/raid1/www/Hosts/bankrupt/TCREUR_Public/230509.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
Tuesday, May 9, 2023, Vol. 24, No. 93
Headlines
B O S N I A A N D H E R Z E G O V I N A
PROCREDIT BANK: Fitch Assigns B+(xgs) Ex-Government Support Rating
G E R M A N Y
BIKESALE SOLUTIONS: Administrator Seeks Investor for Business
CECONOMY AG: Moody's Withdraws 'B1' Corporate Family Rating
NIDDA HEALTHCARE: Fitch Rates EUR250M Term Loan 'B+(EXP)'
G R E E C E
FRIGOGLASS SAIC: S&P Cuts ICR to 'SD' on Restructuring Completion
I R E L A N D
BLACKROCK EUROPEAN XIV: S&P Assigns Prelim 'B-' Rating to F Notes
CANYON EURO 2022-1: Fitch Gives 'B-sf' Final Rating to Cl. F Notes
GOLDENTREE LOAN 2: Moody's Affirms B2 Rating on EUR9.9MM F Notes
HELIOS DAC (NO. 37): S&P Affirms 'D (sf)' Rating on Cl. E Notes
QUINN INSURANCE: Justice Dignam Issues Winding-Up Order
N E T H E R L A N D S
NOBIAN FINANCE: Moody's Affirms B2 CFR & Alters Outlook to Stable
NOBIAN HOLDING: S&P Alters Outlook to Stable, Affirms 'B' LT ICR
NOURYON FINANCE: Fitch Assigns Final BB- Rating to Sr. Secured Debt
S P A I N
LOARRE INVESTMENTS: Fitch Affirms 'BB' Rating on Sr. Secured Notes
T U R K E Y
TURKIYE CUMHURIYETI ZIRAAT: Fitch Rates 2 Tranches Final BB+
U N I T E D K I N G D O M
BAGSHOT MANOR: Goes Into Administration
CALIFORNIA HOLDING: S&P Rates New $550MM Notes 'B', Outlook Stable
FURNESS HOUSE: Enters Administration, Posts GBP1.71MM Loss
HOPS HILL 3: Moody's Assigns (P)B2 Rating to Class F Notes
HOPS HILL NO.3: S&P Assigns Prelim BB (sf) Rating to Class G Notes
JM SCULLY: Falls Into Administration
TAYSIDE AVIATION: Student Pilots May Not Recover Course Fees
- - - - -
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B O S N I A A N D H E R Z E G O V I N A
===========================================
PROCREDIT BANK: Fitch Assigns B+(xgs) Ex-Government Support Rating
------------------------------------------------------------------
Fitch Ratings has assigned ProCredit Bank d.d. Sarajevo
ex-government support (xgs) ratings. These rating actions follow
the publication of Bank Ex-Government Support Ratings Criteria on
11 April 2023.
The underlying ratings are unaffected by these rating actions.
KEY RATING DRIVERS
The ex-government support ratings exclude assumptions of
extraordinary government support from the underlying ratings.
The Long-Term Foreign-Currency IDR (xgs) has been assigned at the
higher of the bank's Viability Rating and the rating obtained by
notching from the parent bank ProCredit Holding AG & Co. KGaA's
Long-Term Foreign-Currency IDR (xgs) in accordance with the
shareholder support notching considerations as outlined in the
relevant Master Criteria.
The one-notch uplift of ProCredit Bank d.d. Sarajevo's Long-Term
Local-Currency IDR (xgs) above its Long-Term Foreign-Currency IDR
(xgs) reflects a lower probability of regulatory restrictions being
placed on servicing local-currency obligations, in case of systemic
stress.
ProCredit Bank d.d. Sarajevo's Short-Term Foreign-Currency IDR
(xgs) and Short-Term Local-Currency IDR (xgs) have been assigned in
accordance with its respective Long-Term Foreign-Currency IDR (xgs)
and Long-Term Local-Currency IDR (xgs) and Fitch's short-term
rating mapping, taking into account the parent's Short-Term IDRs
(xgs).
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Long-term ex-government support ratings could be downgraded if the
parent bank's ability or propensity to provide support weakens, as
assessed by Fitch. A weakening support ability could stem from a
downgrade of ProCredit Holding AG & Co. KGaA's Long-Term
Foreign-Currency IDR (xgs) or if country risks, which constrain
ProCredit Bank d.d. Sarajevo's Long-Term Foreign-Currency IDR
(xgs), increase as assessed by Fitch.
Short-term ex-government support ratings are primarily sensitive to
changes in the long-term ex-government support ratings and could be
downgraded if the latter are downgraded and map to lower short-term
ratings in accordance with Fitch's criteria.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of long-term ex-government support ratings would
require:
- An upgrade of the parent bank's Long-Term Foreign-Currency IDR
(xgs), provided Fitch's view on the parent bank's ability and
propensity to provide support remains otherwise unchanged and
- A reduction of the country risks as assessed by Fitch
Short-term ex-government support ratings are primarily sensitive to
changes in the long-term ex-government support ratings and could be
upgraded if the latter are upgraded and map to higher short-term
ratings in accordance with Fitch's criteria.
ESG CONSIDERATIONS
ESG considerations have remained unchanged since the last rating
review.
Entity/Debt Rating
----------- ------
ProCredit Bank
d.d. Sarajevo LT IDR (xgs) B+(xgs) New Rating
ST IDR (xgs) B(xgs) New Rating
LC LT IDR (xgs) BB-(xgs) New Rating
LC ST IDR (xgs) B(xgs) New Rating
=============
G E R M A N Y
=============
BIKESALE SOLUTIONS: Administrator Seeks Investor for Business
-------------------------------------------------------------
Bike Europe reports that Bikesale Solutions GmbH, Germany's first
professional online bicycle market-place for used bicycles, asked
for insolvency on March 29.
According to Bike Europe, the appointed administrator is now
looking for an investor for the ailing bicycle refurbisher.
CECONOMY AG: Moody's Withdraws 'B1' Corporate Family Rating
-----------------------------------------------------------
Moody's Investors Service has withdrawn the B1 corporate family
rating and B1-PD probability of default rating of CECONOMY AG.
Moody's has also withdrawn the B2 rating on Ceconomy's senior
unsecured notes due 2026 and the NP rating of the company's
commercial paper program. The stable outlook has also been
withdrawn.
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
COMPANY PROFILE
Headquartered in Dusseldorf, Germany, Ceconomy is Europe's largest
consumer electronics retailer, operating two brands—MediaMarkt
and Saturn. The company recorded EUR22 billion of revenue in the 12
months to December 31, 2022. It is listed on the Frankfurt Stock
Exchange and had a market capitalisation of around EUR1.3 billion
as of May 03, 2023.
NIDDA HEALTHCARE: Fitch Rates EUR250M Term Loan 'B+(EXP)'
---------------------------------------------------------
Fitch Ratings has assigned Nidda Healthcare Holding GmbH's EUR250
million term loan G due in 2028 an expected 'B+(EXP)' rating with a
Recovery Rating of 'RR3'.
The expected rating assumes that the proceeds of the loan will be
used to refinance Nidda BondCo GmbH's (Nidda; B/Negative)
outstanding senior secured notes due in 2024, further reducing its
refinancing risk.
Nidda's 'B' Long-Term Issuer Default Rating (IDR) balances its
high, albeit improving, leverage with a robust business profile and
expected continuing positive free cash flow (FCF) generation. Its
Negative Outlook reflects remaining refinancing risk for a majority
of its senior secured debt maturing in 2025, including its
remaining EUR237 million senior unsecured notes due in 2025.
KEY RATING DRIVERS
New Transaction Neutral to Leverage: Fitch expects proceeds from
the new term loan G will be used to refinance Nidda's outstanding
EUR247 million senior secured notes due in 2024. Nidda's
deleveraging pace will depend primarily on EBITDA growth, as the
company will likely refinance all or most of its debt quantum. This
increases risks of refinancing on more onerous terms in case of
increased market volatility when sizeable maturities become due.
Refinancing Risks Driving Outlook: Adjusted for the completion of
the new term loan G, Nidda will have EUR237 million remaining in
outstanding debt that needs to be addressed to extend by a year to
2026 the effective maturities of approximately EUR4.5 billion of
debt, representing the majority of Nidda's debt. Fitch currently
forecasts that Nidda will meet sensitivities in 2023 for its
Outlook to be revised to Stable by refinancing its senior unsecured
notes due in 2025.
Economic Slowdown Affects Growth: Fitch forecasts GDP in Germany to
increase by a mere 0.1% in 2023, below the 0.8% forecast for
eurozone, according to its March 2023 Global Economic Outlook.
Nevertheless, Fitch views the pharmaceutical industry as fairly
resilient to consumer spending pressures, which should support
revenue in European markets. Fitch conservatively assumes Nidda's
revenue growth will slow to mid-single digits in 2023.
Mitigated Cost Inflation Impact: Nidda has geographically
diversified production sites, with less than 10% of production in
Germany and about 50% in Serbia, the latter with a relatively
favourable energy price environment. This significantly reduces its
exposure to energy inflation in the eurozone for the next 12-18
months. Strong ongoing demand recovery across all segments,
successful price increases to pass on cost inflation to customers
and operational efficiencies will likely support Fitch-defined
EBITDA margin at about 23% in 2023.
Aggressive Financial Policy: Until recently, Nidda had prioritised
debt-funded expansion over deleveraging. Fitch expects Nidda to
continue making opportunistic bolt-on acquisitions as the European
pharmaceutical market offers viable targets. These provide
opportunities for large pharmaceutical companies to consolidate and
streamline their product portfolios. Nidda's financial risk may
therefore increase, depending on the size, profitability and
margin-dilutive nature of its targets.
Self-Sufficient Russian Operations: Fitch still does not expect
Nidda's exposure to Russia to have a contagion effect, as the rest
of its operations outside Russia remain healthy. Its profitable
operations in Russia solely serve the local market. The Russian
business is funded by local-currency loans and has limited exposure
to imported substances.
However, shrinking disposable incomes in Russia, together with drug
costs not being reimbursed by compulsory medical insurance, could
undermine Nidda's earnings and cash flow in the country. Russian
counter-sanctions may also constrain the transferability of cash
and profits outside the country, although its base case still
assumes that Nidda is able to repatriate cash from Russian
operations.
Positive Market Fundamentals: Fitch expects the positive
fundamentals for the European generics market to continue as
governments and healthcare providers seek to optimise rising
healthcare costs stemming from growing ageing populations, the
increasing prevalence of chronic diseases, and expensive new
innovative treatments coming to market and affecting state budgets.
Fitch sees continued structural growth opportunities, given more
limited overall generic penetration in Europe than in the US and
the increasing introduction of biosimilars.
DERIVATION SUMMARY
Fitch rates Nidda using its Global Rating Navigator Framework for
Pharmaceutical Companies. Under this framework, Nidda's generic and
consumer business benefits from diversification by product and
geography, with a balanced exposure to mature, developed and
emerging markets.
Nidda's business risk profile is affected by the lack of a global
footprint compared with industry champions such as Teva
Pharmaceutical Industries Limited (BB-/Stable) and Viatris Inc.
(BBB/Stable), and diversified companies, such as Novartis AG
(AA-/Stable) and Pfizer Inc. (A/Stable). High financial leverage is
a key rating constraint compared with international peers and is
reflected in Nidda's 'B' rating and Negative Outlook.
The company ranks ahead of other highly speculative peers, such as
Care Bidco (B/Stable) and Roar BidCo AB (B/Stable), in size and
product diversity. Nidda's business is mainly concentrated in
Europe, but it also has a growing presence in developed and
emerging markets. This gives Nidda a 'BB' category risk profile.
However, its high financial risk, driven by high leverage and a
concentrated debt maturity profile, is weak for the rating.
The rating difference between Nidda and higher-rated peers
CHEPLAPHARM Arzneimittel GmbH and Pharmanovia Bidco Limited (both
B+/Stable) reflects their less aggressive leverage and asset-light
business models, despite smaller business scale and higher product
concentration.
KEY ASSUMPTIONS
- Revenue to reach EUR4.4 billion by 2026, including Russian
operations, due to volume-driven growth of Nidda's legacy product
portfolio, new product launches, the acquisition of intellectual
property rights and business additions
- Fitch-defined EBITDA margin averaging 24% over 2023-2026,
underpinned by a normalisation in trading operations combined with
further cost improvements and synergies realised from the latest
acquisitions. Fitch includes EBITDA from Russia in its rating case,
given Nidda's demonstrated ability to repatriate profits and cash
from the country
- Working-capital investments of 1%-2% of revenue per year to 2026
- Capex at 2.5% of sales per year to 2026
- M&A estimated at EUR100 million a year, to be primarily funded
from internally generated funds and supported by its revolving
credit facility (RCF), and valued at 10x EBITDA with a 20% EBITDA
contribution
Key Recovery Assumptions:
Nidda would be considered a going concern (GC) in bankruptcy and be
reorganised rather than liquidated.
Fitch estimates a post-restructuring EBITDA of around EUR600
million, which would allow Nidda to remain a GC after distress and
assuming implementation of some corrective actions. Its estimate of
GC EBITDA includes profit contribution from Russia.
Fitch continues to apply a 6.0x distressed enterprise value/EBITDA
multiple.
Fitch assumes Nidda's senior unsecured legacy debt (at the
operating company level), which is structurally the most senior, to
rank pari passu with its senior secured acquisition debt, including
term loans, senior secured notes and privately placed senior
secured notes. This view is based on its principal waterfall
analysis and assuming the EUR400 million RCF is fully drawn in a
default. Senior notes at Nidda rank below senior secured
acquisition debt.
Its principal waterfall analysis, after deducting 10% for
administrative claims, generates a ranked recovery for the senior
secured debt of 53% (unchanged) in the 'RR3' category, including
the senior secured exchange notes, leading to a 'B+' instrument
rating, one notch above the IDR. Recoveries envisaged for Nidda's
senior unsecured notes remain 0%, in the 'RR6' band, corresponding
to a 'CCC+' instrument rating, two notches below the IDR.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to an
Upgrade
- Sustained Fitch-defined EBITDA margin in excess of 25% and FCF
margin consistently above 5%
- Reduction in EBITDA leverage to below 6.0x on a sustained basis
- Maintenance of EBITDA/interest cover at above 3.0x
Factors That Could, Individually or Collectively, Lead to a
Revision of the Outlook to Stable:
- Further progress in refinancing the senior unsecured notes due in
2025
- Maintenance of EBITDA leverage below 7.5x by end-2023
- Stable EBITDA margins of above 18% and mid-single-digit FCF
margins
- EBITDA/interest cover of at least 2.5x
Factors That Could, Individually or Collectively, Lead to a
Downgrade:
- Increased refinancing risk, including operating underperformance,
leading to materially more onerous terms for new debt
- Escalation of Western sanctions and Russian-counter sanctions,
hampering transfer and convertibility of cash flows from Russian
operations
- M&A shifting towards higher-risk or lower-quality assets or weak
integration resulting in pressure on profitability and weak FCF
margins
- Persistent operating weakness, with EBITDA margins declining to
below 18%
- Diminished prospects of EBITDA leverage declining to below 7.5x
by end-2023
- EBITDA/interest cover below 2.0x on a sustained basis
LIQUIDITY AND DEBT STRUCTURE
Liquidity Remains Satisfactory: Nidda closed 2022 with about EUR120
million of cash, excluding EUR150 million cash that Fitch treats as
not readily available for debt service, and a fully undrawn EUR400
million RCF. Fitch projects healthy FCF generation to 2026, which
should be sufficient to fund operations and potential M&A
activity.
Debt Maturity Profile Concentrated: Current pro-forma capital
structure presumes that 90% of consolidated gross debt would mature
in 2025, unless Nidda extends or refinances its outstanding EUR237
million senior unsecured notes due in 2025. Should those be
addressed, its maturity profile will remain concentrated, with
majority of currently outstanding debt and the RCF maturing in
2026. At the same time, the new term loan and most recent
placements have more distant maturities, and Fitch expects that
future refinancing will smoothen its maturity profile.
ISSUER PROFILE
Nidda is a special-purpose vehicle that indirectly owns the
Germany-based pharmaceutical company Stada, a manufacturer and
distributor of generic and branded consumer healthcare products.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch adjusts the readily available cash by EUR150 million to
account for funds in Russia and China that are not immediately
available for debt service.
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
----------- ------ --------
Nidda Healthcare
Holding GmbH
senior secured LT B+(EXP) Expected Rating RR3
===========
G R E E C E
===========
FRIGOGLASS SAIC: S&P Cuts ICR to 'SD' on Restructuring Completion
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Frigoglass SAIC to 'SD' (selective default) and its issue rating on
the original EUR260 million notes to 'D' (default).
S&P said, "We plan to review the issuer credit rating on the group
once we can evaluate the company's business and financial prospects
under the amended debt terms.
"We view the completed restructuring as tantamount to default
because creditors received less value than originally promised. On
April 28, 2023, Frigoglass announced the completion of its
previously announced exchange offer on its EUR260 million 6.875%
senior secured notes due February 2025. The notes have been
restructured through a EUR110 million write-off and reinstatement
of new EUR150 million senior secured second-lien notes due 2028.
The holders of the written-off EUR110 million principal amounts of
the 2025 notes received shares in Frigo DebtCo, the group's new
parent entity, through share pledge enforcement. We view this
restructuring as tantamount to a default under our criteria,
because lenders receive less than originally promised. The company
also issued EUR75 million of super senior secured first-lien notes
due 2026. The new debt facilities (super senior secured first-lien
and second-lien notes) were issued out of the new entity, Frigo
DebtCo, which is majority (85% of its share capital) controlled by
the lender group in the restructuring process. The remaining 15% is
held by Frigoglass, the group's Athens Stock Exchange-listed former
parent that entered a shareholders' agreement with the lenders. The
overall restructuring process was supported by noteholders
representing over 95% of the 2025 notes' total principal amount and
Frigoglass' significant shareholder, Truad Verwaltungs A.G."
S&P estimates the company's capital structure post-restructuring
will comprise the following instruments:
-- EUR75 million super senior secured first-lien notes floating
rate (EURIBOR plus 4% cash margin and 8% pay-if-you-can [PIYC; 1%
less if fully paid in cash]) due 2026.
-- EUR150 million senior secured second-lien notes floating rate
due 2028 with coupon payments structured in the following way:
-- EURIBOR plus 2% cash margin and 9% PIYC (1% less if fully
paid in cash) before Dec. 31 2023); and
-- EURIBOR plus 3% cash margin and 8% PIYC (1% less if fully
paid in cash) from Jan. 1, 2024, onward.
-- About EUR75 million local bank facilities at operating
subsidiaries (mostly Nigeria, Russia and India) that were present
before the restructuring and not part of the recapitalization
process.
-- The new capital structure represents an approximately EUR70
million reduction in gross debt compared with the amount
outstanding as of Dec. 31, 2022.
ESG credit indicators: E-2, S-2, G-3
=============
I R E L A N D
=============
BLACKROCK EUROPEAN XIV: S&P Assigns Prelim 'B-' Rating to F Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
BlackRock European CLO XIV DAC's class A, B-1, B-2, C, D, E, and F
notes. At closing, the issuer will also issue unrated subordinated
notes.
The preliminary ratings 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, which S&P expects to be
bankruptcy remote.
-- The transaction's counterparty risks, which S&P expects to be
in line with its counterparty rating framework.
Portfolio benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,777.84
Default rate dispersion 550.14
Weighted-average life (years) 4.53
Obligor diversity measure 135.75
Industry diversity measure 20.42
Regional diversity measure 1.34
Transaction key metrics
CURRENT
Total par amount (mil. EUR) 400
Defaulted assets (mil. EUR) 0
Number of performing obligors 148
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 2.11
'AAA' weighted-average recovery (%) 36.70
Weighted-average spread net of floors (%) 4.20
Asset priming obligations and uptier priming debt
Under the transaction documents, the issuer can purchase asset
priming obligations and/or uptier priming debt to address the risk,
where a distressed obligor could either move collateral outside the
existing creditors' covenant group or incur new money debt senior
to the existing creditors.
In this transaction, current pay obligations are limited to 5.0% of
the collateral principal amount, including uptier priming debt
(which are current pay obligations up to 2.5%). Corporate rescue
loans and uptier priming debt that comprise defaulted obligations
are limited to 5.0%.
Rationale
This is a European cash flow CLO transaction, securitizing a pool
of primarily syndicated senior secured loans or bonds. The
portfolio's reinvestment period ends approximately 4.4 years after
closing, and the portfolio's maximum average maturity date is 8.5
years after closing. Under the transaction documents, the rated
notes pay quarterly interest unless there is a frequency switch
event. Following this, the notes will switch to semiannual
payment.
S&P said, "We understand that at closing the portfolio will be
well-diversified, primarily comprising broadly syndicated
speculative-grade senior secured term loans and senior-secured
bonds. Therefore, we have conducted our credit and cash flow
analysis by applying our criteria for corporate cash flow CDOs.
"In our cash flow analysis, we modeled the EUR400 million target
par amount, the covenanted weighted-average spread of 4.00%, and
the covenanted weighted-average recovery rates. 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.
"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 preliminary ratings, as the exposure to
individual sovereigns does not exceed the diversification
thresholds outlined in our criteria.
"At closing, we expect that the transaction's documented
counterparty replacement and remedy mechanisms will adequately
mitigate its exposure to counterparty risk under our current
counterparty criteria.
"We expect the transaction's legal structure to be bankruptcy
remote, in line with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe that our preliminary
ratings are commensurate with the available credit enhancement for
each class of notes.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-1, B-2, C, D, and E notes is
commensurate with higher ratings than those we have assigned.
However, as the CLO will have a reinvestment period, during which
the transaction's credit risk profile could deteriorate, we have
capped our assigned preliminary ratings on these notes. The class A
notes can withstand stresses commensurate with the assigned
preliminary rating.
"For the class F notes, our credit and cash flow analysis indicates
that the available credit enhancement could withstand stresses that
are commensurate with a lower rating. However, we have applied our
'CCC' rating criteria resulting in a preliminary 'B- (sf)' rating
on this class of notes." The ratings uplift (to 'B-') reflects
several key factors, including:
-- The available credit enhancement for this class of notes is in
the same range as other CLOs that we rate, and that have recently
been issued in Europe.
-- The portfolio's average credit quality is similar to other
recent CLOs.
-- S&P's model generated break-even default rate at the 'B-'
rating level of 24.67% (for a portfolio with a weighted-average
life of 4.53 years), versus if it was to consider a long-term
sustainable default rate of 3.1% for 4.53 years, which would result
in a target default rate of 14.04%.
-- The actual portfolio is generating higher spreads versus the
covenanted thresholds that S&P has modelled in its cash flow
analysis.
S&P said, "For us to assign a rating in the 'CCC' category, we also
assess (i) whether the tranche is vulnerable to nonpayments in the
near future, (ii) if there is a one in two chance of this tranche
defaulting, and (iii) if we envision this tranche to default in the
next 12-18 months. Following this analysis, we consider that the
available credit enhancement for the class F notes is commensurate
with a preliminary 'B- (sf)' rating.
"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 said, "We regard 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:
controversial weapons, sale and extraction of thermal coal and
fossil fuels from unconventional sources, 25% or more production
from sands or from shale and tight reservoirs, 10% or more
production from fields located in the Arctic, 25% or more revenue
from transactions in soft commodities, 25% or more revenue from
tobacco or tobacco-related products, and violation of the United
Nations Global Compact Ten Principles, International Labor
Organization's (ILO) Conventions, OECD Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business and Human
Rights."
ESG corporate credit indicators
S&P said, "The influence of ESG factors in our credit rating
analysis of European CLOs primarily depends on the influence of ESG
factors in our analysis of the underlying corporate obligors. To
provide additional disclosure and transparency of the influence of
ESG factors for the CLO asset portfolio in aggregate, we've
calculated the weighted-average and distributions of our ESG credit
indicators for the underlying obligors. 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* 2.09 2.22 2.89
E-1/S-1/G-1 distribution (%) 0.73 0.25 0.00
E-2/S-2/G-2 distribution (%) 74.68 69.87 14.53
E-3/S-3/G-3 distribution (%) 8.00 8.67 65.77
E-4/S-4/G-4 distribution (%) 0.00 4.12 0.98
E-5/S-5/G-5 distribution (%) 0.00 0.50 2.12
Unmatched obligor (%) 6.60 6.60 6.60
Unidentified asset (%) 10.00 10.00 10.00
*Only includes matched obligor
Ratings List
CLASS PRELIM. PRELIM. SUB (%) INTEREST RATE*
RATING AMOUNT
(MIL. EUR)
A AAA (sf) 244.00 39.00 Three/six-month EURIBOR
plus 1.85%
B-1 AA (sf) 30.00 29.00 Three/six-month EURIBOR
plus 3.15%
B-2 AA (sf) 10.00 29.00 6.95%
C A (sf) 20.50 23.88 Three/six-month EURIBOR
plus 3.90%
D BBB- (sf) 26.00 17.38 Three/six-month EURIBOR
plus 6.40%
E BB- (sf) 16.50 13.25 Three/six-month EURIBOR
plus 7.67%
F B- (sf) 19.00 8.50 Three/six-month EURIBOR
plus 10.22%
Sub NR 26.40 N/A N/A
*The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
CANYON EURO 2022-1: Fitch Gives 'B-sf' Final Rating to Cl. F Notes
------------------------------------------------------------------
Fitch Ratings has assigned Canyon Euro CLO 2022-1 DAC final
ratings, as detailed below.
Entity/Debt Rating
----------- ------
Canyon Euro CLO
2022-1 DAC
A Loan LT AAAsf New Rating
A Notes
XS2584250224 LT AAAsf New Rating
B XS2584250653 LT AAsf New Rating
C XS2584250901 LT Asf New Rating
D-1 XS2584251115 LT BBBsf New Rating
D-2 XS2599092017 LT BBB-sf New Rating
E XS2584251388 LT BB-sf New Rating
F XS2584251545 LT B-sf New Rating
Subordinated
XS2584251891 LT NRsf New Rating
Z XS2584250067 LT NRsf New Rating
TRANSACTION SUMMARY
Canyon Euro CLO 2022-1 DAC is a securitisation of mainly senior
secured obligations (at least 90%) with a component of senior
unsecured, mezzanine, second-lien loans and high-yield bonds. Note
proceeds were used to purchase a portfolio with a target par of
EUR400 million. The portfolio is actively managed by Canyon CLO
Advisors L.P.. The collateralised loan obligation (CLO) has a
four-year reinvestment period and a 8.5-year weighted average life
(WAL) test.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors in the 'B' category. The Fitch
weighted average rating factor (WARF) of the identified portfolio
is 24.36.
High Recovery Expectations (Neutral): At least 90% of the portfolio
will comprise senior secured obligations. Fitch views the recovery
prospects for these assets as more favourable than for second-lien,
unsecured and mezzanine assets. The Fitch weighted average recovery
rate (WARR) of the identified portfolio is 63.4%.
Diversified Asset Portfolio (Neutral): The transaction has two
matrices at closing and two forward matrices that are effective one
year after closing if the aggregate collateral balance (default at
Fitch-calculated collateral value) is at least at the reinvestment
target par balance. The matrices correspond to a fixed rate limit
of 7.5% and 12.5%, respectively, while the top 10 obligor
concentration is at 22%.
The transaction also includes various concentration limits,
including the maximum exposure to the three largest (Fitch-defined)
industries in the portfolio at 42.5%. These covenants ensure that
the asset portfolio will not be exposed to excessive
concentration.
Portfolio Management (Neutral): The transaction has a four-year
reinvestment period and includes reinvestment criteria similar to
those of other European transactions. Fitch's analysis is based on
a stressed-case portfolio with the aim of testing the robustness of
the transaction structure against its covenants and portfolio
guidelines.
Cash Flow Modelling (Positive): The WAL used for the transaction's
stressed-case portfolio was reduced by 12 months. This is because
Fitch believes the strict reinvestment conditions envisaged by the
transaction after its reinvestment period would reduce the
effective risk horizon of the portfolio during a stress period. The
strict reinvestment conditions include, among others, passing both
the coverage tests and the Fitch 'CCC' test post-reinvestment as
well as WAL covenant that gradually steps down over time, both
before and after the end of the reinvestment period.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A 25% increase of the mean default rate (RDR) across all ratings
and a 25% decrease of the recovery rate (RRR) across all ratings of
the identified portfolio would lead to a downgrade of one notch for
the class E and F notes and no impact on the rest of the notes.
Based on the identified portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration. Due to the
better metrics and shorter life of the identified portfolio than
the stressed-case portfolio, the class B, D-1, D-2, E and F notes
have a two-notch cushion, the class C notes one notch and the class
A notes none.
Should the cushion between the identified portfolio and the
stressed-case portfolio be eroded due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
across all ratings and a 25% decrease of the RRR across all ratings
of the stressed-case portfolio would lead to downgrades of up to
four notches for the notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A 25% reduction of the mean RDR across all ratings and a 25%
increase in the RRR across all ratings of the stressed-case
portfolio would lead to upgrades of up to three notches, except for
the 'AAAsf' rated notes, which are at the highest level on Fitch's
scale and cannot be upgraded.
During the reinvestment period, based on stressed-case portfolio,
upgrades may occur on better-than-expected portfolio credit quality
and a shorter remaining WAL test, meaning the notes are able to
withstand larger-than-expected losses for the transaction's
remaining life. After the end of the reinvestment period, upgrades
may occur on stable portfolio credit quality and deleveraging,
leading to higher credit enhancement and excess spread available to
cover losses on the remaining portfolio.
DATA ADEQUACY
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
GOLDENTREE LOAN 2: Moody's Affirms B2 Rating on EUR9.9MM F Notes
----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on the following
notes issued by Goldentree Loan Management EUR CLO 2 Designated
Activity Company:
EUR10,500,000 Class B-1-A Senior Secured Floating Rate Notes due
2032, Upgraded to Aaa (sf); previously on Aug 14, 2020 Affirmed Aa2
(sf)
EUR12,000,000 Class B-1-B Senior Secured Floating Rate Notes due
2032, Upgraded to Aaa (sf); previously on Aug 14, 2020 Affirmed Aa2
(sf)
EUR15,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2032,
Upgraded to Aaa (sf); previously on Aug 14, 2020 Affirmed Aa2 (sf)
EUR15,700,000 Class C-1-A Senior Secured Deferrable Floating Rate
Notes due 2032, Upgraded to A1 (sf); previously on Aug 14, 2020
Affirmed A2 (sf)
EUR12,000,000 Class C-1-B Senior Secured Deferrable Floating Rate
Notes due 2032, Upgraded to A1 (sf); previously on Aug 14, 2020
Affirmed A2 (sf)
EUR28,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2032, Upgraded to Baa2 (sf); previously on Aug 14, 2020
Confirmed at Baa3 (sf)
Moody's has also affirmed the ratings on the following notes:
EUR240,000,000 Class A Senior Secured Floating Rate Notes due
2032, Affirmed Aaa (sf); previously on Aug 14, 2020 Affirmed Aaa
(sf)
EUR24,300,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2032, Affirmed Ba2 (sf); previously on Aug 14, 2020
Confirmed at Ba2 (sf)
EUR9,900,000 Class F Senior Secured Deferrable Floating Rate Notes
due 2032, Affirmed B2 (sf); previously on Aug 14, 2020 Confirmed at
B2 (sf)
Goldentree Loan Management EUR CLO 2 Designated Activity Company,
issued in December 2018, is a collateralised loan obligation (CLO)
backed by a portfolio of mostly high-yield senior secured European
loans. The portfolio is managed by GoldenTree Loan Management, LP.
The transaction's reinvestment period will end in July 2023.
RATINGS RATIONALE
The rating upgrades on the Classes B-1-A, B-1-B, B-2, C-1-A, C-1-B
and D notes are primarily a result of the benefit of the shorter
period of time remaining before the end of the reinvestment period
in July 2023.
In light of reinvestment restrictions during the amortisation
period, and therefore the limited ability to effect significant
changes to the current collateral pool, Moody's analysed the deal
assuming a higher likelihood that the collateral pool
characteristics would maintain an adequate buffer relative to
certain covenant requirements. In particular, Moody's assumed that
the deal will benefit from a shorter amortisation profile, higher
diversity and lower weighted average rating factor than it had
assumed at the last rating action in August 2020.
The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers.
In its base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR387.2m
Defaulted Securities: EUR0m
Diversity Score: 53
Weighted Average Rating Factor (WARF): 2848
Weighted Average Life (WAL): 3.92 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.63%
Weighted Average Coupon (WAC): 4.35%
Weighted Average Recovery Rate (WARR): 44.86%
Par haircut in OC tests and interest diversion test: 0%
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
December 2021.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank and swap provider,
using the methodology "Moody's Approach to Assessing Counterparty
Risks in Structured Finance" published in June 2022. Moody's
concluded the ratings of the notes are not constrained by these
risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
Portfolio amortisation: Once reaching the end of the reinvestment
period in July 2023, the main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which could
lengthen as a result of the manager's decision to reinvest in new
issue loans or other loans with longer maturities, or participate
in amend-to-extend offerings. The effect on the ratings of
extending the portfolio's weighted average life can be positive or
negative depending on the notes' seniority.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
other Moody's analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
HELIOS DAC (NO. 37): S&P Affirms 'D (sf)' Rating on Cl. E Notes
---------------------------------------------------------------
S&P Global Ratings raised to 'AA+ (sf)', 'A+ (sf)', and 'BBB (sf)'
from 'AA (sf)', 'A (sf)', and 'BBB- (sf)' its credit ratings on
Helios (European Loan Conduit No. 37) DAC's class B, C, and D
notes, respectively. At the same time, S&P affirmed its 'AAA (sf)'
ratings on the class A and RFN notes, and its 'D (sf)' rating on
the class E notes.
Rating rationale
S&P said, "The rating actions follow our review of the
transaction's credit and cash flow characteristics. Performance has
recovered since our previous review in July 2020 as the U.K.
emerged from the coronavirus pandemic and all hotels returned to
trading. The hotel portfolio's revenue has rebounded to
pre-pandemic levels, however, operating costs have increased due to
higher energy and staff costs. Our S&P Global Ratings net cash flow
reflects higher non-recoverable expenses assumption and our S&P
Global Ratings value has decreased by 4.9%. At the same time, the
loan has deleveraged through scheduled amortization and prepayment
from equity contribution."
Transaction overview
Helios is backed by a single GBP350 million loan, which was
originated in December 2019 to facilitate the refinancing of 49
limited service hotels in the U.K. by London & Regional Properties.
Specifically, there are 47 Holiday Inn Express hotels, a Hampton by
Hilton hotel, and a Park Inn hotel. The loan maturity date is in
December 2024.
Most of the hotels in the portfolio had to close in March 2020 due
to the COVID pandemic. Several hotels initially remained open and
were contracted to either a government or charitable organization,
to be available for key workers. All hotels remained open during
the November 2020 lockdown and early 2021. Although performance was
limited between July 2020 and May 2021 due to restrictions on
corporate and international travel, the hotels were able to pick up
customers from other hotels that were closed.
The loan breached the debt yield covenant in November 2020, which
resulted in an event of default, and the loan was transferred to
special servicing. The event of default continued until the August
2021 test date with both the loan-to-value (LTV) ratio and debt
yield covenants in breach. In September 2021, the special servicer
waived the covenants until January 2023. In exchange, on Oct. 29,
2021, the senior loan was prepaid by GBP30.0 million. The loan
remained in special servicing until April 2022 and then returned to
primary servicing as a corrected loan.
The class E notes incurred interest shortfalls between February
2021 and November 2021 due to increased transaction costs while the
loan was in special servicing. In September 2021, S&P lowered to 'D
(sf)' from 'B- (sf)' its rating on the class E notes. The interest
shortfalls were subsequently repaid (except for GBP16,710 as of May
2023). In November 2021, the GBP30.0 million loan prepayment was
applied to the class A notes, which increased the weighted-average
margin on the notes. As a result, full interest on the class E
notes has not been paid since February 2022, because the excess
spread in the transaction is insufficient to make interest payments
on the class E notes, and interest on this class of notes is
subject to an available funds cap. Further, the liquidity facility
cannot be drawn to pay interest shortfalls on the class E notes.
Since July 2021 the hotel portfolio performance has improved as the
lockdowns across the U.K. ended and domestic U.K. leisure demand as
well as some corporate travel picked up. As of December 2022, the
trailing 12-month average daily rate (ADR) was GBP78, reflecting a
13.7% increase compared to 2021. The trailing 12-month portfolio
occupancy was 75.9% compared to 58.6% as of December 2021.
As of February 2023, the debt yield test was at 14.28% and in
compliance with triggers. The LTV ratio was 66.1%, in compliance
with the 69.9% covenant but above the 64.9% cash trap trigger.
Based on the January 2023 valuation, the LTV ratio will fall to
63.6%, below the cash trap trigger.
Loan and collateral summary
CURRENT REVIEW PREVIOUS REVIEW
Data as of May 2023 May 2020
Number of properties 49 49
Number of rooms 6,129 5,972
Loan outstanding principal (mil. GBP) 311.5 350.0
LTV ratio (%) 63.6 62.4
Market value (mil. GBP) 490.0 561.1
Debt yield (%) 14.28* 12.26
*Reported as of February 2023.
S&P Global Ratings key assumptions
CURRENT REVIEW PREVIOUS REVIEW
S&P Global Ratings revPAR (GBP) 59.3 55.7
S&P Global Ratings NCF (mil. GBP) 36.4 36.9
S&P Global Ratings value (mil. GBP) 381.0 400.8
S&P Global Ratings cap rate 9.07 9.07
Haircut to reported market value (%) 22 29
S&P Global Ratings LTV before
recovery rate adjustments (%) 81.8 87.3
RevPAR--Revenue per available room.
NCF--Net cash flow.
LTV--Loan-to-value.
S&P said, "We decreased our S&P Global Ratings NCF to GBP36.4
million from GBP36.9 million in our previous review, which reflects
our higher revenue per available room (RevPAR) assumption, in line
with the portfolio's improved ADR, but also includes higher
non-recoverable expenses assumption. Our previous S&P Global
Ratings value included a positive adjustment for GBP14.2 million in
escrowed funds, which were used to fund expansion at three hotels
and add 157 rooms to the room count."
The weighted-average cap rate for the portfolio has remained
unchanged at 9.1%, which leads to a revised S&P Global Ratings
value of GBP381.0 million, after also adjusting for purchase costs.
This translates to a 22% discount to the most recent market value.
Other analytical considerations
At closing, the issuer used the class RFN's proceeds to fund a
liquidity reserve for the transaction. The reserve is available to
fund, among other things, senior expenses and interest payments to
the class RFN, A, B, C, and D noteholders. However, the class E
notes do not benefit from any liquidity support. Further, the class
E notes are subject to an available funds cap, which will lower
payments due to lost interest from loan prepayments.
Counterparty, operational, and legal risks are adequately mitigated
in line with S&P's criteria.
Rating actions
S&P said, "In our view, the transaction's top-line performance has
rebounded following the end of lockdowns and the reopening of
hotels. ADR is driving hotel performance recovery with levels above
2019. Hotel occupancy is still below pre-pandemic levels although
increasing. At the same time, we believe that operating costs are
likely to remain high, mainly driven by energy and labor costs.
"Our updated S&P Global Ratings value results in an S&P Global
Ratings LTV ratio before recovery rate adjustments of 81.8%,
compared to 87.3% at our previous review. The loan has amortized
from scheduled amortization and prepayment. After considering
transaction-level adjustments, we affirmed our ratings on the class
RFN and A notes, and raised our ratings on the class B, C, and D
notes.
"We also affirmed our 'D (sf)' rating on the class E notes. Full
interest payments on the class E notes were not made between
February and November 2021 due to increased issuer costs, including
special servicer fees while the loan was in special servicing. The
interest shortfalls represented a failure to pay timely interest.
Although most of the shortfalls were repaid in November 2021, a
small amount of deferred interest remains, which the servicer
expects to be repaid pending agreement between the borrower and
special servicer and the allocation of funds.
"Our ratings in this transaction address the timely payment of
interest, payable quarterly in arrears, and the payment of
principal no later than the legal final maturity date in May
2030."
QUINN INSURANCE: Justice Dignam Issues Winding-Up Order
-------------------------------------------------------
Breakingnews.ie reports that the High Court has made an order
formally winding up Quinn Insurance DAC.
Mr Justice Conor Dignam made the order appointing chartered
accountant and insolvency expert Damien Harper as liquidator to the
company, founded by bankrupt billionaire Sean Quinn, that was
placed into administration 13 years ago by the Government at a cost
of EUR1 billion to the State, Breakingnews.ie relates.
The court heard that the company's sole creditor was the Insurance
Compensation Fund, which is the State fund used to compensate
policyholders when an insurance company in the state goes into
liquidation, Breakingnews.ie discloses.
The Government took the decision to place the insurer into
administration following the collapse of Sean Quinn's business
empire following the economic recession and banking crisis that
commenced approximately 15 years ago, Breakingnews.ie recounts.
The application to appoint Mr. Harper was made on behalf of the
company's joint administrators Michael McAteer and Paul McCann of
Grant Thornton, Breakingnews.ie statse.
Counsel for the company Garvan Corkery SC told the court that the
application was being made as all outstanding business of the
administration had been completed, Breakingnews.ie notes.
The company was clearly insolvent, has no assets, and there was no
reality that its debt to the ICF could be met, counsel said,
Breakingnews.ie relays.
The company had been run by the administrators and was under the
supervision of four different Presidents of the High Court since
2010, according to Breakingnews.ie.
Counsel said the insurance business's undertaking had been sold to
Liberty Insurance in 2011.
All of its other assets, subsidiaries and undertakings have also
been dealt with, and any value realised, counsel added,
Breakingnews.ie notes.
Mr Justice David Barniville, the current President of the High
Court, had consented to the winding up application being made,
counsel added, Breakingnews.ie relates.
There were no objections to the application, and after being
satisfied that all relevant parties had been put on notice of the
application Mr Justice Dignam made the order winding up Quinn
Insurance, Breakingnews.ie discloses.
=====================
N E T H E R L A N D S
=====================
NOBIAN FINANCE: Moody's Affirms B2 CFR & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service changed the outlook on Nobian Finance
B.V. 's to stable from negative. Concurrently, Moody's affirmed
Nobian's B2 corporate family rating and B2-PD probability of
default rating, as well as the B2 ratings for the backed senior
secured term loan, the backed senior secured global notes and the
backed senior secured multi-currency revolving credit facility
(RCF).
"The rating action reflects Nobian's operating performance over the
past three quarters, which was materially better than Moody's
previously expected; and the decreased risk of production cuts at
Nobian's or its customers' production sites as a result of high
energy costs or potential energy supply disruptions", says Frederic
Massard, Moody's lead analyst for Nobian. "In addition, Moody's
expect that the company will continue to maintain solid credit
metrics for a B2 rating over the next 12-18 months", adds Mr.
Massard.
RATINGS RATIONALE
Nobian's management-adjusted EBITDA increased by around 51% to
EUR433 million in 2022 from EUR286 million in 2021 on the back of
exceptionally high market prices for caustic soda while the company
was able to keep its production rate at high levels. In the high
energy cost environment, the pass-through mechanisms, energy
surcharges and some hedging further supported Nobian's EBITDA
generation.
Nobian's production volumes of caustic soda, a by-product of its
chlorine production, are linked to the production levels of
Nobian's key chlorine customers. The company's customers were able
to better cope with high European energy costs and did not reduce
their demand as much as the agency previously expected. Nobian's
capacity utilization rates were materially better compared to the
European industry-wide chlorine utilization rate in 2022.
As a result, Nobian's gross leverage, as defined and adjusted by
Moody's, decreased to 4x in 2022 from 6.3x in 2021, which supported
the outlook stabilisation. Moody's expects that the company's
leverage will increase gradually towards 4.5x over the next 12-18
months driven by a normalization of caustic soda prices partly
offset by positive effects from delayed energy-pass throughs. The
agency expects Nobian's production utilization rate to remain above
industry-wide levels, even with relatively soft demand in many of
Nobian's main end markets, such as automotive, construction and
consumer goods.
Even though the company's metrics is likely to remain strong for
its current rating in the next 12-18 months, for a higher rating
Nobian would need to establish a track record, in particular with
the regards to the maintenance of the financial discipline and
sustained deleveraging. The risk of dividends and/or an aggressive
growth strategy associated with its private equity ownership
continues to weigh on the credit profile. In addition, the
company's earnings are likely to remain volatile.
LIQUIDITY
Nobian's liquidity profile is good, which also supported
stabilization of the outlook. As of the end of Dec 2022, the
company had around EUR200 million of cash on balance and access to
an undrawn EUR200 million RCF. In combination with forecast funds
from operations, these sources should be sufficient to cover
capital spending, working capital swings and working cash. In early
2023, the company paid a EUR100 million dividend to its owners, The
Carlyle Group and the Government of Singapore Investment
Corporation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade ratings if (1) the company built a track
record and committed to financial policies leading to
Moody's-adjusted debt to EBITDA well below 5.0x on a sustained
basis; (2) Moody's-adjusted FCF/debt would be consistently in the
high single digits (%); (3) adjusted EBITDA/Interest remained above
2.5x; and (4) the company maintained a good liquidity.
Conversely, Nobian's ratings could be downgraded if its (1)
Moody's-adjusted debt/EBITDA increased above 6x on a sustainable
basis; (2) liquidity profile deteriorated, for instance as a result
of sustained negative FCF; (3) or Moody's-adjusted EBITDA interest
coverage declined below 2.0x.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Chemicals
published in June 2022.
COMPANY PROFILE
Based in the Netherlands, Nobian is a vertically integrated leading
European producer of salt, essential base chemicals, and energy
solutions. The main focused is on its chlor-alkali products (mainly
chlorine and caustic soda), which accounted for around 60% of its
sales in 2022. The company operates through the following business
lines: energy, high-purity salt, chlor-alkali and chloromethanes,
hydrogen, and energy storage caverns. Nobian's backward integration
into the energy-salt-chlorine value chain, established market
positions, access to salt deposits and technical knowledge of
handling hazardous chemicals support its strong market position in
the North-western European chlor-alkali industry. Nobian generates
about 50% of its total sales in the Netherlands, 25% in Germany,
21% in rest of Europe, and 4% in the rest of the world. In 2022,
the company generated revenue of around EUR2.4 billion and
company-adjusted EBITDA of around EUR433 million.
NOBIAN HOLDING: S&P Alters Outlook to Stable, Affirms 'B' LT ICR
----------------------------------------------------------------
S&P Global Ratings revised the outlook on Netherlands-based
chemical producer Nobian Holding 2 B.V. (Nobian) to stable, from
negative. S&P also affirmed the 'B' long-term issuer and issue
credit ratings on Nobian and its debt. The recovery rating on the
senior secured debt remains unchanged at '3'.
The stable outlook reflects S&P's expectation that Nobian will
continue to be able to mitigate inflationary cost pressures and the
volatile macroeconomic environment, maintaining S&P Global
Ratings-adjusted leverage well below 7.0x, while continuing to
generate strong cash flow.
S&P said, "The outlook revision reflects Nobian's strong operating
performance in 2022 and our expectation that credit metrics will
remain resilient in future years. In 2022, Nobian's operating
performance was very resilient to the high inflationary cost
environment and volatile market conditions. It reached record high
sales growth and a strong increase in absolute EBITDA. As of
end-December 2022, the company reported an increase in revenues of
about 84% compared with 2021, reaching sales of about EUR2.4
billion. This was mostly driven by exceptionally high selling
prices combined with resilient volumes. Nobian also increased its
adjusted EBITDA to EUR375 million in 2022 from EUR260 million in
2021, showing its ability to pass-through higher raw material and
energy costs. While we believe macroeconomic conditions will remain
challenging in 2023, we expect Nobian will continue to perform well
thanks to its effective pricing strategies, volumes largely
resuming from the second part of the year, and continued cost
management.
"In our view, Nobian's efficient cost management mitigates the
persistent challenging economic conditions. In 2022, Nobian
successfully mitigated higher costs thanks to effective price
increases and newly implemented contractual pass-throughs, as well
as pre-existing energy-forward contracts. Despite this, the company
is highly dependent on European natural gas and does not have the
option to quickly switch to different fuels. Nobian did not
experience any production shutdowns and maintained a strong
utilization rate of about 80% during the second half of 2022, which
is above the chlor-alkali industry average of about 60%. While we
believe that conditions in the European energy market will remain
volatile in 2023, we view Nobian as well positioned to face future
challenges thanks to take-or-pay clauses in long-term contracts and
its largely secured natural gas supply, which mitigate the revenue
and operational risk. Moreover, we expect Nobian will continue to
optimize its cost base and efficiencies across its plants, further
improving profitability.
"We project solid cash flow generation in 2023 even with continued
high capital expenditure (capex) and one-off shareholder dividend
payments. We forecast free operating cash flow (FOCF) of EUR110
million-EUR120 million in 2023, reflecting strong cash flows from
operations. This will be driven by higher absolute EBITDA and the
reversal of working capital resulting in a cash inflow, which more
than compensates higher capex and cash interest expenses. We also
believe the one-off dividend payment of EUR100 million in 2023 will
not materially affect the company's liquidity buffer--which remains
solid thanks to cash on balance sheet and undrawn bank lines. We
note that this is the first time the company will pay a dividend to
its shareholders. While we think the payment is well justified by
Nobian's very strong operating performance and faster than expected
deleveraging, we also note the company operates under top of the
cycle market conditions, which could be less favorable in
2023-2024. The dividend payment is in line with our view that
Nobian's financial sponsor ownership could limit the potential for
leverage reduction over the medium term, reflected in our financial
policy assessment of FS-6. We currently do not assume further
shareholder remuneration in our base case, due to the uncertainty
on amount and timing, but we cannot exclude further dividend
payments in the future."
Gas supply concerns have diminished, and supply bottlenecks
affecting traditionally Russia-supplied Central and Eastern Europe
(CEE) should meaningfully ease in 2023. On the supply side, over
October 2022–February 2023, Europe significantly enhanced its
supply infrastructure, notably in CEE, and S&P has seen little
negative news since the Nord Stream 1 pipeline's idling in late
August of last year. It is quite possible the slight reduction in
Russian and Algerian pipe inflows is due to them becoming less
competitive as wholesale prices collapsed. Russia's continuing
lower supply volume meets under one-tenth of average European
demand, down from more than one-third in 2021. Russia's decision to
fully cut the remaining piped gas exports to Europe and challenges
with the maintenance of the Yamal liquefied natural gas facility,
are not part of our base case. Taken together, S&P sees other
supply sources to Europe as sufficiently reliable.
S&P said, "We expect Nobian's credit metrics will remain resilient
in 2023, maintaining good rating headroom. Following the strong
deleveraging in 2022 (adjusted debt to EBITDA declining to 4.4x in
2022 from 6.6x in 2021), we expect Nobian will maintain strong
headroom under the rating in 2023, mostly thanks to its resilient
EBITDA. Specifically, we expect adjusted debt to EBITDA will stand
at 4.3x-4.5x in 2023--broadly stable compared with 2022 levels. In
our calculations of Nobian's gross debt as of Dec. 31, 2022, we
include a term loan B (TLB) of about EUR954 million, a bond of
about EUR516 million, our debt adjustments of about EUR105 million
of leasing liabilities, EUR23 million of pension deficits, and
other adjustments for about EUR70 million related to asset
retirement obligations. We note the TLB, and revolving credit
facility (RCF) are senior secured credit facilities and
sustainability-linked financing. The company's environmental,
social, and governance key performance indicator targets are linked
to absolute carbon dioxide emissions and the use of renewable
energy; both targets were met in 2022. As such, the applicable rate
payable to Nobian's bond lenders will not be adjusted.
"We do not deduct cash from debt in our calculation, owing to
Nobian's private-equity ownership. In the medium term, the
financial sponsor's commitment to maintaining adjusted debt to
EBITDA sustainably below 5.0x would be necessary for an improved
financial profile assessment.
"The stable outlook reflects our view that Nobian will continue to
show a resilient performance in 2023-2024, supported by effective
cost management, increasing EBITDA, and resilient growth prospects
in end markets. We expect adjusted debt to EBITDA will stand at
4.3x-4.7x over the coming two years, and we anticipate Nobian will
continue to generate positive FOCF. We do not net cash, so EBITDA
growth will drive leverage reduction. Headroom at the current
rating level is relatively comfortable."
S&P could lower the ratings if:
-- Nobian's operating performance deteriorates, jeopardizing the
sustainability of its capital structure and resulting in a much
weaker operating performance and adjusted debt to EBITDA staying
above 7.0x;
-- The company generates negative FOCF in 2023 and 2024, without
prospects for a swift recovery; or
-- The company's liquidity deteriorates materially.
S&P could take a positive rating action if:
-- Nobian continues to improve its top-line growth and EBITDA
margin beyond our base-case scenario, so that it generates material
FOCF and shows a track record of maintaining adjusted debt to
EBITDA below 5x.
S&P would also need to see a strong commitment from the sponsor to
maintain credit metrics commensurate with a higher rating.
ESG credit indicators: E-3, S-2, G-3
NOURYON FINANCE: Fitch Assigns Final BB- Rating to Sr. Secured Debt
-------------------------------------------------------------------
Fitch Ratings has assigned Nouryon Finance B.V.'s incremental
USD750 million senior secured term loan B (TLB) and new senior
secured revolving credit facility (RCF) final ratings of 'BB-' with
Recovery Ratings of 'RR3'.
The proceeds were used to mainly fund a USD500 million dividend and
repay the drawn portion of an existing RCF. The new term loan has a
five-year tenure but will mature at the same time as the company's
existing senior secured term loans, which are currently due in
October 2025 absent any refinancing or amendment.
Fitch expects Nouryon Holding B.V.'s (Nouryon; B+/Stable) funds
from operations (FFO) gross leverage on average of 5.6x in
2023-2026 to remain below its negative rating sensitivity despite
the new debt adding 0.8x based on 2022 EBITDA. Nouryon's 'B+' IDR
is constrained by high FFO gross leverage despite the company's
solid business profile and resilient cash flows.
KEY RATING DRIVERS
Resilient Cash Flows: Nouryon's specialty focus, product
differentiation and business diversification support resilient
profit margins and cash flows. Fitch expects the company's EBITDA
to grow to USD1.28 billion by 2026, after assuming a conservative
7.6% decline in 2023 due to the global economic slowdown and a weak
start of 2023 due to destocking. Nouryon's strong pricing power was
demonstrated in 2022 with EBITDA up 16%, despite severe
raw-material cost inflation and some volume pressure, and its cash
flow from operations remained positive despite a significant
outflow from changes in working capital.
Deleveraging Despite Dividends: Fitch expects Nouryon's FFO gross
leverage and EBITDA gross leverage to decrease, respectively, to
5.2x and 4.5x by 2026 on increased EBITDA, despite assuming further
annual dividends of USD150 million from 2024. Although this
deviates from the voluntary gross debt repayments seen in
2020-2021, Fitch does not see these dividends as a drastic change
in its financial policy, given that the company has sharply reduced
leverage since 2019.
Fit for IPO: Fitch believes that the shareholders of Nouryon will
continue to look for an opportunity to list the company depending
on market conditions, given that Nouryon has spun off its commodity
business in 2021, reshuffled its portfolio through acquisitions and
disposals, deleveraged and has a leading position in its markets.
The new facilities will allow the company some flexibility on the
timing of an IPO.
Interest-Rate Rise Mitigated: Prudent hedging throughout 2022
mitigated the impact of higher interest rates on Nouryon's interest
burden. Its debt structure is mainly composed of floating-rate
instruments. Fitch forecasts FFO interest coverage and EBITDA
interest coverage, respectively, on average at 2.5x and 2.9x in
2023-2026.
Barriers to Entry: Fitch sees significant barriers to entry to
Nouryon's leading positions in niche markets, as the company
specialises in products that are either with differentiated or
bespoke properties, or that are key in the manufacturing process of
a final product. This supports steady volumes, as seen during the
pandemic year of 2020 when they declined only 2%. Nouryon's R&D
investments amount to around 3% of sales, and result in several new
product launches every year.
DERIVATION SUMMARY
Most of Nouryon's specialty chemicals peers in EMEA, such as BASF
SE (A/Stable) or Akzo Nobel N.V. (BBB/Stable), are higher-rated due
to significantly lower leverage, and their leading positions in
larger-scale products globally. However, Nouryon has higher EBITDA
and free cash flow (FCF) margins, and is a leader in its niche
markets.
Compared with Italmatch Chemicals S.p.A. (B/Stable), Nouryon is
significantly larger, more diversified, has higher profit margins
and less cash flow volatility, which support a higher debt
capacity.
Root Bidco S.a.r.l. (Rovensa, B/Stable) has a similar specialty
focus and benefits from dynamic growth of its markets, but is
smaller, less diversified and has higher leverage than Nouryon.
Compared with Scur Alpha 1503 GmbH (B(EXP)/Positive), Nouryon is
larger, more diversified and generates more stable cash flows due
to its exposure to more resilient sectors. Fitch expects Nouryon's
leverage to be lower.
Similar to Nouryon, Nobian Holdings 2 B.V. (B/Stable) has high
margins and strong pricing power. However, Nobian is smaller, less
diversified geographically, and more exposed to fluctuations in the
prices of energy and of the commodities it produces.
KEY ASSUMPTIONS
- Revenue to grow in low single digits in 2023-2026
- EBITDA margin on average at 20% in 2023-2026
- Annual capex on average at 6.3% of sales to 2026
- M&A of USD220 million in 2023, and USD100 million per year in
2024-2026
- Dividends of USD500 million in 2023, and USD150 million per year
in 2024-2026
KEY RECOVERY ANALYSIS ASSUMPTIONS
The recovery analysis assumes that Nouryon would be reorganised as
a going-concern (GC) in bankruptcy rather than liquidated.
The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganisation EBITDA level upon which Fitch bases its
enterprise valuation (EV).
The GC EBITDA of USD800 million reflects changes in regulation or
substantial external pressures, such as a severe global downturn
that particularly hits Nouryon's main end-markets, resulting in
heavily reduced demand for Nouryon's products, but also considers
corrective measures taken to offset adverse conditions.
Fitch uses a multiple of 5.5x to estimate a GC enterprise value for
Nouryon because of its leadership position, resilient exposure to
non-cyclical end-markets, solid profitability and high barriers to
entry due to substantial R&D requirements for product development.
Fitch assumes the company's RCF to be fully drawn and to rank pari
passu with its TLB, and that its securitisation facility would be
replaced by an equivalent super-senior facility.
After deducting 10% for administrative claims, Fitch's analysis
resulted in a waterfall-generated recovery computation (WGRC) for
the senior secured instrument in the 'RR3' band, indicating a 'BB-'
instrument rating. The WGRC output percentage on current metrics
and assumptions was 57% for the senior secured debt.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- FFO gross leverage below 5.0x on a sustained basis
- FFO interest coverage above 3.5x on a sustained basis
- EBITDA margin sustained above 23% and FCF margins above 5%
through synergies and cost savings
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- FFO gross leverage above 7.0x on a sustained basis
- FFO interest coverage below 2.5x on a sustained basis
- Weakening EBITDA and FCF margins, for example, as a result of a
loss of market share or adverse regulatory changes
LIQUIDITY AND DEBT STRUCTURE
Comfortable, Upsized Liquidity: As of 31 March 2023, pro forma for
the new debt facilities, Fitch estimates that Nouryon's liquidity
stood at USD0.8 billion-USD0.9 billion. Nouryon has no meaningful
debt repayment until 2025 but its recently upsized RCF (to USD783
million) is currently due in July 2025 (except for USD33 million
due in 2024). However, should Nouryon's term loans be refinanced or
extended to 2027 or later, USD750 million of the RCF would mature
in 2026. This will provide financial flexibility for possible
acquisitions or shareholder returns based on its expectations of
robust operational cash flows.
Maturity Approaching: Nouryon will have to refinance about USD5
billion of term loans before 2H25. Public listing plans have not
yet materialised due to market conditions. Fitch believes that
Nouryon's strong business profile and forecast leverage will
support a refinancing even during challenging capital-market
conditions.
ISSUER PROFILE
Nouryon is a global producer of specialty chemicals.
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
----------- ------ -------- -----
Nouryon Finance
B.V.
senior secured LT BB- New Rating RR3 BB-(EXP)
=========
S P A I N
=========
LOARRE INVESTMENTS: Fitch Affirms 'BB' Rating on Sr. Secured Notes
------------------------------------------------------------------
Fitch Ratings has affirmed Loarre Investments S.a r.l.'s EUR850
million senior secured notes at 'BB'. The Outlook is Stable.
RATING RATIONALE
The rating reflects Loarre's stable revenue under its silent
partnership agreement with LaLiga, the second most followed
football league in the world, but is weighed down by loose
debt-structure features and high leverage.
Loarre's underlying cashflow is generated from LaLiga, the most
popular sports league in Spain, underpinned by long-term visibility
of both domestic media TV contracts running until the financial
year to end-June 2027 (FY27), and international contracts that are
well-diversified and with potential growth. LaLiga has some of the
world's most renowned clubs and players, with a strong on-pitch
performance, which has fostered a dedicated and stable fan base.
Three of the biggest clubs in Spanish football and the Royal
Spanish Football Federation remain in dispute regarding Loarre's
investment in LaLiga, which they have challenged in the courts.
Despite this, Fitch sees multiple layers of protection as well as
economic incentives that should insulate debt investors from the
risk of these legal challenges if the key transaction documents
were to be nullified. The transaction's legal counsel has opined
that LaLiga has the capacity to enter into all transaction
documents and the most recent court rulings have ratified, on a
preliminary basis, this view.
KEY RATING DRIVERS
Solid Fan Support with Soft Salary Cap - Revenue Risk, League
Business Model: 'Midrange'
LaLiga has a long history of strong fan support underpinned by its
promotion/relegation structure. It is one of the most followed
football leagues in the world, with some of the most successful and
popular clubs. This strong fan base facilitates the sale of the TV
rights both domestically and internationally. Unlike other European
football leagues, it has a soft salary cap, although this is
related to each club's budget, creating a large disparity in the
level of caps, especially given the domination of two high-profile
clubs. Despite this, the measures have increased clubs' financial
sustainability and the league's overall competitiveness.
High Visibility of Revenue - Revenue Risk, National Television and
Other League Revenue: 'Strong'
LaLiga has contracted most of domestic TV rights until FY27,
creating high visibility on the majority of its revenue. Overall,
Fitch expects the share of contracted revenue to be almost 90% in
the 2023-2024 season before falling to 60% in the 2026-2027 season.
LaLiga is a top-tier sport asset, particularly to the main
broadcasters in Spain. Internationally, the strong on-pitch
performance of its clubs and the historical attraction of star
players have fostered a strong global fan base, second only to the
English Premier League.
Moderate-to-Low Growth Prospects - League Initiatives and Growth
Prospects: 'Midrange'
Football is the undisputable leading sport in Spain, but Fitch only
sees moderate growth potential in the domestic market due to its
already strong position. Nonetheless, there are broader growth
opportunities internationally as a result of the widespread
commercial presence of LaLiga. This should allow LaLiga to further
develop its fan base and manage relationships with international
broadcasters.
Concentrated Bullet, Loose Covenants - Debt Structure: 'Weaker'
The debt structure comprises senior fixed- and floating-rate notes
with bullet maturity in 2029 and a super senior revolving credit
facility (RCF). The concentrated bullet maturity leads to
heightened refinancing risk near maturity while a weak covenant
package allows additional debt to be raised while leverage is below
6x. Debt service is supported by a six-month interest-funded debt
service reserve account and a EUR40 million RCF, both of which
provide good liquidity to support interest payment, but do not
reduce the refinancing risk. Many covenants will be waived if the
debt's rating is upgraded to investment-grade.
Legal Risk
The transaction is exposed to legal risk as three high-profile
Spanish clubs and the football federation have explicitly
challenged the transaction's structure in the courts. Despite this,
several layers of protection to noteholders are available.
Firstly, upon review of legal opinions prepared by transaction
counsel, it is its understanding that LaLiga has full capacity to
enter into the transaction documents and that the litigation
outlined above should be dismissed, either by the Courts of First
Appeal or by the higher courts. The most recent court rulings have
ratified on a preliminary basis this view, and have provided more
clarity on how the upper courts may resolve the main case, which
could take several years.
Secondly, in case of an adverse court outcome declaring any of the
investment documents null and void or if there is a change in
regulation affecting LaLiga, the nullity agreement entered into by
Loarre and LaLiga structures an orderly wind down of the
transaction.
Thirdly, in the unlikely case that the nullity agreement is also
declared null and void due to an adverse court ruling, Fitch
understands from the legal counsel that the general provisions of
the Spanish Civil Code will apply and that both sides will be
required to immediately return to the other the balance resulting
from offsetting the amounts paid by each of them, plus the legal
interest applied. In the event of a delay to this repayment, Fitch
sees sufficient liquidity to cover about 18 months of interest, and
incentives for CVC to support debt obligations in the short term,
given the share pledge to lenders and the significant equity CVC
has in the investment.
Financial Profile
Fitch expects high leverage at financial year ending June 2023, due
to a period of pre-agreed gradual increase of distributable net
income share. Under the Fitch rating case (FRC), Fitch expects net
debt/EBITDA slightly above 7.5x by FY23, that will decrease below
5x in FY25, before stabilising at that level. Average net
debt/EBITDA between FY23 and FY27 stands at 5.3x.
PEER GROUP
Loarre differs from all other league ratings through the
involvement of a private equity-owned special-purpose vehicle,
which is the ultimate issuer of the debt. This creates some
structural weaknesses compared with peers'. Compared with the
National Football League's (NFL) wide funding programme (Football
Funding LLC, A/Stable), Loarre has weaker KRD assessments due to
the structural and governance strengths of the NFL, whose leverage
is also significantly lower at below 2x, compared with above 5x at
Loarre. It can also be compared with club ratings, such as Inter
Media and Communication S.p.A. (B+/Stable), which has significantly
higher operational and sporting risk than Loarre given its
franchise nature.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Failure to deleverage below 6x on a sustained basis under the
FRC
- Adverse outcome of litigation against the transaction resulting
in significant uncertainty over Loarre's ability to service debt
obligations
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Reduction of net debt/EBITDA to sustainably below 4x under the
FRC
TRANSACTION SUMMARY
CVC is investing around EUR2 billion in LaLiga in exchange for
around 8.2% of LaLiga's broadcasting audiovisual revenue and other
minor commercial activities for 50 years. The monies are being
on-lent to participating clubs and used for growth investments (at
least 70%), repayment of debt (no more than 15%) and budget related
to players (no more than 15%), under the project framework of
LaLiga Impulso (Boost LaLiga).
CVC's equity contribution amounts to EUR1.2 billion and the senior
secured notes raised amount to EUR822.5 million.
LaLiga is a Spanish Association formed by 42 football clubs that
comprise the top two football categories in Spain (Primera
División, or LaLiga Santander, and Segunda División, or LaLiga
Smartbank). LaLiga is responsible for organising such competitions,
negotiating and commercialising the audiovisual rights of LaLiga as
a single product (both nationally and internationally), and
managing other non-broadcasting revenue. LaLiga is mandated by law
to manage the audiovisual rights, but it does not own them as they
belong to the clubs. To date, 42 out of 46 clubs have adhered to
the plan.
CREDIT UPDATE
Loarre's net leverage expected for FY23 will be slightly higher
than envisaged in its FRC, mainly due to slower ramp-up in the bars
and restaurants channel of LaLiga, and higher costs related to own
production and content. There has been a good renewal rate in
international contracts. Loarre's investments in LaLiga are going
as planned, with two pending installments in June 2023 and June
2024.
FINANCIAL ANALYSIS
The FRC applied a stress of 10% compared to Loarre's management
assumptions in the estimated renewal price in both domestic media
contracts by FY28, and international contracts by FY25. Fitch also
applied a 10% stress in the cost base, reflecting higher
uncertainty developing own content and production. The deleveraging
profile remains solid, decreasing below 5x by FY25.
Fitch has prepared additional scenarios assessing unlikely events
(flat revenues, doubling of costs, or large haircut in main
contract) and Loarre shows robust leverage profiles in the medium
term.
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 Prior
----------- ------ -----
Loarre
Investments
S.a r.l.
Loarre
Investments
S.a r.l./
Senior Secured
Debt/1 LT LT BB Affirmed BB
===========
T U R K E Y
===========
TURKIYE CUMHURIYETI ZIRAAT: Fitch Rates 2 Tranches Final BB+
--------------------------------------------------------------
Fitch Ratings has assigned Ziraat DPR Finance Company's tranche
2023-A and 2023-B final ratings of 'BB+'. The Outlook is Negative.
The ratings address the likelihood of timely payment of interest
and principal.
Entity/Debt Rating
----------- ------
Ziraat DPR
Finance Company
Series 2023-A LT BB+ New Rating
Series 2023-B LT BB+ New Rating
TRANSACTION SUMMARY
The programme is a financial future flow securitisation of existing
and future US dollar-denominated diversified payment rights (DPRs)
originated by Turkiye Cumhuriyeti Ziraat Bankasi Anonim Sirketi
(Ziraat). DPRs can arise for a variety of reasons including
payments due on the export of goods and services, capital flows,
tourism and personal remittances. This is the first issue under
this programme.
KEY RATING DRIVERS
Originator Credit Quality: Ziraat is the largest state-owned bank
in Turkiye (B/Negative/B). Its Long-Term Local-Currency Issuer
Default Rating (LTLC IDR) of 'B'/Negative, the starting point for
the DPR ratings, is driven by the state support. The Negative
Outlook reflects that on the sovereign. Ziraat's Long-Term
Foreign-Currency (LTFC) IDR at 'B-'/Negative is driven by its
Viability Rating of 'b-'.
GCA Score Supports Ratings: Fitch views Ziraat's going-concern
assessment (GCA) as 'GC1'. The GCA score measures the likelihood
that a business remains a going concern and the underlying cash
flow continues to be generated if the bank defaults (as measured by
the IDR).
Four-Notch Uplift from LTLC IDR: Fitch views the overall risks of
Ziraat's DPR programme as being on a par with its 'GC1' peers in
the Turkish market. Visibility on the outcome of any potential
default or bankruptcy for each Turkish bank relevant to the DPR
programme is still limited as market conditions remain
challenging.
Increased DPR Flows in 2022: The DPR flows increased sizably in
2022 and total applicable flows stood at around USD29 billion in
2022 versus USD17.3 billion in 2021. The increase in DPR flows
represents an increase in Ziraat's market share in trade finance
and the overall growth of exports in Turkiye.
The Fitch-calculated monthly debt service coverage ratio (DSCR) for
the programme based on the average monthly offshore flows processed
through designated depositary banks (DDBs) in the past 12 months
stood at 56x. Fitch also tested the DSCR based on minimum
collections observed since 2018, which is significantly below the
DSCR based on recent monthly collections. The DSCR levels could
start to decline if the DPR flow levels observed last year are not
sustained.
Fitch also tested the sufficiency and sustainability of the DSCRs
under various scenarios, including exchange-rate stresses, a
reduction in payment orders based on the top 20 beneficiary
concentrations and a reduction in remittances based on the steepest
quarterly decline in the past few years. Fitch considers that the
DSCRs for the programme are sufficient to support the assigned
ratings.
Healthy Flows Throughout Pandemic: In recent years Ziraat has
increased its market share in various sectors, contributing to the
surge in DPR flows. Despite the short history of increased flow
levels, Fitch analyses the programme based on a forward-looking
view (which considers concentration risk) anticipating that flows
will stabilise. The earthquakes affecting southern and central
Turkiye in February 2023, based on the information available so
far, have not had a significant impact as the affected regions have
fairly weak export flows.
Diversion Risk Reduced: The transaction's structure, like those of
peers, mitigates certain sovereign risks by keeping DPR flows
offshore, allowing the transaction to be rated above Turkiye's
Country Ceiling of 'B'. Fitch believes diversion risk is materially
reduced by the acknowledgement agreements signed by five DDBs.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The most significant variables affecting the transaction's ratings
are the originator's credit quality, the GCA score, the DPR flows,
the size of the DPR programme relative to other funding sources and
DSCR levels. Fitch would analyses an adverse change in any of these
variables for the impact on the transaction's ratings.
The originator's, as well as the sovereign's, ratings are on
Negative Outlooks, which is reflected on the rating of this DPR
issue, in line with the entire sector.
In addition, the ratings of The Bank of New York Mellon, as the
programme agent, would constrain the ratings of DPR debt if they
are below those of the DPR debt and if no remedial action is
taken.
In terms of the applicable DPR flows, one of the reasons for the
sharp growth in flow levels seen in the last two years were
infrequent capital flows. Moreover, Turkish exports could be
affected by slowdown in export demand from Europe and increased
competition from the opening up of China's market. If for any of
the above reasons, the flow levels start reverting to 2019 levels,
it could put a downward pressure on the ratings.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Fitch does not currently anticipate developments with a high
likelihood of triggering an upgrade. The main constraint to DPR
notes' ratings is the originator's credit quality and the market
conditions in Turkiye, which is relevant to DPR flows performance.
Increased economic stability could contribute positively to DPR
flow performance and the rating. Fitch will review the DPR notes'
ratings if any of these variables changes, but this will be fed
through its sovereign and bank ratings.
DATA ADEQUACY
Fitch reviewed the results of a third-party assessment conducted on
the asset portfolio information, and concluded that there were no
findings that affected the rating analysis.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
===========================
U N I T E D K I N G D O M
===========================
BAGSHOT MANOR: Goes Into Administration
---------------------------------------
Ben Vogel at Construction News reports that Bagshot Manor
Developments has gone into administration.
According to Construction News, Bagshot Manor, which occupied the
same Southampton premises as Furness House and is believed to be
its sister company, appointed Moorfields Advisory Limited as
administrators on April 28.
CALIFORNIA HOLDING: S&P Rates New $550MM Notes 'B', Outlook Stable
------------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B' long-term ratings
to Calderys' intermediate parent company, California Holding III
Ltd., and to the proposed $550 million senior secured notes. The
notes have a preliminary recovery rating of '3'.
The stable outlook indicates that S&P expects Calderys to display
fairly resilient operating performance through 2023 and 2024 and to
maintain broadly stable volumes while increasing revenue slightly.
It is also expected to make progress on realizing synergies from
the merger and to sustain S&P Global Ratings-adjusted debt to
EBITDA of 4.5x-4.0x and positive free operating cash flow (FOCF).
Investment firm Platinum Equity created Calderys, a global
refractories solution provider, by merging two recent acquisitions.
The combined group plans to refinance its capital structure to
repay its existing debt and reduce its shareholder funding.
Platinum will contribute about EUR660 million of equity, pro forma
the transaction. S&P understands that there will be no shareholder
loans or debt-like instruments in the new debt structure, which
will consist of:
-- $550 million senior secured notes; and
-- A $200 million ABL facility.
Calderys is a leading global provider of consumable thermal
protection products (known as refractories), with sales of about
EUR1.6 billion a year. It is the third-largest refractories
manufacturer globally, behind RHI Magnesita and Vesuvius (both
unrated). The group's other competitors include regional
manufacturers and more-diversified groups that have refractories
activities. Calderys covers the key end-markets, such as iron and
steel, thermal, and foundry. It also offers additives and related
services that are complementary to refractories, such as design and
engineering, installation, and maintenance and repair. This adds
vertical integration to Calderys' operations and supports strong
customer retention.
S&P considers the combined group to have good business
complementarity and geographical diversification. HWI was focused
on the U.S. market and Imerys' high-temperature solutions business
mainly operated in Europe and Asia-Pacific. Calderys has over 50
manufacturing facilities, which allows the company to be close to
its customers. Given the complex formulation requirements and
difficulty of transporting products, especially monolithics, S&P
views Calderys' good geographical footprint and ability to focus on
local markets as positive.
Calderys' operating margins are below those of its peers. S&P said,
"Its S&P Global Ratings-adjusted EBITDA margin of below 12%
constrains our view of its business risk profile. We understand
that cost structures were suboptimal under the previous ownership
and include the costs of implementing synergies and operational
improvements in our EBITDA calculations. The company has a plan to
use synergies to improve its revenue and profitability. This
includes improving its pricing strategy, reducing fixed costs,
exploiting cross-selling opportunities, improving sourcing, and
capital expenditure (capex) initiatives. We understand that there
is limited overlap between the two entities that merged to form
Calderys. Nevertheless, we acknowledge some execution risk related
to the integration. Calderys has a limited track record of
operating as a stand-alone entity."
Most of Calderys' end-markets are cyclical. Refractories are
consumable products that have a short useful life, generally less
than a year. To some extent, this ensures that they provide a
recurring revenue base. However, Calderys mainly serves the iron
and steel, thermal, and foundry industries--its products are mainly
used in construction, automotive, and industrial end-markets, which
are all cyclical. As S&P saw in 2019 and 2020, Calderys' sales are
likely to fall in a downturn because they are linked to volumes in
the iron and steel, thermal, and foundry industries.
S&P said, "We forecast that FOCF will exceed EUR50 million a year
in 2023-2024. Our view is supported by the group's limited capex
needs, which are less than 3%, even including the cost of the
synergy plan. Calderys' business plan includes some growth and
synergy capex to support a minor expansion in capacity, mainly in
Europe and India. We do not anticipate that it will see material
working capital movements and we understand that the business
formerly owned by Imerys has leeway to optimize its working capital
position.
"Adjusted leverage is expected to gradually reduce from the
4.0x-4.5x forecast in 2023-2024 as EBITDA improves and synergies
are realized. We expect modest growth in revenue, mainly supported
by pricing initiatives and some improvement in volumes. In 2022,
the company completed a new facility in Alabama for its steel
customers, which should boost revenue going forward. We also
forecast that EBITDA will cover interest by more than 3.0x."
Future rating upside would depend on the financial sponsor
committing to maintaining leverage below 5.0x, and Calderys
developing a record of resilient operating performance as a
stand-alone entity. S&P does not deduct cash from debt when
calculating our adjusted leverage because of Calderys'
private-equity ownership, which suggests that cash could be used,
in part, to fund bolt-on mergers and acquisitions (M&A) or
shareholder remuneration.
The final ratings will depend on our receipt and satisfactory
review of all final documentation and final terms of the
transaction. The preliminary ratings should therefore not be
construed as evidence of the final ratings. If S&P does not receive
the final documentation within a reasonable time, or if the final
documentation and terms of the transaction depart from the
materials and terms reviewed, it reserves the right to withdraw or
revise the ratings. Potential changes include, but are not limited
to, use of the proceeds, maturity, size, and conditions of the
facilities, financial and other covenants, security, and ranking.
The stable outlook indicates that S&P expects Calderys to display
fairly resilient operating performance into 2023-2024, with broadly
stable volumes and revenue, while making progress on its synergy
plan and maintaining debt to EBITDA at about 4.5x-4.0x and positive
FOCF.
S&P could lower the ratings if:
-- The group experienced severe margin pressure or operational
issues while combining the two businesses, leading to negative
FOCF;
-- Adjusted debt to EBITDA remained above 6.0x over a prolonged
period;
-- Liquidity came under pressure; or
-- Calderys and its sponsor chose to follow a more-aggressive
financial strategy, accepting higher leverage, pursuing debt-funded
M&A, or increasing shareholder returns.
S&P could raise the ratings if the group develops a track record of
resilient operating performance and EBITDA growth as a stand-alone
entity. In addition, rating upside would depend on Calderys'
management and financial sponsor demonstrating their commitment to
maintaining stronger leverage metrics. Under this scenario, it
would expect Calderys to consistently maintain:
-- Adjusted debt to EBITDA below 5x;
-- Funds from operations (FFO) to debt above 12%; and
-- Positive FOCF.
ESG credit indicators: E-2, S-2, G-3
Governance, in particular governance structure, is a moderately
negative consideration in our credit rating analysis of Calderys,
as for most rated entities owned by private-equity sponsors. S&P
considers the company's highly leveraged financial risk profile
points to corporate decision-making that prioritizes the interests
of the controlling owners. This also reflects generally finite
holding periods and a focus on maximizing shareholder returns.
Environmental and social factors have an overall neutral influence
on S&P's credit rating analysis. Although the group provides
products and solutions for the iron and steel industry, it does not
have the same energy needs as iron and steel manufacturers. Energy
needs are about 3% of sales. In fact, Calderys' products aim to
improve the performance and efficiency of furnaces and high
temperature processes.
FURNESS HOUSE: Enters Administration, Posts GBP1.71MM Loss
----------------------------------------------------------
Ben Vogel at Construction News reports that residential developer
Furness House Developments Limited has gone into administration.
The company turned over GBP1.33 million for the year ended January
31, 2022, generating a pre-tax loss of GBP1.71 million after a
profit of GBP2.27 million in 2021 from turnover of GBP5.97 million,
Construction News discloses.
According to Construction News, the situation worsened in 2022 and
in December that year, directors reported that continuing
"post-pandemic market turmoil" was causing severe problems and the
company was "searching for different exit routes".
MHA MacIntyre Hudson was called in as administrators on April 27,
Construction News relates.
HOPS HILL 3: Moody's Assigns (P)B2 Rating to Class F Notes
----------------------------------------------------------
Moody's Investors Service has assigned provisional ratings to Notes
to be issued by Hops Hill No.3 plc:
GBP[]M Class A Mortgage Backed Floating Rate Notes due December
2055, Assigned (P)Aaa (sf)
GBP[]M Class B Mortgage Backed Floating Rate Notes due December
2055, Assigned (P)Aa3 (sf)
GBP[]M Class C Mortgage Backed Floating Rate Notes due December
2055, Assigned (P)A3 (sf)
GBP[]M Class D Mortgage Backed Floating Rate Notes due December
2055, Assigned (P)Baa3 (sf)
GBP[]M Class E Mortgage Backed Floating Rate Notes due December
2055, Assigned (P)Ba3 (sf)
GBP[]M Class F Mortgage Backed Floating Rate Notes due December
2055, Assigned (P)B2 (sf)
Moody's has not assigned a rating to the GBP []M Class G Mortgage
Backed Notes due December 2055 and to the GBP [] Class J Variable
Funding Notes due December 2055.
The Notes are backed by a pool of UK buy-to-let ("BTL") mortgage
loans originated by Keystone Property Finance Limited. The
originator sold the beneficial title to UK Mortgages Corporate
Funding DAC. This represents the third issuance out of the Hops
Hill label.
The provisional portfolio of assets amount to approximately
GBP329.1 million as of February 28, 2023 pool cutoff date. The
structure allows additional loans up to 10% of the closing
portfolio amount to be added to the pool by way of prefunding, to
be originated by the first note payment date in September 2023. The
addition of pre-funded loans is conditional upon a number of
portfolio tests, amongst others the original and current
loan-to-value not being greater than 71%.
RATINGS RATIONALE
The ratings are primarily based on the credit quality of the
portfolio, the structural features of the transaction and its legal
integrity.
According to Moody's, the transaction benefits from a fully funded
amortising liquidity reserve which is equal to 1.85% of Class A
balance at closing. The liquidity reserve will amortise together
with Class A to the minimum of its closing amount and 3.7% of the
current balance of Class A. It will be available to cover senior
fees and Class A interest. Amortised amounts are released through
principal, ultimately providing credit enhancement to all rated
notes.
However, Moody's notes that the transaction features some credit
weaknesses such as servicing disruption risk as the servicer,
Keystone Property Finance Limited, is an unrated entity that
Moody's categorise as small and new, and no backup servicer is
appointed. Various mitigants have been included in the transaction
structure such as a back-up servicer facilitator, independent cash
manager and estimation language, as well as six months of liquidity
provided by the liquidity reserve for senior expenses and Class A
notes interest. Liquidity provided by the liquidity reserve does
not cover Classes B-F and this has been taken into account in
Moody's analysis, by capping the rating of Class B. There is
negative excess spread at closing under Moody's stressed
assumptions, which incorporates the negative carry the transaction
would experience during the prefunding period when collateral will
be less than the outstanding loans. However, portfolio yield
increases as the fixed rate loans eventually reset to higher
margins. There is principal to pay interest mechanism as a source
of liquidity and principal can be used to pay interest on Class A
without any conditions. For classes B-F, it can be used provided
that either it is the most senior class outstanding or that PDL
outstanding on that class is less than 10%. Due to the negative
excess spread at closing under Moody's stressed assumptions,
Moody's expect that this mechanism will be used in the first
periods.
Additionally, the interest rate risk mismatch between the fixed
rate loans in the portfolio and the floating rate notes is hedged
through an interest rate swap agreement provided by Banco Santander
S.A. Class B and C notes are capped due to linkage to the swap
counterparty.
Moody's determined the portfolio lifetime expected loss of 1.7% and
MILAN credit enhancement ("MILAN CE") of 14% related to borrower
receivables. The expected loss captures Moody's expectations of
performance considering the current economic outlook, while the
MILAN CE captures the loss Moody's expect the portfolio to suffer
in the event of a severe recession scenario. Expected loss and
MILAN CE are parameters used by Moody's to calibrate its lognormal
portfolio loss distribution curve and to associate a probability
with each potential future loss scenario in the ABSROM cash flow
model to rate RMBS.
Portfolio expected loss of 1.7%: This is higher than the UK BTL
RMBS sector and is based on Moody's assessment of the lifetime loss
expectation for the pool taking into account: (i) the portfolio
characteristics, including the WA CLTV for the pool of 70.8%, 93.8%
interest only loans and 16.7% HMO/MUF loans; (ii) good performance
based on the historical data, which however does not cover a full
economic cycle (historical data provided starting 2018); (iii) the
current macroeconomic environment in the UK and the impact of
future interest rate rises on the performance of the mortgage
loans; and (iv) benchmarking with other UK BTL transactions.
MILAN CE of 14%: This is higher than the UK BTL RMBS sector average
and follows Moody's assessment of the loan-by-loan information
taking into account the following key drivers: (i) the WA CLTV for
the pool of 70.8%, which is in line with comparable transactions;
(ii) the pool concentration with the top 20 borrowers accounting
for approximately 11.6% of current balance; (iii) the originator
and servicer assessment; and (iv) benchmarking with other UK BTL
transactions.
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
July 2022.
The analysis undertaken by Moody's at the initial assignment of
ratings for RMBS securities may focus on aspects that become less
relevant or typically remain unchanged during the surveillance
stage.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that would lead to an upgrade of the ratings include: (i)
significantly better than expected performance of the pool together
with an increase in credit enhancement of Notes; (ii) a
deleveraging of the capital structure; (iii) for Class B and C a
reduction in swap counterparty linkage.
Factors that would lead to a downgrade of the ratings include: (i)
an increase in the level of arrears resulting in a higher level of
losses than forecast; (ii) increased counterparty risk leading to
potential operational risk of servicing or cash management
interruptions; or (iii) economic conditions being worse than
forecast resulting in higher arrears and losses.
HOPS HILL NO.3: S&P Assigns Prelim BB (sf) Rating to Class G Notes
------------------------------------------------------------------
S&P Global Ratings has assigned preliminary credit ratings to Hops
Hill No.3 PLC's class A notes and class B-Dfrd to G notes.
This is a RMBS transaction that securitizes a portfolio of
buy-to-let (BTL) mortgage loans secured on properties located in
the U.K. The provisional mortgage portfolio is approximately GBP329
million as of Feb. 28, 2023, plus a prefunding amount. The loans
were all originated in the past two years by Keystone Property
Finance.
The issuer will use the issuance proceeds to purchase the full
beneficial interest in the mortgage loans from the seller at
closing, plus some prefunded loans up to the first interest payment
date. The issuer will grant security over all of its assets in the
security trustee's favor.
S&P considers the collateral to be prime, based on the originator's
conservative lending criteria, the fact that none of the loans are
in arrears or related to borrowers currently under a bankruptcy
proceeding.
Credit enhancement for the rated notes will consist of
subordination and excess spread.
A liquidity reserve will provide liquidity support to cover senior
fees, swap payments, and cure interest shortfalls on the class A
notes. The class A and B-Dfrd through F-Dfrd notes will benefit
from principal to be used to pay interest, provided that, in the
case of the class B-Dfrd to F-Dfrd notes, they are the most senior
class outstanding or the outstanding principal deficiency ledger
(PDL) is less than 10%. The class G notes pay no interest.
The main changes against Hops Hill No.2 PLC are the presence of a
prefunding amount, the issuance of rated class F-Dfrd and G notes,
and the servicing being now done in-house by Keystone.
There are no rating constraints in the transaction under our
counterparty, operational risk, or structured finance sovereign
risk criteria. S&P considers the issuer to be bankruptcy remote.
Preliminary ratings
CLASS PRELIMINARY RATING* CLASS SIZE (%)
A AAA (sf) 85.70
B-Dfrd AA (sf) 6.70
C-Dfrd A+ (sf) 4.30
D-Dfrd A- (sf) 2.50
E-Dfrd BB+ (sf) 1.50
F-Dfrd BB (sf) 0.70
G BB (sf) 0.19
J-VFN NR TBD
Residual certs NR N/A
*S&P's ratings address timely receipt of interest and ultimate
repayment of principal on the class A notes, and the ultimate
payment of interest and principal on the other rated notes (with
the exception of the class G notes). The class G notes pay no
interest.
NR--Not rated.
TBD--To be determined.
N/A--Not applicable.
JM SCULLY: Falls Into Administration
------------------------------------
Ben Vogel at Construction News reports that specialist fit-out
contractor JM Scully went under in April.
The firm was established in 1983 and specialised in retail,
commercial and leisure fit-out jobs for clients such as Argos,
Boots and Vodafone. It had a pipeline of work worth GBP29 million
by March 2022, Construction News discloses.
TAYSIDE AVIATION: Student Pilots May Not Recover Course Fees
------------------------------------------------------------
BBC News reports that students at a Dundee-based flight school said
they have lost tens of thousands of pounds after the training
centre went into administration.
Tayside Aviation Limited, which was founded in 1968, ceased trading
last month with the loss of 22 jobs,
BBC relates.
According to BBC, about 60 trainee pilots paid fees in advance and
now fear they will not have the money returned.
Trainee pilot Zac Chiswell is one of those affected and said he had
lost about GBP35,000, BBC notes.
The firm provided courses for private licences to full commercial
licences and delivered the RAF Air Cadet Pilot Scheme for more than
30 years.
Geoff Jacobs and Blair Nimmo have been appointed as joint
administrators, BBC dislcoses.
The company was bought in December 2021 by Tony Banks, the founder
of Balhousie Care Group.
Mr. Chiswell, as cited by BBC, said: "The administrators made it
very clear that it was very unlikely that any students would see
any sort of funding coming back their way, which is disappointing.
"Without the funding, there's no government support that allows you
to do this sort of job.
"It's very difficult to become a pilot, so therefore I'm having to
look at maybe other options as to how I'm able to get funding to be
able to go to maybe another flight school."
The administrators said that at the time of the purchase, the
company had a significant liability for prepaid flying courses
which affected its ability to generate income from new sales.
*********
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-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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Editors.
Copyright 2023. All rights reserved. ISSN 1529-2754.
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