/raid1/www/Hosts/bankrupt/TCREUR_Public/230324.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 24, 2023, Vol. 24, No. 61
Headlines
F R A N C E
LA FINANCIERE ATALIAN: S&P Affirms 'B-' ICR, Off Watch Negative
I R E L A N D
BUSHY PARK: S&P Assigns B- Rating on EUR14.4MM Class F Notes
I T A L Y
FIS FABBRICA ITALIANA: Fitch Affirms B LongTerm IDR, Outlook Stable
L U X E M B O U R G
WINTERFELL FINANCING: Moody's Rates New EUR400MM Loan 'B2'
WINTERFELL FINANCING: S&P Assigns 'B' Rating on 1st Lien Term Loan
N O R W A Y
PGS ASA: Moody's Hikes CFR to B3 & Alters Outlook to Stable
R O M A N I A
BLUE AIR: Enters Insolvency, May 5 Claims Filing Deadline Set
GLOBALWORTH REAL ESTATE: S&P Cuts LT ICR to 'BB+', Outlook Stable
S P A I N
UCI 16: S&P Affirms D(sf) Rating on Class E Notes
S W I T Z E R L A N D
BREITLING FINANCING: S&P Gives B Rating on Secured Term Loan B
BREITLING HOLDINGS: Moody's Affirms B2 CFR Amid Loan Add-on
T U R K E Y
ARCELIK AS: S&P Lowers ICR to 'BB' on Higher Cost of Debt
U N I T E D K I N G D O M
BRIDGES ANTONINE: Goes Into Administration
CHILD'S PLAY: Goes Into Liquidation
ORIFLAME HOLDING: Moody's Withdraws 'B3' Corporate Family Rating
ORIFLAME INVESTMENT: S&P Lowers ICR to 'B-', Outlook Stable
SEVENOAKS LEISURE: Lullingstone Park Closed Following Liquidation
THAMES WATER: Moody's Affirms B1 Rating on GBP400MM Secured Debt
VIRGIN ORBIT: In Talks with Potential Investors
X X X X X X X X
[*] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace
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F R A N C E
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LA FINANCIERE ATALIAN: S&P Affirms 'B-' ICR, Off Watch Negative
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S&P Global Ratings affirmed its 'B-' long-term ratings on La
Financiere Atalian SAS and removed them from CreditWatch, where S&P
placed them with negative implications on Dec. 26, 2022.
The negative outlook indicates that S&P could lower the ratings on
Atalian if the company is not able to make tangible progress on
improving profitability, cash flow generation, and liquidity in the
coming months.
Atalian, a provider of outsourced cleaning and facility management
services, announced that it had closed the sale of its U.K.,
Ireland, Asia, and Aktrion businesses to CD&R for an enterprise
value of EUR735 million on Feb. 28, 2023. The proceeds will help
Atalian improve its liquidity and largely address its near-term
debt maturities, including the fully drawn EUR103 million revolving
credit facility (RCF) due April 2023 and EUR625 million senior
unsecured notes due May 2024.
Proceeds from sale of Atalian's U.K., Ireland, Asia, and Aktrion
businesses largely alleviate the near-term liquidity risk. Atalian
will receive total proceeds of EUR753 million, including EUR698
million in cash received upfront and EUR55 million in the form of a
two-year payment-in-kind (PIK) vendor loan. The company announced
that it plans to use part of the proceeds to repay its fully drawn
RCF that would not be otherwise refinanced, and to partially
reimburse its EUR625 million notes due in 2024. S&P said, "As a
result of the disposal, Atalian's liquidity has improved but
remains tight as we calculate that its liquidity sources will
barely cover its liquidity uses over the near term, including the
RCF and 2024 notes maturities. However, we understand that Atalian
is also contemplating a refinancing of its capital structure. It
will therefore not immediately use the proceeds to repay debt.
Under its debt documentation, the company has 365 days to apply the
proceeds from an asset sale. We note that Atalian's capital
structure currently presents a debt maturity risk, with a weighted
average maturity of debt below two years, and a currency risk since
it has GBP225 million of pound sterling-denominated debt while it
no longer generates cash flows in this currency."
Atalian's ability to refinance its debt will hinge on the
improvement of its profitability in France and the U.S., which
could prove challenging in the current macroeconomic environment.
S&P said, "We anticipate that Atalian's S&P Global Ratings-adjusted
debt to EBITDA will reduce to 8.5x-9.0x in 2023 and 7.0x-7.5x in
2024, from 12.5x in 2022, on the back of the disposal and our
expectation of moderate margin enhancement and lower restructuring
expenses. In particular, we expect the company's price negotiations
with clients in second-half 2022 will help mitigate cost inflation
and restore margins in France toward their historical level of
above 10%, as reported by the company. Combined with the ongoing
restructuring of its U.S. subsidiary, this should raise Atalian's
S&P Global Ratings-adjusted EBITDA margin toward 5.0%-5.5% in 2023
and 6.0%-6.5% in 2024, from 4.1% in 2022. In turn, EBITDA growth
should drive FOCF after lease payments close to breakeven in 2024,
after negative EUR55 million-EUR60 million expected in 2023.
However, we believe the pace of deleveraging could be challenged by
a recessionary environment, competitive pressures, and ongoing
inflation. Further, there could be additional operational costs
associated with implementation of a new strategy for Atalian's
post-disposal perimeter and the turnaround of the still loss-making
U.S. segment. We note that Atalian recently appointed a new CEO. We
will closely monitor the company's strategy and refinancing plans
under the new management."
Despite the disposal of about one-third of its revenue, Atalian
remains a leading player in Europe, albeit in a very fragmented
market. The sale of U.K., Ireland, Asia, and Aktrion businesses to
CD&R has reduced Atalian's scale and geographic diversity. Post
disposal, the company generates about two-thirds of revenue from
France, 5% from Belgium, 5% from the U.S. and the rest mainly from
Eastern Europe. The company is also considering a sale of its U.S.
business. Such a sale would further reduce the company's geographic
footprint but help improve its profitability and credit metrics in
the short term as the U.S. business has been a drag on the
company's operating performance. The new Atalian's EUR2.0 billion
revenue base ranks above Rekeep and Armorica Lux's close to EUR1.0
billion sales, but is well below Elior (EUR4.3 billion) and ISS
(close to EUR10 billion). However, with about EUR1.4 billion of
revenue in France, Atalian remains one of the leading multifacility
service providers in its home market, with a diverse portfolio of
services provided. Its scale of operations has supported margins
above 10% in France historically, although they declined to about
9% in 2022 due to a higher churn rate along with some inflationary
pressure. We will closely monitor the company's ability to restore
margins, which we see as a reflection of its competitive position.
The negative outlook indicates that S&P could lower the ratings on
Atalian if the company is not able to make tangible progress on
improving profitability, cash flow generation, and liquidity in the
coming months.
S&P could lower the rating on Atalian if:
-- Atalian's liquidity does not improve;
-- Its profitability remains subdued, or the company incurs
material restructuring costs or exceptional items, resulting in
sustained high leverage and causing us to consider the company's
capital structure as unsustainable;
-- S&P sees increased likelihood of a distressed debt
restructuring, including a repurchase of bonds below par.
S&P could revise its outlook to stable if Atalian demonstrates
healthy EBITDA growth that yields improvements in leverage, cash
flow, and liquidity. S&P would also need to see the company making
progress in the refinancing of its debt maturities.
ESG credit indicators: E-2, S-2, G-4
S&P said, "Governance factors are a negative consideration in our
credit rating analysis of Atalian. We believe management has a
higher appetite for internal and operational risks and weak risk
management, as shown by the non-execution of the put option for the
acquisition by CD&R, given weak operating performance and upcoming
debt maturities. Additionally, the company also has a history of
deficiencies in internal controls, litigation settlement, and
additional tax provisions."
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I R E L A N D
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BUSHY PARK: S&P Assigns B- Rating on EUR14.4MM Class F Notes
------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Bushy Park CLO
DAC's class A, B, C, D, E, and F notes. At closing, the issuer also
issued unrated subordinated notes.
The class F notes is a delayed draw tranche, which has a maximum
notional amount of EUR14.4 million, and a spread of three/six-month
Euro Interbank Offered Rate (EURIBOR) plus 9.15%. They can only be
issued once and only during the reinvestment period with an
issuance amount totaling EUR14.4 million. The issuer will use the
full proceeds received from the sale of the class F notes to redeem
the subordinated notes. Upon issuance, the class F notes' spread
could be subject to a variation and, if higher, is subject to
rating agency confirmation.
The reinvestment period is 4.57 years, while the non-call period is
1.57 years after closing.
Under the transaction documents, the rated loans and notes will pay
quarterly interest unless there is a frequency switch event.
Following this, the notes will switch to semiannual payment.
The ratings assigned to the notes reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
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.
-- The transaction's legal structure, is bankruptcy remote.
-- The transaction's counterparty risks, which is in line with our
counterparty rating framework.
Portfolio Benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,794.80
Default rate dispersion 476.17
Weighted-average life (years) 4.60
Obligor diversity measure 127.97
Industry diversity measure 19.29
Regional diversity measure 1.20
Transaction Key Metrics
CURRENT
Total par amount (mil. EUR) 400.00
Defaulted assets (mil. EUR) 0.00
Number of performing obligors 160
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 1.60
Actual 'AAA' weighted-average recovery (%) 36.82
Actual weighted-average spread (%) 3.96
Actual weighted-average coupon (%) 4.91
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 the portfolio to be well-diversified, primarily
comprising 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.
"The transaction includes an amortizing reinvestment target par
amount, which is a predetermined reduction in the value of the
transaction's target par amount unrelated to the principal payments
on the notes. This may allow for the principal proceeds to be
characterized as interest proceeds when the collateral par exceeds
this amount, subject to a limit, and affect the reinvestment
criteria, among others. This feature allows some excess par to be
released to equity during benign times, which may lead to a
reduction in the amount of losses that the transaction can sustain
during an economic downturn. Hence, in our cash flow analysis, we
assumed a starting collateral size of EUR392.85 million (i.e., the
EUR400 million target par minus the maximum reinvestment target par
adjustment amount of EUR7.15 million).
"In our cash flow analysis, we also modeled a weighted-average
spread of 3.85%, and the covenanted weighted-average recovery rates
as indicated by the collateral manager. 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 current 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 and framework 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, C, D, and E notes could
withstand stresses commensurate with higher ratings than those we
have assigned. However, as the CLO will be in its reinvestment
phase starting from the effective date, during which the
transaction's credit risk profile could deteriorate, we have capped
our ratings assigned to the notes. The class A and F notes can
withstand stresses commensurate with the assigned ratings. In our
view, the portfolio is granular in nature, and well-diversified
across obligors, industries, and asset characteristics when
compared with other CLO transactions we have rated recently. As
such, we have not applied any additional scenario and sensitivity
analysis when assigning our ratings to any classes of notes in this
transaction.
"For the class F notes, our credit and cash flow analysis indicates
that the available credit enhancement could withstand stresses
commensurate with a lower rating. However, we have applied our
'CCC' rating criteria, resulting in a 'B- (sf)' rating on this
class of notes."
The ratings uplift for the class F notes reflects several key
factors, including:
-- The class F notes' available credit enhancement, which is in
the same range as that of other CLOs S&P has rated and that have
recently been issued in Europe.
-- The portfolio's average credit quality, which is similar to
other recent CLOs.
-- S&P's model generated break-even default rate at the 'B-'
rating level of 24.35% (for a portfolio with a weighted-average
life of 4.60 years), versus if we were to consider a long-term
sustainable default rate of 3.1% for 4.60 years, which would result
in a target default rate of 14.27%.
-- S&P does not believe that there is a one-in-two chance of this
note defaulting.
-- S&P does not envision this tranche defaulting in the next 12-18
months.
-- Following this analysis, S&P considers that the available
credit enhancement for the class F notes is commensurate with the
assigned 'B- (sf)' rating.
S&P said, "Until the end of the reinvestment period in October
2027, the collateral manager may substitute assets in the portfolio
for so long as our CDO Monitor test is maintained or improved in
relation to the initial ratings on the notes. This test looks at
the total amount of losses that the transaction can sustain as
established by the initial cash flows for each rating, and compares
that with the default potential of the current portfolio plus par
losses to date. As a result, until the end of the reinvestment
period, the collateral manager may, through trading, deteriorate
the transaction's current risk profile, as long as the initial
ratings are maintained.
"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, 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 our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F notes."
Environmental, social, and governance (ESG)
S&P regards the exposure to ESG credit factors in the transaction
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:
-- Production of biological, nuclear, chemical or similar
controversial weapons, anti-personnel land mines, or cluster
munitions.
-- More than 5% of revenue from tobacco and tobacco products; oil
and gas production or extraction; coal mining; pornography or
prostitution; harmful activities affecting animal welfare; or trade
in weapons or firearms.
-- More than 10% of revenue from production of non-sustainable
palm oil.
-- More than 25% of revenue from land acquisition displacement
activities or speculative transactions of soft commodities.
-- More than 50% of revenue from the trade in hazardous chemicals,
pesticides and wastes, ozone-depleting substances; the trade in
predatory or payday lending activities; the trade in cannabis or
opioids.
-- Activities that are in violation of the UN Global Compact's Ten
Principles.
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
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. 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* 2.07 2.14 2.89
E-1/S-1/G-1 distribution (%) 0.75 0.31 0.00
E-2/S-2/G-2 distribution (%) 77.70 75.03 15.52
E-3/S-3/G-3 distribution (%) 6.69 7.49 65.55
E-4/S-4/G-4 distribution (%) 0.00 2.31 1.75
E-5/S-5/G-5 distribution (%) 0.00 0.00 2.31
Unmatched obligor (%) 11.13 11.13 11.13
Unidentified asset (%) 3.74 3.74 3.74
*Only includes matched obligor
Bushy Park CLO 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. Blackstone
Ireland Ltd. will manage the transaction.
Ratings List
CLASS RATING AMOUNT SUB (%) INTEREST RATE*
(MIL. EUR)
A AAA (sf) 247.00 38.25 Three/six-month EURIBOR
plus 1.70%
B AA (sf) 36.00 29.25 Three/six-month EURIBOR
plus 3.05%
C A (sf) 24.50 23.13 Three/six-month EURIBOR
plus 3.70%
D BBB (sf) 26.80 16.43 Three/six-month EURIBOR
plus 5.20%
E BB- (sf) 17.30 12.10 Three/six-month EURIBOR
plus 7.46%
F§ B- (sf) 14.40 8.50 Three/six-month EURIBOR
plus 9.15%
Sub NR 38.50 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.
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I T A L Y
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FIS FABBRICA ITALIANA: Fitch Affirms B LongTerm IDR, Outlook Stable
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Fitch Ratings has affirmed F.I.S. Fabbrica Italiana Sintetici
S.p.A.'s (FIS) Long-Term Issuer Default Rating (IDR) at 'B' with a
Stable Outlook and senior secured instrument rating at 'B+' with a
Recovery Rating of 'RR3'.
The ratings balance FIS's well-established position in the
non-cyclical and structurally growing European contract development
and manufacturing organisation (CDMO) market, its solid
manufacturing asset base and knowledge, with modest scale, product
and customer concentration risks as well as weak free cash flow
(FCF) generation during the company's strategic capex growth.
The Stable Outlook reflects FIS's ability to continue organically
growing in 2023, with EBITDA leverage at a low 5.0x from around
6.0x estimated at end-2022. Fitch expects that profitability and
liquidity pressures will gradually ease in 2023, on the back of
contract renegotiations and gradual reversal of active
pharmaceutical ingredients (API) inventory build-up since
mid-2022.
KEY RATING DRIVERS
Liquidity Headroom to Improve: Despite headwinds in the sector,
Fitch expects an improvement in FIS's liquidity headroom in 2023
following the reversal of a temporary inventory build-up seen since
mid-2022 as API are being sold based on clients' purchase
commitments. High capital intensity significantly impacts FIS's FCF
and remains a rating constraint, but Fitch notes some flexibility
on the timing of certain capex projects supporting its view of
currently tight but sufficient liquidity. The company needs to
complete its strategic investment cycle to become FCF neutral.
Weak Profitability Until 2024: Fitch estimates that FIS's EBITDA
margin declined to 11.5% in 2022 from 14.5% in 2021 due to the
inflationary environment. Fitch forecasts inflation pressure will
remain in 2023, with FIS remaining somewhat constrained in its
ability to immediately pass through cost increases. As a result,
the EBITDA margin will remain at about 12% in 2023 and recover to
14-15% over 2024-2025, supported by contract renegotiations,
procurement synergies, operating leverage from new businesses and
improving capacity utilisation.
Modest Scale, High Product Concentration: The rating reflects FIS's
small scale and high product and customer concentration. The top
five and top 10 drug molecules are expected to account for around
40% and 55% of sales, respectively. The largest molecule
(blockbuster anti-diabetic-inhibitor of dipeptidyl peptidase-4;
DPP-4) accounted for around 25% of sales in 2021. Fitch expects
this concentration will be offset by the growth of two molecules
launched in 2021, which should make up towards 20% of sales by
2025. Nevertheless, revenue is still subject to some volatility due
to the commercial success of target drugs, new customers and
potential loss of key contracts, as in 2017.
Moderate Leverage: Fitch projects EBITDA leverage reached around
6.0x in 2022 and will improve to a low 5.0x by end-2023. As of
September 2022, the company drew EUR45 million from its EUR50
million revolving credit facility (RCF) and used two factoring
facilities with a Fitch-estimated total of about EUR60 million.
Fitch considers EUR60 million factoring facilities as debt and
treat FIS's subordinated EUR53 million convertible bond as equity,
based on its expectation of no recurring cash interest payment on
the instrument.
Strong Revenue Visibility: The rating is supported by FIS's
well-established position in a non-cyclical and growing market and
by strong revenue visibility. As a CDMO of API for small molecules,
FIS benefits from long-term contracts with profitable clients that
have high switching costs and focus more on reliability of supply
than on costs. Setting up a contract manufacturer requires
significant capex, as well as technological knowledge, regulatory
approvals and time to build reputation. These factors, combined
with the long life-cycle of pharma products (typically years),
translate into high revenue visibility.
Supportive Market Fundamentals: FIS's credit profile benefits from
the supportive fundamentals of the broader pharmaceuticals market,
with non-cyclical volume growth driven by growing and ageing
populations and increasing access to medical care. The API CDMO
market is expected to grow at mid-to-high single digits in
percentage terms over 2023-2028.
FIS is well-placed to capitalise on the continuing trend for
outsourcing by pharmaceutical companies of non-core and
technologically complex processes and to leverage its proprietary
knowledge, product pipeline and well-established client
relationships. In addition, FIS may benefit from increased local
production of pharmaceutical APIs, which have been increasingly
sourced to China and India in recent decades.
Conservative Financial Policy: Fitch assumes that FIS will follow a
conservative financial policy, which remains at the discretion of
its owners, the Ferrari family. This drives its assumption that
leverage will remain modest at or below current levels. Fitch
assumes that FIS will pay EUR2 million dividends per year and that
it will focus on organic growth though expansion capex over
acquisitions. Large-scale debt-funded M&A are not included in the
rating case and would be treated as event risk.
DERIVATION SUMMARY
Fitch rates FIS using its global Generic Rating Navigator. Under
this framework, FIS's business profile is supported by resilient
end-market demand, continued outsourcing trends, considerable entry
barriers, with high switching cost for clients, and by strong
revenue visibility. The rating is constrained by its overall
moderate scale in a fragmented and competitive CDMO market with
some commoditisation in the simple molecules segment.
Fitch regards capital- and asset-intensive businesses such as Roar
Bidco AB (Recipharm; B/Stable), European Medco Development 3
S.a.r.l. (Axplora; B/Stable) as the closest peers to FIS as they
all rely on ongoing investments to grow at or above market and to
maintain or improve operating margins.
FIS is smaller than most of its publicly-rated CDMO peers, with
lower EBITDA and FCF generation. The company's EBITDA margin is
well below that of Axplora and Recipharm. FIS's lower profitability
and weaker cash flow generation are balanced by its modest leverage
with an estimated EBITDA leverage of 5.2x in 2023 versus 7.8x at
Recipharm, hence warranting the same rating. Axplora has a stronger
profitability, but has broadly similar FCF margins and credit
metrics, reflected in the companies having the same rating.
In Fitch's wider rated pharmaceutical portfolio, generic drug
manufacturing companies Nidda BondCo GmbH (Stada; B/Negative), is
much larger and has stronger profitability, but these factors are
offset by aggressive financial policies.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Organic sales to grow by 23.2% in 2022 due to strong
post-pandemic demand rebound, followed by mid-to-low single digits
growth over 2023-2026
- EBITDA margin gradually improving to 15.1% in 2026 from 11.5% in
2022
- Working-capital outflow of EUR65 million in 2022, followed by
inflow of EUR10 million in 2023 and annual outflows of EUR5 million
over 2024-2026
- Capex at EUR50 million in 2022, EUR80 million in 2023 and EUR70
million-EUR75 million per year over 2024-2026
- No cash interest paid on convertible bond over the rating horizon
to 2026.
- EUR40 million dividend payment in 2022 to refinance holdco debt,
followed by EUR2 million dividends per year over 2023-2026
- No acquisitions.
Recovery Assumptions
FIS's recovery analysis is based on a going-concern (GC) approach,
reflecting Fitch's view that despite the valuable asset base of the
company, a GC sale of the business in financial distress would
yield a higher realisable value for creditors than a balance-sheet
liquidation. In its view, financial distress could arise primarily
from material revenue and margin contraction, following volume
losses or price pressure related to contract losses and exposure to
generic competition.
For the GC enterprise value (EV) calculation, Fitch continues to
apply a post-restructuring EBITDA of about EUR60 million. This
reflects Fitch's expectation of organic portfolio earnings
post-distress, possible corrective measures and a 5x distressed
EV/EBITDA. In its view, the latter would appropriately reflect
FIS's minimum valuation multiple before considering value added
through portfolio and brand management.
Its principal waterfall analysis generated a ranked recovery in the
'RR3' band, resulting in a senior secured debt rating of 'B+' for
the EUR350 million senior secured notes (SSN), after deducting 10%
for administrative claims. In its debt waterfall, Fitch treats
EUR10 million in short-term borrowings and a EUR50 million secured
RCF, which Fitch assumes to be fully drawn prior to distress, both
as super-senior. Outstanding factoring is excluded from the
waterfall analysis as Fitch assumes the facility would remain
available at times of distress, given the high quality of the
receivables. All these result in a waterfall generated recovery
computation output percentage of 60% based on current metrics and
assumptions.
In its recovery assumptions and leverage calculations, Fitch treats
FIS's EUR53 million convertible instrument as equity, based on
contractual subordination and an option to defer interest payments.
Its treatment of this instrument as equity assumes that no interest
will be paid in its four-year rating case to 2025 and Fitch would
view the introduction of regular interest payments on this
instrument as a trigger for reviewing its equity treatment.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Successful completion of the strategic investment cycle, leading to
accelerated growth improving scale and diversification and EBITDA
margin trending towards 20% on a sustained basis
FCF margins (after dividends) improving to low-to mid-single digits
on a sustained basis
Evidence of a conservative financial policy leading to EBITDA
leverage below 4.5x on as sustained basis
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Declining revenue due to product or production issues or as a
result of customer losses leading to EBITDA margin below 15% on a
sustained basis
Predominantly negative FCF
Diminished liquidity headroom with most of the RCF remaining
permanently drawn
EBITDA leverage above 6.5x on a sustained basis
EBITDA interest coverage below 2.5x.
LIQUIDITY AND DEBT STRUCTURE
Limited Liquidity: Fitch views FIS's liquidity as limited due to an
expected negative FCF over 2023-2024, primarily driven by
investments in the business. Absent expansionary capex, FIS would
generate positive FCF margins in the low-to-mid single digits.
Since mid-2022, the liquidity profile has been temporarily
pressured due to inventory build-up. Fitch expects it will
gradually improve with an expected inventory release in 2023 as the
company is selling down the API based on pre-agreed committed
contractual arrangements with its customers.
FIS benefits from medium-term debt maturities with fixed-coupon SSN
and RCF due 2027.
ISSUER PROFILE
FIS is a CDMO that specialises in the production and development of
API. The business is organised in four divisions: custom (70% of
net sales in 9m22); generic (27%); R&D services (2%); and animal
health (1%). The company has about 2,000 employees and operates
three production facilities in Italy. FIS is wholly owned by Nine
Trees Group S.p.A., the holding company of the Ferrari family.
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 Prior
----------- ------ -------- -----
F.I.S. Fabbrica
Italiana
Sintetici S.p.A. LT IDR B Affirmed B
senior secured LT B+ Affirmed RR3 B+
===================
L U X E M B O U R G
===================
WINTERFELL FINANCING: Moody's Rates New EUR400MM Loan 'B2'
----------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the proposed
EUR400 million non-fungible senior secured term loan B (TLB) add-on
borrowed by Winterfell Financing S.a.r.l. ("Stark" or "the
company"). The company expects to use proceeds primarily to
refinance existing term loan of EUR375 million issued with Nordics
banks to fund the acquisition of Compagnie de Saint-Gobain 's
remaining distribution business in the UK (SGBDUK), as well as to
partly repay drawings under the senior secured revolving credit
facility (RCF).
All other ratings, including Stark's B2 corporate family rating
(CFR), B2-PD probability of default rating and B2 ratings on the
existing EUR1,345 million senior secured TLB and the EUR200 million
senior secured RCF are not affected. The outlook is stable.
The maturity date for the proposed senior secured TLB add-on is May
2028, in line with the existing TLB. As part of the transaction,
Stark will also issue a new super senior RCF (unrated), with
maturity November 2027 in line with the existing senior secured
RCF.
RATINGS RATIONALE
Stark's B2 rating reflects its track record of improving margins
and growing earnings, which underpinned deleveraging since the
takeover by CVC Capital Partners in 2021 and solid free cash flow
(FCF) generation. Pro-forma the acquisition of SGBDUK and including
the current transaction, Moody's estimates debt/EBITDA to increase
to around 5.2x as of January 2023 (4.5x in the last 12 months
ending October 2022). Moody's expects credit metrics will remain
well within the range required by the current rating over the next
12-18 months, including debt/EBITDA between 5.0x-5.5x. Moody's also
believes the existing issuance is credit positive because it will
strengthen Stark' liquidity position.
The acquisition of SGBDUK makes good strategic sense as Stark will
broaden its geographic diversification while accessing the second
largest construction market in Europe where SGBDUK holds a number
two position. Moody's believes there is some execution risks given
the difficult operating environment that the rating agency expects
in the building materials industry over the next 12-18 months
driven by the erosion in construction activities. These risks are
mitigated by Stark's high exposure to renovation activities (70% of
gross profit), rising demand for energy-efficient renovation,
Stark's flexible cost structure and managements' strong track
record of integrating acquired businesses proven also through the
acquisition of the SGBDD German business in 2019.
LIQUIDITY
Stark's liquidity is good. Pro-forma the new issuance, Stark has
around EUR220 million in cash as of January 2023, EUR105 million
available under the EUR200 million senior secured RCF and the new
RCF. Moody's expects the company to generate positive FCF,
supported by good EBITDA cash conversion that will offset capex
increase to fund growth and higher interest payment. Additionally,
the company's liquidity will benefit from a long-term maturity of
its senior secured term loan B, due in 2028. Although its liquidity
is good, the company needs a high level of cash because of high
seasonal swings in working capital, which normally peaks in the
first fiscal quarter and improves throughout the rest of the year,
especially in the fourth fiscal quarter.
The senior secured RCF is subject to a springing first-lien net
leverage ratio covenant, tested when the facility is drawn by more
than 40%, net of cash balances. The covenant is set with
substantial capacity, and Moody's expect Stark to ensure consistent
compliance with this covenant at all times.
RATING OUTLOOK
The stable rating outlook reflects Moody's expectations that, over
the next 12-18 months, leverage will remain between 5.0x and 5.5x
and that the company will continue to generate positive FCF. The
forward view does not incorporate any debt-funded shareholder
distributions or sizable acquisitions in addition to SGBDUK.
STRUCTURAL CONSIDERATIONS
The company's existing EUR1,345 million senior secured TLB, EUR200
million senior secured RCF, the new EUR400 million senior secured
TLB add on and the new RCF rank pari passu. Stark has also signed a
new EUR135 million mortgage on real estate property, which is not
material in the context of the company capital structure. Hence,
there is no notching on existing instruments. Applying the 50%
standard recovery rate for capital structures, the EUR1,345 million
and EUR400 million senior secured TLBs, as well as the EUR200
million senior secured RCF are rated B2 in line with the CFR.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Positive rating pressure requires a sustained improvement in credit
metrics, with (1) debt / EBITDA ratio below 5.0x (2)
Moody's-adjusted operating margin towards 5.0%, (3) FCF / debt
towards high single digit figures, (4) EBITA / Interest above 3.0x
and (5) improvement in liquidity profile.
Conversely, negative rating pressure could arise if (1) Moody's
adjusted gross debt/EBITDA is above 6.25x; (2) Moody's-adjusted
operating margin deteriorates; (3) FCF/ debt reduces below 2%, (4)
liquidity profile deteriorates, or (5) the company undertakes
debt-funded acquisitions or shareholder distributions, which result
in weakening of its credit metrics.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Distribution and
Supply Chain Services published in February 2023.
WINTERFELL FINANCING: S&P Assigns 'B' Rating on 1st Lien Term Loan
------------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue and '3' recovery ratings
to the nonfungible additional first-lien term loan to be issued by
Winterfell Financing S.a.r.l. (Stark Group).
S&P said, "In our view, the proposed transaction would be leverage
neutral. Stark Group intends to use the proceeds to refinance its
existing Nordic term loan (EUR375 million), repay drawings on its
revolving credit facility, and increase the cash on the balance
sheet. The company used the EUR375 million term loan, alongside
cash on the balance sheet, to acquire Saint-Gobain Building
Distribution Ltd. in the U.K., completed Feb. 28, 2023, for an
enterprise value of about EUR850 million. The company paid a net
cash consideration of approximately EUR500 million for the
acquisition due to IFRS16 liabilities and other noncash items.
Stark Group will also put in place a revolving credit facility,
maturing in November 2027, undrawn at closing. As such, our 'B'
issuer credit ratings on Stark Group and its existing term loan are
not affected.
"However, due to higher financial debt and lease liabilities, we
expect Stark Group's leverage, as adjusted by S&P Global Ratings,
to slightly increase to 5.0x-5.3x for the fiscal year ending July
31, 2023, from 4.5x in fiscal 2022, and it will likely remain well
below our downside trigger of 6.5x over the coming two years. The
company reported a record high EBITDA in fiscal 2022, driven by net
sales growth of 21.2% (including 11.3% organic net sales growth)
and a continued focus on cost discipline. We anticipate a
moderation in end-market growth in the second half of fiscal 2023,
but we believe the company will manage to increase its EBITDA on
the back of solid organic growth in the first half of fiscal 2023
and the integration of acquired businesses."
Stark Group--Key Metrics*
--FISCAL YEAR ENDS JULY 31--
(MIL. EUR) 2022A 2023F 2024F
Revenue 5,995 8,800-9,000 8,900-9,100
EBITDA 459 580-600 590-610
EBITDA margin (%) 7.7 6.5-6.7 6.7-6.8
Debt 2,045 2,900-3,000 2,800-3,000
Debt/EBITDA (x) 4.5 5.0-5.3 4.6-4.9
Capital expenditure 95 160-180 100-120
Free operating cash flow. 95 220-250 290-320
Note: The full contribution of Saint-Gobain Building Distribution
Ltd. is included for 2023-2024.
*All figures adjusted by S&P Global Ratings.
a--Actual.
F--Forecast.
Issue Ratings -- Recovery Analysis
Key analytical factors
-- S&P rates 'B', with a '3' recovery rating, the EUR1,345 million
term loan B and the proposed nonfungible additional term loan B.
-- The recovery rating of '3' indicates S&P's expectation of
meaningful (50%-70%; rounded estimate: 60%) recovery in default
scenario. It is constrained by the high proportion of
senior-secured debt.
-- In S&P's hypothetical default scenario, it assumes adverse
macroeconomic trends, a steep decline in the new-construction
market, intense competition, and pricing pressure.
-- S&P values the company as a going concern given its leading
position and strong branch network in its core markets.
Simulated default and valuation assumptions
-- Year of default: 2026
-- Jurisdiction: Luxembourg
Simplified waterfall
-- Emergence EBITDA (after recovery adjustments): EUR311 million
-- Multiple: 5.5x
-- Gross recovery value: EUR1,710 million
-- Net recovery value for waterfall after admin. expense (5%):
EUR1,625 million
-- Priority claims: EUR275 million
-- Total collateral value available to secured debt: EUR1,350
million
-- Total first-lien debt: EUR2,194 million
--Recovery range: 50%-70% (rounded estimate: 60%)
--Recovery rating: 3
Note: All debt amounts include six months of prepetition interest.
===========
N O R W A Y
===========
PGS ASA: Moody's Hikes CFR to B3 & Alters Outlook to Stable
-----------------------------------------------------------
Moody's Investors Service has upgraded PGS ASA's Corporate Family
Rating to B3 and B3-PD Probability of Default Rating. Concurrently
Moody's affirms Petroleum Geo-Services AS's $450 million backed
senior secured Nordic Bond ("Bond") B3 rating. The rating outlook
is stable. This concluded the review for upgrade initiated on March
6, 2023.
The company successfully placed on March 17, 2023 a $450 million
Bond with 13.5% coupon and 4 years maturity; the Bond issue price
was 98, resulting in a yield to maturity of about 14%. The proceeds
from the transaction, together with cash available on balance sheet
will be used to pay for the transaction fees and reduce the TLB
balance ($738 million as of Dec 31, 2022) due in March 2024 to $138
million; the existing $50 million super senior loan due in March
2024 (1 year extension option at company discretion) remains in
place.
RATINGS RATIONALE
PGS' rating upgrade reflects the successful completion of the
refinancing of the existing senior secured Term Loan B due in March
2024, launched by the company on March 6, 2023.
The partial refinancing of the existing senior secured Term Loan B
resolves the liquidity pressure that would have started to build up
after September 2023 with the acceleration of the debt
amortization.
Additionally, PGS has delivered a solid set of 4Q 2022 financial
results that combined with tangible signs of a recovery in oil &
gas exploration activities, reduces uncertainty from the company's
ability to deliver further growth in 2023. Moody's adjusted
leverage stood at 3.3x based on the Q4 earning release from the
company on the January 26, well below prior set-out upgrade
guidance of 5.0x. At the same time, PGS returned to positive free
cash flow generation, achieving FCF/Debt of 6.4%.
LIQUIDITY
With the completion of the refinancing, PGS has an adequate
liquidity profile. This is supported by $114 million of
unrestricted cash available on balance sheet pro-forma for the
transaction, positive free cash flow generation from the business
and next material debt maturity to be one year away.
Moody's expects PGS's free cash flow generation to remain limited
in 2023 and 2024 due to investments in 3D streamers and
multi-client library. Moody's view positively, however, the
additional flexibility the company retains to address its March
2024 debt maturities; the $50 million super senior loan can be
extended, at the company's option, by one year into March 2025, and
the Bond documentation allowance for an additional $75 million of
debt (of which up to $50 million as tap issue) to support a partial
refinancing of the TLB.
The company is subjected to a minimum liquidity covenant of $50
million and a net debt to Ebitda not to exceed 3.0x (-1.7x after
current refinancing), which have sufficient room.
RATING OUTLOOK
The outlook is stable and reflects Moody's view that the seismic
market has recovered and is expected to growth in the coming years
supported by renewed exploration commitments from oil producers. A
positive underlying market will support further deleverage; the
company has publicly stated its net debt target between $600-700
million including IFRS lease liabilities, which Moody's expect to
be reached sometime early in 2024.
ESG CONSIDERATIONS
Moody's assessed the group's governance to be a key driver for the
rating action. Moody's acknowledges that after the limited default
assigned in 2020 when debtholder payments were suspended,
management put significant effort and commitment to reduce leverage
through cost savings and equity private placements and that
management is on track to achieve a sustainable capital structure.
The overall Governance score of PGS remain unchanged at highly
negative for now but could be re-assessed once further track record
is demonstrated.
STRUCTURAL CONSIDERATIONS
Moody's B3 rating of Bond is in line with the CFR of the company.
The Bond, together with the existing TLB, rank pari passu and
benefit from a security package that includes key assets
(streamers, multi-client library, five unencumbered vessels) in
addition to shared security (company's receivables and key bank
account pledges) with the Export Credit Facility lenders.
Furthermore, any excess collateral from the Titan mortgaged
vessels, would be to the benefit of the bondholders, TLB and Super
Senior loan lenders.
The $50 million super senior debt facility has the same security
package of the Bond and TLB, but is ranking ahead.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade is predicated on a continued seismic market
recovery leading to an improved financial profile with a
Moody's-adjusted total debt to EBITDA (excluding multiclient
capital spending) keeping below 3.0x and Moody's-adjusted EBITDA
(excluding multiclient capital spending) to interest of at least
3.0x on a sustained basis. An upgrade would also require the
company to address 2024 debt maturities (TLB and super senior
loan), and to maintain an adequate liquidity profile.
The B3 rating could be downgraded if Moody's-adjusted total debt to
EBITDA (excluding multiclient capital spending) exceeds 4.5x or
Moody's-adjusted EBITDA (excluding multiclient capital spending) to
interest falls below 2.25x on a sustained basis, or the company's
free cash flow turn negative for a period longer than 12-15 months.
Tightening liquidity or pressure building up under the financial
covenants could also lead to a negative rating action.
LIST OF AFFECTED RATINGS
Upgrades:
Issuer: PGS ASA
Probability of Default Rating, Upgraded to B3-PD from Caa1-PD on
review for upgrade
LT Corporate Family Rating, Upgraded to B3 from Caa1 on review for
upgrade
Affirmations:
Issuer: Petroleum Geo-Services AS
BACKED Senior Secured Regular Bond/Debenture, Affirmed B3
Outlook Actions:
Issuer: Petroleum Geo-Services AS
Outlook, Remains Stable
Issuer: PGS ASA
Outlook, Changed To Stable From Rating Under Review
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Oilfield
Services published in January 2023.
COMPANY PROFILE
PGS ASA (PGS) is one of the leading offshore seismic acquisition
companies with worldwide operations. PGS headquarters are located
at Oslo, Norway. The company is a technologically leading oilfield
services company specializing in reservoir and geophysical
services, including seismic data acquisition, processing and
interpretation, and field evaluation. PGS maintains an extensive
multi-client seismic data library. PGS reported revenues of $825
million and EBITDA of $455 million with a margin of 55.2% in 2022.
PGS is a public limited company and it is listed on the Oslo Stock
Exchange.
=============
R O M A N I A
=============
BLUE AIR: Enters Insolvency, May 5 Claims Filing Deadline Set
-------------------------------------------------------------
Bogdan Todasca at SeeNews reports that Romanian low-cost carrier
Blue Air entered insolvency after the Bucharest Tribunal said it
approved the airline's filing for insolvency on March 21.
The list of creditors includes companies such as the Romanian Air
Traffic Services Administration (ROMATSA), air transport
compensation facilitator Air Claim, Cluj International Airport, as
well as numerous individuals, SeeNews relays, citing a document
published on the Bucharest Tribunal's website.
According to SeeNews, in a statement filed with the Bucharest Stock
Exchange in early March, Air Claim said that it had requested the
opening of insolvency proceedings against Blue Air, adding that it
still had to recover EUR85,000 (US$91,682) from the airline. A
separate document published on the court's website also included
Cluj International Airport as a creditor, SeeNews states. The
court ordered the inclusion of this file in Blue Air's current
insolvency case, SeeNews notes.
The Bucharest Tribunal appointed local companies Infinexa
Restructuring and Musat & Asociatii as a provisional judicial
administrator at Blue Air, SeeNews discloses. Creditors must file
requests for claims on Blue Air's assets by May 5, while the final
table of claims must be compiled by June 16, according to SeeNews.
In September, Blue Air said it was suspending all flights from
Romania for a week after the environment ministry blocked its
account, but failed to resume flights thereafter, SeeNews recounts.
The company also said its total debt at the time amounted to
EUR230 million, or half its annual revenues, SeeNews notes.
GLOBALWORTH REAL ESTATE: S&P Cuts LT ICR to 'BB+', Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Romania-based Globalworth Real Estate Investments Ltd. and its
issue ratings on its senior unsecured bonds to 'BB+' from 'BBB-'.
S&P said, "The stable outlook reflects our expectations that
Globalworth will maintain a S&P Global Ratings-adjusted debt to
EBITDA of about 9x-10x, EBITDA interest coverage of above 2.4x, and
debt to debt plus equity of about 42%-44% over the next 12 months,
with sufficient steps taken over the next six-to-12 months to
address its debt maturities well in advance so that it maintains
sufficient liquidity headroom and an average weighted debt maturity
profile of above 3.0 years.
"In our revised base case, we no longer anticipate Globalworth's
credit metrics will be in line with an investment-grade rating. The
company's metrics have been in line with our downside threshold for
the 'BBB-' rating for the past 18 months because of a tough
economic environment and increased hybrid working structures, which
affected its disposal plan, occupancy rates, and rental income.
Globalworth recently reported its full-year 2022 results, with
credit metrics deteriorating further, including S&P Global
Ratings-adjusted debt to debt plus equity of 44.2% versus our
requirements to maintain a 'BBB-' rating of 40% and 41.6% in 2021.
This corresponded to a reported loan-to value (LTV) ratio of 42.6%,
exceeding Globalworth's publicly stated target of an LTV below 40%.
Furthermore, S&P Global Ratings-adjusted EBITDA interest coverage
fell to 2.4x in 2022 from 2.6x in 2021 and debt to EBITDA was 10.4x
versus 9.5x the previous year, deviating further from our 'BBB-'
thresholds of 3.0x and 9.5x respectively. Given current market
volatility, rising interest rates, and pressure on real estate
valuations, we revised our base-case scenario and now expect
Globalworth will take longer to dispose noncore assets than
initially planned. In turn, we expect the company to maintain
ratios broadly in line with its 2022 results over the next 12
months. This includes our expectations of a further increase in
rental yields for the company's portfolio, and therefore negative
property valuations of about 2%-4% in 2023 and 1%-2% in 2024. We
also assume Globalworth's average cost of debt will rise to at
least 3.6%-3.8% over the next 12 months from 2.9% at Dec. 31, 2022,
keeping EBITDA interest coverage at 2.5x-2.7x in 2023, supported by
higher cash flows amid high indexation and lower gross debt post
repayment. That said, we note Globalworth's efforts to strengthen
its balance sheet with its divestment strategy and plans to
continue selling its non-core assets. Globalworth has also
announced its intention to offer its shareholders an option for
scrip dividends to retain further cash and we understand that 90%
of its current shareholders already accepted it for the interim
dividend of 2023.
"Globalworth benefits from a good liquidity position over the next
12 months, but we believe its capital structure is constrained by
the bulk of maturities being in 2025 and 2026. The company enjoys a
good liquidity buffer, which should comfortably cover the limited
debt maturities in 2023 and 2024. Its debt repayments for the next
12 months total EUR3.0 million and a further EUR95 million between
12-24 months, which mainly relates to long-term loans from credit
institutions. We understand that Globalworth primarily aims to
refinance in the secured lending market, since loans can currently
be issued at more competitive rates than the bond market, as shown
when it completed a EUR96.5 million loan issuances during
first-quarter 2023. In addition, Globalworth had EUR155 million of
cash and cash equivalents at year-end 2022 and EUR205 million
available under its committed undrawn backup facilities. However,
the company faces significant debt maturities in 2025 and 2026,
evident in the relatively short weighted-average debt maturity
compared to peers of only 3.3 years at Dec. 31, 2022, when the
senior unsecured bonds with EUR550 million (March 2025) and EUR400
million (July 2026) outstanding falls due. We understand it plans
to address those maturities within a timely manner, keeping the
average debt maturity at above three years. We could take further
rating actions if the company is unable to take sufficient steps to
maintain its average debt maturity profile above three years within
the next six-to-12 months.
"We expect Globalworth's operating performance to remain broadly
stable, benefiting from inflation-linked rental contracts, large
international tenants and demand for high quality centrally located
assets, but occupancy may remain relatively low. For 2022, the
company reported marginal increase in like-for-like rental income
of 1.7% and like-for-like occupancy of 0.2% for its overall
portfolio. This was below the performance of other rated European
office real estate peers, such as Alstria Office REIT AG
(like-for-like rental growth of 1.3%) or French Office player
Gecina (like-for-like rental growth of 4.4%). We forecast
like-for-like rental growth of 5%-7% in 2023 and about 2.0%-3.0% in
2024, primarily based on positive indexation but also due to newly
delivered assets, which we anticipate will be leased in a timely
manner. At the same time, we anticipate occupancy levels will
remain relatively stable at about 85%-87% (85.6% at Dec. 31, 2022)
due to weakening economic trends in the company's key markets,
Romania and Poland. S&P Global Ratings lowered its GDP growth
forecasts for Romania to 2.8% and Poland to 0.9% in 2023 from 4.8%
and 4.9% previously. Globalworth's average occupancy has also
remained below our previous assumptions, partially due to the
delivery of several industrial properties with materially lower
than average occupancy rates and weaker demand for office assets.
However, we note that like-for-like occupancy excluding warta tower
has improved to 90.5% as of Dec. 31, 2022, from 90.3% as of Dec.
31, 2021. That said, we still expect continued demand for its
assets, which are mainly located in the central business districts
of Romania and Poland, host large international tenants, and face
limited competition from new supply. In our view, there is
continued polarization in the real estate market, with high-quality
office assets offering good services and central locations
continuing to fare better than more remote locations. We understand
about 89.8% of Globalworth's gross lease area is "green" certified
with about 70% of standing assets' market value certified via the
Building Research Establishment Environmental Assessment Method
(BREEAM) in the "excellent" or "outstanding" categories. Since we
expect tenants and investors will increasingly focus on green
assets, this could help the company to secure leases faster.
"The stable outlook indicates that we expect cash flows from
Globalworth's income-generating property portfolio to remain
relatively stable over the next six-to-12 months, despite current
market uncertainties. In our base-case scenario, we assume that the
company will maintain occupancy of about 85%-87% and any negative
valuations will be offset by the proceeds of asset sales, such that
its debt to debt plus equity remains at about 42%-44%. We also
forecast EBITDA interest coverage of 2.5x-2.7x and debt to EBITDA
of about 9x-10x over the next 12 months, supported by higher cash
flows and repayment of gross debt.
"In addition, we expect the company to take sufficient steps within
the next six months to maintain a debt maturity profile of at least
three years."
S&P could lower the ratings if;
-- Debt to debt plus equity increases above 50% for a prolonged
period;
-- EBITDA interest coverage falls to 2.4x or below on a
sustainable basis; or
-- Debt to EBITDA increases beyond 11x.
S&P said, "This could occur if operating conditions deteriorate
unexpectedly, asset valuations further reduce, or the company fails
with its asset disposal program. We could also lower the rating if
market conditions worsen and Globalworth's operating performance is
significantly weaker than we currently expect."
In addition, a downgrade could follow if the company fails to
address its debt maturities well in advance, so that its
weighted-average debt maturity falls to below three years with no
credible refinancing plan, or it fails to maintain adequate
liquidity on an ongoing basis.
S&P could raise the ratings if it considers that Globalworth's
asset profile is materially larger, with increased geographical and
tenant diversification, while maintaining the same debt leverage.
In addition, an upgrade would depend on:
-- The company adopting a more prudent approach to financial
discipline and keeping its debt to debt plus equity below 40%;
-- EBITDA interest coverage increasing to 3x or above.
-- Debt to annualized EBITDA moving back to below 9.5x on a
sustained basis; and
-- The company improving its operating performance while
maintaining like-for-like rental growth, raising occupancy levels,
and achieving stable or positive property portfolio valuations.
Furthermore, an upside scenario requires the company to ensure a
comfortable liquidity position, maintaining solid covenant headroom
and an average debt maturity profile comfortably above 3.0 years.
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 Globalworth, given
the joint controlling ownership by peers CPI Property Group and
Aroundtown S.A. (jointly about 60.6%). Although the controlling
shareholders could influence its business strategy, we believe
Globalworth will maintain its publicly stated financial policy and
business strategy. Environmental and social factors are an overall
neutral consideration in our credit rating analysis. A total of
89.8% (target 100%) of assets have environmental certificates (5.7%
are BREEAM Outstanding, 63.5% BREEAM Excellent, 3.9% BREEAM Very
Good, and the rest Leadership in Energy and Environmental Design
[LEED] Gold or Platinum), broadly in line with industry
standards."
=========
S P A I N
=========
UCI 16: S&P Affirms D(sf) Rating on Class E Notes
-------------------------------------------------
S&P Global Ratings raised its credit ratings on Fondo de
Titulizacion de Activos UCI 11's class A, B, and C notes to 'AAA
(sf)', 'AA (sf)', and 'A+ (sf)' from 'AA+ (sf)', 'A (sf)', and 'BBB
(sf)', respectively, and on Fondo de Titulizacion de Activos UCI
16's class A2 and B notes to 'AA- (sf)' and 'BB (sf)' from 'A+
(sf)' and 'BB-(sf)', respectively. S&P also affirmed its ratings on
UCI 16's class C, D, and E notes.
The rating actions reflect its full analysis of the most recent
information we have received on UCI 11 and UCI 16 and the
transactions' current structural features.
S&P said, "The overall effect of applying our global RMBS criteria
is a decrease of our expected losses due to reduced
weighted-average foreclosure frequency (WAFF) and weighted-average
loss severity (WALS) assumptions. Both transactions followed the
same trend, as the WAFF has decreased due to lower effective
loan-to-value (LTV) ratios, higher seasoning, and proportionally
fewer performing agreements loans. This is partially offset by
increased arrears. In addition, our WALS assumptions decreased due
to the lower current LTV ratio, while we kept the same haircut on
valuations as in previous reviews. At the same time, the overall
credit enhancement continues to increase.
S&P said, "The share of loans under performing agreements in the
portfolio has reduced from the previous reviews, and the combined
figure stressed in our analysis that considers restructuring loans
or loans more than 90 days past due within the last five years
together with performing agreements is now down to 11.65% for UCI
11 and 14.64% for UCI 16. This is driven by UCI's updated
restructuring policy, as it now seeks a long-term solution for
borrowers foreclosing or novating the securitized loan in multiple
cases. This increased the annual prepayment rate for both
transactions. In our analysis, as these borrowers pay less compared
with their original schedule, we increased our reperforming
adjustment to 5.0x from 2.5x, as we consider these loans to
introduce higher risk in the transactions. Historically, these
restructurings have not been successful, as they are not a
permanent solution because they have been extended multiple
times."
Table 1
Credit Analysis Results for UCI 11
RATING WAFF (%) WALS (%) CREDIT COVERAGE (%)
AAA 39.68 3.23 1.28
AA 32.02 2.12 0.68
A 27.57 2.00 0.55
BBB 23.08 2.00 0.46
BB 17.66 2.00 0.35
B 13.43 2.00 0.27
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
UCI 11's class A, B, and C notes' credit enhancement increased to
42.0%, 35.52%, and 10.80% from 31.93%, 27.12%, and 8.75%,
respectively, as of S&P's previous review, due to the notes'
amortization, which is sequential following the 90+ days arrears
trigger breach. This trigger also prevents the reserve fund from
amortizing, which currently stands at its target level.
Investor report total arrears have increased to 4.7% as of December
2022 from 2.8% in our last review, particularly driven by the
increase in the 90+ days arrears bucket from 2.1% to 3.5%. Overall
delinquencies are above our Spanish RMBS index.
Table 2
Credit Analysis Results for UCI 16
RATING WAFF (%) WALS (%) CREDIT COVERAGE (%)
AAA 51.63 30.19 15.59
AA 42.54 26.23 11.16
A 37.18 19.92 7.41
BBB 32.45 16.67 5.41
BB 26.31 14.46 3.80
B 20.61 12.48 2.57
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
UCI 16's class A2, B, C, and D notes' credit enhancement has
increased to 32.3%, 14.7%, 4.6%, and 2.4% from 25.6%, 11.5%, 3.4%,
and 1.6%, respectively, as of S&P's previous review, due to the
notes' amortization, which is sequential following the arrears
trigger breach. This trigger also prevents the reserve fund from
amortizing, which currently stands at its target level. The reserve
fund was funded at closing with the issuance of the class E notes,
whose credit enhancement remained stable from our previous review
at -1.1%.
Investor report total arrears increased to 8.6% as of December
2022, compared with 4.0% as of the previous review, particularly
driven by the increase in the 90+ days arrears bucket to 5.68% from
3.51%. Overall delinquencies remain in line with S&P's Spanish RMBS
index.
S&P said, "Our operational, rating above the sovereign,
counterparty, and legal risk analyses remain unchanged since our
previous review. Therefore, the ratings assigned are not capped by
any of these criteria. The replacement framework for the collection
account in each transaction does not satisfy our counterparty
criteria, therefore we are stressing one month of commingling risk
as a loss.
"For UCI 11, we raised to 'AAA (sf)', 'AA (sf)', and 'A+ (sf)' from
'AA+ (sf)', 'A (sf)', and 'BBB (sf)' our ratings on the class A, B,
and C notes, respectively. For UCI 16, we raised to 'AA- (sf)' and
'BB (sf)' our ratings on the class A2 and B notes, respectively.
UCI 11's class B and C notes and UCI 16's class A2 and B notes
could withstand our cash flow stresses at higher ratings than the
revised ratings. However, these ratings consider the uncertain
macroeconomic environment, historical performance of the
transaction, and amount of restructured loans in the portfolio.
"Although credit enhancement has increased for UCI 16's class C and
D notes, these classes still fail our cash flow 'B' stresses. We
consider these classes still vulnerable to nonpayment and dependent
upon favorable business, financial, or economic conditions to meet
their financial commitments. Therefore, we affirmed our 'CCC+ (sf)'
and 'CCC (sf)' ratings on the class C and D notes, respectively."
UCI 16's class E notes receive interest in a timely manner.
However, this tranche is not collateralized and is paid after
amortization of the reserve fund. It previously missed a
significant amount of interest payments, and it is uncertain
whether future interest payments will be missed. Given its current
credit enhancement and position in the waterfall, S&P affirmed its
'D (sf)' rating on the class E notes.
Ratings List
CLASS TO FROM
UCI 11
A AAA (sf) AA+ (sf)
B AA (sf) A (sf)
C A+ (sf) BBB (sf)
UCI 16
A2 AA- (sf) A+ (sf)
B BB (sf) BB-(sf)
C CCC+ (sf) CCC+ (sf)
D CCC (sf) CCC (sf)
E D (sf) D (sf)
=====================
S W I T Z E R L A N D
=====================
BREITLING FINANCING: S&P Gives B Rating on Secured Term Loan B
--------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue rating to the proposed
EUR205 million, nonfungible, senior secured term loan B (TLB) due
2028 and issued by Breitling's subsidiary Breitling Financing
S.a.r.l. In line with the existing term loan, the recovery rating
is '3', indicating our estimate of average 50%-70% (rounded
estimate 60%) recovery prospects in a default scenario.
The issuance proceeds will be partly used to finance private equity
firm Partner Group (PG)'s acquisition of a majority stake in
Breitling signed in December 2022 and for general corporate
purposes. This will see PG, and co-investors participating via PG
vehicles, increase their stake in Breitling to 66% from 25% while
CVC Capital Group, and co-investors participating via CVC vehicles,
retain 31% and management roughly 3%. Under the transaction, which
values Breitling's equity at CHF3.3 billion, the company also aims
to upsize its revolving credit facility (RCF) by Swiss franc (CHF)
25 million to CHF115 million to support its liquidity profile.
S&P said, "We believe Breitling has sufficient headroom under the
current credit metrics to absorb higher debt in its capital
structure, since S&P Global Ratings-adjusted debt to EBITDA is
projected to reduce to close to 4.5x in fiscal 2023 (ending March
31, 2023), excluding the EUR205 million issuance, down from 6.1x in
fiscal 2022. In fiscal 2024, pro-forma the transaction, S&P Global
Ratings-adjusted debt to EBITDA should increase to 5.0x-5.5x, which
is within the thresholds of our 'B' long-term issuer credit rating
on Breitling Holdings S.a.r.l. (parent company of the group). Our
adjusted debt calculation for fiscal 2024 includes the EUR890
million Swiss-franc-equivalent TLB due in 2028, the EUR205 million
proposed issuance, a CHF25 million-CHF30 million mortgage loan, a
CHF25 million - CHF35 million precious metal loan, lease
liabilities of CHF180 million - CHF200 million, pension liabilities
of about CHF15 million - CHF20 million, and CHF40 million - CHF45
million of liabilities related to the option to acquire the
minority shares in Breitling Japan and Breitling Korea."
Breitling is taking advantage of solid consumer demand for luxury
watches in core European markets (about 40% of expected sales in
fiscal 2023) and North America (roughly 28%) amid weaker demand in
Greater China (3%) due to COVID-19 restrictions in 2022, which were
recently lifted.
For fiscal 2023, S&P forecasts Breitling will report net sales of
CHF850 million–CHF870 million, a 23%-26% year-on-year increase.
At the same time, the group's cost-control initiatives and improved
operating leverage support improved profitability, with S&P Global
Ratings-adjusted EBITDA margins of 29.5%-30.0% in fiscal 2023, up
from 26.6% in fiscal 2022. In fiscal 2023, S&P expects free
operating cash flow (FOCF) to remain solid for the current rating,
at CHF40 million–CHF50 million after principal lease payments,
despite significant investments to support direct-to-consumer
expansion through store openings and investments in inventories to
adequately meet consumer demand. Good cash flow conversion, coupled
with about CHF230 million of cash on the balance sheet in early
fiscal 2023, led the company to distribute CHF210 million of
special cash dividends to its shareholders in November 2022.
S&P said, "We expect PG's acquisition of a majority stake in
Breitling will not lead to a shift in the group's strategy, which
will be centered on direct-to-consumer expansion, further
penetration of the Chinese and existing core markets such as the
U.S. and Europe, as well as the active launch of new products,
ongoing penetration of super luxury models, and increasing its
presence for the female customer base. This should enable the
company to continue its growth trajectory, leading us to estimate a
high-single-digit percentage increase in topline to CHF920
million–CHF940 million in fiscal 2024, while S&P Global
Ratings-adjusted EBITDA margins should slightly normalize to close
to 29.0%-29.5% -- accounting for increased structural costs and
selling expenses. However, profitability will likely benefit from
favorable product, geographical, and channel mixes. Over the same
period, we also expect FOCF (after lease payments) to be flat or
slightly positive because of new store openings, increased
investments in the supply chain, and working capital requirements
to support growth. In addition, we factor increased finance
expenses on the back of higher debt and interest rates."
BREITLING HOLDINGS: Moody's Affirms B2 CFR Amid Loan Add-on
-----------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating, B2-PD probability of default rating on Breitling Holdings
S.a r.l. (Breitling or the company). Moody's has also affirmed the
B2 instrument ratings on the EUR890 million backed senior secured
term loan B and the CHF90 million backed senior secured revolving
credit facility (RCF) raised by Breitling Financing S.a r.l.
Concurrently, Moody's has assigned B2 instrument rating to the euro
equivalent CHF205 million add-on to the backed senior secured term
loan B. The outlook on all ratings remains stable.
CHF130 million out of euro equivalent CHF205 million of the add-on
proceeds will be used to partially fund Partners Group's
acquisition of a majority stake in Breitling from CVC. Partners
Group and co-investors participating via Partners Group vehicles
increased their stake in the company from around 25% to 66% while
CVC, co-investors participating via CVC vehicles and management own
the remaining 34%. The remaining CHF75 million will stay with the
company and be used to cover related fees and expenses with some
cash overfunding. As part of the deal, the CHF90 million RCF is
also being upsized to CHF115 million.
RATINGS RATIONALE
The proposed euro equivalent CHF205 million TLB add-on will
increase Breitling's debt-to-EBITDA (Moody's adjusted) ratio from
5.0x as of LTM September 2022 to 5.5x as of FY2023 (fiscal year end
is March). This is still within the triggers set for Breitling's B2
rating and Moody's expects leverage to come down to below 5x by
FY2024 driven by growth in EBITDA.
The rating affirmation reflects the company's strong performance
since covid-19 and Moody's expectation that the company will
continue to reduce its leverage through EBITDA growth coming from
ongoing strong operating performance, solid growth prospects in
retail and e-commerce, as well as the company's good pipeline of
new products. Moody's also expects Breitling's operating
performance will be supported by the company's expansion in China,
in the super luxury watch segment and in ladies' watches, which are
currently underrepresented at Breitling. Moody's expects Breitling
will continue to generate EBITDA of around CHF294 – CHF335
million for FY2024 and FY2025 and free cash flow of around CHF23
– CHF88 million FY2024 and FY2025.
Moody's views the company's aggressive financial policy as a
governance risk under Moody's ESG framework. This transaction is an
illustration of a leveraged buyout of the existing shareholder CVC.
At the same time, the recent shareholder change reinforces the
commitment of the controlling shareholder, Partners Group, in the
company's growth and profitability prospects.
LIQUIDITY
Moody's expects Breitling to maintain good liquidity with a cash
balance of around CHF185 million proforma this transaction, access
to an undrawn CHF115 million RCF maturing in 2028 and positive free
cash flow generation. There are no significant debt maturities
until 2028.
The RCF is subject to a springing net senior secured leverage
covenant of 9.0x if drawings exceed 40%, which provides ample
headroom compared to a net senior secured leverage of 4.1x at the
transaction's closing. Moody's does not expect the RCF to be drawn
over the next 18 months.
STRUCTURAL CONSIDERATIONS
The holding company Breitling Financing S.a r.l. is the issuer of
the CHF115 million RCF, the EUR890 million backed senior secured
term loan B and the euro equivalent CHF205 million add-on. These
debt instruments are guaranteed by the parent holding company
Breitling Holdings S.a r.l. along with domestic and foreign
subsidiaries, which together generate at least 70% of Breitling's
reported EBITDA. The RCF and the backed senior secured term loan B
are secured by share pledges and material intercompany
receivables.
The B2 rating on the RCF and the backed senior secured term loan B
is in line with the CFR, reflecting their pari passu ranking and
the absence of any significant liabilities ranking ahead or behind.
The B2-PD PDR is in line with the B2 CFR assuming a 50% recovery
rate typical for a capital structure comprising bank debt with
loose covenants.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's expectations that Breitling
will continue its strong operating performance, leading to a
decline in its Moody's-adjusted leverage below 5.0x by fiscal 2024,
supported by continued expansion of its network, new product
launches and the company's strategic initiatives to grow in retail,
e-commerce, the super luxury segment, ladies' watches and China.
The stable outlook also incorporates Moody's expectations that
Breitling will generate sustained positive FCF, maintain good
liquidity and prudently manage shareholder distributions with no
detriment to the company's credit profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Breitling's Moody's-adjusted (gross)
debt/EBITDA falls below 4.5x on a sustainable basis and its FCF
generation (as adjusted by Moody's) becomes significantly stronger
with a FCF to debt ratio trending towards high-single digits.
Before a rating upgrade, the company has to demonstrate a more
balanced and predictable financial policy.
Ratings can be downgraded if Breitling's Moody's-adjusted
debt/EBITDA increases and stays sustainably at above 6.0x, as a
result of a deviation from operating forecasts, debt-funded
acquisitions or shareholder distributions. Negative pressure could
also build if the company's Moody's-adjusted FCF becomes negative
or if liquidity weakens.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
COMPANY PROFILE
Breitling is a Switzerland-based manufacturer of luxury watches. In
December 2022, Partners Group increased its investment in Breitling
alongside reinvestment by CVC and management for an enterprise
value of around CHF4.2 billion.
The company generated CHF784 million of net sales and Moody's
adjusted EBITDA of CHF217 million for last twelve months ended
September 30, 2022.
===========
T U R K E Y
===========
ARCELIK AS: S&P Lowers ICR to 'BB' on Higher Cost of Debt
---------------------------------------------------------
S&P Global Ratings lowered to 'BB' from 'BB+' its long-term issuer
credit ratings on Turkish domestic appliances producer Arcelik A.S.
and issue ratings on its senior unsecured debt.
S&P said, "The negative outlook indicates our view that consumer
demand could deteriorate more than we currently anticipate, the
cost of Turkish short-term debt may materially increase, or the
business combination with Whirlpool's European assets could lead to
costly integration, resulting in weaker debt-service coverage
ratios than we currently anticipate.
"Arcelik's debt-service coverage came under pressure in 2022 due to
higher cost of funding in Turkish lira (TRY), resulting in EBITDA
interest coverage of 2.9x, and we forecast further deterioration in
the next 12-18 months. The company has historically been supportive
to its retail partners in Turkey and granted specific payment terms
to support revenue growth, meaning that it relies on local currency
short-term debt to fund working capital requirements. As a result,
at year-end 2022, 70% of the debt in its capital structure had a
remaining maturity of up to 12 months. The company issued
short-term local currency bonds in 2022 with a coupon rate of 25%,
which illustrates the currently high cost of short-term funding. We
forecast interest payments will likely increase for Arcelik due to
the upcoming maturity of the $500 million senior unsecured bond in
April 2023 that has a coupon rate of 5%. Arcelik is contemplating
several options to refinance this bond with another multi-year
facility, however, we anticipate that any new debt instrument will
bear higher interest because of currently difficult debt market
conditions. We forecast Arcelik will successfully refinance its
debt maturities in 2023 because the company has a positive track
record of accessing bank and capital market financing, and its
management team is experienced in operating in difficult market
conditions. We also forecast financing conditions on the short-term
TRY bond market could deteriorate further and push the average cost
of short-term debt to about 30% or higher. Overall, we forecast the
company will achieve EBITDA interest coverage of about 2.8x in 2023
and 2024.
"Arcelik was overall resilient to the worsening consumer demand
environment in its important markets in 2022 and we forecast
challenges will remain in the next 12-18 months. The company
achieved 96% revenue growth last year, thanks to higher prices,
pull forward demand in Turkey in anticipation of further inflation,
TRY depreciation against hard currencies, and the integration of
Hitachi and assets from Whirlpool acquired in 2021. This was partly
offset by lower consumer demand in Europe. The company posted an
S&P Global Ratings-adjusted EBITDA margin of 8.9% in 2022, which
was lower than the 10.1% in 2021, primarily because of lower
absorption of fixed costs due to fewer units sold and the higher
costs of raw materials, logistics, and energy, which were partly
offset by price increases. The company also recorded negative
TRY3.3 billion of free operating cash flow (FOCF) because of high
working capital requirements amid cost inflation and continued
investment capital expenditure (capex). This performance resulted
in S&P Global Ratings-adjusted debt to EBITDA of 2.8x in 2022. For
2023, we forecast consumer demand could continue to worsen,
especially in Western Europe, which accounts for 26% of 2022
revenue, because the ongoing deterioration in purchasing power and
consumer confidence is likely to reduce or postpone replacement and
refurbishment by households. The recent earthquakes in Turkey could
also result in lower demand and a longer time to collect trade
receivables from distributors in the affected regions. We consider
Arcelik well positioned to meet potentially lower consumer demand
thanks to its geographical diversification across mature and
emerging markets, and continued application of its pricing
strategy, which it can achieve thanks to a portfolio of
well-regarded brands. Positively, we also note that the costs of
certain key raw materials and energy and logistics could start
easing this year. We forecast this will enable Arcelik to maintain
robust S&P Global Ratings-adjusted leverage of 2.3x-2.8x in the
next 12-18 months.
"The announced partnership with Whirlpool in Europe presents cost
synergy opportunities and could improve Arcelik's business
diversification, but carries execution risks, in our view. The
partnership will combine both companies' European manufacturing
assets and appliance brands under a newly established business. At
closing, we understand that Arcelik would own a 75% stake in the
new company, meaning that it will fully consolidate its results.
Arcelik and Whirlpool anticipate the transaction will close in
second-half 2023. We estimate that it will increase Arcelik's scale
because Whirlpool's divested business brings 14 factories across
the U.K. and Continental Europe and it generated $3.5 billion in
sales in 2022, which could drive cost synergies across procurement
and footprint optimization. The transaction also increases
Arcelik's presence in Europe and its product diversification,
thanks to the integration of Whirlpool's portfolio of built-in
appliances. However, we note that Whirlpool's assets are less
profitable than Arcelik's, as illustrated by the negative 3% EBIT
margin achieved in 2022, which we believe is partly due to its
manufacturing assets being in countries where labor costs are
higher. Therefore, we anticipate a dilutive effect from the
business combination on Arcelik's profitability after completion.
In addition, we believe the size of the transaction carries
execution risks, since the targeted cost synergies could take
longer and require greater costs and capex than anticipated. That
said, we note management's experience and good track record of
integrating and extracting cost synergies from acquisitions, as
illustrated by the successful integration of Hitachi, which was
acquired in 2021.
"We rate Arcelik three notches above our 'B' foreign currency
sovereign credit rating on Turkey, in line with our 'bb' assessment
of the company's standalone creditworthiness. Arcelik has sizable
operations in the stable and mature Western European market (about
26% of 2022 revenue), resulting in a material amount of cash in
bank deposits denominated in euros and U.S. dollars (59% at
year-end 2022). In addition, we view as positive the company's
well-established and diversified manufacturing footprint and the
advanced approach to sustainability embedded in its supply chain.
These factors give Arcelik significant control over the financial
performance and cash flow of its business and allow it to pass our
sovereign stress test, meaning that we expect its ratio of
liquidity sources to uses to be greater than 1.0x over a one-year
stress scenario. Given the diversified international footprint of
Arcelik's production capacity and operations, our rating on the
company is not capped by our 'B' transfer and convertibility
assessment on Turkey. Liquidity sources sufficiently cover
short-term debt, working capital, and maintenance capex needs under
our stressed economic scenario of a hypothetical sovereign
default.
"The negative outlook reflects the risk of rising short-term
domestic debt costs in the next 12 months, resulting in a stronger
deterioration of Arcelik's debt-service coverage than we currently
anticipate. Our current forecast is that Arcelik will continue to
achieve solid operational performance and successfully integrate
recent acquisitions, overall maintaining S&P Global
Ratings-adjusted debt to EBITDA of 2.3x-2.8x and EBITDA interest
coverage of about 2.8x.
"We could lower the rating on Arcelik if deteriorating
macroeconomic conditions in Turkey result in a significant rise in
the cost of short-term corporate debt, combined with
greater-than-anticipated deterioration in consumer demand for
household appliances in its main markets. Under this scenario, we
anticipate EBITDA interest coverage will deteriorate to below 2.5x
with no expectation of near-term recovery. Difficulties to
refinance the group's upcoming domestic or foreign currency short-
and long-term debt maturities would also likely lead to a rating
downgrade.
"We could also lower the rating in case of material setbacks in the
business combination with Whirlpool Europe, resulting in materially
greater costs and capex requirements than anticipated, and overall
leading to weaker debt-service coverage ratios and FOCF than
forecast.
"We could revise our outlook on Arcelik to stable if we see
tangible signs of lowering costs for local currency short-term
debt, combined with improving consumer demand in its main markets.
Under this scenario, we anticipate Arcelik's EBITDA interest
coverage will sustainably approach 3.0x and positive FOCF. A
seamless integration of recent acquisitions, including the planned
partnership with Whirlpool Europe, would also support a stable
outlook."
===========================
U N I T E D K I N G D O M
===========================
BRIDGES ANTONINE: Goes Into Administration
------------------------------------------
Scott Wright at Herald Scotland reports that the towner of a major
shopping centre in Cumbernauld has collapsed into administration,
underlining the continuing challenges facing the retail sector.
According to Herald Scotland, administrators were appointed to
London-based Bridges Antonine LLP, owner of the Antonine Shopping
Centre, following a "period of creditor pressure".
The failure follows the collapse into administration of the owners
of the East Kilbride and Bon Accord shopping centres in Aberdeen
last year, and as the cost-of-living crisis continues to put
pressure on the retail industry in the wake of the pandemic, Herald
Scotland relates.
The Antonine Shopping Centre, which was built in 2007, spans
200,000 square feet of retail space with 42 retail units and nearly
1,100 car parking spaces. Occupants at the centre, which attracts
an annual footfall of more than 3.5 million shoppers, range from
anchor tenants TK Maxx, Next and TJ Hughes to specialist shops and
cafes.
James Fennessey, Colin Haig, and Matthew Richards, partners of
accountancy firm Azets, were appointed joint administrators of
Bridges Antonine LLP on March 22, Herald Scotland discloses. It
came after an attempt to sell the property by the owner last year
was unsuccessful, Herald Scotland notes.
A statement said the administrators had been appointed to take
control and work with the management team and property agents to
find a buyer for the centre, Herald Scotland relays. The centre,
which directly employs three management staff, remains open for
"business as usual", Herald Scotland states.
CHILD'S PLAY: Goes Into Liquidation
-----------------------------------
Sue Kirby at TeessideLive reports that parents and staff at a
popular nursery have been left without jobs, pay and childcare
places after a nursery suddenly went into liquidation.
Child's Play Private Nursery in Hartlepool suddenly stopped
operating last week, TeessideLive relates. According to
TeessideLive, owners say spiraling energy costs and underfunded
"free" childcare places had made things increasingly difficult.
The Throston Grange Lane nursery, is one of three run by Wayman
Developments Ltd trading as Child's Play Private Nursery &
Naturally Child's Play, TeessideLive states. The other two in
Ferryhill and Seaham are also believed to have shut, TeessideLive
notes.
ORIFLAME HOLDING: Moody's Withdraws 'B3' Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service has withdrawn the B3 corporate family
rating and the B3-PD probability of default rating of Oriflame
Holding Limited ("Oriflame"), a producer and distributor of beauty
and wellness products. Concurrently, Moody's has also withdrawn the
B3 ratings of the backed senior secured notes due 2026 and issued
by Oriflame Investment Holding Plc, a fully owned subsidiary of
Oriflame Holding Limited. The stable outlook for both entities has
been withdrawn.
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
COMPANY PROFILE
Headquartered in UK and Switzerland, Oriflame is a producer and
distributor of beauty and wellness products, with presence in more
than 60 countries globally. The company operates under a direct
selling model, through a network of around 2.1 million active
representatives. Oriflame reported revenue of EUR925 million and
adjusted operating profit of EUR76 million in 2022.
Oriflame Holding Limited is controlled by the members of the af
Jochnick family and closely related parties, who are the founders
of Oriflame.
ORIFLAME INVESTMENT: S&P Lowers ICR to 'B-', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
U.K.-based cosmetics and wellness manufacturer Oriflame Investment
Holding PLC to 'B-' from 'B'. At the same time, S&P lowered its
issue ratings on the company's senior secured notes maturing in
2026 to 'B-' from 'B'. The recovery rating of '3' is unchanged,
indicating recovery prospects of 50%.
The stable outlook indicates that S&P expects Oriflame to gradually
reduce its adjusted leverage supported through expected positive
free operating cash flow (FOCF) generation, although this will be
limited. The company does not have short-term refinancing risks,
which could allow Oriflame to reposition its operations and execute
its cost-saving initiatives.
S&P said, "In our revised base case, we expect adjusted debt to
EBITDA will remain over 7.0x in fiscal 2023. For fiscal 2022,
adjusted debt to EBITDA stands at 8.5x, while our EBITDA interest
coverage ratio is close to 2.0x. In our revised base-case scenario,
we now expect modest leverage improvement in fiscal 2023, although
adjusted leverage will likely remain between 7.0x-7.5x, a level not
commensurate with a 'B' issuer credit rating."
For 2022, the company's adjusted EBITDA margin (excluding
restructuring costs) was close to 9%--a very significant drop
compared with previous year's roughly 18%. The profitability
deterioration is mainly explained by significant cost inflation,
and Oriflame's limited ability to offset this with price increases,
higher marketing expenses, and restructuring costs of close to
EUR19 million. S&P said, "For fiscal 2023, although we expect some
challenges will alleviate (thanks to a moderation in inflation and
cost savings), we do not forecast significant margin improvement.
In addition, we highlight the company paid dividends of EUR30.5
million in January 2023, which was not included into our previous
base case. In our adjusted debt, we include the about EUR765
million of senior secured notes due 2026, and operating leases of
about EUR45 million--minus accessible cash on balance sheet of
about EUR110 million (excluding about EUR15 million-EUR20 million
considered trapped cash). Finally, our adjusted EBITDA for fiscal
2022 includes about EUR20 million of restructuring costs."
S&P said, "We anticipate the recovery in operating performance will
take longer than we originally expected. Reported sales for fiscal
2022 declined by 9% (minus 15% at constant currency), mainly driven
by a significant 21% decrease in volumes year on year but partially
offset by a 6% positive price mix and foreign exchange (FX)
movements as the euro weakened during the year. What is also
notable is the company's continued loss in members, who are private
individuals that purchase Oriflame's products and earn commissions
by reselling them to their acquaintances or by involving more
people in the sale network, a core aspect of the company's business
model based on social selling. At the end of 2022, the company's
reported total members were about 2.1 million, a 14% decline
compared with the previous year. The decrease was experienced
across all regions and was most notable in Asia, which saw a
reduction of about 24%. At the end of fiscal 2022, Oriflame lost a
total of 836,000 members since year-end 2019 (pre-pandemic),
representing a total reduction of close to 28%.
"We expect the group will accelerate its marketing and sales
initiatives (with total annual costs of 30%-32% on total sales) to
invest in its brands and expand its member base. In this regard,
the pickup in marketing activities during the last part of 2022,
coupled with the expansion in Germany (a new market for the
company), showed some initial positive trends in new member
recruitment in Europe and the Commonwealth of Independent States
(CIS).
"The company continues operating in Russia (16% of total sales in
2021), but we expect a progressive decline of activities within
this market. In 2022, the company reported an impairment of close
to EUR74 million mainly related to the Russia-Ukraine conflict, and
a strategic review of the Russian assets is in progress. Moreover,
some uncertainty remains around recovery in Asia due to increased
regulations in China (Oriflame's biggest market in Asia), which
could pose some challenges in reestablishing the lost market
share.
"The stable outlook assumes a gradual deleveraging trend, positive
annual FOCF generation, and adequate liquidity profile. Despite a
difficult operating environment in 2022, Oriflame managed to
generate roughly EUR19 million of positive FOCF (before lease
payments). For 2023, we forecast FOCF of EUR22 million-EUR26
million. The gradual improvement will mainly be driven by a lower
absorption from working capital requirements, lower capital
expenditure (capex; roughly EUR8 million), coupled with minor cash
restructuring expenses. The positive cash flow conversion, together
with the availability of a fully undrawn EUR100 million revolving
credit facility (RCF) due 2025, results in an adequate liquidity
position over the next 12-18 months. Additionally, the company does
not face near-term refinancing risk, with the next key debt
maturity date in May 2026 for the senior secured notes. This could
allow Oriflame to reposition its operations and execute its
cost-saving initiatives.
"The stable outlook reflects our expectation of adjusted debt to
EBITDA of 7.0x-7.5x over the next 12 months and an EBITDA interest
coverage ratio remaining slightly above 2.0x. Over the same period,
we expect reported FOCF generation will remain positive between
EUR22 million-EUR26 million with no liquidity pressure in the short
term.
"We could lower the rating on Oriflame if we observed no
deleveraging prospects from the current high level, such that the
current capital structure becomes unsustainable. This could stem
from a material deterioration in the company's cash flow
generation, for example because of ongoing member losses, higher
capital requirements, and more restructuring costs than currently
anticipated.
"We could raise the rating if we see a material deleveraging trend
with adjusted leverage approaching 6.0x paired with an improved
EBITDA interest coverage ratio, as well as higher recurring cash
flow generation than currently anticipated in our base case."
ESG credit indicators: E-2, S-2, G-2
Environmental, social, and governance factors are an overall
neutral consideration in S&P's credit rating analysis of Oriflame.
The group focuses on sustainable business practices, including
relationships with employees and distributors. The company has
improved its environmental footprint, with 99% of product packaging
and catalogue paper now from certified sources or recycled
materials. Oriflame benefits from its leading product development
by focusing on self-care trends and sourcing natural and
environmentally friendly ingredients for its skin care and personal
care products.
SEVENOAKS LEISURE: Lullingstone Park Closed Following Liquidation
-----------------------------------------------------------------
Golf Business News reports that Lullingstone Park Golf Course in
Kent has been forced to close with immediate effect after the
company that runs it went into liquidation.
Staff at the golf course received notice on March 16 that Sevenoaks
Leisure Limited, the parent company of the firm that manages the
facilities, Sencio, was expected to go into liquidation in the next
few weeks, with workers promised they would receive further
information on their situation within a fortnight, Golf Business
News relates.
Lullingstone Park Golf Course, which first opened in 1967, is home
to two golf courses, the 18-hole Castle Course, which was designed
by Fred Hawtree, and the 9-hole Park Course. It currently charges
GBP820 for 7-day membership and GBP24 for weekday green fees.
As well as the golf course, Sevenoaks Leisure Centre and Edenbridge
Leisure Centre, also managed by Sencio, have also been temporarily
closed, although Sevenoaks District Council is confident that new
operators will be found so that all three facilities can re-open in
the near future, Golf Business states.
The decision puts at risk the jobs of 180 full-time staff and 30
self-employed trainers and instructors, although there is a good
chance that many of the staff will be taken on by a new operator if
one can be found, Golf Business notes.
Like many leisure businesses, Sencio was adversely affected by the
pandemic, Golf Business discloses. It received an extra GBP300,000
bailout from Sevenoaks District Council at the time to tide it over
and another GBP235,000 from Sport England, but the council took the
decision in July 2021 to decline further requests for help, Golf
Business recounts. Instead, it said it would take the management
of the centres back in-house when the firm's current contract
expired, Golf Business relays. Since then, the not-for-profit
organisation has been hit again with soaring bills due to energy
crisis which are high for all leisure centres, according to Golf
Business.
THAMES WATER: Moody's Affirms B1 Rating on GBP400MM Secured Debt
----------------------------------------------------------------
Moody's Investors Service has changed to negative from stable the
outlook of Thames Water (Kemble) Finance PLC and affirmed the
company's B1 GBP400 million backed senior secured debt rating.
This rating action follows the March 20 publication by Ofwat,
economic regulator for the UK water and wastewater sector, of its
decision to change ring-fencing provisions in company licences.
[1]
RATINGS RATIONALE
RATIONALE FOR NEGATIVE OUTLOOK
The negative outlook reflects the increased risk of Kemble's core
operating and cash flow generating subsidiary, Thames Water
Utilities Ltd. (Thames Water, Baa2 stable), becoming subject to a
distribution block, which would be to the detriment of Kemble's
ability to meet its debt obligations.
Following Ofwat's decision, and from April 1, 2025, Thames Water's
ability to pay dividends will be subject to new, tighter rating
trigger levels. Additional licence changes, which will apply from
May 17, 2023, will also allow the regulator to take enforcement
action, where companies do not link their dividend payments to
operational performance or fail to be transparent about their
dividend policy. The changes heighten the risk of a distribution
block at Thames Water, in particular given its current rating level
and below-average performance track record. Although the company
benefits from certain liquidity, Kemble uses dividend income from
Thames Water to meet its own debt service obligations.
Under current licence conditions, regulated water and wastewater
companies may not, without Ofwat's consent, pay dividends (or make
similar distributions, including through upstream loans) while
their credit rating is Baa3 (or equivalent), with a negative
outlook, or lower by any one credit ratings agency. The regulator
has decided to raise this threshold to Baa2, negative from April
2025. The higher rating requirement will serve to trap cash at an
earlier point as the credit quality of an operating water company
deteriorates. The lock up will be subject to a three months grace
period, during which companies may seek to persuade Ofwat that
their financial resilience is not at risk. If a rating subsequently
falls to Baa3 or lower, the lock up will apply automatically.
The definition of "issuer credit rating" that Ofwat considers
relevant for the rating trigger includes Moody's corporate family
rating for Thames Water, currently at Baa2 stable.
The likelihood of an actual lock-up will be influenced by (1)
Thames Water's ongoing turn-around programme, which aims to improve
the operating company's performance; (2) Ofwat's 2024 price review
for the five-year regulatory period, which will commence on April
1, 2025, and associated cost efficiency and performance challenges;
and (3) the operating company's overall financial flexibility.
Successful implementation of the turn-around programme and a
supportive price review will be paramount to supporting credit
quality for both Thames Water and Kemble in the long-term. Any
further steps to bolster balance sheet strength at the operating
company, following the recent equity injection, would also be
credit positive, reducing the risk of a dividend block.
Liquidity and financial strategy at Kemble will determine, how long
the holding company may be able to withstand a (temporary)
distribution block. Kemble is obliged to make reasonable endeavours
to maintain sufficient cash cover for 12 months interest payments,
and the group has a track record of a prudent cash management
policy through maintaining cash reserves and/or liquidity
facilities. Liquidity is currently supported by a GBP150 million
revolving credit facility at Kemble. The facility, which matures in
November 2027, is sized to cover 18 months of interest payments. In
addition, the company held just over GBP100 million of cash at
September 2022.
RATIONALE FOR RATING AFFIRMATION
The affirmation of Kemble's B1 backed senior secured rating
reflects the lag as to when the tighter rating trigger will come
into force, which will allow management and shareholders to take
additional steps to bolster Thames Water's credit quality and/or
improve Kemble's liquidity position ahead of April 1, 2025.
Companies also have the option to appeal licence modifications to
the Competition and Markets Authority within 20 working days of the
regulator publishing its modification notice.
More broadly, Kemble's credit quality is a function of (1) the low
business risk of its key operating subsidiary, Thames Water; and
(2) very high leverage at the Kemble group level, up to 90% of
Thames Water's regulatory capital value (RCV). It also takes into
account the higher probability of default that creditors at the
holding company level are facing and the higher severity of loss in
an actual default scenario because of holding company creditors'
structural and contractual subordination to operating company
creditors.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the current negative outlook as well as the deeply
subordinated nature, structurally as well as contractually, of the
Kemble notes in the context of the operating group's financing
structure and regulatory protections, Moody's does not expect any
upward rating pressure for the Kemble notes.
Moody's could stabilise the outlook at the current rating level
upon a strengthening of the business or financial risk profile of
the operating company and/or sizeable liquidity support at the
holding company, including from additional shareholder commitment,
that would allow it to sustain a multi-year dividend block.
Kemble's rating could be downgraded if the ratings of Thames Water
were downgraded, or the risk of a dividend lock up at the operating
company was not reduced, absent additional liquidity at the holding
company to increase its resilience to dividend blocks. Financial
triggers in Thames Water's financing structure include (1) Class A
RCV gearing in excess of 75% or senior RCV gearing in excess of
85%, or (2) Class A adjusted interest cover ratio below 1.3x or
senior adjusted interest cover ratio below 1.1x in a single year.
Rating triggers, in addition to any licence provisions, include a
Class A or corporate rating below Baa3/BBB- from any agency. In
assessing the downward rating potential, Moody's will consider the
holding company's liquidity position, the likelihood of potential
shareholder support as well as the potential for the regulator to
permit certain distributions upon the licenced company's request.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Regulated Water
Utilities published in June 2018.
Thames Water (Kemble) Finance PLC ("Kemble") is the financing
subsidiary of Kemble Water Finance Limited, which owns Thames Water
through intermediate holding companies including Thames Water
Limited. Thames Water is the largest of the 10 water and sewerage
companies in England and Wales by both RCV and the number of
customers served. It provides drinking water to around nine million
customers and sewerage services to around 15 million customers in
London and the Thames Valley. Kemble is ultimately owned by a
consortium of national and international infrastructure and pension
funds, the largest being OMERS (31.8%) and the Universities
Superannuation Scheme (19.7%).
VIRGIN ORBIT: In Talks with Potential Investors
-----------------------------------------------
Joey Roulette at Reuters reports that billionaire Richard Branson's
cash-strapped satellite launch company Virgin Orbit Holdings said
on March 23 it is in talks with "interested parties" about an
investment in the company.
Reuters reported on March 22 that Texas venture capital investor
Matthew Brown was nearing a deal to invest US$200 million in the
space startup via a private share placement, citing a term sheet
Reuters had seen.
"As we disclosed on March 16, the company has taken cash
preservation measures as it explores strategic options to secure
Virgin Orbit's future," Reuters quotes Virgin Orbit as saying in a
statement.
"The company can confirm that it is in discussions with interested
parties about a potential investment in the company," Virgin Orbit
added. "Beyond this, we will not comment on market rumors."
Mr. Brown confirmed on CNBC he wants to buy Virgin in a deal he
hopes to close by the end of Friday, March 24, Reuters notes.
"We are in active discussions. In fact, I would say final
discussions with the company," Mr. Brown told CNBC. "We like the
company and we fully plan on transacting with the company within
the next 24 hours."
Mr. Brown, who describes himself as a "space enthusiast" who has
invested in more than 13 space companies, told CNBC he would own
Virgin Orbit if the deal closes, Reuters relates.
He did not confirm the contemplated investment amount, but said the
deal would "inject enough capital to make (Virgin Orbit) cash-flow
positive", Reuters notes.
A deal would be a boost of confidence for a company that has
grappled with dwindling cash and mounting losses in recent quarters
in a highly competitive market, according to Reuters.
The company, which received about US$35 million of capital
injections from Branson's Virgin Investments in recent months, said
last week it was exploring options and was in talks for fresh
funding, Reuters recounts.
===============
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 * * *