/raid1/www/Hosts/bankrupt/TCREUR_Public/231201.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, December 1, 2023, Vol. 24, No. 241
Headlines
A U S T R I A
INNIO GROUP: Fitch Affirms 'B' LongTerm IDR, Outlook Positive
INNIO GROUP: Moody's Ups CFR to B2, Rates New First Lien Debt B2
F I N L A N D
FROSN-2018: Fitch Lowers Rating on Cl. E Notes to Bsf, Outlook Neg
G E R M A N Y
PONY SA COMPARTMENT 2023-1: Moody's Assigns B2 Rating to F Notes
SCHOEN KLINIK: Fitch Assigns 'B+' First-Time LT IDR, Outlook Stable
TTD HOLDING III: Fitch Lowers LongTerm IDR to 'B', Outlook Stable
I R E L A N D
HARVEST CLO VIII: S&P Affirms 'B- (sf)' Rating on Class F-R Notes
HARVEST CLO XXXI: Fitch Assigns 'B-(EXP)sf' Rating to F Notes
OZLME III: S&P Affirms 'B- (sf)' Rating on Class F Notes
N E T H E R L A N D S
ANQORE: S&P Downgrades Long-Term ICR to 'B-', Outlook Stable
R U S S I A
UZBEKNEFTEGAZ JSC: S&P Alters Outlook to Neg., Affirms 'B+' Ratings
U N I T E D K I N G D O M
FARADAY PRINTED: Enters Administration, 39 Jobs Affected
JF RENSHAW: Real Good Food to Put Business Into Administration
METRO BANK HOLDINGS: Fitch Affirms B LongTerm IDR, Outlook Positive
METRO BANK: To Review Opening Hours Following Rescue Deal
MODULE-AR LTD: Bought Out of Administration by Third-Party
MORTIMER BTL 2023-1: S&P Rates Class X-Dfrd Notes 'BB+ (sf)'
REAL CONTRACTING: Owed GBP8.5MM to Creditors at Time of Collapse
X X X X X X X X
[*] BOOK REVIEW: Taking Charge
- - - - -
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A U S T R I A
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INNIO GROUP: Fitch Affirms 'B' LongTerm IDR, Outlook Positive
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Fitch Ratings has affirmed INNIO Group Holding GmbH's Long-Term
Issuer Default Rating (IDR) at 'B' following the announcement of an
Amend to Extend (A&E) transaction and an extraordinary dividend
distribution to shareholders. The rating Outlook has been revised
to Positive from Stable. In addition, Fitch has affirmed INNIO's
senior secured ratings at 'B+' with a Recovery Rating of 'RR3',
following the three years extended maturity as part of the leverage
neutral A&E transaction.
The IDR remains constrained by INNIO's medium scale, niche-market
focus and limited product diversification. Rating strengths include
INNIO's global footprint and strong market position in gas-fired
power generation, end-market and customer diversification and
higher margin aftersales services supporting the group's revenue
stability and profitability.
The Positive Outlook reflects the favourable long-term demand,
benefiting from de-carbonisation industry trends supporting
business growth from hydrogen-ready engines. The Outlook also
reflects INNIO's superior reliability and high efficiency
solutions, supporting market share growth. Fitch expects strong
deleveraging over the next three years, subject to a conservative
financial policy from post-transaction gross EBITDA leverage of
c.5.1x to below Fitch's upgrade sensitivity of 5.0x from 2024
onwards.
KEY RATING DRIVERS
Strong Trading: Solid operating performance as of end-December 2022
exceeded Fitch's expectations, a trend that continued over the nine
months as of September 2023, with reported LTM revenue of EUR1,852
million and adjusted LTM EBITDA of EUR414 million. On this basis,
Fitch expects FY23E revenue and EBITDA to be +2% and +9% above its
previous forecasts. Strong backlog of EUR3.2billion as per
September 2023 (2022: EUR3.2 billion; 2021: EUR2.9billion) supports
good revenue visibility from growing installed base and future
aftersales demand.
Successful Bolt-on Integration: INNIO has been acquisitive since
the carve-out from GE in order to strengthen its business model and
has been delivering in integrating its acquired businesses. Fitch
expects INNIO to continue acquiring small businesses with strategic
fit to support growth, targeting higher growth geographies and
vertical integration from complimentary distribution capabilities.
Fitch expects aggregate cash funded acquisitions of EUR90million to
EUR100million over the next three years.
Margins to Remain Healthy: Fitch expects the company's adjusted
EBITDA margin to increase to 19.8% by end-2023, reflecting
inflation pass-through capacity, resilience from subscription-based
services, and the implementation of cost reduction programmes.
Fitch expects the EBITDA margin to gradually increase to c.20.5% by
2026, due to the improvement in services contract performance,
insourcing of value-added tasks and further fixed cost control,
digitalisation and automation. Inflation pressure is expected to
moderate.
Moderate Supply Chain/Inflation Risks: INNIO's supply chain is not
reliant on shipments of parts from war-affected regions and has
therefore seen no material disruptions. To date, INNIO has been
able to effectively navigate the high inflationary raw-material
cost environment, benefiting from a diversified fuel base, with
c.50% of its tailored installed capacity running on specialty
fuels, which are less exposed to gas price volatility.
Strong Cash Flows: INNIO's FCF remains strong for this rating
category, based on a FCF to sales ratio of c.9% from 2025. This is
despite a higher interest burden and higher capex needs to support
the full upgrade of installed base to hydrogen-ready solutions by
2025, which will constrain the FCF margin to the low-mid single
digits over the next two years.
Expected Deleveraging Capacity: Fitch expects gross EBITDA leverage
to decline from 5.9x as of end-2022 to 4.9x by end-2024 (4.6x net),
just below its upgrade leverage sensitivity of 5.0x. Leverage may
remain strong for the rating, assuming moderate business growth,
superior profitability and a continuation of a conservative cash
deployment policy.
Strong Niche Market Position: INNIO is the number one global
manufacturer in power generation and number two in gas compression
engines, a sector with high barriers to entry. Its market-leading
positions are protected by proven technology and reliability, low
lifecycle costs, fuel efficiency and a comprehensive service
offering. INNIO's good diversification by end-customer and
geography is offset by a narrow product range in a niche, albeit
growing, market.
Positive Market Fundaments: The industry's shift towards
de-carbonisation, exemplified by zero carbon targets by 2050, means
that INNIO is well-positioned to capture market growth related to
the global energy transition to gas and hydrogen-led technologies.
INNIO is currently providing 100% hydrogen-ready engines, with a
R&D roadmap for the transition to a full hydrogen next-generation
product portfolio capabilities, expected from 2025, providing
visibility to its long-term growth prospects.
DERIVATION SUMMARY
INNIO's closest competitors by product are Rolls-Royce Power
Systems (RRPS) and Caterpillar Inc. (CAT), both of which exhibit
stronger rating profiles than INNIO.
CAT (A+/Stable) benefits from the largest product portfolio in the
industry, which overlaps with some of more competitive and less
tailored product offering by INNIO. However, in terms of rating
comparison, CAT benefits from larger scale and truly global
diversification, coupled with a financial and funding structure
that provides access to capital markets in line with strong
investment grade companies, therefore making comparison to INNIO
less relevant.
RRPS, fully owned by Rolls-Royce plc (BB/Positive) benefits from
intra-company funding arrangements, and has significantly larger
scale and a business profile far more diversified than INNIO's,
both by geography, product offering and end-markets. However, RR
exhibited larger exposure to cycles as proven over the pandemic, as
travel disruptions adversely impacted the company's operating and
financial metrics, whilst INNIO has proven resilience supported by
higher share of aftersales services. FFO margins are lower than
INNIO's due to its exposure to a wider range of more competitive
end markets, and greater embedded volatility.
Similarly rated diversified industrials companies, such as TK
Elevator Holdco GmbH (B/Negative), exhibit higher leverage and
weaker cash flows. However, these factors are offset by a much
better business profile, including scale and comfortable liquidity.
Compared to German gearboxes and generators manufacturer Flender
International GmbH (B/Negative), INNIO has a superior profitability
and cash flow profile and lower leverage; however, these factors
offset by smaller scale and diversification which constraints the
rating.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within The Rating Case for the Issuer:
- Revenue CAGR of 5% for 2023-2026, driven by moderate growth in
new equipment sales from 2024 thereafter. Organic growth in
services of around 5% p.a., supported by an enlarged installed base
leading to more long-term service agreements.
- Contribution margin broadly stable at slightly above 36% over the
next three years.
- Fitch-adjusted EBITDA margin expected at c.20% by end-2023 and to
moderately increase by 2026 from cost materialization programs.
- Working capital requirements to remain at 1%-2% to sales over the
next two years expected to unwind from 2025.
- Total capex requirements to remain at 5%-6% of sales p.a. up to
2025 albeit expected to wind down to 5% going forward. R&D to
remain at 30%-40% of total capex, supporting the hydrogen
transition, while maintenance capex remains stable at c.1-2% of
sales.
RECOVERY ANALYSIS
Recovery Assumptions
Fitch estimates under its bespoke recovery analysis that a
going-concern approach will lead to higher recoveries for
creditors, given INNIO's long-term proven robust business model,
long-term relationship with customers and suppliers, and existing
barriers to entry in the market.
Fitch estimates a going-concern value for INNIO at around EUR1.25
billion (before deducting 10% for administrative claims), assuming
a post-reorganisation EBITDA of about EUR209 million at a multiple
of 6x. This reflects the company's premium market positioning and
adjusts for the value factoring drawdown of about EUR150 million
(as per Fitch criteria the highest amount drawn in the past 12
months). Its waterfall analysis generated a ranked recovery in the
'RR3' band, indicating a 'B+' rating for the senior secured debt.
The waterfall analysis output percentage on current metrics and
assumptions is 52% for the senior secured debt.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Enhanced business diversification through an expansion of the
product portfolio and/or successful transition to hydrogen
technologies.
- Gross debt/EBITDA sustainably below 5x (2022: 5.9x) over the next
three years, supported by a conservative financial policy towards
deleveraging.
- EBITDA margin above 18% (2022: 19.4%).
- FCF margin above 5% (2022: 6.7%).
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Deterioration in trading leading to EBITDA margin sustainably
below 15%.
- FCF margin sustainably below 3%.
- EBITDA interest cover below 2x (2022: 3.4x).
- Gross debt/EBITDA sustainably above 7x.
LIQUIDITY AND DEBT STRUCTURE
Satisfactory Liquidity: Fitch expects INNIO to have an adequate
liquidity position by end-2023, after the EUR150 million of cash
funded extraordinary dividends to be distributed to shareholders as
part of the A&E transaction. Fitch believes the business will
remain high cash generative and able to build up satisfactory cash
balances over the next three years (up to EUR400 million by 2026)
after including aggregated EUR150 million of cash funded bolt-on
activity assumed over the period.
An additional USD225 million of available Revolving Credit Facility
enhances liquidity position over the forecasted period, coupled
with an improved maturity wall after the A&E transaction, with lack
of material scheduled debt repayments until 2028. An aggressive
financial policy could reduce the liquidity cushion going forward.
Fitch treats EUR25 million of reported cash as necessary for
operating needs of the business during the year and hence
unavailable for debt servicing.
ISSUER PROFILE
Austrian based INNIO Group Holding GmbH (formerly known as AI
Alpine) is a manufacturer and services provider of mission-critical
solutions for power generation and gas compression. The company
operates under two well-known brands, Jenbacher that manufactures
reciprocating gas engines, and Waukesha, that produces gas
compression engines.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
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INNIO Group
Holding GmbH LT IDR B Affirmed B
senior secured LT B+ Affirmed RR3 B+
INNIO GROUP: Moody's Ups CFR to B2, Rates New First Lien Debt B2
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Moody's Investors Service has upgraded the corporate family rating
and probability of default rating of INNIO Group Holding GmbH
(INNIO or the company) to B2 from B3 and to B2-PD from B3-PD
respectively.
Concurrently, the rating agency has assigned B2 instrument ratings
to the backed senior secured first lien term loan B and the backed
senior secured first lien revolving credit facility (RCF) issued by
INNIO. Additionally, the rating agency has assigned B2 instrument
ratings to the backed senior secured first lien term loan B issued
by INNIO North America Holding Inc, a subsidiary of INNIO. In this
proposed amend-and-extend transaction INNIO will extend maturities
on its backed senior secured first lien term loan B and the backed
senior secured first lien RCF to November 2028 and May 2028,
respectively.
The outlook for INNIO and INNIO North America Holding Inc is
stable.
RATINGS RATIONALE
The rating action reflects both, the ongoing strong operating
performance of INNIO and the favorable extension of its maturity
profile in a leverage neutral transaction against a moderate
increase in interest expense. The concurrently proposed shareholder
distribution is considered being one-off and is expected to be
fully paid from the company's high cash position whilst INNIO's
liquidity profile would still be deemed adequate pro-forma of the
distribution. Any increase in the company's M&A activity or any
further shareholder distribution will put immediate negative
pressure in the rating.
As of September 30, 2023, INNIO's Moody's-adjusted debt/EBITDA
decreased to 5.7x, from 7.2x in 2022. The increase in earnings was
driven by a strong performance in both segments, equipment sales
and services, of which the latter generally has contribution
margins between 45% compared with 25% in the new equipment
business. The company benefits from strong market tailwinds
supported by increasing demand in power consumption including a
shift to a decentralized power generation. Based on these market
trends, revenues have consistently grown more than 10% p.a. and the
company was able to grow EBITDA since 2021 proportionally stronger
from a relief of supply chain bottlenecks and volatile raw material
prices. Its services business is more profitable and more resilient
to supply chain disruptions than new equipment business and
represents around 60% of annual revenues which provides good
visibility considering the contractual maintenance cycles with
limited alternatives. This translates into a strong order backlog
of around EUR3.2 billion as of September 2023. Moody's forecasts
INNIO to grow its revenues in mid-to-high single digits in
percentage terms in the next 12-18 months driven by strong
equipment sales and despite the ongoing high interest rate
environment that can lead to postponing capital expenditure
decisions of its clients. INNIO is generally expected to maintain
its strong profitability with Moody's adjusted EBITDA-margins at
around 20% albeit Moody's see inherent volatility from raw material
prices. This strong margin profile translates into a solid free
cash flow generation above 5% Moody's adjusted FCF/debt before
shareholder distributions.
INNIO's B2 rating factors in (1) the company's leading market
position, (2) its long history of offering reliable products that
serve diversified end-markets and benefiting from barriers to
entry; (3) the mission-critical nature of its product offerings;
(4) the structural long-term shift to renewables, which drives
demand for the products of Jenbacher, one of its brands; (5) its
high revenue share of service business, which is a key contributor
to the high margins generated; and (6) its well-invested asset
base.
At the same time, the rating takes into account (1) the company's
high Moody's-adjusted leverage of 5.7x debt/EBITDA as of September
2023, (2) exposure to the cyclical swings of the oil and gas
upstream business through its brand Waukesha, (3) ongoing carve-out
and restructuring costs that weigh on the company's profitability
and FCF, though expected to gradually phase out in the medium-term,
and (4) the risk that the company could re-leverage via debt-funded
shareholder distributions or acquisitions.
LIQUIDITY
INNIO has good liquidity. Post transaction, the company's liquidity
comprises EUR86 million in cash supported by the fully undrawn RCF
and funds from operations of over EUR200 million that Moody's
expects the company to generate in the next 12-18 months. The
company relies on factoring and reverse factoring programs that
support their cash position. These liquidity sources cover the
company's cash needs over the same period. The cash requirements
are largely for working cash, which is typically 3% of annual
sales, seasonal working capital swings and planned capital spending
of around EUR120 million (including R&D spending and lease
principal payments). No significant debt repayments are due until
2028 when the company's backed senior secured first-lien term loan
and RCF mature following the proposed amend and extent.
The available RCF is subject to a springing senior secured net
leverage covenant of 9.0x, to be tested if drawings exceed 40% of
the facility. Moody's expects the company to comply with its
covenant.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook reflects Moody's expectation that over the next
12-18 months INNIO will be able to gradually increase its profit
margins, reduce leverage below 6.0x, generate positive FCF in
mid-single digits range and that the company will maintain its good
liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company's gross debt/EBITDA
decreases sustainably below 5.5x and the company generates strong
FCF as indicated by FCF/debt sustainably above 5% .
The ratings could be downgraded if the company's profitability
deteriorates below low double-digit Moody's-adjusted EBITA margin
on a sustained basis, its leverage sustainably exceeds 6.5x
debt/EBITDA, interest cover falls below 1.5x EBITA/interest, the
company's FCF/debt falls sustainably towards low single digits, or
its liquidity weakens. Indications of a move towards a more
shareholder-friendly financial policy could also trigger a negative
rating action.
STRUCTURAL CONSIDERATIONS
The ratings of INNIO's backed senior secured first-lien term loan
and RCF are in line with the CFR at B2. The credit facilities are
complemented by a pari passu $120 million first-lien multicurrency
guarantee facility.
COVENANTS
Moody's has reviewed the marketing draft terms for the new credit
facilities. Notable terms include the following:
Guarantor coverage will be at least 80% of consolidated EBITDA
(determined in accordance with the credit agreement) and include
all companies representing 5% or more of consolidated revenues or
total assets. Security will be granted over key shares, material
bank accounts and key receivables.
Incremental facilities are permitted up to EUR423 million or 1.0x
consolidated LTM EBITDA plus further capacity via grower baskets
for capitalized lease obligations (35% of LTM EBITDA), local
facilities (30% of LTM EBITDA), recourse factoring (35% of LTM
EBITDA) and an additional general grower basket of 35% LTM EBITDA.
Unlimited pari passu debt is permitted as long as the Fixed Charge
Coverage Ratio is at least 2.00:1.
Restricted payments are permitted if total secured net leverage is
below opening leverage of 3.4x plus a consolidated net income
grower basket of 25% LTM EBITDA and a general grower basket of 35%
LTM EBITDA. Restricted investments are permitted if total leverage
is below opening leverage and does not exceed 35% LTM EBITDA in
certain grower baskets.
Adjustments to Consolidated EBITDA include run rate cost savings
and synergies, capped at 30% of consolidated EBITDA and believed to
be realisable within 24 months of the relevant event.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Manufacturing
published in September 2021.
COMPANY PROFILE
INNIO Group Holding GmbH (INNIO), is a holding company that heads
the distributed power business carved out from General Electric
Company's (Baa1 negative) Power division in 2018. The group, owned
by funds advised by Advent International, is headquartered in
Austria.
It offers mission-critical solutions for power generation and gas
compression. INNIO sells its products under two well-known brands:
Jenbacher and Waukesha. Under the Jenbacher brand the company
offers reciprocating gas engines for distributed power generation,
serving peak load power and backup power needs, an area that has
become increasingly important with the shift of energy production
to renewable sources. Under the Waukesha brand the company is
active in the field of gas compression for the natural gas
industry. Waukesha's engines are used for the production and
transmission of natural gas and on-site power generation for oil
and gas producers.
In the 12 months ended in September 2023, the company generated
around EUR1.9 billion of revenue and company-adjusted EBITDA of
around EUR398 million.
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F I N L A N D
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FROSN-2018: Fitch Lowers Rating on Cl. E Notes to Bsf, Outlook Neg
------------------------------------------------------------------
Fitch Ratings has downgraded six classes of FROSN-2018 DAC's notes,
as detailed below.
Entity/Debt Rating Prior
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FROSN-2018 DAC
Class A1 XS1800197664 LT A+sf Downgrade AA+sf
Class A2 XS1800197748 LT Asf Downgrade AAsf
Class B XS1800198126 LT A-sf Downgrade AA-sf
Class C XS1800200476 LT BBBsf Downgrade A-sf
Class D XS1800200559 LT BBsf Downgrade BBB-sf
Class E XS1800201011 LT Bsf Downgrade B+sf
Class RFN XS1800197235 LT AAAsf Affirmed AAAsf
TRANSACTION SUMMARY
The transaction securitised 87.9% of a EUR577.0 million commercial
real estate loan as well as 47.5% of a EUR13.9 million capex loan
(which has since been fully drawn and spent), secured on a
secondary quality, largely office portfolio in Finland. The
originators retain an additional 5% of the securitised liabilities
through a vertical risk retention loan, which pro rata with the
class RFN notes, also finances an issuer liquidity reserve.
At closing in April 2018, the portfolio comprised 63 properties.
Since then, 20 have been sold (although only 2 in the last 12
months), causing the senior and capex loan to amortise to EUR290.7
million and EUR12.7 million. As at the 31 March 2023 valuation
date, the remaining 43 properties reported market value (MV) of EUR
341.1 million, of which 77% is in office, 17% in retail and 6% in
storage assets. The portfolio is let to a diverse array of 386
tenants, paying total annual rent of EUR42.0 million. While
granular, the top five tenants account for 22.7% of rent, including
from government-related entities.
Only two properties have been sold in the last year, reflecting the
subdued investment appetite and limited liquidity in the Finnish
market for secondary offices. Moreover, broader economic headwinds
have dampened demand for properties with redevelopment potential.
The tail risk present in the portfolio has driven the downgrades
and Negative Outlooks on the notes.
KEY RATING DRIVERS
Defaulted Loan: The loan has been in special servicing since
failing to repay at its (extended) maturity date of 1 March 2023. A
standstill agreement has been in place on a rolling basis since
then, with the current agreement expiring on 29 December 2023. With
note maturity in May 2028, all rated notes current for interest
(despite no interest rate hedging), the liquidity reserve undrawn
and a weighted average (WA) lease term to break of 2.5 years, there
is no immediate pressure to liquidate. This should give some time
for an orderly workout strategy, including some capital upgrading,
to be pursued.
Sharply Declining Value: The valuation saw MVs fall by a third on a
like-for-like basis, reflecting how occupational demand for
European secondary offices has been scarred affected by the shift
to hybrid working and growing scrutiny over green credentials, all
amid higher interest rates. The 85.9% loan-to-value ratio gives
credit to cash held in the cash trap account, despite it being
drawn down to cover ongoing property taxes, management fees and
other borrower costs (including some capex). However, this is
largely offset by the creation of issuer over-collateralisation by
loan default penalty interest being used to repay note principal.
Tail Risks, Stranded Offices: The portfolio is almost 50% vacant
(over 40% for the last three years) and in need of significant
investment. Many of the stronger assets have been sold, leaving
pockets of the portfolio with high structural vacancy facing
obsolescence. Relative to cash generation and remaining equity, the
capex needed to stabilise terminal value only intensifies the
headwinds driving the downgrades. This level of uncertainty, with
risks of properties becoming stranded, warrants a rating cap in the
'Asf' category for all notes except the cash-collateralised super
senior RFN.
Fitch reflects the capex requirements by modelling a two-year
period where property income is entirely reinvested into the
portfolio to achieve stabilised occupancy. Fitch has also increased
its structural vacancy assumptions across the portfolio, reflecting
the erosion of occupational demand for secondary offices, even
those that have been recently refurbished. The underlying portfolio
has a weighted average score of '4' in its analysis.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Further increases in property yields, which reduce collateral
value, could result in negative rating action.
The change in model output that would apply with cap rate
assumptions 1pp higher produces the following ratings (excluding
the RFN):
'Asf'/'BBB+sf'/'BBB+sf'/'BBB-sf'/'B+sf'/'CCCsf'
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Significant improvements in occupancy, which are indicative of
lower levels of structural vacancy, could result in positive rating
action.
The change in model output that would apply with cap rate
assumptions 1pp lower produces the following ratings (excluding the
RFN):
'A+sf'/'A+sf'/'A+sf'/'A-sf'/'BBB-sf'/'BB-sf'
KEY PROPERTY ASSUMPTIONS (all weighted by ERV)
'Bsf' WA cap rate: 5.8%
'Bsf' WA structural vacancy: 35.3%
'Bsf' WA rental value decline: 3.6%
'BBsf' WA cap rate: 6.3%
'BBsf' WA structural vacancy: 39.9%
'BBsf' WA rental value decline: 6.4%
'BBBsf' WA cap rate: 7.0%
'BBBsf' WA structural vacancy: 45.1%
'BBBsf' WA rental value decline: 10.9%
'Asf' WA cap rate: 7.7%
'Asf' WA structural vacancy: 50.2%
'Asf' WA rental value decline: 16.3%
'AAsf' WA cap rate: 8.1%
'AAsf' WA structural vacancy: 53.7%
'AAsf' WA rental value decline: 22.0%
'AAAsf' WA cap rate: 8.5%
'AAAsf' WA structural vacancy: 63.1%
'AAAsf' WA rental value decline: 28.1%
Depreciation: 8.3%
Fitch ERV: EUR66.4 million
DATA ADEQUACY
FROSN-2018 DAC
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. 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.
Prior to the transaction closing, Fitch reviewed the results of a
third party assessment conducted on the asset portfolio information
and concluded that there were no findings that affected the rating
analysis.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
=============
G E R M A N Y
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PONY SA COMPARTMENT 2023-1: Moody's Assigns B2 Rating to F Notes
----------------------------------------------------------------
Moody's Investors Service has assigned the following definitive
ratings to Notes issued by Pony S.A., Compartment German Auto Loans
2023-1:
EUR452.5M Class A Floating Rate Notes due November 2032,
Definitive Rating Assigned Aaa (sf)
EUR10M Class B Floating Rate Notes due November 2032, Definitive
Rating Assigned Aa3 (sf)
EUR10M Class C Floating Rate Notes due November 2032, Definitive
Rating Assigned A2 (sf)
EUR10M Class D Floating Rate Notes due November 2032, Definitive
Rating Assigned Baa2 (sf)
EUR10M Class E Floating Rate Notes due November 2032, Definitive
Rating Assigned Ba2 (sf)
EUR5M Class F Floating Rate Notes due November 2032, Definitive
Rating Assigned B2 (sf)
RATINGS RATIONALE
The Notes are backed by a 12-month revolving pool of German auto
loans originated by Hyundai Capital Bank Europe GmbH ("HCBE") (NR).
HCBE is 51% owned by Santander Consumer Bank AG (A2/P-1 Bank
Deposits; A1(cr)/ P-1(cr)) and 49% owned by Hyundai Capital
Services, Inc. (Baa1 LT Issuer Rating). This is the second issuance
of HCBE.
The definitive portfolio consists of 25,355 loans granted to
obligors in Germany for a total of approximately EUR500 million as
of October 31, 2023 pool cut-off date. The average balance is
EUR19,720, the weighted average interest rate is 4.79%, and
weighted average seasoning is 11.8 months. The portfolio, as of its
pool cut-off date, did not include any loans in arrears.
Moody's analysis focused, amongst other factors, on: (i) an
evaluation of the underlying portfolio of loans at closing and
incremental risk due to loans being added during the 12-month
revolving period; (ii) the historical performance information of
the total book; (iii) the credit enhancement provided by the
subordination, the liquidity reserve, excess spread and
over-collateralisation; (iv) the liquidity support available in the
transaction including the liquidity reserve; and (v) the overall
legal and structural integrity of the transaction.
According to Moody's, the transaction benefits from several credit
strengths such as the granularity of the portfolio and additional
credit enhancement provided by over-collateralisation. However,
Moody's notes that the transaction features some credit weaknesses
such as (i) the percentage of balloon loans in the pool (84.3% of
the total outstanding loans are balloon loans with a final payment
of around 49.9% of the current net loan amount), (ii) an unrated
servicer, (iii) 1-year revolving structure which could increase
performance volatility of the underlying portfolio, and (iv) a
complex structure including interest deferral triggers for juniors
Notes and pro-rata principal payments. Various mitigants have been
included in the transaction structure such as a back-up servicer
facilitator which should facilitate the appointment of a back-up
servicer upon a servicer termination event, as well as a
performance trigger which will stop the revolving period or the
pro-rata amortization.
Hedging: as the collections from the pool are not directly linked
to a floating interest rate, a higher index payable on the floating
Class A to F Notes would not be offset with higher collections from
the pool. The transaction benefits from an interest rate swap with
DZ BANK AG as swap counterparty, where the issuer will pay a fixed
swap rate and will receive one-month EURIBOR on a notional linked
to the outstanding balance of the Class A to F Notes.
MAIN MODEL ASSUMPTIONS
Moody's determined the portfolio lifetime expected defaults of
1.7%, expected recoveries of 35% and portfolio credit enhancement
("PCE") of 10% related to borrower receivables. The expected
defaults and recoveries capture Moody's expectations of performance
considering the current economic outlook, while the PCE captures
the loss we expect the portfolio to suffer in the event of a severe
recession scenario. Expected defaults and PCE are parameters used
by Moody's to calibrate its lognormal portfolio loss distribution
curve and to associate a probability with each potential future
loss scenario in the ABSROM cash flow model.
Portfolio expected defaults of 1.7% are lower than the EMEA Auto
Loan ABS average and are based on Moody's assessment of the
lifetime expectation for the pool. We primarily based Moody's
analysis on the historical cohort performance data that the
originator provided for a portfolio that is representative of the
securitised portfolio. We stressed the results from the historical
data analysis to account for: (i) the expected outlook for the
German economy in the medium term; (ii) the fact that the
transaction is revolving for 12 months and that there are portfolio
concentration limits during that period; and (iii) benchmarks in
the German auto ABS market.
Portfolio expected recoveries of 35% are in line with the EMEA Auto
Loan ABS average and are based on Moody's assessment of the
lifetime expectation for the pool taking into account: (i)
historical performance of the loan book of the originator; (ii)
benchmark transactions; and (iii) other qualitative
considerations.
PCE of 10% is in line with the EMEA Auto Loan ABS average and is
based on Moody's assessment of the pool which is mainly driven by:
(i) evaluation of the underlying portfolio, complemented by the
historical performance information as provided by the originator;
(ii) the relative ranking to originator peers in the EMEA Auto loan
market, and (iii) other qualitative considerations like the
percentage of balloon loans in the portfolio. The PCE level of 10%
results in an implied coefficient of variation ("CoV") of 68.7%.
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Auto Loan- and Lease-Backed ABS" published in
November 2023.
Factors that would lead to an upgrade or downgrade of the ratings:
Significantly different loss assumptions compared with Moody's
expectations at closing due to either a change in economic
conditions from Moody's central scenario forecast or idiosyncratic
performance factors would lead to rating action. For instance,
should economic conditions be worse than forecast, higher defaults
and loss severities resulting from greater unemployment, worsening
household affordability and a weaker housing market could result in
a downgrade of the ratings. A deterioration in the Notes' available
credit enhancement could result in a downgrade of the ratings,
while an increase in credit enhancement could result in ratings
upgrades. Additionally, counterparty risk could cause a downgrade
of the ratings due to a weakening of the credit profile of
transaction counterparties. Finally, unforeseen regulatory changes
or significant changes in the legal environment may also result in
changes of the ratings.
SCHOEN KLINIK: Fitch Assigns 'B+' First-Time LT IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has assigned Schoen Klinik SE (Schoen) a first-time
Long-Term Issuer Default Rating (IDR) of 'B+'. The Outlook is
Stable.
Fitch has also assigned Schoen's proposed EUR350 million term loan
B (TLB) an expected senior secured debt rating of 'BB(EXP)' with a
Recovery Rating of 'RR2'. The assignment of the final rating is
contingent on completing the transaction in line with the terms
already presented.
The 'B+' IDR is supported by Schoen's solid market position in the
non-cyclical and well-funded German private hospital market and
significant financial flexibility enhanced by real-estate
ownership. These strengths are balanced with Schoen´s high EBITDAR
gross leverage, a personnel-intensive fixed cost base and limited
geographical footprint exposing its credit profile to potential
changes in a single reimbursement system.
The Stable Outlook reflects its view of Schoen's moderating
leverage through organic profitability improvement and a prudent
financial policy versus that of traditional sponsor-owned
healthcare providers.
KEY RATING DRIVERS
Defensive Specialised Operations: Schoen has strong market
positions in specialised medical and rehabilitation services in
Germany, benefitting from stable and steadily growing demand. Its
well-established national market position, albeit in narrowly
defined areas, and a reasonably diversified range of services also
contribute to greater operating resilience than narrow
service-focused providers'. Schoen's defensive business profile is
further supported by the regulated nature of the sector with high
barriers to entry, requiring strong technical and investment
expertise.
Significant Financial Flexibility: Schoen's considerable financial
flexibility stems from cash-generative operations and its
unencumbered real estate base. Schoen owns nearly all its hospital
facilities, unlike most Fitch-rated EMEA healthcare-service
providers. This strategic decision provides Schoen with greater
financial flexibility, which is reflected in its EBITDAR
fixed-charge coverage of 2.5x-3.0x estimated for 2023-2026, versus
1.5x or less for most peers within the 'B' rating category.
In addition, the ownership of valuable real estate ensures some
stability in times of financial uncertainty, serving as collateral
or a source of additional liquidity in the form of sale and
leaseback (SALB), which is capped at EUR400 million, as per its TLB
documentation. The value of the property portfolio also supports
the two-notch uplift of the instrument rating from the IDR to
'BB'.
Deleveraging Capacity; Moderate Execution Risks: Fitch views
Schoen's recent Imland acquisition as being in line with its
consolidation-driven growth strategy, as it increases scale and
broadens its somatic portfolio, despite an initially dilutive
impact on profitability.
Fitch projects the debt-funded acquisition will lift EBITDAR gross
leverage to a peak 5.5x in 2023. Fitch believes Schoen has
sufficient organic deleveraging capacity through operational
efficiencies and occupancy rate increases, but it may still face
moderate execution risks in bringing EBITDAR gross leverage to
below 4.5x in the next 12-18 months.
Commitment to Prudent Financial Policies: Schoen's commitment to
EBITDA net leverage below 4.0x (or about 4.5x Fitch-defined EBITDAR
gross leverage) supports the shareholders' intention of positioning
the company strategically for a possible IPO or large-scale M&A in
a fragmented market.
Fitch anticipates Schoen will remain opportunistic on M&A,
targeting under-performing hospitals and returning them to
profitability. Its rating case considers scope for bolt-on
acquisitions of EUR100 million over the next three-to-four years,
funded with internal cash flows and Fitch-estimated debt issues.
Fitch views a larger acquisition as event risk, subject to business
risk, integration complexity, acquisition economics and funding
mix.
Industry-Leading Profitability, Temporarily Subdued: Fitch projects
Schoen's EBITDA margin will remain temporarily subdued at slightly
below 12% to end-2024 due to the impact of high but gradually
receding inflationary pressure and the consolidation of the
margin-dilutive Imland operations. Nevertheless, Schoen's
profitability compares favourably with its European direct peers',
supported by low rent expenses and operating efficiency, with a
high degree of in-sourced operations. Fitch estimates payor rates
will improve by mid-single digits in 2023-2024 which, coupled with
occupancy rates returning to pre-pandemic levels, should support
EBITDA margin improvement to above 12% by 2025.
Margin Improvement Limited: The sector's high intrinsic operating
leverage with labour costs projected to remain at around 60% of
revenues limits the scope for Schoen's further EBITDA margin
improvement to around 12.5%-13.0% in the long term. This is because
maintaining high service standards is an essential competitive
differentiation and necessary to comply with regulatory
requirements.
Constructive Regulatory Frameworks: Schoen's rating benefits from
stable and well-funded, state-backed healthcare systems in Germany
and the UK. Constructive pricing frameworks allow private operators
to pass on most cost inflation, albeit with a delay of 12-18 months
due to a base-rate calculation mechanism. All of Schoen's hospitals
are included in the German federal states' hospital plan, leading
to low reimbursement risk via statutory health insurance
companies.
Germany's promotion of rehabilitation care to reduce the
longer-term burden on social care and the UK government's pledge to
increase the share of the NHS budget for adult mental health (at
least GBP2.3 billion a year by 2023-2024) provide a supportive
framework for independent private operators.
DERIVATION SUMMARY
Fitch rates Schoen under Fitch's Ratings Navigator for Healthcare
Providers. Global sector peers tend to cluster in the 'B'/'BB'
range, driven by the traits of their respective regulatory
frameworks influencing the quality of funding and government
healthcare policies, and by companies' operating profiles,
including scale, service and geographic diversification, and payor
and medical indication mix. Many sector providers pursue
debt-funded M&A strategies, given the importance of scale and
limited room for maximising organic return.
European sector peers have similar operating characteristics of
stable patient demand with a regulated but limited ability to
enforce price increases above inflation, and the necessity of
driving operating efficiencies while maintaining well-invested
clinic networks to safeguard competitive sustainability.
Nevertheless, ratings tend to be constrained by weak credit metrics
as expressed in highly leveraged balance sheets due to continuing
national and cross-border market consolidation with EBITDAR
leverage at 6.0x-7.0x and tight EBITDAR fixed charge cover of
around 1.5x.
Fitch compares Schoen against high-yield European peers such as
Mehilainen Ythima Oy (B/Stable), Almaviva Developpement (B/Stable),
and Median B.V. (B-/Stable). Schoen's IDR benefits from a more
conservative financial policy and higher profitability as a result
of owning hospital facilities and lower rent expenses, which also
translate into higher free cash flow (FCF) and better coverage
compared with its peers. Compared with other asset-heavy healthcare
providers, Schoen has smaller scale and a less diversified
geographic footprint than Fresenius Helios, the healthcare provider
branch of Fresenius SE & Co. KGaA (BBB-/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Revenue growth of 12.7% in 2023 and 15.5% in 2024, driven by the
Imland acquisition, mid-single-digit payor fee increases and
occupancy recoveries. Revenue growth of 4%-5% p.a. for the
following three years, driven mostly by organic growth
- EBITDA margin to remain at around 11.5% in 2023-2024, and
improving to 12.5%-13.0% in 2025-2026
- Working-capital outflows of EUR5 million a year from 2024
onwards
- Capex (excluding state grants received) at 5.5%-6.5% of sales in
2023-2024 and at 4.5% 2025-2026
- Fitch-estimated acquisition spend of EUR100 million in the next
three-to-four years
- Fitch-estimated dividends of EUR20 million-EUR25 million a year
for 2024-2026
RECOVERY ANALYSIS
Fitch assumes that Schoen will be liquidated in bankruptcy rather
than reorganised as a going-concern, given its ownership of
substantial real estate. Fitch also expects that prior to distress
the company will sell and lease back up to EUR400 million of its
real-estate assets and use a third of the proceeds towards debt
repayment, in accordance with the TLB documentation.
Fitch maintains standard advance rates on the market value of
real-estate assets, net of EUR400 million SALB, leading to a total
estimated liquidation value of EUR635 million. After deducting 10%
for administrative claims from the liquidation value, the
allocation of value in the liability waterfall results in a
Recovery Rating of 'RR2' for Schoen's proposed EUR350 million TLB,
leading to a 'BB(EXP)' instrument rating.
Schoen also has equally-ranking term loan A (TLA), promissory notes
and a EUR125 million revolving credit facility (RCF) that Fitch
assumes will be fully drawn prior to distress. The above results in
a waterfall- generated recovery computation percentage of 83% based
on current metrics and assumptions.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Successful Imland integration and execution of medium-term
strategy leading to a further increase in scale and occupancy rates
plus further diversification of services
- Steadily increasing EBITDA, with EBITDA margins above 12% on a
sustained basis
- FCF margins at low single digits on a sustained basis
- Consistent financial policy supporting EBITDAR gross leverage
below 4.5x on a sustained basis
- EBITDAR fixed charge coverage above 2.5x on a sustained basis
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Inability to increase occupancy rates, coupled with
slower-than-expected integration of the Imland acquisition, leading
to an erosion of EBITDA margins to below 10% on a sustained basis
- Neutral-to-negative FCF margins on a sustained basis
- EBITDAR gross leverage above 5.5x on a sustained basis
- EBITDAR fixed charge coverage below 2.0x on a sustained basis
LIQUIDITY AND DEBT STRUCTURE
Comfortable Liquidity: Fitch views Schoen's liquidity as
comfortable with around EUR20 million-EUR30 million in projected
freely available post-dividend year-end cash for 2023-2026
(excluding EUR15 million that Fitch treats as restricted and not
readily available for debt service), and an EUR125 million
available committed RCF. Schoen does not have any major maturities
until November 2027, when the remaining TLA balance comes due.
ISSUER PROFILE
Schoen is a German-based private hospital operator, with a small
presence in the UK. It focuses on providing mental health, somatic
and rehabilitation services.
ESG CONSIDERATIONS
Schoen has an ESG Relevance Score of '4' for Exposure to Social
Impact as it operates in a healthcare market, which is subject to
sector regulation, as well as budgetary and pricing policies
adopted in Germany and the UK. Rising healthcare costs expose
private hospital operators to high risks of adverse regulatory
changes, which could constrain the companies' ability to maintain
operating profitability and cash flows. This has a negative impact
on the credit profile and is relevant to the rating in conjunction
with other factors.
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. Fitch's ESG Relevance Scores are not inputs
in the rating process; they are an observation of the materiality
and relevance of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Schoen Klinik SE LT IDR B+ New Rating
senior secured LT BB(EXP)Expected Rating RR2
TTD HOLDING III: Fitch Lowers LongTerm IDR to 'B', Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has downgraded TTD Holding III GmbH (TTD; also known
as Toi Toi and Dixi) Long-Term Issuer Default Rating (IDR) to 'B'
from 'B+'. The Outlook is Stable. Fitch has also downgraded TTD
Holding IV GmbH's EUR660 million and EUR510 million (the latter
including the recently launched EUR100 million add-on tranche)
senior secured term loans to 'B+' from 'BB-'. The Recovery Rating
remains at 'RR3'.
The downgrade of the IDR follows TTD's EUR100 million add-on debt
tranche to its EUR410 million term loan to fund a dividend payment
to its shareholders. Additional debt delays deleveraging, and Fitch
now views leverage, debt service and cash flow metrics as being
more commensurate with a 'B' rating. The rating gives management
flexibility to execute its growth strategy and/or accommodate
additional shareholder distributions, which Fitch would view as
event risk.
The Stable Outlook reflects its expectations of TTD's continued
strong operational execution in a soft but resilient market, with
continued roll-out of its transformation programme, and ample
headroom under the 7.0x negative EBITDA leverage sensitivity for
the 'B' rating.
KEY RATING DRIVERS
Debt-Funded Dividend Drives Downgrade: TTD's already exhausted
rating headroom under the previous 'B+' IDR means the debt-funded
dividend payment further delays deleveraging. Fitch now forecasts
leverage, debt service and cash flow metrics to be more in line
with a 'B' rating through to 2025.
Continued strong execution on price increases, premiumisation and
cost measures have improved margins for 3Q23. This, combined with
free cash flow (FCF)-funded bolt-on acquisitions, has led us to
forecast Fitch-defined EBITDA at closer to EUR215 million for the
full year (adjusted for lease cost). Nevertheless, with the
additional debt, Fitch now forecasts EBITDA leverage to remain
around 5.5x-5.7x in 2023-2025 (pro forma for the EUR100 million
add-on).
Lower Volumes Reduce Profitability: TTD's net sales in Germany fell
4.0% yoy in 3Q23, taking overall net sales in Germany to -1.1% for
9M23. TTD managed to mitigate weaker end-market demand by pricing
measures and continued premiumisation of cabins and active selling
to push volumes. However, declining long-term cabin rental volumes,
combined with cost inflation on wages and utilities, resulted in a
Fitch-defined EBITDA margin of 27.5% in 1H23. A strong 3Q23 lifted
this metric to 29%.
Higher Interest Cost, Reduced FCF: TTD has hedged around 70% of its
term debt, which matures in February 2025. Higher interest rates
have affected the floating-rate portion of its debt to the extent
Fitch now expects FCF margin to remain in low single digits, and
EBITDA interest cover to remain around 2.5x-3.0x.
Sales Upside: Fitch believes the construction and events business
should continue to benefit from an increased emphasis on
premiumisation. FCF-funded bolt-on acquisitions remain a
cornerstone of the group's growth, building on its scale and route
efficiencies. It made 18 bolt-on acquisitions in 9M23, and Fitch
estimates around EUR30 million of FCF-funded bolt-ons per year in
2024 and 2025, supporting revenues and EBITDA. In addition, one-off
sport events in 2024 may support volumes.
Cost Efficiencies: TTD has been quick to adjust its cost structure
in 9M23, reducing full-time-employees and maintaining tight control
on costs. Fitch believes that once volumes start to pick up again,
continued structural savings (including the transformation
programme) in administrative, procurement and fleet costs should
support profitability improvements over the next three years.
Modest Construction Sector Growth: Fitch Solutions expects the
German construction sector to see real growth of 0.3% and 1.5%,
respectively, in 2023 and 2024 in the residential and
non-residential sector (together around 80% of TTD's construction
business and around 55% of net sales). High construction cost, wage
inflation and higher interest rates will continue to weigh on the
market into 2024, with the biggest impact on residential building
activity (estimated to represent around 30%-35% of TTD's net
sales).
Fitch expects opportunities in green infrastructure projects to
increase. Fitch also expects geopolitical factors such as increased
demand and training of military services to help mitigate softer
residential and new-build demand so that LFL aggregate net sales
remain neutral to positive across its forecasts.
Defensive Route-Based Model: TTD's business model is concentrated
on network density, scale and logistics, which protect its
entrenched market position. In Germany, its national market share
is 15x its closest competitor's. With more stops per servicing
route, TTD can drive down the cost per stop, leading to a margin
advantage. This effectively creates a barrier to entry, as it
becomes difficult for a competitor without a comparable presence to
operate alongside TTD in a given area.
Long-standing Brand and Value Proposition: The Toi Toi & Dixi
brands have decades of recognition, which reinforce TTD's
leadership in Germany and most other European markets. TTD's
strength across the value chain also makes it the top choice for
customers, as the waste management aspect is necessary, but not
highly contested. Aside from premium toilet cabins, TTD also offers
customisable sanitary containers and ancillary equipment for larger
or longer-term projects, which cannot be provided by regional
companies that compete mainly for smaller projects.
DERIVATION SUMMARY
Fitch compares TTD with other services peers with strong
competitive positions and high visibility over recurring revenue
including Irel Bidco S.a.r.l. (IFCO; B+/Stable) and Polygon Group
AB (B/Negative), but also ERP-software peer TeamSystem S.p.A
(B/Stable).
IFCO is larger and more diversified than TTD, allowing it a looser
EBITDA leverage sensitivity for the same rating. Polygon and TTD
have similar geographical diversification, but TTD's construction
end-market is more volatile than the insurance-based property
damage restoration market. Polygon's forecast EBITDA leverage above
7x in 2023 constrains its rating.
TeamSystem's revenue visibility is stronger than TTD's, but TTD is
more geographically diversified with lower leverage for the same
rating.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Reported revenue growth of about 15% in 2023, reflecting full
inclusion of the Ylda acquisition in July 2022 and other bolt-on
acquisitions; negligible LFL revenue growth in 2023 and low-to-mid
single-digit growth in the following two years
- Fitch-defined EBITDA margin of 28%-29% in 2023-2024, and
gradually improving in the next two years, due to volume growth,
lower inflationary pressures and continued roll-out and expansion
of the transformation programme
- Modest working capital outflow at about 1% of sales to 2025
- Capex at 8%-10% of sales to 2025
- Bolt-on M&A of around EUR30 million in 2023 and 2024, funded by
FCF
- A EUR100 million dividend payment by end-2023
RECOVERY ANALYSIS
The recovery analysis assumes that TTD would be considered a going
concern in bankruptcy and that it would be reorganised rather than
liquidated. Fitch has assumed a 10% administrative claim.
Post-restructuring going-concern EBITDA of EUR137 million
(increased by recent bolt-on acquisitions) reflects a
more-severe-than-expected economic downturn and reduced pricing
power with significant margin pressure.
A distressed enterprise value multiple of 6.0x is used to calculate
a post-reorganisation valuation, reflecting TTD's dominant and
entrenched position in most large European markets stemming from
its scale and density.
Fitch deducts administrative claims, local prior-ranking credit
lines, and EUR1,325 million of senior secured claims (EUR1,170
million in term loans and an equally ranking EUR155 million
revolving credit facility (RCF)) in the liability waterfall. Fitch
assumes that local lines and the RCF are fully drawn at default.
Based on current metrics and assumptions, the waterfall analysis
generates a ranked recovery at 54%, hence in the Recovery Rating
'RR3' band, indicating a 'B+' instrument rating for the senior
secured TLBs.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Return to volume growth in key markets and successful continued
roll-out of the transformation programme and bolt-on acquisitions
leading to:
- EBITDA gross leverage sustained below 5.0x
- Improved cash flow metrics with FCF margins in mid-single digits
- EBITDA interest coverage above 3.0x
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- A worse-than-expected slowdown or downturn in TTD's end-markets
or failure to sustain EBITDA margin in line with its expectations
- EBITDA gross leverage sustained above 7.0x due to operational
underperformance or material debt-funded shareholder remuneration
or acquisitions
- EBITDA interest coverage below 2.0x
- Thin or neutral FCF margins
LIQUIDITY AND DEBT STRUCTURE
Satisfactory Liquidity: Fitch views TTD's liquidity as
satisfactory. It had a cash position of EUR59 million at
end-September 2023. Fitch forecasts positive FCF in 2023 and 2024,
while the group has access to an undrawn committed EUR155 million
RCF.
Manageable Refinancing Risk: TTD has a single-source funding, with
its TLBs maturing in October 2026. Fitch views refinancing risk as
manageable with positive FCF and deleveraging towards 5.0x EBITDA
gross leverage in 2025 based on Fitch's forecasts.
ISSUER PROFILE
TTD offers sanitary/toilet cabins, containers and ancillary
products and services to the construction and events industries.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
TTD Holding IV GmbH
senior secured LT B+ Downgrade RR3 BB-
TTD Holding III GmbH LT IDR B Downgrade B+
=============
I R E L A N D
=============
HARVEST CLO VIII: S&P Affirms 'B- (sf)' Rating on Class F-R Notes
-----------------------------------------------------------------
S&P Global Ratings raised its credit ratings on Harvest CLO VIII
DAC's class B-1-R and B-2-R notes to 'AA+ (sf)' from 'AA (sf)',
class C-R notes to 'AA- (sf)' from 'A (sf)', and class D-R notes to
'A- (sf)' from 'BBB (sf)'. S&P also affirmed its 'AAA (sf)' rating
on the class A-R notes, its 'BB (sf)' rating on the class E-R
notes, and its 'B- (sf)' rating on the class F-R notes.
Harvest CLO VIII is a cash flow CLO transaction securitizing
leverage loans and is managed by Investcorp Credit Management EU
Ltd.
The rating actions follow the application of its relevant criteria
and its credit and cash flow analysis of the transaction based on
the October 2023 trustee report.
Since the transaction was reset in 2018:
-- The portfolio's credit quality has improved.
-- Since the CLO entered its amortization phase almost two years
ago (January 2022), 15% of the portfolio has deleveraged, resulting
in an increase in available credit enhancement for the class A-R to
C-R notes. Credit enhancement for the more junior classes has
decreased slightly due to the portfolio balance reducing by a
greater amount than the overall paydown on the notes.
-- The portfolio's weighted-average life has decreased to 3.20
years from 4.03 years.
-- The percentage of 'CCC' rated assets has increased to 3.84%
from 2.50%.
As a result of the improvement in credit quality (mainly due to its
lower weighted-average life), the portfolio's scenario default
rates (SDRs) have decreased for all rating scenarios.
Table 1
Transaction key metrics
AS OF NOVEMBER 2023 AT 2021
(BASED ON TRUSTEE REPORT) REFINANCING
SPWARF 2792.64 N/A
Default rate dispersion 653.23 56.30
Weighted-average life (years) 3.20 6.03
Obligor diversity measure 108.007 94.387
Industry diversity measure 23.418 20.917
Regional diversity measure 1.268 1.614
Total collateral amount (mil. EUR)* 348.54 409.00
Defaulted assets (mil. EUR) 0 0
Number of performing obligors 152 121
Portfolio weighted-average rating B B
'AAA' SDR (%) 55.75 66.81
'AAA' WARR (%) 37.04 34.00
*Performing assets plus cash and expected recoveries on defaulted
assets.
SPWARF--S&P Global Ratings' weighted-average rating factor.
SDR--Scenario default rate.
WARR--Weighted-average recovery rate.
N/A--Not applicable.
On the cash flow side:
-- The reinvestment period ended in January 2022. The class A
notes deleveraged by EUR52.9 million since then, although more than
half of this came on the latest payment date.
-- No class of notes defers interest.
-- All coverage tests are passing as of the October 2023 trustee
report.
Table 2
Credit analysis results
CURRENT CREDIT
ENHANCEMENT (%) CREDIT
CURRENT AMOUNT (BASED ON THE OCTOBER ENHANCEMENT
CLASS (MIL. EUR) TRUSTEE REPORT) AT RESET (%)
A-R 190.451 45.36 40.49
B-1-R 34.400 29.75 27.19
B-2-R 20.000 29.75 27.19
C-R 25.700 22.38 20.90
D-R 20.500 16.49 15.89
E-R 22.100 10.15 10.49
F-R 12.200 6.65 7.51
Credit enhancement = [Performing balance + cash balance + recovery
on defaulted obligations (if any) – tranche balance (including
tranche balance of all senior tranches)] / [Performing balance +
cash balance + recovery on defaulted obligations (if any)].
In S&P's view, the portfolio is diversified across obligors,
industries, and asset characteristics.
S&P said, "Based on the improved SDRs (driven by the portfolio's
lower weighted-average life), we raised our ratings on the class
B-1-R, B-2-R, C-R, and D-R notes as the available credit
enhancement is now commensurate with higher stress levels. These
notes pass our cash flow analysis at higher rating levels than
those currently assigned, but we have considered the sizable
portion of senior notes outstanding and current macroeconomic
conditions.
"Our standard cash flow analysis indicates that the available
credit enhancement levels for the class E-R and F-R notes are
commensurate with higher ratings than those assigned. Although the
transaction has been amortizing since the end of the reinvestment
period in 2022, we also considered the level of cushion between our
break-even default rate (BDR) and SDR for these notes at their
passing rating levels, as well as current macroeconomic conditions
and these classes' relative seniority. We therefore affirmed our
ratings on both the class E-R and F-R notes.
"Our credit and cash flow analysis indicates that the class A-R
notes are still commensurate with a 'AAA (sf)' rating. We therefore
affirmed our rating on the class A-R notes.
"In our view, the portfolio is granular, and well-diversified
across obligors, industries, and asset characteristics compared
with other CLO transactions we have recently rated. Hence, we have
not performed any additional sensitivity analysis.
"Counterparty, operational, and legal risks are adequately
mitigated in line with our criteria.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria."
HARVEST CLO XXXI: Fitch Assigns 'B-(EXP)sf' Rating to F Notes
-------------------------------------------------------------
Fitch Ratings has assigned Harvest CLO XXXI DAC expected ratings.
The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.
Entity/Debt Rating
----------- ------
Harvest CLO XXXI DAC
Class A-1 LT AAA(EXP)sf Expected Rating
Class A-2 LT AAA(EXP)sf Expected Rating
Class B LT AA(EXP)sf Expected Rating
Class C LT A(EXP)sf Expected Rating
Class D LT BBB-(EXP)sf Expected Rating
Class E LT BB-(EXP)sf Expected Rating
Class F LT B-(EXP)sf Expected Rating
Class Z LT NR(EXP)sf Expected Rating
Subordinated Notes LT NR(EXP)sf Expected Rating
TRANSACTION SUMMARY
Harvest CLO XXXI DAC is a securitisation of mainly senior secured
obligations (at least 90%) with a component of senior unsecured,
mezzanine, second-lien loans, first-lien last-out loans and
high-yield bonds. Note proceeds will be used to fund a portfolio
with a target par of EUR400 million. The portfolio will be actively
managed by Investcorp Credit Management EU Limited.
The collateralised loan obligation (CLO) will have a 4.6-year
reinvestment period and 7.5-year weighted average life (WAL). The
WAL test can increase by one year subject to the satisfaction of
the WAL step-up conditions, which include the deal being equal to
or above the reinvestment target par and the transaction passing
all the tests.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'/'B-'. The Fitch weighted
average rating factor (WARF) of the identified portfolio is 25.3.
High Recovery Expectations (Positive): At least 90% of the
portfolio will comprise of senior secured obligations. Fitch views
the recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch weighted
average recovery rate (WARR) of the identified portfolio is 60.5%.
Diversified Portfolio (Positive): The transaction will include a
top-10 obligor concentration limit at 20%, fixed-rate asset limit
of 10%, and weighted average coupon at 4.65%. It will have various
concentration limits, including the maximum exposure to the
three-largest Fitch-defined industries in the portfolio at 40%.
These covenants ensure that the asset portfolio will not be exposed
to excessive concentration.
Portfolio Management (Neutral): The transaction will have a
4.6-year reinvestment period and include reinvestment criteria
similar to those of other European transactions. Fitch's analysis
is based on a stressed portfolio with the aim of testing the
robustness of the transaction structure against its covenants and
portfolio guidelines.
Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed
portfolio and matrices analysis is 12 months less than the WAL
covenant, to account for structural and reinvestment conditions
after the reinvestment period, including passing the
over-collateralisation and Fitch 'CCC' limitation tests after
reinvestment, among others. In Fitch's opinion, these conditions
would reduce the effective risk horizon of the portfolio during the
stress period.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
An increase of the default rate (RDR) at all rating levels in the
identified portfolio by 25% of the mean RDR and a decrease of the
recovery rate (RRR) by 25% at all rating levels would have no
impact on the class A-1 and A-2 notes, but would lead to a
downgrade of one notch for the class B and D notes, two notches for
the class C and E notes, and to below 'B-sf' for the class F notes.
Downgrades may occur if the build-up of the notes' credit
enhancement following amortisation does not compensate for a larger
loss expectation than initially assumed due to unexpectedly high
levels of defaults and portfolio deterioration.
Due to the better metrics and shorter life of the identified
portfolio than the Fitch-stressed portfolio the class C notes
display a rating cushion of one notch, and the class B, D, E and F
notes of two notches. The class A-1 or A-2 notes have no rating
cushion.
Should the cushion between the identified portfolio and the
Fitch-stressed portfolio be eroded either due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
and a 25% decrease of the RRR across all ratings of the
Fitch-stressed portfolio would lead to downgrades of three notches
for the class A-1 and D notes, four notches for the class A-2, B
and C notes, and to below 'B-sf' for the class E and F notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A reduction of the RDR at all rating levels in the Fitch-stressed
portfolio by 25% of the mean RDR and an increase in the RRR by 25%
at all rating levels would result in upgrades of up to three
notches for all notes, except for class A-1, A-2 notes and C notes.
Further upgrades may occur if the portfolio's quality remains
stable and the notes start to amortise, leading to higher credit
enhancement across the structure.
During the reinvestment period, based on the Fitch-stressed
portfolio, upgrades may occur on better-than-expected portfolio
credit quality and a shorter remaining WAL test, meaning the notes
are able to withstand larger-than-expected losses for the
transaction's remaining life. After the end of the reinvestment
period, upgrades may occur on stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
DATA ADEQUACY
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
OZLME III: S&P Affirms 'B- (sf)' Rating on Class F Notes
--------------------------------------------------------
S&P Global Ratings raised its credit ratings on OZLME III DAC's
class B-1 and B-2 notes to 'AA+ (sf)' from 'AA (sf)', class C notes
to 'AA- (sf)' from 'A (sf)', and class D notes to 'A- (sf)' from
'BBB (sf)'. S&P affirmed its 'AAA (sf)' ratings on the class A-1
and A-2 notes, its 'BB (sf)' rating on the class E notes, and our
'B- (sf)' rating on the class F notes.
S&P said, "The rating actions follow the application of our global
corporate CLO criteria and our credit and cash flow analysis of the
transaction based on the October 2023 trustee report.
"Our ratings on the class A-1 to B-2 notes address the payment of
timely interest and ultimate principal, and the payment of ultimate
interest and principal on the class C to F notes."
Since S&P's previous review at closing in February 2019:
-- The weighted-average rating of the portfolio remains at 'B'.
-- The portfolio has become more diversified (the number of
performing obligors has increased to 141 from 111).
-- The portfolio's weighted-average life decreased to 3.22 years
from 6.29 years.
-- The scenario default rate (SDR) decreased for all rating
scenarios, primarily due to a reduction in the weighted-average
life.
Portfolio benchmarks
CURRENT PREVIOUS REVIEW
SPWARF 2,699.48 2,597.39
Default rate dispersion 779.06 774.90
Weighted-average life (years) 3.22 6.29
Obligor diversity measure 99.10 96.37
Industry diversity measure 23.25 20.26
Regional diversity measure 1.27 1.83
SPWARF--S&P Global Ratings weighted-average rating factor.
On the cash flow side:
-- The reinvestment period for the transaction ended in February
2022.
-- The class A-1 and A-2 notes deleveraged by EUR12.09 million up
to the July 2023 interest payment date.
-- Credit enhancement has increased on the class A-1 to B-2 notes
due to deleveraging.
-- No class of notes is currently deferring interest.
-- All coverage tests are passing as of the October 2023 trustee
report.
-- The weighted-average recovery rate has improved at all rating
levels.
Transaction key metrics
CURRENT
Total collateral amount (mil. EUR)* 383.62
Defaulted assets (mil. EUR) 3.98
Number of performing obligors 141
Portfolio weighted-average rating B
'CCC' assets (%) 5.92
'AAA' SDR (%) 53.40
'AAA' WARR (%) 38.40
*Performing assets plus cash and expected recoveries on defaulted
assets.
SDR--scenario default rate.
WARR--Weighted-average recovery rate.
Following the application of our relevant criteria, S&P believes
that the class B-1 to F notes can now withstand higher rating
scenarios.
S&P said, "Our standard cash flow analysis also indicates that the
available credit enhancement levels for the class B-1 to F notes
are commensurate with higher ratings than those assigned. However,
we have limited our rating actions on these notes below our
standard analysis passing levels. While the transaction has
amortized since the end of the reinvestment period in 2022,
reinvestment has continued, rather than all available principal
being used to pay down the senior class. We considered that the
manager may still reinvest unscheduled redemption and sale proceeds
from credit-impaired and credit-improved assets. Such
reinvestments, as opposed to repayment of the liabilities, may
therefore prolong the note repayment profile for the most senior
class. We also considered the level of cushion between our
break-even default rate and SDR for these notes at their passing
rating levels, as well as current macroeconomic conditions and
these classes' relative seniority. We raised our ratings on the
class B-1 and B-2 notes by one notch, and the class C and D notes
by two notches. At the same time, we affirmed our ratings on the
class E and F notes.
"Our credit and cash flow analysis indicates that the class A-1 and
A-2 notes are still commensurate with 'AAA (sf)' ratings. We
therefore affirmed our ratings on the notes.
"Counterparty, operational, and legal risks are adequately
mitigated in line with our criteria.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria."
=====================
N E T H E R L A N D S
=====================
ANQORE: S&P Downgrades Long-Term ICR to 'B-', Outlook Stable
------------------------------------------------------------
S&P Global Ratings lowered to 'B-' from 'B' its long-term issuer
credit rating on AnQore and its issue ratings on its term loan B
(TLB).
The stable outlook indicates S&P's expectation that AnQore's
performance will improve in 2024 versus 2023 as the company starts
benefiting from its new C3 pipeline, which is expected to begin
operations in January 2024.
S&P said, "We now expect Netherlands-based ACR I B.V., parent
company of AnQore, to report much weaker EBITDA and free operating
cash flow (FOCF) in 2023-2024, following a difficult second-half
2023 and our anticipation of still-challenging conditions until at
least first-half 2024.
"We therefore revised our base case and expect AnQore to report S&P
Global Ratings-adjusted EBITDA of only about EUR30 million this
year (excluding EUR25 million of pro forma adjustments) and about
EUR60 million next year, translating into debt to EBITDA of
11.5x-11.7x in 2023 and declining to about 5.8x-6.0x in 2024.
"At the same time, we anticipate negative FOCF in 2023-2024 and
EBITDA interest coverage of below or close to 2x.
"We anticipate that AnQore's earnings will remain low in
fourth-quarter 2023 and first-half 2024, leading to elevated
leverage. Market conditions have not recovered during the second
half as initially expected, and we now forecast AnQore will report
weaker-than-anticipated results for 2023. We therefore revised our
base case and expect AnQore to report an EBITDA of only about EUR30
million this year, translating into S&P Global Ratings-adjusted
debt to EBITDA of 11.5x-11.7x. The much weaker results are
essentially driven by still-subdued demand, higher raw material
costs, and a higher portion of unfavorable spot sales in
second-half 2023, driven by take-or-pay obligations under the C3
supply agreement maturing at year-end 2023. We expect that the
company's EBITDA could recover to about EUR60 million next year,
supported by sizable cost savings from the C3 pipeline. We
therefore forecast adjusted leverage could decline to about
5.8x-6.0x in 2024 but remain above our previous expectations due to
continued challenging market conditions, at least in the first
half.
"We believe that FOCF could remain slightly negative next year if
the company reports negative working outflows. AnQore has incurred
sizable capital expenditure (capex) of EUR103 million in 2023 due
to investments in new projects (notably in the C3 pipeline) and the
four-yearly turn around completed in the second quarter. Therefore,
we anticipate capex will decline significantly to about EUR20
million in 2024. That said, we now believe FOCF could remain
slightly negative--depending on working capital outflows--because
we revised our EBITDA forecast for 2024. We anticipate rising cash
interest expense following the amendment and extension transaction
completed in July 2023, coupled with capex and tax payments, will
result in limited FOCF under our base case. Combined with cash
interest expense increasing to about EUR30 million next year, we
believe S&P Global Ratings-adjusted EBITDA interest coverage could
remain at about 2x in 2024.
"AnQore's liquidity position remains adequate, supported by its
fully available revolving credit facility (RCF), but we see limited
financial flexibility for a further deterioration in earnings. The
company's RCF remained fully undrawn as of Sept. 30, 2023, and
AnQore does not have short-term maturities following the extension
completed in July. Moreover, we expect the company's consolidated
net leverage (as defined under the covenants) will remain below the
5.5x maximum by year-end 2023. That said, we believe financial
flexibility has reduced and covenant headroom will remain tight
through the first two quarters of 2024.
"The stable outlook indicates our expectation that AnQore's
performance will improve in 2024 as the company starts benefiting
from its new C3 pipeline, which is expected to begin operations in
January 2024. In turn, we anticipate the company's leverage will
decline to about 5.8x-6.0x in 2024 from 11.5x-11.7x in 2023.
"Rating pressure may come from a prolonged drop in EBITDA and
continued negative FOCF, reflecting the challenging macroeconomic
environment, such that the company's liquidity position
deteriorates more than expected. We could also take a negative
rating action if the group encounters difficulties in operating the
new C3 pipeline or if the owners follow a more aggressive strategy
in the current challenging environment.
"We could raise the rating if adjusted debt to EBITDA declines
sustainably below 6x and we are confident that AnQore can sustain
positive FOCF, comfortable covenant headroom, and EBITDA interest
coverage above 2x."
===========
R U S S I A
===========
UZBEKNEFTEGAZ JSC: S&P Alters Outlook to Neg., Affirms 'B+' Ratings
-------------------------------------------------------------------
S&P Global Ratings revised the outlook on Uzbekneftegaz JSC (UNG)
to negative from stable and affirmed the 'B+' ratings on the
company and its debt.
The negative outlook reflects that S&P could lower the rating on
UNG in the next 12 months if continued underperformance, notably at
the UzGTL plant, constrains liquidity, absent any support from the
government.
S&P said, "UNG's failure to obtain waivers in a timely manner is a
sign of deficiencies in internal controls, in our view. We
understand that the company was unaware of the potential covenant
breach on one of the loan agreements, which only became apparent
during auditors' review of the financial statements for the first
half of 2023. This left the company little time to obtain the
waivers ahead of release of the financial statements. The auditors
reclassified all debt as short term and issued a going concern
notice. We understand that the covenant waiver was received after
the release of financial statements and thus default was avoided.
These weaknesses in internal controls add to the limitations we
observe in the company's reporting and external communication,
leading us to revise our management and governance assessment to
weak from fair.
"We see deficiencies in the government's oversight of UNG and a
gradual decline in the company's role for the economy as Uzbekistan
becomes a net gas exporter. As a result, we revised our view of the
likelihood of UNG receiving timely and sufficient government
support, from extremely high, to high, capturing that:
"We now see a strong link with the government, versus very strong
previously, since we think the government oversight is not as
scrupulous as we previously believed. Failure to recognize issues
such as covenant breaches or liquidity needs could result in
delayed communication of such information to the state, which in
its turn might lead to delays in providing of timely and sufficient
support to UNG.
"UNG's role for the economy is very important, versus critical
previously, due to the company's declining share in the supply of
natural gas to the country. UNG's production has been declining
over the last few years and the company will need to make a big
effort in the coming years to maintain production at the 33 billion
cubic meters (bcm)-34 bcm per year. At the same time, the
government expects demand for gas in Uzbekistan to increase to
about 60 bcm by 2030 against 43 bcm-46 bcm over the past few years.
The difference will have to be imported which will gradually
decrease the company's role in gas production. Also, as long as
Uzbekistan does not solve the gas shortage issue, UNG's largest
growth projects cannot be fully operational, reducing the
importance of UNG for the economy. We note that UNG is not among
the top three contributors to the state budget.
"We could see a further reduction in the likelihood of support if
the government continues to mandate UNG to invest into large
nationally important projects without providing it with a
reasonable ability to finance and repay such expansions. Over the
last few years the state has mandated UNG to build a $3 billion
gas-to-liquid project, UzGTL, and a $2 billion expansion of the
Shurtan gas chemical complex (GCC), of which only $500 million were
spent. The expectation was that the liberalization of gas tariffs
and cash flows from UzGTL would allow the company to repay debt
related to the large growth projects. However, the market
liberalization has stalled with the current price of gas effective
for UNG raised to $36 per thousand (/th) cubic meters from $28/th
cubic meters, which is materially below the domestic prices of most
its neighbors and compared with global prices. Conversely, the
government wasn't able to ensure sufficient gas imports in the
country (UNG does not have the mandate to import gas into
Uzbekistan), which led to UzGTL still not working at full capacity
and being unable to deliver expected cash flows. At the moment,
UNG's capacity to embark on any new debt-funded projects is
extremely low, and we might regard any additional issuances to
finance projects as a negative government intervention from a
credit perspective, potentially leading us to see a lower
likelihood of support. Any increase in dividend
distributions--which the government continues to request despite
the company's high debt and borderline liquidity--would also put
pressure on the company's credit quality.
"Meaningful improvement in credit metrics and liquidity is
uncertain due to the longer ramp up of UzGTL, higher interest
expenses, and general concerns over the availability of gas in the
country.In our base case, we do not expect FFO to debt to be
comfortably above 12%, which was our previous expectation. We
expect UzGTL to continue ramping up in the next two to three years,
albeit more slowly than originally expected. This is because, in
addition to operational ramp-up issues, the availability of
feedstock for the plant, natural gas, may be somewhat limited as
Uzbekistan is securing additional supplies for its expanding
economy and many gas-intensive projects. In our base case, we see
considerable improvements in EBITDA generation, with Uzbekistani
som (UZS) 14.0 trillion-UZS16.0 trillion in 2024 and UZS15.0
trillion-UZS17.0 trillion in 2025, compared with an estimated
UZS10.5 trillion-UZS11.5 trillion in 2023 and UZS9.1 trillion in
2022. However, the outcomes will vary significantly depending on
the availability of gas in the country, especially in winter. We
currently do not expect the GTL plant to suffer material gas
shortages similar to the ones experienced during the winter of
2022-2023, but we cannot rule them out. Furthermore, the company's
deleveraging capacity will be constrained by the high maintenance
capital expenditure (capex) and material interest expenses, which
we expect to roughly double in 2023 to about UZS5 trillion since
close to 73% of the company's debt has a floating interest rate.
Liquidity improvement would hinge on better operating performance.
Downside risks persist, however, since performance will depend on
the availability of natural gas for UzGTL. In case of prolonged
underperformance, UNG's capacity to deliver capex necessary to
sustain natural gas production could also be at risk, resulting in
continued production decline.
"The negative outlook on UNG reflects the possibility that we would
lower the rating by one notch if the company's performance does not
materially improve over the next 12 months, resulting in FFO to
debt sustainably below 12%. Weaker performance would also mean that
liquidity remains under pressure. Failure to improve operating
performance and liquidity would point to a structural issue in cash
generation capacity at the company, which could lead us to revise
down the SACP to 'b-' and lead us to lower the rating to 'B'.
"We could also lower the rating if we were to revise down the
likelihood of government support. This might occur, if the
government, despite noting UNG's weakened stand-alone
creditworthiness, continues to impose aggressive capex targets and
request high dividends, absent any support.
"We would revise outlook to stable if we observed material
improvements in the company's operating performance and liquidity
with FFO to debt comfortably above 12% and the ratio of liquidity
sources to uses of at least 1x, versus 0.8x currently. This could
happen as a result of material improvements in the company's cash
flow generation, primarily through the further ramp up of the UzGTL
plant."
===========================
U N I T E D K I N G D O M
===========================
FARADAY PRINTED: Enters Administration, 39 Jobs Affected
--------------------------------------------------------
Tom Keighley at BusinessLive reports that nearly 40 jobs have been
lost following the demise of a Washington electronics manufacturer
which had been trading for more than 35 years.
Administrators have been called in to Faraday Printed Circuits Ltd,
a supplier of printed circuit boards to the global electronic
market, BusinessLive discloses.
Insolvency specialists at FRP Advisory said a drop in orders amid
challenging business conditions had triggered the collapse of the
firm, which operated out of a 22,300 sqft site in Washington before
its doors were closed, BusinessLive relates.
A lack of potential buyers meant Allan Kelly and Andrew Haslam of
FRP were forced to cease trading and make the firm's 39 staff
redundant, BusinessLive states. The joint administrators are now
preparing an asset sale with interested parties urged to get in
touch, BusinessLive notes.
According to BusinessLive, Allan Kelly, restructuring advisory
partner at FRP and joint administrator of Faraday Printed Circuits
Limited, said: "Unfortunately, like many other businesses in the
manufacturing industry, Faraday Printed Circuits was not immune to
a significant fall in demand and mounting external pressures, most
notably rising costs, made the business financially unviable.
Regrettably, this meant 39 employees have now been made redundant.
We're supporting the individuals affected with filing their claims
with the Redundancy Payments Service."
The most recent accounts filed at Companies House for Faraday
Printed Circuits, for the year to the end of May 2023 show the firm
had liabilities of about GBP1.2 million and fixed assets, including
plant and machinery, worth about GBP737,000, BusinessLive relays.
JF RENSHAW: Real Good Food to Put Business Into Administration
--------------------------------------------------------------
Simon Harvey at JustFood reports that Real Good Food has flagged
its intent to put the London-listed cake decorations group into
administration within ten business days.
On the Nov. 17, Real Good Food announced the sale of its Rainbow
Dust Colours business for GBP800,000 (then US$994,507) and said it
would conduct a review of its remaining operation, JF Renshaw,
JustFood relates.
According to JustFood, Interpath Advisory, which had been appointed
as adviser to explore "strategic options" for JF Renshaw, including
a possible sale, will now oversee the administration process if it
comes to fruition, Real Good Food said in a stock-exchange filing
on Nov. 28.
Concurrently, the company said the group's shares would be
suspended from trading, effective Nov. 29, JustFood notes.
"Discussions with respect to a sale of JF Renshaw are continuing.
However, the board has concluded that the likelihood of a solvent
sale of the business and assets of JF Renshaw is very limited
within a constrained time-frame," JustFood quotes Real Good Food as
saying in the filing. "Given the impact of the current operating
environment on the group, the group's limited working capital
position and the consequential uncertainty regarding the group's
financial position, the board and the JF Renshaw board have each
concluded that it is required to take the necessary steps to
preserve value for creditors."
Real Good Food added a "notice of intention to appoint
administrators" in the next ten business days was filed on Nov. 28,
with Richard Harrison and Will Wright of Interpath Advisory
earmarked to oversee the process.
The group said it "reserves the right to alter any aspect of the
process or to terminate it at any time", adding a cautionary note
for its investors.
"Should administrators be appointed, the outcome to creditors of
the group is currently uncertain. Given the circumstances, the
capital structure of the company and options open to it, the board
believes that there will be no return to shareholders whether via a
solvent sale of JF Renshaw or any procedure in an administration."
JF Renshaw supplies cake decorations such as marzipan, icings and
caramel to retailers and the foodservice channel. With Rainbow
Dust Colours discarded, Real Good Food said on Nov. 17 that sales
in the run-up to Christmas were expected to be less than previously
envisaged.
METRO BANK HOLDINGS: Fitch Affirms B LongTerm IDR, Outlook Positive
-------------------------------------------------------------------
Fitch Ratings has affirmed Metro Bank Holdings PLC's (MBH) at 'B'
and Metro Bank PLC's (Metro Bank) Long-Term Issuer Default Ratings
(IDRs) at 'B+' and removed them from Rating Watch Evolving (RWE)
following the group's raising of new capital and debt. The Outlook
on the Long-Term IDRs is Positive.
At the same time, Fitch has upgraded Metro Bank's and MBH's
Viability Ratings (VRs) to 'b' immediately after having downgraded
them to 'f' from 'c'.
KEY RATING DRIVERS
The rating actions follow the approval by MBH's shareholders on 27
November 2023 of an equity raise of GBP150 million, which will be
followed shortly thereafter by the issue of GBP175 million senior
holdco debt and refinancing of GBP600 million debt. These
transactions will materially strengthen MBH's capital and Minimum
Requirement for own funds and Eligible Liabilities (MREL) ratios to
above regulatory minimum requirements. The IDRs reflect reduced
risks to MBH's business model stability and of regulatory
intervention.
The VR downgrade reflects its view that completion of the exchange
for the Tier 2 debt constitutes a distressed debt exchange (DDE),
which is equal to a bank failure under its definitions. The
subsequent upgrade to 'b' reflects Fitch's view of the bank's
restored viability following the recapitalisation. As a result
Fitch sees opportunities for improvements to the business profile,
growth and structural profitability as reflected by the Positive
Outlook.
Business Profile Constrains Ratings: Metro Bank's and MBH's VRs are
two notches below their implied VRs because its assessment of the
group's business profile (scored 'b') has a high influence on the
VRs, and Fitch believes that the bank's business profile will take
some time to strengthen following the recapitalisation. Fitch
expects execution risk to remain high until strategic
implementation begins to show progress.
The positive outlook on the group's business profile reflects
likely stabilisation of its business model following capital
strengthening but Fitch expects materially higher funding costs and
restructuring charges to affect short-term profitability. The VR
also reflects, in Fitch's view, uncertainty surrounding the bank's
strategic direction amid plans to sell a material share of its loan
book.
New Equity Supports Capitalisation: The completion of the capital
measures should result in pro-forma common equity Tier 1 (CET1) and
Tier 1 ratios above 13% by end-2023, according to the bank's
announced guidance, which is above regulatory buffer requirements.
The capital raise and the debt refinancing will support MBH's
ability to meet its MREL requirements more sustainably. Although
headroom over regulatory minimum requirements (including buffers)
will likely remain modest on a pro-forma basis, a sale of the
mortgage portfolio could bring relief to risk-weighted assets
(RWAs) and support the buffer further.
Targeting Higher-Yielding Business: Metro Bank's underwriting
standards are reasonable, demonstrated by a manageable low impaired
loans ratio. Fitch expects MBH to expand into higher-yielding
loans, including specialist mortgage and commercial lending, which
tend to be higher-risk than the mortgage loans that have so far
dominated the loan book. MBH is considering the sale of a portfolio
of up to GBP3 billion residential mortgage loans to further improve
its capitalisation, but a deal has not yet been finalised.
Healthy Asset Quality: The bank's impaired loans ratio rose to 2.9%
at end-1H23 from 2.7% at end-2022 due to some deterioration in its
retail mortgage and consumer portfolios. Most loans are to retail
customers, mainly in the form of mortgage lending, and continue to
perform well. Fitch expects asset quality to deteriorate and loan
impairment charges to rise moderately as unemployment increases and
unsecured loans season.
Weak Short-Term Profitability: MBH's weak profitability is likely
to remain under pressure from materially higher funding costs,
restructuring charges and transaction costs from the capital raise.
However, business volume growth should increase earnings over the
medium term as proceeds from the capital increase are deployed into
higher-yielding assets and cost efficiency improves.
More Expensive Funding: MBH's deposit costs will increase
materially given higher interest rates and as the bank attracts
higher-yielding term deposits in the short term. Wholesale funding
costs will also rise given MBH's debt refinancing at higher cost.
The planned sale of mortgage loans would reduce funding needs and
RWAs.
Metro Bank's and MBH's Short-Term IDRs of 'B' are the only option
corresponding to their Long-Term IDRs.
Opco's Long-Term IDR Uplift: Metro Bank's Long-Term IDR is one
notch above MBH's as Metro Bank's senior creditors benefit from the
protection provided by MREL-eligible debt instruments that are
raised by MBH and down-streamed to Metro Bank in a subordinated
manner.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The ratings are primarily sensitive to MBH's business profile. The
ratings would come under pressure if the recapitalisation fails to
strengthen MBH's business franchise, the business model fails to
support a sustainable improvement in the bank's structural earnings
and profitability, or if capital levels cannot be maintained above
regulatory minimum requirements.
A significant loosening in risk appetite accompanied by rapid
growth eroding capital buffers could be negative for the ratings.
The ratings could also be downgraded if funding and liquidity comes
under pressure, particularly from significantly weaker depositor
confidence and deposit instability.
Metro Bank's Long-Term IDR would be downgraded to the same level as
the bank's VR if Fitch believes that the bank's external senior
creditors would no longer benefit from resolution funds, which
could be the case if MBH is not able to sustainably meet its MREL
requirements.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
As indicated by the positive outlook on the business profile score,
the ratings would likely be upgraded on evidence of sustainable
improvement of the business profile. This would require successful
execution of the restructuring and business growth, resulting in a
clear path to improving structural profitability as well as a
stabilisation of the funding profile, and maintenance of adequate
capital and MREL buffers over regulatory minimum requirements.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
Fitch has assigned an expected rating of 'B(EXP)' to MBH's
forthcoming issue of senior unsecured debt in line with MBH's
Long-Term IDR, with a Recovery Rating of 'RR4', reflecting its
expectations of average recoveries.
Fitch has assigned an expected rating of 'CCC+(EXP)' to MBH's
forthcoming Tier 2 bond, two notches below the VR, in line with the
baseline notching in its Bank Rating Criteria, with a Recovery
Rating of 'RR6' to reflect poor recovery prospects in case of
non-viability.
MBH's Government Support Rating (GSR) of 'no support' reflects
Fitch's view that senior creditors cannot rely on extraordinary
support from the UK authorities in the event that it becomes
non-viable. This is due to UK legislation and regulations that
provide a framework requiring senior creditors to participate in
losses after a failure, and to the bank's low systemic importance.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
MBH's senior unsecured debt rating is mainly sensitive to changes
in its Long-Term IDR. The debt rating could also be notched below
the Long-Term IDR if its loss-severity expectations increase.
MBH's Tier 2 debt rating is mainly sensitive to changes in the
bank's VR.
An upgrade of MBH's GSR would be contingent on a positive change in
the sovereign's propensity to support banks, which Fitch believes
is highly unlikely in light of the prevailing resolution regime.
VR ADJUSTMENTS
Metro Bank's and MBH's VRs are below their implied VRs due to the
following adjustment reason: business profile (negative).
The operating environment score of 'aa-' is in line with the 'aa'
implied category score, but Fitch adjusts it downward for the
following reason: sovereign rating (negative). This is because the
score is constrained by the UK sovereign rating (AA-/Negative).
The business profile score of 'b' is below the 'bbb' implied
category score due to the following adjustment reasons: business
model (negative), strategy and execution (negative).
The asset quality score of 'bbb-' is below the 'a' implied category
score due to the following adjustment reason: underwriting
standards and growth (negative).
The capitalisation & leverage score of 'b+' is below the 'a'
implied category score due to the following adjustment reason:
internal capital generation and growth (negative).
The funding & liquidity score of 'b' is below the 'a' implied
category score due to the following adjustment reasons: non-deposit
funding (negative) and historical and future metrics (negative).
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Metro Bank
Holdings PLC LT IDR B Affirmed B
ST IDR B Affirmed B
Viability f Downgrade c
Viability b Upgrade f
Gov’t Support ns Affirmed ns
senior
unsecured LT B(EXP) Expected Rating RR4
subordinated LT CCC+(EXP)Expected Rating RR6
Metro Bank PLC LT IDR B+ Affirmed B+
ST IDR B Affirmed B
Viability f Downgrade c
Viability b Upgrade f
Gov’t Support ns Affirmed ns
METRO BANK: To Review Opening Hours Following Rescue Deal
---------------------------------------------------------
Michael Bow at The Telegraph reports that Metro Bank has announced
a review of its seven-day-a-week opening hours and plans to axe
around 850 jobs in a drastic cost-cutting plan.
According to The Telegraph, the troubled lender, which was recently
forced to strike a GBP925 million rescue deal, said it would review
the opening times of its 76 branches, including both days and
hours. It is in talks with the banking regulator, the Financial
Conduct Authority, about the impact on customers, The Telegraph
discloses.
The review suggests Metro is preparing to call time on long opening
hours at its bank branches, The Telegraph states.
Metro aimed to upend banking conventions when it launched in 2010
with colourful, open-plan branches that opened on Sundays from 8:00
a.m. until 6:00 p.m., The Telegraph notes.
Late night opening hours until 8:00 p.m. during the week also set
it apart from the big high street incumbents.
However, the increasing use of digital banking and apps has seen
customer demand for bank branches fall over the past decade.
Metro, The Telegraph says, is also under pressure to cut costs
after being forced into an emergency refinancing in October, amid
fears about its future.
Shares in the bank plummeted after the banking watchdog told it
that capital rules around its mortgages would not be relaxed and
credit agency Fitch subsequently warned the bank was at risk of a
credit rating downgrade, The Telegraph relays.
Colombian billionaire Jaime Gilinski ultimately led a deal to
inject new capital into Metro and refinance some of its debt, The
Telegraph recounts. The deal was completed on Thursday, Nov. 30,
The Telegraph states.
MODULE-AR LTD: Bought Out of Administration by Third-Party
----------------------------------------------------------
Business Sale reports that the business and assets of Module-AR
Ltd, a modular construction firm based in Hull, have been acquired
out of administration by a third party.
The company fell into administration last month following a period
of huge growth, Business Sale recounts.
The company had seen growth in its order book last year and had
completed a variety of major projects, including a 64-unit
retirement village in Doncaster, Business Sale states. However, in
its most recent accounts, the company warned about the potential
impact of project delays and rising prices, Business Sale notes.
While its turnover increased significantly in its accounts to April
2022 and pre-tax profits rose from GBP802,054 to GBP818,823, its
margins began to be impacted and post-tax profits fell from
GBP783,203 in 2021 to just under GBP640,000, Business Sale
discloses. At the time, the company owed creditors close to GBP7.1
million, according to Business Sale.
Dean Watson and Paul Stanley of Begbies Traynor were subsequently
appointed as joint administrators of the company alongside Rikki
Burton of Anderson Brookes on October 27, 2023, Business Sale
relates.
The joint administrators undertook a marketing campaign and entered
into negotiations with several potential buyers, prior to
ultimately securing a rescue deal, Business Sale recounts.
The sale of Module-AR's business and assets as a going concern, to
an as-yet unnamed third party, secures more than 70 jobs, Business
Sale states.
MORTIMER BTL 2023-1: S&P Rates Class X-Dfrd Notes 'BB+ (sf)'
------------------------------------------------------------
S&P Global Ratings has assigned credit ratings to Mortimer BTL
2023-1 PLC's (Mortimer 2023-1) class A and B notes and class C-Dfrd
to X-Dfrd interest deferrable notes.
Mortimer 2023-1 is a static RMBS transaction that securitizes a
portfolio of buy-to-let (BTL) mortgage loans secured on properties
in the U.K. LendInvest BTL Ltd. originated the loans in the pool
between 2018 and 2023.
Of the loans in the pool, 32% come from the Mortimer 2019-1 PLC
transaction (which was called on its first optional redemption date
in September 2022), whereas 68% are new originations.
At closing, the issuer used the issuance proceeds to purchase the
full beneficial interest in the mortgage loans from the seller. The
issuer grants security over all of its assets in favor of the
security trustee.
Credit enhancement for the rated notes consists of subordination
from the closing date, the general reserve fund, and
overcollateralization following the step-up date, which will result
from the release of the excess amount from the liquidity reserve
fund to the principal priority of payments.
The transaction features a general reserve fund and liquidity
reserve fund to provide liquidity.
The transaction incorporates a swap to hedge the mismatch between
the notes, which pay a coupon based on the compounded daily
Sterling Overnight Index Average (SONIA), and the loans, which
primarily pay fixed-rate interest before reversion.
There are no rating constraints in the transaction under S&P's
counterparty, operational risk, or structured finance sovereign
risk criteria. S&P considerss the issuer to be bankruptcy remote.
Ratings
CLASS RATING AMOUNT (MIL.GBP)
A AAA (sf) 366.876
B* AA (sf) 22.546
C-Dfrd A+ (sf) 8.198
D-Dfrd BBB+ (sf) 8.198
E-Dfrd BBB- (sf) 4.100
X-Dfrd BB+ (sf) 5.124
Certs NR N/A
*The transaction documents allow the class B notes to defer
interest, but our rating addresses the timely payment of interest.
NR--Not rated.
N/A--Not applicable.
REAL CONTRACTING: Owed GBP8.5MM to Creditors at Time of Collapse
----------------------------------------------------------------
Dave Rogers at Housing Today reports that Real Contracting Group, a
partnerships housing firm created two years ago by the former boss
of residential at Wates, has gone into liquidation owing more than
GBP8 million.
The firm went into liquidation earlier this month and a
liquidator's report said the business owed GBP8.5 million at the
time of its appointment last week, Housing Today relates.
The firm owed GBP8.4 million to Rydon Regeneration and close to
GBP114,000 to a recruitment business, Housing Today discloses.
Subsidiary Real SW, which covered the South-west market and which
went into liquidation earlier this month, was owed GBP30,000,
Housing Today states. A liquidator's report for this business
shows it owed GBP17.4 million, Housing Today notes.
No explanation in either report is given for why the firms sank.
Real Contracting Group liquidator Cowgills has also been appointed
to oversee the administration of Real LSE, the other regional
subsidiary of the business, Housing Today recounts.
===============
X X X X X X X X
===============
[*] BOOK REVIEW: Taking Charge
------------------------------
Taking Charge: Management Guide to Troubled Companies and
Turnarounds
Author: John O. Whitney
Publisher: Beard Books
Softcover: 283 Pages
List Price: $34.95
Order a copy today at:
http://beardbooks.com/beardbooks/taking_charge.html
Review by Susan Pannell
Remember when Lee Iacocca was practically a national hero? He won
celebrity status by taking charge at a company so universally known
as troubled that humor columnists joked their kids grew up thinking
the corporate name was "Ayling Chrysler." Whatever else Iacocca may
have been, he was a leader, and leadership is crucial to a
successful turnaround, maintains the author.
Mediagenic names merit only passing references in Whitney's book,
however. The author's own considerable experience as a turnaround
pro has given him more than sufficient perspective and acumen to
guide managers through successful turnarounds without resorting to
name-dropping. While Whitney states that he "share[s] no personal
war stories" in this book, it was, nonetheless, written from inside
the "shoes, skin, and skull of a turnaround leader." That sense of
immediacy, of urgency and intensity, makes Taking Charge compelling
reading even for the executive who feels he or she has already
mastered the literature of turnarounds.
Whitney divides the work into two parts. Part I is succinctly
entitled "Survival," and sets out the rules for taking charge
within the crucial first 120 days. "The leader rarely succeeds who
is not clearly in charge by the end of his fourth month," Whitney
notes. Cash budgeting, the mainstay of a successful turnaround, is
given attention in almost every chapter. Woe to the inexperienced
manager who views accounts receivable management as "an arcane
activity 'handled over in accounting.'" Whitney sets out 50
questions concerning AR that the leader must deal with -- not
academic exercises, but requirements for survival.
Other internal sources for cash, including judiciously managed
accounts payable and inventory, asset restructuring, and expense
cuts, are discussed. External sources of cash, among them banks,
asset lenders, and venture capital funds; factoring receivables;
and the use of trust receipts and field warehousing, are handled in
detail. Although cash, cash, and more cash is the drumbeat of Part
I, Whitney does not slight other subjects requiring attention. Two
chapters, for example, help the turnaround manager assess how the
company got into the mess in the first place, and develop
strategies for getting out of it.
The critical subject of cash continues to resonate throughout Part
II, "Profit and Growth," although here the turnaround leader
consolidates his gains and looks ahead as the turnaround matures.
New financial, new organizational, and new marketing arrangements
are laid out in detail. Whitney also provides a checklist for the
leader to use in brainstorming strategic options for the future.
Whitney's underlying theme -- that a successful business requires
personal leadership as well as bricks and mortar, money and
machinery -- is summed up in a concluding chapter that analyzes the
qualities that make a leader. His advice is as relevant in this
1999 reprint edition as it was in 1987 when first published.
John O. Whitney had a long and distinguished career in academia and
industry. He served as the Lead Director of Church and Dwight Co.,
Inc. and on the Advisory Board of Newsbank Corp. He was Professor
of Management and Executive Director of the Deming Center for
Quality Management at Columbia Business School, which he joined in
1986. He died in 2013.
*********
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 * * *