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       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

          Thursday, September 21, 2023, Vol. 24, No. 190

                           Headlines



I T A L Y

WEBUILD SPA: S&P Assigns 'BB' Rating on New Unsec. Notes Due 2028


L U X E M B O U R G

NAUTILUS INKIA: S&P Lowers ICR to 'BB-', Outlook Negative


N E T H E R L A N D S

BME GROUP: Moody's Affirms 'B2' CFR, Outlook Remains Stable
BME GROUP: S&P Affirms 'B' LT ICR & Alters Outlook to Stable


U N I T E D   K I N G D O M

AVON FINANCE NO. 4: S&P Assigns CCC(sf) Rating on Class X Notes
CAMVAC LTD: Enters Administration, Owes GBP11.7 Million
EVERTON FC: Three Months Away From Going Into Administration
HEATH SPRINGS: Enters Administration, Buyer Sought for Business
JD COOLING: Bought Out of Administration in Pre-pack Deal

MODAL ELECTRONICS: Enters Administration as Part of Restructuring
PEPCO GROUP: S&P Assigns 'BB-' LongTerm ICR, Outlook Stable
RMAC NO. 3: S&P Assigns B+ Rating on Class F-Dfrd Notes
SOUTHEND UNITED: At Risk of Going Into Administration

                           - - - - -


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I T A L Y
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WEBUILD SPA: S&P Assigns 'BB' Rating on New Unsec. Notes Due 2028
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue rating to the senior
unsecured notes of up to EUR500 million, due in 2028, to be issued
by Italian construction company Webuild SpA (BB/Stable/--). The '4'
recovery rating reflects the proposed notes' unsecured and
unguaranteed nature, as well as their structural subordination to
prior-ranking claims. S&P estimates recovery prospects at 40%.

The proposed notes will rank pari passu with all Webuild's existing
unsecured senior debt. Webuild intends to use the proceeds to
partially refinance existing debt and for general corporate
purposes. The issue and recovery ratings on the proposed notes are
based on preliminary information and subject to their successful
issuance and our satisfactory review of the final documentation.

S&P said, "We expect the documentation for the proposed notes will
be broadly in line with that for the existing notes. We understand
the documentation includes one incurrence covenant stipulating a
minimum consolidated interest coverage ratio of 2.5x, which limits
Webuild's ability to incur additional debt. There is also a
restricted-payment covenant as well as limitation on the sale of
certain assets and transactions with affiliates. Moreover, the
documentation includes a EUR50 million cross-default threshold
provision.

"In our hypothetical default scenario, we assume a prolonged
economic downturn would affect the construction sector. We also
consider a delay in collecting payments for projects that would
result in severe margin contraction and negative operating cash
flow. In our view, this would weaken Webuild's ability to meet its
debt obligations, triggering a payment default in 2028.

"We value Webuild as a going concern, based on its strong brand
value, market position, and global presence."

Simulated default assumptions

-- Year of default: 2028

-- Jurisdiction: Italy

-- Emergence EBITDA (after recovery adjustments): EUR365 million

-- Multiple: 5x in line with the standard assumption for the
construction sector

Simplified waterfall

-- Gross recovery value: EUR1,827 million

-- Net recovery value after admin. expenses (5%): EUR1,735
million

-- Estimated priority claims: EUR105 million

-- Value available to first-lien claims: EUR1,630 million

-- Estimated first-lien claims: EUR230 million

-- Value available to unsecured claims: EUR1,400 million

-- Unsecured debt claims: EUR3,210 million




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

NAUTILUS INKIA: S&P Lowers ICR to 'BB-', Outlook Negative
---------------------------------------------------------
On Sept. 18, 2023, S&P Global Ratings lowered its issuer credit
rating on Nautilus Inkia Holdings SCS (Inkia) to 'BB-' from 'BB'
and its issue-level rating to 'B+' from 'BB-', as the notes
continue to be structurally subordinated.

The negative outlook reflects S&P's view that it could downgrade
Inkia further by one or more notches in the next 6-12 months if its
parent company continues to adhere to its divestment strategy, for
example, through the sale of new subsidiaries that represent a vast
majority of consolidated EBITDA. This would further pressure the
group's business risk profile. Moreover, a downgrade could follow a
deterioration of the group's financial risk profile, which could
occur if Inkia distributes the new sales proceeds as dividends
instead of repurchasing debt at the holding level.

I Squared Capital Advisors LLC, Nautilus Inkia Holdings SCS'
(Inkia's) ultimate shareholder, recently announced the sale of its
power transmission and distribution business in Guatemala to
Threelands Energy Ltd. Inkia will distribute the sale proceeds as
dividends to its shareholder.

S&P said, "Nautilus consolidates several subsidiaries, which are
co-issuers and jointly responsible for Inkia's $218 million
existing bullet notes, which we now rate at 'B+'. In addition,
Nautilus consolidates the financial results of Orazul Energy Peru
S.A. (BB-/Stable/--) and other operating companies located in Latin
America. We treat Nautilus as a single economic entity bearing the
same default risk, given the level of integration and synergies
among the group's entities, as well as the sharing of the top
management and controlling shareholder."




=====================
N E T H E R L A N D S
=====================

BME GROUP: Moody's Affirms 'B2' CFR, Outlook Remains Stable
-----------------------------------------------------------
Moody's Investors Service affirmed BME Group Holding B.V.'s long
term corporate family rating of B2 and the probability of default
rating of B2-PD. Concurrently, Moody's assigned a new B2 instrument
rating to BME's amended and extended EUR750 million backed senior
secured first lien term loan B2 (TL) due 2029 and the EUR195
million backed senior secured first lien revolving credit facility
(RCF) due 2029. The outlook remains stable.

The rating action follows BME's announcement that it intends to
refinance a portion of the currently outstanding EUR178 million
backed senior secured first lien term loan A and EUR1,470 million
backed senior secured first lien term loan Bs due in 2025 and 2026,
respectively, with an amend and extend transaction for its EUR750
million backed senior secured first lien term loan B2 due 2029.
Following the transaction, around EUR898 million of the current
backed senior secured first lien term loans will largely be due in
2026 and the remaining EUR750 million will be extended to 2029,
improving the company's maturity profile. The rating action
reflects Moody's expectations that the transaction will be
completed as planned.

RATINGS RATIONALE

The rating action reflects:

-- Moody's expectations that BME will generate positive Free Cash
Flow (FCF) over the next 12-18 months and will maintain good
liquidity, offsetting a temporary deterioration in key credit
metrics such as Moody's adjusted gross leverage of around 6.3x-6.7x
and Moody's adjusted EBITA/ Interest of around 1.3x – 1.4x. BME's
ability to generate FCF through the cycle reflects its low capex
needs, flexible cost structure and countercyclical nature of
working capital, which will also offset the higher interest burden
following the transaction.

-- Moody's expectations that construction activities will remain
depressed in 2023 and 2024, namely in the residential market, due
to rising interest rates and record high construction costs, and
will start to recover in the second half of 2024 supporting an
improvement in credit metrics more in line with B2 rating,
including debt/EBITDA below 6.0x and EBITA/ Interest above 1.5x in
2025.

-- Management cost saving plans that will partly mitigate the
lower volume in 2023 and 2024, and will support improvement in
profitability thereafter.

-- BME exposure to the more stable renovation market (70% of gross
profit), non-residential market and sanitary heating and plumbing,
in particular in Germany, that is benefitting  from high demand for
energy efficient renovation, offsetting the weaker construction
activities.

BME's rating remains supported by BME's diversified pan-European
footprint, with leading positions in regional markets; track record
of earnings growth since the spun-off from CRH plc (Baa1, stable)
in 2019 thanks to management strategic initiatives, solid demand
and contribution from acquisitions; and significant portfolio of
owned real estate assets. BME's rating is constrained by
structurally low profitability of basic business material
distributors.

ESG considerations relevant for the ratings includes event risk
associated with shareholder distributions and debt-financed
acquisitions because of private equity ownership, partly offset by
good management track record proven since the assignment of the
rating in 2019.

LIQUIDITY

BME's liquidity is adequate and will benefit from the extension of
part of its maturity profile. The cash balance of around EUR261
million as of June 2023 and an undrawn upsized RCF of EUR195
million support liquidity. Sources of liquidity are further
supported by EUR750 million portfolio of real estate assets.

These sources, together with internally generated funds from
operations, are sufficient to cover intra-year working capital
swings. Liquidity is further supported by Moody's expectation that
working capital will be released over the next 12 months due to the
lower volumes. Other uses include annual capital spending of around
1% of sales, lease payments and spending on bolt-on M&A.

The RCF contains a springing maintenance covenant of 8.4x leverage
calculated on a first lien senior secured net debt basis, which is
tested when the facility drawings net of cash exceed 45% of total
commitments.

STRUCTURAL CONSIDERATIONS

BME's backed senior secured first lien term facilities comprising
the senior secured term loan B, term loan A (maturing in October
2025) and the RCF share the same security and are guaranteed by
certain subsidiaries of the group, accounting for at least 80% of
consolidated EBITDA. As a result, the loans and the RCF are rated
B2, in line with the CFR.

OUTLOOK

The stable outlook reflects Moody's expectations that debt/EBITDA
will increase to around 6.5x in 2023 and 2024, but will decline
below 6.0x in 2025. Weaker than expected results in 2023 and 2024
with a leverage spike above 7x a deterioration in interest coverage
towards 1x or an expectation of a slower recovery in credit metrics
would put the rating under pressure. This forecasts exclude debt
funded acquisitions or shareholder distributions, and assume that
BME will continue to perform bolt on acquisitions funded with
internally generated FCF.        

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The ratings could be upgraded if strong earnings growth results in
sustained improvement in credit metrics, including:

-- Moody's-adjusted debt/EBITDA below 5.0x,

-- Moody's-adjusted FCF/debt in the high-single-digit percentages
and good liquidity,

-- Operating margins increasing towards 5.0%

-- Evidence of a balanced financial policy

The ratings could be downgraded with expectations for:

-- Moody's-adjusted debt/EBITDA above 6.25x on a sustained basis,
or

-- Moody's-adjusted EBITA/Interest sustainably below 1.5x, or

-- FCF reducing below 2% on a sustained basis, or

-- If liquidity deteriorates

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.

COMPANY PROFILE

Based in Schiphol, the Netherlands, BME Group Holding B.V. (BME) is
the third-largest European building material distributor operating
in Germany, the Netherlands, Belgium, France, Switzerland, Austria,
Portugal and Spain. On October 31, 2019, the company was acquired
by Blackstone from CRH plc, one of the world's largest building
material companies, for EUR1.7 billion. In the 12 months that ended
June 2023, BME generated EUR5.6 billion of revenue and EUR287
million of management-adjusted EBITDA (pre-IFRS16).


BME GROUP: S&P Affirms 'B' LT ICR & Alters Outlook to Stable
------------------------------------------------------------
S&P Global Ratings revised its outlook on BME Group Holding B.V.
(BME), to stable from negative, affirmed its 'B' long-term issuer
credit and issue ratings on BME and its existing debt, and assigned
its 'B' issue rating to the proposed new facility.

The stable outlook reflects S&P's expectation that BME will
continue generating solid FOCF of at least EUR100 million while
maintaining healthy margins and a financial policy focus on
deleveraging, with leverage declining to about 6.5x next year.

BME's proposed amendment and extension (A&E) will reduce future
refinancing risks by pushing back the maturities of a significant
portion of its debt. To optimize the capital structure, BME is
looking to execute a partial extension of the maturities of the TLA
(due October 2025) and TLB (due October 2026) via a new term loan
due December 2029. Concurrently, the company plans to extend the
maturity of its revolving credit facility (RCF) to September 2029.
S&P understands that the transaction is leverage neutral because
BME is not planning to raise additional debt. S&P views it as
opportunistic given the company's manageable maturities (exceeding
two years), adequate liquidity with EUR261 million of cash and cash
equivalents as of June 30, 2023, the EUR195 million undrawn RCF,
and healthy FOCF.

S&P said, "We anticipate BME's leverage will recover to about 6.5x
next year following a challenging 2023.Last year, BME demonstrated
its ability to pass through most material price inflation to
customers and maintain broadly stable margins, despite higher
labor, energy, and lease costs. This led to a robust EBITDA margin
of 7.3% and adjusted leverage of 5.9x in 2022. However, we
anticipate leverage will increase to about 6.7x-6.9x due to
difficult market conditions in 2023. Following a challenging first
half with normalized EBITDA (as reported by the company) declining
about 20% year on year to EUR138 million, we anticipate volumes
will remain depressed in the second half. At the same time, we
anticipate a modest recovery next year, driven by positive pricing
effects versus 2023 and improved year-on-year profitability thanks
to cost savings and operating leverage. We also understand that BME
and financial sponsor Blackstone will focus on deleveraging through
cash generation and EBITDA growth. We forecast BME's leverage will
decline to about 6.5x in 2024, which we consider commensurate with
a 'B' rating."

BME's FOCF will remain healthy, despite lower volumes and weakening
margins. Despite lower earnings, BME's cash flow generation (as
reported by the company) was strong in first-half 2023, driven by
efficient management of net working capital such as lower
inventories and higher utilization of factoring. BME's normalized
operating cash flow amounted to EUR39 million, significantly higher
than the negative EUR24 million reported in first-half 2022 after a
net working capital release of EUR33 million in second-quarter
2023. S&P Said, "We therefore anticipate the company's adjusted
FOCF will remain healthy and exceed EUR100 million in 2023-2024. As
is the case with rated building materials distribution peers, BME
also has limited capital expenditure (capex) requirements, and we
anticipate capex will represent 1.2% of revenue in 2023-2024. We
understand that the company could postpone its investments in case
of a more severe downturn."

S&P said, "The stable outlook reflects our expectation that BME
will continue generating solid FOCF of at least EUR100 million
while maintaining healthy margins and a financial policy focused on
deleveraging. We expect leverage to decline to about 6.5x in 2024
from an elevated (for the rating) 6.7x-6.9x this year due to
macroeconomic headwinds."

S&P could lower the rating if BME's financial policy becomes more
aggressive or its operating performance weakens, such that adjusted
debt to EBITDA remains sustainably above 6.5x beyond 2023. This
could stem from:

-- Further debt-funded shareholder returns or acquisitions;

-- Unexpected integration issues, higher restructuring costs, or
an unexpected contraction in European construction activity;

-- The company not progressing on its operating initiatives,
leading to lower EBITDA margins; or

-- FOCF durably below EUR100 million.

The probability of an upgrade over the next 12 months is limited,
given the group's high leverage and the potentially aggressive
financial policy of Blackstone. S&P could raise the rating if BME
posted adjusted debt to EBITDA sustainably below 5x. In addition,
an upgrade would depend on a commitment from the financial sponsor
to maintain leverage at a level commensurate with a higher rating.




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

AVON FINANCE NO. 4: S&P Assigns CCC(sf) Rating on Class X Notes
---------------------------------------------------------------
S&P Global Ratings assigned credit ratings to Avon Finance No.4
PLC's class A, B, C-Dfrd, D-Dfrd, E-Dfrd, F-Dfrd, G-Dfrd, and
X-Dfrd U.K. RMBS notes. At closing, the transaction also issued
unrated class Z and R notes, and X1, X2, and Y certificates.

The transaction is a refinancing of Avon Finance No.2 PLC, which in
turn was a refinancing of Warwick Finance Residential Mortgages
Number One PLC, which closed in May 2015.

It is a static RMBS transaction, which securitizes a portfolio of
GBP563.3 million first-lien mortgage loans, both owner-occupied and
buy-to-let (BTL), secured on properties in the U.K.

Platform Funding Ltd. (PFL) and GMAC-RFC Ltd. (now called Paratus
AMC Ltd.) originated the underlying loans in the securitized
portfolio. The loans in the securitized portfolio will continue to
be serviced by Western Mortgage Services Ltd.

Of the pool, 15.76% of the loans are in arrears, with 7.69% of that
portion in severe arrears (90+ day arrears). Of the pool, 6.25% is
considered reperforming.

There is high exposure to interest-only and part-and-part loans in
the pool at 84.41%, and the borrowers in this pool may have
previously been subject to a county court judgement (CCJ; or the
Scottish equivalent), an individual voluntary arrangement, or a
bankruptcy order prior to the origination.

The rated notes are supported by the principal borrowing mechanism
(class A to G-Dfrd notes), the general reserve (class A to G-Dfrd
notes), and the liquidity reserve (class A and B notes). Both
principal borrowing and usage of the general reserve fund is
subject to conditions for the class B to G-Dfrd notes. The class B
notes' access to the liquidity reserve fund is also subject to
conditions.

A portion of joint lead managers' (JLMs) indemnity claims ranks
senior and is therefore modelled in our cash flow analysis. It
represents a potential expense (to the benefit of the JLMs) if, for
instance, investors sue the JLMs for costs and expenses in
connection with the issuance of the notes. There is also a
subordinated component to the JLMs' indemnity claims, which rank
senior to the class X-Dfrd principal and interest. S&P has
considered this in its rating on the class X-Dfrd notes.

There are no rating constraints in the transaction under S&P's
counterparty, operational risk, or structured finance sovereign
risk criteria. It considers the issuer to be bankruptcy remote.

S&P said, "We expect interest rates to continue to be high in the
U.K. in the near term. Borrowers in this transaction are largely
paying a floating rate of interest (standard variable rate or
tracker). As a result, they will feel the effect of high interest
rates. We have considered these risks in our loan characteristic
and originator adjustments. Based on our most recent macroeconomic
forecasts, we have also maintained our mortgage market outlook for
the U.K. to reflect uncertain economic conditions and increased
credit risk. These continue to affect our 'B' foreclosure frequency
assumptions for the archetypal pool. We have also performed
sensitivities related to higher levels of defaults in our cash flow
analysis and the assigned ratings remain robust to these
sensitivities."

  Ratings

  CLASS       RATING*     AMOUNT (MIL. GBP)

  A           AAA (sf)      469.111

  B           AA (sf)        33.089

  C-Dfrd      A (sf)         19.722

  D-Dfrd      BBB (sf)       11.833

  E-Dfrd      B+ (sf)        11.833

  F-Dfrd      B- (sf)         9.015

  G-Dfrd      CCC (sf)        2.817

  Z           NR              5.353

  R           NR              6.740

  X-Dfrd      CCC (sf)        8.452
  
  X1 certs    NR                N/A

  X2 certs    NR                N/A

  Y certs     NR                N/A

*S&P said, "Our ratings address timely receipt of interest and
ultimate repayment of principal for the class A and B notes, and
the ultimate payment of interest and principal on the other rated
notes. Our ratings also address the timely receipt of interest on
the class C–Dfrd to X-Dfrd notes when they become the most senior
outstanding." All class C-Dfrd to X-Dfrd interest deferred prior to
a class of notes becoming most senior is due by the legal final
maturity date.

N/A--Not applicable.
NR--Not rated.


CAMVAC LTD: Enters Administration, Owes GBP11.7 Million
-------------------------------------------------------
Chris Bishop at Eastern Daily Press reports that a food packing
company, which employs almost 150 people in a Norfolk town has gone
into administration.

According to Eastern Daily Press, official record the London
Gazette states administrators Alvarez and Marsal Europe have been
appointed by the High Court at Thetford-based Camvac Ltd.

It comes three years after Camvac underwent major expansion, saying
demand for the food packaging products it produced had increased
since the pandemic, Eastern Daily Press notes.

In their report for the year ended June 30, 2022, the directors
said the profitability of the business had been "considerably
improved" following a "substantial" loss in 2021, Eastern Daily
Press relates.

Turnover was up from GBP20 million to GBP26 million, with a profit
of GBP288,000 compared to a GBP1.3 million loss in 2021, Eastern
Daily Press discloses.

The report, as cited by Eastern Daily Press, said the business was
developing "exciting new products" and exercising tight cost
control.

Accounts also showed Camvac's debts had increased from GBP9.4
million in 2021, to GBP11.7 million in 2022, while the accounts to
June 2023 have not yet been filed on the Companies House website,
Eastern Daily Press states.

Camvac, which has operated in Thetford for more than 50 years,
supplied food firms around the globe with packaging materials.


EVERTON FC: Three Months Away From Going Into Administration
------------------------------------------------------------
Daniel Lewis at Goodison News reports that Everton Football Club
could be just three months away from going into administration,
according to respected Toffees podcaster and writer The Esk.

Ian Herbert shared the news in his Daily Mail column on Sept. 19,
which explored the numerous financial issues Everton are facing.

Farhad Moshiri has agreed to sell 94.1% of his shares to American
investment fund 777 Partners, but the deal has to be ratified by
the Premier League.

Mr. Herbert believes there are better options out there, but a
worrying update suggests Everton cannot afford to be picky about
who takes control of the club.

"Inner Circle and others will tell you that there are credible
buyers out there at the right price because Americans consider
British clubs wonderful and inimitable, as well as a means of
extracting financial value," Mr. Herbert wrote.

"Everton will become a target when Moshiri sets a realistic price
and that may be soon, given that the club going into administration
would mean him walking away with nothing. That could be three
months away, observes "The Esk".



HEATH SPRINGS: Enters Administration, Buyer Sought for Business
---------------------------------------------------------------
Jimmy Saunders and Matthew Ingram of Kroll have been appointed as
Joint Administrators of Heath Springs and Components Limited on
Sept. 15, 2023.

The Joint Administrators are continuing to trade the business in
the short to medium term, whilst a purchaser for the business is
sought.

The Joint Administrators act as agents of the Company and without
personal liability.

Heath Springs and Components ("The Company") is a leading
manufacturer of professional grade springs, clips and other
precision formed metal components.  The Company is based in
Redditch and is a critical supplier to a number of OEMs and
industries globally including the automotive, aerospace and
industrial markets.

Jimmy Saunders, Managing Director, Kroll said "Heath Springs and
Components is a long-established business, with a reputation for
specialist engineering and providing a wide range of high-quality
products.  However, like many companies in this sector, it has
suffered from unprecedented cost increases which it has been unable
to pass on quickly enough to its customers.  Consequently, due to
cash flow pressures facing the business, steps were taken to place
the Company into Administration to stabilise operations and allow
trading to continue.  We will be bringing the business to market in
the coming weeks and are hopeful that a purchaser for the business
as a going concern will come forward."

Interested parties are invited to contact the Joint Administrators
directly to register their interest in acquiring the business and
assets.

                           About Kroll

As the leading independent provider of risk and financial advisory
solutions, Kroll leverages our unique insights, data and technology
to help clients stay ahead of complex demands.  Kroll's team of
more than 6,500 professionals worldwide continues the firm's nearly
100-year history of trusted expertise spanning risk, governance,
transactions and valuation.


JD COOLING: Bought Out of Administration in Pre-pack Deal
---------------------------------------------------------
Cooling Post reports that the service and maintenance business of
JD Cooling Systems was acquired by its directors in a pre-packaged
deal for GBP162,116, the administrator's report reveals.

The new company JD Cooling Service and Maintenance, a previously
dormant company, was established in February 2021 as JD Cooling
Renewables.  It changed its name to JD Cooling Service and
Maintenance on Aug. 17 and completed the purchase on Aug. 25,
Cooling Post notes.

J D Cooling Systems was placed into administration on
Aug. 17, Cooling Post recounts.  The company made a loss of
GBP939,581 in the year to May 31, 2022, after seeing turnover drop
from nearly GBP30 million to GBP16.5 million in that time, Cooling
Post discloses.

The creditors' statement by administrators McTear Williams & Wood
now reveals that the unpublished management accounts for the 11
months to April 30, 2023, showed a turnover of GBP14.7 million and
a loss of GBP1.3 million, Cooling Post notes.

The position quickly worsened when recent contracts worth GBP2.6
million were further delayed and few new sales were won, Cooling
Post relates.  "This had a significant impact on the Company's
profitability and its cashflows becoming unworkable," the
administrator reports.


MODAL ELECTRONICS: Enters Administration as Part of Restructuring
-----------------------------------------------------------------
Ben Rogerson at musicradar reports that UK synth manufacturer Modal
Electronics has gone into administration.

According to musicradar, records on Companies House show that the
last time Modal filed accounts was in 2021, and that it was
declared insolvent and went into administration on September 8,
2023.

Modal has confirmed that it's gone into administration as part of a
wider restructuring process, musicradar relays, citing Synth
Anatomy.  

It says that all employees will remain with the company but that it
will be under new management, musicradar discloses.


PEPCO GROUP: S&P Assigns 'BB-' LongTerm ICR, Outlook Stable
-----------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term issuer credit
rating to Pepco Group N.V. and its 'BB-' issue rating to PEU (Fin)
PLC's senior secured notes. The recovery rating is '3', indicating
its expectation of meaningful recovery prospects (50%-70%; rounded
estimate: 65%) in our hypothetical default scenario. The ratings
are in line with the preliminary ratings S&P assigned on June 21,
2023.

The stable outlook reflects S&P's view that the group will continue
to execute its strategy of improving scale while investing in lower
prices to pursue organic revenue growth an EBITDAR coverage ratio
of about 2.2x and adjusted debt to EBITDA below 3.0x.

S&P said, "Our ratings on Pepco reflect its position across a
cohort of eastern European countries and the U.K. and moderate debt
to EBITDA of below 3.0x, but tempered by an aggressive expansion
strategy and the overhang of the legacy debt located outside its
restricted group. With over 4,100 retail stores spread across 19
countries in Europe, Pepco operates in the apparel and general
merchandising (GM) categories through its Pepco brand (constituting
approximately 60% of total revenue for the nine months ended June
30, 2023) and in the fast-moving consumer goods (FMCG) sector
through its Poundland and Dealz brands (accounting for the
remaining 40%). Pepco's merchandising strategy is centered around
achieving price leadership across key categories, aiming to provide
its value seeking customers with products at low prices. To
maintain competitive pricing, Pepco relies on its in-house sourcing
business, PGS, which connects with 375 suppliers and 750 factories
primarily located in China, India, and Bangladesh. Over the years,
Pepco has established a solid brand name and has consistently
experienced organic revenue growth. Its revenue has more than
doubled in the past seven years, increasing from EUR2.2 billion in
fiscal 2016 to EUR4.8 billion in fiscal 2022. Given Pepco's scale,
geographic presence, and profitability (S&P Global Ratings-adjusted
EBITDA of EUR682 million with margins above 14%), it is positioned
comfortably within the fair business risk profile category, albeit
slightly weaker than peers such as Action (with an EBITDA of EUR1.4
billion) and B&M European Value Retail S.A. (with an EBITDA of
EUR900 million) who share a similar business risk profile.

"We expect Pepco's robust operating momentum will continue in
2023-2024, underpinned by the strong store development program,
which contributed to historically healthy revenue growth. Pepco has
expanded its store footprint over the past 10 years to nearly 4,286
in 2023 to date. Its expansion strategy focuses on developing in
the domestic market and expanding in other European regions in a
bid to expand its overall addressable market. The company is making
considerable strides toward achieving its targeted 20,000 stores in
Europe, opening 516 net new stores in 2022 (483 in 2021) with a
primary focus for new store opening in its core market of Central
and Eastern Europe but also expanding in Western Europe.
Additionally, the company's strategy includes store rebranding and
an increase in selling space over its existing 2,000 stores in
Central European markets over the next 2.5 years. We anticipate
these measures will boost its organic growth rate by expanding the
retail floor space and improving efficiency by reducing the number
of full-time staff operating a store.

"Strong in-house capabilities support historically stable
profitability, but we expect this to be weakened by inflationary
pressure in 2023. The consumer retail sector remains an extremely
competitive space including national retail chains, convenience
stores, and pure online players. While the value retail segment
tends to be relatively resilient during difficult economic
environments, it isn't immune from the risk of changing consumer
preferences and inflationary cost pressures. In its most recent
trading update, the group has flagged that macroeconomic headwinds
are resulting in fewer customer visits and lower average basket
size. Despite the gross margin pressures, Pepco's S&P Global
Ratings-adjusted EBITDA margins have stood within 14%-16% over the
past five years, with a marginal dip to around 12% in 2020 during
the pandemic, recovering to 14% in 2022. We expect economic
conditions to remain difficult in 2023 and that weak consumer
confidence and purchasing power will limit the group's ability to
fully pass on cost increases without hampering volumes. Staff cost
inflation and relatively lower margins from the new Western
European stores will be a drag on the group's operating margins and
accordingly, we forecast the S&P Global Ratings-adjusted EBITDA
margins to contract by around 100 basis points to 13% in 2023 and a
gradual recovery thereafter."

PGS provides cost and operational advantages but exposes the group
to supply chain disruption and foreign exchange risks. Pepco
sources its products mainly from China, India, and Bangladesh, with
about 84% of the apparel and GM in Pepco stores imported from these
countries. While the far-shoring helps to keep the costs low, the
company faces the risk of cross-border geo-political risks and
supply chain disruptions. Pepco pays most of its overseas suppliers
in U.S. dollars and Chinese yuan, whereas its revenues are in
Polish zloty (about 24% of 2022 revenues) and British pounds
sterling (about 34%). Pepco hedges the exchange risks arising by
entering into forward purchase agreements, but if the zloty or
sterling depreciates against the euro then this would erode the
group's profitability.

S&P said, "In the coming 12-18 months, we anticipate the group's
aggressive store expansion strategy will keep pressuring free
operating cash flow and the EBITDAR coverage ratio. We estimate
that Pepco's capital expenditure (capex) will be around EUR400
million (roughly 6%-7% of its revenue) in both 2023 and 2024, given
the company's aggressive new store opening and refit program. This
figure represents a considerable increase compared with historical
levels, which have typically hovered around 4% of revenue.
Nevertheless, Pepco possesses a degree of financial flexibility,
benefiting from a low amount of financial debt on its balance sheet
and no dividend payments, over the next two years. Since lease
liabilities represent about 70% of our adjusted debt calculation,
we place a greater emphasis on S&P Global Ratings-adjusted EBITDAR
coverage (the ratio of EBITDA before rents to cash interest plus
rents), which focuses on Pepco's ability to service its interest
and lease burden. We estimate the cash outflow for leases to be
about EUR330 million in 2023 compared with EUR291 million in 2022
and will continue to increase by EUR30 million-EUR40 million per
year if the group achieves its targeted 550 new store openings each
year. We forecast Pepco's EBITDAR coverage of about 2.0x-2.2x over
fiscal 2023. Pepco recently acquired the option to take over the
leases of up to 71 Wilko stores in the U.K., subject to terms
agreed with the landlords, which could help the group toward
reaching its 550 new stores target.

"We delink Pepco from the broader SIHNV group while incorporating a
negative modifier to the rating due to a weak principal
shareholder. Since Pepco listed 21% of its equity on the Warsaw
Stock Exchange in 2021, it has operated independently in terms of
operations and finances from its ultimate shareholder. To safeguard
the rights of minority shareholders, a relationship agreement was
established between SIHNV, intermediate holding company Steenbok
Newco 3 Limited (Newco 3), and Pepco. According to this agreement,
the principal shareholder, who currently holds 72.28% of the
shares, can only nominate three out of the total 10 board members,
and therefore does not control Pepco. Since its public listing,
Pepco's board has demonstrated a track record of prioritizing
long-term growth by focusing heavily on expanding through new
stores. There have been no dividends or other distributions to
shareholders. The existing senior facilities agreement includes a
maintenance leverage covenant (pre-IFRS 16) of 2.8x (current
covenant leverage is 0.9x). The bond documentation does not include
financial covenants but includes an incurrence covenant test of
senior secured leverage below 2.0x. Currently, SIHNV is undergoing
dissolution as per a court-approved restructuring plan.
Consequently, the control over SIHNV's equity stake in Pepco is
transitioning to a newly formed entity, Ibex Topco B.V. This
entity, which is controlled by the creditors of SIHNV and its
subsidiaries, symbolizes a change in ownership dynamics while
perpetuating the tradition of Pepco's self-reliant operations. We
note that Pepco does not provide any guarantees or security for the
indebtedness incurred by the ultimate shareholder or any of its
intermediary holding companies, and that it was able to
independently run its operations and raise financing in the capital
markets notwithstanding the financial distress of its parent. As a
result of all of these factors, in our ratio analysis, we
acknowledge a certain delinkage from the entities above Pepco Group
N.V., and exclude the estimated circa EUR10 billion payment-in-kind
(PIK) debt located at Newco3 and Ibex Topco B.V from Pepco's credit
metrics calculation. Notwithstanding, our final rating encompasses
a one notch negative modifier to reflect any event risk that this
may cause. In the past, part of the debt at the entities above
Pepco was repaid through the sale of their holdings of Pepco
equity.

"The stable outlook reflects our view that the group will continue
to execute its strategy of improving scale while investing in lower
prices to maintain annual like for-like group sales growth of
4%-6%. It also incorporates our view that the group will maintain
its adjusted EBITDA margins above 12% and EBITDAR coverage ratio
about 2.2x and will not pursue debt-funded shareholder returns."

A downgrade could arise from a more aggressive financial policy
than S&P anticipates, eroding the group's cash cushion and credit
metrics. S&P could lower the rating on Pepco if the group's
operating performance and earnings weaken, translating into any of
the following metrics:

-- An EBITDAR coverage ratio dropping below 2.0x for sustained
period;

-- A change in the group's financial policy resulting in adjusted
debt to EBITDA above 3.0x; or

-- FOCF after leases (after adjusting for new stores capex)
falling below EUR100 million.

This could stem from higher-than-expected margin erosion amid
fierce price competition in its end markets, an inability to
stabilize working capital, or consumer spending dropping such that
its target customers reduce spending for an extended period.

S&P said, "We could also lower the ratings if we observe that for
any reason, the creditworthiness of SIHNV group entities and their
high debt located outside the restricted group in any way
jeopardized Pepco's credit quality.

"We are unlikely to take a positive rating action until the
material debt located at the group's principal direct and indirect
shareholders, NewCo 3, NewCo 1, and Ibex Topco, is dealt with."

In addition, S&P could raise the rating on Pepco if the group's
operating performance and cash generation were materially above
S&P's base case, and translated into sustainable:

-- EBITDAR coverage ratio above 3.0x; and

-- Improved scale, with S&P Global Ratings-adjusted EBITDA of
about EUR1 billion, while maintaining adjusted EBITDA margins
closer to 14%-15%.

S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of Pepco Group N.V.
With the impending dissolution of SIHNV, Ibex Topco B.V. will
indirectly own 72.28% of the group. While there are sufficient
measures to protect the interest of the minority shareholders, the
presence of a heavily leveraged parent as a principal shareholder
could expose the entity to potential event risks. We view the
sudden resignation of Pepco's CEO with immediate effect as a
potential governance constraint. However, we do not expect any
material change in the group's strategy as the board chairman and
prior group CEO, Andy Bond, has taken over the interim CEO role.
Moreover, we note that auditors issued a qualified opinion on
Pepco's 2022 annual report to flag the difference between the
group's physical inventory and its accounting record. However, we
note the difference amounted to EUR7 million, which is slightly
less than the value of stock it sells in a day."


RMAC NO. 3: S&P Assigns B+ Rating on Class F-Dfrd Notes
-------------------------------------------------------
S&P Global Ratings assigned its credit ratings to RMAC No. 3 PLC's
class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, and F-Dfrd notes. At
closing, RMAC No. 3 also issued unrated class Z notes, and RC1 and
RC2 residual certificates.

RMAC No. 3 is a static RMBS transaction that securitizes a
portfolio of GBP344.7 million owner-occupied and buy-to-let (BTL)
mortgage loans secured on properties in the U.K.

At closing the seller (Paratus AMC Ltd.) purchased the beneficial
interest in the portfolio of loans originated by GMAC-RFC Ltd.,
Amber Homeloans Ltd., participating firms in GMAC-RFC's lending
program and Future Mortgages Ltd. The issuer used the issuance
proceeds to purchase the full beneficial interest in these mortgage
loans. The issuer granted security over all of its assets in favor
of the security trustee.

The pool is well seasoned. All the loans are first-lien U.K.
owner-occupied and BTL residential mortgage loans. The borrowers in
this pool may have previously been subject to a county court
judgement (or the Scottish equivalent), an individual voluntary
arrangement, a bankruptcy order, may be self-employed, have
self-certified their incomes, or were otherwise considered by banks
and building societies to be nonprime borrowers. The loans are
secured on properties in England, Wales, and Scotland, and were
mostly originated over 10 years ago.

The pool has high exposure to interest-only loans (82.2%), and
20.67% of the mortgage loans are currently in arrears greater than
(or equal to) one month.

A general reserve fund provides credit enhancement and liquidity,
and principal can be used to pay senior fees and interest on the
notes subject to various conditions. The liquidity reserve fund
provides liquidity support to the class A and B-Dfrd notes.

Paratus AMC is the servicer in this transaction.

Counterparty, operational, legal or sovereign risks do not
constrain the ratings.

S&P said, "In our cash flow analysis we apply stresses at all
rating levels. In our stresses on the class A notes, notes must pay
full and timely principal and interest. Our ratings on the class
B-Dfrd to D-Dfrd notes address the payment of ultimate principal
and interest while they are not the most senior class outstanding.
When the class B-Dfrd to D-Dfrd notes become the most senior class
outstanding, our ratings address the timely payment of interest and
ultimate payment of principal (all previously deferred interest on
the then senior most note is to be repaid immediately. For the
class E-Dfrd and F-Dfrd notes our ratings address ultimate payment
of interest, and once they become most senior, only the newly
accrued interest becomes due immediately, while any previous
interest shortfall can be repaid by the legal maturity.

"We consider that the available credit enhancement for the rated
notes is commensurate with the ratings assigned."

  Ratings

  CLASS       RATING*    AMOUNT (MIL. GBP)

  A           AAA (sf)     303.33

  B-Dfrd      AA+ (sf)      12.93

  C-Dfrd      AA (sf)        3.45

  D-Dfrd      A+ (sf)        2.59

  E-Dfrd      BBB- (sf)      7.93

  F-Dfrd      B+ (sf)        3.27

  Z1          NR            11.20

  Z2          NR             5.17

  RC1 residual certs  NR      N/A

  RC2 residual certs  NR      N/A

*S&P's ratings address timely receipt of interest and ultimate
repayment of principal for the class A notes, the ultimate payment
of interest and principal on the class B-Dfrd, C-Dfrd, and D-Dfrd
notes, which must pay timely interest once they become the most
senior notes outstanding (including immediate repayment of
previously deferred interest), and our ratings on the class E-Dfrd
and F-Dfrd notes address ultimate payment of interest and principal
(once these classes of notes become most senior, only the newly
accrued interest becomes due immediately, while any previous
interest shortfall can remain due until final legal maturity).

N/A--Not applicable.
NR--Not rated.


SOUTHEND UNITED: At Risk of Going Into Administration
-----------------------------------------------------
BBC Sport reports that investors looking to buy financially
troubled Southend say they fear the club could go into
administration after having two takeover bids rejected.

According to BBC Sport, Southend have faced numerous winding-up
petitions over unpaid tax and are next due in court on Oct. 4.

Justin Rees, on behalf of the prospective buyers, said they
understand that owner Ron Martin will ensure the club "avoids
liquidation", BBC Sport relates.

"However, the threat of administration remains," BBC Sport quotes
Mr. Rees as saying in a statement.

"Administration impacts the club significantly, on and off the
pitch, as well as its numerous creditors who have supported the
club financially for many years.

"As such, it has been our strong preference to avoid
administration.  However, this is of course not within our
control."

When the case against Southend was last adjourned, in August, the
judge said Southend would be would up if that deadline to settle
its GBP275,000 debt with HM Revenue & Customs was missed, BBC Sport
notes.

Southend, who have total debts of GBP2.5 million, have been docked
10 points by the National League because of their ongoing financial
issues and are second from bottom of England's fifth tier, BBC
Sport discloses.

Australian businessman Rees said the consortium he is representing
have been working on a deal for the past 10 weeks and have had two
bids in the past seven days knocked back by Martin, who first put
Southend up for sale in March, BBC Sport relays.

Mr. Martin has long maintained that the solution to their financial
problems is a move to a new stadium at Fossetts Farm -- but work
has yet to begin at the site, BBC Sport states.

As a result, the prospective buyers have outlined that they want to
return ownership of Southend's Roots Hall ground and its training
base to the club as part of any takeover deal, according to BBC
Sport.



                           *********


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
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Information contained herein is obtained from sources believed to
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