---

       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, June 13, 2023, Vol. 24, No. 118

                           Headlines



A Z E R B A I J A N

AZERBAIJAN: S&P Affirms 'BB+/B' Sovereign Credit Ratings


D E N M A R K

DFDS A/S: Egan-Jones Retains 'B+' Senior Unsecured Ratings


F I N L A N D

FINNAIR OYJ: Egan-Jones Retains 'CCC-' Sr. Unsec. Debt Ratings


F R A N C E

AIR FRANCE-KLM: Egan-Jones Retains 'CCC' Senior Unsecured Ratings
ELECTRICITE DE FRANCE: S&P Rates New Sub. Hybrid Notes 'B+'
LAGARDERE SA: Egan-Jones Retains 'B' Sr. Unsec. Debt Ratings
RENAULT SA: Egan-Jones Retains 'BB-' Unsec. Debt Ratings


I T A L Y

ENEL SPA: Egan-Jones Retains 'BB' Sr. Unsec. Debt Ratings
TELECOM ITALIA: Egan-Jones Retains 'B' Sr. Unsecured Ratings


L U X E M B O U R G

MALLINCKRODT INTERNATIONAL: $1.4B Bank Debt Trades at 24% Discount


S P A I N

AYT COLATERALES BBK II: Fitch Hikes Rating on Class B Debt to BB+
DURO FELGUERA: EUR85M Bank Debt Trades at 47% Discount
GRUP MEDIAPRO: EUR180M Bank Debt Trades at 16% Discount


S W E D E N

SAS AB: Egan-Jones Retains C Senior Unsecured Ratings
STORSKOGEN GROUP: S&P Affirms 'BB' LongTerm IR, Outlook Negative


U N I T E D   K I N G D O M

ATLANTICA SUSTAINABLE: Egan-Jones Retains 'B-' Unsec. Debt Ratings
CHEUNG LOONG: Alvarez & Marsal Appointed as Receiver Over Shares
DIRTY MARTINI: Bought Out of Administration by Nightcap
FRAMES CONSERVATORIES: Enters Administration, Ceases Operations
INTERNATIONAL GAME: Egan-Jones Retains 'B' Senior Unsecured Ratings

KIKA/LEINER: To File for Bankruptcy, 23 Stores to Shut Down
LERNEN BIDCO: Fitch Alters Outlook on 'B-' LongTerm IDR to Positive
PLATFORM BIDCO: EUR600M Bank Debt Trades at 18% Discount
RED CAT: Goes Into Administration
SMALL BUSINESS 2023-1: Fitch Gives BB+(EXP)sf Rating on Cl. D Notes

SOLUTION PERFORMANCE: Bought Out of Administration, 20 Jobs Saved
TUFFNELLS PARCELS: Goes Into Administration
WPP PLC: Egan-Jones Retains 'BB' Sr. Unsecured Debt Ratings
ZARA UK TOPCO: S&P Lowers LongTerm ICR to 'B-', Outlook Stable

                           - - - - -


===================
A Z E R B A I J A N
===================

AZERBAIJAN: S&P Affirms 'BB+/B' Sovereign Credit Ratings
--------------------------------------------------------
S&P Global Ratings, on June 9, 2023, affirmed its 'BB+/B' long- and
short-term foreign and local currency sovereign credit ratings on
Azerbaijan. The outlook is stable.

Outlook

The stable outlook reflects S&P's expectation that favorable
hydrocarbon prices will support Azerbaijan's fiscal and
balance-of-payments positions over the next year, despite a
projected medium-term decline in oil production.

Downside scenario

S&P said, "We could lower the ratings if Azerbaijan's fiscal
balances prove weaker than we expect over the medium term. This
could happen, for example, because aging oil fields result in oil
production declining faster than we expect. Reduced hydrocarbon
revenue could also weigh on Azerbaijan's broader economic
prospects, with real per capita GDP growth falling further below
that of peers at a similar level of economic development. We could
also lower the ratings if the conflict in Karabakh were to reignite
significantly."

Upside scenario

Conversely, S&P could consider an upgrade if Azerbaijan sustains
higher external surpluses for longer than S&P expects, resulting in
sizable additional external asset accumulation. Ratings upside
could also build if the government implements reforms addressing
some of Azerbaijan's structural impediments, including the
undiversified nature of its economy and constraints on monetary
policy effectiveness.

Rationale

Azerbaijan's strong fiscal and external stock positions are a key
support for the sovereign ratings. The government has accumulated
substantial liquid assets, mainly within the sovereign wealth fund,
the State Oil Fund of the Republic of Azerbaijan (SOFAZ). S&P
forecasts that the government will have access to liquid assets of
close to 55% of GDP through 2026 and that gross general government
debt will gradually moderate to 17% of GDP by 2026 from an
estimated 19% of GDP at end-2022. In addition to existing strong
stock positions, favorable oil prices should also support
Azerbaijan's budgetary and balance-of-payments performance.

Nevertheless, Azerbaijan's economy remains concentrated on the oil
and gas sector, which accounts for close to 50% of the country's
nominal GDP. Consequently, Azerbaijan remains vulnerable to any
potential adverse changes in hydrocarbon prices. S&P's ratings on
Azerbaijan also remain constrained by weak institutional
effectiveness and limited monetary policy flexibility.

Institutional and economic profile: A gradual decline in oil
production over the medium term as key fields continue to age

-- S&P expects Azerbaijan to exhibit muted growth prospects over
2023-2026 against the background of a long-term gradual decline in
oil output.

-- Azerbaijan remains a member of the OPEC+ group of countries,
but production has been unaffected by the recent decisions on
production cuts, because it has persistently produced below its
allocated level for the past few years.

-- Azerbaijan's institutional environment remains relatively weak
and political power is centralized in the presidential
administration.

Azerbaijan's economy is significantly dependent on the hydrocarbon
sector, with oil and gas constituting 90% of exports and about 50%
of GDP. It currently benefits from favorable oil prices, which, in
turn, support Azerbaijan's fiscal and balance-of-payments
positions. Following an estimated average Brent oil price of almost
$100 per barrel (/bbl) in 2022, S&P expects that oil prices will
average a still-high $86/bbl in 2023 and $85/bbl thereafter.

Azerbaijan mainly exports hydrocarbons to the European region:
Italy accounts for about 45% of Azerbaijan's total oil exports,
with other EU countries accounting for an estimated further 25%.
Italy is also the largest market for gas exports, accounting for an
estimated 50% of the total, followed by Turkiye (around 35%) and
Georgia (around 10%).

However, while oil prices have been favorable, Azerbaijan's
production volumes have continued to decline. Azerbaijan is one of
the oldest oil producers in the world, having started industrial
oil production in the 19th century. Existing oilfields
(particularly the key Azeri-Chirag-Deepwater Gunashli [ACG] field)
are aging, so their output is gradually reducing for natural
reasons. Between 2010 and 2021, for instance, oil production
(including natural gas liquids) dropped by 30% to an estimated 0.74
million barrels per day (mbpd) from over 1 mbpd. Oil production
dropped by a further 5% in 2022 to 0.70 mbpd.

S&P said, "We expect oil production will continue declining over
the medium term, but at a slightly more gradual pace, with output
dropping by about 7% cumulatively over 2023-2026. This is because
the Azeri Central East project--the latest stage of the ACG
development--is scheduled to come onstream in 2024, and at its peak
is expected to produce 100,000 bpd. Nevertheless, we expect that
production ramp-up will be gradual, while elsewhere the production
decline will persist, so the net trend will still be for slightly
falling oil output."

Azerbaijan remains a member of the OPEC+ group of countries and is
therefore subject to the latest production quota for crude oil of
0.55 mbpd for 2024. However, its actual crude oil production
(excluding natural gas liquids, which are not subject to the OPEC+
quota) so far in 2023 has averaged close to 0.52 mbpd, because of
structural production constraints.

In contrast with oil, the outlook is stronger for Azerbaijan's gas
sector. Production at the new Shah Deniz II gas field commenced in
2018, and two related pipelines--the Trans-Anatolian Natural Gas
Pipeline and the Trans Adriatic Pipeline, carrying gas to Turkiye
and Europe, respectively--became operational in 2019 and 2020.
Consequently, we estimate that between 2017 and 2022, Azerbaijan's
gas production rose by 90% to 34 billion cubic meters (bcm). S&P
said, "Nevertheless, even considering this recent production
ramp-up, we expect that gas exports will play a relatively modest
role in Azerbaijan's economy compared with oil, and are unlikely to
fully offset the oil production decline. We also note that European
gas prices have moderated significantly from the highs exhibited in
the second half of 2022 and have recently dropped below the levels
experienced just before the start of the Russia-Ukraine war."

S&P estimates that most gas production ramp-up from the second
stage of Shah Deniz has already happened and gas output will only
slightly increase, by an additional 7% cumulatively, through 2026.
The key South Caucasus Pipeline is operating at close to full
capacity, so any additional net gas exports in the future,
including to Europe, will require further expansion of the pipeline
infrastructure.

Azerbaijan's non-oil sector exhibited strong growth in 2022, up 9%
year on year. The favorable trend has been fairly broad-based in
terms of subsectors, with cargo transportation (13% growth in
volumes of cargo), passenger transportation (a 34% rise in
passenger numbers), IT (15% growth), and industrial production
excluding the oil and gas sector (7% growth) exhibiting strong
dynamics. That said, S&P expects the momentum to gradually slow,
partly because of base effects (it is likely that previous growth
at least partially represents a post-pandemic rebound), but also
because of limited progress in economic diversification and
structural reforms in recent years.

S&P said, "Overall, we forecast Azerbaijan's real GDP will stagnate
in 2023, which is in line with our previous December 2022 forecast.
While the non-oil sector will continue to grow and there will be
some increase in gas production in 2023, lower oil output will be a
drag. Declining oil production will continue to weigh on growth
over the medium term and we forecast an average real growth of 1.4%
over 2024-2026. We view this as comparatively modest for a
developing emerging market economy.

"In our opinion, Azerbaijan's institutions remain weak. They are
characterized by highly centralized decision-making, which can make
policy responses difficult to predict. Political power remains
concentrated with the president and his administration, and there
are limited checks and balances. In our view, structural reforms
and economic-diversification efforts have yielded only limited
results in recent years.

"We also consider that Azerbaijan continues to suffer from material
gaps in reported data." For instance, there are no volume national
income accounts available broken down by expenditure and there is
no international investment position data available for the economy
overall. However, the sovereign wealth fund, SOFAZ, provides
significant detail and timely disclosure of its asset composition.

Following a six-week war in Karabakh that started in September
2020, Azerbaijan and Armenia agreed to a Russia-brokered ceasefire
that took effect on Nov. 10, 2020. However, skirmishes have broken
out since then, one of which was in September 2022, with
significant reported casualties. More recently, there have been
signs that the two countries are approaching a longer-term
agreement on the status of Karabakh and on broader bilateral
relations, following negotiations in May 2023 held in Moscow.

Flexibility and performance profile: Sizable assets accumulated
within the sovereign wealth fund are a key ratings support

-- S&P projects Azerbaijan will post 4% of GDP general government
and 18% of GDP current account surpluses in 2023.

-- In S&P's view, Azerbaijan will retain an average general
government net asset position of around 40% of GDP through 2026.

-- Monetary policy effectiveness remains limited, constrained by
the central bank's limited operational independence, heavy
intervention in the foreign exchange market, and underdeveloped
local currency capital markets.

S&P said, "We consider that Azerbaijan's strong external stock
position will remain a core rating strength, reinforced by the
large amount of foreign assets accumulated at SOFAZ. We estimate
that external liquid assets will surpass external debt through 2025
and the net international investment position will average 65% of
GDP in 2023-2026. Although Azerbaijan remains vulnerable to
potential terms-of-trade volatility, we consider that its large net
external asset position will serve as a buffer that could mitigate
the potential adverse effects of economic cycles on domestic
economic development. Based on our oil price and production
forecasts, we expect that Azerbaijan's current account surplus will
average 15% of GDP over 2023-2026, following a record 30% of GDP
current account surplus in 2022, the highest level in over a
decade."

Azerbaijan's net fiscal asset position remains strong, mirroring
its external position and supporting the sovereign ratings. The
general government surplus was 6.1% of GDP in 2022 and S&P's
forecast surpluses to persist over the medium term, gradually
declining toward balance by 2026 as expenditure increases, while a
continued gradual decline in oil output will weigh on government
revenue. Despite a rapid increase in natural gas production volumes
in recent years, it considers that the fiscal receipts for the
government from this source will remain significantly lower than
from oil. For instance, even with the much higher market prices for
gas last year, the proceeds from gas sales amounted to about $1
billion (1.3% of GDP) compared with $10 billion (13% of GDP) for
oil sales from the ACG field.

S&P said, "We expect that the net general government asset position
will remain about 40% of GDP through 2026. In calculating net
general government debt, we include our estimate of SOFAZ's
external liquid assets. We exclude less-liquid exposures equivalent
to about 14% of 2022 GDP--including the fund's domestic investments
and certain equity exposures abroad--because we consider that they
could not be liquidated quickly when needed." Azerbaijan is far
more transparent than many of its peers (such as those in the Gulf
Cooperation Council) about the composition of its assets and size
of the sovereign wealth fund. For example, SOFAZ publishes detailed
audited annual reports with granular information on the categories
of investments it holds.

The government owns a majority stake in the International Bank of
Azerbaijan (IBA) and in 2017 restructured the bank and assumed some
of its debt. The government has also transferred IBA's
nonperforming loans--with a book value of about Azerbaijani manat
(AZN) 10 billion--to AqrarKredit, a state-owned nonbanking credit
organization funded by the Central Bank of Azerbaijan. There is a
government guarantee on the loans provided to AqrarKredit by the
central bank. S&P therefore includes AqrarKredit's
sovereign-guaranteed loans of AZN9.5 billion in general government
debt.

Excluding the guaranteed debt of AqrarKredit, Azerbaijan's direct
government debt is low, estimated at around 11% of GDP at the end
of 2022. Of this, around a quarter is domestic debt denominated in
local currency while the rest represents external foreign-currency
denominated debt. Azerbaijan is planning to gradually shift away
from foreign to more domestic funding.

S&P said, "We assume that Azerbaijan will retain the manat's de
facto peg to the U.S. dollar at AZN1.7 to $1.0, supported by the
authorities' regular interventions in the foreign-currency market.
Nevertheless, in our view, should hydrocarbon prices drop sharply
and remain low for a prolonged period, the authorities could
consider adjusting the exchange rate." This would help avoid a
substantial loss of foreign-currency buffers, similar to the
central bank's actions in 2015.

Like most other emerging and advanced economies, Azerbaijan's
inflation has continued to exceed our forecasts, surpassing levels
over 2016-2017, when prices rose significantly following the 2015
manat devaluation. Current upward price pressures are driven by the
effects of the post-pandemic reopening, food price inflation, and
global trends, since Azerbaijan imports a wide range of goods from
abroad and foreign inflation developments affect it significantly.
S&P now forecasts that inflation will average 12% in 2023, down
from almost 14% in 2022. It should thereafter gradually slow to 5%
through to 2025. The Central Bank of Azerbaijan has been
progressively tightening monetary policy in response.

S&P said, "We consider Azerbaijan's banking system to be broadly
stable, with overdue loans continuing on a downward trend and
reaching 2.9% at end-2022, although we consider that they could
increase moderately to 3.5%-4% in 2023. The financial sector
remains small, with total assets of under 50% of GDP, which limits
possible contingent liability risks for the government.
Nevertheless, Azerbaijan's banking system is characterized by
several persistent structural vulnerabilities, including the
still-high levels of dollarization of deposits, despite a recent
decline; weak governance and transparency in an international
context; and relaxed lending and underwriting standards."

In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.

After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.

The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.

The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.

  Ratings List

  RATINGS AFFIRMED

  AZERBAIJAN

   Sovereign Credit Rating              BB+/Stable/B

   Transfer & Convertibility Assessment   BB+




=============
D E N M A R K
=============

DFDS A/S: Egan-Jones Retains 'B+' Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on May 17, 2023, maintained its 'B+'
foreign currency and local currency senior unsecured ratings on
debt issued by DFDS A/S.  EJR also withdrew its 'A3'  rating on
commercial paper issued by the Company.

Headquartered in Copenhagen, Denmark, DFDS A/S operates focused
transport corridors combining ferry infrastructure, including port
terminals and rail connections, and logistics solutions including
door-door full/part loads for dry goods and cold chain as well as
contract logistics for select industries.




=============
F I N L A N D
=============

FINNAIR OYJ: Egan-Jones Retains 'CCC-' Sr. Unsec. Debt Ratings
--------------------------------------------------------------
Egan-Jones Ratings Company, on May 18, 2023, maintained its 'CCC-'
foreign currency and local currency senior unsecured ratings on
debt issued by Finnair Oyj. EJR also withdrew its 'C'  rating on
commercial paper issued by the Company.

Headquartered in Vantaa, Finland, Finnair Oyj operates scheduled
passenger traffic, technical and ground handling operation,
catering, travel agencies, and reservation services.




===========
F R A N C E
===========

AIR FRANCE-KLM: Egan-Jones Retains 'CCC' Senior Unsecured Ratings
-----------------------------------------------------------------
Egan-Jones Ratings Company, on May 17, 2023, maintained its 'CCC'
foreign currency and local currency senior unsecured ratings on
debt issued by Air France-KLM. EJR also withdrew its 'C'  rating on
commercial paper issued by the Company.

Headquartered in Tremblay-en-France, France, Air France-KLM offers
air transportation services.


ELECTRICITE DE FRANCE: S&P Rates New Sub. Hybrid Notes 'B+'
-----------------------------------------------------------
S&P Global Ratings assigned its 'B+' long-term issue rating to the
perpetual, optionally deferrable, and subordinated hybrid capital
security issued in U.S. dollars by Electricite de France S.A. (EDF)
(BBB/Stable/A-2).  Parallel with the issuance, EDF has launched a
tender offer on its $1.5 billion subordinated hybrid instrument
with a first call date on Jan. 22, 2024, which the new issuance
replaces.  Therefore, if EDF would issue $1.5 billion, after this
transaction the overall amount of hybrid capital eligible for
intermediate equity credit would be unchanged at EUR11.7 billion
and comfortably below our 15% upper guidance.

S&P said, "If EDF issues less than $1.5 billion, on aggregate we
expect to keep the intermediate equity credit on its existing stock
of hybrids. In the specific case of EDF, the conversion of
convertible bonds (namely, its OCEANEs maturing September 2024) is
eligible to act, over several quarters, as replacement for up to
double the amount of subsequently called hybrids. As part of EDF's
renationalization process and beyond the purchase of all minority
shareholders' stakes, the French government also achieved 100%
ownership of EDF's OCEANEs. As the sole holder of those OCEANEs, it
has converted them almost entirely during first-half 2023, as
communicated publicly. The conversion of the OCEANEs by the
government will have the same cash and creditworthiness impact as
the issuance of new shares, the proceeds of which were to be 100%
used to redeem the OCEANEs. It preserves cash for the group in the
same manner and can replace a hybrid layer with a common equity
layer in a standard two-to-one proportion in application of our
hybrid methodology.

"This is subject to the total stock of hybrids outstanding not
decreasing significantly below EUR10 billion, in line with our
understanding of EDF's commitment to hybrids as a long-term
component of its capital structure, supporting senior
creditworthiness."

In the specific case of EDF, replacing the hybrids with common
equity via the conversion of OCEANEs reflects a singular
combination of additional factors, notably:

-- The state is using about EUR9.7 billion of cash to buy out
common-equity and OCEANE holders and reach full ownership of a
systemically critical energy company set to build France's new
nuclear fleet;

-- Public communication has been transparent as to the link
between converting OCEANEs and potentially the subsequent call of
outstanding hybrids; and

-- S&P sees substantial common share repurchases as remote in the
coming years.

S&P said, "We consider the proposed no step-up securities to have
intermediate equity content because they meet our criteria in terms
of their ability to absorb losses and preserve cash in times of
stress, including through subordination and the deferability of
interest at the company's discretion in this period.

"We also continue to assess the equity content on the remaining
hybrids as intermediate."

S&P arrives at its 'B+' issue rating on the proposed security by
notching down from its 'BBB' issuer credit rating because S&P:

-- Include one notch of uplift from the 'bb-' stand-alone credit
profile (SACP), to reflect potential extraordinary government
support.

-- Deduct one notch for subordination because our long-term issuer
credit rating on EDF is investment grade (that is, higher than
'BB+'); and

-- Deduct an additional notch for payment flexibility, to reflect
that the deferral of interest is optional.

S&P said, "Overall, the notching to rate the proposed security
reflects our view that the issuer is relatively unlikely to defer
interest. Should our view change, we may increase or reduce the
number of notches we deduct to derive the issue rating.

"To reflect our view of the intermediate equity content of the
proposed security, we allocate 50% of the related payments as a
fixed charge and 50% as equivalent to a common dividend. The 50%
treatment of principal and accrued interest also applies to our
adjustment of debt.

"EDF can redeem the security for cash at year 10 (the first reset
date) and every five years thereafter. Although the proposed
security is perpetual, it can be called at any time for a tax,
accounting, ratings, or substantial repurchase event. If any of
these events occur, EDF intends, but is not obliged, to replace the
instruments. In our view, this statement of intent mitigates the
issuer's ability to repurchase the notes on the open market. In
addition, EDF can call the instrument any time prior to the first
call date at a make-whole premium. EDF has stated that it has no
intention to redeem the instrument during this make-whole period,
and in our view the inclusion of this type of clause does not
create an expectation that the issue will be redeemed during the
make-whole period. Accordingly, we do not view it as a call feature
in our hybrid analysis, even if it is referred to as a make-whole
call clause in the hybrid documentation."

Key Factors in S&P's Assessment of the Securities' Deferability

In S&P's view, EDF's option to defer payment on the proposed
securities is discretionary. This means that EDF may elect not to
pay accrued interest on an interest payment date because it has no
obligation to do so. However, any outstanding deferred interest
payment, plus interest accrued thereafter, will have to be settled
in cash if EDF declares or pays an equity dividend or interest on
equally ranking securities, and if EDF redeems or repurchases
shares or equally ranking securities. However, once EDF has settled
the deferred amount, it can still choose to defer on the next
interest payment date.

Key Factors in S&P's Assessment of the Securities' Subordination

The proposed securities are intended to constitute deeply
subordinated obligations. They rank senior only to ordinary shares
of EDF S.A. (the issuer) and to any other class of the issuer's
share capital (including preference shares). They also rank pari
passu among themselves and with all other present and future deeply
subordinated obligations of the issuer and are subordinated to
present and future titres participatifs or prêts participatifs
issued by or granted to the issuer, as well as ordinary
subordinated obligations, and unsubordinated obligations of the
issuer.


LAGARDERE SA: Egan-Jones Retains 'B' Sr. Unsec. Debt Ratings
------------------------------------------------------------
Egan-Jones Ratings Company, on May 26, 2023, maintained its 'B'
foreign currency and local currency senior unsecured ratings on
debt issued by Lagardere SA. EJR also withdrew its 'A3'  rating on
commercial paper issued by the Company.

Headquartered in Paris, France, Lagardere SA operates as a media
company.


RENAULT SA: Egan-Jones Retains 'BB-' Unsec. Debt Ratings
--------------------------------------------------------
Egan-Jones Ratings Company, on May 26, 2023, maintained its 'BB-'
foreign currency and local currency senior unsecured ratings on
debt issued by Renault SA. EJR also withdrew its 'A3'  rating on
commercial paper issued by the Company.

Headquartered in Boulogne-Billancourt, France, Renault designs,
manufactures, markets, and repairs passenger cars and light
commercial vehicles.




=========
I T A L Y
=========

ENEL SPA: Egan-Jones Retains 'BB' Sr. Unsec. Debt Ratings
---------------------------------------------------------
Egan-Jones Ratings Company, on May 24, 2023, maintained its 'BB'
foreign currency and local currency senior unsecured ratings on
debt issued by Enel SpA. EJR also withdrew its 'A2'  rating on
commercial paper issued by the Company.

Headquartered in Rome, Italy, Enel SpA operates as a multinational
power company and an integrated player in the global power, gas,
and renewables markets.


TELECOM ITALIA: Egan-Jones Retains 'B' Sr. Unsecured Ratings
------------------------------------------------------------
Egan-Jones Ratings Company, on May 22, 2023, maintained its 'B'
foreign currency and local currency senior unsecured ratings on
debt issued by Telecom Italia S.p.A. EJR also withdrew its 'A3'
rating on commercial paper issued by the Company.

Headquartered in in Milan, Italy, Telecom Italia S.p.A., through
subsidiaries, offers fixed line and mobile telephone and data
transmission services in Italy and abroad.




===================
L U X E M B O U R G
===================

MALLINCKRODT INTERNATIONAL: $1.4B Bank Debt Trades at 24% Discount
------------------------------------------------------------------
Participations in a syndicated loan under which Mallinckrodt
International Finance SA is a borrower were trading in the
secondary market around 76.3 cents-on-the-dollar during the week
ended Friday, June 9, 2023, according to Bloomberg's Evaluated
Pricing service data.

The $1.39 billion facility is a Term loan that is scheduled to
mature on September 30, 2027.  About $1.33 billion of the loan is
withdrawn and outstanding.

Mallinckrodt International Finance SA manufactures and distributes
pharmaceutical products. The Company's country of domicile is
Luxembourg.




=========
S P A I N
=========

AYT COLATERALES BBK II: Fitch Hikes Rating on Class B Debt to BB+
-----------------------------------------------------------------
Fitch Ratings has upgraded eight tranches of four Spanish AyT
Colaterales Global Hipotecario RMBS transactions and affirmed the
others.  All Outlooks are Stable.

   Entity/Debt                 Rating              Prior
   -----------                 ------              -----
AyT Colaterales Global Hipotecario,
FTA Serie BBK II

   Class A ES0312273362     LT  AAAsf   Upgrade     A+sf
   Class B ES0312273370     LT  BB+sf   Upgrade     CCCsf

AyT Colaterales Global Hipotecario,
FTA Serie BBK I

   Class A ES0312273008     LT  AAAsf   Upgrade     A+sf

AyT Colaterales Global Hipotecario,
FTA Serie Caja Cantabria I

   Class A ES0312273446     LT  AAAsf   Affirmed    AAAsf
   Class B ES0312273453     LT  A+sf    Affirmed    A+sf
   Class C ES0312273461     LT  A+sf    Upgrade     Asf
   Class D ES0312273479     LT  Asf     Upgrade     BB+sf

AyT Colaterales Global Hipotecario,
FTA Serie Vital I

   Class A ES0312273081     LT  AAAsf   Affirmed    AAAsf
   Class B ES0312273099     LT  AAsf    Upgrade     A+sf
   Class C ES0312273107     LT  A-sf    Upgrade     BBBsf
   Class D ES0312273115     LT  BB+sf   Upgrade     CCCsf

TRANSACTION SUMMARY

The transactions are static securitisations of Spanish residential
mortgages serviced by Kutxabank S.A. (BBB+/Stable/F2 for AyT
Colaterales Global Hipotecario, FTA Serie BBK I, AyT Colaterales
Global Hipotecario, FTA Serie BBK II and AyT Colaterales Global
Hipotecario, FTA Serie Vital I) and Unicaja Banco S.A.
(BBB-/Stable/F3 for AyT Colaterales Global Hipotecario, FTA Serie
Caja Cantabria I).

KEY RATING DRIVERS

Iberian Recovery Rate Assumptions Updated: In the update of its
European RMBS Rating Criteria on  December 16, 2022, Fitch updated
its recovery rate (RR) assumptions for Spain, reducing the house
price decline and foreclosure sale adjustment assumptions. This had
a positive impact on recovery rates and consequently Fitch's
expected loss in Spanish RMBS transactions. The upgrades of Vital
I's class B to D notes and Cantabria I's class D notes reflect the
updated criteria.

Performance Expectations; CE Trends: The rating actions reflect its
expectation of a mild deterioration in asset performance for the
securitised portfolios. This is consistent with the weaker
macroeconomic outlook linked to inflationary pressures that
negatively affect real household wages and disposable income. The
transactions are protected by substantial seasoning of the
portfolios (more than 17 years). However, downside performance risk
has increased as the recent spike in inflation may put pressure on
household financing, especially for more vulnerable borrowers.

The rating actions also reflect Fitch's view that the notes are
sufficiently protected by credit enhancement (CE) to absorb the
projected losses commensurate with prevailing and higher rating
scenarios. Fitch expects CE ratios for BBK I, BBK II and Cantabria
I to continue increasing for the senior notes due to the prevailing
sequential amortisation of the notes. Fitch expects CE ratios for
Vital I to remain broadly stable due to the pro-rata amortisation
of the notes.

Payment Interruption Risk Cap Removed: Fitch considers payment
interruption risk for BBK I and BBK II mitigated in the event of a
servicer disruption. Fitch deems the available structural mitigant
of a cash reserve fund (RF) that can be depleted by losses
sufficient to cover stressed senior fees and senior notes interest
due amounts while an alternative servicer arrangement was
implemented. Fitch expects the RF to remain sufficiently funded in
the medium term, based on its performance expectations for both
transactions.

Fitch expects a replenishment of the RF due to the transactions
having a variable asset yield and fixed rate liabilities generating
higher excess spread following recent increases in Euribor. As a
result, Fitch has removed the 'A+sf' cap on the notes' rating for
both BBK I and BBK II, in line with its Structured Finance and
Covered Bonds Counterparty Rating Criteria.

BBK II Rating Constraint: Due to the open interest rate risk in BBK
II, the class B notes' rating is capped at 'BB+sf'. These notes may
suffer volatility in their model-implied rating (MIR) in future
model updates. All else equal, falling Euribor would lead to a
lower MIR.

Excessive Counterparty Exposure: Fitch does not consider Cantabria
I's class C notes rating as capped at the transaction account bank
(TAB) provider rating (Banco Santander S.A., A-/Stable/F2, deposit
rating A/F1). This is because CE after assuming the loss of the RF
does not imply downgrades of the notes of 10 or more notches, in
accordance with Fitch's Structured Finance and Covered Bonds
Counterparty Rating Criteria. Cantabria I's class D notes' rating
is capped at the TAB's deposit rating as the RF is the only source
of CE for this tranche.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

For senior notes rated 'AAAsf', a downgrade of Spain's Long-Term
Issuer Default Rating (IDR) that could decrease the maximum
achievable rating for Spanish structured finance transactions. This
is because these notes are rated at the maximum achievable rating,
six notches above the sovereign IDR.

Long-term asset performance deterioration such as increased
delinquencies or larger defaults, which could be driven by adverse
changes to macroeconomic conditions, interest-rate increases or
borrower behaviour. Higher inflation, larger unemployment and lower
economic growth could impact borrowers' ability to pay their
mortgage debt.

CE ratios unable to fully compensate the credit losses and cash
flow stresses associated with the current ratings, all else being
equal, will also result in downgrades. Fitch conducts sensitivity
analyses by stressing both a transaction's base-case foreclosure
frequency (FF) and RR assumptions, and examining the rating
implications for all classes of issued notes. A 15% increase in the
weighted average (WA) FF and decrease in the WARR by 15 % would
result in downgrades of no more than three notches.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

The notes rated 'AAAsf' are at the highest level on Fitch's scale
and cannot be upgraded.

For mezzanine and junior notes, CE ratios increase as the
transactions deleverage, able to fully compensate the credit losses
and cash flow stresses commensurate with higher rating scenarios,
all else being equal. Fitch tested an additional rating sensitivity
scenario by applying a decrease in the WAFF of 15% and an increase
in the WARR of 15%. The results indicated an upgrade of more than
three notches for Vital I's class D notes and up to two notches for
other classes.

DATA ADEQUACY

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. Fitch has not reviewed the results of
any third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.

Fitch did not undertake a review of the information provided about
the underlying asset pools ahead of the transactions' initial
closing. The subsequent performance of the transactions over the
years is consistent with the agency's expectations given the
operating environment and Fitch is therefore satisfied that the
asset pool information relied upon for its initial rating analysis
was adequately reliable.

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.


DURO FELGUERA: EUR85M Bank Debt Trades at 47% Discount
------------------------------------------------------
Participations in a syndicated loan under which Duro Felguera SA is
a borrower were trading in the secondary market around 52.6
cents-on-the-dollar during the week ended Friday, June 9, 2023,
according to Bloomberg's Evaluated Pricing service data.

The EUR85 million facility is a Term loan that is scheduled to
mature on July 27, 2023.  The amount is fully drawn and
outstanding.

Duro Felguera, S.A., through its subsidiaries, manufactures
industrial equipment for the mining industry. The Company also
markets and sells control systems for producing steel for machinery
and railroad components. The Company's country of domicile is
Spain.


GRUP MEDIAPRO: EUR180M Bank Debt Trades at 16% Discount
-------------------------------------------------------
Participations in a syndicated loan under which Grup Mediapro SA is
a borrower were trading in the secondary market around 84.3
cents-on-the-dollar during the week ended Friday, June 9, 2023,
according to Bloomberg's Evaluated Pricing service data.

The EUR180 million facility is a Term loan that is scheduled to
mature on December 26, 2025.  The amount is fully drawn and
outstanding.

Grup Mediapro is involved in the European audiovisual sector in
content integration, production and audiovisual distribution. The
Company's country of domicile is Spain.




===========
S W E D E N
===========

SAS AB: Egan-Jones Retains C Senior Unsecured Ratings
-----------------------------------------------------
Egan-Jones Ratings Company, on May 16, 2023, maintained its 'C'
foreign currency and local currency senior unsecured ratings on
debt issued by SAS AB. EJR also withdrew its 'D'  rating on
commercial paper issued by the Company.

Headquartered in Stockholm, Sweden, SAS AB offers air
transportation services.


STORSKOGEN GROUP: S&P Affirms 'BB' LongTerm IR, Outlook Negative
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' long-term issuer credit rating
on Storskogen Group AB (Storskogen).

The negative outlook reflects that uncertain macroeconomic
conditions could result in a weaker, more volatile operating
performance and weaker cash flow generation than S&P expects in the
next 12 months.  This would indicate a deterioration of the group's
business risk profile, and increase the risk that FFO to debt would
remain below 20% in 2023.

Storskogen plans to issue new Swedish krona (SEK) 1.5 billion
(EUR133 million equivalent) senior unsecured notes with expected
tenor of 3.75 years. Along with cash on balance sheet, drawings on
the revolving credit facilities (RCFs), and proceeds from
divestments, the new issuance will be used to partially refinance
the group's upcoming near-term maturities.

The proposed bond issuance will improve the group's debt maturity
and liquidity profile. Storskogen Group AB intends to issue new
SEK1.5 billion (EUR133 million equivalent) senior unsecured notes
with expected tenor of 3.75 years, the proceeds of which will be
used to partially repay the outstanding SEK3 billion unsecured
notes due May 2024, along with cash on balance sheet and drawings
under the RCF. In addition, cash proceeds of about SEK450 million
from divestments completed since the beginning of the year will be
fully used to continue paying down the EUR200 million term loan due
in March 2025. In February 2023, the group negotiated the extension
of its EUR1 billion senior unsecured RCF by one year to September
2025; the facility agreement includes an additional one-year
extension option. In S&P's view, these initiatives will marginally
improve the group's weighted-average maturity profile to above two
years, but will only temporarily address the near-term refinancing
risk. Following the transaction, a portion of the term loan due in
March 2025 will remain outstanding, and the next large maturity
will be the SEK3.0 billion bond due December 2025. These maturities
will need to be addressed in a timely manner to sustainably improve
the group's debt maturity and liquidity profile. S&P's negative
outlook captures this risk.

The group's operating performance has improved in the first quarter
of 2023, but it will remain challenged by weak macroeconomic
conditions and sustained high inflation during the year.Storskogen
is demonstrating resilient revenue growth and profitability in the
first quarter of 2023, with net sales increasing 33% year on year,
including organic growth of 3%, and its reported EBITA margin
improving to 9.6% from 8.2% in the same period last year.
Nevertheless, S&P views the group's operating environment as
unfavorable, due to weak projected GDP growth and continued high
inflation in its geographic markets, which could result in weaker
demand for its products and services, and rising costs. While the
group has been able to increase prices to offset inflation in the
past months, it has done so with a time lag. A delayed or reduced
ability to pass-through increased costs in a context of weak GDP
growth could constrain the group's profitability improvement,
despite its efforts to strengthen cost control and operating
efficiency measures.

S&P said, "In our view, operating cash flow improvements
underpinned by better working capital management are likely to be
partly offset by increased interest burden. Following a weak cash
flow performance in 2022, due to inventory buildup, supply chain
disruptions, and a sharp increase in raw material costs, Storskogen
implemented various initiatives to strengthen cash conversion. As a
result, we expect a cash inflow from working capital of roughly
SEK500 million-SEK600 million for full-year 2023. We also project
modest capital expenditure (capex) of about 1.9% of revenue. This
will support FOCF generation but, on the other hand, we forecast a
significant increase in interest expenses stemming from rising
interest rates and a higher coupon rate on the proposed new bonds.
This will likely strain FOCF and result in only a modest
improvement in Storskogen's FFO-to-debt ratio to about 21%-21.5% in
2023, from 17.9% in 2022. Although we expect leverage will improve
more significantly to 3.0x from 4.0x in 2022, the relative weakness
in the FFO-to-debt ratio, in addition to the deteriorating FFO cash
interest coverage ratio, reduces headroom under the current
rating.

"We expect the group's financial policy will hamper any
deleveraging below 3.0x adjusted debt to EBITDA.To date,
Storskogen's growth strategy has been to expand via mergers and
acquisitions (M&A). It completed 54 acquisitions in 2022,
representing pro forma last-12-month (LTM) revenue of about SEK11.9
billion. But since July 2022, in light of the weaker-than-expected
operating performance, the group significantly slowed its pace of
acquisitions, with only five completed in the last quarter of 2022
and only three in the first quarter of 2023. However, we continue
to assess Storskogen's growth strategy as driven by M&A, and
believe the slowdown is temporary. In our view, once Storskogen
gradually reduces leverage toward the lower end of its stated
2.0x-3.0x interest-bearing net leverage target, it will likely
resume more frequent M&A transactions because external growth,
business diversification, and geographical expansion are key
pillars in its medium-to-long-term strategy. Given we include
earnout liabilities and minority put options in our adjusted debt
metrics, we understand the group's stated net leverage target of
2.0x-3.0x corresponds to adjusted leverage of about 3.0x-4.0x,
which we would view as commensurate with a 'BB' rating, combined
with a sustainable improvement in the group's debt maturity
profile.

"The negative outlook reflects that uncertain macroeconomic
conditions could result in a weaker, more volatile operating
performance and weaker cash flow generation than we expect in the
next 12 months. This would indicate a deterioration of the group's
business risk profile, and increase the risk that FFO to debt would
remain below 20%."

S&P could lower the rating if:

-- The group suffers operational underperformance or if it
undertakes more debt-funded M&A or shareholder-friendly actions
than we anticipate, resulting in leverage deteriorating above 4.0x
or FFO to debt remaining below 20% in the coming 12 months.

-- Storskogen experiences operating difficulties for a prolonged
period, resulting in a more volatile operating performance without
short-term recovery prospects.

-- The group fails to take necessary actions to address the
refinancing of the debt maturities due 2025 in a timely manner.

-- Storskogen fails to continue upstreaming its FOCF from
subsidiaries to the parent, or the number of entities reduce across
its cash-pooling mechanism.

S&P said, "We could revise the outlook to stable if Storskogen's
operating performance sustainably improves, including continued
organic growth and stable EBITDA margins, such that the group
sustains S&P Global Ratings-adjusted debt to EBITDA comfortably
below 4.0x and FFO to debt above 20%. In addition, we could revise
the outlook to stable if the group takes necessary actions to
improve its weighted average debt maturity profile sustainably."

ESG credit indicators: E-2, S-2, G-3

S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of Storskogen,
reflecting our view that management's decisions and actions
underline a higher risk tolerance than we initially perceived.
Although the proposed bond issuance, if successful, will marginally
extend the group's debt maturity profile and temporarily lift
short-term refinancing risk, we still capture the group's liquidity
risk tolerance and appetite for leverage, as demonstrated by the
high pace of investments for external growth in 2022, while the
group experienced operating underperformance including large
working capital cash outflows. In addition, we consider that the
concentration of voting rights in the hands of a limited number of
key persons -- with three co-founders and one member of senior
management holding 52.6% -- who own less than 15% of the share
capital, could negatively influence corporate decision-making and
promote the interests of the controlling owners above those of
other stakeholders. We believe the board composition partly
mitigates this risk given that four out of five board members are
considered independent from the company and its management, but we
note that co-founder and head of M&A, Alexander Bjargard, is also a
board member. We also question the group's ability to ensure
adequate governance given the very high pace of acquisitions,
although we are not aware of any governance deficiencies at this
stage."




===========================
U N I T E D   K I N G D O M
===========================

ATLANTICA SUSTAINABLE: Egan-Jones Retains 'B-' Unsec. Debt Ratings
------------------------------------------------------------------
Egan-Jones Ratings Company, on May 26, 2023, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Atlantica Sustainable Infrastructure PLC.  EJR also
withdrew its 'B-' rating on commercial paper issued by the
Company.

Headquartered in United Kingdom, Atlantica Sustainable
Infrastructure PLC provides renewable energy solutions.


CHEUNG LOONG: Alvarez & Marsal Appointed as Receiver Over Shares
----------------------------------------------------------------
Sky News reports that a second Canary Wharf office block in as many
weeks has collapsed into a form of insolvency amid growing
financial pressure on commercial property owners.

Sky News understands that Alvarez & Marsal, the restructuring firm,
has been appointed as fixed charge receiver over the shares of
Cheung Loong Holdings Limited, which indirectly owns the long
leasehold of 20 Canada Square.

Encompassing about 70,000 square metres, 20 Canada Square shares a
beneficial owner with 5 Churchill Place -- former home to the
collapsed investment bank Bear Stearns -- which crashed into
insolvency last month, Sky News relates.

The latest development will not affect the day-to-day operation of
the building, with Jones Lang LaSalle (JLL) and BNP Paribas Real
Estate continuing to act as asset and property manager
respectively, Sky News notes.

According to Sky News, Rob Croxen, a managing director at A&M, said
in a statement issued to Sky News: "The appointment of fixed charge
receivers over the shares of Cheung Loong is not expected to cause
any operational impact at 20 Canada Square, which will continue to
operate as normal.

"JLL and BNP will be reaching out to tenants and suppliers to
provide reassurance over the continued operation of the building in
the next few days."

Both Canary Wharf buildings were acquired by Cheung Kei Group, a
Chinese property developer, in 2017, for a combined GBP680 million,
Sky News recounts.

The twin insolvencies largely relate to Cheung Kei's financial
position, but will nevertheless trigger questions about commercial
real estate values in the aftermath of the COVID-19 pandemic, Sky
News states.


DIRTY MARTINI: Bought Out of Administration by Nightcap
-------------------------------------------------------
Sophie Witts at The Caterer reports that Nightcap, the company led
by ex-Dragon's Den investor Sarah Willingham, has purchased the
Dirty Martini cocktail bar chain and its sister restaurant Tuttons
out of administration in a GBP4.65 million pre-pack sale.

The deal includes five Dirty Martini bars in London and five across
Birmingham, Bristol, Manchester, Cardiff and Leeds, The Caterer
states.

Tuttons, a 202-cover British brasserie restaurant which has
operated in Covent Garden for over 45 years and shares a kitchen
with Dirty Martini Covent Garden, is also included in the sale, The
Caterer notes.

Nightcap will pay GBP4.15 million in cash on completion of the deal
and a further £500,000 based on certain conditions being met, The
Caterer discloses.

According to The Caterer, in a trading update, the group said Dirty
Martini's operator DC Bars Limited had struggled with "tough
trading conditions" over the past year as well as "significant"
debts which led to it falling into administration.

None of the debts will transfer to Nightcap except those which are
required by law.


FRAMES CONSERVATORIES: Enters Administration, Ceases Operations
---------------------------------------------------------------
Camille Berriman at Suffolk News reports that Frames Conservatories
Direct, a Bury St Edmunds-based double glazing firm, has gone into
administration after more than 20 years trading in the town.

An official notice on The Gazette said administrators were
appointed on June 6, Suffolk News relates.

According to Suffolk News, Andrew Kelsall, one of the
administrators, confirmed on June 12 Frames Conservatories Direct
Limited had entered administration and ceased to trade.

The Gazette notice added that the company also traded as Plastic
Trade Frames and Garden Retreats.
The firm specialised in windows, conservatories, doors, roofline
and garden rooms, with showrooms in Ely and Diss, along with sales
contacts in Ipswich, Cambridge, Newmarket, Sudbury, Haverhill,
Stowmarket, Thetford, Attleborough and Saffron Walden.

"The business was operated by the same family for over 20 years and
had been involved in many community and charitable events," Suffolk
News quotes Mr. Kelsall as saying.

"Sadly, with the general economic position trading has proved
difficult and this coincided with the directors' wishes to retire
from business."

"There was an attempt to sell the business either in whole or part,
but this has not proved successful. It is understood that most if
not all former employees/contractors now have alternative
employment."

Lee Green, of Larking Gowen chartered accountants, is joint
administrator, Suffolk News discloses.

Frames Conservatories Direct, which describes itself as a
family-run firm, was established in 2001.


INTERNATIONAL GAME: Egan-Jones Retains 'B' Senior Unsecured Ratings
-------------------------------------------------------------------
Egan-Jones Ratings Company, on May 18, 2023, maintained its 'B'
foreign currency and local currency senior unsecured ratings on
debt issued by International Game Technology. EJR also withdrew its
'A3'  rating on commercial paper issued by the Company.

Headquartered in London, United Kingdom, International Game
Technology designs and manufactures computerized casino gaming
systems.


KIKA/LEINER: To File for Bankruptcy, 23 Stores to Shut Down
-----------------------------------------------------------
Sam Jones at The Financial Times reports that barely a week after
Austrian property billionaire Rene Benko sold central Europe's
popular Kika/Leiner chain of furniture stores, the retailer is
filing for bankruptcy.

In a statement on June 7, Kika/Leiner's newly installed management
said that after a careful review, it had been decided the company
required a radical economic restructuring to save it as a viable
business, the FT relates.

According to the FT, half of its workforce will be axed in the next
few weeks, and 23 of its 40 stores will be permanently closed.

Benko's Signa Group announced the sale on June 1, for a price
reported in the Austrian media of about EUR400 million --
significantly less than the EUR500 million paid for the group in
2018, the FT discloses.  Signa insiders said the company had
nevertheless pocketed a EUR300 million gain on its investment,
having already sold off Kika/Leiner's eastern European business in
2018, and a number of valuable properties owned by the group over
the past few years, the FT notes.


LERNEN BIDCO: Fitch Alters Outlook on 'B-' LongTerm IDR to Positive
-------------------------------------------------------------------
Fitch Ratings has revised the Outlook on Lernen Bidco Limited's
(Cognita) Long-Term Issuer Default Rating to Positive from Stable,
and affirmed the IDR at 'B-'.

Fitch has assigned the new EUR905 million term loan facilities an
expected rating of 'B(EXP)' with a Recover Rating of 'RR3'.

The rating actions follow Cognita's recently launched term loan B
(TLB) amend and extend (A&E) transaction. Proceeds from the new TLB
will be used to repay the existing term loans in full together with
related transaction fees. The transaction is largely leverage
neutral. Fitch expects to assign final ratings to the new debt
instrument upon completion of the A&E transaction.

The Positive Outlook reflects its updated forecasts, including two
part-equity funded acquisitions, with leverage and interest cover
moving towards its upgrade sensitivities over the next 12-18
months. If the company performs strongly, this would lead to
reduced refinancing risks for any amounts due under the second
lien, and should not preclude a potential upgrade.

Cognita's IDR is constrained by high EBITDAR leverage at around
8.9x in the financial year ending August 2023 (FY23; on a reported
basis), which Fitch forecasts will improve towards 7.0x in FY24.
EBITDAR interest cover is likely to remain around 1.7x in FY23-24.
Expansion of schools weighs on near-term free cash flow (FCF),
which turns positive in FY25. The rating is underpinned by the
group's increasingly diversified global operations and revenue
predictability.

KEY RATING DRIVERS

Strong 1H23 Trading: Average pupil numbers increased by about
16,000 in 1H23, 13,500 from acquisitions (York Preparatory School,
Redcol in September 2022). About 50% of revenue growth in 1HFY23
was organic, driven by higher pupil numbers, yoy fee increases and
increased ancillary services through the reopening of most schools.
Company-defined adjusted EBITDA of GBP93.6 million in 1H23 included
about GBP18.7 million of acquired EBITDA.

Middle East Acquisitions Part Equity-Funded: The company's recently
established partnership with EKI in the Middle East increased
capacity by 6,700, and an additional GBP21 million
company-estimated pro-forma EBITDA in FY23. Dubai operations are
typically expatriate-concentrated, but the average stay is long
(kindergarten to 12th grade; K-12), and the partnership diversifies
Cognita's global EBITDA distribution and enhances its EBITDA
margin.

The contemplated second add-on in the Middle East will bring an
additional GBP14 million of company-estimated pro-forma EBITDA in
FY23. With capacity utilisation currently around 76% at EKI, Fitch
expects significant growth (around 30% student CAGR) from the
Middle East region in FY23-FY25.

Extended TLB Maturities: The A&E will extend the revolving credit
facility (RCF) and TLB structure into 2028 and 2029, but will
mature at the earliest of the new maturities or the existing second
lien (in January 2027). With strong performance in the underlying
business and two part-equity funded acquisitions, deleveraging and
interest cover metrics are now on positive trends.

Resilient Growth, Higher Costs: Its rating case includes revenue
growth of around 29% in FY23 and 23% in FY24 (both including M&A,
Redcol and York in FY23 and the Middle East in FY24). In addition
to increased students (acquired and enrolled), significant fee
increases result in higher average revenue per pupil of 6-7% in
FY24-FY25 (including M&A in Middle East). Fitch expects
inflationary pressures to remain in FY23 and possibly into FY24,
with the Fitch-defined EBITDA margin around 20% by FY24, but still
up from FY22's 16.1%.

Improving Leverage and Interest Cover: Fitch forecasts EBITDAR
leverage of around 8.9x and EBITDAR fixed charge coverage of around
1.7x by FY23, which are weaker than rated peers. Fitch forecasts
strong deleveraging in the underlying business, driven by student
number growth and tuition fee increases above inflation, but also
from the partnerships in the Middle East fully incorporated into
FY24, with EBITDAR leverage of 7.0x in FY24. Due to higher overall
capital market rates, Fitch expects EBITDAR fixed charge coverage
to remain around 1.7x in FY24.

Capex and M&A Drive Growth: Fitch expects Cognita to continue to
invest in growth through development capex and bolt-on
acquisitions. Its rating case includes development capex of around
GBP165 million across FY23-FY25, with negative FCF in FY23 and
FY24, before turning positive in FY25. Investments in new capacity
weigh on FCF, but given likely student enrolment, profits will grow
after capex is incurred.

Revenue Predictability, High Retention Rates: The private-pay K-12
market is characterised by strong revenue visibility with long
average student stay, typically eight to 10 years for local
students and four to six years for expat students. Equivalent
switching costs once a child is settled are high, and tuition fees
are deemed a non-discretionary expense by parents, as demonstrated
by Cognita's above inflation price increases and resilient
enrolment across the economic cycle.

Cognita's student retention rate is around 80% including
graduation, and is supported by more than 80% local students in
Europe (UK-weighted) and LatAm (together 48% of pre-central cost
EBITDA in FY22).

Some Execution Risk Persists: Fitch sees inherent execution risks
from recently established or newly-built schools as they only
gradually fill capacity. This is partly mitigated by high
visibility of the competitive environment with long lead times (and
hence a predictable fill of completed capacity investments), use of
strong brands and reputation, including academic record and
parental scoring.

Execution risk from M&A is predominantly for larger acquisitions,
like the recent partnership with EKI in Dubai and entry into a new
area (Kuwait). However, this is mitigated by Cognita's focus on
profitable targets and record of due diligence and integration. The
rating case incorporates a prudent M&A and investment policy.

Top Schools Dominate, Type Varies: Fitch expects the top 10 schools
to represent around 43% of revenue and around 61% of pre-central
cost EBITDA in FY23. Exposure to expat, often premium (versus
local, mid-market) students is greater in the Asia portfolio (73%
of Asian FY22 pre-central cost EBITDA), whereas the higher volume,
lower-fee (GBP3,500 average revenue per pupil) LatAm portfolio
focuses on local students. The European portfolio (UK and
Spain-weighted) includes smaller-capacity schools, yielding average
revenue per pupil of around GBP13,500, whereas the Asia portfolio
is characterised by much larger schools, fewer students, and higher
average revenue per pupil (GBP20,000).

DERIVATION SUMMARY

Compared with Fitch's Credit Opinions on private, for-profit,
education providers at the lower end of the 'B' rating category
globally, Cognita benefits from a diverse portfolio in geography,
expat versus local student intake, curriculum and price points. The
private education sector continues to grow, and annual fee
increases can be at or above inflation. GEMS Menasa (Cayman)
Limited (B/Stable) is Dubai-concentrated with a focus on the UAE,
but its K-12 portfolio covers different price entry points, premium
to mid-market, and curricula. Both GEMS and Cognita have long-dated
revenue given their average student stay.

Although for-profit Global University Systems Holding B.V. (GUSH;
B/Stable) provides post-graduate university-intake courses, its
geographic reach and exposure to different disciplines (business,
accounting, law, medical, arts, languages and industrial) is wider
than K-12 schools. However, it offers shorter typically three- to
four-year courses (longer for part-time). As the group has grown it
has increased its reliance on international students: recruiting
for third-party US universities and its own Canada operations
versus predominantly local intake for its India, UK and Asia
locations.

GEMS's significantly lower leverage (FY22 forecast: 6.3x funds from
operations (FFO)-adjusted gross leverage) and larger scale
underline the one-notch rating differential with Cognita. However,
this is partly compensated by Cognita's global diversification and
resilient pandemic trading, with deleveraging capacity from
student-and-tuition fee growth and increased utilisation rates from
expansion investments.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

- Revenue growth around 23% in FY24 (including acquired revenue)
and 7% in FY25

- Student growth of 25% in FY23 and around 10% in FY24

- Average revenue per pupil increasing by around 10% per year in
FY24 (Middle East incorporated) and normalising to around 3% in
FY25

- Fitch-defined EBITDA margin increasing to 18.4% in FY23 and 20.2%
in FY24 through higher utilisation rates and improved staff
efficiency (after including higher wages in Europe) and a mix
effect from recent acquisitions

- Cash-based lease rent increasing to around GBP50 million in FY24
(due to expansion and CPI-linked rent contracts) from GBP36 million
in FY22

- Working-capital inflow of around 0.4%-0.6% of revenue per year to
FY26

- Development capex of around GBP165 million across FY23-FY25

- Negative FCF in FY23 and FY24, turning positive (post-expansion
capex) in FY25

- Two predominantly equity-funded acquisitions, one in FY23 and one
in FY24. No further M&A due to lack of visibility around funding
mix

Key Recovery Assumptions

Its recovery analysis assumes that Cognita would be reorganised as
a going concern (GC) in bankruptcy rather than liquidated. Fitch
has assumed a 10% administrative claim. The GC EBITDA of GBP135
million (incorporating recent acquisitions) reflects stress
assumptions that could be driven by weaker operating performance
and an inability to increase students and pricing according to plan
with lower overall utilisation rates, adverse regulatory changes or
weaker economic development in key markets with reduced pricing
power.

The enterprise value (EV) multiple of 6.0x has been applied to the
GC EBITDA to calculate a post re-organisation EV. The choice of
this multiple is based on well-invested operations, strong growth
prospects with medium- to long-term revenue visibility and
diversified global operations. However, the multiple is constrained
by weaker-than-average profitability compared with peers'. The
multiple is in line with Fitch-rated wider education sector
peers'.

Fitch assumes Cognita's GBP120 million revolving credit facility
(RCF) to be fully drawn upon default ranking pari passu with its
GBP775 million equivalent existing senior secured TLBs - which
ranks below local, prior-ranking debt. Its EUR255 million
second-lien debt ranks junior to the senior secured debt.

Based on current metrics and assumptions, the waterfall analysis
generates a ranked recovery at 61% in the 'RR3' band for the
existing senior secured debt, and 0% in 'RR6' for the second lien.
Upon consummation of the A&E transaction, the allocation of value
in the liability waterfall analysis would result in Recovery
Ratings corresponding to 'RR3' for the TLB and 'RR6' for the
second-lien debt. This indicates a 'B' instrument rating for the
TLB and a 'CCC' rating for the second-lien debt, with
waterfall-generated recovery computations of 56% and 0%,
respectively.

RATING SENSITIVITIES

Factors That Could, Individually Or Collectively, Lead To Positive
Rating Action/Upgrade

- Successful execution of growth strategy with improved
profitability and FCF margin

- EBITDAR leverage structurally below 7.0x

- EBITDAR fixed charge coverage, defined as EBITDAR/ (interest +
rent), sustained above 1.8x

- Neutral to positive FCF (post expansion capex)

Factors That Could, Individually Or Collectively, Lead To The
Outlook Being Revised To Stable

- EBITDAR leverage remaining structurally above 7.0x owing to
operational underperformance or an appetite for debt-funded
acquisitions

- EBITDAR fixed charge coverage remaining structurally below 1.8x

- Inability to turn FCF neutral to positive (post expansion capex)
with reduced liquidity headroom

Factors That Could, Individually Or Collectively, Lead To Negative
Rating Action/Downgrade

- Inability to increase students and pricing according to plan with
lower overall utilisation rates, adverse regulatory changes or a
general economic decline with lower growth

- Failure to reduce EBITDAR leverage structurally below 8.5x

- EBITDAR fixed charge coverage below 1.2x

- Sustained negative FCF

- Minimal liquidity headroom or difficulties in refinancing
M&A/earn-out drawings under the RCF

- Increased refinancing risk with off-market refinancing options

LIQUIDITY AND DEBT STRUCTURE

Satisfactory Liquidity: Cognita's Fitch-adjusted cash position is
estimated at around GBP90 million at end-FY23 (including GBP75
million of RCF drawings to part-fund acquisitions) and negative FCF
(including expansion capex) of GBP16 million in FY24. Fitch include
some additional RCF drawings to part fund development capexed and
scheduled earn-outs from recent acquisitions, so that the RCF is
assumed fully drawn in FY25. Fitch expects the company to issue
some additional funding to repay the RCF drawings.

Fitch restricts GBP50 million of cash for some overseas accounts.
Although available for investments and projects locally, Fitch
believes they are not readily available to repay debt at the issuer
level.

Reduced Refinancing Risk: Refinancing risk is somewhat mitigated by
Cognita's deleveraging capacity, a resilient business profile and
positive underlying cash flow generation. The extended RCF and TLBs
(which represent the main part of the capital structure) mature in
October 2028 and April 2029, respectively, but with a springing
maturity and hence prior to the existing second-lien. The
second-lien facility matures in January 2027.

ISSUER PROFILE

Cognita is a global private-pay, for-profit, K-12 educational
services group that operates schools across Asia, Europe, LatAm,
North America and the Middle East.

CRITERIA VARIATION

Fitch's Corporate Rating Criteria guide analysts to use the income
statement rent charge (depreciation of leased assets plus interest
on leased liabilities) as the basis of its rent-multiple adjustment
(capitalising to create a debt-equivalent) in Fitch's
lease-adjusted ratios. However, Cognita's accounting rent (GBP45.4
million) in its FY22 income statement is significantly higher than
the cash flow rent paid per year, so Fitch has applied an 8x debt
multiple to the annual cash rent (GBP36.8 million).

There may be various reasons for the difference in accounting rent
versus cash paid rent. Cognita has prepaid some rents, and its
long-dated real estate leases (some more than 20 years) result in
higher non-cash, straight-lined, "depreciation" within accounting
rent. In some other Fitch-rated leveraged finance portfolio
examples, the difference between accounting and cash rents is not
of the magnitude to justify this switch to cash rents.

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
   -----------             ------             --------   -----
Lernen Bidco
Limited             LT IDR B-    Affirmed                   B-

   senior secured   LT     B(EXP)Expected Rating RR3

   senior secured   LT     B     Affirmed        RR3        B

   Senior Secured
   2nd Lien         LT     CCC   Affirmed        RR6       CCC  


PLATFORM BIDCO: EUR600M Bank Debt Trades at 18% Discount
--------------------------------------------------------
Participations in a syndicated loan under which Platform Bidco Ltd
is a borrower were trading in the secondary market around 81.8
cents-on-the-dollar during the week ended Friday, June 9, 2023,
according to Bloomberg's Evaluated Pricing service data.

The EUR600 million facility is a Term loan that is scheduled to
mature on September 23, 2028.  The amount is fully drawn and
outstanding.

Platform Bidco Ltd is a UK entity incorporated in April 2021 for
the acquisition of Valeo Foods Group Ltd, an Irish-headquartered
producer and distributor of branded and non-branded ambient food
products. The Company's country of domicile is the United Kingdom.


RED CAT: Goes Into Administration
---------------------------------
Jessica Mason at The Drinks Business reports that British craft
brewery Red Cat Brewing, based in Winchester, has confirmed it has
gone into administration.

The Hampshire brewery was set up by former publicans Iain McIntosh
and Andy Mansell.


SMALL BUSINESS 2023-1: Fitch Gives BB+(EXP)sf Rating on Cl. D Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Small Business Origination Loan Trust
2023-1 DAC (SBOLT 23-1) notes expected ratings as detailed below.
The assignment of final ratings is contingent on the receipt of
final documents conforming materially to information already
reviewed.

   Entity/Debt                Rating        
   -----------                ------        
Small Business
Origination Loan
Trust 2023-1 DAC

   Class A XS2629043428   LT AA(EXP)sf   Expected Rating
   Class B XS2629043931   LT A(EXP)sf    Expected Rating
   Class C XS2629045043   LT BBB+(EXP)sf Expected Rating
   Class D XS2629045555   LT BB+(EXP)sf  Expected Rating
   Class E XS2629046017   LT NR(EXP)sf   Expected Rating
   Class R XS2629046876   LT NR(EXP)sf   Expected Rating
   Class Z XS2629046447   LT NR(EXP)sf   Expected Rating

TRANSACTION SUMMARY

SBOLT 23-1 is a true-sale securitisation of a static pool of UK
unsecured SME loans, originated through the marketplace lending
(MPL) platform of Funding Circle Ltd (FC, servicer) and sold by
Glencar Investments 40 DAC (Glencar). This transaction is the first
issue from this platform to be rated by Fitch, and the seventh
overall.

KEY RATING DRIVERS

SME Borrower Default Probability: Fitch analysed the default risk
of the underlying SME portfolio based on FC static default vintage
data separately disclosed by their internal risk band. For the
securitised portfolio including 'A+' to 'D' risk bands Fitch
determined an average one-year probability of default (PD) at close
to 5%.

Unsecured SME Loans: The securitised loans are unsecured except for
personal guarantees granted by the owners or directors of the SME
borrowers. Fitch analysed the static recovery vintage data and
determined an average recovery rate at close to 35%, expected to be
uniformly distributed over a five- year period following the
borrower default. Waterfall Eden Master Fund, Ltd may also purchase
defaulted loans at a price no less than 36.5% of their par amount.

Granular Portfolio: The collateral portfolio features low single
obligor concentration levels, with the top 10 obligors accounting
for 2.1% of the portfolio balance. Industry concentration, on the
other hand, is more in line with other SME portfolios', with the
largest three industries accounting for 44.4% of the portfolio
balance, of which property and construction is the largest (18.8%)
followed by retail (13.5%) and business services (12.1%).

Sensitivity to Pro-Rata Period: The transaction will feature
pro-rata amortisation of the notes at closing until the breach of a
sequential-pay trigger. The pro-rata amortisation is based on the
note balance net of the corresponding principal deficiency ledger
but also includes the subordinated notes. Pro-rata structures
generally leak proceeds to subordinated notes and therefore are
higher-risk to sequentially amortising structures. Under pro-rata
structures ratings are more sensitive to the back-loaded default
timing assumption as it determines the timing of the continued
leakage of principal to subordinated notes.

Consistent with the historical performance default data provided by
FC for its loan book and their previous securitisations, Fitch
applied some defaults also during the first year of the
transaction's life under its back-loaded default timing assumption.
This approach is also in line with the Fitch criteria for
portfolios of consumer loans with similar granularity and tenor.

Rating Cap May Constrain Ratings: Fitch decided to cap the highest
achievable rating of the notes at 'AA+sf' on account of limited
availability of historical performance data following changes in
FC's underwriting process as a result of the Covid-related stress
period. While the ratings being assigned are not constrained by
this cap at present, with the highest rating being one notch below,
it may constrain the rating once the pro-rata period expires
(barring future revisions of the cap itself) and as the transaction
deleverages.

Deviation from MIR: The class D notes' rating is one notch lower
than its model-implied rating (MIR). The deviation reflects the
limited cushion between its break-even default rate and the hurdle
default rate at the MIR, while also considering that pro-rata
amortisation of the notes makes them more sensitive to asset
performance assumptions than in comparable sequential-pay
structures.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade

Weakening asset performance is strongly correlated to increasing
levels of delinquencies and defaults that could reduce credit
enhancement available to the notes. Additionally, unanticipated
declines in recoveries could also result in lower net proceeds,
which may make certain notes' ratings susceptible to negative
rating action, depending on the extent of the decline in those
recoveries.

An increase of the rating default rate (RDR) by 25% of the mean
default rate and a 25% decrease of the rating recovery rate (RRR)
at all rating levels would lead to a downgrade of up to three
notches for the notes.

Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade

After the end of the pro-rata period, upgrades may occur on
better-than-initially expected asset performance, leading to higher
credit enhancement and excess spread available to cover losses in
the remaining portfolio, albeit subject to the 'AA+sf' rating cap.

A reduction of the RDR by 25% of the mean default rate and a 25%
increase of the RRR at all rating levels would lead to an upgrade
of up to three notches for the notes.

CRITERIA VARIATION

Fitch calibrated its correlation assumption so as to ensure that
the default rate for the overall portfolio in the 'Asf' rating
scenario covers the 32.7% peak of delinquencies observed in FC loan
book during the Covid-19 stress. The impact of this criteria
variation is lower ratings by one notch for the class A and C
notes, two notches for the class B notes, and three notches for the
class D notes.

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.

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.


SOLUTION PERFORMANCE: Bought Out of Administration, 20 Jobs Saved
-----------------------------------------------------------------
BusinessCloud reports that a Newcastle-based software team has been
rescued from administration by Solution Performance Group in a move
that will safeguard 20 jobs in the region.

Boxmodel Digital Media Limited fell into administration last month,
BusinessCloud relates.  SPG was able to offer employment to the
development company's employees.

According to BusinessCloud, the move will boost SPG's team to 70
and support its growth plans.  It says the larger team will be
better-placed to meet the growing demand for digital transformation
across the public and private sectors, BusinessCloud notes.  

Boxmodel counted Airbus Defence and Space, Renault and Rentokil as
customers.  Founded in 2009, it provided end-to-end software
engineering services.


TUFFNELLS PARCELS: Goes Into Administration
-------------------------------------------
Business Sale reports that Tuffnells Parcels Express has fallen
into administration and appointed joint administrators at Interpath
Advisory after failing to secure funding in the past couple of
weeks.

The delivery giant came under pressure in recent years due to
increasing costs, the impact from COVID-19 and the "highly
competitive nature" of the UK parcel delivery market, Business Sale
relates.

According to Business Sale, Richard Harrison, the managing director
at Interpath Advisory and joint administrator with Howard Smith,
said: "Unfortunately, the highly competitive nature of the UK
parcel delivery market, coupled with significant inflation across
the company's fixed cost base in recent times, has resulted in the
company experiencing intense pressure on cashflow."

Tuffnells is one of the biggest parcel delivery firms in the UK,
with 33 depots, handling goods being sent to and from over 160
worldwide destinations and with more than 4,000 business customers.
The firm specialises in distributing mixed freight and handling
packages with irregular dimensions.

A total of 500 contractors are also set to be affected by the
collapse which will see Tuffnells' transport hubs and depots closed
until further notice, Business Sale discloses.  The news could also
cause disruption for global businesses awaiting parcels as well as
consumers from Tuffnells' retail clients, such as Wickes and Evans
Cycles, who will be waiting on deliveries for large items such as
furniture or bikes, Business Sale notes.

In the company's most recent results, for the year ending December
31 2021, it reported turnover of GBP178.1 million and pre-tax
profits of GBP5.4 million, compared to GBP212.4 million in revenue
and GBP6 million in pre-tax profits for the 16 months to December
31, 2020, Business Sale states.

At the time, the company's non-current assets were valued at
GBP13.1 million and current assets at GBP31.7 million, while net
assets amounted to GBP15.9 million, according to Business Sale.


WPP PLC: Egan-Jones Retains 'BB' Sr. Unsecured Debt Ratings
-----------------------------------------------------------
Egan-Jones Ratings Company, on May 25, 2023, maintained its 'BB'
foreign currency and local currency senior unsecured ratings on
debt issued by WPP PLC. EJR also withdrew its 'A2'  rating on
commercial paper issued by the Company.

Headquartered in London, United Kingdom, WPP PLC operates a
communications services group.


ZARA UK TOPCO: S&P Lowers LongTerm ICR to 'B-', Outlook Stable
--------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Zara UK Topco Ltd. (Flamingo Group International Ltd.) to 'B-' from
'B'. S&P also lowered to 'B-' from 'B' its issue ratings on the
EUR280 million senior secured first-lien term loan B due February
2025, and EUR30 million committed RCF due February 2024.

S&P said, "The stable outlook indicates that Flamingo Group will
perform in line with our base case with an adjusted EBITDA margin
of 8.0%-8.5%, and will generate small negative FOCF over the next
12 months, while remaining self-funding. We also assume the group
will be able to make meaningful progress toward the refinancing of
its EUR30 million RCF and EUR280 million term loan B."

The downgrade reflects a deterioration in credit metrics, notably
slightly negative FOCF generation, due to a worse-than-expected
operating performance. S&P said, "Fiscal 2022 results have
negatively deviated from our last published base-case scenario. We
estimate fiscal 2022 S&P Global Ratings-adjusted FOCF to be about
negative GBP1 million to negative GBP0.5 million, and funds from
operations (FFO) cash interest coverage to land at about 2.0x. In
addition, we estimate adjusted leverage at about 5.5x. Since our
previous expectations, macroeconomic conditions have worsened,
which adversely affected Flamingo Group's top-line growth and
earnings generation. Furthermore, the group lost important
contracts with two large retailers in the U.K., while the rise in
interest rates over the past year has led to an increase in the
cost of debt. Fiscal 2022 revenue decreased by about 5% to GBP664.7
million, stemming from a decline in sales in the U.K. because of
the loss of the two contracts, alongside a decline in consumer
confidence and a steep rise in the cost of living. We estimate that
adjusted EBITDA fell by about 26% in fiscal 2022 to GBP54
million-GBP55 million, partly because of an increase in operating
expenses--namely raw materials such as chemicals and fertilizers,
packaging materials, energy, water, and staff costs--amid
inflationary pressures. We estimate the adjusted EBITDA margin at
8.2% in fiscal 2022, a decline of about 240 basis points (bps)
compared with fiscal 2021."

S&P said, "For fiscal 2023, we anticipate that sales will decrease
to about GBP630 million-EUR635 million, while the adjusted EBITDA
margin will be about 8%-8.5%. We forecast FOCF of negative GBP3
million to negative GBP2 million, stemming from lower earnings
generation and working capital requirements. Interest expense will
increase further in 2023 because of rising interest rates, since
all of Flamingo Group's debt is floating rate and the group has not
put in place any interest rate hedging instruments. FFO cash
interest coverage will deteriorate to about 1.5x-1.8x and adjusted
leverage will be about 6x, although we acknowledge adjusted debt to
EBITDA remains low.

"We believe Flamingo Group's significant exposure to the U.K.
flower market, the loss of important contracts with two retailers,
and the decline in consumer confidence will continue hampering the
group's performance in 2023. Given the deteriorating macroeconomic
conditions, characterized by consumers' disposable income being
squeezed by inflation, we believe declining consumption trends will
continue in 2023. Flowers and plants are seen as discretionary
products by most consumers, and we view Flamingo Group's business
model as vulnerable to the macroeconomic context because it is a
cyclical business. Therefore, we forecast a decline in sales in
fiscal 2023 of about 5% because of the U.K. business, which was
also adversely affected by the abovementioned loss of contracts. We
expect the European business to show some sales growth; namely
Afriflora, which sells roses to European discounters and
supermarkets with prices marked at the lower end. At the same time,
large retailers seem less receptive to further price increases in
2023, contributing to some top-line and earnings deterioration. In
addition, high-cost inflation will continue to affect operating
costs, albeit at a slower pace. The group has been implementing
cost-efficiency measures, such as more efficient packing methods,
to partly offset inflation effects, which we view positively. Other
risks the group has been historically exposed to are related to the
political instability and weather conditions in Ethiopia and Kenya,
which can have an adverse effect on production and create
volatility in earnings, although we acknowledge the situation is
broadly stable at present.

"We have revised our liquidity assessment to less than adequate
from adequate, reflecting liquidity pressures. Flamingo Group's
liquidity position has weakened and we estimate the liquidity ratio
at about 0.78x over the next 12 months. The RCF has been fully
drawn as of March 31, 2023 (about GBP27 million), and the group has
solid working capital requirements, intra-year working capital
requirements, and maintenance capital expenditure (capex), while
cash FFO generation will continue to be adversely affected by lower
earnings, despite solid cash on balance sheet. The RCF was fully
drawn as of March 31, 2023, because the facility sits with Credit
Suisse, and the group took this decision because of recent
developments with the bank, although the move contributes to an
increase in interest expense. About GBP12 million of the drawn
amount is sitting as cash on balance sheet (cash balances of about
GBP31.8 million as of March 31, 2023).

"Flamingo Group is facing rising refinancing risks. The EUR30
million RCF maturity is in less than 12 months, so we see
refinancing risks are rising. Flamingo Group has already taken
steps toward the refinancing process/maturity extension of the RCF
due February 2024, and we expect a deal to be achieved before the
end of September 2023, although it is too early to comment on what
the new deal and terms will be. The EUR280 million term loan B
matures in February 2025 and the group has started preparing for
the refinancing process, which it expects will be completed by the
end of 2023. In our view, the negative FOCF coupled with the recent
intentional financial misstatement of the fiscal 2022 financials at
the U.K. business level by an employee increase refinancing risks
for the group. Nevertheless, Flamingo Group has been implementing
measures to strengthen its internal controls and ensure a similar
situation will not take place again.

"The stable outlook reflects our expectation that Flamingo Group
will perform in line with our base case with an adjusted EBITDA
margin of 8.0%-8.5%, and generate small negative FOCF over the next
12 months, while remaining self-funding. We also assume the group
will be able to make meaningful progress toward the refinancing of
its EUR30 million RCF and EUR280 million term loan B coming due in
February 2024 and February 2025, respectively.

"In our base case, we expect operational headwinds from the recent
loss of contracts with two important U.K. retailers, shrinking
consumer purchasing power, especially in the U.K., coupled with
inflationary pressures on the operating cost structure.

"We could lower the ratings in the next 12 months if Flamingo Group
is unable to successfully refinance in a timely manner its EUR30
million RCF and EUR280 million term loan B coming due in February
2024 and February 2025, respectively, or if we think the group is
facing a near-term liquidity shortfall.

"We could raise the rating if the group were able to successfully
refinance its EUR30 million RCF and EUR280 million term loan B in a
timely manner and outperform our base case, such that FOCF turned
significantly positive on a sustained basis. This could occur if
the group returned to meaningful sales and adjusted EBITDA
growth."

ESG credit indicators: E-3, S-2, G-3



                           *********


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 * * *