/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/170815.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 Tuesday, August 15, 2017, Vol. 18, No. 161 Headlines A Z E R B A I J A N ATABANK: Fitch Cuts IDR to CCC on Weak Post-Merger Credit Profile F R A N C E NOVARTEX SAS: Moody's Hikes CFR to Caa3, Outlook Stable I R E L A N D ENDO INT'L: S&P Cuts CCR to 'B' & Secured Debt Rating to 'BB-' I T A L Y GAMENET SPA: S&P Affirms Then Withdraws 'B' Corp Credit Rating K A Z A K H S T A N BAITEREK HOLDING: S&P Affirms Then Withdraws 'BB-/B' ICR L U X E M B O U R G ARMACELL HOLDCO: S&P Affirms 'B' LT Corporate Credit Rating N E T H E R L A N D S JUBILEE CDO VII: Moody's Hikes Rating on Class E Notes to Ba1(sf) REFRESCO GROUP: Moody's Confirms Ba3 CFR, Outlook Negative VIMPELCOM HOLDINGS: Moody's Gives Def. Ba2 Unsec. Rating to Bonds R U S S I A ENERGETICHESKAYA: Court Applies for Observation Proceedings U N I T E D K I N G D O M BHS GROUP: Liquidators Commence Legal Action CO-OPERATIVE BANK: Narrows Losses Following Rescue Deal FAIRPOINT GROUP: Enters Into Administration, CEO to Exit Board MOVETTE: High Court Puts Business Under Liquidation TATA STEEL: Reaches Deal to Restructure British Pension Fund ********* =================== A Z E R B A I J A N =================== ATABANK: Fitch Cuts IDR to CCC on Weak Post-Merger Credit Profile ----------------------------------------------------------------- Fitch Ratings has downgraded Azerbaijan-based Atabank OJSC's (AB) Long-Term Issuer Default Rating (IDR) to 'CCC' from 'B-' and affirmed Expressbank Open Joint Stock Company's (EB) at 'B' with a Stable Outlook. KEY RATING DRIVERS IDRs and VRs ATABANK The downgrade of AB reflects Fitch's view that the post-merger credit profile has turned out to be weaker than previously anticipated and no longer commensurate with the 'B-' rating level. Specifically, asset quality is worse than expected due to additional deterioration in 1H17, offsetting the positive impact from the merger with the stronger-capitalised Caspian Development Bank OJSC (CDB), with the volume of unreserved non-performing loans (NPLs, 90+ days overdue) equaling a high 1.2x Fitch core capital (FCC) at end-1H17. Fitch also estimates that cash-based (excluding non-received accrued interest) pre-impairment profitability was about breakeven in 2016-1H17, which makes reserving of problem loans challenging without external capital support. AB's NPLs increased significantly to 42% of total gross loans at end-1H17, from 14% at end-2015, while the loan book grew 14% in the same period with more than 40% of this growth being uncollected accrued interest. Reserve coverage of NPLs weakened to 26% at end-1H17 from 39% at end-2015 and their additional provisioning could erode the bank's capital position. Even after the merger with CDB in May 2017 and a further AZN20 million equity injection in 1H17, AB's unreserved NPLs were a significant 1.2x FCC at end-1H17 (end-2015: 0.8x FCC). Following a review of the bank's 25 largest corporate exposures Fitch identified that about 26% of gross loans at end-1H17, although not NPLs, were potentially high-risk (project finance, foreign currency loans to unhedged borrowers and non-amortising bullet repayment loans). Loans to related parties (excluding those considered higher-risk) equalled a further 4% of gross loans at end-1H17. The lower-risk corporate loans (15% of gross loans) were mostly guaranteed by the state or fully covered by pledged deposits. The performance of AB's retail portfolio (21% of gross loans) is also weak with around a third of them being NPLs at end- 1H17. AB's post-merger regulatory tier 1 and total capital ratios were 21.4% and 22.9%, respectively (regulatory minimums are 5% and 10%) at end-1H17, up from 12.8% and 14.2% at end-4M17. However, this should be viewed together with the bank's significantly increased unreserved NPLs, other high-risk loans and weak core earnings. Fitch estimates that at end-1H17 AB's regulatory capital would allow the bank to reserve only around half of unreserved NPLs. Internal capital generation capacity is weak due to modest earnings (return on average equity (ROAE) of 3.2% in 1H17, -0.6% in 2016) with a sizable part of interest income not received in cash (around 41% in 2016). Fitch estimates that cash-based (excluding not received accrued interest) pre-impairment profit was negative in 2016 and is likely to have remained weak in 1H17 and unable to absorb loan impairment losses to cover NPLs, which in turn would eat into capital. AB's liquidity is tight after funding outflows in 4Q15-1H16. The bank's total available liquidity net of potential debt repayments equaled a low 6.2% of non-related customer accounts (excluding deposits pledged as collateral against loans). This is particularly weak in light of the bank's rather concentrated customer funding and largely long-term nature of the bank's corporate book. EB The affirmation of EB's ratings reflects only limited changes to its credit profile over the last 12 months. The ratings take into account EB's limited franchise in the difficult Azerbaijan operating environment and a high level of related-party lending. Positively, the ratings reflect EB's solid capital buffer, still reasonable, albeit moderately deteriorating, asset quality, limited exposure to foreign currency lending and ample liquidity. The Stable Outlook reflects Fitch's expectation that, despite the potential for some further asset quality deterioration, this should be covered by pre-impairment profits and additionally mitigated by the bank's solid capital buffer. EB's corporate loan book (55% of gross loans at end-1Q17) is reportedly performing with zero NPLs. It almost entirely consists of exposures to the bank's main corporate shareholder and its subsidiaries (79% of FCC), including a large construction company engaged in infrastructure construction and to a start-up diversified production plant, the development of which is supported by the government. In addition, EB issued a AZN30 million uncovered guarantee in favour of these related companies (around 22% of FCC). Positively, total related-party exposure decreased to AZN139 million (101% of FCC) at end-1Q17 from AZN192 million (138% of FCC) at end-2015, and may decrease further due to the gradual phasing-in (by mid-2018) of the regulatory deduction of related- party exposures from Tier 1 capital for capital adequacy purposes. These borrowers reportedly target repaying foreign currency loans first, thus also reducing EB's foreign currency risks. Retail NPLs decreased significantly to 6% of total retail loans (almost fully covered by reserves) at end-1Q17 from a high 20% at end-1H16, due to large write-offs. However, NPL generation - a good proxy for credit losses and calculated as the net increase in NPLs plus write offs and divided by average performing loans,- increased in 1Q17 to 17% (annualised) from 11% in 2016, indicating ongoing deterioration. EB's robust capital position, as expressed by its high FCC ratio, further improved to around 50% at end-2016 from 43% at end-2015 following a moderate 14% deleveraging. Near-term loan growth potential is limited, and the FCC ratio is unlikely to significantly decrease in the next couple of years. However, regulatory capitalisation is lower due to deduction of half of related-party exposure at end-1Q17. The bank plans to reduce the related-party exposure to avoid taking a bigger hit on regulatory capital. EB is funded by customer deposits (87% of total liabilities at end-1Q17) and liquidity risks are mitigated by a sizeable net liquidity buffer, which was sufficient to repay a high 44% of customer funding at end-1Q17, and by rapid retail loan turnover. Wholesale funding (11% of end-1Q17 liabilities) is sourced domestically and likely to be rolled over. SUPPORT RATINGS (SR) AND SUPPORT RATING FLOORS (SRF) AB and EB The SRFs of 'No Floor' and SRs of '5' for both banks reflect their limited scale of operations and market shares. Although Fitch believes some regulatory forbearance may be available for these banks, in case of need, any extraordinary direct capital support from the Azerbaijan authorities is very uncertain. This view is also supported by the recent default of International Bank of Azerbaijan (IBA; 'Restricted Default'; See 'Fitch Downgrades International Bank of Azerbaijan to 'RD'' on May 24, 2017, on www.fitchratings.com), which is the largest bank in the country and government-owned, meaning that state support for less systemically-important privately-owned banks cannot be relied upon. The potential for support from the banks' private shareholders is not factored into the ratings. RATING SENSITIVITIES Positive rating action for EB would be contingent on substantial franchise development through growth of third-party business, a reduction in volumes of operations with affiliated parties and a moderation of asset quality risks. At both banks, capital depletion as a result of further asset quality deterioration (more likely in AB) may lead to negative rating actions. Negative rating pressure for AB could also stem from a further liquidity squeeze. Fitch believes that positive rating actions on the banks' SR and SRFs are unlikely in the near-term. The rating actions are: Expressbank: Long-Term IDR: affirmed at 'B', Outlook Stable Short-Term IDR: affirmed at 'B' Viability Rating: affirmed at 'b' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Atabank: Long-Term IDR: downgraded to 'CCC' from 'B-' Short-Term IDR: downgraded to 'C' from 'B' Viability Rating: downgraded to 'ccc' from 'b-' Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' =========== F R A N C E =========== NOVARTEX SAS: Moody's Hikes CFR to Caa3, Outlook Stable ------------------------------------------------------- Moody's Investors Service has upgraded Novartex S.A.S.' corporate family rating (CFR) to Caa3 from C and probability of default rating (PDR) to Caa3-PD from Ca-PD. Concurrently, Moody's has confirmed the Caa3 instrument rating on the EUR500 million senior bonds due in October 2021 (the new money bonds) issued by Vivarte, a subsidiary of Novartex. The outlook on the ratings is stable. The rating action concludes the review for upgrade initiated on July 4, 2017 following Moody's review of the company's strategy and financial policy, including potential disposals, projected liquidity position over the short- to medium-term, and amended legal terms and conditions of the new money bonds and fiducie agreement post restructuring. The restructuring closed on June 20, 2017 and resulted in the conversion of EUR780 million of reinstated debt maturing in October 2020 into common equity. In addition, Novartex' lenders agreed to convert the EUR800 million bonds redeemable into NRD B Preferred Shares into common equity, while the shareholders' loan was downsized to EUR1.6 million from EUR2 million. Before the conversion of the preferred shares, Moody's had treated both the preferred shares and shareholders' loan as debt as the instruments did not meet Moody's published criteria for equity treatment. RATINGS RATIONALE "The two-notch upgrade of Novartex' CFR mainly reflects the significant improvement in the company's adjusted gross leverage to 6.1x as projected by Moody's by fiscal year (FY) end August 31, 2017 following the completion of the debt restructuring from close to 11x prior to the transaction", says Sebastien Cieniewski, Moody's lead analyst for Novartex. Nevertheless Moody's believes that the rating remains constrained by (1) the company's track record of prolonged decline in like- for-like sales over the last three years in the context of challenging trading and competitive environments, (2) the vulnerability of the business to unfavorable weather conditions which has historically led to a significant volatility in earnings, (3) the elevated risk of default over the next two years driven by the fact that Novartex is operating under limited headroom under covenants set up in the amended terms and conditions of new money bonds and fiducie agreement, and (4) the expectation that the company will continue generating a negative free cash flow (FCF) over at least the next 12-18 months mainly due to significant restructuring charges related to store closures and social plans. Post restructuring, Novartex will operate under tight covenants as set up in the new money bonds and fiducie agreements, including the requirement (1) to meet certain minimum weekly and monthly liquidity tests, with the latter set at EUR95 million (or EUR75 million in the third quarter of each fiscal year), (2) to meet maximum leverage tests, and (3) to repay EUR300 million of new money bonds by October 2019. Failure to meet these requirements could lead to the launch of a forced market sale process or the equitisation of the new money bonds. The repayment of EUR300 million of new money bonds by October 2019 will rely on the ability of Novartex to dispose of some of its banners starting from Naf Naf and Merkal, which have been put up for sale earlier in 2017. Moody's notes, however, that such disposals are subject to execution risk, including lower-than-expected consideration and delayed closing of the sale. While Moody's forecasts an improvement in EBITDA (as calculated by the company pre-restructuring charges) to approximately EUR75 million for FY 2017 compared to EUR54 million in the prior year, the rating agency considers that a return to a sustainable recovery remains uncertain. The higher EBITDA in FY 2017 should be driven by (1) the positive sales momentum in Q4 2017 vs. relatively weak comparables in the same period last year as well as (2) cost savings, including those generated from the closure of non-performing stores during the year. Novartex' liquidity position has been deteriorating over the last 12 months. The cash balance declined to EUR167 million as of May 31, 2017 from EUR288 million a year earlier and Moody's projects FCF to remain negative over the next 12-18 months. Despite the potential relief provided by the PIK toggle feature of the amended new money bonds -- to be activated if the monthly cash position is projected below EUR95 million at any point over the following 6-month period - and the intention of management to maintain capital expenditures at below 4% of sales, Moody's believes that high restructuring charges will continue to constrain FCF generation in FY 2018. In that context, the cash flow from the disposal of banners is important to support Novartex' liquidity position and to face large working capital swings related to the seasonality of the business. The Caa3 rating on the EUR500 million new money bonds, at the same level as the CFR, reflects the absence of any significant non-debt liabilities ranking ahead or behind. The new money bonds do not benefit from guarantees from operating subsidiaries, however, they are secured by a pledge over receivables related to intercompany loans down-streaming the proceeds of the notes to the operating subsidiaries. At the level of the operating companies, these intercompany loans rank pari passu with the other operating liabilities, except for up to EUR80.2 million of trade payables, which are guaranteed by letters of credit, ranking ahead. The stable outlook on the ratings reflects Moody's expectation that Novartex' operating performance will not experience any significant deterioration and that it will be able to maintain its liquidity position above the minimum covenant threshold over the short-term. WHAT COULD CHANGE THE RATING UP/DOWN Upward pressure on the ratings is unlikely in the short-term. Over time, Novartex' ratings could be upgraded if (1) the company generates sufficient proceeds from the disposal of its banners to meet the EUR300 million debt repayment requirement in October 2019, (2) the liquidity position stabilizes as FCF breaks even, and (3) LfL sales experience growth on a sustained basis. Downward pressure on the ratings could result from (1) a deterioration in Novartex' liquidity position due to larger-than- expected negative FCF generation and (2) a higher probability that Novartex will not meet its minimum liquidity tests or its debt repayment requirement by October 2019 in the absence for example of significant proceeds generated from disposal well in advance of the deadline. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Retail Industry published in October 2015. Novartex is a leading France-based footwear and apparel retailer focusing on city centre boutiques and out-of-town stores. In FY 2016, the company generated revenues of EUR2.2 billion and statutory EBITDA of EUR54 million (corresponding to EUR279 million on a Moody's-adjusted basis, primarily after the capitalization of operating leases). ============= I R E L A N D ============= ENDO INT'L: S&P Cuts CCR to 'B' & Secured Debt Rating to 'BB-' -------------------------------------------------------------- S&P Global Ratings lowered its corporate credit rating on Dublin, Ireland-based pharmaceutical company Endo International PLC (Endo) to 'B' from 'B+'. The outlook is stable. S&P said, "At the same time, we lowered our issue-level rating on Endo's senior secured debt to 'BB-' from 'BB'. The recovery rating on this debt remains '1', indicating our expectations for very high (90%-100%; rounded estimate: 90%) recovery in the event of payment default. In addition, we lowered our issue-level rating on the company's unsecured debt to 'CCC+' from 'B-'. The recovery rating on this debt remains '6', reflecting our expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of payment default." Endo is the fourth-largest generic pharmaceutical company and a competitor in the specialty branded market with a small international presence in select markets. The company's businesses have been negatively affected by continued generic pricing pressures and increased scrutiny on opioid prescriptions. Endo is seeing double-digit growth in its higher-margin specialty drug franchise, highlighted by growth in products such as Xiaflex and Supprelin (treatments for Peyronie's disease/Dupuytren's contracture and precocious puberty, respectively). S&P said, "However, we expect gains will be largely offset by price and volume declines in its base generic drug and branded pain management portfolios." S&P added, "The stable outlook reflects our expectation for lower revenue and EBITDA over the next year due to continued price erosion, lower market shares, and asset divestitures. We also expect an increase in adjusted leverage to over 6.0x reflecting the higher mesh obligations." Downside scenario S&P said, "We could lower the rating if we see a trajectory of sustained revenue contraction or EBITDA erosion. We believe this could result from intensified generic price erosion coupled with a significant decline in volumes in the pain management segment without successful product launches. Alternatively, we could downgrade the company if its cash flows weaken materially beyond our expectations as a result of significant litigation costs." Upside scenario S&P said, "Although unlikely over the next year, we could raise the rating if we see a trajectory of top-line and free cash flow growth. In our view, this could happen if the generic industry stabilizes and the company achieves better-than-expected new product launches while achieving targeted cost efficiencies." ========= I T A L Y ========= GAMENET SPA: S&P Affirms Then Withdraws 'B' Corp Credit Rating -------------------------------------------------------------- S&P Global Ratings affirmed its 'B' long-term corporate credit rating on Italy-based gaming and betting operator Gamenet SpA. S&P subsequently withdrew the rating on Gamenet SpA at the parent company Gamenet Group SpA's request, as currently debt is issued and the accounts are reported at the parent level. Therefore Gamenet Group SpA is now the only rated entity in the group. The outlook was stable at the time of withdrawal. =================== K A Z A K H S T A N =================== BAITEREK HOLDING: S&P Affirms Then Withdraws 'BB-/B' ICR -------------------------------------------------------- S&P Global Ratings, on Aug. 11, 2017, affirmed its long- and short-term foreign and local currency issuer credit ratings on Kazakhstan's Baiterek Holding (Baiterek, or the holding company) at 'BB-/B'. S&P said, "At the same time, we affirmed the Kazakhstan national scale ratings at 'kzBBB+'. We subsequently withdrew the ratings at the issuer's request. "At the time of the withdrawal, the ratings on Baiterek Holding reflected our view that the Baiterek group remains an essential government tool, and the likelihood of the group receiving extraordinary support from the government remains almost certain. The ratings on Baiterek Holding incorporate several notches of support, being higher than what its intrinsic, stand-alone creditworthiness would warrant. We assess at 'b' the consolidated group's creditworthiness on an autonomous basis, that is, without factoring in the potential for extraordinary government support." Nevertheless, the ratings also reflect the gradual decline in the Kazakhstani government's willingness to provide resources for timely debt service to the government-related entity (GRE) sector in case of need. This is evidenced by the authorities' comparatively limited involvement in ensuring a timely payment on the obligations of several GREs in Kazakhstan over the past 18 months. The Baiterek group and its parent company Baiterek Holding were established in 2013 by presidential decree. The group is controlled by the government, which fully owns the holding company. At present, there are 11 subsidiaries under the holding company, which can be broadly characterized as development institutions implementing several strategic government programs. Specifically, the government mandates the group to: -- Foster the development and diversification of the Kazakhstan economy; -- Support small and midsize enterprises (SMEs); and -- Resolve some of the state's socially oriented tasks, in particular in the housing segment. S&P assesses the consolidated group's creditworthiness (the group credit profile [GCP]) at 'bb+', which is based on its view of the group's: -- Integral link with the government. The state owns 100% of Baiterek Holding, which in turn fully owns its subsidiaries (with the exception of one subsidiary, of which Baiterek Holding owns 97.7%). Being one of the three national management holdings in the country, Baiterek Holding has a special public status. A number of senior government officials are on the Baiterek board of directors, including the prime minister, first deputy prime minister, minister of investments and development, minister of finance, and the minister of the economy, among others. The government closely oversees the activities of the group. -- Critical public policy role as a vehicle for implementing a number of strategic government programs. The subsidiaries of Baiterek Holding are involved in implementing several key national policies, including the Business Road Map 2020, the infrastructure program Nurly Zhol, and the new housing construction program Nurly Zher. Baiterek is also a financial operator for the State Program for Industrial and Innovative Development for 2015-2019 and plays a role in implementing the Program for Development of Productive Employment. S&P said, "Our ratings on Baiterek Holding are two notches lower than the 'bb+' GCP, reflecting the higher credit risks characteristic of a nonoperating holding company compared with its operating subsidiaries. These include the holding's reliance on distributions from operating companies to meet its obligations. It also reflects our perception of the group's importance for the government as primarily stemming from the operating companies that are directly involved in implementing government programs. In our view, in a hypothetical scenario of the group being under stress, the government may have incentives to support subsidiaries ahead of the holding company. "The holding company's role involves overseeing the implementation of government programs, managing the subsidiaries, in particular improving their financial performance, and removing any duplication of functions. However, while we view this function as important for the government -- as it improves the operational efficiency of dealing with several development institutions -- we do not view it as critical from a credit standing point of view." In March 2017, Baiterek Holding adopted a new development strategy through 2023. According to the document, Baiterek Holding will continue to participate in the implementation of many government programs. At the same time, the strategy explicitly states that the holding needs to be optimized with a transfer of functions that could be commercially fulfilled to the private sector, reflecting the demands of President Nursultan Nazarbayev in his speech in January 2017. The strategy also calls for a reduction of state financing and increasing focus on borrowing from other sources. S&P said, "That said, we expect the latter to be a gradual process. The holding company has received both capital contributions and loans on concessional terms in recent years and we expect this will continue in the near future. "The negative outlook on Baiterek Holding at the time of withdrawal mirrored our outlook on the sovereign ratings on Kazakhstan." =================== L U X E M B O U R G =================== ARMACELL HOLDCO: S&P Affirms 'B' LT Corporate Credit Rating ----------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term corporate credit rating to Armacell Holdco Luxembourg S.a.r.l. (Armacell Holdco), producer of flexible foam insulation products. The outlook is stable. S&P said, "We also affirmed our 'B' long-term corporate credit rating Armacell Bidco Luxembourg S.a.r.l. (Armacell). The outlook is stable. "At the same time, we affirmed our 'B' issue ratings on Armacell's senior secured debt, including its first-lien EUR100 million revolving credit facility (RCF), its EUR482 million first-lien term loan, and its EUR140 million first-lien debt. The '4' recovery rating on these instruments remains unchanged, indicating our expectation of recovery prospects of about 35% in the event of a payment default. "Lastly, we withdrew our 'B' long-term corporate credit rating on Armacell International S.A." S&P related, "The affirmation reflects our view that the group should be able to strengthen its credit metrics over the next couple of years, after a peak in debt to EBITDA following debt- financed bolt-on acquisitions in 2016 and 2017. "We estimate that Armacell's adjusted debt to EBITDA was about 7.5x (pro forma the acquisitions) at year-end 2016, but we think it will reduce to about 6.5x by the end of 2017 and decrease further to 5.5x-6.0x in 2018, which we view as commensurate with the 'B' rating. The decline should occur as the company unlocks synergies in the newly integrated group, continues to grow in its global market, and repays some of its first-lien debt. The repricing of debt and lower interest costs in the first quarter of 2017 will support stronger cash flows and better EBITDA interest coverage ratios, in our opinion. We also foresee improvement in the operating cash flow-to-debt ratio to about 10% in 2018. We see such credit metrics in 2017-2018 as commensurate with the 'B' rating. "The ratings on Armacell continue to reflect our view of its relatively limited scale and scope of operations compared with global building materials producing peers and by its exposure to the cyclical construction industry, which accounts for more than 50% of total revenues. These risks are partly mitigated by the group's leading positions in the niche market of engineered foams, with strong market shares above 30% in its key regions of operation. Armacell also benefits from the geographic diversity of its business, with a balanced presence and market-leading positions in Europe, the Middle East, and Africa (EMEA), the Americas, and Asia-Pacific. Its relatively asset-light business model and flexible cost base help it support stable profitability. "The stable outlook reflects our view that, over the next 12 months, Armacell's profitability will continue to gradually improve on the back of above-market-average growth in most regions, synergies unlocked after recent acquisitions, and a continued focus on cost savings. At the same time, we think that the group will reduce its currently high debt to EBITDA to about 6.5x by the end of 2017. "We could lower our rating on Armacell over the next 12 months if we saw material margin erosion due to weakening markets in Europe and Asia-Pacific. We could also consider a downgrade if large debt-funded acquisitions or distributions to shareholders led to leverage metrics substantially deviating from our base-case scenario, such that we no longer anticipated that debt to EBITDA would decrease to about 6.5x in 2017-2018. "In our view, the potential for an upgrade is currently limited, given the group's highly leveraged capital structure and aggressive financial policy, owing to its private equity ownership. Strong recurring free cash flow and adjusted debt to EBITDA improving to below 5.0x, on a consistent basis, could be positive for the rating over the long run." ===================== N E T H E R L A N D S ===================== JUBILEE CDO VII: Moody's Hikes Rating on Class E Notes to Ba1(sf) ----------------------------------------------------------------- Moody's Investors Service has taken various actions on the ratings of the following classes of notes issued by Jubilee CDO VII B.V.: -- EUR50M (Current outstanding balance of EUR17.3M) Class B Notes, Affirmed Aaa (sf); previously on Jul 8, 2016 Affirmed Aaa (sf) -- EUR30M Class C Notes, Affirmed Aaa (sf); previously on Jul 8, 2016 Affirmed Aaa (sf) -- EUR31M Class D Notes, Upgraded to Aa1 (sf); previously on Jul 8, 2016 Upgraded to A2 (sf) -- EUR20M Class E Notes, Upgraded to Ba1 (sf); previously on Jul 8, 2016 Upgraded to Ba2 (sf) Jubilee CDO VII B.V., issued in November 2006, is a Collateralised Loan Obligation ("CLO") backed by a portfolio of mostly high yield senior secured European loans. The portfolio is managed by Alcentra Limited. The transaction's reinvestment period ended in November 2012. RATINGS RATIONALE The rating actions on the notes are primarily a result of the significant deleveraging of the senior notes following amortisation of the underlying portfolio over the past twelve months. The Class A Notes have fully redeemed and Class B Notes paid down by approximately EUR32.7M (65.4% of orginal balance) over the last two payment dates. As a result of the deleveraging, over- collateralisation has increased. As per the latest trustee report dated June 2017, the Classes A/B, C, D and E OC ratios are reported at 644.98%, 236.10%, 142.65% and 113.63%, respectively, compared to 220.92%, 159.13%, 123.45% and 107.85% in the June 2016 report. 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 and principal proceeds balance of EUR110.51M, defaulted par of EUR7.02M, a weighted average default probability of 17.71% over a 3.73 years weighted average life (consistent with a WARF of 2754), a weighted average recovery rate upon default of 47.36% for a Aaa liability target rating, a diversity score of 12 and a weighted average spread of 3.69%. 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. 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 analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in October 2016. 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 assumed lower weighted average recovery rate for the portfolio. Moody's ran a model in which it reduced the weighted average recovery rate by 5%; the model generated outputs which were unchanged for Classes B and C, and within one notch of the base-case results for Classes D and E. This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, 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 behavior 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 the following: * 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. * Around 4.99% of the collateral pool consists of debt obligations whose credit quality Moody's has assessed by using credit estimates. As part of its base case, Moody's has stressed large concentrations of single obligors bearing a credit estimate as described in "Updated Approach to the Usage of Credit Estimates in Rated Transactions" published in October 2009 and available at http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_120461. * Recoveries on 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 analysed 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. * Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that, at transaction maturity, the liquidation value of such an asset will depend on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. Liquidation values higher than Moody's expectations would have a positive impact on the notes' ratings. * Lack of portfolio granularity: The performance of the portfolio depends to a large extent on the credit conditions of a few large obligors especially when they default. Because of the deal's low diversity score and lack of granularity, Moody's supplemented its typical Binomial Expansion Technique analysis with a simulated default distribution using Moody's CDOROMTM software and an individual scenario analysis. 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. REFRESCO GROUP: Moody's Confirms Ba3 CFR, Outlook Negative ---------------------------------------------------------- Moody's Investors Service has confirmed the Ba3 corporate family rating (CFR) and the Ba3-PD probability of default rating (PDR) of Refresco Group N.V., a leading independent manufacturer of soft drinks and juices for A-brands and retailers. Concurrently, Moody's has assigned Ba3 ratings to Refresco's new senior secured facilities, which include a EUR200 million revolving credit facility due 2023, a EUR1,300 million term loan due 2024, and a USD620 million term loan due 2024. Proceeds from the new debt will be used to fund the acquisition of Cott Corporation's (B2 review for upgrade) bottling activities as well as refinance existing debt. The outlook on all ratings is negative. The confirmation of Refresco's CFR and PDR concludes Moody's review initiated on July 27, 2017 following the announcement of the acquisition. The confirmation of Refresco's Ba3 CFR with a negative outlook reflects the high Moody's-adjusted debt / EBITDA of 5.2x at closing of the acquisition (based on full-year 2016 accounts). Moody's will consider stabilising the outlook if the Moody's- adjusted debt / EBITDA reduces below 4.5x on a sustained basis, supported by the envisaged new equity raise and merger synergies. RATINGS RATIONALE Moody's views the Ba3 CFR as weakly positioned given the increase in the Moody's-adjusted debt / EBITDA to approximately 5.2x pro- forma for the debt-funded acquisition from 3.4x on a stand-alone basis (based on full-year 2016 accounts). The company intends to reduce its reported net leverage to below 3.5x within two years of closing from the reported net leverage of 4.5x at closing supported by (1) its intention to raise EUR200 million of new equity within 12 months of closing to reduce its gross indebtedness, (2) EBITDA growth driven by estimated cost synergies of EUR47 million of which 30% and 60% is expected to be realised on a cumulative basis the first year and the second year respectively after closing, and (3) free cash flow generation. Moody's considers that there is scope for deleveraging towards 4.5x on Moody's-adjusted basis in the next 12 to 18 months but cautions that the equity raise is subject to market conditions and there are significant execution risks associated with the integration of the target business given its scale and recent history of growth challenges. The company is acquiring assets that will likely require additional capex to offset under-investments in the past two years as the traditional beverage business became less strategic to the previous owner. It will also face challenges to reinvigorate growth in a category that has been in secular decline for nearly a decade. That being said, Moody's acknowledges the company's good track record in terms of integration including large scale acquisitions such as Gerber Emig in 2013, which generated GBP650 million of revenues at the time of the acquisition (based on full-year 2012 accounts). Moody's also views the acquisition as positive to Refresco's business profile owing to the increased scale, wider geographic footprint and reduced customer concentration of the combined group. The acquisition will also enable Refresco to become the largest independent manufacturer of soft drinks for retailer brands and A-brands in North America, where it made its first entrance in July 2016 via the acquisition of Whitlock Packaging. The combination of the two businesses will enable Refresco to be the main consolidator of the regional market through further investments and acquisitions. However, Moody's understands that the company intends to focus on the integration of the acquired activities before considering further large scale acquisitions. Closing of the acquisition is expected by year-end 2017, subject to anti-trust approval in various jurisdictions and approval of Refresco's extraordinary general meeting to be held in early September. LIQUIDITY The liquidity profile is adequate. At closing, Moody's expects cash balances of approximately EUR124 million at closing and the EUR200 million revolving credit facility to be undrawn. Moody's also expects positive free cash flow generation and comfortable financial covenant headroom over the next 12-18 months. STRUCTURAL CONSIDERATIONS Applying the Moody's Loss Given Default for Speculative-Grade Companies methodology with a 50% recovery rate, the senior secured credit facilities are rated Ba3, at the same level as the CFR because they are the only debt class in the debt structure. RATING OUTLOOK The negative outlook reflects the high Moody's-adjusted debt / EBITDA of 5.2x at closing of the acquisition (based on full-year 2016 accounts). Moody's will consider stabilising the outlook if the Moody's-adjusted debt / EBITDA reduces below 4.5x on a sustained basis, driven by the planned new equity raise and merger synergies. WHAT COULD CHANGE THE RATING UP/DOWN While unlikely in the near term given the weak rating positioning, there could be positive pressure over time if (1) the Moody's- adjusted debt/EBITDA ratio remains sustainably below 3.5x; and the company maintains a financial policy consistent with this leverage level; (2) the company sustains its Moody's-adjusted EBITA margin at around 7%; and (3) maintains a solid liquidity profile including positive free cash flow. Conversely, the rating could be lowered if Refresco does not launch the equity raise within 12 months of closing or is unable to successfully integrate the acquired activities, resulting in the debt/EBITDA ratio remaining sustainably above 4.5x. The rating could also be lowered if underlying operating performance deteriorates, resulting in falling margins, negative free cash flow or liquidity concerns. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Global Soft Beverage Industry published in January 2017. Headquartered in Rotterdam, the Netherlands and listed on Euronext Amsterdam, Refresco is a leading independent manufacturer of soft drinks and juices for A-brands and retailers. It generated sales and EBITDA (as reported) of EUR2.1 billion and EUR222 million respectively in 2016 (approximately EUR3.6 billion and EUR350 million respectively pro-forma for the acquisition of Cott's bottling activities based on USD/EUR exchange rate of 1.14). VIMPELCOM HOLDINGS: Moody's Gives Def. Ba2 Unsec. Rating to Bonds ----------------------------------------------------------------- Moody's Investors Service has assigned a definitive Ba2 senior unsecured rating and LGD4 to the bonds issued by VimpelCom Holdings B.V., a 100% indirectly-owned subsidiary of VEON Ltd. (Ba2 stable), on June 16, 2017. The bonds were provisionally rated by Moody's (P)Ba2 on May 30, 2017. Moody's has also upgraded the senior unsecured rating on the outstanding bonds of GTH Finance B.V. guaranteed by VimpelCom Holdings B.V. to Ba2 (LGD4) from Ba3 (LGD5). The action concludes the review for an upgrade of the Ba3 senior unsecured rating of the outstanding bonds of GTH Finance B.V. guaranteed by VimpelCom Holdings B.V. initiated by Moody's on May 30, 2017. The outlook on all ratings is stable. Moody's acknowledges that the steps completed by VEON to date reflect a significant progress of the group in transitioning to a new predominantly unguaranteed debt/capital structure. RATINGS RATIONALE In May 2017, VEON refinanced approximately $1.1 billion worth of subsidiary RUB-denominated bank debt at VimpelCom Holdings B.V. level, and repaid $0.6 billion of subsidiary or subsidiary- guaranteed debt. In June, VEON successfully bought back $1.26 billion, or more than 50% of the bonds targeted during a tender offer (USD-denominated 9.125% Loan Participation Notes issued by VIP Finance Ireland Limited (the 2018 Notes), 7.748% Loan Participation Notes issued by VIP Finance Ireland Limited (the 2021 Notes), and 7.5043% Guaranteed Notes issued by VimpelCom Holdings B.V. (the 2022 Notes), all guaranteed by VimpelCom PJSC. The buy-back was refinanced via a new bonds issue at VimpelCom Holdings B.V. Subsequently, VEON terminated subsidiary VimpelCom PJSC's (issuer rating Ba2 stable) "fall-away" guarantees on the approximately $1.78 billion of bonds issued at the holding level. As a result, guaranteed financial debt was reduced to approximately 22% of the group's financial debt from more than 70% previously (excluding debts at Global Telecom Holding S.A.E. and its subsidiaries, where Moody's maintains separate CFRs). Further steps, such as prepayment and/or repayment at maturity of other debts within the next 6-7 months will help VEON to reduce subsidiary and subsidiary-guaranteed financial debt to less than 15% of total financial debt of the group (excluding debts at Global Telecom Holding S.A.E. and its subsidiaries). Moody's expects VEON to complete the transformation of its debt/capital structure by April 2018 and a move to a predominantly unsecured and unguaranteed centralised group-financed model from the previous subsidiary-financed model. VimpelCom Holdings B.V. will act as the main borrower for the VEON group of companies, and manage liquidity within the group by orchestrating distribution of proceeds and managing group's repayments from diversified cash flow sources including dividends, proceeds from the sale of assets and intracompany loans. As a result of the restructuring, debt investors now have a single credit reference and benefit from pari passu credit ranking of the majority of the group's obligations. As part of the process, VEON' currently significant foreign exchange risks associated with debt/cash flow currency mismatch should be reduced. RATIONALE FOR THE STABLE OUTLOOK The stable outlook on VEON's ratings reflects Moody's expectation that the company will sustainably maintain its leverage around 3.0x on an adjusted gross-debt basis and trend towards 2.0x on a net-debt basis (unadjusted, consistent with the internal financial policy), and adjusted RCF/Debt above 20%. The agency expects that VEON will maintain a robust liquidity profile and address its refinancing needs in a timely fashion. WHAT COULD CHANGE THE RATING UP/DOWN A sustainable reduction in leverage measured by gross debt/EBITDA towards 2.5x and below and strengthening of coverage metrics would exert positive pressure on the ratings, provided that there are no negative developments in the company's operating profile, market positions and liquidity. Conversely, a material deterioration in VEON's operating and financial profile measured by (1) an increase in leverage measured by gross debt/EBITDA above 3.5x, and (2) a weakening of RCF/debt to below 20% on a sustained basis would put pressure on the ratings. Moody's would assess any material acquisition/shareholder distribution; such actions could exert negative pressure on the ratings. The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017. Headquartered in Amsterdam, the Netherlands, VEON Ltd. (VEON, former VimpelCom Ltd.) is an international telecoms company operating in 13 countries. It consolidates VimpelCom PJSC (Russia), Kyivstar G.S.M. Joint Stock Company (Ukraine), and Global Telecom Holding S.A.E., and operates in Russia, Ukraine, Kazakhstan, Italy, Algeria, Pakistan, and the Commonwealth of Independent States (CIS). VEON operates in Italy via a 50/50 joint venture with CK Hutchison Holdings Limited (A3 stable) - Wind Tre S.p.A. (B1 positive). VimpelCom is 47.9% owned by LetterOne (not rated), 19.7% by Telenor ASA (A3 stable), 8.3% by the Stichting Administratiekantoor Mobile Telecommunications Investor (the "Stichting") and 24.1% is in free float. In the last 12 months to March 31, 2017, VimpelCom generated revenue of $9.1 billion and Moody's-adjusted EBITDA of $3.9 billion. =========== R U S S I A =========== ENERGETICHESKAYA: Court Applies for Observation Proceedings ----------------------------------------------------------- A Russian Court has applied observation proceedings for Energeticheskaya Russkaya Kompaniya. OAO Energeticheskaya Russkaya Kompaniya (OAO ERKO or Russian Energy Company OJSC) offers real estate leasing services. The company is based in Moscow, Russian Federation. =========================== U N I T E D K I N G D O M =========================== BHS GROUP: Liquidators Commence Legal Action -------------------------------------------- Rhiannon Bury at The Telegraph reports that liquidators for BHS have begun legal action against Sir Philip Green's Arcadia retail empire. Papers have been filed in the High Court by lawyers representing SHB Realisations, the holding company for BHS, which is now in the hands of restructuring firm FRP Advisory, The Telegraph relates. In the documents, SHB is named as the claimant and Arcadia Group, Sir Philip's company which is behind shops such as Miss Selfridge and Topshop, is the defendant, The Telegraph discloses. After its collapse, BHS was placed into the hands of administrator Duff & Phelps, before FRP Advisory was appointed as joint administrator in July, The Telegraph recounts. It was eventually appointed liquidator of BHS last December, meaning it is handling the sale of the retailer's assets in order to pay creditors, The Telegraph states. Duff & Phelps had protested about an attempt to push the retailer into liquidation amid claims that it could recover more money for creditors without a duplication of adviser fees, The Telegraph relays. However, the Pension Protection Fund (PPF), the company's biggest unsecured creditor, put pressure on the business to move into liquidation, The Telegraph notes. CO-OPERATIVE BANK: Narrows Losses Following Rescue Deal ------------------------------------------------------- Martin Flanagan at The Scotsman reports that the red ink has continued at embattled Co-operative Bank as the lender on Aug. 10 put out its first earnings report since it recently sealed a GBP700 million rescue deal with investors. On the plus side, Co-op Bank reduced its losses to GBP135.2 million in the six months to end-June, down from GBP177 million a year earlier, The Scotsman relates. The group however is not out of the woods as it has been revealed that the haemorrhaging of customers and cash goes on against a backcloth of uncertainty about the financial lifeline thrown to it by the former mutual's hedge fund investors, The Scotsman notes. Co-op Bank said it had lost about another 25,000 current account customers since the end of 2016 and that GBP400 million of instant access savings cash had been pulled out of the bank, The Scotsman relays. The lender, which has struggled since a GBP1.5 billion shortfall was discovered in its balance sheet in 2013, put itself up for sale earlier this year before the rescue deal was agreed with the hedge funds and bondholders, The Scotsman recounts. According to The Scotsman, Co-op Bank said on Aug. 10 that its latest six-month trading performance had been hit by "retail customer reaction to uncertainty" before and after that deal was agreed in June. Under the refinancing package agreed with its investors, which is expected to complete next month, the wider Co-op Group, whose businesses include food retail and funeral directors, will see its residual stake in the finance arm contract from 20% to 1%, The Scotsman discloses. The lender has also agreed to divorce itself from the Co-op Group's pension scheme, The Scotsman notes. Co-op Bank has hailed the rescue deal as enabling it to meet regulatory requirements on long-term capital cushions, and allowing it to continue as a stand-alone bank, The Scotsman states. About Co-operative Bank The Co-operative Bank plc is a retail and commercial bank in the United Kingdom, with its headquarters in Balloon Street, Manchester. In 2013-2014, the Bank was the subject of a rescue plan to address a capital shortfall of about GBP1.9 billion. The Bank mostly raised equity to cover the shortfall from hedge funds. In February 2017, the Bank's board announced that they were commencing a sale process for the Bank and were "inviting offers." The Troubled Company Reporter-Europe reported on February 17, 2017 that Moody's Investors Service downgraded Co-operative Bank plc's standalone baseline credit assessment (BCA) to ca from caa2. The downgrade of the bank's BCA to ca reflects Moody's view that the bank's standalone creditworthiness is increasingly challenged and that the bank will not be able to restore its declining capital position without external assistance. TCR-Europe also reported on July 5, 2017, Moody's Investors Service has placed on review for upgrade Co-Operative Bank Plc's Ca long-term senior unsecured debt rating, reflecting Moody's expectation that the bank's recently announced capital raising plan does not include a liability management exercise on senior unsecured bonds, reduces the probability of the bank being placed in resolution, and lowers the risk of loss on these instruments. These developments are also reflected in Moody's review for upgrade on the bank's ca standalone baseline credit assessment (BCA), given the rating agency's expectations that the bank's credit profile and risk-absorption capacity will improve if the capital raising plan is implemented as announced. Moody's has placed on review direction uncertain the Caa2 long-term deposit ratings, reflecting a different balance of risks for junior deposit holders, who would benefit from the recapitalisation but would be at risk of loss in a resolution, should the plan fail. The short-term deposit ratings were unaffected by this action and remain at Not Prime. FAIRPOINT GROUP: Enters Into Administration, CEO to Exit Board -------------------------------------------------------------- Fairpoint Group PLC disclosed that Sandy Kinninmonth, Lindsey Cooper and Gareth Harris of RSM Restructuring Advisory LLP have been appointed as joint administrators to Fairpoint Group plc. The relevant business address of RSM Restructuring Advisory LLP is 3 Hardman Street, Manchester M20 3LD. The company directors intend to continue to work with the administrators of Fairpoint Group in order to try and preserve any remaining stakeholder value. As a result of the appointment of administrators, David Broadbent, Chief Executive Officer, is to leave the Board with immediate effect. Furthermore, with mutual agreement by the Board, Shore Capital and Corporate Limited has resigned as Nominated Adviser and Shore Capital Stockbrokers Limited as Broker to the Company with immediate effect. Pursuant to AIM Rule 1, if a replacement Nominated Adviser is not appointed within one month, the admission of the Company's securities will be cancelled on AIM. The Company has no current intention of appointing a replacement Nominated Adviser. The suspension to trading in the Company's shares on AIM, as announced on June 28, 2017, remains effective. However, Simpson Millar and its subsidiary companies, (the "Legal Businesses"), will continue to trade as going concerns through the dedicated funding line provided by Doorway Capital. The appointment of administrators to Fairpoint Group will have no impact on the day to day running of these businesses. The client services that Simpson Millar provides and the protections its clients' enjoy are not in any way affected by the appointment of administrators to Fairpoint Group. The announcement will have no material impact on the planned disposal of the IVA and Claims divisions to a third party, as previously announced on August 4, 2017. Headquartered in Adlington, UK, Fairpoint Group PLC provides consumer debt reduction and management advice. MOVETTE: High Court Puts Business Under Liquidation --------------------------------------------------- CityA.M reports that a company that scammed more than GBP500,000 by pretending to be part of Google has been wound up in the High Court. According to CityA.M, Manchester-based Movette "misrepresented" itself by claiming either to be an affiliate of the Silicon Valley giant or that it worked on its behalf, managing the "Google My Business" listings. The company also "falsely stated or implied" that customers would lose their existing services from Google if they did not pay up, CityA.M relates. Movette charged a fee of between GBP199 and GBP249 for a 12-month contract, which automatically renewed, CityA.M discloses. It ignored or rejected requests for contracts to be cancelled and used "offensive and threatening" debt collection methods. Its financial records showed that it had received GBP537,00 during its two-and-a-half year trading history, CityA.M relays. An investigation found that a "significant volume of complaints" had been made against Movette to regulatory bodies such as Action Fraud and Trading Standards, CityA.M relates. Colin Cronin, investigation supervisor with the Insolvency Service, as cited by CityA.M, said: "Movette used deceptive methods to persuade customers to sign up for its service, including stating or implying that it represented or was connected to Google. "The company then made it difficult for customers to extract themselves from rolling contracts and used debt collection methods which were coercive and intimidatory. These proceedings show that the Insolvency Service will take firm action against companies which operate in this manner." TATA STEEL: Reaches Deal to Restructure British Pension Fund ------------------------------------------------------------ Michael Pooler and Naomi Rovnick at The Financial Times report that Tata Steel has agreed a deal to restructure its 130,000- member British pension fund after nearly a year of negotiations. The UK steelmaker, part of the Indian conglomerate, said it had approval from regulators and the trustees of the GBP15 billion British Steel Pension Scheme (BSPS) to offload the scheme into the Pension Protection Fund, the government's pensions lifeboat, the FT relates. In return, Tata will inject GBP550 million into the old scheme and the BSPS will own 33% of Tata Steel UK, the FT discloses. A new defined benefit scheme, which provides a guaranteed income in retirement, will also be set up but with lower annual increases in income, the FT states. The deal will clear the way for Tata to merge its European steel business with German steelmaker ThyssenKrupp, the FT notes. The legacy pension scheme has been a millstone around Tata's British steelmaking business, which was threatened with closure last year after global steel prices crashed due to oversupply, the FT says. Union members voted to accept the closure of the BSPS earlier this year in an attempt to keep the tradition of iron and steelmaking alive at Port Talbot and save 8,500 jobs across the company, which also includes smaller mills throughout Wales and England, the FT relays. The settlement involves a rarely used legal mechanism, called a regulated apportionment agreement, which allows an employer in financial difficulties to rid itself of defined benefit pension liabilities, the FT states. According to the FT, a final deal was signed off by the trustee of the BSPS, the UK pension regulator and the Pension Protection Fund. The one remaining barrier to a definitive settlement is a 28-day period for legal challenges, the FT discloses. Tata Steel is the UK's biggest steel company. ********* 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. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2017. 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 or Joseph Cardillo at 856-381-8268. * * * End of Transmission * * *