/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/220915.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 Thursday, September 15, 2022, Vol. 23, No. 179 Headlines G E R M A N Y HAKLE: Files for Bankruptcy Due to High Gas Prices PACCOR HOLDINGS: Moody's Withdraws B3 CFR on Faerch Transaction UNIPER: In Talks Over Equity Increase with German Government [*] GERMANY: To Provide Loan Guarantees for Ailing Energy Firms K A Z A K H S T A N FINCRAFT GROUP: S&P Retains 'BB-' LongTerm ICR on Watch Negative S P A I N FTPYME TDA CAM 4: S&P Affirms 'D(sf)' Rating on Class D Notes U N I T E D K I N G D O M AMIGO LOANS: Moody's Confirms Caa1 CFR & Alters Outlook to Stable GLOUCESTERSHIRE CREDIT: Enters Administration, Halts Trading SCUNTHORPE UNITED: On Brink of Administration WORCESTERS WARRIORS: Owners Agree to Terms of Club's Sale - - - - - ============= G E R M A N Y ============= HAKLE: Files for Bankruptcy Due to High Gas Prices -------------------------------------------------- David Boos at The European Conservative reports that the German company Hakle, a traditional toilet paper manufacturer, in business since 1928, has now succumbed to high gas prices and has filed for bankruptcy. Back in March, Hakle warned that skyrocketing gas prices would weaken supply, as its production processes are particularly energy-intensive and require large amounts of gas in the drying process, The European Conservative recounts. According to The European Conservative, Volker Jung, managing director of the 220-employee company, announced in a statement: "Since the start of the Corona pandemic in 2020, the energy-intensive paper industry has been subject to severe distortions in the global raw materials, logistics and energy market." This situation was further exacerbated in the months following Russia's invasion of Ukraine, and the company was neither willing nor able to fully pass on the increased costs to customers. Mr. Jung, however, hopes to continue operating independently, thanks to the bankruptcy filing, The European Conservative notes. "We are confident that this attempt at reorganization will succeed in this challenging situation of what can be described as a historic energy crisis," The European Conservative quotes Mr. Jung as saying. "We hope there will be someone who will buy the company and work with us to move things forward." Distribution partners say security of supply is set for now, The European Conservative discloses. Likewise, the Federal Labor Agency has guaranteed wage continuation payments until the end of November 2022, The European Conservative states. PACCOR HOLDINGS: Moody's Withdraws B3 CFR on Faerch Transaction --------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings and stable outlook of PACCOR Holdings GmbH (PACCOR or the company), including its B3 corporate family rating and its B3-PD probability of default rating. PACCOR is a German plastic packaging manufacturer. Concurrently, Moody's has withdrawn the stable outlook and B3 ratings on the EUR437 million backed senior secured term loan B due 2025 and on its EUR50 million backed senior secured revolving credit facility (RCF) due 2024, and the Caa2 rating on the EUR70 million backed senior secured second lien term loan due 2026, all borrowed by PACCOR Packaging GmbH. RATINGS RATIONALE Moody's has decided to withdraw the ratings of PACCOR because the company's debt previously rated by Moody's has been fully repaid following the acquisition by Faerch Group on September 1, 2022. Faerch Group is a Danish-based European leader in rigid food packaging and integrated tray recycling, ultimately owned by A.P. Moller Holding. LIST OF AFFECTED RATINGS Withdrawals: Issuer: PACCOR Holdings GmbH Probability of Default Rating, Withdrawn , previously rated B3-PD LT Corporate Family Rating, Withdrawn , previously rated B3 Issuer: PACCOR Packaging GmbH BACKED Senior Secured Bank Credit Facility, Withdrawn , previously rated B3 BACKED Senior Secured Bank Credit Facility, Withdrawn , previously rated Caa2 Outlook Actions: Issuer: PACCOR Holdings GmbH Outlook, Changed To Ratings Withdrawn From Stable Issuer: PACCOR Packaging GmbH Outlook, Changed To Ratings Withdrawn From Stable COMPANY PROFILE Headquartered in Dusseldorf, Germany, PACCOR Holdings GmbH is a producer of rigid plastic packaging for food and non-food within consumer goods end markets. UNIPER: In Talks Over Equity Increase with German Government ------------------------------------------------------------ Guy Chazan at The Financial Times reports that Uniper is discussing an equity increase with the German government that would leave Berlin with more than 50% of the struggling energy group. The company, which has already received about EUR19 billion in German government support, said on Sept. 14 that talks with its major shareholder, Finnish utility Fortum, and the German government were continuing over a "long-term solution", the FT relates. The company has been driven to the brink of insolvency by Russia's decision to choke off gas to Germany, which has forced it to buy more expensive gas on the spot market in order to meet its supply contracts, the FT discloses. In July, the government agreed on a EUR15 billion rescue package and took a 30% stake in the company, the FT recounts. But Uniper requested more financial help in August, raising the bill for its bailout to EUR19 billion, the FT notes. Officials in Berlin have been desperate to prevent a collapse, fearing it might trigger a Lehman Brothers-style meltdown of the whole German energy sector, the FT relays. According to the FT, Uniper said on Sept. 14 that since the July deal was signed, Europe's energy crisis had "escalated further" thanks to Russia's move on Sept. 3 to suspend indefinitely all gas shipments through the Nord Stream 1 pipeline that connects Russia to Germany. Uniper, as cited by the FT, said gas and power prices had been "extremely high and volatile" and that consequently, its "financial losses due to the higher gas procurement cost have significantly increased". "The deteriorating operating environment and Uniper's financial situation have to be taken into account while Fortum, the German government and Uniper continue their discussions on a long-term solution for Uniper," the FT quotes the company as saying. [*] GERMANY: To Provide Loan Guarantees for Ailing Energy Firms --------------------------------------------------------------- Kamil Kowalcze at Bloomberg News reports that Germany is set to use a fund created to help companies cope with the economic hit from the pandemic to provide loan guarantees for struggling energy firms, according to a person familiar with the plan. State development bank KfW would oversee the mechanism and the volume of loan guarantees available would be around EUR67 billion (US$67.9 billion), said the person, who asked not to be identified discussing confidential information, Bloomberg News relates. According to Bloomberg News, the person said Chancellor Olaf Scholz's government was set to approve the plan -- which is designed to help energy companies forced to pay higher prices due to Russian supply cuts -- at a regular cabinet meeting Wednesday, Sept. 14. The latest loan guarantee plan, which was first reported by Handelsblatt newspaper, is separate from a financial aid package announced in April partly targeted at helping energy firms overburdened by collateral requirements, Bloomberg News discloses. Germany and its European partners are taking emergency action to support utilities amid fears that companies will be unable to cope with growing margin calls, Bloomberg News states. Mr. Scholz on Sept. 13 sought to reassure German industry that the government is doing all it can to address any liquidity problems, Bloomberg News notes. "We have extended and expanded the protective shield for companies that are particularly affected," Bloomberg News quotes Mr. Scholz as saying in a speech at a BDA employers association conference in Berlin. He said measures include low-interest KfW loans, guarantee programs and help for energy-intensive companies, Bloomberg News relays. =================== K A Z A K H S T A N =================== FINCRAFT GROUP: S&P Retains 'BB-' LongTerm ICR on Watch Negative ---------------------------------------------------------------- S&P Global Ratings extended its CreditWatch with negative implications on the 'BB-' long-term issuer credit rating and 'kzA-' national scale ratings on Fincraft Group LLP (Fincraft). The ratings were initially placed on CreditWatch on May 24, 2022. Fincraft has established a plan to refinance its 2023 bonds. The group intends to buy back about 50% of the outstanding bonds using cash injected by the shareholder and the remaining debt via a new three-year issuance. S&P understands Fincraft has completed preliminary negotiations with investors but the refinancing plan remains a work in progress. The shareholder intends to transfer income-generating assets to Fincraft. Over 2022, Kenes Rakishev intends to transfer a 50% stake in a commodity business. Although S&P understands that this business requires additional investments, it will generate some free cash flow that can be distributed to Fincraft in case of need. Fincraft's liquidity will stay tight, even after refinancing New assets should improve the group's cash-generating capacity somewhat but the extent is uncertain. Although Fincraft will likely have some modest free cash and investment income, it may still partly rely on the sale of relatively illiquid assets to meet its operating cash outflows. S&P will continue to closely monitor Fincraft's projected cash flows and their sufficiency for its liquidity needs. The CreditWatch negative reflects the high likelihood that S&P would lower the ratings, possibly by multiple notches, in the next 90 days if the company's liquidity worsens. S&P could downgrade Fincraft if: -- The company fails to proceed with the refinancing of its debt coming due in 2023; or -- S&P considers the group's post-refinancing liquidity very weak, as indicated by our cash flow test, with it continuing to rely on asset sales to fund ongoing activities. S&P would remove the ratings from CreditWatch and affirm the ratings in the next 90 days if Fincraft successfully refinances its debt and receives asset transfers from its shareholders. The affirmation would also require sufficient cash flows from newly transferred assets. ========= S P A I N ========= FTPYME TDA CAM 4: S&P Affirms 'D(sf)' Rating on Class D Notes ------------------------------------------------------------- S&P Global Ratings raised to 'AA- (sf)' from 'B+ (sf)' its credit rating on FTPYME TDA CAM 4, Fondo de Titulizacion de Activos' class C notes. At the same time, S&P affirmed its 'AAA (sf)' rating on the class B notes and its 'D (sf)' rating on the class D notes. Credit analysis S&P said, "We have applied our European small and midsize enterprise (SME) CLO criteria to determine the scenario default rates (SDRs)--the minimum level of portfolio defaults that we expect each tranche to be able to withstand at a specific rating level using CDO Evaluator. "We ranked the originator in the moderate category. Taking into account Spain's banking industry country risk assessment (BICRA) score of 4, we lowered the archetypical average credit quality by one notch to 'b' from 'b+'. Due to the absence of information on the securitized portfolio's creditworthiness compared with the originator's entire loan book, we have historically further adjusted the average credit quality by three notches to 'ccc'. However, for at least the past five years, cumulative defaults have remained relatively flat, at approximately 8.0%, and average arrears over this period are below 1.5%. As such, we revised the average credit quality adjustment to two notches from three notches resulting in an average credit quality assessment of 'ccc+'. The portfolio selection adjustment is intended to capture portfolio selection biases and is typically determined at closing. Nevertheless, the last 15 years of data lead us to re-consider the negative adjustment and diminish it. "We used this 'ccc+' average credit quality assessment to generate our 'AAA' SDR of 78.67% (a 4.46% improvement since our 'AAA' SDR of 83.13% in our previous review). The improvement in the 'AAA' SDR was driven by the updated average credit quality assessment and a reduced weighted-average maturity (5.21 years from 5.39 years in our previous review). "We have calculated the 'B' SDR, based primarily on our analysis of historical SME performance data and our projections of the transaction's future performance. We have reviewed the portfolio's historical default data, and assessed market developments, macroeconomic factors, changes in country risk, and the way these factors are likely to affect the loan portfolio's creditworthiness. As a result of this analysis, and considering that cumulative defaults increased only marginally since our previous review, we maintained our 'B' SDR at 12%. Maintaining our 'B' SDR at 12% lowers the total cumulative defaults we expect over the transaction's life. "We interpolated the SDRs for rating levels between 'B' and 'AAA' in accordance with our European SME CLO criteria." Cash flow analysis S&P said, "At each liability rating level, we applied a weighted-average recovery rate (WARR) by considering observed historical recoveries. In addition, we consider the time taken to realize recoveries upon a default as part of our recovery timing analysis. The length of time we assume the recovery process will take is determined by the category we have placed the country's legal framework in. As our country grouping for Spain is 'Group A', the minimum recovery timing is 12 months. The recent recovery timing for the transaction is in line with this 12-month period and we have therefore applied a 12-month recovery timing assumption. "On review of our WARR assumption in a 'B' scenario we increased the expected recovery to 70% from 45% with 35% to be received after the initial minimum 12-month period and the remaining 35% to be received after 24 months. This improved recovery assumption follows continuing improving recoveries which have increased to 75% from 53% over the past five years. In addition, the performing portfolio currently comprises 94% of senior secured first-lien loans which represent high recovery prospects. "We used the portfolio balance that the servicer considered to be performing, the current weighted-average spread, and the above WARRs. We subjected the capital structure to various cash flow stress scenarios, incorporating different default patterns and interest rate curves, to determine the rating level, based on the available credit enhancement for each class of notes under our European SME CLO criteria." Country risk S&P said, "Under our structured finance sovereign risk criteria, the class B notes can be rated up to six notches above the unsolicited long-term rating on Spain. "Since our previous review, in July 2021, the class B notes have continued to amortize with almost EUR10.6 million of principal repaid. The class B notes now have 16% principal outstanding, compared with their original issuance level, with an aggregate principal amount of EUR10.5 million supported by a current reserve fund balance of EUR23.6 million. Considering the results of our credit and cash flow analysis and the application of our sovereign risk criteria, we affirmed our 'AAA (sf)' rating on this class of notes. "Deleveraging of the senior class B notes has also benefitted the junior class C notes, with credit enhancement increasing to 48.83% from 35.97% in our previous review. However, as the portfolio's weighted-average maturity still exceeds five years, repayment of the class C notes in our modeling relies on recovery proceeds received on assets defaulted by our stress scenarios. As such, the highest achievable rating for the class C notes is sensitive to the recovery assumption, recovery timing, and fees assumed. In a high default scenario, in which little to no principal is being received, the 12-month recovery lag means that the transaction relies on excess spread to cover the fees. As the portfolio balance falls and the excess spread is reduced, or removed all together, the repayment of the notes becomes sensitive to large, fixed fee amounts which become due. The actual fixed fee amounts paid are reducing in line with the portfolio balance, and as such, we have reduced the total fee coverage we assume in modeling since our previous review. "Considering the benefit of increased credit enhancement, an improved weighted-average recovery rate assumption, a one notch improvement to the average credit quality assessment and reducing fee amounts, we raised to 'AA- (sf)' from 'B+ (sf)' our rating on the class C notes. The results of our credit and cash flow analysis suggest that this class could pass at higher rating levels, however our 'AA- (sf)' rating reflects the note repayments' sensitivity to the recovery assumptions, recovery timing, and fees assumed in high default scenarios." S&P affirmed its 'D (sf)' rating on the class D notes as they continue to miss their interest payments. FTPYME TDA CAM 4 is a single-jurisdiction cash flow CLO transaction securitizing a portfolio of SME loans that BANCO CAM S.A.U. originated in Spain. The transaction closed in December 2006. =========================== U N I T E D K I N G D O M =========================== AMIGO LOANS: Moody's Confirms Caa1 CFR & Alters Outlook to Stable ----------------------------------------------------------------- Moody's Investors Service has confirmed Amigo Loans Group Ltd's (Amigo) Caa1 corporate family rating and the B3 backed senior secured note rating issued by Amigo Luxembourg S.A. The outlook on the ratings has been changed to stable from ratings under review. This rating action concludes the review for downgrade initiated on February 5, 2021 and subsequently extended on May 28, 2021, October 13, 2021 and March 11, 2022. The outlook on the issuers was negative prior to placing the ratings under review. RATINGS RATIONALE CONFIRMATION OF SENIOR SECURED NOTES The confirmation of the B3 rating on the senior secured notes reflects Amigo's strong cash position and the notes' position in the company's funding structure, the amortising loan book with no new lending and the magnitude of the economic loss expected in the coming months. In Moody's opinion, the notes' priority ranking security interest relative to the current cash position, ahead of other claimants, provides protection and reduces their expected loss. These factors underpin the positioning of the notes at B3 one notch above Amigo's CFR which captures the total expected loss of Amigo's liabilities. CONFIRMATION OF CFR The confirmation of the Caa1 CFR reflects Amigo's good cash reserves replenished by ongoing collections from outstanding loans which are amortizing quickly enabling Amigo to meet its near-term operational and funding expenses; and its solid Tangible Common Equity relative to Tangible Managed Assets at 24.05% as of June 2021 that provides a good loss absorbing cushion. Moody's expects that Amigo will continue to remain close to breakeven in the next 12-18, months given the shrinking revenue base and pending potential regulatory fines. The confirmation of the Caa1 CFR also reflects the favourable outcome in regard to both the creditors and the Court's approval of "the Scheme" in May bringing clarity in relation to the amount redress the company will have to fund in meeting the claims of all current and former customers. Amigo's senior secured notes are due in 2024 which provides no imminent refinancing needs, supporting its ability to gradually resume modest lending once the regulatory investigations are completed, and assuming regulatory approvals are granted. Nevertheless, the Caa1 CFR reflects uncertainties around the timing and likelihood of Amigo receiving required regulatory approvals to resume lending and the company's ability to complete the necessary equity raise under current market conditions for speculative grade issuers. Without these conditions being met, the company would undertake an orderly wind-down resulting in a moderate loss on its liabilities. OUTLOOK The outlook on Amigo's ratings is stable, reflecting the uncertainties ahead but also the extent to which the company's cash reserves, ongoing collections from its loan book and capital levels bring an element of stability from the point of view of expected loss. Furthermore, the stable outlook on the senior secured notes reflects the much- reduced outstanding volume, the company's cash reserves and the unimpaired loan balance on which it continues to collect providing the probability of a strong recovery for bond holders. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Amigo's CFR could be assigned a positive outlook if the company is allowed to resume lending by the Financial Conduct Authority and if redress to creditors can be achieved without adverse developments in its solvency and liquidity profile and franchise positioning. Furthermore, a positive outlook would be conditional on whether Amigo Group Ltd is able to raise sufficient equity and or debt funding, a prerequisite to resuming new lending. Amigo Luxembourg S.A.'s backed senior secured debt ratings could be upgraded upon upgrade of Amigo's CFR and continued growth in unencumbered assets to continue to meet the claims of the senior noteholders. Amigo's CFR could be downgraded if there is a significant deterioration in the company's solvency or liquidity profile elevating expected losses for creditors and other liabilities of the firm. The senior secured notes may be downgraded if there is a significant increase in the liabilities that will rank super senior to or pari passu with the senior secured notes that would increase their expected loss. If the redemption of the senior notes were to occur at a significant discount, this could be viewed as a distressed exchange and result in a multi-notch downgrade. LIST OF AFFECTED RATINGS Issuer: Amigo Luxembourg S.A. Confirmations: Backed Senior Secured Regular Bond/Debenture, Confirmed at B3, previously placed on review for downgrade Outlook Action: Outlook, Changed To Stable From Ratings Under Review Issuer: Amigo Loans Group Ltd Confirmation: Long-term Corporate Family Rating, Confirmed at Caa1, previously placed on review for downgrade Outlook Action: Outlook, Changed To Stable From Ratings Under Review PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. GLOUCESTERSHIRE CREDIT: Enters Administration, Halts Trading ------------------------------------------------------------ Gloucestershire Credit Union Ltd, on Sept. 14, 2022, was placed into administration and ceased trading. The Financial Services Compensation Scheme declared Gloucestershire Credit Union Ltd as failed (in default) on September 14, 2022. James Sleight and Peter Hart of PKF Geoffrey Martin & Co Ltd (PKF GM) are the appointed Joint Administrators. As a Gloucestershire Credit Union Ltd customer, you don't need to worry, as your money is safe. FSCS will automatically pay back your money, according to the account details it receives from the credit union. SCUNTHORPE UNITED: On Brink of Administration --------------------------------------------- Aidan McCartney at GrimsbyLive reports that Scunthorpe United are understood to be in genuine danger of entering administration after a proposed takeover deal collapsed. The National League side have been searching for a buyer for the last few months with owner Peter Swann looking to sell his majority stake in the club following relegation from League Two, GrimsbyLive discloses. However, the businessman confirmed last week that a potential deal had fallen through after the takeover group failed to prove funds despite passing the Owners' and Directors' Test needed in non-league, GrimsbyLive relates. According to GrimsbyLive, speaking to BBC Radio Humberside, he confirmed that the main takeover option was no longer on the table, explaining: "We are still negotiating. The buyer has to have the funds and I'm afraid that they didn't have them. "I've been working with a couple of other groups at the minute and we start again, virtually, on some of the stuff. It's not easy to sell the club, as you can imagine at this moment in time, but that's why I stepped away so I can crack on with that." Mr. Swann revealed that two different parties are in talks about buying the club but neither has been advanced, leaving a deal looking some way off, GrimsbyLive notes. He added: "If they can't prove they have proof of funds, how are we supposed to proceed? There are still a couple of others bubbling under the surface so we caught up with them again and started to move on with them. "Hopefully, we can get something done as soon as we can. It's not an easy task but I am trying various avenues to get this deal done." Speaking earlier, Mr. Swann, as cited by GrimsbyLive, said his priority was still to find a buyer. But when asked about administration, he refused to be drawn on his next moves. Bottom of the league with four points from eight matches, administration could see the FA deduct the Iron points from their total this season with consecutive relegations possible, GrimsbyLive states. The Swann family has owned the club since 2013 and they reached the League One play-offs in 2017 and 2018. The Swann's continue to finance the club but with time running out to agree on a deal, the potential of the club being plunged into administration is thought to be just weeks away, GrimsbyLive relays. WORCESTERS WARRIORS: Owners Agree to Terms of Club's Sale --------------------------------------------------------- BBC News reports that Worcester Warriors' owners say they have agreed the terms of the sale of the troubled Premiership club. Players, staff and fans have endured a month of worry that Warriors might fold after a winding-up petition from HMRC over an unpaid GBP6 million tax bill, BBC discloses. But co-owners Jason Whittingham and Colin Goldring say they are now happy that the sale can go through, BBC notes. They are also working with the potential buyer on the "immediate deposit of significant funds", BBC states. The cash injection would mean their first home Premiership game of the season against Exeter Chiefs can go ahead on Sunday, Sept. 18, according to BBC. Warriors, whose winding-up court appearance to face HMRC has reportedly been set for Oct. 6, also have to pay back GBP14 million worth of Sports Survival Package money, as sanctioned by the Department for Digital, Culture, Media & Sport during the Covid pandemic, BBC discloses. In total, their debts are reported to total GBP25 million, BBC states. But the deal with the as yet unnamed "interested party" would, subject to Rugby Football Union approval, secure their status both in the short term -- enabling debts to catering staff, stewards and suppliers to be paid -- and long term, BBC notes. Co-owners Messrs. Whittingham and Goldring have been under pressure to put the club into administration -- both from a group of local MPs and a consortium led by former Warriors chief executive Jim O'Toole, who made that a key stipulation of any sale, BBC relates. But, in an exclusive interview with BBC Hereford & Worcester last week, Mr. Whittingham referred to people "jumping up and down making a lot of noise", while making the point that, if the club do go into administration, creditors -- including many local ones -- would end up not getting paid, BBC discloses. Mr. Whittingham also said one of the reasons the money transfer to staff for their August wage payments had taken so long was the automated bank security procedures that have become commonplace for both private and business account holders in recent years, BBC notes. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *