/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/221208.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, December 8, 2022, Vol. 23, No. 239 Headlines G E R M A N Y ESPG AG: S&P Downgrades Rating to 'CCC', Outlook Negative IBEO AUTOMOTIVE: Microvision Acquires Parts of Business MERCER INTERNATIONAL: Moody's Affirms 'Ba2' CFR, Outlook Stable I R E L A N D BRASSERIE SIXTY6: EMI MR Investments Objects to Rescue Plan NEUBERGER BERMAN 5: S&P Assigns B- (sf) Rating to Class F Notes OCP EURO 2022-6: Moody's Gives (P)Ba3 Rating to EUR17.5MM E Notes L U X E M B O U R G ADLER GROUP: S&P Cuts ICR to 'CC' on Proposed Debt Restructuring BELRON GROUP: S&P Alters Outlook to Positive, Affirms 'BB+' ICR FR FLOW CONTROL 1: Moody's Affirms 'B3' CFR, Outlook Now Stable U N I T E D K I N G D O M 888 HOLDINGS: S&P Assigns 'B' Issuer Credit Rating, Outlook Neg. ACTIVE MAINTENANCE: Enters Administration, 24 Jobs at Risk MCLAREN HOLDINGS: Moody's Affirms 'Caa1' CFR, Alters Outlook to Neg SBS PRINT: Three Businesses Owed Millions to Unsecured Creditors SEVEN TECHNOLOGIES: Goes Into Administration, Assets Up for Sale WASPS RUGBY: RFU Rejects Administrator's Bid to Block Relegation - - - - - ============= G E R M A N Y ============= ESPG AG: S&P Downgrades Rating to 'CCC', Outlook Negative --------------------------------------------------------- S&P Global Ratings lowered its ratings on German real estate landlord ESPG AG to 'CCC' from 'B-' and its issue rating on its senior unsecured debt to 'CCC-' from 'CCC+'. The recovery ratings are unchanged. The negative outlook reflects the risk that the company may fail to refinance its short-term debt in a timely manner or pursue a debt restructuring in the coming 12 months. S&P said, "In our view, ESPG's ability to meet its short-term financial obligations and reduce the likelihood of a debt restructuring depends on successful negotiations with funding suppliers. As of Sept. 30, 2022, ESPG has about EUR88 million of debt maturities to refinance in the coming 12 months, including a secured loan of about EUR31.4 million, due May 2023, and an outstanding EUR46.6 million senior unsecured bond, due October 2023. We understand that ESPG has no undrawn back-up facilities and that unrestricted cash reserves amounted to only EUR3.2 million at the end of third-quarter 2022. Liquidity was further constrained because of delays to the company's growth strategy and operational improvement measures, which have limited our cash flow expectations for the next six to 12 months. That said, we understand that the company's financial covenant headroom remains adequate, at well above 10%, and we expect it will maintain sufficient headroom. Furthermore, we understand that the company is actively working on a refinancing plan and that its new shareholder, Alvarium, plans to financially support repayment of a significant amount of subordinated debt to reduce the company's overall leverage over the medium term. At this stage, we have not incorporated any potential shareholder support in our liquidity analysis, because it is not yet committed. "ESPG's capital structure remains highly leveraged, with EBITDA interest coverage not approaching 1x before year-end 2023, in our view. ESPG's S&P Global Ratings-adjusted debt-to-debt-plus-equity ratio was 82.1% and its interest coverage was about 0.8x for the rolling 12 months as of June 30, 2022, and we expect it to remain well above 70% and below 1x until year-end 2023. This is mainly because of a lower-than-expected earnings increase that stemmed from delayed portfolio growth and re-lettings to fill vacant premises. We expect ESPG will continue expanding its cash-flow base and portfolio throughout 2023, but that its currently limited cash-flow base and high debt-servicing needs may weigh on its capital structure and liquidity headroom. We understand that ESPG is in ongoing letting discussions for available empty space in its portfolio. The company's average debt maturity is just above 3.1 years as of November 2022, which is very short compared with other rated high-yielding peers. We think that ESPG's highly leveraged capital structure and market uncertainties pose a risk to its ability to secure new funding, particularly during a market downturn, which could weigh on its financial sustainability. In addition, we see a risk that commercial properties with science park characteristics in secondary locations may not benefit from positive valuation developments, and that demand could become more subdued compared with prime locations. We forecast that the asset valuation of office properties in Germany will decline by about 5% in 2023. This could further delay ESPG's efforts to deleverage toward its reported loan-to-value target. We understand that Alvarium may also support the company's growth plans with equity over the short term. Our forecast assumes any acquisitions will be funded at a loan-to-value of 50%-55%. "The negative outlook reflects our view that we could lower the ratings further on ESPG within the next six to 12 months if ESPG were unable to address sufficient liquidity sources to cover its short-term maturing debt, the company violates any of its covenants, or a distressed debt restructuring becomes more likely." S&P could lower its ratings if we observe: -- Further developments that make refinancing of upcoming maturing debt even less likely; -- Any indication that financial covenants will be breached; -- That lenders might not receive debt repayment on time; or -- Potential distressed debt restructuring that might affect any lender. S&P could revise the outlook to stable if it observes: -- Successful refinancing of all debt maturities in 2023, without bond holders and lenders bearing losses; and -- That liquidity sources provided do not deteriorate ESPG's credit metrics significantly. ESG credit indicators: E-2, S-2, G-3 IBEO AUTOMOTIVE: Microvision Acquires Parts of Business ------------------------------------------------------- Christoph Hammerschmidt at eeNews Europe reports that Microvision, a U.S.-based supplier of MEMS-based solid-state lidar sensorss, has announced the acquisition of parts of insolvent German manufacturer Ibeo Automotive Systems. Microvision plans to integrate Ibeo's perception software into its own future ASICs, eeNews Europe states. Ibeo's acquisition software has already successfully gone through qualification processes with several OEMs, which will allow MicroVision to significantly accelerate the path to a finished product. According to eeNews Europe, Microvision will pay EUR15 million for the acquisition. The company estimates revenues from joint hardware and software products at US$8 million to US$15 million in 2031, with further growth in the future, eeNews Europe notes. Under the terms of the purchase agreement, MicroVision will acquire certain assets from Ibeo, as well as IP and teams that will be working at MicroVision at the time of closing, eeNews Europe discloses. Through the acquisition, MicroVision gains experienced development teams, hardware and software, as well as sales and business development specialists focused on automotive and other markets, eeNews Europe relays. The acquisition is expected to close in the first half of 2023 and is subject to clearance by the German Federal Ministry of Economics, eeNews Europe says. MERCER INTERNATIONAL: Moody's Affirms 'Ba2' CFR, Outlook Stable --------------------------------------------------------------- Moody's Investors Service affirmed Mercer International Inc.'s Ba2 corporate family rating, Ba2-PD probability of default rating, and Ba3 senior unsecured debt rating. The company's speculative-grade liquidity rating remains unchanged at SGL-1. The ratings outlook remains stable. "The affirmation reflects Moody's expectation that Mercer will maintain solid credit metrics and very good liquidity over the next 12-18 months despite commodity prices moderating", said Aziz Al Sammarai, Moody's analyst. "Moody's expect that benchmark North American pulp prices will decline in 2023, as supply ramps up." Affirmations: Issuer: Mercer International Inc. Corporate Family Rating, Affirmed Ba2 Probability of Default Rating, Affirmed Ba2-PD Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD4) Outlook Actions: Issuer: Mercer International Inc. Outlook, Remains Stable RATINGS RATIONALE Mercer's rating (Ba2 CFR) benefits from its leading global market position in northern bleached softwood kraft (NBSK) pulp; earnings contribution from relatively stable energy and chemical business segment; operational flexibility and geographic diversity with several pulp mills in Germany and Canada, and wood product facilities in Germany, all which produce surplus energy; and very good liquidity. Mercer's rating is constrained by the inherent price volatility of market pulp and lumber which periodically results in high leverage during trough market prices; high product concentration with over 75% of sales tied to pulp; and constrained fiber availability in western Canada. Mercer has very good liquidity (SGL-1), supported by about $660 million of sources and no near term debt maturity over the next four quarters. The company had about $362 million in cash and short term investments at September 2022, about $259 million of availability under several committed credit facilities totaling about $410 million (most expiring on 2027), and about $40 million of Moody's expected free cash flow over the next four quarters. Moody's expect the company will remain in compliance with its financial covenants. Most of the company's fixed assets are unencumbered, which could provide alternate liquidity. Mercer does not have any significant debt maturities until its $300 million senior unsecured notes mature in 2026. The Ba3 rating on the company's $1.2 billion senior unsecured notes, one notch below the Ba2 CFR, reflects structural subordination to the Canadian revolving credit facility and other indebtedness and liabilities of the operating subsidiaries. The company's senior unsecured notes do not benefit from operating subsidiary guarantees. The stable rating outlook reflects Moody's expectation that Mercer will maintain very good liquidity as financial leverage increases toward 4.4x in 2023 because higher pulp and lumber volumes will not offset the decline in prices and increase in operating costs. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade Less earnings volatility with increased diversification away from the cyclical market pulp sector Adjusted debt to EBITDA is sustained at or below 3x The company's retained cash flow to adjusted debt is sustained at or above 20% The company maintains strong liquidity and conservative financial policies Factors that could lead to a downgrade Significant deterioration in the company's liquidity and operating performance Changes in financial management policies that would materially pressure the company's balance sheet The company total adjusted debt to EBITDA is sustained above 4.5x The company's retained cash flow to adjusted debt is sustained below 10% Mercer International Inc. is a leading producer of northern bleached softwood kraft (NBSK) pulp and operates two large lumber mills in Germany. The company is incorporated in the State of Washington and headquartered in Vancouver, British Columbia. The principal methodology used in these ratings was Paper and Forest Products published in December 2021. ============= I R E L A N D ============= BRASSERIE SIXTY6: EMI MR Investments Objects to Rescue Plan ----------------------------------------------------------- Catherine Sanz at Business Post reports that a company connected to the Mercantile Group is attempting to "drag" a Dylan McGrath restaurant into liquidation, a court has heard. According to Business Post, EMI MR Investments Ltd, which is controlled by businessmen Michael Breslin and Maurice Regan, is objecting to the rescue plan for Brasserie Sixty6, a Dublin 2 restaurant co-owned by McGrath. Under a restructuring agreement unanimously approved by creditors in September, two of McGrath's restaurants, including Brasserie Sixty6, avoided liquidation, Business Post discloses. NEUBERGER BERMAN 5: S&P Assigns B- (sf) Rating to Class F Notes --------------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Neuberger Berman Loan Advisers Euro CLO 5 DAC's class A, B, C, D, E, and F notes. The issuer will also issue unrated subordinated notes. This is a European cash flow CLO transaction, securitizing a pool of primarily syndicated senior secured loans or bonds. The portfolio's reinvestment period ends approximately one year after closing, and the portfolio's maximum average maturity date is six years after closing. 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. S&P said, "We consider that the portfolio on the effective date will be well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow collateralized debt obligations." Portfolio Benchmarks CURRENT S&P Global Ratings weighted-average rating factor 2720.97 Default rate dispersion 513.68 Weighted-average life (years) 4.84 Obligor diversity measure 117.23 Industry diversity measure 22.51 Regional diversity measure 1.29 Transaction Key Metrics CURRENT Total par amount (mil. EUR) 300 Defaulted assets (mil. EUR) 0 Number of performing obligors 139 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.17 Covenanted 'AAA' weighted-average recovery (%) 35.82 Weighted-average spread net of floors (%) 3.82 S&P said, "In our cash flow analysis, we modeled the EUR300 million target par amount, the covenanted weighted-average spread of 3.80%, the covenanted weighted-average coupon of 4.60%, and the covenanted weighted-average recovery rates for all 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. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "The transaction's legal structure is bankruptcy remote, in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for the class A, B, C, D, E, and F notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B, C, D, and E notes is commensurate with higher ratings than those we have assigned. However, as the CLO will have a reinvestment period, during which the transaction's credit risk profile could deteriorate, we have capped our assigned ratings on these notes. "The class F notes' current break-even default rate (BDR) cushion is negative at the 'B-' rating level. 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 reflects several factors, including: -- The class F notes' available credit enhancement is in the same range as that of other CLOs S&P has and that have recently been issued in Europe. -- S&P's BDR at the 'B-' rating level is 24.44% versus a portfolio default rate of 15.01% if it was to consider a long-term sustainable default rate of 3.1% for a portfolio with a weighted-average life of 4.842 years. -- Whether the tranche is vulnerable to non-payment soon. -- 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. -- Following this analysis, S&P considers that the available credit enhancement for the class F notes is commensurate with a 'B- (sf)' rating. S&P said, "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A to E notes in four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance (ESG) factors S&P said, "We regard the exposure to ESG credit factors in the transaction as 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 the manger from investing in activities that are United Nations Global Compact violations or that are related to the manufacture, trade, storage or marketing of weapons; trade in endangered or protected wildlife; hazardous chemicals, pesticides, waste or ozone-depleting substances; production of or trade in illegal drugs or narcotics; payday lending; trade of products, services or activities involving forced labour or child labour; tobacco production; opioids; thermal coal or coal extraction, oil sands extraction, utilities with expansion plans that would increase their negative environmental impact, services to physical casinos and/or online gambling platforms, non-sustainable palm oil production, speculative transactions of soft commodities, pornography or prostitution, and operation, management, or provision of services to private prisons. Since the exclusion of assets related to these activities 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." Environmental, social, and governance (ESG) corporate credit indicators S&P said, "The influence of ESG factors in our credit rating analysis of European CLOs primarily depends on the influence of ESG factors in our analysis of the underlying corporate obligors. To provide additional disclosure and transparency of the influence of ESG factors for the CLO asset portfolio in aggregate, we've calculated the weighted-average and distributions of our ESG credit indicators for the underlying obligors. We regard this transaction's exposure as being broadly in line with our benchmark for the sector, with the environmental and social credit indicators concentrated primarily in category 2 (neutral) and the governance credit indicators concentrated in category 3 (moderately negative)." Corporate ESG Credit Indicators ENVIRONMENTAL SOCIAL GOVERNANCE Weighted-average credit indicator* 2.12 2.13 2.90 E-1/S-1/G-1 distribution (%) 1.18 0.50 0.00 E-2/S-2/G-2 distribution (%) 76.25 80.98 14.90 E-3/S-3/G-3 distribution (%) 11.82 4.53 70.45 E-4/S-4/G-4 distribution (%) 0.00 2.25 1.67 E-5/S-5/G-5 distribution (%) 0.00 1.00 2.25 Unmatched obligor (%) 10.74 10.74 10.74 Unidentified asset (%) 0.00 0.00 0.00 *Only includes matched obligor Ratings List CLASS RATING AMOUNT SUB (%) INTEREST RATE* (MIL. EUR) A AAA (sf) 173.00 42.33 Three/six-month EURIBOR plus 2.09% B AA (sf) 38.50 29.50 Three/six-month EURIBOR plus 4.06% C A (sf) 16.10 24.13 Three/six-month EURIBOR plus 4.63% D BBB- (sf) 20.30 17.37 Three/six-month EURIBOR plus 6.16% E BB- (sf) 12.10 13.33 Three/six-month EURIBOR plus 8.54% F B- (sf) 10.10 9.97 Three/six-month EURIBOR plus 9.57% Sub NR 25.00 N/A N/A *The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. OCP EURO 2022-6: Moody's Gives (P)Ba3 Rating to EUR17.5MM E Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to notes to be issued by OCP Euro CLO 2022-6 Designated Activity Company (the "Issuer"): EUR238,000,000 Class A Senior Secured Floating Rate Notes due 2033, Assigned (P)Aaa (sf) EUR23,250,000 Class B Senior Secured Floating Rate Notes due 2033, Assigned (P)Aa2 (sf) EUR17,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2033, Assigned (P)A2 (sf) EUR19,250,000 Class D Senior Secured Deferrable Floating Rate Notes due 2033, Assigned (P)Baa3 (sf) EUR17,500,000 Class E Senior Secured Deferrable Floating Rate Notes due 2033, 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. Onex Credit Partners, LLC (the "Manager") may sell assets on behalf of the Issuer during the life of the transaction. During the Non-Call Period, proceeds from the sale of Credit Risk Obligations may be reinvested into Substitute Collateral Obligations subject to certain conditions including a limit of 5% of the Target Par Amount. In addition, the Issuer will issue EUR24,000,000 of Subordinated Notes due 2033 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 Manager'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: EUR350,000,000 Diversity Score: 57 Weighted Average Rating Factor (WARF): 2821 Weighted Average Spread (WAS): 3.89% (actual spread vector of the portfolio) Weighted Average Coupon (WAC): 3.64% (actual spread vector of the portfolio) Weighted Average Recovery Rate (WARR): 44.36% Weighted Average Life (WAL): 4.56 years (actual amortization vector of the portfolio) =================== L U X E M B O U R G =================== ADLER GROUP: S&P Cuts ICR to 'CC' on Proposed Debt Restructuring ---------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on Adler Group S.A. (Adler) to 'CC' from 'CCC', and its issue rating on its senior unsecured debt to 'CC' from 'CCC'. S&P said, "We also lowered our long-term issuer credit rating on Adler Real Estate AG (Adler RE), subsidiary of Adler, to 'CCC-' from 'CCC', and our issue rating on its senior unsecured debt to 'CCC-' from 'CCC'. "The negative outlook reflects our expectation that Adler would execute its debt restructuring in the next few weeks, which will lead us to further lower the rating on Adler Group S.A to SD (selective default) and its debt ratings on several affected instruments to 'D', according to our criteria. "We understand that the proposed reorganizing of debt could stabilize the group's capital structure and enhance the liquidity however, we view the proposed transaction as distressed and tantamount to default, in line with our criteria. We see the proposed transaction as offering the lenders less than the original promise of the securities. In addition, the high debt leverage, with S&P Global Ratings-adjusted debt to debt plus equity reaching close to 71% as of Q3 2022 from 66.1% on Dec. 31, 2021, and EBITDA interest coverage ratio remaining below 1.0x as of Q3 2022, constrain its capital structure. We understand further that Adler remains outside the required threshold level of its incurrence covenants, which limits Adler´s ability to raise any new debt. We understand that the group had cash and cash equivalent of EUR615 million as of Sept. 30, 2022, and could roll-over the upcoming secured bank debts at maturities or could dispose assets to satisfy the upcoming maturities. However, in absence of the proposed restructuring offer, we view the risk of a conventional default as heightened, as we currently assess Adler's liquidity at weak and insufficient to cover the debt maturities in next twelve months, which is exacerbated by the ongoing challenges the real estate market is currently facing to sell assets at close to book values. These points raise the possibility of a conventional default, which we view as distressed under our criteria." Adler has obtained consent from 45% of its unsecured nonconvertible bond holders and has launched a consent solicitation offer to the unsecured nonconvertible bond holders to reach the 75% threshold. S&P said, "To complete the restructuring exercise, Adler needs at least 75% of bond holders to consent and we understand that it may achieve this based on its recent discussions with the bond holders. The proposed transaction would allow the company to change the maturity of its EUR400 million unsecured bond due on July 26, 2024, to July 31, 2025. It would also be allowed to change the interest terms for all the outstanding unsecured nonconvertible bonds at the Adler Group S.A to PIK from cash (a coupon uplift of 2.75 percentage points per year) until July 31, 2025, and issue a new secured debt on a priority ranking basis of up to EUR937.5 million (subject to certain conditions), at a 12.5% per year PIK with a maturity until June 30, 2025, mainly to repay two outstanding unsecured bonds issued at Adler RE. We understand that the issuance of new secured debt will be secured on a first- or second-lien basis and Adler's existing unsecured bonds will be secured on a second- or third-lien basis, which in our view would alter the ranking of Adler's current unsecured non-convertible bonds. While we have not changed our estimated recovery at default at present, we believe the proposed transaction might dilute the recovery prospects of the group's existing senior unsecured non-convertible bonds following the transaction close. We understand all existing bondholders are being given an opportunity to participate in the new debt on a pro rata basis." S&P said, "Our downgrade of Adler RE to 'CCC-' is based on our view of increased restructuring risk in the short term. We understand that the proposed restructuring relates to Adler's outstanding unsecured nonconvertible bonds issued by Adler and currently doesn't include the unsecured bonds issued by Adler RE. However, because we understand that Adler would launch a second transaction at a later stage on Adler RE's unsecured nonconvertible bonds, we have lowered the current rating of Adler RE by one notch to 'CCC-' to reflect our view of increased restructuring risk. "The negative outlook reflects our expectation that Adler will likely execute a debt restructuring within the next few weeks, which would lead us to further lower the debt ratings on several affected instruments to 'D', according to our criteria. "In such case, we would also expect to lower our long-term issuer credit rating on Adler to 'SD' (selective default) and our issue-level ratings on Adler s senior unsecured non-convertible bonds to 'D' upon completion of the transaction based on our criteria. "Subsequently, upon implementation of the transaction, we would then review the ratings, the company's new capital structure, and its improved liquidity position. "The negative outlook on Adler Real Estate AG reflects our view that we could lower our ratings on Adler RE if a restructuring that we view as distressed under our criteria is officially launched." ESG credit indicators: E-2, S-2, G-5 BELRON GROUP: S&P Alters Outlook to Positive, Affirms 'BB+' ICR --------------------------------------------------------------- S&P Global Ratings revised its outlook on the rating to positive from stable and affirmed its 'BB+' long-term issuer credit rating on Luxembourg-based vehicle glass repair and replacement (VGRR) services company Belron Group S.A. (Belron) and its 'BB+' issue ratings on Belron's senior secured term debt with a recovery rating of '3' (60% rounded estimate recovery prospects). S&P said, "The positive outlook reflects our expectation that Belron's leading position in the VGRR market will support robust top-line growth, resilient margins, and continued positive FOCF in fiscal year ending Dec. 31, 2023, and fiscal 2024. We expect the group will manage any future dividend recapitalizations such that our credit metrics will gradually and sustainably improve to a level potentially in line with an investment-grade rating. "The positive outlook reflects our expectation of a continued strong operating performance over 2022 and 2023, with credit metrics potentially improving to a level commensurate with an investment-grade rating even with recurring dividend recapitalizations. We project that Belron's revenue will grow to more than EUR5.5 billion in 2022 and more than EUR6 billion in 2023, supported by strong demand, price increases, and foreign exchange tailwinds. At the same time, we expect Belron's S&P Global Ratings-adjusted EBITDA margins will strengthen slightly over the next 12-24 months, and that the group will generate free operating cash flow (FOCF) of comfortably in excess of EUR600 million in 2022 and EUR700 million in 2023. Management continues to successfully navigate the group through the current inflationary environment, including attracting and retaining skilled technicians in a tight labor market. As profitability grows, we also expect leverage to improve, despite an expectation of recurring dividend recapitalizations, because we believe that Belron will raise new debt and pay dividends in a balanced fashion that keeps leverage in line with or below the gradual step-downs in maximum leverage permitted in the shareholder agreement (which ultimately targets leverage of no more than 3x in 2025). "We believe that Belron has significant capacity to issue new debt and pay dividends while potentially moving to an investment-grade rating, with ratings upside firmly driven by financial policy. If the group performs in line with our base case, we think it will be able to undertake a dividend recap in 2023 that is comparable in size to the one undertaken in 2021, and potentially slightly larger, while maintaining some ratings upside. We first consider the expected growth in EBITDA in fiscal 2023, then we calculate the quantum of new term debt that the group could potentially issue, and then the amount of dividends it could pay and stay aligned to management's leverage target while still exhibiting ratings upside (that is, S&P Global Ratings-adjusted leverage trending to sustainably below 4x). Our forecasts suggest that Belron could issue EUR1.1 billion-EUR1.2 billion of new term debt and pay a dividend of up to EUR1.6 billion in 2023, while retaining a healthy level of cash on balance sheet--at least in line with cash balances of 2021—while also exhibiting overall adjusted debt to EBITDA of about 4x or slightly less. The potential dividend recap amounts that we model for 2024 for debt issuance and shareholder return are smaller than in 2023, but we think that adjusted leverage will gradually decline to about 3.7x or slightly lower in 2024, even if management maximize both debt issuance and shareholder return. Because of our adjustments, there is about 0.2x-0.4x difference between S&P Global Ratings-adjusted leverage and the group's leverage as defined under its shareholder agreement. We therefore expect reported debt to EBITDA to be 3.7x or less in 2023 and under 3.5x in 2024, subject to the size and timing of future dividend recapitalizations. The group's publicly stated target--as noted in the shareholder agreement--is no more than 3x leverage in 2025. "A track record of lower-than-expected leverage coupled with the potential for further dividend recapitalizations is why we have changed the construction of our ratings on Belron. The group saw adjusted debt to EBITDA of 3.6x in 2020 and 3.9x in 2021, we expect it to post 3.5x in 2022 absent any further dividend recapitalization in the next six weeks--which we view as unlikely given the recent debt market conditions. As such, we believe that Belron exhibits credit metrics more in line with a significant financial risk profile (previously aggressive). That said, in our view the shareholders and management are highly likely to undertake actions that will result in re-leveraging, so we apply a negative financial policy modifier to arrive at our final 'BB+' ratings. The path to a 'BBB-' rating would unfold through 2023 if the group performs in line with expectations, management continued to manage leverage in line with the shareholder agreement, and we expect that the resultant lower leverage will be sustained for at least two years (our ratings horizon for investment-grade issuers)." Belron continues to benefit from increasingly complex windscreen technology and the growth in sales of complementary products. Recalibration jobs on windscreens with ADAS technology offer a large market opportunity given that the penetration rate, or percent of ADAS calibration jobs per windscreen jobs, amounted to about 24% in 2021 (versus 17% in 2020 and 11% in 2019). S&P said, "As new vehicles are rolled out with increasing complexity and technology, we think this rate will increase, because Belron is well positioned to capitalize on this growth area. This is because the group benefits from pre-existing investments in calibration capabilities and trained technicians, which could help increase profitability over the medium term through economies of scale and increasing the average profit per job. Furthermore, we expect that the risks of any potential VGRR volume growth slowdown would be counterbalanced by the group's leadership position in the sector and the continued increased in windscreen technology complexity, translating into higher pricing. Indeed, the pandemic demonstrated that the group was able mitigate the hit to sales from decreasing job volumes through a favorable product mix, increasing technological complexity (with Belron's ADAS offering), and additional sales of complementary products. These materialized through its value-added products such as windscreen wipers and rain repellents, which are relatively price-inelastic in our view and can be offered for a mark-up. Furthermore, the attachment rate, or percentage of customers buying a retail product such as wipers, increased to 21% in 2021 from about 10% in 2017, highlighting the group's ability to cross-sell when customers bring in their vehicles for a VGRR job." S&P said, "We expect D'Ieteren Group's investment in Belron will persist in the long term. Belron is owned by long-term family run D'Ieteren Group (50.1%), financial sponsors including CD&R (38.2%), and management and the founding family (11.8%). We understand that D'Ieteren Group and the financial sponsors operate as a true partnership. D'Ieteren Group has a majority stake; however, if the shareholders disagree, veto rights require a joint agreement on all key decisions such as shareholder renumeration, and management changes. As such, D'Ieteren Group cannot direct cash flows in a manner detrimental to CD&R or the other financial sponsors. In parallel, the requirement for consent at the shareholder level leads us to think that the financial sponsor cannot impose more aggressive financial policies. "The positive outlook reflects our expectation that Belron's leading position in the VGRR market will support robust top-line growth, resilient margins, and continued positive FOCF in fiscal years 2023 and 2024. We expect the group will manage any future dividend recapitalizations such that our credit metrics will gradually and sustainably improve to a level in line with an investment-grade rating." S&P could revise the outlook to stable if: -- Profitability were to weaken below S&P's base case, with management unable to offset margin pressure through cost savings; or -- Coupled with a softer potential operating performance, management pursued an aggressive dividend recapitalization strategy that resulted in adjusted net debt to EBITDA stabilizing between 4.0x and 4.5x, more in line with the current 'BB+' ratings. S&P could raise the ratings if: -- The group and its shareholders maintained a financial policy such that S&P expected adjusted net debt to EBITDA to fall to sustainably below 4x; and -- Adjusted EBITDA margins remained resilient despite ongoing inflation and supply-chain disruption. ESG credit indicators: E-2, S-2, G-3 FR FLOW CONTROL 1: Moody's Affirms 'B3' CFR, Outlook Now Stable --------------------------------------------------------------- Moody's Investors Service affirmed the ratings of FR Flow Control Luxco 1 S.a r.l. (Flow Control), including the B3 corporate family rating, B3-PD probability of default rating and B3 senior secured debt rating. Moody's also changed the outlook to stable from positive. The affirmation of the ratings and outlook change to stable reflects Moody's expectation that improvement in key credit metrics will be protracted as a result of earnings pressures from macro headwinds, supply chain delays and a high cost environment that will continue likely into 2023. Moody's expects these factors to lead to weaker results in 2022, including pro forma adjusted debt-to-EBITDA above 5.5x. Leverage approached 4.5x at the time of the acquisition of Termomeccanica Pompe (TM.P), a global manufacturer of pump and compressors, in April 2022. However, Flow Control's meaningful base of installed equipment should enable the company to leverage its aftermarket position for positive pricing and support modest margin expansion and lower leverage over the next year, aided by cost measures and lean initiatives. Moody's anticipates favorable dynamics in certain key markets (e.g., nuclear power generation and water/wastewater) will also enable the company to capture profitable growth opportunities. Moody's also expects Flow Control to maintain adequate liquidity and policies that support good financial flexibility over the next 12-18 months. Affirmations: Issuer: FR Flow Control Luxco 1 S.a r.l. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Gtd Senior Secured Term Loan B, Affirmed B3 (LGD3) Gtd Senior Secured Multi Currency Revolving Credit Facility , Affirmed B3 (LGD3) Outlook Actions: Issuer: FR Flow Control Luxco 1 S.a r.l. Outlook, Changed To Stable From Positive RATINGS RATIONALE The ratings reflect Flow Control's solid market positions in attractive niches, particularly nuclear power generation. Further, heightened focus on the recurring aftermarket revenue stream should enhance the company's cash flow capabilities, aided by modest capex requirements. Moody's expects higher aftermarket sales and ongoing cost optimization to help offset the negative impact of supply chain disruptions on the timing of order shipments (mainly original equipment), as well as weakening macro conditions and cost inflation. Expectations for margin improvement hinge on expanding aftermarket opportunities by better serving the installed base of equipment through increased investment in the service center network and maintaining an adequate supply of spare parts. Cost discipline along with savings achieved from footprint consolidation and procurement initiatives, as well as acquisition synergies should also support margin expansion. Additionally, Moody's believes TM.P will be accretive over time, increasing Flow Control's mix of higher margin aftermarket revenue. Despite the increased scale from TM.P, Flow Control's revenue scale remains modest (expected below $525 million) and the company operates in fragmented and competitive markets. Flow Control also has a short history of execution as a standalone company following its 2019 split from The Weir Group, lower margins than industry peers, and cash flow that is prone to periodic working capital swings. Given these factors and the company's exposure to cyclical markets, Moody's expects Flow Control to operate with moderate financial leverage, which should fall with expected EBITDA growth towards 5x in 2023. Moody's expects FR Flow to maintain adequate liquidity, based on unrestricted cash ($26 million at September 30, 2022) and expectations of ample availability on the undrawn $40 million revolving facility expiring in 2025, balancing negative free cash flow in the near term. Free cash flow will be constrained by working capital implications of supply chain disruptions and higher interest expense, as well as TM.P integration costs. The cash flow is exposed to a lag in timing between order and shipment and potential delays in large order payments, albeit tempered by paid advances for a portion of the order. Moody's expects free cash flow to improve and turn modestly positive over the next 12-18 months. The revolver will likely be used intra quarter during periods of higher working capital needs. The credit agreement includes a secured net leverage covenant of 5.5x. Moody's expects Flow Control to maintain good cushion in complying with the covenant requirement over the next year. There are no near-term debt maturities and less than $1 million of required term loan amortization payments annually. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded with EBITDA margin improving steadily and sustained well above 10%, benefiting from a larger share of higher-margin aftermarket sales from the installed base. Debt-to-EBITDA remaining below 5x and positive free cash flow on a sustained basis could also result in a ratings upgrade. A track record of top-line stability and growth as well as the maintenance of good liquidity would also be necessary for an upgrade. The ratings could be downgraded with Moody's expectation of sustained deterioration in margins and debt-to-EBITDA remaining above 6x. Inability to complete the integration of TM.P successfully and grow the aftermarket revenue stream, which adds resilience to the top-line, would be viewed negatively. Weaker liquidity, including free cash flow remaining negative, significantly reduced revolver availability or tight covenant compliance could also result in a ratings downgrade, as would debt funded transactions that meaningfully weaken the credit metrics. The principal methodology used in these ratings was Manufacturing published in September 2021. FR Flow Control Luxco 1 S.a r.l. is the financing subsidiary for FR Flow Control Midco Limited (U.K.), doing business as Trillium Flow Technologies, which designs and manufactures highly-engineered valves and pumps and provides specialist support services to several industries. These include the global power generation, industrial, oil & gas, water & wastewater, and other aftermarket oriented process industries. Revenue for the twelve months ended September 30, 2022, approximated $463 million. =========================== U N I T E D K I N G D O M =========================== 888 HOLDINGS: S&P Assigns 'B' Issuer Credit Rating, Outlook Neg. ---------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating on Gibraltar-based 888 Holdings PLC (888). S&P also assigned its 'B' issue ratings on the group's current rated debt issues, including senior secured pound sterling and euro term loan As, the U.S. dollar term loan B, and the euro fixed and floating notes. The rating on the proposed tap on the euro fixed and floating rate, fungible with the existing euro notes, is 'B'. The negative outlook reflects S&P's forecast that 888's credit metrics could remain weaker for longer than originally forecast, at above 7.5x S&P Global Ratings-adjusted debt to EDITDA, with negative operating free cash flow to debt after leases. The 888 and William Hill merger should result in material synergies, but execution is critical. At its capital markets day on Nov. 29, 2022, 888 outlined its plans for a 50% increase in targeted synergies and an accelerated capture timeline from first estimates resulting from the merger. 888 now intends to capture GBP150 million in total synergies by 2025, consisting of GBP116 million cumulative operating expenditure (opex) synergies and GBP34 million capital expenditure (capex) synergies. As a result of the acceleration of the capture timeline, the group intends to realize GBP87 million and GBP24 million of opex and capex synergies, respectively, in fiscal 2023, and costs of GBP66 million. S&P said, "In our view, the group's ability to execute on planned synergy capture and on budget is critical to enhance its profitability and ability to generate free cash flow. Our fiscal 2023 forecast includes only a modest synergy sensitivity (we forecast GBP10 million net savings instead of GBP21 million; resulting from the difference of the above-mentioned GBP87 million and GBP66 million) and with this the group's S&P Global Ratings-forecast free cash flow after leases is negative, and S&P Global Ratings-adjusted EBITDA margins are 12%-13% (after deducting GBP60 million of capitalized development costs and synergy costs; please see Our Base Case Scenario: Assumptions below for details on how we calculate our reported EBITDA margins.) Consequently, we view successful execution of the synergy plan, in what is currently an inflationary environment, as crucial to underpinning the rating in the next 12-18 months." There is a strong rationale for the William Hill merger but it has also substantially increased leverage. The merger's key benefits include greater scale and diversification, in S&P's view. William Hill has brought more sports wagering positions to 888, which had a predominantly online gaming product positioning. William Hill will also introduce the group to physical retail exposure, and the combination of online and physical platforms should allow for greater operating efficiencies and a broader suite of products and technology. The acquisition will materially increase 888's adjusted debt to EBITDA to more than 8x in 2022 and 2023 under S&P's base-case forecast, from a position of net cash on a stand-alone basis pre-merger. This occurs when key outcomes from the U.K. gaming review are pending and inflation pressures are persisting, most notably in the UK. 888 now has its largest geographical exposure to the U.K., where future developments regarding discretionary spending, cost of living, and domestic economic and consumer health could affect demand for the group's products. The pending review of the U.K. Gambling Act 2005 remains a key macro risk to our forecast. S&P said, "We expect the review to result in a government white paper with draft recommendations. Key changes could include greater affordability measures, GBP2 online slot stake limits, bans on sport advertising or other marketing, and greater collective measures to identify and prevent gaming harm to individuals categorized as young or vulnerable. The timing remains uncertain, although the paper could be released during the next six months, with measures implemented thereafter. In our view, depending on the scope of the recommendations, U.K. regulatory risk remains a very material risk to the rating." 888 has some hedging in place, but it is partially exposed to interest and foreign exchange rates. S&P understands that the group's look-through debt exposure by currency (after swapped principal is converted) is approximately 56% euro, 36% pound sterling, and 8% U.S. dollar. 888's euro debt interest expense, including swapped principal to euro, is comfortably covered by more than 1.2x EBITDA interest cover. Pro forma for this proposed bond tap, 50% of the group's debt principal will be hedged at blended rates approximating current respective base rates and for about three years. The negative outlook reflects S&P's forecast that 888 credit metrics in the next 12-18 months could remain weaker for longer than originally forecast, at above 7.5x adjusted debt to EBITDA, and negative operating free cash flow to debt after leases. S&P could lower the ratings on 888 in the next 12 months if the group's credit metrics performed below our base-case forecast. This includes: -- Adjusted debt to EBITDA well above 7.5x over a three-year (fiscal years 2022-2024) weighted period, such that in S&P's view the likelihood of deleveraging below 7.5x in outer forecast years was less visible or certain; -- Adjusted FOCF to debt after leases was materially negative such that in S&P's view there was uncertainty in about the group's ability to generate positive free cash flow by fiscal 2024; and -- The group deviating from its financial policy commitment of 3x debt to EBITDA, including dividends or mergers and acquisitions that prevent leverage reduction toward its policy target and weigh on leverage. S&P said, "We could also lower the ratings if, following a review of the U.K. gambling regulation, we considered that the implementation of regulatory measures could materially affect the group's financial or business position outside of its control. Lastly, we could lower the ratings if the group's integration fell behind schedule, such that synergies and costs were materially below expectations, placing meaningful pressure on our base case. "We think it will take time for the group to demonstrate successful progress on a material integration effort, in addition to leverage reduction needed in the short to medium term, before 888 reaches its financial policy target of 3x company reported debt to EBITDA. Furthermore, with about 65% of pro forma revenue coming from the U.K., we see regulatory and macro uncertainty as a key limiting short-term macro factor until further clarity is available, particularly on likely U.K. regulatory impacts on the group." For an upgrade, the combined group would need to develop a track record of increasing regulated revenue; organic revenue, EBITDA, and EBITDA margin growth; and sustainable trading in the retail network. In terms of financial metrics, S&P could revise the outlook to stable if it saw: -- Debt to EBITDA below 7.5x, with a continued commitment to leverage remaining below this level; and -- A demonstrable track record of positive adjusted FOCF to debt after leases at about 2%-3%. ESG credit indicators: E-2, S-4, G-3 ACTIVE MAINTENANCE: Enters Administration, 24 Jobs at Risk ---------------------------------------------------------- Gary McDonald at The Irish News reports that Derry building contractor Active Maintenance Solutions Ltd (AMS) has gone into administration with the potential loss of all 24 jobs at the company. AMS, which undertakes construction projects in both the public and private sector, has appointed Michael Drumm of CavanaghKelly to look after its financial affairs, and staff have been advised of the situation, The Irish News relates. The company is based at Springtown industrial estate. According to The Irish News, founder and owner Gerry Donaghy cited insurmountable financial challenges caused by inflationary cost pressures. The administrator has informed staff that he would be temporarily suspending operations whilst he carries out a further review of the options available to the company, The Irish News notes. Customers and suppliers are in the process of being contacted by the administrator and there will be an update to all stakeholders on the situation within the next week, The Irish News discloses. MCLAREN HOLDINGS: Moody's Affirms 'Caa1' CFR, Alters Outlook to Neg ------------------------------------------------------------------- Moody's Investors Service has affirmed McLaren Holdings Limited's (McLaren, the company) Caa1 corporate family rating, and its Caa1-PD probability of default rating. Concurrently, Moody's affirmed the Caa1 instrument rating to the USD620 million guaranteed senior secured notes due 2026, issued by McLaren Finance PLC. The outlook has been changed to negative from stable. RATINGS RATIONALE The outlook change to negative reflects McLaren's very weak Q3 2022 results and heightened uncertainty about the company's ability to achieve an operational turnaround in the next 12-18 months. The negative outlook also reflects Moody's concerns about McLaren's weak liquidity despite additional funding received from its shareholders. On November 29, 2022, McLaren published its Q3 2022 financial results which showed wholesale volumes, revenues, profitability and cash flow generation well below the rating agency's previous expectations. McLaren's 545 wholesale units in Q3 2022 compare to Moody's previous forecast of slightly above 1,000 units. McLaren cited industry-wide semi-conductor shortages and ongoing supply constraints as the key drivers for the low production volume. Low production volumes resulted in a company-reported EBITDA loss of GBP54 million for the first nine months of 2022. McLaren's cash balance reduced to GBP47 million at the end of September 2022 compared with GBP77 million at the end of 2021 despite an equity injection in Q3 2022 of $125 million. The rating agency also notes that McLaren reported that after September 30, 2022, it identified certain technical upgrades that are required for its new hybrid model Artura. McLaren relies on the success of this model as more than 50% of its order book comprises of Artura orders. However, McLaren also stated that the Group's lead shareholder has committed to provide the company with further liquidity of around GBP100 million and Moody's understands that the funds have now been received. In addition, McLaren reported that it is in active discussions with key shareholders regarding a broader recapitalisation of the Group and that it anticipates that a transaction will be agreed and announced in the first quarter of 2023. Based on the weak results for the first nine months of 2022 and the technical issues of the Artura, Moody's has revised downwards its forecast for 2022-23. The rating agency now expects McLaren to wholesale only around 2,000 cars in 2022 and around 3,000 in 2023. Although improving, the rating agency projects Moody's-adjusted EBITDA to remain negative at around GBP190 million in 2022 and around GBP80 million in 2023. Accordingly, under Moody's base case, McLaren remains highly free cash flow negative in 2022-23. The rating agency estimates that the company needs at least an additional GBP150 million of funding to cover the forecasted cash burn. Nevertheless, the Caa1 ratings assume further shareholder support without any contributions from noteholders. In addition, the ratings continue to reflect positively the company's strong market position as a designer and manufacturer of high performance luxury super- and hypercars; strong brand recognition and pricing power underpinned by the company's historical racing prowess. LIQUIDITY The company's liquidity profile is weak despite the recent GBP125 million preference share issuance and additional GBP100 million of funding provided by its shareholders. Before the GBP100 million additional funding, McLaren had a cash balance of only GBP46.7 million as of September 2022. As the same date, GBP40 million was undrawn under the GBP55 million committed revolving credit facility (RCF) due in 2026. However, there is a net leverage covenant set at 4.25x, which is tested once 35% of the RCF is used. McLaren would currently not meet the net leverage covenant and Moody's does not expect the company to meet the covenant in 2023 either. Moody's base case projections indicate that McLaren would run out of cash in 2023 without additional funding. The rating agency also notes that the company continues to use substantial working capital financing to support liquidity. RATING OUTLOOK The negative outlook reflects the failure to improve volumes, earnings and cash flow generation in recent quarters which has resulted in a weakening liquidity profile despite the recent equity injection. The negative outlook also reflects the uncertainty of the timing of Mclaren's operational and financial recovery in the light of the recently announced need for technical upgrades to the new Artura. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS While unlikely in the near term, positive pressure could arise should McLaren demonstrate improvements in volume and profitability resulting in Moody's-adjusted debt/EBITDA improving towards 7.0x on a sustained basis and a sustained positive free cash flow profile (after interest and capex). A rating upgrade would also require liquidity to be at least adequate. Conversely, negative pressure on the rating could intensify should McLaren fail to progress sufficiently towards the recovery of volumes and profitability. A lack of improvements in free cash flow resulting in a further deteriorating liquidity profile could also create negative pressure and so could increases in debt. Signs of reduced shareholder support could also weigh on the ratings. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Automobile Manufacturers published in May 2021. COMPANY PROFILE McLaren Holdings Limited (McLaren) is the holding company of McLaren Group Limited's Automotive segment, which manufactures luxury cars. In 2021, McLaren generated GBP0.6 billion from the wholesale of 2,138 cars. McLaren is a private company, but with a diversified shareholder base. The majority investor is Bahrain Mumtalakat Holding Company B.S.C. SBS PRINT: Three Businesses Owed Millions to Unsecured Creditors ---------------------------------------------------------------- Richard Stuart-Turner at Printweek reports that documents filed by the administrators of the three operating Leicestershire print businesses of SBS Print Group have revealed that the businesses owed large inter-company amounts as well as millions of pounds to other creditors. SBS fell into administration and ceased trading with the immediate loss of 55 jobs two months ago, Printweek recounts. Matt Ingram and Steven Muncaster of Kroll's Birmingham and Manchester offices respectively were appointed joint administrators of Streamline Press Limited, John Baxter & Sons Limited, and Spectrum Printing Services Limited on Oct. 5, Printweek relates. The notice of statement of affairs in administration documents for the group's three businesses, filed at Companies House, showed that at Streamline Press, unsecured creditors were hit to the tune of nearly GBP4.3 million, including trade creditors amounts owing of over GBP1.7 million, Printweek discloses. HMRC was owed nearly GBP450,000, Printweek states. For Spectrum, unsecured creditors were owed over GBP2.7 million, with trade creditors making up nearly GBP400,000 of this amount and HMRC owed just shy of GBP154,000, Printweek notes. Highlighting inter-company dealings, Streamline Press was owed over GBP365,000 by Spectrum while John Baxter & Sons was owed nearly GBP308,000, according to Printweek. John Baxter & Sons owed unsecured creditors over GBP2.4 million, with trade creditors owed over GBP287,000 and the HMRC owed over GBP105,000, Printweek discloses. Streamline Press was owed just over GBP315,000, Printweek relays. According to Printweek, the notice of administrator's proposals reports also detailed the circumstances leading up to the group being placed into administration, stating: "The group's management team completed a consolidation exercise over the course of 2022 to operationally restructure the business and bring the majority of operations into one location. Accordingly, this resulted in the group being able to reduce overheads and deliver synergies, Printweek notes. However, the impact of the unprecedented lockdown from March 2020 due to the Covid-19 global pandemic significantly affected sales revenue and a significant burden was placed on the group's cash resources, Printweek recounts. "In addition, material prices increased significantly namely paper, ink and consumables. Due to a competitive market, the group was unable to pass on these cost increases to its customers. "Ultimately the group did not have the cash resources to service the high levels of debt in the business, including the government backed loans it obtained during the pandemic, and to deal with the decreasing margins of the businesses." SEVEN TECHNOLOGIES: Goes Into Administration, Assets Up for Sale ---------------------------------------------------------------- Business Sale reports that surveillance technology manufacturers Seven Technologies Group Ltd has fallen into administration, with the company's assets set to be put up for sale. According to Business Sale, the company's collapse was attributed to the impact of COVID-19, as well as wider macroeconomic headwinds and uncertainty. The company is headquartered and houses its operations in Leeds and also has a manufacturing facility in Lisburn, Northern Ireland. It operates in the defence sector, with its principal activity being manufacturing surveillance technology and other products for customers in government, military and law enforcement. The firm has appointed Andrew Dolliver, Jo Robinson and John Sumpton of EY's Restructuring division as joint administrators, Business Sale relates. The administrators have been tasked with finding a buyer for the group's assets, as well as providing support and assistance for employees, after the majority of the workforce was made redundant as a result of the administration, Business Sale discloses. In its accounts for the year ending September 30 2020, Seven Technologies Group reported turnover of GBP8.5 million, down from GBP11.2 million a year earlier, Business Sale states. The company's gross profit also fell from GBP4.89 million in 2019 to GBP1.3 million in 2020, while it went from a GBP1.47 million post-tax profit to a post-tax loss of GBP1.1 million, Business Sale notes. At that time, the company's fixed assets were valued at GBP8.4 million and current assets at GBP4.18 million, according to Business Sale. The group's creditors were owed GBP13.3 million, resulting in net liabilities of GBP840,579, Business Sale discloses. WASPS RUGBY: RFU Rejects Administrator's Bid to Block Relegation ---------------------------------------------------------------- Shrivathsa Sridhar at Reuters reports that England's Rugby Football Union (RFU) has rejected applications by the administrators of Wasps and Worcester seeking to prevent the automatic relegation of both clubs, saying the COVID-19 pandemic was not the primary reason for their financial woes. According to Reuters, Wasps and Worcester, who have both been suspended for going into administration, will now drop from the top-flight Premiership to the second-tier Championship in the 2023-24 season. "We are all deeply concerned by the insolvency of Worcester Warriors and Wasps rugby clubs," Reuters quotes RFU Chief Executive Officer Bill Sweeney as saying in a statement on Dec. 6. "We appreciate this decision will be disappointing for the clubs and their fans but it's clear from the Club Financial Viability Group's investigation that there were factors beyond COVID that resulted in the clubs entering insolvency." ********* 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 * * *