/raid1/www/Hosts/bankrupt/TCREUR_Public/160113.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
Wednesday, January 13, 2016, Vol. 16, No. 008
Headlines
B E L G I U M
* EU Orders Belgium to Recover Unpaid Taxes From 35 Firms
F R A N C E
LA FINANCIERE ATALIAN: Moody's Affirms B1 CFR; Outlook Stable
I R E L A N D
EATON VANCE VII: Moody's Raises Rating on Cl. E-1 Notes to 'Ba1'
I T A L Y
SIENA LEASE 2016-2: Fitch Assigns B(EXP)sf Rating on Class C Debt
SIENA LEASE 2016-2: Moody's Rates Class C Notes (P)Ba3(sf)
L U X E M B O U R G
DH SERVICES: Moody's Affirms B2 CFR & Changes Outlook to Positive
MILLICOM INT'L: Fitch Affirms 'BB+' Long-term Currency IDRs
N O R W A Y
NORSKE SKOG: Shareholders Support Restructuring Deal
NORSKE SKOG: Moody's Assigns '(P)Caa1' Rating to QSF Notes
R O M A N I A
HELLO SHOPPING: KBC Bank Takes Over Shopping Center
U K R A I N E
INTERCREDITBANK: Liquidation Procedure Extended Thru Jan. 2017
MELIOR BANK: Liquidation Procedure Extended Thru Feb. 10, 2017
PRIME-BANK: Liquidation Procedure Extended Thru Jan. 13 Next Year
U N I T E D K I N G D O M
CAPARO INDUSTRIES: Faces Pension Fund Black Hole
CEVA GROUP: Moody's Affirms Caa1 CFR & Changes Outlook to Stable
EQUINOX (ECLIPSE 2006-1): Fitch Cuts Class A Notes Rating to Dsf
MAMAS & PAPAS: Returns to Profit; Emerges From Reconstruction
SCOOT FERRIES: Gone Bust; Cancels All Sailings
PURE WAFER: Enters Voluntary Liquidation with Immediate Effect
ROUNDABOUT: Lost Business Due to Roadworks
* Paul Fleming Joins Dechert's Restructuring Group in London
*********
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B E L G I U M
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* EU Orders Belgium to Recover Unpaid Taxes From 35 Firms
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Tom Fairless at The Wall Street Journal reports that about 35
multinationals, including brewer Anheuser-Busch InBev NV, will be
required to pay roughly EUR700 million ($765 million) in
additional taxes in Belgium after European Union regulators ruled
they had benefited from an illegal tax break.
The Journal relates that after an 11-month investigation, the
European Commission, the bloc's top antitrust regulator, concluded
on Jan. 11 that a Belgian tax-discount plan for multinationals
amounted to "a very serious distortion of competition within the
EU's single market," and ordered Belgium to recover the unpaid
taxes.
Other companies facing back-tax demands as a result of the
decision include BP PLC, German chemicals giant BASF SE and a
company recently spun off by Pfizer Inc., a person familiar with
the case said, the Journal relays. Pfizer said it won't be
affected by the decision.
According to the report, the tax bill dwarfs an earlier ruling
against Starbucks Corp. and Fiat Chrysler Automobiles in October,
setting an ominous new benchmark in an expanding inquiry into tax
deals that has ensnared major U.S. multinationals including Apple
Inc. and Amazon.com Inc.
It comes at a sensitive time for Belgium-based AB InBev, which is
in the middle of a complicated $108 billion deal to buy the
world's second-largest brewer, SAB Miller PLC of London. Belgian
Finance Minister Johan Van Overtveldt warned that the EU's
decision, if implemented, would have considerable consequences for
the companies concerned, and that the reimbursement itself would
be complex, the Journal reports.
According to the Journal, the commission said the tax scheme, in
place since 2005, allowed certain corporations to reduce their tax
base by between 50% and 90% to discount for so-called excess
profits that allegedly result from being part of a multinational
group.
At a news conference, EU antitrust chief Margrethe Vestager said
the scheme had given "carte blanche to double non-taxation" of
certain multinationals in Belgium, the Journal relays. Ms.
Vestager declined to name the companies affected, but she stressed
that they were primarily European, seeking to deflect criticism
that she has focused too much of her firepower on U.S.
multinationals.
The Journal relates that a person familiar with the matter said
the largest beneficiaries of the Belgian scheme -- and therefore
those likely to face the biggest back-tax bills -- were AB InBev,
Swedish industrial company Atlas Copco, BP, BASF, Belgian
telecommuications operator Belgacom, now known as Proximus Group,
French retailer Celio and vehicle-component manufacturer Wabco.
The Journal says AB InBev confirmed in a statement that it
benefits from the type of Belgian tax ruling deemed illegal by
Brussels. It said it was disappointed by the EU's decision and was
confident that it had always complied with "Belgian and
international tax provisions."
"We will consider our options, taking into account the reactions
by the Belgian authorities," the company said -- leaving the door
open to an appeal with the EU's top courts in Luxembourg, the
Journal relays.
According to the Journal, BASF said it was closely following the
case, adding it was one of the largest taxpayers in Belgium. Atlas
Copco declined to comment, citing a "quiet period" before its
results later this month. A spokesman for Wabco said the company
was reviewing the EU's announcement and would "issue its own
statement in due course." BP declined to comment, the Journal
adds.
Other companies involved didn't respond to requests for comment,
the Journal says.
The Journal states that tax experts warned that the EU's decision
would create uncertainty for corporate directors, and risked
driving investment away from Belgium.
"The reputation of Belgium as an investment location will
certainly be damaged as trust and legal certainty is key," the
Journal quotes Dirk Van Stappen, a tax partner at KPMG in Belgium
and professor at the University of Antwerp, as saying.
The Journal relates that Mr. Van Overtveldt said Belgian
authorities would hold further negotiations with EU regulators,
and didn't rule out lodging an appeal with the bloc's top courts
in Luxembourg, depending on the outcome of those talks.
The Journal reports that Geert De Neef, a Brussels-based partner
with international tax consultancy Taxand, said multinationals
might consider moving their headquarters to London, the
Netherlands or Luxembourg, where headline corporate tax rates are
lower than Belgium's 34%. "Then you don't need special tricks, you
know it is acceptable for the European Commission," Mr. De Neef,
as cited by the Journal, said.
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F R A N C E
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LA FINANCIERE ATALIAN: Moody's Affirms B1 CFR; Outlook Stable
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Moody's Investors Service has affirmed the B1 corporate family
rating and B1-PD probability of default rating of La Financiere
ATALIAN S.A. Concurrently, Moody's has affirmed the B2 (LGD4 from
LGD5) rating on the group's senior unsecured notes maturing in
2020. All ratings have stable outlook.
RATINGS RATIONALE
On Jan. 8, Atalian acquired Temco-Euroclean -- a US-based provider
of cleaning and facility management services -- for an enterprise
value of approximately EUR45 million. The acquisition will be
funded through EUR60 million new bank facilities, a portion of
which will be repaid with a tap-offering of EUR125 million of
senior unsecured notes. The remaining proceeds from the bond-
offering will largely be applied towards redemption of the
company's factoring facilities amounting to around EUR109 million
as of FYE August 2015.
With EUR323 million of revenues for the financial year ended 30
September, 2015, Temco will contribute to Atalian further
diversifying its international exposure. Atalian has over the
past three years pursued a strategy of international expansion
and, pro-forma for the acquisition of Temco, revenues derived from
international operations represented approximately 34% of the
company's total revenues for the financial year ending 31 August
2015. Whereas Atalian since 2003 has bought 161 companies, Temco
is larger than the bolt-on acquisitions that Atalian typically
engages in. As such, Moody's considers that the integration-risk
is somewhat higher and the rating agency notes that Temco will
have a dilutive impact on Atalian's profit-margins due to its
lower profitability.
Atalian's B1 CFR continues to reflect (1) the company's high
exposure to its home market, France; (2) its high leverage; (3)
the fact that a substantial proportion of the company's costs
comprise personnel charges, which leaves it vulnerable to
legislative changes that affect labour costs. However, these
factors are partially offset by Atalian's (1) solid competitive
positioning within the French market, particularly within the
cleaning segment; (2) positioning across both hard and soft
services, allowing for the provision of multi-services solutions
with a limited need for subcontractors; (3) limited degree of
customer concentration; and (4) family ownership, which provides
some comfort as regards to the company's future strategic
direction.
Moody's expects Atalian's liquidity profile to remain adequate
going forward. In addition to expected positive free cash flows,
Atalian has also access to a EUR18 million RCF expected to be
undrawn at closing. Moody's also notes that further liquidity
cushion is provided through the company's EUR140 million factoring
facility. Moody's notes, however, that the company's bilateral
facilities mature within one year (with an option of extending for
another year at banks' discretion).
RATING OUTLOOK
The stable outlook reflects Moody's assumptions that low single
digit organic revenue growth will translate into further growth of
Atalian's EBITDA allowing for the company to continue to de-
leverage upon the acquisition of Temco. Moreover, the stable
outlook factors in a gradual improvement of profit-margins
following the initial dilutive impact that Temco will exhibit on
Atalian's EBITDA-margins. Moody's expects Atalian to pursue its
strategy of international expansion, however, the current rating
does not factor in any larger material debt-funded acquisitions.
WHAT COULD CHANGE THE RATING UP/DOWN
Whilst not expected in the near term, over time Moody's could
consider upgrading the rating to Ba3 if Atalian's leverage,
measured by debt/EBITDA, move sustainably below 4.0x, combined
with EBITA/ interest expense above 2.5x and the generation of
positive free cash-flow. An upgrade would also require that the
liquidity remains sufficiently solid with appropriately sized
committed credit facilities in place.
Conversely, negative pressure could develop if Atalian's leverage
moves well above 4.5x for a sustainable period of time or if
Moody's becomes concerned about the company's liquidity. Downward
rating pressure could also materialize should the CICE tax-benefit
disappear unless offset by other forms of legislation alleviating
the company's cost structure.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in December 2014.
Atalian is a France-based provider of outsourced building
services. It serves around 25,000 customers in the private and
public sector and operates throughout 21 countries. For the
financial year ended Aug. 31, 2015, the company reported total
revenues of EUR1.3 billion and an EBITDA of EUR89 million.
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I R E L A N D
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EATON VANCE VII: Moody's Raises Rating on Cl. E-1 Notes to 'Ba1'
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Moody's Investors Service has upgraded the ratings on these notes
issued by Eaton Vance CDO VII PLC:
EUR13.4 mil. Class B-1 Second Priority Secured Floating Rate
Notes, Upgraded to Aaa (sf); previously on July 5, 2011,
Upgraded to Aa1 (sf)
US$16.3 mil. Class B-2 Second Priority Secured Floating Rate
Notes, Upgraded to Aaa (sf); previously on July 5, 2011,
Upgraded to Aa1 (sf)
EUR10.8 mil. Class C-1 Third Priority Deferrable Secured
Floating Rate Notes, Upgraded to Aa1 (sf); previously on
May 8, 2012, Upgraded to A1 (sf)
US$13.1 mil. Class C-2 Third Priority Deferrable Secured
Floating Rate Notes, Upgraded to Aa1 (sf); previously on
May 8, 2012 Upgraded to A1 (sf)
EUR14.2 mil. Class D-1 Fourth Priority Deferrable Secured
Floating Rate Notes, Upgraded to Baa1 (sf); previously on
May 8, 2012, Upgraded to Baa3 (sf)
US$17.2 mil. Class D-2 Fourth Priority Deferrable Secured
Floating Rate Notes, Upgraded to Baa1 (sf); previously on
May 8, 2012, Upgraded to Baa3 (sf)
EUR8 mil. (Current Balance: EUR4,141,881.39) Class E-1 Fifth
Priority Deferrable Secured Floating Rate Notes, Upgraded to
Ba1 (sf); previously on May 8, 2012, Upgraded to Ba3 (sf)
US$9.7 mil. (Current Balance: US$5,022,031.15) Class E-2 Fifth
Priority Deferrable Secured Floating Rate Notes, Upgraded to
Ba1 (sf); previously on May 8, 2012, Upgraded to Ba3 (sf)
Moody's also affirmed the ratings on these notes issued by Eaton
Vance CDO VII PLC:
EUR120 mil. (Current Balance: EUR68,957,965.73) First Priority
Senior Secured Floating Rate Variable Funding Note, Affirmed
Aaa (sf); previously on May 25, 2006, Assigned Aaa (sf)
EUR74 mil. (Current Balance: EUR12,910,705.23) Class A-1 First
Priority Senior Secured Floating Rate Notes, Affirmed Aaa
(sf); previously on May 25, 2006, Assigned Aaa (sf)
US$89.9 mil. (Current Balance: US$51,978,685.66) Class A-2
First Priority Senior Secured Floating Rate Notes, Affirmed
Aaa (sf); previously on May 25, 2006, Assigned Aaa (sf)
Eaton Vance CDO VII PLC, issued in April 2006, is a Collateralised
Loan Obligation backed by a portfolio of mostly high yield US and
European loans. The portfolio is managed by Eaton Vance
Management. The transaction's reinvestment period ended on June
25, 2013.
RATINGS RATIONALE
The rating upgrades of the notes are primarily a result of the
redemption of senior notes and subsequent increases of the
overcollateralization ratios of the remaining classes of notes.
Moody's notes that the class A and Variable Funding notes have
redeemed by approximately EUR152.6 million (or 83% of their
original balance). As a result of the deleveraging the OC ratios
of the notes have increased significantly. According to the
December 2015 trustee report, the classes A/B, C, D and E OC
ratios are 147.44%, 130.61%, 113.56% and 109.23% respectively
compared to levels just prior to the payment date in September
2015 of 141.89%, 127.54%, 112.59% and 108.60% respectively. The
OC ratios will increase further following the payment date in
December 2015.
The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. In its base
case, Moody's analysed the underlying collateral pool as having a
performing par balance of EUR 239.7 million, a weighted average
default probability of 14.78% (consistent with a WARF of 2398 and
a weighted average life of 3.77 years), a weighted average
recovery rate upon default of 46.97% for a Aaa liability target
rating and a diversity score of 52.
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on
future defaults is based primarily on the seniority of the assets
in the collateral pool. Moody's generally applies recovery rates
for CLO securities as published in "Moody's Approach to Rating SF
CDOs". In some cases, alternative recovery assumptions may be
considered based on the specifics of the analysis of the CLO
transaction. In each case, historical and market performance and
a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analyzing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Global Approach to Rating Collateralized Loan Obligations"
published in December 2015.
Factors that would lead to an upgrade or downgrade of the ratings:
In addition to the base-case analysis, Moody's conducted
sensitivity analyses on the key parameters for the rated notes,
for which it lowered the weighted average recovery rate by 5
percentage points; the model generated outputs that were in line
with the base-case results for classes A and B and within one
notch for classes C, D and E.
This transaction is subject to a high level of macroeconomic
uncertainty, which could negatively affect the ratings on the
note, in light of uncertainty about credit conditions in the
general economy. CLO notes' performance may also be impacted
either positively or negatively by 1) the manager's investment
strategy and behaviour and 2) divergence in the legal
interpretation of CDO documentation by different transactional
parties because of embedded ambiguities.
Additional uncertainty about performance is due to:
Portfolio amortization: The main source of uncertainty in this
transaction is the pace of amortization of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes'
ratings.
Amortization could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral
manager or be delayed by an increase in loan amend-and-extend
restructurings. Fast amortization would usually benefit the
ratings of the notes beginning with the notes having the
highest prepayment priority.
Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes
have defaulted can result in volatility in the deal's over-
collateralization levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell
defaulted assets can also result in additional uncertainty.
Moody's analyzed defaulted recoveries assuming the lower of
the market price or the recovery rate to account for potential
volatility in market prices. Recoveries higher than Moody's
expectations would have a positive impact on the notes'
ratings.
Foreign currency exposure: The deal has a significant exposure
to USD denominated assets. Volatility in foreign exchange
rates will have a direct impact on interest and principal
proceeds available to the transaction, which can affect the
expected loss of rated tranches.
In addition to the quantitative factors that Moody's explicitly
modeled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
other Moody's analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
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I T A L Y
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SIENA LEASE 2016-2: Fitch Assigns B(EXP)sf Rating on Class C Debt
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Fitch Ratings has assigned Siena Lease 2016-2 S.r.l.'s notes
expected ratings, as follows:
EUR761,300,000 Class A: 'AA+(EXP)sf' ; Outlook Stable
EUR202,500,000 Class B: 'BBB+(EXP)sf' ; Outlook Stable
EUR202,500,000 Class C: 'B(EXP)sf' ; Outlook Stable
EUR251,000,000 Class D: not rated
EUR202,530,000 Junior Notes: not rated
The transaction is a granular cash flow securitisation of a
EUR1,62m static pool of euro-denominated receivables deriving from
lease agreements entered into between Italian small and medium
sized enterprises, entrepreneurs, artisans and self-employed
individuals, and Monte dei Paschi di Siena Leasing and Factoring
Banca per i servizi finanziari alle imprese (MPS L&F).
The ratings address the likelihood of investors receiving interest
payments in accordance with the terms of the transaction
documentation and full repayment of principal by legal final
maturity in September 2040.
Final ratings are contingent on the receipt of final documentation
conforming to information already received.
KEY RATING DRIVERS
High Default Probability
Based on the internal ratings, Fitch determined an annual average
probability of default (PD) for the originators' book of 7.5% and
6.7% for the transaction. This implies a positive selection of the
securitised portfolio compared with the originator balance sheet,
which was accomplished through the removal of lower credit quality
lessees from the securitised portfolio. Fitch expects the credit
quality of the originator book and securitised portfolio to be
slightly worse than Fitch's Italian benchmark.
Low Recovery Rate
The originator has transferred all receivables from the sale
and/or re-lease of the assets to the SPV, but the ownership of the
leased assets was not transferred. Given that the originator is
not rated by Fitch and the low rating of the parent company, Fitch
gave no credit to recoveries from the sale or re-lease of the
assets.
Diversified Portfolio
The securitised portfolio is fairly diversified, with the largest
industry and the top 10 lessees accounting for 23.6% and 5.5% of
the portfolio, respectively.
No Residual Value Risk
The noteholders will have no exposure to residual value risk as
this component of the receivables will not be securitised.
However, interest paid by the lessees and received by the SPV will
be computed on the basis of the whole outstanding principal
balance (inclusive of the residual value component) as it is
usually the case for Italian SME leasing deals.
Sovereign Cap
The class A notes are capped at 'AA+sf', driven by sovereign
dependency, in accordance with Fitch's Criteria for Sovereign Risk
in Developed Markets for Structured Finance and Covered Bonds.
RATING SENSITIVITIES
As part of its analysis, the agency considered the sensitivity of
the notes' ratings to the stresses on defaults, recovery rates and
correlation to assess the impact on the ratings.
An increase of 25% of the default probabilities assigned to the
underlying obligors could result in a downgrade of up to three
notches for the rated notes. A decrease of 25% of their assumed
recovery rates would have no impact on the class A notes and could
result to a downgrade of one notch for the class B and C notes.
Finally a joint stress combining these stresses plus a doubled
country correlation could lead to a five-notch downgrade for the
class A notes and a four-notch downgrade for the class B notes.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation
to this rating action.
DATA ADEQUACY
Fitch reviewed the results of a third party assessment conducted
on the asset portfolio information, which indicated errors or
missing data related to the loans' identifier, industry sector,
origination and maturity date, interest rate type and collateral
location. These findings were immaterial to this analysis.
Fitch conducted a review of a small targeted sample of the
originator's origination files and found the information contained
in the reviewed files to be adequately consistent with the
originator's policies and practices and the other information
provided to the agency about the asset portfolio.
Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.
SIENA LEASE 2016-2: Moody's Rates Class C Notes (P)Ba3(sf)
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Moody's Investors Service has assigned these provisional ratings
to ABS notes to be issued by Siena Lease 2016-2 S.r.l:
EUR761,300,000 Class A Asset-Backed Floating Rate Notes due
October 2040, Assigned (P)Aa2 (sf)
EUR202,500,000 Class B Asset-Backed Floating Rate Notes due
October 2040, Assigned (P)A2 (sf)
EUR202,500,000 Class C Asset-Backed Floating Rate Notes due
October 2040, Assigned (P)Ba3 (sf)
EUR251,000,000 Class D Asset-Backed Floating Rate Notes due
October 2040, Assigned (P)Caa2 (sf)
Moody's has not assigned ratings to the EUR202,530,000 Junior
Asset backed Residual Return Notes due which are expected to be
issued.
Siena Lease 2016-2 S.r.l. is a cash securitisation of lease
receivables originated by MPS Leasing & Factoring Spa (fully owned
by Bance Monte dei Paschi di Siena S.p.A, rated B3/NP) and granted
to individual entrepreneurs and small and medium-sized enterprises
(SME) domiciled in Italy. Assets are represented by receivables
belonging to different sub-pools: real estate (61.69%), equipment
(30.44%) and auto transport assets (7.88%). The securitized
portfolio does not include the so-called "residual value
instalment", i.e. the final instalment amount to be paid by the
lessee (if option is chosen) to acquire full ownership of the
leased asset.
RATINGS RATIONALE
According to Moody's, the rating takes into account, among other
factors, (i) the loan-by-loan evaluation of the underlying
portfolio, also complemented by the historical performance
information as provided by the originator; (ii) the structural
features of the transaction, with the inclusion of, inter alia,
(a) a EUR 21.7 million amortizing cash reserve (funded at closing
through a subordinated loan) designed to provide liquidity
coverage over the life of the transaction and credit support only
at maturity for Class A and Class B; (b) a Class B, Class C and
Class D interest subordination event that is triggered
respectively upon cumulative defaults exceeding 35%, 25% and 15%
of the initial portfolio; and (iii) the sound legal structure of
the transaction.
Moody's notes as credit strengths of the transaction its static
nature as well as the structure's efficiency, which provides for
the application of all cash collections to repay the Class A notes
should the portfolio performance deteriorate beyond certain
limits. Other credit strengths include (i) the granular portfolio
composition as reflected by low single lessee concentration (with
the top lessee and top 5 lessees group exposure being 0.67% and
2.98% respectively and an effective number over 900); (ii) the
relatively high seasoning of the pool (4.24 years); (iii) no
potential losses resulting from set-off risk as obligors do not
have deposits or did not enter into a derivative contract with MPS
Leasing & Factoring Spa; and (iv) the relative high yield of the
underlying portfolio as the SPV benefits from the interest paid on
the residual value component of the leasings.
Moody's notes that the transaction also features a number of
credit weaknesses, such as: (i) some industry concentration as
more than 44% of the obligors belong to the top two sectors,
namely Construction & Building and Beverage Food & Tobacco
(according to Moody's industry classification; (ii) poor
performance in terms of defaults and arrears of the leases
originated by MPS Leasing & Factoring Spa as reflected by the
historical data provided; (iii) more than 30% exposure to leases
originated through dealers-brokers channel; (iv) more than 3.5%
exposure to SPV for which the repayment of the leases relies
solely on the cash flow generated by the real estate asset object
of the lease; (v) the potential losses resulting from commingling
risk which are partially mitigated by a daily sweep into the
accounts of the issuer and are reflected in the credit enhancement
levels of the transaction; (vi) the potential impact on recoveries
upon originator's default; and (vii) subject to certain restricted
conditions MPS Leasing & Factoring Spa will remain active in some
servicing activities even after its revocation as the servicer.
Finally, Moody's notes that the transaction is exposed: (i) to
fixed-floating interest rate risk (6.98% of the pool reference a
fixed interest rate) which is partially mitigated by an interest
rate cap entered into with HSBC Plc (Aa2/P-1); and (ii) to limited
basis risk given the discrepancy between the interest rates paid
on the leasing contracts compared to the rate payable on the notes
and no hedging arrangement being in place for the structure.
As of the valuation date (Nov. 30, 2015), the portfolio principal
balance amounted to EUR 1,619.8 million. The portfolio is
composed of 13,181 leasing contracts granted to 8,848 lessees,
mainly small and medium-sized companies. The leasing contracts
were originated between 2003 and 2015, with a weighted average
seasoning of 4.24 years and a weighted average remaining life of
approximately 8.89 years. The interest rate is floating for
93.02% of the pool while the remaining part of the pool bears a
fixed interest rate. The weighted average spread on the floating
portion is 3.34%, while the weighted average interest on the fixed
portion is 5.89%.
In its quantitative assessment, Moody's assumed an inverse normal
default distribution for this securitized portfolio due to its
level of granularity. The rating agency derived the default
distribution, namely the relevant main inputs such as the mean
default probability and its related standard deviation, via the
analysis of: (i) the characteristics of the loan-by-loan portfolio
information, complemented by the available historical vintage
data; (ii) the potential fluctuations in the macroeconomic
environment during the lifetime of this transaction; and (iii) the
portfolio concentrations in terms of industry sectors and single
obligors. Moody's assumed the cumulative default probability of
the portfolio to be equal to 23.57% (equivalent to B2) with a
coefficient of variation (i.e. the ratio of standard deviation
over mean default rate) of 27.50%. The rating agency has assumed
stochastic recoveries with a mean recovery rate of 35%, a standard
deviation of 20%, and a 10.5% stressed mean recovery rate upon
insolvency of the originator. In addition, Moody's has assumed
the prepayments to be 5% per year.
The transaction is modeled via Moody's ABSROM cash flow model
which evaluates all default scenarios that are then weighted
considering the probabilities of such default scenarios occurring
as defined by the transaction-specific default distribution. On
the recovery side Moody's assumes a stochastic (normal) recovery
distribution which is correlated to the default distribution. In
each default scenario, the corresponding loss for each class of
notes is calculated given the incoming cash flows from the assets
and the outgoing payments to third parties and noteholders.
Therefore, the expected loss for each tranche is the sum product
of (i) the probability of occurrence of each default scenario; and
(ii) the loss derived from the cash flow model in each default
scenario for each tranche. As such, Moody's analysis encompasses
the assessment of stressed scenarios.
Moody's used CDOROM to determine the coefficient of variation of
the default distribution for this transaction. The Moody's CDOROM
model is a Monte Carlo simulation which takes borrower specific
Moody's default probabilities as input. Each borrower reference
entity is modelled individually with a standard multi-factor model
incorporating intra- and inter-industry correlation. The
correlation structure is based on a Gaussian copula. In each
Monte Carlo scenario, defaults are simulated.
The ratings address the expected loss posed to investors by the
legal final maturity of the notes. In Moody's opinion, the
structure allows for timely payment of interest and ultimate
payment of principal with respect to the Notes by the legal final
maturity. Moody's ratings address only the credit risk associated
with the transaction, other non-credit risks have not been
addressed but may have a significant effect on yield to investors.
No previous ratings were assigned to this transaction.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors or circumstances that could lead to a downgrade of the
ratings affected by today's action would be (1) the worse-than-
expected performance of the underlying collateral; (2)
deterioration in the credit quality of the counterparties; and (3)
an increase in Italy's sovereign risk.
Factors or circumstances that could lead to an upgrade of the
ratings affected by the action would be a decline in Italy's
sovereign risk.
Stress Scenarios:
Moody's also tested other set of assumptions under its Parameter
Sensitivities analysis. At the time the rating was assigned, the
model output indicated that the Class A would have achieved Aa2
even if the mean default rate was as high as 24.57% with a
recovery rate assumption of 30% (all other factors unchanged).
Additionally Moody's observes that under the same stressed
assumptions Class B would have achieved A3 rating.
Parameter Sensitivities provide a quantitative, model-indicated
calculation of the number of notches that a Moody's-rated
structured finance security may vary if certain input parameters
used in the initial rating process differed. The analysis assumes
that the deal has not aged. It is not intended to measure how the
rating of the security might migrate over time, but rather, how
the initial rating of the security might differ as certain key
parameters vary.
Moody's issues provisional ratings in advance of the final sale of
securities, but these ratings only represent Moody's preliminary
credit opinion. Upon a conclusive review of the transaction and
associated documentation, Moody's will endeavour to assign
definitive ratings to the Notes. A definitive rating may differ
from a provisional rating. Moody's will disseminate the
assignment of any definitive ratings through its Client Service
Desk.
===================
L U X E M B O U R G
===================
DH SERVICES: Moody's Affirms B2 CFR & Changes Outlook to Positive
-----------------------------------------------------------------
Moody's Investors Service has affirmed the debt ratings of DH
Services Luxembourg S.a.r.l. ("Dematic") including the B2
corporate family, the Ba3 senior secured ratings, and the Caa1
senior unsecured rating, but changed the rating outlook to
positive from stable.
Issuer: DH Services Luxembourg S.a.r.l.
Outlook changed:
Rating Outlook, to Positive from Stable
Ratings affirmed:
Corporate Family Rating, B2
Probability of Default Rating, B2-PD
$265 million senior unsecured notes due December 2020, Caa1
(LGD5)
Issuer: Mirror BidCo Corp
Outlook changed:
Rating Outlook, to Positive from Stable
Ratings affirmed:
$75 million senior secured revolving credit facility due
December 2017, Ba3 (LGD2)
$576 (outstanding) million senior secured term loan due Dec.
2019, Ba3 (LGD2)
RATINGS RATIONALE
The positive outlook reflects strong order trends which are
expected to translate into meaningful revenue and earnings growth
over the next 12 months. The positive outlook also incorporates
Dematic's growing backlog which has increased markedly over the
last few quarters (June 30th 2015 backlog was $1.2 billion, 68%
higher than September 2014) along with expectations that Dematic's
credit profile will improve over the coming quarters.
Dematic's B2 corporate family rating recognizes the company's
well-established position within the automated material handling
equipment market, long-standing relationships with blue chip
customers, and the company's good diversity by end market and
geographic region. The ratings are also supported by on-going
trends such as continued growth in direct distribution and e-
commerce, greater use of automation in warehouses and distribution
centers, and the increased complexity of supply chains, all of
which, should allow for continued demand for Dematic's product and
service offering. Tempering considerations include Dematic's
relatively high degree of financial leverage (estimated Moody's
adjusted Debt-to-EBITDA of about 5.1x as of September 2015) and
on-going pricing pressure from large customers which acts as a
constraint on profitability measures. Uncertainty around
Dematic's long-term financial policy as well as the company's
exposure to the cyclicality of customers' investment budgets also
act as ratings constraints.
Dematic has a relatively good cash flow profile supported by
modest capital expenditure requirements (averaging about 3% of
sales) and negative working capital trends which are driven by
upfront and subsequent milestone payments on many of its
contracts. Moody's expects the company to generate about $100
million in free cash flow in FY 2015 which equates to about 10%
free cash flow as a % of debt. Moody's anticipates continued free
cash flow generation in FY 2016, albeit at more muted levels than
FY 2015, with free cash flow as a % of debt likely to be in the
low-to-mid single digits. Liquidity is also supported by
Dematic's sizable cash balances and minimal amortization on the
company's term loan (about $6 million per annum). External
liquidity is provided by an unused $75 million revolver expiring
December 2017. The revolver contains a springing senior secured
leverage covenant of 4.25x that comes into effect if usage under
the facility exceeds 20% and we expect the company to maintain
comfortable cushions with respect to financial covenants.
Factors that could contribute to a ratings upgrade include
leverage sustained below 4.75x, continued strength in order and
backlog levels, and free cash flow to debt consistently above 5%.
A good liquidity profile along with expectations of a conservative
financial policy would also be prerequisites for any ratings
upgrade.
The ratings and/or outlook could be lowered if weaker earnings or
free cash flow were to result in a deterioration in key credit
metrics such that Moody's adjusted Debt-to-EBITDA were to exceed
6.25x. A more aggressive financial policy, a large debt-financed
acquisition or a weakening of Dematic's liquidity profile could
also result in downward rating pressure.
The $265 million senior notes were issued by holding company DH
Services Luxembourg S.a.r.l. whereas the senior secured credit
facilities (comprised of a $75 million revolver and $575 million
term) were issued by Mirror BidCo Corp., a holding and subsidiary
of DH Services Luxembourg S.a.r.l. The Caa1 (LGD5) rating assigned
to the $265 million senior unsecured notes due 2020 is two notches
below the B2 Corporate Family Rating, reflecting that the notes
are unsecured obligations of the company and rank junior to the
company's senior secured credit facility.
Headquartered in Luxembourg, DH Services Luxembourg S.a.r.l
("Dematic") is a leading provider of logistics and materials
handling solutions with a strong focus on food, general
merchandise and apparel retail. For the fiscal year ended
Sept. 30, 2015, the company is expected to generate revenues of
about $1.6 billion. Dematic is owned by funds managed by private
equity firms AEA Investors LP and Teachers' Private Capital (the
private equity arm of Ontario Teachers' Pension Plan).
The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.
MILLICOM INT'L: Fitch Affirms 'BB+' Long-term Currency IDRs
-----------------------------------------------------------
Fitch Ratings has affirmed the long-term foreign and local
currency Issuer Default Ratings (IDRs) of Millicom International
Cellular, S.A. (MIC) at 'BB+' with a Stable Outlook. Fitch has
also affirmed MIC's senior unsecured debt at 'BB+.'
MIC's ratings reflect the company's geographical diversification,
strong brand recognition and network quality, all of which have
contributed to its leading market positions in key markets, steady
subscriber growth, and solid operational cash flow generation. In
addition, the rapid uptake in subscribers' data usage, as well as
MIC's ongoing expansion into the under-penetrated fixed-line
services bode well for its medium- to long-term revenue growth.
Despite these diversification benefits, MIC's ratings are
constrained by the company's presence in countries in Latin
America and Africa with low sovereign ratings. The ratings are
also tempered by the recent increase in the company's financial
leverage due to M&A activities, historically high shareholder
returns, and debt allocation between subsidiaries and the holding
company.
While operational fundamentals and key financial metrics are
stable, the ongoing investigation regarding the improper payment
on behalf of Tigo Guatemala is credit negative. The timeline or
the magnitude of the potential impact stemming from this issue
remains largely uncertain at this time. Fitch will closely monitor
the situation and take immediate action, if necessary, when
details become available.
KEY RATING DRIVERS
Leading Market Positions:
MIC has retained its market leadership in most of its key cash-
generating operating companies in Latin America and we expect
these positions to remain intact over the medium term backed by
its extensive network quality, strong service quality and brand
recognition. The company has maintained a steady subscriber base
expansion, which was 7% during the first nine months of 2015
(9M15) compared to the level at end-2014, and its increasing
investment into fixed-line operation will help acquire more
revenue-generating units going forward. As of September 2015, MIC
maintained its largest market positions in its key cash-generating
mobile markets, such as Guatemala, Paraguay, and Honduras.
Solid Performance:
MIC has achieved a stable revenue and EBITDA improvement during
9M15, driven by continued subscriber expansion, solid growth in
its fixed-line operation, and the improved cost structure. On a
constant currency basis, the company has achieved service revenue
growth of about 6% during 9M15 while improving its EBITDA margin
to 33.4% from 32.7% during the same period, backed by its efforts
to rein in marketing and holding company corporate costs.
Excluding the currency impact, Fitch estimates that the company's
EBITDA has grown by close to 10% during the period, which is a
noticeable improvement compared to its consistent EBITDA margin
erosion until 2014 due to competitive pressures.
Ongoing FX Headwind:
MIC's recent solid performance has been largely diluted by the
ongoing local currency depreciation against the U.S. dollar, the
reporting currency of the company. During the 3Q15, the average
local currency depreciation in the company's operational
geographies was 13.5% compared to a year ago, with the largest
impact seen in Colombia with 52% and Paraguay with 23% among the
key subsidiaries. As a result, its reported revenues fell by 1.3%
during 9M15, while EBITDA generation managed to grow by just 0.8%.
Currency mismatch is also high for MIC with regard to its debt
structure, as 75% of its total debt is denominated in USD while
its cash flow generation is predominantly based in local currency.
Positively, we believe that this risk is manageable, as the
company has stable cash flow generation without any sizable USD
bond maturities until 2020, while its access to international
capital markets have historically been solid.
Diversifying Revenue Mix:
MIC's growth strategy will be increasingly centered on mobile
data, fixed internet and pay-TV services as it tries to alleviate
pressure on the traditional voice/SMS revenues. The mobile data
customer base reached 29% of total subscribers as of Sept. 30,
2015, from 20% as of end-2013, which supported 25% mobile data
revenue growth during 9M15, compared to a year ago. Broadband and
pay-TV businesses also maintained solid growth, largely due to UNE
EPM Telecomunicaciones S.A., as the segmental revenues grew by
116% during the same period. As this trend continues, Fitch
forecasts mobile service revenues to continue to fall well below
65% of total revenues over the medium term, which compares to 83%
in 2013.
Increased Leverage:
The company's leverage has increased in recent years due to M&A
activities, mainly the merger in August 2014 between its Colombian
subsidiary and UNE, the Colombian fixed-line operator, and
historically high shareholder distributions. The company's net
leverage, measured by adjusted net debt-to-EBITDAR including
minority shareholder dividend, was 2.5x as of Sept. 30, 2015; this
compares unfavorably to 1.4x at end-2012. On a proportionate
consolidation basis, the net leverage ratio was 2.3x during the
same period.
Positively, Fitch forecasts MIC's leverage to gradually fall over
the medium term as the company continues to refrain from
aggressive shareholder payouts amid EBITDA improvement. The
company paid only USD264 million in dividends annually in 2013 and
2014, which was a sharp reduction from USD731 million including
share repurchase in 2012 and USD991 million in 2011. In addition,
capex should remain relatively flat at around USD1.3 billion over
the medium term, representing about 18% of revenues, which is a
decline from 22.5% in 2013. These will lead to neutral to modest
positive free cash flow (FCF) generation and help the company
reduce its leverage moderately over the medium term, barring any
material financial impact from the ongoing legal investigation.
Concentration in Low-Rated Sovereigns:
Despite the diversification benefit, MIC's ratings are tempered by
its operational footprint in countries in Latin America and Africa
with low sovereign ratings and GDP per capita. The operational
environment in these regions, in terms of political and regulatory
stability and economic conditions, tend to be more volatile than
developed markets, which could have an adverse effect on MIC's
operations. This also adds currency mismatch risk as 75% of MIC's
total debt was based on USD while most of its cash flows are
generated in local currencies in each country.
KEY ASSUMPTIONS
-- Mid-single-digit annual revenue growth over the medium term;
-- Cable & Digital Media segment to grow to well over 25% of
consolidated revenues over the medium term, compared to 16% in
2013, largely due to UNE consolidation;
-- EBITDA margin to remain stable at around 30%-31% range in
2016, reflecting the minority dividend payment;
-- Annual capex to remain at about USD1.3 billion over the medium
term in line with the 2014 level;
-- No significant increase in shareholder distributions in the
short- to medium-term with annual dividend payments remaining
at USD264 million.
RATING SENSITIVITIES
Negative rating action can be considered in case of an increase in
net leverage to 3.0x without a clear path to deleveraging due to
any one or combination of the following: sustained negative free
cash flow generation due to competitive/regulatory pressures
amidst market maturity, sizable M&A activities, and aggressive
shareholder distributions.
Also, any potential material financial impact from the ongoing
investigation regarding the improper payment on behalf of its
joint venture operation in Tigo Guatemala would pressure the
ratings.
In Fitch's analysis for MIC's financial profile, the group's
proportionately consolidated key financial metrics and the amount
and the geographical breakdown of the upstream cash flow income
from its subsidiaries will remain key considerations.
Positive rating action in the short- to medium-term is unlikely
given the company's higher leverage level than the past, its
operational concentration in low-rated countries, and the ongoing
investigation.
A positive rating action could be considered in case of a material
improvement in diversification of cash flow generations, mainly
from investment-grade-rated countries, and stronger market
positions and stable positive free cash flow generation leading to
consistent recovery in its leverage.
LIQUIDITY
MIC's liquidity profile is good given its large cash position,
which fully covered the short-term debt as well as its well-spread
debt maturities with an average life of 5.6 years. As of Sept. 30,
2015, the consolidated group's readily available cash was USD724
million, which compares to its short-term debt of USD191 million.
Fitch does not foresee any liquidity problem for both the
operating companies and the holding company given operating
companies' stable cash generation and their consistent cash
upstream to the holding company.
In addition, MIC has a USD500 million undrawn credit facility
which further bolsters its liquidity. MIC also has a good track
record in terms of its access to capital markets when in need of
external financing, which supports its liquidity management.
===========
N O R W A Y
===========
NORSKE SKOG: Shareholders Support Restructuring Deal
----------------------------------------------------
Bloomberg News' Luca Casiraghi and Jonas Cho Walsgard report that
Norske Skogindustrier ASA's shareholders voted to overhaul the
struggling Norwegian paper maker's board, shoring up support for a
restructuring deal with GSO Capital Partners and Cyrus Capital
Partners.
According to the report, more than 90% of shareholders at an
extraordinary general meeting in Oslo voted to appoint Joanne Owen
and Nils Ingemund Hoff in place of Karin Bing Orgland and Ole
Enger.
GSO, controlled by Blackstone Group LP, and Cyrus called for
the changes after GSO became Norske Skog's largest shareholder
last month, the report relays.
The funds, which reached a deal with Norske Skog to exchange 2016
and 2017 notes, also need more creditor support for it to succeed,
Bloomberg News adds.
Norske Skog said it needs at least 90 percent of the 2016 notes
and 75 percent of the 2017 bonds to be tendered for the exchange
to succeed, according to a statement, Bloomberg News cites.
Ms. Owen is a partner at DLA Piper in London and previously
advised Blackstone on real estate transactions, according to the
law firm's website. Mr. Hoff is chief financial officer of
Bergen Group ASA.
GSO's plan would extend bonds long enough to avoid triggering
payouts on credit default swap contracts it sold maturing by 2017,
Bloomberg News quotes people with knowledge on the matter as
saying.
The secured bondholders' plan may trigger payouts on debt
insurance, people familiar with the matter said, Bloomberg News
adds.
About Norske Skog
Norske Skogindustrier ASA or Norske Skog, which translates as
Norwegian Forest Industries, is a Norwegian pulp and paper
company based in Oslo, Norway and established in 1962.
As reported by the Troubled Company Reporter-Europe in mid-
November 2015, Moody's Investors Service downgraded Norske
Skogindustrier ASA's (Norske Skog) Corporate Family Rating
("CFR") to Caa3 from Caa2 and its Probability of Default Rating
(PDR) to Ca-PD from Caa2-PD. Standard & Poor's Ratings Service
also downgraded the Company's long-term corporate credit rating to
CC from CCC.
NORSKE SKOG: Moody's Assigns '(P)Caa1' Rating to QSF Notes
----------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Caa1
(LGD2) rating to the proposed Qualified Securitisation Financing
(QSF) Exchange Notes due December 2026 by Norske Skog AS.
Further, Moody's downgraded the rating of the EUR290 million
senior secured notes due Dec-2019 issued by Norske Skog AS to Caa2
(LGD3) from Caa1 (LGD2).
Concurrently, Moody's affirmed Norske Skogindustrier ASA's (Norske
Skog) Corporate Family Rating at Caa3 and the Probability of
Default Rating at Ca-PD. Moody's also affirmed the provisional
(P)Ca (LGD5) rating to the proposed unsecured exchange notes due
2019 and 2026, the provisional (P)C (LGD6) to the subordinated
Perpetual Notes, and the Ca (LGD5) rating of the legacy senior
unsecured notes due 2016, 2017 (to be exchanged) and 2033 issued
by Norske Skog as well as the Caa3 (LGD4) rating of the senior
unsecured notes due 2021 and 2023, issued by Norske Skog Holdings
AS. The outlook on all ratings is negative.
The rating action follows Norske Skog's extraordinary general
meeting and a revised debt exchange offer that was launched to all
holders of the 2016 and 2017 notes which, if executed
successfully, would qualify as distressed exchange under Moody's
definition. The new exchange offer expires at 12 noon GMT on
Wednesday Feb. 3. Upon successful conclusion of the transaction,
Moody's expects to assign a "/LD" indicator to the company's PD
rating.
RATINGS RATIONALE
Following a recent agreement with 2 major bond holders, GSO
Capital Partners LP (GSO) and Cyrus Capital Partners, L.P.
(Cyrus), the exchange offer now includes a combination of
qualified securitization financing (QSF) notes of up to EUR110
million due 2026 and an offer to subscribe for new equity (2016
and 2017 note holders) of up to EUR15 million in addition to the
new unsecured notes due June 2019 (2016 note holders) and December
2026 (2017 note holders) as well as perpetual notes (2016 and 2017
note holders) described in the original November exchange offer.
The new envisaged structure is proposed as:
The holders of the 2016 senior unsecured bonds are offered 44%
(reduced from previously 90%) of nominal value in exchange notes
due June 2019 bearing a cash interest rate of 5.875% and a PIK
interest rate of 5.875% (unchanged). Yet, in addition to the
previous exchange offer, the 2016 note holders would also receive
54% of nominal value in the QSF exchange notes due in 2026 bearing
a cash interest rate of 6% and PIK interest rate of 6%, as well as
10% of nominal value as perpetual exchange notes, bearing 2% of
interest subject to deferral rights. The 2016 holders also have
the right to subscribe to 4.418% of nominal value in cash for
ordinary shares of Norske Skogindustrier ASA at a price of NOK
2.24.
Meanwhile, the holders of the 2017 senior unsecured bonds are
offered to receive 26.4% (reduced from previously 50%) of nominal
value as exchange notes due 2026 bearing a cash interest rate of
3.5% (unchanged) and a PIK interest rate of 3.5% (unchanged) as
well as a 36.2% (up from previously 25%) of nominal value as
perpetual exchange notes, bearing 2% interest subject to deferral
rights (unchanged). In addition to the previous exchange offer,
the 2017 note holders would also receive 20.4% of nominal value in
QSF exchange notes due in 2026 bearing a cash interest rate of 6%
and PIK interest rate of 6%. The 2017 holders also have the right
to subscribe to 4.418% of nominal value in cash for ordinary
shares of Norske Skogindustrier ASA at a price of NOK 2.24.
The revised transaction is expected to ease near-term refinancing
needs in 2016-2017 significantly though liquidity would remain
tight even after a successful exchange as Norske reported a
further reduction in liquidity during Q4 2015 from NOK699 million
as per September 2015. In addition, the exchange offer is
expected to result in a pro-forma total debt reduction of up to
around NOK800 million (up from NOK600m previously envisaged) in
case of full participation, yet given the currently very weak
profitability this will only have a moderate effect on pro forma
leverage.
The Caa3 CFR and negative outlook reflects Norske Skog's weaker
than expected profitability and cash flow generation in 2015. Its
high exposure to the mature publication paper market in Europe and
Australia weighs on the company's ability to improve
profitability. Recently announced investments in growth projects,
namely biogas and tissue production as well as the acquisition of
a New Zealand-based wood pellet production to diversify away from
the traditional publication paper market are not sufficient to
materially offset challenging market conditions in its paper
operations. Moody's notes that these investments will only
moderately improve profit generation over time. Nevertheless, the
incremental profits from the investments as well as slight
improvements in paper prices should help to improve profitability,
which combined with the significantly reduced near-term maturities
would ease the immediate refinancing pressure until 2019 and would
therefore be credit positive.
The continued weak profitability is reflected in a negative EBITDA
as adjusted by Moody's as of LTM ending September 2015. Also,
Moody's forecasts that demand for publication paper will continue
to decline in the coming years including the company's relevant
and rather mature newsprint and magazine markets. Despite
continued substantial capacity reductions, indicated by sizeable
capacity closures, pricing power has generally been subdued while
raw material costs remain elevated and add pressure to
profitability and cash generation. This will make it challenging
for Norske Skog to materially improve profit and cash flow
generation and to meaningfully reduce its debt load to more
sustainable levels.
STRUCTURAL CONSIDERATIONS
Pursuant to the revised debt exchange offer, the (P)Caa1 rating
assigned to the proposed senior secured QSF notes due 2026 by
Norske Skog AS enjoys collateral including first-priority pledges
over Norwegian inventory and bank accounts and of French inventory
and a second-priority pledge of Norwegian receivables, which in
turn diminishes the position of the now Caa2 rated EUR290 million
senior secured notes issued by Norske Skog AS. Notwithstanding,
the still higher rating compared to the CFR reflects the
relatively higher recovery expectations compared to the
structurally and contractually subordinated legacy unsecured
exchange notes and the remaining unsecured legacy notes. This is
because the secured notes enjoy first priority ranking pledges
over assets and bank accounts, land charges on lands and buildings
from Australian and New Zealand subsidiaries as well as upstream
guarantees from all material subsidiaries. The Caa3 rating of the
senior notes maturing in 2021 and 2023 is in line with the CFR and
reflective of the junior ranking to the sizeable amount of secured
bonds but seniority over the remaining portion of the unsecured
debt due to upstream guarantees from operating entities, placing
them ahead of other unsecured debt at the holding company level,
namely the legacy 2016, 2017 and 2033 as well as the proposed new
(P)Ca rated senior unsecured exchange notes due 2019 and 2026.
Lastly, the proposed perpetual notes are contractually
subordinated to all other debt in the group and therefore rated
(P)C.
The above instrument ratings are based on the assumption of a
minimum participation by the 2016 (minimum 90%) and 2017 (minimum
75%) note holders and are therefore subject to the level of
participation and final outcome of the offer.
Outlook
The negative outlook reflects that a default continues a likely
threat in the near term and that a failure of the exchange offer
could be credit negative with potentially weaker recovery
prospects for creditors in case of disorderly default.
What Could Change the Rating Up/Down
The outlook could be stabilized if the 2016 and 2017 debt
maturities were successfully refinanced and Norske Skog was able
to improve its profitability to sustainable levels and generate
meaningful positive free cash flow allowing the company to de-
leverage over time. However, given Norske Skog's highly leveraged
capital structure and diminished profitability and cash flow
generation, Moody's considers that an upgrade of the ratings would
require a substantial improvement of the cash-flow generation for
considering a potential upgrade.
Conversely, the rating of the CFR and the existing bonds could be
downgraded if the exchange offer does not attract sufficient
interest from existing bondholders, and therefore would heighten
the company's refinancing risk towards its June 2016 debt maturity
with the risk of a disorderly payment default and a bankruptcy,
which could imply low recovery prospects for creditors.
The principal methodology used in these ratings was Global Paper
and Forest Products Industry published in October 2013.
Norske Skogindustrier ASA, with headquarters in Oslo, Norway, is
among the world's leading newsprint and magazine producers with
production in Europe and Australasia. In the last twelve months
ending September 2015, Norske Skog recorded sales of around
NOK11.7 billion (approximately EUR1.24 billion).
=============
R O M A N I A
=============
HELLO SHOPPING: KBC Bank Takes Over Shopping Center
---------------------------------------------------
The Romania-Insider reports that Hello Shopping Park, a shopping
center in Bacau, eastern Romania, has been taken over by its
secured creditor, KBC Bank NV.
The shopping center, developed by Belgian company Belrom, was
opened in 2008, but was declared insolvent in 2013, the report
notes.
According to The Romania-Insider, KBC Bank had a EUR21 million
secured claim of Hello Shopping. Economica.net added that the
Dutch bank also had EUR22.5 million unsecured claim from the
insolvent shopping center.
=============
U K R A I N E
=============
INTERCREDITBANK: Liquidation Procedure Extended Thru Jan. 2017
--------------------------------------------------------------
Interfax-Ukraine reports that the Individuals' Deposit Guarantee
Fund said on its website it has prolonged the terms of the
liquidation procedure for Intercreditbank until January 16, 2017.
According to Interfax-Ukraine, the Fund has delegated power of
liquidators in Intercreditbank to Yulia Prykhodko through January
16 next year.
The National Bank of Ukraine (NBU), on January 16, 2015, decided
to revoke the bank license of Intercreditbank and liquidate it,
the report relates.
Intercreditbank ranked 145th among 166 operating banks as of
October 1, 2014, in terms of total assets worth UAH 334.507
million, according to the NBU.
MELIOR BANK: Liquidation Procedure Extended Thru Feb. 10, 2017
--------------------------------------------------------------
Interfax-Ukraine reports that the Individuals' Deposit Guarantee
Fund said on its website it has prolonged the terms of the
liquidation procedure for Melior Bank until February 10, 2017.
According to Interfax-Ukraine, the Fund has delegated power of
liquidators in Melior Bank to Yulia Prykhodko through February 10
next year.
The National Bank of Ukraine (NBU), on February 10, 2015, decided
to revoke the bank license of Melior Bank and liquidate it, the
report relates.
Melior Bank was registered on February 24, 2012. Its only
shareholder was Krian LLC. Andriy Kuznetsov held 75% in Krian LLC
and Olha Kononova held 24%.
Melior Bank ranked 158th among 158 operating banks as of January
1, 2015, in terms of total assets worth UAH 84.765 million, the
NBU said.
PRIME-BANK: Liquidation Procedure Extended Thru Jan. 13 Next Year
-----------------------------------------------------------------
Interfax-Ukraine reports that the Individuals' Deposit Guarantee
Fund said on its website it has prolonged the terms of the
liquidation procedure for Prime-Bank until January 13, 2017.
According to Interfax-Ukraine, the Fund has delegated power of
liquidators in Prime-Bank to Stanyslav Braiko through January 13
next year.
The National Bank of Ukraine (NBU), on January 13, 2015, decided
to revoke the bank license of Prime-Bank and liquidate it, the
report relates.
Prime-Bank was founded in 2001. By the beginning of July 2014, the
bank had no shareholders with a stake exceeding 10%, the report
notes.
Prime-Bank ranked 129th among 166 operating banks as of October 1,
2014, in terms of total assets worth UAH 533.148 million,
according to the NBU.
==========================
U N I T E D K I N G D O M
==========================
CAPARO INDUSTRIES: Faces Pension Fund Black Hole
------------------------------------------------
Alan Tovey at The Telegraph reports that Caparo Industries, the
engineering group that collapsed into administration last year,
had liabilities of more than GBP160 million when it failed.
The Telegraph relates that documents filed by administrators PwC
showed that the business, in which Labour-supporting peer Lord
Paul held a major stake, had a black hole in its pension fund.
A "statement of affairs" document listing Caparo's assets and
debts filed by PwC just days after Caparo imploded revealed the
scale of the troubles at the company, The Telegraph says.
According to The Telegraph, the document stated that on
October 19 last year Caparo faced claims against it of GBP163.7
million when it failed, putting more than 1,800 jobs under threat.
One of the largest liabilities was a GBP45.6 million "pension
scheme deficit excess", only exceeded by the GBP60 million owed to
other companies within the group as part of complex internal
financing arrangements, The Telegraph discloses.
The Telegraph notes that a summary of Caparo's assets reveals that
it had assets with a book value of GBP50 million available to
preferential creditors but these were expected by administrators
to realise just GBP73,000.
The Telegraph says Caparo, which was involved in the steel
industry, was thought to have been the latest victim of the crisis
hitting the sector when the business collapsed in October.
However, the company -- started by billionaire Lord Paul more than
50 years ago -- was later revealed to have already been
struggling, and its troubles were exacerbated by its use of asset-
based financing, which involves securing loans against sales
invoices, The Telegraph relates. The already difficult trading
environment Caparo faced meant the loans the business could raise
declined as its sales slipped.
According to its 2014 accounts, Caparo Industries' turnover
slipped 1.3% to GBP368.1 million, and the business fell into the
red with a GBP700,000 operating loss, down from a GBP3.1 million
profit last time around, The Telegraph discloses.
Lord Paul's family was hit by tragedy a fortnight after the
company failed, when his youngest son Angad Paul, the chief
executive of Caparo Group and who took over the business from his
father in 1996, fell to his death from the roof of a London
penthouse, The Telegraph recalls.
The Telegraph says administrators managed to save the bulk of the
jobs within the Caparo companies after selling them off piecemeal,
but some of the businesses were unsustainable and about 500
redundancies were made.
The Pension Protection Fund (PPF), the Government-run lifeboat
that protects retirement schemes of companies which have collapsed
with insufficient funds to cover payouts, could have to bail out
Caparo pension funds, The Telegraph states.
The organisation confirmed that four of the five companies in the
1988 Caparo Pension Scheme are currently in assessment with the
PPF, adds The Telegraph.
Caparo plc is a British company involved mainly in the steel
industry, primarily in the design, manufacturing and marketing of
steel and niche engineering products. House of Lords peer Swraj
Paul founded Caparo Industries in 1968 with a GBP5,000 loan. His
son Angad Paul took over as chief executive until he fell to his
death on November 6, 2015, two weeks after the company went into
administration.
CEVA GROUP: Moody's Affirms Caa1 CFR & Changes Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service has affirmed Ceva Group plc's CFR of
Caa1 and its PDR of Caa1-PDR. Concurrently Moody's affirmed the
B2 ratings of the senior secured term loans maturing 2021, the
revolving credit facility maturing 2019, the synthetic letter of
credit facility maturing 2021 and the senior secured notes
maturing 2021, the Caa2 rating of the 1.5 Lien senior secured
notes maturing 2021 and the Caa3 rating of the senior unsecured
notes maturing 2020, all instruments issued by CEVA Group plc.
The ratings outlook was changed to stable from negative.
RATING RATIONALE
The change of outlook reflects the gradual improvement in the
rating positioning driven by the recently improved performance of
the company since the fourth quarter of 2014, with EBITDA growth
driven by organic revenue growth and significant cost and
efficiency savings. This has led to a reduction in leverage from
8.8x at Dec. 31, 2014, to 7.4x at Sept. 30, 2015, on a Moody's-
adjusted basis. Moody's expect further efficiency improvements to
enable the company to sustain stable performance despite economic
headwinds increasing in 2016.
The Caa1 CFR reflects (1) the high Moody's-adjusted leverage at
7.4x at Sept. 30, 2015, including debt in the form of intercompany
PIK loan owned by CEVA's parent company, CEVA Holdings LLC, and
giving rise to concerns over the sustainability of the financial
structure; (2) the highly competitive nature of the industry with
low profitability margins particularly in freight management (FM);
(3) whilst improving, free cash flow remains negative reflecting
high exceptional costs and interest burden; (4) exposure to
cyclical automotive, consumer and retail industries; (5) expected
volume and margin headwinds in FM in 2016; and (6) currency risks,
in particular exposure to appreciation of the US Dollar.
However the rating also reflects: (1) the scale, global reach and
breadth of the company's service offering; (2) the large and
diverse blue-chip customer base with high retention rates in
contract logistics (CL); (3) the turnaround actions implemented by
the new management team since 2014; and (4) the improved trading
performance since the fourth quarter of 2014.
CEVA's liquidity is sufficient to address operating requirements
over the next 12-18 months. As at Sept. 30, 2015, the company had
USD249 million cash balances and a further USD268 million of
committed undrawn facilities. Its first significant debt maturity
is in 2018. Moody's expects cash outflows to reduce from 2015
onwards which should enable sufficient liquidity headroom to be
maintained.
RATING OUTLOOK
The stable outlook reflects Moody's expectations for stable or low
growth in EBITDA over the next 12 to 18 months, with market
headwinds being offset by modest revenue gains and continued costs
and productivity savings. It also assumes no material change in
the company's capital structure.
WHAT COULD CHANGE THE RATING - UP
There remains limited near term potential for an upgrade in view
of the continued high leverage. However an upgrade could occur if
Moody's-adjusted leverage reduces sustainably below 6x, (and
providing such deleveraging is not driven solely by increases in
back-to-back operating leases) and Moody's-adjusted EBIT /
interest increases sustainably above 1x, with free cash flows
turning positive, and provided the company's liquidity position
remains adequate.
WHAT COULD CHANGE THE RATING - DOWN
A rating downgrade could occur as a result of a deterioration in
one, or a combination of the following: (i) market conditions;
(ii) CEVA's liquidity position; (iii) the group's operating
margins; and (iv) its cash flow generation.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was the Global
Surface Transportation and Logistics Companies published in April
2013.
EQUINOX (ECLIPSE 2006-1): Fitch Cuts Class A Notes Rating to Dsf
----------------------------------------------------------------
Fitch Ratings has downgraded Equinox (Eclipse 2006-1) Class A
notes to 'Dsf' from 'CCCsf'. The downgrade follows a default of
the notes on the payment of interest.
GBP75.3 million Class A (XS0259279585) downgraded to 'Dsf';
Recovery Estimate (RE) 90%
GBP16.7 million Class B (XS0259280088) affirmed at 'Dsf'; RE0%
GBP0 million Class C (XS0259280161 affirmed at 'Dsf'; RE0%
GBP0 million Class D (XS0259280591) affirmed at 'Dsf'
GBP0 million Class E (XS0259280674) affirmed at 'Dsf'
The transaction is a securitisation of 13 UK commercial mortgage-
backed loans, comprising 12 originations by Barclays Bank PLC, and
one acquired from Royal Bank of Scotland PLC. After repayment of
the GBP1.1m Ocean Park loan, there are currently two loans
remaining in the portfolio: the performing GBP18.9 million Holland
Park Towers loan and the GBP71.6 million Ashbourne Portfolio
Priority A (APPA) loan, which is in special servicing. The Holland
Park loan matures on 15 January.
KEY RATING DRIVERS
The issuer incurred an increase in servicing fees at the October
2015 interest payment date. This meant that available income was
insufficient to meet mandatory expenses (namely class A interest),
causing an event of default.
This increase was caused by periodic servicing fees being deferred
over several quarters, leading to a one-off charge of some
GBP120,000. Meanwhile, the accrual of such fees meant that the
class B notes continued to receive periodic interest payments,
effectively at the expense of class A noteholders. Had these fees
been paid on a quarterly basis, a shortfall on class A interest
may have been avoided.
RATING SENSITIVITIES
The recovery estimate for the class A notes could decrease in the
absence of tangible progress in resolving the defaulted APPA loan.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation
to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that were
material to this analysis. Fitch has not reviewed the results of
any third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
Fitch did not undertake a review of the information provided about
the underlying asset pool ahead of the transaction's initial
closing. The subsequent performance of the transaction over the
years is consistent with the agency's expectations given the
operating environment and Fitch is therefore satisfied that the
asset pool information relied upon for its initial rating analysis
was adequately reliable.
Overall, Fitch's assessment of the information relied upon for the
agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.
MAMAS & PAPAS: Returns to Profit; Emerges From Reconstruction
-------------------------------------------------------------
Laurence Kilgannon at Insider Media Limited reports that one-off
costs totaling almost GBP5 million have led to widened losses at
Mamas & Papas, but the nursery brand returned to profit in the
second half of the 2014/15 financial year and enjoyed record
trading over the recent Christmas period.
The report relays that in the 12 months to 29 March 2015, Mamas &
Papas (Holdings) reported an operating profit of GBP91,000 before
one-off costs, compared to a GBP5.7 million loss in 2014, while
maintaining sales at GBP137.6 million, according to Insider Media
Limited. Turnover in the UK increased to GBP107.8 million from
GBP104.5 million, of which GBP88.6 million related to retail
sales, the report relays.
The report notes exceptional items of GBP4.6 million, largely
incurred as a result of the closure of loss-making stores and a
comprehensive restructure of the group's head office in
Huddersfield, contributed to widened pre-tax losses of GBP12.3
million, however.
After returning to profit in the second half of that financial
year, the business said its turnaround in its UK retail operation
had accelerated, with like-for-like sales in the six weeks to
January 3, 2016, about 18 per cent higher at GBP12 million,
according to Insider Media Limited.
The report says December 27 was the best trading day yet in its
ongoing stores. More car seats were sold in a week than ever
before and 2,000 pushchairs were bought -- equivalent to one every
ten minutes a store was open, the report discloses.
The report notes that Executive Chairman Derek Lovelock said: "Our
strong performance this Christmas underlines the strength of the
turnaround at Mamas & Papas. The first phase of the strategic
plan, which included a fundamental restructure of the business,
was completed at pace.
"Like the rest of the business, the UK retail estate is now
trading well, outperforming business plan expectations and
delivering robust like-for-like sales growth. We expect growth in
both revenue and profit to be maintained," the report quoted Mr.
Lovelock as saying.
The report notes that business, which was acquired by BlueGem
Capital Partners in July 2014, operates in 59 countries, has 34
stores in the UK and employs 1,245 people.
The report discloses that in September 2014, landlords voted
overwhelmingly to approve a Company Voluntary Arrangement with
Mamas & Papas' UK retail subsidiary.
As part of the restructure, a new four-year loan facility was also
secured with HSBC to support ambitious investment plans, the
report says. These include the opening of a flagship store in
London's Westfield shopping centre and the launch of a new e-
commerce platform in 2016.
Mr. Lovelock added: "Investment in global product launches
continue to drive double-digit growth in our key categories of
travel, home and clothing. The new sourcing strategy for clothing
has enabled us to maintain our premium quality position while
passing on lower prices to our customers," the report adds.
SCOOT FERRIES: Gone Bust; Cancels All Sailings
----------------------------------------------
BBC News reports that a new Isle of Wight ferry company has
announced it has gone bust after suddenly cancelling all its
sailings.
Scoot Ferries earlier posted a message on its website saying it
had received "some very unfestive news" and all services had been
cancelled, according to BBC News.
The report notes that it has issued a statement saying it had to
"suspend operations with immediate effect" after buyout talks
failed.
Chief executive Zoe Ombler said she was "devastated" by the news
but was still hopeful the company could recover, the report
relays.
The statement said that David Meany of Ashtons Recovery LLP has
been appointed as official receiver and will be applying for a
Company Voluntary Arrangement with immediate effect, the report
discloses.
The report notes that Ms. Ombler added: "I very much hope that
this is not the end for Scoot and believe there is an immediate
opportunity to find the necessary investment to allow us to
continue to operate."
Earlier in the day, customers posting on social media asked the
company for more information and complained they had booked
journeys and were left waiting, the report notes.
The firm started running services between Yarmouth and Lymington,
as well as Portsmouth and Cowes, earlier this year, the report
relays.
PURE WAFER: Enters Voluntary Liquidation with Immediate Effect
--------------------------------------------------------------
David Casey at Insider Media Limited reports that computer chip
recycling company Pure Wafer plc has entered voluntary liquidation
with immediate effect.
A fire at the firm's Swansea plant in December 2014 forced the
company to shift production to its US plant in Arizona, according
to Insider Media Limited.
Plans to reopen the Swansea factory were abandoned, and the
company entered into consultation with the 115 staff employed at
the plant over redundancy, the report relays.
Now the business has confirmed joint liquidators have been
appointed. Its board expects the liquidators will make a total
distribution of up to 188p per share to investors, the report
notes.
ROUNDABOUT: Lost Business Due to Roadworks
------------------------------------------
Amanda Cameron at the Bath Chronicle reports that a second-hand
clothing shop in Bath is set to close its doors after nearly three
decades.
Roundabout on Prior Park Road is moving to Bradford on Avon later
this month after business dropped off as a result of roadworks in
Widcombe, according to Bath Chronicle.
The report notes owner Fiona Leach said her shop, which was
attacked by vandals on New Year's Eve, lost 70 per cent of its
business as a result of the year-long roadworks and the new road
layout.
"The first big problem was the roadworks," the report quoted Ms.
Leach as saying. "And now people are actually bypassing Widcombe
because it's a nightmare to find a park and get through the
roundabouts," Ms. Leach added.
"There's very, very little parking and because of the wide
pavements you can't turn into some of the spaces. And you can't
stop because of the bollards. It's got impossible with the
parking situation. We're just losing too much money," Ms. Leach
said, the report relays.
The report notes Ms. Leach said Roundabout relied on people being
able to drop off clothes that they wanted the shop to sell on
their behalf.
Ms. Leach said she'd been getting up to ten phone calls a day from
people having problems delivering clothes to the Bath store, the
report notes.
So she reluctantly decided it was time to close the Bath branch of
Roundabout in favour of the sister shop in Bradford on Avon, the
report discloses.
The Bradford on Avon store, which opened in 2014, will offer a
collection service for Bath customers.
* Paul Fleming Joins Dechert's Restructuring Group in London
------------------------------------------------------------
Paul Fleming has joined Dechert LLP as a partner in London. Mr.
Fleming, who focuses his practice on restructuring matters,
advises institutional lenders, insolvency practitioners, equity
investors and management. A significant portion of his work
involves cross-border restructuring matters.
"We are so pleased to have Paul join our team," said Michael Sage
and Allan Brilliant, co-chairs of Dechert's business
reorganization and restructuring group. "His extensive experience
expands our global capabilities and will be of significant benefit
to the firm's clients."
Mr. Fleming, who is a Solicitor of the Senior Courts of England
and Wales, is ranked in Chambers UK 2016 for London (Firms):
Restructuring/Insolvency and is also recommended by The Legal 500
UK 2015 in London: Finance: Corporate Restructuring and
Insolvency.
"Dechert offers a dynamic global platform for my practice," Mr.
Fleming said. "I've been so impressed with the team's
organization, dedication and collegiality. I'm pleased to join
such a well-respected team."
Dechert's business restructuring and reorganization group
represents troubled companies, private equity funds, hedge funds,
mutual funds, creditors, and investors in distressed assets and
debt in all types of in-court and out-of-court restructurings, as
well as bankruptcy planning and litigation, distressed lending,
and distressed mergers and acquisitions.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
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.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Julie Ann L. Toledo, Ivy B. Magdadaro, and Peter
A. Chapman, Editors.
Copyright 2016. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
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