250620.mbx

250620.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, June 20, 2025, Vol. 26, No. 123 Headlines A U S T R I A KOMMUNALKREDIT AUSTRIA: S&P Rates New Tier 2 Sub. Notes 'BB+' F R A N C E TEREOS SCA: S&P Affirms 'BB-' LT ICR & Alters Outlook to Negative G E R M A N Y BENTELER INT'L: Moody's Rates New EUR600MM Sr. Secured Notes 'Ba3' H U N G A R Y WIZZ AIR: Moody's Downgrades CFR to Ba2, Outlook Remains Negative I R E L A N D AVOCA CLO XXXVII: S&P Assigns Prelim. B-(sf) Rating on Cl. F Notes BARINGS EURO 2021-1: Moody's Cuts Rating on EUR8MM F Notes to Caa1 DRYDEN 27 R 2017: S&P Affirms 'B-(sf)' Rating on Class F-R Notes I T A L Y FIBERCOP SPA: Moody's Rates New Senior Secured EUR Notes 'Ba1' TEAMSYSTEM SPA: Moody's Affirms 'B2' CFR, Outlook Stable N E T H E R L A N D S DEUTSCHE EUROSHOP: S&P Assigns 'BB+' ICR, Outlook Stable S P A I N AERNNOVA AEROSPACE: Moody's Alters Outlook on 'B3' CFR to Negative S W I T Z E R L A N D GATEGROUP HOLDING: S&P Raises ICR to 'B+' on Completed Refinancing U N I T E D K I N G D O M 79TH COMMERCIAL: Quantuma Advisory Named as Administrators 79TH LUXURY: Quantuma Advisory Named as Administrators AWAZE LTD: S&P Affirms 'B-' ICR & Alters Outlook to Negative BELLIS FINCO: Moody's Rates New EUR959MM Senior Secured Notes 'B1' CAMBRIAN ASSOCIATES: Begbies Traynor Named as Administrators GERMAN SPECIALISTS: Begbies Traynor Named as Administrators HENLEY DEVELOPMENTS: RSM UK Named as Administrators MEDDINGS THERMALEC: Lameys Named as Administrators PHARMANOVIA BIDCO: S&P Downgrades ICR to 'B-', Outlook Negative PLANTMADE LIMITED: Begbies Traynor Named as Administrators STARS UK: New EUR100MM Loan Add-on No Impact on Moody's 'B2' CFR X X X X X X X X [] BOOK REVIEW: Bailout: An Insider's Account of Bank Failures - - - - - ============= A U S T R I A ============= KOMMUNALKREDIT AUSTRIA: S&P Rates New Tier 2 Sub. Notes 'BB+' ------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating to the proposed EUR150 million Tier 2 nondeferrable, subordinated notes to be issued by Kommunalkredit Austria AG (Kommunalkredit; BBB/Stable/A-2). The rating is subject to our review of the final issuance documentation. In accordance with our criteria for hybrid capital instruments, the 'BB+' issue rating reflects S&P's analysis of the proposed instrument and our assessment of Kommunalkredit's 'bbb' stand-alone credit profile (SACP). The issue rating stands two notches below the SACP, due to the following deductions: -- One notch because of the notes' contractual subordination with respect to the bank's senior obligations; and -- One notch because the notes contain a statutory loss absorption feature with write-down or conversion of claims, which could be triggered at the "point of non-viability" of Kommunalkredit through declaration by the Austrian Financial Market Authority as the competent authority for resolution of the bank. S&P said, "When evaluating the instrument, we believe there are no additional nonpayment risks that would justify deduction of additional notches to those noted above. "We understand that the instrument will be eligible as Tier 2 regulatory capital for Kommunalkredit. But given the notes' lack of going-concern loss absorption, we do not include them in our calculation of the bank's total adjusted capital." =========== F R A N C E =========== TEREOS SCA: S&P Affirms 'BB-' LT ICR & Alters Outlook to Negative ----------------------------------------------------------------- S&P Global Ratings revised its outlook on sugar group Tereos SCA to negative from positive and affirmed the 'BB-' long-term issuer credit rating. At the same time, S&P affirmed its 'BB-' rating on the company's existing senior unsecured notes. S&P said, "The negative outlook reflects that we could lower our issuer credit rating on Tereos in the next 12-18 months if the group is unable to restore its operational performance from fiscal 2027 and delivers a slower recovery in credit metrics than we expected, despite the more supportive market conditions for sugar and ethanol that we anticipate and the cost-savings measures implemented by the Group. "After reporting solid results in fiscal 2025 (ended March 31, 2025), we now forecast Tereos SCA's operational performance will deteriorate more than we expected in fiscal 2026. We now see S&P Global Ratings-adjusted debt to EBITDA rising about 6.0x (3.2x in 2025) and funds from operations (FFO) to debt decreasing to about 5%-10% (versus 18% in 2025), reflecting adverse market conditions in Europe for sugar and ethanol and lower margins for starch products. "But we also anticipate Tereos' operating performance will rebound in fiscal 2027 thanks to higher sugar market prices in Europe, cost-savings measures, and improving operating efficiency, such that S&P Global Ratings-adjusted debt to EBITDA ratio decreases to 4.5x-5.0x and FFO to debt of 12%-17%. "We forecast Tereos' operational performance will deteriorate temporarily in fiscal 2026 because of weak market prices in Europe sugar and ethanol, which made up 65% of total sales last year. We now forecast Tereos will achieve an S&P Global Ratings-adjusted debt to EBITDA of about 6x and FFO to debt of about 5%-10% in fiscal 2026. This is a material deterioration from the 3.2x and 18% achieved in fiscal 2025. We forecast lower margins for sugar and ethanol, notably in Europe, reflecting our expectation of lower contracted prices for sugar, lower spot prices for ethanol, and high production costs. Sugar prices in Europe have declined substantially because producers have increased their sugar beet planted areas to benefit from favorable market conditions in recent years, and because of large volumes of tax-free imports from Ukraine. On the ethanol market, imports of corn ethanol from the U.S. have contributed to lower prices, along with lower oil prices. We also consider the likely lower volumes of sugarcane processed in Brazil amid adverse weather conditions, lower international market prices caused by large volumes of exports from India, and a devaluation of the Brazilian real against the U.S. dollar. These will contribute to a lower margin. Yet we note that the ethanol market price remains supportive in Brazil, thanks to a growing demand." Tereos' ambition to regain volumes in the starch and sweeteners segment will also put short-term pressure on its margins in this segment. According to the company, this segment contributed 24.5% of Tereos' total EBITDA in fiscal 2025. A starch factory in France has been running at sub-optimal levels following an industrial incident that happened in November 2023 which should be largely resolved in 2026. Tereos may have to lower selling prices of starch products as both starch factories gradually recover volumes, which will likely result in lower profitability in this segment. The challenges in sugar, ethanol, and starch combined underpin our forecast of lower S&P Global Ratings-adjusted EBITDA for Tereos at about EUR480 million-EUR500 million in fiscal 2026, from the EUR790 million achieved in fiscal 2025. S&P said, "We see Tereos' profits and cash flows improving in fiscal 2027, thanks to higher market prices for sugar in Europe and from the company's efforts to streamline its cost structure. We forecast higher S&P Global Ratings-adjusted EBITDA for Tereos at EUR600 million-EUR620 million in fiscal 2027 versus EUR480 million-EUR500 million in fiscal 2025. As such, we forecast Tereos to improve its credit metrics in fiscal 2027 versus fiscal 2026, such that it reaches S&P Global Ratings-adjusted debt to EBITDA of 4.5x-5.0x and FFO to debt of 12%-17%, which are in line with the rating but leave little headroom for underperformance. Sugar prices in Europe will likely be supported by the recent decision by several sugar producers to reduce their planted areas of sugar beets, which Tereos estimates will reduce by 8% in Europe, and to close some sugar beet processing factories. We forecast higher margins from the sugar international division, supported by higher volumes of sugarcane processed in Brazil and stable prices, as well as a moderate improvement in margin from the starch and sweeteners segment, thanks to growing volumes. Additionally, we believe it plausible that Tereos may continue to look to sell or close noncore and unprofitable assets to focus on its strategic businesses. Recent asset sales include the announced disposal of its natural products trading activities, and the disposal of its packaging site in the U.K. Tereos has also announced initiatives to reduce costs across support functions from 2027. "The sugar and ethanol business remain working capital and capital spending (capex) intensive, but Tereos should be able to retain good access to bank financing and periodically to debt capital markets. We continue to see Tereos as well funded for its day-to-day activities, despite the inherent cash flow volatility in large parts of its business. We project FFO of around EUR170 million this year and around EUR420 million next year. We forecast capex at EUR350 million-EUR370 million in fiscal 2026 and fiscal 2027 (versus EUR455 million last year). We note that a large share of forecast capex is to achieve Tereos' sustainability ambitions through various projects, which the company could postpone if it needs to protect its free cash flow generation and financial flexibility under adverse market conditions. Our forecast reflects the high annual spending to maintain an efficient industrial footprint, sugarcane planting projects in Brazil, and decarbonization initiatives. We see Tereos' business as working capital intensive and exposed to price and availability of raw materials, which results in sizable short-term funding needs. We believe the group retains sizable cash balances at all times and good access to committed bank financing in Europe and Brazil. The group also has an established track record in accessing debt capital markets, as evidenced by the successful EUR300 million bond issuance in January 2025. "We assume Tereos will maintain a consistent capital allocation policy to prioritize deleveraging over discretionary spending. Tereos' public targets include its ambition to maintain a reported net debt leverage ratio below 3x over the medium term. It is looking to accomplish this by achieving an EBIT margin higher than 5% and by reducing debt with positive free cash flows before working capital requirements. In addition to the group's efforts to streamline its unprofitable operations and continue to benefit from cost savings, we see as highly unlikely the group would pursue a medium to large debt-financed acquisition. This is notably because the board and the cooperative's members (10,300 sugar beet farmers in France) support the management's efforts to strengthen the group financially versus pursuing ambitious expansion plans. "The negative outlook indicates our view that we could lower our issuer credit rating on Tereos in the next 12-18 months if the company is unable to restore credit metrics commensurate with the 'BB-' rating from fiscal 2027. We currently forecast that the company will successfully improve its operational performance in fiscal 2027, after a temporary deterioration this year, such that its S&P Global Ratings-adjusted debt to EBITDA improves to within 4x-5x and FFO to debt to above 12%. We also forecast Tereos will generate high FFO of more than EUR400 million from fiscal 2027 to support its large capex requirements. Yet we see some degree of uncertainty in Tereos' capacity to improve its credit metrics from fiscal 2027, which relies on favorable market conditions and on the successful application of cost containment measures. "We could lower our rating if Tereos' is unable to materially improve its credit metrics due to weaker-than-expected cash flows, such that adjusted debt leverage is greater than 5x and FFO to debt below 12% until fiscal 2027. We would also view negatively if the EBITDA interest coverage ratio declined below 2x over the same period, which would weaken the group's ability to access bank funding and capital markets in our opinion. "We believe cash flows could remain weak over the next 18 months should profits in sugar and ethanol activities in Europe remain very low due to subdued market prices driven by ample supply and weak demand. Severe operational disruptions in its main growing regions and processing plants in France and Brazil could also impact the group's operating performance with Tereos unlikely to be able to immediately take drastic cash-conservation measures, given the high working capital and capex intensity of the group. "We could revise the outlook to stable over the next 12-18 months if Tereos demonstrates its ability to improve the operational performance of its sugar and ethanol operations, such that the company performs broadly in line with or better than our current expectation, with adjusted debt to EBITDA returning to within 4x-5x and FFO to debt above 12% from fiscal 2027." This could happen if Tereos is able to benefit from more supportive sugar prices in Europe, combined with a continued execution of its business strategy to focus on achieving high margins and efforts to contain costs, translating into higher profitability in its sugar and ethanol segments. ============= G E R M A N Y ============= BENTELER INT'L: Moody's Rates New EUR600MM Sr. Secured Notes 'Ba3' ------------------------------------------------------------------ Moody's Ratings said that it expects to assign a Ba3 instrument rating to BENTELER International AG's ("BIAG", "BENTELER" or the "Company") proposed new EUR600 million backed senior secured notes due 2031. The issuance is in the context of a refinancing of all of BIAG's existing debt instruments, including its outstanding $500 million 10.5% and EUR525 million 9.375% backed senior secured bonds due 2028, which have become callable since May 2025. Following the transaction, BAIG's total debt will remain unchanged, except for transaction cost. Moody's expects the proposed refinancing to result in lower annual interest payments, in addition to extending the maturity profile, both a credit positive. The rating on the new backed senior secured bonds are expected to be aligned with BIAG's Corporate Family Rating (CFR) at Ba3. BENTELER's current and future financial debt instruments are ranking pari passu and benefit from the same security package. BENTELER International AG's Ba3 CFR is supported by (i) the company's global scale and strong market position, with expertise in metal processing of steel and aluminum for automotive and industrial customers, (ii) the company's strong and differentiated product portfolio, and well established relationships with OEM customers, (iii) a good level of diversification due to the steel tube business, and (iv) a relatively conservative financial policy, and a commitment to reduce gross debt and maintain a company-defined net leverage of 1.5x through the cycle (2.0x in the last twelve months to March 2025). The rating is constrained by (i) the company's exposure to the automotive industry, which is highly cyclical and highly competitive, and its highly concentrated customer portfolio in the automotive business, (ii) the high sensitivity to the Shreveport steel tube plant whose performance is highly reliant on the Oil and Gas industry in the US, (iii) the relatively low group profitability, and (iv) a history of low and volatile operating profits. The outlook is stable and reflects Moody's expectations that BENTELER will be able to maintain an EBIT margin of at least 4.5% over the next 12-18 months despite being in a challenging operating environment. The outlook also assumes that the company will continue to generate positive free cash flow (Moody's-adjusted) supporting its good liquidity profile, and deleveraging towards 3.5x (Moody's-adjusted) during this period. ============= H U N G A R Y ============= WIZZ AIR: Moody's Downgrades CFR to Ba2, Outlook Remains Negative ----------------------------------------------------------------- Moody's Ratings has downgraded Wizz Air Holdings plc's (Wizz Air) long-term corporate family rating to Ba2 from Ba1. Concurrently, Moody's downgraded Wizz Air's Probability of Default rating to Ba2-PD from Ba1-PD and Wizz Air Finance Company BV's backed senior unsecured notes as well as the backed senior unsecured medium term note program ratings to Ba2 from Ba1 and to (P)Ba2 from (P)Ba1, respectively. The outlook on both entities remains negative. "The rating action reflects the company's ongoing weak point-in-time credit metrics with a slower than expected recovery driven by the high level of groundings from the GTF engine issue that lead to higher costs beyond the agreed compensation levels" says Dirk Goedde, a Moody's Ratings Vice President – Senior Analyst and lead analyst of Wizz Air. "The grounding of aircraft has significantly hindered Wizz Air's growth plans, which are essential for improving profitability. The airline relies on growth to offset rising operating and inflation-related costs, but this strategy is undermined by its inability to fully utilize its fleet.", Mr. Goedde continued. RATINGS RATIONALE Wizz Air's financial performance in its fiscal year 2025 was weaker than expected and its financial metrics remained outside of the Ba1 rating category. Despite Wizz Air growing its total fleet, the full-year effect of the groundings from the GTF engine issue has reduced the planned expansion of its operating fleet so that the company's capacity as measured by available seat kilometers (ASK) was flat in FY25. While an improvement in load factor by 1pp to 91.2% and increase in yields catered for 4% revenue growth, structural cost increases did impact its profitability with Moody's adjusted EBIT-margin declining to 2.8% from 5.8%. Such increases included higher staff and network related costs but also higher indirect costs from the groundings such as higher maintenance costs as well as higher depreciation of the growing fleet albeit around 20% was not operational. While Moody's believes that the company can return to its previous growth pattern from new deliveries and the grounded part of its fleet being gradually reduced, credit metrics will remain subdued in the next 12-18 months. Based on the recent delivery schedule and under the assumption that the company will further improve load factors against slightly lower yields to stimulate demand while RASK (revenue per average seat kilometer) continues to grow, Moody's forecasts revenue growth of 12% and 10% in fiscal year 2026 and 2027 respectively. Although Moody's believes that the recently lower fuel prices will support a margin recovery, cost increases for staff and network will persist leading to an increase in its Moody's adjusted EBIT-margin towards 5% in 2026 with some upside thereafter. This increase leads to an improvement in Wizz Air's Moody's adjusted debt/EBITDA towards 5.0x and 4.8x in 2026 and 2027 respectively, from 5.9x in fiscal year 2025. Considering the ongoing fleet expansion, Moody's expects ongoing negative Moodys-adjusted free cash flow generation which will be compensated for by cash gains from sale-and-leaseback transactions (depending on the company's financing decisions) and contracted PDP refunds – both of which are excluded from Moodys adjusted free cash flow. More general, Wizz Air's rating remains supported by the company's superior cost base, its efficient fleet and focus on the growing CEE aviation market. The company's expansionary strategy remains unchanged and will benefit from these supportive factors, although it will require some time for new routes to become profitable and Moody's cannot rule out a margin of error as Wizz Air executes this growth strategy. Wizz Air's rating is also supported by the company's strong liquidity profile. The company had around EUR1.7 billion available cash and cash equivalents on balance sheet as per End of March 2025 or 32% of fiscal year 2025 revenue. Liquidity is deemed more than sufficient to maneuver through a 12-month period of weak operating conditions if market conditions deteriorate. Wizz Air faces debt maturities of EUR500 million backed senior unsecured notes in January 2026, issued by Wizz Air Finance Company BV and EUR272 million ETS repurchase obligation due in March 2026, with the latter being expected to be rolled over at maturity. OUTLOOK The negative outlook reflects credit metrics outside of the requirement for a Ba2 rating (e.g. Debt/EBITDA below 5.0x) and risks around a recovery and successful adoption of the expansion given the volatility in the industry. Moody's may stabilize the outlook if Wizz Air credit metrics in line with Moody's base case and absent any external negative effects. STRUCTURAL CONSIDERATIONS Wizz Air Finance Company BV's backed senior unsecured notes are rated Ba2, at the same level of Wizz Air's CFR, in line with Moody's Loss Given Default for Speculative-Grade Companies (LGD) methodology published in December 2015. This reflects the fact that the majority of the financial debt of Wizz Air is senior unsecured and issued by a finance subsidiary backed by the parent company of Wizz Air. However, the notes are structurally subordinated to the secured ETS financing as well as opco-liabilities such as lease liabilities given the lack of guarantees. Any further unsecured debt issuance may therefore create negative pressure on the instrument ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive rating pressure could develop if on a Moody's adjusted basis (i) Wizz Air reduces its Debt/EBITDA sustainably below 4.0x , (ii) its EBIT margin exceeds 10% on a sustained basis, (iii) its (funds from operations + interest)/interest is maintained above 6.0x and (iv) its strong liquidity profile is maintained. Moody's could downgrade Wizz Air if over the next 12 to 18 months the company does not demonstrate an ongoing positive trajectory of metrics, and (i) gross adjusted debt to EBITDA remains sustainably above 5.0x, (ii) its (funds from operations + interest)/interest falls below 4.0x and (iii) adjusted EBIT margin below 5%. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Passenger Airlines published in August 2024. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COMPANY PROFILE Wizz Air Holdings plc (Wizz Air is the largest low-cost airline in CEE and one of Europe's leading ultra-low-cost airlines that provide short- and medium-haul point-to-point routes. Established in 2003, Wizz Air has grown significantly and carried around 63.4 million passengers in 2025 (40 million in 2019). The company has 33 operating bases (+1 y-o-y) and serves around 200 airports (+20 y-o-y) in 55 countries (+1 y-o-y), with an A320/321 family fleet of about 231 aircraft (+23 y-o-y). Its core markets include Poland, Romania, Hungary and Bulgaria, which the company links to other CEE and Western European destinations, especially the UK. In fiscal 2025, Wizz Air generated revenue of around EUR5.3 billion (+4% y-o-y), with a company adjusted EBITDA of EUR1,134 million (-5% y-o-y). ============= I R E L A N D ============= AVOCA CLO XXXVII: S&P Assigns Prelim. B-(sf) Rating on Cl. F Notes ------------------------------------------------------------------ S&P Global Ratings assigned its preliminary ratings to Avoca CLO XXXVII DAC's class A, B, C, D, E, and F notes. At closing, the issuer will also issue unrated subordinated notes. The preliminary ratings assigned to Avoca CLO XXXVII's notes reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P weighted-average rating factor 2,868.85 Default rate dispersion 342.79 Weighted-average life (years) 4.68 Obligor diversity measure 128.88 Industry diversity measure 17.55 Regional diversity measure 1.24 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.75 'AAA' weighted-average recovery (%) 36.86 Weighted-average spread (%) 3.77 Covenanted weighted-average coupon (%) 5.00 Rationale Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.5 years after closing. S&P said, "At closing, we expect the portfolio to be well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we modeled a target par of EUR400 million. Additionally, we modeled the actual weighted-average spread (3.77%), the covenanted weighted-average coupon (5.00%), and the weighted-average recovery rates calculated in line with our CLO criteria for all classes of notes. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on Jan. 25, 2030, the collateral manager may substitute assets in the portfolio as long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain--as established by the initial cash flows for each rating--and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk sufficiently mitigated at the assigned preliminary ratings. "At closing, we expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "The CLO will be managed by KKR Credit Advisors (Ireland) Unlimited Co., and the maximum potential rating on the liabilities is 'AAA' under our operational risk criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe the preliminary ratings are commensurate with the available credit enhancement for the class A to F notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B to F notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from closing--during which the transaction's credit risk profile could deteriorate--we have capped our preliminary ratings on the notes. "Given our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for all the rated classes of notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we also included the sensitivity of the ratings on the class A to E notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P said, "We regard the transaction's exposure to environmental, social, and governance (ESG) credit factors as broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental and social credit factors is viewed as below average, while governance credit factors are average. For this transaction, the documents prohibit or limit certain assets from being related to certain activities. Accordingly, since the exclusion of assets from these activities does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Avoca CLO XXXVII DAC is a European cash flow CLO securitization of a revolving pool, comprising mainly euro-denominated leveraged loans and bonds. The transaction is a broadly syndicated CLO that will be managed by KKR Credit Advisors (Ireland) Unlimited Co. Ratings list Prelim. Prelim. Amount Indicative Credit Class rating* (mil. EUR) interest rate§ enhancement (%) A AAA (sf) 244.00 Three/six-month EURIBOR 39.00 plus 1.33% B AA (sf) 50.00 Three/six-month EURIBOR 26.50 plus 1.75% C A (sf) 24.00 Three/six-month EURIBOR 20.50 plus 2.15% D BBB- (sf) 27.00 Three/six-month EURIBOR 13.75 plus 3.00% E BB- (sf) 18.00 Three/six-month EURIBOR 9.25 plus 5.50% F B- (sf) 11.00 Three/six-month EURIBOR 6.50 plus 8.26% Sub NR 29.50 N/A N/A *The preliminary ratings assigned to the class A and B notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. § Solely for modeling purposes as the actual spreads may vary at pricing. The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. BARINGS EURO 2021-1: Moody's Cuts Rating on EUR8MM F Notes to Caa1 ------------------------------------------------------------------ Moody's Ratings has taken a variety of rating actions on the following debt issued by Barings Euro CLO 2021-1 Designated Activity Company: EUR40,000,000 Class B Senior Secured Floating Rate Notes due 2034, Upgraded to Aa1 (sf); previously on May 12, 2021 Definitive Rating Assigned Aa2 (sf) EUR8,000,000 Class F Senior Secured Deferrable Floating Rate Notes due 2034, Downgraded to Caa1 (sf); previously on May 12, 2021 Definitive Rating Assigned B3 (sf) Moody's have also affirmed the ratings on the following debt: EUR198,000,000 Class A Senior Secured Floating Rate Notes due 2034, Affirmed Aaa (sf); previously on May 12, 2021 Definitive Rating Assigned Aaa (sf) EUR50,000,000 Class A Senior Secured Floating Rate Loan due 2034, Affirmed Aaa (sf); previously on May 12, 2021 Definitive Rating Assigned Aaa (sf) EUR28,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2034, Affirmed A2 (sf); previously on May 12, 2021 Definitive Rating Assigned A2 (sf) EUR25,000,000 Class D Senior Secured Deferrable Floating Rate Notes due 2034, Affirmed Baa3 (sf); previously on May 12, 2021 Definitive Rating Assigned Baa3 (sf) EUR23,000,000 Class E Senior Secured Deferrable Floating Rate Notes due 2034, Affirmed Ba3 (sf); previously on May 12, 2021 Definitive Rating Assigned Ba3 (sf) Barings Euro CLO 2021-1 Designated Activity Company, issued in May 2021, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Barings (U.K.) Limited. The transaction's reinvestment period will end in July 2025. RATINGS RATIONALE The rating upgrade on the Class B notes is primarily a result of the benefit of the shorter period of time remaining before the end of the reinvestment period in July 2025. The downgrade on the rating on the Class F notes is primarily a result of par loss paired with continued deterioration of the WAS of the underlying pool since the payment date in July 2024. The affirmations to the ratings on the Class A debt, Class C notes, Class D notes and Class E notes are primarily a result of the expected losses on the notes remaining consistent with their current rating levels, after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralisation ratios. In light of reinvestment restrictions during the amortisation period, and therefore the limited ability to effect significant changes to the current collateral pool, Moody's analysed the deal assuming a higher likelihood that the collateral pool characteristics would maintain an adequate buffer relative to certain covenant requirements. The key model inputs Moody's uses in Moody's analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on Moody's published methodology and could differ from the trustee's reported numbers. In Moody's base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR388.7 million Defaulted Securities: EUR4.9 million Diversity Score: 63 Weighted Average Rating Factor (WARF): 2896 Weighted Average Life (WAL): 4.4 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.8% Weighted Average Coupon (WAC): 4.2% Weighted Average Recovery Rate (WARR): 43.1% Par haircut in OC tests and interest diversion test: 0% The default probability derives from the credit quality of the collateral pool and Moody's expectations of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Structured Finance Counterparty Risks" published in May 2025. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated debt's performance is subject to uncertainty. The debt's performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the debt's performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: Once reaching the end of the reinvestment period in July 2025, the main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the debt ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. -- Weighted average life: The debt ratings are sensitive to the weighted average life assumption of the portfolio, which could lengthen as a result of the manager's decision to reinvest in new issue loans or other loans with longer maturities, or participate in amend-to-extend offerings. The effect on the ratings of extending the portfolio's weighted average life can be positive or negative depending on the notes' seniority. -- Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over-collateralisation levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Recoveries higher than Moody's expectations would have a positive impact on the debt ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. DRYDEN 27 R 2017: S&P Affirms 'B-(sf)' Rating on Class F-R Notes ---------------------------------------------------------------- S&P Global Ratings raised its credit ratings on Dryden 27 R Euro CLO 2017 DAC's class B-1-R and B-2-R notes to 'AA+ (sf)' from 'AA (sf)', class C-R notes to 'AA- (sf)' from 'A (sf)', and class D-R notes to 'BBB+ (sf)' from 'BBB (sf)'. At the same time, S&P affirmed its 'AAA (sf)' rating on the class A-R notes, 'BB- (sf)' rating on the class E-R notes, and 'B- (sf)' rating on the class F-R notes. S&P said, "The rating actions follow the application of our global corporate CLO criteria, and our credit and cash flow analysis of the transaction based on the March 2025 trustee report. "Our ratings address timely payment of interest and ultimate payment of principal on the class A-R, B-1-R, and B-2-R notes, and ultimate payment of interest and principal on the class C-R, D-R, E-R, and F-R notes." Since the transaction closed in March 2021: -- The portfolio's weighted-average rating is 'B'. -- The portfolio is diversified with 125 obligors. -- The portfolio's weighted-average life is 3.55 years. Despite a more concentrated portfolio, the scenario default rates (SDRs) decreased for all rating scenarios, mainly due to improved credit quality and the reduction in the portfolio's weighted-average life to 3.55 years from 4.65 years. Portfolio benchmarks SPWARF 2,861.81 Default rate dispersion (%) 688.61 Weighted-average life (years) 3.55 Obligor diversity measure 89.43 Industry diversity measure 17.98 Regional diversity measure 1.21 SPWARF--S&P Global Ratings' weighted-average rating factor. On the cash flow side: -- The reinvestment period for the transaction ended in April 2023. The class A-R notes have deleveraged by EUR68.36 million since then, with a note factor of 75.45%. -- No class of notes is deferring interest. -- All coverage tests are passing as of the March 2025 trustee report. -- The transaction saw a decrease in assets compared with liabilities, amounting to EUR9.60 million. Transaction key metrics Total collateral amount (mil. EUR)* 388.03 Defaulted assets (mil. EUR) 0 Number of performing obligors 125 Portfolio weighted-average rating B 'CCC' assets (%) 5.79 'AAA' SDR (%) 58.75 'AAA' WARR (%) 36.32 *Performing assets plus cash and expected recoveries on defaulted assets. SDR--Scenario default rate. WARR--Weighted-average recovery rate. Credit enhancement Current credit Previous credit enhancement enhancement Current (based on the March 2025 closed in Class amount (EUR) trustee report) (%) (March 2021) (%) A-R 210,136,415 45.85 40.24 B-1-R 33,250,000 31.74 28.49 B-2-R 21,500,000 31.74 28.49 C-R 30,250,000 23.94 22.00 D-R 32,500,000 15.57 15.02 E-R 24,000,000 9.38 9.87 F-R 13,000,000 6.03 7.08 Sub 46,900,000 N/A N/A Credit enhancement = [Performing balance + cash balance + recovery on defaulted obligations (if any) – tranche balance (including tranche balance of all senior tranches)]/ [Performing balance + cash balance + recovery on defaulted obligations (if any)]. N/A--Not applicable. The CLO has a smoothing account that helps to mitigate any frequency timing mismatch risks. S&P said, "In our credit and cash flow analysis, we considered the transaction's available current cash balance and the SDRs, as per the March 2025 trustee report. Based on the improved SDRs and continued deleveraging of the senior notes--which has increased available credit enhancement--we raised our ratings on the class B-1-R, B-2-R, C-R, and D-R notes. The available credit enhancement for these tranches is now commensurate with higher levels of stress." At the same time, we affirmed our 'AAA (sf)','BB- (sf)', and 'B- (sf)' ratings on the class A-R, E-R, and F-R notes, respectively. The available credit enhancement for these tranches remains commensurate with the assigned ratings. S&P's cash flow analysis indicates that the class C-R notes could withstand stresses at a higher rating level than that assigned. The transaction has continued to amortize since the end of the reinvestment period in April 2023. However, S&P has considered that the manager has been reinvesting unscheduled redemption proceeds and sale proceeds from credit-improved and credit-impaired assets. Such reinvestments (as opposed to repayment of the liabilities) therefore prolong the note repayment profile for the most senior class of notes. S&P said, "We also considered the portion of senior notes outstanding, the current macroeconomic environment, and the tranches' relative seniority. Considering all of these factors, we limited our upgrade of the class C-R notes and raised our rating by two notches to 'AA- (sf)'. "In our cash flow analysis, the class E-R notes pass at a lower rating level than that assigned. However, we considered that the failure at the current rating level of 'BB-' is 20 basis points, and that the tranche's available credit enhancement is commensurate with a 'BB- (sf)' rating. We therefore affirmed our rating. "For the class F-R notes, our cash flow analysis indicated a lower rating than that currently assigned. The tranche's current break-even default ratio cushion at the 'B-' rating level is negative. Based on the portfolio's actual characteristics and additional overlaying factors, including our long-term corporate default rates and the notes' available credit enhancement, this class is able to sustain a steady-state scenario, in accordance with our 'CCC' rating criteria." S&P's analysis also considers: -- The notes' available credit enhancement is in the same range as other recently issued European CLOs S&P rates. -- S&P's model-generated portfolio default risk is at the 'B-' rating level at 14.32% (for a portfolio with a weighted-average life of 3.55 years), versus 11.00% if it was to consider a long-term sustainable default rate of 3.1% for 3.55 years. -- Whether the tranche is vulnerable to nonpayment risk in the near term. -- If there is a one-in-two chance of this tranche defaulting. -- If S&P envisions this tranche defaulting in the next 12-18 months. S&P said, "Following our analysis, we consider that the class F-R notes' available credit enhancement is commensurate with a 'B- (sf)' rating. We therefore affirmed our rating. "Counterparty, operational, and legal risks are adequately mitigated in line with our criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria." Dryden 27 R Euro CLO 2017 DAC is a broadly syndicated CLO managed by PGIM Ltd. ========= I T A L Y ========= FIBERCOP SPA: Moody's Rates New Senior Secured EUR Notes 'Ba1' -------------------------------------------------------------- Moody's Ratings assigned Ba1 ratings to the FiberCop S.p.A. (FiberCop) proposed senior secured Euro Notes. Other ratings, including FiberCop's Ba1 Corporate Family Rating are not affected. The outlook is negative. The Notes, which will be split into fixed rate notes and floating rate notes maturing between 2030 and 2032, are expected to have a cumulative amount of approximately EUR1.4 billion. Net proceeds from the issuance, will be used for general corporate purposes, including capital expenditures and the potential refinancing of existing debt maturities in 2026. RATINGS RATIONALE The Ba1 rating for the proposed EUR1.4 billion senior secured Euro Notes of FiberCop are general senior secured obligations and rank pari passu in right of payment with the company's existing notes, term loans and revolving credit facility. As such, the Ba1 rating of the Notes is in line with FiberCop's CFR. The Ba1 CFR is underpinned by (1) FiberCop's role as a critical infrastructure provider in Italy, with a unique nationwide fixed-line network that spans asymmetric digital subscriber line (ADSL), fiber-to-the-cabinet (FTTC), and fiber-to-the-home (FTTH) technologies; (2) its entrenched position in the wholesale broadband market, with approximately 71% market share, alongside a growing portfolio of specialised services for telecom operators and large enterprise; (3) limited infrastructure competition and high barriers to entry across much of its network footprint; (4) the relative stability and predictability of its revenue base, supported by long-term wholesale agreements with all major telecom operators and growing demand for high-speed connectivity; and (5) the low risk of technology substitution, given the absence of cable infrastructure and the complementary role of FTTC during the ongoing transition to FTTH. However, the rating is constrained by (1) the company's ambitious FTTH rollout strategy, which requires a significant acceleration of its capital expenditure and will lead to negative free cash flow until at least 2027; (2) its indirect exposure to a highly competitive retail broadband market, which may indirectly affect wholesale volumes and pricing dynamics; and (3) the high financial leverage, which limits near-term financial flexibility. Over the coming years, Moody's expects FiberCop's EBITDA to improve moderately, driven by the implementation of cost saving initiatives and network efficiencies. However, as the company remains in its peak FTTH roll out phase, Moody's-adjusted debt/EBITDA is forecast to peak at around 7.0x in 2025 and decline progressively toward 6.0x as capital spending substantially decreases in 2028. OUTLOOK The negative outlook reflects Moody's expectations that FiberCop's credit metrics will remain weak for the Ba1 rating through 2027 due to its large FTTH investment plan. It also reflects that execution risks and sustained negative free cash flow during the peak deployment phase constrain the credit profile, although Moody's expects the company to maintain a prudent financial policy and adequate liquidity. LIQUIDITY Following the successful issuance of the EUR1.4 billion Notes, FiberCop will have a strong liquidity position. This is also supported by EUR923 million of cash as of March 2025 and a fully undrawn EUR2 billion revolving credit facility maturing in 2029. The company benefits from a well-distributed debt maturity profile, with approximately EUR700 million of debt repayments due in the first half of 2026. Overall, Moody's expects that FiberCop's liquidity position and cash flow generation will be sufficient to cover its cash requirements, including investments, interest, and debt repayments, over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on FiberCop's ratings is unlikely in the near term. However, the outlook could be stabilised if the company demonstrates consistent execution of its business plan, including timely and cost-effective FTTH deployment, while maintaining performance in line with budget. Evidence of improving operating performance and effective cost control, resulting in Moody's-adjusted debt/EBITDA trending toward 6.0x, alongside a prudent financial policy and solid liquidity, would also support stabilisation. Downward pressure on FiberCop's ratings could arise from a permanent weakening in the company's financial profile, such that Moody's-adjusted debt/EBITDA is likely to remain above 6.0x for a prolonged period, without a clear path to deleveraging. Additional pressure could emerge from a deterioration in the company's liquidity position, or the implementation of a financial policy that prioritises shareholder returns over creditor interests, including debt-funded acquisitions or dividend distributions during the FTTH rollout phase. The principal methodology used in these ratings was Communications Infrastructure published in February 2022. COMPANY PROFILE FiberCop S.p.A. owns and operates the largest fixed-line wholesale network in Italy, with a nationwide footprint and significant coverage across broadband and ultrabroadband services. In 2024, FiberCop's pro-forma revenues, considering the effects of the separation transaction and related agreements, amounted to around EUR3.9 billion and pro-forma EBITDA to around EUR2.2 billion. The company is majority-owned by a consortium led by KKR, alongside ADIA, CPPIB, F2i, and the Italian Ministry of Economy and Finance. TEAMSYSTEM SPA: Moody's Affirms 'B2' CFR, Outlook Stable -------------------------------------------------------- Moody's Ratings affirmed TeamSystem S.p.A.'s (TeamSystem or the company) B2 long term corporate family rating and the B2-PD probability of default rating. Concurrently, Moody's assigned B2 ratings to the proposed EUR1.2 billion senior secured notes contemplated in the recently launched transaction, the proceeds of which will be used to partially refinance existing debt, finance bolt-on acquisitions and a shareholder distribution and boost cash on balance. The ratings of the existing senior secured notes due 2028 and 2031 were affirmed at B2. The outlook remains stable. RATINGS RATIONALE The rating action balances the negative impact on credit metrics implicit in the recently launched transaction with TeamSystem's slightly enhanced business profile following further acquisitions, and solid track record in improving revenues, EBITDA and credit metrics following the 2021 recapitalisation transaction, as well as Moody's expectations that credit metrics will improve to levels in line with the B2 ratings over the next 12 to 18 months. TeamSystem will use the proceeds of the new EUR1.2 billion senior secured notes to refinance EUR300 million of its EUR850 million senior secured floating rate notes maturing in 2028 and the EUR45 million draw under the Revolving Credit Facility (RCF); finance a EUR350 million distribution to shareholders and prefund existing deferred and other M&A related considerations in the amount of EUR220 million. The remainder of around EUR285 million will strengthen the company's cash position for future bolt-on acquisitions and pay transaction related fees. In addition, TeamSystem is also envisaging issuing a new EUR350 million pay-if-you-want (PIYW) notes issued outside the restricted group that will be used to fund shareholder distributions. Pro forma for the transaction, Moody's-adjusted gross debt to EBITDA weakens to around 7.4x as of March 2025, outside the expectations for the B2 CFR. However, Moody's estimates growth will facilitate leverage improvement towards 6.0x over the next 12 to 18 months, in line with the expectations for the B2 rating. Although the company's acquisitive strategy may delay forecast leverage reduction, Moody's expects the leverage reduction trajectory to remain intact. Additionally, Moody's estimates Moody's-adjusted free cash flow (FCF) generation and interest coverage will remain solid, at around 4-5% FCF/debt and at least 2.5x on a EBITDA – capital expenditures) / interest basis, over the next 12 to 18 months. This calculation incorporates Moody's expectations that the company will no longer service the interest on the PIYW notes issued outside of the restricted group (EUR650 million pro forma for the transaction). TeamSystem's leading position in the Italian enterprise software market targeting professionals and small and medium-sized enterprises; the complexity of Italy's tax, payroll and accounting frameworks, which drives demand for frequent software upgrades and provides some protection against international software vendors; and significant recurring revenue and low churn, which boost revenue visibility, support its B2 CFR. Conversely, the company's still high geographical concentration, with revenue generated mainly in Italy; limited degree of product diversification, given its focus on enterprise software; and aggressive financial policy, all constrain the rating. RATING OUTLOOK TeamSystem's stable outlook reflects Moody's expectations that the company's credit metrics will improve and remain commensurate with the B2 ratings guidance over the next 12 to 18 months. The outlook incorporates Moody's assumptions that there will be no significant increase in leverage from any future debt-funded acquisitions or shareholder distributions prior to an improvement of credit metrics to levels commensurate with Moody's expectations for the B2 rating, and that the company will maintain at least adequate liquidity. LIQUIDITY TeamSystem's liquidity is very good, supported by EUR160 million of cash on balance as of end March 2025, a EUR300 million super-senior RCF, which pro forma for the transaction will be upsized to EUR350 million and fully available (EUR45 million drawn as of end March 2025) and forecast solid positive FCF. Moody's expects the group to maintain significant capacity against the springing senior secured net leverage covenant, which is set at 9.98x and tested when the RCF is drawn by more than 40%. STRUCTURAL CONSIDERATIONS The B2 instrument ratings are in line with TeamSystem's CFR. All instruments rank pari passu, with the exception of the super-senior RCF. However, the RCF's quantum of EUR350 million is not sufficiently large to lead to a notching down from the CFR. The security package provided to the senior secured lenders is limited to pledges over shares, bank accounts and intercompany receivables. Moody's do not include the PIYW notes debt in TeamSystem's Moody's-adjusted credit metrics calculation, nor in its loss given default waterfall. However, Moody's considers its existence qualitatively as credit negative. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Although unlikely at this stage, positive rating pressure could develop if the company continues to grow its revenue and EBITDA, such that Moody's-adjusted leverage (R&D capitalised) improves to below 5.0x; Moody's-adjusted FCF/debt improves towards 10%; and Moody's-adjusted (EBITDA – capital expenditures) / interest expense improves towards 3.0x, all on a sustained basis. Adequate liquidity and financial policy clarity are also important considerations. Conversely, negative rating pressure could develop if the company's revenue and EBITDA growth is weaker than expected such that there is no longer an expectation that Moody's-adjusted leverage (R&D capitalised) will improve towards 6.0x over the next 18 months; Moody's-adjusted FCF weakens towards breakeven, or Moody's-adjusted (EBITDA – capital expenditures) / interest expense is below 2.0x, all on a sustained basis; or if liquidity deteriorates. A transaction that significantly increases leverage before TeamSystem demonstrates improvement in credit metrics could also have negative ratings implications. ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS Even though the transaction has no implication to the CFR and instrument ratings, the company's decision to debt fund a shareholder distribution and to a lesser extent acquisitions, thereby increasing leverage, is a negative governance consideration. The track record of EBITDA growth and improvement in credit metrics following the 2021 recapitalisation is a positive consideration. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Software published in June 2022. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COMPANY PROFILE TeamSystem is a provider of ERP software to SMEs and professionals mainly in Italy, but with operations in other countries such as Turkiye, Spain, France or Israel. The company offers integrated ERP systems covering mainly accounting, tax, legal and payroll management software solutions. Additionally, TeamSystem also provides vertical-specific software solutions and training (CAD/CAM, education and other) for sectors such as manufacturing, retail and technology, among others. It operates through direct commercial branches and indirect channels, such as value-added resellers (VARs). In the last twelve months ended in March 2025 and pro forma for acquisitions, TeamSystem recorded revenue of EUR996 million and company-adjusted EBITDA of EUR438 million. TeamSystem is controlled by funds managed by Hellman & Friedman LLC (H&F). In addition, Silver Lake, Abu Dhabi Investment Authority (ADIA) and CapitalG and management hold minority stakes in the company. ===================== N E T H E R L A N D S ===================== DEUTSCHE EUROSHOP: S&P Assigns 'BB+' ICR, Outlook Stable -------------------------------------------------------- S&P Global Ratings assigned its 'BB+' long-term issuer credit rating on Deutsche EuroShop AG (DES) and its 'BBB-' issue rating on the senior unsecured bond. The recovery rating is '2' (85%). The stable outlook reflects S&P's view that DES' operating performance should remain resilient over the coming 12 months, while its leverage would remain consistent with the current rating level. DES, a Germany-based retail landlord, owns and manages a EUR4.0 billion portfolio of 21 shopping centers in Germany (80%), and in Austria and Eastern Europe (20%). The company plans to use the proceeds of its EUR500 million senior unsecured bond to repay existing secured debt, and fund capital expenditure (capex) and dividends which will be partly used to repay its main shareholder Hercules BidCo's debt. S&P said, "Our assessment of DES' business risk profile is underpinned by its moderately sized portfolio of stable income-generating shopping centers, well positioned to address customers' daily necessities, and its good market position in Germany. The company's EUR4.0 billion portfolio (as of end March 2025) comprises 21 shopping centers across Germany (about 80% of portfolio value) and Austria and Central and Eastern Europe (CEE; one center per country in the Czech Republic, Hungary, Poland, and Austria). DES' assets aim to attract people for daily necessities, with locations in catchment areas, and an average value of EUR204 million per asset. DES has a long and solid track record of operations in Germany, where it benefits from a very good market position and from the experience of its asset manager ECE Group's track record (assets under management of EUR31.0 billion market value in 12 countries). The area for new shopping centers has been limited in Germany over the past few years, leading to a relatively low gross leasable area (GLA) per inhabitants as compared to other European countries (2.0 GLA per 100,000 inhabitants as per Statista and Green Street compared with more than 10 in some Nordic countries). To enhance the quality of its portfolio, DES has started to increase its capex program over the last few years from EUR18.7 million in 2021 to EUR40 million-EUR45 million annually over 2022-2024 and we assume it could increase further to about EUR70 million-EUR90 million in 2025 and above EUR50 million in 2026. As of March 2025, the portfolio's occupancy stood at 95.4%, improved from its 93.0% level end of 2023, but still slightly lower than pre-pandemic levels (97.6% end of 2019). In our view, the retail industry remains vulnerable to economic and consumption trends, and retailers have proven fragile in recent years and especially during the COVID-19 pandemic, and we view a risk that some of the retailers could demonstrate thinner margins, more leverage, and declining turnover over the coming years. This is especially the case in the fashion industry, which represent around half of DES' annual rental income. We expect that the company's diversified tenant base will support occupancy levels to remain relatively stable over our 12-month forecast horizon, with the top 10 tenants accounting for 21% of 2024 rental income, including H&M for 2.7%, Deichmann SE for 2.4%, and The New Yorker for 2.4%. We view the company's occupancy cost ratio of 11.3% as of end-2024, and its weighted average lease maturity of 4.7 years as relatively good and standard for the industry. We anticipate the development risk to remain limited in the portfolio because the share of such activities is limited to the extension of existing properties. Moreover, we expect the share of assets under development should remain below 5% in near future. "As a result of increased capex and dividends, we expect the company's debt to debt plus equity and debt to EBITDA to increase over 2025-2026, although consistent with the current rating level. We forecast DES' S&P Global Ratings-adjusted debt-to-debt-plus-equity and debt-to-EBITDA ratios to increase from 53.0% as of end-2024 to about 57.0%-57.5% in 2025-2026, and from 9.5x as of end-2024 to 10.0x-10.5x, respectively. This is because we assume about EUR200 million of dividends in 2025 and about EUR115 million in 2026, and EUR70 million-EUR90 million of capex in 2025 and above EUR50 million in 2026. Hercules BidCo (owned 98.8% by Oaktree and 1.2% by Alexander Otto) owns 55% of DES, and we understand the dividends that will be paid to this shareholder will be used to repay its debt (EUR279 million end of 2024) and related interests, which we consider as debt in our credit metrics. As a result, the effect from dividends on the company's debt under our calculations mainly comes from the portion paid to the other shareholders. In addition, the company's strategy since the Hercules BidCo takeover in 2022 is to improve its existing portfolio through higher capex, including investments in modernization work, extension of assets, LED lighting, photovoltaics, etc. Given the currently subdued German economy and household consumption, we assume potential negative reversion on rents could offset indexation over the coming years. As growth in cash flows may be muted for the coming years, we also expect potential slight decline in portfolio value. At the same time, about half of the company's bond proceeds will be used to repay existing secured debt. "Despite the cost of debt increasing over time, we expect the company's EBITDA-interest-coverage ratio will remain robust over our forecast horizon. We forecast this ratio to stand at 2.5x-2.6x over 2025-2026, from 2.8x over 2024. In addition to a relatively subdued growth in EBITDA, we expect the company's capital structure to gradually reflect the current higher interest rates environment, with an average cost of debt increasing from its 2.8% level end of 2024 (excluding the Bidco) to about 3.5% over 2025-2026, following the EUR500 million bond issuance with a 4.5% coupon. That said, the effect of this higher cost of debt on the company's interest burden will partly be compensated by the progressive repayment of the EUR279 million Bidco loan (as of end 2024), which bears a much higher interest rate. "Our assessment of DES' financial policy factors in the company's ownership structure, under which the company's largest shareholder is the private equity firm Oaktree, through the entity Hercules BidCo holding 55% of DES. We assess DES' financial policy as Financial Sponsor-5 (FS-5), indicating that we consider that DES could adopt a more aggressive leverage to maximize its largest shareholder returns, which we consider as a financial sponsor, as compared to companies with larger free float and limited shareholder influence for example. That said, we acknowledge that Oaktree and Alexander Otto (who holds 21.4% of DES) have a joint control over DES and Hercules BidCo, through a partnership agreement and a voting agreement, which balances to some extent the influence of Oaktree over the company. The remaining 23.6% are listed free float. Our FS-5 assessment incorporates our expectations that the risk of releveraging beyond our forecast is relatively low, based on the company's moderate financial risk appetite and adequate liquidity profile. "We view DES' management and governance as moderately negative, with no impact on the final issuer credit rating. This assessment incorporates the company's joint controlled ownership by Oaktree (55% through Hercules BidCo in which it owns 98.8% and Alexander Otto owns 1.2%) and the Otto family (21.4% through Alexander Otto). We think that Oaktree might consider a more aggressive agenda of maximizing shareholder returns. According to the documentation, Oaktree plans to exit the investment starting from 2027. We further think that the company's group structure is relatively complex, to the extent we think it could lead to additional credit risk due to reduced transparency or potential conflicts of interest with creditors or increased analytical complexity. The board comprises nine members: Three are Oaktree representatives, three are Alexander Otto representatives, and three are independent members; decision-making would be dependent on the common agreement between Oaktree and the Otto family. "We view DES' credit quality as comparable to that of other 'BB+' rated peers, notably thanks to a moderate leverage for its current financial risk profile assessment. We apply a positive comparable rating analysis modifier, which results in a one notch uplift from our 'bb' anchor, mainly reflecting the company's credit metrics, which we view at the better end of our aggressive financial risk profile assessment (capped at this level due to financial sponsor ownership). This notably includes an EBITDA-interest-coverage ratio well above 1.8x, better than that of peers within the same financial risk profile category, as well as debt to debt plus equity remaining below 60% over our 12-month forecast horizon. We also view the company's creditworthiness, including its sizable portfolio of stable income-generating assets and robust market position, as more robust than those of peers rated at 'BB' (like IGD Siiq SpA or Globalworth Real Estate Investments Ltd. for example). "The stable outlook reflects our view that DES' operating performance should remain resilient over the next 12 months on the back of positive, although slowing, indexation and resilient retailer sales growth. Including the bond issuance, we expect S&P Global Ratings-adjusted debt to debt plus equity to remain at 55%-58% and debt to EBITDA at about 9.5x-10.5x over the coming 12 months, while its EBITDA-interest-coverage ratio should remain at above 2.4x." S&P could lower its ratings on DES if its operating performance deteriorates, for example, owing to a market downturn with a decline in occupancy rates and like-for-like rental growth or a negative valuation of the portfolio, which could lead to the following ratios, on a sustained basis: -- Debt to debt plus equity increasing to 60% or above; -- EBITDA interest coverage failing to remain well above 1.8x; or -- Debt to EBITDA deviating materially from our base case. At the same time, if the shareholders' approach to DES became more aggressive, this would also prompt us to lower our rating. This could happen if, for example, the company materially increases the expected dividend payout or increases leverage so that DES' credit metrics deteriorate significantly. A sustained deterioration in the company's operating performance, such as decreasing occupancy levels, could also prompt us to review the rating downward. Although S&P currently views an upgrade to DES as remote, it could upgrade DES if the company would adopt a more conservative financial policy, for example through a track record in the shareholders' behavior that would be consistent with a higher rating level, including a limited appetite for further leveraging and a strong operating performance. Such a track record needs to be solid enough for us to consider the company as not being controlled by a financial sponsor. A positive rating action could also stem from a change in the shareholding structure of DES, in which the financial sponsor would relinquish control over the medium term. A more conservative financial policy that would be consistent with a higher rating level would require ratios such as: -- Debt to debt plus equity toward 50%; -- EBITDA interest coverage well above 2.4x; and -- Debt to EBITDA below 9.5x. ========= S P A I N ========= AERNNOVA AEROSPACE: Moody's Alters Outlook on 'B3' CFR to Negative ------------------------------------------------------------------ Moody's Ratings has affirmed the B3 long term corporate family rating and the B3-PD probability of default rating of Spain-based design, engineering and aerostructures manufacturer Aernnova Aerospace Corporation, S.A. (Aernnova). Concurrently, Moody's affirmed the B3 instrument rating on the backed senior secured bank credit facilities raised by Aernnova Aerospace, S.A.U. The outlook on both entities has been changed to negative from stable. RATINGS RATIONALE The rating action reflects a deterioration in Moody's expectations regarding Aernnova's deleveraging prospects for 2025. The company ended 2024 with Moody's-adjusted gross debt/EBITDA at approximately 8.1x (including factoring), which was broadly in line with Moody's prior expectations. Revenue grew by 12%, and the Moody's-adjusted EBITDA margin improved to 10.6%, up from 8.7% in 2023, supported by strong demand and increased deliveries in the aerostructures segment. However, contrary to Moody's earlier projections, Moody's no longer expect the deleveraging trend to continue in 2025. This is primarily due the slower-than-expected ramp-up of the A350 program - due to the complexity and time required to integrate Spirit into Airbus SE's production value chain - is likely to negatively impact Aernnova's profitability. Further headwinds include EUR5–10 million in costs related to the ANN 2025 cost-efficiency program and adverse foreign exchange effects stemming from USD depreciation against the EUR. Additionally, Process Automation segment's (Automotive sector) sales declined by approximately 60% in Q1 2025, resulting in EBITDA-level losses. Moody's anticipates similar performance for the full year, although this segment only represents 5% of the group sales. As a result, Moody's now expect the company's Moody's-adjusted EBITDA margin to decline to the 7.5%–8.5% range in 2025, including one offs costs and hedging costs mentioned before. The company currently has hedging in place for 24 months (covering all of 2025 and 2026, and partially 2027). Hedging for 2025 is included in the published budget. The company does not expect any cash impact due to exchange rate volatility. At the same time, Aernnova's Moody's-adjusted gross debt increased by EUR77 million as of March 2025 compared to year-end 2023. This rise is attributed to the upsizing of the backed senior secured Term Loan B (TLB) last year, plus the higher amount of bilateral revolving facilities and the drawing under the syndicated backed senior secured revolving credit facility (RCF). Moody's believes this higher debt quantum will hinder the company's ability to deleverage into the 6–7x range in the future. In 2025, leverage may exceed 10x, positioning Aernnova weakly within the single-B rating category. As of March 2025, Moody's-adjusted gross leverage had already risen to 9.3x. The maturities of its main debt instruments raised by Aernnova Aerospace, S.A.U., the EUR540 million TLB and the EUR100 million RCF, were extended to 2030 and 2029, respectively, during last year's refinancing. The rating is also underpinned by Aernnova's robust order backlog of $4.8 billion as of December 2024, equivalent to approximately 4.5x trailing twelve-month revenue. Despite ongoing supply chain challenges affecting new aircraft production, the aerospace industry's fundamental outlook remains strong. Aernnova's core Aerospace segment continued to perform well in Q1 2025, with 12% growth in both revenue and EBITDA. The rating is mainly supported by (1) the fundamentally positive outlook for the global aerospace and defense sector with increasing aircraft production and higher defense budgets globally; (2) Aernnova's well-established and long-term cooperation with aerospace original equipment manufacturers (OEMs), especially with its main customer Airbus SE (A2 positive), responsible for 47% of its sales in 2024 and almost Â¾ of its order backlog; (3) its solid competitive position, underpinned by Aernnova's in-house composite capabilities and its role as a sole source supplier for almost all of its contracts; and (4) its improved business diversification over the last few years with increased exposure to narrowbody, business jets and defense segments. The rating is primarily constrained by (1) weak credit metrics with around 9.3x Moody's adjusted gross leverage as of March 2025; (2) risks that the leverage may remain elevated and the capital structure could come under increasing pressure due to the slower than expect production ramp-up in commercial aerospace, underperformance in the automotive segment, own restructuring costs, unfavorable FX movements etc; and (3) Aernnova's modest scale and the cyclical nature of the commercial aerospace industry. RATIONALE FOR NEGATIVE OUTLOOK The negative outlook reflects Moody's concerns that Aernnova's credit metrics may deteriorate in 2025, with Moody's adjusted gross leverage potentially exceeding 10x by the year-end. Moreover, additional debt raised to offset negative free cash flow in 2024 and 2025 could result in leverage remaining elevated, even as EBITDA begins to recover. The negative outlook is also driven by a weakening of Aernnova's liquidity position due to the increased use of bilateral credit facilities which are subject to annual extension. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive rating pressure could arise if: -- Further stabilization of operating environment with increasing aerospace production rates; -- Moody's-adjusted gross debt/ EBITDA below 6x on a sustained basis; -- Consistently positive free cash flow generation; -- Absence of major execution challenges in key platforms. Conversely, negative rating pressure could arise if: -- Inability to reduce Moody's-adjusted gross debt/ EBITDA below 7x; -- Moody's-adjusted EBIT/ Interest remaining below 1x; -- Further deterioration in liquidity with a greater reliance on uncommitted facilities; -- Execution challenges materially distorting earnings and cash generation. LIQUIDITY Aernnova's liquidity profile is weak. As of March 31, 2025, the company had EUR42 million in cash on its balance sheet plus the EUR85 million available under the EUR100 million revolving credit facility (RCF), maturing in 2029. The amount of debt maturities in the coming years - EUR18 million in 2025, EUR15 million in 2026, EUR7 million in 2027 – are manageable, with its main debt instrument, the EUR540 million TLB, coming due only in 2030. However, the EUR60 million bilateral facilities drawn require annual extension. Moreover, in 2024 Aernnova had a negative EUR51 million of free cash flow (Moody's adjusted) and Moody's expects another EUR10-40 million consumption in 2025, which includes one-off costs related to transfer of work between operating entities. Excluding the one-offs the company expects to have a positive cash flow in 2025. A rating stabilization would require a reversal to sustainably positive FCF generation and strengthening of the liquidity profile with lower reliance on bilateral facilities with annual renewal. STRUCTURAL CONSIDERATION In the Loss Given Default for Speculative-Grade Companies(LGD) assessment for Aernnova, Moody's rank pari passu the EUR540 million TLB maturing in 2030 with the senior secured EUR100 million RCF maturing in 2029 raised by Aernnova Aerospace, S.A.U. The senior debt instruments are guaranteed by Aernnova's parent company, Aernnova Aerospace Corporation, S.A., and its material subsidiaries, representing at least 80% of consolidated EBITDA. The security package includes pledges over shares, bank accounts and intragroup receivables. These instruments are rated B3 in line with the corporate family rating. Moody's assumes a standard family recovery rate of 50%, which reflects the covenant-lite nature of the loan documentation, and this results in a B3-PD probability of default rating. The capital structure also includes the EUR41 million of unsecured institutional debt as of March 31, 2025, mostly non-interest-bearing and amortizing, as well as the EUR21 million bank loans and the EUR60 million bilateral credit facilities that Moody's rank junior to senior secured instruments. However, the existence of unsecured instruments does not lead to an uplift for senior secured instrument given their relatively modest share in the capital structure. Moreover, their amortization over time reduces the extent of loss absorption in case of financial difficulties. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Aerospace and Defense published in December 2024. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. PROFILE Headquartered in Alava, Spain, Aernnova Aerospace Corporation S.A. (Aernnova) is a leading Tier 1/ Tier 2 supplier of metallic and composite aerostructures and components such as wings, empennages and fuselage sections for original equipment manufacturers (OEMs) in the aeronautical sector (e.g. Airbus SE (A2 positive), Embraer S.A. (Baa3 stable) etc.). In addition, the company provides engineering services to the main aircraft manufacturers and other Tier 1 suppliers. Aernnova is also involved in the manufacturing of welding products for the automotive sector and general industrial use. The group owns production facilities in Spain, the UK, Portugal, Romania, Mexico, Brazil and the US, which along with the commercial office in China support its global activities across 30 aerospace programmes. In the last 12 months ended in March 2025, Aernnova generated EUR990 million of revenue. ===================== S W I T Z E R L A N D ===================== GATEGROUP HOLDING: S&P Raises ICR to 'B+' on Completed Refinancing ------------------------------------------------------------------ S&P Global Ratings raised its long-term issuer credit ratings on gategroup Holding AG (gategroup) and its finance and core subsidiary gategroup Finance International S.a.r.l. to 'B+' from 'B-' and removed them from CreditWatch with positive implications. The rating on the term loan B issued by gategroup Finance is unchanged at 'B+'. S&P said, "The stable outlook indicates that we expect gategroup to expand its earnings base, enabling it to lower adjusted debt to EBITDA for 2025-2026 to below 5.0x on a weighted-average basis. Although the financing documentation permits it, we do not expect gategroup to pursue potential shareholder distributions or debt-funded acquisitions that would cause adjusted debt to EBITDA to exceed 5.0x." The upgrade is underpinned by the successful completion of the refinancing transaction, which significantly improved gategroup's capital structure position. As expected, gategroup used most of the proceeds from issuing the EUR675 million and $500 million tranches to alleviate the pressure on its liquidity caused by two large upcoming maturities. These comprised a term loan A and drawings under the existing revolving credit facility (RCF), both due in October 2026. As a result, S&P removed its one-notch negative capital structure modifier. The company also signed a new multicurrency RCF equivalent to CHF300 million, which was undrawn at closing. S&P understands that gategroup used part of the remaining proceeds to make early repayments on COVID-19 related debt. It had accessed a debt facility under the U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act and has also received French government-guaranteed bank loans under a COVID-19 support program. The term loan B issued was CHF45 million larger than gategroup's initially proposed issuance amount. It will use the additional amount to pay other debt-like items. Following the amendments to gategroup's shareholder loan, S&P now excludes it from adjusted debt. The amended shareholder loan is now treated as equity, in line with its criteria, which lowered adjusted debt at gategroup to about CHF2.2 billion in 2025, from CHF2.8 billion in 2024. S&P said, "We do not deduct cash when calculating our adjusted debt because 50% of gategroup's shares are owned by a financial sponsor. Given the company's capacity to generate positive free operating cash flow (FOCF), track record of limited shareholder returns, and the shareholders' focus on deleveraging, we don't expect an increase in adjusted debt above this level. Therefore, we revised our financial sponsor assessment to 'FS-5', from 'FS-6'. "Our base-case assumption is that higher passenger volumes, high customer retention rates, new contract wins, and contractual and extraordinary price increases, will support EBITDA growth. The most pronounced growth in passenger volumes recently has been in Asia-Pacific and for long-haul traffic. We forecast that adjusted EBITDA after restructuring costs will rise to CHF400 million-CHF450 million in 2025, and to CHF450 million-CHF500 million in 2026, from CHF368 million in 2024 and CHF222 million in 2023. This implies that the company will be able to sustain the positive FOCF (after lease payments) it achieved in 2024 (CHF74 million) and 2023 (CHF31 million). "Our forecast indicates that gategroup's adjusted debt to EBITDA will improve to about 5.3x in 2025 and further to about 4.6x in 2026, from the opening level of about 6.0x. Therefore, we have revised our financial risk profile to aggressive from highly leveraged. Because the forecast weighted-average adjusted leverage over 2025-2026 of 4.9x-5.0x is at the lower end of our aggressive financial risk profile category, we adjust the anchor down by one notch from 'bb-'. The anchor is derived from the company's fair business risk profile and aggressive financial risk profile. "The stable outlook indicates that we expect gategroup to expand its earnings base, enabling it to lower adjusted debt to EBITDA for 2025-2026 to below 5.0x on a weighted-average basis. Although the financing documentation permits it, we do not expect gategroup to pursue potential shareholder distributions or debt-funded acquisitions that would cause adjusted debt to EBITDA to exceed 5.0x. "We could lower the rating if gategroup's adjusted debt to EBITDA exceeds 5.0x for a prolonged period. This could occur if the company experiences operational setbacks--for instance, if demand for air travel declines unexpectedly--or if gategroup's profitability does not improve as expected. It could also occur if the company unexpectedly decides to make large debt-funded shareholder distributions or acquisitions. If it were to follow a more-aggressive financial policy, we would very likely revise down our financial sponsor assessment to 'FS-6'. "We could raise the rating if gategroup exhibits strong operating performance and FOCF generation, so that adjusted debt to EBITDA falls below 4.5x and is sustained at this level, and at the same time, the company prioritizes reducing leverage and uses excess cash to make debt repayments instead of discretionary spending. An upgrade would also depend on gategroup's liquidity remaining adequate, so that liquidity sources exceeded uses by at least 1.2x." =========================== U N I T E D K I N G D O M =========================== 79TH COMMERCIAL: Quantuma Advisory Named as Administrators ---------------------------------------------------------- 79th Commercial One Ltd was placed into administration proceedings in the Business and Property Courts in England and Wales, Court Number: CR-2025-002947, and Jeremy Woodside and Andrew Stoneman of Quantuma Advisory Limited were appointed as administrators on May 12, 2025. 79th Commercial engaged in service activities. Its registered office is at Southport Business Park, Wight Moss Way, Southport, PR8 4HQ and it is in the process of being changed to C/o Quantuma Advisory Limited, The Lexicon, 10-12 Mount Street, Manchester, M2 5NT Its principal trading address is at Southport Business Park, Wight Moss Way, Southport, PR8 4HQ The joint administrators can be reached at: Jeremy Woodside Quantuma Advisory Limited The Lexicon 10-12 Mount Street Manchester M2 5NT -- and -- Andrew Stoneman Robert Goodhew Kroll Advisory Ltd 32 London Bridge Street London, SE1 9SG For further details, please contact Alex Holliday Tel No: 01616 949 144 Email: alex.holliday@quantuma.com 79TH LUXURY: Quantuma Advisory Named as Administrators ------------------------------------------------------ 79th Luxury Living Four Limited was placed into administration proceedings in the Business and Property Courts in England and Wales, Court Number: CR-2025-003913, and Jeremy Woodside and Robert Goodhew of Quantuma Advisory Limited were appointed as administrators on June 9, 2025. 79th Luxury Living engaged in service activities. Its registered office is at Southport Business Park, Wight Moss Way, Southport, PR8 4HQ and it is in the process of being changed to C/o Quantuma Advisory Limited, The Lexicon, 10-12 Mount Street, Manchester, M2 5NT Its principal trading address is at Southport Business Park, Wight Moss Way, Southport, PR8 4HQ The joint administrators can be reached at: Jeremy Woodside Quantuma Advisory Limited The Lexicon 10-12 Mount Street Manchester M2 5NT -- and -- Andrew Stoneman Robert Goodhew Kroll Advisory Ltd 32 London Bridge Street London, SE1 9SG For further details, please contact Alex Holliday Tel No: 01616 949 144 Email: alex.holliday@quantuma.com AWAZE LTD: S&P Affirms 'B-' ICR & Alters Outlook to Negative ------------------------------------------------------------ S&P Global Ratings revised its outlook on European vacation rental operator group parent Awaze Ltd. to negative from stable and affirmed its 'B-' long-term issuer credit and issue ratings on the group and its EUR350 million term loan B (TLB) and EUR75 million revolving credit facility (RCF). The negative outlook indicates that S&P could lower the rating if Awaze fails to demonstrate recovery in operating performance and credit metrics, leading it to view its capital structure as unsustainable. Weak consumer confidence, high gross customer acquisition costs and relatively high nonoperating costs pushed Awaze Ltd.'s leverage to 13.4x for 2024 from 6.4x in 2023. S&P said, "Awaze has underperformed our expectations for fiscal 2024 and management guidance for 2025 is materially weaker than our expectation." This has resulted in S&P-Global Ratings adjusted debt to EBITDA reaching a wider-than-expected 13.4x for fiscal 2024, with a projected 9.0x for 2025 compared with 6.4x in 2023. The issues in 2024 stem from a competitive environment, high nonoperating cost expense, inflationary cost pressure, and an overestimation of peak summer demand, which led to higher customer acquisition costs and a working capital drag. The group's nonoperating costs in 2024 (including deal costs of EUR3.5 million and sponsor advisory fees and travel expense of EUR4.2 million) stress profitability, given the group's limited scale operation reflected in its S&P Global Ratings-adjusted EBITDA of EUR31 million (after deducting EUR8.7 million of capitalized development costs adjustment) for 2024. If the group does not demonstrate a trend of improving the quality of its earnings, S&P could assess the group's capital structure as unsustainable. The new management team is focused on increasing its revenue mix from direct channels and addressing the cost base, which should drive more meaningful credit metric improvement from 2026. In 2024, the group used indirect channels to improve occupancy rates, but demand wasn't strong enough to justify the higher acquisition costs. Now, the focus is on increasing the overall revenue mix from direct channels to 65%-67% and addressing its cost base. This strategy is supported by a completed technology stack update, which includes all inventories posted on a single platform with dynamic pricing, and the rollout of a consumer app to improve customer retention and lower customer acquisition costs. S&P Said, "The company expects these initiatives, along with a back-office process automation, to deliver incremental EBITDA and we anticipate the early benefits will become apparent in fiscal 2026 and we anticipate S&P Global Ratings-adjusted EBITDA to improve to EUR55 million from EUR40 million in 2025. We expect the group's FOCF after leases to remain negative in 2025, then improve to about EUR12 million in 2026." Awaze's liquidity position remains adequate, supported by a fully undrawn RCF and sound cash balance. As of March 31, 2025, the RCF was fully undrawn, and the group held EUR103.9 million in unrestricted cash. S&P anticipates the group's cash balance and the undrawn RCF should cover the working capital swings of about EUR100 million. The company negotiated adjustments to leverage covenants for December 2025 and December 2026, setting the tests at 5.5x and 4.5x, respectively. This provides headroom and mitigates potential covenant breaches, particularly given the springing covenant that is triggered if 35% (EUR26 million) of the EUR75 million RCF is drawn. The RCF, which matures in February 2028 alongside the EUR350 million TLB in May 2028, presents no near-term debt maturity risks. The negative outlook indicates that S&P could lower the rating in the upcoming quarters if Awaze does not demonstrate positive momentum in operating performance to sustainably improve its profitability by adjusting its cost base and improve its occupancy rates. It also reflects the risk of failure to generate FOCF from persistent high exceptional costs, or maintains leverage above 7x sustainably, which could lead us to consider the company's capital structure unsustainable. S&P could lower its rating on Awaze if: -- The group proves unable to deliver benefits from its initiative programs or reduce non-operating expense, translating into weak EBITDA and funds from operations (FFO), persistently negative FOCF, and no material deleveraging, which could make us consider the capital structure unsustainable; or -- The company's liquidity tightens, reflecting weak earnings, unexpected intrayear working capital outflows, or drawings under the company's RCF resulting in covenant breach. S&P said, "We could revise the outlook to stable if Awaze's operating performance improved better than our base-case scenario, with substantial EBITDA margin expansion, showing a path to sustainable leverage reduction and positive FOCF." A stable outlook would also require the group to maintain adequate liquidity. BELLIS FINCO: Moody's Rates New EUR959MM Senior Secured Notes 'B1' ------------------------------------------------------------------ Moody's Ratings has assigned a B1 instrument rating to Bellis Finco PLC's (ASDA) contemplated new EUR595 million backed senior secured notes with maturity in 2031, to be issued by Bellis Acquisition Company PLC. All other ratings, including ASDA's B1 corporate family rating, probability of default rating, backed senior unsecured rating and the negative outlook on both entities are unaffected. ASDA intends to use the proceeds of the new issuance and about GBP300 million of cash on balance sheet to refinance its GBP500 million backed senior unsecured notes due February 2027 and about GBP300 million of senior secured notes due 2026. RATINGS RATIONALE The B1 instrument rating assigned to ASDA's new EUR595 million backed senior secured notes due 2031 is in line with other senior secured obligation that Moody's currently rate. The transaction is however credit positive overall, as it extends the company's debt maturity profile and reduces its leverage. If completed as proposed, the transaction would leave ASDA's next debt maturities as a GBP162 million term loan due in 2028 and a GBP684 million privately placed facility due in 2029. Pro forma for the transaction and based on the last 12 months (LTM) period ended March 31, 2025, Moody's-adjusted debt/EBITDA would decline to 6.0x from 6.3x. However, leverage would still be elevated for the B1 rating category, as evidenced by the negative outlook. The planned debt repayment will also reduce liquidity to around GBP530 million of cash on balance sheet, pro forma as of March 31, 2025. Although cash is limited considering ASDA's scale and working capital needs, the company's liquidity remains adequate, supported by a fully available GBP793 million senior secured bank credit facility due October 2028. Moody's-adjusted free cash flow (FCF) has been broadly neutral over the LTM March 2025 period. The refinancing will have a marginal impact on interest expense, which Moody's estimates to increase by GBP15-20 million to GBP380-385 million. Moody's therefore still expect ASDA to generate around GBP200 million p.a. of FCF in 2025 and 2026, notwithstanding the capital spending for Project Future and supported by working capital inflows of about GBP200 million in 2025 and GBP30 million in 2026. Beyond the refinancing, ASDA's turnaround plan will continue. The company has invested in price which results in a material reduction in profit in the short term amid intense competitive and cost pressure. Following a challenging year 2024 when ASDA's like-for-like (LFL) non-fuel sales were down 3.4% in the year and 4.2% in Q4, trading is improving although still in decline in the first half of 2025. ASDA's strategy is focused on widening the price gap with the other Big Four incumbents, improving its availability and leveraging the broad offering at its large stores. Non-fuel LFL sales were down 4.5% in the first quarter, or 3.1% adjusted for the timing of Easter. LFL sales for May to the 27th were down 1.7%. As a result, the company-adjusted after-rent EBITDA from large stores in the first quarter declined materially. Although ASDA's volume growth continues to trail that of the broader UK grocery market, the gap has been reducing. ASDA's market share continued to decline year-over-year and was down by about one percentage point to 12.1% during the first five months of 2025. RATING OUTLOOK The negative outlook reflects Moody's expectations that ASDA's key credit metrics will remain weak for the rating category, and highlights the execution risks associated with the company's strategy. The outlook could return to stable if ASDA successfully turns around the business, supported by the significant investments and operational improvements that it expects to continue through 2025. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The negative outlook indicates that the ratings are unlikely to be upgraded over the next 12-18 months. However, positive rating pressure could develop if ASDA's operating performance and market share improve significantly over time, if its Moody's adjusted leverage consistently reduces below 4.5x, if its coverage of interest expenses (measured as (EBITDA - CAPEX)/interest) exceeds 2.5x, and if free cash flow to debt surpasses 10%, with at least adequate liquidity. The ratings could be downgraded if (1) ASDA's operating performance and grocery market share fail to improve in line with the company's business plan, (2) Moody's adjusted leverage for ASDA does not remain on path to reduce to below 6.0x beyond 2025, or (3) its interest coverage ratio falls below 1.75x, the company generates negative free cash flows on a Moody's adjusted basis, or if its liquidity deteriorates. The principal methodology used in this rating was Retail and Apparel published in November 2023. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. CORPORATE PROFILE Headquartered in Leeds, ASDA is the UK's third largest grocery retailer and second largest independent fuel retailer. In 2024, it reported GBP26.8 billion in revenue, including GBP5.1 billion from fuel, and an after-rent EBITDA of GBP1,141 million. It operates 580 supermarkets, 469 convenience stores, and 322 fuel forecourts. ASDA is primarily owned by TDR Capital LLP, with Walmart, Inc. and Mohsin Issa holding minority stakes. In November 2024, TDR Capital increased its stake to 67.5%, while Mohsin Issa retains 22.5%, and Walmart, Inc. holds 10%. CAMBRIAN ASSOCIATES: Begbies Traynor Named as Administrators ------------------------------------------------------------ Cambrian Associates Limited was placed into administration proceedings in Business and Property Courts in Manchester, Insolvency & Companies List (ChD, Court Number: CR-2025-MAN-000849, and Dean Watson and Paul Stanley of Begbies Traynor (Central) LLP were appointed as administrators on June 11, 2025. Cambrian Associates engaged in financial intermediation. Its registered office is at 4th Floor, Merchants House, Crook Street, Chester, CH1 2BE. The joint administrators can be reached at: Dean Watson Paul Stanley Begbies Traynor (Central) LLP 340 Deansgate Manchester, M3 4LY For further details contact: Jack Priestley Begbies Traynor (Central) LLP E-mail: Cambrian@btguk.com Tel No: 0161 837 1700 GERMAN SPECIALISTS: Begbies Traynor Named as Administrators ----------------------------------------------------------- German Specialists Ltd was placed into administration proceedings Business and Property Courts in Manchester, Insolvency & Companies List (ChD), Court Number: CR-2025-000848, and Dean Watson and Paul Stanley of Begbies Traynor (Central) LLP were appointed as administrators on June 11, 2025. German Specialists engaged in Motor Trade. Its registered office is C/O Begbies Traynor (Central) LLP, 340 Deansgate, Manchester, M3 4LY. The joint administrators can be reached at: Dean Watson Paul Stanley Begbies Traynor (Central) LLP 340 Deansgate Manchester, M3 4LY For further details contact: Sam Shaw Begbies Traynor (Central) LLP Email: Sam.Shaw@btguk.com Tel No: 0161 837 1700 HENLEY DEVELOPMENTS: RSM UK Named as Administrators --------------------------------------------------- Henley Developments 210 Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Leeds, Insolvency & Companies List (ChD), Court Number: CR-2025-000576, and James Miller and Lee Van Lockwood of RSM UK Restructuring Advisory LLP were appointed as administrators on June 9, 2025. Henley Developments specialized in the development of building projects. Its registered office is at Central Square, 5th Floor, 29 Wellington Street, Leeds, LS1 4DL Its principal trading address is at Land on the North-East Side, Greenock Road, London, W3 8DU The joint administrators can be reached at: James Miller Lee Van Lockwood RSM UK Restructuring Advisory LLP Central Square, 5th Floor 29 Wellington Street Leeds, LS1 4DL Correspondence address & contact details of case manager: Ryan Marsh RSM UK Restructuring Advisory LLP Central Square, 5th Floor 29 Wellington Street Leeds, LS1 4DL Tel: 0113 285 5053 Contact details for Joint Administrators: Tel: 0113 285 5000 MEDDINGS THERMALEC: Lameys Named as Administrators -------------------------------------------------- Meddings Thermalec Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-4025, and Michelle Anne Weir of Lameys was appointed as administrators on June 12, 2025. Meddings Thermalec is a manufacturer of metal forming machinery. Its registered office and principal trading address is at Kingsley Close, East Way, Lee Mill Industrial Estate, Ivybridge, Devon, PL21 9LL. The joint administrators can be reached at: Michelle Anne Weir Lameys One Courtenay Park, Newton Abbot Devon, TQ12 2HD For further details contact: Sophie Fay Email: sfay@lameys.co.uk Tel No: 01626 366117 PHARMANOVIA BIDCO: S&P Downgrades ICR to 'B-', Outlook Negative --------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on specialty pharmaceutical company Pharmanovia Bidco Ltd. to 'B-' from 'B'. At the same time, S&P lowered its issue rating on Pharmanovia's EUR980 million term loan B (TLB) to 'B-', with an unchanged recovery rating of '3' and recovery prospects of 50%-70% (rounded estimate: 55%). The negative outlook reflects uncertainty around the timing of recovery to support the uplift in Pharmanovia's operating performance and profitability. The downgrade reflects the material deviation S&P expects in fiscal 2025 performance due to operational challenges and larger-than-anticipated portfolio erosion leading to considerably weaker profitability. Pharmanovia's preliminary results for fiscal 2025 are significantly lower than anticipated with guidance for topline contracting by approximately 12% to about EUR355 million from EUR406 million in the prior year. A combination operational challenges, which all culminated in the fourth quarter, drives this. Pharmanovia encountered labelling issues for Rocaltrol China at the beginning of fiscal 2025 which led to higher-than-anticipated inventory buildup suppressing primary and secondary sales to the market. While there had been some recovery in the third quarter of 2024, the business in China was further hit with the implementation of regulatory policies at a local level. This led to a material 66% drop in year-on-year sales for Rocaltrol China in the fourth quarter alone. Outside China, Pharmanovia also experienced supply challenges, particularly in Mexico, along with normalization of inventory build-up in the rest of the world, namely in Italy and Spain. In addition to supply and operational challenges, the existing portfolio experienced higher-than-anticipated decline in fiscal 2025. The strong decline of higher margin products, such as Bonviva (51% year-on-year decline) and Valium (41% year-on-year decline), and the increase in contribution of lower margin products such as Ellipse, resulted in a negative mix effect on EBITDA margin generation. S&P said, "We now forecast S&P Global Ratings-adjusted EBITDA for fiscal 2025 to be EUR83 million-EUR84 million, corresponding to the adjusted EBITDA margin dropping to 23.5% (compared with 37.3% in the prior year). This is a material deviation compared with our previous expectation of EUR185 million. As a result, key credit metrics for fiscal 2025 are significantly weaker than our previous expectations. We estimate S&P Global Ratings-adjusted debt to EBITDA of about 12.5x, compared with our previous forecast of 5.7x, and EBITDA interest coverage of about 1.0x, a decline compared with the expected 2.6x. Additionally, despite supportive working capital dynamics and no materially large capital expenditure (capex), we forecast negative FOCF generation of about EUR25 million-EUR30 million." S&P said, "We anticipate S&P Global Ratings-adjusted debt to EBITDA to decline but remain elevated at about 10.0x in fiscal 2026 as Pharmanovia focuses on operational transformation. Under our updated base-case forecast, we assume revenue will remain stagnant at about EUR350 million, primarily due to the destocking effect of Ellipse which will offset recovery in Mexico following the supply challenges and growth in the innovation portfolio, namely Sunosi and the newly acquired licensing agreement of Reagila. In China, Pharmanovia has also established new commercial partnerships in retail and hospital channels. We anticipate a gradual, although back-weighted to second half fiscal 2026, recovery of Rocaltrol China as Pharmanovia invests more heavily in promotional activity to recover primary and secondary sales. We forecast S&P Global Ratings-adjusted EBITDA to improve slightly to about EUR105 million as operational saving initiatives begin to reap benefits. For fiscal 2026, Pharmanovia have identified, and are executing, more than EUR10 million savings as part of the operational transformation. Coupled with the realization of technical transfer savings as the company integrates recent acquisitions, this should help offset the higher personnel expenses, increased China Contract Sales Organization (CSO) fees, and increased sales and marketing from promotional activity to increase the innovation portfolio. We anticipate S&P Global Ratings-adjusted EBITDA margins to remain suppressed at about 30%, opposed to historical levels of approximately and above 40%, as Pharmanovia require time to reinvigorate the mix of portfolio to recover higher margin product growth, along with turnaround of operational challenges. "We expect Pharmanovia to maintain adequate liquidity, generating positive FOCF in fiscal 2026 supporting gradual deleveraging. Considering the asset-light nature of the business model, which we view as positive for the company, we estimate stable capex requirements of about EUR15 million-EUR20 million annually to facilitate technical transfers of recent acquisitions. As Pharmanovia unwinds and phases the working capital cycle, this should help generate positive FOCF in fiscal 2026 of about EUR10 million. We think that Pharmanovia will likely pursue small in-licensing deals or acquisitions in the near term to supplement growth, as evidenced with recent acquisition of licensing agreements for regional rights to a new New Chemical Entity (NCE) Reagila. However, we do not incorporate large scale acquisitions as we think that the company will focus on internal operational improvements over the next 12-18 months. We note there are no near-term refinancing risks as the company recently refinanced the capital structure such that the maturity of the EUR980 million TLB is in February 2030. Pharmanovia also has access to EUR217.9 million revolving credit facility (RCF) maturing August 2029, which was drawn EUR20 million at end fiscal 2025 and we do not anticipate the covenant test to be triggered in the next 12 months. Overall, positive free cash flow generation and RCF availability should help support the company deleverage over the next 12-18 months. "We could lower our ratings on Pharmanovia to 'CCC+' if adjusted debt to EBITDA remains elevated by end-March 2026 and leading to a capital structure becoming unsustainable, with no prospects for rapid improvement or if we see FOCF remains negative. This could arise if recovery in Rocaltrol China and the rest of the world portfolio does not materialize and from operational transformation initiatives failing to result in tangible benefits and a sizable EBITDA recovery. "We could also lower the rating if the company entered a sizable debt-financed acquisition, since this would question the company's deleveraging path and limit management's focus on operational recovery. "We could revise our outlook to stable over the next 12 months if Pharmanovia's performance improved such that adjusted debt to EBITDA decreases well below 10.0x on a sustained basis as well as sustained positive FOCF generation." This would stem from sustainable volume demand across the innovation portfolio, along with strong recovery of Rocaltrol China, and delivery of operational efficiency projects, leading to a rebound in EBITDA generation. PLANTMADE LIMITED: Begbies Traynor Named as Administrators ---------------------------------------------------------- Plantmade Limited was placed into administration proceedings in the High Court of Justice, Business & Property Courts in Manchester, Insolvency & Companies (ChD), Court Number: CR-2025-MAN-000831, and Mark Weekes and Paul Stanley of Begbies Traynor (Central) LLP were appointed as administrators on June 9, 2025. Plantmade Limited engaged in the retail sale of cosmetic and toilet articles. Its registered office is at Unit 6 Io Trade Centre, Deacon Way, Tilehurst, Reading, RG30 6AZ. The joint administrators can be reached at: Mark Weekes Paul Stanley Begbies Traynor (Central) LLP 340 Deansgate Manchester, M3 4LY For further details contact: Sam Shaw Begbies Traynor (Central) LLP Email: Sam.Shaw@btguk.com Tel No: 0161 837 1700 STARS UK: New EUR100MM Loan Add-on No Impact on Moody's 'B2' CFR ---------------------------------------------------------------- Moody's Ratings reports that on June 16, 2025, Stars UK Bidco Limited (Theramex or the company) has launched a EUR100 million fungible add-on to its existing senior secured term loan B3. The issuance will be used, together with cash from its balance sheet, to repay the EUR170 million Holdco PIK instrument outside the rated group. The company's ratings are unaffected by the proposed transaction, including its B2 long-term corporate family rating, B2-PD probability of default rating and the B2 ratings of the senior secured bank credit facilities, and the stable outlook. The transaction follows solid financial performance in recent quarters, especially in the first quarter of 2025, on the back of growth in several of its core products especially its menopause-related portfolio. For the rest of 2025, Moody's expects continued solid performance with growth in the menopause portfolio balanced by greater competition in contraception and osteoporosis. Some of the outperformance was also driven by a one-off refund and timing of revenue with distributors, which will balance over 2025. Moody's-adjusted debt/EBITDA pro-forma for the transaction remains high at 7.1x (expensing all exceptional cost), but takes into account the company's track record and Moody's expectations of organic deleveraging towards 6.0x in 2026. Leverage is also no higher than it stood a quarter ago and prior to the transaction, at 7.3x for 2024, given the company's strong Q1 performance. Pro-forma for the transaction and as of March 31, 2025, the company had EUR45 million of cash and access to the fully undrawn EUR130 million senior secured multi-currency revolving credit facility. Moody's also expects the company to remain free cash flow positive over the next 12-18 months. RATING OUTLOOK The stable outlook reflects Moody's expectations that Theramex will be able to sustain its market position and successfully launch new products without experiencing any major supply issues. As a result, the outlook assumes gradual revenue and EBITDA growth and ensuing gross deleveraging as well as materially positive free cash flow generation. The outlook also incorporates Moody's expectations that the company will not embark on any further materially releveraging debt-funded acquisitions or make debt-funded shareholder distributions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on the ratings could arise if revenue and EBITDA growth continue after the expiration of the Zoely patent in selected European markets, and product and supplier concentration reduce. Positive rating pressure could also arise if Moody's-adjusted leverage decreases below 4.5x on a sustainable basis, Moody's-adjusted free cash flow/debt increases sustainably above 10%, and there is an absence of shareholder distributions and further material debt-funded acquisitions. Conversely, negative rating pressure could arise if revenue and EBITDA decline organically or in case of significant supply, operational or litigation issues. Negative pressure on the ratings could also arise if Moody's-adjusted leverage fails to reduce sustainably below 6.0x, including as a result of debt-funded transactions, free cash flow generation reduces to below 5% of Moody's-adjusted debt on a sustained basis or the liquidity position deteriorates materially. Theramex is a pharmaceutical sales and marketing organisation focused on women's health. It benefits from a stable portfolio of largely off-patent branded drugs, strong distribution capabilities, particularly in its core Western European markets, and a stable to growing market. =============== X X X X X X X X =============== [] BOOK REVIEW: Bailout: An Insider's Account of Bank Failures -------------------------------------------------------------- Bailout: An Insider's Account of Bank Failures and Rescues Author: Irvine H. Sprague Publisher: Beard Books Soft cover: 321 pages List Price: $34.95 Order your personal copy at https://ecommerce.beardbooks.com/beardbooks/bailout.html No one is more qualified to write a work on this subject of bank bailouts. Holding the positions of chairman or director of the Federal Deposit Insurance Corporation (FDIC) during the 1970s and 1980s, one of Sprague's most important tasks was to close down banks that were failing before they could cause wider damage. The decades of the 1970s and '80s were times of high interest rates for both depositors and borrowers. Rates for depositors at many banks approached 10%, with rates for loans higher than that. The fierce competition in the banking industry to offer the highest rates to attract and keep depositors caused severe financial stress to an unusually high number of banks. Having to pay out so much in interest to stay competitive without taking in much greater deposits was straining the cash and other assets of many banks. The unprecedented high interest rates also had the effect of reducing the number of loans banks were giving out. There were not so many borrowers willing to take on loans with the high interest rates. With the disruptions in their interrelated deposits and loans, many banks began to engage in unprecedented and unfamiliar financial activities, including investing in risky business ventures. As well as having harmful effects on local economies, the widely reported troubles of a number of well-known and well-respected banks were having a harmful effect on the public's confidence in the entire banking industry. Sprague along with other government and private-sector leaders in the banking and financial field realized the problems with banks of all sizes in all parts of the country had to be dealt with decisively. Action had to be taken to restore public confidence, as well as prevent widespread and long-lasting damage to the U.S. economy. Sprague's task was one of damage control largely on the blind. The banking industry, the financial community, and the government and the public had never faced such a large number of bank failures at one time. The Home Loan Bank Board for the savings-and-loans associations had allowed these institutions to treat goodwill as an asset in an effort to shore up their deteriorating financial situations with disastrous results for their depositors and U.S. taxpayers. Such a desperate stratagem only made the problems with the savings-and-loans worse. The banks covered by the FDIC headed by Sprague were different from these institutions. But the problems with their basic business of deposits and loans were more or less the same. And the cause of the problem was precisely the same: the high interest rates. Faced with so many bank failures, Sprague and the government officials, Congresspersons, and leaders he worked with realized they could not deal effectively with every bank failure. So one of their first tasks was to devise criteria for which failures they would deal with. Their criteria formed what came to be known as the "essentiality doctrine." This was crucial for guidance in dealing with the banking crisis, as well as for explanation and justification to the public for the government agency's decisions and actions. Sprague's tale is mainly a "chronicle [of] the evolution of the essentiality doctrine, which derives from the statutory authority for bank bailouts." The doctrine was first used in the bailout of the small Unity Bank of Boston and refined in the bailouts of the Bank of the Commonwealth and First Pennsylvania Bank. It then came into use for the multi-billion dollar bailout of the Continental Illinois National Bank and Trust Company in the early 1980s. Continental's failure came about almost overnight by the "lightening-fast removal of large deposits from around the world by electronic transfer." This was another of the unprecedented causes for the bank failures Sprague had to deal with in the new, high-interest, world of banking in the '70s and '80s. The main part of the book is how the essentiality doctrine was applied in the case of each of these four banks, with the especially high-stakes bailout of Continental having a section of its own. Although stability and reliability have returned to the banking industry with the return of modest and low interest rates in following decades, Sprague's recounting of the momentous activities for damage control of bank failures for whatever reasons still holds lessons for today. For bank failures inevitably occur in any economic conditions; and in dealing with these promptly and effectively in the ways pioneered by Sprague, the unfavorable economic effects will be contained, and public confidence in the banking system maintained. As chairman or director of the FDIC for more than 11 years, Irvine H. Sprague (1921-2004) handled 374 bank failures. He was a special assistant to President Johnson, and has worked on economic issues with other high government officials. ********* 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 * * *