/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/221220.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, December 20, 2022, Vol. 23, No. 247 Headlines D E N M A R K NORICAN GLOBAL: S&P Downgrades ICR to 'CCC+', On Watch Negative F R A N C E CGG SA: S&P Alters Outlook to Positive, Affirms 'CCC+' LT Rating G E R M A N Y SPEEDSTER BIDCO: EUR225M Bank Debt Trades at 16% Discount UNIPER: Shareholders Approve State Bailout WIRECARD AG: Key Prosecution Witness Admits Guilt in Scam N E T H E R L A N D S MEDIAN BV: GBP250M Bank Debt Trades at 14% Discount U N I T E D K I N G D O M GREENSILL: Credit Suisse Gave Funding to Set Up Insurance Firm JEHU GROUP: Unsecured Creditors Unlikely to Get Repaid PURE FEED: Bought Out of Administration by Parakore X X X X X X X X [*] Patrick Bright Joins Paul Hastings as Partner in London - - - - - ============= D E N M A R K ============= NORICAN GLOBAL: S&P Downgrades ICR to 'CCC+', On Watch Negative --------------------------------------------------------------- S&P Global Ratings lowered its ratings on Danish metallics enhancement firm Norican Global A/S and its debt to 'CCC+' from 'B-' and placed them on CreditWatch negative. S&P said, "We could lower our ratings on Norican by up to two notches over the coming 30-60 days if the company does not successfully refinance its May 2023 bond. Conversely, if the company successfully refinances its debt and we expect positive FOCF for 2023, we could consider raising the ratings to our 'B' category." The downgrade reflects Norican's material refinancing risks amid unpredictable capital market conditions while its operating results reached record high levels in 2022. As of end-September 2022, Norican's cash balance of about EUR156 million only covers about 50% of its EUR340 million bond coming due in May 2023. Although Norican is addressing its imminent debt refinancing needs, S&P believes its aggressive risk and liquidity management exposes the group to largely unstable and volatile debt markets. The aggressive cash management overshadows Norican's record-high operating results in 2022. Under S&P's current base case, it anticipates Norican's revenue will reach EUR495 million-EUR505 million at end-2022, representing an increase of 25%-30% from the result at end-2021. Even though cost inflation will moderately affect profit margins, the adjusted EBITDA margin should hold up well at 10.0%-10.5% by end-2022, compared with 10.8% in 2021, thanks to a proactive list price management. That said, Norican's equipment order backlog, which represents about 50% of sales, has decreased over the past nine months to EUR195 million, if compared to 2021, notwithstanding a proactive price management (-29% as of end-September 2022 as opposed to the same period in 2021). As a result, S&P anticipates Norican's topline to grow in 2023 by 0%-5% as a function of its recent Simpson acquisition and further price adjustments, on a like for like basis, but that lower volumes will likely drive a moderate business contraction. This should translate into EBITDA margins showing some resilience in 2023 at 9%-10%. Some improvements in China, Norican's core market (21% of revenues in 2021) will likely support sales. At the same time, the group's customers in high-energy-intensive end markets could take a hit from the current energy crisis that leads them to reconsider their investments plans. S&P said, "We anticipate Norican's FOCF will be neutral to moderately negative in 2022, then in 2023 it should be moderately positive excluding refinancing costs. FOCF could reach up to negative EUR5 million. This is largely due to increased safety stocks, higher input costs, and lower-than-anticipated advance payments, as a testament of lumpy demand. Conversely, in 2023, FOCF, excluding potential one off cost related to the bond refinancing, should be moderately positive, even when assuming a benchmark interest rate of 10%-12% on its maturing debt (about 3.0x-3.5x higher if compared to Norican's current cost of funding). Positively, thanks to Norican's asset-light business model, the group has a track record of generating solid FOCF; in 2016-2021 it averaged EUR27 million annually. Additionally, we note that Norican has generated FOCF under challenging market circumstances. This represents a clear strength for Norican's business and creditworthiness, absent the current material refinancing risk. "We could lower our ratings on Norican by up to two notches in the coming 30-60 days or so if the company does not successfully refinance its May 2023 bond. "Conversely, if the company successfully refinances its debt coupled with positive free operating cash flow prospects, we could consider raising its ratings back into the 'B' category." ESG credit indicators: E-3, S-2, G-3 =========== F R A N C E =========== CGG SA: S&P Alters Outlook to Positive, Affirms 'CCC+' LT Rating ---------------------------------------------------------------- S&P Global Ratings revised its outlook on global seismic services company CGG SA to positive from stable and affirmed its long-term 'CCC+' rating. The positive outlook reflects S&P's expectation of favorable dynamics for the seismic sector in 2023 as oil and gas (O&G) producers continue to drive offshore production in the next two to three years, ultimately benefiting CGG's services. The outlook revision reflects the increasing likelihood of burgeoning capital spending in the O&G sector, which could support the demand and pricing for CGG's services in the next couple of years. S&P said, "We currently assume relatively strong hydrocarbon prices to continue over 2023-2024, despite a recent softening in spot prices. In particular we anticipate the Brent oil price to beat $90 per barrel (/bbl) in 2023 and $80/bbl on average. While most O&G companies for now are guiding only moderate increases in capital spending (10%-15% on average, including the inflation impact), we see the potential for further increases, especially among national oil companies. This might translate into backlog increase and higher pricing for seismic services, although the correlation is indirect and can occur with a lag. Still we note very significant uncertainty over the evolution of market conditions. Therefore, we currently do not factor it in our base case; instead recognizing the potential improvement through the positive outlook. "Our forecasts are largely unchanged at this stage, but stronger market conditions could allow the company to reach debt to EBITDA of 5x by the end of 2023. We anticipate EBITDA to reach $450 million-$500 million in 2023 and higher in 2024 because we believe margin should continue to improve and anticipate revenue could continue to grow potentially up to 10%-15% year on year. This would be supportive of a higher rating, but the timing for this improvement to materialize is somewhat uncertain amid the volatile market conditions and we note that the seismic industry's recovery has been relatively slow in 2022. As an illustration, CGG's EBITDA in this segment was only about $240 million in the first three quarters of 2022 and revenue was relatively stable year on year over the same period, if we exclude an estimated $50 million loss due to the ban on exports to Russia. "We believe net debt will decrease over time, mainly driven by positive free operating cash flow (FOCF), despite potentially negative working capital and heavy capex needs. In our base case we anticipate about $50 million of positive FOCF annually in 2023-2024, which would enable the company to deleverage at a modest pace. This factors in negative working capital outflows and capex of about $250 million on an annual basis to fund growth. Further to last year's restructuring, we assume a stable capital structure in the coming years, characterized by sizable gross debt of $1.2 billion (mainly consisting of bonds), which constrains the rating. Higher cash generation than expected and potential divestments could accelerate the deleveraging trajectory (although we do not take this into account in our adjusted metrics). "The positive outlook reflects our expectation of favorable dynamics for the seismic sector in 2023 as O&G producers continue to drive offshore production in the next two to three years, ultimately benefiting CGG's services. "Under our base-case scenario, we forecast EBITDA of $450 million-$500 million and FOCF of about $50 million in 2023, translating into 5.0x-5.5x debt to EBITDA. "We would upgrade CGG in the next 12 months if we see the potential to achieve adjusted debt to EBITDA below 5.0x sustainably in the next 12-18 months (during normal market conditions), which would be supported by our view that CGG will achieve the higher part of our projected EBITDA range in 2023 while it maintains adequate liquidity. "We could revise the outlook to stable if we don't see any material tangible improvement in the company's EBITDA in the next 12 months, which could stem from only subdued improvement in the market environment, or major operational issues." Environmental, Social, And Governance (ESG) ESG credit indicators: E-4 S-2 G-3 S&P said, "Environmental factors are a negative consideration in our credit rating analysis of CGG, which is active in seismic data and analysis, in line with other oil field services companies. This is explained by CGG's significant exposure to the oil and gas end markets, rather than its actual greenhouse gas emissions. We note that the company has started diversifying outside of its historical core markets. Governance factors are a moderately negative consideration in our credit rating analysis, reflecting somewhat aggressive financial management in the past, leading to a debt restructuring back in 2018 and continued high leverage." ============= G E R M A N Y ============= SPEEDSTER BIDCO: EUR225M Bank Debt Trades at 16% Discount --------------------------------------------------------- Participations in a syndicated loan under which Speedster Bidco GmbH is a borrower were trading in the secondary market around 84.3 cents-on-the-dollar during the week ended Friday, December 16, 2022, according to Bloomberg's Evaluated Pricing service data. The EUR225.0 million facility is a Term loan. It is scheduled to mature on March 31, 2028. The amount is fully drawn and outstanding. Speedster Bidco GmbH is controlled by Hellman & Friedman, which had acquired AutoScout24 in 2020. Parent company, Munich, Germany-based AutoScout24 GmbH, operates a website for trading vehicles such as motorcycles, cars, trucks, and more. It also offers loans and vehicle licensing products. UNIPER: Shareholders Approve State Bailout ------------------------------------------ Christoph Steitz and Tom Kackenhoff at Reuters report that shareholders in Uniper on Dec. 19 approved a state bailout that has so far cost the German government more than EUR50 billion (US$53 billion), paving the way for a de facto nationalisation of the struggling gas giant. According to Reuters, Uniper Chief Executive Officer Klaus-Dieter Maubach earlier on Dec. 19 told a virtual extraordinary meeting that the disarray caused by the loss of gas supplies from Russia could leave shareholders with nothing if they did not accept the German proposal. Russia's Gazprom was once Uniper's biggest supplier of gas, but a big drop in deliveries after Moscow's invasion of Ukraine forced the German gas importer to buy gas elsewhere at much higher prices to honour its contracts, Reuters states. That, Mr. Maubach said, was the sole reason for the bailout, Reuters notes. Uniper's investors voted in favour of the two main measures at the Dec. 19 meeting, an EUR8 billion capital injection by the German state and allowing a further injection of up to EUR25 billion by Berlin, Reuters relates. "(The measures) are indispensable for this company's future," Reuters quotes Mr. Maubach as saying. "If approval is not granted, we would have to review very critically the so-called going concern forecast for our company," he added. "In the Management Board's view, a possible insolvency could lead to a complete loss for shareholders." WIRECARD AG: Key Prosecution Witness Admits Guilt in Scam --------------------------------------------------------- Christina Amann and Marta Orosz at Reuters report that the key prosecution witness in Germany's biggest post-war fraud trial admitted guilt on Dec. 19 in a scam that led to Wirecard's collapse but said the company was a "swindle" from the start, with former chief executive Markus Braun at its core. Wirecard's downfall two years ago shook the German business establishment, putting politicians who had backed it under intense scrutiny, along with regulators that took years to investigate allegations against the payments company, recalls Reuters. The report recounts that Oliver Bellenhaus, who was head of Wirecard's subsidiary in Dubai, became a key witness in the case after turning himself in to German authorities in 2020. Mr. Bellenhaus is on trial along with former CEO Braun, who denies wrongdoing and accuses others of running a shadow operation without his knowledge, and one other high-ranking manager of the defunct blue-chip company, Reuters states. They face charges including fraud and market manipulation and could be jailed for up to 15 years if convicted, according to Reuters. Florian Eder, a lawyer for Mr. Bellenhaus, told Reuters that the cooperation of his client should result in a "very significant reduction" in his sentence. Mr. Bellenhaus has been in custody for close to two years. At the start of the trial this month, prosecutors accused the defendants of being part of a gang that invented vast sums of phantom revenue through bogus transactions with partner companies to mislead creditors and investors, Reuters recounts. Prosecutors said the deception allowed managers to siphon money out of Wirecard for years, Reuters notes. In testimony last week, Braun's lawyers alleged that Mr. Bellenhaus was the main perpetrator of the fraud at Wirecard, which began processing payments for pornography and online gambling and rose to be a DAX company worth US$28 billion, Reuters relays. But Mr. Bellenhaus told the court on Dec. 19 it was "blind loyalty" to Braun, whom he described as an "absolutist CEO", that had landed him in court in Munich. "Braun gave the marching orders and everyone followed," he said, notes the report. In his 95-page statement, Mr. Bellenhaus described how accounts were fudged and revenues fabricated, Reuters discloses. At one point, staff rented space in a Dubai hotel, where they generated fake transactions for an audit, he said, adding that the remote location was to chosen to hide from journalists and for its proximity to a shopping mall for food, according to Reuters. ===================== N E T H E R L A N D S ===================== MEDIAN BV: GBP250M Bank Debt Trades at 14% Discount --------------------------------------------------- Participations in a syndicated loan under which Median BV is a borrower were trading in the secondary market around 85.6 cents-on-the-dollar during the week ended Friday, December 16, 2022, according to Bloomberg's Evaluated Pricing service data. The GBP250.0 million facility is a Term loan. It is scheduled to mature on May 16, 2027. The amount is fully drawn and outstanding. Median B.V. is the result of the September 2021 private equity-led merger of Median (Germany) and Priory (UK), two leading providers of medical rehabilitation and mental care services in their respective countries. The Company's country of domicile is the Netherlands. =========================== U N I T E D K I N G D O M =========================== GREENSILL: Credit Suisse Gave Funding to Set Up Insurance Firm -------------------------------------------------------------- Robert Smith and Owen Walker at The Financial Times report that Credit Suisse provided funding for Greensill Capital to set up its own in-house insurance firm, weeks after the supply-chain finance company's main insurer refused to renew its policy. The loss of a key insurance policy was one of the main factors that hastened the demise of Greensill last year, triggering a sprawling financial and political scandal that engulfed former British prime minister David Cameron, who earned millions as an adviser to the finance company, the FT notes. Credit Suisse, which had deep ties with Greensill, provided a US$140 million loan to the company in October 2020, less than five months before it collapsed, the FT recounts. Documents seen by the FT show that part of the loan's proceeds were earmarked for setting up a "captive insurance firm", the FT states. This money was intended to support Greensill's plan to establish its own insurer to provide coverage for the risky lending it carried out, the FT relays, citing people familiar with the matter. Insurance underpinned the products that Greensill sold to investors, including wealthy clients of Credit Suisse, which poured US$10 billion into supply-chain finance funds that the Swiss bank largely marketed as safe alternatives to cash, the FT states. One person involved in the negotiations around the loan described it as "mind-boggling" that Credit Suisse believed that "Greensill would be allowed to build an insurance company", given the growing issues it was facing at the time, the FT relates. On September 1, 2020, weeks before Credit Suisse finalized the loan, Australian insurance firm The Bond and Credit Company informed Greensill that it would not renew a crucial policy that expired in six months, the FT recounts. The Bond and Credit Company's parent company Tokio Marine earlier this year accused Greensill Capital of having "fraudulently obtained" these insurance policies, the FT notes. The firm's founder, Lex Greensill, rebutted accusations of fraud at an appearance before British lawmakers investigating the firm's collapse last year, according to the FT. While Greensill Capital collapsed months after Credit Suisse made the US$140 million loan, it has since been able to recover the money it lent as it had a first ranking charge across the firm's assets, the FT states. The FT reported last week that this loan's collateral included invoices to companies that deny ever doing the business stated on the documents, however. Credit Suisse has also revamped its risk management safeguards since the collapse of Greensill and the bank losing US$5.5 billion on the implosion of Archegos Capital a few weeks later, the FT recounts. JEHU GROUP: Unsecured Creditors Unlikely to Get Repaid ------------------------------------------------------ Dave Rogers at Building reports that unsecured creditors owed more by than GBP3 million by collapsed Welsh firm Jehu Group have been told they are unlikely to see any of it returned. In an update filed to Companies House, administrator Begbies Traynor said there will be "insufficient funds" for those firms owed a total of GBP3.2 million by the company which sank into administration at the end of October after 85 years in business, Building relates. The figure includes GBP2.4 million of intercompany loans while the update said employees were owed just over GBP62,000 in unpaid wages and missing holiday pay -- although they are set to get their missing cash back. Jehu employed 104 people at the time of its collapse, Building notes. Two secured creditors, finance firms DBW14 and DBW3, are owed GBP758,000 and GBP3.3 million respectively with the administrator saying DBW3 will be paid back in full although DBW14 will "suffer a shortfall", Building relays. HMRC, owed close to GBP47,000, has also been told it won't be paid in full, Building states. Begbies Traynor's report detailed further the problems the company ran into after the covid-19 pandemic struck in March 2020 which "brought severe disruption, followed [by] significant supply chain cost inflation, Building recounts. Delays in completing projects caused by the pandemic and subsequent cost increases caused a severe cashflow crisis that ultimately the group could not recover from." Joint administrator Huw Powell previously said cost increases of 25% on fixed-price jobs had ransacked the firm's cash reserves which before the pandemic amounted to almost GBP7 million in net assets in 2019, Building relates. According to Building, it said spiralling costs on fixed-price jobs "significantly depleted" the firm's cash reserves last summer while its cash worries were compounded after the firm's main bank "sought to reduce the existing overdraft facility". The Bridgend-based contractor and developer formally went into administration on Oct. 28 with sister companies Jehu Project Services and Waterstone Homes also sinking, Building recounts. A last-minute attempt for Jehu to keep trading with an emergency bridging loan following a meeting with funders, the Welsh government and RSLs came to nothing, the report added, Building notes. PURE FEED: Bought Out of Administration by Parakore --------------------------------------------------- Hannah Baker at BusinessLive reports that a North Somerset producer and seller of horse feed has been sold out of administration, saving seven jobs. The Pure Feed Company was placed into administration in November after being hit by a "combination of challenges" which it said left it unable to trade, BusinessLive recounts. According to administrators Begbies Traynor, difficulties included price rises in raw materials and a shortage of supplies caused by the war in Ukraine. It was also met with extra costs from the hike in energy prices, BusinessLive discloses. After a major supplier also imposed a change in trading terms, causing cash flow issues, the company appointed Paul Wood and Simon Haskew, partners at Begbies Traynor, to oversee the administration, BusinessLive relates. The company had a turnover of GBP2.1 million before it fell into difficulty, BusinessLive notes. "The company spent years establishing its reputation through a dedicated team of equine professionals who are experts in animal science and nutrition," BusinessLive quotes Mr. Wood as saying. "Finding a buyer means the business will be able to continue to supply feed for everything from rescue animals to Olympic champions." Pure Feed has been sold to Parakore, which was set up specifically to buy the goodwill and assets of the North Somerset firm, BusinessLive says. It is headed up by managing director Chris Spratling. =============== X X X X X X X X =============== [*] Patrick Bright Joins Paul Hastings as Partner in London ----------------------------------------------------------- Continuing the strrategic expansion of its market-leading global finance practice, Paul Hastings LLP on Dec. 19 disclosed that Patrick Bright, a leader in European high-yield transactions, has joined the firm as a partner in London. Adding more strength to the firm's robust team, the move brings together Mr. Bright's preeminent high-yield practice and the top-ranked 15-lawyer leveraged finance group that previously joined to form a powerhouse team capable of handling the most complex transactions across the finance spectrum and around the world. "Patrick has a stellar reputation as one of the leading high-yield lawyers in the London and global markets," said Paul Hastings Chair Frank Lopez. "Patrick strengthens our premier London and global finance platform as a destination for the entire capital structure in the most complex finance transactions." Mr. Bright has deep experience advising investment banks, sponsors, corporates, and funds on high-yield offerings, leveraged and acquisition financings, bond restructurings, and other capital markets transactions, including financings for Verisure, Kantar, Biofarma, TeamSystem, Itelyum, Paprec, Kiloutou, Infopro, Very Group, and Aston Martin. Mr. Bright is consistently ranked by Legal 500, Chambers UK, and IFLR1000 as a top practitioner in the high-yield space and he previously led the European high-yield team at Weil, Gotshal & Manges LLP. "We're delighted to have Patrick join our team," said Ross Anderson, London office co-chair and a partner in the global finance practice. "Patrick's market reputation and experience in executing transactions in key European jurisdictions will be a boon for our clients and aligns with several of the new teams that have joined this year in London and across our global footprint." "With the focus on finance and its strategy of consistently elevating the global finance practice, Paul Hastings is the place to be for lawyers who want to practice at the highest level and for clients who want to take advantage of this experience and the benefits that come with that," said Bright. "I've been involved in transactions with the firm's lawyers and I'm excited to now be on the same team." The addition of Mr. Bright brings to 10 the number of 2022 London partner hires for Paul Hastings and reflects the continued momentum of the firm's London office, which posted a 41% revenue increase in 2021. Globally, the firm has added more than 40 partners across practices, including finance, M&A, private equity, structured credit, securities and capital markets, IP litigation, and leveraged finance. Mr. Bright marks the second addition in two weeks to the firm's elite global finance team after Morgan Bale joined in New York. These moves are on the heels of the Band 1 team that joined in London and other recent strategic additions in which the firm has attracted premier talent across diverse practices, including investigations and white collar defense, M&A and shareholder activism, financial restructuring, infrastructure and energy transition, financial services investigations, regulation and litigation, and real estate. The Paul Hastings global finance practice advises virtually every leading investment bank and the largest and most prestigious asset managers in finance and capital-raising transactions. The firm is recognized as one of the world's premier platforms in leveraged finance, private credit, capital markets and structured credit domestic and cross-border transactions. About Paul Hastings With widely recognized elite teams in finance, mergers & acquisitions, private equity, restructuring and special situations, litigation, employment and real estate, Paul Hastings -- http://www.paulhastings.com-- is a premier law firm providing superior intellectual capital and execution globally to the world's leading investment banks, asset managers and corporations. ********* 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 * * *