/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/230524.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 Wednesday, May 24, 2023, Vol. 24, No. 104 Headlines F I N L A N D OUTOKUMPU OYJ: Moody's Hikes CFR to Ba2 & Alters Outlook to Stable G E O R G I A GEORGIA CAPITAL: Notes Maturity No Impact on Moody's B1 Rating TBC LEASING: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable I C E L A N D NICEAIR: To File for Bankruptcy After Failing to Obtain Aircraft I R E L A N D SIGNAL HARMONIC I: Moody's Assigns (P)B3 Rating to EUR4MM F Notes I T A L Y AUTOFLORENCE 3: Fitch Assigns 'B+(EXP)' Rating on Class E Notes L U X E M B O U R G KANTAR GLOBAL: Moody's Affirms 'B2' CFR & Alters Outlook to Stable S P A I N TDA 22 MIXTO: Moody's Affirms B1 Rating on EUR5.7MM Class D2 Notes VIA CELERE: Fitch Affirms LongTerm IDR at 'BB-', Outlook Stable S W I T Z E R L A N D CREDIT SUISSE: Bankruptcy Credit Event Has Not Occurred U N I T E D K I N G D O M MARSTON'S ISSUER: Fitch Affirms BB- Rating on B Notes, Outlook Neg. STONE PLUS: Administrators Seek Buyer for Business VENATOR MATERIALS: Enters Chapter 11 With Prepackaged Plan WASPS: License to Play in Second-Tier Championship Revoked - - - - - ============= F I N L A N D ============= OUTOKUMPU OYJ: Moody's Hikes CFR to Ba2 & Alters Outlook to Stable ------------------------------------------------------------------ Moody's Investors Service has upgraded the corporate family rating of Outokumpu Oyj to Ba2 from Ba3, as well as its probability of default rating to Ba2-PD from Ba3-PD. The outlook was changed to stable from positive. "The upgrade reflects Moody's expectations that even in a more challenging operating environment Outokumpu will maintain its credit metrics in line with a Ba2 rating over the next 12-18 months, supported by its intention to keep low leverage and the ongoing actions to structurally increase the profitability and the resilience of its operations", says Martin Fujerik, a Moody's Vice President – Senior Credit Officer and lead analyst for Outokumpu. RATINGS RATIONALE The upgrade reflects Moody's expectation that Outokumpu will maintain its credit metrics in line with a Ba2 rating over the next 12-18 months, despite lower volumes and prices compared to the record 2022 levels and the ongoing pressure on input costs. The rating agency forecasts Outokumpu's EBITDA, as adjusted by Moody's, to reach roughly EUR530 million in 2023, significantly down from the record level of around EUR1.2 billion in 2022. Although the company's Moody's-adjusted gross debt/EBITDA will increase to around 2.2x based on the agency's forecast, from 1.0x in 2022, the higher level is still in line with a Ba2 rating, especially when considering sizeable cash balances not reflected in the metrics. Outokumpu's ongoing discipline in capital allocation supports this forecast. Over the past three years the company has significantly reduced both its gross and net debt, operating now with reported net cash. The Ba2 ratings assume that over the next 12-18 months the company will continue to manage its balance sheet with capacity under its net leverage target below 1.0x under normal market conditions and will not significantly increase its gross debt. Furthermore, the agency expects that Outokumpu will opt for shareholder distribution that will enable it to continue generating meaningful positive free cash flow (FCF), even with higher investments in the second phase of the business plan compared to the first phase. Moody's assumes that for 2023 Outokumpu will only modestly raise its 2022 base dividend of EUR0.25/share paid in April 2023, in line with its policy to pay stable and growing dividend. During 4Q 2022 and 1Q 2023 the company executed EUR100 million share buyback and commented that buybacks would remain one of the tools to return capital to its shareholders. However, Moody's expects that Outokumpu will use this tool only to return excess cash if cash flows are stronger than expected. In the upgrade the rating agency also recognizes that Outokumpu continues to take measures to improve its profitability and resilience to economic cycles, which is an important rating consideration for a company that operates in a highly volatile, cyclical, capital-intensive and to a large extent commoditized stainless steel market. By the end of March 2023 Outokumpu already delivered EUR52 million out of the targeted EUR200 million EBITDA run-rate improvements envisaged for the second phase of its business plan running from July 2022 through 2025. This is in addition to the EUR250 million EBITDA improvements the company achieved in the first phase of the plan. The upgrade also reflects a further improvement in the company's liquidity profile, which Moody's views as good. Outokumpu's sizeable cash balances with EUR714 million of cash and cash equivalents at the end of March 2023; limited debt maturities until 2025 (notwithstanding its exposure to uncommitted factoring); and access to back-up facilities, support this assessment. RATIONALE FOR OUTLOOK The stable outlook reflects the rating agency's expectations that Outokumpu will maintain credit metrics in line with a Ba2 rating over the next 12-18 months, such as Moody's-adjusted gross debt/EBITDA around 2.2x and Moody's-adjusted (cash flow from operations [CFO]-dividends)/gross debt in high twenties in % terms, further underpinned by good liquidity. ESG CONSIDERATIONS Governance considerations were among the primary drivers of this rating action because the upgrade is supported by Moody's expectation of Outokumpu opting for capital allocation priorities allowing it to maintain low leverage and meaningful FCF generation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could further upgrade Outokumpu's ratings, if the company enhanced its scale and diversification; developed a further track record of sustainably increasing its resilience to cycles; and applied financial policies that would lead to sustained Moody's-adjusted gross debt/EBITDA below 2.5x and Moody's-adjusted (CFO-dividends)/gross debt ratio above 35% through varying stainless steel price points. The upgrade would also require a maintenance of good liquidity profile. Conversely, the ratings could be downgraded, if Outokumpu applied more aggressive financial policies, leading to Moody's adjusted gross debt/EBITDA sustainably exceeding 3.5x and Moody's-adjusted (CFO-dividends)/gross debt sustainably reducing below 25%. A deterioration of liquidity could also lead to a downgrade. The principal methodology used in these ratings was Steel published in November 2021. Headquartered in Helsinki, Finland, Outokumpu is a leading global stainless steel producer. The company also owns a chromite mine and produces ferrochrome, a key raw material for stainless steel production. In the period of 12 months that ended March 2023, Outokumpu generated sales of around EUR8.9 billion. ============= G E O R G I A ============= GEORGIA CAPITAL: Notes Maturity No Impact on Moody's B1 Rating -------------------------------------------------------------- "Moody's Investors Service considers that JSC Georgia Capital's (Georgia Capital or the company, B1 stable) liquidity position has weakened as it approaches the March 2024 maturity date for its USD300 million senior unsecured notes rated B1," says Sebastien Cieniewski, a Moody's Vice President - Senior Credit Officer and lead analyst for Georgia Capital. The company's cash balance of USD135 million supports its credit profile but remains insufficient to repay the notes at maturity, leaving Georgia Capital exposed to the volatility of debt capital markets over the coming months. Its relatively low leverage and liquid assets somewhat mitigate this risk and improve Georgia Capital's refinancing risk. Following the repurchase of notes through a modified Dutch auction in 2022, Georgia Capital reduced the outstanding amount of senior unsecured notes due 2024 to USD300 million from USD365 million through the cancellation of USD65 million of this instrument in Q4 2022. From these USD300 million of notes outstanding, USD79 million were held in treasury by Georgia Capital as of March 31, 2023. However, Georgia Capital's cash balance of USD135 million as of March 31, 2023 and the positive cash flow Moody's projects in 2023 will not be sufficient to cover the around USD221 million of notes held by third-parties (assuming the cancellation of USD79 million of notes held in treasuy as of March 31, 2023) at maturity in March 2024. The rating agency understands that the company is actively working on the refinancing of the senior unsecured notes through a potential local bond issuance of a smaller size facilitated by the use of part of its excess cash balance, but any such transaction remains exposed to the volatility of capital markets and needs to be executed in a relatively tight timeframe. Georgia Capital's relatively low leverage as measured by net market value leverage (net MVL) with the expectation of further improvements over the next twelve months, the strong performance of its investments which has supported the aggregated portfolio value, and the good momentum for Georgia's (Government of Georgia, Ba2 negative) economy which will support growth for the company's investment companies, all support the rating and improve the company's prospects for refinancing. Moody's assessment of Georgia Capital's weak liquidity position thus reflects the relatively aggressive management of the timing for the refinancing of the senior unsecured notes due 2024. The rating agency will continue to monitor the progress made by the company to refinance its senior unsecured notes in a timely manner. Moody's highlights the continued good performance of Georgia Capital's investment portfolio. The portfolio value stood at USD1,276.2 million equivalent as of March 31, 2023 – 7.8% higher compared to the end of 2022. The higher valuation supported by the appreciation of the Georgian Lari against the US dollar, among others, combined with a relatively stable outstanding net debt resulted in an improved net market value leverage ratio of 13.0% (as calculated by Moody's) as of the end of Q1 2023 compared to 13.3% at the end of 2022 and 24.4% in 2021. Moody's expects a positive trend in valuations of its investment portfolio over the next twelve months supported by the growth of the Georgian economy. Moody's projects real gross domestic product (GDP) growth of 4.5% in 2023 (forecasts as of February 2023). Georgia Capital had a large cash balance of USD135 million as of March 31, 2023 and Moody's projects that the company will generate excess cash flow in 2023 supported by its outlook of between GEL150 million and GEL160 million (USD59-62 million equivalent) of dividend income during the year (including buyback dividends from Bank of Georgia, Ba2 negative). Georgia Capital has announced a USD10 million share buyback and cancellation programme that was launched in April 2023. A significant portion of dividend income will be generated from Georgia Capital's holding of a 20.3% stake in JSC Bank of Georgia (Ba2 negative). The price of JSC Bank of Georgia's shares, which are listed on the London Stock Exchange (LSE), has increased significantly over the last twelve months with the company's stake in the bank valued at GEL830 million (or USD324 million equivalent) as of the end of Q1 2023 with a further significant appreciation since then. Additionally, JSC Bank of Georgia's shares provide liquidity for Georgia Capital to support the refinancing of its debt. Georgia Capital also holds a 20% stake in a water utility business, valued at GEL155 million (USD61 million equivalent) as of March 31, 2023 by the application of a pre-agreed put option multiple with Aqualia (Aqualia acquired 80% of the water utility business from Georgia Capital in 2022). Although Georgia Capital can only exercise the put option in 2025 and 2026, after the maturity of the senior unsecured notes, it represents an additional potential source of liquidity that the company could pledge to facilitate a refinancing of its debt. COMPANY PROFILE Georgia Capital is a Georgia-based intermediate holding company. It holds a number of investments focused on the Georgian economy. Georgia Capital is ultimately owned by Georgia Capital PLC, the parent company of the group listed on the LSE. TBC LEASING: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable ------------------------------------------------------------- Fitch Ratings has upgraded JSC TBC Leasing's (TBCL) Long-Term Issuer Default Rating (IDR) to 'BB' from 'BB-' with a Stable Outlook and its Shareholder Support Rating (SSR) to 'bb' from 'bb-'. The rating actions follow the upgrade of the Long-Term IDR of TBCL's sole shareholder, JSC TBC Bank (BB/Stable/bb) on May 5, 2023. The Stable Outlook mirrors that on the parent. KEY RATING DRIVERS Support Drives Rating: TBCL's IDRs are driven by support from TBC Bank. Fitch believes the propensity of the parent to support TBCL is high, reflecting full ownership, common branding, integration, a record of capital and funding support and high reputational risks from a subsidiary default. TBCL's foreign lenders are largely the same international financial institutions (IFIs) and impact investors from which TBC Bank sources a material portion of its own wholesale funding. Fitch believes a failure to support TBCL would significantly damage TBC Bank's reputation with its key lenders, undermining its business model and growth potential. To support TBCL's growth, TBC Bank has provided capital and funding in recent years. The parent has approved an injection of GEL3.2 million (USD1.3 million) to be disbursed according to TBCL's needs and also provides a contingency funding line up to USD30 million (undrawn at end-2022). TBC Bank provides TBCL letters of support to enable third-party borrowing and also facilitates TBCL's bond placements. Strong Market Share, Small Size: TBCL operates solely in Georgia, where it is the market leader with an 82% share at end-2022. The company mainly provides financial leasing to corporate clients of TBC Bank as well as to SMEs, micro-businesses and individuals. The company accounts for a modest 2% of TBC Bank's assets, but its significance to its product offering has been increasing in recent years. Weaker Standalone Profile: TBCL's standalone credit profile does not drive the IDR as it is constrained by a monoline business model, relatively weak asset quality, high risk appetite, and tolerance for high leverage. Positively, the leverage (gross debt to tangible equity) improved to 5.4x at end-2022 from 6.6x in 2021 and 10.8x in 2020, and there was a reduction in concentration to single names (21% for the top 10 compared with 32% in 2021). Asset Quality and Profitability Improvement: TBCL's clients are often higher-risk than those of TBC Bank (the impaired ratio, including both leases and other financial assets, was high at 17.8% at end-2022), but this is somewhat mitigated by access to liquid collateral and the adequate pricing of risk. The Stage 3 ratio (including only impaired leases) improved to 5.6% at end-2022 from 9.6% at end-2021, mainly driven by an acceleration of repossessions and stronger underwriting standards. TBCL's profitability is a relative strength (pre-tax income to average assets of 3.3% in 2022, return on equity of 24%). RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade -- A downgrade of TBC Bank's Long-Term IDR would lead to a downgrade of TBCL's IDR. -- A material weakening of TBC Bank's propensity or ability to support TBCL could result in the subsidiary's rating being notched down from the parent's IDR. This could be driven, for example, by greater regulatory restrictions on support or diminishing of TBCL's strategic importance. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade -- An upgrade of TBC Bank's Long-Term IDR by one notch would lead to an upgrade of TBCL's IDR. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS TBCL's senior secured debt rating is equalised with the company's Long-Term IDR, notwithstanding the bond's secured nature and an outstanding buffer of contractually subordinated debt. This reflects its expectations of average recoveries, because asset recoveries in the event of both TBCL and TBC Bank being in default would likely be weighed down by considerable macro-economic stress that would likely accompany such an event. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Changes to TBCL's Long-Term IDR would be mirrored in the company's senior secured bond rating. The possible conversion of the bond to unsecured would not lead to a downgrade of the issue, provided this was accompanied by a similar conversion of TBCL's other funding facilities. 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 ----------- ------ ----- JSC TBC Leasing LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Shareholder Support bb Upgrade bb- senior secured LT BB New Rating ============= I C E L A N D ============= NICEAIR: To File for Bankruptcy After Failing to Obtain Aircraft ---------------------------------------------------------------- Joe Kunzler at Simple Flying, citing ch-aviation.com, reports that Iceland's Niceair will be filing for bankruptcy after being unable to obtain a replacement aircraft for operations. According to Simple Flying, since April 7, Niceair has been unable to obtain a replacement aircraft after Hi Fly Malta failed to keep up with the payment schedule. Although the virtual airline has been working hard to obtain a new aircraft, time had run out, Simple Flying states. Hence the need to declare bankruptcy, Simple Flying notes. "These were in every way uncontrollable reasons. This closure is particularly tragic as there were good grounds and experience had shown that there was a basis for direct international flights through Akureyri. We deeply regret the harm caused to the company's customers, staff, suppliers, and others affected. All claims will go through the legal channels," Simple Flying quotes Niceair as saying in a May 19 statement. "After the company suffered major setbacks due to the non-compliance of its foreign partner HiFly, [. . .] there were no more flights operated by the company and the company had no income, so the conditions for a recently completed financing round were broken and it was not possible to recall the share capital pledge. The company laid off all employees at the end of April." ============= I R E L A N D ============= SIGNAL HARMONIC I: Moody's Assigns (P)B3 Rating to EUR4MM F Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to notes to be issued by Signal Harmonic CLO I DAC (the "Issuer"): EUR195,000,000 Class A Senior Secured Floating Rate Notes due 2036, Assigned (P)Aaa (sf) EUR35,750,000 Class B Senior Secured Floating Rate Notes due 2036, Assigned (P)Aa2 (sf) EUR15,900,000 Class C Senior Secured Deferrable Floating Rate Notes due 2036, Assigned (P)A2 (sf) EUR19,500,000 Class D Senior Secured Deferrable Floating Rate Notes due 2036, Assigned (P)Baa3 (sf) EUR19,850,000 Class E Senior Secured Deferrable Floating Rate Notes due 2036, Assigned (P)Ba3 (sf) EUR4,000,000 Class F Senior Secured Deferrable Floating Rate Notes due 2036, Assigned (P)B3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. The Issuer is a managed cash flow CLO. At least 90% of the portfolio must consist of senior secured obligations and up to 10% of the portfolio may consist of senior unsecured obligations, unsecured senior obligations, second-lien loans, first lien last out loans and high yield bonds. The portfolio is expected to be 80% ramped as of the closing date and to comprise of predominantly corporate loans to obligors domiciled in Western Europe. Signal Harmonic Limited ("Signal Harmonic") and Signal Capital Partners Limited ("Signal Partner") will manage the CLO. Signal Harmonic will direct the selection, acquisition and disposition of collateral obligations which are not bonds on behalf of the Issuer while Signal Partner will perform such functions for the collateral obligations which are bonds. They may engage in trading activity, including discretionary trading, during the transaction's four-year reinvestment period. Thereafter, subject to certain restrictions, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations. The Class F Notes are delayed draw tranche. On the closing date, the Issuer will subscribe to Class F Notes with a notional of EUR4,000,000 for a zero net cash flow. During the reinvestment period only, subordinated noteholders may direct the Issuer to sell the Class F Notes. Any sale proceeds shall be deposited in either, or in any combination of (i) the principal account (a) in mandatory redemption in part of the Subordinated Notes or (b) to acquire assets and/or (ii) the interest account. In addition to the six classes of notes rated by Moody's, the Issuer has issued EUR36,430,000 of Subordinated Notes which are not rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology underlying the rating action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2021. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2021. Moody's used the following base-case modeling assumptions: Par Amount: EUR325,000,000 Diversity Score: 46 Weighted Average Rating Factor (WARF): 2800 Weighted Average Spread (WAS): 4.30% Weighted Average Coupon (WAC): 5.00% Weighted Average Recovery Rate (WARR): 43.25% Weighted Average Life (WAL): 7.00 years Moody's has addressed the potential exposure to obligors domiciled in countries with local currency ceiling (LCC) of A1 or below. As per the portfolio constraints, exposures to countries with LCC between A1 to A3 cannot exceed 10 and exposures of LCC below A3 is not greater than 0%. ========= I T A L Y ========= AUTOFLORENCE 3: Fitch Assigns 'B+(EXP)' Rating on Class E Notes --------------------------------------------------------------- Fitch Ratings has assigned Autoflorence 3 S.r.l.'s notes expected ratings. The assignment of final ratings is contingent on the receipt of final documentation conforming to information already reviewed. Entity/Debt Rating ----------- ------ Autoflorence 3 S.r.l. Class A notes LT AA(EXP)sf Expected Rating Class B notes LT A+(EXP)sf Expected Rating Class C notes LT BBB(EXP)sf Expected Rating Class D notes LT BB(EXP)sf Expected Rating Class E notes LT B+(EXP)sf Expected Rating Class F notes LT NR(EXP)sf Expected Rating TRANSACTION SUMMARY The transaction is a 12-month revolving securitisation of Italian auto loans originated by Findomestic Banca S.p.A., which specialises in consumer lending and is part of BNP Paribas S.A. (A+/Stable/F1) banking group. KEY RATING DRIVERS Performance in Line with Peers: The pool includes loans to buy auto (new and used) and other vehicles (motorcycles and recreational vehicles). Fitch has observed historical performance broadly in line with other non-captive auto loans lenders in Italy. Fitch has assumed base-case lifetime default and recovery rates for the portfolio of 2.6% and 20%, respectively, for the worst-case portfolio, based on the documented revolving concentration limits. Revolving Period Risk Mitigated: Fitch considers some of the revolving period termination triggers relatively loose compared to the expected performance of the portfolio and has taken this into account in the default stress multiples. Fitch has applied a 'AAsf' stress multiple of 4.5x to its base case default rate. Deteriorating Asset Performance Outlook: Fitch expects some moderate asset performance deterioration stemming from inflationary pressures and rising rates, which may squeeze borrowers' affordability. Asset assumptions reflect the agency's forward-looking view and are supported by the performance of outstanding transactions and the originator loan's book in periods of economic stress. Decreasing Rates Limits Available Funds: The structure is particularly sensitive to decreasing interest rate scenarios. However, Fitch believes that decreasing interest rates are unlikely, given the current interest rate environment, the short weighted-average life of the portfolio of around two years and its expectations for policy rates. The class C notes' rating is one notch higher than the relevant model-implied rating to take this into account. Sequential Switch Softens Pro- Rata: The class A to F notes can repay pro-rata until a sequential redemption event occurs if, among others, cumulative defaults on the portfolio exceed certain thresholds. Fitch believes the switch to sequential amortisation in its expected case scenario is unlikely during the first four years after closing, given the portfolio performance expectations compared with defined triggers. The mandatory switch to sequential pay-down when the outstanding collateral balance falls below 10% successfully mitigate tail risk. 'AAsf' Sovereign Cap: The class A notes are rated 'AA(EXP)sf', six notches above Italy's rating (BBB/Stable/F2), which is the highest achievable rating for Italian structured finance and covered bonds. The Stable Outlook on the senior notes reflects that on the sovereign Long-Term Issuer Default Rating (IDR). RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The class A notes' rating is sensitive to changes in Italy's Long-Term IDR. A downgrade of Italy's IDR and the related rating cap for Italian structured finance transactions, currently 'AAsf', could trigger a downgrade of the class A notes. Unexpected increases in the frequency of defaults or decreases in recovery rates that could produce loss levels higher than the base case and could result in negative rating action on the notes. For example, a simultaneous increase of the default base case by 25% and decrease of the recovery base case by 25% would lead to a two-notch downgrade of the class A, C and D notes and a three-notch downgrade of the class B and E notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The class A notes' rating is sensitive to changes in Italy's Long-Term IDR. An upgrade of Italy's IDR and the related rating cap for Italian structured finance transactions, currently 'AAsf', could trigger an upgrade of the class A notes if available credit enhancement is sufficient to withstand stresses associated with higher rating scenarios. For the class B, C, D and E notes, an unexpected decrease in the frequency of defaults or increase in recovery rates that would produce loss levels lower than the base case could result in positive rating action. For example, a simultaneous decrease in the default base case by 25% and increase in the recovery base case by 25% would lead to two-notch upgrades of the class B, D and E notes and a one-notch upgrade of the class C notes. DATA ADEQUACY Autoflorence 3 S.r.l. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action 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. Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. 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. =================== L U X E M B O U R G =================== KANTAR GLOBAL: Moody's Affirms 'B2' CFR & Alters Outlook to Stable ------------------------------------------------------------------ Moody's Investors Service has changed the outlook on the ratings for Kantar Global Holdings S.a r.l. (Kantar) as well as its debt issuing indirect subsidiaries to stable from negative. At the same time, Moody's has affirmed the B2 corporate family rating and the B2-PD probability of default rating for Kantar Global Holdings S.a r.l. The agency has concurrently affirmed the B2 rating for the USD833 million and EUR1135 million outstanding Senior Secured Term Loans B and USD400 million RCF (due 2026) issued by Kantar's subsidiaries Summer (BC) Bidco B LLC and Summer (BC) Holdco B S.a r.l., and also for the EUR1.0 billion backed senior secured notes issued by Summer (BC) Holdco B S.a r.l. and the USD425 million backed senior secured notes issued by Summer (BC) Bidco B LLC. The rating for the outstanding EUR428 million senior unsecured notes (due 2027) issued by Summer (BC) Holdco A S.a r.l. has also been affirmed at Caa1. The change in outlook to stable reflects (1) the steady revenue and EBITDA growth momentum achieved over 2021 and 2022; (2) the improvement in the company's business profile helped by the successful execution of its business transformation plan as well as the portfolio repositioning since 2019; (3) improvement in its Moody's adjusted gross leverage (debt is net of the notional cash pooling in the bank overdrafts) to around 6.5x in 2022/23 with further de-leveraging expected in 2024. "While revenue growth momentum is likely to be softer in 2023 (compared to 2022) in the backdrop of a difficult macro-economic environment, Moody's expect the company to manage its liquidity prudently and not engage in material debt-funded acquisitions in the next 12-18 months" says Gunjan Dixit, a Moody's Vice President -- Senior Credit Officer and lead analyst for Kantar. RATINGS RATIONALE After growing its gross revenue by 9% (at constant currency) in 2021, Kantar has achieved a steady revenue growth of 6% in 2022 (5% including Public and Russia/Ukraine). The company's reported EBITDA margin has improved to 19.7% (including incentives) in 2022 compared to 16.8% in 2021. Growth in gross revenue has been supported by growth in almost all divisions including Insights (56% of total revenue; 4% growth in 2022), Profiles (9%/8%), Worldpanel (10%/7%), Numerator (6%/21%) and Media (15%/6%). For full year 2023, Moody's expects Kantar's underlying revenue growth (at constant currency) to be slower than in 2022 with a reported EBITDA margin (including incentives) of around 20% helped by the successful realization of cost savings despite the inflationary pressures. Against the backdrop of the difficult macro-economic environment, Moody's believes that revenue growth in Kantar's Insights division has potential to recede while its Media, Numerator and Worldpanel divisions should continue to remain relatively resilient in 2023. This is because Worldpanel and Numerator have a highly recurring revenue base helped by the syndicated nature of the products and Media division's revenue are secured by contracts with duration of three to seven years. Over the last few years, Kantar has focused on improving the quality of its Insights business. The division's revenue grew by 4% in 2022 and the profitability of the division has also improved. Kantar estimates that its Insights business' revenue is now about 60% recurring and only 22% is based on pure ad hoc contracts. While Moody's cautiously recognizes that the short contract duration for this division of between 1-3 years, it takes some comfort from the low churn (of around 1%) this division has seen over 2019-22. Moody's believes that despite the business improvements, this division still carries some vulnerability to a recessionary environment. Moody's currently projects a flat revenue trend as a downside scenario for the Insight's division revenue for 2023. Under Bain's majority ownership, Kantar has been undertaking a series of transformational initiatives in various areas, including technology, procurement and real estate, optimizing its organizational structure and using technology to increase productivity. While the company remains on track to achieve its cost savings target (USD101 million of cumulative savings are targeted to be achieved over 2023/24), Moody's expects the restructuring related cash outflows to remain sizable at around USD100 million in 2023 before seeing a visible reduction from 2024. Moody's estimates Kantar's gross leverage (Moody's adjusted - debt is net of the notional cash pooling in the bank overdrafts) to remain largely flat at around 6.5x at the end of 2023) helped by cost savings that will support EBITDA generation despite softer revenue growth. The agency expects Kantar's adjusted leverage to trend around or below 6.0x in 2024 helped by revenue and EBITDA improvements provided it refrains from making material debt-funded add-on acquisitions in the next 12-18 months. Moody's considers Kantar's liquidity as adequate. The company had cash and cash equivalents of USD234 million at the end of December 2022 (within the senior lender group and net of the notional cash pooling in the bank overdrafts), after having drawn USD145 million under its RCF of USD392 million (net of an ancillary carve out of USD8 million). In January 2023, Kantar raised EUR185 million senior secured term loan B add-on due 2026 and repaid the drawn portion of the RCF. Moody's expects free cash flow generation (after working capital and capex but before acquisitions related payments) to remain marginally negative in 2023 impacted by the restructuring related cash outflows. The cash on company's balance sheet together with the undrawn RCF should therefore be sufficient to cover its cash needs. RATING OUTLOOK The stable outlook reflects Moody's expectation that the company generates cost savings in line with its plan and achieves operating performance such that the company's gross leverage (Moody's adjusted) will be maintained below 6.5x over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on the ratings is unlikely over the next 12-18 months. It could develop over time, if (1) Kantar demonstrates steady revenue and EBITDA growth momentum; (2) its gross debt/EBITDA (Moody's-adjusted) decreases sustainably and is maintained below 5.5x; and (3) the company's Moody's adjusted free cash flow (FCF)/ Debt ratio improves towards 10%. Downward ratings pressure would materialize if (1) Kantar's revenues and EBITDA fail to grow in line with its current business plan (2) its gross leverage (Moody's-adjusted gross debt/EBITDA) increases to visibly above 6.5x on a sustained basis; and/ or (3) its free cash flow remains materially negative in 2023 and beyond. There would also be downward rating pressure if the company's liquidity were to significantly deteriorate. LIST OF AFFECTED RATINGS Affirmations: Issuer: Kantar Global Holdings S.a r.l. Probability of Default Rating, Affirmed B2-PD LT Corporate Family Rating, Affirmed B2 Issuer: Summer (BC) Bidco B LLC Senior Secured Bank Credit Facility, Affirmed B2 BACKED Senior Secured Regular Bond/Debenture, Affirmed B2 Issuer: Summer (BC) Holdco A S.a r.l. BACKED Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 Issuer: Summer (BC) Holdco B S.a r.l. BACKED Senior Secured Regular Bond/Debenture, Affirmed B2 Outlook Actions: Issuer: Kantar Global Holdings S.a r.l. Outlook, Changed To Stable From Negative Issuer: Summer (BC) Bidco B LLC Outlook, Changed To Stable From Negative Issuer: Summer (BC) Holdco A S.a r.l. Outlook, Changed To Stable From Negative Issuer: Summer (BC) Holdco B S.a r.l. Outlook, Changed To Stable From Negative PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. COMPANY PROFILE Kantar Global Holdings S.a r.l. (Kantar), is the top-most entity of the restricted group that owns Kantar. In its fiscal year ended December 31, 2022, Kantar reported revenue of USD3.7 billion and EBITDA of USD725 million in constant currencies. ========= S P A I N ========= TDA 22 MIXTO: Moody's Affirms B1 Rating on EUR5.7MM Class D2 Notes ------------------------------------------------------------------ Moody's Investors Service has upgraded the rating of Class C2 notes backed by Group 2 ("Pool B") in TDA 22 MIXTO, FTA. The upgrade reflects the better than expected collateral performance and the increased levels of credit enhancement for the affected Notes. Moody's affirmed the ratings of the notes that had sufficient credit enhancement to maintain their current ratings. EUR48.8 million A2b Class Notes, Affirmed Aa1 (sf); previously on Jul 26, 2022 Affirmed Aa1 (sf) EUR14.6 million B2 Class Notes, Affirmed Aa1 (sf); previously on Jul 26, 2022 Upgraded to Aa1 (sf) EUR6 million C2 Class Notes, Upgraded to Aa2 (sf); previously on Jul 26, 2022 Upgraded to A1 (sf) EUR5.7 million D2 Class Notes, Affirmed B1 (sf); previously on Jul 26, 2022 Upgraded to B1 (sf) The maximum achievable rating is Aa1 (sf) for structured finance transactions in Spain, driven by the corresponding local currency country ceiling of the country. RATINGS RATIONALE The rating action is prompted by decreased key collateral assumptions, namely the portfolio Expected Loss (EL) and MILAN CE assumptions due to better than expected collateral performance, and an increase in credit enhancement for Class C2 notes. Revision of Key Collateral Assumptions: As part of the rating action, Moody's reassessed its lifetime loss expectation for the portfolio reflecting the collateral performance to date. The performance of the transaction has been better than previously expected. 90 days plus arrears as percentage of the current balance have remained overall stable in the past year, standing at 0.2% for Pool B. The cumulative written-off mortgage assets currently stand at 5.2% of original pool balance for Pool B and remained broadly stable from a year earlier. Moody's maintained the expected loss assumption of 3.73% for Pool B as a percentage of current pool due to the improving performance. This expected loss assumption corresponds to 3.35% as a percentage of original pool balance for Pool B, down from 3.40%. Moody's also assessed loan-by-loan information as part of its detailed transaction review to determine the credit support consistent with target rating levels and the volatility of future losses. As a result, Moody's has decreased the MILAN CE assumption for Pool B to 13% from 14.0%. Increase in Available Credit Enhancement The credit enhancement for Class C2 notes affected by the rating action increased to 26.0% from 24.1% since the last rating action in July 2022. The notes are paid sequential since the last payment date in March 2023, given the reserve fund is not fully funded. The amortization of principal will switch to sequential upon the pool factor decreasing below 10% of original pool balance, compared to the current level (11.5%). The principal methodology used in these ratings was "Moody's Approach to Rating RMBS Using the MILAN Framework" published in July 2022. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement, (3) improvements in the credit quality of the transaction counterparties and (4) a decrease in sovereign risk. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. VIA CELERE: Fitch Affirms LongTerm IDR at 'BB-', Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Via Celere Desarrollos Inmobiliarios, S.A.U.'s Long-Term Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook and its senior secured debt at 'BB'/RR3. The affirmation reflects Via Celere's good operating performance and sales visibility, slightly down from the peak in 2021. The traditional build-to-sell (BTS) residential development division is continuing to generate robust and stable cash flows, while the recently signed JV agreement with a residential-for-rent specialised operator (Via Celere's stake is 45%), will allow the company to bulk-sale its build-to-rent (BTR) developments. Via Celere's leverage profile was well within Fitch's rating sensitivities in 2022 and Fitch expects only a temporary deviation in 2023 as the company is progressing with the construction of the targeted BTR units to be delivered over the next two years. KEY RATING DRIVERS BTR Portfolio JV: Via Celere entered into a joint venture (JV) with Greystar Real Estate Partners in March 2023 for the forward sale of 12 BTR projects with a total 2,425 units that Via Celere is developing in Madrid, Malaga, Valencia, Seville and Bilbao. Under this agreement, Via Celere will retain 45% ownership in the newly-formed JV which will acquire at completion the rental housing units that Greystar will market and operate. Around 90% of this portfolio is currently under construction and around 1,500 units are expected to be delivered by end-2023, with the remainder by 1Q25. This transaction is in line with the management's strategy to bulk-sell BTR projects to institutional investors at completion, monetising their value rather than Via Celere becoming permanently a rental operator. Volumes Slightly Decreased: In Via Celere's core operations as BTS homebuilder, deliveries declined to 1,781 units in 2022 from the peak reached in 2021 (1,938), although higher than Fitch anticipated (around 1,500 units). Sales volumes in the past few quarters were healthy, with the increase in average selling price (ASP; 2022 +4%) helping preserve operating margins. Fitch views material further increases in the ASP as unlikely, given the current macroeconomic environment. However, the company's existing vast portfolio of land, some of it acquired cheaply after the global financial crisis, should limit replenishment expenditure in the near term, supporting stable cash flow generation. Good Sales Visibility: The order book at end-2022 was solid, providing good visibility of BTS deliveries until end-2024. Signed contracts for BTS sales amounted to EUR666 million (2021: EUR709 million), corresponding to 2,444 units. Pre-sales cover 88%, 72% and 35% of management's targeted BTS deliveries for 2023 to 2025, respectively. The cancellation rate remains low and only 19 contracts cancelled in 2022 (2021: 30), deterred by the non-reimbursable nature of the upfront payment (10% of the unit's value) required from clients at the signing of the sale and purchase agreement, and additional monthly payments received until the delivery date (a further 10% of the value). Via Celere usually starts new developments once the project's funding is procured, with financial institutions usually requiring 30%-50% pre-sales before granting developers bespoke financing for each new development. This acts as a further incentive for Via Celere to pre-sell part of its new developments. Supporting Housing Demand: Demand for new housing in Spain in the past two years was robust. Despite the sharp rise in interest rates and deteriorating economic conditions in 2H22, Spanish house prices rose by an average of 5.5% in 2022 (6.2% for newly-built homes). Fitch expects demand to reduce from the post-pandemic peak, given increasing mortgage costs, and prices to cool in 2023. However, both are expected to remain healthy, aided by the imbalance in supply of new homes that Spain has experienced over the last 10 years. New Housing Law: In May 2023, the Spanish parliament approved a multi-faceted federal housing law. This will allow (but not require) regional authorities to apply a set of measures, including rent controls on new and existing leases as well as social housing requirements for new developments. The Ley por el Derecho a Vivienda (Right to Housing Law) envisages rent caps for apartments owned by landlords (with 10 properties or more) in areas with tight supply. Fitch believes that given the complexity of introducing these measures in specific areas (zoning), any regulation will take a few years to be fully implemented. Also, some authorities in key regions already expressed their concerns in implementing the rules as they may discourage new investment and prevent more new housing from being created. Leverage Profile: In the past two years, Via Celere generated strong free cash flow totaling around EUR180 million after paying dividends of EUR193 million. Record high operating performances pushed EBITDA net leverage at 2021 and 2022 down to a low 1.8x and 1.0x, respectively. Fitch expects completion of the first BTR portfolio and its partial divestment to the 45% owned JV to increase net debt/EBITDA, which could potentially peak at above 5.0x in 2023. However, Fitch views this increase as temporary, driven by the timing of the construction and the monetisation of the residential for rent projects. DERIVATION SUMMARY Via Celere is a merger of various smaller Spanish entities over the past 15 years. The owned land bank is a distinctive feature, making the company one of the largest land owners together with its listed domestic peers Neinor Homes, S.A. (BB-/Stable) and AEDAS Homes, S.A. (BB-/Stable). Unlike its UK-based peer Miller Homes Group (Finco) PLC (Miller Homes, B+/Stable), Via Celere does not hold options to buy land (a common practice in the UK). In Spain, the seller may offer deferred payment terms to the buyer of the land, limiting the homebuilder's cash outflow at the time of the acquisition. The UK affordable-focused homebuilder Maison Bidco Limited (trading as Keepmoat, BB-/Stable) also enjoys deferred payment terms when purchasing the land. However, this is a feature of its partnership model, which entails working closely with local authorities from the early stages of a development, including the identification and sourcing of suitable land and its project planning. Miller Homes' and Keepmoat's focus is on single family homes in selected regions of the UK away from London. The products offered by the three Fitch-rated Spanish homebuilders are mid- to mid-high-value apartments part of large multi-family condominiums built in prominent cities. The ASP of Via Celere's units in 2022 was EUR279,000, slightly lower than that of Neinor Homes and AEDAS Homes, both above EUR300,000. Spanish housebuilders with their own portfolios of existing available land are committing resources to the BTR segment as it allows them to sell a whole development in bulk, reducing the stock of land previously amassed. Via Celere has entered into a JV with a specialised rental operator for the sale of its BTR developments at completion. AEDAS Homes' strategy entails seeking advance agreements with private rented sector operators to deliver turnkey BTR developments before committing capital, minimising the risk of the end-purchase of its projects. Neinor Homes is also dedicating its construction expertise and land bank to BTR, but unlike its two peers, it may keep the BTR assets on its balance sheet, becoming a rental operator for such properties. Each peer has different financial policies. Rather than penalise a company for its private equity ownership and assume that cash will be extracted out of the group, despite bonds' permitted distribution mechanisms, Fitch has been transparent in disclosing and where appropriate reflecting in its rating case management's intentions to target certain financial policies over the rating horizon. If management accelerate improvements in financial metrics, it could warrant an upgrade as per Fitch's rating sensitivities. Equally, if dividend payouts and use of cash worsen metrics, Fitch could downgrades the ratings. Under Fitch's Corporate Recovery Ratings and Instrument Ratings Criteria, the secured debt of a company with a 'BB-' IDR can be rated up to two notches from its IDR with a Recovery Rating of 'RR2'. Similar to other 'BB-' rated Spanish homebuilders, Via Celere's secured debt has a one-notch uplift to 'BB' and a 'RR3' Recovery Rating, reflecting the significant volatility of collateral values in this asset class in Spain. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Land bank expected to decrease to around five to six years equivalent of production. Land spend limited to partially replenish the land bank used in future developments - Average of around 1,000 BTS units to be sold annually in the next three years, reflecting the company's focus on prioritising deliveries for its BTR JV - First BTR projects of around 1,500 units to be completed and delivered to the JV in 2023; remaining 900 units in the following 18 months. No rental-derived dividends forecast from the BTR JV - Dividend payments to follow free cash flow generated by the company. The company paid a EUR125 million special dividend in February 2023 and Fitch does not expect any further distributions in 2023. Fitch forecasted an annual dividend of EUR80 million to be paid annually in 2024 and 2025. RATING SENSITIVITIES Factors That Could, Individually Or Collectively, Lead To Positive Rating Action/Upgrade - Successful completion and delivery of the BTR portfolio projects by end-2024, materially improving the group's long-term net debt position - EBITDA net leverage below 1.5x Factors That Could, Individually Or Collectively, Lead To Negative Rating Action/Downgrade - Failure to reduce EBITDA net leverage below 3.0x by the time the BTR portfolio is expected to be delivered - Shareholder-friendly policy leading to a deterioration in leverage metrics LIQUIDITY AND DEBT STRUCTURE Healthy Liquidity: At end-2022, Via Celere had EUR288 million of cash - net of EUR32 million of restricted cash related to pre-sales, which is held in dedicated accounts - and access to a EUR30 million super-senior revolving credit facility (undrawn) maturing in October 2025. Debt mainly comprised EUR300 million of fixed-rate (5.25%) secured notes due April 2026 and EUR105 million bespoke developer loans (2021: EUR135 million) used to fund each development and typically repaid when the units are completed and delivered. ISSUER PROFILE Via Celere is a Spain-based homebuilder targeting the mid value residential segment in the largest cities of Spain. 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 ----------- ------ -------- ----- Via Celere Desarrollos Inmobiliarios, S.A.U. LT IDR BB- Affirmed BB- senior secured LT BB Affirmed RR3 BB ===================== S W I T Z E R L A N D ===================== CREDIT SUISSE: Bankruptcy Credit Event Has Not Occurred ------------------------------------------------------- Herbert Lash at Reuters reports that a derivatives committee ruled on May 22 that a bankruptcy credit event had not occurred in relation to Credit Suisse, quashing investors' efforts to trigger a payout on credit insurance linked to the Swiss lender. The ruling was in response to an investor question about US$17 billion in senior and subordinated bonds issued by Credit Suisse whose holders were wiped out when the Swiss bank was taken over by UBS in March in a state-assisted deal, Reuters relates. The ruling upended a long-established practice of giving bondholders priority over shareholders in a debt recovery, Reuters notes. According to Reuters, it should not surprise investors who have read the Credit Suisse prospectuses, said Philip Jacoby, chief investment officer at Spectrum Asset Management in Stamford, Connecticut, one of the biggest holders of the bank's debt months before its takeover. Mr. Jacoby, as cited by Reuters, said unlike a bankruptcy proceeding in court, regulators have determined what class of securities were "bailed in" and written down to zero, and what classes were preserved. "The big surprise is what happened to the common equity. The common equity had some value preserved, rather than getting written down to zero too." The debt in question included standard European corporate, standard European financial corporate and standard European contingent convertible (CoCo) financial corporate transaction types, the EMEA Credit Derivatives Determination Committee (CDDC) said in a statement on its website, Reuters notes. The committee said the DC reviewed the information submitted with the question and decided it not confirm a credit event, Reuters relates. =========================== U N I T E D K I N G D O M =========================== MARSTON'S ISSUER: Fitch Affirms BB- Rating on B Notes, Outlook Neg. ------------------------------------------------------------------- Fitch Ratings has affirmed Marston's Issuer Plc's class A at 'BB+' and class B notes at 'BB-'. The Outlooks are Negative. Entity/Debt Rating Prior ----------- ------ ----- Marston's Issuer PLC Marston's Issuer PLC/ Debt/1 LT LT BB+ Affirmed BB+ Marston's Issuer PLC/ Debt/3 LT LT BB- Affirmed BB- RATING RATIONALE The ratings reflect the progress on the transformation of Marston's estate, with improved quality of tenanted and franchise pubs and a stable managed estate. The debt structure is robust and benefits from the standard whole business securitisation (WBS) legal and structural features and a comprehensive covenant package. The Fitch rating case (FRC) free cash flow (FCF) debt service coverage ratios (DSCRs) to 2032 are1.2x for the class A notes and 1.1x for the class B notes. These are at the border line of the downgrade sensitivity, leaving no headroom for further weakening before any downgrade. The Negative Outlooks reflect this limited headroom and signal the susceptibility of the ratings to a deterioration in profitability and potentially challenging trading due to inflationary pressures on costs and falling real disposable income. KEY RATING DRIVERS Sector in Structural Decline but Strong Culture: Industry Profile - Midrange The Covid-19 pandemic and its related containment measures had a material impact on the UK's pub sector. Trade volumes are recovering, although some uncertainties remain, especially amid high inflation pressure on demand and profitability. The UK pub sector has a long history, but trading performance for some assets showed significant weakness even prior to the pandemic. The sector has been in structural decline for the past three decades due to demographic shifts, greater health awareness and the growing presence of competing offerings. Exposure to discretionary spending is high, and revenues are therefore linked to the broader economy. Competition is keen, including off-trade alternatives, and barriers to entry are low. Despite the ongoing contraction, Fitch views the sector as sustainable in the long term, supported by a strong UK pub culture. Sub-KRDs - Operating Environment: Weaker, Barriers to Entry: Midrange, Sustainability: Midrange Hybrid Managed/Tenanted Model: Company Profile - Midrange Marston's is one of several large operators of pubs and bars in the UK, operating over 1,400 pubs and bars across the country. After selling its brewing business to form a joint venture with Carlsberg UK, Marston's is now a more focused pub operator. The company's securitised perimeter consists of 926 tenanted and managed pubs across the UK. The management team is experienced and has been stable, despite the appointment of a new CEO in October 2021. Fitch considers Marston's asset quality adequate and in line with its peers. The company has had higher than covenant level maintenance capex in the past. Information shared by the company is adequate. Sub-KRDs: Financial Performance: Midrange; Company Operations: Midrange; Transparency: Midrange; Dependence on Operator: Midrange; Asset Quality: Midrange Standard WBS Structure with Junior Back-Ended Amortisation: Debt Structure - Midrange All debt is fully amortising on a fixed schedule, eliminating refinancing risk. The class A notes benefit from deferability of the junior class B notes. Amortisation of the class B notes is back-ended, and their interest-only period is substantial. Both classes of notes are either fixed rate or fully hedged. The security package is strong, with comprehensive first-ranking fixed and floating charges over borrower assets. Class A is the senior ranking controlling creditor, with the class B notes lower ranking, resulting in a 'Midrange' assessment. All standard WBS legal and structural features are present, and the covenant package is comprehensive. The restricted payment condition levels are standard, with 1.5x EBITDA DSCR and 1.3x FCF DSCR. The liquidity facility is covenanted at 18 months' peak debt service. All counterparties' ratings are at or above the rating of the highest-rated notes. The issuer is an orphan bankruptcy-remote special-purpose vehicle. Sub-KRDs: Debt Profile: Class A 'Stronger'; Class B 'Midrange', Security Package: Class A 'Stronger'; Class B 'Midrange', Structural Features: Class A and B 'Stronger'. Financial Profile Under the FRC Fitch assumes recovery of both managed and tenanted estates EBITDA by 2025. In the long term, the underlying assumption is for marginally increasing EBITDA and marginally decreasing FCF. This results in DSCR of 1.2x and 1.1x for the class A and B notes, respectively. PEER GROUP Marston's closest peers are hybrid pubco (managed and tenanted) securitisations, such as Greene King Finance Plc and Spirit Issuer Plc, and managed pubco securitisations such as Mitchells & Butlers Finance Plc. Marston's managed and tenanted pubs generate roughly equal EBITDA as of April 2023, which is less favourable as Fitch considers a higher proportion of managed pubs to be a stronger feature as they have greater transparency and control. Other hybrid pubco peer Greene King generates more than 70% through managed pubs, while Spirit generates around 66%. The contribution per pub in managed and tenanted estate of Marston's is slightly lower than peers. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade -- Improved cash generation supporting a sustained improvement in credit metrics could lead to the Outlook being revised to Stable. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade -- Deterioration of the FRC-projected profile FCF DSCRs to substantially below 1.2 x for the class A notes and 1.1x for the class B notes could result in negative rating action. TRANSACTION SUMMARY The transaction is a securitisation of managed and tenanted pubs operated by Marston's comprising 265 managed pubs and 661 tenanted pubs as at April 2023. CREDIT UPDATE Marston's securitisation revenues in 1H23 (to April) recovered to pre-pandemic levels as a result of trading rebounding after pandemic mobility restrictions being lifted. Sales in 2Q23 were around GBP95 million, 101% of pre-pandemic levels in the same period, despite the inflationary environment squeezing customers' disposable income. However, Marston's profitability deteriorated due to rising costs, especially energy bills. Wet-led pubs are leading revenues, and Marston's is re-designing its food offer with a simplified menu in an effort to bring costs down and pass the price increases to end-customers while not compromising guest satisfaction. In the short term, a portion of inflation will be mitigated by price increases, menu engineering or operational productivity. Rising utility bills represent the major challenge. Positively, Marston's has hedged gas-related expenses until March 2025 and electricity until March 2024. As of April 2023, Marston's had GBP11 million cash and GBP105 million of an available liquidity facility. FINANCIAL ANALYSIS In the updated FRC, Fitch assumes profitability will return to pre-pandemic levels by 2025. In the long term (2025-2035), the underlying assumption is marginally increasing EBITDA (CAGR of +0.2%) and marginally decreasing FCF (CAGR of -0.1%). This reflects cost pressures as well as changing consumer habits affecting the pubs industry. This results in FCF DSCRs for the class A and B notes at 1.2x and 1.1x, respectively. 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. STONE PLUS: Administrators Seek Buyer for Business -------------------------------------------------- Business Sale reports that administrators are seeking a buyer for a Northamptonshire-based stone supplier following the company's collapse. Stone Plus UK, which is headquartered in Mawsley, Kettering, fell into administration on May 9, 2023, Business Sale relates. The company supplied both builders' merchants and landscape centres with landscaping products ranging from natural stone and concrete to porcelain. In the South of England, the company also held the distribution rights for McMonagle Stone and Oakdale Greenscaping. Jo Hammond and Gareth Rusling of Begbies Traynor have been appointed as the company's joint administrators, Business Sale discloses. The administrators commented that the firm had "experienced financial difficulties due to shipping problems and cashflow pressure, which led to significant debts accruing and made the business unviable". Upon the appointment of the joint administrators, the company's three full-time employees were made redundant, Business Sale relays. Eddison, Business Sale says, has been appointed by the administrators to run a marketing campaign for Stone Plus UK's business and assets, with offers currently being evaluated ahead of a sale being concluded. In Stone Plus UK's most recent accounts at Companies House, for the year ending June 30 2022, its fixed assets were valued at GBP29,400, while current assets stood at slightly over GBP3.55 million, Business Sale states. At the time, the company owed a similar amount (around GBP3.58 million) to creditors falling within one year, Business Sale notes. VENATOR MATERIALS: Enters Chapter 11 With Prepackaged Plan ---------------------------------------------------------- Venator Materials PLC (NYSE: VNTR), a global manufacturer and marketer of chemical products, announced May 15, 2023, that it has reached an agreement with the overwhelming majority of its lenders and noteholders on the terms of a comprehensive recapitalization plan. The agreement will equitize nearly all of the Company's funded debt, strengthen its balance sheet and facilitate an infusion of new capital, which will position the Company for future growth and success. The recapitalization will be implemented through a prepackaged Chapter 11 process in the United States and will be financed by a debtor-in-possession ("DIP") financing facility, which includes a commitment for $275 million in new-money financing from the Company's supporting creditors. Following approval by the Court, the DIP financing, together with cash on hand and cash generated from ongoing operations, is expected to provide substantial liquidity to support Venator throughout the recapitalization process and beyond. Venator's businesses are expected to continue to operate as normal for the duration of the process, and Venator expects to continue to pay wages and benefits to its global workforce, and to pay all trade partners in the ordinary course. Throughout the court-supervised Chapter 11 process, Venator will remain in possession and control of its assets, retain its existing management team and board of directors, and gain access to the array of tools available under Chapter 11 to position the company for long-term sustainable growth. Simon Turner, President and Chief Executive Officer of Venator, said: "The agreement we have reached with our lenders on a recapitalization plan will significantly reduce Venator's debt burden and place the Company on a sound financial footing, which will enable us to deliver on our strategy and capitalize on future growth opportunities. We have faced unprecedented economic headwinds, including significantly lower product demand and higher raw material and energy costs in the second half of 2022, but Venator's management, alongside our advisors, has worked tirelessly to assess all viable options available to us to ensure the long-term sustainable success of the Company." Venator commenced solicitation for votes on its prepackaged Chapter 11 plan, and expects to complete its Chapter 11 process within approximately two months. Venator expects to be delisted by the New York Stock Exchange in accordance with its rules. Venator common shares will, however, continue to trade in the over-the-counter marketplace throughout the duration of the Chapter 11 process. The shares are proposed to be cancelled as part of Venator's restructuring. About Venator Venator is a global manufacturer and marketer of chemical products that comprise a broad range of pigments and additives that bring color and vibrancy to buildings, protect and extend product life, and reduce energy consumption. We market our products globally to a diversified group of industrial customers through two segments: Titanium Dioxide, which consists of our TiO2 business, and Performance Additives, which consists of our functional additives, color pigments and timber treatment businesses. Based in Wynyard, U.K., Venator employs approximately 2,800 associates and sells its products in more than 106 countries. On May 14, 2023, Venator Materials PLC, and 23 affiliated companies filed petitions seeking relief under chapter 11 of the United States Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90301). On May 14, 2023, Venator Materials PLC et al., commenced a solicitation of acceptances of their Prepackaged Plan from holders of claims that are eligible to vote â€" Class 3 Senior Secured Claims (Senior Secured Notes Claims and Term Loan Claims) and Class 4 Senior Unsecured Claims. The Debtors expect to meet the requirement for confirmation of the Plan and to emerge from bankruptcy expeditiously after filing. In connection with the prepackaged Chapter 11 and recapitalization process, Venator is assisted by Moelis & Company and Kirkland & Ellis as respective financial and legal advisors, in addition to Alvarez & Marsal as operational advisor, and has asked the Court for authority to employ Epiq Corporate Restructuring, LLC as claims, noticing, and solicitation agent. Additional information may be found at: https://dm.epiq11.com/venator WASPS: License to Play in Second-Tier Championship Revoked ---------------------------------------------------------- The Associated Press reports that Wasps, one of England's most storied rugby teams and a two-time European champion, must begin rebuilding from the bottom of the country's league pyramid after having a license to play in the second-tier Championship revoked on May 18. The club was expelled from the top-flight Premiership after falling into administration -- a form of bankruptcy protection -- in October amid debts totaling GBP95 million (US$118 million), the AP relates. It had been hit by a winding-up order from the revenue department for GBP2 million in unpaid tax after financial issues stemming from its relocation from London to Coventry in 2014, the AP discloses. Wasps' new owners, HALO22 Limited, failed to meet a deadline by the Rugby Football Union for proving the club could operate at the second-tier level, the AP states. Among the commitments that have not been kept are the provision of evidence that creditors have been paid and the creation of a suitable governance structure, the AP notes. The RFU has also been told by Wasps that the club is unable to recruit staff or players until additional finance has been secured and cannot recommit to playing in the Championship, the AP relates. The governing body has been forced to remove Wasps from the league structure, meaning they are likely to have to start in the 10th tier of the English game, according to the AP. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2023. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *