/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/230119.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, January 19, 2023, Vol. 24, No. 15 Headlines F R A N C E CIRCET EUROPE: Fitch Corrects Dec. 5 Rating Release G E O R G I A GEORGIA GLOBAL: Fitch Hikes LongTerm IDR to 'BB-', Outlook Stable I R E L A N D JUBILEE CLO 2018-XX: Fitch Affirms B-sf Rating on Class F Debt P O R T U G A L ENERGIAS DE PORTUGAL: S&P Rates New Green Hybrid Bond 'BB+' S E R B I A PINKI: Files for Liquidation, Peter Djukic Tapped S W E D E N PERSTORP HOLDING: S&P Withdraws 'B-' LongTerm Issuer Credit Rating T U R K E Y QNB FINANS: Fitch Affirms 'B-' Foreign Currency IDR, Outlook Neg. U N I T E D K I N G D O M BRITISHVOLT: Glencore, Tata Express Interest to Buy Factory Site CARZAM: Creditors to Get Money Back, Administrators' Report Shows CASTELL PLC 2021-1: S&P Raises Class F-Dfrd Notes Rating to 'BB+' EAT LOCAL: Seeks Direct Funding From Grey County Council HERITAGE GLASS: Goes Into Creditors' Voluntary Liquidation IN-TIME: Owed Millions to Creditors at Time of Administration NORTHERN ROCK: Lawyers Seek Compensation for Mortgage Borrowers - - - - - =========== F R A N C E =========== CIRCET EUROPE: Fitch Corrects Dec. 5 Rating Release --------------------------------------------------- Fitch Ratings issued a revised commentary on Circet Europe SAS, replacing the version published on Dec. 5, 2022 to include Key Assumptions plus amendments to the liquidity and debt structure section. The revised ratings release is as follows: Fitch Ratings has revised the Outlook on French telecoms provider, Circet Europe SAS's Long-Term Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at 'B+'. Fitch has also affirmed the EUR1,825 million senior secured term loan B (TLB) at 'BB-'/RR3/57%. The Positive Outlook reflects its view that Circet's EBITDA growth and solid free cash flow (FCF) generation of about 5% could accelerate deleveraging, reducing leverage to 4.5x over the next 12-18 months, a year earlier than previously expected. The rating reflects Circet's still-high EBITDA leverage after its acquisition by Intermediate Capital Group (ICG) in 4Q21, coupled with pressured margins in an inflationary environment for 2022 and geographical expansion into less profitable markets, albeit with a good growth platform, such as the US. A good record of project execution, increased scale, geographical diversification, and leading positions in key markets offset the customer concentration and inherent risks from its acquisitive strategy. KEY RATING DRIVERS Temporary Margin Erosion: Fitch expects Circet's FY22 profitability to be adversely affected by inflationary pressure and margin-diluting acquisitions of the Italian and US entities. Circet has renegotiated pricing with its customers, which is likely to partially restore profitability, albeit with some time lag. Inflationary challenges from personnel costs could be mitigated by a subdued labour market in some operating countries. Nevertheless, with an EBITDA margin forecast of 13%-13.5% beyond 2022, Circet is still solidly positioned against peers like Spie and Whistler and is in line with its expectation for investment-grade profitability medians in the diversified services navigator. Deleveraging Supported by Strong FCF Generation: The recent acquisitions were largely financed via a term loan B (TLB) add-on and drawn-down of the up-sized revolving credit facility (RCF). Fitch forecasts EBITDA leverage will remain stable despite the EBITDA margin erosion. Fitch believes that EBITDA leverage will drop below 4.5x as early as 2023 and Circet has deleveraging capacity supported by strong FCF generation. Its FCF margin is in line with higher rated peers and could result in a rapid build-up of cash balances. Cash deployment to finance new, sizable acquisitions, together with increased borrowing could hinder deleveraging. More Diversified Geographical Footprint: Fitch expects Circet's revenue to grow to over EUR3 billion in 2022 from EUR1.4 billion in 2019, implying a CAGR of over 20%. This is driven by strong organic growth in existing markets and expansion into new regions through M&A, as demonstrated by its entry into Benelux (2020) and Germany (2021). Fitch expects the two acquisitions in Italy and the US at the start of 2022 to add combined annual revenue of EUR700 million per year. Circet will likely remain a small player in the US market, but it will benefit from the growth prospects from increased adoption of fibre in the states in which it operates. Improved Business Profile: Market-leading positions, strong contract execution and a reputation for expertise and quality continue to support Circet's business profile. Its scale and diversification are commensurate with a 'bb' midpoint according to the diversified services navigator. Dependence on the French telecom infrastructure and on Orange has continued to decline. Service diversification is also satisfactory as Circet moves up the value chain and increases its added-value per contract. Nonetheless, there is still customer, geographic and end-market concentration. This is mitigated through a high contracted income structure and recurring revenue stream. Leading Market Position: Leading market positions in its core service fields in France, Ireland and the UK, Germany, and Benelux with its Circet and KN brands, are a positive credit factor. Circet has effectively used its expertise in telecom infrastructure services to secure out-sourcing contracts with several major European telecom operators, such as Orange, SFR, Deutsche Telekom, and BT/Openreach. The expansion into the US market grants Circet access to customers outside Europe and potentially attract cross-region business opportunities with existing clients. Fitch believes that the group is the only market operator able to work on all technologies while being involved in the design, roll-out, activation and maintenance of its client's network. Manageable Earning Risks: Moderate customer diversification and significant exposure to new build contracts create meaningful, but manageable, earning risks, notably through contract renewal risk. Circet's operations remain concentrated in France (41% pro-forma for recent acquisitions), but Fitch expects this share to decrease. Its two largest customers still account for around 23% of revenue and its services offering is focused on the telecommunication infrastructure market. Longer technology cycles and high fibre coverage in the long term could weigh on the availability of build contracts. The telecom industry's low cyclicality, growing maintenance and subscriber connection capabilities, a good customer retention rate and the trend toward out-sourcing are mitigating factors. DERIVATION SUMMARY Circet's business profile solidly maps to the 'BB' rating category. Its ratings are supported by leading market positions, strong contract execution, adequate scale and services diversification for the TMT sector, and exposure to high-profile customers. However, geographical and customer concentration, although materially improving, remain weak features of the business profile. Circet is stronger than smaller similarly-rated peers that are more focused on one service offering and one country. It also compares well with peers that offer a wider range of services to broader end-markets, such as Spie, Morrison or Telent. Like most Fitch-rated medium-sized business services companies, Circet benefits from a leading position in a specific end-market. Sales also tend to be concentrated on a limited number of customers in a small number of countries. However, this is a characteristic of the TMT sector composed of few operators, often a leader in their own country. Fitch believes that Circet's resilience through the cycle is likely to be greater than services peers as the company is exposed to the telecom industry with low cyclicality. Circet's lean and flexible cost structure supports operating and cash profitability that is significantly higher than peers and strong for the current rating. EBITDA leverage of 5.3x in 2022 exceeds its expectation for the 'BB' median of 4.0x. However, Fitch expects Circet to deleverage rapidly towards 5.0x for FFO leverage and 4.0x for EBITDA leverage over the next 24 months, which is more commensurate with a 'BB' rating. KEY ASSUMPTIONS -- Revenue CAGR of 8.6% between 2022 and 2025, Italy-Co and US-Co combined annual revenue contribution of EUR600 million-EUR700 million -- Group EBITDA margin of 12.4% in 2022, before gradually trending toward 13.3% by 2025 -- Capital expenditure of 2.4% of revenue in 2022 and 2.2% in the following three years -- Small, annual bolt-ons capped at EUR50 million in 2023-2025, all cash-funded -- Working capital outflow in 2022, mainly due to inflation and upfront investment in construction activities -- Full RCF paydown over 2023 and 2024 RECOVERY ASSUPTIONS: A going concern (GC) EBITDA of EUR300 million, compared with 2022 pro forma post-acquisition EBITDA of EUR400 million is assumed, implying a discount rate of about 33%. Financial distress is likely to occur if Circet loses one or two customers that account for10%-20% revenue, coupled with erosion in EBITDA margin toward the industry average (approximately 10%) from the current double digits. Its cash flow calculation shows with the assumed GC EBITDA Circet is still able to remain cash flow-neutral as a GC. An enterprise value (EV) multiple of 5.0x is used to calculate a post-reorganisation valuation, which reflects Circet's absolute small size (though sizable relative to peers') and a business model that is exposed to regulations, TMT development and concentration in customers. Circet's debt comprises the RCF, TLB, and a small amount of local bank lines. The RCF carries a springing covenant (net senior secured debt leverage of under 9.0x) when utilisation exceeds 40%. Fitch does not expect any breach of covenant with its GC EBITDA assumption. Therefore, the RCF is assumed to be fully drawn at EUR300 million. Fitch also considered the factoring utilisation of EUR160 million in the recovery analysis. Its analysis results in an instrument rating of 'BB-' with a Recovery Rating of 'RR3'. Based on its assumptions used for recovery, its waterfall calculation implies a 57% recovery. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - EBITDA leverage below 4.5x on a sustained basis - FFO gross leverage below 5.5x on a sustained basis - FCF margin above 5% on a sustained basis - Increasing share of life-of-contract revenue and improving contract length Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDA leverage above 5.5x - Failing to deliver an FFO gross leverage below 6.5x before end-2022 - FCF margin below 2.5% - Loss of contracts with key customers LIQUIDITY AND DEBT STRUCTURE Ample Liquidity: Fitch expects Circet to end 2022 with approximately EUR100 million cash, after its adjustment for restricted cash. Fitch consider the internally generated cash more than sufficient to sustain working capital swings mainly resulting from project deployment process. The liquidity position is additionally supported by the EUR64 million undrawn portion of RCF of after the US acquisition. On the back of solid cash generation, Fitch anticipates gradual cash build-up in the coming years to more than EUR200 million by 2023, which will give the group some deleveraging capacity. Distant Balloon Debt Maturity: The TLB and RCF are both floating-rate and due in 2028 and 2029, respectively, and comprise the majority of debt. Circet has overdraft and bank borrowings. Fitch forecasts Circet's future bolt-on acquisitions to be self-financed and does not expect it to face significant, imminent debt maturity and refinancing needs over the rating horizon. Financial hedging instruments are in place for part of the debt obligation, which mitigates the risk from rising benchmark rates. Circet also has a factoring line of around EUR160 million. ISSUER PROFILE Cirect Europe owns France-based Odyssee, which is the number one provider of telecom infrastructure services for telecom operators in France and now has leading positions in several other European countries. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery ----------- ------ -------- Circet Europe SAS LT IDR B+ Affirmed senior secured LT BB- Affirmed RR3 ============= G E O R G I A ============= GEORGIA GLOBAL: Fitch Hikes LongTerm IDR to 'BB-', Outlook Stable ----------------------------------------------------------------- Fitch Ratings has upgraded Georgia Global Utilities JSC's (GGU) Long-Term Issuer Default Rating (IDR) to 'BB-' from 'B+', and removed it from Rating Watch Evolving (RWE). The Outlook is Stable. The upgrade reflects the completion of the acquisition of GGU by FCC Aqualia, S.A. (BBB-/Stable), including the repayment of GGU's USD250 million bond and spin-off of its independent renewable assets. Fitch views the strategic incentives for Aqualia to support its weaker subsidiary GGU as moderate, resulting in a one-notch uplift of the IDR from GGU's Standalone Credit Profile (SCP) of 'b+' under its Parent and Subsidiary Linkage Criteria (PSL). Fitch sees no material changes to the debt capacity and SCP of GGU post de-merger. The Stable Outlook reflects Fitch's expectation that GGU will maintain credit metrics comfortably within its rating sensitivities for the 'b+' SCP during 2022-2025. KEY RATING DRIVERS Holding Company: GGU is a holding company which, following the de-merger of its independent renewable assets in 2022, consolidates Georgia Water and Power LLC (GWP), Rustavi Water LLC, Gardabani Sewage Treatment LLC, Saguramo Energy LLC, Georgian Engineering and Management Company LLC and Georgian Energy Trading Company LLC (GETC, electricity trading arm of the group). Medium Links with Aqualia: Fitch expects a reasonable financial contribution from GGU to the consolidated Aqualia group. In our view GGU offers moderate growth potential for Aqualia, for instance, given the subsidiary's investment requirements to modernise its water infrastructure, to shrink large water losses and to reduce own electricity consumption. The rating uplift under the PSL analysis therefore reflects its view of Aqualia's medium strategic incentives to support GGU, while Fitch assesses both the legal and the operational incentives to support as low. Non-recourse Subsidiary: Fitch expects Aqualia to hold GGU as a non-recourse subsidiary in the medium term, with its rating case including the repayment of Aqualia's shareholder loan in 2024 through the issue of a new bond at GGU level with restricted terms similar to its old bond called in 2022. Improved Capital Structure in 2022: After the bond repayment and the spin-off of the independent renewable assets in September 2022, GGU holds no financial debt other than Aqualia's USD164 million shareholder loan, and Fitch estimates funds from operations (FFO) net leverage (excl. connection fees) at below its positive rating sensitivity of 3.5x at end-2022 (end-2021: 4.6x). The deleveraging was driven by the improved capital structure post-transaction and positive foreign-exchange (FX) movements in 2022. Unchanged Debt Capacity: Fitch does not see the spin-off of the independent renewable energy assets entailing a significant change to GGU's underlying business risk. While this leaves GGU with a less diversified business mix, its credit profile is supported by a higher share of regulated earnings (on average around 80% of EBITDA in its rating case), further driven by a ramp-up of capex (GEL160 million a year) estimated by GGU for the 2024-2026 regulatory period (RP). No Visibility on Third RP: There is no visibility yet on the main regulatory parameters for the next RP of 2024-2026. If GGU's investment plan is approved by the regulator, Fitch foresees regulated water revenues increasing on average 30% versus the previous RP. The increased capex may also support higher electricity revenues as improving asset quality could bring higher volumes of electricity for sale. Credit Metrics within Guidelines: Fitch forecasts FFO net leverage (excl. connection fees) to gradually increase up to 3.7x in 2024 and 2025, which is still close to the positive sensitivity for the SCP. This is below Aqualia's long-term net debt / EBITDA target of 4.0x for GGU. Its forecasts consider positive price dynamics in the electricity segment as well as GGU's indication of no dividend distributions to Aqualia in 2022 and 2023. The gradual increase in leverage reflects the capex ramp-up in 2023-2025 and Fitch's assumption that dividends will be reinstated in 2024 once the bond issue of GGU is launched and regulatory visibility improves. FX Risk Could Worsen Post-Bond: GGU's stream of US dollar-denominated revenues has reduced following the spin-off of the independent renewable assets. Fitch expects GGU to issue bonds in foreign currency in 2024, potentially resulting in higher FX risk. A potential mismatch between coupon payments and its US dollar-denominated revenues would be credit-negative. Fitch expects a weakening of the Georgian lari against the US dollar over the rating horizon. Its forecasts assume a negative FX impact on GGU's debt and interest, and conversely, a positive impact on US dollar-denominated revenues. GWP Paramount for GGU: Fitch expects GWP to represent over 90% of GGU's total revenues. The company is a regulated water utility with a natural monopoly in Tbilsi and ownership over the water infrastructure. The remaining business is electricity sales, with GWP operating hydro power plants with an installed capacity of 145MW linked to the water utility (out of 149 MW in total for GGU). Less than half of GWP's generated electricity is for own consumption, while excess electricity is sold predominantly through bilateral agreements with direct customers. Any remaining portion is exposed to merchant risk. DERIVATION SUMMARY GGU's business mix combines a regulated water utility business and hydroelectric generation assets. The exposure to merchant risk in its electricity business is mitigated by the large share of regulated earnings of the water segment, which is based on a regulated asset base (RAB)-framework. A close peer of GGU is JSC Energo-Pro Georgia, a subsidiary of Energo-Pro a.s. (EPas, BB-/Stable), which distributes electricity to all regions of Georgia except Tbilisi. EPas is a utility headquartered in the Czech Republic with operating companies in Bulgaria, Georgia and Turkiye. Its core activities are power distribution, grid support services and electricity generation. GGU is comparable to European water utilities such as Miejskie Wodociagi i Kanalizacja w Bydgoszczy Sp. z o.o. (MWiK, BBB/Stable), and Aquanet S.A. (BBB+/Stable). These companies are mainly differentiated from GGU by more supportive regulation. Bulgarian Energy Holding EAD (BB/Positive) is significantly larger and more diversified with strong sovereign support benefiting its rating. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Total revenues to average GEL262 million a year in 2022-2025 - EBITDA margin on average at 63% during 2022-2025 - Capex averaging GEL144 million a year over 2022-2025 - No distributions in 2022-2023. Fitch assumes dividends of GEL35 million per year over 2024-2025 - New bond issue of around USD 250million in 2024 at GGU level with restricted terms similar to old bond (i.e. ring-fenced structure) - Georgian lari/US dollar average exchange rate of 3 in 2023 and 3.25 during 2024-2025 based on Fitch's FX forecasts - Water utility business to see allowed revenues increase on average 30% in the next RP (versus last RP) - Electricity business to see blended power price on average of about 19 GELTetri/kWh in 2023-2025 based on Fitch's expectations RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Stronger links between GGU and Aqualia could lead to an upgrade of GGU's IDR - A positive revision of GGU's SCP could lead to an upgrade of GGU's IDR For the SCP - Improved FFO net leverage (excluding connection fees) sustainably below 3.5x if accompanied by a consistent financial policy - Improved business risk resulting from a longer record of supportive regulation, a step improvement in asset quality (ie significantly smaller network losses or lower own electricity consumption), or a sustained positive effect resulting from the launch of organised electricity markets Factors that could, individually or collectively, lead to negative rating action/downgrade: - A reassessment of Aqualia's strategic incentives to support GGU as 'low' would imply a standalone rating approach for GGU and would lead to a downgrade of its IDR - A negative revision of GGU's SCP could lead to a downgrade of GGU's IDR For the SCP - FFO net leverage (excluding connection fees) above 4.5x and FFO interest coverage (excluding connection fees) below 2.5x on a sustained basis - Higher business risk - Significantly lower-than expected allowed revenues from the water utility business in the next RP, a sustained reduction in profitability and cash flow generation (eg through a failure to shrink water losses or deterioration in cash collection rates); an aggressive financial policy with increased dividends; or a material increase in exposure to foreign-currency fluctuations LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of November 2022, GGU held cash and cash equivalents of GEL41 million, which is sufficient to cover negative free cash flows in 2023. GGU's debt includes almost exclusively the USD164 million shareholder loan maturing in August 2024. Fitch expects GGU to refinance the shareholder loan with proceeds from an upcoming bond issue. Fitch understands from management that Aqualia may extend the maturity of the shareholder loan by up to two years if capital markets do not offer attractive cost of financing. As a result, Fitch assesses GGU's liquidity position as adequate, also considering the possibility of deferring the refinancing beyond 2025. An adverse FX development increasing interest payments is mitigated by US dollar-denominated revenues from the sale of electricity. ISSUER PROFILE GGU is a water utility and renewable energy business that supplies potable water and provides wastewater collection and processing services to almost 1.4 million people in Georgia. More than half of the electricity generated by GGU is sold to third parties, while the remaining electricity is used by its water supply and sanitation services business for internal consumption to power its water distribution network. ESG CONSIDERATIONS Georgia Global Utilities JSC has an ESG Relevance Score of '4' for water & wastewater management, due to heavily worn-out water infrastructure and large water losses, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Georgia Global Utilities JSC LT IDR BB- Upgrade B+ ============= I R E L A N D ============= JUBILEE CLO 2018-XX: Fitch Affirms B-sf Rating on Class F Debt -------------------------------------------------------------- Fitch Ratings has revised the Outlook on five tranches of Jubilee CLO 2018-XX DAC to Stable from Positive and affirmed all ratings. Entity/Debt Rating Prior ----------- ------ ----- Jubilee CLO 2018-XX DAC A XS1826049097 LT AAAsf Affirmed AAAsf B-1 XS1826050426 LT AAsf Affirmed AAsf B-2 XS1826049683 LT AAsf Affirmed AAsf B-3 XS1834758861 LT AAsf Affirmed AAsf C-1 XS1826051077 LT Asf Affirmed Asf C-2 XS1834758192 LT Asf Affirmed Asf D XS1826051663 LT BBBsf Affirmed BBBsf E XS1826052471 LT BBsf Affirmed BBsf F XS1826052638 LT B-sf Affirmed B-sf TRANSACTION SUMMARY Jubilee CLO 2018-XX DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by Alcentra Ltd and exited its reinvestment period in July 2022. KEY RATING DRIVERS Reinvestment Period Exited: The transaction exited its reinvestment period in July 2022. The transaction is passing all its tests (portfolio profile, collateral quality and coverage tests) so the manager can continue to reinvest unscheduled principal proceeds and sale proceeds from credit-risk and credit improved obligations, subject to compliance with the reinvestment criteria. Given the manager's ability to reinvest, Fitch's analysis is based on a stressed portfolio run testing all the points in the matrix. Limited Deleveraging Prospects: The Stable Outlooks on all notes reflect limited deleveraging prospects as long as the deal can still reinvest. Even if reinvestment becomes constrained due to tests failing, Fitch expects deleveraging to remain limited in the next 12-18 months with few assets maturing in 2023. The Stable Outlooks also reflect the macroeconomic headwinds the sector currently faces. Affirmation Reflects Stable Performance: The affirmation was driven by the transaction's stable performance. The transaction is passing all relevant tests. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 3.33% excluding non-rated assets, as calculated by Fitch, below the 7.5% limit. The transaction is 0.12% below par and the positive default rate cushion at the current ratings using the current portfolio supports the affirmation. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/'B-'. The reported weighted average rating factor of the current portfolio was 24.80 as of 5 December 2022, against a covenanted maximum of 28.00. High Recovery Expectations: Senior secured obligations comprise 99% of the portfolio, as calculated by the trustee. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. Fitch calculates the weighted average recovery rate (WARR) at 62.7%. The Fitch WARR reported by the trustee for the current portfolio was 62.5% as of 05 December 2022, which compares favourably with the covenanted minimum of 54.00%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration is 15.8%, and no obligor represents more than 1.9% of the portfolio balance, as reported by the trustee. Cash Flow Analysis: Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls and the various structural features of the transaction, and to assess their effectiveness, including the structural protection provided by excess spread diverted through the par-value and interest-coverage tests. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the current portfolio would result in no rating changes to the notes. Based on the actual portfolio, downgrades may occur if the loss expectation of the current portfolio is larger than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, there is a cushion of one notch for the class C and E notes, two notches for the class B notes, four notches for the class D notes and five notches for the class F notes. If the cushion between the identified portfolio and the Fitch-stressed portfolio was eroded, due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the stressed portfolio would result in a one- to two-notch downgrades for the class A, B, C, D, F notes and a four-notch downgrade for the class E notes. Factors that could, individually or collectively, lead to positive rating action/upgrade: A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would result in upgrades of no more than three notches for the class B, C, D, E notes, five notches for the class F notes, and no change to the class A notes. Upgrades may occur on better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. TRANSACTION SUMMARY Jubilee CLO 2018-XX DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by Alcentra Ltd and exited its reinvestment period in July 2022. KEY RATING DRIVERS Reinvestment Period Exited: The transaction exited its reinvestment period in July 2022. The transaction is passing all its tests (portfolio profile, collateral quality and coverage tests) so the manager can continue to reinvest unscheduled principal proceeds and sale proceeds from credit-risk and credit improved obligations, subject to compliance with the reinvestment criteria. Given the manager's ability to reinvest, Fitch's analysis is based on a stressed portfolio run testing all the points in the matrix. Limited Deleveraging Prospects: The Stable Outlooks on all notes reflect limited deleveraging prospects as long as the deal can still reinvest. Even if reinvestment becomes constrained due to tests failing, Fitch expects deleveraging to remain limited in the next 12-18 months with few assets maturing in 2023. The Stable Outlooks also reflect the macroeconomic headwinds the sector currently faces. Affirmation Reflects Stable Performance: The affirmation was driven by the transaction's stable performance. The transaction is passing all relevant tests. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 3.33% excluding non-rated assets, as calculated by Fitch, below the 7.5% limit. The transaction is 0.12% below par and the positive default rate cushion at the current ratings using the current portfolio supports the affirmation. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/'B-'. The reported weighted average rating factor of the current portfolio was 24.80 as of 5 December 2022, against a covenanted maximum of 28.00. High Recovery Expectations: Senior secured obligations comprise 99% of the portfolio, as calculated by the trustee. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. Fitch calculates the weighted average recovery rate (WARR) at 62.7%. The Fitch WARR reported by the trustee for the current portfolio was 62.5% as of 05 December 2022, which compares favourably with the covenanted minimum of 54.00%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration is 15.8%, and no obligor represents more than 1.9% of the portfolio balance, as reported by the trustee. Cash Flow Analysis: Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls and the various structural features of the transaction, and to assess their effectiveness, including the structural protection provided by excess spread diverted through the par-value and interest-coverage tests. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the current portfolio would result in no rating changes to the notes. Based on the actual portfolio, downgrades may occur if the loss expectation of the current portfolio is larger than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, there is a cushion of one notch for the class C and E notes, two notches for the class B notes, four notches for the class D notes and five notches for the class F notes. If the cushion between the identified portfolio and the Fitch-stressed portfolio was eroded, due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the stressed portfolio would result in a one- to two-notch downgrades for the class A, B, C, D, F notes and a four-notch downgrade for the class E notes. Factors that could, individually or collectively, lead to positive rating action/upgrade: A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would result in upgrades of no more than three notches for the class B, C, D, E notes, five notches for the class F notes, and no change to the class A notes. Upgrades may occur on better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. =============== P O R T U G A L =============== ENERGIAS DE PORTUGAL: S&P Rates New Green Hybrid Bond 'BB+' ----------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue rating to the undated, optionally deferrable, and subordinated green hybrid capital securities to be issued by EDP - Energias de Portugal S.A. (BBB/Stable/A-2). The hybrid amount remains subject to market conditions, but S&P understands it will be a benchmark size (EUR500 million or more). The new issue is to be sized so that EDP's total hybrid capital remains equal to its current level of at least EUR3.75 billion, which is less than 15% of capitalization. The proposed green hybrid is intended to refinance the EUR1 billion hybrid with a first call date in January 2024. Therefore, S&P will revise the equity content of the NC 2024 hybrid to minimal for an equivalent of the amount raised from the new hybrid issue upon completion of the transaction. Alongside the proposed issuance, EDP will launch a tender offer on the NC 2024 hybrids capped at an amount equal to the new hybrid issue's size. S&P understands that, after the replacement and liability management transactions, the group intends to maintain the total amount of hybrids at EUR3.75 billion. If EDP issues the new security and completes the liability management transaction, S&P will: -- Assign intermediate equity content to the new instrument until the first reset date. -- Revise the equity content on the NC 2024 hybrid to minimal for an equivalent of the amount raised for the new hybrid issue. S&P said, "The proposed securities will have intermediate equity content until their first reset date, which we understand will fall no sooner than five years and three months from issuance (meaning the first call date is no sooner than five years). During this period, the securities meet our criteria in terms of ability to absorb losses or conserve cash if needed." S&P derives its 'BB+' issue rating on the proposed securities by applying two downward notches from its 'BBB' issuer credit rating on EDP. These notches comprise: -- A one-notch deduction for subordination because the rating on EDP is at 'BBB' or above; and -- A one-notch deduction to reflect payment flexibility--the deferral of interest is optional. S&P said, "The number of downward notches applied to the issue rating reflects our view that the issuer is unlikely to defer interest. Should our view change, we could increase the number of downward notches. "In addition, to reflect our view of the proposed securities' intermediate equity content, we allocate 50% of the related payments on these securities as a fixed charge, and 50% as equivalent to a common dividend, in line with our hybrid capital criteria. The 50% treatment of principal and accrued interest also applies to our adjustment of debt. "EDP can redeem the securities for cash on any date in the three months before their reset date, then on every interest payment date. Although the proposed securities are long-dated, the company can call them at any time for events that are external or remote (such as a change in tax, gross-up, rating, or change of control; or a clean-up call). In our view, the statement of intent, combined with EDP's commitment to reduce leverage, mitigates the group's ability to repurchase the notes on the open market. In addition, EDP has the ability to call the instrument any time before the first call date at a make-whole premium. It has stated its intention not to redeem the instrument during this make-whole period, and we do not think this type of clause makes it any more likely that EDP will do so. Accordingly, we do not view it as a call feature in our hybrid analysis, although it is referred to as a make-whole call clause in the hybrid documentation. "We understand that the interest on the proposed securities will increase 25 basis points (bps) five years after the first reset date, and a further 75 bps at the second step-up date 20 years after the first reset date assuming the rating remains above 'BBB-'. We view any step-up above 25 bps as presenting an economic incentive to redeem the instrument, and therefore treat the date of the second step-up as the instrument's effective maturity. For issuers in the 'BBB' category, we view a remaining life of 20 years as sufficient to support credit quality and achieve intermediate equity content. The instrument's documentation specifies that if we were to downgrade EDP to speculative-grade--that is, 'BB+' or below--the economic maturity of the hybrid securities would diminish by five years, while the instrument's permanence would be unaffected. "At the first reset date, the instrument will have less than 20 years (less than 15 if EDP is speculative-grade) to effective maturity. Therefore, we will no longer view equity content as intermediate. We consider that the loss of equity content could be an incentive to redeem. However, this should not prevent us from assessing the instrument as intermediate until the first reset date, since EDP has stated its willingness to maintain or replace the securities, despite the loss of the preferential treatment, in a statement of intent." Key Factors In S&P's Assessment Of The Instruments' Deferability S&P said, "In our view, the issuer's option to defer payment on the proposed securities is discretionary. This means it may elect not to pay accrued interest on an interest payment date because doing so is not an event of default. However, EDP will have to settle any deferred interest payment outstanding in cash if it declares or pays an equity dividend or interest on equally ranking securities and it redeems or repurchases shares or equally ranking securities. We see this as a negative factor." Still, this condition remains acceptable under our methodology because once the issuer has settled the deferred amount, it can still choose to defer on the next interest payment date. Key Factors In S&P's Assessment Of The Instruments' Subordination The proposed securities (and coupons) constitute direct, unsecured, and subordinated obligations of EDP, ranking senior to its common shares. =========== S E R B I A =========== PINKI: Files for Liquidation, Peter Djukic Tapped ------------------------------------------------- Djordje Jajcanin at SeeNews reports that the operator of Pinki, a sports and culture hall located in the Serbian capital Belgrade, has filed for liquidation, according to a bourse filing on Jan. 4. Peter Djukic has been named liquidation administrator, a notice published on the website of the Belgrade Stock Exchange reads, SeeNews notes. Pinki's largest shareholder is NIS with 48.7%, followed by MK Holding with 18%, and Radomir Maric with 15.2%, SeeNews relays, citing the Central Register of Securities. =========== S W E D E N =========== PERSTORP HOLDING: S&P Withdraws 'B-' LongTerm Issuer Credit Rating ------------------------------------------------------------------ S&P Global Ratings withdrew its 'B-' long-term issuer credit rating on Perstorp Holding AB (publ) (Perstorp) at the company's request. The rating was on CreditWatch with positive implications, where it was placed on May 30, 2022, at the time of the withdrawal. On Oct. 11, 2022, Malaysia-based Petronas Chemical Group Berhad (PCG) completed its acquisition of Perstorp. Following this, all outstanding debt was fully repaid. S&P said, "PCG announced the agreement to acquire the entire equity interest in Perstorp on May 17, 2022. In our May 30 review, we noted that the CreditWatch resolution would depend on our assessment of Perstorp's status within PCG, as well as its future stand-alone credit quality. "S&P Global Ratings did not resolve the CreditWatch placement and determine accurate final ratings before the withdrawal because we lacked necessary information at the time of the request." =========== T U R K E Y =========== QNB FINANS: Fitch Affirms 'B-' Foreign Currency IDR, Outlook Neg. ----------------------------------------------------------------- Fitch Ratings has affirmed three Turkish bank subsidiaries at 'B-' Long-Term Foreign-Currency Issuer Default Ratings (LTFC IDRs). They are leasing companies - Deniz Finansal Kiralama A.S. (Deniz Leasing) and QNB Finans Finansal Kiralama A.S. (QNB Leasing) - and factoring company - QNB Finans Faktoring A.S. (QNB Factoring). The Outlooks on all LTFC IDRs are Negative, mirroring those on their respective parents. KEY RATING DRIVERS Support-Driven Ratings: The ratings of Deniz Leasing, QNB Leasing and QNB Factoring are equalised with those of their parents, reflecting Fitch's view that they are core and highly integrated subsidiaries. The ratings are underpinned by potential shareholder support, but capped at 'B-' by intervention risk. The Negative Outlook on the Long-Term IDRs mirrors those on their parents. Highly Integrated Subsidiaries: All three subsidiaries share the same branding as their parents, are highly integrated into their banking groups in risk and IT systems, and draw most of their, board, senior management and underwriting practices from their parent banks. The subsidiaries benefit from the franchises of their parent banks and mostly share the same customer base with a high share of referrals from their respective groups. High Support Propensity, Limited Ability: Cost of support would be limited as the subsidiaries are small compared with their parents and total assets usually do not exceed 3% of group assets. This, together with other support factors listed above, means that Fitch believes that parents' propensity support to the subsidiaries remains very high. Ability to support is, however, limited by the respective parents' creditworthiness. Stable National Ratings: The affirmation of all National Rating with a Stable Outlook mirrors their respective parent's National ratings and reflects its view that the three subsidiaries' creditworthiness in local currency relative to other Turkish issuers' is unchanged. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: The subsidiaries' Long-Term IDRs are sensitive to a downgrade of their parents' Long-Term IDRs or further deterioration in the operating environment triggered by a sovereign downgrade. A downgrade in the parents' National Ratings would also likely be mirrored in the subsidiaries' ratings. The ratings could be notched down from their respective parents on material deterioration in parents' propensity or ability to support or if the subsidiaries become materially larger relative to the respective banks' ability to provide support. The ratings could be notched down from their respective parents if the subsidiaries' strategic importance is materially reduced, for example, through a substantial reduction in business referrals, reduced operational and management integration or ownership or a prolonged period of underperformance. Factors that could, individually or collectively, lead to positive rating action/upgrade: An upgrade of the subsidiaries' Long-Term IDRs is unlikely in the short term, given the Negative Outlook, but an upgrade of the relevant parent's ratings would be reflected on the subsidiary's ratings. This would likely be the result of improvements in Turkiye's operating environment. ESG CONSIDERATIONS Unless otherwise stated, the highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- QNB Finans Finansal Kiralama A.S. LT IDR B- Affirmed B- ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Natl LT AA(tur)Affirmed AA(tur) Shareholder Support b- Affirmed b- QNB Finans Faktoring A.S. LT IDR B- Affirmed B- ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Natl LT AA(tur)Affirmed AA(tur) Shareholder Support b- Affirmed b- Deniz Finansal Kiralama A.S. LT IDR B- Affirmed B- ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Natl LT AA(tur)Affirmed AA(tur) Shareholder Support b- Affirmed b- =========================== U N I T E D K I N G D O M =========================== BRITISHVOLT: Glencore, Tata Express Interest to Buy Factory Site ---------------------------------------------------------------- Harry Dempsey, Peter Campbell, Michael O'Dwyer and Jim Pickard at The Financial Times report that more than a dozen companies have expressed interest in buying Britishvolt's Northumberland factory site only hours after the battery group collapsed, as politicians warned the failure was a "disaster for the UK car industry". Britishvolt fell into administration on Jan. 17 after a last-ditch fundraising effort was blocked by its creditors, the FT relates. Its largest asset is a site in Blyth, in north-east England, which was to be the home of a GBP3.8 billion battery gigafactory that would form a key part of the UK's electric car industry, the FT notes. Businesses including FTSE 100 miner Glencore and Jaguar Land Rover owner Tata Motors have expressed interest in the site, according to people with knowledge of the discussions, as well as several other car manufacturers and wind turbine makers, the FT discloses. According to the FT, although the site is currently empty, its deepwater port, access to clean energy and rail links make it ideal for a large-scale battery factory. Graham Stuart, climate minister, said the government was working with the local authority and potential investors on the sale, adding that ministers were not "giving up" on the automotive industry and insisted plans to scale up the EV industry were "greater than ever", the FT relates. The electric car and battery industry represents a big economic opportunity for the UK, which is set to ban sales of new petrol and diesel vehicles by 2030, but has fallen behind European rivals in developing gigafactories, the FT notes. Mr. Stuart, as cited by the FT, said the government had offered "significant support" to Britishvolt through its Automotive Transformation Fund but that certain criteria to secure the funds -- including private sector investment -- had not been met. Administrators at EY have been seeking buyers for the rump of Britishvolt's business, which consists of the technology behind its prototype batteries as well as 26 prized staff behind its intellectual property, the FT discloses. Katch Fund Solutions, a secured creditor of Britishvolt, has separately appointed Begbies Traynor as receiver over the Blyth site, the FT relates. Katch's loan to the company was secured against the land, railhead and portacabins at the site, according to the FT. A receiver has powers to sell assets to recover money owed to a secured lender, the FT states. Surplus funds from any sale would then go to Britishvolt shareholders, the FT notes. The two likely outcomes are a packaged sale of the intellectual property and land or simply a sale of the land, the FT relays, citing two people familiar with the matter, but EY has a limited opportunity to make the former happen. The preferred bidder for the Britishvolt site must be planning to build a battery manufacturing plant and have at least GBP150 million of working capital, a requirement that needs to be met to access the government's pledged GBP100 million grant for the project, according to the FT. CARZAM: Creditors to Get Money Back, Administrators' Report Shows ----------------------------------------------------------------- Ben Salisbury at AIM Group reports that creditors of British online automotive business Carzam which went bust in June are unlikely to get any money back, according to a progress report from administrators. In total, 48 creditors were owed GBP18.9 million (US$23.1 million) when joint administrators, Adam Stephens and Greg Palfrey, of Evelyn Partners LLP published a statement of affairs in November, AIM Group relates. Co-founders Peter Waddell and John Bailey accounted for GBP12 million of this figure, AIM Group discloses. It now looks like they will get nothing back, AIM Group says. The progress report shows assets of just GBP310,000, which is likely to all go to lawyers and administrators in fees, AIM Group states. The list of creditors reveals that Waddell is personally owed GBP2 million and over GBP4 million through Peter Waddell Holdco Ltd and Bailey was owed GBP6.25 million, AIM Group notes. When Carzam announced it was being put into administration just 18 months after launching, Mr. Waddell blamed Cazoo for the change in investors attitude that meant no more funding was forthcoming, AIM Group recounts. He said Carzam was unable to raise sufficient funds because the fall in Cazoo's share price meant investors shied away from investing more in a similar business model, according to AIM Group. CASTELL PLC 2021-1: S&P Raises Class F-Dfrd Notes Rating to 'BB+' ----------------------------------------------------------------- S&P Global Ratings raised its credit ratings on Castell 2021-1 PLC's class B-Dfrd notes to 'AA+ (sf)' from 'AA (sf)', C-Dfrd notes to 'AA (sf)' from 'A (sf)', D-Dfrd notes to 'A (sf)' from 'BBB (sf)', E-Dfrd notes to 'BBB (sf)' from 'BB (sf)', and F-Dfrd notes to 'BB+ (sf)' from 'B- (sf)'. At the same time, S&P affirmed its 'AAA (sf)' rating on the class A notes. The transaction is backed by a pool of second-lien mortgage loans secured on properties in the U.K. The rating actions reflect the decline of the pool factor since closing due to prepayments. As a result, because the transaction has amortized sequentially since closing, credit enhancement for the outstanding notes has significantly increased. At the same time, the required credit coverage at all rating levels has declined since closing. S&P said, "Since closing, our weighted-average foreclosure frequency (WAFF) assumptions have decreased at all rating levels to 'BBB' from 'AAA'. The weighted-average indexed current loan-to-value (LTV) ratio of the pool has declined by three percentage points since closing, driven by a steady increase in house prices. The reduction in the weighted-average indexed current LTV ratio has a positive effect on our WAFF assumptions as the LTV ratio applied is calculated with a weighting of 80% of the original LTV ratio and 20% of the current LTV ratio. The WAFF has increased at all rating levels to 'B' from 'BB' due to the 1.5 percentage point increase in arrears since closing, with an increase in arrears of greater than 90 days of 0.7 percentage points. "This reduction in the weighted-average current LTV ratio has also led to a reduction in our weighted-average loss severity (WALS) assumptions." Credit Analysis Results RATING LEVEL WAFF (%) WALS (%) CREDIT COVERAGE (%) AAA 26.62 88.12 23.46 AA 18.39 83.27 15.31 A 14.13 72.27 10.21 BBB 10.04 63.23 6.35 BB 5.73 55.63 3.19 B 4.77 47.55 2.27 Loan-level arrears in the transaction have increased since closing and currently stand at 1.8%. Total arrears are above our U.K. prime index, while prepayments are in line with it. Cumulative losses currently stand at £109,578. There are no counterparty constraints on the ratings on the notes in this transaction. The replacement language in the documentation is in line with S&P's counterparty criteria. S&P said, "Our credit and cash flow results indicate that the available credit enhancement for the class A notes continues to be commensurate with the assigned rating. We therefore affirmed our 'AAA (sf)' rating on the class A notes. "The upgrades of the class B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, and F-Dfrd notes reflect the decline of required credit coverage at all rating levels since closing. At the same time, prepayments have significantly increased credit enhancement for the asset-backed notes. As a result, our cash flow analysis indicated that the class B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, and F-Dfrd notes could withstand stresses at higher ratings than those previously assigned. We therefore raised our ratings on these classes of notes. "The rating on the class B-Dfrd notes is below that indicated by our cash flow analysis. These notes are rated according to the payment of ultimate interest and principal, and we do not believe a deferrable note is commensurate with the definition of a 'AAA' rating. "The ratings on the class C-Dfrd, D-Dfrd, and F-Dfrd notes are below the level indicated by our standard cash flow analysis. The assigned ratings reflect sensitivities related to higher levels of defaults due to macroeconomic factors (such as cost of living pressures on borrowers). "We expect U.K. inflation to remain high for the rest of 2023. Although high inflation is overall credit negative for all borrowers, inevitably some borrowers will be more negatively affected than others, and to the extent inflationary pressures materialize more quickly or more severely than currently expected, risks may emerge. We consider the borrowers in the transaction to be prime and, as such, will generally be resilient to inflationary pressures. Of the borrowers in this transaction, 90% are paying a fixed rate of interest on average until 2025. As a result, in the short to medium term borrowers are protected from rate rises, but will be affected by cost of living pressures. As a result, we performed additional sensitivities related to higher levels of defaults due to macroeconomic factors (such as cost of living pressures on borrowers). The assigned ratings reflect the results of these sensitivities." EAT LOCAL: Seeks Direct Funding From Grey County Council -------------------------------------------------------- Chris Fell at CollingwoodToday.ca reports that struggling to remain financially viable, Eat Local Grey Bruce has asked Grey County council to provide US$25,000 in direct funding to help the group continue to operate. According to CollingwoodToday.ca, the local non-profit food cooperative that promotes healthy eating and locally grown and produced food recently announced that it is insolvent and may have to file for bankruptcy. In an effort to continue operating, the organization has launched a crowdfunding campaign, is trying to reorganize the business into a more sustainable model and is seeking new volunteers to revitalize the group, CollingwoodToday.ca relates. Representatives from the organization appeared as a delegation at Grey County council's meeting on Jan. 12 to ask for financial support moving forward, CollingwoodToday.ca states. Board secretary Marcelina Salazar and board director Kristine Hammel outlined the group's plight to county council, CollingwoodToday.ca notes. Ms. Salazar, as cited by CollingwoodToday.ca, said demand for the service exploded during the COVID-19 pandemic, in one week sales doubled for the group. However, interest has waned in recent months as businesses have reopened and life has returned to normal, CollingwoodToday.ca relays. The loss of revenue and an unexpected change of warehouse locations has resulted in serious financial issues, CollingwoodToday.ca states. The group has launched an online crowdfunding campaign in an effort to raise US$115,000 and, to date, over US$34,000 has been raised, CollingwoodToday.ca discloses. The campaign ends on Jan. 25, CollingwoodToday.ca says. The organization is also seeking new volunteers and customers to support the model, according to CollingwoodToday.ca. They asked for a US$20,000 grant from the county (conditional on a successful fundraising drive), as well as the county to cover the warehouse costs which are US$5,000, CollingwoodToday.ca notes. Ms. Hammel said the cooperative currently has participation from 50 farm grower households and 950 eater households, CollingwoodToday.ca relates. HERITAGE GLASS: Goes Into Creditors' Voluntary Liquidation ---------------------------------------------------------- David Tooley at Shropshire Star reports that a family owned glass company that suddenly collapsed leaving customers thousands of pounds out of pocket has decided to go into voluntary liquidation. Directors of Heritage Glass (Shrewsbury) held a board meeting on Jan. 17 and decided to place the company into a creditors' voluntary liquidation with a financial black hole estimated to be about GBP800,000, Shropshire Star relates. The company, based at Racecourse Crescent, Monkmoor, had been trading for 23 years, Shropshire Star. It has identified a Shropshire-based insolvency practitioner to handle the liquidation and to secure the company's assets, Shropshire Star discloses. The appointment of Nick West, of West Advisory, in Telford, is subject to confirmation by creditors, Shropshire Star states. Mr. West, as cited by Shropshire Star, said retail customers are classified as "unsecured creditors" and they are unlikely to get much if anything back. Details of the liquidation are being sent to all known creditors, including retail customers and trade customers, Shropshire Star notes. IN-TIME: Owed Millions to Creditors at Time of Administration ------------------------------------------------------------- Rebecca Butler at Professional Jeweller reports that watch and jewellery repair specialist, In-Time, owed millions to its creditors before the company was rescued by service retailer Timpson, according to documents filed on Companies House. Due to a lack of cash, the company was unable to make payments of staff wages on December 23, 2022, and In-Time was deemed unable to trade as a result, Professional Jeweller discloses. In-Time entered into administration on Jan. 5, at which time Geoffrey Paul Rowley and Anthony John Wright of FRP Advisory Trading Limited were appointed as administrators, Professional Jeweller recounts. The majority of the business and the company's assets were sold across two separate transactions, Professional Jeweller states. In-Time's watch and jewellery repair business was sold to service retailer Timpson for GBP150,000, Professional Jeweller notes. Meanwhile, the company's watch strap and bracelet business was sold to parent company Hirsch for GBP20,000, according to Professional Jeweller. It has now been revealed that the company's debts totalled millions, Professional Jeweller relays. In-Time owed staff GBP83,000 for arrears in wages, unpaid pension contributions and holiday pay, according to the report, Professional Jeweller notes. According to Professional Jeweller, the administrators anticipate that staff will be paid outstanding amounts in full, based on the information available at the time of writing the report. The new buyers have taken on repayment responsibilities for staff salaries for the month of December, Professional Jeweller says, citing the document. As highlighted in the Statement of Administrator's Proposal document, In-Time also owed HMRC GBP256,000 in respect to an outstanding Time-to-Pay arrangement, present VAT liabilities and employee-associated liabilities -- such as PAYE and National Insurance, Professional Jeweller discloses. An additional GBP1.25 million was owed to other creditors, including The Swatch Group, Seiko, Richemont, Cousins, National Association of Jewellers, Royal Mail and Connoisseurs, as well as a number of council offices, Professional Jeweller states. The company's secured creditor, Barclays bank, was paid out in full shortly after the appointment of the administrators, on completion of the business and asset sale, Professional Jeweller notes. The company's cash of GBP170,000 was used to settle the majority of this debt, while the outstanding balance of GBP27,000 was settled under a fixed charge distribution of GBP30,000 upon the completion of the business and asset sale, according to Professional Jeweller. Parent company, Hirsch, has provided funding to In-Time in recent years, resulting in an intercompany payable amount of GBP2 million, Professional Jeweller discloses. In-Time was struggling for a number of years prior to its collapse in December, Professional Jeweller recounts. The company has seen a steady decline in trading performance since 2019. In the 2019 Financial Year, In-Time was operating with a net profit of GBP52,000, Professional Jeweller notes. By FY20, the company was operating with a loss (-GBP293,000), Professional Jeweller discloses. This figure decreased further, to -GBP895,000 by the end of the 2021 Financial Year, Professional Jeweller states. According to Professional Jeweller, in the statement of administrator's proposal, submitted to Companies House, Rowley and Wright attribute the core contributors to the business's decreased financial performance to the insolvency of Debenhams in late 2020 and government lockdowns throughout the COVID-19 pandemic. When operations ceased, In-Time received extensive interest from potential buyers, and the decision was made to sell the business and assets via a pre-packaged administration, Professional Jeweller recounts. NORTHERN ROCK: Lawyers Seek Compensation for Mortgage Borrowers --------------------------------------------------------------- Emma Dunkley at The Financial Times reports that lawyers are seeking compensation of at least GBP150 million on behalf of thousands of mortgage borrowers who believe they have been unfairly charged high standard variable rates, after the loans were snapped up following the collapse of Northern Rock. According to the FT, Harcus Parker is representing more than 200,000 mortgage borrowers who argue they were kept stuck on rates of about 5% for more than a decade, even though interest rates plunged in the wake of the financial crisis and remained near record lows until a year ago. US private equity group Cerberus was among the companies that snapped up portfolios of home loans from Northern Rock after it was nationalised in the 2008 financial crisis, the FT notes. It now holds the mortgages through its Landmark brand, the FT states. Other companies that bought Northern Rock's mortgages include Topaz Finance Limited, which trades under the name Heliodor Mortgages, according to the FT. Harcus Parker has argued that these firms did not reduce the standard variable rate on these loans from 5%, even though the Bank of England cut the base rate to as low as 0.1% in 2020, the FT relates. Matthew Patching, a senior associate at Harcus Parker, said the firm is preparing to sue if claims are not settled before then, the FT notes. The move comes as the Bank of England continues to increase interest rates, forcing the standard variable mortgage rates even higher, the FT says. Harcus Parker has already issued proceedings against high street bank TSB over similar concerns that borrowers were left on high rates, the FT discloses. TSB bought GBP3.3 billion worth of Northern Rock mortgages covering 27,000 homeowners from Cerberus in 2015, grouping them under its Whistletree brand, the FT recounts. The law firm said TSB continued to charge Whistletree customers a standard variable rate that is more than double the amount it applied to its other customers on such a rate, according to the FT. A court hearing has been set for March to progress with a group litigation order for mortgage customers, the FT notes. ********* 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. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *