/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/230106.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 Friday, January 6, 2023, Vol. 24, No. 6 Headlines I R E L A N D DUBLIN BAY 2018-MA1: DBRS Confirms BB(low) Rating on Z1 Notes SILVERPAIL DAIRY: High Court Confirms Appointment of Examiner N E T H E R L A N D S MAGOI BV: DBRS Confirms B Rating on Class F Notes S P A I N CLAVEL RESIDENTIAL 2: DBRS Assigns B Rating to Class E Notes U N I T E D K I N G D O M ECOTEC SERVICES: Administration Process Makes Progress ICONIC LABS: Creditors Approve Company Voluntary Arrangement MAGENTA 2020: DBRS Hikes Class E Notes Rating to BB(low) ODX INNOVATIONS: Financial Difficulties Prompt Administration PAVILLION MORTGAGES 2022-1: DBRS Finalizes BB(high) E Notes Rating WILKO: Secures Fresh Funding Amid Cash Difficulties X X X X X X X X [*] BOOK REVIEW: Transnational Mergers and Acquisitions - - - - - ============= I R E L A N D ============= DUBLIN BAY 2018-MA1: DBRS Confirms BB(low) Rating on Z1 Notes ------------------------------------------------------------- DBRS Ratings GmbH confirmed its ratings on the bonds issued by Dublin Bay Securities 2018-MA1 DAC (the Issuer) as follows: -- Class A1 confirmed at AAA (sf) -- Class A2A confirmed at AAA (sf) -- Class A2B confirmed at AAA (sf) -- Class S confirmed at AAA (sf) -- Class B confirmed at AA (sf) -- Class C confirmed at A (high) (sf) -- Class D confirmed at A (sf) -- Class E confirmed at BBB (high) (sf) -- Class F confirmed at BB (high) (sf) -- Class Z1 confirmed at BB (low) (sf) The confirmations follow an annual review of the transaction and are based on the following analytical considerations: -- Portfolio performance, in terms of delinquencies, defaults, and losses, as of the September 2022 payment date; -- Probability of default (PD), loss given default (LGD), and expected loss assumptions on the remaining receivables; and -- Current available credit enhancement to the notes to cover the expected losses at their respective rating levels. The Issuer is a bankruptcy-remote special-purpose vehicle (SPV) incorporated in the Republic of Ireland (Ireland). The Issuer used the proceeds of the notes to fund the purchase of Irish residential mortgage loans originated by Bank of Scotland plc (Bank of Scotland) and secured over properties located in Ireland. In September 2018, the Bank of Scotland sold the mortgage portfolio to Erimon Home Loans Ireland Limited, a bankruptcy-remote SPV wholly owned by Barclays Bank plc. Pepper Finance Corporation acts as the servicer of the mortgage portfolio during the life of the transaction while CSC Capital Markets (Ireland) Limited acts as the replacement servicer facilitator. PORTFOLIO PERFORMANCE As of September 2022, loans two to three months in arrears represented 0.3% of the outstanding portfolio balance, stable since September 2021. The 90+ days delinquency ratio increased to 4.3%, up from 3.0%, during this period, and the cumulative default and loss ratios each remained at 0.0%. PORTFOLIO ASSUMPTIONS AND KEY DRIVERS DBRS Morningstar conducted a loan-by-loan analysis of the remaining pool of receivables and updated its base case PD and LGD assumptions to 2.1% and 9.1%, respectively. CREDIT ENHANCEMENT As of September 2022, credit enhancement for the Class A1, Class A2A, and Class A2B notes was 20.8%, up from 20.5% in September 2021. In the same period, the credit enhancements for the Class B, Class C, Class D, Class E, Class F, and Class Z1 notes were 16.6%, 13.8%, 10.6%, 8.4%, 6.2%, and 5.5%, respectively, up from 16.3%, 13.6%, 10.4%, 8.1%, 5.9%, and 4.5%, respectively. The Class S notes are excess spread notes (i.e., they are not collateralized and do not have any credit enhancement). The Class S notes are redeemed under the pre-enforcement revenue priority of payments, but principal receipts can be used to cure shortfalls in the required payments for the Class S notes. The transaction benefits from a protected amortization reserve fund of EUR 8.0 million, which provides credit and liquidity support to the Class A2A and Class A2B notes to ensure that the scheduled payments are met. The reserve fund was unfunded at transaction closing. It reached its target level of 2% of the original balance of the collateralized notes as of the September 2019 interest payment date. The transaction also benefits from a liquidity reserve fund of EUR 2.9 million, which is available to provide liquidity support to the senior fee and interest payments on the Class A and Class S notes. Citibank, N.A., London Branch (Citibank) is the Issuer Account Bank, Paying Agent, and Cash Manager. Based on DBRS Morningstar's private rating on Citibank, the downgrade provisions outlined in the transaction documents, and other mitigating factors inherent in the transaction structure, DBRS Morningstar considers the risk arising from the exposure to Citibank to be consistent with the ratings assigned to the notes, as described in DBRS Morningstar's "Legal Criteria for European Structured Finance Transactions" methodology. Notes: All figures are in euros unless otherwise noted. SILVERPAIL DAIRY: High Court Confirms Appointment of Examiner ------------------------------------------------------------- RTE News reports that the High Court has confirmed the appointment of an examiner to companies involved in the manufacture of ice-cream and cream liqueurs. Last month the court appointed insolvency expert Shane McCarthy as examiner to Silverpail Dairy, Unlimited Company and a related entity, Havana Company Unlimited, on an interim basis, RTE News recounts. According to RTE News, Mr. Justice Michael Quinn on Jan. 4 confirmed Mr. McCarthy as examiner to the companies after receiving a report on the examinership to date. Silverpail employs 82 full time staff, as well as several contract workers at various times of the year, from its facility in Fermoy in Co Cork. The court heard that despite the group's current financial difficulties it can survive if certain steps, including the appointment of an examiner and securing fresh investment, are taken, RTE News relates. The examiner now has up to 100 days to agree to a scheme of arrangement with the firm's creditors, which if approved by the High Court will allow the company to survive as a going concern, RTE News discloses. There was no opposition to the appointment, however Revenue represented by Arthur Cunningham Bl said his client, which is owed EUR2.46 million by the companies, did have some issues it wants addressed as part of the examinership process, RTE News notes. Dairypail, which makes tubs of ice cream and Irish Cream Liqueur for the Irish, UK, EU, Middle Eastern and US Markets, petitioned the court for the appointment of the examiner, which will give the group protection from its creditors, RTE News states. It claims that the appointment was in the interests of all affected parties, including its creditors and its employees, according to RTE News. Creditors would do much better under a successful examinership compared to if the group was wound up, the court also heard, RTE News says. The court heard that the business has traded successfully for many years but has experienced financial difficulties due to the impact of reduced sales during the Covid-19 pandemic, and increased costs such as energy and commodity prices, RTE News discloses. The court heard that the business owes its trade creditors some EUR4.16 million, according to RTE News. It had sought additional investment and had been engaged in discussions with a potential investor for several months, which ultimately did not work out, RTE News notes. ===================== N E T H E R L A N D S ===================== MAGOI BV: DBRS Confirms B Rating on Class F Notes ------------------------------------------------- DBRS Ratings GmbH (DBRS Morningstar) confirmed its ratings on the bonds issued by Magoi B.V. (the Issuer) as follows: -- Class A Notes at AAA (sf) -- Class B Notes at AA (sf) -- Class C Notes at A (high) (sf) -- Class D Notes at A (low) (sf) -- Class E Notes at BBB (sf) -- Class F Notes at B (sf) The rating on the Class A Notes addresses the timely payment of interest and the ultimate repayment of principal on or before the legal final maturity date in July 2039. The ratings on the Class B, Class C, Class D, Class E, and Class F Notes address the ultimate payment of scheduled interest while the class is subordinate and the timely payment of scheduled interest as the most-senior class as well as the ultimate repayment of principal by the legal final maturity date. The confirmations follow an annual review of the transaction and are based on the following analytical considerations: -- Portfolio performance, in terms of delinquencies, defaults, and losses, as of the October 2022 payment date; -- Probability of default (PD), loss given default (LGD), and expected loss assumptions on the remaining receivables; and -- Current available credit enhancement to the notes to cover the expected losses at their respective rating levels. The transaction is an asset-backed security (ABS) transaction comprising a portfolio of fixed-rate unsecured amortizing personal loans granted to individuals domiciled in the Netherlands for general consumption. The loan portfolio is serviced by InterBank N.V., which is owned by Crédit Agricole Consumer Finance Nederland B.V. (CACF NL). The transaction included an eight-month revolving period, which ended with the August 2020 payment date. PORTFOLIO PERFORMANCE As of October 2022, loans two to three months in arrears represented 0.2% of the outstanding portfolio balance, up from 0.1% in October 2021; at 0.1%, the 90+-day delinquency ratio has remained stable during this period; and the cumulative default and loss ratios were 0.5% and 0.0%, respectively. PORTFOLIO ASSUMPTIONS AND KEY DRIVERS DBRS Morningstar has maintained its base case PD and LGD assumptions at 4.0% and 77.0%, respectively. CREDIT ENHANCEMENT The credit enhancement to the rated notes is provided by the subordination of the junior notes. As of the October 2022 payment date, credit enhancement to the Class A, Class B, Class C, Class D, Class E, and Class F Notes were 21.9%, 15.3%, 11.3%, 8.9%, 6.6%, and 4.2%, respectively, unchanged since October 2021 because of the pro rata amortization of the notes. The transaction includes a liquidity reserve fund of EUR 1.0 million available to the Issuer during the amortization period in restricted scenarios where the interest and principal collections are not sufficient to cover the shortfalls in senior expenses, swap payments, and interest on the Class A and Class B Notes. During the accelerated redemption period, the liquidity reserve amount is not available to the Issuer and is instead returned directly to the liquidity provider. The transaction also includes a commingling reserve fund of EUR 6.3 million, which may be used each month as part of the available funds up to the collection amounts not received by the Issuer. Credit Agricole Corporate and Investment Bank (CA-CIB) acts as the account bank for the transaction. Based on DBRS Morningstar's private rating on CA-CIB, the downgrade provisions outlined in the transaction documents, and other mitigating factors inherent in the transaction structure, DBRS Morningstar considers the risk arising from the exposure to the account bank to be consistent with the rating assigned to the Class A Notes, as described in DBRS Morningstar's "Legal Criteria for European Structured Finance Transactions" methodology. CACF NL acts as the swap counterparty for the transaction and CA-CIB acts as the standby swap counterparty. DBRS Morningstar's private rating on CA-CIB is consistent with the First Rating Threshold as described in DBRS Morningstar's "Derivative Criteria for European Structured Finance Transactions" methodology. DBRS Morningstar analyzed the transaction structure in Intex DealMaker. Notes: All figures are in euros unless otherwise noted. ========= S P A I N ========= CLAVEL RESIDENTIAL 2: DBRS Assigns B Rating to Class E Notes ------------------------------------------------------------ DBRS Ratings GmbH assigned ratings to the following classes of notes issued by Clavel Residential 2 DAC (the Issuer): -- Class A Notes at AA (high) (sf) -- Class B Notes at A (sf) -- Class C Notes at BBB (high) (sf) -- Class D Notes at BB (high) (sf) -- Class E Notes at B (sf) -- Class F Notes at CCC (sf) The rating on the Class A Notes addresses the timely payment of interest and the ultimate payment of principal on or before the final maturity date in 2076. The ratings on the Class B, Class C, Class D, Class E, and Class F Notes (together with the Class A Notes, the rated notes) address the ultimate payment of interest and the ultimate repayment of principal on or before the final maturity date. DBRS Morningstar did not assign ratings to the Class RFN, Class Z1, Class Z2 and Class X Notes (together with the rated notes, the notes) also issued in the transaction. All the notes except for the Class RFN and Class X Notes are collateralized (the collateralized notes). The ratings on the rated notes do not address the likelihood of receipt of any net weighted-average (WA) coupon (WAC) additional amounts. The Issuer will use proceeds from the issuance of the rated notes to pay various fees and expenses and to purchase a series of unitranche bonds (the fondo de titulizacion (FT) purchaser bonds), issued by a Spanish securitization fund (FT Lantana or the FT purchaser), which are backed by a portfolio of reperforming Spanish residential mortgage loans represented by mortgage transfer certificates. FT Lantana transfers the FT purchaser bonds to the seller, and subsequently, the seller transfers them to the Issuer on the closing date. Banco Santander SA (Banco Santander), Banesto SA (Banesto), and Banco Popular, S.A. (Banco Popular) (together, the originators) originated the mortgage loans. In April 2013, Banesto was integrated into Banco Santander and in June 2017, Banco Santander announced the acquisition of Banco Popular, which became effective in October 2018. The notes will be paid sequentially following the principal priority of payments, which provides the notes with credit enhancement in the form of subordination. A reserve fund (RF), set up at closing, will provide liquidity support to the rated notes. At closing, the RF balance will amount to 2.0% of the initial balance of the collateralized notes. The RF is split into a liquidity reserve fund (LRF) and a nonliquidity reserve fund (NLRF). The LRF will provide liquidity support to the Class A Notes in case of an interest shortfall and is also available to cover senior expenses and payments on the interest rate (IR) cap. The RF will be equal to 2.0% of the outstanding balance of the Class A Notes and will be floored at 1.0% of the Class A Notes' initial balance. The NLRF will provide liquidity support to the rated notes in case of an interest shortfall and will clear principal deficiency ledger balances on the Class A to Class F Notes' subledgers. The NLRF required amount is equal to the RF required amount less the LRF required amount. The excess from the NLRF will become part of the available principal funds when all the rated notes are redeemed. Furthermore, the transaction benefits from a yield supplement overcollateralization (YSO) release amounting to 10% of the portfolio at the closing date. This YSO will provide additional liquidity support to the notes. The rated notes will pay interest linked to three-month Euribor on a quarterly basis. Following the payment date in April 2025 (the step-up date), the margin payable on the rated notes will increase. Banco Santander is acting as the primary servicer and Aktua Soluciones Financieras Holdings, SL, the Spanish subsidiary of Intrum Ireland Limited, will act as the special servicer, carrying out the management of loans in arrears for more than 150 days. Banco Santander is also acting as the collection account bank. Banco Santander will transfer the mortgage loan collections to an account in the name of the FT Purchaser at Banco Santander within two business days of receipt. All borrower payments under the mortgage loans will be held in this account until the FT purchaser bonds make payments to the Issuer four days before each payment date. The transaction contains downgrade provisions relating to the account bank whereby, if Banco Santander is downgraded below "A", the Issuer will replace the collection account bank. The downgrade provisions are consistent with DBRS Morningstar's criteria for the AA (high) (sf) rating assigned to the Class A Notes in this transaction. Elavon Financial Services DAC (Elavon) is the Issuer account bank, custodian, and paying agent for this transaction. DBRS Morningstar privately rates Elavon and concluded that Elavon meets its minimum criteria to act in such capacity. The transaction contains downgrade provisions relating to the Issuer account bank whereby, if Elavon is downgraded below "A", the Issuer will replace the Issuer account bank. The downgrade provisions are consistent with DBRS Morningstar's criteria for the AA (high) (sf) rating assigned to the Class A Notes in this transaction. BNP Paribas SA (BNP Paribas; rated AA (low) with a Stable trend by DBRS Morningstar) will provide an IR cap with a strike rate that starts at 3.0% and increases over time. DBRS Morningstar concluded that BNP Paribas meets its minimum criteria to act in such capacity. The transaction contains downgrade provisions relating to the IR cap provider. The downgrade provisions are consistent with DBRS Morningstar's criteria for the AA (high) (sf) rating assigned to the Class A Notes in this transaction. DBRS Morningstar was provided with a portfolio equal to EUR 537.1 million as of 30 September 2022 (the cut-off date), which consisted of 5,021 loans extended to 4,623 main borrowers. Of the portfolio balance, 99.9% of the loans were restructured while, as of the cut-off date, 80.7% were performing, 10.7% were no more than one month in arrears, 8.4% were between one and three months in arrears, and 0.2% were more than three months in arrears. However, there will be no loans at 90+ days past due (DPD) payment as of October 31, 2022, following exclusions from the portfolio which would have otherwise breached certain representations and warranties. DBRS Morningstar assessed the historical performance of the mortgage loans and factored restructuring arrangements into its analysis by selecting a portfolio score of "Low" in its European RMBS Insight Model. The WA seasoning of the portfolio is 11.8 years whereas the WA remaining term is 23.4 years. The WA original loan-to-value (LTV) ratio stands at 76.3% while the WA indexed current LTV is 64.1%. DBRS Morningstar also considered the latest valuations provided by the Issuer in its analysis, which would increase the WA indexed LTV of the portfolio to 94.6%. Currently, 92.0% of the portfolio comprises floating-rate loans linked to 12-month Euribor while 7.5% is linked to other Spanish indices. The remaining 0.5% of the portfolio comprises fixed-rate loans. The notes are floating rate linked to three-month Euribor. Any basis risk mismatch will remain unhedged. DBRS Morningstar took basis risk into account in its cash flow analysis. Loans corresponding to 24.4% of the total amount are currently in their grace period, with deferred principal payments and reduced IRs. DBRS Morningstar considered these in its assessment. During the first three years, some delinquent loans (150+ days DPD) may be repurchased from the portfolio at a discount. DBRS Morningstar considers that the risk of a repurchase on some loans below par is partially mitigated by the fact that more than 90% of the loans would suffer a loss of less than 30% if they were repurchased this way, which is lower than DBRS Morningstar's loss given default (LGD) assumption in the B (low) (sf) scenario. In its role as servicer, Banco Santander can renegotiate with the borrower the terms of any loan that is less than five months in arrears, without the Issuer's authorization, subject to the satisfaction of certain conditions. Permitted variations are limited to margin reduction and maturity extension. Furthermore, there is a limit of 10.0% of the initial balance in terms of maturity extension. DBRS Morningstar considered the optionality in its analysis by extending the maturity and decreasing the margin for some loans in its cash flow analysis. RATING RATIONALE DBRS Morningstar based its ratings on the following analytical considerations: -- The transaction capital structure and form and sufficiency of available credit enhancement and liquidity provisions. -- The credit quality of the mortgage portfolio and the ability of the servicer to perform collection and resolution activities. DBRS Morningstar received historical mortgage performance data as well as loan-level data for the mortgage portfolio. DBRS Morningstar calculated probability of default (PD), LGD, and expected loss levels on the mortgage portfolio, which it uses as inputs in the cash flow tool. DBRS Morningstar analyzed the mortgage portfolio in accordance with its "European RMBS Insight Methodology" and "European RMBS Insight: Spanish Addendum". -- The transaction's ability to withstand stressed cash flow assumptions and repay the noteholders according to the terms and conditions in the transaction documents. DBRS Morningstar analyzed the transaction structure using Intex DealMaker. DBRS Morningstar considered additional sensitivity scenarios of 0% conditional repayment rate stress. -- The transaction parties' financial strength to fulfil their respective roles and the structural mitigants in place to avoid potential payment disruptions caused by operational risk, such as downgrade and replacement language in the transaction documents. -- The consistency of the transaction's legal structure with DBRS Morningstar's "Legal Criteria for European Structured Finance Transactions" methodology as well as the appropriate legal opinions that address the assignment of the assets to the Issuer. -- DBRS Morningstar's sovereign rating on the Kingdom of Spain of "A" with a Stable trend as of the date of this press release. Notes: All figures are in Euros unless otherwise noted. =========================== U N I T E D K I N G D O M =========================== ECOTEC SERVICES: Administration Process Makes Progress ------------------------------------------------------ Joshua Doherty at letsrecycle.com reports that the administration process at Worcester-based biomass boiler manufacturer Ecotec Services progressed this week (Jan. 3), as a notice of "deemed approval" was published. Ecotec went into administration on October 22, 2022, with a total "deficiency" of GBP2.9 million noted, including debts to Barclays, Close Brothers and HMRC, letsrecycle.com relates. The deemed approval notice was published by the administrators, Begbies Traynor, and signifies that there were no objections from creditors to the draft proposals set out last month, letsrecycle.com recounts. These proposals also recommended that the company be dissolved once its assets have been divided, letsrecycle.com discloses. Ecotec Services Ltd was founded in 2009 and originally installed biomass boilers for the agricultural sector, taking advantage of companies able to use the renewable heat incentive (RHI) support scheme. According to the administration documents, the company then began to sell biomass boilers to the waste sector, where companies could use the heat to "dry fuel and reduce costs to landfill", letsrecycle.com states. The document added that more than 20 boilers were added to waste sites, some with electricity generation, letsrecycle.com notes. "However, in 2018 the government announced that the RHI tariff was ending on drying, and stopping altogether in 2020," the administrator added. It then looked to develop a small-scale RDF plant which could be sold to customers in around 2018/19. However, the administrators said this project faced a number of difficulties, letsrecycle.com relays. The project went through technical due diligence and the company started to identify sites, letsrecycle.com recounts. However administrators noted the high apex value, cost of borrowing and excessive planning regulations as reasons it was difficult to locate sites, according to letsrecycle.com. This was exacerbated by Covid when people put off investment decisions and planning "taking even longer", letsrecycle.com states. The final nail in the coffin, according to the administrator, was "the government's disastrous mini-budget", which the company said made investment decisions harder and created uncertainty, according to letsrecycle.com. ICONIC LABS: Creditors Approve Company Voluntary Arrangement ------------------------------------------------------------ Kalkine Media reports that Iconic Labs PLC's company voluntary arrangement has been approved by creditors. According to Kalkine Media, the company's goal now is to get suspension of Iconic's shares lifted so that trading can resume. The company and its advisors are currently in discussions with the Financial Conduct Authority to lift trading suspension on the company's shares as soon as possible, Kalkine Media discloses. The company incurred a loss for financial year 2022 of GBP762,107 (2021 - GBP7,697,306), Kalkine Media notes. Iconic Labs Plc is a United Kingdom-based media, data, information, Internet, security, and technology company. The Company is focused on providing online marketing, content and technology driven products. The Company's principal activity within this sector is in digital and social media publishing. MAGENTA 2020: DBRS Hikes Class E Notes Rating to BB(low) -------------------------------------------------------- DBRS Ratings Limited took the following rating actions on the commercial mortgage-backed floating rate notes (the notes) issued by Magenta 2020 PLC (the Issuer): -- Class A notes upgraded to AAA (sf) from AA (high) (sf) -- Class B notes confirmed at A (low) (sf) -- Class C notes confirmed at BBB (low) (sf) -- Class D notes upgraded to BB (high) (sf) from BB (sf) -- Class E notes upgraded to BB (low) (sf) from B (high) (sf) DBRS Morningstar also changed the trend on all classes of notes to Stable from Negative. The rating actions reflect the deleveraging of the loan and improved performance metrics of the underlying hotels following the lifting of Coronavirus Disease (COVID-19) restrictions over the last year. Magenta 2020 PLC is the securitization of a GBP 274.0 million senior loan advanced to DTP Subholdco Limited (the borrower) to finance the acquisition of a portfolio of hotels from Marathon Asset Management Limited in March 2020. The borrower also acquired a 25% stake in the operating platform Valor Hospitality Europe Limited (Valor Europe), although it did not use the loan to acquire this stake. The lender and lead arranger, Goldman Sachs Bank U.S.A., also provided a mezzanine loan of GBP 66.0 million to DTP Regional Hospitality Group Limited, part of the borrower group. The mezzanine loan is structurally and contractually subordinated to the senior loan and is not part of the transaction. The senior loan is secured by 17 hotels located in the U.K, concentrated mainly in the north west of England, and the East Midlands. The hotels are managed by Valor Europe and operate under various franchise agreements with InterContinental Hotels Group (IHG), Hilton and Marriott. Three hotels operate under the Hilton Double Tree brand; seven under the Crowne Plaza brand; three under Hilton Garden Inn; two under AC by Marriott; and one each under the Holiday Inn and Indigo brands. Following the pandemic-led disruption to business, the servicer, CBRE Loan Services Limited (CBRE), entered into an amendment and waiver letter with the borrower and finance counterparties in June 2020 to allow the borrower to manage their medium term liquidity without breaching their obligations, subject to certain conditions imposed to protect the Issuer's position. Specifically, the sponsor (DTGO Corporation Limited) injected GBP 17.5 million of equity into the cure account for the borrower to cover operating and financial shortfalls. Further equity injections occurred in December 2020 (GBP 0.7 million), March 2021 (GBP 5.8 million), and May 2021 (GBP 1.5 million). On December 20, 2021 (the original initial maturity date), the noteholders approved a restructuring of the loan via a written extraordinary resolution and the maturity was extended to December 2024 (final loan maturity) with new hedging in place until the final loan maturity, offering protection from further interest rate hikes. As part of the agreement, the senior loan was deleveraged by GBP 12 million in March 2022 by way of prepayment via an equity injection. Proceeds were applied on a pro-rata basis. Finally, the deadline for a programme of improvement works on the Hilton properties was also extended to December 2023. Following the restructuring, a 12 months period was established, during which the debt yield (DY) ratio default covenant was waived. The waiver expires as of the December 2022 interest payment date (IPD). As of the September 2022 IPD, the loan metrics reflect an improving outlook: the occupancy rate has increased to 72% from less than 50% last year, and the average daily rate is GBP 98, compared with GBP 86 at the cut-off date in March 2020. Overall, the net operating income is GBP 24.8 million p.a. The DY is 10.9%, which is above the 9.3% cash trap covenant. The DY cash trap will increase to 9.6% from the December 2022 IPD. DBRS Morningstar expects the DY default covenant to revert to the previously agreed level of 8.75% from December 2022 IPD onwards. In September 2022, Savills carried out a new valuation and, in aggregate, appraised the portfolio's market value at GBP 397.6 million, representing a 3% increase from the August 2021 valuation. However, this is still 9% below the original 2019 valuation. Based on the new valuation and the outstanding loan amount as of the September 2022 IPD, the loan to value (LTV) ratio is 62.3%. Due to the deleveraging of the loan, both by scheduled amortization and by prepayment via equity injection, the LTV ratio dropped to the level at origination (62.2%) and below the LTV cash trap covenant of 67.2%. In October 2022, an amendment and reinstatement agreement to the senior loan facility was signed for the remedial works on cladding to be completed by 31 July 2023. DBRS Morningstar's assumptions remain unchanged since it downgraded its ratings on the notes in November 2020: the cap rate and net cash flow (NCF) remain unchanged at 7.75% and GBP 21 million, respectively. As a result, DBRS Morningstar's NCF haircut on issuer NCF stands at 15.3% and DBRS Morningstar value haircut stands at 31.9% on appraised value. The transaction benefits from a liquidity reserve facility of GBP 8.08 million available to the Class A, Class B and Class C notes, which was funded out of the proceeds of the Class A notes and a proportionate amount of the issuer loan. Based on a cap strike rate of 3.8%, DBRS Morningstar estimated that the liquidity reserve will cover 14 months of interest payments on the notes. Based on a cap on the Sterling Overnight Index Average (Sonia) of 5%, the liquidity reserve will cover nine months of interest. The final maturity of the loan is in December 2024. The transaction benefits from a five year tail period with final notes' maturity in December 2029. Notes: All figures are in British pound sterling unless otherwise noted. ODX INNOVATIONS: Financial Difficulties Prompt Administration ------------------------------------------------------------- Business Sale reports that administrators are looking for a buyer following the collapse of Inverness-based medical technology firm ODx Innovations Ltd. According to Business Sale, the company is reported to have fallen into administration due to significant financial difficulties. The company, which was based at the Inverness Campus, was involved in developing improved testing and treatment for urinary tract infections (UTIs). Administrators said that the company had developed "ground-breaking technology" with the "potential to help people all around the world" but had run into financial difficulties which made its administration "unavoidable", Business Sale relates. Duncan Raggett of AAB and Seamas Keating of FPM Accountants were appointed as joint administrators to the firm shortly before Christmas, Business Sale recounts. Upon the appointment of the joint administrators, 38 of the firm's employees were made redundant, with a "small number" of employees retained to preserve and protect its assets, Business Sale notes. The joint administrators have urged any parties with an interest in acquiring the business or its assets to come forward, Business Sale discloses. In its most recent accounts, for the year ending December 31 2020, ODx's fixed assets were valued at GBP452,726, while its current assets were valued at slightly over GBP1.6 million, Business Sale states. At the time, the firm's total equity stood at close to GBP1.2 million, Business Sale discloses. PAVILLION MORTGAGES 2022-1: DBRS Finalizes BB(high) E Notes Rating ------------------------------------------------------------------- DBRS Ratings Limited finalized its provisional ratings on the following classes of notes issued by Pavillion Mortgages 2022-1 PLC (the Issuer): -- Class A notes at AAA (sf) -- Class B notes at AAA (sf) -- Class C notes at AA (high) (sf) -- Class D notes at A (sf) -- Class E notes at BB (high) (sf) The finalized ratings on the Class A and Class B notes address the timely payment of interest and the ultimate repayment of principal by the legal final maturity date. The finalized ratings on the Class C to Class E notes (together with the Class A and Class B notes, the rated notes) address the timely payment of interest once most senior and the ultimate repayment of principal by the legal final maturity date. DBRS Morningstar does not rate the Class R notes also issued in this transaction. RATING RATIONALE The Issuer is a bankruptcy-remote special-purpose vehicle incorporated in the UK. The collateralized notes are backed by first-lien owner-occupied residential mortgage loans originated by Barclays Bank UK PLC (BBUK). A liquidity reserve fund (LRF) provides liquidity support to the Class A and Class B notes and to the senior deferred consideration in the priority of payments. The LRF's initial balance will be 0.5% of the Class A and Class B notes' outstanding balance at closing. On each interest payment date (IPD), the target level will be 0.5% of the Class A and Class B notes' outstanding balance as at the end of the collection period until the Class B notes are redeemed. A general reserve fund (GRF) provides liquidity and credit support to the rated notes. On the closing date and on each IPD thereafter, the GRF will have a target balance equal to 2.50% of the portfolio's outstanding balance at closing, minus the LRF required amount. DBRS Morningstar calculated the credit enhancement to the Class A notes at 15.55%, provided by the subordination of the Class B to Class E notes and the GRF's initial balance. Credit enhancement to the Class B notes will be 11.30%, provided by the subordination of the Class C to Class E notes and the GRF's initial balance. Credit enhancement to the Class C notes will be 7.20%, provided by the subordination of the Class D to Class E notes and the GRF's initial balance. Credit enhancement to the Class D notes will be 3.15%, provided by the subordination of the Class E notes and the GRF's initial balance. Credit enhancement to the Class E notes will be 2.05%, provided by the GRF's initial balance. As of October 31, 2022, the mortgage portfolio consisted of 2,044 loans with an aggregate principal balance of GBP 498.5 million. The majority of the loans in the pool (77% of the initial collateral balance) were originated in the third quarter of 2022 while the rest were granted in the remaining part of 2022. The mortgage loans in the asset portfolio are all secured by a first-ranking mortgage right and almost all were granted to employed borrowers (94.2%). The portfolio's weighted-average (WA) original loan-to-value (LTV) ratio and WA indexed current LTV are substantially the same at 89.7% because the properties have not benefitted from material price rises in the short time that has elapsed since origination, and the loans have amortized by less than 0.5% compared with their original balance. This relatively high LTV compared with peer transactions in the UK reflects the pool selection criteria that target high LTV loans in the BBUK book that were granted to first-time buyers. The final portfolio contains 100% fixed-rate loans with a fixed-rate period. Once their fixed-rate period is over, the loans will switch to a floating rate. As of the final cut-off date, all mortgage loans were performing. The Issuer has entered into a fixed-to-floating swap with BBUK to hedge the interest rate mismatch between the fixed-rate mortgage loans and the compounded Sterling Overnight Index Average (Sonia) rate payable on the notes. BBUK originated and services the mortgages. CSC Capital Markets UK Limited will be the backup servicer facilitator in the transaction. DBRS Morningstar based its ratings on a review of the following analytical considerations: -- The transaction's capital structure and form and the sufficiency of available credit enhancement. -- The credit quality of the mortgage portfolio and the ability of the servicer to perform collection and resolution activities. DBRS Morningstar calculated the probability of default (PD), loss given default (LGD), and expected loss outputs on the mortgage portfolio, which DBRS Morningstar used as inputs into the cash flow tool. -- The ability of the transaction to withstand stressed cash flow assumptions and repay the Class A, Class B, Class C, Class D, and Class E notes according to the terms of the transaction documents. DBRS Morningstar analyzed the transaction structure using Intex DealMaker, considering the default rates at which the rated notes did not return all specified cash flows. -- The structural mitigants in place to avoid potential payment disruptions caused by operational risk, such as a downgrade, and replacement language in the transaction documents. -- DBRS Morningstar's sovereign rating on the United Kingdom of Great Britain and Northern Ireland at AA (high), Under Review with Negative Implications, as of the date of this press release. -- The expected consistency of the transaction's legal structure with DBRS Morningstar's "Legal Criteria for European Structured Finance Transactions" methodology and presence of legal opinions that are expected to address the assignment of the assets to the Issuer. Notes: All figures are in British pound sterling unless otherwise noted. WILKO: Secures Fresh Funding Amid Cash Difficulties --------------------------------------------------- Jonathan Eley at The Financial Times reports that UK discount retailer Wilko has secured fresh funding and replaced the granddaughter of the company's founder as chair as it moves to protect its future after a turbulent period. According to the FT, the asset-backed GBP40 million credit facility will be provided by Hilco, the special situations investor that also owns DIY retailer Homebase and crockery manufacturer Denby. The terms have not been disclosed but they are likely to be more expensive than a conventional bank credit facility, the FT notes. The lender has also been given security over much of Wilko's intellectual property, including its logo, marketing slogans and various own-label product names, the FT relays, citing documents filed at Companies House. The family-controlled retailer had previously warned that if trading deteriorated further and it did not secure access to additional funding, it could run out of cash by the end of this year, the FT notes. It has already sold and leased back its headquarters building in Nottinghamshire to raise additional funds, the FT discloses. It said the facility would enable it "to significantly increase financial flexibility", the FT relays. The company said that Chris Howell would join as chair in place of family director Lisa Wilkinson, the granddaughter of the company's founder, although she will remain on the board, according to the FT. Wilko endured a particularly difficult pandemic, the FT recounts. Although its 400 stores were permitted to remain open during the lockdowns, they are mostly located in high streets and shopping centres, where the falls in shopper numbers were most pronounced, the FT states. Same-store sales declined 7.7% in the year to January 2021 and dropped a further 3.3% the following year, according to the FT. =============== X X X X X X X X =============== [*] BOOK REVIEW: Transnational Mergers and Acquisitions ------------------------------------------------------- Author: Sarkis J. Khoury Publisher: Beard Books Softcover: 292 pages List Price: $34.95 Order your personal copy today at http://is.gd/hl7cni Transnational Mergers and Acquisitions in the United States will appeal to a wide range of readers. Dr. Khoury's analysis is valuable for managers involved in transnational acquisitions, whether they are acquiring companies or being acquired themselves. At the same time, he provides a comprehensive and large-scale look at the industrial sector of the U.S. economy that proves very useful for policy makers even today. With its nearly 100 tables of data and numerous examples, Khoury provides a wealth of information for business historians and researchers as well. Until the late 1960s, we Americans were confident (some might say smug) in our belief that U.S. direct investment abroad would continue to grow as it had in the 1950s and 1960s, and that we would dominate the other large world economies in foreign investment for some time to come. And then came the 1970s, U.S. investment abroad stood at $78 billion, in contrast to only $13 billion in foreign investment in the U.S. In 1978, however, only eight years later, foreign investment in the U.S. had skyrocketed to nearly #41 billion, about half of it in acquisition of U.S. firms. Foreign acquisitions of U.S. companies grew from 20 in 1970 to 188 in 1978. The tables had turned an Americans were worried. Acquisitions in the banking and insurance sectors were increasing sharply, which in particular alarmed many analysts. Thus, when it was first published in 1980, this book met a growing need for analytical and empirical data on this rapidly increasing flow of foreign investment money into the U.S., much of it in acquisitions. Khoury answers many of the questions arising from the situation as it stood in 1980, many of which are applicable today: What are the motives for transnational acquisitions? How do foreign firms plans, evaluate, and negotiate mergers in the U.S.? What are the effects of these acquisitions on competition, money and capital markets; relative technological position; balance of payments and economic policy in the U.S.? To begin to answer these questions, Khoury researched foreign investment in the U.S. from 1790 to 1979. His historical review includes foreign firms' industry preferences, choice of location in the U.S., and methods for penetrating the U.S. market. He notes the importance of foreign investment to growth in the U.S., particularly until the early 20th century, and that prior to the 1970s, foreign investment had grown steadily throughout U.S. history, with lapses during and after the world wars. Khoury found that rates of return to foreign companies were not excessive. He determined that the effect on the U.S. economy was generally positive and concluded that restricting the inflow of direct and indirect foreign investment would hinder U.S. economic growth both in the short term and long term. Further, he found no compelling reason to restrict the activities of multinational corporations in the U.S. from a policy perspective. Khoury's research broke new ground and provided input for economic policy at just the right time. Sarkis J. Khoury holds a Ph.D. in International Finance from Wharton. He teaches finance and international finance at the University of California, Riverside, and serves as the Executive Director of International Programs at the Anderson Graduate School of Business. ********* 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 2023. 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. 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