/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/230310.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, March 10, 2023, Vol. 24, No. 51 Headlines B E L G I U M AZELIS FINANCE: S&P Rates New EUR400MM Sr. Unsecured Notes 'BB+' AZELIS GROUP: Fitch Assigns First-Time 'BB+' IDR, Outlook Stable F R A N C E GRANDIR GROUP: S&P Affirms 'B-' LT ICR & Alters Outlook to Stable G E R M A N Y NORDEX SE: S&P Raises ICR to 'B' on Debt Repayment, Outlook Stable I R E L A N D CAPITAL FOUR V: S&P Assigns B-(sf) Rating on EUR12MM Class F Notes PALMER SQUARE 2023-1: Moody's Assigns (P)Ba3 Rating to Cl. E Notes PRIMROSE RESIDENTIAL 2022-1: Fitch Affirms CCC Rating on G Certs P O R T U G A L SAGRES STC - PELICAN 3: S&P Raises Class D Notes Rating to 'BB+' U N I T E D K I N G D O M AARTEE BRIGHT: UK Court to Hear GFG's Challenge on Administration GROSVENOR SQUARE 2023-1: S&P Assigns Prelim. 'B' Rating on F Certs HARTLEY PENSIONS: Joint Administrators Mull Suit to Recover Loan ME AND MY HEALTH: Intends to Appoint Administrators RAILSR: Bought Out of Administration Via Pre-Pack Deal RIDE-ON SCOTLAND: Placed In Provisional Liquidation STEEL RIGGING: Director Faces 17-Year Disqualification VMOTO DISTRIBUTION: Formally Enters Administration X X X X X X X X [*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace - - - - - ============= B E L G I U M ============= AZELIS FINANCE: S&P Rates New EUR400MM Sr. Unsecured Notes 'BB+' ---------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue rating and '3' recovery rating to Azelis Finance N.V.'s proposed EUR400 million senior unsecured notes. The notes will mature in 2028 and rank pari passu with the company's other unsecured debt. The rating on the proposed notes is subject to our review of the notes' final terms and conditions. Proceeds from the offering will fund general corporate purposes. S&P understands that Azelis intends to finance recently signed acquisitions, which the company expects to close in first-half 2023, representing EUR225 million. At the same time, Azelis is increasing the weighted-average duration of existing financing by repaying EUR100 million drawn under its revolving credit facility and strengthening its liquidity with EUR70 million in cash overfunding. Issue Ratings--Recovery Analysis Key analytical factors -- S&P rates the notes 'BB+', with a '3' recovery rating, based on meaningful recovery prospects (50%-70%; rounded estimate 65%) in a default scenario. -- The recovery rating is supported by our valuation of the business as a going concern, based on Azelis' deeply entrenched relationship with its customers and suppliers, its strong technological history of research and development, low minimum capital expenditure requirements, and track record of integrating acquisitions and improving its margins. -- The recovery rating is constrained by the presence of various pari passu-ranking debt facilities, but benefits from a lack of significant prior ranking debt. -- S&P's hypothetical default scenario assumes an inability to service debt payments, due to loss of distribution agreements from increased competition amid adverse economic conditions. Simulated default and valuation assumptions -- Year of default: 2028 -- Jurisdiction: Belgium (jurisdiction ranking A) Simplified waterfall -- Emergence EBITDA (after recovery adjustments): EUR277 million -- Multiple: 5.5x -- Gross recovery value: EUR1.53 billion -- Net recovery value for waterfall after administrative expenses (5%): EUR1.45 billion -- Total priority debt: EUR69 million -- Total value available to senior unsecured claims: EUR1.38 billion -- Total senior unsecured debt: EUR2.11 billion --Recovery expectations: 50%-70% (rounded estimate of 65%) All debt amounts include six months' prepetition interest. AZELIS GROUP: Fitch Assigns First-Time 'BB+' IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned Azelis Group NV a first-time Long-Term Issuer Default Rating (IDR) of 'BB+' with a Stable Outlook. It has also assigned Azelis a senior unsecured rating of 'BB+'. The Recovery Rating is 'RR4'. The IDR balances Azelis's position as a leading specialty chemical distributor with strong diversification of suppliers, customers and products against its higher leverage than other chemical distributor peers. It also captures the company's record of stable profit margins and positive free cash flow (FCF), which supports EBITDA-accretive bolt-on acquisitions. The Stable Outlook reflects its expectation that Fitch-calculated EBITDA net leverage will remain close to but below 3.5x in 2023-2026, despite its assumption that Azelis will spend more aggressively on acquisitions than chemical distributor peers. KEY RATING DRIVERS Global Specialty Distributor: Azelis is the second-largest pure-play specialty chemical distributor by revenue behind IMCD N.V., and is fourth-largest when considering Brenntag's and Univar Solutions, Inc's specialty segments. Its critical mass in a fragmented industry allows Azelis to benefit from long-standing exclusivity contracts with suppliers and a large number of customers globally. Azelis's market position continues to be strengthened with organic growth in existing markets and small, bolt-on M&A in new and existing markets and geographies. Scale, technical and formulation expertise and geographical breadth provide competitive advantages to specialty chemical distributors such as Azelis versus smaller players when it comes to securing supply contracts with large chemical producers. Diversified Markets, Stable Margins: Azelis's diversification, variable cost structure and specialty product portfolio results in resilient organic revenues and margins. Moreover, the company benefits from the stability of specialty chemicals demand, and the growth of distribution outsourcing. Fitch assumes the Fitch-calculated EBITDA margin is maintained at around 10% in 2023-2026, slightly lower than in 2022 which Fitch views as an exceptional year. The company operates in 63 countries in the three main regions, with 60% of revenues derived from life science end-markets including food and nutrition, pharmaceuticals and personal care, which are typically less cyclical than commodity chemical markets. Azelis has highly diversified customers and suppliers, which limits the impact of possible customer or supplier loss. The company's asset-light structure and flexible cost base allows it to reduce costs during downturns, providing further margin resilience. Deferred Considerations: Fitch includes deferred considerations in its calculation of financial debt, which results in Fitch's net debt/EBITDA metric being 3.2x, higher than 2.2x reported by the company for 2022. These liabilities are reported on the balance sheet and represent delayed M&A outflow. Over half are due within one year, with the remaining balance due by end-2025. While a potential increase in debt should be viewed together with earnings outperformance of the acquired companies, the net impact on leverage metrics can be negative. Aggressive M&A Expansion: Fitch believes that Azelis will continue to pursue an aggressive acquisition strategy to consolidate a fragmented specialty chemical distribution market. Fitch assumes Azelis will spend EUR300 million to EUR400 million (excluding payments of deferred considerations) on bolt-on acquisitions per year in 2023-2026, acquiring an average of EUR30 million to EUR45 million per year of EBITDA annually. There will be additional outflow of deferred considerations between 2023 and 2025. This represents a more aggressive rate of inorganic growth than peers and will require additional funding to supplement FCF. While bolt-on acquisitions are commonplace in the chemical distribution industry, this prevents material deleveraging from current levels. Leverage Manageable: Fitch expects Azelis to maintain its EBITDA net leverage at 3.3x to 3.5x in 2023-2026 following its deleveraging from above 6x EBITDA net leverage pre-IPO. Strong performance in 2021 and 2022 combined with incremental EBITDA from bolt-on acquisitions led to EBITDA net leverage falling to 3.2x in 2022. Fitch views the resilience of Azelis's business model as supportive of relatively high leverage for a 'BB+' rating, as the company could deleverage rapidly by scaling down acquisitions, given the earnings growth trajectory and quick realisation of synergies. Financial Policy Allows Manoeuvrability: The company's public financial policy aims to maintain EBITDA net leverage between 2.5x and 3.0x. In 2022, the ratio was lower than Fitch's calculation, primarily due to the agency's inclusion of deferred considerations and receivables factoring in its debt calculation. This means in a scenario where Azelis grows its deferred consideration balance through aggressive M&A, its reported leverage metrics may remain within the company's financial policy, but breach Fitch's negative sensitivity, which may lead to negative rating action. DERIVATION SUMMARY Azelis's closest Fitch-rated peer is IMCD N.V. (BBB-/Stable). Both companies are pure-play specialty chemical distributors with market-leading positions, a similar growth strategy focused on FCF-funded bolt-on M&A and a comparable diversification of suppliers and customers. Both companies have similar EBITDA and FCF margins, but IMCD has larger EBITDA and lower leverage. Univar Solutions, Inc (BB+/Positive) is the second-largest global chemical distributor behind Brenntag. It is larger than Azelis but generates about two-thirds of its revenues from commodity chemical sales, exposing it to more volatile prices and lower EBITDA margins. Univar is less geographically diversified, with 75% of revenue from North America in 2022, whereas Azelis's revenue has no notable geographical concentration. Blue Tree Holdings, Inc. (BB-/Stable) and Reliance Steel & Aluminum Co. (BBB+/Stable) are leaders in North America for polymers and metals, respectively. Both companies operate in a fragmented market like Azelis, although they do not benefit from the greater pricing power of specialty products. Azelis has higher leverage than both companies. Fitch forecasts through the cycle net EBITDA leverage to remain under 3.0x and 1.0x for Blue Tree and Reliance, respectively. Arrow Electronics, Inc. (BBB-/Stable) is a distributor of electronic components and enterprise computing solutions. Its EBITDA is larger than Azelis but it operates in an industry with lower switching costs and value-add for distributors, resulting in lower EBITDA margins of 4%-5%, and higher earnings volatility. Arrow Electronics has significantly lower leverage than Azelis with through the cycle net EBITDA leverage below 2.0x. KEY ASSUMPTIONS - Organic revenue growth of 2% to 3% per year in 2023 to 2026 - EBITDA margin of 11% in 2023 and 10% in 2024-2026 - Capex at 0.5% of revenues - EUR300 million to EUR400 million of M&A per year in 2023 to 2026 - Dividends in line with the company's stated financial policy - Deferred considerations outstanding at end-2022 repaid over 2023-2025 RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - EBITDA net leverage below 2.5x on a sustained basis - FCF margin above 5% on a sustained basis - Conservative execution of the company's financial policy Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDA net leverage at or above 3.5x on a sustained basis - FCF margin below 2.5% on a sustained basis - Capital allocation prioritising acquisitions and growth over an adherence to a prudent approach to managing leverage LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity for M&A: As at end-2022, Azelis's liquidity stood at EUR518 million, consisting of EUR268 million in cash and a EUR250 million undrawn revolving credit facility. Pro forma for the issuance of Schuldschein tranches, acquisitions closed or signed in early 2023, and for a potential EUR400 million issue, liquidity amounts to about EUR820 million. This will comfortably cover current financial debt and deferred considerations due in 2023 and will supplement FCF to fund M&A in the coming years, although the company may need to raise additional funding. Potential issuance would diversify Azelis's maturity profile, which is concentrated with EUR1 billion of term loans due in 2026 out of total gross debt of EUR1.8 billion including the proposed issuance. ISSUER PROFILE Azelis is a specialty chemicals distributor headquartered in Belgium with operations in 63 countries. SUMMARY OF FINANCIAL ADJUSTMENTS Lease liabilities are excluded from financial debt; amortisation of right-of-use assets and lease-related interest expense are reclassified as cash operating costs. Factoring is added to financial debt and trade receivables are increased by the same amount. Cash flow statement is adjusted to reflect changes in factoring use in cash flows from financing activities rather than cash flows from operating activities. Amortised issuance costs are added back to financial debt to reflect debt amounts payable at maturity. 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 ----------- ------ -------- Azelis Group NV LT IDR BB+ New Rating Azelis Finance NV senior unsecured LT BB+ New Rating RR4 =========== F R A N C E =========== GRANDIR GROUP: S&P Affirms 'B-' LT ICR & Alters Outlook to Stable ----------------------------------------------------------------- S&P Global Ratings revised its outlook on The Grandir Group to stable from positive and affirmed its 'B-' long-term issuer credit and issue ratings on the company and its EUR475 million TLB, respectively. The stable outlook reflects S&P's view that the company will integrate its latest acquisitions, scaling up the business and increasing profitability while reporting neutral or slightly positive FOCF after leases over the next two years. Grandir is issuing a EUR125 million add-on for its EUR350 million term loan B (TLB) to repay revolving credit facility (RCF) drawings of EUR65 million, refinance the equity bridge (used for mergers and acquisitions [M&A]) of EUR35 million, and finance bolt-on acquisitions. Grandir is raising new debt to finance its strong M&A activity. The EUR125 million debt add-on will repay the EUR65 million RCF drawings and EUR35 million equity bridge that financed the company's dynamic M&A activity, with 17 deals closed in 2022, mainly in the U.K. and U.S. Proceeds will also finance EUR30 million of secured M&A in the U.K., the U.S., France, and Canada, expected to close by the end of May 2023. S&P thinks these acquisitions should strengthen the business by adding geographic diversity and scale in a highly fragmented childcare industry. This should ultimately support margin and FOCF, given high operating leverage of the business model. It will also improve the geographic diversification of the group, which remains highly concentrated in the French market (about 67% of revenue in 2022). So far, Grandir has demonstrated a sound track record in integrating bolt-on acquisitions and is progressing well with the integration of Liveli, delivering expected synergies. Additional debt will delay deleveraging and consume FOCF in the next year. S&P said, "While these M&A transactions will support growth in revenue and EBITDA, we estimate adjusted leverage will remain close to 6.0x over the forecast period, as some ramp-up and synergies are yet to be achieved. Also, we anticipate FOCF after leases will remain neutral or slightly positive in the near future due to higher interest rates as well as transaction and restructuring expense related to the group's intense M&A activity. Cash flow will also be hampered by material investment in greenfield expansion projects, and we expect negative FOCF after leases of about EUR5 million in 2023, partially due to a one-off working capital reversal of EUR12 million, compared with our previous expectation of at least EUR10 million-EUR15 million. Still, we believe Grandir is well on track to achieve that target as it continues to roll out its growth strategy, but it will take longer than anticipated to achieve sustainably and meaningfully positive FOCF." The transaction will restore liquidity, which should remain adequate. S&P said, "We expect the EUR75 million RCF will be undrawn, along about EUR45 million of cash on the balance sheet, at the transaction's closing. We think the group will continue consolidating its market presence with further bolt-on acquisitions in the next couple of years. We anticipate that it will maintain prudent liquidity management, including cost monitoring in an inflationary context and tight investment criteria on new additions to the network, such that liquidity should remain adequate." S&P said, "The stable outlook reflects our expectation that Grandir will continue to roll out its growth strategy, improving scale and geographic diversification with no material disruption or delays. We anticipate the group will report leverage of 6.0x-6.5x and about neutral FOCF after leases in 2023, while maintaining adequate liquidity." S&P could lower its ratings on Grandir if, in the next 12 months: -- Delays integrating the latest acquisitions, a higher burden of exceptional costs than we expect, or further economic disruptions weaken the group's operating performance and render the capital structure's sustainability more uncertain; -- FOCF after leases remains negative for a prolonged period, weakening Grandir's liquidity position; or -- The group pursues a more aggressive financial policy including, for example, debt-funded acquisitions, resulting in persistently very high and unsustainable leverage. S&P could consider an update if Grandir delivers on growth plans such that FOCF after lease payments and restructuring or exceptional costs is at least EUR10 million-EUR15 million per year, and its adjusted FOCF-to-debt ratio for the group exceeds 5% sustainably. Any upgrade would also be predicated on a financial policy commitment to leverage being sustainably below 5.5x, supported by a track record of deleveraging. 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 Grandir, as is the case for most rated entities owned by private-equity sponsors. We believe the company's highly leveraged financial risk profile points to corporate decision-making that prioritizes the controlling owners's interests. This also reflects generally finite holding periods and a focus on maximizing shareholder returns." Environmental and social factors have an overall neutral influence. Grandir's revenue declined only modestly during the pandemic, and in Western Europe, government subsidies consistently helped the company face social risks. ============= G E R M A N Y ============= NORDEX SE: S&P Raises ICR to 'B' on Debt Repayment, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings raised its long-term issuer credit rating on Germany-based wind turbine manufacturer Nordex SE to 'B' from 'B-', reflecting the continued shareholder support and lack of material bullet maturities. The stable outlook reflects Nordex's decreased leverage and improved financial flexibility. S&P said, "We also consider that profitability will gradually improve as industry pressures will subside in the medium term. We project Nordex's performance will remain volatile in the next 12 months, constraining the company's profitability and cash flow generation." Nordex's debt repayment led to improved financial flexibility and materially lower adjusted debt. The rating upgrade follows the full repayment of the company's EUR275 million high-yield bond. The instrument was issued in 2018, with a five-year maturity and a 6.5% coupon. In 2022, Nordex's main shareholder, Acciona, lent EUR286 million to Nordex to repay the bond. Acciona has been supportive over the last three years by issuing a deeply subordinated shareholder loan in 2021, which for the largest part was converted to equity later, and subscribing to two capital increases made by Nordex, increasing its stake in the firm to 41%. Through the repayment, Nordex significantly decreased its debt. Its adjusted debt will be about EUR214 million in 2023 and EUR230 million in 2024. S&P said, "In our view, with the expected gradual recovery of profitability debt to EBITDA is likely to remain below 3.0x over the next 12 months. More than half of this debt consists of lease liabilities of EUR123.4 million and the remainder local facilities. We also incorporate that all outstanding shareholder loan amounts will be converted into equity throughout 2023, including accumulated interest." Legacy contracts and delayed effects of price increases limit Nordex's profitability through 2022 and into 2023. S&P said, "We anticipate Nordex's profitability will remain constrained through 2023, as the company will deliver on legacy wind turbine contracts agreed at a time when cost assumptions were much lower and with a lower ability to pass through costs in the contract structure. The time lag between order intake and construction of the wind turbine is about 18 months. Therefore, we do not anticipate the full benefits of Nordex's different measures, including recent price increases, to counter cost inflation will be realized before the later end of 2023 going into 2024, as these will benefit more from recent orders. Continued volatility caused by supply chain constraints and additional logistics disruptions in 2023 may further limit the benefits of such countermeasures by, for example, further delaying deliveries, thus preventing legacy orders from rolling off Nordex's order book sooner. This could cause orders to complete at higher cost, or result in penalties. We do not expect supply chain and freight dynamics to normalize before 2024. We now do not assume a normalized environment for wind turbine manufacturers before 2025. Hence, we will see only a gradual margin improvement over the next 24 months." S&P said, "Nordex's track record of negative FOCF weighs on the rating and we expect it will not turn positive over the next 12 months. The company's adjusted EBITDA margin has been negative for the last three years, resulting in negative FOCF generation. We do not expect it will turn positive in 2022 and 2023. As investment needs remain high at about 3.5% of revenues, FOCF could become neutral in 2024 if profitability increases like we project and working capital is managed prudently. "The stable outlook reflects Nordex's decreased leverage and improved financial flexibility. We also consider that profitability will gradually improve as industry pressures will subside in the medium term. We project Nordex's performance will remain volatile over the next 12 months, constraining the company's profitability and cash flow generation." Rating pressure could arise if the operating environment remains challenging, translating into no progress on improving profitability or generating consistently negative FOCF. This could result from escalating global supply, production, and installation constraints. S&P could also take a negative rating action if order intake weakens, indicating a loss of competitiveness, or liquidity deteriorates. S&P said, "We could consider raising the rating or revising the outlook if Nordex's operating environment starts stabilizing and profitability recovers, leading to consistent positive FOCF. Upside potential could arise from further support from main shareholder Acciona. We would also expect an adjusted EBITDA margin of at least 5%." ESG credit indicators: E-1, S-2, G-2 ============= I R E L A N D ============= CAPITAL FOUR V: S&P Assigns B-(sf) Rating on EUR12MM Class F Notes ------------------------------------------------------------------ S&P Global Ratings assigned its credit ratings to Capital Four CLO V DAC's class A, B-1, B-2, C, D, E, and F notes. At closing, the issuer also issued unrated subordinated notes. Under the transaction documents, the rated notes pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payment. This transaction has a two-year non-call period and the portfolio's reinvestment period ends approximately four and a half years after closing. The ratings assigned to the notes reflect S&P's assessment of: -- The diversified collateral pool, which consists primarily of broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. Portfolio Benchmarks CURRENT S&P Global Ratings weighted-average rating factor 2,766.81 Default rate dispersion 424.39 Weighted-average life (years) 4.83 Obligor diversity measure 111.74 Industry diversity measure 18.74 Regional diversity measure 1.35 Transaction Key Metrics CURRENT Total par amount (mil. EUR) 350.00 Defaulted assets (mil. EUR) 0 Number of performing obligors 122 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.00 'AAA' target portfolio weighted-average recovery (%) 37.56 Covenanted weighted-average spread (%) 3.92 Covenanted weighted-average coupon (%) 3.90 Delayed draw tranche The class F notes is a delayed draw tranche. It is unfunded at closing and has a maximum notional amount of EUR12.00 million and a spread of three/six-month Euro Interbank Offered Rate (EURIBOR) plus 11.00%. The class F notes can only be issued once and only during the reinvestment period. The issuer will use the proceeds received from the issuance of the class F notes to redeem the subordinated notes. Upon issuance, the class F notes' spread could be higher (compared with the issue date) subject to rating agency confirmation. For the purposes of our analysis, we assumed the class F notes to be outstanding at closing. Asset priming obligations and uptier priming debt Under the transaction documents, the issuer can purchase asset priming (drop down) obligations and uptier priming debt to address the risk of a distressed obligor either moving collateral outside the existing creditors' covenant group or incurring new money debt senior to the existing creditors. Rating rationale S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. We consider that the portfolio will primarily comprise broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR350 million par amount, the covenanted weighted-average spread of 3.92% and the covenanted portfolio weighted-average recovery rates for all rated notes. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "The transaction's legal structure is bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1 to F notes could withstand stresses commensurate with higher rating levels than those we have assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our assigned ratings on the notes. The class A notes can withstand stresses commensurate with the assigned rating. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for the class A, B-1, B-2, C, D, E, and F notes. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A to E notes based on four hypothetical scenarios. As S&P's ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and it would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, it has not included the above scenario analysis results for the class F notes. Environmental, social, and governance (ESG) factors S&P said, "We regard the exposure to ESG credit factors in the tr ansaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to the following industries: controversial weapons, casinos, pornography or prostitution, payday lending, tobacco, coal, palm oil, weapons, hazardous chemicals, endangered wildlife, or hazardous chemicals, waste, and pesticide. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Environmental, social, and governance (ESG) corporate credit indicators S&P said, "The influence of ESG factors in our credit rating analysis of European CLOs primarily depends on the influence of ESG factors in our analysis of the underlying corporate obligors. To provide additional disclosure and transparency of the influence of ESG factors for the CLO asset portfolio in aggregate, we've calculated the weighted-average and distributions of our ESG credit indicators for the underlying obligors (see "The Influence Of Corporate ESG Factors In Our Credit Rating Analysis Of European CLOs," published on April 20, 2022). We regard this transaction's exposure as being broadly in line with our benchmark for the sector, with the environmental and social credit indicators concentrated primarily in category 2 (neutral) and the governance credit indicators concentrated in category 3 (moderately negative)." Corporate ESG Credit Indicators ENVIRONMENTAL SOCIAL GOVERNANCE Weighted-average credit indicator* 2.03 2.15 2.87 E-1/S-1/G-1 distribution (%) 1.37 0.00 0.00 E-2/S-2/G-2 distribution (%) 80.25 75.37 15.46 E-3/S-3/G-3 distribution (%) 3.83 6.94 67.94 E-4/S-4/G-4 distribution (%) 0.00 3.14 0.00 E-5/S-5/G-5 distribution (%) 0.00 0.00 2.06 Unmatched obligor (%) 9.26 9.26 9.26 Unidentified asset (%) 5.29 5.29 5.29 Only includes matched obligor. The manager will provide an ESG monthly report that will include: -- The portfolio's weighted-average ESG score and distribution; -- The portfolio's weighted-average carbon intensity; and -- The list of obligors that have been reclassified as ESG ineligible obligations. Capital Four V DAC is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by speculative-grade borrowers. Capital Four CLO Management K/S manages the transaction as a lead manager and Capital Four Management Fondsmæglerselskab A/S as a co-collateral manager. Ratings List CLASS RATING AMOUNT SUB (%) INTEREST RATE* (MIL. EUR) A AAA (sf) 211.80 39.49 Three/six-month EURIBOR plus 1.84% B-1 AA (sf) 27.80 28.97 Three/six-month EURIBOR plus 3.00% B-2 AA (sf) 9.00 28.97 6.50% C A (sf) 17.50 23.97 Three/six-month EURIBOR plus 3.85% D BBB (sf) 22.80 17.46 Three/six-month EURIBOR plus 5.85% E BB- (sf) 15.40 13.06 Three/six-month EURIBOR plus 6.91% F§ B- (sf) 12.00 9.63 Three/six-month EURIBOR plus 11.00% Sub NR 35.40 N/A N/A *The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. §The class F notes is a delayed drawdown tranche, which is not issued at closing. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. PALMER SQUARE 2023-1: Moody's Assigns (P)Ba3 Rating to Cl. E Notes ------------------------------------------------------------------ Moody's Investors Service announced that it has assigned the following provisional ratings to notes to be issued by Palmer Square European Loan Funding 2023-1 Designated Activity Company (the "Issuer"): EUR272,000,000 Class A Senior Secured Floating Rate Notes due 2032-1, Assigned (P)Aaa (sf) EUR32,600,000 Class B1 Senior Secured Floating Rate Notes due 2032, Assigned (P)Aa2 (sf) EUR5,000,000 Class B2 Senior Secured Fixed Rate Notes due 2032, Assigned (P)Aa2 (sf) EUR17,800,000 Class C Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)A2 (sf) EUR21,400,000 Class D Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Baa3 (sf) EUR18,800,000 Class E Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Ba3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. The Issuer is a static CLO. The notes will be collateralized primarily by broadly syndicated senior secured corporate loans. Moody's expect the portfolio to be 100% ramped as of the closing date. Palmer Square Europe Capital Management LLC (the "Servicer") may sell assets on behalf of the Issuer during the life of the transaction. Reinvestment is not permitted and all sales and unscheduled principal proceeds received will be used to amortize the notes in sequential order. In addition, the Issuer will issue EUR28,590,000 of Subordinated Notes due 2032 which are not rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the Notes in order of seniority. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2021. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Servicer's investment decisions and management of the transaction will also affect the debt's performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2021. Moody's used the following base-case modeling assumptions*: Par Amount: EUR400,000,000 Diversity Score: 61 Weighted Average Rating Factor (WARF): 2697 Weighted Average Spread (WAS): 3.89% (actual spread vector of the portfolio) Weighted Average Coupon (WAC): 4.05% (actual spread vector of the portfolio) Weighted Average Recovery Rate (WARR): 44.5% Weighted Average Life (WAL): 4.5 years (actual amortization vector of the portfolio) * Moody's base case assumptions include a very low single digit proportion of dummy assets. PRIMROSE RESIDENTIAL 2022-1: Fitch Affirms CCC Rating on G Certs ---------------------------------------------------------------- Fitch Ratings has revised the Outlooks on Primrose Residential 2022-1 DAC's class C, D, E and F notes to Positive from Stable and affirmed all ratings. Entity/Debt Rating Prior ----------- ------ ----- Primrose Residential 2022-1 DAC A XS2460259752 LT AAAsf Affirmed AAAsf B XS2460260255 LT AA-sf Affirmed AA-sf C XS2460260842 LT A-sf Affirmed A-sf D XS2460260925 LT BBBsf Affirmed BBBsf E XS2460261147 LT BBsf Affirmed BBsf F XS2460267771 LT B-sf Affirmed B-sf G XS2460267938 LT CCCsf Affirmed CCCsf TRANSACTION SUMMARY Primrose Residential 2022-1 DAC is a securitisation of first-lien residential mortgage assets that were originated before the global financial crisis by three Irish lenders. The seller is Ailm Residential DAC and the provider of representations and warranties is Morgan Stanley Principal Funding, Inc. Mars Capital Finance Ireland DAC and Pepper Finance Corporation (Ireland) DAC service the portfolio and remain the legal title holder. KEY RATING DRIVERS Limited Transaction History: The transaction closed less than 12 months ago, and during this short period portfolio performance and notes amortisation were consistent with Fitch's expectations. The transaction's limited seasoning, together with the increased macroeconomic uncertainty, led affirmations. The revision of the Outlooks on the class C, D, E and F notes was driven by the significant margin of safety in the relevant rating scenarios. Stable Performance: As at December 2022, 8.7% (9.2% at closing) of the pool was in arrears by more than one month, with 6.3% (5.4% at closing) in arrears by more than three months. Since closing, 0.2% of the portfolio is in repossession and the realised losses account for less than 45bp. WAC Caps May Limit Interest: The class B to G notes are subject to a net weighted average coupon (WAC) cap and the additional amounts due above the net WAC has been paid in full in a subordinated position in the revenue waterfall, since the first interest payment date. The class A notes will not be subject to the net WAC cap. The ratings do not address these amounts, but Fitch notes that small additional amounts have been paid in a subordinate position for class B, contrary to what expected at closing. Fitch understands this is due to the rapidly raising rate environment and the time-lag between rate determination on the bonds (each month) and the assets (a lag up to two months). Fitch expects these amounts to remain small and to gradually reduce once the interest rate environment stabilises. High Portion of Restructured Loans: A significant portion of the pool contains restructured loans (47.9%) but many restructured borrowers' ability to pay improved post-restructure, as most of these loans are now reperforming. For borrowers with a reported date last in arrears in the past 12 months and a clean arrears balance, Fitch has reduced the foreclosure frequency (FF) adjustment to 1.5x the base loan-level FF from an FF floor of 55% (more than three months' arrears) at an expected case. This constituted a variation from the European RMBS Rating Criteria, applied since closing. Unhedged Basis Risk: Of the loans in the portfolio, 63.1% track the ECB base rate with a loan weighted-average (WA) margin of 1.5%. There is no swap to hedge the mismatch between the ECB tracker-linked assets and the Euribor-based notes, exposing the transaction to potential basis risk. For these loans, Fitch has stressed the transaction cash flows for this mismatch, in line with its criteria. The rest of the floating-rate loans are on standard variable rate (31.8% of the portfolio balance). These have a minimum documented WA margin of one-month Euribor plus 2.5%, which largely mitigates the mismatch with the notes. Fixed-rate loans are limited to 2.7% of the pool, of which 1.4% is fixed for life. Rising Rate Exposure Partially Hedged: At closing, an interest rate cap was put in place for 10 years to hedge against rising interest rates. It is based on an initial scheduled notional amount of EUR100 million (27.2% of the closing asset balance) and a strike rate that rises incrementally to a maximum of 3.5%. The cap has a premium of 30bp running for the first three years, rising to 60bp for the remaining seven years. The premium is included as an issuer senior expense. Fitch tested an amended stressed interest rate path with a plateau of 3.5% to assess whether as a result of the interest rate cap, a lower plateau would be significantly more stressful than Fitch's standard upward interest rate curves as outlined in its Structured Finance and Covered Bonds Interest Rate Stresses Rating Criteria. The outcome of this test did not affect the assigned ratings. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: The transaction's performance may be affected by changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing levels of delinquencies and defaults that could reduce credit enhancement available to the notes. In addition, unanticipated declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to potential negative rating action depending on the extent of the decline in recoveries. Fitch tested a 15% increase in the WAFF and a 15% decrease in the WA recovery rate. The results indicate downgrades of one notch for the class A, B and C notes, and two notches for the class D, E and F notes. In this instance the class G notes will be downgraded by more than one category. Factors that could, individually or collectively, lead to positive rating action/upgrade: Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement levels and consideration of potential upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the FF of 15% and an increase in the recovery rate of 15%. The ratings could be upgraded by one notch for the class B, two notches for the class C, more than one rating category for the class D, E, F notes and one rating category for the class G. CRITERIA VARIATION Fitch applied a criteria variation to account for the perfect payment history of certain borrowers. This was undertaken by re-classifying these loans in the 12-23-month arrears bucket, where a 1.5x adjustment is applied to the base loan-level FF. This constituted a variation from the European RMBS criteria. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Primrose Residential 2022-1 DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Prior to the transaction closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. 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. =============== P O R T U G A L =============== SAGRES STC - PELICAN 3: S&P Raises Class D Notes Rating to 'BB+' ---------------------------------------------------------------- S&P Global Ratings raised its credit ratings on SAGRES STC - Pelican Mortgages No. 3's class B notes to 'A+ (sf)' from 'BBB (sf)', class C notes to 'BBB+ (sf)' from 'BB (sf)', and class D notes to 'BB+ (sf)' from 'B+ (sf)'. At the same time, S&P has affirmed its 'AA+ (sf)' rating on the class A notes. The rating actions reflect its full analysis of the most recent information that it has received and the transaction's structural features. S&P said, "After applying our global RMBS criteria, the overall effect is a decrease of our expected losses due to the decrease of our weighted-average foreclosure frequency (WAFF) and weighted-average loss severity (WALS) assumptions. Our WAFF assumptions have decreased due to lower effective loan-to-value (LTV) ratios and higher seasoning. In addition, our WALS assumptions have decreased due to the lower current LTV ratio. At the same time, the overall credit enhancement continues to increase. The upgrades are driven by the lower expected losses and higher available credit enhancement." Table 1 Credit Analysis Results RATING WAFF (%) WALS (%) CREDIT COVERAGE (%) AAA 9.22 2.00 0.18 AA 6.30 2.00 0.13 A 4.85 2.00 0.10 BBB 3.69 2.00 0.07 BB 2.48 2.00 0.05 B 1.63 2.00 0.03 WAFF--Weighted-average foreclosure frequency. WALS--Weighted-average loss severity. Arrears are low, currently about 0.24% of the outstanding collateral balance. Overall delinquencies remain well below S&P's Portuguese RMBS index. Cumulative defaults have barely increased in the last two years. There are 12.7% of loans that benefit from a government subsidy for mortgage interest payments. Since 2020, subsidized loans were misreported by the servicer. S&P said, "We have reviewed our previous analysis with the correct figures, and it does not have an impact on the ratings. In our analysis, we incorporate the risk of a sovereign default, which would affect the transaction's performance." S&P's operational, counterparty, and legal risk analyses remain unchanged since its previous review. Therefore, the ratings assigned are not capped by any of these criteria. Although the notes are amortizing on a pro rata basis, the available credit enhancement for all classes of notes has increased since our previous reviews due to the nonamortizing reserve fund. S&P said, "The analytical framework in our structured finance sovereign risk criteria assesses a security's ability to withstand a sovereign default scenario. These criteria classify this transaction's sensitivity as low. Therefore, the highest rating that we could assign to the tranches in this transaction is six notches above the unsolicited sovereign rating on Portugal, or 'AA+ (sf)'. For this reason, despite our analysis indicating that the credit enhancement available for class A is commensurate with a higher rating, we have affirmed our 'AA+ (sf)' rating on the class A notes. We also consider that the rating assigned to these notes can be delinked from the swap. "We have raised to 'A+ (sf)' from 'BBB (sf)', 'BBB+ (sf)' from 'BB (sf)', and 'BB+ (sf)' from 'B+ (sf)' our ratings on the class B, C, and D notes, respectively. These notes could withstand stresses at a higher rating than the ratings assigned. However, we have limited our upgrades based on their overall credit enhancement and their position in the waterfall, and the current macroeconomic environment considering the increased cost of living. In addition, the most junior tranches are expected to have a longer duration than the senior tranches, meaning that they are more vulnerable to tail-end risk." SAGRES STC - Pelican Mortgages No. 3 is a Portuguese RMBS transaction that securitizes a pool of first-ranking prime residential mortgage loans originated by Caixa Economica Montepio Geral. It closed in March 2007. =========================== U N I T E D K I N G D O M =========================== AARTEE BRIGHT: UK Court to Hear GFG's Challenge on Administration ----------------------------------------------------------------- Christopher Rivituso at MetalMiner reports that on March 15, a UK court will hear a challenge by GFG Alliance against Aartee Bright Bar's (ABB) entrance into administration, the UK equivalent of bankruptcy. The move comes shortly after the business group's mid-February acquisition of the specialty bar producer and its steel production facilities, MetalMiner notes. According to a source close to MetalMiner, the decision directly stems from a Feb. 24 application to reverse the administration. ABB made the official announcement on Feb. 6, MetalMiner recounts. A few days earlier, the steel production company's New York-headquartered creditor, FGI, filed for administration, MetalMiner discloses. At the time, the latter company claimed it needed to enforce its debts against West Midlands-based ABB. It even appointed compatriot company Alvarez & Marsal as administrators, MetalMiner relates. Upon making the announcement, ABB's parent company, Aartee Group, claimed it made regular payments to FGI, MetalMiner notes. On Feb. 17, GFG officially announced its plans to challenge ABB's administration, MetalMiner recounts. In addition to this, that was the same day the group announced its acquisition of the company, MetalMiner MetalMiner discloses. GFG Alliance is the parent company of Liberty Steel, which has steelmaking production assets in the UK and worldwide. According to its website, Liberty Steel has an estimated total crude steel capacity of about 15 million metric tons per year. Liberty is the main feedstock supplier to ABB, and GFG noted its plans to integrate the bar producer into Liberty's operations. GROSVENOR SQUARE 2023-1: S&P Assigns Prelim. 'B' Rating on F Certs ------------------------------------------------------------------ S&P Global Ratings assigned preliminary ratings to Grosvenor Square RMBS 2023-1 PLC's (GSQ 2023-1's) class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, F-Dfrd, G-Dfrd, XS1-Dfrd, and XS2-Dfrd notes. At closing, GSQ 2023-1 also issued unrated Z notes and X and Y certificates. GSQ 2023-1 is a static RMBS transaction that securitizes a portfolio of owner occupied and buy-to-let (BTL) mortgage loans secured on properties in the U.K. The transaction also has a prefunding mechanism. Most loans in the pool (99.9%) were originated by Kensington Mortgages Company Ltd. (KMC), a non-bank specialist lender. The remaining 0.1% of the pool were originated by Southern Pacific Mortgages Ltd., Southern Pacific Personal Loans Ltd., and Money Partners Ltd. For this sub-pool, KMC previously acquired the loans from the respective originators and is currently the legal titleholder to each of the loans. The mortgages originated by KMC have all previously been securitized within transactions from the Finsbury Square or Gemgarto shelf. The collateral comprises complex income borrowers with limited credit impairments, and there is a high exposure to self-employed, contractors, and first-time buyers. The transaction benefits from a general reserve fund, and principal can be used to pay senior fees and interest on the notes subject to various conditions. A further liquidity reserve can be funded via the principal waterfall subject to certain conditions. Credit enhancement for the rated asset-backed notes will consist of subordination from the closing date and the general reserve fund. The transaction incorporates a swap to hedge the mismatch between the notes, which pay a coupon based on the compounded daily Sterling Overnight Index Average (SONIA), and the loans, which pay fixed-rate interest before reversion. Kensington Mortgage Company Ltd. will continue to service the portfolio. At closing, the issuer will use the issuance proceeds to purchase the full beneficial interest in the mortgage loans from the seller. The issuer grants security over all its assets in favor of the security trustee. S&P said, "There are no rating constraints in the transaction under our counterparty, operational risk, or structured finance sovereign risk criteria. We consider the issuer to be bankruptcy remote under our legal criteria. We have not received the legal opinions for this transaction at this stage. We expect to assign credit ratings on the closing date subject to a satisfactory review of the transaction documents and legal opinions. "Our current macroeconomic forecasts are considered in our ratings through additional cash flow sensitivities assuming increased defaults." Preliminary Ratings CLASS PRELIM. RATING* AMOUNT (MIL. GBP) A AAA (sf) 1,138.323 B-Dfrd AA- (sf) 68.299 C-Dfrd A (sf) 32.524 D-Dfrd BBB (sf) 26.019 E-Dfrd BB (sf) 16.262 F-Dfrd B (sf) 9.757 G-Dfrd CCC (sf) 9.756 XS1-Dfrd BBB+ (sf) 9.757 XS2-Dfrd BBB (sf) 6.505 Z NR 13.010 X Certificate NR N/A Y Certificate NR N/A HARTLEY PENSIONS: Joint Administrators Mull Suit to Recover Loan ---------------------------------------------------------------- Michael Klimes at Money Marketing reports that the joint administrators of Hartley Pensions are considering "whether legal action should be commenced” to recover a loan made by the Sipp provider. Hartley Pensions made the loan to Wilton & Partners Ltd (W&P), an Irish registered entity within the Wilton Group, according to a report, Money Marketing discloses. The revelation sheds additional light on the commercial relationships between Hartley Pensions and other parts of the Wilton Group. These relationships involved intercompany loans that ultimately led to the Financial Conduct Authority stopping Hartley Pensions from conducting any new business in March 2022, Money Marketing notes. In the report, administrator UHY Hacker Young LLP said it identified four transactions in company records, Money Marketing relates. It was advised these were a loan from Hartley Pensions to W&P and they totalled EUR1,654,822.50, Money Marketing discloses. UHY Hacker Young LLP goes onto say that upon requesting payment of the loan, it was provided with a loan agreement dated July 14, 2022, Money Marketing notes. This was between the Hartley Pensions, W&P and Wilton Group Limited -- the ultimate parent. The loan agreement stated that the loans would be repaid upon the creation of a Wilton controlled pensions holding company to be known as "Guinness Mahon", according to Money Marketing. In the event that repayment could not be made under the agreed terms, it was said the loans would be repaid from the sale of Bespoke Trustees Limited, Money Marketing discloses. This was bought by Wilton Group in September 2021 and is a Sipp operator. According to Money Marketing, the report said "it should be noted" that the agreement was dated two weeks prior to the Hartley Pensions being placed into administration. And while UHY Hacker Young LLP requested documentation to support the expressed intention at the time of loan, no supporting evidence has been provided and no documents have been identified in the Hartley Pensions's records, Money Marketing staes. The Financial Conduct Authority accused Hartley Pensions of taking client money without their consent and failing to meet liquid capital requirements, Money Marketing recounts. The owners of Hartley Pensions originally proposed a rescue plan to the FCA that was rejected before it went into administration, Money Marketing relays. These plans involved intercompany loans that Hartley Pensions claimed it would be able to recoup from affiliated companies [Wilton UK (Group) Ltd and Wilton & Partners Ltd] to meet liquid capital requirements (LCR) and solvency issues, Money Marketing discloses. Wilton UK (Group) Ltd bought Hartley Pensions in 2016 and is wholly owned by Wilton Group Ltd in the Isle of Man. ME AND MY HEALTH: Intends to Appoint Administrators --------------------------------------------------- Daniel Pye at The Mail reports that a healthcare company that had failed to pay staff for two months is now seeking administration. An internal email sent to Me and My Health staff, based at Harding Rise in Barrow, by chief executive officer Stuart MacLennan, said the directors of the company had "sought professional advice and have concluded that the company is insolvent", The Mail relates. "Accordingly, the directors have lodged a Notice of Intention to appoint Administrators with the High Court with a view to placing the company into Administration as soon as possible," The Mail quotes the email as saying. "The company has ceased to trade and steps are being taken to appoint Administrators to deal with the affairs of the company. "Unfortunately, redundancies will now be inevitable and the directors are taking the appropriate steps to commence this process." RAILSR: Bought Out of Administration Via Pre-Pack Deal ------------------------------------------------------ Amy O'Brien at Sifted reports that London-based embedded finance platform Railsr has closed a rescue deal with a syndicate of new and existing investors that will allow it to continue as a business. According to Sifted, Railsr, which had been struggling to find a buyer for months, has received a capital investment from a consortium of investors led by new investor D Squared Capital and existing investors Moneta VC and Ventura Capital. The exact terms of the sale were not disclosed, Sifted notes. The deal is part of a pre-pack administration process that will see its existing business entity put into administration, so that it can continue to trade under a new entity -- called Embedded Finance Limited, Sifted states. Railsr said the change of control had been agreed with the UK's Financial Conduct Authority, Sifted relates. The sale means that Railsr's customers -- including British fintech Wagestream, which has more than 5 million customers -- will be able to continue using its platform, Sifted discloses. It brings to an end a months-long struggle to find a buyer, after takeover talks with Nigerian fintech Flutterwave collapsed last year, Sifted recounts. RIDE-ON SCOTLAND: Placed In Provisional Liquidation --------------------------------------------------- Peter A Walker at insider.co.uk reports that Ride-on Scotland, an e-bike hire business with fleets and infrastructure in Dundee and Leicester, has been placed in provisional liquidation. Founded in 2018 and headquartered in Dundee, the company invested in e-bikes, charging and docking stations, software, maintenance systems and support. It was then acquired outright by Enzen in 2020. Ride-on offered a membership model with monthly or annual subscriptions which, together with an app, provided 24/7 access. Dundee City Council and Leicester City Council had awarded contracts to the business to operate the services. The Dundee business suspended operations in November and the Leicester business suspended operations last week, insider.co.uk recounts. According to insider.co.uk, due to a lack of investment the business suffered unsustainable working capital and cash flow problems, and as such, the directors had no alternative other than to request the appointment of provisional liquidators. Ride-on and its operations in Dundee and Leicester have now ceased trading and all nine employees have been made redundant, insider.co.uk relates. Joint provisional liquidators FRP Advisory will now wind up the business and market the business and assets for sale, including a fleet of e-bikes -- around 200 in Dundee and 300 in Leicester -- along with charging systems, software and maintenance systems, insider.co.uk discloses. STEEL RIGGING: Director Faces 17-Year Disqualification ------------------------------------------------------ The Insolvency Service on March 8 disclosed that Michael Andrew Higgins, 56, and Dean Emanuel Miller, 41, both from Sheffield, have been disqualified as company directors for a total of 17 years after separate Insolvency Service investigations found that through their respective companies they had each abused the covid loan support scheme. Michael Higgins was sole director of Steel Rigging Ltd, which traded as a company providing driving services for vehicles on outside TV broadcasts, from its incorporation in March 2015 until it went into liquidation in December 2021. In November 2020, Higgins applied for a GBP20,000 Bounce Back Loan to support his business through the Covid-19 pandemic, stating on the application that the company's turnover for 2019 had been GBP80,000. Bounce Back Loans were a government scheme to support businesses during the Covid-19 pandemic, in which companies could apply for loans of up to 25% of their 2019 turnover, to a maximum of GBP50,000. Under the rules of the scheme, any loan money allocated was to be used for the economic benefit of the business, and not for personal purposes. But Steel Rigging Ltd went into liquidation in December 2021, owing GBP23,900 -- including the full amount of the Bounce Back Loan -- and prompting an investigation by the Insolvency Service. Investigators found that the company's turnover had in fact been just under GBP40,000 in financial year ending March 31, 2019, and around GBP43,100 for the following financial year, meaning that the company had claimed at least GBP9,200 more in loan money than it was entitled to. They also discovered that Higgins had transferred the GBP20,000 to his own bank account over a period of 3 weeks in January and February 2021, without any evidence to show that these funds were used for the benefit of Steel Rigging Ltd. And in a separate case, Dean Miller, sole director of IBODYTALKS Ltd, an online health and fitness business also based in Sheffield, applied for a GBP42,000 Bounce Back Loan for his company in May 2020. Miller stated in the application that the firm, which was incorporated in April 2019, had been dormant until April 2020, and used a predicted turnover of GBP168,000 to apply for the loan. Under the rules of the scheme, businesses incorporated after January 1, 2019, were asked to estimate their turnover. But the company went into liquidation in October 2021 owing more than GBP40,000, triggering an Insolvency Service investigation. Investigators discovered that IBODYTALKS Ltd had in fact been trading since December 2019, after finding that five deposits totalling GBP588 had been made into the company bank account between then and April 2020. They calculated that IBODYTALK's projected turnover for the year could only have been around GBP101,100, meaning that it had received more than £16,700 of loan money to which it had not been entitled. Investigators also found that in June 2020, a month after the company received the loan, Miller transferred GBP41,000 to a connected company, and did not provide any evidence to show the money was used for the benefit of IBODYTALKS Ltd. The Secretary of State for Business, Energy and Industrial Strategy accepted disqualification undertakings from the two directors, after both did not dispute that they had caused their companies to receive Bounce Back Loans to which they were not entitled, and failed to show that the money had been used for the economic benefit of their companies. Michael Higgins' disqualification lasts for 8 years and started on January 3, 2023. Dean Miller was banned for 9 years, beginning February 1, 2023. The disqualifications prevent them from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court. Lawrence Zussman, Deputy Head of Company Investigations at the Insolvency Service, said: "Covid support schemes were a lifeline to businesses across the UK, protecting jobs and preserving businesses. "Michael Higgins and Dean Miller abused the scheme, and their lengthy bans should serve as a reminder to others that the Insolvency Service will not shirk from its responsibility in taking action in order to protect the public and the taxpayer." VMOTO DISTRIBUTION: Formally Enters Administration -------------------------------------------------- Sam Metcalf at TheBusinessDesk.com reports that an electric motorbike distributor that describes itself as being part of an "urban mobility revolution" has formally entered administration. The move to appoint Kingsbridge Corporate Solutions comes after Newark-based Vmoto Distribution UK posted two notices of intention to appoint administrators (NOI) in just over a week in the second half of February, TheBusinessDesk.com relates. The firm employs around around 14 people, according to its last available accounts, TheBusinessDesk.com notes. Vmoto Distribution UK is a subsidiary of London-based GreenMo UK. It is the sole UK importer and distributor of Vmoto motorbikes and Super Soco electric scooters. =============== X X X X X X X X =============== [*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace ------------------------------------------------------------- Author: Warren E. Agin Publisher: Bowne Publishing Co. List price: $225.00 Review by Gail Owens Hoelscher Red Hat Inc. finds itself with a high of 151 5/8 and low of 20 over the last 12 months! Microstrategy Inc. has roller-coasted from a high of 333 to a low of 7 over the same period! Just when the IPO boom is imploding and high-technology companies are running out of cash, Warren Agin comes out with a guide to the legal issues of the cyberage. The word "cyberspace" did not appear in the Merriam-Webster Dictionary until 1986, defined as "the on-line world of computer networks." The word "Internet" showed up that year as well, as "an electronic communications network that connects computer networks and organizational computer facilities around the world." Cyberspace has been leading a kaleidoscopic parade ever since, with the legal profession striding smartly in rhythm. There is no definition for the word "cyberassets" in the current Merriam-Webster. Fortunately, Bankruptcy and Secured Lending in Cyberspace tells us what cyberassets are and lays out in meticulous detail how to address them, not only for troubled technology companies, but for all companies with websites and domain names. Cyberassets are primarily websites and domain names, but also include technology contracts and licenses. There are four types of assets embodied in a website: content, hardware, the Internet connection, and software. The website's content is its fundamental asset and may include databases, text, pictures, and video and sound clips. The value of a website depends largely on the traffic it generates. A domain name provides the mechanism to reach the information provided by a company on its website, or find the products or services the company is selling over the Internet. Examples are Amazon.com, bankrupt.com, and "swiggartagin.com." Determining the value of a domain name is comparable to valuing trademark rights. Domain names can come at a high price! Compaq Computer Corp. paid Alta Vista Technology Inc. more than $3 million for "Altavista.com" when it developed its AltaVista search engine. The subject matter covered in this book falls into three groups: the Internet's effect on the practice of bankruptcy law; the ways substantive bankruptcy law handles the impact of cyberspace on basic concepts and procedures; and issues related to cyberassets as secured lending collateral. The book includes point-by-point treatment of the effect of cyberassets on venue and jurisdiction in bankruptcy proceedings; electronic filing and access to official records and pleadings in bankruptcy cases; using the Internet for communications and noticing in bankruptcy cases; administration of bankruptcy estates with cyberassets; selling bankruptcy estate assets over the Internet; trading in bankruptcy claims over the Internet; and technology contracts and licenses under the bankruptcy codes. The chapters on secured lending detail technology escrow agreements for cyberassets; obtaining and perfecting security interests for cyberassets; enforcing rights against collateral for cyberassets; and bankruptcy concerns for the secured lender with regard to cyberassets. The book concludes with chapters on Y2K and bankruptcy; revisions in the Uniform Commercial Code in the electronic age; and a compendium of bankruptcy and secured lending resources on the Internet. The appendix consists of a comprehensive set of forms for cyberspace-related bankruptcy issues and cyberasset lending transactions. The forms include bankruptcy orders authorizing a domain name sale; forms for electronic filing of documents; bankruptcy motions related to domain names; and security agreements for Web sites. Bankruptcy and Secured Lending in Cyberspace is a well-written, succinct, and comprehensive reference for lending against cyberassets and treating cyberassets in bankruptcy cases. ********* 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 * * *