/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/231229.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 29, 2023, Vol. 24, No. 261 Headlines A U S T R I A SIGNA PRIME: Two Divisions File for Self-Administered Restructuring G E R M A N Y NIDDA BONDCO: Fitch Affirms 'B' LongTerm IDR, Outlook Stable REVOCAR 2021-2: Fitch Affirms 'BBsf' Rating on Class D Notes I R E L A N D AB CARVAL I-C: Fitch Assigns 'B-sf' Final Rating on Class F Notes CONTEGO CLO XII: Fitch Assigns 'B-sf' Final Rating on Class F Notes PENTA CLO 15: Fitch Assigns 'B-sf' Final Rating on Class F Notes SONA FIOS I: Fitch Assigns 'B-sf' Final Rating on Class F Notes S W E D E N SAS AB: Unsecured Creditors to Get Share of GUC Trust in Plan U N I T E D K I N G D O M GOMEZ: Enters Administration, Ceases Trading VOLTA TRUCKS: Luxor Capital Unit Buys UK Business, Assets [*] UK: Nearly 30,000 Businesses Expected to Fail Next Year [*] UK: Winding Up Petitions From HMRC More Than Triple in 2023 X X X X X X X X [*] BOOK REVIEW: The Phoenix Effect - - - - - ============= A U S T R I A ============= SIGNA PRIME: Two Divisions File for Self-Administered Restructuring ------------------------------------------------------------------- Tom Sims and Alexander Hubner at Reuters report that European property company Signa on Dec. 28 said that two key divisions are filing for insolvency, a significant development in the unravelling of founder Rene Benko's real estate empire. Signa Prime Selection filed for self-administrated restructuring in a Vienna court on Thursday, Dec. 28, and Signa Development Selection will file today Friday, Dec. 29, Signa said, Reuters relates. The announcements are the latest twist in the saga for Signa, the biggest casualty so far in Europe's real-estate crisis. "It is well known that external factors have had a negative impact on business development in the real estate sector in recent months," Reuters quotes Signa as saying. The holding company of Signa -- a group of some 1,000 companies, with high-profile projects and department stores across Germany, Austria and Switzerland -- filed for insolvency last month with around EUR5 billion (US$5.56 billion) in debt, Reuters recounts. Other divisions have followed suit, but Prime Selection is Signa's largest real estate division with 54 properties valued at EUR19.3 billion and debts of EUR4.5 billion, according to the AKV creditor protection association, Reuters discloses. Signa Development, with new projects in the works in Vienna, Berlin, and Wolfsburg, Germany, has a balance sheet of EUR4.6 billion, Reuters relays, citing Signa's website. ============= G E R M A N Y ============= NIDDA BONDCO: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Nidda BondCo GmbH's (Nidda) Long-Term Issuer Default Rating (IDR) at 'B', with a Stable Outlook. The rating action follows Nidda's recent corporate restructuring, which has had a limited impact on business risk. Nidda's 'B' IDR balances its high, albeit improving, post-restructuring leverage and a record of aggressive M&A growth with a robust business profile and expected continuing positive free cash flow (FCF) generation. The Stable Outlook reflects its expectation of mid-single-digit annual sales growth in 2023-2026, with EBITDA leverage trending to 6.5x by end-2024. Fitch also assumes that Nidda will be able to address upcoming maturities in 2025 on a timely basis, and see lower refinancing risk for its 2026 debt, on the back of strong underlying performance, deleveraging capacity and positive cash flow generation. The affirmation of Nidda's senior secured debt reflects its updated assumptions of positive impact on valuations from a reduced exposure to Russian operations, which is partially offset by decreased business scale. KEY RATING DRIVERS Limited Impact of Corporate Restructuring: The recent restructuring to move its Russian operations outside of its restricted group has had a neutral impact on its assessment of business risk profile and the ratings. Even excluding Russian operations that generated around 15% of consolidated revenues, Fitch expects Nidda's product and geographic diversification to remain strong. Although its Russian business had lower financial leverage, its revised leverage forecast is still comfortably below the negative sensitivity of 7.5x. On a pro-forma basis, excluding contribution of the Russian operations and local debt facility, Nidda's EBITDA leverage would be 7.1x at end-2023, compared with 6.1x under its previous forecast. Solid Cash-Generative Operations: The ratings are supported by cash-generative operations, due to contained capex intensity and profitability initiatives. Even excluding Russian operations, a growing contribution of high-margin drugs and an improving capacity to produce in lower-cost geographies will offset a high interest burden and net working-capital (NWC) outflows, and support free cash flow (FCF) margins at 5%-6% in 2025-2026. The latter should be sufficient to fund EUR100 million of bolt-on acquisitions a year to 2026 and also aid future refinancing. Profitability Improvement Initiatives: Nidda is actively working on reinforcing its profitability through cost optimisation by strategically locating its production facilities and increasing their utilisation rates. Using its existing brands for new product launches helps optimise advertising costs and supports high brand visibility. Fitch forecasts that Nidda's strategy and scalable operations will support EBITDA margins of about 23% (excluding Russian operations), which are strong for the rating. Reduced Refinancing Risk: Fitch continues to expect Nidda to redeem with cash on hand or refinance the remaining portion of its EUR237 million senior unsecured notes. This will enable it to extend by a year to 2026 the maturities of a majority of its debt totalling approximately EUR4.5 billion. Fitch does not expect Nidda to generate sufficient cash flows to fully address the 2026 maturities but strong operating momentum should reduce refinancing risk for its sizeable debt quantum. Financial Policy Key to Rating: Fitch believes Nidda has the ability to deleverage given its strong cash generation, but until recently its strategy had been to prioritise acquisitions. Fitch expects Nidda to continue making opportunistic bolt-on acquisitions, and signing business development and in-licensing (BD&L) agreements as the European pharmaceutical market offers viable targets. Sizeable debt-funded acquisitions as well as a change in the ownership structure, which could affect its financial policy, are an event risk to the rating. Strategic Focus Drives Growth: Nidda's focus on bringing value-added specialty drugs to market through BD&L agreements is a distinct feature of its strategy since its LBO in 2017. This differentiates it from some leveraged-financed generics peers, with greater organic growth potential, but also more investments in the pipeline and associated execution risk. Fitch expects an ongoing expansion of the consumer healthcare portfolio and a ramp-up of its specialty products (including biosimilars, innovative pharma) to drive EBITDA to about EUR1 billion by end-2026. Positive Market Fundamentals: Fitch expects overall demand will continue to grow in the mid-single digits, with higher pricing in complex product areas driven by growing ageing populations and the increasing prevalence of chronic diseases, which will support Nidda's further deleveraging. Fitch sees continued structural growth opportunities, given more limited overall generic penetration in Europe than in the US and the increasing introduction of biosimilars. DERIVATION SUMMARY Fitch rates Nidda using its Global Rating Navigator Framework for Pharmaceutical Companies. Under this framework, Nidda's generic and consumer business benefits from diversification by product and geography, with a balanced exposure to mature, developed and emerging markets. Nidda's business risk profile is affected by the lack of a global footprint compared with industry champions such as Teva Pharmaceutical Industries Limited (BB-/Stable), Hikma Pharmaceuticals PLC (BBB-/Positive), Viatris Inc. (BBB/Stable), and diversified companies, such as Novartis AG (AA-/Stable) and Pfizer Inc. (A/Stable). High financial leverage is a key rating constraint compared with international peers and is reflected in Nidda's 'B' rating. In terms of scale and product diversity, Nidda ranks ahead of other highly speculative peers, such as ADVANZ PHARMA HoldCo Limited (B/Stable), Cooper Consumer Health (B/Stable) and Roar BidCo AB (B/Stable). Nidda's business is mainly concentrated in Europe, but it also has a growing presence in other developed and emerging markets. This gives Nidda a 'BB' category risk profile. However, its higher leverage and concentrated debt maturity profile constrain the rating. The rating difference between Nidda and higher-rated peers CHEPLAPHARM Arzneimittel GmbH and Pharmanovia Bidco Limited (both B+/Stable) reflects their less aggressive leverage and asset-light business models, despite smaller business scale and higher product concentration. KEY ASSUMPTIONS Key Assumptions Within Its Rating Case for the Issuer - Revenue to reach close to EUR4.4 billion by 2026, excluding contribution of Russian operations, due to volume-driven growth of Nidda's specialty product portfolio, the acquisition of intellectual property rights, and BD&L agreements - Fitch-defined EBITDA margin at around 23% by 2026, underpinned by cost improvements and ramp-up of higher-margin products - Working-capital investments at 1%-2% of sales a year to 2026 - Capex at around 5% of sales (including deferred milestone payments) a year to 2026 - M&A estimated at EUR100 million a year, valued at 10x EBITDA with a 20% EBITDA contribution share. M&A to be primarily funded from internally generated funds and supported by its revolving credit facility (RCF) RECOVERY ANALYSIS Nidda would be considered a going concern (GC) in bankruptcy and be reorganised rather than liquidated. Fitch estimates a GC EBITDA of around EUR550 million, down from a previously forecast EUR600 million, to reflect the EBITDA contribution loss after the corporate restructuring of the Russian operations outside the restricted group. Nevertheless, Fitch increases the distressed enterprise value (EV)/EBITDA multiple to 6.5x from 6.0x, as the valuation of the restricted group would less likely be diluted by its exposure to Russian operations. Fitch assumes Nidda's senior unsecured legacy debt (at the operating company level), which is structurally the most senior, to rank equally with its senior secured acquisition debt, including term loans, senior secured notes and privately placed senior secured notes. This view is based on its principal waterfall analysis and assuming the EUR360 million RCF is fully drawn in a default. Senior unsecured notes at Nidda rank below its senior secured acquisition debt. Its principal waterfall analysis, after deducting 10% for administrative claims, generates a ranked recovery for the senior secured debt of 57% (55% previously) in the 'RR3' category, including the senior secured exchange notes, leading to a 'B+' instrument rating, one notch above the IDR. Recoveries envisaged for Nidda's senior unsecured notes remain 0% in the 'RR6' band, corresponding to a 'CCC+' instrument rating, two notches below the IDR. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustained Fitch-defined EBITDA margins in excess of 25% and FCF margins consistently above 5% - Reduction in EBITDA leverage to below 6.0x on a sustained basis - Maintenance of EBITDA interest cover above 3.0x Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - M&A shifting towards higher-risk or lower-quality assets or weak integration resulting in EBITDA leverage trending to 7.5x - Persistent operating weakness leading to neutral FCF margins and EBITDA margins below 18% - EBITDA interest cover below 2.0x on a sustained basis LIQUIDITY AND DEBT STRUCTURE Liquidity Remains Satisfactory: Fitch expects Nidda to end 2023 with about EUR212 million of cash, excluding EUR100 million cash that Fitch treats as not readily available for debt service, and EUR250 million available under its EUR360 million RCF. Fitch projects healthy FCF generation to 2026, which would support liquidity and should be sufficient to fund operations and M&A activity. Debt Maturity Concentrated in 2026: Nidda's current capital structure presumes that 90% of consolidated gross debt would mature in 2025, unless it extends, repays or refinances its outstanding EUR237 million senior unsecured notes due in 2025. Should this debt be addressed, its maturity profile will remain concentrated, with a majority of currently outstanding debt and the RCF maturing in 2026. At the same time, the new term loan and most recent placements have more distant maturities, and Fitch believes that strong organic deleveraging will reduce refinancing risk for its 2026 debt. ISSUER PROFILE Nidda is an SPV with indirect ownership of the German-based pharmaceutical company Stada Arzneimittel AG. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch treats EUR100 million cash as not readily available for debt service. In addition, Fitch estimates that Nidda utilises about EUR100 million factoring facility that Fitch treats as debt and include in its leverage calculations. 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 ----------- ------ -------- ----- Nidda BondCo GmbH LT IDR B Affirmed B senior unsecured LT CCC+ Affirmed RR6 CCC+ Nidda Healthcare Holding GmbH senior secured LT B+ Affirmed RR3 B+ REVOCAR 2021-2: Fitch Affirms 'BBsf' Rating on Class D Notes ------------------------------------------------------------ Fitch Ratings has upgraded RevoCar 2019-2 UG (Haftungsbeshraenkt)'s class C and D notes and affirmed the other tranches. Fitch has also affirmed RevoCar 2020 UG (haftungsbeschraenkt) and RevoCar 2021-2 UG (Haftungsbeschraenkt). Entity/Debt Rating Prior ----------- ------ ----- RevoCar 2020 UG (haftungsbeschraenkt) A XS2181028916 LT AAAsf Affirmed AAAsf B XS2181029302 LT A+sf Affirmed A+sf C XS2181029641 LT A-sf Affirmed A-sf D XS2181030813 LT BBB-sf Affirmed BBB-sf RevoCar 2019-2 UG (haftungsbeschraenkt) Class A XS2053516550 LT AAAsf Affirmed AAAsf Class B XS2053516808 LT A+sf Affirmed A+sf Class C XS2053516980 LT Asf Upgrade BBB+sf Class D XS2053517012 LT BBB+sf Upgrade BBB-sf RevoCar 2021-2 UG (haftungsbeschraenkt) A XS2396099454 LT AAAsf Affirmed AAAsf B XS2396101706 LT Asf Affirmed Asf C XS2396108206 LT BBBsf Affirmed BBBsf D XS2396117025 LT BBsf Affirmed BBsf TRANSACTION SUMMARY The transactions are securitisations of auto loan receivables originated by non-captive Bank11 für Privatkunden und Handel Gmbh. RevoCar 2020 is currently revolving while RevoCar 2019-2 and 2021-2 are amortising. The transactions feature standard amortising (EvoClassic) and balloon loans (EvoSmart). Bank11 also originated an additional product called EvoSuperSmart loans, which were balloon loans with special features. Bank11 discontinued originating these loans in 2021. For RevoCar 2020 and 2019-2, the share of EvoSuperSmart loans has reduced during each transaction's revolving period as they have been replaced by standard balloon loans (EvoSmart). The RevoCar 2021-2 transaction does not include any EvoSuperSmart loans. KEY RATING DRIVERS Revolving Period Ending: The revolving period for RevoCar 2019-2 ended on the August 2023 interest payment date and on the October 2023 interest payment date for RevoCar 2021-2. Consequently, Fitch sees reduced risk from Bank11's underwriting standards and has reduced the default multiple applied at 'AAAsf' to 6.5x from 7.0x for both transactions. The assumption is unchanged for RevoCar 2020, which remains in its revolving period that is due to end in around six months. The upgrades of RevoCar 2019-2's class C and D notes were primarily driven by the additional credit enhancement that has built up since the transaction began amortising. Unchanged Base Case Assumptions: All three transactions have performed in line with expectations as of the latest investor reporting. Therefore, Fitch has maintained its default base case assumption at 1.6% and recovery base case assumption of 45% for all three transactions. The base cases incorporate some stress to account for performance deterioration, which may arise from inflationary pressure and declining real incomes. Junior Notes' Payment Interruption Risk: An amortising liquidity reserve is available in all three transactions to cover senior expenses and class A interest payments. However, it is only available in case of a servicer termination event, which is a weaker set-up than for peer transactions. The reserve does not cover interest payments on junior notes. This unmitigated payment interruption risk results in a rating cap of 'A+sf' for junior notes as per its criteria. Prepayments Exposed to Commingling Risk: All scheduled payments are remitted to the issuer's accounts daily, but prepayments are transferred monthly. A commingling reserve does not fully cover the risk of commingling these collections for RevoCar 2020 and RevoCar 2021-2. Fitch incorporated potential losses by deducting the exposed amount of 1.0% and 0.5% of the asset balance from the receivables balance for the two transactions. The commingling risk is sufficiently reduced by a reserve for RevoCar 2019-2. Counterparty Replacement Procedures Adequate: The servicer continuity risks are adequately reduced with servicer replacement conditions clearly defined. Account bank and swap counterparty downgrade risks are adequately reduced with triggers and replacement procedures in line with its criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade RevoCar2019-2 UG Default rate increased by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'Asf'; Class D: 'BBBsf' Default rate increased by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBB-sf' Default rate increased by 50% Class A: 'AA+sf'; Class B: 'Asf'; Class C: 'BBB+sf'; Class D: 'BB+sf' Recovery rate reduced by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'Asf'; Class D: 'BBBsf' Recovery rate reduced by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'Asf'; Class D: 'BBBsf' Recovery rate reduced by 50% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBB-sf' Default rate increased by 10% and recovery rate reduced by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBBsf' Default rate increased by 25% and recovery rate reduced by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'BBB+sf'; Class D: 'BB+sf' Default rate increased by 50% and recovery rate reduced by 50% Class A: 'AA+sf'; Class B: 'A-sf'; Class C: 'BB+sf'; Class D: 'BB-sf' RevoCar 2020 UG Default rate increased by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBB-sf' Default rate increased by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'BBB+sf'; Class D: 'BB+sf' Default rate increased by 50% Class A: 'AA+sf'; Class B: 'Asf'; Class C: 'BBBsf'; Class D: 'BBsf' Recovery rate reduced by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBB-sf' Recovery rate reduced by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBB-sf' Recovery rate reduced by 50% Class A: 'AA+sf'; Class B: 'Asf'; Class C: 'BBB+sf'; Class D: 'BB+sf' Default rate increased by 10% and recovery rate reduced by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A-sf'; Class D: 'BBB-sf' Default rate increased by 25% and recovery rate reduced by 25% Class A: 'AA+sf'; Class B: 'Asf'; Class C: 'BBB+sf'; Class D: 'BBsf' Default rate increased by 50% and recovery rate reduced by 50% Class A: 'AA-sf'; Class B: 'BBB+sf'; Class C: 'BBsf'; Class D: 'B+sf' RevoCar 2021-2 UG Default rate increased by 10% Class A: 'AAAsf'; Class B: 'Asf'; Class C: 'BBBsf'; Class D: 'BB-sf' Default rate increased by 25% Class A: 'AA+sf'; Class B: 'BBB+sf'; Class C: 'BBB-sf'; Class D: 'B+sf' Default rate increased by 50% Class A: 'AAsf'; Class B: 'BBBsf'; Class C: 'BBsf'; Class D: 'Bsf' Recovery rate reduced by 10% Class A: 'AAAsf'; Class B: 'Asf'; Class C: 'BBBsf'; Class D: 'BB-sf' Recovery rate reduced by 25% Class A: 'AAAsf'; Class B: 'A-sf'; Class C: 'BBB-sf'; Class D: 'B+sf' Recovery rate reduced by 50% Class A: 'AAAsf'; Class B: 'A-sf'; Class C: 'BB+sf'; Class D: 'Bsf' Default rate increased by 10% and recovery rate reduced by 10% Class A: 'AAAsf'; Class B: 'A-sf'; Class C: 'BBB-sf'; Class D: 'B+sf' Default rate increased by 25% and recovery rate reduced by 25% Class A: 'AA+sf'; Class B: 'BBB+sf'; Class C: 'BBsf'; Class D: 'Bsf' Default rate increased by 50% and recovery rate reduced by 50% Class A: 'A+sf'; Class B: 'BBB-sf'; Class C: 'B+sf'; Class D: 'NRsf' Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The class A notes in all three transactions are at their maximum achievable rating of 'AAAsf'. The ratings on all tranches below class A are capped at 'A+sf' due to unmitigated payment interruption risk. The class B notes of RevoCar 2019-2 and RevoCar 2020 are already at their maximum achievable rating of 'A+sf' due to the cap. RevoCar2019-2 UG Default rate reduced by 10% and recovery rate increased by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A+sf'; Class D: 'A-sf' Default rate reduced by 25% and recovery rate increased by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A+sf'; Class D: 'A+sf' RevoCar 2020 UG Default rate reduced by 10% and recovery rate increased by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A+sf'; Class D: 'BBB+sf' Default rate reduced by 25% and recovery rate increased by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'A+sf'; Class D: 'Asf' RevoCar 2021-2 UG Default rate reduced by 10% and recovery rate increased by 10% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'BBB+sf'; Class D: 'BB+sf' Default rate reduced by 25% and recovery rate increased by 25% Class A: 'AAAsf'; Class B: 'A+sf'; Class C: 'Asf'; Class D: 'BBBsf' DATA ADEQUACY RevoCar 2020 (haftungsbeschraenkt), RevoCar2019-2 UG (haftungsbeschraenkt) 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. Prior to the transaction closing, Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. RevoCar 2021-2 UG (haftungsbeschraenkt) 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. ============= I R E L A N D ============= AB CARVAL I-C: Fitch Assigns 'B-sf' Final Rating on Class F Notes ----------------------------------------------------------------- Fitch Ratings has assigned AB CarVal Euro CLO I-C DAC final ratings, as detailed below. Entity/Debt Rating ----------- ------ AB CarVal Euro CLO I-C DAC Class A-L LT AAAsf New Rating Class A-N XS2713766009 LT AAAsf New Rating Class B XS2713766264 LT AAsf New Rating Class C XS2713766777 LT Asf New Rating Class D. XS2713766934 LT BBB-sf New Rating Class E XS2713767072 LT BB-sf New Rating Class F XS2713767403 LT B-sf New Rating Subordinated Notes XS2713767585 LT NRsf New Rating TRANSACTION SUMMARY AB CarVal Euro CLO I-C DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds were used to fund a portfolio with a target par of EUR330 million. The portfolio is actively managed by CarVal CLO Management LLC. The collateralised loan obligation (CLO) has a 4.6-year reinvestment period and an 8.5-year weighted average life (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors in the 'B' category. The Fitch weighted average rating factor (WARF) of the identified portfolio is 24.1. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise 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 64.1%. Diversified Asset Portfolio (Positive): The transaction has two matrices effective at closing, corresponding to the 10 largest obligors at 20% of the portfolio balance and a fixed-rate asset limit at 5% and 10% of the portfolio. It has two forward matrices corresponding to the same top 10 obligors and fixed-rate asset limits, which will be effective one year after closing, provided the aggregate collateral balance (defaults at Fitch-calculated collateral value) is at least at the reinvestment target par balance. The transaction also has various concentration limits, including the maximum exposure to the three largest Fitch-defined industries in the portfolio at 42.5%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a 4.6-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Neutral): The WAL used for the transaction's Fitch-stressed portfolio was 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, among others. Fitch believes 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 A 25% increase in the mean default rate (RDR) across all ratings and a 25% decrease in the recovery rate (RRR) across all ratings of the identified portfolio would lead to downgrades of one notch for the class D and E notes, and to below 'B-sf' for the class F notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B, D and E notes have a cushion of two notches, the class C notes of one notch and the class A notes no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded due to manager trading or negative portfolio credit migration, a 25% increase in the mean RDR across all the ratings and a 25% decrease in the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches for the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction in the mean RDR across all ratings and a 25% increase in the RRR across all the ratings in the Fitch-stressed portfolio would lead to upgrades of up to three notches, except for the 'AAAsf' rated notes. 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 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. CONTEGO CLO XII: Fitch Assigns 'B-sf' Final Rating on Class F Notes ------------------------------------------------------------------- Fitch Ratings has assigned Contego CLO XII DAC final ratings, as detailed below. Entity/Debt Rating ----------- ------ Contego CLO XII DAC A XS2708631598 LT AAAsf New Rating B XS2708631911 LT AAsf New Rating C XS2708632133 LT Asf New Rating D XS2708632562 LT BBB-sf New Rating E XS2708632646 LT BB-sf New Rating F XS2708633297 LT B-sf New Rating Subordinated Notes XS2708633024 LT NRsf New Rating TRANSACTION SUMMARY Contego CLO XII DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of corporate rescue loans, senior unsecured, mezzanine, second-lien loans and high-yield bonds. Net proceeds from the note issuance were used to fund a portfolio with a target size of EUR400 million. The portfolio manager is Five Arrows Managers LLP. The collateralised loan obligation (CLO) envisages a 5.1-year reinvestment period and an 8.1 weighted average life (WAL) test. 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 25.9. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise 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 60.3%. Diversified Portfolio (Positive): The transaction includes a top 10 obligor concentration limit at 20%, two fixed-rate asset limits at 5% and 10% and an 8.1-year WAL test. The transaction also has 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. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by one year, to 9.1 years, on the step-up date, which can be one year after closing at the earliest. The WAL extension is at the option of the manager but subject to conditions including meeting the collateral-quality tests and the reinvestment target par, with defaulted assets at their collateral value. Portfolio Management (Neutral): The transaction has a 5.1-year reinvestment period and includes 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 transaction's Fitch-stressed portfolio and matrices analysis is 12 months less than the WAL covenant. This reflects the strict reinvestment criteria post-reinvestment period, which includes satisfaction of Fitch 'CCC' limitation and coverage tests, as well as a WAL covenant that progressively steps down over time. In Fitch's opinion, these conditions reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase in the mean default rate (RDR) across all ratings and a 25% decrease in the recovery rate (RRR) across all ratings of the identified portfolio would lead to a downgrade of two notches on the class E notes, one notch on the class B, C and D notes, to below 'B-sf' on the class F notes, and have no impact on the class A notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than initially assumed due to unexpectedly high levels of defaults and portfolio deterioration. Owing to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B, D and E notes have a two-notches cushion and class C and F notes have a one-notch cushion. The class A notes have no rating cushion. Should the cushion between the current portfolio and the Fitch-stressed portfolio be eroded, either due to manager trading or to negative portfolio credit migration, a 25% increase in the mean RDR across all ratings and a 25% decrease in the RRR across all ratings of the Fitch-stressed portfolio, would lead to downgrades of up to four notches for the rated notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction in the RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches for the rated notes, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, which are based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, leading to the ability of the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades, except for the 'AAAsf' notes, 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. PENTA CLO 15: Fitch Assigns 'B-sf' Final Rating on Class F Notes ---------------------------------------------------------------- Fitch Ratings has assigned Penta CLO 15 DAC final ratings as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Penta CLO 15 DAC Class A-L XS2714461873 LT AAAsf New Rating AAA(EXP)sf Class A-N XS2708723528 LT AAAsf New Rating AAA(EXP)sf Class B XS2708724252 LT AAsf New Rating AA(EXP)sf Class C XS2708724849 LT Asf New Rating A(EXP)sf Class D XS2708724922 LT BBB-sf New Rating BBB-(EXP)sf Class E XS2708725739 LT BB-sf New Rating BB-(EXP)sf Class F XS2708725903 LT B-sf New Rating B-(EXP)sf Subordinated Notes XS2708726117 LT NRsf New Rating NR(EXP)sf TRANSACTION SUMMARY Penta CLO 15 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds have been used to fund a portfolio with a target par of EUR350 million. The portfolio is actively managed by Partners Group. The collateralised loan obligation (CLO) has about a 4.5-year reinvestment period and an 8.5 year weighted average life (WAL) test limit. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors in the identified portfolio at 'B'/'B-'. The Fitch weighted average rating factor (WARF) of the identified portfolio is 26. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise 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 62.7%. Diversified Asset Portfolio (Positive): The transaction includes four Fitch test matrices, of which two are effective at closing. The matrices correspond to a top 10 obligor concentration limit of 25%, and fixed-rate obligation limits at 5% and 10%. It has two forward matrices corresponding to the same top 10 obligors and fixed-rate asset limits, which will be effective one year after closing, provided the aggregate collateral balance (defaults at Fitch-calculated collateral value) is at least at the reinvestment target par balance. The transaction also includes 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 has an approximately 4.5-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Neutral): The WAL used for the stressed-cased portfolio was 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, and a WAL covenant that progressively steps down over time, both before and after the end of the reinvestment period. In Fitch's opinion, these conditions 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 A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on the class A-N notes and A-L loan, but would lead to downgrades of no more than one notch for the class B, C, D and E notes, and to below 'B-sf' for the class F notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger 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 stressed-case portfolio, the class B to F notes display a rating cushion of up to two notches. 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 across all ratings and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches for the rated notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches for the rated notes, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, which are based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, leading to the ability of the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades, except for the 'AAAsf' notes, 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. SONA FIOS I: Fitch Assigns 'B-sf' Final Rating on Class F Notes --------------------------------------------------------------- Fitch Ratings has assigned SONA FIOS CLO I DAC final ratings, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- SONA FIOS CLO I DESIGNATED ACTIVITY COMPANY A-1 Loan LT AAAsf New Rating AAA(EXP)sf A-1 XS2714442220 LT AAAsf New Rating AAA(EXP)sf A-2 XS2720029755 LT AAAsf New Rating AAA(EXP)sf B-1 XS2714442493 LT AAsf New Rating AA(EXP)sf B-2 XS2714442576 LT AAsf New Rating AA(EXP)sf C XS2714442659 LT Asf New Rating A(EXP)sf D XS2714442733 LT BBB-sf New Rating BBB-(EXP)sf E XS2714442816 LT BB-sf New Rating BB-(EXP)sf F XS2714442907 LT B-sf New Rating B-(EXP)sf Subordinated Notes XS2714443038 LT NRsf New Rating NR(EXP)sf TRANSACTION SUMMARY SONA FIOS CLO I DAC is a securitisation of mainly senior secured obligations (at least 92.5%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds have been used to purchase a portfolio with a target par of EUR425 million. The portfolio is actively managed by Sona Asset Management (UK) LLP. The CLO has a 4.6-year reinvestment period and an 8.5-year weighted average life test (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors to be in the 'B' category. The Fitch weighted average rating factor of the identified portfolio is 24.5. High Recovery Expectations (Positive): At least 92.5% of the portfolio comprises 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 of the identified portfolio is 63.1%. Diversified Portfolio (Positive): The transaction includes two matrices covenanted by a top-10 obligor concentration limit at 20% and fixed-rate asset limits of 7.5% and 12.5%, and a weighted average coupon at 5%. It has 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 has a 4.6-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. The transaction includes two Fitch matrices, one effective at closing and the other one year after closing. The second can be selected by the manager at any time from one year after closing as long as the aggregate collateral balance (including defaulted obligations at their Fitch collateral value) is at least at the target par. Cash Flow Modelling (Positive): The WAL used for the transaction stress portfolio is reduced by 12 months from the WAL covenant. This reduction to the risk horizon accounts for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include, among others, passing both the coverage tests and the Fitch 'CCC' test post reinvestment as well as a WAL covenant that progressively steps down over time. Fitch believes 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 A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on the class A-1 notes, A-1 loan, A-2 and C notes and would lead to downgrades of one notch for the class B-1, B-2, D, E and F notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger 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 B-1, B-2, D, E, and F notes have a cushion of two notches and the class C one notch. The class A-1 notes, A-1 loan and A-2 notes have no cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded, 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 up to four notches. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches, except for the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. 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, allowing the notes to withstand larger-than-expected losses for the remaining life of the transaction. 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 SONA FIOS CLO I DESIGNATED ACTIVITY COMPANY The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations 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. =========== S W E D E N =========== SAS AB: Unsecured Creditors to Get Share of GUC Trust in Plan ------------------------------------------------------------- SAS AB and its Subsidiary Debtors filed with the U.S. Bankruptcy Court the Disclosure Statement describing their Joint Chapter 11 Plan dated December 19, 2023. SAS was founded in 1946 by national aircraft companies owned by the Danish State Investor, the Kingdom of Norway, and the Kingdom of Sweden (the "Swedish State"). The Debtors commenced the Chapter 11 Cases to pursue and implement a comprehensive financial restructuring to deleverage the Debtors' balance sheet to ensure the Debtors' long-term viability. Following the completion of the Debtors' equity solicitation process in these Chapter 11 Cases, the Debtors selected a group of bidders comprised of Castlelake, L.P., on behalf of certain of its funds or affiliates ("Castlelake"), Air France-KLM S.A. ("AFKLM"), and Lind Invest ApS ("Lind Invest" and, collectively with Castlelake and AFKLM, the "Bidder Consortium"), together with the Kingdom of Denmark (the "Danish State Investor" and, together with the Bidder Consortium, the "Investors"), as the winning bidders with respect to a transaction involving an investment in, and issuance of new equity interests and secured convertible debt by, reorganized SAS AB ("Reorganized SAS AB" and, such transaction, the "Transaction"). The Transaction is memorialized in the Investment Agreement, and the terms of which are incorporated into the Plan by reference as if fully set forth therein. As a result, the Plan provides for a comprehensive restructuring of the Debtors' balance sheet and a significant investment of new capital from the Investors, which will provide the Debtors with liquidity to support operations as a going concern. More specially, the Plan incorporates the Transaction and provides for: * a total investment in Reorganized SAS AB of $1.2 billion (SEK12,249 million), comprised of $475 million (SEK4,849 million) in new unlisted equity and $725 million (SEK7,401 million) in secured convertible debt; * the allocation of up to $325 million (SEK3,318 million) to fund distributions to general unsecured creditors through a combination of cash and the remaining approximately 13.6% of new unlisted equity in Reorganized SAS AB, subject to the terms of the Investment Agreement and the Plan; * the post-confirmation implementation of the Plan, with respect to SAS AB, in Sweden through a Swedish company reorganization (likely to be filed in 2024) (the "Swedish Reorganization" and, such plan, the "Swedish Reorganization Plan"); * the establishment of the GUC Trust to be funded with the Reserved Funds, which will be used by the Reorganized Debtors to (i) (a) challenge any State non-tax claims attributable to the period from 2020 to 2023 that may be raised against the Debtors in national courts (each such claim, a "State Non-Tax Claim") and (b) satisfy any costs or expenses that may arise or have arisen from a third party agreeing to pay in full and without recourse to the Debtors any State Non-Tax Claim, (ii) in the event of (a) a final decision from a competent court requiring the Debtors to pay or (b) a State under Applicable Law being required to ex officio demand payment of any State Non-Tax Claim, pay that State Non-Tax Claim, to the extent a third party has not already paid, or agreed to pay, such State Non-Tax Claim, and (iii) in the event that the Reserved Funds exceed any amounts paid pursuant to the preceeding clauses (i) and (ii), make distributions to holders of GUC Trust Interests in accordance with the Plan and the Swedish Reorganization Plan; * the cancellation of Debtor SAS AB's existing common shares and Commercial Hybrid Bonds; * a reduction in the Debtors' prepetition debt by approximately $2 billion (SEK20.4 billion); and * approximately $1.1 billion (SEK11,2 billion) of unrestricted cash on the Reorganized Debtors' go forward balance sheet. The Plan provides for the substantive consolidation only of the Consolidated Debtors exclusively for the purposes set forth in the Plan, and otherwise shall be implemented without any substantive consolidation. Subject to the satisfaction of the conditions set forth in the Investment Agreement or the waiver thereof by the party entitled to waive that condition, on the Effective Date Reorganized SAS AB shall issue New Shares and New Convertible Notes to the Investors for an aggregate purchase price equal to the Total Share Subscription Amount and the New Convertible Notes Amount, respectively, subject to and in accordance with the terms and conditions of the Plan, the Investment Agreement, the New Convertible Notes Indenture, the Governance Term Sheet, the Shareholders' Agreement, the Articles, and any consents or approvals required under each of the foregoing. Accordingly, the Restructuring shall include: * a total investment in Reorganized SAS AB corresponding to $1.2 billion (SEK12,249 million), comprised of $475 million (SEK4,849 million) in New Shares and $725 million (SEK7,401 million) in New Convertible Notes; * the allocation of up to $325 million (SEK3,318 million) in value to holders of Allowed General Unsecured Claims as set forth in the Plan, subject to the establishment of a GUC Trust with respect to the GUC Trust Amount, through a combination of the Available Cash, the GUC Trust Interests, and the New Shares Distribution Pool. Based upon such Financial Projections, the Debtors conclude they will have sufficient resources to make all payments required pursuant to the Plan and that confirmation of the Plan is not likely to be followed by liquidation or the need for further reorganization. The Debtors concluded that the recoveries to holders of Allowed Claims would be maximized by the Debtors' continued operation as a going concern through implementation of the Plan and the Transaction. The Debtors' business and assets have significant value that would not be realized in a liquidation. A full-text copy of the Disclosure Statement dated December 19, 2023 is available at https://urlcurt.com/u?l=XKyMR7 from Kroll Restructuring Administration, LLC, claims agent. Attorneys for Debtors: Gary T. Holtzer, Esq. Kelly DiBlasi, Esq. David Griffiths, Esq. Lauren Tauro, Esq. Weil Gotshal & Manges, LLP 767 Fifth Avenue New York, NY 10153 Tel: (212) 310-8000 Fax: (212) 310-8007 Email: Gary.Holtzer@weil.com kelly.diblasi@weil.com david.griffiths@weil.com lauren.tauro@weil.com About Scandinavian Airlines SAS SAB -- https://www.sasgroup.net/ -- Scandinavia's leading airline, with main hubs in Copenhagen, Oslo and Stockholm, is flying to destinations in Europe, USA and Asia. In addition to flight operations, SAS offers ground handling services, technical maintenance, and air cargo services. SAS is a founder member of the Star Alliance, and together with its partner airlines offers a wide network worlxdwide. SAS AB and its subsidiaries, including Scandinavian Airlines Systems Denmark-Norway-Sweden and Scandinavian Airlines of North America Inc., sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10925) on July 5, 2022. In the petition filed by Erno Hilden, authorized representative, SAS AB estimated assets between $10 billion and $50 billion and liabilities between $1 billion and $10 billion. Judge Michael E. Wiles oversees the cases. The Debtors tapped Weil, Gotshal & Manges, LLP as global legal counsel; Mannheimer Swartling Advokatbyra AB as special counsel; FTI Consulting, Inc. as financial advisor; Ernst & Young AB as tax advisor; and Seabury Securities, LLC and Skandinaviska Enskilda Banken AB as investment bankers. Seabury is also serving as restructuring advisor. Kroll Restructuring Administration, LLC is the claims agent and administrative advisor. The U.S. Trustee for Region 2 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. The committee is represented by Willkie Farr & Gallagher, LLP. =========================== U N I T E D K I N G D O M =========================== GOMEZ: Enters Administration, Ceases Trading -------------------------------------------- Michael Barker and Fred Searle at Fresh Produce Journal report that Kent fresh produce supplier Gomez has ceased trading. The Canterbury-based business informed staff of its closure last week and has appointed administrators, it has been confirmed, Fresh Produce Journal relates. On December 15, Glen Carter and Terence Guy Jackson of RSM UK Restructuring Advisory LLP were announced as joint administrators, Fresh Produce Journal discloses. According to Fresh Produce Journal, in a letter to staff managing director Raquel Hernandez said, "As most of you are aware, the business has been encountering many financial challenges following the loss of its business since undertaking a gradual wind-down of its operations over recent weeks. "Unfortunately the financial pressures on the business have meant that the shareholders and directors of the company have had to take the reluctant decision to cease operations with immediate effect." Gomez's most recent accounts, for the year to September 30, 2022, underline its financial struggles, Fresh Produce Journal notes. It posted a significant reduction in turnover during the period, from GBP167 million to GBP133.8 million, Fresh Produce Journal states. At the same time, the company suffered a pre-tax loss of GBP415,914 in 2021/22, compared to a pre-tax profit of GBP1.1 million in 2020/21, Fresh Produce Journal says. According to Fresh Produce Journal, Ms. Hernandez wrote in the financial report that the 19.9% reduction in sales was "due to lost contracts during a business reset carried out by our customers and the removal of some non-profit-generating depots". She said the fall in gross profit margin to 4.75 per cent in 2021/22, against 5.91% in 2020/21, was a "disappointing result" caused in part by the oversupply of some crops versus customer demand, Fresh Produce Journal recounts. Market observers say the massive shortfalls in salads out of Spain due to bad weather in early 2023 will have made things even more difficult for Gomez, Fresh Produce Journal relays. VOLTA TRUCKS: Luxor Capital Unit Buys UK Business, Assets --------------------------------------------------------- Reuters reports that the UK business and assets of Volta Trucks have been sold to a new unit of hedge fund Luxor Capital, which had invested heavily in the electric truck maker, the bankrupt company's administrators said on Dec. 1. According to Reuters, the administrators said the company had been sold to Volta Commercial Vehicles Limited, without providing financial details. Volta, which is headquartered in Sweden but which had its operations in the United Kingdom, filed for bankruptcy last month citing the bankruptcy in August of its supplier Proterra and uncertainty over its battery supplier, which had made it hard to raise capital from investors, Reuters relates. The startup had raised a total of around EUR460 million (US$501.4 million) from investors and had taken orders for more than 5,000 trucks before it filed for bankruptcy, Reuters discloses. [*] UK: Nearly 30,000 Businesses Expected to Fail Next Year ----------------------------------------------------------- Melissa Lawford and Eir Nolsoe at The Telegraph report that nearly 30,000 businesses will fail next year under the weight of high interest rates, economists have warned, taking corporate insolvencies to their highest level since 2004. Company insolvencies are predicted to surge by 15% over the next 12 months, according to a forecast by PwC, as debt pressures take their toll, The Telegraph relates. The new report said small businesses are most likely to go under, with one in four hotel and catering companies at risk, The Telegraph notes. Businesses in the manufacturing, transport and storage sectors are also under threat, The Telegraph states. According to The Telegraph, Barret Kupelian, PwC's chief economist, said a combination of high interest rates, low economic growth and high energy prices will tip businesses over the edge. However, PwC's forecasts show that even as inflation falls, companies will continue to struggle with high borrowing costs, The Telegraph relays. The prediction of nearly 30,000 insolvencies will far outstrip levels seen during the financial crisis when around 24,000 firms collapsed in 2009, The Telegraph says. It will also prove a jump on this year's figures, as PwC expects 26,000 firms to have been declared insolvent by the end of 2023, The Telegraph discloses. According to The Telegraph, Caroline Sumner, chief executive of R3, the UK's insolvency and restructuring trade body, said insolvencies in 2023 were "incredibly high". She said: "What we appear to be looking at now is sustained volatility for the foreseeable future, where it's likely that insolvencies will remain relatively high." High interest rates hit businesses in three key ways as they drive up borrowing costs, make it harder to secure new funding, and dampen consumer spending, The Telegraph states. There is hope that rates will fall as inflation cools next year but even as consumer sentiment improves, the outlook for small businesses remains bleak, The Telegraph notes. Prices are still far higher than pre-pandemic, and the ongoing squeeze from interest rates will depress spending through next year, Ms. Sumner said, The Telegraph relates. Concerns around corporate insolvencies and ballooning debt have led some economists to warn that a global financial reckoning is looming, according to The Telegraph. [*] UK: Winding Up Petitions From HMRC More Than Triple in 2023 --------------------------------------------------------------- Sabah Meddings at Bloomberg News reports that British companies are being targeted with a sharp rise in winding up petitions as the country's tax authority chases unpaid debts. HM Revenue & Customs applied to shut down 2,391 businesses in the year to Dec. 7 over unpaid tax debts, more than triple the attempts in the previous year, Bloomberg relays, citing data compiled by accountancy firm UHY Hacker Young. "The huge increase in petitions being issued by HMRC is a clear sign that the tax authority is chasing unpaid tax debts more aggressively," Bloomberg quotes Peter Kubik, a partner at the accountancy firm, as saying. HMRC was restricted from lodging winding up petitions until the end of March 2022 by measures designed to protect companies during Covid lockdowns, Bloomberg notes. It lodges the winding up petitions, used by creditors who are owed money, in an effort to chase businesses who have fallen behind on their bills. A winding up petition, which can lead to businesses being liquidated and their remaining assets distributed, can be resolved by paying the debt. "What we are seeing is them being more proactive and that's definitely leading to more companies having to face up to their challenges," said Geoff Rowley, chief executive officer of FRP Advisory. Monthly figures from the UK government on Dec. 15 showed an increase in compulsory liquidations, usually started by creditors taking action to collect debt, Bloomberg discloses. In July, the Insolvency Service, which tracks business failures, highlighted the increase in winding up petitions from HMRC, Bloomberg recounts. Businesses have been under pressure from high energy costs, stubborn inflation and a cost-of-living crisis which has squeezed consumers, Bloomberg states. In some cases, businesses have prioritized other creditors instead of HMRC, Bloomberg says. In its most recent performance update, for the three months between July and September, unpaid debts to HMRC had reached GBP37.7 billion (US$48 billion), up from GBP31.2 billion two years ago, Bloomberg relays. "There's a huge amount of debt out there that should be collected," said Mr. Rowley. According to Bloomberg, a spokesperson for HMRC said it applied for winding up petitions only as a last resort, and that the numbers were returning to more usual levels after pandemic protections measures ended in March 2022. "We take a supportive approach to dealing with customers who have tax debts and only file winding up petitions once we've exhausted all other options, in order to protect taxpayers' money," the spokesperson said. =============== X X X X X X X X =============== [*] BOOK REVIEW: The Phoenix Effect ----------------------------------- Nine Revitalizing Strategies No Business Can Do Without Authors: Carter Pate and Harlann Platt Publisher: John Wiley & Sons, Inc. Softcover: 244 Pages List Price: $27.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at http://amazon.com/exec/obidos/ASIN/0471062626/internetbankrupt Think of all the managers of faltering companies who dream of watching those companies rise from the ashes all around them! With a record number of companies failing in 2001, and another record-setting year expected for 2002, there are a lot of ashes from which to rise these days. Carter Pate and Harlan Platt highly value strong leadership able to sharpen a company's focus and show the way to the future. They believe that all too often, appropriate actions required to improve organizations are overlooked because upper management either isn't aware of the seriousness of the issues they face or they don't know where to turn for accurate information to best address their concerns. In the Phoenix Effect, the authors present their ideas to "confront, comprehend, and conquer a company's ills, big and small." These ideas are grouped into nine steps: (i) Find out whether the company needs a tune-up, a turnaround, or crisis management. Locate the source of "the pain." (ii) Analyze the true scope of the company's operations. Decide whether to stay in the same businesses, withdraw from existing businesses, or enter new ones. (iii) Hold the company to its mission statement. If it strives to be "the most environmentally friendly." Figure out how. (iv) Manage scale. Should the company grow, stay the same size, or shrink? (v) Determine debt obligations and work toward debt relief. (vi) Get the most from the company's assets. Eliminate superfluous assets and evaluate underused assets. (vii) Get the most from the company's employees. Increase output and lower workforce costs. (viii) Get the most from the company's products. Turn out products that are developed and marketed to fill actual, current customer needs. (ix) Produce the product. Search for alternate ways to create the product: owning or leasing facilities, outsourcing, etc. The authors believe that "how you're doing is where you're going." They assert that the "one fundamental source of life in companies, as in people, is the capacity for self-renewal, the ability to excite your team for game after game. to go for broke season after season." This ability can come from "(g)enetics, charisma, sheer luck, stock options -- all crucial, yes, but the best renewal insurance is a leader who always knows exactly how his or her company is doing." There are a lot of books written on this topic. Pate and Platt successfully bridge the gap between overgeneralization and too detail. They are equally adept at advising on how to go about determining a business's scope and arguing for Monday rather than Friday for implementing layoffs. They don't dwell on sappy motivational techniques. They don't condescend to the reader or depend too much on folksy vernacular and cliche. Their message is clear: your company's phoenix, too, can rise from its ashes. Carter Pate has served on the Board of multiple public companies. During his two decades as a Partner at PricewaterhouseCoopers, he held several global leadership positions, including being the Global Managing Partner of the Advisory Services Practice, Healthcare Practice and the Government practice. He subsequently served as the CEO of Providence Service Corporation (revenue $1.5B) and as the CEO of MV Transportation, one of the largest privately held transportation companies. Dr. Harlan D. Platt is a professor of Finance and Insurance at Northeastern University. He is president of 911RISK, Inc., which specializes in developing analytical models to predict corporate distress. He received a Ph.D. from the University of Michigan, and holds a B.A. degree from Northwestern University. ********* 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. 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