XS1853034624 LT A-sf Upgrade BBB+sf
E-RR XS1849531618 LT BB+sf Affirmed BB+sf
F-RR XS1849531709 LT B+sf Affirmed B+sf
TRANSACTION SUMMARY
Richmond Park CLO DAC is a cash flow collateralised loan obligation
(CLO). The underlying portfolio of assets mainly consists of
leveraged loans and is managed by Blackstone Ireland Limited. The
deal exited its reinvestment period in July 2021.
KEY RATING DRIVERS
Increased Credit Enhancement: The trade date principal cash balance
was EUR9.06 million as of the 1 July 2022 investor report. The
senior A-RR note has been repaid by EUR101.9 million since the last
review in October 2021. As a result, credit enhancement has
increased across the structure.
Reinvestment Possible: Following its exit from its reinvestment
period in July 2021 any reinvestment of unscheduled principal
proceeds and sale proceeds from credit-impaired and credit-improved
obligations will be subject to the satisfaction of the Fitch- and
Moody's-calculated weighted average rating factor (WARF), 'CCC',
and the weighted average life (WAL) tests (on the last day of the
reinvestment period). As of 1 July 2022 the transaction was failing
its WAL and Fitch-calculated WARF tests.
Given the manager is unlikely to reinvest, Fitch has assessed the
transaction by notching down one level all assets in the current
portfolio with Fitch-derived ratings (FDR) on Negative Outlook.
Limited Deleveraging Prospect: The Stable Outlooks on all notes
reflect Fitch's expectation that deleveraging of the notes would be
constrained in the next 12-18 months by the small portion of assets
maturing by 2023 and limited prepayment expectation in the current
uncertain macroeconomic environment.
Resilient Asset Performance: The transaction's metrics indicate
resilient asset performance, which together with increased credit
enhancement, led to today's upgrades. This is despite the
transaction being currently 0.9% below par and is failing the
Fitch-calculated WARF limit, WAL, and Moody's spread test as of 1
July 2022. As of the 1 July 2022 investor report exposure to assets
with FDRs of 'CCC+' and below was 5.96% as calculated by the
trustee, and the portfolio had no exposure to defaulted assets.
'B'/'B-' Portfolio: Under Fitch's latest CLO Criteria the WARFs
calculated by the agency were 25.43 for the current portfolio and
26.84 for the stressed portfolio of notched-down FDRs on Negative
Outlook.
High Recovery Expectations: Senior secured obligations comprise
99.38% of the portfolio. 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 current portfolio as reported by the trustee was
65.1% as of the July investor report.
Diversified Portfolio Despite Amortisation: The portfolio has
repaid EUR101.9 million since last review but remains
well-diversified across obligors, countries and industries. The
top-10 obligor concentration is 15.59%, and no obligor represents
more than 1.87% of the portfolio balance as calculated by Fitch.
Deviation from Model-implied Rating: The class D-RR notes rating is
below their model-implied rating (MIR) by two notches, reflecting
limited cushion on the Negative Outlook-stressed portfolio at the
MIR.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
An increase of the default rate (RDR) at all rating levels by 25%
of the mean RDR and a decrease of the recovery rate (RRR) by 25% at
all rating levels will result in downgrades of no more than three
notches depending on the notes. While not Fitch's base case,
downgrades may occur if build-up of the notes' 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 reduction of the RDR at all rating levels by 25% of the mean RDR
and an increase in the RRR by 25% at all rating levels would result
in upgrades of up to three notches depending on the notes except
for the class A-RR notes, which are already at the highest rating
on Fitch's scale and cannot be upgraded. Further upgrades, except
for the 'AAAsf' notes, may occur if the portfolio's quality remains
stable and notes continue to amortise, leading to higher credit
enhancement across the structure.
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 pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
[*] Fitch Takes Actions on Aircraft ABS Deals on Neg. Watch
------------------------------------------------------------
As part of Fitch Rating's overall review of aircraft ABS
transactions previously placed on Rating Watch Negative (RWN) due
to Russia-Ukraine exposure, Fitch has downgraded four classes and
affirmed one class. These actions complete Fitch's review of the 13
transactions and are primarily driven by exposure to Russian and
Ukrainian collateral as well as the continued pressure on aircraft
values and lease rate volatility given the challenging market
environment.
The transactions mentioned below have been removed from Watch and
placed on Outlook Negative where applicable.
RATING ACTIONS
Rating Prior
------ -----
Thunderbolt III Aircraft Lease Limited
A 88607AAA7 LT BBsf Downgrade A-sf
B 88607AAB5 LT Bsf Downgrade BBsf
Sapphire Aviation Finance I
A 80306AAA8 LT BBsf Downgrade BBBsf
B 80306AAB6 LT B-sf Downgrade BBsf
C 80306AAC4 LT CCCsf Affirmed CCCsf
TRANSACTION SUMMARY
In March 2022, Fitch placed thirteen Aircraft ABS transactions on
Rating Watch Negative (RWN) due primarily to the presence of
collateral assets in Russia and Ukraine. Following an evaluation of
transaction performance and collateral development, Fitch has taken
the above rating actions, which are primarily driven by exposure to
Russian and Ukrainian collateral as well as the continued pressure
on aircraft values and lease rate volatility given the challenging
market environment.
Given the uncertainty surrounding insurance claims related to
Russia and Ukraine, Fitch ran various scenarios testing the
sensitivity regarding the timing and ultimate payouts from
insurance claims. Fitch's base case used in this review was a 50%
payment of the Maintenance Adjusted Base Value as of May 2022 and
this payment was lagged by 36 months. These levels were stressed
further for rating levels above the Single-B category.
Commercial aviation continues to face headwinds including the
lingering pandemic variants and associated travel restrictions as
well as elevated oil prices, rising interest rates, and potential
demand destruction due to higher ticket prices and recessionary
concerns. Such events may lead to additional lease restructurings,
lessee delinquencies and defaults, reductions of lease rates in the
pool, and accelerated declines to asset values, all of which cause
downward pressure related to future cash flows required to meet
debt service.
Despite these challenges, the market continues to recover from the
depths of the Pandemic crisis during 2020 and 2021, although there
are significant regional differences in performance. U.S. domestic
air travel is near pre-pandemic levels; international air travel,
however, is still approximately 25% below pre-pandemic levels. The
Asia Pacific region, specifically China, continues to underperform
and dampen the overall global rebound. While the main driver
impacting ratings relate to the Russian and Ukrainian exposure, the
rating review considered other factors including aircraft values,
cash collections, and the credit quality of certain lessees.
KEY RATING DRIVERS
Sapphire Aviation Finance I Limited:
Russian/Ukraine Transaction-Specific Commentary:
Sapphire had two aircraft leased to Russian airlines, representing
approximately 5.4% of the portfolio by asset value. These leases
have been terminated pursuant to regulations, but the servicer has
been unable to repossess these aircraft and is pursuing insurance
claims. Additionally, the servicer has an aircraft leased to a
Ukrainian airline that has been stored in Ukraine for several
months. The airline is working to try to remove the aircraft from
Ukraine but continues to face logistical and safety challenges. The
servicer has reported that the aircraft is airworthy and that the
lessee remains cooperative. For modeling purposes, Fitch has
assumed a delay in the aircraft's removal from Ukraine and
resumption of rental payments during the medium term.
Aircraft Collateral:
While the portfolio features mostly narrowbody aircraft (65%),
widebody makes up a meaningful exposure (35%). Weighted average
aircraft age is relatively high at 16 years. Aircraft over 18 years
of age (approaching the end of expected useful life) represent
approximately 37% of the portfolio. The portfolio was last
appraised by three third party appraisers on Dec. 31, 2021. The
lesser of the mean and median (LMM) of the maintenance adjusted
base values (MABV), excluding the two aircraft held in Russia and
adjusting values for several aircraft under consignment, was $464
million as of the Dec. 31, 2021 appraisal date. Controlling for
aircraft sold since the prior appraisal, the pool depreciated by
15%, which is higher than average. Adding the exposure relating to
the aircraft held in Russia to the depreciation rate results in
value decline of about 20%.
Lease Rate Volatility and Asset Value:
The weighted average lease rate factor (LRF) of the pool has
experienced declines, adversely impacting contractual cash flows.
Excluding off-lease aircraft, the majority of leases have
experienced recent declines in LRF. These declines primarily
resulted from restructures and power-by-the-hour (PBH) contracts in
which airlines only pay for hours flown. The servicer's willingness
to enter into these arrangements reflects continued pressure in the
market for commercial aircraft leasing.
Utilization has decreased as several aircraft reaching lease expiry
are close to the end of their useful life and are likely to be sold
outright or parted out instead of being re-leased. Including the
aircraft held in Russia, off-lease aircraft are about 28% of the
pool (using Fitch-modeled valuations).
Lessee Credit Quality:
The portfolio credit quality remains relatively stable with several
airlines improving in credit quality and others continuing to
deteriorate.
Thunderbolt III Aircraft Lease Limited:
Russian/Ukraine Transaction-Specific Commentary:
The portfolio had one aircraft with exposure to Russia when Fitch
placed the transaction on RWN, comprising approximately 5% of the
portfolio. The lease has been terminated, and recovery efforts are
underway. Fitch believes the likelihood of recovering the aircraft
is relatively low, however, the lessor continues to focus its
efforts on pursuing the insurance claim.
Aircraft Collateral:
The pool consists of 17 narrow body (NB) and 1 wide body (WB)
primarily mid-life aircraft (weighted-average [WA] age of 12.6
years) and leases with moderate remaining terms (WA 3.7 years
remaining term). Fitch considers the aircraft in this portfolio to
be generally marketable and supports the current credit quality of
this transaction.
Asset Value and Lease Rate Volatility:
Utilization is acceptable with only about 5% of the aircraft off
lease. Collateral values declined approximately 20% from June 30,
2021 to June 30, 2022 based on external appraisals on an LMM basis.
Controlling for the removal of the aircraft held in Russia, the
pool depreciated by 15%.
The weighted-average lease rate factor has not been significantly
impacted by modifications or re-leases.
Lessee Credit Quality:
Since Fitch's last review three aircraft have moved to a new
lessee. Overall, lessee credit quality has declined as several
lessees have experienced significant delinquencies and further
financial pressure.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Downgrades are possible if the concentration of grounded aircraft
or lease deferrals resulting in material decline in cash flows
remains high, or impacts to structural features. This includes
notable increases in transaction LTVs that impair credit
enhancement, taking into account pool transaction performance
metrics, and forward-looking scenarios that stress transaction
liquidity and cash flows.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Potential for upgrades is limited as Fitch caps the aircraft ABS
sector at 'Asf' ratings. This is due to heavy servicer reliance,
historical asset and performance risks and volatility, and its
pronounced exposure to exogenous risks. This was evidenced by the
effects of the events of Sept. 11, 2001, the 2008-2010 credit
crisis and the global pandemic, which all impacted demand for air
travel. Finally, the risks that aviation market cyclicality
presents to these transactions are compounded because when lessee
default probability is highest, aircraft values and lease rates are
typically depressed.
Fitch also considers jurisdictional concentrations per the
"Structured Finance and Covered Bonds Country Risk Rating
Criteria," which could result in lower rating caps. Hence, senior
class 'Asf' rated notes are capped, and there is no potential for
upgrades for certain tranches at this time.
For classes rated below 'Asf', potential upgrades across Fitch's
rated portfolio are highly limited at this time given ongoing
pressure on transaction performance metrics and the ongoing
geopolitical risk, which combined will retain negative ABS rating
pressure, especially for transactions that are underperforming
relative to Fitch's pandemic-recovery expectations. Key drivers of
potential upgrades would be strong collections, debt service
coverage ratio above triggers and a decline in LTVs sustained over
a period of time, among other factors.
===================
K A Z A K H S T A N
===================
KAZAKHSTAN ELECTRICITY: S&P Affirms 'BB+' LT ICR, Outlook Now Neg.
------------------------------------------------------------------
S&P Global Ratings revised its outlook on Kazakhstan Electricity
Grid Operating Company (KEGOC) to negative from stable and affirmed
its 'BB+' long-term issuer credit rating and 'BB+' long-term issue
rating on the company's senior unsecured loans.
The negative outlook reflects that on Kazakhstan.
S&P said, "The outlook revision reflects our view that KEGOC's
creditworthiness will remain closely tied with that of the
government of Kazakhstan. Our view of a high likelihood of
extraordinary financial support from the country's government leads
us to uplift the issuer credit rating by two notches above KEGOC's
stand-alone credit profile (SACP). As Kazakhstan's main electricity
transmission system operator, KEGOC is very important for the
economy and government. It has a track record of state support,
including credit-supportive tariff increases, equity injections,
tax benefits, and state guarantees on debt. As such, the negative
outlook on KEGOC primarily reflects that on Kazakhstan.
Additionally, a growing public debt servicing burden amid global
monetary tightening could lead to negative government
interventions. Although not part of our base-case scenario, this
could lead to a downward revision of our government support
assessment and the rating on KEGOC, all else being equal."
The 'bb-' SACP reflects KEGOC's monopoly position in regulated
electricity transmission with relatively stable cash generational
though capital expenditure (capex) may increase from 2025. Although
KEGOC's existing tariff framework is long term and incorporates a
certain rate of return on approved expenses and investments, it
doesn't allow for full cost reimbursement. It therefore leaves the
company exposed to electricity transmission volume volatility,
while the tariff calculation's profit is not transparent. Moreover,
the tariff regime is subject to regulatory interventions, as
demonstrated in 2021 and 2022, which reduces visibility over
KEGOC's future earnings and cash flow generation. Current capex
levels are insufficient for large-scale modernization efforts, and
grid modernization could significantly increase annual investments
to about KZT100 billion from 2025, from the current KZT35
billion–KZT40 billion. S&P said, "At the same time, we note that
as final decision-maker, the government may increase this sooner.
These increases will likely be financed through tariff increases.
Moreover, the company's high cash balances and potential dividends
flexibility could mitigate rising capex, if tariffs are not
supportive. That said, we think KEGOC will maintain its funds from
operations (FFO) to debt above 30%, which is commensurate with the
rating."
The negative outlook on KEGOC reflects that on Kazakhstan
(BBB-/Negative/A-3).
S&P said, "On a stand-alone basis, we expect KEGOC to maintain
existing headroom in the metrics within the rating, supported by
the sizable cash balance. Under our base-case scenario, FFO to debt
should remain at least above 30%, compared with the 20%-30% we view
as commensurate with the rating. Although increasing capex needs to
modernize aged assets, we understand the program is not yet
finalized and can be financed with cash or by reducing dividends."
S&P may lower the rating on KEGOC if:
-- S&P lowers the sovereign rating on Kazakhstan;
-- Liquidity becomes unexpectedly stressed or debt leverage
increases materially, with FFO to debt falling below 20%, as a
result of new large investment program financing or government
intervention reducing the tariffs and EBITDA; or
-- S&P lowers its assessment of extraordinary government support,
although it currently does not expect to do this.
-- S&P may revise the outlook on KEGOC to stable if it takes a
similar action on Kazakhstan, all else remaining equal.
S&P said, "On a stand-alone basis, we consider an upside scenario
to be limited at this stage, as it would require further improving
credit metrics, which we do not assume in our base-case scenario.
We believe this improvement would also need to include more clarity
on future large-scale investments, tariffs, and dividend
flexibility."
ESG credit indicators: E-2, S-2, G-4
KEGOC's long-term development strategy focuses on providing
reliable power system operations, stable cash flow generation for
shareholders, and sustainable development. At this stage,
environmental and social factors have a limited impact on our
credit ratings on KEGOC. Kazakhstan's electricity generation is
heavily skewed toward coal, with a low and only slightly increasing
share of renewable generation. Although Kazakhstan's President
Tokayev has mentioned decarbonization goals, S&P understands that
specific steps are yet to be decided. This implies limited calls
for additional capex on KEGOC's electricity grid infrastructure to
accommodate a growing share of renewable generation, at least for
the next couple of years, in stark contrast to European electricity
grids. KEGOC's position as a government-related entity exposes it
to sometimes unpredictable and politicized decision-making, but
also provides the rationale for government support.
LONDON-ALMATY INSURANCE: S&P Lowers ICR to 'B+', Outlook Positive
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit and
financial strength ratings on Kazakhstan-based London-Almaty
Insurance Co. JSC (LA) to 'B+' from 'BB-' and its national scale
ratings on the insurer to 'kzBBB+' from 'kzA-'. The outlook is
positive.
On Aug. 27, 2022, Kazakhstan-based Freedom Finance JSC--an
operational entity of Freedom Holding Corp. (FRHC)--acquired
London-Almaty Insurance Co. (LA), which S&P now considers a
moderately strategic subsidiary of FRHC. The group has also
announced plans to integrate LA into Freedom Finance Insurance JSC
(FFI) by the end of 2022.
The rating action reflects Freedom Finance JSC's announcement that
it acquired LA and plans to merge the company with FFI by the end
of the year. S&P continues to assess LA's stand-alone credit
profile (SACP) at 'bb-'. This reflects our view of LA's competitive
standing in Kazakhstan, in particular in the corporate insurance
market, which is supported by solid capital adequacy, although the
absolute size of its capital base is small, and sufficient
reinsurance protection.
S&P said, "Our ratings on LA are higher than FRHC's GCP because we
believe the regulatory framework in Kazakhstan prevents outflows of
funds from insurers to support a parent, for example through
dividend payments or material investments in the parent's financial
instruments. Thus, we consider FFI to be an insulated subsidiary of
its parent, FRHC, and currently we could rate the insurance company
up to two notches above the parent's GCP (currently 'b-').
"We will reassess of ratings of the newly created subgroup once the
details of the merger are more concrete. We assume that Freedom
Group will take the first steps toward integrating LA into FFI by
November 2022. Gradual integration of IT systems and business
processes will follow. We believe successful integration of LA into
FFI will strengthen the group's presence on the Kazakhstani
property and casualty insurance market. Thus, we believe that LA is
important to the group's long-term strategy. However, the level of
integration between LA and Freedom Group is yet to be tested. We
consider LA to be moderately strategic subsidiary of FRHC following
the acquisition.
"The positive outlook on LA mirrors that on FRHC's core operating
entities and reflects our expectations that the group's operations
will remain resilient to disruptions in capital markets amid the
Russia-Ukraine conflict. Additionally, we believe the group will
successfully complete its corporate restructuring initiatives and
that LA will preserve its competitive position, while focusing on
solid financial results and maintaining the quality of its
investment portfolio.
"We could raise the ratings on LA if we revised upward our
assessment of FRHC's GCP. LA would also need to maintain its
stand-alone creditworthiness, and the integration with the group
would need to bring no new substantial risks to the insurer.
"Future rating actions on LA would also hinge on our view of the
group's creditworthiness.
"We could revise the outlook to stable if we were to take the same
rating action on FRHC's core operating entities. Significant and
sustained deterioration in LA's capital base due to underwriting or
investment losses and earnings volatility may also lead us to
revise the outlook on the insurer to stable. Significant and
sustained deterioration in asset quality to 'BB' or lower could
also lead to revise outlook to stable."
ESG credit indicators: E-2, S-2, G-3
=============
R O M A N I A
=============
BLUE AIR: Cancels Flights After Romania Freezes Bank Accounts
-------------------------------------------------------------
Andra Timu and Irina Vilcu at Bloomberg News report that Romanian
discount carrier Blue Air Aviation SA canceled all flights through
Monday, Sept. 5, after its bank accounts were frozen by the state
amid concerns over unpaid debt.
According to Bloomberg, the sudden intervention left Blue Air
unable to pay daily operating costs, the carrier said, with the
grounding leaving thousands of passengers stranded at airports
across Europe and beyond. The government said the halt to services
was unjustified and urged the company to discuss a rescheduling of
the debt, Bloomberg relates.
Like other carriers, Blue Air was hit hard by the coronavirus
crisis, and its latest difficulties may signal a wider financial
squeeze on the sector as the summer travel period gives way to the
winter low season just as spiraling inflation lifts costs and
weighs on consumer spending, Bloomberg discloses.
Blue Air's main competitors, Wizz Air Holdings Plc and Ryanair
Holdings Plc, have already stepped in with offers of "special
tariffs" for passengers impacted by the grounding, Bloomberg
states. Bernstein said the pair have the flexibility to quickly
draft in aircraft to grab share in markets where incumbents
struggle, Bloomberg notes.
Blue Air received a six-year state loan of RON300 million in 2020,
guaranteed with a 75% stake, Bloomberg recounts. While the carrier
entered a special restructuring procedure, it had continued to
operate and was allowed to carry on selling tickets even after
receiving several large fines for canceled or delayed flights,
according to Bloomberg.
VIVRE: To Receive Add'l. EUR1MM Financing from Major Shareholder
----------------------------------------------------------------
Razvan Timpescu at SeeNews reports that Romanian online furniture
retailer Vivre said it will receive an additional financing of EUR1
million (US$990,801) from its majority stakeholder as the company
is preparing to enter a concordat procedure with its creditors in
order to avoid insolvency.
According to SeeNews, the company said in a report filed with the
Bucharest Stock Exchange on Sept. 7 the EUR1 million line of credit
is an addition to the EUR2.5 million in financing already granted
by its majority stakeholder, investment fund Neogen.
The company filed a request to open a concordat agreement with two
of its creditors, aiming to solve its financial difficulties,
SeeNews relates.
During the first half of 2022, the company's net loss widened to
RON18.64 million (US$3.8 million/ EUR3.83 million) from RON17.03
million loss recorded in the same period last year, SeeNews
discloses.
=====================
S W I T Z E R L A N D
=====================
OBSEVA SA: Receives Nasdaq Non-Compliance Notice
------------------------------------------------
ObsEva SA, a biopharmaceutical company developing novel therapies
to improve women's reproductive health, disclosed that on August
19, 2022, it received a notification letter from The Nasdaq Stock
Market ("Nasdaq") advising the Company that it was not in
compliance with Listing Rule 5450(b)(1)(A) requiring companies
listed on the Nasdaq Global Select Market to maintain a minimum of
$10,000,000 in stockholders' equity for continued listing.
The notification letter from Nasdaq was based on the Company's Form
6-K dated August 17, 2022, disclosing financial information for the
period ended June 30, 2022, which reported shareholders' equity of
($2,103,000). Under Nasdaq rules, the Company would normally have
45 calendar days to submit a plan to regain compliance. However,
Nasdaq has determined to shorten the response time for the Company
to submit its plan pursuant to its discretionary authority set
forth in Listing Rule 5101.
The Company had until August 29, 2022 to submit a plan to regain
compliance, and the Company intends to submit a plan by such date.
If the plan is accepted, which there can be no assurance, the
Company may be granted an extension of up to 180 calendar days from
August 19, 2022 to regain compliance with this particular rule. If
Nasdaq determines that the Company's plan is not sufficient to
achieve and sustain compliance, it may provide written notice to
the Company that its securities will be subject to delisting. At
that time, the Company may appeal the delisting determination to a
Nasdaq Hearings Panel.
The notification letter has no immediate effect on the listing of
the Company's common stock, and its common stock will continue to
trade on the Nasdaq Global Select Market under the symbol "OBSV" at
this time.
Amendment and Forbearance Agreement
On July 31, 2022, ObsEva SA (the "Company") entered into an
amendment and forbearance agreement (the "Amendment") with certain
funds and accounts managed by JGB Management, Inc. ("JGB"), in
relation to the Company's amended and restated securities purchase
agreement (the "Securities Purchase Agreement"), deemed dated as of
October 12, 2021, that certain Senior Secured Convertible Note due
October 12, 2024, in the aggregate original principal amount of
$31,496,063 (the "First Tranche Note"), and that certain Senior
Secured Convertible Note due January 28, 2025, in the aggregate
original principal amount of $10,500,000 (the "Second Tranche Note"
and together with the First Tranche Note, the "Outstanding Notes",
and together with the Securities Purchase Agreement and ancillary
agreements thereto, the "Transaction Agreements"), with JGB. Prior
to entering into the Amendment, the Company's previously announced
application to the courts of competent jurisdiction of the Swiss
canton of Geneva for a preliminary moratorium resulted, and/or may
result, in certain events of default under the Outstanding Notes
(the "Events of Default").
Pursuant to the Amendment, the Company and JGB agreed to apply the
$31,000,436 cash balance of the Company (the "Account Balances")
previously held in a control account in accordance with the
Transaction Agreements against the Outstanding Notes on a pro rata
basis, and JGB waived any application of a 25% prepayment premium
permitted under the Outstanding Notes with respect to the Account
Balances. In addition, JGB has agreed to refrain and forebear from
exercising or pursuing any rights or remedies under the Transaction
Agreements with respect to the Events of Default until the earlier
to occur of (i) October 29, 2022, (ii) the occurrence of any event
of default under the Transaction Agreements (other than the Events
of Default), and (iii) the date upon which a preliminary moratorium
has been granted by the courts of competent jurisdiction of the
Swiss canton of Geneva.
In exchange for the waiver of the prepayment penalty and
forbearance on exercising such rights and remedies, $1,500,000 was
added to the outstanding principal balance under the Outstanding
Notes, resulting in an aggregate outstanding balance of
approximately $11,000,000 under the Outstanding Notes, the
conversion price of the Outstanding Notes was adjusted to a
conversion price of $0.26 per share (subject to adjustment as
provided in the Outstanding Notes) and the Company's right to
mandatory conversion of any convertible notes issued pursuant to
the Securities Purchase Agreement, including the Outstanding Notes,
was terminated. In addition, JGB is no longer obligated to fund
any future mandatory or optional tranche closing under the
Securities Purchase Agreement. Except as provided herein and in the
Amendment, the terms of the Transaction Agreements remained
unchanged.
About ObsEva
ObsEva (NASDAQ: OBSV / SIX: OBSN) -- http://www.ObsEva.com-- is a
biopharmaceutical company developing novel therapies to improve
women's reproductive health and pregnancy. Through strategic
in-licensing and disciplined drug development, ObsEva has
established a clinical pipeline with development programs focused
on new therapies for the treatment of preterm labor and improving
clinical pregnancy and live birth rates in women undergoing in
vitro fertilization. ObsEva is listed on the Nasdaq Global Select
Market and is traded under the ticker symbol "OBSV" and on the SIX
Swiss Exchange where it is traded under the ticker symbol "OBSN".
SPORTRADAR GROUP: Moody's Hikes CFR to Ba3, Outlook Remains Stable
------------------------------------------------------------------
Moody's Investors Service has upgraded to Ba3 from B2 Sportradar
Group AG's ("Sportradar" or "the company") corporate family rating.
Moody's has also upgraded to Ba3-PD from B2-PD the company´s
probability of default rating. Concurrently, Moody's has upgraded
to Ba3 from B2 the rating on the outstanding EUR220 million senior
secured TLB ("TLB") due 2027 issued by Sportradar Capital S.a r.l
and the EUR110 million senior secured multicurrency Revolving
Credit Facility ("RCF"). The rating outlook for both entities
remains stable.
"The upgrade reflects the company's solid 2022 financial
performance and significant debt reduction following the EUR200
million early repayment of the TLB (EUR420 million were initially
issued in 2020) which brings the debt to EBITDA ratio to 2.6x from
4.6x as of June 2022. The upgrade also reflects the expectation of
positive free cash flow generation in 2022 and 2023.
Moody's believes the company has significant financial resources to
execute on its investment plan and any future acquisitions will
largely be EBITDA accretive to support the overall growth and
diversification of its business", says Stefano Cavalleri, Vice
President - Senior Analyst and lead analyst for Sportradar.
RATINGS RATIONALE
The Ba3 rating is supported by Sportradar's (1) market leading
position, with the highest revenue, largest market share in its
core markets and largest volume of sports data amongst its peers;
(2) well-invested proprietary technology and strong geographic
coverage with more than 8,300 trained data journalists, which act
as barriers to entry; (3) established long term relationships with
key sports betting and media companies, sports federations,
authorities and content rights providers; (4) deeply embedded
workflows with customers resulting in high switching costs and low
churn; (5) moderately conservative financial policy with no plans
for shareholder distributions and negative net debt.
Sportradar's rating is also constrained by the (1) company's high
fixed cost base resulting from its dependence on acquiring ongoing
sports rights, mitigated by the proven ability to reduce sports
rights payments during live sports disruptions; (2) technology
disruption in data collection and processing by other competitors;
(3) risk of a sizeable M&A transaction and its integration; (4)
negative EBITDA from the US operations which are ramping up ahead
of plan and will breakeven in 2023/2024; (5) some keyman risk on
the principal founder and CEO of the business, who also control the
majority of the voting rights.
ESG CONSIDERATIONS
Sportradar is highly exposed to social risks because it provides
sports data used for betting purposes. Whilst the company is a
service provider to the betting operators, it remains exposed to
tighter regulation. At the same time, the introduction of
regulatory frameworks also provides a business opportunity as is
the case in the USA. Sportradar is a publicly listed company
although with a short track record. The company raised over $600
million through an IPO and it has significant liquidity to fund its
growth plans. The recent debt pre-payment also points to a
conservative financial policy coupled with a zero dividend policy.
However, the company has not well articulated its appetite for
leverage and there is material concentration of voting rights with
the founder and CEO.
LIQUIDITY
Sportradar's liquidity position is very strong thanks to
significant cash on balance sheet – EUR529 million as of July
2022 – and no debt maturities until 2027. Additionally the
company can draw on further liquidity from the EUR110 million RCF
facility and is expected to have positive free cash flow profile
going forward.
Moody's expect use of cash on balance sheet for M&A to be gradual
and to support revenue diversification away from sports rights.
RATIONALE FOR THE STABLE OUTLOOK
The stable rating outlook reflects Moody's view that, in the next
12-18 months, the sports data market will continue to growth at
double digit supported by online migration and more states opening
up in the USA and that Sportradar leading market share will
continue to drive EBITDA growth bringing the company's leverage
below 2.0x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade is predicated upon further strengthening of the
company's business profile including a longer track record of
integrating acquisitions and growing the revenue base through cross
selling of new products. An upgrade is also likely if margins
improve as a result of the US operations becoming profitable. Lower
M&A risk and better articulation of the company's appetite for
leverage would also be considered positively in the rating.
Downward pressure on the ratings could occur if the company's (1)
Moody's-adjusted gross leverage is maintained for a prolonged
period of time above 3.0x; (2) Interest coverage falls below 3.0x;
(3) changes to its financial policy resulting in greater appetite
for leverage. A downgrade could also occur as a result of free cash
flow generation being negative for a sustained period of time.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
COMPANY PROFILE
Sportradar is a leading service provider globally of end-to-end
sports data analytics solutions to both betting and media
industries, as well as to sport federations and authorities.
Sportradar covers the entire value chain of collecting, processing,
marketing and monitoring of sports-related live data as well as
providing sports-related services, including a proprietary fraud
detection system. Sportradar serves over 1,700 customers and
partners in over 123 countries around the world, with over 8,300
data journalists, covering over 890,000 events annually across 90+
sports. The company generated revenue for the last twelve months to
June 30, 2022 of EUR634.2 million and company-adjusted EBITDA of
EUR96.5 million.
=============
U K R A I N E
=============
UKRAINE: EU Confirms EUR5 Billion in Macro-Financial Aid
--------------------------------------------------------
Andrea Shalal at Reuters reports that Ukraine's President Volodymyr
Zelenskiy on Sept. 7 thanked the European Union for confirming EUR5
billion (US$4.97 billion) in macro-financial aid but said the
country needed a "full-fledged" program of financing from the
International Monetary Fund.
Mr. Zelenskiy made the comments in a Twitter post following a
conversation with German Chancellor Olaf Scholz, who he said
discussed plans to further strengthen Ukraine's defence
capabilities, Reuters relates.
It was not immediately clear what Mr. Zelenskiy meant by a
"full-fledged" program, Reuters notes.
Ukraine's Economy Minister Yulia Svyrydenko last month told Reuters
that the government would begin negotiations with the IMF in
September. She declined to say how much Ukraine would request in a
new program, but said it should be "relatively large" and needed to
be agreed quickly to help free up funds from other creditors and
reassure investors.
According to Reuters, Oleg Ustenko, a senior economic adviser to
Mr. Zelenskiy, has said an IMF loan of US$5 billion over 18 months
could serve as an anchor for a larger package of US$15 billion to
US$20 billion from other creditors.
===========================
U N I T E D K I N G D O M
===========================
AVONSIDE: Enters Administration, Seeks Buyer for Energy Division
----------------------------------------------------------------
Grant Prior at Construction Enquirer reports that Avonside Group
Services, the UK's largest roofing contractor, has fallen into
administration.
According to Construction Enquirer, Begbies Traynor is now in
charge of Avonside which employs 465 people and installs more than
17,000 roofs a year for house builders via its 39-strong branch
network across the UK.
The administrators have managed to sell nine roofing branches
saving 79 jobs and are hoping to find a buyer for Avonside's energy
division which is continuing to trade, Construction Enquirer
relates.
The remaining roofing operations and Avonside's plumbing business
will cease trading, Construction Enquirer discloses.
CINEWORLD: Files for Bankruptcy Protection in U.S.
--------------------------------------------------
Reuters reports that Britain's Cineworld Group on Wednesday,
September 7, filed for bankruptcy protection in the United States
as the world's second largest cinema chain operator struggles to
rein in its massive debt.
The Chapter 11 filing, which allows firms to stay in business while
trying to restructure their debt, involves Cineworld's US, UK, and
Jersey operations, covering the bulk of its business, notes
Reuters.
According to the report, Cineworld said it expected to emerge from
Chapter 11 protection during the first quarter of 2023 and intended
to pay all its vendors in full during the process as well as pay
employees their usual wages.
Group companies have $1.94 billion of commitments from existing
lenders and Cineworld expects to operate its global business and
cinemas as usual throughout the process, it added, notes Reuters.
Cineworld shares hit a record low of 1.80 pence after the Wall
Street Journal first reported its potential bankruptcy in August,
Reuters recalls. Two years ago, it abandoned plans to take over
rival Cineplex and is in a legal dispute with the Canadian firm,
which has sought C$1.23 billion ($946 million) in damages.
Cineplex said it would review in detail the materials filed in
connection with the bankruptcy proceedings and explore all avenues
available to advance its claim against Cineworld, reports Reuters.
According to the report, while Cineworld reiterated there was no
guarantee of any recovery for holders of existing equity interests,
it does not expect the filing to result in a suspension of trading
in its London shares. Cineworld also said it expected to change its
real estate strategy in the United States and would engage with
landlords to improve US cinema lease terms, it adds.
While the cinema industry has been struggling to recover from the
pandemic, Cineworld's specific issue is the amount of debt it has
amassed over the years, says the report. Its net debt including
lease liabilities stood at $8.9 billion at the end of 2021, Reuters
relates. Excluding lease liabilities, its net debt was $4.84
billion at that time. The company's market value was about 59
million pounds ($68 million) at Sept. 7, Wednesday's close, adds
Reuters.
Cineworld, which operates more than 9,000 screens across 10
countries and employs around 28,000 people, took on debt to fund
part of its $3.6-billion purchase of Regal in 2017, and more to
survive the pandemic, Reuters relates.
MICRO FOCUS: Fitch Puts 'BB-' LongTerm IDR on Watch Positive
------------------------------------------------------------
Fitch Ratings has placed Micro Focus International plc's, MA
FinanceCo., LLC's and Seattle SpinCo, Inc.'s Long-Term Issuer
Default Ratings (IDR) of 'BB-' and senior secured debt ratings of
their first-lien facilities of 'BB+'/'RR1' on Rating Watch Positive
(RWP).
The RWP follows the announced acquisition of Micro Focus by
Canada-based Open Text Corporation for an enterprise value (EV) of
about GBP5.1 billion in cash. The transaction, which is subject to
certain conditions and antitrust approvals, is expected to close in
1Q23 and will result in the repayment of all of Micro Focus's
existing debt. The RWP will be resolved on completion of the
transaction.
The acquisition of Micro Focus comes at a time when the rating is
under pressure and the company is part way through executing a
turnaround strategy that aims to stabilise declines in core
business areas while reshaping the portfolio for growth in the
medium term.
On a standalone basis, Micro Focus is making progress in executing
its strategy but visibility on the pace and extent of cash flow
improvements remains low. Delays in stabilising revenue and
achieving cost reductions in line with existing management business
plans could lead to leverage being sustained above the negative
threshold of its 'BB-' standalone rating for an extended period.
Potential macro-economic pressure and rising interest rates may
also exacerbate pressures on the company's free cash flow (FCF).
KEY RATING DRIVERS
Cash Acquisition, Repayment of Debt: Successful acquisition - at
6.3x adjusted EV to EBITDA (12 months ending 30 April 2022) - will
result in the repayment of all of Micro Focus's outstanding debt.
Open Text intends to fund the acquisition through a USD2.6 billion
term loan, a USD2 billion bridge loan facility and existing cash
and a revolving credit facility (RCF). Open Text aims to reduce net
leverage to below 3.0x within eight quarters from completion of the
transaction.
Strong Industrial Rationale: The combined group will have
annualised revenue of USD6.2 billion and adjusted EBITDA of USD2.2
billion with likely strategic benefits through increased scale, a
complementary product portfolio, strengthening geographic
footprint, plus synergies in R&D and operations. It will be
well-positioned to accelerate the simplification of the business
and increase revenue through improved market access for Micro
Focus's existing portfolio given OpenText's significant experience
in SaaS, transitions and its established SMB channel. Open Text
believes it can extract an additional USD100 million of cost
reduction from Micro Focus's existing plan of USD300 million (net
of inflation).
Secular Revenue Pressure: About 86% of revenue in FY21 (financial
year ending October) was from maintenance services and licencing,
which have declined on average 7% p.a. over the past three years. A
subset of Micro Focus's business focuses on mature software assets,
such as mainframe technology, which is in secular decline. While
pressure on its mature products and services will continue, they
are likely to still generate revenue for a sustained period and
remain profitable. Micro Focus has a strong position in supporting
legacy architecture investments, which are often mission-critical
for its industrially and geographically diverse customer base.
Receding HPE Integration Impact: The merger of HPE's software
assets with Micro Focus in 2017 had a significant negative impact
on the latter's operational and financial performance as the
company had underestimated the complexities of asset carve-out,
integration and synergy extraction. These complexities led to
sales-execution challenges, delays in IT system implementations,
attrition in sales personnel and disruption in the acquired
customer base leading to lower revenue and cash flow. We believe
Micro Focus has largely grappled with the integration challenges
and the incremental impact on overall financial performance will
now be less pronounced.
Cost Reduction Key: Micro Focus is aiming to reshape its business
portfolio to have a greater exposure to growth areas such as SaaS
and cyber security, curb declines in its mature software assets,
streamline its internal and sales operations, and reduce its cost
base. It is aiming for flat revenue in FY23 and reduce its FY21
cost base of around USD1.84 billion (exc. Digital safe) to USD1.5
billion-USD1.6 billion. Achieving these targets would be sufficient
to bring Fitch-defined net debt/EBITDA to 3.5x in FY24. At
end-1HFY22 the company reported that it had achieved USD150 million
of annualised cost savings from its gross target of USD400
million-USD500 million by FY23.
Uncertainties on Turnaround: While we believe management targets
are plausible, visibility on achieving these targets is low. The
combination of macro-economic pressure, increasing inflation and
interest rates, and operational execution risks could delay the
company stabilising its revenue and achieving sufficient cost
savings within the envisaged timeframe. The low visibility is
reflected in Fitch's slightly more cautious standalone base-case
forecasts, which assume revenue declines of 1.5% in FY23 on a cost
base of about USD1.65 billion.
High Standalone Leverage Reducing Slowly: At FYE21 Micro Focus's
net debt/EBITDA of 4.2x was above the 3.5x negative threshold of
its 'BB-' rating. Our base case assumes that this will increase to
4.4x in FY22 before gradually declining to 3.5x. in FY25. This
underlines a decline in EBITDA in FY22 before gradually increasing
from FY23 as it reduces costs and begins to grow revenue from FY24.
We expect growth to be driven by slower declines in legacy product
revenue, improving contribution from SaaS and new sales starting in
2HFY23 from the company's recently extended partnership with AWS.
Supportive FCF Generation: FCF has been hit by revenue declines,
EBITDA margin compression, and high restructuring, integration and
IT costs. Despite these pressures, FCF has remained largely
positive. Our base case envisages that pre-dividend FCF will
average around USD280 million per year and around 7%-8% of revenue
during FY22-FY25. These metrics are supportive of its 'BB-'
standalone rating.
DERIVATION SUMMARY
Micro Focus has strong geographic and customer diversification with
a cash-generative business model and leadership in key market
segments. This is, however, tempered by a significant dependence of
revenue streams that are in secular decline, which is being
addressed by the company's business portfolio restructuring towards
growth assets and to reduce cashflow volatility.
The company has significantly smaller scale than enterprise
software peers such as MSFT, IBM, ORCL and HPE, but is closer in
scale to direct competitors such as CA, Inc. and BMC. Historically,
Fitch had viewed the company's EBITDA margin above 45%, which is in
line with top peers', as a mitigating factor to its smaller scale.
However, its troubled integration of the HPE carve-out and ongoing
go-to-market struggles have resulted in Fitch forecasting
significant EBITDA margin compression to 30%-35%.
Fitch applies a generic approach to rate and assign Recovery
Ratings (RRs) to instruments for issuers rated 'BB-' or above. The
process of establishing ratings for the obligations of issuers
rated between 'AAA' and 'BB-' refers, for the most part, to
aggregate recoveries in the market as a whole, and not to
issuer-specific recovery analysis. For corporate entities rated
'BB-' and above, the rating assigned to a senior unsecured debt
instrument assumes an average recovery in the event of bankruptcy,
corresponding to the 31%-50% range, and equivalent to 'RR4'.
When average recovery prospects are present, IDRs and unsecured
debt instrument ratings are thus equal, with no notching. For
secured debt, Fitch evaluates characteristics such as leverage at
the priority level, an instrument's relative claim on an issuer's
EV, structural or legal subordination, or collateral coverage
relative to other debt in the capital structure. Under Fitch's
Corporates Recovery Ratings and Instrument Ratings Criteria (9
April 2021), Fitch sets the first-lien senior secured debt rating
at 'BB+'/'RR1' due to our belief that the majority of the company's
EV emanates from the U.S., despite being a U.K.-based borrower.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer on a
Standalone Basis
- Revenue decline of about 9% in FY22 (excluding the Digital Safe
disposal), 1.5% in FY23 and about 2.5% in FY24
- Fitch-defined EBITDA margin of 30.5% in FY22, increasing to
about 32% by FY24
- Capex at about 2.8% of revenue in FY22, decreasing to 2.5% by
FY24
- Dividends of USD74 million in FY22, USD77 million in FY23 and
USD85 million in FY24
- Disposal proceeds of USD335 million in FY22 and acquisition
spend of USD50 million in FY23 and FY24
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade (on a standalone basis):
- Total debt with equity credit/operating EBITDA sustained below
3.5x (equivalent to about 3.0x Fitch- defined net debt/EBITDA)
- FCF margin sustained above 10%
- Progress towards management's target of reaching neutral
revenue growth by FYE23 and achieving planned cost savings
Factors that could, individually or collectively, lead to negative
rating action/downgrade (on a standalone basis):
- Total debt with equity credit/operating EBITDA sustained above
4.0x (equivalent to about 3.5x Fitch- defined net debt/EBITDA)
- FCF margin sustained below 5%
- Inability to arrest revenue declines, or sustained revenue
declines of mid-single digits or above
LIQUIDITY AND DEBT STRUCTURE
Adequate Standalone Liquidity: Fitch believes liquidity is
sufficient for the rating category, comprising about USD579 million
of readily available cash (1H22) and access to a USD250 million
undrawn RCF. Liquidity is also supported by pre-dividend FCF, which
Fitch forecasts will average about USD280 million per annum in
FY22-FY25.
Fitch believes pre-dividend FCF is an appropriate measure given the
company's demonstrated willingness to cut dividend during periods
of stress as in FY20, underlining flexibility of its dividend
commitment. Liquidity requirements are moderate given low capital
intensity and minimal required debt amortisation.
ISSUER PROFILE
Micro Focus is an enterprise software company specialising in
modernising customers' legacy software environment to bridge the
latest innovations and platforms. The company is headquartered in
the UK, with significant operations in the U.S. and India where the
majority of its workforce is based.
ESG CONSIDERATIONS
Micro Focus has an ESG Relevance Score of '4' for management
strategy due to continued deterioration in operating results
following the challenged integration of the transformative HPE
carve-out acquisition, which has a negative impact on the credit
profile, and is relevant to the ratings in conjunction with other
factors. Given a change in senior management team at the company
since the HPE acquisition, this factor could be revised to '3' upon
successful execution of the company's turnaround strategy.
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.
RATING ACTIONS
Rating Prior
------ -----
Micro Focus
International Plc LT IDR BB- Rating Watch On BB-
MA FinanceCo., LLC LT IDR BB- Rating Watch On BB-
senior secured LT BB+ Rating Watch On RR1 BB+
Seattle Spinco, Inc. LT IDR BB- Rating Watch On BB-
senior secured LT BB+ Rating Watch On RR1 BB+
PREMIER CARS: Driver Jobs, Operations Secured Despite Liquidation
-----------------------------------------------------------------
Owen Hughes at NorthWales Live reports that a cab firm boss says
driver jobs and taxi operations have been secured despite a venture
having to be put into liquidation.
Premier in Bangor are one of the biggest taxi firms in north west
Wales.
But after being "battered" by Covid and hit by recent legislation
changes over self employed drivers following the Uber case, Premier
Cars Bangor Ltd has been put into a Creditors voluntary
liquidation, NorthWales Live relates. However, Premier Group North
Wales has been formed to continue the Premier name -- with 45 staff
employed covering parts of Gwynedd and Anglesey.
According to NorthWales Live, Boss Chris O'Neal said it had been a
difficult period but that they were treating it as a "learning
curve". He said that they had come back stronger with a "vision"
of being the leading taxi firm in the area.
He said no driver jobs were lost and the new venture has invested
in 19 electric and hybrid vehicles as they look to the future,
NorthWales Live notes. Mr. O'Neal, as cited by NorthWales Live,
said they were in talks with HMRC over previous liabilities from
Premier Cars Bangor Ltd.
According to Companies House, the venture has liabilities of nearly
GBP294,000, NorthWales Live discloses. This includes GBP180,000 to
HMRC, GBP45,000 to Lloyds bank and GBP31,000 to Nest Pension,
NorthWales Live states. He said he expected payments to be made to
reduce the liabilities in the winding up of the business,
NorthWales Live relates.
Mr. O'Neal, a former Gwynedd councillor, said they had been badly
impacted by Covid which removed a huge chunk of its normal income
as lockdowns closed schools and slashed the numbers travelling,
NorthWales Live recounts. There had also been implications to
changes to self employment rules following a Supreme Court ruling
on a case brought by Uber drivers over employment rights, according
to NorthWales Live.
He said a vast majority of the 45 staff were now fully employed by
the firm, NorthWales Live notes.
SHANKLY HOTEL: Court Enters Liquidation Order
---------------------------------------------
Jon Robinson at Business Live reports that the company that
operated The Shankly Hotel in Liverpool has been ordered into
liquidation.
According to Business Live, The Shankly Hotel Liverpool Ops Limited
has been the subject of a successful winding up petition by HMRC, a
creditor of the company.
The business operated the hotel, which entered administration in
April 2020, Business Live relates. It is part of the Signature
Living family of hotels and hospitality businesses.
The firm that holds the leasehold interest of the Victoria Street
building, Signature Shankly Limited, remains in administration,
Business Live notes. Advisory firm Kroll, which is handling the
administration, confirmed that Signature Shankly Limited has taken
over the day-to-day running of the hotel, which remains open,
Business Live discloses.
In a recently-filed document with Companies House, it has been
confirmed that The Shankly Hotel Liverpool Ops Limited was the
subject of a winding up petition in February this year, brought by
HMRC, Business Live relays.
That led to a ruling on Aug. 17 that the business was to be wound
up under the provisions of the Insolvency Act 1986, Business Live
notes.
The ruling also ordered that HMRC's costs should be paid out of the
assets of The Shankly Hotel Liverpool Ops Limited, Business Live
states.
According to an administrator's progress report for Signature
Shankly Limited, which was published in May, The Shankly Hotel
Liverpool Ops Limited continued to trade the hotel while steps were
taken to put it up for sale, Business Live discloses.
Kroll said there had been a "number of interested parties that were
in an advanced phase of the bidding process", Business Live
relates.
However, after a period of exclusivity was entered into with one
interested party the potential buyer withdrew their interest,
Business Live discloses. Kroll added that the hotel "will be
brought back to market as soon as possible".
According to Business Live, a Kroll spokesperson said: "Following
the liquidation of The Shankly Hotel Liverpool Ops Limited, the
joint administrators of Signature Shankly Limited, the entity that
owns the leasehold interests in the hotel, has taken over the
day-to-day operations at the Shankly Hotel.
"All upcoming bookings and events will be honoured and all
employees that remain in the business, will be offered new
contracts of employment.
"The joint administrators continue to pursue a sale of the business
and assets of the Shankly Hotel as a going concern."
===============
X X X X X X X X
===============
[*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
-------------------------------------------------------------
Author: Warren E. Agin
Publisher: Bowne Publishing Co.
List price: $225.00
Review by Gail Owens Hoelscher
Red Hat Inc. finds itself with a high of 151 5/8 and low of 20 over
the last 12 months! Microstrategy Inc. has roller-coasted from a
high of 333 to a low of 7 over the same period! Just when the IPO
boom is imploding and high-technology companies are running out of
cash, Warren Agin comes out with a guide to the legal issues of the
cyberage.
The word "cyberspace" did not appear in the Merriam-Webster
Dictionary until 1986, defined as "the on-line world of computer
networks." The word "Internet" showed up that year as well, as "an
electronic communications network that connects computer networks
and organizational computer facilities around the world."
Cyberspace has been leading a kaleidoscopic parade ever since, with
the legal profession striding smartly in rhythm. There is no
definition for the word "cyberassets" in the current
Merriam-Webster. Fortunately, Bankruptcy and Secured Lending in
Cyberspace tells us what cyberassets are and lays out in meticulous
detail how to address them, not only for troubled technology
companies, but for all companies with websites and domain names.
Cyberassets are primarily websites and domain names, but also
include technology contracts and licenses. There are four types of
assets embodied in a website: content, hardware, the Internet
connection, and software. The website's content is its fundamental
asset and may include databases, text, pictures, and video and
sound clips. The value of a website depends largely on the traffic
it generates.
A domain name provides the mechanism to reach the information
provided by a company on its website, or find the products or
services the company is selling over the Internet. Examples are
Amazon.com, bankrupt.com, and "swiggartagin.com." Determining the
value of a domain name is comparable to valuing trademark rights.
Domain names can come at a high price! Compaq Computer Corp. paid
Alta Vista Technology Inc. more than $3 million for "Altavista.com"
when it developed its AltaVista search engine.
The subject matter covered in this book falls into three groups:
the Internet's effect on the practice of bankruptcy law; the ways
substantive bankruptcy law handles the impact of cyberspace on
basic concepts and procedures; and issues related to cyberassets as
secured lending collateral.
The book includes point-by-point treatment of the effect of
cyberassets on venue and jurisdiction in bankruptcy proceedings;
electronic filing and access to official records and pleadings in
bankruptcy cases; using the Internet for communications and
noticing in bankruptcy cases; administration of bankruptcy estates
with cyberassets; selling bankruptcy estate assets over the
Internet; trading in bankruptcy claims over the Internet; and
technology contracts and licenses under the bankruptcy codes. The
chapters on secured lending detail technology escrow agreements for
cyberassets; obtaining and perfecting security interests for
cyberassets; enforcing rights against collateral for cyberassets;
and bankruptcy concerns for the secured lender with regard to
cyberassets.
The book concludes with chapters on Y2K and bankruptcy; revisions
in the Uniform Commercial Code in the electronic age; and a
compendium of bankruptcy and secured lending resources on the
Internet. The appendix consists of a comprehensive set of forms for
cyberspace-related bankruptcy issues and cyberasset lending
transactions. The forms include bankruptcy orders authorizing a
domain name sale; forms for electronic filing of documents;
bankruptcy motions related to domain names; and security agreements
for Web sites.
Bankruptcy and Secured Lending in Cyberspace is a well-written,
succinct, and comprehensive reference for lending against
cyberassets and treating cyberassets in bankruptcy cases.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.
Copyright 2022. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000.
* * * End of Transmission * * *