/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/220927.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Tuesday, September 27, 2022, Vol. 23, No. 187 Headlines B E L G I U M VILLA DUTCH: Moody's Assigns 'B2' CFR, Outlook Stable G E R M A N Y SEFE: German Gov't Mulls Nationalization to Avert Bankruptcy I R E L A N D BANK OF IRELAND: Irish Gov't. Exits Lender Years After Bailout HAYFIN EMERALD X: S&P Assigns B-(sf) Rating on Class F Notes MADISON PARK X: Moody's Affirms B2 Rating on EUR12.15MM F Notes PALMER SQUARE 2022-3: Moody's Assigns (P)Ba3 Rating to Cl. E Notes K A Z A K H S T A N QAZAQGAZ NC: S&P Affirms 'BB' LongTerm ICR, Outlook Positive L U X E M B O U R G SAMSONITE INT'L: S&P Raises ICR to 'BB-', Outlook Positive U N I T E D K I N G D O M BIRMINGHAM INNER: Goes Into Administration MONK FRYSTON: Enters Administration, Buyer Sought for Hotel NOMAD FOODS: Moody's Affirms 'B1' CFR & Alters Outlook to Stable OVO: Expected to Breach Covenants Prior to Government Support WASPS: Needs to Find GBP2 Million to Avert Administration WORCESTER WARRIORS: Co-Owner Says Administration Among Options - - - - - ============= B E L G I U M ============= VILLA DUTCH: Moody's Assigns 'B2' CFR, Outlook Stable ----------------------------------------------------- Moody's Investors Service has assigned B2 corporate family rating and probability of default rating of B2-PD to Villa Dutch Bidco B.V. (House of HR or the company). Concurrently, Moody's has assigned B2 instrument ratings on the EUR1,020 million senior secured first lien term loan B, EUR125 million senior secured first lien delayed drawn term loan and EUR250 million senior secured multi-currency revolving credit facility (RCF). Moody's has assigned a Caa1 rating to the EUR310 million senior secured second lien term loan issued by Villa Dutch Bidco B.V. The outlook is stable. Moody's expects the current senior secured notes to be refinanced with other senior secured debt and the action is dependent on the successful refinancing of House of HR's capital structure. At the same time, Moody's has withdrawn the B2 CFR and B2-PD PDR of House of HR NV and all instrument ratings at both House of HR NV and House of Finance N.V. (The) will be withdrawn following the closing of this transaction. Moody's has decided to withdraw the ratings for its own business reasons. RATINGS RATIONALE The rating action follows the refinancing of House of HR's capital structure following the leveraged buyout (LBO) of the company by Bain Capital from NaxiCap Partners. This secondary LBO positions the company weakly in the B2 rating category due to the higher debt quantum resulting in Moody's adjusted debt/EBITDA of 6.3x at closing of the transaction amidst a much weaker macroeconomic backdrop. House of HR has so far demonstrated strong operating performance after the pandemic and a track record of operating as a larger entity after having completed several acquisitions in the last two years. Moody's expects this strong operating performance and improvement in earnings to continue with leverage declining to 5.8x by 2023 while free cash flow (FCF)/debt is expected to be around 3% while maintaining adequate liquidity. House of HR benefits from a flexible cost structure, mainly consisting of candidate salaries and their ability to pass through wage increases to clients, including through automatic contractual mechanisms which will protect its margins. However, the company operates in a cyclical industry and has high exposure to small and medium-sized enterprises ("SMEs"). This makes the company vulnerable to downside risk given Moody's expectation of a weakening economic environment that could result in high unemployment rates, surplus labour supply and low vacancy rates that could weaken House of HR's revenue and EBITDA. In contrast, the focus on white-collar and specialised blue-collar workers is a credit positive as hiring trends are less cyclical in these segments. Governance was a key rating driver of the rating action in line with Moody's ESG framework following the sale of House of HR to Bain Capital. Moody's expects House of HR to have aggressive financial policies and potentially pay dividends or make sizeable debt-financed acquisitions to increase revenue and scale which could delay deleveraging. The company has grown through bolt-on acquisitions, purchasing several businesses with incremental debt proceeds over the last two years. LIQUIDITY House of HR's liquidity is adequate. The LBO transaction is structured with EUR50 million cash at closing and Moody's expects annual free cash flow generation of around EUR60 million for 2023. House of HR will also have 6.5-year EUR250 million senior secured multi-currency revolving credit facility (RCF) which may be drawn together with other cash sources to fund this transaction. The senior secured RCF only has a springing maintenance covenant based on senior secured net leverage of 8.1x, tested when drawings exceed 40%. STRUCTURAL CONSIDERATIONS The PDR is B2-PD, in line with the CFR, reflecting Moody's assumption of a 50% recovery rate as is customary for capital structures including notes and bank debt. The senior secured RCF, senior secured first lien term loan B and senior secured first lien delayed drawn term loan, which rank pari passu, are rated B2, in line with the CFR while the senior secured second lien term loan is rated Caa1. OUTLOOK RATIONALE The stable outlook reflects Moody's expectation that House of HR's leverage, as measured by Moody's adjusted debt/EBITDA, will be well below 6x in the next 12-18 months supported by continuous improvement in earnings. The company's limited capex requirements (c.1% of revenues) will also support FCF/debt of around 3%. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive rating pressure though unlikely at this stage could arise if the company's: (1) strong operating performance continues both in terms of sales and EBITDA margin; (2) leverage, as measured by Moody's-adjusted debt/EBITDA, decreases sustainably below 4.5x; (3) FCF/ debt rises sustainably above 5% and liquidity remains strong. Negative rating pressure could arise if the company's: (1) operating performance were to deteriorate and deviate materially from Moody's expectations; (2) leverage, as measured by Moody's-adjusted debt/EBITDA, increases above 6x; (3) free cash flow turns negative for a prolonged period and liquidity concerns arise. LIST OF AFFECTED RATINGS Assignments: Issuer: Villa Dutch Bidco B.V. Probability of Default Rating, Assigned B2-PD LT Corporate Family Rating, Assigned B2 Senior Secured Bank Credit Facility, Assigned B2 Senior Secured Bank Credit Facility, Assigned Caa1 Withdrawals: Issuer: House of HR NV Probability of Default Rating, Withdrawn , previously rated B2-PD LT Corporate Family Rating, Withdrawn , previously rated B2 Outlook Action: Issuer: Villa Dutch Bidco B.V. Outlook, Assigned Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. COMPANY PROFILE House of HR is a Belgium-based provider of human resource solutions with a focus on SMEs. The company predominantly operates in Belgium, the Netherlands, Germany and France, and serves two segments: (1) Specialized Talent Solutions - general temporary and permanent staffing services of candidates with technical profiles and (2) Engineering and Consulting (EC) - secondment of engineers and highly skilled technicians, consultants and lawyers. On a pro forma basis, the company reported revenue of EUR2,634 million and company adjusted EBITDA of EUR318 million for the last twelve months ending June 30, 2022. ============= G E R M A N Y ============= SEFE: German Gov't Mulls Nationalization to Avert Bankruptcy ------------------------------------------------------------ Christian Kraemer and Tom Kackenhoff at Reuters report that Germany is looking at nationalising gas importer Sefe, previously Gazprom Germania, to protect it from bankruptcy, two sources familiar with the matter said on Sept. 22, a day after Berlin moved to nationalise top gas importer Uniper. The sources told Reuters no decision had been taken on the potential nationalisation, which was first reported by Spiegel. According to Reuters, spokespeople for the economy ministry and the energy regulator said talks on the future of Sefe were ongoing. With Russian gas flows down sharply in response to European sanctions against Moscow over the invasion of Ukraine, Germany is struggling to secure its energy supplies, Reuters discloses. ============= I R E L A N D ============= BANK OF IRELAND: Irish Gov't. Exits Lender Years After Bailout -------------------------------------------------------------- Jude Webber at The Financial Times reports that thirteen years after pumping in cash to rescue Bank of Ireland, the government has finally exited the country's largest lender, the first of the three institutions bailed out during the financial crisis to return to private hands. According to the FT, BoI hailed the move as a "milestone" and Paschal Donohoe, the finance minister, said it freed up taxpayers' cash for "more productive purposes". "The gradual disposal of the state's investment in Bank of Ireland into a rising market has been successful in delivering on this objective for our citizens," he said in a statement. The government invested EUR4.7 billion in BoI between 2009 and 2011 in a sector-wide crisis sparked by a reckless mortgage lending spree that ended up crashing the entire Irish economy, the FT relates. The government had now recovered almost EUR6.7 billion, the ministry said, with the price for its phased disposals rising to an average of EUR6.17 per share from an initial EUR4.96, the FT notes. "The completion of the sale of the state shareholding in Bank of Ireland is a very positive moment for Irish taxpayers, for Bank of Ireland, and for the sector as a whole," the FT quotes Gavin Kelly, interim group chief executive, as saying. "This is a milestone moment for Bank of Ireland as we move conclusively beyond the financial crisis, and is a very important step towards full normalisation of our relationship with the state," he added. HAYFIN EMERALD X: S&P Assigns B-(sf) Rating on Class F Notes ------------------------------------------------------------ S&P Global Ratings assigned its credit ratings to Hayfin Emerald CLO X DAC's class A, B-1, B-2, C, D, E, and F notes. At closing, the issuer also issued unrated subordinated notes. The class F notes is a delayed draw tranche. It is unfunded at closing and has a maximum notional amount of EUR15.3 million and a maximum spread of three/six-month Euro Interbank Offered Rate (EURIBOR) plus 9.95%. The class F notes can only be issued once and only during the reinvestment period for the full EUR15.3 million amount. The issuer used the full proceeds received from the issuance of the class F notes to redeem the subordinated notes. At issuance, the class F notes' spread can be lowered subject to rating agency confirmation. Under the transaction documents, the rated notes pay quarterly interest unless there is a frequency switch event. Following this, the notes will switch to semiannual payment. The portfolio's reinvestment period will end on Oct. 15, 2024. The ratings assigned to the 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. Portfolio Benchmarks CURRENT S&P Global Ratings weighted-average rating factor 2726.79 Default rate dispersion 549.04 Weighted-average life (years) 4.89 Obligor diversity measure 106.71 Industry diversity measure 20.26 Regional diversity measure 1.14 Transaction Key Metrics CURRENT Total par amount (mil. EUR) 450.0 Defaulted assets (mil. EUR) 0.0 Number of performing obligors 127 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.0 'AAA' weighted-average recovery (%) 35.14 Covenanted weighted-average spread (%) 3.95 Reference weighted-average coupon (%) 3.45 Rating rationale S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. We consider that the portfolio is well-diversified on the effective date, primarily comprising 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 used the EUR450 million par amount, the covenanted weighted-average spread of 3.95%, the reference weighted-average coupon of 3.45%, and the rating-specific recovery rates for the rated notes. 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. "The transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our current counterparty criteria at the time of assigning final ratings. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk is limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "The transaction's legal structure is bankruptcy remote, in line with our legal criteria. "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 is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our ratings on the notes. Our cash flow analysis indicates that the available credit enhancement for the class A, B-1, B-2, C, D, and E notes is commensurate with the ratings assigned. "The class F notes' current break-even default rate (BDR) cushion is negative at the current rating level. Nevertheless, based on the portfolio's actual characteristics and additional overlaying factors, including our long-term corporate default rates and recent economic outlook, we believe 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, which is in the same range as that of other CLOs S&P has rated and that have recently been issued in Europe. -- S&P's model-generated portfolio default risk, which is at the 'B-' rating level at 25.81% versus 15.28% if it was to consider a long-term sustainable default rate of 3.1% for a weighted-average life of 4.89 years. -- Whether the tranche is vulnerable to nonpayment in the near future. -- If there is a one-in-two chance for this note to default. -- If S&P envisions this tranche to 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 F notes to five of the 10 hypothetical scenarios we looked at in our publication, "How Credit Distress Due To COVID-19 Could Affect European CLO Ratings," published on April 2, 2020." Environmental, social, and governance (ESG) factors S&P said, "We regard the exposure to ESG credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities, including, but not limited to, the following: an obligation of a company whose revenues are more than 0% derived from the development, production, maintenance, trade, or stockpiling of weapons of mass destruction or in the trade of illegal drugs or illegal narcotics; one whose revenues are more than 20% derived from products that contain tobacco or are involved in non-certified palm oil production; one whose revenues are more than 10% derived from the mining of thermal coal or oil sands extraction; and one whose revenues are more than 20% derived from trading in endangered or protected wildlife. 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." Ratings List CLASS RATING AMOUNT SUB (%) INTEREST RATE* (MIL. EUR) A AAA (sf) 270.00 40.00 3M EURIBOR + 169.5 bps B1 AA (sf) 21.90 29.87 3M EURIBOR + 315 bps B2 AA (sf) 23.70 29.87 535 bps C A (sf) 24.60 24.40 3M EURIBOR + 430 bps D BBB- (sf) 30.30 17.67 3M EURIBOR + 524 bps E BB- (sf) 21.40 12.91 3M EURIBOR + 686 bps F B- (sf) 15.30 9.51 3M EURIBOR + 995 bps Sub. NR 37.10 N/A N/A *The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. 3M--Three month. EURIBOR--Euro Interbank Offered Rate. Bps--Basis point. NR--Not rated. N/A--Not applicable. MADISON PARK X: Moody's Affirms B2 Rating on EUR12.15MM F Notes --------------------------------------------------------------- Moody's Investors Service has upgraded the ratings on the following notes issued by Madison Park Euro Funding X DAC: EUR22,000,000 Class B-1 Senior Secured Floating Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Sep 11, 2020 Affirmed Aa2 (sf) EUR32,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Sep 11, 2020 Affirmed Aa2 (sf) EUR17,820,000 Class C-1 Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to A1 (sf); previously on Sep 11, 2020 Affirmed A2 (sf) EUR10,530,000 Class C-2 Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to A1 (sf); previously on Sep 11, 2020 Affirmed A2 (sf) Moody's has also affirmed the ratings on the following notes: EUR253,500,000 Class A-1 Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Sep 11, 2020 Affirmed Aaa (sf) EUR21,000,000 Class A-2 Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf); previously on Sep 11, 2020 Affirmed Aaa (sf) EUR16,030,000 Class D-1 Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed Baa2 (sf); previously on Sep 11, 2020 Confirmed at Baa2 (sf) EUR7,370,000 Class D-2 Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed Baa2 (sf); previously on Sep 11, 2020 Confirmed at Baa2 (sf) EUR24,750,000 Class E Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed Ba2 (sf); previously on Sep 11, 2020 Confirmed at Ba2 (sf) EUR12,150,000 Class F Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed B2 (sf); previously on Sep 11, 2020 Confirmed at B2 (sf) RATINGS RATIONALE The rating upgrades on the Class B-1, B-2, C-1 and C-2 Notes are primarily a result of the improvement in the credit quality of the underlying collateral pool and the improvement of over-collateralisation ratios since August 2021. The transaction's reinvestment period ended in July 2022. The credit quality has improved as reflected in the improvement in the average credit rating of the portfolio (measured by the weighted average rating factor, or WARF) and a decrease in the proportion of securities from issuers with ratings of Caa1 or lower. According to the trustee report dated August 2022 [1], the WARF was 2,994, compared with 3,175 in the August 2021 [2] report. Securities with ratings of Caa1 or lower currently make up approximately 6.26% of the underlying portfolio, versus 8.38% in August 2021. The over-collateralisation ratios of the rated notes have improved since August 2021. According to the trustee report dated August 2022 the Class A/B, Class C, Class D and Class E OC ratios are reported at 137.05%, 126.16%, 118.39% and 111.16% compared to August 2021 levels of 134.32%, 123.65%, 116.04% and 108.95%, respectively. The rating affirmations on the Class A-1, A-2, D-1, D-2, E and F Notes reflect the expected losses of the notes continuing to remain consistent with their current ratings after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralization levels. In light of reinvestment restrictions during the amortisation period, and therefore the limited ability to effect significant changes to the current collateral pool, Moody's analysed the deal assuming a higher likelihood that the collateral pool characteristics would maintain an adequate buffer relative to certain covenant requirements. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR450.37m Defaulted Securities: EUR0.49m Diversity Score: 63 Weighted Average Rating Factor (WARF): 2888 Weighted Average Life (WAL): 4.16 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.82% Weighted Average Coupon (WAC): 4.75% Weighted Average Recovery Rate (WARR): 44.04% Par haircut in OC tests and interest diversion test: None The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2021. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance" published in June 2022. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. In particular, the length and severity of the economic and credit shock precipitated by the global coronavirus pandemic will have a significant impact on the performance of the securities. CLO notes' performance may also be impacted either positively or negatively by: (1) the manager's investment strategy and behavior; (2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Additional uncertainty about performance is due to the following: Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. PALMER SQUARE 2022-3: Moody's Assigns (P)Ba3 Rating to Cl. E Notes ------------------------------------------------------------------ Moody's Investors Service announced that it has assigned the following provisional ratings to notes to be issued by Palmer Square European Loan Funding 2022-3 Designated Activity Company (the "Issuer"): EUR268,000,000 Class A Senior Secured Floating Rate Notes due 2032, Assigned (P)Aaa (sf) EUR34,400,000 Class B Senior Secured Floating Rate Notes due 2032, Assigned (P)Aa2 (sf) EUR19,200,000 Class C Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)A2 (sf) EUR14,200,000 Class D Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Baa3 (sf) EUR22,200,000 Class E Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Ba3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. The Issuer is a static CLO. The issued notes will be collateralized primarily by broadly syndicated senior secured corporate loans. Moody's expect the portfolio to be 100% ramped as of the closing date. Palmer Square Europe Capital Management LLC (the "Servicer") may sell assets on behalf of the Issuer during the life of the transaction. Reinvestment is not permitted and all sales and unscheduled principal proceeds received will be used to amortize the notes in sequential order. In addition, the Issuer will issue EUR31,500,000 of Subordinated Notes due 2032 which are not rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology underlying the rating action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2021. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Servicer's investment decisions and management of the transaction will also affect the debt's performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2021. Moody's used the following base-case modeling assumptions: Par Amount: EUR400,000,000 Diversity Score: 63 Weighted Average Rating Factor (WARF): 2616 Weighted Average Spread (WAS): 3.56% (actual spread vector of the portfolio) Weighted Average Coupon (WAC): 3.51% (actual spread vector of the portfolio) Weighted Average Recovery Rate (WARR): 44.6% Weighted Average Life (WAL): 4.7 years (actual amortization vector of the portfolio) =================== K A Z A K H S T A N =================== QAZAQGAZ NC: S&P Affirms 'BB' LongTerm ICR, Outlook Positive ------------------------------------------------------------ S&P Global Ratings affirmed its 'BB' long-term issuer credit ratings on QazaqGaz NC JSC (Qazaqgas) and its core operating subsidiary Intergas Central Asia JSC (ICA). The positive outlook reflects S&P's view that Qazaqgas' credit metrics might continue to improve, notably with adjusted funds from operations (FFO) to debt sustained above 60% over the next two years upon the release of the financial guarantee. The upcoming refinancing of 50% joint venture Beineu-Shymkent Gas Pipeline LLP (BSGP) will improve Qazaqgas' financials. On Sept. 5, 2022, Qazaqgas' board of directors approved the full refinancing of BSGP's loan portfolio through a $700 million syndicated loan. The loan proceeds will be used to repay the $405.7 million intercompany loan to Qazaqgas and the $288 million Mitsubishi UFJ Financial Group loan guaranteed by Qazaqgas. S&P said, "As a result, we will remove the financial guarantee, which currently represents about 20% of Qazaqgas' total reported net debt, and expect its FFO to debt to reach 90%-100% and 60%-70% in 2022 and 2023, respectively, from 28.8% and 70.9% in 2020 and 2021. We expect the transaction to be finalized by mid-October 2022." S&P said, "We continue giving Qazaqgas benefits from its two joint ventures with China. Qazaqgas co-owns 50% of the Asian Gas Pipeline (AGP) and BSGP with China National Petroleum Corp. We understand that Qazaqgas doesn't have control over the two companies and we therefore treat them as equity affiliates, increasing S&P Global Ratings-adjusted EBITDA with dividends received from these associates without consolidating their debt at Qazaqgas. However, we understand that Qazaqgas is actively engaged in managing some of BSGP's liabilities and has provided the above-mentioned financial guarantee." S&P said, "Qazaqgas' increasing reliance on the two joint ventures' dividends weighs on the rating. Given expanding domestic demand for gas, we see Qazaqgas refocusing on the domestic market rather than exports. Since domestic tariffs approved by the government are lower than tariffs for exports, we expect Qazaqgas' reported EBITDA to keep deteriorating over 2022-2024 to Kazakhstani tenge (KZT) 90 billion-KZT100 billion (about $200 million-$210 million) in 2024 from KZT230 billion-KZT240 billion in 2022 (about $480 million-$500 million). On the other hand, we expect dividends from AGP and BSGP to increase to a combined KZT100 billion-KZT200 billion in 2023-2025 from KZT58 billion in 2021 and an expected KZT82.7 billion in 2022, helping maintain Qazaqgas' S&P Global Ratings-adjusted EBITDA at about KZT150 billion-KZT200 billion over 2022-2024. By 2024, we expect dividends from the joint ventures to represent about 50% of S&P Global Ratings-adjusted EBITDA, which reduces the quality, stability, and visibility of earnings, in our view." Qazaqgas has begun a large investment cycle that will pressure its credit metrics. Higher demand and the government's strategy to gasify the country will lead Qazaqgas to undergo an extensive investment plan over 2022-2024. This is of utmost importance for the country, with some elements included on a list of national projects, and--having started in May 2022--it must be finished by year-end 2024, in line with the state's requirements. The projects will be financed with Qazaqgas' cash flows and a KZT75 billion equity injection from sovereign wealth fund Samruk-Kazyna expected in 2023. They include: -- Gasification of Sarsha (Western Kazakhstan)--KZT25.7 billion by ICA. -- Gasification of Sarsha (Western Kazakhstan)--KZT8.3 billion by KTG Aimak. -- Construction of Beineu-Zhanaozen second gas pipeline--KZT180.1 billion. -- Construction of gas infrastructure for gas supply of a heat and power plant in Almaty city--KZT95.6 billion. -- Construction of looping at Makat-North Caucauses gas pipeline--KZT95.6 billion. S&P said, "We therefore expect Qazaqgas' capex to reach KZT150 billion-KZT340 billion annually over 2022-2023 from KZT134 billion in 2021, leading to negative free operating cash flow (FOCF) of about KZT100 billion-KZT120 billion over our forecast period. At the same time, we highlight that the company has accumulated ample cash balances (KZT395 billion as of Dec. 31, 2021), which alleviate the need to raise debt. In addition, any state fund injections aimed at these projects would also confirm state support being available to the company. "Uncertainties regarding the future of gas in the region constrain the rating. Kazakhstan's goal is to gasify the entire country and Qazaqgas is the government's arm to do so. We expect 7% growth in domestic gas consumption in 2022 spurred by an increase in large consumers, including conversion of thermal power plants to gas, new chemical facilities, and new commercial consumers. Should Kazakhstan keep recording such growth, we expect domestic gas demand to surpass available production reserves by about 1.7 billion cubic meters (bcm) from 2024.' Therefore, several remedy measures have been adopted including: -- A memorandum of cooperation between Gazprom JSC and Qazaqgas to expand processing volume at the Orinbor gas processing plant, increasing gas supply to 1.7 bcm per year. -- A contract between KazRosGas LLP and Gazprom pererabotka to process an additional 0.57 bcm from a previously planned 8.1 bcm in 2022 and an additional 1.23 bcm over 2022 levels in 2023. -- The transfer of 100% of GPC Investment's shares to the government under a donation agreement. Qazaqgas and Samruk-Kazyna also signed a trust management agreement for 100% of GPC Investment's shares. The company operates a gas processing plant with a capacity of 1.15 bcm per year. Eventually, Samruk-Kazyna -- or a company from Samruk-Kazyna group -- and Qazaqgas will co-own GPC Investments and S&P expects Qazaqgas to provide up to a $200 million intercompany loan to finance GPC's capex. As a result of increasing demand, Qazaqgas is refocusing its operations on domestic transportation and gas sales rather than exporting gas to China at a higher tariff. S&P said, "We therefore expect annual exports to China to reach a high of 5 bcm-6 bcm in 2022 but gradually reduce thereafter toward 2 bcm in 2024, decreasing Qazaqgas' reported EBITDA. We also understand that Qazaqgas is in discussions with the government regarding the development of new measures for a pricing reform that won't affect socially vulnerable segments of the population but could lead to higher revenue for the company. This has been approved and finalized by the government but needs to be set in law by parliament prior to being implemented. We expect the new methodology to be adopted over 2023-2024." S&P said, "The recent revision of the outlook on our long-term sovereign rating on Kazakhstan to negative doesn't directly affect Qazaqgas. If we lowered the 'BBB-' rating on Kazakhstan it would not trigger a downgrade of Qazasgas. However, we still believe a systemic shock could negatively affect the issuer due to its reliance on U.S.-dollar revenue to service its debt. The $706 million Eurobond due in 2027 represents about 60% of Qazaqgas' gross financial debt while about 50% of its 2021 reported revenue was in U.S. dollars. With lower gas sales to China, we expect the share of U.S.-dollar-denominated revenue to decrease, exposing the issuer to higher currency risk should tenge depreciation continue." S&P continues to think there is moderately high likelihood of extraordinary government support for Qazaqgas.This is based on its assessment of the company's: -- Important role for Kazakhstan, given its strategic importance as the monopoly gas supplier in the service area, and ICA's status as the national trunk gas pipeline operator; and -- Strong link with the government via full ownership of Qazaqgas by new parent, 100% state‐owned Samruk-Kazyna. Qazaqgas currently benefits from its national gas operator status, which, among other things, means the company is nominated to purchase associated gas from oil producers at favorably low fixed prices and resell to customers with a margin. S&P said, "As we understand, Qazaqgas has recently obtained the status of national gas company, which means it will be responsible for the whole sector, from preemptive rights to develop domestic gas fields, to transportation, maintaining regional gas infrastructure, and exercising initiatives on the gasification of Kazakhstan's cities. At the same time, we highlight current uncertainties, notably details of the strategic governmental view over Qazaqgas' gas exploration and production activities, new investment mandates, and the future dividend policy. We also would expect to see more details on Qazaqgas' medium-term plans for gas infrastructure development, financial policies with leverage targets, and potential dividend payouts." The strong link with the government is further demonstrated by Samruk-Kazyna's KZT75 billion equity injection to support the extensive investment program over 2022-2024. S&P said, "We also note the government is working on a new tariff proposition for domestic sales that will benefit Qazaqgas. We expect this change to occur over 2023-2024, following which we believe Qazaqgas will prepare to list up to 25% of its shares before 2025." The positive outlook reflects potential rating upside should Qazaqgas' stand-alone financial metrics improve, with FFO to debt well above 45% on a sustainable basis and total refinancing of BSGP's liabilities, while its financial policy, investment plans, and dividend targets are supportive of maintaining metrics at that level. Rating upside would stem from continuous strengthening of credit metrics, including FFO to debt well above 45% on a sustainable basis, or higher government support. S&P would revise the outlook to stable if Qazaqgas assumes a much higher level of investments and potentially dividends, for instance, into gas exploration and production, upgrading regional gas infrastructure, or gasification of cities. ESG credit indicators: E-3, S-2, G-4 =================== L U X E M B O U R G =================== SAMSONITE INT'L: S&P Raises ICR to 'BB-', Outlook Positive ---------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Luxembourg–based Samsonite International S.A. to 'BB-' from 'B+', reflecting its forecast for deleveraging toward 3x in fiscal 2022 from an elevated 6.4x in 2021. S&P said, "We also raised our issue-level rating on its senior secured debt to 'BB' from 'BB-' and our rating on its senior unsecured debt to 'BB-' from 'B+'. "The positive outlook reflects that we could raise our ratings on the company over the next 12 months if its top-line recovery trend continues and it preserves margin gains from the past year, leading to our expectation for S&P Global Ratings-adjusted leverage sustained below 3x." Samsonite's sales recovered further through the first half of fiscal 2022, and S&P sees modest continued global travel upside that would improve performance through 2023. Accelerated sales recovery through the first half of 2022 amid global pent-up demand for travel and easing COVID-19 pandemic restrictions are driving faster deleveraging than we anticipated. Samsonite reported comparable sales growth of 75% in the first half on a constant currency basis, along with good profit generation from expense-reduction initiatives. The sales growth reflects rebounding global demand for leisure travel. S&P said, "Still, sales remained 20% below pre-pandemic levels on a constant currency basis, partially driven by ongoing restrictions in some parts of the world that we believe are stifling demand for travel-related merchandise. Over the coming quarters, we anticipate further easing of restrictions, which should allow international travel to continue to recover. We believe this will lead Samsonite to approach pre-pandemic revenues in fiscal 2023." S&P said, "Though we expect total sales to remain about 15% below 2019 levels this year, our forecast for a faster recovery and sustained profitability improvements should lead to S&P Global Ratings-adjusted leverage of only about 3x by the end of 2022 (from 6.4x in 2021), compared to our earlier forecast of 4x. We also anticipate leverage will continue to improve to the mid-2x area in 2023. Therefore, we revised our financial risk profile assessment to significant from aggressive. This also reflects volatility in cash flows that we expect will continue over the coming year given lack of clarity on medium-term travel spending. Furthermore, many retailers have reported a glut of inventory this year with softer than initially anticipated sales trends leading to clearance activities and contracting margins. This could pose a risk to Samsonite's wholesale business as retailers look to maintain leaner inventory. "Risk of further travel industry disruptions limit the rating. Samsonite continues to recover from the COVID-19 pandemic, which revealed the travel industry's sensitivity to external disruptions. While our forecast does not consider broad-based mobility restrictions, we believe restrictions could be reinstated or consumer discretionary spending reduced amid persistent inflation. We maintain a negative comparable ratings analysis modifier on Samsonite to reflect the risk of possible adversities that would sharply reduce performance. This also reflects our view that Samsonite's credit profile is comparably riskier than that of 'BB' rated peers that are less exposed to the travel and tourism industry. "We expect the ongoing recovery of global air travel trends will offset potential slowing demand amid macroeconomic uncertainty. Increasing risk of recession in the U.S. (S&P Global Ratings believes there is a 45% chance of a technical recession over the next 12 months) and persistent inflation could impair consumer spending and limit Samsonite's revenue growth. Still, pent-up demand for leisure travel globally is likely to persist over the next 12-24 months and support ongoing sales recovery toward pre-pandemic levels, in our view. As of the second quarter, regional sales lagged 2019 levels on a constant currency basis, by 17% in North America and 35% in Asia. We believe easing travel restrictions, especially in China, Japan, and South Korea, will continue to lift Samsonite's top-line performance. Similarly, we believe sales recovery in North America, aided by the U.S. elimination of COVID-19 testing requirements for international travelers in June, will also help recovery toward pre-pandemic revenue. Meanwhile, Samsonite's diversified portfolio of brands allows it to accommodate consumer trade-downs to its value-oriented brands such as American Tourister, maintaining market share. "We use 2019 as a reference point for pre-pandemic performance but note reported sales that year were down about 4% from the previous year (2% on a constant currency basis) on heightened tensions between the U.S. and China, political unrest in Hong Kong, and weakening economic conditions elsewhere. As high inflation and reduced consumption growth improves beyond 2023, we expect Samsonite will exceed 2019 revenue and profitability." Samsonite has already expanded beyond pre-pandemic profit margins, leading to improved credit measures and cash flow generation. The company's aggressive measures to address its fixed-cost structure during the pandemic included headcount reductions, store closures, and corporate spending cutbacks, and led to a $200 million run-rate reduction in selling, general, and administrative expenses relative to 2019. These actions allowed the company to generate last-12-months S&P Global Ratings-adjusted EBITDA margin of about 21% (compared to 19.1% in 2019) as the last-12-months revenue remains more than $1 billion below 2019 levels as of the second quarter. S&P believes last-12-months profitability benefited from temporary cost reductions, including lower advertising spending, reduced store operations, and reduced payroll expenses. As these dissipate through the remainder of 2022, it anticipatea they will offset profitability benefits from expanding revenues. S&P said, "We forecast Samsonite will sustain EBITDA margins at about 21% this year and expand incrementally next year as freight and supply chain costs begin to abate. This reflects a significant improvement relative to our earlier projection for EBITDA margin in the 15% area. We expect Samsonite will continue to invest in working capital, which will limit cash generation. We also expect it will ramp up toward pre-pandemic capital expenditures (capex). With these actions, we forecast over $250 million of free operating cash flow (FOCF) this year. We expect Samsonite will begin to generate consistently positive cash flow, leading to our forecast of about $400 million of FOCF in 2023. "The positive outlook reflects that we could raise our ratings over the next 12 months if Samsonite continues to recover sales while maintaining good profitability with only limited effect on its performance from anticipated macroeconomic weakness." S&P could raise its ratings on Samsonite if: -- Credit measures improve in line with our forecast, and S&P expects S&P Global Ratings-adjusted leverage sustained below 3x; -- Its revenue continues to increase toward pre-pandemic levels, supported by an ongoing improvement in travel trends and easing mobility restrictions; and -- S&P believes it can successfully navigate the inflationary environment and other macroeconomic challenges, maintaining demand for its products and offsetting rising costs through cost-saving initiatives and pricing. S&P could revise its outlook to stable if: -- S&P expects leverage sustained at 3x or higher, perhaps driven by performance that is relatively weaker than its forecast or because of a more aggressive financial policy; -- Revenue growth stalls and S&P no longer believe Samsonite can achieve similar sales to those before the pandemic, perhaps driven by competitors taking market share or by declining demand; or -- S&P believes economic challenges will reduce sales and contract EBITDA margin. ESG credit indicators: E-2, S-3, G-2 =========================== U N I T E D K I N G D O M =========================== BIRMINGHAM INNER: Goes Into Administration ------------------------------------------ Anna Cooper at TheBusinessDesk.com reports that the Birmingham Inner Circle Community Credit Union has entered administration following regulatory breaches under the PRA/FCA prudential and conduct rules and solvency issues. Based in Ladywood, Birmingham, the financial cooperative offered its members financial security through saving and borrowing. In 2020, it recorded a turnover of GBP105,000. It's one site will permanently close in the next month and one job will be lost, TheBusinessDesk.com discloses. All members funds, below the GBP85,000 limit, will be protected and repaid in full by the Financial Services Compensation Scheme (FSCS), TheBusinessDesk.com notes. All loan members will be required to continue repaying their loans in this administration, in line with the loan agreement, TheBusinessDesk.com states. Dina Devalia and James Varney of business advisory firm Quantuma have been appointed as joint administrators of the financial cooperative Sept. 26, TheBusinessDesk.com relates. MONK FRYSTON: Enters Administration, Buyer Sought for Hotel ----------------------------------------------------------- Greg Wright at The Yorkshire Post reports that a Yorkshire hotel which was a popular wedding venue has been placed into administration after it struggled to cope with the financial impact of disruption caused by the pandemic. Julian Pitts and Bob Maxwell of Begbies Traynor were appointed as joint administrators of Monk Fryston Hall Hotel Ltd on Sept. 16, The Yorkshire Post relates. Located in the Vale of York, between Leeds and Selby, the Grade II listed country house hotel dates back to the 12th century. Set in extensive parkland, it has function rooms, a restaurant and 29 en-suite bedrooms, and was a well-known wedding venue. According to The Yorkshire Post, a statement issued on behalf of the joint administrators said: "Having traded successfully for many years, the hotel was forced to close during the Covid pandemic and faced challenges that prevented it from re-opening. "Despite interest from a number of parties, a sale has not been concluded and the directors have now appointed Begbies Traynor to place it into administration in order to protect the business while a purchaser is sought." Monk Fryston Hall Hotel, which includes 29 acres of land with ornate gardens, lakes and mature parkland, is being marketed by Eddisons, The Yorkshire Post discloses. The hotel is currently not trading and around 10 staff who were laid off following the Covid outbreak have now been made redundant, The Yorkshire Post notes. The administrators said that anyone seeking further information about the sale of Monk Fryston Hall Hotel, should contact Eddisons on 0113-209-1064, The Yorkshire Post relays. NOMAD FOODS: Moody's Affirms 'B1' CFR & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service has changed to stable from positive the outlook on the ratings of Nomad Foods Limited ("Nomad" or "the company"), a leading European frozen food producer, and also of its subsidiaries. Concurrently, Moody's has affirmed Nomad Foods Limited's corporate family rating of B1 and probability of default rating of B1-PD. At the same time Moody's has affirmed B1 ratings on the backed senior secured instruments issued by Nomad Foods BondCo Plc, Nomad Foods Europe MidCo Limited and Nomad Foods Lux S.a r.l. RATINGS RATIONALE The change of outlook to stable from positive reflects Nomad's weaker than expected operating performance due to a significant increase in input costs and declining consumer confidence in EU and the United Kingdom. The company's EBITDA margin (Moody's-adjusted) declined to 14.6% for last twelve months (LTM) to June 2022 from 16% in 2021 and 17.5% in 2020 while organic sales decreased by more than 3% LTM. However, the results during this period were against the strong comparables achieved thanks to the spike in demand driven by the coronavirus pandemic. Nomad's financial leverage, on a Moody's-adjusted gross debt/EBITDA basis and pro forma for Fortenova's (FFBG) full year contribution increased to approximately 5.9x as of June 2022 from 4.6x as of December 2020, a high level for the current rating. However, as Nomad is making progress to offset the inflationary pressures on the business through price increases and cost savings, Moody's expects organic revenue to stabilise in Q3 and return to 1%-3% growth thereafter. This, coupled with additional EBITDA from the acquisitions, synergies and its transformation programme, will support deleveraging to around 5.5x in 2022 and further towards 5x in 2023. The company is exposed to the consequences of the Russia-Ukraine military conflict on the food markets. Nomad sources a significant portion of its fish from Russia and its German business relied on supply of edible oils from Ukraine. Moody's understands that the company has been looking for alternative sources, which however, requires time and may result in higher costs and / or supply disruption. More positively, so far Nomad's service levels have been solid and even improved over the last 12-18 months. Nomad also faces refinancing risk as its $960 million term loans are due in May 2024. The rating action is based on Moody's expectations that the company will address this maturity in advance by Q1 next year. The rating agency also expects that the company will have to accept significantly higher cost of debt compared to just above 2.5% currently, but positively notes that Nomad's solid margins will allow to maintain healthy interest coverage ratio and free cash flow generation following the refinancing. Nomad's rating is support by (1) its strong foothold in the European frozen food market, with leading market positions in a number of countries; (2) its good geographic diversification across Europe; (3) its portfolio of long standing brands with strong customer recognition; and (4) expectations of positive free cash flow (FCF) generation. Nomad's rating is constrained by (1) its exposure to a mature market that demands ongoing innovation to maintain top-line and profitability growth; (2) its customers being large retailers which negotiation power may lead to time lag when putting through price increases; (3) exposure to volatility in commodity prices and currency exchange rates; and (4) some appetite for acquisitions and shareholder friendly actions such as share buy backs. ESG CONSIDERATIONS The company is NYSE listed and subject to the SEC regulations. Nomad benefits from well-developed governance guidelines and procedures. The company has demonstrated some appetite for debt-funded M&A, as illustrated by acquisitions of FFBG, Aunt Bessie and Goodfella's and Moody's expects this to continue. The company also has a track record of shareholder-friendly actions, including share buy-backs. More positively, the company demonstrated prudent liquidity management over the last several years and adhered to its financial policy target of 4.5x maximum net leverage despite the debt-funded acquisitions. LIQUIDITY The company's liquidity is good, supported by about EUR30-40 million free cash flow generation a quarter and by EUR221 million cash balance as of the end of June 2022. The company's EUR175 million RCF is likely to remain undrawn in cash terms, although around EUR15-20 million is normally used for letters of credits and bank guarantees. Moody's also expects that the company will maintain good flexibility under its single financial covenant, a net debt covers below 7.25x, only applicable to its RCF and tested when drawn above 40%. STRUCTURAL CONSIDERATIONS Nomad's capital structure comprises EUR800 million of backed senior secured notes due June 2028 and EUR1.4 billion equivalent of backed senior secured bank credit facilities, split among a EUR553 million term loan due June 2028, the outstanding $906.7 million (original face value $960 million) term loans due May 2024 and a EUR175 million RCF due June 2026. Applying the Loss Given Default for Speculative-Grade Companies methodology (assuming a standard 50% recovery rate), all these instruments are rated at the same level as the corporate family rating, reflecting their pari passu ranking. The instruments also share the same guarantee and security package. RATING OUTLOOK The stable outlook reflects Moody's expectation of low to mid single-digits organic growth in both sales and profitability over the next 12-18 months leading to gradual deleveraging. While the Moody's understands that Nomad aims to make further acquisitions to build a global consumer food business, the stable outlook factors in Moody's assumption that any debt-funded acquisition activity will be small in nature. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating pressure could materialise if (1) Moody's-adjusted gross debt/EBITDA decreases well below 5x on a sustained basis, (2) the company maintains a Moody's-adjusted EBITA margin in the mid-teens in percentage terms and good liquidity, and (3) Nomad maintains solid free cash flow / debt at around 10%. Nomad's rating could be lowered if (1) the company's earnings deteriorate, resulting in Moody's-adjusted gross debt/EBITDA increasing well above 5.5x on a sustained basis, or (2) the Moody's-adjusted EBITA margin declines towards the low teens in percentage terms or liquidity concerns emerge. Moody's could also consider downgrading the rating if significant concerns arise on the ability of the company to address debt maturities in 2024 or in the event of any material debt-funded acquisitions or change in financial policy. LIST OF AFFECTED RATINGS Affirmations: Issuer: Nomad Foods BondCo Plc BACKED Senior Secured Regular Bond/Debenture, Affirmed B1 Issuer: Nomad Foods Europe MidCo Limited BACKED Senior Secured Bank Credit Facility, Affirmed B1 Issuer: Nomad Foods Limited Probability of Default Rating, Affirmed B1-PD LT Corporate Family Rating, Affirmed B1 Issuer: Nomad Foods Lux S.a r.l. BACKED Senior Secured Bank Credit Facility, Affirmed B1 Outlook Actions: Issuer: Nomad Foods BondCo Plc Outlook, Changed To Stable From Positive Issuer: Nomad Foods Europe MidCo Limited Outlook, Changed To Stable From Positive Issuer: Nomad Foods Limited Outlook, Changed To Stable From Positive Issuer: Nomad Foods Lux S.a r.l. Outlook, Changed To Stable From Positive PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Consumer Packaged Goods published in June 2022. COMPANY PROFILE Headquartered in Middlesex, the UK, Nomad Foods Limited (Nomad) a leading producer of frozen food products. The company's key markets include the UK, Italy, Germany and Sweden, but it serves several other European countries. The company sells a wide range of branded frozen food items, including seafood, vegetables, poultry and ready meals. It generated revenue of EUR2.7 billion in 2021. Nomad is listed on the New York Stock Exchange (market capitalisation was close to $3 billion as of date of this publication) and is led by co-founders and co-chairmen Noam Gottesman and Martin E. Franklin. OVO: Expected to Breach Covenants Prior to Government Support ------------------------------------------------------------- Peter Campbell and Nathalie Thomas at The Financial Times report that Ovo Group, the owner of the UK's third-largest energy supplier, feared breaching its financial covenants in the months before the government announced unprecedented support for British households and businesses to pay soaring energy bills. According to the FT, newly released accounts for Ovo show it was at risk of not being able to meet its lending requirements this year, as it feared a sharp rise in bad debt if households were unable to afford record electricity and gas bills. The business warned that it expected to breach banking covenants during 2022 because of soaring prices, according to accounts filed for 2021 and published by Companies House on Sept. 25, the FT relates. "High energy prices resulted in [an] over 50 per cent increase in bills in April 2022, which means that millions more households will struggle to heat their homes in winter", the company, as cited by the FT, said, with "a further increase in bad debt" expected during the year. Breaching its covenants would risk putting the viability of the business, whose core operations are still lossmaking, in "material uncertainty", the FT quotes Ovo as saying in its accounts. Earlier this month, ministers unveiled an estimated GBP150 billion package designed to partly shield households from energy prices that have spiralled since Russia's full-scale invasion of Ukraine, the FT recounts. WASPS: Needs to Find GBP2 Million to Avert Administration --------------------------------------------------------- Bobby Bridge at CoventryLive reports that Wasps reportedly need to find GBP2 million in 20 working days or the club will go into administration. HMRC issued the club with a winding-up order on Sept. 21 that prompted the club to file its intention with the High Court to appoint an administrator, CoventryLive relates. According to CoventryLive, a subsequent Wasps statement said this action was undertaken to "protect its interests", stressing the measure "does not mean the business is in administration" -- but will provide "a crucial period of grace to continue negotiations with a number of interested parties to secure the long-term future of the group". The Times has now reported the extent of the financial battle that Wasps face, with GBP2 million needed to be found to pay a tax bill, CoventryLive notes. It was also reported that Wasps has interest from overseas buyers, while chief operating officer Chris Holland has also been 'linked with a bid' to buy the club. Mr. Holland's company owns Wasps' training ground that was officially opened last summer in Henley-in-Arden. The venue was used for a players' and staff meeting on Sept. 22, which was attended by directors including owner Derek Richardson and representatives of FRP, Wasps' restructuring partner, CoventryLive relays. CoventryLive understands from this meeting that those present were told the club was blindsided by the HMRC who made a sudden and unexpected request for a large sum of money. Wasps have endured a challenging summer beset by financial challenges as it failed to repay the GBP35 million owed to bondholders who helped fund the club's migration from London to the Midlands, and the Coventry Building Society Arena, in 2014, CoventryLive recounts. Attempts to refinance the bond have not been straightforward, with May's bond maturity date passing without bondholders receiving their money, CoventryLive states. Earlier this month, a statement from Wasps Finance Plc stated that it had received an offer that would see the bonds fully deemed on completion of this refinancing and that "discussions with this lender are at an advanced stage", CoventryLive notes. If administration does occur, under RFU rules, Wasps will be relegated at the end of the season. However, another rule states that exemptions can be made if the club can demonstrate the situation was not their fault. WORCESTER WARRIORS: Co-Owner Says Administration Among Options -------------------------------------------------------------- Marcello Cossali-Francis at the Worcester News reports that Worcester Warriors' co-owner Colin Goldring conceded that they will place the rugby club into administration if it is "in the best interest of creditors and the club". Rumours circled on Sept. 23 that administrators had been appointed at the club but that has not been confirmed, the Worcester News relates. It comes after Worcester MP Robin Walker encouraged the government and DCMS to place Worcester into administration on Sept. 22 when addressing the House of Commons in a parliament debate, the Worcester News notes. "We are not in administration but we are considering all options and having plans in place if the buyers don't come through," said Mr. Goldring to the Worcester News. "We would still rather make a complete exit. We were asked to stay on and finish the work we'd started on the development work and as a hand over on the running of the club and stadium. "We are prepared to sell the whole group and walk away completely, always have been. Likewise we are prepared to put the club into administration if that's in the best interest of creditors and club. "It protects us to out the club into administration but we are concerned about the consequences and would rather an outright sale if that guarantees the clubs survival and doesn't risk loss of the p-share." "We have always worked with DCMS and their advisors, there are no new advisors," added Mr. Goldring. "But we continue to work with the same people to ensure we have properly considered all options and what's in the best interest of creditors and club." ********* 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 * * *