260514.mbx

260514.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, May 14, 2026, Vol. 27, No. 96 Headlines B E L G I U M ONTEX GROUP: Moody's Affirms 'B1' CFR, Alters Outlook to Negative F R A N C E BISCUIT HOLDING: S&P Ups LT ICR to 'CCC-' on Likely Debt Revamp COLISEE GROUP: S&P Lowers ICR to 'SD' on Debt Exchange Transaction COLISEE GROUP: S&P Ups LT ICR to 'CCC+' After Debt Restructuring HOLDING D'INFRASTRUCTURES: Fitch Alters Outlook on BB+ IDR to Neg. SECHE ENVIRONNEMENT: S&P Affirms 'BB' ICR on Prospects for 2027 SEPTODONT HOLDING: S&P Assigns 'B+' Long-Term ICR, Outlook Stable G E R M A N Y EPHIOS SUBCO 1: Fitch Rates EUR370MM PIK Notes 'CCC+(EXP)' TK ELEVATOR: Fitch Puts 'B' Long-Term IDR on Watch Positive TMD FRICTION: Fitch Assigns BB-(EXP) Long-Term IDR, Outlook Stable TMD FRICTION: S&P Assigns Preliminary 'B+' ICR, Outlook Stable I R E L A N D BAIN CAPITAL 2026-1: S&P Assigns B- (sf) Rating to Class F Notes CIMPRESS PLC: S&P Rates New $1.1BB Senior Secured Term Loan 'BB' PALMER SQUARE 2026-1: Moody's Assigns Ba3 Rating to EUR23MM E Notes PHOENIX AVIATION: Fitch Hikes Long-Term IDR to 'B+', Outlook Stable I T A L Y ESSELUNGA SPA: S&P Affirms 'BB+' ICR, Alters Outlook to Stable FLOS B&B: Fitch Affirms 'B' Long-Term IDR, Outlook Negative LA DORIA: Fitch Affirms 'B+' Long-Term IDR, Outlook Stable L U X E M B O U R G EPHIOS SUBCO: S&P Assigns 'B' Long-Term ICR, Outlook Stable MOVIDA EUROPE: S&P Rates Proposed Senior Unsecured Notes 'BB-' N E T H E R L A N D S VITA LUXCO: S&P Assigns 'B+' Long-Term ICR, Outlook Stable R U S S I A ALOQABANK JSC: Fitch Rates USD Sr. Unsec. Eurobond 'BB(EXP)' S P A I N GRIFOLS SA: Moody's Affirms 'B1' CFR, Alters Outlook to Positive S W E D E N INTRUM AB: S&P Places 'CCC+' ICR on CreditWatch Positive T U R K E Y GURMAT ELEKTRIK: Fitch Rates USD Sr. Sec. Notes Issuance B+(EXP) U K R A I N E KERNEL HOLDING: Fitch Affirms 'CCC-' Long-Term IDR VEON LTD: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable U N I T E D K I N G D O M 85 LEXHAM: BTG Begbies, FRP Advisory Appointed as Administrators BRUTON PLACE: FRP Advisory, BTG Appointed as Joint Administrators CHILTERN COURT: FRP Advisory, BTG Appointed as Joint Administrators DILKE STREET: BTG Begbies, FRP Advisory Appointed as Administrators EDGE MIDCO: S&P Affirms 'B+' Long-Term ICR, Outlook Stable TMF GROUP: S&P Rates EUR1.8BB Senior Secured Term Loan 'B' - - - - - ============= B E L G I U M ============= ONTEX GROUP: Moody's Affirms 'B1' CFR, Alters Outlook to Negative ----------------------------------------------------------------- Moody's Ratings has changed the outlook to negative from stable on Ontex Group NV (Ontex or the company), a leading European-based manufacturer of private label disposable hygiene products. Concurrently, Moody's affirmed the company's B1 long-term corporate family rating and B1-PD probability of default rating, as well as the B1 rating on the EUR400 million backed senior unsecured notes due April 2030, issued by Ontex. "The outlook change to negative reflects Moody's expectations that rising cost inflation and a still-challenging operating environment will constrain the pace of EBITDA recovery in 2026, increasing the risk that credit metrics remain weaker than currently expected", says Giuliana Cirrincione, Moody's Ratings lead analyst for Ontex. RATINGS RATIONALE Following the significant deterioration in its operating performance in 2025, Ontex has remained weakly positioned in its B1 rating. The structural demand decline in the baby care segment – which is the second largest business of the group with 40% of total sales – was further exacerbated by the intense price competition by branded product manufacturers and led to a large volume decline for the company. While Ontex's performance in the first quarter of 2026 was broadly in line with Moody's expectations that market conditions would not materially deteriorate further but would still remain difficult, the renewed geopolitical tensions in the Middle East in late February have increased risks of renewed oil-price volatility and cost inflation. The ongoing tensions pose significant challenges to those companies like Ontex whose raw material inputs are predominantly linked to oil-related indices, and in Moody's views there's higher risk that Ontex's credit metrics may not return to levels commensurate with its B1 rating by the end of 2026, including Moody's-adjusted leverage declining to slightly below 5x and free cash flow (FCF) turning moderately positive. In Moody's base case, Moody's forecasts that EBITDA, on a Moody's-adjusted basis, will decline to EUR160 million in 2026, from EUR167 million the prior year. This assumes that consumers' down trading will stabilize but will continue to constrain volume growth and price/mix improvement, while higher raw material costs from the second half of 2026 will largely offset the expected SG&A and procurement cost savings. Moody's also expects Ontex to implement price increases towards the end of 2026, but these will be gradual and will not fully absorb the impact of cost inflation in the year. Under this scenario, Moody's-adjusted debt/EBITDA will remain high at 5.1x in 2026 and will only improve to below 5x by 2027, and FCF will be at best neutral in 2026. Although these metrics are not materially distant from Moody's previous expectations, they are weak and the still-fragile macroeconomic environment increases the uncertainty over the pace of Ontex's earnings recovery over the next 12-18 months. Ontex's B1 ratings remain, however, supported by the company's adequate liquidity and its leading position in the private label segment of the disposable personal hygiene products market in Europe. While earnings volatility is inherent to the industry and particularly to Ontex given its focus on private label products, the relatively less cyclical nature of its products and the increasing contribution from adult incontinence are credit-positive considerations. The rating also factors in the organic growth prospects associated with the ongoing, albeit slower than the company initially expected, expansion plan in North America, which mitigate Ontex's smaller perimeter following the disposal of its emerging markets operations. The public commitment to a net leverage target - as defined by the company - of 3x is also supportive of the rating, although the company is currently above that level, at around 3.3x. LIQUIDITY Ontex's liquidity is adequate, with a cash balance of EUR72 million as of March 31, 2026, and around EUR200 million available under its EUR270 million revolving credit facility (RCF) due in November 2029. Based on Moody's forecasts, the available cash balance and the internal cash generation will cover all basic cash requirements, which include modest working capital requirements (including the use of factoring), and maintenance and expansionary capital spending of around EUR100 million annually from here on (including the portion related to the lease repayment). Capex needs will be roughly 20% lower than in the past three years, as investments related to the production capacity expansion in the US are now complete. Moody's forecasts that FCF will at best be neutral in 2026. Ontex's RCF is subject to a net leverage covenant of 3.5x tested semiannually, and Moody's expects the company to maintain adequate capacity under these covenants. STRUCTURAL CONSIDERATIONS The B1 rating on the EUR400 million senior unsecured 5.25% fixed-rate notes due April 2030 is in line with the CFR. All liabilities within the capital structure rank pari passu among themselves, and the notes are guaranteed by material subsidiaries representing a minimum of 70% of consolidated EBITDA. Moody's assumes the standard 50% family recovery rate to reflect the presence of both notes and bank debt within the company's capital structure. RATIONALE FOR NEGATIVE OUTLOOK The negative outlook reflects Moody's expectations that higher transportation and raw material cost inflation will constrain Ontex's EBITDA recovery in 2026 amid still-weak consumer demand in baby care and intense price competition, resulting in weaker credit metrics than previously anticipated over the next 12–18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Although unlikely in the near-term due to the negative outlook, Moody's could upgrade Ontex's ratings if business expansion in North America results in much faster business growth in the region than currently assumed, such that Moody's-adjusted leverage remains sustainably well below 4x; and Moody's-adjusted FCF/debt and EBITA margin increase towards the mid-teens percentages. An upgrade would also require Ontex to maintain consistently good liquidity. Moody's could downgrade Ontex's ratings if Moody's-adjusted leverage remains around 5x on a sustained basis, if FCF weakens, and Moody's-adjusted FCF/debt and EBITA margin remain in the low-single-digit percentages for a prolonged period. A deterioration in liquidity because of reduced capacity under financial covenants could also lead to a downgrade. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Consumer Packaged Goods published in February 2026. 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 Ontex, headquartered in Aalst-Erembodegem, Belgium, is a leading manufacturer of mainly retailer- and healthcare-branded hygienic disposable products with operations across Europe and North America. Ontex operates in three product categories: adult incontinence (46% of sales in 2025), baby care (40%) and feminine care (13%). In 2025, Ontex generated net sales of EUR1.76 billion and company-adjusted EBITDA (that is, before restructuring costs) of around EUR176 million. In 2025, Ontex completed the divestiture of its two remaining Emerging Market businesses, namely Brazil and Turkiye. Ontex is a public company listed on the Euronext Brussels Stock Exchange. =========== F R A N C E =========== BISCUIT HOLDING: S&P Ups LT ICR to 'CCC-' on Likely Debt Revamp --------------------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on Biscuit Holding S.A.S. (Biscuit International; BI) to 'CCC-' from 'SD' (selective default) and raised its issue rating on its EUR150 million second-lien instrument to 'C' from 'D' (default). S&P affirmed its 'CCC-' issue rating on its EUR695 million term loan B (TLB). The negative outlook indicates that S&P could downgrade BI in the near term if the company announces a debt restructuring process that it considers to be equivalent to a default. Following a consensual arrangement with its second-lien lenders, BI has deferred the interest payment on its EUR150 million second-lien facility that was due on March 31, 2026. S&P viewed this as a default under our rating definitions as lenders have received less than originally promised. The company remains current on its other obligations. BI is continuing negotiations with all the lender groups to address near-term debt maturities, which S&P sees as highly likely to result in a distressed restructuring. S&P said, "We see high likelihood of a debt restructuring that we could consider to be equivalent to a default over the near term as BI continues negotiations with the lender groups. The group has upcoming maturities that it has not yet addressed, including a EUR85 million revolving credit facility (RCF) due August 2026, its EUR695 million term loan B (TLB), and EUR130 million equally ranking notes due February 2027, and EUR150 million second-lien TLB due in February 2028. While we understand the group is undertaking negotiations with all lenders groups to address the near-term maturities, we view a distressed restructuring transaction as highly likely. "The negative outlook indicates that we could downgrade BI within the next six months if it announces a debt restructuring that we consider to be equivalent to a default. "We could lower our rating on BI if it announces a debt restructuring that we consider equivalent to a default or if it misses any principal or interest payments. "We could raise our rating on BI if we no longer view a default scenario as highly probable over the next six months. This could occur, for example, if the company secures alternative financing that we expect will ease refinancing risk." COLISEE GROUP: S&P Lowers ICR to 'SD' on Debt Exchange Transaction ------------------------------------------------------------------ S&P Global Ratings lowered its long-term issuer credit rating on Colisee Group to 'SD' (selective default) from 'CCC-' and its issue-level rating on its term loan B to 'D' (default). At the same time, S&P removed the ratings from CreditWatch, where they were placed with developing implications on May 14, 2025. S&P plans to reassess its ratings on Colisee in the coming days, incorporating its revised capital structure, cash flow outlook, and our forward-looking assessment of its creditworthiness. On April 30, 2026, Colisée Group closed its recapitalization, with post-transaction balances of EUR749 million senior notes, EUR268 bilateral facilities, an EUR80 million reinstated and undrawn at closing and EUR69 million undrawn revolving credit facility and EUR215 million super senior notes. The lenders also received equity compensation and now own 100% of the company. S&P said, "Although we view the transaction as a necessary step toward improving the company's capital structure given its very high leverage of about 15x at year-end 2024, we view the recapitalization as distressed and tantamount to a default because lenders will receive less than they were originally promised without offsetting adequate compensation. "The downgrade reflects Colisee's recapitalization transaction, which we view as tantamount to a default. On April 30, 2026, the company completed the exchange of its term loans, RCF, and bilateral lines." Under the restructuring, existing debt obligations due in 2027 totaling EUR1.2 billion in euro term loans, EUR290 million bilateral facilities, and a fully drawn EUR218 million RCF were exchanged for: -- A reinstated EUR749 million senior term loan B, denominated in euro, with a five-year maturity carrying a EURIBOR + 4.25% interest rate margin; -- A reinstated EUR80 million RCF, denominated in euro, with a five-year maturity carrying a EURIBOR + 4.25% interest rate margin; -- New EUR215 million super senior notes, denominated in euro, with a five-year maturity carrying either a EURIBOR + 4.25% interest rate margin or a payment-in-kind interest of 2% per year; -- A new EUR69 million super senior RCF expected to remain undrawn at closing; and -- About EUR268 million bank debt incorporating bilaterial facilities, factoring lines, capex lines etc. extended over 24 months. -- EUR127 million accrued interest were written off as part of the transaction. -- As part of the transaction, ownership of the group has been transferred to a consortium of institutional investors, including CVC, PIMCO, Farallon. -- The company remains current on its other obligations, including factoring and some bilateral loans. S&P said, "Although we view the transaction as a necessary step toward improving the company's capital structure, considering its very high leverage of about 15x at year-end 2024, we consider the exchange of the term loan, RCF, and bilateral lines as distressed and tantamount to a default. This is because the lenders will receive less than they were promised under the original securities, considering primarily the material debt write-off. "We expect to reassess our issuer credit rating on the company over the next few business days.It will incorporate the revised capital structure, cash flow outlook, and our forward-looking assessment of its creditworthiness." COLISEE GROUP: S&P Ups LT ICR to 'CCC+' After Debt Restructuring ---------------------------------------------------------------- S&P Global Ratings raised its long-term rating on nursing home operator Colisee Group SAS to 'CCC+' from 'SD' (selective default) and its rating on the reinstated EUR749 million term loan to 'CCC+' from 'D' (default), with a '4' recovery rating reflecting our expectation of 30%-50% recovery (rounded estimate 40%) in a default scenario; S&P rated the EUR215 million super senior notes due in 2031 'B', with a recovery rating of '1' reflecting its expectation of 90%-100% recovery (rounded estimate 95%) in the event of a payment default. The outlook is stable because S&P believes Colisee's profitability will gradually improve over the next 12 months as the group continues to execute revenue and cost-savings initiatives, with sufficient liquidity and no debt maturing until 2031. Colisee's debt restructuring, completed on April 30, 2026, reduces the group's debt, extends its debt maturity profile, and eases the cash interest burden over the medium term. Colisee has reinstated EUR749 million of the previous EUR1.17 billion term loan B into a new senior note due in November 2031, EUR80 million of the previous EUR218 million RCF due in August 2031. As part of the restructuring process, all interests have been added to equity in addition the non-reinstated portion of the old RCF and old TLB. As part of the restructuring under an Accelerated Safeguard Plan--a court-approved procedure under French law--the group has also issued EUR215 million of super senior notes due in November 2031. These new notes have an option for payment-in-kind (PIK) interest of 2% over the EURIBOR (Euro Interbank Offered Rate) plus 4.25% cash interest. Colisee also has a new EUR69 million super senior RCF due in August 2031. S&P said, "However, we believe the company's leverage will remain high, with low fixed-charge coverage and negative FOCF after leases. We forecast S&P Global Ratings-adjusted debt to EBITDA will exceed 9.0x in 2026 and 2027, with fixed-charge coverage at about 1.0x, before leverage gradually improves toward 8.5x in 2028. Fixed-charge coverage is forecast to remain at 1.0x-1.5x from 2028. We estimate FOCF (after leases) will remain negative EUR130 million-negative EUR150 million at year-end 2026, down from our estimate of negative EUR80 million–negative EUR100 million in 2025. The deterioration of FOCF (after leases) in 2026 is linked mostly to exceptional costs stemming from the recapitalization transaction. We therefore expect FOCF (after leases) will improve to normal levels of negative EUR65 million–negative EUR85 million in 2027. Furthermore, we project the group's capital expenditure (capex) at EUR60 million-EUR70 million annually over 2026-2027 to support greenfield investments and refurbishment projects. In addition, we forecast overall cash interest payments (adjusted for operating leases) at EUR170 million-EUR160 million per year over that period. We expect the group will be reasonably protected against interest-rate fluctuations with its hedging strategy. "We forecast Colisee's operating performance to improve as the group continues executing its revenue-growth and cost-savings initiatives. Under our base-case scenario, we forecast negative revenue growth of 1.0%-2.0% in 2026, reflecting mostly the impact of the home care segment's disposal in 2025, despite subdued organic growth across markets in various countries. We expect revenue growth to recover from 2027 reflecting additional capacity fueled by recent greenfield investments, further average daily rate repricing, and to a lesser extent, continued improvement of occupancy rates. We consider that demographic trends and current government reimbursement policies broadly support Colisee in all of its markets. We forecast S&P Global Ratings-adjusted EBITDA margins will improve by about 25 basis points (bps) to 50 bps annually in 2026 and 2027, with EBITDA rising to about EUR315 million-EUR325 million in 2026 and EUR325 million-EUR 335 million in 2027. Operating performance improvement will stem mainly from the group's continued cost-efficiency measures. Nonetheless, there are potential risks arising from inflationary pressures in France and Belgium, notably on wages, which could offset cost-savings measures in 2026-2027. "We think the group will have sufficient liquidity over the next 12 months, benefitting from the absence of near-term debt maturities. Colisee had cash on balance sheet of about EUR67 million as of Dec. 31, 2025, and access to credit lines, with no significant debt maturities until 2031. Moreover, the group has low working capital requirements and moderate capex needs. Under its debt covenant, the group is required to maintain minimum monthly liquidity of EUR75 million, tested each quarter. "The stable outlook reflects our view that Colisee's profitability will gradually improve over the next 12 months as the group continues to execute revenue-growth and cost-savings initiatives. In addition, we think the group will retain sufficient liquidity, supported by about EUR69 million available under the super senior RCF, EUR80 million available under the reinstated RCF, and no major debt maturities (except for small bilateral lines) until 2031. "We could lower our ratings on Colisee if we believed there was an increased risk of default in the next 12 months. This could occur, for example, if the expected business recovery fails to take hold, due for example to unfavorable economic conditions, notably inflationary pressures that have a significant impact on operations; persistent deeply negative FOCF after leases; and deteriorating liquidity, including reduced headroom under the minimum liquidity covenant. "We could raise the rating if Colisee's operating performance shows a sustained recovery, leading to a material reduction in S&P Global Ratings-adjusted debt to EBITDA and sustainably positive FOCF generation." HOLDING D'INFRASTRUCTURES: Fitch Alters Outlook on BB+ IDR to Neg. ------------------------------------------------------------------ Fitch Ratings has revised Holding d'Infrastructures des Metiers de l'Environnement's (SAUR) Outlook to Negative from Stable, while affirming its Long-Term Issuer Default Rating (IDR) and senior unsecured rating at 'BB+'. The Recovery Rating is 'RR4'. The Negative Outlook reflects its expectations that SAUR's deleveraging path towards its 5.2x negative sensitivity will be delayed to 2028, one year later than in its previous review. Fitch forecasts leverage to start normalising after a peak in 2026 on the back of a structural improvement in tariff indexation for municipal water, moderate municipal growth and continuous deployment of management optimisation measures. Fitch expects Saur's industrial business to remain under pressure from softer industrial output and geopolitical uncertainties. The rating reflects the company's solid business profile, largely underpinned by long-term contracts, and its market positioning especially in France. Rating constraints are higher earnings volatility than peers', negative free cash flows (FCF) and high leverage. Key Rating Drivers Leverage Drives Negative Outlook: Fitch expects SAUR's funds from operations (FFO) net leverage to peak at 7.0x in 2025-2026 and to decline towards 5.7x by 2027, still above its negative sensitivity of 5.2x for 'BB+', driving the Negative Outlook. Fitch had expected some deleveraging in 2025, but weaker industrial water performance drove a leverage increase to 7.0x (excluding from EBITDA the impact of a cyber incident at the company), postponing deleveraging by one year. Its current rating case assumes that SAUR will deleverage steadily and meet its rating sensitivity in 2028, driven by positive momentum for the water services business and a gradual recovery of the industrial water business. Fitch sees no headroom in the current rating and underperformance compared with the rating case would lead to a downgrade. Industrial Water Underperformance: Industrial water business underperformed in 2025 due to an unfavourable operating environment in Europe and the US, compounded by a cyber incident. The incident, resolved by end-2025, delayed project execution and billing, reducing EBITDA by EUR11 million. Fitch treats the cyber incident as a one-off and reclassify it below FFO. Fitch expects more structural weaknesses in the industrial water business due to softer industrial output in Europe, geopolitical tension and increasing competition. However, Fitch acknowledges that during 2025, the company received EUR540 million in orders and have limited contract cancellation, so Fitch expects an EBITDA improvement from the low level of 2025. Water France Positive Trend: SAUR's water services business in France reported a 19% reported EBITDA growth in 2025, continuing its gradual recovery started in 2023. The performance was supported by a combination of positive price effect, volume gains and productivity measures implemented by management. Efforts to optimise the cost structure of the water business in France resulted in EUR12 million of savings in 2025. Fitch expects SAUR's optimisation plan, focused on procurement costs, stricter pricing discipline and tariff measures, to support EBITDA in the water business in France. Tariff Indexation Supports Water France: SAUR will benefit from the revision of the electricity indexation formulas recently published by the INSEE (Institut national de la statistique et des études économiques) for water utilities. The revised mechanism should enable the company to better align tariff adjustments with movements in electricity procurement costs, reducing the risk of the material cost-recovery mismatches seen in 2023. Fitch views this development as supportive of SAUR's business profile. Ongoing Optimisation Plan: The company continued to implement cost optimisation measures in 2025, generating EUR22 million of savings, mainly in the municipal water business. Management expects these efforts to continue in 2026, with further initiatives on both the water services and industrial services businesses primarily through procurement initiatives and consumables optimisation. Fitch expects Fitch-defined EBITDA to rise to about EUR300 million in 2028 from EUR210 million in 2025, with margins gradually improving to 11.3% by 2028, from 8.9% at end-2025. Working Capital Improvement: SAUR improved its working capital position in 2025, with an outflow of EUR17 million, from EUR93 million in 2023 and EUR44 million in 2024. The cyber incident had an adverse impact on working capital, mainly through delays in customer billing. Management expects to reverse this impact in 2026, while continuing to focus on billing acceleration, broader use of direct debit and tighter inventory control. Fitch expects working capital to be broadly neutral in 2026, before turning moderately negative again from 2027, driven by the expansion of the industrial water business. Negative Free Cash Flow: Fitch forecasts SAUR's free cash flow (FCF) to remain mildly negative to 2028, despite expected EBITDA margin gains and limited working capital outflows. This mainly reflects large capex of about EUR185 million on average to support new commercial wins. Fitch believes management retains some flexibility to moderate capex (40% discretionary growth) to protect cash flow generation should operating performance weaken further. Fitch does not expect dividend distribution. Increasing Lease Debt: SAUR's lease debt has increased materially since 2022, mainly driven by numerous concession renewals in its French water operations, which have resulted in longer lease contract tenors, and by growth in its industrial water business. Fitch expects this trend to continue well into 2026-2028 as the company actively manages its lease contracts and renews older cost-inefficient lease contracts. Short-term lease liabilities relate predominantly to light-fleet vehicles, while long-term obligations are primarily associated with buildings and logistics facilities. Fitch treats leases as operational expenses. Peer Analysis SAUR is France's third-largest water and wastewater management company, behind Veolia Environnement S.A. and Suez S.A. Both companies benefit from larger scale and a greater presence outside the domestic market than SAUR. These peers also benefit from larger and more profitable contracts for their water business, which explains their higher profitability even though they operate under the same contractual framework as SAUR. FCC Aqualia, S.A. (BBB-/Stable), the Spanish water concessions operator, is SAUR's closest rated peer by business mix and scale. Aqualia's municipal business accounts for about 90% of EBITDA, compared with about 80% for SAUR at end-2025. Overall, Fitch considers Aqualia's business risk to be slightly lower than SAUR's, with longer average concession residual life, higher renewal rates, better profitability and earnings visibility due to higher capex intensity and a contractual framework that includes timely financial equilibrium mechanisms. This allows for higher debt capacity with a threshold for investment grade at FFO net leverage of 5.0x for Aqualia compared with 4.5x for SAUR. Acea SpA (BBB+/Stable) is an Italian diversified multi-utility operating in water distribution, environmental services, and electricity production and distribution. Acea benefits from a stronger business profile due to a high share of regulated revenue, supported by a mature and predictable regulatory framework. Acea's diversified revenue streams and regulated revenue mechanism provides better protection against inflation, which enabled it to preserve its EBITDA margin during the recent inflationary period. Fitch’s Key Rating-Case Assumptions - Revenue CAGR of 5.2% for 2026-2028, supported by organic growth, mainly in water business in France and industrial water - Fitch-calculated EBITDA margin averaging 10% on 2026 to 2028 - Average capex of about EUR185 million a year over 2026-2028 - No M&A - No dividends to 2028 Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (bb+, Lower), Sector Characteristics (bb+, Moderate), Market and Competitive Positioning (bb+, Moderate), Diversification and Asset Quality (bbb-, Moderate), Company Operational Characteristics (bbb, Lower), Profitability (bb+, Higher), Financial Structure (bb, Higher), and Financial Flexibility (bbb, Moderate). - The quantitative financial subfactors are based on custom CRT financial period parameters: 10% weight for the historical year 2025, 30% for the forecast year 2026, 30% for the forecast year 2027 and 30% for the forecast year 2028. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'a+' results in no adjustment. - The SCP is 'bb+'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to a Revision of Outlook to Stable - FFO net leverage trending towards 5.2x in 2027, in line with Fitch's current forecast - Achievement of neutral FCF on a sustained basis Factors that Could, Individually or Collectively, Lead to a Downgrade A downgrade could be triggered by any of the following: - Any sign of underperformance versus Fitch's current forecast, indicating that the company is not on track to deleverage towards 5.2x in 2027 - FFO interest coverage deteriorating to below 3.0x on a sustained basis - Heightened earnings volatility, stemming from adverse changes in public contract terms, regulatory frameworks, or a shift toward a less contracted business mix or higher-risk counterparties. In particular, a material increase in exposure to industrial water, rising above 35%-40% of total EBITDA (from 20% forecast in 2025), could prompt Fitch to reassess SAUR's business risk profile and debt capacity for the current rating Factors that Could, Individually or Collectively, Lead to an Upgrade An upgrade is not expected over the forecast horizon, given the current Negative Outlook. However, Fitch could upgrade if credit metrics were to improve sustainably toward the following levels: - FFO net leverage sustained below 4.5x, combined with a material and durable recovery in EBITDA margins, supporting stronger cash flow generation and a more resilient financial profile Liquidity and Debt Structure At end-2025, SAUR had EUR318 million of readily available cash complemented by a EUR400 million revolving credit facility (RCF). During 2025, SAUR repaid the remaining EUR241 million of its sustainability-linked tranche (initially EUR 450 million issued in 2021) and a EUR300 million bond issued in 2023. The company also repaid EUR250 million of its drawn RCF during the same year. The debt repayment was financed by the issuance of two bonds in 2024 and 2025 for EUR550 million and EUR500 million, respectively. Fitch believes liquidity is sufficient to cover expected negative FCF to 2028 and given limited debt repayment before 2028. Issuer Profile SAUR is an integrated water and wastewater treatment and distribution operator for households and a water services provider for industries. It also provides engineering and procurement and other water-related works for municipalities and serves more than 20 million residents and 9,200 municipalities. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Holding d'Infrastructures des Metiers de l'Environnement LT IDR BB+ Affirmed BB+ senior unsecured LT BB+ Affirmed RR4 BB+ SECHE ENVIRONNEMENT: S&P Affirms 'BB' ICR on Prospects for 2027 --------------------------------------------------------------- S&P Global Ratings affirmed its 'BB' long-term issuer credit rating and issue-level ratings on France-based waste treatment services provider Seche Environnement S.A. and its senior unsecured bonds, with the '3' recovery rating unchanged. The stable outlook indicates S&P's expectation of S&P Global Ratings-adjusted debt to EBITDA reduction to 4.0x and funds from operations (FFO) to debt improving above 16% by the end of 2027. Seche has faced a decline in certain circular economy activities, but the group's hazardous waste management business remains resilient, and its international subsidiaries show dynamic growth. S&P said, "We expect its cost-saving plan, combined with the consolidation of recent acquisitions--Hidronor and La Filippa--will enable solid EBITDA growth in 2026 and 2027. After a temporary deterioration in 2026, we expect resilient growth and profitability improvements will rapidly bring credit metrics back to levels we view as commensurate with the 'BB' rating. We no longer factor in the delayed potential Flamme acquisition. "The affirmation reflects our expectation of a recovery by 2027 after weak credit metrics in 2026 due to operating challenges. In March 2026, Seche revised its EBITDA guidance for 2026 to EUR260 million-EUR270 million, from EUR275 million-EUR285 million previously. This reflects softer market conditions during 2025 that we project will persist in 2026, leading to a fall in revenue from circular economy activities. In particular, energy recovery was penalized by low energy prices, while chemical purification and solvent regeneration activities suffered from a downturn in the chemical sector. Meanwhile, resilient performance in the hazard management business and services activities somewhat mitigated the decline in chemical-related end markets. "We expect Seche's performance plan will boost like-for-like EBITDA by 5%-10% in 2026 through cost savings and intragroup synergies. When including the contribution from Hidronor and La Filippa, completed in January/February 2026, we expect about 18% EBITDA growth. Exceptional costs associated with the plan and with the integration of these new acquisitions will partly offset margin increase in 2026, but will decline in 2027. This results in our projected adjusted leverage of 4.4x and FFO to debt of about 15% in 2026, improving to about 4.0x and 17%, respectively, in 2027, when the synergies and cost savings take full-year effect, and exceptional costs decrease, absent any new material acquisition." Seche's acquisition appetite reduces rating headroom. Seche finalized two acquisitions during the first quarter of 2026. They align with the group's international development strategy but will add EUR230 million to net financial debt. With revenue of EUR42 million in 2024 and an EBITDA margin of about 33%, Hidronor is a leading player in the hazardous waste management market in Chile, where it provides countrywide coverage to a loyal customer base of industrial customers in various sectors such as mining, energy, and chemicals. This acquisition will strengthen Seche's market position in Chile, given Hidronor's complementary operations and footprint. The other acquisition is La Filippa, a non-hazardous waste storage facility based in Northern Italy, which operates with very high profitability, partly driven by the scarcity of providers in this region. Seche expects to generate commercial and industrial synergies with La Fillipa. The two acquisitions will be financed by the group's large available cash balance resulting from Seche's issuance of EUR300 million deeply subordinated notes in October 2025. S&P said, "Our projections no longer incorporate the consolidation of Groupe Flamme, at this stage. The acquisition of Groupe Flamme, announced on June 6, 2025, with an enterprise value estimated at approximately EUR320 million, is still pending antitrust approval by the French regulator and closing of the transaction will likely be delayed versus earlier expectations, due to additional investigations from competition authorities. We chose not to include the acquisition in our base case because we see an increased likelihood that the transaction closing could be delayed or that the conditions of the acquisition could materially differ from our earlier expectations, especially if there were scope adjustments. However, if we included the acquisition of Groupe Flamme from early 2027, this could materially deteriorate our adjusted leverage and FFO-to-debt ratios. Groupe Flamme, based in northern France, is the last independent operator in France specializing in hazardous waste management. It generated about EUR100 million in revenue and EUR20 million in EBITDA in 2024. "Adjusted free operating cash flow (FOCF) should stay at EUR50 million per year or more. We expect stable adjusted FOCF in 2026 because the increase in EBITDA linked to new acquisitions will compensate higher interest expenses and higher exceptional costs associated with the group's performance plan. We forecast an increase in interest costs in 2026 due to the additional debt incurred in 2025 (new EUR470 million senior unsecured notes and the EUR300 million deeply subordinated notes, which we consider have intermediate equity content). In our view, the group's underlying operating cash flow generation remains solid, supported by the resilient hazard management activities and neutral working capital variations. We forecast FOCF to increase to EUR70 million in 2027. "Rating headroom will depend on the success of the group's performance plan and consistency in financial policy. Considering the implementation of Seche's performance plan, management is targeting a reduction of net leverage to 3.0x by the end of 2027, equivalent to our S&P Global Ratings-adjusted leverage of 4.0x-4.5x, which we consider as commensurate with the 'BB' rating. Nevertheless, the group's appetite for acquisitions has pushed our credit metrics close to our downside triggers in recent years. Our current base case assumes no acquisitions beyond those closed early 2026, to enable Seche to absorb the financial impact of recent acquisitions and to focus on restoring operating performance. But if the acquisition of Flamme materializes, or if Seche undertakes other material debt-funded acquisitions, this could materially weaken our credit metrics and reflect a more aggressive financial policy than we anticipated. "The stable outlook indicates our expectation that Seche's performance plan, combined with the consolidation of the recent Hidronor and La Filippa acquisitions, will enable solid EBITDA growth in 2026 and 2027. This will drive adjusted debt to EBITDA reduction toward 4.0x and FFO to debt improving above 16% by the end of 2027, after a temporary deterioration of credit metrics in 2026. "We could lower the rating if S&P Global Ratings-adjusted debt to EBITDA exceeded 4.5x or FFO to debt remained below 16%--both on a sustained basis. This could result from persisting economic headwinds affecting circular economy activities, higher-than-expected costs associated with the group's performance plan or with the integration of acquisitions, or operational missteps. It could also be the result of financial policy decisions, such as the acquisition of Groupe Flamme, other sizable debt-funded acquisitions, or returns cash to shareholders that keep debt to EBITDA above 4.5x. "We could raise the rating if adjusted debt to EBITDA declines to less than 4x and FFO to debt exceeds 20%. An upgrade would hinge on us being certain that Seche's financial policy would sustainably support these credit metrics." A positive rating action would also depend on an improvement in Seche's adjusted EBITDA margins and cash flow generation. This would likely result from the successful integration of recent acquisitions, and Seche's consistently solid performance in other markets, spurring organic growth. SEPTODONT HOLDING: S&P Assigns 'B+' Long-Term ICR, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term issuer and issue credit rating to France-based specialist dental pharmaceutical company Septodont Holding SAS. S&P also assigned a '3' recovery rating to the proposed EUR450 million term loan B, which indicates average recovery prospects of 55% under a hypothetical default scenario. The stable outlook reflects S&P's view that the company is well positioned to maintain a resilient operating performance and increase profitability over the next few years while generating positive FOCF, which will support steady deleveraging below 4x on a sustained basis. Septodont's main expertise lies in dental anesthetics, where it holds leading positions, while steadily investing in complementary product offerings. The company develops, manufactures, and distributes dental products, focusing on local injectable anesthetics in different delivery formats (cartridges, vials, ampoules, needles, and topical). It generates most of its revenue from pain management products (77% of estimated 2025 revenue), mainly through its own brands as Septanest, Ultracain and Inibsa (both acquired through previous acquisitions), and private label products. In recent years, Septodont has also invested in products beyond pain management, such as those used in complex settings like dentin restoration, surgeries, and endodontics, which contribute 15% of its sales. The remaining 8% stems from its contract development and manufacturing organization (CDMO) business, under its flagship Novocol, for which it offers services that require cartridge filling, providing fill and finish solutions to its customers. Thanks to its expertise and diverse brands, Septodont holds leading market share positions in dental anesthetics, notably in the U.S., France, and Germany, among others. S&P believes that the company's focus brings a better understanding of its end markets, while its strong brand equity provides higher loyalty from its dental professional customers; hence its leading positions in its core geographies. Septodont benefits from a diverse geographic footprint, backed by well-invested manufacturing sites and a loyal customer base. The company has a well-balanced presence globally, with 47% of its estimated 2025 revenue in North America, notably the U.S. (40%), while Europe represents 34% of revenue. It serves its core markets through its seven own manufacturing sites (two in France, two in Brazil, one in Canada, one in India, and one in Spain), this enables the company to serve its customers locally and limits its reliance on a single manufacturing site per product. Septodont serves its customers directly in France, Belgium, Spain, Portugal, and Columbia. The remaining sales are through distributors either for Septodont's products only or private label. This enables the company a very limited churn rate on distributors, as they have multiyear contracts, with many renewed automatically. S&P said, "We see a bit more contract volatility among direct sales customers, mainly as they are independent dentists, dental support organizations, or hospitals, due to nonannual sales. However, we believe this is widely mitigated by the distributors' sales channel, with which the company has longstanding relationships spanning more than 20 years on average." S&P said, "We view Septodont as benefitting from high barriers to entry, stemming from considerable upfront investments and regulatory hurdles. This is also thanks to solid brand equity linked to the quality of its products and reputation among dental professionals. We also see regulatory hurdles for any new entrants, such as market authorizations and investments in manufacturing capabilities, as a solid barrier, considering that investments must be made three or four years before facility approval, while regulatory approval for a new product or drug would add another four years. We also see customers' loyalty and multiyear relationships limiting opportunities for new entrants, considering that Septodont often acts as a one-stop shop for its customers' supplies in anesthetics and related medical devices. Finally, in our view, Septodont has solid market shares in the mature market of local dental anesthetics, which is relatively limited in terms of end-market addressables, which represent a buffer for new entrants because it enables the company to lead through a focused and specialized approach. "The company is constrained by its limited smaller business scale and size of earnings. We expect revenue to grow by 3%-4% in 2026 and 7.5%-8.5% in 2027, mostly attributed to the full contribution of the Inibsa acquisition, while the existing business will continue to increase sustainably, backed by existing long-term contracts. We believe that Septodont's ability to pass through inflationary costs should support margin expansion. In our view, the group's scale is reflective of the size of its core addressable market, which is estimated at about EUR1.5 billion. Nevertheless, we believe the company will continue to gain market share within its core addressable market, while exploring opportunities to grow in relevant adjacent markets such as CDMO. "We view Septodont's latest acquisition of majority shares of Inibsa as supportive in its long-term strategy in its dental core market, solidifying its position as a dental anesthetics' player. The acquisition closed in October 2024, when Septodont acquired 51% of Inibsa, with the remaining shares acquired by partner Acteon. We believe this acquisition provides further depth to Septodont's dental anesthetics expertise, with an additional manufacturing site in Barcelona, Spain, a more diversified customer base, as Inibsa also operates as a contract manufacturing organization for other dental customers, but also in terms of geographic exposure." Septodont's presence in the CDMO space offers some product diversification, beyond dental anesthetics, and offers further growth opportunities. Through the start-up of the pharmaceutical division at Novocol in 2014, Septodont benefits from a wider addressable market and some diversification away from dental anesthetics. The company manufactures a portfolio of cartridges and syringes from its facility in Cambridge, Canada, where it notably manufactures COVID vaccines for Moderna through a multiyear contract agreement, but also small molecules and peptides for pharmaceutical players. Therefore, Septodont has the ability to develop and produce injectable and semisolid pharmaceuticals, and S&P believes that the company will be expanding further into this market which offers solid growth prospects of 7%-9% compound annual growth rate by 2034 (industry consensus), through internal growth projects, but also through acquisitions, opportunistically, either through manufacturing capabilities or complementary modalities. Septodont has a solid track record of product innovation and launches, supported by its research and development (R&D) capabilities. Although Septodont operates in markets where the active pharmaceutical ingredient (API) expired decades ago, as is the case for the anesthetics molecules (Articaine, Lidocaine, and Mepivacaine) used in its products, it still invests in R&D for improving patients' outcomes and dentists' experience. The company does not hold patents over the APIs, but has patents on its products and brand in the markets where it operates. Thanks to a fully integrated R&D engine embedded in its manufacturing sites in France, Spain, and Canada, Septodont has a track record of launching innovative products, rather than new product development. It aims to increase usability by dentists through shorter times for drugs to release, such as with Buffer Pro (through buffering: neutralizing the acidic pH of traditional anesthetic solutions, which in turns accelerates the onset of anesthesia), and boosting patients' comfort with, for example, better tasting anesthetics (i.e., Flavata--launching in 2026). Solid manufacturing footprint will support growth, but upcoming investments in capacity expansion will slightly constrain cash flow over the next two years. Septodont operates seven manufacturing sites, four of them dedicated to pain management, two to dental therapeutics, and one combining both. It also has four R&D centers worldwide. The company's planned significant capex in 2026-2027 (for site expansions, new lines, including replacement of old lines, etc.) includes maintenance capex of around 5% of revenue to drive manufacturing efficiencies and reduce operating costs. S&P said, "Currently, the company has a high utilization rate throughout its manufacturing plants, which we believe might constrain its ability to capture further market demand. However, despite what we consider to be a capex-intensive business model, we still expect the group to report positive FOCF in 2026 - 2027. Nevertheless, we see some risk if the company underperforms its revenue and EBITDA growth, which could undermine its capex plans and weaken its operational efficiency." Profitable growth, supported by investments, should allow Septodont's S&P Global Ratings-adjusted leverage to stabilize at 3x-4x over the next 18-24 months. S&P said, "We believe that full ownership by the Schiller family ensures operating stability and strategy continuance, and therefore a more disciplined approach to deleveraging and a diligent acquisition strategy. We assume the company will allocate around EUR10 million-EUR15 million to acquisitions per year, to opportunistically seek new assets on the markets, in line with its track record. We forecast our S&P Global Ratings-adjusted leverage to be around 3.0x-3.5x in 2026 and around 4.0x-4.5x in 2027." S&P said, "The stable outlook reflects our view that Septodont is well positioned to maintain a resilient operating performance and grow profitably over the next few years owing to predictable revenue growth from its multiyear contracts across its geographies. We also assume the group will maintain operating cost discipline that will support our S&P Global Ratings-adjusted EBITDA margins to incrementally improve and higher FOCF by the end of 2027. This, alongside a consistent financial policy backed by its family ownership, should translate into Septodont being able to maintain adjusted debt leverage of 3x-4x in 2026-2027. "We could lower our rating on Septodont if its operating performance deviates materially from our base case, such that the group fails to improve its profitability in line with our assumptions, resulting in a significant deterioration in its credit metrics. "Under this scenario, we would observe weaker-than-anticipated FOCF and adjusted leverage sustainably above 5x." This could stem from: -- Operational disruption to production sites that impacts its ability to deliver to its customers; -- Loss of market shares in its core markets (U.S., France, and Spain); -- Nonrenewal or loss of its multiyear contracts; or -- A significant increase in production and distribution costs that Septodont is unable to pass through to customers. S&P could raise the ratings if Septodont demonstrates continuous, profitable growth by seamlessly executing on existing contracts and ability to gain new ones, so that adjusted EBITDA margins rise further, and achieve robust growth by continuous and successful product launches and expansion of its third-party manufacturing (CDMO business). An upgrade would be supported by Septodont developing a track record of strong positive FOCF and demonstrating that it can sustain lower leverage of 3x-4x. ============= G E R M A N Y ============= EPHIOS SUBCO 1: Fitch Rates EUR370MM PIK Notes 'CCC+(EXP)' ---------------------------------------------------------- Fitch Ratings has assigned Ephios Subco 1 S.a.r.L.'s EUR370 million structurally and contractually subordinated payment in kind (PIK) toggle notes a 'CCC+(EXP)' expected subordinated rating with a Recovery Rating of 'RR6'. Fitch has also affirmed Ephios Subco 3 S.a.r.l's (Synlab) Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Proceeds from the notes will be used to refinance EUR370 million of the outstanding EUR400 million PIK loan with the remaining EUR30 million to be amended and extended (A&E) until January 2032 with both to be treated as debt following the A&E. Following the issuance, Fitch-calculated leverage will increase beyond the sensitivities for the 'B' IDR, given Fitch's debt treatment for the new PIK notes. The affirmation of Synlab's ratings is supported by strong visibility of revenue and margin growth through 2027, allowing leverage to ease into the sensitivities over the next 18 to 24 months. Its expectations of neutral to positive free cash flow (FCF) generation, adequate EBITDAR fixed charge coverage and Synlab's ability to deleverage underpin the Stable Outlook. Key Rating Drivers PIK Notes Debt Treatment: Synlab plans to issue new PIK toggle notes of EUR370 million due January 2032 that will be structurally and contractually subordinated to the existing senior secured and unsecured debt. The notes features, mainly the "pay if you can" interest regime subject to a minimum balance sheet cash level restriction, drive Fitch's treatment as debt of the rated entity. Temporary Spike in Leverage: The planned issuance will increase Synlab's gross debt, leading to a deterioration in leverage metrics. Fitch expects Fitch calculated EBITDAR gross leverage to rise to 7.8x (7.4x net) at end-2026, above the negative leverage sensitivity for the 'B' rating. Nevertheless, Fitch expects an improvement in gross leverage to below 7.5x in 2027 and below 7.0x in 2028, driven by Fitch's expectations of organic revenue growth close to 3% annually and modest margin expansion. Fitch expects EBITDAR fixed charge coverage to remain around 1.7x-2.0x during 2026-2029, adequate for the 'B' rating. Its rating case does not factor in faster deleveraging through divestments of non-core countries or portfolio pruning at attractive multiples. However, the Stable Outlook is supported by the financial flexibility these strategic options provide. Fitch understands management intends to pursue these options selectively, as it did in 2025, depending on its ability to divest at attractive valuations. Financial Policy Key to Rating: Any further rise in debt, debt-funded acquisitions or dividend distributions might further pressure the already exhausted leverage headroom, potentially driving negative rating action. The expected deleveraging is driven by the assumed operating performance improvements, but also implies a more conservative financial policy, abstaining from shareholders distributions and potential divestment-led deleveraging. Steady Margin Recovery: Synlab's Fitch-defined EBITDA margin (calculated excluding IFRS16 lease-related expenses) improved in 2025 to 9.7% from 8.9% in 2024 (pro forma for a cyberattack). Fitch forecasts a further gradual rise in margins, supported by the cost optimisation programme, portfolio optimisation focusing on core markets and disposal of non-core assets. Fitch expects the Fitch-defined EBITDA margin to expand towards 11% in 2026, gradually improving towards 13% by 2029. Neutral FCF to Improve: Fitch forecasts marginally negative FCF generation in 2026 due to ongoing capex programmes, high interest expenses and reorganisation costs in some countries. Fitch expects the FCF margin to be slightly positive in 2027 and to gradually improve towards 2.5% in 2029, driven by higher EBITDA and lower capex intensity. Defensive Sector, Reimbursement Pressure: Fitch views lab testing as a defensive and non-cyclical industry. The sector benefits from structurally rising demand, supported by the growing prevalence of preventive and stratified medicine. However, these favourable demand trends are partly offset by ongoing price and reimbursement pressures as national regulators seek to contain healthcare spending. Larger operators such as Synlab are better positioned to benefit from long-term demand growth, given their ability to capture scale efficiencies and gain market share from smaller, less efficient and less focused peers. Diversification Mitigates Regulatory Pressure: Synlab operates across multiple regulated healthcare markets, subject to different pricing and reimbursement dynamics. This mitigates the impact of adverse reimbursement changes in any single country. Synlab's largest markets are France, Germany, Italy and the UK, which together account for around two-thirds of revenue. Certain jurisdictions, such as France, are subject to tight price and volume agreements, while others, particularly in northern and eastern Europe, benefit from greater pricing flexibility through inflation-indexed tariff frameworks. Peer Analysis Synlab compares well with its direct peers in European clinical laboratory services. It is much smaller than higher-rated peers like Quest Diagnostics, Inc. (BBB+/Stable) and Eurofins Scientific S.E. (BBB-/Stable), more concentrated on European market (about 90% of sales) and more exposed to the routine lab-testing market. Quest and Eurofins are more diversified across other diagnostic markets such as environmental and food testing. Nevertheless, Synlab has larger scale than its direct competitors in European clinical laboratory services such as Inovie Group (B/Negative) and Laboratoire Eimer Selas (Biogroup; B/Stable). Synlab also has better geographical diversification than Inovie and Biogroup, which are primarily focused on France. Synlab's Fitch-defined EBITDA margins of 10%-13% are lower than peers due to its geographic mix and associated regulatory reimbursement environment. Nevertheless, Synlab's EBITDAR leverage is better than Inovie and Biogroup's, albeit weaker than higher-rated peers such as Quest Diagnostics and Eurofins. Fitch’s Key Rating-Case Assumptions - Organic sales growth of 2.9% on average for 2026-2029, as volume growth offsets price declines - Revenue to increase by 2.8% in 2026 and in 2027, with further growth of 2.9% in 2028 and 3.5% in 2029 supported by acquisitions in 2029 - EBITDA margins (after IFRS16 lease expenses) to rise to 11% in 2026 with further gradual improvement towards 13% by 2029 - Disposal proceeds of EUR35 million in 2026 - No acquisitions during 2026-2028 followed by EUR50 million acquisitions in 2029, at enterprise value/EBITDA multiple of 10x - Modest working capital inflow in 2026-2027, followed by modest outflows in 2028-2029 - Capex at 4.5% of sales in 2026, followed by 3%-4% during 2027-2029 - Repayment of EUR248 million of the existing PIK loan with a mix of drawn revolving credit facility (RCF) of EUR125 million and available cash on balance - Issuance of new PIK loan of EUR370 million treated as debt in order to refinance EUR370 million of existing PIK loan of EUR400 million; Fitch treats the residual amount of EUR30 million under the rolled and amended existing PIK loan as debt as well - No common dividends paid over 2026-2029 Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (b+, Moderate), Sector Characteristics (bb-, Moderate), Market and Competitive Positioning (bb, Moderate), Diversification and Asset Quality (bb, Higher), Company Operational Characteristics (bb-, Moderate), Profitability (bb-, Moderate), Financial Structure (ccc, Higher), and Financial Flexibility (bb-, Moderate). - The quantitative financial subfactors are based on custom CRT financial period parameters: 20% weight for the historical year 2025, 30% for the forecast year 2026, 30% for the forecast year 2027 and 20% for the forecast year 2028. - B+ to CC considerations apply in its analysis and result in no adjustment. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'a+' results in no adjustment. - The other risk elements adjustment applies and results in an adjustment of 1 notch(es). - The SCP is 'b'. Recovery Analysis The recovery analysis assumes that Synlab would be reorganised as a going concern in bankruptcy rather than liquidated, given its leading market positions, asset-light operations and diversified geographical exposure. Fitch estimates going-concern EBITDA of EUR225 million, which reflects the potential regulatory changes, a failure to improve margins, and an aggressive and poorly executed M&A strategy leading to an unsustainable capital structure. At this EBITDA level Synlab will have an unsustainable capital structure with neutral to negative cash flow generation. Fitch assumes a 10% administrative claim. Fitch uses a 6.0x EBITDA enterprise value multiple to calculate a post-reorganisation valuation, which is comparable with multiplies applied to peers such as Biogroup. This multiple reflects Synlab's geographic breadth and scale as a leader in the European lab-testing market and its cash-generative operations. Fitch assumes Synlab's EUR500 million RCF is fully drawn on default and ranks equally with senior secured loans and notes. Fitch treats the EUR85.5 million term loan B4 (TLB4) issued by Synlab Bondco as subordinated to its senior secured debt, as not guaranteed by any operating subsidiary. The planned new PIK EUR370 million notes are structurally and contractually subordinated to the senior secured and unsecured debt. Its waterfall analysis indicates ranked recovery in the 'RR3' band for the senior secured debt, supporting a 'B+' instrument rating. Ranked recovery for the senior unsecured debt falls in the 'RR6' band, supporting a 'CCC+' instrument rating. The planned subordinated PIK notes also fall in the 'RR6' band, supporting a 'CCC+(EXP)' instrument rating. Fitch does not apply further notching despite the presence of another 'RR6' instrument, as the outstanding under TLB4 is not material, matures in 2027, and the group does not intend to issue new unsecured debt. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDAR leverage above 7.5x on a sustained basis. - EBITDAR fixed-charge coverage below 1.5x on a sustained basis. - Negative or neutral FCF margins beyond 2026. - Absence of like-for-like sales growth, inability to extract synergies and integrate acquisitions, or other operational challenges. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A more conservative and clearly communicated financial policy leading to EBITDAR leverage below 5.5x on a sustained basis. - EBITDAR fixed-charge coverage above 2.0x on a sustained basis. - Strengthening FCF margins in the low-single digits on a sustained basis. Liquidity and Debt Structure At end-2025 Synlab's Fitch-defined readily available cash (net of restricted cash of EUR50 million) was EUR265 million. This is sufficient to cover expected marginally negative FCF of EUR10 million in 2026. The group does not have any material upcoming maturities except for its EUR85 million TLB due in July 2027. The liquidity position is also supported with an available committed EUR500 million RCF due in October 2030, which has been partly drawn by around EUR125 million to repay EUR248 million of the existing EUR648 million PIK loan. Available cash of EUR123 million was used to redeem the existing PIK loan. The group is planning to issue EUR370 million PIK toggle notes with a term of 5.5 or 6 years, which Fitch treats as debt and that will be used to redeem the existing EUR370 million PIK loan. The group's sources of funding mainly consist of EUR1.3 billion TLB due April 2031 and EUR450 million senior secured notes due January 2031. The group repriced its TLB due April 2031 in February 2026 and partly repaid its TLB due July 2027 with EUR85 million currently outstanding. The group also repriced its RCF in April 2026, which together with TLB repricing resulted in about 150bp savings since the take-private transaction. Issuer Profile Synlab is one of Europe's largest providers of medical diagnostic testing services. It runs operations in around 40 countries, with a predominant focus on France, Germany, Italy and the UK. Summary of Financial Adjustments Fitch restricts EUR50 million from readily available cash. Fitch-defined EBITDA deducts IFRS16 lease expenses, calculated as depreciation of right-of-use assets plus interest on lease borrowings. Fitch decided to adjust the reported lease liability to calculate the EBITDAR leverage ratios. Fitch's lease-equivalent debt was calculated using a capitalisation multiple of 5.5x to Fitch-defined lease expenses of EUR104 million for 2025. Fitch-defined lease expenses were calculated as 60% of IFRS16 lease expenses, representing the approximate share of leases related to real estate. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of its Climate.VS screener did not indicate an elevated risk for Ephios Subco 3 S.a.r.l. ESG Considerations Ephios Subco 3 S.a.r.l has an ESG Relevance Score of '4' for Exposure to Social Impacts due to increased risks of tightening regulation that may constrain its ability to maintain operating profitability and cash flow. This has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Ephios Subco 3 S.a.r.l LT IDR B Affirmed B senior secured LT B+ Affirmed RR3 B+ Synlab Bondco PLC senior unsecured LT CCC+ Affirmed RR6 CCC+ Ephios Subco 1 S.a.r.l. subordinated LT CCC+(EXP) Expected Rating RR6 TK ELEVATOR: Fitch Puts 'B' Long-Term IDR on Watch Positive ----------------------------------------------------------- Fitch Ratings has placed TK Elevator Holdco GmbH's (TKE) Long-Term Issuer Default Ratings (IDR) of 'B' and senior secured debt rating of 'B+' with a Recovery Rating of 'RR3', on Rating Watch Positive (RWP) following the announcement of TKE's acquisition by KONE Oyj (not rated). The RWP reflects the potential for a multi-notch upgrade of TKE's ratings after transaction completion, which will create a global leader benefiting from large scale, broad global presence and high share of recurring service revenue. The enlarged group's improved credit profile will be supported by KONE's strong financial structure and the proposed cash and share-based offer to TKE's shareholders. Resolution of the RWP is expected in 2Q27 at the earliest as transaction closing is subject to regulatory approvals. Fitch may upgrade the ratings before the transaction closes if TKE continues to perform in line with its current rating case and meets its positive rating sensitivities on a standalone basis. Key Rating Drivers Transaction To Create Global Leader: The combination of KONE and TKE will create the world's largest elevator company, with KONE's strong market position in Asia complemented by TKE's strong footprint in North America. Fitch expects the transaction to face intense regulatory scrutiny. This may lead to remedial requirements including asset disposal, and significantly delay transaction closing and RWN resolution. Until then TKE remains a standalone business and the rating reflects that. Fitch expects that integration of TKE into KONE's operations will create a combined group with materially stronger business and financial profiles, possibly with investment grade characteristics, compared with standalone TKE. Sustainable Leverage Improvement: On a standalone basis, Fitch forecasts continuous improvement in TKE's EBITDA gross leverage to 6.0x at FYE26 and a further decrease to 5.6x at FYE28, below its positive rating sensitivity. This will primarily be driven by robust EBITDA growth to above EUR1.5 billion in FY26-FY27 on 2%-3% revenue growth, and margin improvement due to an increasing share of modernisation and services operations and cost optimisation. Its assumptions reflect TKE's 2QFY26 results and TKE's limited exposure to risks from the Iran conflict. The ability to maintain healthy margins without a material increase in debt will strengthen TKE's rating positioning and may support an upgrade in the next 12 months. FCF to Turn Positive: Fitch expects the company's FCF margin to turn positive in FY26 at 2.7%, after -0.8% in FY25, and to trend towards 3.5% in FY27-FY28, above its positive rating sensitivity. This will be driven by a rise in underlying earnings, order intake growth in TKE's markets (with new installations also growing), manageable capex, the lack of dividend or other shareholder payments and declining restructuring cash costs. The improvement in FCF generation will also be driven by reduced interest expenses following recent refinancings, alongside its expectations of lower base rates until FY28. EBITDA Margin Upside: Fitch expects TKE to maintain high EBITDA margins with cost-cutting measures and a higher share from the more profitable services and modernisation divisions (65% of total revenue in FY25 versus 57% in FY22). Its rating case assumes healthy EBITDA margins of 16.5% to FY28, supported by increasing exposure to more profitable markets in the Americas (57% of EBITDA in the last 12 months to December 2025). A successful turnaround of its German manufacturing business, driven by a product-mix shift towards the EOX elevator model, and leaner overall production with much lower human capital should aid further deleveraging. Good Market Position: TKE's position, scale and broad service network provide it with an advantage over many competitors, while its global footprint helps streamline its cost structure. TKE is number four globally in the elevator industry, with a market share of 13%. About two-thirds of the global market is represented by four companies. Limited Business Profile: TKE's business profile is constrained by its narrow product range and end-customer exposure, relative to many other diversified industrials companies. It makes and services elevators and is partly dependent on property construction cycles. This is offset by a strong maintenance business that is resilient in economic cycles and the good geographic diversification of its business, which limits the effects of cyclicality in the property sector. Peer Analysis TKE's cash flow is lower than that of direct peers, such as OTIS Worldwide Corporation, Schindler Holding Limited and KONE Oyj, all of which benefit from more streamlined cost structures. Other high-yield diversified industrials issuers, such as INNIO Holding GmbH (B+/Stable) and Ammega Group B.V. (B-/Negative), which specialise in a fairly narrow range of products, have also shown better cash flow generation. TKE's gross leverage (forecast at 6.0x at FYE26) is higher than that of most similarly rated peers over the medium term, despite Fitch's expectations of deleveraging. Higher-rated INNIO's leverage is expected to decline to 4.8x at end-2026 from 5.0x at end-2025. Fitch expects gross leverage at lower-rated Ammega to reduce to 8.2x in 2026 from 8.7x in 2025, which remains above its downgrade sensitivity of 7.5x. TKE has a superior business profile than these peers, with much greater scale and global diversification, and a stronger market position. It is also less vulnerable to economic cycles and shocks, as seen in recent downturns. Fitch’s Key Rating-Case Assumptions - Revenue to increase by 2.1% in FY26, 2.6% in FY27, 3% in FY28 and 2.9% in FY29 - EBITDA margin at 16.2% in FY26 and 16.4% in FY27 before edging slightly higher to 16.5% in FY28-FY29 on cost-cutting and price increases - Capex at 2.3% of revenue in FY26, due to EOX portfolio implementation, before slightly decreasing to 2.2% to FY29 - Restructuring-related cash costs at EUR100 million in FY26, before moderating to EUR50 million in FY27-FY28 - No dividend or other shareholder payments Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (bb+, Lower), Sector Characteristics (bbb, Higher), Market and Competitive Positioning (bbb+, Moderate), Diversification and Asset Quality (bbb-, Moderate), Company Operational Characteristics (bbb-, Moderate), Profitability (bbb, Moderate), Financial Structure (b-, Higher), and Financial Flexibility (b+, Moderate). - The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027. - B+ to CC considerations apply in its analysis and result in an adjustment of -1 notch. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'a' results in no adjustment. - The SCP is 'b'. Recovery Analysis Fitch's recovery analysis follows its bespoke approach for issuers rated 'B+' and below and found that a going-concern (GC) valuation would yield higher realisable values in distress than liquidation. This reflects the globally concentrated market of elevator manufacturers, where the top four companies have an almost 70% total market share. TKE holds the number four position, with a robust business profile, sustainable cash flow generation capacity, a defensible market position and products that are strongly positioned in the global market. Its assumption of the GC EBITDA of EUR1 billion continues to result in persistently negative FCF, effectively representing a post-distress cash flow proxy for the business to remain a GC. TKE would deplete internal cash reserves, due to less favourable contractual terms with customers, to help rebuild its order book after restructuring. Fitch applies a 6.0x distressed multiple to EBITDA to estimate total enterprise valuation (EV) of EUR6 billion. This reflects TKE's leading market position, high recurring revenue base and international manufacturing and distribution diversification. Fitch treats its factoring line as priority debt, which is deducted from the EV. The EV is further reduced by 10% for administrative claims, after which the remaining value is distributed to holders of first-lien secured debt totalling EUR9.3 billion (including a fully drawn EUR1 billion revolving credit facility; RCF). Fitch excludes local facility of EUR335 million from the waterfall analysis as it is cash collateralised, but Fitch includes TKE's EUR245 million unsecured (working-capital) loans in China as priority debt. Its waterfall analysis generated a ranked recovery in the 'RR3' band, indicating a 'B+' instrument rating (a notch higher than the 'B' IDR) for the senior secured debt including term loans B and senior secured notes issued by TK Elevator Midco GmbH and TK Elevator U.S. Inc. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Cancellation of the transaction would likely lead to affirmation of the ratings and removal from RWP On a standalone basis: - EBITDA leverage above 7.5x - EBITDA margin below 12% - FCF margin consistently neutral to negative - EBITDA interest coverage below 2.0x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - KONE's acquisition of TKE would likely lead to a multi-notch upgrade for the combined entity and removal from RWP On a standalone basis: - EBITDA leverage below 6.0x - FCF margin above 3% - EBITDA interest coverage above 3.0x Liquidity and Debt Structure TKE had EUR466 million of reported cash and short-term financial investments as of 31 March, 2026, 1% of which Fitch treats as restricted for intra-year operating needs. Its EUR1 billion RCF maturing in 2030 was undrawn. Fitch assesses TKE's liquidity as comfortable over FY26-FY29, based on its undrawn RCF and projected positive FCF margins of about 3% in FY26-FY28, supported by lower cash interest cost, capex and restructuring costs, plus a lack of dividend payments. Issuer Profile TKE's product portfolio includes passenger and freight elevators, escalators and moving walkways, passenger boarding bridges, chair and platform lifts, which is complemented by a recurring, largely resilient, service and modernisation business. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of its Climate.VS screener did not indicate an elevated risk for TKE. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- TK Elevator Holdco GmbH LT IDR B Rating Watch On B TK Elevator U.S. Newco, Inc. senior secured LT B+ Rating Watch On RR3 B+ TK Elevator Midco GmbH senior secured LT B+ Rating Watch On RR3 B+ TMD FRICTION: Fitch Assigns BB-(EXP) Long-Term IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has assigned TMD Friction Group GmbH (TMD) an expected Long-Term Issuer Default Rating (IDR) of 'BB-(EXP)'. The Outlook is Stable. Fitch has also assigned TMD an expected senior secured instrument rating of 'BB+(EXP)' with a Recovery Rating of 'RR2'. The rating reflects TMD's resilient aftermarket-focused business model, strong profitability and solid FCF generation, which support manageable releveraging following the proposed bond issuance. These strengths are balanced against TMD's small scale, narrow product offering and concentration by geography, which limit its positioning relative to larger and more diversified automotive suppliers. The final ratings are subject to the proposed refinancing execution in line with terms presented to Fitch. Key Rating Drivers Narrow Business Model: TMD's business model is narrowly focused relative to both large tier 1 automotive suppliers and more diversified brake system specialists. TMD has sound technical expertise but its in-house manufacturing is limited to brake friction products, primarily pads and linings, while discs, drums and brake shoes are sourced from third parties. As a result, TMD's product offering and technological scope are limited, which constrains its positioning in the automotive supply chain. In original equipment manufacturer (OEM) activities, the company typically operates as a tier 2 supplier, limiting its strategic relevance relative to larger and more diversified peers. Small and Concentrated Business Profile: With revenue of approximately EUR800 million in 2025, TMD is the smallest issuer among Fitch-rated auto suppliers. Its business profile is further constrained by geographic concentration. While globally present, Europe accounted for a significant amount of revenue in 2025. As a result, despite the relative defensiveness of its aftermarket-focused business model, in its view, TMD is more exposed to external shocks than larger auto suppliers with broader product diversification and wider geographic reach. Aftermarket Exposure Supports Resilience: TMD's business profile benefits from its significant exposure to the automotive aftermarket, which typically provides more stable demand and higher margins than the OEM segment. In FY25, close to 70% of revenue was generated from replacement activities, including original equipment service (OES). Demand for brake pad replacement is largely driven by vehicle usage rather than discretionary spending, supporting a comparatively resilient demand profile. In addition, replacement sales generally carry higher margins, reflecting the lower bargaining power of independent distributors relative to OEM customers. Strong Profitability, Cash Flow Generation: With Fitch-adjusted EBITDA/EBIT margins slightly above 13%/10% in 2025, TMD's profitability is strong and in line with the sector high investment grade medians. Cash flow has benefited from low Capex and net working capital intensity and a modest cash interest burden. Fitch expects moderate profitability improvement from structural measures, like production relocation in best-cost countries and better fixed-cost absorption. Despite higher cash interest expense from the new bond issuance, TMD's FCF margin is expected to remain among the strongest in the Fitch-rated auto suppliers, assuming no additional ordinary dividends. Manageable Releveraging: The proposed bond issuance will increase TMD's leverage from a debt-free position at end-2025, aside from some off-balance sheet factoring usage. Fitch expects the new bond to result in EBITDA gross leverage of about 3.0x, broadly consistent with a low 'BB'/high 'B' financial profile under Fitch's rating criteria for auto suppliers. However, EBITDA net leverage is expected to remain below 1.0x, supported by cash overfunding from the transaction. In the absence of M&A, Fitch expects TMD's solid cash generation to support sound deleveraging capacity. Established Niche Supplier: TMD is a well-established niche supplier with long-standing customer relationships and recognised technical expertise. At end-2025, most customer relationships had lasted more than 25 years, including more than 30 years with German OEMs. The company's product portfolio ranges from premium to budget brake pads and covers around 99.5% of the European car parc. TMD's technical capabilities also reflect its expertise in brake-friction formulations and development of a portfolio compliant with Euro 7 requirements, which for the first time introduce limits on brake particle emissions. Peer Analysis TMD compares less favourably with similarly rated peers such as Tenneco LLC (B/Positive) and Benteler International Austria GmbH (BB-/Stable) in terms of scale, geographic reach and product diversification. Its business profile is constrained by its small size and narrow product scope, as well as a stronger concentration in Europe. However, TMD benefits from high aftermarket exposure, which supports business resilience and aligns it more closely with higher-rated issuers such as Pirelli & C. SpA (BBB/Stable), Continental AG (BBB/Positive) and Compagnie Generale des Etablissements Michelin (A/Stable), all of which benefit from replacement-driven demand. TMD's profitability and cash flow generation are strong relative to the Fitch-rated auto supplier universe. Double-digit EBIT margins compare favourably not only with tyre manufacturers, but also with Garrett Motion Inc. (BB/Stable), reflecting TMD's defensive business mix, low capital intensity and established market position. Following the transaction, Fitch expects leverage to increase to a level slightly above Garrett's, but to remain manageable for the rating. Strong FCF generation should support good deleveraging prospects. Fitch’s Key Rating-Case Assumptions - 2026-2028 sales CAGR of 4.1% driven by favourable volumes and pricing development, especially in the aftermarket business - Fitch-adjusted EBIT margin to improve towards 14%, supported by cost actions undertaken and improved fixed cost absorption - NWC/sales investments at 1.1% between 2026 and 2029 led by business growth - Capex at about 30 million p.a. - In line with the proposed transaction, Fitch assumes EUR230 million dividend in 2026 and no common dividend thereafter - Fitch assumes no M&A in its forecasts Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (bbb-, Lower), Sector Characteristics (bb, Moderate), Market and Competitive Positioning (b+, Higher), Diversification and Asset Quality (bb, Moderate), Company Operational Characteristics (bb, Moderate), Profitability (a-, Moderate), Financial Structure (bb-, Moderate), and Financial Flexibility (bbb-, Lower). - The quantitative financial subfactors are based on custom CRT financial period parameters: 20% weight for the forecast year 2026, 40% for the forecast year 2027 and 40% for the forecast year 2028. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'a' results in no adjustment. - The SCP is 'bb-'. To derive the IDR: - No other consideration was applied. Recovery Analysis The proposed secured debt rating benefits from an uplift of two notches above the IDR, reflecting its criteria for recovery ratings in the 'BB' category. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBIT margin below 5% - FCF margin below 0.5% - EBITDA leverage above 3.0x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA leverage below 2.5x - Increase in scale, with sales above EUR 1 billion Liquidity and Debt Structure At YE25, TMD reported EUR128 million cash and equivalents. Fitch considers about EUR20 million to be not immediately available for operational needs (approximately 2.5% of sales). Pro forma reported cash declined to EUR108 million in January 2026, following a EUR20 million dividend distribution. Along with the new bond, TMD intends to raise EUR35 million super senior RCF which, along with the excess cash left after the dividend payment, will provide a significant cash buffer to the group. The company's capital market access will be tested with the note's issuance. At YE25, TMD had no reported financial debt and only off-balance sheet factoring. Issuer Profile TMD Friction Group GmbH manufactures brake friction materials for passenger cars and commercial vehicles. The company develops and produces disc brake pads and linings supplied to OEMs, OESs and the independent aftermarket. Date of Relevant Committee 29-Apr-2026 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The Climate.VS for 2035 is 51 out of 100. This reflects a VSp of 20 and a VSt of 50, suggesting elevated exposure to climate-related risks. This is primarily driven by TMD's exposure to the global automotive sector, which faces evolving emissions regulation and technological change. However, TMD's product portfolio is more insulated from powertrain transition risk than many traditional automotive suppliers, as brake friction products are required for internal combustion engine, hybrid and battery electric vehicles. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- TMD Friction Group GmbH LT IDR BB-(EXP) Expected Rating senior secured LT BB+(EXP) Expected Rating RR2 TMD FRICTION: S&P Assigns Preliminary 'B+' ICR, Outlook Stable -------------------------------------------------------------- S&P Global Ratings assigned its preliminary 'B+' long-term issuer credit rating to TMD Friction Group GmbH (TMD) and its preliminary 'B+' issue-level rating to TMD's proposed senior secured notes. The stable outlook reflects our expectation that TMD will continue to generate steady FOCF of at least EUR20 million per year and gradually deleverage below 4.5x in 2027 with adjusted EBITDA margins of 14%-15%, as well as controlled capital expenditure (capex) and working capital investments. TMD Friction Group GmbH (TMD) produces brake pads and linings for passenger cars (PCs) and commercial vehicles (CVs), with a large exposure to the independent aftermarket (IAM). The group is 100% owned by private investment firm Aequita SE & Co. KGaA (Aequita). We anticipate that the group's S&P Global Ratings-adjusted EBITDA margin will grow to about 13.7% in 2026 and 14.6% in 2027, from 12.6% in 2025, mainly thanks to its cost-savings initiatives and the ability to pass on some raw material cost increases to customers, offsetting likely subdued volumes. S&P said, "TMD plans to issue EUR300 million of senior secured notes to fund a EUR200 million distribution to its shareholder, which we estimate will increase its adjusted debt to EBITDA to 4.6x in 2026, from 2.0x as of year-end 2025. At the same time, we expect it will maintain ample liquidity, robust interest coverage ratios, and free operating cash flow (FOCF) above EUR20 million through 2027." TMD Friction Group GmbH's (TMD's) sizable IAM and CV sales partly offset its product and geographic concentration. With revenue of EUR792 million in 2025, the group generates the bulk of its sales from brake pads. Its revenue stems primarily from Europe (68% in 2025), followed by South America and North America (15%), Asia (13%), and the Middle East and North Africa (MENA, 4%) region. TMD is the third largest supplier of original equipment (OE) brake pads in the region, with a total market share of 10%-15% behind industry leader ITT Inc. (55%-60%) and Tenneco LLC (20%-25%). The group is a longstanding supplier of all German premium brands, and S&P Global Ratings estimates that these brands represent close to 30% of TMD's total OE sales for PCs. Its share in the European IAM is lower at 5%-10%, reflecting higher market fragmentation and the group's position on higher-quality products through its core brand, Textar. Overall, about 53% of its sales are generated in the IAM, which S&P views as a strength given the stronger stability of this channel compared with cyclical OE production. In addition, about 35% of the group's OE sales stem from CV production, which provides additional diversification. S&P said, "We anticipate that TMD will maintain high cash balances and strong interest coverage ratios after its dividend recapitalization. Following the group's planned EUR200 million debt-funded dividend, we expect adjusted debt to EBITDA will increase to 4.6x in 2026, from 2.0x in 2025. Apart from the proposed EUR300 million notes, our EUR500 million of adjusted debt as of the end of 2026 includes EUR124 million of trade receivables sold in factoring programs (with EUR80 million sold in the supply chain financing programs of large IAM distributors), EUR46 million of unfunded pension obligations, and EUR30 million of lease liabilities. In line with our methodology, we do not net cash in our credit metrics calculation. That said, we view favorably the group's ample liquidity, mainly reflecting a high cash balance of about EUR200 million after the secured notes issuance and an undrawn EUR35 million revolving credit facility (RCF). This could fund tuck-in acquisitions or strategic capex to support the group's earnings base. We also project that TMD will maintain funds from operations (FFO) cash interest coverage of at least 3x pro forma the transaction. This supports our 'B+' issuer credit rating on TMD. "TMD's operating initiatives support its profitability amid difficult market conditions. We anticipate that the group's adjusted EBITDA margin will continue to grow to 13.7% in 2026, from 12.6% in 2025 and 10.5% in 2024, thanks to additional cost savings. The group has recently closed some of its higher-cost plants in Germany and France while increasing production in best-cost countries including Romania, Brazil, and China, with about 50% and 62% of its OE and IAM production now located in countries with these cost advantages. TMD targets further savings from increased outsourced production, including for its Mintex brand, which serves the mass segment of the IAM. We expect these initiatives will offset muted volume growth in 2026 stemming from weak European auto production and uncertainty from the Middle East conflict. For 2027, we expect TMD's adjusted EBITDA margin will improve to 14.6%, mainly because restructuring costs will fall to about EUR7 million from EUR13 million in 2026. This should support some reduction in TMD's debt to EBITDA toward 4.2x. "We expect cost inflation will have a limited effect on TMD's 2026 margins. Indexation clauses in OE contracts should allow TMD to offset a good portion of the ongoing raw material inflation to its customers, albeit with a potential lag, while energy costs are hedged by a 10-year purchase price agreement for all its electricity needs in Germany. On the IAM channel, the group has a track record of passing on cost inflation via price increases, notably for its premium brand Textar. We estimate material costs accounted for 49% of TMD's total costs in 2025, followed by factory and other production (29%); selling, general, and administrative (18%); and research and development (4%). Main raw materials include steel, copper, tin as well as resin, rubber-based components, and other specialty chemicals. "We forecast healthy FOCF, despite higher interest expenses and strategic investments. We think adjusted annual FOCF will stay above EUR20 million in 2026-2027 after the EUR57 million generated in 2025, even with higher cash interest expenses of about EUR30 million per year and ongoing investments. In addition, we forecast working capital outlays of EUR10 million-EUR15 million per year in 2026-2027 amid cost inflation and as TMD repositions its Mintex and Pagid brands toward the mass and premium segments, respectively. Ongoing production relocations and new OE projects indicate that capex will stay relatively high in 2026, at EUR35 million (4.4% of sales) from about EUR32 million in 2025 (4.1%). Our base case assumes lower capex of EUR29 million in 2027 (3.5%) on reduced project spending, although this remains above TMD's historical maintenance capex levels of EUR20 million-EUR22 million (2.5%-2.7%). "TMD will likely use some of its additional cash to fund bolt-on acquisitions and organic growth. We estimate the group's pro forma cash balance of about EUR200 million results in sizable financial flexibility for potential tuck-in acquisitions in its core European market or in new regions where it is less present, such as the U.S. (less than 3% of total sales in 2025)." The group plans to consolidate its existing Chinese operations into one single site in Pinghu by 2028 to increase production capacity and generate cost savings. Our base case assumes total growth and project capex of EUR5 million-EUR10 million per year through 2027 but no acquisition spending and associated earnings contribution. Regenerative braking is unlikely to have a material effect on TMD's sales in the near to medium term. Significantly lower tear on braking systems in battery electric vehicles (BEVs) and plug-in-hybrid electric vehicles (PHEVs) could lead to longer replacement cycles and lower aftermarket demand as the adoption of electrified vehicles increases. However, the European car parc average age remains elevated and is still increasing (to 12.7 years based on the 2026 ACEA report, compared with 12.3 years in 2024), and S&P thinks this is likely to mitigate any potential impact. Also, the safety-critical nature of brake pads means they could still be replaced regularly during routine inspections. In addition, the much slower powertrain transition on the CV market should shield TMD's aftermarket revenue in this segment. S&P said, "We consider Aequita as a financial sponsor. This reflects the relatively aggressive financial strategy followed by the group with the proposed dividend recapitalization that will lead to a material releveraging of its balance sheet. However, we acknowledge that Aequita has a slightly different profile from pure private equity firms because it invests its proprietary capital only and does not manage the assets of third-party investors. It is also targeting a longer investment horizon than traditional private-equity firms. Aequita made its investment in TMD through common equity, with no remaining shareholder loan in the ownership structure pro forma the planned transaction. We understand that all Aequita's different investments in the automotive and industrial sectors (about 30% and 70% of total, respectively) are managed independently from each other, with no cross-default clauses. "The final rating will depend on the company's successful notes issuance. We expect TMD to issue EUR300 million of senior secured notes, of which EUR200 million will be allocated to a dividend distribution to Aequita and the remainder to cash on balance sheet and transaction expenses. The final rating will depend on our receipt and satisfactory review of all final transaction documentation. If S&P Global Ratings does not receive final documentation within a reasonable time frame, or if final documentation departs from materials reviewed, it reserves the right to withdraw or revise the ratings. Potential changes include, but are not limited to, utilization of the new notes proceeds; maturity, size, and conditions of the instruments; financial and other covenants; security; and ranking. "The stable outlook reflects our expectation that TMD will continue to generate steady FOCF of at least EUR20 million per year and gradually deleverage below 4.5x in 2027 thanks to adjusted EBITDA margins of 14%-15% in 2027 as well as controlled capex and working capital investments. "We could lower our rating on TMD if we expect its adjusted debt to EBITDA will increase above 5x or if it does not maintain FOCF to debt at about 4%-5% by 2027 and beyond. This could stem from setbacks in its cost-savings initiatives, meaningful increases in capex and working capital investments, or if Aequita adopts a more aggressive financial policy. "Although unlikely in the short term, we could raise our rating on TMD if we think it can generate FOCF to debt of at least 10% while maintaining adjusted debt to EBITDA of well below 4x. This could happen if the group's profitability improvements materially exceed our expectations and it reduces its capital intensity. An upgrade would also be contingent on TMD's financial sponsor committing to keep leverage at much lower levels than anticipated." ============= I R E L A N D ============= BAIN CAPITAL 2026-1: S&P Assigns B- (sf) Rating to Class F Notes ---------------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Bain Capital Euro CLO 2026-1 DAC's A Loan and class A, B, C, D, E, and F notes. At closing, the issuer also issued EUR29.40 million unrated subordinated notes. The reinvestment period will be approximately 4.5 years, while the non call period will be 1.5 years after closing. Under the transaction documents, the rated notes and loan will pay quarterly interest unless a frequency switch event occurs. Following this, the notes and loan will switch to semiannual payments. The ratings assigned to the notes and loan 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 and loan through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,679.97 Default rate dispersion 558.42 Weighted-average life (years) 4.97 Obligor diversity measure 169.77 Industry diversity measure 23.04 Regional diversity measure 1.22 Transaction key metrics Total par amount (mil. EUR) 400 Defaulted assets (mil. EUR) 0 Number of performing obligors 196 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.46 Target 'AAA' weighted-average recovery (%) 36.33% Actual weighted-average spread net of floors (%) 3.53 Actual weighted-average coupon (%) 4.90 Rating rationale S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. "The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400.00 million target par amount, the actual weighted-average spread of 3.53%, the actual weighted-average coupon of 4.90%, and the target weighted-average recovery rates. 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. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "Under our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's legal structure and framework is bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B to D notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase starting from the effective date, during which the transaction's credit risk profile could deteriorate, we capped our ratings assigned to the notes." The class A Loan, A and E notes can withstand stresses commensurate with the assigned ratings. The class F notes' current BDR cushion is negative at the assigned rating. Nevertheless, based on the portfolio's actual characteristics and additional overlaying factors, including our long-term corporate default rates and recent economic outlook, S&P believes this class can sustain a steady-state scenario, in accordance with our criteria. S&P's analysis further reflects several factors, including: -- The class F notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- S&P's model-generated portfolio default risk, which is at the 'B-' rating level at 23.50% (for a portfolio with a weighted-average life of 4.97 years) versus 15.90% if it was to consider a long-term sustainable default rate of 3.2% for 4.97 years. -- Whether the tranche is vulnerable to nonpayment in the near future. -- If there is a one-in-two chance for this tranche defaulting. -- If S&P envisions this tranche defaulting in the next 12-18 months. S&P said, "Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with the assigned 'B- (sf)' rating. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for all rated classes of notes and the class A Loan. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have included the sensitivity of the ratings on the class A to F notes and A Loan, 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 exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Bain Capital Euro CLO 2026-1 DAC is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by speculative-grade borrowers. Bain Capital Credit CLO Management III (DE), LP manages the transaction. Ratings Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate§ A AAA (sf) 195.00 38.00 Three/six-month EURIBOR plus 1.27% A Loan AAA (sf) 53.00 38.00 Three/six-month EURIBOR plus 1.27% B AA (sf) 44.00 27.00 Three/six-month EURIBOR plus 2.05% C A (sf) 25.00 20.75 Three/six-month EURIBOR plus 2.50% D BBB- (sf) 27.00 14.00 Three/six-month EURIBOR plus 3.35% E BB- (sf) 18.00 9.50 Three/six-month EURIBOR plus 6.40% F B- (sf) 12.00 6.50 Three/six-month EURIBOR plus 7.45% Sub notes NR 29.40 N/A N/A *The ratings assigned to the A Loan, and class A, and B notes address timely interest and ultimate principal payments. Our ratings address ultimate interest and principal payments on the rest of the other rated notes. §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. CIMPRESS PLC: S&P Rates New $1.1BB Senior Secured Term Loan 'BB' ---------------------------------------------------------------- S&P Global Ratings assigned its 'BB' issue-level rating and '2' recovery rating to Cimpress PLC's proposed $1.1 billion senior secured term loan due 2033 and $250 million revolving credit facility due 2031. The '2' recovery rating indicates its expectation for substantial (70%-90%; rounded estimate: 85%) recovery in the event of a payment default. The company intends to use the proceeds from this issuance to refinance its existing debt. Cimpress modestly raised its fiscal-year 2026 (ending June 2026) guidance on its third-quarter earnings call to reflect its strong operating performance, with the company reporting revenue and adjusted EBITDA growth of about 10% and 9%, respectively, through the first three quarters of the year. S&P said, "We expect Cimpress will improve its S&P Global Ratings-adjusted debt to EBITDA to the mid-3x area in fiscal year 2026 on solid revenue and EBITDA growth stemming from a continued robust performance in its elevated product categories. We also believe the company will continue to reduce its net leverage toward its 2.5x target (about 3.0x on an S&P Global Ratings-adjusted basis) in fiscal years 2027 and 2028, while integrating its recently announced acquisition of the SAXOPRINT and viaprinto businesses from CEWE Stiftung & Co. KGaA, as its investments in its technology and production capabilities further expand its revenue and EBTIDA margin. That said, we believe any additional leverage reduction will depend on Cimpress' capital-allocation decisions." Issue Ratings--Recovery Analysis Key analytical factors -- S&P's simulated default contemplates a deterioration in economic conditions that causes small- and microbusinesses to postpone their marketing spending, as well as financial stress from a mistimed debt-financed acquisition. -- S&P expects Cimpress would reorganize in a default scenario and anticipate its lenders would benefit from its diverse customer base, brand presence, and operational and marketing capabilities. -- Cimpress' debt capitalization comprises the proposed $250 million senior secured revolving credit facility due 2031, the proposed $1.1 billion senior secured term loan B due 2033, and $525 million of 7.375% senior unsecured notes due 2032. -- The senior secured debt is secured by a lien on substantially all the co-borrowers' and guarantors' capital stock and tangible and intangible property. The first-lien credit facility, comprising the term loans and the revolver, benefits from a first-priority claim on the collateral. S&P notes that the company derives approximately 16% of its consolidated EBITDA from nonguarantors. -- S&P uses a 6x EBITDA multiple to value Cimpress, which is higher than the multiples it uses to value other printing companies such as Quad/Graphics Inc. and R.R. Donnelley & Sons Co. The higher multiple reflects the company's scale and price leadership in its mass customization capabilities, as well as the favorable dynamics supporting its Upload and Print business that are comparable with the secular headwinds in its traditional print segments. Simulated default assumptions -- Simulated year of default: 2030 -- EBITDA at emergence: $224 million -- EBITDA multiple: 6x -- The revolving credit facility is 85% drawn at default -- Estimated nonguarantor EBITDA contribution at default: 16% Simplified waterfall -- Net enterprise value (after 5% administrative costs): $1.274 billion -- Value available to first-lien debt claims: $1.071 billion -- Secured first-lien debt claims: $1.316 billion --Recovery expectations: 70%-90% (rounded estimate: 85%) -- Value available to unsecured debt claims: $204 million -- Total unsecured claims: $544 million --Recovery expectations: 10%-30% (rounded estimate: 25%) PALMER SQUARE 2026-1: Moody's Assigns Ba3 Rating to EUR23MM E Notes ------------------------------------------------------------------- Moody's Ratings announced that it has assigned the following definitive ratings to the notes issued by Palmer Square European Loan Funding 2026-1 Designated Activity Company (the "Issuer"): EUR340,000,000 Class A Senior Secured Floating Rate Notes due 2035, Definitive Rating Assigned Aaa (sf) EUR45,500,000 Class B Senior Secured Floating Rate Notes due 2035, Definitive Rating Assigned Aa1 (sf) EUR27,300,000 Class C Senior Secured Deferrable Floating Rate Notes due 2035, Definitive Rating Assigned A2 (sf) EUR25,700,000 Class D Senior Secured Deferrable Floating Rate Notes due 2035, Definitive Rating Assigned Baa3 (sf) EUR23,000,000 Class E Senior Secured Deferrable Floating Rate Notes due 2035, Definitive Rating Assigned Ba3 (sf) RATINGS RATIONALE The rationale for the rating is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodologies. The Issuer is a static cash flow CLO. The issued notes are collateralized primarily by broadly syndicated senior secured corporate loans. The portfolio is fully ramped up as of the closing date and comprises of predominantly corporate loans to obligors domiciled in Western Europe. Palmer Square Europe Capital Management LLC ("Palmer Square") may sell assets on behalf of the Issuer during the life of the transaction. Reinvestment is not permitted and all sales and principal proceeds received will be used to amortize the notes in sequential order. In addition to the five classes of notes rated by us, the Issuer has issued EUR39.9m of Subordinated Notes which are not rated. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology underlying the rating action: The principal methodology used in these ratings was "Collateralized Loan Obligations" published in April 2026. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' 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 notes' performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Moody's methodologies. Moody's used the following base-case modeling assumptions: Par Amount: EUR500.3m Diversity Score: 61 Weighted Average Rating Factor (WARF): 2704 Weighted Average Spread (WAS): 3.37% Weighted Average Coupon (WAC): 3.46% Weighted Average Recovery Rate (WARR): 44.03% Weighted Average Life (WAL): 4.65 years PHOENIX AVIATION: Fitch Hikes Long-Term IDR to 'B+', Outlook Stable ------------------------------------------------------------------- Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of Phoenix Aviation Capital LLC (PAC) and its rated subsidiary, Phoenix Aviation Capital Limited (PACL), to 'B+' from 'B'. The Rating Outlook is Stable. Fitch has also upgraded PACL's senior unsecured debt rating to 'B+' from 'B' with a Recovery Rating of 'RR4' and the senior secured rating on the Term Loan B (TLB) co-issued by PAC Aviation III Designated Activity Company (PACDIII) and PAC DAC LLC (PACD), collectively the co-issuers and ultimately wholly owned by Phoenix Aviation Capital, LLC (PAC), to 'BB' from 'BB-' with a Recovery Rating of 'RR2'. These rating actions are being taken in conjunction with Fitch's global aircraft leasing sector review. For more information on the sector review, please see "Fitch Ratings Completes Aircraft Lessor Peer Review; Revises Sector Outlook to Deteriorating,". Key Rating Drivers Upgrade on Strong Execution and Improved Diversification: The rating upgrade reflects PAC's improving scale and portfolio diversification from orderbook placements and secondary market trading, as well as strong execution against its business strategy. PAC's fleet of owned aircraft grew to 30 from 17 one year ago, with a net book value (NBV) of $1.6 billion at March 31, 2026, pro forma for its contracted pipeline. In addition, portfolio diversification improved notably with the single largest lessee representing 15% of NBV at 1Q26, down from 29% one year ago, while its geographic reach expanded to 13 airlines in 10 countries from seven airlines in six countries over the same period, pro forma for its contracted pipeline. PAC executed several capital markets transactions and further diversified its funding profile, most notably with its inaugural $592 million Term Loan B offering in October 2025, which was upsized by $42 million in March 2026. PAC also issued an inaugural $600 million unsecured note in June 2025 and a $150 million add-on in January 2026, resulting in an increase in unsecured funding to around 37% of total debt at Dec. 31, 2025, on a pro forma basis. Fitch expects scale and diversification will continue to improve as PAC adds aircraft from its orderbook. At the current rating level, PAC's ratings remain supported by its market standing as a full-service lessor focused on new technology, narrowbody aircraft, appropriate current and target leverage, the absence of any meaningful near-term debt maturities and clear growth visibility through its near-term orderbook. Ambitious Growth Targets: Rating constraints include the company's short operating track record as a standalone lessor, execution risk associated with its ambitious growth targets, reliance on wholesale secured funding, a smaller, concentrated portfolio by customer and geography compared to peers, and funding and placement risks associated with the firm's sizable orderbook. Fitch also notes potential governance and conflicts of interest associated with PAC's externally managed business model and ownership by fixed life funds. Sector Constraints: Rating constraints applicable to the aircraft lessor industry more broadly include the monoline nature of the business, potential exposure to residual value risks, the reliance on wholesale funding sources, and vulnerability to exogenous shocks including sensitivity to higher oil prices, inflation and unemployment, which could negatively impact travel demand. Fitch also notes the ongoing Iran conflict and risk of protracted jet fuel shortages. While airlines globally have responded by cutting capacity on less-profitable routes, lessors may still face increased requests for lease deferrals. If granted, these deferrals could negatively impact liquidity and internal capital generation over time. Nominal Franchise: As of March 31, 2026, PAC has a committed orderbook for 25 Boeing B737-8 aircraft, which are scheduled to deliver through 2028, and has optional purchase rights for an additional 30 B737-8 aircraft. The company expects to support additional portfolio growth through sale-leaseback and secondary market opportunities over the medium term. Attractive Portfolio: PAC's portfolio comprises highly liquid tier 1 (86% of NBV) and tier 2 aircraft (14%), as categorized by Fitch, with a weighted average age of the owned portfolio of 3.2 years, and an average remaining lease term of 8.4 years, as of Dec. 31, 2025. Compared to rated peers, PACs maintains a younger and more liquid aircraft portfolio while its remaining lease term is one of the longest in the market. In Fitch's view, this underpins asset performance as a relative rating strength for the business. Modest Earnings: Net spreads (lease yields less funding costs) were 1.7% for FY2025 down from 2.0% in FY2024, due to higher interest expense and the dilutive effect of new orderbook assets being introduced into the portfolio during the year. Fitch expects net spreads to improve over time as existing new technology aircraft become more seasoned and funding costs decline with anticipated refinancing. Over the medium term, Fitch expects net spreads to move into the 'bb' category benchmark range of 1%-5% for aircraft lessors with a sector risk operating environment (SROE) score in the 'bbb' category. Adequate Leverage: Fitch's calculated leverage (gross debt to tangible equity), which assigns 100% equity credit to PAC's $652 million preferred equity, was 3.7x at YE 2025, or 3.4x net of cash. This was aligned with the firm's business plan projections and was within management's stated leverage target of 3.0x-3.5x on a net debt-to-equity basis. PAC's leverage is appropriate given its fleet profile. Improved Funding Mix: Following unsecured debt issuances in 2025 and early 2026, unsecured debt comprised 37% of total debt at YE 2025, pro forma for the $150 million unsecured note add-on issued in January 2026, versus a fully secured funding mix at YE 2024. Current funding comprises unsecured notes, a Term Loan B and secured term loans and warehouse financings backed by aircraft. Fitch expects PAC's unsecured mix to decrease modestly in the near term, as deliveries are initially funded through its secured warehouse facility. Over time, PAC may term out some of this debt in the unsecured bond market. Fitch expects unsecured debt to remain within the 'bb' range of 10%-35% for aircraft lessors with an SROE score in the 'bbb' category. Appropriate Liquidity: PAC faces heightened funding and placement risks due to its substantial order book commitments, but all 2026 order book positions and 43% of 2027 deliveries are already placed. Liquidity resources for the next 12 months totaled $949 million at YE 2025, including $174 million of unrestricted cash, $604 million of availability under secured and unsecured credit facilities, and $170 million of operating cash flow. These resources provide adequate liquidity coverage of 1.6x relative to the next 12 months' order purchase commitments of $510 million and debt maturities of $98 million. On-balance-sheet liquidity will also be supported by an additional $325 million equity commitment from shareholders. Stable Outlook: The Stable Outlook reflects Fitch's expectation that PAC will manage its balance sheet growth to maintain sufficient headroom relative to its targeted leverage range and Fitch's negative rating sensitivities for liquidity coverage over the Outlook horizon, despite Fitch's expectation for increased macro challenges including geopolitical risks, increased fuel prices, higher inflation and uncertainty around the robustness of air travel demand. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Weakening in the company's projected long-term cash flow generation, unsecured debt below 20% of total debt, net spreads sustained below 1%, liquidity coverage dropping below 1.0x, and/or a sustained increase in Fitch-calculated gross leverage above 5x; - Macroeconomic and/or geopolitical headwinds that lead to lease restructurings rejections, lessee defaults, and increased losses, or a material deterioration in fleet quality, particularly concerning the proportion of tier 1 aircraft, average fleet age and average lease terms, could also negatively impact ratings; - PAC's ownership by private funds could lead to negative rating actions if it results in elevated capital extractions or if a forced sale of the company at fund maturity undermines PAC's financial profile, franchise, or long-term strategic direction; - Shortcomings in corporate governance or conflicts of interest that weaken PAC's franchise position, limiting its ability to pursue new business opportunities. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustained strong execution against planned growth targets and long-term strategic objectives, particularly if this leads to further fleet diversification, with single airline exposure approaching 10% of NBV while maintaining a liquid, young fleet portfolio; - Profitably improving franchise scale, as demonstrated by net operating income exceeding $25 million on a sustained basis; - Maintaining a sound financial profile, including gross leverage below 4.0x, low impairment ratios, a sustained increase in net spreads above 2% and liquidity coverage above 1.1x; - Continued ability to fund and proactively place order book assets; - Demonstrated capital market access while maintaining unsecured debt above 30% of total debt. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The senior secured debt rating (BB/RR2) is two notches above PAC's Long-Term IDR and reflects the aircraft collateral backing the obligations, which suggests strong recovery prospects. The senior unsecured debt rating (B+/RR4) is equalized with PAC's Long-Term IDR and reflects expectations for average recovery prospects in a stress scenario, given the availability of unencumbered assets. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The senior secured debt rating is primarily sensitive to changes in PAC's Long-Term IDR and secondarily to the relative recovery prospects of the instruments. In the event of a future upgrade in PAC's Long-Term IDR to 'BB-' or above, Fitch will assess recovery prospects using its generic notching approach, which could lead to a narrowing in the notching between the Long-Term IDR and secured debt rating. The senior unsecured debt rating is primarily sensitive to changes in PAC's Long-Term IDR and the relative recovery prospects of the instruments. A decline in unencumbered asset coverage, combined with a material increase in secured debt relative to PAC's business plan, could result in the notching of the unsecured debt down from the Long-Term IDR. ADJUSTMENTS The Standalone Credit Profile has been assigned in line with the implied Standalone Credit Profile. The Business Profile score has been assigned above the implied score due to the following adjustment reason(s): Historical and future developments (positive). The Asset Quality score has been assigned below the implied score due to the following adjustment reason(s): Concentrations; Asset performance (negative), risk profile and business model (negative). The Earnings & Profitability score has been assigned below the implied score due to the following adjustment reason(s): Historical and future metrics (negative). The Capitalization & Leverage score has been assigned below the implied score due to the following adjustment reason(s): Risk profile and business model (negative). ESG Considerations PAC has an ESG Relevance Score of '4' for Management Strategy due to execution risk associated with the operational implementation of the company's outlined business plan. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. PAC has an ESG Relevance Score of '4' for Governance Structure due to potential governance and conflicts of interest risks associated with PAC's limited number of independent board members and ownership by a fixed-life fund structure and external management. Shortcomings in corporate governance or conflicts of interest could weaken PAC's franchise position and limit its ability to pursue new business opportunities. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Phoenix Aviation Capital Limited LT IDR B+ Upgrade B senior unsecured LT B+ Upgrade RR4 B PAC DAC LLC senior secured LT BB Upgrade RR2 BB- Phoenix Aviation Capital LLC LT IDR B+ Upgrade B PAC Aviation III Designated Activity Company senior secured LT BB Upgrade RR2 BB- ========= I T A L Y ========= ESSELUNGA SPA: S&P Affirms 'BB+' ICR, Alters Outlook to Stable -------------------------------------------------------------- S&P Global Ratings revised its outlook on Esselunga SpA to stable from negative and affirmed its 'BB+' long-term issuer credit and issue ratings on the company and its senior unsecured notes. The stable outlook reflects S&P's view that Esselunga's revenue will continue to grow by 1.0%-1.5%, its adjusted EBITDA margin will stabilize at 7.0%-7.5%, and FOCF after leases at EUR80 million-EUR100 million per year over 2026-2028, such that adjusted leverage remains at 3.0x-3.5x and FFO to debt at 20%-25%. Esselunga SpA's S&P Global Ratings-adjusted EBITDA margin rebounded to 7.7% in 2025 from 6.4% in 2024, and S&P expects it to stabilize between 7.0%-7.5% over 2026-2028, after higher-than-expected volatility over 2022-2024, thanks to lower one-offs, efficient cost management, and lower fees from meal vouchers. Improved profitability and the global refinancing completed in December 2025 reduced adjusted leverage to 3.1x in 2025, from 4.0x in 2024, and extended the group's weighted average maturity to more than five years. Esselunga's profitability improved to 7.7% in 2025, supported by cost discipline, and we expect it to remain stable in 2026. In 2025, Esselunga reported net sales of about EUR9.4 billion and adjusted EBITDA of EUR726 million, up by 2.3% (0.9% on a gross revenue basis) and 27.0%, respectively, from 2024. Sales were supported by four new stores opening in 2025, as well as price increases offsetting to some extent the slightly negative volume dynamics. Esselunga's adjusted EBITDA margin improved to 7.7% (7.2% excluding the EUR48 million one-off income linked to the end of the 2021-2025 loyalty program Fidaty), up 130 basis points from 6.4% in 2024. This was achieved thanks to disciplined operating cost management compared to that in 2024, following the internalization of employees in processing and production functions, previously provided by third-party service companies and cooperatives. This followed concerns raised by Italian prosecutor investigations in 2023, later dismissed in 2024 after the group successfully implemented required remedies. After significant volatility between 2022 and 2024 caused by a combination of aggressive pricing in a highly inflationary environment and the direct and indirect consequences of the legal case, S&P expects profitability to stabilize at 7.0%-7.5% over 2026-2028. This will also be supported by continued cost efficiency measures and the start of the new five-year loyalty program, which is relatively less onerous than the previous one. In addition, in 2025 Italian law reduced the maximum amount of fees payable on meal vouchers to 5%, which will benefit Esselunga and Italian food retailers in general. S&P said, "We expect funds from operations (FOCF) after leases to rebound to EUR80 million-EUR100 million per year over 2026-2028 thanks to stable profitability and lower capital expenditure (capex). In 2025, the company's cash flow generation was affected by the end of the Fidaty loyalty program, which resulted in a negative EUR137 million working capital outflow. That said, the group reported positive EUR61 million FOCF after leases in 2025--significantly above our previous expectations of negative EUR120 million--thanks to stronger-than anticipated profitability, lower-than-expected capex, and lower cash taxes paid. We understand the group intends to retain a higher degree of financial flexibility and liquidity and we forecast capex of about EUR350 million per year. This corresponds to a capex intensity ratio of about 3.6%, still well above the 2.0%-3.0% average we observe for other rated food retailers in Europe, but below the company's historical level, which has fluctuated between 4.1% and 5.7% over the last five years. The company's higher investment levels compared to peers reflect its strategy of owning almost its entire network, building sizeable real estate value in its books and limiting lease payments. This is reflected in an EBITDAR coverage ratio (adjusted EBITDA divided by rents and interest expenses) of about 5x, which corresponds to an assessment of modest according to our financial risk profile category. More controlled capex will allow the group to generate positive FOCF after leases of about EUR80 million in 2026 and about EUR100 million per year from 2027. "We view the December 2025 refinancing positively because it extended Esselunga's weighted average maturity and secured the repayment of its upcoming debt maturity. In December 2025, Esselunga issued a EUR1.3 billion term loan and signed an undrawn EUR500 million revolving credit facility (RCF), both due in December 2030. Proceeds from the term loan were used to repay the EUR775 million unsecured term loan due in 2027, as well as the outstanding amount drawn under the company's previous EUR600 million RCFs, which were fully repaid and cancelled. In addition, the company secured a EUR400 million commitment for a delayed-drawn term loan, dedicated to repaying the EUR500 million senior unsecured notes maturing in October 2027. We view the transaction positively, as it reduces pressure from Esselunga's previously short-dated debt instruments, extends its weighted average maturity to more than five years from two years previously (as calculated at year-end 2024), and restores the group's buffer on our 'BB+' long-term issuer credit rating. "We believe the appointment of a new CEO will help strengthen management and governance professionalism. On May 6, Esselunga announced the appointment of Claude Sarrailh as its new CEO. Mr. Sarrailh currently serves as CEO Europe and Indonesia at Koninklijke Ahold Delhaize N.V. (BBB+/Stable/A-2) and is due to join Esselunga in November 2026. This appointment is part of Esselunga's ongoing efforts to streamline and standardize business practices, and we see it as a step toward increased professionalism at management and governance level. Although we do not anticipate any material changes to the group's current strategy under Mr. Sarrailh's leadership, we will monitor the impact any new strategic announcement could have on Esselunga's creditworthiness. "The stable outlook reflects our view that Esselunga's gross revenue will continue to grow by 1.0%-1.5%, our adjusted EBITDA margin will stabilize at 7.0%-7.5%, and FOCF after leases at EUR80 million-EUR100 million per year over 2026-2027, such that adjusted leverage remains at 3.0x-3.5x and funds from operations (FFO) to debt at 20%-25% over that period." S&P could lower the ratings if Esselunga materially underperforms its base case, or its financial policy becomes more aggressive, such that: -- Debt to EBITDA increases structurally to above 4.0x; -- FFO to debt declines structurally below 20%; or -- FOCF after leases deteriorates materially compared to our current forecasts. S&P could upgrade Esselunga if it overperforms our base case in terms of profitability and cash flow generation, such that FFO to debt structurally exceeds 30% and the company commits to clear long-term financial and shareholder distribution policies consistent with an investment-grade rating. FLOS B&B: Fitch Affirms 'B' Long-Term IDR, Outlook Negative ----------------------------------------------------------- Fitch Ratings has affirmed Flos B&B Italia S.p.A.'s (Flos) Long-Term Issuer Default Rating (IDR) at 'B'. The Outlook remains Negative. The Negative Outlook reflects Fitch's expectation that EBITDA leverage will remain above 6.0x in 2026 and 2027, as cyclical weakness in luxury market demand continues to weigh on revenue and delay the deleveraging path. The affirmation is supported by positive free cash flow (FCF), above-average EBITDA margins underpinned by a flexible cost structure, improving interest coverage and adequate liquidity. Fitch would downgrade the rating to 'B-' if the deleveraging path were disrupted by sustained operating underperformance. Key Rating Drivers Weak Demand Pressures Revenue: Fitch anticipates that weak premium demand will continue to pressure Flos's rating through lower sales volumes. Fitch does not expect any revenue growth in 2026 after two years of decline, as cyclical weakness in the luxury market, softer consumer sentiment and geopolitical uncertainty continue to weigh on spending. The contract channel has been the only area of growth, partly offsetting weaker performance in wholesale. The group's main markets, the US and Europe, are likely to remain weak, while APAC does not provide enough support for a broader recovery. The Iran conflict adds uncertainty, with risks of order delays or projects phasing in the Middle East. Competition is also rising from Chinese luxury brands in domestic markets. Limited price sensitivity may partly offset volume pressure, but Fitch does not view pricing control as sufficient to drive strong growth in a sector that is inherently sensitive to shifts in discretionary spending. High Leverage: The Negative Outlook reflects Fitch-projected leverage metrics will exceed the 6.0x negative rating threshold until at least end-2027. Fitch project Flos's EBITDA leverage to remain high in 2026 at 6.4x, due to stagnant EBITDA and weak revenue. A slower-than-anticipated recovery in revenue and profitability from 2026 would put pressure on deleveraging capacity and could lead to a downgrade. Margins Supported by Flexible Costs: Fitch forecasts Flos's EBITDA margin to remain at 19%-20% over 2026-2029, above the sector average, supported by a flexible cost structure with about 70% variable costs, ongoing cost-optimisation measures and effective cost pass-through. The company's pricing discipline has preserved its gross margin at about 75% despite weaker volumes. Fitch expects limited cost pressure from the Middle East conflict, as Flos is not energy-intensive and has limited sourcing from Asia. However, business volumes from the Middle East are subject to significant risks in 2026. Strategic Measures Partly Offset Weakness: Flos is pursuing commercial and cost initiatives to counter weak market dynamics, including new product launches, increasing shop space, expanding emerging brands and growing its contract channel to improve cost and pricing control. New senior management has been appointed across segments to lead the strategic refocus. The group has also been implementing a cost-saving programme for two years, including product reengineering and supplier renegotiation, to improve efficiency, which is on track. Fitch expects these measures to partially offset inflationary pressures and support modest normalisation in volumes and margins. Positive FCF: Fitch expects FCF margins to remain strong at 3%-4% of revenue between 2026 and 2029, supported by strong underlying profitability and minimal working capital impact. This will allow Flos to absorb moderate capex of about 4% of revenue. In 2026, Fitch expects working capital inflow due to inventory reduction, while Flos continues to benefit from a largely flexible cost base and strong supply chain management. Sustained positive FCF and healthy liquidity are the major supportive factors for the IDR. Interest Coverage to Recover: Fitch expects Flos's interest coverage to normalise at above 2.0x in 2026, from a low of 1.5x in 2024, when its debt service cost increased sharply. Easing interest cover metrics will be supported by mild EBITDA expansion, in combination with the prospect of moderating base rates in the medium term. This is further aided by the group's proactive management of its liabilities, such as the prepayment of EUR42.5 million of expensive debt in 2025. Peer Analysis Flos's luxury peers are Capri Holdings Limited (BB/Negative), the owner of Versace, Jimmy Choo and Michael Kors (USA), Inc., and Tapestry Inc., the owner of Coach, Kate Spade and Stuart Weitzman. Fitch sees higher fashion risk and greater exposure to retail distribution in Capri and Tapestry than at Flos. However, comparability is limited, as Flos is smaller and has a materially different capital structure. Within Fitch's leveraged buyout portfolio of branded consumer goods, Flos shares similarities with Birkenstock Holding plc (BB+/Stable). The shoe producer's rating reflects its larger scale, stronger brand recognition, better margins and lower leverage than Flos, especially after its initial public offering in 2024 and partial debt prepayment. Mobilux Group SCA (B+/Stable) has greater operational scale and a stronger position in its respective market, but a thinner EBITDA margin of 6.1% compared with Flos B&B. Its rating is one notch higher, reflecting stronger EBITDAR leverage of under 4.0x and a strong cash balance. Rino Mastrotto Group S.p.A. (B+/Negative) is rated one-notch higher than Flos, despite broadly similar EBITDA margins, as it has stronger expected FCF margins and lower projected leverage at 5.4x in 2025, versus about 6.0x for Flos in 2025-2026. Fitch’s Key Rating-Case Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - Revenue decline of about 3.6% in 2026, before returning to low-to-mid single-digit expansion from 2027; revenue growth to be driven by organic expansion and bolt-on M&A - EBITDA margin to stay at 19%-20% over 2026-2029 - Neutral working capital-related cash flow between 2026 and 2029 - Capex at an average of 4.3% of sales over the next four years - Bolt-on M&A acquisitions of about EUR20 million a year in 2027-2029 Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (bb, Moderate), Sector Characteristics (bb, Moderate), Market and Competitive Positioning (bb-, Higher), Diversification and Asset Quality (bb+, Moderate), Company Operational Characteristics (bb, Moderate), Profitability (bbb, Lower), Financial Structure (b, Higher), and Financial Flexibility (b+, Moderate). - The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027. - B+ to CC considerations apply in its analysis and result in an adjustment of -1 notch. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'a+' results in no adjustment. - The SCP is 'b'. Recovery Analysis The recovery analysis assumes that Flos would be considered a going concern (GC) in bankruptcy and would be reorganised rather than liquidated, given its immaterial asset base and the inherent value of its distinctive portfolio of brands. Additional value lies in its retail network and wholesale and contract client portfolio. Fitch has assumed a 10% administrative claim. Fitch assesses GC EBITDA at about EUR95 million, following slower revenue growth due to weak expansion in certain distribution channels and weaker pricing, leading to lower margins. At this GC EBITDA level, Fitch estimates Flos would face an unsustainable capital structure, making refinancing extremely difficult and necessitating a debt restructuring. Fitch used a 6.0x multiple, which is at the high end of its distressed multiples for high-yield and leveraged finance credits. Its choice of multiple is justified by the premium valuations in the sector for strong design and luxury brands. The security package includes share pledges in the main operating subsidiaries. No security is provided over the intellectual property rights, access to which is, however, protected by negative pledges and limitation-of-lien provisions. Fitch assumes Flos's increased revolving credit facility (RCF) of EUR145 million to be fully drawn at default. The RCF ranks super senior, ahead of the senior secured notes of EUR890 million. Fitch expects Flos's factoring facilities, of about EUR6.6 million, to remain available in bankruptcy, given its industry and client base. Its waterfall analysis generates a ranked recovery for senior secured noteholders in the 'RR4' category, leading to a 'B' instrument rating in line with the IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Persisting operating underperformance, higher drawdowns under the RCF, or debt-funded acquisitions leading to EBITDA leverage higher than 6.0x through the cycle - EBITDA interest coverage deteriorating towards 2.0x - FCF margin lower than 2.0% Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA leverage below 5.0x on a sustained basis, including as a result of a lower leverage target - EBITDA interest coverage above 3.0x on a sustained basis - FCF margin of 5.0% or higher, due to successful pass-through of input cost increases and strong retention of pricing power Liquidity and Debt Structure Flos's liquidity is satisfactory. Fitch-adjusted available cash at end-2025 was EUR72 million, while its RCF was drawn by EUR20 million. Liquidity is further supported by its expectations of consistently positive FCF. Flos's debt maturity profile improved after its refinancing in December 2024, when it extended the maturity of its floating-rate notes to 2029. Also, EUR340million of senior secured notes are due in November 2028. Issuer Profile Flos is a leading high-end furniture designer and manufacturer, based in Italy, with global operations through different channels (wholesale, contracts, e-commerce and directly operated stores. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of its Climate.VS screener did not indicate an elevated risk for Flos. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Flos B&B Italia S.p.A. LT IDR B Affirmed B senior secured LT B Affirmed RR4 B LA DORIA: Fitch Affirms 'B+' Long-Term IDR, Outlook Stable ---------------------------------------------------------- Fitch Ratings has affirmed La Doria S.p.A.'s Long-Term Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. Fitch has also affirmed La Doria's senior secured notes at 'BB-' with a Recovery Rating of 'RR3'. La Doria's IDR reflects its niche scale and concentrated retail customer base, which are mitigated by its longstanding customer relationships and adequate operating profitability for a private-label food-processing company. The rating is also supported by La Doria's moderate leverage metrics and sustained positive free cash flow (FCF). The Stable Outlook reflects its expectations of sustained EBITDA growth, driven mostly by product premiumisation and margin-accretive acquisitions, while Fitch projects credit metrics to be adequate, remaining consistently below 5.0x from end-2026. It also reflects its view of consistently positive FCF generation, limited execution risk and adherence to a consistent financial policy. Key Rating Drivers Volume to Support Growth: Fitch expects revenue to grow by 6.8% in 2026, driven by the full integration of Fege and Pasta Lensi. Its assumptions incorporate only moderate pricing power, given intense competition from branded producers, while recognising the defensive characteristics of private label, which can support volumes during periods of high inflation. In 2025, La Doria reported organic revenue growth of 2%, while its EBITDA margin remained broadly stable at 11.5% (vs 11.6% in 2024). Its recent performance was constrained by intense competition from branded goods producers, particularly in 1H25, as well as limited pricing momentum in a deflationary environment. Sustainability of EBITDA Margins Critical: La Doria's ability to maintain profitability at 11%-12% is key to its rating. Fitch expects EBITDA margins to remain at about 11.5% in 2026, broadly in line with 2025, as acquisition synergies and scale benefits are likely to be offset by raw material inflation and rising labour costs. Margins should then rise towards 12% by 2029, driven by product mix changes, premiumisation, margin-accreditive bolt-on acquisitions, efficiency measures and more agile contractual pricing terms reducing the lag between input and output prices, thereby limiting EBITDA margin volatility. Moderate Leverage, Deleveraging Capacity: The rating is underpinned by La Doria's moderate credit metrics, with EBITDA leverage below 5.0x and EBITDA interest cover well above 3.0x. Fitch forecasts EBITDA leverage to decline gradually to 4.1x at end 2029 (2025: 5.2x) , mainly driven by EBITDA expansion supported by organic and inorganic revenue growth, together with cost optimisation and synergies. The fragmented market offers ample scope for M&A activity, but frequent, large debt-funded acquisitions could hinder deleveraging and put pressure on the rating. Positive FCF Generation: Fitch forecasts that La Doria will generate positive FCF margins of about 3.5%, except in 2026, when the margin is projected at 0.8% due to higher capex, equivalent to 3.7% of sales. Over 2026-2029, FCF will also benefit from tax credit and government grant inflows of EUR10 million-12 million per year, equivalent to an improvement of about 70bp in FCF margin. The group's credit profile is supported by its ability to generate FCF, underpinned by strong profitability for the rating category, limited working-capital outflows and modest capex intensity. Shareholder Distributions Possible: The group's approach to acquisitions is opportunistic, and Fitch expects any new acquisitions to be modest, limiting integration and execution risks. Fitch expects the group to use its rising cash balances for shareholder distributions, subject to compliance with financial documentation. Slow Cost Pass-Through: La Doria benefits from a largely variable cost base. Its supplier base is fairly diversified, with the top five suppliers accounting for about 18% of cost of goods sold. Tomato sourcing is strong due to framework agreements with several producers, but pulse suppliers are more concentrated. However, the company is exposed to fluctuations in the price and yield of tomatoes and other commodities, with slow cost pass-through of up to a year. This could affect profitability in low-yielding seasons or at times of geopolitical tension. Fitch estimates the gap between input and output prices will reduce as sales contracts are renegotiated, enhancing margin stability. Niche Product, Concentrated Customers: La Doria's ratings are constrained to the 'B' rating category by its niche position in food processing and modest business scale. It also has a highly concentrated customer base, with its top 10 clients representing about 46% of revenue. However, this is mitigated by La Doria's longstanding customer relationships and the absence of contract cancellations, backed by its logistic and production capabilities. The group's margins of above 10% are strong for the rating, underscoring its attractive product offering, despite its customers' stronger bargaining power. Peer Analysis La Doria compares favourably with several consumer, food and beverage leveraged buyouts in Fitch's public and private ratings coverage. Sigma Holdco BV (B/Stable) has materially larger scale, greater geographic diversification and higher margins, supported by its branded portfolio and a different cost base. Fitch allows Sigma higher debt capacity, despite its focus on a single offering facing secular difficulties. Nomad Foods Limited (BB/Stable), which is strong in branded and private-label frozen food, is larger with stronger profitability. It leverage is also lower, justifying its larger debt capacity and higher rating than La Doria. Flamingo Group International Limited (B/Stable) operates in the highly fragmented, agriculture-like floriculture market, with a concentrated customer base and limited FCF generation. It is smaller than La Doria, with limited diversification by geography and product. It is exposed to crop breeder risks and adverse weather conditions. Sammontana Italia S.p.A. (B+/Stable), rated at the same level as La Doria, has comparable credit metrics and similar scale, but a slightly stronger business profile due to its broader product offering, stronger brand awareness and lower customer concentration. Its profits are also less exposed to input cost volatility. These strengths are partly offset by La Doria's lower execution risks, as Sammontana is pursuing market consolidation and expansion, including in overseas markets. Platform Bidco's (Valeo Foods; B-/Stable) business profile is stronger than La Doria's, supported by a diverse branded portfolio, complemented by broad private-label offerings and wider product diversification. However, it has weaker leverage, which Fitch expects at 8x-7x in 2026-2027. Fitch’s Key Rating-Case Assumptions Fitch's Key Assumptions within Its Rating Case for the Issuer - Revenue growth of about 7% in 2026 and 4.5%-6% in 2027-2029. Fitch assumes organic growth of about 3% in 2026-2029, with the remainder coming from acquisitions - EBITDA margin to be flat at 11.5% in 2026-2027 (2025: 11.5%), before improving to 11.8%-11.9% in 2028-2029, due to easing inflationary pressure and improved product mix - Gross capex at EUR55million in 2026, before normalising to about EUR40 million per year in 2027-2029 - Cash inflow from tax credits and grants of about EUR10 million in 2026 and EUR12 million per year in 2027-2029 - Fitch-assumed M&A spending averaging at EUR35 million per year in 2027-2029, funded by FCF and readily available cash Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (bb, Lower), Sector Characteristics (bb-, Lower), Market and Competitive Positioning (b, Higher), Diversification and Asset Quality (b+, Moderate), Company Operational Characteristics (b, Moderate), Profitability (bb-, Higher), Financial Structure (bb-, Moderate), and Financial Flexibility (bb, Moderate). - The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027. - B+ to CC considerations apply in its analysis and result in no adjustment. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'a+' results in no adjustment. - The SCP is 'b+'. Recovery Analysis Its recovery analysis assumed that La Doria would be considered as a going concern (GC) in bankruptcy and would be reorganised rather than liquidated. This is because most of its value lies in its client-and-supplier relationships, as well as its production and logistic capabilities. Fitch assumed a 10% administrative claim. Fitch assessed GC EBITDA at EUR115 million, reflecting corrective measures and a restructuring of La Doria's capital structure that would allow it to retain a viable business model. Loss of customer contracts, sourcing challenges and difficulties in passing on its input costs may drive financial distress, leading to a restructuring in which the capital structure becoming unsustainable. Fitch applied a recovery multiple of 5.0x, which is in the mid-range for packaged food companies in EMEA. Fitch assumed the RCF of EUR122.5 million would be fully drawn on default. The RCF ranks super senior to the senior secured notes. Fitch expects La Doria's existing receivables factoring facilities of about EUR160 million to remain available during and after distress without requiring alternative funding, although it may be available at a reduced amount. This assumption is driven by the strong credit quality of the group's client base. Its waterfall analysis generated a ranked recovery for the senior secured noteholders in the 'RR3' category, leading to a 'BB-' instrument rating, one notch above the IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Increase in EBITDA gross leverage to above 5x, due to lower profitability or debt-funded acquisitions - EBITDA margin below 12%, resulting in lower FCF margins at below 2% - EBITDA interest coverage weakening towards 3.0x or below Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Fitch does not envisage an upgrade to the 'BB' rating category unless the group achieves: - Greater scale and broader geographic diversification, while product premiumisation supports EBITDA growth to EUR300 million - Higher EBITDA margin, supporting FCF margin at above 3% - EBITDA gross leverage consistently below 4.0x, driven by organic expansion, integration of bolt-on targets or gross debt prepayment, and EBITDA interest coverage above 4.0x for an extended period Liquidity and Debt Structure La Doria's cash balance was EUR69 million at end-2025, after restricting EUR20 million of cash for operating purposes, and was also supported by an undrawn RCF of EUR122.5 million. Positive FCF generation should sustain comfortable liquidity headroom and support cash build-up over the rating horizon, which is likely to be used for bolt-on acquisitions. La Doria has no major debt maturities before 2030, when its senior secured notes of EUR675 million and RCF of EUR122.5 million come due. Issuer Profile La Doria is an Italian manufacturer of private-label tomato, vegetable and fruit derivatives, including sauces, soups, dressings, purees and juices. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of its Climate.VS screener did not indicate an elevated risk for La Doria. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- La Doria S.p.A. LT IDR B+ Affirmed B+ senior secured LT BB- Affirmed RR3 BB- =================== L U X E M B O U R G =================== EPHIOS SUBCO: S&P Assigns 'B' Long-Term ICR, Outlook Stable ----------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating on Ephios Subco 1 S.a.r.l., a holding company for the Germany-based Synlab group of subsidiaries operating in the medical laboratories market. The rating covers the same business perimeter and is equivalent to the issuer credit rating, which S&P previously assigned on Ephios Subco 3 S.a.r.l., a lower level holding company in the group structure. S&P said, "We assigned our 'CCC+' issue rating on the new EUR370 million payment-in-kind (PIK) toggle notes, to be issued by Ephios Subco 1, with a '6' recovery rating reflecting our estimate of 0% recovery prospects in the event of payment default. "We lowered our issue rating on the EUR1.3 billion senior secured loans issued by Ephios Subco 3 to 'B' from 'B+' based on the downward revision of recovery prospects for this issuance to 65% from 70%. Owing to lower estimated rounded recovery prospects, we lowered the recovery rating on the senior secured loans to '3' from '2' and lowered the issue rating in line with the entity rating, according to our methodology. This action primarily reflects a rebalancing between the secured and unsecured debt issue volumes in Synlab's capital structure, while our view of the overall fundamental credit quality of the group remains unchanged. At the same time, we affirmed our issuer credit rating on by Ephios Subco 3. "The stable outlook reflects our expectation that Synlab can maintain profitable growth in the next 12 months, backed by supportive underlying volume dynamics, and visibility around reimbursement tariffs and pricing for 2026." Synlab amended and extended its EUR1.3 billion term loan B (TLB) to mature in April 2031 and is refinancing its PIK debt with a new PIK toggle note due in 2032. In February 2026, Synlab increased the size of its TLB to EUR1.3 billion from EUR1 billion, with the EUR300 million debt increment repaying the majority of the EUR385 million outstanding unsecured TLB4 issued by Synlab Bondco PLC. At the same time, it extended the maturity of the TLB to April 2031. The rebalancing in the capital structure between secured and unsecured debt has resulted in an increase in the debt quantum treated as first-lien debt within our recovery rating waterfall. S&P said, "Therefore, we revised down the recovery prospects on the total senior secured debt comprising the EUR1.3 billion TLB and the EUR450 million senior secured notes to 65% from 70%. As a result of rebalancing between senior secured and unsecured debt in issue, the majority of Synlab's debt is now senior secured and carries a recovery rating of '3', bringing our issue rating on the debt in line with the entity rating at 'B'. In April 2026, the group completed a partial repayment for about EUR250 million of its existing PIK debt (at Ephios Subco 1 level), bringing the outstanding amount to EUR400 million. This voluntary early repayment was funded with cash on balance sheet and by drawing on the revolving credit facility (RCF) for about EUR125 million. Following this partial repayment, the group is issuing new EUR370 million PIK toggle notes due in 2032 to refinance EUR370 million of the existing PIK debt. The remaining portion of EUR30 million will be amended to mirror the terms of the new PIK toggle notes, except for the coupon, which will be floating instead of fixed. Therefore, we assigned our 'CCC+' issue rating on the new EUR370 million PIK toggle notes to be issued by Ephios Subco 1, based on the recovery rating of '6' and our estimated recovery in a simulated payment default scenario of 0%." S&P said, "In our view, Synlab's 2025 full year results demonstrated the group's ability to execute its business portfolio management strategy to foster profitable growth, and we expect this to continue in 2026.The group reported revenue on a pro forma basis of EUR2,473 million in 2025, compared with EUR2,387 million in 2024, or an increase of 3.6% year on year. We estimate debt leverage to decrease to below 7.0x in 2026, thanks to continued improvement in profitability over the next 12-24 months. We anticipate that increasing volumes, mainly in France and Germany, should support topline growth of 3.7%. The smaller Southern Europe region should continue to benefit from a stronger revenue momentum due to better pricing conditions as well as increasing volumes. The Northern Europe region should benefit from the ramp-up of contracts in the U.K., notably thanks to the Synnovis partnerships. We also view the continuation of Synlab's strategic plan focusing on business portfolio management, to prioritize faster growing segments and to exit less profitable markets, as positive. "Therefore, we estimate an S&P Global Ratings-adjusted EBITDA margin of about 17.4% in 2026, increasing from a low point in 2024 when the company was hit by several cyberattacks in the U.K. and Italy. As a result, we expect S&P Global Ratings-adjusted debt to EBITDA to decrease below 7.0x in 2026. We anticipate high capital expenditure (capex) of about EUR120 million for the next two years, including significant investment into IT to strengthen the group's operational back-bone, cybersecurity capabilities, or digitalization; and use of AI which should enable Synlab to unlock further operational efficiencies. Because of the group's rebound in profitability; this will translate into positive free operating cash flow (FOCF) after leases of EUR35 million-EUR40 million in 2026. "The stable outlook reflects our expectation that Synlab can maintain profitable growth over the next 12 months, backed by supportive underlying volume dynamics, and visibility around pricing in 2026. Margins should benefit from continuous cost improvement measures, such as productivity measures linked to higher levels of automation, process standardization, and homogenization of IT platforms. We do not anticipate an acceleration in shareholder distributions and merger and acquisition spending. Therefore, we forecast an S&P Global Ratings-adjusted EBITDA margin of about 17%-18% in 2026, along with adjusted leverage gradually decreasing to about 7.0x over the same period. "We could take a negative rating action on Synlab in the next 12 months if the group fails to deliver on its cost-savings and portfolio optimization targets. This could result in lower profitability than we currently forecast, translating into S&P Global Ratings-adjusted debt to EBITDA increasing above 7.0x on a more entrenched basis, combined with a negative FOCF. "We could also lower the rating if the company accelerates discretionary spending materially ahead of current expectations. "We could take a positive rating action if Synlab successfully optimizes its portfolio and achieves efficiency gains for operating margins to recover to historical highs (excluding comparison with the COVID-19 pandemic-related product margins). Rating upside will also depend on the group's ability and willingness to reduce and maintain leverage below 5.0x." MOVIDA EUROPE: S&P Rates Proposed Senior Unsecured Notes 'BB-' -------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue rating to Movida Europe S.A.'s proposed senior unsecured notes. S&P also assigned a '3' recovery rating to the proposed notes, indicating its expectation of a meaningful recovery (50%-70%) for the company's unsecured debt in the event of default. Movida Europe is a wholly owned finance subsidiary of Brazilian car rental and fleet management services provider Movida Participacoes S.A. (Movida; BB-/Stable/--), which will unconditionally and irrevocably guarantee the notes. The company intends to use the proceeds from the proposed notes for liability management, including the announced tender offer for its outstanding 2029 notes, extending company's debt maturity profile. Issue Ratings--Recovery Analysis Key analytical factors S&P said, "We assess recovery prospects using a simulated default scenario, with a discrete asset valuation approach. We value the company on a going-concern scenario because we believe Movida would be restructured, given the medium-term nature of its fleet management contracts, thereby generating greater value for its creditors. "In our default scenario, we incorporate a combination of factors, such as high delinquency rates in Movida's contracts, a drop in vehicle prices and demand for used cars in Brazil, and very high interest rates. These factors would severely reduce the company's cash flow and limit its access to debt refinancing." Simulated default assumptions -- Country of insolvency: Brazil (Jurisdiction B), resulting in a '3' jurisdictional cap for unsecured debt -- Simulated year of default: 2030 S&P applies a 15% haircut to the fleet value because the company would need to apply a discount to liquidate those assets in a stress scenario Dilution rate of 20% and then a haircut of 30% in receivables, simulating a potential drop in contract renewal rates and an increase in delinquency rates S&P assumes Movida would use excess cash to purchase vehicles, and it applies a 100% haircut to the company's remaining cash position because it would be consumed up to the default point The above assumptions lead to a general haircut of about 32% to Movida's total asset base value, resulting in an estimated gross enterprise value at emergence of approximately Brazilian real (R$) 18.0 billion Simplified waterfall -- Net enterprise value after 5% administrative costs: R$17.1 billion -- Priority secured debt: R$18.3 million (Finep) -- Senior unsecured debt: R$21.5 billion -- Recovery expectations: 65% Note: All debt amounts include six months of prepetition interest. ===================== N E T H E R L A N D S ===================== VITA LUXCO: S&P Assigns 'B+' Long-Term ICR, Outlook Stable ---------------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term issuer credit rating to Vita LuxCo Sarl, Hanab Holding BV, and Hanab Installations Holding BV. S&P also assigned its 'B+' issue rating and '3' recovery rating to the EUR1.1 billion term loan B and EUR200 million revolving credit facility (RCF). The stable outlook reflects S&P's view that Hanab will generate strong revenue growth in 2026 and 2027, while expanding adjusted EBITDA margins toward 13.5%-14.0%. This will drive adjusted leverage to about 5.0x by year-end 2026. Private equity firm Triton Partners is refinancing its EUR605 million senior secured term loan B (TLB) issued by Vita Bidco S.a.r.l. with a EUR1.1 billion seven-year senior secured TLB to be issued by Hanab Holding BV and will take out a EUR495 million dividend, including transaction fees. Hanab Holding BV, Hanab Installations Holding BV, and the parent of the group Vita LuxCo will also co-borrow a EUR200 million 6.5-year senior secured revolving credit facility (RCF). Although S&P Global Ratings-adjusted closing leverage will be well above 5x, we expect Hanab will quickly deleverage to about 5x by year-end 2026 via strong revenue growth and EBITDA margin expansion in a booming energy and utility, and installation services markets, supported by the sustainability trends leading to the Dutch economy's electrification. The owner of Hanab, Triton, is refinancing the EUR605 million senior secured TLB issued by Vita Bidco with a EUR1.1 billion seven-year senior secured new TLB issued by Hanab and taking a EUR495 million dividend, including transaction fees. Apart from extracting further value from Hanab, the transaction aims to optimize and streamline of the group's legal structure, with key purposes including clarifying governance and management structures, strengthening the coordination of group operating activities, and setting the foundation for growth and expansion. S&P said, "The transaction will drive debt to EBITDA to about 6.7x at closing on a S&P Global Ratings-adjusted basis, but we forecast strong deleveraging to 5.1x by year-end 2026 and beyond. We project total debt of about EUR1.2 billion by year-end 2026, including the EUR1.1 billion TLB, about EUR100 million of lease liabilities, and EUR5 million of pension obligations. We do not net about EUR140 million of cash given the 100% financial sponsor ownership by Triton. We expect EBITDA growth from organic performance and reduced exceptional costs to support the reduction in adjusted leverage to 5.1x and 4.4x by year-end 2026 and 2027, respectively. "Although Triton has increased its tolerance for leverage, we think the Hanab's strong performance supports a 'B+' rating. The company-calculated closing leverage of 5.15x corresponds to about 6.7x after our adjustments. In our base-case scenario, exceptional costs normalize at about EUR15 million per year by year-end 2026, compared with EUR40 million for the 12 months before the transaction's closing. Leverage is higher than under the previous capital structure as Triton now has clarity on Hanab operating as a single entity following its creation out of the merger of three companies in 2024. We understand that Hanab is likely to accelerate its acquisitions from 2026 onward, notably to diversify geographically. Nevertheless, our base-case scenario assumes EUR30 million a year, financed exclusively by cash flow from operations. We think releveraging could come through new dividend recapitalizations (following the EUR200 million dividend paid out in June 2024, EUR52 million in first-quarter 2026, and EUR495 million as part of this transaction) but strong EBITDA growth would rapidly bring adjusted leverage back to about 5x, consistent with the 'B+' rating. "We have revised positively our business risk profile to fair from weak in light of strong operating performance in 2024 and 2025, driving increased scale and profitability. Despite the decline in the Fttx (fiber to the x) business, Hanab's scale has improved with revenue growth of close to 10% annually, thanks to the strong expansion of the energy and utility, and installation services business. Hanab also expanded its S&P Global Ratings-adjusted EBITDA margins to 11.6% in 2025 from 9.4% in 2024, and we forecast another increase to 13.5% in 2026, bringing its profitability above the peer group average. The group has also demonstrated its ability to generate very strong free operating cash flow (FOCF), which was above EUR100 million in 2024 and 2025 thanks to minimal capital expenditure requirements at below 1% of revenue and well controlled working capital requirements of 3.6% of revenue on average. Our assessment remains constrained by the high client concentration (the top 10 clients account for 66% of revenue) and high exposure to the Netherlands (95% of revenue), but these factors are mitigated by the very high credit quality of the Netherlands and of Hanab's top 10 clients and because demand for its services comes from committed multiyear spending plans necessary to adapt the Dutch economy to the green transition with increased electrification. "Vita LuxCo is on track for very strong revenue growth in 2026, mostly driven by the energy and utility business. We expect 20% revenue growth in 2026 to EUR1.75 billion. The energy and utility division will propel most of this growth, as the energy transition continues to drive strong demand for Hanab's services. We also forecast the installation services business will continue to grow thanks to increased business with existing clients. Conversely, we project the decline in telecom & connectivity will continue as some new and fiber to the office activities have been moved under the energy and utility division and Fttx volumes continue to decline in the Netherlands. However, we still expect the connectivity business to grow following the transfer of some activities from the telecom unit. Our base-case scenario also assumes that acquisitions during the year will add EUR25 million to revenue on a pro rata basis, EUR50 million on a pro forma basis. In 2027, we project 11% revenue growth with similar trends as in 2026. "We expect strong improvement in profitability again for 2026. We project S&P Global Ratings-adjusted EBITDA margins will increase to 13.5% in 2026 from 11.6% in 2025 and 9.4% in 2024. The main factor will be a positive mix effect with superior growth for the profitable energy and utility business. In addition, we expect margins to improve within the telecom and utility business following reorganization measures in 2025. Our base-case scenario assumes about EUR15 million of exceptional costs, which we deduct from our EBITDA figure. In 2027, we expect a further increase in adjusted EBITDA margins to 13.8% on top-line growth and a positive mix effect. "We anticipate lower, but still comfortably positive, free operating cash flow (FOCF) in 2026. The company had an exceptionally strong 2025 with FOCF of EUR187 million. Working capital benefited from particularly favorable conditions, with the receipt of advance billings within the installation technology, energy solutions, and pipelines and industry segments. In 2026, we expect these positive impacts to wind down as projects funded by these advance payments get completed. The strong top-line growth will fuel EUR48 million working capital outflows, leading to FOCF of EUR94 million. In 2027, we calculate FOCF of EUR171 million as working capital movements normalize to an inflow of EUR7 million. "The stable outlook reflects our view that Hanab will generate strong revenue growth in 2026 and 2027, while expanding adjusted EBITDA margins toward 13.5%-14.0%. This will drive adjusted leverage to about 5.0x by year-end 2026." S&P could lower its rating on Hanab in the next 12 months if S&P expects its adjusted debt to EBITDA to remain materially above 5.0x, likely because of: -- A more aggressive financial policy involving further debt-funded shareholder returns or acquisitions; -- A significant decline in FOCF; or -- Weaker trading performance. Although unlikely in the next year, S&P could consider a positive rating action if the owner adopts a less aggressive approach to debt, such that it does not anticipate a significant leveraging event over 4.5x. =========== R U S S I A =========== ALOQABANK JSC: Fitch Rates USD Sr. Unsec. Eurobond 'BB(EXP)' ------------------------------------------------------------ Fitch Ratings has assigned Uzbekistan-based Joint-Stock Commercial Aloqabank's (Aloqa) upcoming issue of US dollar-denominated senior unsecured Eurobonds an expected long-term rating of 'BB(EXP)' and an expected long-term rating (xgs) of 'B(xgs)(EXP)'. The assignment of final ratings is contingent on the receipt by Fitch of the final documentation conforming to the information already received from the issuer. Aloqa's US dollar-denominated Eurobonds are expected to be fixed-rate bonds. Key Rating Drivers The notes' long-term ratings are in line with Aloqa's 'BB' Long-Term Issuer Default Rating (IDR) and Long-Term IDR (xgs), as all settlements are in US dollars. The notes will represent direct, unconditional and senior unsecured obligations of the bank, which rank equally with its other senior unsecured obligations. Aloqa's 'BB' Long-Term IDR reflects a moderate probability of support from the government of Uzbekistan, as captured by its 'bb' Government Support Rating. This reflects the bank's majority state ownership, a solid record of capital and funding support from the state, and its new policy role as the government's agent bank for subsidised development lending to young entrepreneurs. Fitch also considers a low cost of potential support relative to the sovereign's international reserves. The ex-government support IDR excludes assumptions of extraordinary government support from the underlying rating on the international scale and is at the level of the bank's 'b' Viability Rating (VR). The terms of the proposed Eurobond include financial covenants relating to Aloqa's compliance with regulatory capital ratios and dividend payments. A put option gives bondholders the right to seek early repayment in the event that the national government ceases to control at least 50% plus one share of the bank's issued and outstanding voting common stock, unless the issuer is acquired by an entity with the rating at least equal to the rating of the Republic of Uzbekistan. The terms also contain provisions for a call option that can be exercised by the issuer at any time prior to the maturity date. For more details on Aloqa see Fitch's rating action commentary dated 1 July 2025 ('Fitch Upgrades JSC Aloqabank to 'BB'; Outlook Stable'). Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The expected long-term rating will be downgraded if the bank's Long-Term IDR is downgraded. The expected long-term rating (xgs) will be downgraded if the bank's Long-Term IDR (xgs) is downgraded. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The expected long-term rating will be upgraded if the bank's Long-Term IDR is upgraded. The expected long-term rating (xgs) will be upgraded if the bank's Long-Term IDR (xgs) is upgraded. Public Ratings with Credit Linkage to other ratings Aloqa's Long-Term IDRs are directly linked to Uzbekistan's IDRs. ESG Considerations Aloqa has an ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the banks at board level and in the business. This factor has a negative impact on the bank's credit profile and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ Joint-Stock Commercial Aloqabank senior unsecured LT BB(EXP) Expected Rating senior unsecured LT (xgs) B(xgs)(EXP) Expected Rating ========= S P A I N ========= GRIFOLS SA: Moody's Affirms 'B1' CFR, Alters Outlook to Positive ---------------------------------------------------------------- Moody's Ratings has affirmed the B1 corporate family rating and the B1-PD probability of default rating of Grifols S.A. (Grifols or the company). Consequently, Moody's have affirmed the Ba3 instrument ratings of the backed senior secured notes issued by Grifols and backed senior secured first lien bank credit facilities issued by Grifols International Services DAC. At the same time, Moody's have affirmed the B3 instrument ratings of the backed senior unsecured notes issued by Grifols Escrow Issuer, S.A.U. The outlook on all entities has been changed to positive from stable. RATINGS RATIONALE The ratings affirmation and change in outlook to positive mainly reflect Moody's expectations that the company's key credit metrics, in particular its Moody's-adjusted gross leverage will improve more rapidly than Moody's previously anticipated, following the EUR500 million debt repayment on 5 May. Over the next 12-18 months, Moody's now expects the company's Moody's-adjusted gross leverage to trend towards 5x. The debt repayment aligns with the company's strategy to reduce leverage towards its net leverage target to 3.0-3.5x, and improve credit metrics. This action is key to the rating action and is part of Moody's assessments of governance considerations within Moody's ESG framework. Furthermore, following the company's refinancing of about EUR3 billion of debt that was due in 2027 in March 2026, the company has now longer-dated maturities and lower interest expense, and Moody's now estimate a Moody's-adjusted free cash flow (FCF) generation of about EUR200-220 million per year, over the next 12-18 months. The B1 CFR reflects the company's strong market position, scale and vertical integration in human blood plasma-derived products, which are relevant for the industry, the favourable fundamental demand drivers of the sector, the high barriers to entry in the industry because of regulation, customer loyalty, and its good product safety track record. The rating also takes into consideration the company's current high leverage, high capital intensity of the business and working capital requirements, which can have large swings during the fiscal year and are important drivers of FCF. Moody's forecasts the company's top-line revenue to grow in the mid-single digit range over the next 12-18 months. Over the same period, Moody's expects Grifols' Moody's-adjusted EBITDA to be around EUR1.85 billion with improved profitability due to volume growth, operational leverage, reduced cost per litre and continued focus on higher margins. OUTLOOK The positive outlook reflects Moody's expectations that Grifols will continue to have a strong operating performance and prudent financial management over the next 12-18 months, leading to a Moody's-adjusted leverage ratio improving towards 5x and increasing Moody's-adjusted FCF generation. LIQUIDITY Moody's views Grifols' liquidity as good, supported by EUR702 million of cash balances as of March 31, 2026, and a fully available backed senior secured revolving credit facility (RCF) of about $2 billion due in 2032. Moody's forecasts Moody's-adjusted FCF, before dividend payments, of about EUR380-410 million over the next 12-18 months, assuming working capital requirements of about 2% of revenue, total capital expenditure of about EUR450 million per year. Moody's assumes the company will continue to pay dividends to shareholders at about EUR150-190 million over the same period. The company's next debt maturities are about EUR2 billion due in 2028, which Moody's expects the company to address in a prudent and timely manner. The RCF is subject to a springing leverage covenant (consolidated total net debt/EBITDA at a maximum of 7x) that is activated if drawings exceed 40%. Grifols' leverage covenant was 4.3x as of March 31, 2026 and Moody's expects the company to maintain adequate capacity under the threshold. STRUCTURAL CONSIDERATIONS Grifols' capital structure comprises a mix of senior secured debt instruments (term loans, RCF and notes) rated Ba3, one notch above the CFR, and senior unsecured notes that are ranked behind the senior secured debt in the waterfall and are rated B3, two notches below the CFR. All these instruments benefit from guarantees of subsidiaries representing at least 60% of Grifols' EBITDA. The senior secured debt instruments benefit from collateral, which includes among others certain tangible and intangible assets and plasma inventories. The B1-PD probability of default rating (PDR) is in line with the B1 CFR, assuming a 50% corporate family recovery rate appropriate for debt structures comprising bank and bond debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the ratings if the company continues to demonstrate ability to grow revenue and EBITDA, improve profitability, all supported by continued strong market fundamentals and its solid business profile. Quantitatively, this would translate into a Moody's-adjusted gross leverage moving towards 5x, with solid interest coverage and Moody's-adjusted FCF to debt strengthening, all on a sustainable basis. The outlook could be revised to stable if the company's recent strong performance does not prove sustainable, leading to credit metrics being more in line with the current guidance. Conversely, Moody's could downgrade Grifols' ratings if its operating performance weakens, leading to deterioration of credit metrics. Numerically, this would translate into a Moody's-adjusted gross leverage remaining above 6x, Moody's-adjusted EBITDA to interest expense declining towards 2.5x, or its Moody's-adjusted FCF materially weakening, all on a sustained basis. Additionally, Moody's could consider a downgrade if liquidity were to deteriorate. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Medical Products and Devices published in October 2025. 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 Grifols, headquartered in Barcelona, Spain, is a global healthcare company primarily focused on human blood plasma-derived products and transfusion medicine. Grifols also supplies devices, instruments and assays for clinical diagnostic laboratories. It reported a company-adjusted EBITDA of EUR1,806 million for the last twelve months ended in March 2026. =========== S W E D E N =========== INTRUM AB: S&P Places 'CCC+' ICR on CreditWatch Positive -------------------------------------------------------- S&P Global Ratings placed its issuer and issue credit ratings on Swedish distressed debt collector Intrum AB (publ) (Intrum) on CreditWatch with positive implications. S&P expects to resolve the CreditWatch placement within the next 90 days, most likely after the extraordinary general meeting (EGM) vote. Intrum announced a fully guaranteed equity capital raise of Swedish krona (SEK) 7.5 billion to accelerate its deleveraging efforts. The deal remains contingent on shareholder approval at an extraordinary general meeting (EGM) on June 9, 2026. In S&P's view, the equity injection would strengthen the company's capital structure, which would enable it to reduce refinancing risk from its 2027 debt maturities. The new capital would also increase Intrum's broad financial flexibility. The reduced interest expense from liability management would allow Intrum to step up portfolio investments in the short to medium term, supporting its business stability and cash flow profile. S&P said, "We placed our 'CCC+' rating on Intrum on CreditWatch with positive implications following the announcement of a new fully guaranteed equity capital raise. The new SEK7.5 billion fully guaranteed equity capital raise remains contingent on shareholder approval at an EGM on June 9, 2026, and incorporates two main elements. The first element is a SEK1.5 billion directed issue to selected institutional investors. The second is a fully underwritten rights issue for SEK6 billion. The main purpose behind the capital injection is to accelerate the deleveraging path laid out by Intrum in early 2026, strengthening its capital structure. Our base case considers that the company will prioritize shorter-term maturities and proactively address its growing refinancing risk, ensuring business sustainability in the middle to long term." The transaction aims to accelerate Intrum's strategic plan and strengthen its balance sheet. With a still complicated capital structure after last year's restructuring process, Intrum's new management will have to turn around the business and ensure its sustainability going forward. The company faces nearly SEK10 billion in debt maturities in 2027 alone, roughly 22% of its total debt, or 30% if we exclude its revolving credit facility. As such, the capital raise would be a material support to the company managing refinancing risk, supporting its financial sustainability. S&P said, "We think that servicing income will continue to dominate Intrum's revenue generation, however, income from investments will bolster EBITDA levels in the next 24 to 36 months. In line with its strategic plan, we expect Intrum will continue to focus on expanding its servicing platform. We view this as a credit supportive since it offers a relatively more stable revenue base with higher predictability. For the first quarter of 2026, servicing income represented close to 70% of Intrum's total revenues, signaling a clear preference for capital-light initiatives." By reducing its debt stack, Intrum's interest expenses will decrease and allow it to direct additional resources toward select portfolio investments. This will eventually translate to higher EBITDA generation. These new investments will in time counterbalance the shrinkage in the existing investment portfolio that Intrum has pursued as part of its deleveraging strategy. S&P said, "We expect that its annual investment in new portfolios will remain low through 2026 at about SEK1.5 billion, before increasing to about SEK2 billion-SEK3 billion for the following years. This should stabilize the investment portfolio while contributing additional income to the company as collections remain above 100% of estimated recoveries. Therefore, our S&P Global Ratings-adjusted debt to EBITDA will continue to improve to about 5.5x for 2026 and 5.0x for 2027." S&P said, "Our CreditWatch placement reflects our view that we could raise the rating within the next 90 days. This will depend on the approval of the announced capital raise in Intrum's upcoming EGM. We expect to resolve the CreditWatch placement once the outcome of the EGM is made public. "Conversely, we could affirm the rating on Intrum if the EGM votes against the capital raise and the transaction does not proceed as expected." =========== T U R K E Y =========== GURMAT ELEKTRIK: Fitch Rates USD Sr. Sec. Notes Issuance B+(EXP) ---------------------------------------------------------------- Fitch Ratings has assigned Gurmat Elektrik Uretim A.S.'s proposed issuance of US dollar-denominated senior secured notes an expected rating of 'B+(EXP)'. The Outlook is Stable. The final rating is contingent on the receipt of final documents materially conforming to information already received. The 'B+(EXP)' rating reflects Gürmat's financial profile, driven by increasing exposure to merchant electricity prices and geothermal resource-driven generation variability. Resource risk is partly mitigated by a clearly defined top-up drilling programme supported by a fully funded, onshore-secured major maintenance reserve account (MMRA), although long-term effectiveness remains a key risk. Fitch views debt service coverage ratios (DSCR) as key metrics to evaluate the resilience of the project. Under Fitch's rating case, the average and minimum DSCRs are 1.24x and 1.15x, respectively. Fitch views counterparty risk as systemic, not bilateral, as payments depend on EPIAŞ's centralised market, the regulatory cost-sharing framework, and the ultimate pass-through of costs to end-consumers. KEY RATING DRIVERS Operation Risk - Midrange In-house Operations; Proven Record Gürmat's operations are supported by long-standing in-house delivery, experienced technical management, and broadly embedded original equipment manufacturer (OEM) support, together delivering consistently high availability of the portfolio's geothermal assets. Exworks provides administrative and staffing support without technical authority or performance risk, while OEMs handle preventive and corrective maintenance and supply parts for equipment requiring specialist support. Flexibility in scheduling major maintenance works and dedicated MMRA for top-up wells, alongside well-managed spare parts, help manage cost variability. In Fitch's view, the absence of a fixed-price, full-scope operations and maintenance contract and the limited contractual performance incentives shift cost and performance responsibility onto Gürmat, but performance and costs risks are mitigated by its demonstrated availability and disciplined maintenance practices. Revenue Risk - Volume - Midrange Resource-Driven Generation Variability The geothermal portfolio's volume risk is primarily linked to resource/steam-side performance. Gürmat's generation has historically closely tracked installed capacity, but total output fell between 2022 and 2025, with a sharper downturn at certain dual-flash units. The technical advisor's findings indicate availability remains high and conversion efficiency has been broadly stable, implying the recent capacity factor weakening is more likely driven by reservoir behaviour than by equipment reliability. This risk is partly mitigated by management's plan to drill top-up wells to support output. Two production wells have already been drilled and are ready for commissioning, and the remaining wells are scheduled to be drilled within one year under a clearly defined commissioning timetable. However, the timing and long-term effectiveness of these interventions remain key risks. Curtailment-related volume risk appears low with no reported curtailment events and sufficient grid connection capacity, meaning revenues should largely reflect resource performance rather than dispatch constraints. Revenue Risk - Price - Weaker Transition to Merchant Price Exposure The portfolio's revenue profile is transitioning from predominantly regulatory fixed tariff-backed to increasingly merchant revenues as tariffs expire. During the remaining YEKDEM periods for Efe VI-VIII, US dollar-indexed tariffs provide predictable cash flows per MWh and reduce sensitivity to EPİAŞ day-ahead price volatility. Once these protections lapse (end-2027, end-2028, end-2031), output will fully clear at market prices, heightening exposure to hourly price volatility, regulatory interventions, and FX movements given the lira-denominated settlements. Consequently, the revenue risk profile is increasingly driven by day-ahead market price fundamentals, gas input costs and BOTAŞ tariffs, electricity demand growth, and potential policy actions, which can compress margins in low-price periods and amplify volatility absent hedging or fixed-price contracted offtake. Debt Structure - Midrange Fixed-Rate, Fully Amortising; FX Mismatch The debt structure comprises a single tranche of senior secured project bonds. The notes are fixed rate and fully amortise over nine years, with semi-annual US dollar payments. They benefit from a robust security package, including first-ranking pledges over shares, accounts, movables and mortgages over immovables assets and operation license, and collateral assignments of receivables (including EPİAŞ market receivables). The covenant package is strong, featuring minimum actual and projected DSCR tests of 1.10x and a distribution lock-up trigger at 1.30x, alongside other covenants typical of a project finance transaction. Liquidity is provided by a six-month debt service reserve account (DSRA), cash-funded at closing and secured offshore, and a minimum cash balance of USD10 million and a cash-funded secured MMRA of about USD24 million. The issuer faces a currency mismatch as US dollar-denominated debt service is increasingly supported by lira-denominated spot sales following the YEKDEM tariff roll-off. This risk is partially mitigated by the inherent linkage between Turkish electricity prices and the US dollar, reflecting the US dollar-influenced cost structure of marginal power plants that set the market-clearing price, absent political intervention that could decouple prices from the exchange rate. EPİAŞ settlement mechanics introduces variability between Turkish lira collections and US dollar-indexed tariffs, which could pressure margins and debt service capacity, particularly when the Turkish lira depreciates between the timing of daily advance payments and the monthly settlement conversion. Overall, the company is exposed to foreign-exchange movements for roughly 45 days on its YEKDEM receivables. Peer Analysis The closest geothermal peers in Fitch's portfolio are Star Energy Geothermal (Salak-Darajat) Restricted Group (SEGSD RG; BBB-/Stable) and Star Energy Geothermal (Wayang Windu) Ltd. (SEGWW; BB/Stable), both in Indonesia. A key differentiator versus Gürmat is the absence of merchant exposure: both Indonesian issuers benefit from fully contracted volumes under long-term (beyond the debt tenor), US dollar-denominated, take-or-pay energy sales contracts with the Indonesian state-owned power company, which mitigates inflation and exchange-rate risks. For Gürmat, merchant exposure increases gradually, with the portfolio becoming fully merchant in 2031. All three issuers rely on top-up drilling to maintain steam supply and electricity generation. Fitch assesses operating risk for Gürmat at Midrange and Weaker for the Indonesian issuers. All three benefit from historically strong availability and experienced management, Gürmat is supported by an MMRA sized to fund the full top-up drilling programme, funded and secured in an onshore account, whereas the Indonesian MMRAs provide more limited funding. All three debt structures are amortising. Gürmat has a more conservative distribution lock-up ratio of 1.30x, compared with 1.15x for SEGSD RG and 1.10x for SEGWW. Gürmat and SEGWW have six-month DSRAs, while SEGSD RG benefits from a 12-month DSRA. However, SEGSD RG's security package excludes the generation assets. Gürmat has lower projected average and minimum DSCRs of 1.24x and 1.15x, respectively, compared with SEGSD RG's 2.42x and 1.66x and SEGWW's 1.41x and 1.13x. Together with Gürmat's increasing merchant exposure, this explains the rating differential RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The projected DSCR under Fitch's rating case consistently falling below 1.20x, with the threshold progressively increasing to 1.25x by 2032 to reflect the project's growing exposure to merchant revenues over the life of the debt. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The projected DSCR under Fitch's rating case consistently rising above 1.30x, with the threshold progressively increasing to 1.40x by 2032 to reflect the project's growing exposure to merchant revenues over the life of the debt. Financial Profile Under Fitch's base case, the annual DSCR averages 1.43x over 2026-2035 with a minimum DSCR of 1.32x. The average and minimum DSCRs are 1.24x and 1.15x, respectively, under Fitch's rating case. TRANSACTION SUMMARY Gürmat is seeking to issue a fully amortising senior secured project bond. The bond is expected to benefit from a full project finance-style security package and day-one, cash-funded DSRA and MMRA. Proceeds will be used to refinance Gürmat's existing senior secured bank debt, fund the reserve accounts required under the proposed notes, pay transaction costs, distribute a one-time payment to Mogan Energi and repayment of shareholder loan, and for general corporate purposes. The bond will have a legal tenor of nine years. SECURITY Project finance-style security package, expected to include: a first-ranking pledge over 100% of the issuer's shares, first-ranking security over key offshore and onshore bank accounts (including the DSRA, disbursement account and MMRA), first-ranking security interests over movable and immovable assets (including a first-degree mortgage and mortgage over the operation licence), and collateral assignments of present and future receivables, including EPİAŞ market receivables, subordinated shareholder-related receivables, and insurance/reinsurance receivables. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ Gurmat Elektrik Uretim A.S. Gurmat Elektrik Uretim A.S./Project Revenues/1 LT USD bond/note LT B+(EXP) Expected Rating ============= U K R A I N E ============= KERNEL HOLDING: Fitch Affirms 'CCC-' Long-Term IDR -------------------------------------------------- Fitch Ratings has affirmed Kernel Holding S.A.'s Long-Term Issuer Default Rating (IDR) and senior unsecured rating at 'CCC-'. The Recovery Rating is 'RR4'. The 'CCC-' rating reflects Kernel's high credit risks, stemming from a challenging operating environment since Russia's invasion of Ukraine. It also captures increased refinancing risk as Kernel's USD300 million bond approaches maturity in October 2027, with additional uncertainty related to the National Bank of Ukraine's (NBU) limitations on cross-border foreign-currency (FC) payments by corporates. Fitch expects Kernel's new growth capex plan of about USD400 million, along with potential acquisitions, to increase EBITDA gross leverage towards 2.5x by FY29 (financial year-end June) from 1.3x at end-FY25, which is still strong relative to the rating. Fitch also expects free cash flow (FCF) to be mildly negative during the growth cycle in FY27-FY28, following positive FCF in the previous three years. Key Rating Drivers Increased Refinancing Risk: The rating captures increased refinancing risk as the October 2027 debt maturity approaches, when the USD300 million bond falls due. The company's timely redemption of its previous bond in 2024 and their proven access to international financial institutions (IFIs) show adequate financing management, despite restrictions imposed by the NBU on local corporates, constraining Kernel's ability to service its FC debt. Failure to refinance the bond on a timely basis would likely lead to a downgrade. The conflict in the Middle East has had a limited impact on Kernel's operations, but it may increase risk aversion and tighten financing conditions in global debt markets, potentially adding uncertainty around Kernel's ability to refinance its debt or the terms of refinancing. Expansion Strategy Increases Leverage: Fitch assumes Kernel's new growth projects will be mostly debt-funded, including by supranational banks, as shown by the new USD45 million European Bank for Reconstruction and Development loan signed in April 2026. Fitch estimates this will rebalance Kernel's low-leveraged capital structure towards longer-term instruments and lead to increased leverage at about 2.5x by FY29. Limited growth opportunities in the crushing business have shifted Kernel's strategic focus towards farming and energy, although Kernel retains flexibility in implementing its announced capex plan. Fitch views Kernel's leverage as strong for the rating. Fitch also assumes the growth plan could include additional opportunistic M&A of up to USD500 million in FY27-FY29. These ambitions are confirmed by the acquisition of Enselco in April 2026, which aimed to increase the group's agricultural land bank and expand its renewable energy portfolio, thereby enhancing the self-sufficiency of its operations. Fitch anticipates the company's financial profile would be able to absorb this potential investment. Growth Capex Pressures FCF: Fitch anticipates Kernel's plan to invest about USD400 million in growth projects across the farming and renewable energy segments will lead to mildly negative FCF in FY27-FY28, after consistently positive FCF since FY23. Fitch assumes these projects will have only a limited impact on the group's profits over the period, given the material uncertainty and execution risks in Ukraine's operating environment. Fitch also assumes the company will take a prudent approach to these growth plans, given its record of well-executed strategy and proactive liquidity management, with the projects remaining uncommitted and conditional on available financing. Profit Normalisation: Fitch estimates Kernel's Fitch-adjusted EBITDA will decline to about USD370 million in FY26 (FY25: USD410 million), driven by unfavourable weather conditions, the sale of carried-over stocks from the previous year, lower crushing margins and operational disruptions caused by intensified attacks on Black Sea ports, which have increased shipping and handling expenses. Visibility on profitability in FY27-FY29 is limited due to uncertainty over the stability of access to the grain export corridor, Kernel's operating environment, harvest volumes, commodity prices and freight costs, which is reflected in the company's rating despite strong FY25 results. Acquisition Neutral to Rating: Kernel's acquisition of Enselco Holding Limited in FY26 is neutral to the rating, as it is primarily driven by operating environment and financial flexibility considerations. At the same time, the USD348 million acquisition of a business of 190,000 hectares of leasehold agricultural land, a proprietary network of grain silos, agricultural machinery and equipment and a fleet of grain railcars, among other assets, is likely to support the group's operations. Fitch estimates it will contribute about USD60 million of annual EBITDA to the group from FY27. Regulatory Limitations on Debt Service: The NBU's constraints on cross-border FC payments limit companies' ability to service FC obligations. Exceptions are possible, and specific permissions apply, including for certain import, IFI debt-service, Eurobond-related and other transactions subject to detailed conditions. Cash generated offshore from exports must generally be repatriated within 120 days for grain and vegetable oil exports. These risks are partly offset by Kernel's material cash balance outside Ukraine of USD212 million as of end-FY25. Availability of Stable Export Routes: The Ukrainian Navy corridor along the Black Sea established in 2023 has proven to be a sustainable and efficient export route during the Russia-Ukraine war. In 9MFY26, despite new attacks, Kernel's export volumes through this route only decreased by 6% year-on-year, while increasing pressure on freight costs. Kernel also has access to the alternative Danube River route, supported by a new port terminal there. Further growth in exports remains dependent on continued resilient access to export routes for Kernel's large-scale trading operations. Peer Analysis Ratings in the 'CCC' category and below for most corporate issuers in Ukraine reflect heightened operational and financial risks. Kernel's rating is in line with those of Fitch-rated Ukrainian corporates Interpipe Holdings plc (CCC-) and Metinvest B.V. (CCC-; Rating Watch Negative), both of which are exposed to challenging operating environments since Russia's invasion and also face refinancing pressures. Kernel has better operational resilience, performance, export infrastructure and creditor support, but its 'CCC-' rating mainly reflects high risks associated with the operating environment in Ukraine, the war's limited predictability and its potential material impact on the group's operations, as well as increasing refinancing risk as 2027 maturity approaches. MHP SE's 'CCC' rating reflects stronger headroom against debt maturities, proven access to capital markets following its 2026 refinancing and the presence of international operations in its business model. Fitch’s Key Rating-Case Assumptions - Revenue decline of 0.6% in FY26, followed by growth of 9.5% in FY27-FY26, normalising to about 5% thereafter - EBITDA margin of 9.1% in FY26, declining further to 8.6% in FY27 before gradually recovering to 9.4% by FY29 - Capex of about USD110 million in FY26, spiking to USD310 million-330 million in FY27-FY28 on execution of Kernel's planned growth projects - M&A spending of USD350 million in FY26 (including Enselco), followed by USD150 million-200 million annually - No dividends Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP): - Business and financial profile factors (assessment, relative importance): Management (bbb-, Lower), Sector Characteristics (bb, Moderate), Market and Competitive Positioning (b+, Higher), Diversification and Asset Quality (bb+, Moderate), Company Operational Characteristics (bb+, Lower), Profitability (bb+, Lower), Financial Structure (bb-, Moderate), and Financial Flexibility (ccc, Higher). - The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027. - Weakest link considerations adjustment is applied based on Access to Capital factor and results in an adjustment of -1 notch(es). - B+ to CC considerations apply in its analysis and result in an adjustment of -1 notch. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'b-' results in no adjustment. - The SCP is 'ccc-'. Recovery Analysis The recovery analysis assumes that Kernel would be considered a going concern (GC) in bankruptcy and reorganised rather than liquidated. Fitch has assumed a 10% administrative claim. fitch assessed Kernel's GC EBITDA through the cycle, reflecting volatility in grain and sunflower oil prices, FX risks and potential severe disruptions in exports and local operations resulting from Russia's invasion of Ukraine. The GC EBITDA estimate of USD220 million, up from USD200 million previously to reflect Enselco's acquisition, reflects its view of a sustainable post-reorganisation EBITDA, and forms the basis of its valuation of Kernel. Fitch used an enterprise value/EBITDA multiple of 3.5x to calculate a post-reorganisation valuation, reflecting a mid-cycle multiple. This is in line with the multiple used for MHP, a leading Ukrainian poultry producer. Fitch assumed that working-capital facilities were fully drawn. However, Fitch did not include trade-financing facilities in its waterfall, as these are transactional in nature, and Fitch, therefore, assumed they would not be available in a financial distress scenario. Its assumptions result in a ranked recovery in the 'RR4' band for the senior unsecured bond, indicating a 'CCC-' rating. The waterfall analysis output, based on these metrics and assumptions, was 100%. However, the bond is rated in line with Kernel's IDR, capped by the Ukrainian jurisdiction, in accordance with Fitch's Country-Specific Treatment of Recovery Ratings Criteria. Therefore, the waterfall analysis output remains capped at 50%. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Significant operational disruptions or liquidity constraints as a result of the Russian-Ukraine war - A temporary waiver or standstill following non-payment of remaining financial obligations - Reversal of restrictions on cross-border FX payments Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade is unlikely unless the Russia-Ukraine war de-escalates, facilitating the removal of any constraints on exports, reducing operating risks along and leading to a relaxation of restrictions on cross-border FX payments Liquidity and Debt Structure At end-December 2025, Kernel had USD331 million of cash on balance sheet, part of which was held offshore. Together with undrawn facilities of about USD81 million, this is sufficient to cover operational needs over the next 12 months. Refinancing risk remains high due to restricted access to capital markets and capital controls on cross-border FC payments. However, Fitch sees improvement in liquidity management and in Kernel's ability to service FC debt, following partial relaxations of capital control and consistent access to international funding. Issuer Profile Kernel is the world's largest sunflower oil producer and exporter. It is based in Ukraine. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of its Climate.VS screener did not indicate an elevated risk for Kernel. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Kernel Holding S.A. LT IDR CCC- Affirmed CCC- LC LT IDR CCC- Affirmed CCC- Natl LT CCC-(ukr) Affirmed CCC-(ukr) senior unsecured LT CCC- Affirmed RR4 CCC- VEON LTD: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed VEON Ltd.'s Long-Term Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. Fitch has also affirmed VEON Midco B.V.'s senior unsecured notes at 'BB-' with a Recovery Rating of 'RR4'. The affirmation reflects VEON's diversified revenue base, strong operating positions in key markets and Fitch-defined EBITDA net leverage that provides sufficient headroom given potentially challenging operating environments and foreign-exchange risks. The company's free cash profile in the short to medium-term is weak for a 'BB-' rating. Fitch expects net leverage to remain below 2.0x in 2026-2029, but this is offset by weak Fitch-defined cashflow from operations (CFO) less capex/ debt and Fitch-defined interest coverage. Fitch expects absolute EBITDA growth and lower capex intensity including spectrum costs, to gradually allow CFO less capex/ debt to trend to 3% by 2029. The metric will remain constrained by high interest and tax costs, with Fitch-defined interest coverage averaging around 4.0x. Key Rating Drivers Leverage Headroom: Fitch forecasts Fitch-defined net leverage below 2.0x (excluding Ukraine) in 2026-2029, supported by mid-30% EBITDA margins driven by market-leading positions in Pakistan and Kazakhstan. VEON manages a currency mismatch between predominantly local-currency cash flows and foreign-currency debt with an estimated 50%-70% of capex is denominated in hard currency. However, around 50% of debt is in local currency, providing leverage stability by hedging against adverse foreign exchange (FX) movements. This debt attracts higher base interest rates, keeping interest coverage to around 4.0x, although a more service-oriented, less debt-intensive business model may support improved coverage metrics over time. Weak Cash Flows: Fitch forecasts CFO less capex/debt at around 2-3% in 2026-2029, below its 5.5% downgrade threshold. Cash flows are affected by high cash interest, FX risks, cyclical investment capex including spectrum, and cash taxes in Pakistan and Bangladesh, with Pakistan a material contributor to group profitability. Fitch believes there is scope for the metric to improve through a combination of EBITDA growth and gradual reduction in capex and associated finding requirements, in the medium term. It is critical for VEON to generate stable operating cash generation to build headroom to maintain sufficient organic liquidity to absorb unforeseen operating and financial risks. High Capex, Gradual Decline: VEON has invested heavily in 4G rollout and digital infrastructure, with Fitch-defined cash capex intensity (including spectrum payments) at 17% in 2026 and 18% in 2027, increased by the new Pakistan spectrum acquisition (190 MHz in March 2026). 4G coverage is now above 90% outside Pakistan (above 70% in Pakistan), and VEON has opted for 4.9G rather than 5G in Kazakhstan. Fitch expects capex intensity to trend to 16% in 2029 as capex moderates due to recent tower sales, the conclusion of network investments and limited demand for 5G. Further material reductions will be contingent on capex-intensive asset sales. Digital Services, Multi-Play: VEON's digital revenue grew by 42% in 2025 to 20% of total revenue, excluding Ukraine. Increasing data usage and improving socio-economic conditions, supported by lower customer acquisition and distribution costs allow VEON to compete in underserved markets and segments. Multi-play services attract higher average revenue per user, retention and upselling/cross selling opportunities. Pakistan's digital revenues were over 30% of total revenues with financial services contributing significantly. Fitch expects double-digit growth rates in this segment as it scales but at a lower EBITDA margin, with the reported metric at 27% in 2025. Business Mix Shift: In 2025, 80% of revenue and 90% of EBITDA originated from telecoms services, but VEON has the ambition of becoming an asset-light, digital services company. Fitch believes this will support its competitive position while offering new revenue streams. However, a higher proportion of earnings from volatile segments such as lifestyle applications, entertainment and financial services introduces risks relative to cash flows from telecom operations. Fitch has revised VEON's leverage sensitivity to 2.5x-3.5x from 4.0x and CFO less capex / debt to 5.5%-7.5% from 5% to reflect its VEON's evolving business mix, operating environments and to better align with peers. Operating-Environment Risks: Fitch assesses the applicable Country Ceiling to be Kazakhstan (BBB+). EBITDA from Kazakhstan is sufficient to cover gross interest payments at current leverage. However, VEON operates in countries with an overall weighted average operating environment of 'B+', excluding Ukraine. Even in the absence of transfer and convertibility risks, Fitch considers the ratings of corporates operating in such markets to be adversely influenced by factors such as fragile economic structures and uncertain governance and regulation. Its rating thresholds for VEON are therefore tighter than those for peers operating in more developed markets. Diversified Asset Portfolio: Pakistan, Kazakhstan (pro-forma TNS+ disposal) and Uzbekistan delivered double-digit revenue growth in 2025, while Bangladesh declined 12%, although customer losses slowed in the last two quarters. VEON is a leader in Pakistan and Kazakhstan in markets with fewer competitors or dominant players. It is also a leader in Uzbekistan but in a highly competitive market with up to five mobile network operators. Conversely, VEON is third placed in Bangladesh, in a four-operator market with the incumbent, Grameenphone Ltd, dominant. VEON's geographic diversification allows strong performance in some markets to mitigate operating pressures in others. Opportunistic M&A: VEON's recent M&A includes disposing of towers in Pakistan and Bangladesh and fixed-line network TNS+ in Kazakhstan, while acquiring assets such as Uklon (ride-hailing, Ukraine) in 2025 and agreeing to acquire OLX (classifieds, Kazakhstan, USD75 million) and TPL Insurance (Pakistan, USD14 million) in 2026. Fitch expects VEON to continue build its digital portfolio opportunistically while also looking for opportunities to monetise further existing assets or build scale in existing markets, funded by asset sales. Peer Analysis Axian Telecom Holding and Management plc (B+/Stable), Africell Global Holdings Ltd (B-/Stable) and Liquid Telecommunications Holdings Limited (CCC+/RWP) are peers operating in countries with weak operating environments. VEON has more financial flexibility at its rating than these companies, reflecting its scale and stronger operating profile with well-established or leading positions in its markets and moderately better operating environments. Airtel Africa (Parent: Bharti Airtel Limited; BBB-/Stable) benefits from materially larger scale and geographic diversification. Bhati's Standalone Credit Profile is capped by India's Country Ceiling Rating of 'BBB-'. VEON's ratings reflect the negative impact of the weaker operating environment mix, which restricts its debt capacity for any given rating when compared with operators like NJJ Continental Holding S.A. (Salt; BB-/Stable) and VodafoneZiggo Group B.V. (B+/Stable) in developed European markets. Fitch’s Key Rating-Case Assumptions Its assumptions are based on VEON excluding operations in Ukraine. - Mid-single-digit reported US dollar revenue growth across the portfolio to 2029. Revenue growth to be driven by pricing, 4G penetration, data usage and digital services, offset by FX risks and competitive pressures - Fitch-defined EBITDA margins (including lease costs) falling from 35% to 33% in 2026-2029, with growth in digital revenues diluting EBITDA margins - Capex (including for spectrum) at USD600 million-USD700 million a year between 2026 and 2029. New spectrum acquired in Pakistan for the equivalent of USD239.5 million in Pakistani rupee in March 2026 to be 50% paid in 2027 and the remaining portion paid in equal instalments. - Non-recurring cash outflows of USD120 million in 2026 reflects the upfront portion of the settlement with the Dhabi Group - No dividends between 2026 and 2029 - Net M&A inflows of USD147 million in 2026 and USD20 million in 2027 - Net equity inflow of USD140 million in 2026 from the sale of shares in Kyivstar Holdings B.V. - Share buy-backs of USD100 million a year 2026-2029 Corporate Rating Tool Inputs and Scores Fitch scored the issuer as follows, using its Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP) (Excluding Ukraine): - Business and financial profile factors (assessment, relative importance): Management (bbb-, Lower), Sector Characteristics (bb+, Moderate), Market and Competitive Positioning (bbb-, Higher), Diversification and Asset Quality (bbb, Lower), Company Operational Characteristics (bbb-, Moderate), Profitability (bb+, Lower), Financial Structure (bb-, Higher), and Financial Flexibility (bb-, Moderate). - The quantitative financial subfactors are based on standard CRT financial period parameters: 20% weight for the latest historical year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027. - The Governance assessment of 'Good' results in no adjustment. - The Operating Environment assessment of 'b+' results in an adjustment of -1 notch(es). - The SCP is 'bb-'. Recovery Analysis Fitch assigns VEON a senior unsecured rating of 'BB-' in accordance with its Corporates Recovery Ratings and Instrument Ratings Criteria, under which it applies a generic approach to instrument notching for 'BB' rated issuers, resulting in a Recovery Rating of 'RR4', aligned with the IDR. The Recovery Rating is also capped at 'RR4' in accordance with its Country-Specific Treatment of Recovery Ratings Rating Criteria in which Pakistan, Kazakhstan, Bangladesh and Uzbekistan are in Group D. RATING SENSITIVITIES Rating Sensitivities exclude the contribution from Ukrainian operations. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - CFO less capex/total debt consistently below 5.5%, outside of peak capex cycles, combined with lower visibility on cash flow circulation across key subsidiaries leading to weaker liquidity - EBITDA net leverage sustained above 3.5x - Significant change in business mix leading to higher volatility in Fitch-defined Free Cash Flow Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Improvement in the operating environment of the countries in which VEON is present or a favourable change in the geographical mix of cash flows, and continued strong market position in countries of operation - Improving cash flow profile with clear visibility of CFO less capex/total debt above 7.5% - Maintenance of a conservative capital-allocation policy and leverage profile with EBITDA net leverage sustained below 2.5x - EBITDA interest coverage consistently above 6x Liquidity and Debt Structure VEON's cash at end-December 2025 was around USD1 billion, excluding cash in Ukraine and relating to banking operations in Pakistan, with USD556 million held at the holding company. VEON no longer has a revolving credit facility, having repaid and cancelled it during 2024, limiting access to additional committed liquidity. However, Fitch believes a combination of holding company cash, lower holding company debt and expected dividends from operating companies should cover holding company interest and operating costs. During 2025, VEON was able to upstream USD323 million from its operating companies after withholding tax. Fitch forecasts VEON will retain balance sheet cash averaging USD960 million in 2026-2029, with no material restrictions extracting cash from operating companies, excluding Ukraine. VEON's next material debt maturity will be USD1.2 billion in 2027. Fitch expects the company to proactively refinance upcoming maturities, albeit it at a higher interest on its USD1 billion bond. Fitch believes the company has sufficient liquidity to absorb higher interest rates on future refinancing. Issuer Profile VEON is a mobile network and digital and financial services operator with leading or well-established competitive positions in Pakistan, Ukraine, Kazakhstan, Bangladesh and Uzbekistan. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. Climate Vulnerability Signals The results of its Climate.VS screener did not indicate an elevated risk for Veon. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Veon Midco B.V. senior unsecured LT BB- Affirmed RR4 BB- VEON Ltd. LT IDR BB- Affirmed BB- =========================== U N I T E D K I N G D O M =========================== 85 LEXHAM: BTG Begbies, FRP Advisory Appointed as Administrators ---------------------------------------------------------------- 85 Lexham Gardens Limited was placed into administration in the Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), Court Number CR-2026-001934, and Paul Cooper of BTG Begbies Traynor (London) LLP, and David Paul Hudson and Simon Baggs of FRP Advisory Trading Limited, were appointed as administrators on March 12, 2026. 85 Lexham Gardens Limited carried on a business of buying and selling of own real estate, and other letting and operating of own or leased real estate. Its registered office is at 134 Buckingham Palace Road, London, SW1W 9SA. The Administrators can be contacted at: Paul Cooper BTG Begbies Traynor (London) LLP 31st Floor, 40 Bank Street Canary Wharf London E14 5NR -- and -- David Paul Hudson Simon Baggs FRP Advisory Trading Limited 110 Cannon Street London EC4N 6EU Further information contact: Abigail Smith BTG Begbies Traynor (Central) LLP E-mail: MFS@btguk.com Telephone: 0161 837 1700 BRUTON PLACE: FRP Advisory, BTG Appointed as Joint Administrators ----------------------------------------------------------------- Bruton Place (BC) Limited was placed into administration in the High Court of Justice, Court Number CR-2026-001836. David Hudson and Simon Baggs of FRP Advisory Trading Limited and Paul Steven Cooper of BTG Begbies Traynor (London) LLP, were appointed as joint administrators on March 11, 2026. Bruton Place (BC) Limited carried on a business of buying and selling of own real estate. Its registered office is at 134 Buckingham Palace Road, London, SW1W 9SA (to be changed to FRP Advisory Trading Limited, Minerva, 29 East Parade, Leeds, LS1 5PS). Its principal trading address is 134 Buckingham Palace Road, London, SW1W 9SA. The Joint Administrators can be contacted at: David Hudson Simon Baggs FRP Advisory Trading Limited 110 Cannon Street London EC4N 6EU -- and -- Paul Steven Cooper BTG Begbies Traynor (London) LLP 40 Bank Street Canary Wharf London E14 5NR Further details contact: The Joint Administrators Tel: 0113 831 3555 Alternative contact: Usman Khan Email: cp.leeds@frpadvisory.com CHILTERN COURT: FRP Advisory, BTG Appointed as Joint Administrators ------------------------------------------------------------------- Chiltern Court (BS) Limited was placed into administration in the High Court of Justice, Court Number CR-2026-001879. David Hudson and Simon Baggs of FRP Advisory Trading Limited and with Paul Steven Cooper of BTG Begbies Traynor (London) LLP, were appointed as joint administrators on March 12, 2026. Chiltern Court (BS) Limited carried on a business of buying and selling of own real estate. Its registered office is at 134 Buckingham Palace Road, London, SW1W 9SA (to be changed to FRP Advisory Trading Limited, Minerva, 29 East Parade, Leeds, LS1 5PS). Its principal trading address is 134 Buckingham Palace Road, London, SW1W 9SA. The Joint Administrators can be contacted at: David Hudson Simon Baggs FRP Advisory Trading Limited 110 Cannon Street London EC4N 6EU -- and -- Paul Steven Cooper BTG Begbies Traynor (London) LLP 31st Floor 40 Bank Street Canary Wharf London E14 5NR Further information contact: The Joint Administrators Tel: 0113 831 3555 Alternative contact: Usman Khan Email: cp.leeds@frpadvisory.com DILKE STREET: BTG Begbies, FRP Advisory Appointed as Administrators ------------------------------------------------------------------- Dilke Street Property Limited was placed into administration in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), Court Number CR-2026-002012. Paul Cooper of BTG Begbies Traynor (London) LLP and David Paul Hudson and Simon Baggs of FRP Advisory Trading Limited, were appointed as administrators on March 13, 2026. Dilke Street Property Limited carried on a business of buying and selling of own real estate, and other letting and operating of own or leased real estate. Its registered office and principal trading address is 134 Buckingham Palace Road, London, SW1W 9SA. The Administrators can be contacted at: Paul Cooper BTG Begbies Traynor (London) LLP 31st Floor, 40 Bank Street Canary Wharf London E14 5NR -- and -- David Paul Hudson Simon Baggs FRP Advisory Trading Limited 110 Cannon Street London EC4N 6EU For further information, contact: Debbie Ilako BTG Begbies Traynor (Central) LLP E-mail at Debbie.ilako@btguk.com Telephone: 0113 867 2319 EDGE MIDCO: S&P Affirms 'B+' Long-Term ICR, Outlook Stable ---------------------------------------------------------- S&P Global Ratings affirmed its 'B+' long-term issuer credit ratings on Edge Midco Ltd. (Evri) and Edge Finco PLC and its 'B+' issue and '3' recovery rating on the GBP694 million TLB and GBP725 million senior secured notes maturing in 2031. The stable outlook reflects S&P's expectation that Evri's EBITDA will continue to increase, owing to robust growth in parcel volumes and material post-merger synergies. S&P said, "We expect strong parcel volume growth in fiscal 2026 and Evri's cost-efficient business model to support robust results in fiscal 2027 and beyond. The company delivered solid stand-alone results during the nine months to Nov. 30, 2025, with parcel volumes and revenue growth up 13% and 14% year over year, respectively. The company reported parcel volume growth across all key segments, including low-level growth from large U.K. corporates (the group's largest division), and in the international, online marketplaces and small-to-midsize enterprise (SME) segments. Despite rising costs due to inflationary pressures from national insurance and national living wage increases throughout the year, Evri reported a 21% increase in its company-adjusted EBITDA in the nine-month period, as strong cost management initiatives translated to greater profitability. This excludes exceptional costs, a majority of which were related to the DHLe acquisition, which were much higher than we expected, with total exceptional costs for the year estimated at about GBP55 million. We forecast about 8% revenue growth (compared with pro forma 2026 revenue, which includes 12 months of DHLe) for the combined group in fiscal 2027, driven by continued solid parcel volume growth at both Evri and DHLe, and low growth in parcel pricing. We expect continued cost discipline and synergies from the integration will result in EBITDA margins increasing to 14%-15% in fiscal years 2027 and 2028 as operating leverage improves. We understand that Evri has recovered the initial net increase in fuel and energy costs through pricing and hedging activity. "We view the merger with DHLe as significantly benefiting Evri's competitive offering. We expect DHLe's well-established network in the attractive U.K. premium parcel market will continue to complement Evri's focus on higher-volume, lower-value deliveries and support the group's overall No. 3 position in the U.K. parcel market, behind Royal Mail and Amazon (the latter of which has a different business model and largely captive market). Before the merger, Evri concentrated its operations on the midsize parcel market for relatively low-value items, particularly in the fashion sector (including clothing, footwear, eyewear, and accessories) in the business-to-consumer (B2C) space. Following the merger, we estimate that the combined group will generate about GBP2.4 billion in revenue for fiscal 2026 (including DHLe from October 2025), versus about GBP1.9 billion in fiscal 2025 for Evri stand-alone." This was bolstered by the addition of DHLe's distinct parcel profile, which consists of heavier and higher-value parcels across both the B2C and business-to-business sectors, which should allow the combined group to deliver over 1 billion parcels and a further 1 billion business letters (a new market for Evri) annually. The added scale from the merger brings significant benefits, including a larger addressable market supporting substantial cross-selling opportunities to a new, attractive, and more diversified customer base. S&P said, "As such, we view Evri's competitive position as having improved post-merger. However, compared with rated postal peers such as International Distribution Services (BBB-/Stable/A-3), PostNL (BBB-/Stable/A-3), and bpost (A-/Stable/A-2), Evri's overall size remains smaller and the group remains solely in the U.K., whereas peers are more diversified globally and have near-monopolistic positions in their domestic markets. Still, Evri displays much stronger profitability metrics, owing to its highly efficient network, self-employed courier model, and excellent cost management strategies. It has EBITDA margins of more than 12%, which we forecast to improve meaningfully given expected synergies and is far superior to rated peers. DHLe's weaker stand-alone profitability partially dilutes the combined group's expected profit margins, alongside the near-term, considerable one-off cash integration costs required to combine the two groups. However, we expect the merger to be more EBITDA accretive from fiscal 2027 onward once meaningful cost and operational-related synergies are realized and as the group continues with its transformation program, including its out-of-home expansion strategy." S&P said, "We anticipate Evri's strong EBITDA to result in S&P Global Ratings-adjusted debt-to-EBITDA improving to below 5x by fiscal 2027, absent large debt-financed shareholder distributions or acquisitions. We forecast sustainable free cash flow of about GBP180 million in fiscal 2027, despite elevated capital expenditure (capex) relating to the company's out-of-home strategy, resulting in a comfortable liquidity buffer. "The stable outlook reflects our expectation that Evri's EBITDA will continue increasing supported by robust growth in parcel volumes and synergies following the company's merger with DHLe. We anticipate S&P Global Ratings-adjusted debt to EBITDA will remain below 6x over the next 12 months. "We could lower the rating if Evri's pro forma adjusted debt to EBITDA remained above 6.0x on a sustained basis due to operating underperformance or more aggressive financial policy than expected. This could result from an unexpected slowdown or decline in the U.K. parcels market, or from significant debt-financed dividends, acquisitions, or capex. We could also lower the rating if the company no longer generated healthy free operating cash flow (FOCF) or its liquidity weakens. "We view ratings upside as unlikely based on our assessment of Evri's financial-sponsor owner's financial policy and track record. Nevertheless, we could raise the rating if the company committed to deleverage the business significantly, underpinned by a planned exit of the financial sponsor. We could also improve our assessment of Evri's business risk profile if it demonstrates sustainably elevated profitability and FOCF." TMF GROUP: S&P Rates EUR1.8BB Senior Secured Term Loan 'B' ---------------------------------------------------------- S&P Global Ratings assigned its 'B' issue rating to TMF Group Ltd.'s (TMF's) new EUR1.8 billion equivalent senior secured term loan due 2033, which will be split into euro and U.S. dollar-denominated tranches. S&P assigned its '3' recovery rating to the new senior secured term loan, indicating its expectation of meaningful recovery prospects (50%-70%; rounded estimate: 55%) for debtholders in the event of a payment default. TMF (B/Stable/--) intends to use the net proceeds to repay its existing EUR1.5 billion senior secured debt due 2028 and revolver drawings of EUR50 million. The company also plans to fund a EUR300 million dividend distribution. Although this transaction will increase leverage beyond S&P's previous expectation, it views the extended debt maturity and improved liquidity profile resulting from the restored revolver capacity as modestly positive. TMF demonstrated strong operating performance in 2025, achieving 9% revenue growth and strengthening its credit metrics to provide sufficient headroom to absorb the EUR350 million incremental debt. S&P said, "However, we believe the rating headroom will reduce due to the dividend recapitalization, leading to a spike in S&P Global Ratings-adjusted debt to EBITDA to about 6.5x in 2026. That said, we expect the recurring, essential nature of the group's services will continue to drive business momentum in the coming quarters, supporting gradual deleveraging and an improvement in credit metrics over the medium term. In our base case, we estimate TMF's adjusted debt to EBITDA will trend toward 6x or below while maintaining positive free operating cash flow (FOCF) generation and cash interest coverage exceeding 2x. We expect these will remain within the thresholds for the current 'B' issuer credit rating level." S&P said, "The stable outlook on our 'B' issuer credit rating on TMF is unchanged and reflects our view that demand for the group's services will remain steady despite economic turmoil in its markets, thanks to the essential nature of its offering. We anticipate TMF will achieve strong organic growth over 2026-2027, with margins moderately expanding toward 30% or above, allowing the company to reduce leverage toward 6x or below, maintain its funds from interest cash interest coverage at about 2.0x or above, and generate positive FOCF over 2026-2027." ********* 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 2026. 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 * * *