/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/230127.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 27, 2023, Vol. 24, No. 21 Headlines C R O A T I A ULJANIK: February 9 Deadline Set for Expressions of Interest F R A N C E [*] FRANCE: Company Insolvencies Up 49.9% to 42,500 in 2022 G E R M A N Y HES INT'L: Declared Bankrupt, Terminal to be Sold Through Auction ZENLOOP: Enters Insolvency Despite Last-Ditch Rescue Efforts I R E L A N D JUBILEE CLO 2015-XV: S&P Raises Class F Notes Rating to B(sf) L U X E M B O U R G EOS FINCO: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable N E T H E R L A N D S ADRIA MIDCO: Moody's Affirms 'B2' CFR & Alters Outlook to Negative CROWN VAN GELDER: Declared Bankrupt by Noord-Holland Court TELEFONICA EUROPE: S&P Rates New Hybrid Securities 'BB' S P A I N FOODCO BONDCO: Moody's Cuts CFR to Ca, Outlook Remains Negative PRONOVIAS: S&P Lowers ICR to 'CC' on Announced Recapitalization S W E D E N VERISURE HOLDING: S&P Rates EUR450MM Senior Secured Notes 'B' U N I T E D K I N G D O M 2 SISTERS: Factory Faces Closure, 730 Jobs at Risk ADVANZ PHARMA: Moody's Alters Outlook on 'B3' CFR to Positive ICONIC LABS: FCA Lifts Suspension of Shares on LSE PIRAEUS GROUP: S&P Withdraws 'B' ST Rating on Commercial Paper X X X X X X X X [*] BOOK REVIEW: Transnational Mergers and Acquisitions - - - - - ============= C R O A T I A ============= ULJANIK: February 9 Deadline Set for Expressions of Interest ------------------------------------------------------------ Annie Tsoneva at SeeNews reports that Croatia's bankrupt shipyard Uljanik Brodogradiliste said that its receiver is inviting expression of interest in the purchase of the company's entire 54.77% equity stake in local shipyard Uljanik Brodogradnja 1856 at a starting price of EUR27.6 million (US$30 million). The deadline for potential investors to submit expression of interest is Feb. 9, by 3:00 p.m. local time, SeeNews relays, citing an announcement published by the receiver on the webiste of Uljanik Brodogradiliste. The public call is based on a decision of creditors of Uljanik Brodogradiliste to offer the stake for sale in a tender rather than accept the proposal of Czech investor CE Industries for direct negotiations for the transaction, SeeNews notes. =========== F R A N C E =========== [*] FRANCE: Company Insolvencies Up 49.9% to 42,500 in 2022 ----------------------------------------------------------- EURACTIV reports that in 2022, some 42,500 French businesses shut up shop, accounting for an almost 50% insolvency increase compared to 2021, according to a report by data analytics consultancy Altares. This represents a 49.9% increase compared to 2021 -- a record figure that results from poor economic recovery since the start of the COVID-19 pandemic, EURACTIV notes. According to EURACTIV, insolvency numbers fell sharply between March 2020 and November 2021 as businesses heavily relied on government support programmes. As the cash tap runs dry and businesses have to start repaying state-backed loans, the number of insolvencies is going up again -- and though 2022 numbers remain below those of 2019, the speed at which they are recorded is significant, EURACTIV discloses. Generally, insolvencies have hurt the smallest businesses the most, EURACTIV states. Across Europe, 80% of all bankruptcies (1.6 million) in 2021 involved one-person companies, according to the European Commission -- and the same is true of France, EURACTIV notes. Yet Altares' data shows the situation is becoming increasingly worrying larger SMEs with 10-99 employees, EURACTIV relays. "3,214 SME insolvencies were recorded in 2022 compared to 1,804 in 2021, a surge of +78% over one year', the report reads. A third of these insolvencies occurred in the last three months of 2022, representing a 93% increase. "When SMEs fall, it is the whole local economic network that is impacted," Thierry Millon, who directed the study, told EURACTIV France. "They can no longer pay their suppliers, and the job loss is much greater across the value chain," he said. What's of particular concern to him is that some of these SMEs were economically sound to start with before they were forced to unwind. Soaring energy bills, low economic growth and the numerous financial constraints imposed by the repayment of state-guaranteed loans all contribute to this trend, according to EURACTIV. ============= G E R M A N Y ============= HES INT'L: Declared Bankrupt, Terminal to be Sold Through Auction ----------------------------------------------------------------- Rowena Edwards at Reuters reports that the bankruptcy of a major storage terminal planned in northwest Europe has supported regional tank storage rates for diesel and gasoline, just as European traders rush to fill up diesel tanks ahead of a Feb. 5 ban on Russian fuel. Earlier this month, the district court in Rotterdam declared the insolvency of the long-delayed HES Hartel Tank Terminal, to be developed in Europe's major trading port of Rotterdam, Reuters relates. The terminal would have offered 1.3 million cubic metres of storage capacity for gasoline, diesel, gasoil, jet fuel and biofuels, Reuters states. Oil major BP -- operator of the 400,000 barrel per day (bpd) Rotterdam refinery -- had planned to connect to the new terminal by pipeline, which was expected to reduce the company's demand for storage facilities elsewhere, Reuters notes. Originally planned to be operational from 2019, the HES Hartel tank terminal project ran into financial difficulties, Reuters discloses. According to Reuters, a number of setbacks, including the COVID-19 pandemic and a fire at the terminal, caused delays and additional costs, according to HES International. "Due to the delays, the intended user demanded new conditions which made the business case no longer viable," Reuters quotes Carl Hamm from law firm Borsboom & Hamm, administrator during the suspension of payment, and who was appointed trustee, as saying. Mr. Hamm, as cited by Reuters, the company was declared bankrupt and the terminal will be sold through an informal auction. It is expected to be sold in 3-6 months, but still needs considerable work and investment to finish it, he added, Reuters relates. "Unfortunately, it is no longer financially viable for HES International to invest the further significant amounts required to complete the HES Hartel Tank Terminal given the level of project finance indebtedness at the terminal level," Reuters quotes HES as saying. ZENLOOP: Enters Insolvency Despite Last-Ditch Rescue Efforts ------------------------------------------------------------ According to techeu's Callum Cyrus, Zenloop has reportedly went under despite last ditch efforts to stay afloat with additional debt financing. German customer journey software startup Zenloop and its founding squad of ex-Flaconi (the online perfume outlet) pioneers tried their hardest to make the product stick. Sadly, and despite venture support at seed and series A stage, it wasn't to be and German media is reporting Zenloop will close up having already entered insolvency, techeu relays, citing Gruenderszene. As the Berlin-HQed startup's suppliers wrestle over whatever is left, company lead Paul Schwarzenholz laid the blame on the final hour collapse of a crucial convertible loan deal, techeu relates. Mr. Schwarzenholz said Zenloop was agonisingly close to survival having sought a EUR500,000 bridge loan, techeu notes. The CEO argued this would've been enough runway for Zenloop to become profitable, but, unfortunately, its equity structure was already heavily populated, and shareholders couldn't agree on a way forward, techeu discloses. ============= I R E L A N D ============= JUBILEE CLO 2015-XV: S&P Raises Class F Notes Rating to B(sf) ------------------------------------------------------------- S&P Global Ratings raised its credit ratings on Jubilee CLO 2015-XV DAC's class C-R, D-R, E, and F notes. At the same time, S&P affirmed its ratings on the class A-R and B-R notes. The rating actions follow the application of our global corporate CLO criteria and its credit and cash flow analysis of the transaction based on the December 2022 trustee report as the transaction continues to amortize. S&P's ratings address timely payment of interest and ultimate payment of principal on the class A-R and B-R notes, and the ultimate payment of interest and principal on the class C-R, D-R, E, and F notes. Since S&P's previous review in November 2020: -- The weighted-average rating of the portfolio remains at 'B'. -- The portfolio has become less diversified, as the obligors decreased to 66 from 83. -- The portfolio's weighted-average life decreased to 2.49 years from 3.19 years. -- The percentage of 'CCC' rated assets has decreased to 5.33% from 10.42%. -- The scenario default rate has decreased for all rating scenarios as the pool becomes more concentrated with continued deleveraging. Portfolio Benchmarks CURRENT PREVIOUS REVIEW SPWARF 2,863.70 2,932.03 Default rate dispersion (%) 753.17 746.50 Weighted-average life (years) 2.49 3.19 Obligor diversity measure 44.12 56.12 Industry diversity measure 13.96 16.26 Regional diversity measure 1.08 1.10 SPWARF—S&P Global Ratings weighted-average rating factor. On the cash flow side: -- The reinvestment period for the transaction ended in July 2019. -- The class A-R notes have deleveraged so that only EUR10.4 million remains outstanding. -- No class of notes is deferring interest. All coverage tests are passing as of the December 2022 trustee report. Transaction Key Metrics CURRENT PREVIOUS REVIEW Total collateral amount (mil. EUR)* 181.52 237.92 Defaulted assets (mil. EUR) 0.36 0.36 Number of performing obligors 66 83 Portfolio weighted-average rating B B 'CCC' assets (%) 5.33 10.42 'AAA' WARR (%) 38.26 37.18 GBP assets (%) 1.87 1.42 *Performing assets plus cash and expected recoveries on defaulted assets. WARR--Weighted-average recovery rate. S&P said, "Following these developments, our model results show that the class C-R, D-R, E, and F notes benefit from a level of credit enhancement that is typically commensurate with higher ratings than those previously assigned. We have therefore raised our ratings on these classes of notes. At the same time, we have affirmed our ratings on the class A-R and B-R notes based on the results of our cash flow analysis. "On a standalone basis, the results of the cash flow analysis indicated higher ratings than those currently assigned for the class D-R, E, and F notes. However, under our supplemental tests, the ratings on class E and F notes are restricted to lower rating levels and could continue to be as the transaction continues to amortize, as it has since the end of the reinvestment period in 2019. We also considered the current macroeconomic conditions and the seniority of these classes of notes. Considering all of these factors, we have raised our ratings on the class D-R notes by three notches, class E by two notches, and class F notes by one notch." Counterparty, operational, and legal risks are adequately mitigated in line with S&P's criteria. Ratings List CLASS RATING TO RATING FROM RATINGS RAISED C-R AAA (sf) AA+ (sf) D-R AA+ (sf) A+ (sf) E BBB (sf) BB+ (sf) F B (sf) B- (sf) RATINGS AFFIRMED A-R AAA (sf) B-R AAA (sf) =================== L U X E M B O U R G =================== EOS FINCO: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable --------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating to global telecommunication materials distributor Eos Finco S.a.r.l. (ETC) and its 'B' issue rating to the term loan B (TLB) tranches, with a recovery rating of '3', indicating meaningful recovery prospects (50%-70%; rounded estimate 65%) in the event of a payment default. The stable outlook signifies that we expect ETC to maintain stable organic business and EBITDA growth in the coming years. High end-market activity and the improved operating leverage caused by its increasing scale and realization of synergies should support a reduction in leverage to below 7.0x in 2023. Private equity firm Cinven has acquired a majority stake in ETC, a distributor of telecommunications materials, via a new entity, Eos Finco S.a.r.l. It funded the acquisition through a new $540 million term loan B tranche 1 (TLB-1), EUR475 million term loan B tranche 2 (TLB-2) and equity contribution of 58% (representing EUR1.3 billion); the previous majority shareholder Carlyle reinvested in a minority stake and the founder retained a significant minority stake. The 'B' issuer credit rating on Eos Finco is constrained by the company's financial sponsor ownership and highly leveraged capital structure. S&P Global Ratings considers the EUR325 million of PECs held by minority owners to be debt-like, given the potential for repayment, but acknowledges their long-dated maturity, subordination against the senior secured TLB, and cash preservation function. S&P said, "As a result of the company's financial-sponsor ownership, we do not net cash in our calculations and incorporate only gross debt. We expect leverage, measured as adjusted debt to EBITDA, to have peaked in 2022, at around 7.6x (5.7x excluding the PECs) when the transaction closed. Our forecast is that it will decline below 7.0x in 2023 (5.0x excluding the PECs) and toward 6.5x by 2024 (4.5x without the PECs), fueled by solid, largely organic, revenue and EBITDA growth. Our 'B' rating reflects our view that funds from operations (FFO) cash interest coverage will rebound to around 2x in 2024 and the company will reduce leverage further, supported by EBITDA growth and some contractual debt amortization. Moreover, we expect the group to continue to generate sufficient cash to meet increasing amortization from 2025." ETC has a market-leading position as a pure-play specialist distributor within the telecom and technology infrastructure industry. The company completed three acquisitions in the U.S. and U.K. over 2020-2021; these almost doubled its revenue base to over EUR1 billion. The large base of more than 750 suppliers supports its significant offering of over 50,000 products and it has a focus on fiber/optical and active equipment, where its capabilities are stronger. In addition, ETC's value-added services, including logistics and refurbishment, as well as the tailoring/design of specific products and its own branded product portfolio, provide a full service offering for many of its customers. The business benefits from minimal customer churn and strong relationships with key materials suppliers. ETC has strong relationships with many of its 14,000 customers, and has lost less than EUR34 million of revenue as a result of customer attrition. There has been no churn among its top 30 customers over the past three years. On average, ETC's relationships with its clients have lasted over 12 years in France and nine years in the U.K. During the past four years, the company has maintained its top 10 customers and strongly increased its share of revenue across 70% of these customers. Its top five customers have contributed an additional EUR100 million in revenue over this time and the company has been able to expand its overall customer base. Good EBITDA margin generation and low capital expenditure (capex) support solid free cash flow generation. ETC's EBITDA margin, which is expected to be above 15% in 2023 despite lower margin acquisitions during 2020 and 2021, is one of the highest among similar rated resellers and general distribution businesses. S&P said, "Even in a challenging macroeconomic environment, we anticipate margins will remain above 15% thanks to ETC's strong market position. We consider this level of profitability as strong compared with that of peers such as Presidio and Staples. All of the companies ETC has acquired since 2020 had lower margins than the ETC average, but management expects margins to improve as a result of around EUR20 million in synergies. These largely arise from procurement savings and the company had already realized about EUR7 million of run-rate synergies by the end of 2022. There is further upside potential over the coming years, particularly on operating expenditure and business development, which will support margins further. Because ETC's cost base is weighted more to variable costs, it can sustain strong margins, which are also supported by limited inventory write-offs and risk of obsolescence. Some of the products ETC sells bypass its own inventory and are sent by the original equipment manufacturer straight to ETC's clients; this is a common practice within ETC's French business and helps it avoid inventory buildup. Combined with low capex and modest working capital outflows, it also supports solid cash generation." S&P said, "The concentration on products, countries, and customers constrains our business risk assessment. Around 60% of the products ETC sells relate to the fixed broadband and active equipment market, which is continually adapting. The company has shown resilience since it was established in 1993, as technical capabilities have evolved to fiber from copper and to 5G from 1G. It has some geographic concentration: the U.S. represents around 65% of revenue and its three core countries (the U.S., France, and the U.K.) represent 91% of revenue. Although we consider the broadband market in France more mature than that in the U.S., we still expect investment in new technologies to continue, which suggests the market environment will be stable in the coming years. ETC are the sole supplier for Altice, and generates almost half its revenue from this one customer. That said, it has several contracts with Altice across the U.S. and EU. Customer oversupply on particular products has affected ETC in the past, though we understand this reversed during 2021. However, further oversupply in any particular year could affect top-line growth or lead to an inventory buildup. A material buildup could weigh on our credit metrics. "Market tailwinds from public and private spending support revenue stability and growth opportunities despite challenging macroeconomic conditions globally. We expect ETC to benefit from good revenue visibility and a stable business environment over the coming years. The pandemic has accelerated demand for better connectivity. We forecast elevated capex from telecom operators over the next few years -- particularly in the U.S., the U.K., and Germany, where connectivity falls short of more advanced countries such as France -- to accelerate the deployment of fiber to the home (FTTH) and satisfy end-customer demand. Investment is likely to be boosted by public support aimed at improving digital connectivity, such as the infrastructure bill in the U.S. or the "Building Digital UK" program. Increasing data consumption opens up growth opportunities within data-center and mobile offerings. "In 2023, we expect ETC to maintain the solid performance it demonstrated in the first nine months of 2022 despite a difficult market environment. ETC reported strong performance in the first nine months of 2022, with a year-on-year revenue increase of close to 24% (based on constant currency and across all regions). This is 0.4% over its budget. Performance was particularly solid in the U.S., where FTTH deployment has accelerated. The strong top-line growth was accompanied by year-on-year margin expansion of 200 basis points (bps), 40 bps over the budget. Again this was mainly driven by the U.S. businesses, where realized synergies linked to procurement savings were combined with better fixed-cost absorption. "This solid growth trajectory supports our expectations for 2023. Year-on-year revenue growth is predicted to be about 8% based on solid organic volume growth, boosted by the increase in capex at ETC's clients, new client wins, and cross-selling opportunities. Telecom operators are investing in the deployment of FTTH and the build out of 5G, particularly within the U.S. We also expect ETC's EBITDA margins to increase toward 15.5% in 2023, from around 14.5% in 2022, based on organic growth, improved efficiency, and the realization of synergies, which the company expects will generate more than EUR20 million. In particular, ETC anticipates generating synergies from procurement savings as it will have greater scale and more opportunities to cross-sell to existing clients, as well as the new clients onboarded as part of acquisitions. At the same time, ETC's improved operating leverage and product mix should bolster growth, particularly in its own products, and shift its weighting toward higher-margin products and services. The benefit will be partially offset by exceptional costs for integration and the realization of synergies, as well as higher transportation and labor costs." The ratings are in line with the preliminary ratings S&P assigned on July 29, 2022. The stable outlook signifies that S&P expects ETC to maintain stable organic business and EBITDA growth in the coming years. High end-market activity and the improved operating leverage caused by its increasing scale and realization of synergies should support a reduction in leverage to below 7.0x in 2023. S&P could lower the rating if: -- S&P saw weaker earnings generation or greater volatility in margins from operational or integration issues, or increased competition, which could lead to negative free operating cash flow (FOCF); -- The company cannot sustain FFO cash interest coverage at about 2x; or -- Debt-funded acquisitions or shareholder-friendly returns cause adjusted debt to EBITDA to remain above 7.0x (including PECs). S&P said, "Although we consider an upgrade unlikely in the coming 12 months, we could raise the ratings if the shareholders demonstrate commitment to a prudent financial policy, maintain adjusted debt to EBITDA below 5x, and continue to generate solid FOCF. In addition, we would expect to see the company improve margins and maintain stability in its margin base following successful integration of acquisitions, diversification across its customer base, and improved scale." ESG credit indicators: E-2, S-2, G-3 S&P said, "Governance factors are a moderately negative consideration in our credit rating analysis of ETC. Our assessment of the company's financial risk profile as highly leveraged reflects corporate decision-making that prioritizes the interests of the controlling owners, in line with our view of the majority of rated entities owned by private-equity sponsors. Our assessment also reflects generally finite holding periods and a focus on maximizing shareholder returns." ===================== N E T H E R L A N D S ===================== ADRIA MIDCO: Moody's Affirms 'B2' CFR & Alters Outlook to Negative ------------------------------------------------------------------ Moody's Investors Service has changed to negative from stable the outlook on the ratings of Adria Midco B.V ('Adria' or 'the company'), a leading telecom operator in Southeastern Europe. At the same time, Moody's has affirmed the company's B2 corporate family rating, the B2-PD probability of default rating, and the B2 rating on the company's EUR4.58 billion backed senior secured notes issued by its wholly owned subsidiary United Group B.V. ('UG'). "The change in outlook to negative reflects the company's high leverage and weakened liquidity over the past 12 months at a time when Adria will need to address upcoming debt maturities in 2024 and 2025," says Agustin Alberti, a Moody's Vice President–Senior Analyst and lead analyst for Adria. "The rating affirmation considers the company's solid operating momentum and growth opportunities, improved scale and scope of operations over the past few years, and its strategic shift to focus on cash flow generation, liquidity and deleveraging," adds Mr. Alberti. RATINGS RATIONALE The outlook change to negative factors in that the company has been weakly positioned in the B2 rating for some time, with its leverage exceeding the 5.5x maximum tolerance for the category. In addition, its liquidity has weakened owing to a combination of (1) negative free cash flow generation mainly due to high capital spending, (2) continued M&A transactions such as the acquisition of Bulsatcom EOOD's mobile and fixed networks, and (3) other uses such as related party transactions including a loan to the founder. Moody's acknowledges Adria's plans to monetize some of its mobile tower portfolio assets and its intention to apply the net cash proceeds towards the repayment of the EUR525 million and the EUR550 million of backed senior secured notes maturing in July 2024 and May 2025, respectively, but also of the EUR545 million PIK notes maturing in November 2025 issued at Summer BidCo level, outside of the restricted group defined by Adria's lenders. This plan was announced in October 2022 [1]. The rating agency will assess the impact from a successful tower sale transaction for Adria's restricted group leverage (as adjusted by Moody's), liquidity and refinancing plans, which will depend on the structure of the transaction, valuation, and final use of proceeds. Moody's has assumed that this transaction will close by mid 2023, well in advance of the 2024 bond maturity. The rating agency also acknowledges the potential sale of other non-core assets, which could be used for further deleveraging, according to the company. However, Moody's notes a degree of execution risk in both the tower sale and the non-core asset disposals, and while this risk is low, failure to complete the tower sale transaction on time could significantly weaken the liquidity profile of the company. Moody's expects Adria's organic revenue and EBITDA growth to remain solid in the mid-single digits, driven by overall RGUs and price increases, synergies from acquisitions and savings from efficiency measures that will help to offset cost inflation pressures. The rating agency estimates that the company's Moody's adjusted gross debt to EBITDA ratio will be slightly above 6.0x in 2022 but will improve over the next 12-18 months towards 5.5x, although this is subject to the final use of proceeds from the tower sale. Although the towers will likely be sold at an attractive multiple, part of the proceeds may be used to repay the PIK that is sitting outside the restricted group, and therefore, any expected improvement in the leverage ratio at the restricted group is likely to me more muted. While the rating action reflects Adria's high leverage and weakened liquidity, the rating affirmation reflects the expectation that the tower sale will be completed successfully while the company will shift its focus from M&A to improving free cash flow generation and reducing leverage. LIQUIDITY Moody's estimates that by year end 2022, the company had cash and cash equivalents of around EUR85 million and access to a EUR325 million super senior RCF (SSRCF) due in June 2025, of which around EUR200 million are currently drawn. The SSRCF is restricted by a leverage-based springing covenant (of 9.5x Net Debt to Consolidated EBITDA) tested on an quarterly basis. The company also has access to local bilateral lines of EUR170 million, of which EUR100 million are currently drawn. In Moody's view, this amount of internal and external sources is small relative to the size of the company and relative to its cash needs over the next 12 to 24 months. Moody's notes that the SSRCF has a springing maturity: it will become due in February 1, 2024 if the existing 2024 backed senior secured notes are not fully refinanced by that date, or in February 15, 2025 if the existing 2025 backed senior secured notes are not fully refinanced by that date. This makes the completion of the tower deal and repayment of the 2024 notes critical for the liquidity profile of the company. STRUCTURAL CONSIDERATIONS Adria is the top company within the restricted group and the reporting entity for the consolidated group. Its subsidiary UG is the issuer of the rated backed senior secured notes and also one of the original borrowers under the company's EUR325 million SSRCF. The SSRCF ranks ahead in an enforcement scenario. It shares a guarantee and security package with the rated backed senior secured notes. In addition, the SSRCF (but not the backed senior secured notes) is secured on Serbian assets and receives guarantees from Serbian subsidiaries. Consequently, the SSRCF ranks first and the backed senior secured notes second in the waterfall of claims, together with the local bilateral lines of EUR170 million in aggregate, and Adria's trade payables. Given the limited weight of the SSRCF ranking ahead of the backed senior secured notes, the notes are rated B2, at the same level as the CFR. In addition, EUR545 million outstanding PIK notes (unrated) due in November 2025 have been issued at the holding company, Summer BidCo, outside of the restricted group defined by the lenders of Adria. RATIONALE FOR THE NEGATIVE OUTLOOK The negative outlook reflects the company's high leverage and weakened liquidity at a time when it needs to address the refinancing of the 2024/25 debt maturity wall. The outlook on the rating could be stabilized if the company successfully completes the planned asset disposal and addresses the upcoming debt maturities. An outlook stabilization would also depend upon a strengthening of the company's liquidity platform that is more consistent with the needs of an enlarged business that has grown rapidly through acquisitions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Downward pressure could result from (1) a failure to raise additional liquidity sources to address refinancing needs well in advance of debt maturities; (2) a deterioration in operating performance that further raises leverage such that the Moody's-adjusted debt/EBITDA ratio remains above 5.5x on a sustained basis; or (3) a deterioration of the liquidity profile of the company. Upward pressure could arise if the company reduces its leverage so that its Moody's-adjusted gross debt/EBITDA falls below 4.5x and demonstrates its capacity to generate positive Moody's-adjusted FCF/debt on a sustained basis. However, the PIK instrument outside of the restricted group represents an overhang for Adria, as it could be refinanced within the restricted group once sufficient financial flexibility develops. Therefore, the PIK instrument could be a constraint to upward rating pressure in the future. LIST OF AFFECTED RATINGS Affirmations: Issuer: Adria Midco B.V. Probability of Default Rating, Affirmed B2-PD LT Corporate Family Rating, Affirmed B2 Issuer: United Group B.V. BACKED Senior Secured Regular Bond/Debenture, Affirmed B2 Outlook Actions: Issuer: Adria Midco B.V. Outlook, Changed To Negative From Stable Issuer: United Group B.V. Outlook, Changed To Negative From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Telecommunications Service Providers published in September 2022. COMPANY PROFILE Headquartered in the Netherlands, Adria is one of the leading telecommunications and media operators in Southeast Europe. Active in eight countries, the company has approximately 15.5 million users. BC Partners owns approximately 56% of the company, senior management approximately 42% and the EBRD approximately 2%. Annualizing the last two quarters ended September 30, 2021, the company generated EUR2,536 million of pro forma run-rate revenues and pro forma run-rate adjusted EBITDAaL of EUR969 million (pro forma for acquisitions). CROWN VAN GELDER: Declared Bankrupt by Noord-Holland Court ---------------------------------------------------------- Packaging Europe reports that Crown Van Gelder B.V. has been declared bankrupt by the District Court of Noord-Holland with its financial difficulties partially attributed to the high costs of energy and raw materials. The company is a producer of paper for such applications as ice cream packaging, luxury shoppers, and High Speed Inkjet printers. It possesses two paper machines at its mill in Velsen and reports that it sells 90% of its paper to customers outside of the Netherlands. According to Packaging Europe, in spite of its apparently positive operating result for the 2022 financial year, Crown Van Gelder has been unable to resolve a liquidity shortfall caused by increased costs -- especially those stemming from energy and raw materials -- and a sharp decrease in orders causing long-term standstills in production. The company also expresses its uncertainty about future market developments and has filed for bankruptcy in the belief that it cannot meet its payment obligations, Packaging Europe discloses. The managing board and bankruptcy trustees from Pot Jonker Advocaten and Schenkeveld Advocaten, respectively, are said to be in deliberation with several interested parties regarding the continuation of the mill's activities in the future, Packaging Europe relates. TELEFONICA EUROPE: S&P Rates New Hybrid Securities 'BB' ------------------------------------------------------- S&P Global Ratings assigned its 'BB' long-term issue rating to the proposed hybrid securities to be issued by Telefonica Europe B.V. (BBB-/Stable/--), the Dutch finance subsidiary of Spain-based telecom group Telefonica S.A. (BBB-/Stable/A-3), which will guarantee the proposed securities. Spain-based telecommunications operator Telefonica S.A. intends to issue subordinated hybrid securities through Dutch finance subsidiary Telefonica Europe B.V. Telefonica plans to use proceeds to refinance an equivalent amount of hybrids with first call dates in September 2023 and March 2024. The company said it might also repurchase some of these instruments via a tender offer, and S&P understands that Telefonica does not intend to permanently increase its stock of hybrids. After the replacement and liability management transaction, Telefonica expects its hybrid portfolio size will remain similar. S&P will therefore assess an equivalent amount of existing hybrids as having minimal equity content. S&P said, "We calculate hybrids outstanding to S&P Global Ratings-adjusted capitalization at about 11% from 2021, including the proposed hybrid securities and replacement. This is slightly below the 15% limit on hybrid capitalization, which caps the amount of hybrids that may receive equity content under our criteria. "We classify the proposed hybrid as having intermediate equity content until the first reset date (May 3, 2030) because it meets our criteria in terms of subordination, permanence, and optional deferability during this period. Consequently, when we calculate Telefonica S.A.'s adjusted credit ratios, we will treat 50% of the principal outstanding under the proposed securities as equity rather than debt, and 50% of the related payments on these securities as equivalent to a common dividend." The two-notch difference between S&P's 'BB' issue rating on the securities and its 'BBB-' issuer credit rating (ICR) on Telefonica S.A. reflects the following downward adjustments from the ICR: -- One notch for the proposed securities' subordination, because our long-term ICR on Telefonica S.A. is investment-grade; and -- An additional notch for payment flexibility due to the optional deferability of interest. S&P said, "The notching points to our view that there is a relatively low likelihood that Telefonica Europe will defer interest payments. Should our view change, we may significantly increase the number of downward notches that we apply to the issue rating. We may lower the issue rating before we lower the ICR." Key Factors In S&P's Assessment Of The Securities' Permanence Although the proposed securities have no maturity, Telefonica Europe can redeem them on any date between the first call date (Feb. 3, 2030) and the first reset date (May 3, 2030), and on every interest payment date thereafter. In addition, Telefonica can call the instrument any time at a premium through a make-whole redemption option. S&P said, "Telefonica stated it has no intention to redeem the instrument before the redemption window of the first reset date, and we do not consider this type of make-whole clause to create an expectation that the proposed securities will be redeemed before then. Accordingly, we do not view it as a call feature in our hybrid analysis, even if it is referred to as a make-whole option clause in the hybrid instrument's documentation." S&P said, "More generally, we understand the group intends to replace the proposed hybrid securities, although it is not obliged to do so. In our view, this statement of intent and the group's track record mitigates the likelihood that it will repurchase the securities without replacement. "The coupon to be paid on the proposed securities equals the sum of the applicable benchmark rate plus a margin. The margin will increase 25 basis points (bps) 10.25 years from issuance, and a further 75 bps 20 years after the first reset date. We view the cumulative 100 bps as a moderate step-up, providing Telefonica Europe with an incentive to redeem the instruments at least 27.25 years after issuance. "Consequently, we will no longer recognize the proposed securities as having intermediate equity content after the first reset date. This is because the remaining period until economic maturity would, by then, be less than 20 years." Key Factors In Our Assessment Of The Securities' Subordination The proposed securities will be deeply subordinated obligations of Telefonica Europe and have the same seniority as the hybrids issued in 2013, 2014, 2016, 2017, 2018, 2019, 2020, 2021, and 2022. As such, they will be subordinated to senior debt instruments, and are only senior to common and preferred shares. S&P understands that the group does not intend to issue any such preferred shares. Key Factors In S&P's Assessment Of The Securities' Deferability S&P said, "In our view, Telefonica Europe's option to defer payment of interest on the proposed securities is discretionary and it may therefore choose not to pay accrued interest on an interest payment date. However, if an equity dividend or interest on any equal-ranking or junior securities is paid, or if there is a redemption or repurchase of the hybrid or any equal-ranking or junior securities, any deferred interest payment would have to be settled in cash. "This condition remains acceptable under our rating methodology because once the issuer has settled the deferred amount, it can choose to defer payment on the next interest payment date." The issuer retains the option to defer coupons throughout the securities' life. The deferred interest on the proposed securities is cash-cumulative and compounding. ========= S P A I N ========= FOODCO BONDCO: Moody's Cuts CFR to Ca, Outlook Remains Negative --------------------------------------------------------------- Moody's Investors Service has downgraded to Ca from Caa3 the corporate family rating of Foodco Bondco, S.A.U. ("Telepizza" or "the company"), the parent company of Spanish pizza delivery operator Food Delivery Brands (formerly known as Telepizza). Concurrently, Moody's has downgraded to Ca-PD from Caa3-PD the company's probability of default rating, and to Ca from Caa3 the rating on the EUR335 million senior secured notes due 2026 issued by Foodco Bondco, S.A.U. The outlook remains negative. The rating action follows Telepizza's announcement on January 17, 2023 [1] that it had reached an agreement with Yum! Brands Inc. (Yum! Brands) regarding its strategic alliance. The company also disclosed that it is still negotiating with the majority lenders of its 2026 senior secured notes with the possibility of the lenders taking a stake in the company through a conversion of debt to equity. The rating action follows the company's decision not to pay the coupon on the notes that was due on January 16th and instead, use the 30 day grace period available under the term and conditions of the notes. If the company does not to pay the coupon before the end of the 30 day grace period, Moody's will consider this as a default. In this event, Moody's expects to assign an "/LD" to the PDR at that time. "The downgrade reflects Moody's expectation of Telepizza's near term default either through a missed payment or through a debt restructuring that results in higher losses for creditors than those assumed in the previous Caa3 rating," says Michel Bove, a Moody's AVP-Analyst and lead analyst for Telepizza. RATINGS RATIONALE The downgrade of Telepizza's CFR and PDR reflects Moody's view that the company's probability of default, including the potential for a missed coupon payment or a restructuring that Moody's considers a distressed exchange, is very high over the near term. The company missed the January 16th coupon payment, and if the company is unable to pay during the 30-day grace period, this will result in a default. While Telepizza said it is in discussions with the majority lenders for the restructuring of its debt, the company indicated that the current negotiations contain principles upon which the lenders might be approved to become shareholders by exchanging their debt into equity. Moody's would likely consider such debt restructuring as a distressed exchange, which is a type of default under Moody's definitions. Telepizza also disclosed that it had reached an agreement with its strategic partner Yum! Brands. The revised agreement establishes that Telepizza will focus on its operations in its equity markets (Colombia, Ecuador, Mexico and Chile), while relinquishing its master franchisee rights in the other remining Latin American markets. Telepizza will continue operating its store network in Spain, Andorra, Gibraltar, Portugal and Chile, as usual but will also assess strategic options including the potential transfer of its operations in some of these territories to one or more third parties. While Moody's believes that the agreement reduces the uncertainty around the evolution of the company's business profile, it also reduces the flexibility of its asset-light model by relying more on the operation of its equity stores, which are more exposed to cost inflation such as energy, labor and raw materials. The Ca rating also reflects (1) the company's high financial leverage, with a Moody's-adjusted (gross) debt/EBITDA expected to reach 10.4x as of year-end 2022, (2) its unsustainable capital structure owing to the company's deteriorated performance and weak prospects for 2023 in a high interest rate environment; (3) the intense competition with other pizza and non-pizza delivery operators and substitute products, particularly in Spain; (4) its exposure to foreign-currency fluctuations in Latin America, raw material prices and cost inflation as well as continued erosion of consumer purchasing power, which creates the potential for earnings volatility; and (5) its sustained negative free cash flow (FCF) generation, which keeps straining liquidity. Telepizza's credit profile remains supported by (1) its strong brand awareness and position as the number one competitor in the pizza delivery market in Spain, Portugal and a number of Latin American countries; (2) the growth and diversification potential stemming from its strategic alliance with Yum! Brands; and (3) its asset-light and vertically integrated business model, which enhances the resilience of its profit margin, although expected to be reduced following the renegotiation of its agreement with Yum! Brands. LIQUIDITY Telepizza's liquidity has materially deteriorated in 2022 on the back of the expected decline in earnings and the larger than expected negative free cash flow. The closure costs related to the Pizza Hut stores in Spain and the need to relax franchisee collections, to help them overcome the cash flow tensions stemming from the drop in profitability, have further strained liquidity. Current sources of liquidity include the EUR27 million of cash on balance sheet as of September 2022 and the EUR23 million second tranche of committed equity from its shareholders. Despite having access to these sources of liquidity, the company decided not to pay the coupon due on January 16th. Sustained negative FCF generation in the range of EUR30million - EUR45 million per year through 2023, the fully drawn revolving credit facility (RCF) of EUR45 million due in 2026, the use of reverse factoring, access to which may be curtailed given the deterioration in credit quality, will strain liquidity to a point that it becomes increasingly tight in the next 6-12 months. STRUCTURAL CONSIDERATIONS The Ca rating of the EUR335 million 6.25% senior secured notes due 2026 issued by Foodco Bondco, S.A.U. is in line with the CFR, reflecting the fact that they represent most of the company's financial debt. However, the senior secured notes are subordinated to the EUR45 million super senior RCF due 2026, which is currently fully drawn. The senior secured notes and the super senior RCF share the same security package, with the RCF benefitting from priority claim on enforcement proceeds. The senior secured notes and the RCF also benefit from guarantees provided by operating subsidiaries of the group. The security package comprises pledges over the shares of notes' issuer and guarantors, bank accounts and intragroup receivables. The EUR40 million bilateral loans due in November 2025 rank pari passu with the notes. The Ca-PD PDR reflects Moody's assumption of a 50% family recovery rate, in line with the rating agency's standard approach for capital structures that include both bonds and bank debt. RATIONALE FOR NEGATIVE OUTLOOK The negative outlook reflects the increasing likelihood of a near term default owing to a missed payment or a debt restructuring that could lead to substantial losses for the company's financial creditors. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of Telepizza's ratings is currently unlikely and would require greater clarity regarding the company's future capital structure and liquidity position. The ratings could be further downgraded if Telepizza if expected recovery rates for lenders are lower than Moody's current expectations. LIST OF AFFECTED RATINGS Downgrades: Issuer: Foodco Bondco, S.A.U. Probability of Default Rating, Downgraded to Ca-PD from Caa3-PD LT Corporate Family Rating, Downgraded to Ca from Caa3 Senior Secured Regular Bond/Debenture, Downgraded to Ca from Caa3 Outlook Action: Issuer: Foodco Bondco, S.A.U. Outlook, Remains Negative PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Restaurants published in August 2021. COMPANY PROFILE Founded in 1987 and headquartered in Madrid, Telepizza is a leading pizza delivery operator, with operations concentrated mainly in Spain, Portugal and Latin America. Following its alliance with Yum! Brands, effective since December 2018, Telepizza has become the exclusive master franchisee of the Pizza Hut brand in Latin America (excluding Brazil), the Caribbean, Spain, Portugal and Switzerland. As of September 31, 2022, Telepizza had a network of 2,533 stores, including 1,371 stores under the Telepizza brand and 1,161 stores under the Pizza Hut brand. For the last twelve-month as of September 2022, the company reported revenue of EUR421 million and company-adjusted EBITDA of EUR50 million (both numbers excluding the effect of IFRS16). Telepizza is majority owned by funds advised by private equity firm KKR, which hold a 84.3% stake in the company. PRONOVIAS: S&P Lowers ICR to 'CC' on Announced Recapitalization --------------------------------------------------------------- S&P Global Ratings lowered to 'CC' from 'CCC' its issuer credit rating on group entity bridalwear designer Pronovias (CatLuxe S.a.r.l.), as well as its issue-level ratings on the group's EUR45 million revolving credit facility and EUR215 million senior secured term loan B. The negative outlook indicates that when the transaction completes, S&P expects to lower its issuer credit rating to 'SD' (selective default) or 'D' (default) and its issue-level ratings to 'D'. Pronovias Group announced on Dec. 20, 2022, that its principal shareholder BP Partners and a substantial majority of its senior and junior lenders had entered into a binding agreement to recapitalize the group and alter its capital structure. If all of its first-lien lenders agree, the group will be able to implement the transaction through a fully consensual route. If it cannot gain the unanimous consent of its first-lien lenders, Pronovias will implement the transaction through a U.K. restructuring plan, scheme of arrangement, or another appropriate route. As of Dec. 20, 2022, it had already gained the consent of more than 75% of its first-lien lenders and the transaction is expected to be complete by the end of March 2023. As part of the agreement, Pronovias will receive a total of about EUR110 million-EUR115 million in new cash from some of its existing lenders, in the form of a new senior secured loan that will mature five years after closing. It will use the money to repay existing bridge facilities, as well as to pay transaction costs. The rest will become cash on its balance sheet at closing. Under the terms and conditions that have been announced, the transaction would reduce Pronovias' debt by a significant amount (EUR267 million). At closing, debt would total about EUR210 million, comprising: -- A new senior facility of approximately EUR110 million-EUR115 million; -- Unsecured payment-in-kind (PIK) notes of EUR78 million, which would consist of a new facility at the holding company level, stapled pro rata to equity; and -- Some of the existing local facilities, which would be rolled over. At the same time, as part of the proposed agreement, the majority ownership in the Pronovias group would be transferred to a consortium of investors led by Bain Capital and MV Credit. S&P said, "The negative outlook indicates that when the transaction completes, we will lower our issuer credit rating to 'SD' or 'D' and our issue-level ratings to 'D'. We may then rate the group based on our assessment of its business plan and its credit metrics under the new capital structure." Environmental, Social, And Governance ESG credit indicators: E-2, S-2, G-3 =========== S W E D E N =========== VERISURE HOLDING: S&P Rates EUR450MM Senior Secured Notes 'B' ------------------------------------------------------------- S&P Global Ratings assigned its 'B' rating to Verisure Holding AB's proposed issuance of EUR450 million senior secured notes due 2028. The recovery rating is '3', indicating S&P's expectation of meaningful recovery (50%-70%; rounded estimate 60%) for noteholders in the event of a default. Verisure (B/Stable/--) primarily plans to use the proceeds to repay drawings on its revolving credit facility; at the end of the third-quarter 2022, EUR408 million was drawn. Any remaining amount will be used to fund cash on the balance sheet and pay the transaction fees relating to the issuance of the notes. The transaction is mostly debt for debt, and therefore it does not affect its 'B' issuer credit rating or stable outlook on Verisure. S&P has not made any material changes to its forecast for Verisure group since its latest report "Verisure Midholding", which it published on Dec. 14, 2022. =========================== U N I T E D K I N G D O M =========================== 2 SISTERS: Factory Faces Closure, 730 Jobs at Risk -------------------------------------------------- BBC News reports that a chicken factory is facing closure, putting 730 jobs at risk. Poultry giant 2 Sisters Food Group said the site in Llangefni, Anglesey, was old and would require significant investment to bring it up to the same standard as its other locations, BBC relates. According to BBC, the firm also said Llangefni was one of its smallest sites and products could be made more efficiently elsewhere. It added that it would speak with employees to explore the options before making final decisions on closure, BBC notes. The company's chief executive Ronald Kers said 2 Sisters would try to find alternative work for everyone, BBC relates. This would be with other local employers, or at its other sites including Sandycroft in Flintshire and Rogerstone, Newport. However, he admitted redundancies were likely. "We will do our best to redeploy as many people as possible, but I think it will be unrealistic to assume that we can redeploy everyone, so we will be looking at redundancies," BBC quotes Mr. Kers as saying. "We realise that this is absolutely terrible news for those families and we'll do all that we can to listen to the ideas before we make any final decision. "However, it is also our responsibility to the other 13,000 people that we employ to make sure that our business is sustainable as a total division." Mr. Kers, as cited by BBC, said a consultation with unions would explore the best way forward, but left little prospect of the factory staying open. "I would never rule anything out, but the fact of the matter is that the site is old," he added. "It's over 50 years old, it's small, it's inefficient, the transport costs are too high. "So if there was an easy solution, we would have definitely explored that in more detail. Unfortunately, the picture is bleak." The planned closure follows a review by 2 Sisters of its UK poultry division to overcome "challenges facing the food manufacturing sector". Its review described the Llangefni site, which it bought in 2013, as "not sustainable" and lacking space to be efficient, despite GBP5 million being invested there, BBC discloses. "The cost to produce here is higher, and it would require significant investment to bring it up to the standards of our other factories," a statement said. "Our products can be made more efficiently elsewhere across our estate. The company's last published accounts show it made a GBP95.5 million loss to July 31, 2021, BBC states. ADVANZ PHARMA: Moody's Alters Outlook on 'B3' CFR to Positive ------------------------------------------------------------- Moody's Investors Service has affirmed the B3 corporate family rating and B3-PD probability of default rating of UK-based pharmaceutical company ADVANZ PHARMA Holdco Limited and the B3 ratings of Cidron Aida Finco S.a r.l, its direct subsidiary. Concurrently, Moody's changed the outlook on all entities to positive from stable. The following factors drove the outlook change to positive: -- Improved organic performance in 2022 and expected organic growth in 2023 -- Reduced leverage from equity funding for a large acquisition in 2022 -- Highly cash generative profile with good protection from interest rate increases RATINGS RATIONALE RATIONALE FOR THE OUTLOOK CHANGE ADVANZ PHARMA's performance will have markedly improved in 2022, reaching positive organic growth for the first time. Although some improvements are sustainable, Moody's continues to expect like-for-like revenue regression in ADVANZ PHARMA's base business (i.e., the sales perimeter at the end of 2021) in the low-to-mid single digit percentage area. However, the rating agency expects organic growth overall in 2023 and 2024 thanks to new product launches and the better growth profile of products acquired in 2022. Last year, the roll out of a larger neurology product from its pipeline (Mytolac) has started to make a difference to the top line and it still has some runway. In 2023, ADVANZ PHARMA will launch another injectable generic drug (paliperidone) which will add to its organic growth. Liver rare disease drug Ocaliva, whose ex-US rights ADVANZ PHARMA has acquired in mid-2022, will further enhance organic growth in the next few years. Pro forma for all the acquisitions ADVANZ PHARMA made in 2022, its Moody's adjusted gross debt/EBITDA was 5.2x at the end of September 2022, versus a turn higher at the time of the LBO in 2021. Per management's calculations, ADVANZ PHARMA has acquired up to GBP75 million of EBITDA in 2022 while its balance sheet debt increased by less than GBP200 million. This is because owners Nordic Capital have injected GBP344 million of fresh equity in the third quarter to fully fund the acquisition of Ocaliva's ex-US rights. The company maintains a highly cash generative profile and the increased earnings base will boost free cash flow (FCF) generation (after interest and non-recurring items) to over GBP100 million in 2023 from around GBP75 million - GBP80 million in 2022. Moody's views risks to FCF as limited because floating rate debt represents less than a quarter of ADVANZ PHARMA's debt, therefore protecting it well against interest rate rises. RATIONALE FOR THE CFR ADVANZ PHARMA's B3 CFR still reflects the company's levered capital structure and a degree of concentration risk by product and geography. Patent-protected Ocaliva has become the company's largest drug, representing around 17% of revenue on a pro forma basis. A confirmatory study is ongoing in the European Union following the drug's conditional approval in 2018, hence there is a risk that the product does not remain on the market. Furthermore, Moody's estimates that ADVANZ PHARMA derives around 30% of its revenue from the UK, where downward price pressure and hand backs to government payers is high. The CFR also reflects ADVANZ PHARMA's acquisitive strategy, which will likely require additional funding. Moody's forecasts that the company will maintain stable Moody's adjusted leverage in 2023 and 2024 with a broadly flat EBITDA pre-exceptionals in the range of GBP220 million – GBP230 million. However, including bolt-on acquisitions to be made at a multiple higher than the company's leverage and using a mix of cash and debt, ADVANZ PHARMA's leverage could climb over 5.5x. In addition, the company is still at risk of material litigation-related outflows of up to GBP65 million for potential infringement of competition laws in the UK, an ESG credit negative. ADVANZ PHARMA is in the appeal process for fines issues regarding three of its products. However, ADVANZ PHARMA's credit quality benefits from good therapeutic diversity and a broad geographic presence. Its asset-light business model commands a solid Moody's-adjusted EBITDA margin of around 36%-37% and limited capital expenditure, which contributes to high FCF and good liquidity. LIQUIDITY ADVANZ PHARMA's liquidity is good. The company had GBP204 million of unrestricted cash on balance sheet at the end of September 2022 as well as GBP148 million equivalent undrawn under its EUR170 million senior secured revolving credit facility (RCF) maturing in 2027. The RCF is subject to a springing net leverage covenant, tested when the facility is drawn for more than 40%, with ample headroom expected. ESG CONSIDERATIONS The ongoing litigation proceedings with the UK's Competition and Markets Authority (CMA) reflect customer relations risk although these products now represent a very small proportion of ADVANZ PHARMA's revenue. The company is also exposed to risks related to responsible production as it does not directly operate its supply chain. In addition, the emergence of more complex products in its portfolio raises product safety and regulatory risks linked to manufacturing compliance. Governance factors that Moody's considers in ADVANZ PHARMA's credit profile include the risk that the company will embark on debt-funded acquisitions which would increase leverage or business risk. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade ADVANZ PHARMA's ratings if (i) the company continues to improve its like-for-like revenue and EBITDA, at stable to growing, and (ii) it maintains a Moody's-adjusted debt/EBITDA below 5.5x, (iii) while generating solid FCF with good liquidity. Obtaining greater certainty that Ocaliva's conditional approval in Europe will turn permanent and a satisfactory resolution of legal proceedings in the UK could also lead to an upgrade of ADVANZ PHARMA's ratings. ADVANZ PHARMA's ratings could be under downward pressure if (1) organic revenue and EBITDA regression returned to a mid-single digit percentage or worse and Moody's adjusted gross debt/EBITDA increased materially, or (2) liquidity weakened, particularly if FCF reduced sustainably, or (3) the company executed large debt-funded acquisitions. LIST OF AFFECTED RATINGS Affirmations: Issuer: ADVANZ PHARMA Holdco Limited Probability of Default Rating, Affirmed B3-PD LT Corporate Family Rating, Affirmed B3 Issuer: Cidron Aida Finco S.a r.l Senior Secured Bank Credit Facility, Affirmed B3 BACKED Senior Secured Regular Bond/Debenture, Affirmed B3 Outlook Actions: Issuer: ADVANZ PHARMA Holdco Limited Outlook, Changed To Positive From Stable Issuer: Cidron Aida Finco S.a r.l Outlook, Changed To Positive From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Pharmaceuticals published in November 2021. CORPORATE PROFILE Headquartered in London, UK, ADVANZ PHARMA is a pharmaceutical company marketing a portfolio of more than 180 branded drugs and generics in over 80 countries and across various therapeutic areas. Including a full year's contribution of all acquisitions made in 2022, ADVANZ PHARMA has revenue of around GBP600 million and EBITDA (before exceptional items) of around GBP230 million. ADVANZ PHARMA was acquired by funds ultimately controlled and advised by financial sponsor Nordic Capital in June 2021. ICONIC LABS: FCA Lifts Suspension of Shares on LSE -------------------------------------------------- Alliance News reports that Iconic Labs PLC, a London-based media and technology business, says the Financial Conduct Authority has lifted the suspension of the company's shares on the London Stock Exchange. Earlier this month, Iconic said all disputes involving the company, its former management and European High Growth Opportunities Securitization Fund were now resolved, Alliance News relates. It also signed a GBP3 million financing facility with European High Growth Opportunities Securitization Fund to pay for its short-term operational needs and its company voluntary arrangement requirements, Alliance News discloses. "Iconic has been successfully restructured, we have financing in place, and the trading suspension has been lifted. The company is now working to formalise terms with the various parties that we have been speaking with over the last few months, but who understandably would not formalise discussions until the trading suspension was lifted," Alliance News quotes Chief Executive Brad Taylor as saying. PIRAEUS GROUP: S&P Withdraws 'B' ST Rating on Commercial Paper -------------------------------------------------------------- S&P Global Ratings has withdrawn its 'B' short-term rating on Piraeus Group Finance PLC's commercial paper, at the company's request. S&P's issuer credit ratings on Piraeus Bank S.A. (B/Positive/B) and on Piraeus Financial Holdings S.A. (B-/Stable/B) are unchanged. =============== 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. 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 * * *