/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/221228.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 Wednesday, December 28, 2022, Vol. 23, No. 253 Headlines F R A N C E LA FINANCIERE ATALIAN: S&P Lowers Rating to 'B-', On Watch Negative G E R M A N Y COLOUROZ INVESTMENT 1: EUR50M Bank Debt Trades at 25% Discount I T A L Y GUALA CLOSURES: Moody's Affirms B1 CFR & Alters Outlook to Stable L U X E M B O U R G COVIS FINCO: EUR309M Bank Debt Trades at 32% Discount N E T H E R L A N D S GTT COMMUNICATIONS: $140M Bank Debt Trades at 58% Discount GTT COMMUNICATIONS: EUR750M Bank Debt Trades at 58% Discount P O R T U G A L SAO TOME: Portugal Provides EUR15 Mil. to Meet Cash-Flow Needs S P A I N SAN PATRICK SL: EUR61M Bank Debt Trades at 63% Discount TELFER INVESTMENTS: EUR1.05B Bank Debt Trades at 16% Discount S W E D E N FUSILLI HOLDCO: EUR300M Bank Debt Trades at 24% Discount RAMUDDEN HOLDCO: Moody's Assigns 'B2' CFR, Outlook Stable STENA AB: Moody's Raises CFR to B1 & Senior Unsecured Notes to B2 U K R A I N E AZOVSTAL: Zaporizhzhia Court Commences Bankruptcy Proceedings UKRAINIAN RAILWAYS: S&P Cuts ICR to 'SD' on Debt Restructuring U N I T E D K I N G D O M BUSINESS MORTGAGE 5: Moody's Upgrades Rating on 2 Tranches to Ba1 MADE.COM: 30,000+ Shoppers May Not Get GBP12MM Deposits Back MR LEE'S: Owed More Than GBP3MM to Creditors at Time of Collapse OLD DAIRY: Finds Buyer for Taproom, Retail Side of Business RICHMOND UK: Moody's Lowers CFR to Caa1, Outlook Remains Stable SHAWS THE DRAPERS: Goes Into Voluntary Liquidation ZEPHYR BIDCO: GBP395M Bank Debt Trades at 19% Discount - - - - - =========== F R A N C E =========== LA FINANCIERE ATALIAN: S&P Lowers Rating to 'B-', On Watch Negative ------------------------------------------------------------------- S&P Global Ratings lowered all its ratings on France-based facility management company La Financiere Atalian to 'B-' from 'B' and placed them on CreditWatch with negative implications. The CreditWatch placement indicates the possibility of a downgrade if the company is not able to refinance or repay its RCF within the next few months. S&P said, "We expect Atalian's operating performance and credit measures to remain weak in 2022 and 2023. Atalian's operating performance was lower than we expected in the first nine months of 2022. Even though revenue was up to EUR2.9 billion (7.5% year on year growth), driven by contract wins and price increases and the integration of recent bolt-on acquisitions, the reported EBITDA and margin were down to EUR105.8 million (about a 33% decline) and 5% (compared with 7.3% in 2021), based on management's accounts. The lower EBITDA was mainly due to weak performance in France and the U.S. and restructuring expenses in the U.S. The operations in France were hit by lower margins on contract renewals and a higher turnover rate, and only partly offset by new contracts in the ramp-up phase, along with lower COVID-19 special works. The U.S. operations continued to report negative EBITDA due to lower sales and delays in turning around the business. Cash flow generation was also affected by unfavorable working capital, leading to reported FOCF after lease payments of negative EUR45 million compared with positive EUR19 million in 2021. As a result, we have revised down our margin and cash flow expectations for 2022 and 2023. We now expect Atalian's adjusted leverage at more than 10x and funds from operations (FFO) interest coverage between 1.5x and 1.8x in 2022 and 2023. Pro forma the sale of the U.K., Ireland, and Asia businesses to CD&R, we believe leverage would be only marginally lower in 2023, since debt repayment with the disposal proceeds would be offset by the deconsolidation of EUR63 million of EBITDA. "We have revised our liquidity assessment to weak, given that the revised scope and delayed calendar of the transaction with CD&R heighten liquidity risk for Atalian. On Dec. 16, 2022, Atalian announced that its shareholder had decided not to exercise its put option to sell the entire share capital of Atalian to CD&R, which would have led to a full repayment of its debt. Instead, the shareholder signed an agreement whereby CD&R will acquire only Atalian's operations in the U.K., Ireland, and Asia (including Aktrion) for an enterprise value of EUR735 million. The transaction is subject to customary regulatory and competition authority approvals and is expected to close in the first quarter of 2023. The net proceeds are intended for the repayment of the fully drawn RCF due in April 2023 otherwise not financed, and promptly after closing, for the partial redemption of the EUR625 million notes due in 2024. We understand that the company has started discussions with its banks to refinance the RCF to extend the maturity and ensure adequate liquidity for its operations in the next 12-18 months, in view of the expected cash consumption and increasing reliance on factoring facilities to fund business needs. However, we believe Atalian faces a liquidity risk if is not able to refinance its RCF in the next few months, or if closing of the transaction with CD&R is delayed." The company's capital structure could become unsustainable if Atalian's operating performance and cash flow generation does not meaningfully improve ahead of its debt maturities in 2024-2025. Currently Atalian's weighted average maturity (WAM) of debt is less than two years. Even if the RCF and EUR625 million notes due 2024 are repaid early 2023 with the proceeds from the sale to CD&R, WAM will remain at about two years based on its next debt maturity in May 2025, which includes GBP225 million 6.625% senior unsecured notes and EUR350 million 5.125% senior unsecured notes. S&P believes that weak macroeconomic conditions could make it difficult for Atalian to improve its operations and cash flows, thereby increasing the refinancing risk. Challenging debt market conditions could also delay the refinancing. S&P said, "We could reassess Atalian's business risk after the disposal to CD&R if its operations in France and the U.S. remain weak. Atalian has announced that it will sell about one-third of its business. The remaining perimeter will be relatively smaller and less diversified, although with sales still above EUR2 billion. We could re-assess our view of Atalian's business profile if the operations in France report lower performance than expected and the U.S. operations continue to drag on the company's operating performance. Historically, operations in France had significantly higher margin of about 10.5%-11.5% (based on management accounts) but we expect it to decline to 8.0%-9.0% in 2022-2023. The operations in the U.S. are expected to reach break-even profitability in 2023 after negative EUR28 million EBITDA in the 12 months to Sept. 30, 2022. The management is also exploring several options with respect to its U.S. business, including a potential sale, which would further adversely impact geographic diversity but improve both profitability and cash flows. "We have revised our assessment of Atalian's governance to negative from moderately negative. This is because we believe that the non-execution of the put option for the acquisition by CD&R, given Atalian's weak operating performance and upcoming debt maturities, is further evidence of poor risk management and a higher appetite for internal and operational risks. Additionally, the company also has a history of deficiencies in internal controls, litigation settlement, and additional tax provisions. "We could revise down our recovery estimate if the company continues to use a high percentage of its prior-ranking factoring facilities. As part of its efforts to improve liquidity, Atalian has upsized its non-recourse factoring facilities in the recent quarters and has used more of them. Our recovery estimate of 30% is at the borderline and we could lower it if this continues. "The CreditWatch placement indicates that we could lower the rating by several notches if the company is not able to refinance or repay its RCF within the next few months or if we consider the negotiated outcome as distressed. We expect to resolve the CreditWatch when we have visibility on the company's ability to repay or refinance its RCF by April 2023 and on the transaction closing." ESG credit indicators: To: E-2, S-2, G-4; From: E-2, S-2, G-3 S&P revised down its governance credit indicator because it believes management has a higher appetite for internal and operational risks and weak risk management, as shown by the non-execution of the put option for the acquisition by CD&R, given weak operating performance and upcoming debt maturities. Additionally, the company also has a history of deficiencies in internal controls, litigation settlement, and additional tax provisions. Environmental, social, and governance (ESG) credit factors for this change in credit rating/outlook and/or CreditWatch status: -- Risk management, culture, and oversight ============= G E R M A N Y ============= COLOUROZ INVESTMENT 1: EUR50M Bank Debt Trades at 25% Discount -------------------------------------------------------------- Participations in a syndicated loan under which ColourOZ Investment 1 GmbH is a borrower were trading in the secondary market around 75.1 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. During the week ended Friday, December 2, 2022, they were trading in the secondary market around 77.3 cents-on-the-dollar. The EUR50.0 million facility is a Payment in kind term loan that is scheduled to mature on September 21, 2024. The amount is fully drawn and outstanding. ColourOz Investment 1 GmbH manufactures paint products. The Company's country of domicile is Germany. ========= I T A L Y ========= GUALA CLOSURES: Moody's Affirms B1 CFR & Alters Outlook to Stable ----------------------------------------------------------------- Moody's Investors Service has changed to stable from negative the outlook on Guala Closures S.p.A.'s ratings. Guala is the world leading manufacturer of plastic and aluminium closures for the beverage industry. Concurrently, Moody's has affirmed Guala's B1 corporate family rating, its B1-PD probability of default rating and the B1 rating on its EUR500 million backed senior secured notes due 2028. "The outlook change to stable from negative reflects Guala's stronger-than-expected operating performance in the first nine months of 2022 and its improved credit metrics, which position the company more strongly in the B1 rating category," says Donatella Maso, a Moody's Vice President-Senior Credit Officer and lead analyst for Guala. "Despite the strong positioning based on credit metrics, the stable outlook also takes into account potential near-term earnings volatility due to the risks posed by a global economic slowdown, the company's exposure to Ukraine and potential energy disruption in Europe", adds Ms Maso. RATINGS RATIONALE Guala's operating performance in the first nine months of 2022 exceeded Moody's previous expectations. The company's reported revenue and EBITDA increased by 37% and 46% respectively, year-on-year, supported by three waves of price increases to compensate for cost inflation, continued post-Covid demand volume recovery and improved product mix, which offset some operational disruptions in Ukraine and Belarus. LTM September 2022 EBITDA, as adjusted by Moody's increased to EUR159 million, a level that the company never reached historically. As a result, Guala was able to strengthen its credit metrics, including its Moody's adjusted leverage ratio, which improved to 3.7x as of LTM September 2022, compared to 5.4x at the end of 2021, which compares strongly with the 4.0x-5.0x guidance for the B1 rating category. There is uncertainty regarding Guala's ability to continue to grow and sustain its EBITDA over the next 12 to 18 months. This is because of the high inflationary environment, which could hamper the consumer demand and particularly the out-of-home consumption of beverage with a negative effect on volumes and profit margins, the company's presence in Ukraine, which still represents 14% of group's EBITDA, and potential gas supply disruptions in several European countries where Guala operates, albeit the reliance on gas is marginal. Nevertheless, these risks will be partly mitigated by benefits from the price increases implemented in 2022, the full year contribution of Labrenta, an Italian premium closures manufacturer, which was acquired in October 2022, and savings from the closure of its Luxembourg headquarters. Moody's base case assumes that Guala's EBITDA will moderately decline in 2023 from a very high level in prior year before recovering in 2024. Moody's also expects that the company's free cash flow (FCF) generation will be negative in 2023 and in 2024 mainly due to approximately EUR50 million of special projects aiming to increase the existing capacity and improve the production efficiency. These investments, which consist in the construction of new plants in Scotland and in China, in the expansion of its Mexican facilities and in the enhancement of the company's IT infrastructure, are likely to be funded with debt, constraining the company's deleveraging profile. The rating agency thus expects Guala's leverage to increase and remain slightly above 4.0x, over the next 12 to 18 months. Guala's B1 rating is also constrained by its small scale compared with its much larger and consolidated customer base; the fact that more than 50% of its revenue is derived from more commoditised products (standard closures) that are subject to more intense competition; its exposure to raw material price volatility, particularly for aluminium and plastic resins; and its exposure to foreign-exchange fluctuations because of the currency mismatch between cash flow and debt, which is mainly euro denominated. On the positive side, the B1 rating is supported by Guala's solid business profile, which is underpinned by its market-leading position (with a global share of around 60%) in the niche and less-standardised safety and luxury closure segments; its presence in the less discretionary food and beverage end markets; its good geographical diversification; the positive industry trends driven by the increased need for safety closures in emerging markets where the risk of counterfeiting is higher, and by the ongoing substitution of cork with aluminium screw caps. LIQUIDITY The rating is supported by an adequate liquidity profile. The company had access to EUR90 million of cash on balance sheet as of the end of September 2022; full availability under its EUR96 million super senior revolving credit facility (RCF) maturing in 2028 and the company has no significant debt maturities until 2028, when the backed senior secured notes are due. These sources of liquidity are sufficient to cover intra-year working capital swings because of seasonality, capital spending (excluding IFRS 16 lease repayments) of 6% of revenue per year; special projects for EUR50 million, the bulk of it to be spent in 2023, and dividends to minority shareholders. STRUCTURAL CONSIDERATIONS The B1-PD rating is aligned with the B1 CFR. This is based on a 50% recovery rate, as is typical for transactions that include both bonds and bank debt. The B1 rating on the EUR500 million backed senior secured notes is the same as the CFR because they represent most of the debt in the capital structure. They rank behind the EUR96 million super senior RCF and the debt sitting in non-guarantor subsidiaries. Both the notes and the super senior RCF are mainly secured against share pledges of certain companies of the group. Moody's typically view debt with this type of security package to be akin to unsecured debt. As of September 2022, the notes benefitted from the guarantees of subsidiaries representing, together with the issuer, 42% of consolidated revenue, 36% of consolidated adjusted EBITDA and 50% of total assets, which the rating agency considers to be weak. RATING OUTLOOK The stable outlook reflects Moody's expectations that Guala will able to withstand challenges posed by a deteriorating macroeconomic environment, and will maintain leverage at around 4.0x as well as an adequate liquidity profile. The outlook assumes that the company will not embark in material debt funded acquisitions or shareholders distributions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating pressure could develop if Guala demonstrates its ability to sustain the level EBITDA achieved in 2022, its profitability (measured as EBITDA margin) remains in the high teens, its financial leverage (measured as Moody's-adjusted debt/EBITDA) below 4.0x, its FCF/debt stays above 5%, while maintaining an adequate liquidity profile. Downward rating pressure could arise if Guala's operating performance deteriorates so that its Moody's-adjusted (gross) debt/EBITDA increases sustainably above 5.0x, free cash flow remains negative from 2024 onwards and liquidity weakens, or there is evidence for a more aggressive financial policy from its owners. LIST OF AFFECTED RATINGS Affirmations: Issuer: Guala Closures S.p.A. Probability of Default Rating, Affirmed B1-PD LT Corporate Family Rating, Affirmed B1 BACKED Senior Secured Regular Bond/Debenture, Affirmed B1 Outlook Action: Issuer: Guala Closures S.p.A. Outlook, Changed To Stable From Negative PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass and Plastic Containers published in December 2021. COMPANY PROFILE Headquartered in Italy, Guala is a global leader in the production of safety closures for spirits and aluminium closures for wine and a major global player in the production and sale of aluminium closures for the beverage industry. The company operates on five continents with 30 production facilities, and employs over 4,800 people. For the 12 months ended September 2022, Guala generated EUR834 million of revenue and EUR159 million of EBITDA (on a Moody's adjusted basis). Guala is majority-owned by private equity sponsor Investindustrial VII L.P. =================== L U X E M B O U R G =================== COVIS FINCO: EUR309M Bank Debt Trades at 32% Discount ----------------------------------------------------- Participations in a syndicated loan under which Covis Finco Sarl is a borrower were trading in the secondary market around 68.5 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The EUR309.6 million facility is a term loan that is scheduled to mature on February 14, 2027. The amount is fully drawn and outstanding. Covis Finco SARL is an entity affiliated with Covis Pharma, which is backed by Apollo Global Management. Covis Pharma distributes pharmaceutical products for patients with life-threatening conditions and chronic illnesses. Finco is the borrower under a term loan facility used to refinance existing debt and refinance the debt incurred to finance products acquired from AstraZeneca. Finco has its registered office in Luxembourg. ===================== N E T H E R L A N D S ===================== GTT COMMUNICATIONS: $140M Bank Debt Trades at 58% Discount ---------------------------------------------------------- Participations in a syndicated loan under which GTT Communications BV is a borrower were trading in the secondary market around 41.8 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The $140 million facility is a term loan. It is scheduled to mature on May 31, 2025. About $69.7 million of the loan is withdrawn and outstanding. GTT Communications B.V. provides telecommunication services. The Company's country of domicile is the Netherlands. GTT COMMUNICATIONS: EUR750M Bank Debt Trades at 58% Discount ------------------------------------------------------------ Participations in a syndicated loan under which GTT Communications BV is a borrower were trading in the secondary market around 42.1 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The EUR750.0 million facility is a term loan. It is scheduled to mature on May 31, 2025. About EUR374.4 million of the loan is withdrawn and outstanding. GTT Communications B.V. provides telecommunication services. The Company's country of domicile is the Netherlands. =============== P O R T U G A L =============== SAO TOME: Portugal Provides EUR15 Mil. to Meet Cash-Flow Needs -------------------------------------------------------------- Ines Lopes at Portugal Resident reports that Portugal provided Sao Tome and Principe with EUR15 million in direct support towards the country's budget in order to "meet immediate needs", announced the minister of foreign affairs, Joao Gomes Cravinho. The funding was done through the Camoes cooperation and language institute, Portugal Resident notes. "This amount of EUR15 million is to meet immediate cash-flow needs. Sao Tome and Principe is -- we can now say that it "was" -- on the verge of total collapse in terms of cash flow and it was, therefore, essential that Portugal provided this support now, even before the end of the year," explained the head of Portuguese diplomacy, following the signing of a memorandum of understanding between the two countries at the foreign affairs ministry in Lisbon. Mr. Gomes Cravinho said he was unable "at this time" to anticipate whether Portugal would increase the amount of this support, making such an eventuality dependent on talks between the governments of the two countries in early 2023, Portugal Resident relates. "We are working with the Sao Tome authorities and, at the beginning of the year, we will travel there to define a strategic plan [for cooperation] for the next few years, so that this amount, and others that may be necessary in the future, will be directed towards a systematic economic recovery plan and in line with the needs in the fields of education, health and the rule of law," Portugal Resident quotes the foreign affairs minister as saying. According to the head of Portuguese diplomacy, "there will be a need" to involve other international bodies in supporting Sao Tome, "primarily the CPLP, but also the International Monetary Fund (IMF) and other bodies that may be identified". "With this support of EUR15 million, we have gained time to work with the Sao Tome authorities and with other international bodies to see how we can together meet those needs," he said, notes the report. Mr. Gomes Cravinho clarified that Portugal has a cooperation plan with Sao Tome, "which will continue, Portugal Resident discloses. This is an additional amount. However, we anticipate that during 2023 more support will be needed," he said. ========= S P A I N ========= SAN PATRICK SL: EUR61M Bank Debt Trades at 63% Discount ------------------------------------------------------- Participations in a syndicated loan under which SAN Patrick SL is a borrower were trading in the secondary market around 37.0 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The EUR61 million facility is a term loan. It is scheduled to mature on October 2, 2024. The amount is fully drawn and outstanding. SAN Patrick SL manufactures apparel. The Company offers wedding gowns, dresses, and accessories for women. The Company's country of domicile is Spain. TELFER INVESTMENTS: EUR1.05B Bank Debt Trades at 16% Discount ------------------------------------------------------------- Participations in a syndicated loan under which Telfer Investments SL is a borrower were trading in the secondary market around 84.3 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The EUR1.05 billion facility is a term loan. It is scheduled to mature on July 1, 2026. The amount is fully drawn and outstanding. Telfer Investments SL's country of domicile is Spain. =========== S W E D E N =========== FUSILLI HOLDCO: EUR300M Bank Debt Trades at 24% Discount -------------------------------------------------------- Participations in a syndicated loan under which Fusilli Holdco AB is a borrower were trading in the secondary market around 76.2 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The EUR300 million facility is a term loan. It is scheduled to mature on October 12, 2023. The amount is fully drawn and outstanding. Fusilli HoldCo AB manufactures HVAC building products. The Company's country of domicile is Sweden. RAMUDDEN HOLDCO: Moody's Assigns 'B2' CFR, Outlook Stable --------------------------------------------------------- Moody's Investors Service has affirmed the B2 instrument ratings of EUR785 million backed senior secured term loan B2 and EUR140 million backed senior secured revolving credit facility (RCF), both maturing in 2026 and issued by AVS Group GmbH (AVS). Furthermore, Moody's assigned a B2 corporate family rating and a B2-PD probability of default rating to Ramudden HoldCo AB (Ramudden, also known as Work Zone Safety Group (WZS Group)), the new holding company. The outlook on all ratings is stable. At the same time, Moody's has withdrawn the B2 CFR, the B2-PD PDR and the outlook of AVS Holding GmbH. The affirmation of the B2 rating with a stable outlook reflects WZS Group's solid operating performance while Moody's adjusted debt to EBITDA was 5.9x as per the last twelve months that ended in September 2022 given ongoing debt-funded acquisitions which is why the rating is weakly positioned in the B2 rating category but Moody's expect improvements once all funds from the term loan add-on are invested. The change of the CFR to Ramudden HoldCo AB reflects the technical amendments to the underlying debt documentation from the last add-on whereby Ramudden HoldCo AB has become the new consolidating and reporting entity of the group. RATINGS RATIONALE More generally, the B2 CFR reflects WZS Group's leading position in traffic safety services in its core markets of Germany, Belgium, the UK and the Nordics/Baltics as well as Ontario, and its increased scale following acquisitions; the group's integrated business model, which includes the design and partially manufacturing of traffic safety products such as mobile barriers, presenting some barriers to entry; and its strong and relatively stable margins, with a Moody's-adjusted EBITA margin of around 15%. The rating is constrained by WZS Group's high financial leverage of about 5.8x debt/EBITDA (Moody's-adjusted) expected in 2022, pro forma for the debt-financed bolt-on acquisitions; relatively weak free cash flow (FCF); an acquisitive business model, which may restrict deleveraging and creates ongoing integration risk; and still relatively low diversification in terms of products and high dependence on public spending programs for road infrastructure. RATING OUTLOOK The stable outlook reflects Moody's expectation that Ramudden will be able to generate organic revenue growth at least in the low-single digits in percentage terms while maintaining high operating profit margins of around 15% (Moody's-adjusted EBITA) over the next 12-18 months. The stable outlook also reflects Moody's expectation of a gradual deleveraging to 4.5x-5.5x Moody's-adjusted debt/EBITDA over the next 12-18 months, mainly driven by moderate profit growth and positive FCF. Finally, the stable outlook reflects no intention to pay dividends and Moody's assumption that M&A activities would be limited to bolt-on acquisitions, which would not increase leverage beyond the above-mentioned range. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure could arise of debt/EBITDA (Moody's-adjusted) remaining below 4.5x on a sustained basis, and EBITA (Moody's-adjusted) margin exceeding 25% on a sustained basis, and retained cash flow/net debt exceeding 20%. Conversely, negative pressure could arise if debt/EBITDA (Moody's-adjusted) remains above 5.5x on a sustained basis, or EBITA (Moody's-adjusted) margin remaining below 15% on a sustained basis, or negative FCF, or a deterioration in liquidity to weak levels. LIQUIDITY WZS Group's liquidity is adequate, considering the company's expected positive FCF over the next 12-18 months and the absence of any short-term debt maturities. The company also has access to a sizable EUR140 million RCF due March 2026, which is fully undrawn. The RCF is subject to a springing net leverage covenant, tested when the facility is drawn more than 35%. The covenant is set with a 40% initial buffer at the closing of the transaction at just over 9x senior secured net leverage, and Moody's expect the company to retain sufficient capacity. As of September 2022, the company reported a cash balance of around EUR107 million. In 2022 and pro forma for the bolt-on acquisitions, Moody's expect WZS Group to generate funds from operations of around EUR86 million. STRUCTURAL CONSIDERATIONS The rating of the EUR785 million backed senior secured term loan B2 and the RCF owed by AVS is in line with the CFR of Ramudden. AVS is a wholly owned subsidiary of Ramudden. AVS is also the direct and indirect owner of all operating subsidiaries within the group, comprising the existing AVS operations, predominantly in Germany, the Fero/Vevon operations in Belgium and the Netherlands, the Ramudden operations in the Nordics and the Baltics, the Stinson operations in Canada, and Chevron in the UK. The backed senior secured term loan B2 ranks pari passu with the EUR140 million RCF. Apart from minor pension liabilities (EUR1 million as of December 2021) and capitalized lease liabilities mainly relating to rent (estimated at around EUR6 million as of December 2021; based on Moody's global standard adjustments), there is no other financial debt within the group. LIST OF AFFECTED RATINGS Assignments: Issuer: Ramudden HoldCo AB Probability of Default Rating, Assigned B2-PD LT Corporate Family Rating, Assigned B2 Affirmations: Issuer: AVS Group GmbH BACKED Senior Secured Bank Credit Facility, Affirmed B2 Withdrawals: Issuer: AVS Holding GmbH Probability of Default Rating, Withdrawn, previously rated B2-PD LT Corporate Family Rating, Withdrawn, previously rated B2 Outlook Actions: Issuer: AVS Group GmbH Outlook, Remains Stable Issuer: Ramudden HoldCo AB Outlook, Assigned Stable Issuer: AVS Holding GmbH Outlook, Changed To Ratings Withdrawn From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. COMPANY PROFILE Ramudden HoldCo AB (WZS Group) is a provider of traffic safety services predominantly in Germany, Belgium, the Netherlands, the Nordics, Canada and the UK. In the fragmented highway traffic safety services segment, the group holds leadership positions in its core markets. The group employs about 2,000 professionals and generated around EUR689 million in revenue in the twelve months that ended in September 2022 on a pro forma basis. Ramudden is majority owned by the private equity firm Triton Partners. STENA AB: Moody's Raises CFR to B1 & Senior Unsecured Notes to B2 ----------------------------------------------------------------- Moody's Investors Service has upgraded Stena AB's ("Stena") corporate family rating to B1 from B2, its probability of default rating to B1-PD from B2-PD and its senior unsecured notes rating to B2 from Caa1. Furthermore, Moody's upgraded the backed senior secured notes rating of subsidiary Stena International S.A. to Ba3 from B1. The outlook on all ratings remains stable. "The upgrade of the CFR to B1 from B2 was prompted by a reduction in financial leverage driven partly by the continued strong performance of Stena's ferry business Stena Line but also significantly improved prospects for its tanker and drilling divisions" says Daniel Harlid, a Moody's Vice President - Senior Analyst and the lead analyst for Stena AB. "The rating continues to benefit from its long track record of managing a diverse set of businesses as well as its conservatively leveraged and relatively low risk portfolio of Swedish rental residential properties" Mr Harlid added. "A higher degree of performance stability and further improved credit metrics could support further positive rating pressure in the medium term", Mr. Harlid continues. RATINGS RATIONALE Following a significant recovery of Stena's shipping-related businesses during the last twelve months, Stena AB's key credit metrics for the last twelve months that ended in September 2022 were the strongest on record since 2017. This was facilitated by a very strong tanker market, increased efficiency and profitability of the ferry business and a return to positive EBITDA for Stena Drilling. This led to leverage as measured by gross debt / EBITDA returning below 7.0x (6.9x) and RCF / Net debt returning to double digit percentages (10.2%) and FFO coverage increasing to 3.7x. The upgrade reflects Moody's expectation that these metrics will be sustained despite a weaker macroeconomic environment. The rating action also positively incorporates Stena's sizeable and conservatively leveraged real estate portfolio of Swedish rental residential properties, a highly regulated market in terms of rent setting which results in very low vacancy and asset value risk (in relative terms). Moody's notes that the company has a long track record of being conservative when valuing real estate properties. Although some key credit metrics are still weak for the B1 rating category, Moody's expects continued strengthening over the next quarters. Moody's considers however that Stena's leverage reflected in debt / EBITDA of 6.9x on Moody's-adjusted basis for the twelve months that ended September 30, 2022 is inflated by (1) its real estate business which is responsible for 26% of debt but only 15% of EBITDA and (2) Stena Drilling with 17% of debt but only 8% of EBITDA (all on a twelve month trailing basis). Both of these businesses typically carry higher leverage than Stena's other shipping assets. Free cash flow generation continues to be negative, driven by significant growth investment activities of the company. Having said that, Moody's standard calculation of free cash flow does not include proceeds from asset sales which are a significant source of cash resources for Stena, totalling SEK14.2 billion over the last five years. Moody's also positively notes Stena's track record of repeatedly realizing profits from vessel and property divestments, which over the last five years amounted to SEK4.0 billion. STRUCTURAL CONSIDERATIONS Stena's senior unsecured bond rating is one notch below its CFR, reflecting the contractual subordination to the secured debt existing within the group. The reduction to one notch from two notches reflects the increasing benefit in terms of potential recovery for unsecured creditors of the company's sizeable and conservatively leveraged real estate portfolio in Stena Property and its investment holdings through Stena Addactum, which is owned by the parent Stena AB. As Stena AB is part of the restricted group and guarantees all of its debt, all of its underlying assets have been considered in Moody's LGD assessment, while Stena Property and its investment holdings are considered as a factor for the CFR, but the related debt is not included in the LGD. The senior secured notes issued by Stena International S.A. are rated Ba3, one notch above the CFR, reflecting their security largely in the form of drilling assets and their structurally senior position ahead of the senior unsecured bonds issued by Stena AB. RATING OUTLOOK The stable outlook is anchored in Moody's expectations on continued strengthening of the group's profitability, in particular supported by growth for Stena Bulk (its tanker and LNG business) as well Stena Drilling. Moody's expects Stena's credit metrics to further improve in line with Moody's expectations for the B1 rating category. LIQUIDITY Stena's liquidity profile is adequate, supported by SEK9.3 billion in cash, short term investments and marketable securities as well as SEK11.2 billion in availability under various RCFs end of September 2022. Although capex is expected to be around SEK8 billion during 2023, Moody's understand a significant part to be uncommitted. Liquidity is however somewhat constrained by sizeable debt maturities equivalent to SEK9 billion during the first quarter of 2024 which Moody's however expects will be refinanced in a timely manner. Despite the current adverse market environment, Moody's foresees the company being able to respect its covenants under its RCFs. Moody's further positive acknowledges Stena's extended debt maturity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on Stena's ratings could develop following (1) progressive deleveraging of the group's balance sheet, with total consolidated debt/EBITDA sustainably below 6.0x, (2) retained cash flow/net debt approaching mid-teens in percentage terms, (3) interest coverage improving measured as (FFO + Interest Expense) / Interest Expense toward 4.0x, and (4) preservation of a solid liquidity profile supported by a progression of free cash flow generation. Negative pressure could build following (1) sustained debt / EBITDA above 7.0x; (2) sustainably interest coverage, measured as (FFO + Interest Expense) / Interest Expense, below 2.5x; (3) deterioration of Stena's cash flow generation, reflected in retained cash flow / net debt below 10% or (4) a deterioration of the group's free cash flow generation and weakening of Stena's liquidity profile. LIST OF AFFECTED RATINGS Upgrades: Issuer: Stena AB Probability of Default Rating, Upgraded to B1-PD from B2-PD LT Corporate Family Rating, Upgraded to B1 from B2 Senior Unsecured Regular Bond/Debenture, Upgraded to B2 from Caa1 Issuer: Stena International S.A. BACKED Senior Secured Regular Bond/Debenture, Upgraded to Ba3 from B1 Outlook Actions: Issuer: Stena AB Outlook, Remains Stable Issuer: Stena International S.A. Outlook, Remains Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Shipping published in June 2021. COMPANY PROFILE Stena AB (Stena) is one of the largest privately owned groups in Sweden (100% owned by the Olsson family). In 2021, the group generated consolidated turnover of SEK36.7 billion and EBITDA of SEK9.3 billion. Stena is a holding company, which controls the group's five business divisions (1) Stena Line, the group's ferry operator; (2) Stena Drilling, the group's offshore drilling company; (3) Shipping Operations (comprising Stena's RoRo, Bulk and LNG operations, as well as Northern Marine, the fleet manager); (4) Stena Property, the group's real estate company; and (5) Adactum, the group's investment arm. Stena Property and Stena Adactum are outside of the restricted group, as defined by the terms and conditions of the indentures governing Stena's bonds. ============= U K R A I N E ============= AZOVSTAL: Zaporizhzhia Court Commences Bankruptcy Proceedings ------------------------------------------------------------- Ukrainian News reports that on Dec. 21, the Commercial Court of the Zaporizhzhia Region started proceedings on the bankruptcy of the metallurgical plant Azovstal. This follows from a statement by Azovstal, the Ukrainian News notes. The court decided to open proceedings on the bankruptcy of the combine at the request of the Zaporizhvohnetryv plant, which is also part of the Metinvest group, the Ukrainian News relates. According to the Ukrainian News, the reason for opening proceedings in the bankruptcy case of the issuer is the seizure and destruction of the single property complex Azovstal in occupied Mariupol and, as a result, insolvency and the impossibility of fulfilling monetary obligations to creditors. As the Ukrainian News agency earlier reported, on Dec. 19, the Economic Court of the Zaporizhzhia Region started proceedings on the bankruptcy of the Illich Iron & Steel Works (Mariupol, Donetsk region). A total of 16 enterprises of the Metinvest group filed a lawsuit with the European Court of Human Rights against Russia regarding compensation for the damage caused to the property and property of the group in Mariupol and in other territories of Ukraine from February 24, 2022, the Ukrainian News discloses. In particular, the lawsuits were filed by the Azovstal metallurgical plant and the Illich Iron & Steel Works, the Ukrainian News states. UKRAINIAN RAILWAYS: S&P Cuts ICR to 'SD' on Debt Restructuring -------------------------------------------------------------- S&P Global Ratings lowered its foreign currency (FC) issuer credit rating on Ukrainian Railways JSC (UR) to 'SD' (selective default) from 'CC'. The 'CC' local currency (LC) issuer credit rating remains unchanged. The negative outlook on the LC rating reflects S&P's view that the effects of the war on the company's operations and liquidity may weaken the company's ability to stay current on its local currency debt. On Dec. 21, 2022 and Dec. 22, 2022, the required majority of noteholders of UR's 2024 and 2026 eurobonds gave consent to UR's proposal to defer payments on all debt obligations by 24 months. S&P Global Ratings does not rate the eurobonds. S&P considers this debt restructuring as distressed and thus have lowered its FC rating on UR to 'SD', according to its ratings definitions. Upon the FC debt restructuring taking effect, S&P could consider the default as cured and could raise the rating from 'SD', reflecting new terms and conditions of the debt in the rating. UR's debt restructuring comes amid significant liquidity pressures on UR emanating from the war between Russia and Ukraine. There are also high uncertainties regarding the Ukrainian government's financial capacity to provide further timely support to UR. The deferral of the debt service payments will allow UR to use liquidity to cover ongoing operating and capital expenditures. S&P Global Ratings acknowledges a high degree of uncertainty about the extent, outcome, and consequences of the war between Russia and Ukraine. Irrespective of the duration of military hostilities, related risks are likely to remain in place for some time. As the situation evolves, S&P will update its assumptions and estimates accordingly. S&P does not assign an outlook to its long-term FC issuer credit ratings on UR, since the rating is 'SD' (selective default). The negative outlook on the LC rating reflects S&P's view that the negative consequences of the war on company's operations and liquidity may impair the company's ability to stay current on its local currency debt. S&P could lover the LC ratings if it sees indications that Ukrainian-hryvnia-denominated obligations could suffer nonpayment or restructuring. S&P expects to raise its long-term FC rating on UR once the FC debt restructuring has been implemented and the new amendments to bond terms and conditions have become legally effective. S&P's analysis will incorporate the post-restructuring credit factors, including the new terms and conditions of its external debt. S&P could take a positive rating action on the LC rating if there are signs of an improved credit profile. ESG credit indicators: E-2, S-2, G-4 =========================== U N I T E D K I N G D O M =========================== BUSINESS MORTGAGE 5: Moody's Upgrades Rating on 2 Tranches to Ba1 ----------------------------------------------------------------- Moody's Investors Service has taken the following rating actions on Notes issued by Business Mortgage Finance PLC 4 (BMF 4) and 5 (BMF 5) series of UK SME transactions. Issuer: Business Mortgage Finance 4 PLC (BMF 4) GBP41.25M (Current outstanding amount GBP3.29M) Class M Notes, Aa2 (sf) Placed Under Review for Possible Downgrade; previously on Feb 18, 2022 Affirmed Aa2 (sf) GBP15M Class B Notes, Affirmed B2 (sf); previously on Feb 18, 2022 Downgraded to B2 (sf) Issuer: Business Mortgage Finance 5 PLC (BMF 5) GBP27M (Current outstanding amount GBP9.44M) Class M1 Notes, Upgraded to Ba1 (sf); previously on Oct 10, 2018 Upgraded to B2 (sf) EUR36.5M (Current outstanding amount EUR12.76M) Class M2 Notes, Upgraded to Ba1 (sf); previously on Oct 10, 2018 Upgraded to B2 (sf) GBP12M Class B1 Notes, Affirmed Ca (sf); previously on Oct 10, 2018 Affirmed Ca (sf) EUR11.5M Class B2 Notes, Affirmed Ca (sf); previously on Oct 10, 2018 Affirmed Ca (sf) Business Mortgage Finance 4 PLC (BMF 4) and Business Mortgage Finance 5 PLC (BMF 5) are a securitisation of non-conforming commercial mortgage loans originated and brought to market in 2006. The loans were originated by Commercial First Mortgages Limited (CFML) and Commercial First Business Limited and are secured on commercial, quasi-commercial or, in limited cases, residential properties located throughout the UK. RATINGS RATIONALE The rating actions reflect: BMF 4: The rating action on Class M Notes is prompted by the persistently high annualized service cost which are uncapped. As of November 2022, the annualized service costs increased to 5.7% of the pool balance compared with 4.3% in November 2021 and 2.2% in November 2020. BMF 4 has had to draw on its reserved fund in order to pay senior costs and interest on notes. The balance on the reserve fund as of November 2022 has reduced to GBP645.8k compared to GBP1.9M a year ago. Moody's note that there is a liquidity facility balance of GBP782.2k which can be utilize to pay senior costs and interest on notes. However, if the service cost remain high, the transaction may not have sufficient revenue to cover senior payment outflows. Moody's will monitor the evolution of senior costs and available revenue receipts during the review period, and Moody's expect to conclude this review within 90 days. The rating of the Class M Notes is constrained at Aa2 (sf) due to Moody's assessment of the financial disruption risk present in the transaction. Moody's affirmed the rating of the Class B Notes as there is sufficient credit enhancement and liquidity to maintain current rating on the affected notes. BMF 5: The upgrade rating action is prompted by deal deleveraging resulting in an increase in credit enhancement (CE) for the affected tranches. Revision of Key Collateral Assumptions: As part of the rating action, Moody's reassessed its expected loss (EL) assumptions for the portfolio, reflecting the collateral performance to date. BMF 4: Total delinquencies in the transaction have increased in the past year, with 90 days plus arrears standing at 14.1% of the collateral pool in November 2022 compared to 13.2% in November 2021. Cumulative losses is at 12.94% of original pool balance, a marginal increase from 12.91% in November 2021. The credit enhancement (CE) for Classes M and B have stabilized. BMF 4 Class M CE now stands at 89.6% in November 2022 from 81.6% in November 2021, whilst for the Class B Notes the CE now stands at 30.9% from 30.8%. The calculation of the CE takes into account the current portfolio balance including delinquent loans. Moody's has maintained its expected loss assumption on the current pool balance at 21.7% since the last rating action in February 2022. BMF 5: Total delinquencies have been broadly stable over the last year, with 90 days plus arrears as of November 2022 standing at 17.3% of current pool balance compared to 17.1% as of November 2021. Cumulative losses remains stable at 17.08% of original pool balance, compared to 17.07% in November 2021. The Reserve Fund in BMF 5 is completely depleted and losses flow directly to the PDL ledgers within the transaction. Nonetheless, the deleveraging and excess spread trapping have been sufficient to improve the CE levels on all rated Classes of Notes. Class M1 and M2 CE is calculated at 41.7% in November 2022 from 33.5% in November 2021, whilst Class B1 and B2 CE is negative (due to an uncleared PDL balance) and stands at -0.8% in November 2022 from -1.9% in November 2021. Moody's has adjusted its expected loss on the current pool balance upwards to 34.4% since the last rating action in October 2018. Counterparty Exposure: The rating actions took into consideration the notes' exposure to relevant counterparties, such as servicer, account banks or swap providers. Moody's considered how the liquidity available in the transactions and other mitigants support continuity of note payments, in case of servicer default. The Servicer (Special Servicer) is unrated and is also acting as cash manager and calculation agent. The ratings of the notes are constrained at Aa2 (sf) by the financial disruption risk. The assessment considered the likelihood of servicer disruption occurring, and the ease of transfer of duties such as servicer, cash manager and calculation agent. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating SME Balance Sheet Securitizations" published in July 2022. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement, (3) improvements in the credit quality of the transaction counterparties and (4) an increase in available liquidity to pay senior costs and interest on notes. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement, (4) deterioration in the credit quality of the transaction counterparties and (5) deterioration in available liquidity to pay senior costs and interest on notes. MADE.COM: 30,000+ Shoppers May Not Get GBP12MM Deposits Back ------------------------------------------------------------ Sarah Butler and Kalyeena Makortoff at The Guardian report that more than 30,000 Made.com shoppers are collectively owed almost GBP12 million they will not get back, according to the latest report by administrators to the collapsed furniture seller. Shoppers paid GBP13.7 million in deposits on large items such as sofas, The Guardian relays, citing documents filed with Companies House late last week. However, less than GBP1.9 million has been recouped by customers through card charge-backs, which is where credit card providers refund borrowers when purchases go wrong, The Guardian notes. The document makes clear there will not be enough funds to repay the GBP11.9 million owed to customers, who are on a list of unsecured creditors that are among the last to be paid when money is recovered from the sale of the company's remaining assets, The Guardian states. The list of unsecured creditors also includes suppliers and some employees. Those assets include stock worth nearly GBP19 million, which is expected to fetch less than GBP2 million through auction, according to The Guardian. Among Made.com's biggest unsecured creditors are Facebook (owed GBP1.4 million), Google (owed about GBP1.7 million) and the operator of the group's Antwerp warehouse (GBP1.8 million), The Guardian discloses. However, Made.com's main lender, Silicon Valley Bank, is likely to recover nearly all the GBP3.8 million it is owed, after the retailer Next bought the Made.com brand and database for GBP3.4 million, The Guardian notes. Most of its employees and HMRC, which is owed GBP3.57 million, will also be paid in full, The Guardian says. Administrators from PricewaterhouseCoopers (PwC) were appointed to Made.com on Nov. 9, completing a reversal of fortunes for the London-based retailer, which was valued at almost GBP800 million when it listed on the stock exchange in June 2021 and heralded as the future of furniture retail, The Guardian recounts. Its collapse was the latest example of the bursting of the online retail bubble, after investors who bet that the switch to buying online during the pandemic would be permanent had their hopes dashed, The Guardian relays. More than 300 people were made redundant when the company went into administration and nearly all 500 employed at the time are expected to lose their jobs, according to The Guardian. MR LEE'S: Owed More Than GBP3MM to Creditors at Time of Collapse ---------------------------------------------------------------- Darren Slade at Daily Echo reports that a healthy noodles business which went into administration is thought to owe more than GBP3 million to creditors who are not expected to see any money. Bournemouth-based Mr Lee's Pure Foods went into administration in May after losing all the airline customers who accounted for 70% of its revenue. Administrators made all 10 staff redundant after attempts to sell the business as a going concern fell through. The statement of affairs provided to the administrators by the company's directors said unsecured creditors were owed GBP3.16 million and that the company's assets totalled GBP61,320. Most of the company's debts were in unsecured loans, convertible loans and investment received in advance of share issues. The debts included GBP1.2 million to UK Future Fund, the government-backed support scheme for business, and six-figure sums to several investors. Trade creditors were owed GBP136,619 and staff GBP43,820. In previous reports, joint administrators James Saunders and Robert Armstrong of Kroll Advisory said the business had been "effectively" in "start-up phase" ever since its founding in 2016. They wrote in their latest update: "The sales process for the assets of the company has now been concluded. The joint administrators have realised GBP25,795 in the administration." They added the company had no secured creditors and that "as anticipated, there are insufficient funds available" to pay any other creditors. OLD DAIRY: Finds Buyer for Taproom, Retail Side of Business ----------------------------------------------------------- Chantal Weller at KentOnline reports that a Kent brewery plunged into administration last month has revealed a new owner will take on its popular taproom. The struggling Old Dairy Brewery in Tenterden revealed in October it was looking for a buyer after its exports had been decimated by Brexit red tape, KentOnline relates. An offer for the business and assets was accepted, but the deal collapsed after the prospective new owners pulled out, forcing the firm to appoint administrators in November, KentOnline notes. Now, it has announced a buyer has been found to take on the taproom and retail side of the business, but the sale of beers wholesale to pubs and other venues will end, KentOnline discloses. According to KentOnline, managing director Sean Calnan said: "After a long and drawn out process with all of its ups and downs and trials along the way we are now able to confirm that the taproom and retail side of the business has a new owner. "On the face of things there will be no immediate change and all the staff involved in this side of the business will continue to pour your pints or sell you bottles and cans of our beers from our taproom. "The wholesale side of the business however will cease trading at the end of this year. "Online shop is currently closed but will reopen early in the new year." RICHMOND UK: Moody's Lowers CFR to Caa1, Outlook Remains Stable --------------------------------------------------------------- Moody's Investors Service has downgraded to Caa1 from B3 the corporate family rating and to Caa1-PD from B3-PD the probability of default rating of RICHMOND UK HOLDCO LIMITED (Parkdean or the company), a UK holiday park operator. At the same time Moody's downgraded to B3 from B2 the ratings of the backed senior secured first lien term loan B and the backed senior secured first lien revolving credit facility (RCF), borrowed by Richmond UK Bidco Limited. The outlook of both entities remains stable. RATINGS RATIONALE Moody's downgraded the ratings because of (1) increased refinancing risk as the company approaches March 2024 when it will need to refinance its full capital structure in constrained funding markets with much higher interest costs and an already weak interest cover ratio (2) a more challenging operating environment that will lead to higher leverage, weaker credit metrics and lower liquidity. Moody's expects weaker consumer confidence and inflationary pressure to weigh on the company's performance although parts of the business have proven to be resilient in previous downturns. As a result the rating agency expects Moody's-adjusted gross debt/ EBITDA to be slightly above 9x by year end 2022 (compared to 7.2x at year-end 2021) and to remain elevated in 2023 before gradually reducing to 8.5x by year end 2024. Moody's-adjusted EBITA / Interest is expected to deteriorate below the 1x level in 2023, although depreciation exceeds Parkdean's "maintenance capital" requirement given recent significant investments. However, Moody's also expects EBITDA less capital spend/Interest to be less than 1x in 2023 and 2024. Free cash generation is expected to be significantly negative in 2022 will be moderately positive in 2023 helped by a much-reduced capital spend and working capital reversal. More positively, the company's ownership of most of its parks (externally valued at GBP1.8 billion in December 2021) provides asset backing to creditors. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS ESG considerations primarily reflect governance risks from the company's tolerance for high leverage. Mitigating some of its ESG risks, the company has a comprehensive strategy encapsulated in 25 commitments to achieve by 2025 as part of its ESG plan. OUTLOOK The stable outlook reflects Moody's expectation of weak operating performance and elevated leverage in 2023 that will constrain liquidity and increase refinance risk ahead of the upcoming debt maturity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the company's ratings if Parkdean successfully refinances its maturities and sustains good operating performance while preserving profitability leading to EBITDA growth and deleveraging. Quantitatively, an upgrade would require Moody's adjusted Debt/EBITDA to decline below 7.5x and EBITA / Interest well above 1x while generating positive free cash flow and maintain good liquidity. Moody's could downgrade Parkdean's ratings if operational underperformance results in declining EBITDA and sustainably negative free cash flow generation or an increasing likelihood of debt restructuring. LIQUIDITY As of September 30, 2022 the company had GBP8.9 million of cash and cash equivalents. The company will need to rely on external sources to support seasonal working capital variations and project-based capital expenditures. To support its working capital swings and project-based capex, the company will be able to rely on RCF of GBP100 million (undrawn as of September 30, 2022). The company has extended part of RCF at the reduced amount of GBP91 million until March 2024. Moody's considers liquidity to be weak largely driven by the debt maturities that are due within 18 months. STRUCTURAL CONSIDERATIONS The B3 ratings of the outstanding GBP538.5 million backed senior secured first lien term loan B and the GBP100 million RCF are one notch above the group's Caa1 CFR. The ratings on these instruments reflect their contractual seniority in the capital structure and the cushion provided by the GBP150 million second-lien term loan. Both rated instruments are secured on a first priority ranking basis by all assets of the company, including most of the real estate holdings. In addition, the financing consists of two ground rent transactions totaling GBP242.7 million (as at December 31, 2021), which are structured as an on-balance-sheet finance lease liability. LIST OF AFFECTED RATINGS Downgrades: Issuer: Richmond UK Bidco Limited BACKED Senior Secured Bank Credit Facility, Downgraded to B3 from B2 Issuer: RICHMOND UK HOLDCO LIMITED Probability of Default Rating, Downgraded to Caa1-PD from B3-PD LT Corporate Family Rating, Downgraded to Caa1 from B3 Outlook Actions: Issuer: Richmond UK Bidco Limited Outlook, Remains Stable Issuer: RICHMOND UK HOLDCO LIMITED Outlook, Remains Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. PROFILE Parkdean controls a portfolio of 66 caravan parks that are geographically diversified across the coastal areas of England, Wales and Scotland. It owns around 33,000 pitches (around 10% of the UK market) and has relationships with around 20,000 caravan owners. The Canadian investment firm Onex Corporation acquired the company in March 2017. The group operates in four business segments: (1) caravan and lodge sales, (2) holiday sales, (3) owners' income, and (4) on-park spend. SHAWS THE DRAPERS: Goes Into Voluntary Liquidation -------------------------------------------------- Ben Summer at WalesOnline reports that Shaws the Drapers has gone into liquidation after 110 years of business. The company, which operated 28 stores across Wales and England, appears to have told staff in an email that after an "extremely challenging" year, the business would go into voluntary liquidation and employees would be let go, WalesOnline relates. Insolvency company Stones & Co of Swansea confirmed that it had been instructed to assist the directors of Shaws with voluntary liquidation, WalesOnline discloses. The company ceased trading on December 23, 2022, and liquidators understand that former employees have been paid their outstanding wages and holiday pay, WalesOnline recounts. The closure follows reports that Shaws branches had been selling stock at bargain prices and that some branches had "unexpectedly" closed, WalesOnline notes. Shaws has been a mainstay across south Wales from Haverfordwest and Carmarthen to Cardiff and Newport, as well as locations in England including Bristol, Bath, Exeter and Swindon. According to WalesOnline, a spokesperson for Stones & Co said: "Stones & Co Insolvency Practitioners Limited t/a Stones & Co, Swansea, have been instructed today by the Directors of Shaws (Cardiff) Limited to assist them in placing the Company into Creditors' Voluntary Liquidation. A member's meeting under the deemed consent procedure will be held on 10th January 2023 at which resolutions will be passed to wind up the Company voluntarily and to appoint Gareth Stones MIPA as Liquidator of the Company." Geoff Ready Services has been engaged to value the company's remaining assets, WalesOnline states. ZEPHYR BIDCO: GBP395M Bank Debt Trades at 19% Discount ------------------------------------------------------ Participations in a syndicated loan under which Zephyr Bidco Ltd is a borrower were trading in the secondary market around 80.7 cents-on-the-dollar during the week ended Friday, December 23, 2022, according to Bloomberg's Evaluated Pricing service data. The GBP395.0 million facility is a term loan. It is scheduled to mature on July 12, 2025. The amount is fully drawn and outstanding. Zephyr Bidco Limited provides Internet-based services. The Company's country of domicile is the United Kingdom. ********* 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. 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