/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/231228.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 Thursday, December 28, 2023, Vol. 24, No. 260 Headlines F I N L A N D [*] FINLAND: Number of Corporate Bankruptcies Hit 25-Year High F R A N C E CASINO GUICHARD: Creditors to Vote on Accelerated Safeguard Plans G E R M A N Y SIGNA DEVELOPMENT: S&P Downgrades LT Issuer Credit Rating to 'D' SPRINGER NATURE: S&P Withdraws 'B+' Long-Term Issuer Credit Rating I R E L A N D BARINGS EURO 2023-2: S&P Assigns B- (sf) Rating to Class F Notes K A Z A K H S T A N KAZMUNAYGAS NC: S&P Affirms 'BB+' ICR, Outlook Stable M A L T A MELITA LTD: S&P Withdraws 'B' Long-Term Issuer Credit Rating R O M A N I A ROMAERO BUCURESTI: Files for Insolvency in Bucharest Court S P A I N BERING III: S&P Upgrades ICR to 'B-', Outlook Stable S W I T Z E R L A N D COVIS PHARMA: S&P Downgrades ICR to 'CCC-' on Weak Liquidity NORD STREAM 2: Court Extends Bankruptcy Moratorium Until July 10 U N I T E D K I N G D O M INTU PROPERTIES: PwC's UK Arm Averts Sanctions Over Audits MAJESTIC BINGO: Eight Bingo Clubs Sold Out of Administration - - - - - ============= F I N L A N D ============= [*] FINLAND: Number of Corporate Bankruptcies Hit 25-Year High -------------------------------------------------------------- Xinhua reports that in the past 12 months, 3,293 companies have filed for bankruptcy in Finland, which is the highest number in 25 years, Statistics Finland said in a press release published on Dec. 20. According to Statistics Finland's bankruptcy and corporate restructuring statistics, 345 bankruptcies were filed in November 2023, 112 more than in November last year, Xinhua relates. During the past 12 months, the number of bankruptcy applications surged by 25% compared to the corresponding period in the previous year, Xinhua discloses. "The number of bankruptcy applications has grown faster than at the time of the financial crisis in 2009. In other words, the number of bankruptcies is the highest in 25 years," Xinhua quotes Tommi Veistamo, chief actuary at Statistics Finland, as saying in the press release. Mr. Veistamo added that the number of bankruptcies is still far from the levels seen during the great depression in the 1990s, according to Xinhua. Statistics Finland pointed out that the number of bankruptcies is increasing in almost all industries in the country, Xinhua notes. Mr. Veistamo, as cited by Xinhua, said the number of bankruptcies in industry is now lower than during the financial crisis in 2009, but that in the construction industry is almost the same as it was in 2009. =========== F R A N C E =========== CASINO GUICHARD: Creditors to Vote on Accelerated Safeguard Plans ----------------------------------------------------------------- By judgments dated October 25, 2023, the Commercial Court of Paris ruled in favor of Casino's request and opened accelerated safeguard proceedings in its favor and in favor of certain of its subsidiaries1 for a two-month period. As mentioned in the press release published by Casino on December 11, 2023, these accelerated safeguard proceedings were extended by a judgment of the Commercial Court of Paris for a further two months (from December 25, 2025 until February 25, 2024). In this context, in their capacity as judicial administrators (administrateurs judiciaires) of Casino, Maitre Aurelia Perdereau, Maitre Helene Bourbouloux and Maitre Frederic Abitbol, have convened all relevant classes of affected parties, shareholders of Casino, Guichard-Perrachon and creditors to vote on the draft accelerated safeguard plans which will be submitted to them. The classes of affected parties will thus be able to vote on the draft plans, either electronically between December 21, 2023 and January 10, 2024 (with the votes being recorded on January 11, 2024) or, in the case of shareholders, in person at the meeting of the class of shareholders to be held on January 11, 2024, all in accordance with the specific procedures set out in the rules of procedure of the classes of affected parties and the notices of meeting. To this end, the convening notices, as well as the notice of meeting serving as the convening notice for the shareholders' class, are subject to legal publicity and were published in the bulletin of required legal notices (Le bulletin des annonces legales obligatoires - BALO) and the legal notices section of "La Tribune" on December 21, 2023. They are also accessible, along with the internal regulations of the classes of parties affected and the voting procedures and all the documents that must be made available to creditors and shareholders under the applicable legal and regulatory conditions, on Casino's website in the "Financial Restructuring" section. The classes of affected parties, including the class of shareholders, will vote at the level of each Casino Group company concerned on a single resolution, i.e. approval of the accelerated safeguard plan regarding each of these companies. Availability of the draft safeguard plans The draft accelerated safeguard plans, prepared by Casino with the assistance of the judicial administrators, on the basis of which all classes of affected parties will vote by correspondence at the level of each group entity concerned between December 21, 2023 and January 10, 2024 (or, as the case may be, on January 11, 2024, in person for Casino, Guichard-Perrachon's shareholders) are now available on the Company's website in the "Financial Restructuring" section. At the end of the vote, the results will be published on Casino's website. The technical terms and conditions of the equity transactions provided for in the draft accelerated safeguard plan of Casino, Guichard-Perrachon to be submitted to the Commercial Court of Paris for review, and the transactions to be carried out subsequently, are described in further detail in the Appendix, which is also available in the "Accelerated safeguard proceeding" section. Update of the consortium's business plan The Consortium, comprised of EP Global Commerce a.s., Fimalac and Attestor, has updated its business plan to take into account the updated 2023 forecasts for France and the announcement that it has entered into exclusive negotiations with Auchan Retail and Le Groupement Les Mousquetaires regarding the disposal of the majority of Casino hypermarkets and supermarkets to occur during the second quarter in 2024. It appears from the revised business of the consortium a 2024 EBITDA of EUR126 million (vs. EUR316 million in the previous business plan of the consortium), reaching EUR920 million in 2028 (vs. EUR949 million in the previous business plan of the consortium). The updated business plan is available on Casino's website in the "Accelerated safeguard proceeding" section. ============= G E R M A N Y ============= SIGNA DEVELOPMENT: S&P Downgrades LT Issuer Credit Rating to 'D' ---------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on Signa Development Selection AG (SDS) to 'D' from 'CC'. S&P said, "We don't assign an outlook to 'D' ratings, but we will assign forward-looking issuer credit and issue-level ratings on the company and its debt once it emerges from any group insolvency. "The downgrade follows our belief that a significant subsidiary of SDS has filed for insolvency, and therefore an event of default occurred under its bond documentation. We understand SDS has informed the bondholders' representative that one of its subsidiaries, which is defined as significant under the bond terms (representing more than 10% of revenue or assets) filed for insolvency or bankruptcy. This led to an event of default under the bond documentation. "We expect to reassess all of our ratings on SDS and its new capital structure when it emerges from any group insolvency." SPRINGER NATURE: S&P Withdraws 'B+' Long-Term Issuer Credit Rating ------------------------------------------------------------------ S&P Global Ratings withdrew its 'B+' long-term issuer and issue credit rating on global publishing group Springer Nature and its senior secured debt at the company's request. S&P understands that the company has fully repaid the debt. At the time of the withdrawal, the outlook was stable. ============= I R E L A N D ============= BARINGS EURO 2023-2: S&P Assigns B- (sf) Rating to Class F Notes ---------------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Barings Euro CLO 2023-2 DAC's class A Loan, and class A, B-1, B-2, C, D, E, and F notes. At closing, the issuer also issued unrated subordinated notes. The ratings assigned to the notes reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with our counterparty rating framework. Portfolio benchmarks CURRENT S&P Global Ratings' weighted-average rating factor 2,711.90 Default rate dispersion 654.56 Weighted-average life (years) 4.54 Obligor diversity measure 115.82 Industry diversity measure 19.08 Regional diversity measure 1.30 Transaction key metrics CURRENT Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 2.97 Covenanted 'AAA' weighted-average recovery (%) 37.30 Covenanted weighted-average spread (%) 4.18 Covenanted weighted-average coupon (%) 4.77 Under the transaction documents, the rated notes pay quarterly interest unless a frequency switch event occurs. Following this, the rated notes will switch to semiannual payments. The portfolio's reinvestment period will end 4.58 years after closing. The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, S&P has conducted its credit and cash flow analysis by applying its criteria for corporate cash flow CDOs. S&P said, "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (4.18%), the reference weighted-average coupon (4.77%), and the covenanted minimum 'AAA' weighted-average recovery rate (37.30%) as indicated by the collateral manager. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "The transaction's legal structure and framework is bankruptcy remote, in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our assigned ratings are commensurate with the available credit enhancement for the class A Loan, and class A, B-1, B-2, C, D, E, and F notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1, B-2, C, D, and E notes could withstand stresses commensurate with the same or higher ratings than those we have assigned. However, as the CLO will be in its reinvestment phase starting from closing, during which the transaction's credit risk profile could deteriorate, we have capped our ratings assigned to these notes. "The class F notes' current break-even default rate (BDR) cushion is negative at the 'B-' rating level. Based on the portfolio's actual characteristics and additional overlaying factors, including our long-term corporate default rates and recent economic outlook, we believe this class is able to sustain a steady-state scenario, in accordance with our criteria." S&P's analysis reflects several factors, including: -- The class F notes' available credit enhancement is in the same range as that of other CLOs S&P has rated and that have recently been issued in Europe. -- S&P's BDR at the 'B-' rating level is 24.78% versus a portfolio default rate of 14.19% if it was to consider a long-term sustainable default rate of 3.1% for a portfolio with a weighted-average life of 4.58 years. -- Whether the tranche is vulnerable to non-payment soon. -- If there is a one-in-two chance for this note to default. -- If S&P envisions this tranche to default in the next 12-18 months. S&P said, "Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with a 'B- (sf)' rating. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." The transaction securitizes a portfolio of primarily senior-secured leveraged loans and bonds, and is managed by Barings (U.K.) Ltd. Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities (non-ESG collateral obligations). "Accordingly, since the exclusion of assets from such industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list AMOUNT CREDIT CLASS RATING (MIL. EUR) INTEREST RATE (%) ENHANCEMENT (%) A AAA (sf) 213.60 3mE + 1.73 38.00 A Loan AAA (sf) 34.40 3mE + 1.73 38.00 B-1 AA (sf) 30.00 3mE + 2.45 28.00 B-2 AA (sf) 10.00 6.00 28.00 C A (sf) 25.80 3mE + 4.00 21.55 D BBB- (sf) 25.40 3mE + 5.99 15.20 E BB- (sf) 16.20 3mE + 8.48 11.15 F B- (sf) 15.60 3mE + 9.34 7.25 Subordinated NR 29.50 N/A N/A NR--Not rated. N/A--Not applicable. 3mE--Three-month Euro Interbank Offered Rate. =================== K A Z A K H S T A N =================== KAZMUNAYGAS NC: S&P Affirms 'BB+' ICR, Outlook Stable ----------------------------------------------------- S&P Global Ratings affirmed the long-term issuer and issue credit ratings on Kazakhstani Oil Producer KazMunayGas NC JSC (KMG) at 'BB+' and the Kazakhstan national scale rating on the company at 'kzAA'. The stable outlook reflects that on the sovereign. S&P revised its stand-alone credit profile on KMG to 'bb' from 'bb-' to reflect the headroom in credit metrics the company has built against the rating-commensurate 45% FFO-to-debt on a multiyear average basis. S&P thinks there is still a very high likelihood of extraordinary state support for KMG. S&P said, "With our expectations of Brent oil price at $85 per barrel (/bbl) in 2024 and 2025, we think KMG's metrics will continue to provide headroom. 2023 is the first year of full consolidation of KMG's 16.88% stake in the Kashagan field, which we estimate will contribute about $1.4 billion to KMG's full-year EBITDA. In addition, in the current pricing environment, the company generated solid free operating cash flow (FOCF), at Kazakhstani tenge (KZT)573 billion (about $1.3 billion) in the 12 months ended Sept 30, 2023. These factors allowed KMG to demonstrate solid credit metrics of FFO to debt at 70%, with S&P Global Ratings-adjusted debt to EBITDA of 1.2x. We think in the next two years the company will continue to have headroom relative to our FFO to debt threshold of 45% (multiyear average) for a 'BB+' rating. This led us to revise the SACP to 'bb'. We think the company will generate strongly positive annual FOCF of KZT950 billion-KZT1,300 billion, which might be largely diverted to the dividends. Although the current dividend policy is more flexible, it is based on free cash flow and links the payout to net debt to EBITDA. Notably, with net debt to EBITDA of below 1.0x the company will have to pay at least 50% of its free cash flow while with net debt to EBITDA in the range of 1.0x-1.5x, the payout requirement is at least 40% of free cash flow generated." About 20%-25% of S&P Global Ratings-adjusted consolidated EBITDA is attributable to dividends received from its joint ventures. Notably, in 2022 the company received KZT462 billion as dividends from its joint ventures, with the largest contributor being Tengizchevroil (about a half of this amount). This reliance brings some volatility of earnings and cash flows compared with the core oil and gas business. In addition, it aggravates exposure to geopolitical risks, given that Tengizchevroil is almost fully reliant on the transportation of produced oil via the Caspian Pipeline Consortium pipeline, which runs through Russia. S&P said, "Event risks around the CPC pipeline remain to the fore amid the Russia-Ukraine conflict. We estimate that at least 65% of KMG's EBITDA (including dividends from joint ventures) is linked to oil exports through CPC in 2023, and more than 80% to exports through Russia, including the Atyrau-Samara pipeline that also carries Kazakhstani oil to the port of Novorossiysk through Transneft's oil pipeline system. A number of incidents led to brief closures of the pipeline in 2022, while more recent Ukrainian attacks on the Novorossiysk port in Russia highlight the security risks around the Black Sea. We think that the current ample cash balances and solid metrics make risks related to short-term disruptions to the pipeline manageable, however. At this point, we do not incorporate any lengthy disruptions to CPC in our base-case scenario, but shutdowns exceeding three-to-five days would start affecting KMG's oil production and key assets, resulting in weaker cash flows and credit metrics. "The stable outlook on KMG mirrors that on Kazakhstan. It also reflects our view that KMG's involvement in the refining and oil transportation segments, as well as its sizable liquidity buffer, should somewhat offset the risks of short-term disruption of oil exports via the CPC. In our base case, we assume that credit metrics will be supportive in the current pricing environment, with FFO to debt close to or slightly above 60%, which provides some headroom against the weighted average of 45% that we see as commensurate with a 'BB+' rating." Downside scenario S&P would lower the rating on KMG if we lowered the rating on Kazakhstan. Pressure on the ratings might also stem from prolonged disruption to KMG's export oil transportation routes, a materially weaker pricing environment, or the company undertaking more aggressive financial policies, leading to revision of the SACP by at least two notches down to 'b+'. S&P thinks that would likely correspond to FFO to debt below 30% on a multiyear average, without prospects of recovery. Upside scenario A positive rating action on KMG would stem from a combination of: -- Commitment to a more conservative financial policy, with 60% FFO to debt at all times, -- A significant reduction in the absolute debt level, which would alleviate the exposure of credit metrics and cash flows to volatility in the commodity pricing environment, -- More visibility on future investment spending and dividend payouts. An upgrade of the sovereign by one notch might lead to an upgrade of KMG if the SACP and the likelihood of extraordinary state support remain the same. ========= M A L T A ========= MELITA LTD: S&P Withdraws 'B' Long-Term Issuer Credit Rating ------------------------------------------------------------ S&P Global Ratings withdrew its 'B' long-term issuer credit rating on Melita Ltd. at the company's request. The outlook was positive at the time of the withdrawal. S&P also withdrew the 'B' issue rating on the company's senior secured term loan B. ============= R O M A N I A ============= ROMAERO BUCURESTI: Files for Insolvency in Bucharest Court ---------------------------------------------------------- Tibi Oprea at Ziarul Financiar reports that Romaero Bucuresti, a state-run strategic company for Romania's aerospace and defense industry, on Dec. 22 notified the Bucharest Stock Exchange that it decided to file for insolvency with the Bucharest Court of Law. ========= S P A I N ========= BERING III: S&P Upgrades ICR to 'B-', Outlook Stable ---------------------------------------------------- S&P Global Ratings raised to 'B-' from 'CCC+' its issuer credit rating on frozen fish producer Bering III S.a.r.l. (Iberconsa) and its issue rating on its term loan B. The recovery rating on the term loan B is unchanged at '3', indicating meaningful recovery prospects of 50%-70 (rounded estimate 60%, previously 55%). The stable outlook indicates that S&P expects Iberconsa to remain self-funding and improve its credit metrics over the next 12 months. Iberconsa closed an amend-and-extend transaction in December 2023 that covered its senior debt maturities and effectively removed its near-term refinancing risk. The transaction slightly reduced the company's debt burden and relieved the pressure on its liquidity position--Iberconsa no longer faces large near-term debt maturities. The changes should support an improvement in credit metrics in 2024. Under the terms of the transaction, Iberconsa agreed with its lenders to extend its EUR290 million term loan B by three years to December 2027 and its EUR50 million revolving credit facility (RCF) to May 2027. In exchange, the term loan B lenders received a margin uplift of 75 basis points (bps) plus a 1% payment-in-kind (PIK) consent fee. The RCF lenders got a 25-bps margin uplift and a 0.5% cash fee. The refinancing process was supported by a EUR72 million pure equity injection from shareholders, led by the sponsor Platinum. The proceeds of this were used to pay down debt. The company has already repaid EUR25 million of the term loan B, and S&P expects it to repay about EUR25 million of the RCF and EUR10 million of its other debts over the coming few months. Overall, Iberconsa has demonstrated a resilient operating performance in 2023, despite a difficult economic backdrop for the seafood industry. S&P said, "We estimate that despite inflationary pressures, the company is likely to achieve revenue growth of about 12% in 2023, supported by higher average selling prices and a recovery in volumes, which suffered due to technical and availability issues last year. Repricing in the retail channel, especially for hake and shrimp tails, is also contributing to top-line growth. Despite persistently high fuel, freight, and staff costs, we estimate that S&P Global Ratings-adjusted EBITDA will grow to around EUR47 million in 2023 from EUR39 million in 2022, underpinned by higher revenue and more-favorable exchange rates." For part of 2023, Iberconsa benefited from a preferential exchange rate set by the former Argentinian government. This allowed exporting companies to obtain more value from their dollar sales and partly offset the increase in local operating costs (denominated in Argentinian pesos [ARS] and subject to local hyperinflation). S&P said, "Despite weakening demand in Europe and stabilizing prices, we see like-for-like revenue growth around 2% in 2024. This should mainly come from improvements to the product mix as the company shifts toward selling value-added products through the retail channel. We expect Iberconsa to be able to uphold volumes in 2024, although we see demand for fish likely softening in Europe, thanks to the flexibility of its global sales network. Its ability to redirect sales toward regions where demand is picking up, such as China, offers the group a key competitive advantage within the fishing industry. That said, squid and shrimp production volumes have historically varied by up to 5% in either direction, depending on the weather and the performance of fishing vessels, which could have an unforeseen impact on revenue growth. Higher efficiency, stabilizing freight and fuel costs, and a more-favorable exchange rates should support further growth in adjusted EBITDA during 2024. If volumes remain stable and profitability increases as expected, adjusted EBITDA could rise to EUR55 million-EUR60 million in 2024 from around EUR47 million in 2023. This implies an increase in the adjusted EBITDA margin of about 200 bps, supported by efficiency gains, more-stable input costs, and favorable exchange rates. Since early in 2023, Iberconsa's management and its sponsor have been working to increase efficiency at the company's processing facilities, streamline procurement and trade routes, and optimize its cost overhead structure. S&P said, "We anticipate that squid and shrimp fishing seasons will normalize in 2024 after unfavorable weather hindered the efficiency of fishing vessels in 2023. We also factor in a slight drop in freight and fuel costs for 2024 from the very high levels of 2022-2023. In addition, the pressure on earnings caused by overvaluation of the Argentinian peso is likely to ease; we understand that the Argentinian government will continue to focus on aligning the official exchange rate with the currency's market value." The peso has been valued at an artificially high rate for about two years, but the government undertook a hefty devaluation on Dec. 13, 2023. This should alleviate peso-denominated costs for Iberconsa in 2024; currently, these represent about a third of total operating costs. S&P said, "We now expect Iberconsa to have adequate headroom to absorb exchange rate (FX) volatility, including any from its Argentinian operations. Its forecast credit metrics have improved based on the equity injection and our revised, more-optimistic, base case. We anticipate that adjusted leverage will be about 9.5x by year-end 2023 and will drop to around 7.5x in 2024, based on growth in adjusted EBITDA, combined with the executed and prospective debt repayments from the proceeds of the equity injection. Our updated credit metrics imply headroom to absorb potential deviations from our base-case scenario. "In our view, the main potential source of volatility stems from Iberconsa's exposure to Argentina. Unforeseen FX movements or measures imposed by the Argentinian government could alter adjusted EBITDA or FOCF in any direction during 2024. Iberconsa's profitability is also sensitive to seafood prices, notably shrimp and squid, and to fast-changing consumer trends affecting international demand, especially in Asian markets. finally, the recovery we forecast is reliant on the evolution of freight and fuel prices. We expect these to gradually decrease over the coming months, but they are likely to remain volatile." Iberconsa should remain self-funding over 2024, enabling it to further replenish its liquidity position. Higher adjusted EBITDA in 2024 suggests that FOCF generation should be neutral or slightly positive; it was negative by EUR37.9 million in 2022. FOCF generation is also likely to benefit from the unwinding of inventories in 2023, especially the elevated shrimp stocks, and from the normalizing of inflation. In addition, capital expenditure (capex) requirements should ease following the completion of capex-intense projects linked to the fleet renovation. S&P said, "Following the amend-and-extend transaction, we estimate the company will have around EUR30 million in cash on its balance sheet and around EUR25 million undrawn in its RCF by year-end 2023. This should adequately cover its liquidity needs for 2024. We estimate it will need about EUR20 million for maintenance capex and have peak-to-trough working capital of around EUR25 million. We understand that the RCF repayments scheduled to occur before the end of 2023 will bring net RCF utilization to below 35%, the threshold at which the covenant is tested. Moreover, should the covenant be tested due to working capital requirements in the first half of 2024, we forecast that Iberconsa will have adequate headroom. "The stable outlook indicates that, by year-end 2024, we expect Iberconsa to have reduced its leverage toward 7.5x and to have achieved FFO cash interest of 1.5x. We forecast that adjusted EBITDA will increase to EUR55 million-EUR60 million in 2024, and that FOCF will be neutral or slightly positive. Operating performance is likely to gradually improve, supported by normalizing input costs, improved efficiency, and a more-favorable exchange rate environment. This should allow the company to remain self-funding and to have sufficient headroom under its financial covenants. "We could lower the rating if we foresee a covenant breach or that Iberconsa will be inability to self-fund operations over the coming 12 months. In addition, we could lower the rating if Iberconsa fails to reduce leverage from the current high levels, or if FOCF remains negative, with no prospect of improvement. "We would be especially concerned if negative FOCF followed an inability to manage working capital swings and caused the company's liquidity position to significantly weaken. This might happen if Iberconsa fails to adapt to persistent FX and inflationary headwinds by implementing repricing strategies and cost efficiencies, or if it suffered a sharp drop in volumes because of a deterioration in consumer demand." An upgrade would depend on Iberconsa reducing the leverage in its capital structure close to 6.0x, improving FFO cash interest coverage to above 2.0x, and maintaining positive FOCF for a sustained period. This could occur if profitability improves more than S&P expects following a seamless execution of the company's efficiency plan, or after a rapid easing of inflationary and FX pressures. Raising the rating would also depend on sizable FOCF generation, supported by disciplined working capital and capex. S&P said, "Environmental factors are a moderately negative consideration in our credit rating analysis of Iberconsa because environmental risks (including climate change, water scarcity, and biodiversity) are inherent to the agribusiness industry and can cause a high degree of profit volatility. Governance factors are also a moderately negative consideration, in line with most rated entities owned by private equity sponsors. In our view, financial sponsor-owned companies that have aggressive or highly leveraged financial risk profiles demonstrate corporate decision-making that prioritizes the interests of the controlling owners; typically, this means finite holding periods and a focus on maximizing shareholder returns." The company has long-standing fishing licenses and well-established relationships with local authorities and communities. These help sustain its access to natural stocks of fish and offsets exposure to potential political and regulatory changes in Argentina, Namibia, and South Africa, where Iberconsa has its fishing operations. ===================== S W I T Z E R L A N D ===================== COVIS PHARMA: S&P Downgrades ICR to 'CCC-' on Weak Liquidity ------------------------------------------------------------ S&P Global Ratings lowered its issuer credit rating to 'CCC-' from 'B-' on Covis Pharma and its issue-level rating on the company's super senior (SS) loan facility due in 2027 to 'CCC+' from 'B+' as well as its issue rating on its first-lien loan to 'CCC-' from 'B-'. The recovery rating on the SS debt is '1', with recovery prospects in the 90%-100% range (rounded estimate 95%). The recovery rating is '3' for the first-lien loan, indicating our expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default. Covis Finco S.a.r.l., the holding company of Covis Pharma, faces a higher risk of liquidity shortfall than S&P had previously anticipated, due to material cash flow deficits. S&P said, "The negative outlook indicates that we could lower our ratings on Covis Pharma if the company announces a distressed debt exchange on any of its instruments or we see an escalation in its risk of a payment default. "We estimate that the company has insufficient liquidity to meet its payment obligations in the near term. Based on cash on balance sheet of about $35 million as of Dec. 21, 2023, an upcoming quarterly interest payment of $25 million, and mandatory debt amortization of $5 million, the company might experience a near-term liquidity shortage due to some adverse cash flow movements. As such, we believe a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated and significantly favorable changes in the issuer's circumstances." The company may opt to pursue a distressed exchange with existing lenders to pre-empt a liquidity shortfall. Tightening credit conditions over the past 18 months have led to a growing trend of distressed issuers pursuing debt restructurings with lenders, according to S&P Global Ratings' leveraged finance analysts. S&P expects that Covis Pharma could consider this option, but could also consider selling some assets, although the latter would most likely distress the company's valuation. The negative outlook reflects the potential for a lower rating if a default becomes inevitable. S&P could lower the rating if the company announces an event that it would deem as distressed exchange, without adequate compensation. S&P could take a positive rating action if the company's liquidity improves such that it believes there is no near-term (within 12 months) credit or payment crisis. NORD STREAM 2: Court Extends Bankruptcy Moratorium Until July 10 ---------------------------------------------------------------- Interfax reports that a court in Zug, Switzerland, has extended the moratorium on the bankruptcy procedure for the Nord Stream 2 gas pipeline operator, Nord Stream 2 AG, for another six months until July 10, 2024, the court said in its ruling. The Nord Stream 2 underwater pipeline, with capacity to transport 55 billion cubic meters of gas per year, runs from the Slavyanskaya compressor station in the Kingisepp district of Russia's Leningrad region across the Baltic Sea to Germany. The German authorities suspended the process of certifying the pipeline, and the United States imposed sanctions on project company Nord Stream 2 AG, Interfax relates. The company had to terminate contracts with staff due to the sanctions, Interfax discloses. =========================== U N I T E D K I N G D O M =========================== INTU PROPERTIES: PwC's UK Arm Averts Sanctions Over Audits ---------------------------------------------------------- Michael Kapoor at Bloomberg Law reports that PwC's UK arm escaped sanctions on Dec. 19 over its review of a shopping center group's financial statements, in what had threatened to become the latest in a series of scandals surrounding the auditors of collapsed companies. According to Bloomberg Law, the Financial Reporting Council said that it had closed an investigation launched in January into the Big Four firm's audits of Intu Properties Plc for fiscal years 2017 and 2018. Deloitte took over the audit in 2019 and warned that there was a "material uncertainty" over the company's ability to continue as a going concern, an accounting term for ongoing operations, Bloomberg Law relates. PwC, also known as PricewaterhouseCoopers, failed to give a similar warning in 2017-2018, Bloomberg Law notes. Intu, the owner of big shopping malls such as Trafford Centre in Manchester and Riverside in Essex, collapsed in 2020 with debts of GBP4.5 billion (US$5.7 billion), Bloomberg Law discloses. MAJESTIC BINGO: Eight Bingo Clubs Sold Out of Administration ------------------------------------------------------------ Sam Metcalf at BusinessDesk reports that eight bingo clubs formerly owned by the stricken Lincolnshire operator Majestic Bingo have been sold out of administration in a deal which will make Real Fun Group one of the largest indie operators in the sector. The acquisition brings the group's portfolio to 10 bingo clubs throughout England and Wales whilst saving over 140 jobs, BusinessDesk notes. Majestic Bingo Limited entered administration on July 7, overseen by Tim Bateson and Chris Pole from Interpath Advisory as joint administrators, BusinessDesk recounts. Mr. Bateson, as cited by BusinessDesk, said: "Having been appointed in July 2023 and traded the business for nearly six months, we are absolutely delighted to have achieved this going concern sale, which not only will see all eight venues continue to trade, but which also both safeguards the employment of 140 people and ensures continuity for the communities which these clubs serve. "We would like to extend our thanks to the many stakeholders who have provided support to the administration team since our appointment, including customers, suppliers and Majestic's dedicated staff. Their support has enabled us to conclude this transaction which will enable the business to continue under new ownership." Following the deal, Real Fun Group now employs nearly 200 staff, BusinessDesk states. According to BusinessDesk, the eight sites are: -- Hippodrome, Bishop Auckland -- Apollo, Caernarfon -- Apollo, Camborne -- Globe, Donnington -- Apollo, Rhyl -- Roman Bank, Skegness -- Judges, Tonypandy -- Majestic, Worcester ********* 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. 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