250529.mbx

250529.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, May 29, 2025, Vol. 26, No. 107 Headlines B E L G I U M INFRAGROUP BIDCO: Moody's Alters Outlook on 'B2' CFR to Stable F R A N C E SEQUANS COMMUNICATIONS: Renesas Faces $250M Claim Over MoU Breach I R E L A N D BAIN CAPITAL 2018-1: Fitch Affirms 'B-sf' Rating on Class F Notes GRIFFITH PARK: Fitch Affirms 'B+sf' Rating on Class E Notes MALLINCKRODT PLC: Members' Scheme Meetings Scheduled for June 13 ST. PAUL III-R: Fitch Affirms 'B+sf' Rating on Class F-R Notes I T A L Y AUTOFLORENCE 3: S&P Raises Class E-Dfrd Notes Rating to 'BB-(sf)' N E T H E R L A N D S ABERTIS INFRAESTRUCTURAS: Fitch Rates EUR500MM Hybrid Notes 'BB+' N O R W A Y KONGSBERG AUTOMOTIVE: Moody's Alters Outlook on B2 CFR to Negative P O L A N D ALIOR BANK: S&P Affirms 'BB+/B' Issuer Credit Ratings, Outlook Pos. S P A I N GRIFOLS SA: Moody's Upgrades CFR to B2, Outlook Remains Positive TAGUS STC: Fitch Assigns 'BB+(EXP)sf' Rating on Class E Notes U N I T E D K I N G D O M ALEXANDRITE MONNET: S&P Affirms 'B+' LongTerm ICR, Outlook Stable MAGIC MEDIA: Begbies Traynor Named as Administrators STRATTON LONDON: Leading UK Named as Liquidator - - - - - ============= B E L G I U M ============= INFRAGROUP BIDCO: Moody's Alters Outlook on 'B2' CFR to Stable -------------------------------------------------------------- Moody's Ratings has affirmed the B2 long term Corporate Family Rating and a B2-PD Probability of Default Rating of Infragroup Bidco S.a.r.l (Infragroup or the company), a leading multi-utility network infrastructure service provider in Belgium. Concurrently, Moody's have affirmed the B2 rating of its proposed upsized EUR1,220 million senior secured term loan B and the B2 rating of its proposed upsized EUR150 million senior secured revolving credit facility (RCF) issued by Finco Utilitas BV. The outlook has been changed to stable from positive for both entities. Infragroup recently announced plans to raise a EUR470 million incremental term loan B add-on. Proceeds from the new debt plus EUR30 million of cash will be used to fund a EUR300 million dividend to existing shareholders, primarily PAI Partners and management, and the remaining EUR186 million will be used to fund M&A completed during the first half of 2025. The company also intends to upsize its existing EUR130 million RCF by EUR20 million, which will remain undrawn pro forma for the transaction. RATINGS RATIONALE The change in outlook to stable from positive factors in a more aggressive financial policy as reflected by the increase in leverage as a result of the dividend recapitalization from previously expected leverage of 4.1x by the end of 2025 to over 6.5x on a reported basis and around 5.5x estimated pro forma for closed and signed acquisitions in the first half of 2025, which is in line with the maximum tolerance threshold for the current B2 rating. The ratings affirmation balances the increase in leverage with the company's track record of solid operating performance coupled with an improved business profile following successful integration of recent acquisitions. Infragroup's B2 CFR is supported by its well-established market position in Belgium with a broad end market coverage; favourable market growth dynamics; good revenue visibility on the back of its EUR4.9 billion orderbook pro forma for acquisitions closed in 2025 further supported by framework agreements and long-standing relationships with key customers; good level of margin protections from contractual cost pass-through mechanisms, albeit with a time lag; and positive expected free cash flow (FCF) supported by solid profitability, and relatively modest capex and working capital needs. At the same time, the CFR is constrained by the high leverage pro forma for the transaction with deleveraging pace dependent on M&A activity; relatively high customer concentration with exposure to end-market investment cycles; the competitive and fragmented market with execution risks from the recent entrance into new markets; and the limited track record under the current perimeter. The company's currently high Moody's adjusted leverage positions it weakly in its rating category and leaves limited room for deviation against Moody's current expectations. Over the next 12-18 months Moody's expects Infragroup's earnings to continue to grow on an organic basis in the mid-single digits supporting a leverage reduction towards 5.0x. However, Moody's anticipates the company to continue its external growth strategy which could delay the deleveraging pace. Moody's also expects the company's FCF/debt to deteriorate towards 1%-3% in the next two years compared to Moody's initial expectations of mid-to-high single digits. Moody's expects interest coverage as measured by EBITA/Interest to remain above 2.0x. A comprehensive review of all credit ratings for the respective issuer(s) has been conducted during a rating committee. ESG CONSIDERATIONS Governance was one of the key drivers of rating action in accordance with Moody's ESG framework because Moody's views the releveraging transaction as reflective of a more aggressive financial policy. STRUCTURAL CONSIDERATIONS Pro forma for the transaction, Infragroup's capital structure will consist of a EUR1.22 billion senior secured Term Loan B and a EUR150 million senior secured RCF, both rated in line with the CFR. The instruments share the same security package, rank pari passu and are guaranteed by a group of companies representing at least 80% of the consolidated group's EBITDA. The security package, consisting of shares, bank accounts and intragroup receivables, is considered limited. The B2-PD PDR is at the same level as the CFR, reflecting the use of a standard 50% recovery rate as is customary for capital structures with first-lien bank loans and a covenant-lite documentation. LIQUIDITY Infragroup's liquidity is adequate and supported by EUR113 million of cash on its balance sheet, pro forma for the transaction, and an upsized undrawn RCF of EUR150 million. Moody's expects these sources of liquidity, in addition to the likely positive FCF, to provide ample headroom to cover working capital and capital spending needs over the next 12-18 months. There are no major debt maturities until 2030. The debt structure is covenant-lite, with one springing maintenance covenant set at 8.75x senior secured net leverage tested only when the RCF is drawn more than 40%. The company will likely maintain ample headroom under this covenant over the next 12-18 months. RATIONALE FOR THE STABLE OUTLOOK The stable rating outlook reflects Moody's expectations that Infragroup will continue to increase its earnings and generate positive FCF over the next 12-18 months, which will support a leverage reduction to around 5.0x over the next 12-18 months. The stable outlook also assumes that the company will continue a disciplined growth strategy while maintaining a good liquidity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on the rating could develop if Moody's adjusted debt/EBITDA sustainably falls below 4.5x, Moody's adjusted EBITA/Interest expense above 2.5x and FCF/debt moves in the high-single digits in percentage terms, whilst maintaining a good liquidity position. An upgrade will also require a commitment to a conservative financial policy, a track record of growth and further scale expansion. Downward pressure on the rating could develop if Moody's adjusted debt/EBITDA exceeds 5.5x on a sustained basis, if Moody's adjusted EBITA/Interest expense declines well below 2.0x, or if liquidity were to weaken, with prolonged weak or negative FCF. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Construction published in April 2025. COMPANY PROFILE Infragroup, headquartered in Belgium, is a multi-utility network infrastructure service provider in Belgium, its core market, in Germany, the Netherlands, France and Denmark. It currently serves four key end markets: Gas & Electricity, Water & Sewage, Telecom and Roadworks & Earthmoving, providing design, engineering, and installation to maintenance services. The company employs over 5000 employees and as of LTM December 2024 generated pro forma revenues of around EUR1.2 billion and a company's adjusted EBITDA of EUR192 million. =========== F R A N C E =========== SEQUANS COMMUNICATIONS: Renesas Faces $250M Claim Over MoU Breach ----------------------------------------------------------------- Sequans Communications S.A. disclosed in a Form 6-K Report filed with the U.S. Securities and Exchange Commission that on May 13, 2025, the Company filed a complaint in the Court of Chancery of the State of Delaware against Renesas Electronics Corporation for breach of affirmative covenants set forth in the Memorandum of Understanding dated August 4, 2023 (as amended on August 31, 2023, December 4, 2023, and January 5, 2024) pursuant to which the Company and Renesas agreed to pursue the sale of the Company's shares to Renesas by the way of a public tender. The complaint further alleges that Renesas breached its implied covenant of good faith and fair dealing and committed fraud. As a result, the Company is seeking monetary damages of $250 million, plus interest. About Sequans Communications Colombes, France-based Sequans Communications S.A. is a fabless semiconductor company that designs, develops, and markets integrated circuits and modules for 4G and 5G cellular IoT devices. Paris-La Defense, France-based Ernst & Young Audit, the Company's auditor since 2008, issued a "going concern" qualification in its report dated May 15, 2024, citing that the Company has suffered recurring losses from operations, has a working capital deficiency, and has stated that substantial doubt exists about the Company's ability to continue as a going concern. Sequans Communications incurred net losses of $9 million and $41 million in 2022 and 2023, respectively. As of December 31, 2023, the Company had $109.2 million in total assets, $115.2 million in total liabilities, and $6.1 million in total deficit. ============= I R E L A N D ============= BAIN CAPITAL 2018-1: Fitch Affirms 'B-sf' Rating on Class F Notes ----------------------------------------------------------------- Fitch Ratings has upgraded Bain Capital Euro CLO 2018-1 DAC's class C and D notes and affirmed the others. Fitch has also revised the class F notes' Outlook to Negative from Stable. Entity/Debt Rating Prior ----------- ------ ----- Bain Capital Euro CLO 2018-1 DAC A XS1713469598 LT AAAsf Affirmed AAAsf B-1 XS1713469168 LT AAAsf Affirmed AAAsf B-2 XS1713465257 LT AAAsf Affirmed AAAsf C XS1713468194 LT AAAsf Upgrade AAsf D XS1713467469 LT A+sf Upgrade BBB+sf E XS1713467030 LT BB+sf Affirmed BB+sf F XS1713466909 LT B-sf Affirmed B-sf Transaction Summary Bain Capital Euro CLO 2018-1 DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by Bain Capital Credit, Ltd. and exited its reinvestment period in April 2022. KEY RATING DRIVERS Amortisation Enhances Credit Enhancement: The class A notes have been 99% paid down since the transaction closed in May 2018, and a further EUR50 million has been repaid since the last review in December 2024. The benefit from amortisation outweighs further par losses that have occurred since the previous review and increased the credit enhancement of the rated notes, except for the class F notes, leading to their respective upgrades and affirmations. Junior Notes Sensitive to Deterioration: The transaction has experienced further par losses since the previous review and is currently 5.9% below par. The class F par value test has been failing in the past year and the ratio has decreased further to 99.6% currently from 100.9% in November 2024. This decline reflects deterioration in the credit quality of the portfolio, resulting in decreasing margin of safety for the class F notes and, consequently, the Outlook change to Negative. The portfolio has EUR14 million of defaulted assets and EUR22 million (or 17.4% of the portfolio) of Fitch 'CCC' obligations. Exposure to obligors with a Negative Outlook is 26.8%, as calculated by Fitch. The class F notes have limited protection against new defaults and any further deterioration in the credit quality of the portfolio can lead to a downgrade to 'CCCsf'. 'B'/'B-' Portfolio Credit Quality: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. Fitch calculated, under its latest criteria, the weighted average rating factor at 30.1 for the current portfolio and 31.9 for the stressed portfolio for which Fitch has adjusted assets on Negative Outlook downward by one notch. High Recovery Expectations: Senior secured obligations comprise 96.7% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than second-lien, unsecured and mezzanine assets. The Fitch calculated weighted average recovery rate for the portfolio is 60.4% under its latest criteria. Diversified Portfolio: The portfolio is reasonably diversified across obligors, countries and industries, although the top 10 obligor concentration limit is 24.6%, failing a limit of 18%. The largest obligor represents 2.9% of the portfolio balance and exposure to the three largest Fitch-defined industries is 32.5%. The fixed-rate assets constitute 7.2% of the portfolio, below a maximum of 10%. Transaction Outside Reinvestment Period: The transaction exited its reinvestment period in April 2022, and the most senior notes are deleveraging. However, the transaction cannot reinvest due to the failure of the Fitch 'CCC' limit and the class F par value test. The manager's inability to reinvest means Fitch's downgrade analysis is based on the current portfolio, and the upgrade analysis is based on a stressed portfolio for which Fitch has notched down assets on Negative Outlook and floored the weighted average life at four years. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than Fitch assumed, due to unexpectedly high defaults and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY 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. 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. ESG Considerations Fitch does not provide ESG relevance scores for Bain Capital Euro CLO 2018-1 DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. GRIFFITH PARK: Fitch Affirms 'B+sf' Rating on Class E Notes ----------------------------------------------------------- Fitch Ratings has upgraded Griffith Park CLO DAC's class A-2A-R, A-2B-R, B-R and C-R notes. Entity/Debt Rating Prior ----------- ------ ----- Griffith Park CLO DAC Class A-1A-R XS2309452410 LT AAAsf Affirmed AAAsf Class A-1B-R XS2309453061 LT AAAsf Affirmed AAAsf Class A-2A-R XS2309453731 LT AAAsf Upgrade AA+sf Class A-2B-R XS2309454200 LT AAAsf Upgrade AA+sf Class B-R XS2309455199 LT AA+sf Upgrade A+sf Class C-R XS2309455603 LT Asf Upgrade BBB+sf Class D XS1903440532 LT BB+sf Affirmed BB+sf Class E XS1903440458 LT B+sf Affirmed B+sf Transaction Summary Griffith Park CLO DAC is a cash flow collateralised loan obligation CLO actively managed by the manager, Blackstone Ireland Limited. On March 2021 the class A1 to C notes were refinanced, and the reinvestment period ended in May 2023. KEY RATING DRIVERS Deleveraging Transaction: The transaction is out of the reinvestment period and has not met the criteria to reinvest since April 2024, resulting in the deployment of principal proceeds to pay down the class A-1A-R notes since then. According to the latest trustee report, the principal account had EUR30.7 million in cash. The class A-1A-R notes have been paid down by around EUR115 million, leading to an increase in credit enhancement across the structure. This has resulted in the upgrade and affirmations. The comfortable break-even default rate cushions for all note ratings support the Stable Outlooks. Stable Performance: The transaction's performance has been stable and refinancing risk is limited. According to the latest trustee report, the transaction is failing the weighted average life (WAL) test, fixed rate collateral obligations test and two other tests of another rating agency. The report also shows 7.05% of assets with a Fitch-Derived Rating of 'CCC+' and below, which is below the limit of 7.5%. The transaction is 1% below par (calculated as the current par difference over the original target par) and defaults comprise 1.43% of the portfolio according to the trustee report. Low Refinancing Risks: The transaction has manageable exposure to near- and medium-term refinancing risk, with no portfolio assets maturing in 2025 and 4.3% maturing in 2026. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor of the current portfolio is 26.4 as calculated by Fitch. High Recovery Expectations: Senior secured obligations plus cash comprise 97.0% of the portfolio, as calculated by the trustee. 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 current portfolio as reported by the trustee is 63.3%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration is 19.5% as calculated by Fitch, and no obligor represents more than 2.4% of the portfolio balance according to the trustee report. Transaction Outside Reinvestment Period: The transaction is failing the WAL test, which needs to be satisfied for any reinvestment. The manager discontinued reinvestment activity in April 2024, which was also when the WAL test started to fail, and the manager is unlikely to bring the test back into compliance. As a result, Fitch has assessed the transaction based on the current portfolio, notching down by one level all assets with Negative Outlook on their Fitch-Derived Ratings. The transaction's WAL has also been extended to four years, in line with its criteria, to account for refinancing risk. Deviation from Model Implied Rating (MIR): The class C-R notes are one notch below their model-implied rating (MIR), reflecting a limited break-even default-rate cushion at the MIR. This takes into consideration Fitch's expectation of deterioration in asset performance, which unlike reinvesting CLOs, would immediately affect the ratings of a static CLO. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY 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. 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. ESG Considerations Fitch does not provide ESG relevance scores for Griffith Park CLO DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. MALLINCKRODT PLC: Members' Scheme Meetings Scheduled for June 13 ---------------------------------------------------------------- Pursuant to Section 450(3) of the Companies Act 2014, four separate meetings of the members of Mallinckrodt Public Limited Company will be convened to consider and, if thought appropriate, to approve (with or without modification(s) approved or imposed by the Irish High Court) the proposed scheme of arrangement between the Company and all of its members as follows: 1.1 a meeting of the First List Shareholders (as defined in the Scheme Document); 1.2 a meeting of the Second Designator Shareholders (as defined in the Scheme Document); 1.3 a meeting of the Third Designator Shareholders (as defined in the Scheme Document); and 1.4 a meeting of the Non-Designated Shareholders (as defined in the Scheme Document). The purpose of the Scheme is to facilitate the amendment of Article 6 of the Company's articles of association in the manner set out in the Scheme Document with a view to facilitating the merger between the Company's subsidiary, Salvare Merger Sub LLC, and Endo, Inc. such that the Merger Sub will cease to exist and Endo will survive the merger as a wholly owned subsidiary of the Company. By Order of the High Court dated May 12, 2025, the High Court ordered that the Scheme Meetings be convened in accordance with the following directions: 1.5 the meeting of the First List Shareholders will be held at the offices of Arthur Cox LLP, Ten Earlsfort Terrace, Dublin 2, D02 T380, Ireland on June 13, 2025 at 9:00 a.m. (Irish time); 1.6 the meeting of the Second Designator Shareholders will be held at the offices of Arthur Cox LLP, Ten Earlsfort Terrace, Dublin 2, D02 T380, Ireland on June 13, 2025 at 9:10 a.m. (Irish time), or, if later, immediately after the conclusion or the adjournment of the preceding court meeting; 1.7 the meeting of the Third Designator Shareholders will be held at the offices of Arthur Cox LLP, Ten Earlsfort Terrace, Dublin 2, D02'T380, Ireland on June 13, 2025 at 9:20 a.m. (Irish Time) or, if later, immediately after the conclusion or the adjournment of the preceding court meetings; and 1.8 the meeting of the Non-Designated Shareholders will be held at the offices of Arthur Cox LLP, Ten Earlsfort Terrace, Dublin 2, D02 T380, Ireland on June 13, 2025 at 9:30 a.m. (Irish time) or, if later, immediately after the conclusion or the adjournment of the preceding court meetings. The entitlement to attend, speak and vote at the Scheme Meetings and the number of votes that may be cast was determined by reference to the register of members of the Company as at close of business (Eastern Time in the United States) on April 29, 2025. All members as at the Voting Record Time are invited to attend the Scheme Meeting(s) applicable to them. In addition to the approvals to be sought at the Scheme Meetings, the Scheme will require the passing of certain resolutions at a separate extraordinary general meeting of the Company to be convened at the same location on June 13, 2025 at 9:40 a.m. (Irish Time) and at which place and time all members at the Voting Record Time are invited to attend. Members entitled to attend, speak and vote at the Scheme Meetings and/or the EGM are entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote at the Scheme Meetings and/or the EGM. Copies of the Scheme and the scheme circular prepared pursuant to Section 452 of the Act can be obtained by accessing the Investor Relations section of the Company's website (www.mallinckrodt.com). Information regarding the Scheme Meetings, including the full, unabridged text of the documents and resolutions to be submitted to the Scheme Meetings, will also be available at www.mallinckrodt.com. About Mallinckrodt plc Mallinckrodt (OTCMKTS: MNKTQ) -- http://www.mallinckrodt.com/-- is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The Company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt in mid-June 2022 successfully completed its reorganization process, emerged from Chapter 11 and completed the Irish Examinership proceedings. Mallinckrodt Plc said in a regulatory filing in early June 2023 that it was considering a second bankruptcy filing and other options after its lenders raised concerns over an upcoming $200 million payment related to opioid-related litigation. Mallinckrodt plc and certain of its affiliates again sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 23-11258) on Aug. 28, 2023. Mallinckrodt disclosed $5,106,900,000 in assets and $3,512,000,000 in liabilities as of June 30, 2023. Judge John T. Dorsey oversees the new cases. In the prior Chapter 11 cases, the Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray, LLP as litigation counsel; Torys, LLP as CCAA counsel; Guggenheim Securities, LLC as investment banker; and AlixPartners, LLP, as restructuring advisor. In the new Chapter 11 cases, the Debtors tapped Latham & Watkins, LLP and Richards, Layton & Finger, P.A., as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Guggenheim Securities, LLC as investment banker; and AlixPartners, LLP, as restructuring advisor. Kroll is the claims agent. ST. PAUL III-R: Fitch Affirms 'B+sf' Rating on Class F-R Notes -------------------------------------------------------------- Fitch Ratings has upgraded St. Paul's CLO III-R's class C-R notes and revised the Outlook on the class F notes to Negative from Stable. Entity/Debt Rating Prior ----------- ------ ----- St. Paul's CLO III-R DAC A-R XS1758464090 LT AAAsf Affirmed AAAsf B-1-R XS1758464330 LT AAAsf Affirmed AAAsf B-2-R XS1758464686 LT AAAsf Affirmed AAAsf C-R XS1758464926 LT AAsf Upgrade A+sf D-R XS1758465220 LT Asf Affirmed Asf E-R XS1758465659 LT BB+sf Affirmed BB+sf F-R XS1758465816 LT B+sf Affirmed B+sf Transaction Summary St. Paul's CLO III-R DAC is a cash flow collateralised loan obligation (CLO). The underlying portfolio of assets mainly consists of leveraged loans and is managed by Intermediate Capital Managers Limited. The deal exited its reinvestment period in January 2022. KEY RATING DRIVERS Amortisation Benefits Senior Notes: The transaction continues to deleverage with the class A-R notes further amortising by EUR124.7 million since the last review in June 2024, leading to an increase in credit enhancement across the structure. According to the 3 April 2025 trustee report, the transaction has accumulated EUR 29.5 million in cash, which is expected to increase credit enhancement further following the next payment date. The increase in the credit enhancement drives the upgrade of the class C-R notes. Portfolio Deterioration Hits Junior Notes: The transaction is 4.4% below target par, compared with 3.5% below target par in the last review, indicating further par erosion. According to the trustee report, defaulted assets have increased to EUR27.4 million (7.8% of the portfolio balance), from EUR12.9 million in the last review. Excluding defaulted obligations, exposure to assets with a Fitch-derived rating of 'CCC+' and below is 8.1%, over its limit of 7.5%. The deterioration in the portfolio credit quality has led to the failure of the class F par value test and to a reduced default-rate buffer for the class F-R notes rating to absorb further defaults in the portfolio. This drives the revision of the class F notes Outlook to Negative. Transaction Outside Reinvestment Period: The transaction is failing several tests, some of which must be satisfied after any reinvestment, effectively blocking the manager from any reinvesting activity. The manager has not made any purchases since April 2024. As the transaction is restricted from reinvesting, Fitch's analysis is based on the current portfolio, which Fitch stressed by downgrading any obligor with a Negative Outlook by one notch (with a floor at CCC-) when testing for upgrades, and by applying a floor to the portfolio's weighted average life (WAL) at four years, in line with its criteria. Portfolio Diversification: The top 10 obligor concentration as calculated by the trustee is 23%, which exceeds the test limit of 21% and has increased from 17.9% since the last review. However, the portfolio is well-diversified across countries and industries with exposure to the three largest Fitch-defined industries at 29.1%, as calculated by the trustee, which is below the test limit of 40%. No obligor represents more than 3.5% of the portfolio balance. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the obligors at 'B'/'B-'. The Fitch-calculated weighted average rating factor (WARF) of the current portfolio is 27.5, while for the Fitch-stressed portfolio, it is 28.7. High Recovery Expectations: Senior secured obligations comprise 98.8% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate (WARR) of the current portfolio is 59.8% (based on the most recent criteria). Model-Implied Rating Deviation: The class C-R and D-R notes ratings are each one notch below their model-implied ratings (MIR). The rating deviation reflects insufficient default rate cushion at their MIRs. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if loss expectations are larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY 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. 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. ESG Considerations Fitch does not provide ESG relevance scores for St. Paul's CLO III-R DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. ========= I T A L Y ========= AUTOFLORENCE 3: S&P Raises Class E-Dfrd Notes Rating to 'BB-(sf)' ----------------------------------------------------------------- S&P Global Ratings its credit ratings on Autoflorence 3 Srl's class A notes to 'AA+ (sf)' from 'AA (sf)', class B-Dfrd notes to 'AA (sf)' from 'A+ (sf)', class C-Dfrd notes to 'A (sf)' from 'BBB (sf)', class D-Dfrd notes to 'BBB (sf)' from 'BB+ (sf)', and class E-Dfrd notes to 'BB- (sf)' from 'B- (sf)'. S&P said, "The rating actions follow our review of the transaction's performance and the application of our relevant criteria and consider the transaction's current structural features. Following our April 11, 2025, upgrade of Italy to 'BBB+' from 'BBB', the highest rating that we can assign to the tranches in this transaction is now 'AA+', up from 'AA', according to our structured finance sovereign risk criteria. “As of the March 2025 payment date, the pool factor has fallen to 70%. As no triggers have been breached, the transaction continues to amortize pro rata, with the credit enhancement available for each class of notes remaining constant since closing and our last review (see “Related Research”). Our cash flow model incorporates the sequential payment triggers, testing the effect of a change in the type of amortization of the notes. In addition, we have run two default curves, equally spread and backloaded defaults, to test the effect of a trigger being hit at different stages of the transaction’s life. "Given the good collateral performance, with loans more than 30 days in arrears remaining stable, below 0.70%, we lowered our base-case gross loss assumptions but kept the gross loss multiples unchanged. We then recalibrated our base-case gross loss assumptions to account for the portfolio's current size and applied a 2.99% base-case gross loss on the loan’s total outstanding balance. "We continue to assume a recovery rate base case of 16%. Our rating-specific recovery haircuts remain unchanged. "Under our criteria, we applied the following credit assumptions in our analysis." Credit assumptions Previous Parameter review Current Gross loss base case (%) 3.10 2.70 Gross loss base case on the current balance (%) N/A 2.99 Multiples (x) 'AA+' 4.00 4.00 'AA' 3.50 3.50 'A' 2.50 2.50 'BBB' 1.75 1.75 'BB-' 1.42 1.42 Recoveries (%) Base case 16.0 16.0 'AA+' haircut 35 35 'AA' haircut 30 30 'A' haircut 20 20 'BBB' haircut 15.0 15.0 'BB-' haircut 8.3 8.3 Stressed net losses (%) 'AA+' 11.1 10.7 'AA' 9.6 9.3 'A' 6.8 6.5 'BBB' 4.7 4.5 'BB-' 3.7 3.6 N/A--Not applicable. S&P said, "Our cash flow analysis indicates the available credit enhancement for the class A notes is sufficient to withstand the credit and cash flow stresses that we apply at the 'AAA' rating level. However, our structured finance sovereign risk criteria constrain our maximum rating in this transaction at 'AA+ (sf)'. We therefore raised our rating on the class A notes to 'AA+ (sf)' from 'AA (sf)'. "The available credit enhancement for the class B-Dfrd, C-Dfrd, D-Dfrd, and E-Dfrd notes is now able to pass our stresses at higher rating levels. We therefore raised our ratings on these classes of notes. "Our analysis included additional sensitivity tests to assess the effect of increasing the gross default and lowering the recovery rate in our base case. The table below shows the eight sensitivity runs we ran, in which we increased the stressed defaults, reduced the expected recoveries, or both factors." The results of the above sensitivity analysis indicate a deterioration of no more than three notches for the class A, B-Dfrd, and C-Dfrd notes. The junior classes are more sensitive to increased stress due to their position in the capital structure. Overall, the results are in line with S&P's credit stability expectations. S&P's counterparty and operational risk criteria do not constrain the ratings in this transaction. Autoflorence 3 is an Italian ABS transaction that securitizes a portfolio of auto loan receivables to private borrowers in Italy originated by Banca Findomestic SpA. ===================== N E T H E R L A N D S ===================== ABERTIS INFRAESTRUCTURAS: Fitch Rates EUR500MM Hybrid Notes 'BB+' ----------------------------------------------------------------- Fitch Ratings has assigned Abertis Infraestructuras Finance B.V.'s (Abertis Finance) EUR500 million hybrid securities final ratings of 'BB+' with Stable Outlooks. The securities qualify for a 50% equity credit. The new hybrid notes are guaranteed by Abertis Infraestructuras SA (Abertis) and their proceeds are used for part repayment of its outstanding hybrid notes. RATING RATIONALE The notes are deeply subordinated, while coupon payments can be deferred at the option of the issuer. These features are reflected in the 'BB+' rating, which is two notches lower than Abertis' senior unsecured rating. The 50% equity credit reflects their cumulative interest coupon, a more debt-like feature. The new notes rank equally with Abertis's 'BB+' rated outstanding EUR2.0 billion hybrids issued during November 2020, January 2021 and November 2024. The final ratings are the same as the expected ratings because the transaction's terms are in line with the draft documentation. For further information on Abertis's rating, see "Fitch Affirms Abertis IDR at 'BBB'; Stable Outlook", dated 5 July 2024. KEY RATING DRIVERS Rating Reflects Deep Subordination: The proposed notes are rated two notches below Abertis's senior unsecured rating of 'BBB', given their deep subordination relative to senior obligations. The notes only rank senior to the claims of equity shareholders. Fitch believes Abertis intends to maintain a consistent amount of hybrids of EUR2 billion in the capital structure, and therefore apply 50% equity credit to the full amount of hybrid securities. Equity Treatment: The new securities will qualify for 50% equity credit as they are deeply subordinated, have a remaining effective maturity of at least five years, and full discretion to defer coupons for at least five years and limited events of default. These are key equity-like characteristics, affording Abertis greater financial flexibility. The interest coupon deferrals are cumulative, a more debt-like feature that results Fitch treating the hybrid notes as 50% equity and 50% debt. Fitch treats the coupon payments as 100% interest despite the 50% equity treatment. Mandatory Interest Payment Possible: Abertis will be obliged to make a mandatory settlement of deferred interest payments under certain circumstances, including the declaration of a cash dividend. Under the existing shareholders' agreement, the dividend policy is flexible and may be adjusted to maintain an investment-grade rating threshold. However, Fitch perceived deterioration in the shareholders' agreement, leading to decreasing flexibility in the dividend policy, could negatively affect the equity credit of the hybrid notes. Effective Maturity Date: The proposed hybrid is perpetual, but Fitch considers its effective remaining maturity as the date from which the issuer will no longer be subject to replacement language (second step-up date), which discloses the company's intent to redeem the instrument at its reset date with the proceeds of a similar instrument or with equity. This is applicable even if the coupon step-up is within Fitch's aggregate threshold of 100bp. The equity credit of 50% would change to 0% five years before the effective maturity date. The issuer has the option to redeem the notes in the three months immediately preceding and including the first reset date, which is at 5.75 years from the expected issue date, and on any coupon payment date thereafter. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Fitch-adjusted leverage above 6.2x by 2025 under the Fitch Rating Case Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Positive rating action is unlikely given Abertis's acquisitive strategy. TRANSACTION SUMMARY Abertis is a large Spain-based infrastructure group with network under management predominantly in Spain, France, Brazil, Chile, US and Mexico. Date of Relevant Committee July 4, 2024 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 Prior ----------- ------ ----- Abertis Infraestructuras Finance B.V. Abertis Infraestructuras, S.A./Toll Revenues – Second Lien - Expected Ratings/1 LT LT EUR 500 mln Variable hybrid capital instruments XS3074459994 LT BB+ New Rating BB+(EXP) =========== N O R W A Y =========== KONGSBERG AUTOMOTIVE: Moody's Alters Outlook on B2 CFR to Negative ------------------------------------------------------------------ Moody's Ratings has changed the outlook on Norway-based automotive parts supplier Kongsberg Automotive ASA (KA or the group) to negative from stable. At the same time, Moody's affirmed the group's B2 long term corporate family rating and B2-PD probability of default rating. RATINGS RATIONALE The outlook change to negative was prompted by KA's continued weak financial results for the first quarter of 2025 (Q1 2025), against Moody's expectations of modest perfomance improvements. The perfomance contraction was driven by protracted sluggish demand and year-over-year (yoy) declining production in its key passenger car and commercial vehicle end-markets. As a result, KA's group sales declined by 10.4% yoy in Q1 2025 and its reported EBIT by 78%, which was further adversely impacted by increased restructuring and warranty costs. In addition, the rating action was prompted by Moody's lowered economic growth expectations for this year and likely continued sluggish consumer sentiment against increased trade protection measures in the US and China, which adds significant uncertainty to Moody's forecasts at this stage. KA's Moody's adjusted credit metrics remain currently very weak for its B2 rating, as shown, for instance, by a 0.1% EBIT margin, gross debt EBITDA ratio of 7.0x, as well as EUR13 million negative Moody's adjusted free cash flow (FCF) for the last 12 months (LTM) ended March 2025. Moody's also expects the ratios to remain weak and FCF negative, albeit improving through the remainder of this year. For fiscal year 2025, Moody's forecasts KA's sales to decrease in the mid-single-digit range, while its profitability in terms of Moody's adjusted EBIT margin should recover to over 2.0%, supported by savings from a cost reduction program launched in 2024, improved product mix and lower warranty costs, which significantly increased in the second half of 2024. The profit growth should also support a gradual reduction in KA's leverage, which, however, Moody's expects to remain above Moody's defined 5x maximum for a B2 rating in 2025. Moody's also projects KA's Moody's adjusted FCF to remain negative in 2025, and possibly also next year. That said, Moody's sees significant downside risks to Moody's forecasts amid the current challenging macro-economic and geopolitical environment. At the same time, uncertainty around increased import tariffs in the US and China remains high, while KA still needs to demonstrate its ability to share tariff related cost increases with its customers, as expected by management. The affirmation of KA's B2 rating is supported by the group's continued adequate liquidity, with a good cash balance and no material debt maturities other than lease liabilities before 2028 when its EUR110 million bond will be due. Moody's further expect the group's profitability to steadily strengthen and its leverage to reduce to more appropriate levels for a B2 rating in 2026. Other factors that support the B2 rating include KA's diversification in non-automotive (including commercial vehicles and passenger cars) end markets, such as construction or agriculture; strong market positions in very profitable specialty products, where competition is limited because of significant entry barriers; good customer diversification; over EUR1.2 billion in order intake as of LTM March 2025, providing revenue and earnings visibility for the next two to three years; and its conservative financial policy, which Moody's expects to continue prioritizing de-leveraging over acquisitions or shareholder distributions. Factors constraining the rating relate to KA' exposure to the cyclical and competitive markets for trucks and passenger cars; its relatively small size in the context of other automotive suppliers that Moody's rate globally, with group revenue of less than EUR0.8 billion in 2024; and its exposure to volatile raw material prices. LIQUIDITY KA's liquidity remains adequate. As of March 31, 2025, the group had cash and cash equivalents of EUR74 million and full access to its EUR15 million revolving credit facility (maturing in 2028). Moody's expects the group to generate about EUR20 million funds from operations over the next 12 months, insufficient to cover annual capital spending of around EUR27 million (Moody's adjusted, including lease liability payments) and Moody's standard working cash assumption of 3% of group sales. As of March 31, 2025, KA had no short-term debt outstanding. Moody's assumes that KA will continue to abstain from dividend payments and share buybacks. Moody's further expect the group to comply with its maintenance covenants (EUR10 million minimum liquidity and maximum reported leverage of 3.5x) over the next 12 months. RATIONALE FOR THE NEGATIVE OUTLOOK The negative outlook indicates a possible downgrade of KA's ratings, if the group failed to steadily and significantly strengthen its current weak credit metrics to Moody's defined ranges for a B2 rating over the next 12-18 months. In addition, a weakening of the group's liquidity would also lead to negative pressure building on the rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's would consider to downgrade the rating, if KA's (1) Moody's-adjusted EBIT margin remains constantly below 3%, (2) leverage exceeds 5x Moody's-adjusted debt/EBITDA beyond 2025, (3) Moody's-adjusted EBITDA/interest remained below 3.5x, (4) Moody's-adjusted FCF failed to gradually improve and reach break-even by year-end 2025; or if its liquidity started to weaken. Moody's could upgrade the rating, if KA's (1) Moody's-adjusted EBIT margin sustainably exceeded 4.5%, (2) Moody's-adjusted gross debt/EBITA reduced sustainably to well below 4x, (3) Moody's-adjusted EBITDA/interest reaches 4.5x, (4) Moody's-adjusted FCF turned sustainably positive. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Automotive Suppliers published in December 2024. COMPANY PROFILE Kongsberg Automotive ASA (KA) is a global automotive supplier headquartered in Kongsberg, Norway, and is publicly listed in Norway. KA is a manufacturer and supplier of powertrain, chassis and specialty products for the use in commercial vehicles (56% of 2024 group revenue), passenger cars (32%) and other markets, mainly agriculture and construction. Its main products include air couplings, fluid transfer systems (FTS), transmission control and vehicle dynamics. The group employs around 4,900 people in 22 manufacturing plants and 6 technical centers in Europe, the Americas and Asia. In the 12 months through March 2025, KA reported revenue of EUR766 million and EBIT of EUR10.8 million (1.4% margin). =========== P O L A N D =========== ALIOR BANK: S&P Affirms 'BB+/B' Issuer Credit Ratings, Outlook Pos. ------------------------------------------------------------------- S&P Global Ratings affirmed its ratings on Poland-based Alior Bank S.A. at 'BB+/B'. The positive outlook continues to reflect the possibility of a material and sustainable improvement of Alior's asset quality over the next 12 months, on the back of tightened underwriting standards in lending activities and the reduction of nonperforming loans. On May 26, 2025, S&P Global Ratings affirmed its long- and short-term issuer credit ratings on Poland-based Alior Bank S.A. at 'BB+/B'. The outlook remains positive. At the same time, S&P affirmed the long- and short-term resolution counterparty ratings at 'BBB/A-2'. Alior's ongoing tightening of underwriting standards in lending activities and the active workout of nonperforming loans (NPLs) continues to support improvements in the bank's risk profile and underpins financial stability. S&P said, "We captured these efforts in the outlook revision to positive on May 17, 2024. Since then, we've observed further portfolio diversification with a slightly growing share of lower-risk products like mortgages and, to a lesser extent, loans to small and midsize enterprises (SMEs). At the same time, there is a decreasing share of higher risk products, such as micro loans. In addition, Alior decreased its NPL ratio to 6.9% at end-2024 from 8.6% a year earlier. This stemmed not only from the active workout and sales of existing NPLs, but also from moderate formation of new stage 3 loans. The active NPL management had a slightly positive impact on the bank's costs of risk, while total loan loss provisions improved to 62 basis points (bps) from 98 bps in 2023. This compares to the Polish banking system's averages of 4.7% NPL and 50 bps risk costs. Furthermore, despite the uncertainty from conflicts in international trade, we expect the Polish economy to remain resilient. This points to a stabilization of credit losses in the coming two years and, absent economic shocks, supports Alior's targets to reduce its NPL ratio to below 5% in 2026. Nevertheless, Alior's current asset quality and concentration of higher-risk products indicate that the bank remains a negative outlier in the Polish banking system for now." S&P said, "We think that Alior's "New Strategy 2027" has the potential to further diversify the bank's business profile, if executed well and without compromising on risks. Alior's management board published the strategy in March 2025, underlining a strong focus on growth alongside other objectives for 2025-2027. We think that the competitive and highly digitalized market may challenge the bank's target of above-average lending growth. But, if executed effectively, the new strategy should support business stability. Alior is expanding its products offering and client base, with a shift toward more recurring revenues, including expanding cooperation with the parent company Powszechny Zaklad Ubezpieczen (PZU, A-/Positive/--). This could make Alior's structural financial performance more resilient. Management's key financial targets include revenue of about Polish zloty (PLN) 7 billion (versus PLN6.1 billion in 2024), a cost-to-income ratio of about 35% (versus 34.9%) and net profit of PLN2.6 billion (versus PLN2.4 billion). Underlying these targets is an annual GDP growth above 3% and an expected reduction in reference rate to 3.5% by 2027 from 5.75% in 2024. At the same time, pursuing these targets could mean a moderate increase in risk appetite, so we will monitor risk metrics closely. "We expect the reorganization of banking assets within the parent group PZU will not impair the likelihood and capacity of support. "The rating on Alior includes one notch of group support from PZU, its largest shareholder, This reflects the bank's moderately strategic group status to PZU and the likelihood of external support if needed. In December 2024, PZU signed a memorandum of understanding with Bank Polska Kasa Opieki S.A. (Pekao, A-/Stable/A-2), where PZU owns 20%, to investigate a potential transfer of PZU's 31.9% stake in Alior to Pekao. Should this transfer materialize, we would likely assess Alior's group status to its immediate shareholder Pekao instead of PZU. For now, we assume that the group status would be moderately strategic or higher, thereby continuing to support the rating on Alior at the current level. If PZU would sell its stake in Alior to external investors, outside of PZU group, we would base our assessment of the likelihood of support to Alior on our view these new investors. That said, PZU's announcement to create a holding structure, where the banking assets are no longer owned by the insurance entity, could reduce pressure to execute further on the reorganization of banking assets. "Strong internal capital generation supports shareholder distribution and facilitates growth. Alior's capital strength enabled the first dividend payment in its history in 2024, and we expect the bank to continue a payout ratio of 50% of net income over the coming years. At year-end 2024, Alior's risk-adjusted capital (RAC) ratio improved to 13.0% from 12.6% a year before, and we expect it to rise further, as internal capital generation is likely to outpace risk-weighted assets (RWAs). Our projections on Alior's lending and related RWA growth are more conservative than Alior's budget. In our base case, we consider loan growth of 6%-7% over the coming two years, more in line with the market. This, combined with a receding net interest margin of about 5.2% in 2026 (versus 5.7% in 2024), some growth in fee income, about 6% growth in operating expenses, and stable cost of risk of about 70bps, translates to net profits of above PLN2 billion annually in our base case for 2025-2027. Stronger lending growth or higher payouts could result in somewhat lower capital ratios, but still in line with a strong capital and earnings assessment, in our view. "Legal risk could weigh on profitability. Alior does not have material legacy Swiss franc mortgages that would require sizable legal provisions. However, we do see a legal risk in its cash loan portfolio since some clients try to claim back cash loan costs, alleging violations of the Consumer Credit Act. While the number and value of the claims remain low, any further traction on this topic could become costly. For now, we only incorporate very moderate legal risk costs into our forecast. "The positive outlook indicates that, over the next 12 months, we expect Alior to continue transforming its risk profile by improving its diversification toward lower risk products and clients, and reducing legacy NPL balances, while reporting risk metrics on new lending more in line with peers than in past years." S&P could revise the outlook to stable if: -- Recent management changes and a focus on strong lending growth indicate a higher risk appetite or raise governance concerns; -- Lending policies do not result in the expected sustainable improvement in credit metrics; -- Legal risks lead to a material drag on profitability; or -- Aggressive growth or unexpected losses causes Alior's RAC to deteriorate below 10%. S&P said, "Also, we could take a negative rating action if a sale of PZU's stake to external investors led us to assess a weaker likelihood of extraordinary support if needed. "We could raise the ratings if the bank further diversifies into less risky products and clients while resolving its high NPL balance. In our view, continued improvements in risks metrics and increased diversification will support profitability and capital buffers through the cycle. The absence of material legal costs related to Alior's cash loan portfolio and a track record of new NPL and risk costs formation more in line to its peers would be preconditions for the upgrade. "We could also consider an upgrade if we observed a higher likelihood of external support from PZU or, after a potential reorganization, from Pekao." ========= S P A I N ========= GRIFOLS SA: Moody's Upgrades CFR to B2, Outlook Remains Positive ---------------------------------------------------------------- Moody's Ratings has upgraded to B2 from B3 the corporate family rating and to B2-PD from B3-PD the probability of default rating of Grifols S.A. (Grifols or the company). Consequently, Moody's have upgraded to B1 from B2 the instrument ratings of the backed senior secured instruments issued by Grifols, Grifols World Wide Operations Ltd. and Grifols World Wide Operations USA, Inc. At the same time, Moody's have upgraded to Caa1 from Caa2 the instrument ratings of the backed senior unsecured instruments issued by Grifols Escrow Issuer, S.A.U. The outlook on all entities remains positive. RATINGS RATIONALE The upgrade of the CFR to B2 from B3 reflects Grifols' continued strong operating performance with robust revenue and profitability growth and improved management execution, which has led to an improvement of its key credit metrics. Moody's expects the company's Moody's-adjusted gross leverage to trend below 6.5x by the end of 2025 from 7x for the last twelve months to March 2025, and its Moody's-adjusted EBITDA to interest expense to be around 3x in 2025. Moody's forecasts the company's Moody's-adjusted free cash flow (FCF) of about EUR250-270 million over the next 12-18 months and continued good liquidity. The positive outlook reflects Moody's expectations that Grifols's operating performance and credit metrics will continue to improve over the next 12-18 months. In particular, Moody's forecasts its Moody's-adjusted gross leverage to trend towards 5.5x, with a Moody's-adjusted EBITDA to interest expense above 3x, and increasing cash generation. The B2 rating also reflects the company's strong market position, scale and vertical integration in human blood plasma-derived products, which are relevant for the industry, the favourable fundamental demand drivers of the sector, the high barriers to entry in the industry because of regulation, customer loyalty, and its good product safety track record. The rating also takes into consideration the company's current high leverage, high capital intensity of the business and working capital requirements which can have large swings during the fiscal year, and are important drivers of FCF. Governance considerations were key to the rating action, in particular recent changes made to the company's Board of Directors with nomination of an independent non-executive Chairwoman, and an improved visibility into the company's new financial policy and capital allocation strategy. Management execution has also been improving since the new executive committee was finalised at the end of last year, but the track record is still fairly recent. Moody's forecasts the company's top-line revenue growth to be in the mid-to-high single digit range in percentage terms over the next 12-18 months, mainly driven by high demand for plasma derivative products. Over the same period, Moody's expects Grifols' Moody's-adjusted EBITDA to be around EUR1.8 billion with improved profitability due to volume growth and operational leverage, reduced cost per litre and roll-out and market penetration of higher-margin products. OUTLOOK The positive outlook reflects Moody's expectations that Grifols will continue to have a strong operating performance and prudent financial management over the next 12-18 months, leading to a Moody's-adjusted leverage ratio improving to around 5.5x and increasing Moody's-adjusted FCF generation. LIQUIDITY Moody's views Grifols' liquidity as good supported by EUR753 million of cash balances at the end of March 2025, and a fully available revolving credit facility (RCF) of $938 million due in May 2027. Moody's forecasts positive Moody's-adjusted FCF of about EUR250-270 million over the next 12-18 months, assuming working capital requirements amounting to about 2% of revenue, total capital expenditure of about EUR500 million per year, and the company restarting to distribute dividends from this year. The company's next debt maturities are about EUR3 billion due in 2027. The RCF is subject to a springing leverage covenant (net debt/EBITDA at a maximum of 7x) that is activated if drawings exceed 40%. Grifols' leverage covenant was 4.5x as of March 31, 2025 and Moody's expects the company to maintain adequate capacity under the threshold. STRUCTURAL CONSIDERATIONS Grifols' capital structure comprises a mix of senior secured debt instruments (term loans, RCF and notes) rated B1, one notch above the CFR, and senior unsecured notes that are ranked behind the senior secured debt in the waterfall and are rated Caa1, two notches below the CFR. All these instruments benefit from guarantees of subsidiaries representing at least 60% of Grifols' EBITDA. The senior secured debt instruments benefit from collateral, which includes among others certain tangible and intangible assets and plasma inventories. The B2-PD probability of default rating (PDR) is in line with the B2 CFR, assuming a 50% corporate family recovery rate appropriate for debt structures comprising bank and bond debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the rating if there is a continued improvement to operating, financial performance, profitability and cash flow generation. Quantitatively, this would translate into a Moody's-adjusted gross leverage moving towards 5.5x, Moody's-adjusted EBITDA to interest expense improving above 3x, and Moody's-adjusted FCF to debt growing towards the mid-single digit range in percentage terms; all on a sustainable basis. The rating could be stabilised if Moody's expectations of gradual improvement of key credit metrics do not materialise over the next 12-18 months, notably if leverage remains elevated or FCF generation does not improve as planned. Conversely, Moody's could downgrade Grifols' rating if its operating performance weakens, leading to a worsening of credit metrics. Numerically, this would translate into a Moody's-adjusted gross leverage remaining above 6.5x, Moody's-adjusted EBITDA to interest expense declining towards 2.0x, or its Moody's-adjusted FCF, all on a sustained basis. Additionally, Moody's could consider a downgrade if liquidity were to deteriorate. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Medical Products and Devices published in October 2023. COMPANY PROFILE Grifols, headquartered in Barcelona, Spain, is a global healthcare company that is primarily focused on human blood plasma-derived products and transfusion medicine. Grifols also supplies devices, instruments and assays for clinical diagnostic laboratories. It reported a company-adjusted EBITDA of EUR1,829 million for the last twelve months ended in March 2025. TAGUS STC: Fitch Assigns 'BB+(EXP)sf' Rating on Class E Notes ------------------------------------------------------------- Fitch Ratings has assigned Tagus, STC S.A. / Silk Finance No. 6 expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already received. Entity/Debt Rating ----------- ------ Tagus, STC S.A. / Silk Finance No. 6 Class A PTTUSDOM0008 LT AAA(EXP)sf Expected Rating Class B PTTUSEOM0007 LT AA-(EXP)sf Expected Rating Class C PTTUSFOM0006 LT BBB(EXP)sf Expected Rating Class D PTTUSGOM0005 LT BB+(EXP)sf Expected Rating Class E PTTUSHOM0004 LT BB+(EXP)sf Expected Rating Class R PTTUSIOM0003 LT NR(EXP)sf Expected Rating Class X PTTUSJOM0002 LT NR(EXP)sf Expected Rating Transaction Summary Tagus, STC S.A. / Silk Finance No. 6 is a securitisation of a EUR450 million revolving portfolio of auto loans and finance leases originated by Santander Consumer Finance, S.A. Portuguese Branch (SCFP) to Portuguese residents. Santander Consumer Finance, S.A. is ultimately owned by Banco Santander, S.A. (A/Stable/F1). KEY RATING DRIVERS Asset Assumptions Reflect Mixed Portfolio: Fitch has calibrated blended base-case default and recovery rate assumptions to the stressed portfolio of 4.6% and 39.5%, considering the historical data provided by SCFP, Portugal's economic outlook and the originator's underwriting and servicing strategies. For the 'AAAsf' rating case, Fitch has assumed 20.6% and 19.7% default and recovery rates, respectively. Short Revolving Period: The transaction features a revolving period until December 2025. In its credit analysis of the portfolio, Fitch has calibrated a stressed composition of the pool reflecting a larger share of used car loans of up to 40% in volume terms (35.7% in the preliminary pool). Used car loans are linked to a higher default rate than new car loans and leases. Pro Rata Note Amortisation: After the revolving period ends, the class A notes will amortise sequentially until it reaches credit enhancement of 27% provided by tranche subordination. The class A to D notes will then be repaid pro rata unless a sequential amortisation event occurs primarily linked to performance triggers such as a principal deficiency ledger or cumulative defaults exceeding certain thresholds. Fitch views these triggers as sufficiently robust to prevent the pro rata mechanism from continuing on early signs of performance deterioration. Fitch believes the tail risk posed by the pro rata pay-down is mitigated by the mandatory switch to sequential amortisation when the portfolio balance falls below 10% of the initial balance. Interest Rate Hedge: An interest rate swap will hedge the risk arising from mismatch between the portfolio, which pays a fixed interest rate for life and the floating rate securitisation notes. The swap notional is the collateralised note (class A to D) balances. Liquidity Protection Mitigates Servicing Disruption: Servicing disruption risk is mitigated by a dedicated cash reserve, which covers senior costs, net swap payments and interest on the class A to D notes for more than three months, providing sufficient time to resume collections by a replacement servicer. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Long-term asset performance deterioration such as increased delinquencies or reduced portfolio yield, which could be driven by changes in portfolio characteristics, business practices or the legislative landscape. For the class D notes, a combination of reduced excess spread and the late receipt of recovery cash flows, particularly at the tail of the life of the transaction. This considers the thin layer of credit enhancement protection from subordination available to the class D notes, which is only provided by the reserve fund. Expected impact on the notes' ratings of increased defaults (class A/B/C/D/E) Increase default rates by 10%: 'AAAsf'/'A+sf'/'BBB-sf'/'BBsf'/'BB+sf' Increase default rates by 25%: 'AA+sf'/'Asf'/'BB+sf'/'BBsf'/'BB+sf' Increase default rates by 50%: 'AAsf'/'A-sf'/'BBsf'/'B+sf'/'BBsf' Expected impact on the notes' ratings of reduced recoveries (class A/B/C/D/E) Reduce recovery rates by 10%: 'AAAsf'/'A+sf'/'BBB-sf'/'BB+sf'/'BB+sf' Reduce recovery rates by 25%: 'AAAsf'/'A+sf'/'BB+sf'/'BBsf'/'BB+sf' Reduce recovery rates by 50%: 'AAAsf'/'Asf'/'BBsf'/'BB-sf'/'BB+sf' Expected impact on the notes' ratings of increased defaults and reduced recoveries (class A/B/C/D/E) Increase default rates by 10% and reduce recovery rates by 10%: 'AAAsf'/'A+sf'/'BB+sf'/'BBsf'/'BB+sf' Increase default rates by 25% and reduce recovery rates by 25%: 'AA+sf'/'A-sf'/'BBsf'/'B+sf'/'BBsf' Increase default rates by 50% and reduce recovery rates by 50%: 'AA-sf'/'BBB-sf'/'B-sf'/'NRsf'/'Bsf' Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Increasing credit enhancement ratios as the transaction deleverages to fully compensate for the credit losses and cash flow stresses commensurate with higher rating scenarios. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Tagus, STC S.A. / Silk Finance No. 6 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, and concluded that there were no findings that affected the rating analysis. Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations 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. =========================== U N I T E D K I N G D O M =========================== ALEXANDRITE MONNET: S&P Affirms 'B+' LongTerm ICR, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings related that despite posting solid operating performance in 2024, with S&P Global Ratings-adjusted EBITDA rising by more than 28%, Alexandrite Monnet UK HoldCo's (Befimmo) high interest burden and rapid amortization of issuance costs have resulted in a low EBITDA interest coverage ratio of only 0.8x. S&P anticipated that recent project deliveries and expanding profitability should support the recovery in the EBITDA interest coverage ratio toward 1.0x over the next 12 months, despite recently increased leverage. S&P now projects S&P Global Ratings-adjusted debt to debt plus equity will peak in 2025 at about 62.5%-63.5%, following the debt-funded EUR61 million prepayment of its shareholder loan and additional capital expenditure (capex) funding. Therefore, S&P affirmed its 'B+' long-term issuer credit rating on Befimmo, and its 'B+' issue rating on the company's senior secured notes, with a recovery rating of '3'. The stable outlook continues to reflect S&P's view that Befimmo will maintain steady, predictable rental income from its good-quality office property portfolio and long-term lease profile with high exposure to public tenants, and that its S&P Global Ratings-adjusted EBITDA interest coverage will progressively recover to 1.0x over the next 12 months. S&P said: "We expect Befimmo's S&P Global Ratings-adjusted EBITDA interest coverage will recover to about 0.9x-1.0x in 2025, after a drop to an estimated 0.8x in 2024. The ratio dropped more than we expected in 2024, due to higher capitalized interest and amortization of issuance costs, below our previous forecast of 1.0x-1.1x. In our view, additional leverage and further amortization of transaction costs will constrain the recovery in interest coverage metrics and limit the headroom under our downside rating thresholds in 2025. However, we expect this to be offset by a robust operating performance and additional rental growth from delivery of development projects. The company exhibits a high average cost of debt of about 5.5%, since it fully refinanced its capital structure between September 2023 and May 2024, when credit market conditions remained adverse. That said, we understand that on a fully cash basis, the adjusted EBITDA interest coverage should remain at least 1x over the next 12 months. "We understand that Befimmo issued secured debt to partially redeem its shareholder loan at the beginning of 2025, tightening the headroom under the 'B+' rating. In March 2025, we understand that Befimmo raised secured debt to repay EUR61 million of the EUR160 million shareholder loan provided by Brookfield in 2024, which we consider as equity. Against our previous expectations, the transaction will likely raise the debt to debt plus equity ratio to about 62.5%-63.5% in 2025 from 60.4% in 2024. While we view the transaction as shareholder friendly, we understand Befimmo remains committed to its financial policy of maintaining a maximum loan-to-value (LTV) of 60% and an adjusted ratio of debt to debt plus equity below 65%. We have maintained our equity content on the remaining portion of shareholder loan, but we will monitor closely any further development and reassess our analysis and ratings if further unexpected events occur." Befimmo's credit quality is underpinned by the company's EUR2.9 billion portfolio and solid tenant base comprising large public sector organizations. Befimmo has well-located office assets, with about 70% of the portfolio in Brussels' prime areas close to mobility hubs, where supply-and-demand dynamics remain supportive. Also, institutions in Belgium (unsolicited AA/Negative/A-1+) and the EU (AA+/Stable/A-1+) form Befimmo's solid tenant base, generating 54% of rental income (as of December 2024). This, alongside long-term leases, supports rental income stability and predictability. Also, development risks remain limited; most of the committed development pipeline is pre-let, mitigating vacancy risks and providing cash flow visibility. In 2024, Befimmo delivered solid total rental income growth of about 18%, supported by the delivery of the office and residential space of the Zin tower (almost fully occupied) and additional indexation and positive reversion from new letting and renegotiation. S&P said, "We assume Befimmo's annual rental income growth will be around 8%-10% in 2025 and 2%-4% in 2026, benefitting from the delivery of the Pacheco project and hotel space of the Zin tower in 2025, and the PLXL project in 2026. We expect 2%-3% like-for-like rental growth from the company's fully inflation-linked and uncapped lease contracts and increasing occupancy (95.2% as of year-end 2024) thanks to the solid demand for office spaces in Belgium's key cities. This is particularly true in Brussels' prime area, where most of Befimmo's portfolio is located. The company benefits from an excellent weighted-average lease term of more than 10 years (or 9.5 years until first break) and high exposure to public tenants (54% of total rents as of December 2024). The portfolio occupancy rate, including future signed leases, was high at 95.2% (95.9% including future signed leases) in December 2024, showing the strong demand for the assets. Additionally, we expect S&P Global Ratings-adjusted EBITDA to land at about EUR104 million in 2024, in line with our forecasts, and to increase toward EUR115 million-EUR120 million in 2025. We understand that the group's consolidated accounts include Silversquare revenues as part of total rental income, while we added these directly to EBITDA, explaining the lower expected margin versus our previous forecast." S&P said, "We expect Befimmo will maintain adequate liquidity over the next 12 months, but refinancing needs will increase over the next 24 months. Befimmo does not face any debt maturities until December 2027, when the facility totaling about EUR209 million and linked to the Fedimmo portfolio will come due. We note that as of April 30, 2025, Befimmo's weighted-average debt maturity (WAM) stood close to 3.5 years, close to our rating threshold of a minimum of three years. We expect Befimmo to take sufficient steps to ensure a WAM of comfortably above three years. All the debt remains hedged against interest rate volatility, thus mitigating short-term refinancing and liquidity risks. That said, interest payments will be high, which will limit the company's liquidity headroom over the next 24 months if, as we forecast, funds from operations (FFO) in 2025 remain limited at around EUR5 million-EUR15 million. We understand that Brookfield has committed to injecting additional equity should the company fail to cover the scheduled interest payments on its senior secured notes -- this mitigates short-term risks, in our view. We also understand that capex needs are limited because the main development projects are coming to an end over the next 24 months. Moreover, Befimmo maintained adequate headroom on its senior secured notes' financial covenant of maintaining maximum total consolidated leverage of 70% (about 60% as of end-2024). "The stable outlook reflects our expectation that Befimmo will sustain stable and predictable rental income from its good-quality office property portfolio and long leases with reliable tenants. The outlook also reflects our expectation that Befimmo's adjusted EBITDA interest coverage will improve to close to 1.0x and adjusted debt to debt plus equity will be about 60%-63% over the next 12 months." S&P could lower its ratings on Befimmo in the next 12 months if: -- S&P Global Ratings-adjusted EBITDA interest coverage fails to improve to close to 1.0x; -- Debt to debt plus equity increases well above 65%; or -- Debt to EBITDA deviates materially from our base-case projection. S&P said, "We could also lower the rating if Befimmo's cash flow from operations turns negative. This could occur if capex is higher than expected, devaluations are larger than anticipated, or EBITDA growth is weaker than expected. "The ratings could also come under pressure if we see unexpected events weakening Befimmo's creditworthiness, such as shareholder distributions funded with debt or available cash or the company failing to maintain an average debt maturity profile of above three years." An upgrade would depend on Befimmo's ability to: -- Improve and sustain its EBITDA interest coverage closer to 1.3x or above; -- Maintain debt to debt plus equity well below 65%; and -- Improve debt to EBITDA toward 13x on an annualized basis. An upgrade would also hinge on Befimmo ensuring solid headroom under its liquidity position and financial covenants and maintaining a stable operating environment. MAGIC MEDIA: Begbies Traynor Named as Administrators ---------------------------------------------------- Magic Media Works Limited was placed into administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Court Number: CR-2025-003316, and Asher Miller and Stephen Katz of Begbies Traynor (London) LLP were appointed as administrators on May 14, 2025. Magic Media engaged in ready-made interactive leisure and entertainment software development. The Company's registered office is at Pearl Assurance House, 319 Ballards Lane, London, N12 8LY. The joint administrators can be reached at: Asher Miller Stephen Katz Begbies Traynor (London) LLP Pearl Assurance House 319 Ballards Lane London, N12 8LY Any person who requires further information may contact: Rionesa Svarca Begbies Traynor (London) LLP Email: et-team@btguk.com Tel No: on 020 8343 5900 STRATTON LONDON: Leading UK Named as Liquidator ----------------------------------------------- Petitions to wind up Stratton London Limited was presented in August 2024 by the Commissioners for HM Revenue and Customs, claiming to be creditors of the Company, in the High Court of Justice (Chancery Division), Companies Court No. CR-2024-004985 of 2024. Winding Up Orders were issued in January 2025. Pursuant to Rule 7.59 of the Insolvency (England and Wales) Rules 2016, a Liquidator has been appointed to the Company by the Secretary of State on May 16, 2025. Jamie Playford of Leading UK has been appointed as liquidator to the Company. Stratton London engaged in the construction of domestic buildings. The Company's registered office and principal trading address is at 15 Crusader Court Harrier Way, Eagle Business Park, Yaxley, PE7 3AT. The Liquidator can be reached at: Jamie Playford Leading UK Lawrence House 5 St Andrews Hill Norwich, NR2 1AD For further details, contact: 01603 552028 ********* 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 2025. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *