/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/180927.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, September 27, 2018, Vol. 19, No. 192 Headlines C R O A T I A ZAGREBACKA BANKA: S&P Alters Outlook to Pos. & Affirms 'BB+' ICR G E R M A N Y BAVARIA YACHTBAU: Private Equity Fund to Acquire Business I R E L A N D ADAGIO V: Moody's Assigns (P)B2 Rating to Class F-R Notes ADAGIO V: Fitch Assigns 'B-(EXP)sf' Rating to Class F Debt FINSBURY SQUARE 2016-2: Fitch Affirms CCC Rating on Class E Debt TORO EUROPEAN 2: Fitch Assigns B-(EXP) Rating to Class F-R Debt S L O V E N I A KD GROUP: Fitch Withdraws 'BB' IDR for Commercial Reasons S W I T Z E R L A N D GAM HOLDING: Begins Paying Out Luxembourg Fund Investors T U R K E Y BETA AYAKKABI: Declares Concordatum Amid Financial Woes U N I T E D K I N G D O M AVIS BUDGET: S&P Rates New EUR350MM Senior Unsecured Notes 'BB' BMI HEALTHCARE: Nears GBP2BB Restructuring Deal to Cut Rent Bill FAIRHOLD SECURITISATION: Seeks to Invalidate Admin. Appointment OCADO GROUP: Fitch Affirms BB- IDR, Alters Outlook to Negative * 10% of UK Firms May Go Bankrupt Due to Brexit Border Delays ********* ============= C R O A T I A ============= ZAGREBACKA BANKA: S&P Alters Outlook to Pos. & Affirms 'BB+' ICR ---------------------------------------------------------------- S&P Global Ratings said that it revised its outlook on Croatia- based Zagrebacka Banka (Zaba) to positive from stable. At the same time, S&P affirmed its 'BB+' long-term issuer credit rating and its 'BB+' resolution counterparty rating on the bank. The outlook revision follows the similar action on the sovereign credit rating on Croatia. S&P said, "If we upgraded the sovereign, we may also incorporate more parental support into our ratings on Zaba. This is because we think that the bank will continue to operate as a strategically important subsidiary within the UniCredit group (BBB/Stable/A-2)." S&P said, "Under our criteria, we could rate the bank three notches above its stand-alone credit profile (SACP) and up to one notch below the rating on its parent company. "That said, we cap our long-term rating on Zaba at the sovereign level because we think that Zaba is predominantly exposed to Croatia's economic risks. "The outlook on Zaba is positive, mirroring that on Croatia. It incorporates our view that Zaba will preserve its strategic role within the UniCredit group over the next 12 months as an important conduit for the group's retail and corporate activities in Croatia and Bosnia and Herzegovina. "We could raise our long-term rating on Zaba following a similar action on the sovereign, all else being equal. "We could revise our outlook back to stable following a similar action on Croatia. Furthermore, although this is currently not our base case, we could also revise the outlook on Zaba back to stable if, despite macroeconomic improvements in Croatia, we thought that Zaba's strategic importance within the UniCredit group had materially diminished or the parent company's creditworthiness had weakened, resulting in deteriorated potential support from the parent." ============= G E R M A N Y ============= BAVARIA YACHTBAU: Private Equity Fund to Acquire Business --------------------------------------------------------- Plasteurope.com reports that a private equity fund advised by German investment firm CMP Capital Management-Partners will acquire Germany's largest manufacturer of sailing yachts and motor boats, Bavaria Yachtbau, through a transfer of restructuring after insolvency. Its French subsidiary, Bavaria Catamarans, is also part of the transaction, Plasteurope.com states. A corresponding purchase agreement was concluded on Sept. 15, along with the approval of the creditors' committee and Bavaria Yachtbau administrator, Hubert Ampferl, Plasteurope.com discloses. At the end of April 2018, Bavaria Yachtbau had applied for permission to restructure under self-administration, Plasteurope.com recounts. The German district court of Wuerzburg opened the proceedings in July, Plasteurope.com relates. All 550 employees at the Giebelstadt site and all 250 employees in Rochefort/France will be transferred to the Berlin-based firm, Plasteurope.com notes. According to Plasteurope.com, CMP managing director Kai Brandes said the focus is on "regaining market share and improving production costs." This is to be managed by restructuring expert and CMP partner Ralph Kudla, who will join Bavaria's executive board, and Bavaria's managing director Tobias Brinkmann, Plasteurope.com relays. ============= I R E L A N D ============= ADAGIO V: Moody's Assigns (P)B2 Rating to Class F-R Notes --------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to refinancing notes to be issued by Adagio V CLO Designated Activity Company: EUR 2,900,000 Class X Senior Secured Floating Rate Notes due 2031, Assigned (P)Aaa (sf) EUR 215,500,000 Class A-R Senior Secured Floating Rate Notes due 2031, Assigned (P)Aaa (sf) EUR 26,930,000 Class B-1R Senior Secured Floating Rate Notes due 2031, Assigned (P)Aa2 (sf) EUR 9,000,000 Class B-2R Senior Secured Fixed Rate Notes due 2031, Assigned (P)Aa2 (sf) EUR 6,310,000 Class C-1R Deferrable Mezzanine Floating Rate Notes due 2031, Assigned (P)A2 (sf) EUR 17,000,000 Class C-2R Deferrable Mezzanine Floating Rate Notes due 2031, Assigned (P)A2 (sf) EUR 21,000,000 Class D-R Deferrable Mezzanine Floating Rate Notes due 2031, Assigned (P)Baa3 (sf) EUR 19,430,000 Class E-R Deferrable Junior Floating Rate Notes due 2031, Assigned (P)Ba2 (sf) EUR 10,500,000 Class F-R Deferrable Junior Floating Rate Notes due 2031, Assigned (P)B2 (sf) Moody's issues provisional ratings in advance of the final sale of financial instruments, but these ratings only represent Moody's preliminary credit opinions. Upon a conclusive review of a transaction and associated documentation, Moody's will endeavor to assign definitive ratings. A definitive rating (if any) may differ from a provisional rating. RATINGS RATIONALE Moody's provisional ratings of the rated notes reflect the risks from defaults on the underlying portfolio of loans given the characteristics and eligibility criteria of the constituent assets, the relevant portfolio tests and covenants as well as the transaction's capital and legal structure. Furthermore, Moody's considers that the collateral manager, AXA Investment Managers, Inc. ("AXA IM"), has sufficient experience and operational capacity and is capable of managing this CLO. The Issuer will issue the refinancing notes in connection with the refinancing of the following classes of notes: Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F Notes due 2029, previously issued on September 15, 2016. On the refinancing date, the Issuer will use the proceeds from the issuance of the refinancing notes to redeem in full the Original Notes. On the Original Closing Date the Issuer also issued EUR 37.8 million of subordinated notes, which will remain outstanding. Interest and principal amortisation amounts due to the Class X Notes are paid pro rata with payments to the Class A-R. The Class X Notes amortise by 12.5% or EUR 362,500 over the first 8 payment dates, starting on the 1st payment date. As part of this reset, the Issuer has set the reinvestment period to 4.25 years and the weighted average life to 8.5 years. In addition, the Issuer will amend the base matrix and modifiers that Moody's will take into account for the assignment of the definitive ratings. The Issuer is a managed cash flow CLO. At least 90.0% of the portfolio must consist of secured senior loans or senior secured bonds and up to 10.0% of the portfolio may consist of unsecured senior loans, second-lien loans, mezzanine loans and high yield bonds. The underlying portfolio including principal proceeds is expected to be 99.5% ramped up as of the closing date. The Issuer will apply approximately EUR 1.8 million of proceeds from the issuance of refinancing notes to the purchase of additional collateral obligations in order to fully ramp-up the portfolio to the target par amount. AXA IM will manage the collateral pool of the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's 4.25- year reinvestment period. Thereafter, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations and credit improved obligations, and are subject to certain restrictions. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology underlying the rating action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in August 2017. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Moody's modeled the transaction using CDOEdge, a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in August 2017. Moody's used the following base-case modeling assumptions: Par amount: EUR 350,000,000 Diversity Score: 42 Weighted Average Rating Factor (WARF): 2850 Weighted Average Spread (WAS): 3.55% Weighted Average Coupon (WAC): 4.50% Weighted Average Recovery Rate (WARR): 44.3% Weighted Average Life (WAL): 8.5 years Moody's has addressed the potential exposure to obligors domiciled in countries with a local currency ceiling (LCC) of A1 or below. As per the portfolio constraints, exposures to countries with LCC of A1 or below cannot exceed 10%, with exposures to LCC of Baa1 to Baa3 further limited to 5% and with exposures of LCC below Baa3 not greater than 0%. ADAGIO V: Fitch Assigns 'B-(EXP)sf' Rating to Class F Debt ---------------------------------------------------------- Fitch Ratings has assigned Adagio V CLO DAC expected ratings, as follows: Class X: 'AAA(EXP)sf'; Outlook Stable Class A: 'AAA(EXP)sf'; Outlook Stable Class B-1: 'AA(EXP)sf'; Outlook Stable Class B-2: 'AA(EXP)sf'; Outlook Stable Class C-1: 'A(EXP)sf'; Outlook Stable Class C-2: 'A(EXP)sf'; Outlook Stable Class D: 'BBB-(EXP)sf'; Outlook Stable Class E: 'BB(EXP)sf'; Outlook Stable Class F: 'B-(EXP)sf'; Outlook Stable Subordinated notes: 'NR(EXP)sf' The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Adagio V CLO DAC is the refinancing of a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, and second-lien loans issued in September 2016. A total expected note issuance of EUR366.4 million will be used to fund a portfolio with a target par of EUR350 million. The portfolio is managed by AXA Investment Managers Inc. The CLO envisages a 4.25-year reinvestment period and an 8.5-year weighted average life (WAL). The transaction is currently below target par, prior to the refinancing of the notes. There is no effective date rating event language in the refinancing offering circular. The assignment of final ratings will therefore be contingent to the aggregate collateral balance including cash being at or above target par and all portfolio profile tests, collateral quality tests and overcollateralisation tests being satisfied on the closing date. Otherwise Fitch may assign final ratings below the expected ratings. KEY RATING DRIVERS 'B' Portfolio Credit Quality Fitch places the average credit quality of obligors in the 'B' range. The Fitch-weighted average rating factor (WARF) of the identified portfolio is 32.6. High Recovery Expectations At least 90% of the portfolio comprises senior secured obligations. Recovery prospects for these assets are typically more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-weighted average recovery rating (WARR) of the identified portfolio is 65.9%. Diversified Asset Portfolio The covenanted maximum exposure to the top 10 obligors for assigning the expected ratings is 20% of the portfolio balance. The transaction also includes limits on maximum industry exposure based on Fitch's industry definitions. The maximum exposure to the three largest (Fitch-defined) industries in the portfolio is covenanted at 40%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management The transaction features a 4.25-year reinvestment period and includes reinvestment criteria similar to other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Analysis Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls and the various structural features of the transaction, and to assess their effectiveness, including the structural protection provided by excess spread diverted through the par value and interest coverage tests. RATING SENSITIVITIES A 125% default multiplier applied to the portfolio's mean default rate, and with this increase added to all rating default levels, would lead to a downgrade of up to two notches for the rated notes. A 25% reduction in recovery rates would lead to a downgrade of up to four notches for the rated notes. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information. 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. FINSBURY SQUARE 2016-2: Fitch Affirms CCC Rating on Class E Debt ---------------------------------------------------------------- Fitch Ratings has upgraded 2 tranches of Finsbury Square 2016-2 plc and affirmed the rest, as follows: Class A (ISIN: XS1495599570): affirmed at 'AAAsf'; Outlook Stable Class B (ISIN: XS1495603273): upgraded to 'AAAsf' from 'AA+sf'; removed from Rating Watch Positive; Outlook Stable Class C (ISIN: XS1495603513): affirmed at 'A+sf'; removed from Rating Watch Positive; Outlook Stable Class D (ISIN: XS1495603604): upgraded to 'A+sf' from 'Asf'; removed from Rating Watch Positive; Outlook Stable Class E (ISIN: XS1495603786): affirmed at 'CCCsf'; removed from Rating Watch Positive; Recovery Estimate 100% This transaction is a securitisation of near-prime owner-occupied (OO) and buy-to-let (BTL) mortgages originated by Kensington Mortgage Company in the UK. KEY RATING DRIVERS Increasing Credit Enhancement High prepayments in the last 12 months, together with sequential amortisation, have led to a significant increase in credit enhancement to 33.2% (from 17%) for the class A notes, to 24.4% (from 12.5%) for the class B notes, to 15.1% (from 7.7%) for the class C notes and to 10.4% (from 5.3%) for the class D notes. The increasing credit enhancement is the main driver of the upgrades of the class B and D notes. Counterparty Criteria Updated Fitch had placed the class B, C, D and E notes on RWP following the update of its Structured Finance and Covered Bonds Counterparty Rating Criteria on August 1, 2018, and in particular the change in the way commingling risk is addressed. Based on the current criteria, Fitch views commingling risk as immaterial in this transaction and no losses were sized in the analysis. The rating actions follow its updated analysis based on the published criteria. Higher Arrears not Indicative The balance of loans with arrears over one month has increased to 3.5% (from 0.59% one year ago) while the balance of loans with arrears over three months has increased to 1.22% (from 0.16% one year ago). The increasing arrears rates are driven largely by the prepayment of performing loans increasing the amount of loans in arrears as a portion of the pool and consequently are not viewed as material indicators of negative performance. A low number of the arrears have turned into repossessions, with cumulative repossessions currently at 0.02%. Fitch expects asset performance to remain robust. Payment Interruption Risk The class C and D notes only have access to the general reserve fund for liquidity purposes. In high stress scenarios the general reserve fund may be depleted to cover for losses and therefore not be available to cover for payment interruption risk. Consequently the ratings of the class C and D notes have been constrained to 'A+sf'. In contrast, the class A and B notes also benefit from a specific liquidity reserve fund mechanism. RATING SENSITIVITIES The notes could be upgraded in case of sustained increases in credit enhancement and ongoing stable asset performance. The notes could be downgraded should asset performance deteriorate in excess of Fitch's current expectations. The notes may also be downgraded if the issuer account bank (Citibank N.A.; A+/Stable/F1) or the derivative counterparty (BNP Paribas SA; A+/Stable/F1) are downgraded below certain documented threshold levels with no documented remedial actions being implemented on a timely basis. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transaction. There were no findings that affected the rating 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. Prior to the transaction closing, Fitch reviewed the results of a third-party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Overall and together with the assumptions referred, 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. TORO EUROPEAN 2: Fitch Assigns B-(EXP) Rating to Class F-R Debt --------------------------------------------------------------- Fitch Ratings has assigned Toro European CLO 2 DAC (Reset) expected ratings as follows: Class X: 'AAA(EXP)sf'; Outlook Stable Class A-R: 'AAA(EXP)sf'; Outlook Stable Class B-1-R: 'AA(EXP)sf'; Outlook Stable Class B-2-R: 'AA(EXP)sf'; Outlook Stable Class C-R: 'A(EXP)sf'; Outlook Stable Class D-R: 'BBB-(EXP)sf'; Outlook Stable Class E-R: 'BB-(EXP)sf'; Outlook Stable Class F-R: 'B-(EXP)sf'; Outlook Stable The assignment of the final ratings is contingent on the receipt of final documents conforming to information already reviewed. Toro European CLO 2 DAC is a cash flow CLO closed in September 2016. The portfolio is actively managed by Chenavari Credit Partners LLP, and the asset portfolio mostly comprises European leveraged loans and bonds. Net proceeds from the notes are being used to redeem the old notes, with a new identified portfolio comprising the existing portfolio, as modified by sales and purchases conducted by the manager. Class X notes will be added on the top of the structure, and will be repaid over the first eight IPDs out of available interest funds. The reset CLO will feature a two-year reinvestment period (ending September 2020) and a 6.7-year weighted average life (WAL). KEY RATING DRIVERS 'B' Portfolio Credit Quality Fitch places the average credit quality of obligors in the 'B' range. The Fitch-weighted average rating factor (WARF) of the current portfolio is 32.79. High Recovery Expectations At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-weighted average recovery rate (WARR) of the current portfolio is 64.95%. Interest Rate Exposure Fixed-rate liabilities represent 4.25% of the target par, while fixed-rate assets can represent between 0% and 10% of the portfolio. At closing the issuer purchased an interest rate cap to hedge the transaction against rising interest rates. The notional of the cap is EUR10 million (representing 2.5% of the target par amount); the strike rate is 2%. Diversified Asset Portfolio The transaction will feature different Fitch test matrices with different allowances for exposure to the 10 largest obligors. The manager will be able to interpolate between these matrices. In assigning expected ratings, Fitch factored in a 22% exposure to the 10 largest obligors in its analysis. The transaction also includes limits on the exposure to Fitch- defined industries. The largest industry exposure is limited to a maximum of 17.5%, the second- largest 15% and the third-largest 12%, for an overall exposure to the largest three Fitch-defined industries of up to 44.5%. Exposures to the remaining Fitch- defined industries may not exceed 10%. These covenants are higher than in comparable transactions, implying lower diversification. In constructing the stressed portfolio, Fitch considered these increased industry concentration limits. Limited Foreign-Exchange Risk The transaction is allowed to invest up to 30% of the portfolio in non-euro-denominated assets, provided these are hedged with perfect asset swaps at settlement. Adverse Selection and Portfolio Management The transaction features a two-year reinvestment period and includes reinvestment criteria similar to other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Analysis Fitch used a customised proprietary cash flow model to replicate the principal and interest waterfalls and the various structural features of the transaction, and to assess their effectiveness, including the structural protection provided by excess spread diverted through the par value and interest coverage tests. RATING SENSITIVITIES A 125% default multiplier applied to the portfolio's mean default rate, and with this increase added to all rating default levels, would lead to a downgrade of up to two notches for the rated notes. A 25% reduction in recovery rates would lead to a downgrade of up to four notches for the rated notes. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information. 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. =============== S L O V E N I A =============== KD GROUP: Fitch Withdraws 'BB' IDR for Commercial Reasons --------------------------------------------------------- Fitch Ratings has maintained Slovenian holding company KD Group financna druzba, d.d.'s (KD Group) 'BB' Issuer Default Rating (IDR) on Rating Watch Negative (RWN) and has chosen to withdraw the rating for commercial reasons. KEY RATING DRIVERS The RWN on KD Group's IDR reflects that the company is in the process of selling Adriatic Slovenica (Insurer Financial Strength (IFS) rating: BBB-/RWP) to Generali CEE Holding B.V., the intermediate holding company managing Assicurazioni Generali S.p.A.'s (IFS rating: A-/Negative) operations in central and eastern Europe. KD Group will be a very small real estate investor, which Fitch regards as higher risk, instead of an insurance holding company after the sale of Adriatic Slovenica. Also, KD Group will no longer have access to Adriatic Slovenica's dividends. Fitch is not resolving the RWN as the sale of Adriatic Slovenica has not been completed. RATING SENSITIVITIES Not applicable. ===================== S W I T Z E R L A N D ===================== GAM HOLDING: Begins Paying Out Luxembourg Fund Investors -------------------------------------------------------- Patrick Winters at Bloomberg News reports that GAM holding AG said it had begun paying out some investors as it proceeds with the wind-down of suspended star manager Tim Haywood's funds, and plans to return more than 80% of the money to clients in certain funds in coming days. The Swiss firm said it had made a first payment to holders of Luxembourg-domiciled funds that were previously run by Mr. Haywood and plans to make a slightly higher-than-expected second payment by Sept. 26, Bloomberg relates. According to Bloomberg, GAM said information on Irish, Cayman and Australian funds will follow in the coming days. The company, as cited by Bloomberg, said further fund assets will be liquidated to cash and returned over the coming months, depending on market conditions. "The liquidation process is progressing as planned and we continue to ensure all clients in the funds are being treated fairly and equally, receiving their proportionate share of the liquidation proceeds," Bloomberg quotes the company as saying in a letter published on its website on Sept. 21. Since the Swiss investment firm suspended one of its biggest money managers over allegations of misconduct and froze more than US$7 billion of his funds, clients have pulled US$3 billion from unrelated portfolios, Bloomberg discloses. GAM is in the process of winding down nine bond funds after Mr. Haywood's suspension triggered massive redemption requests, Bloomberg relays. The asset manager had said in August that it would initially return 74% to 87% of the assets in Luxembourg and Irish-domiciled funds, Bloomberg recounts. Investors in Haywood's Cayman Islands-based hedge fund would only get about 60% in early September, with another 5% expected by the end of the month, Bloomberg states. =========== T U R K E Y =========== BETA AYAKKABI: Declares Concordatum Amid Financial Woes ------------------------------------------------------- Taylan Bilgic at Bloomberg News reports that Turkish shoemaker Beta Ayakkabi has declared concordatum. According to Bloomberg, the board has started the restructuring process aimed at changing payment structure. The court has ruled for injunction following request for concordatum, Bloomberg discloses. Beta Ayakkabi Chairman Taner Ikiisik cites lira depreciation, cash crunch and FX-based rents at shopping centers, Bloomberg relates. Mr. Ikiisik also cites a recent fire that broke out at its factory about six months ago, Bloomberg notes. Beta Ayakkabi serves about 1 million customers every year with 400 employees and 50 stores. =========================== U N I T E D K I N G D O M =========================== AVIS BUDGET: S&P Rates New EUR350MM Senior Unsecured Notes 'BB' --------------------------------------------------------------- S&P Global Ratings assigned its 'BB' issue-level rating and '4' recovery rating to Avis Budget Finance PLC's proposed EUR350 million senior unsecured notes due 2026. Avis Budget Finance PLC is an indirect subsidiary of Avis Budget Group Inc. The '4' recovery rating indicates S&P's expectation that lenders would receive average (30%-50%; rounded estimate: 35%) recovery of their principal in the event of a payment default. S&P said, "At the same time, we affirmed our 'BB' issue-level rating on Avis Budget's existing unsecured debt. The '4' recovery rating remains unchanged, indicating our expectation for average recovery (30%-50%; rounded estimate: 35%) in the event of a payment default. We revised our rounded recovery estimate on the debt to 35% from 30% due to an increase in the size of the company's vehicle fleet. In addition, we affirmed our 'BBB-' rating on Avis Budget's existing senior secured debt." The company will use the proceeds from the proposed notes to repay Avis Budget Car Rental LLC's outstanding senior unsecured notes due 2022 and pay fees and other related expenses in connection with the offering. Avis Budget will use any remaining proceeds for general corporate purposes. S&P said "Our ratings on Avis Budget reflect the company's position as one of the largest global car rental companies and the price-competitive and cyclical nature of on-airport car rentals. Our ratings also incorporate the relatively stable cash flow that the company's car rental business generates--even during periods of earnings weakness--and its substantial capital spending requirements, which it can quickly reduce if industry or economic conditions warrant." RATINGS LIST Avis Budget Group Inc. Avis Budget Car Rental LLC Issuer Credit Rating BB/Stable/-- New Rating Avis Budget Finance PLC Senior Unsecured EUR350 mil notes due 2026 BB Recovery Rating 4(35%) Ratings Affirmed; Recovery Expectations Revised To From Avis Budget Finance PLC Avis Budget Finance Inc Avis Budget Car Rental LLC Senior Unsecured BB BB Recovery Rating 4(35%) 4(30%) Ratings Affirmed; Recovery Ratings Unchanged Avis Budget Car Rental LLC Senior Secured BBB- Recovery Rating 1(95%) BMI HEALTHCARE: Nears GBP2BB Restructuring Deal to Cut Rent Bill ---------------------------------------------------------------- Mekhla Raina and Sathvik N in Bengalur at Reuters report that Britain's largest private healthcare group, BMI Healthcare, is nearing a GBP2 billion restructuring deal that could cut millions of pounds from its annual rent bill, a person familiar with the matter said on Sept. 25. The source told Reuters an announcement under which BMI's rent bill will be cut by about GBP60 million is likely to be made imminently. According to Reuters, the source said funds including Centerbridge and Och-Ziff Capital Management will inject about GBP50 million of equity into the business, and maturity of about GBP2 billion of debt on the balance sheet of BMI and its property arm General Healthcare Group will be extended by six years. BMI Healthcare operates 59 hospitals and clinics throughout the United Kingdom and had about 276,000 inpatient visits per year, according to its website. FAIRHOLD SECURITISATION: Seeks to Invalidate Admin. Appointment --------------------------------------------------------------- Asad Asali at Global Capital reported that the High Court was standing room only as Fairhold Securitisation Limited and the note trustee Global Loan Agency Services Limited (GLAS), tried to invalidate the appointment of three individuals as administrators of Fairhold. Clifden, the real estate focused fund manager, had bypassed GLAS to make the appointment. Clifden IOM, the fund which failed in its tender offer for UK non-conforming bonds from the RMAC series earlier this year, is still on the hunt for assets from the issuer of Fairhold Securitisation, a pre-crisis distressed CMBS backed by UK ground rents, Global Capital had disclosed. According to Global Capital, a court heard on Aug. 8, Clifden IOM's claims to have appointed administrators to Fairhold, were "fanciful" and "incredible". Out-law.com recounts that in a securitisation transaction dated March 30, 2006, Cayman-registered Fairhold Securitisation Ltd issued two classes of notes backed by the income receivables from a complex portfolio of sheltered housing properties in England and Wales. The notes were due to mature in October 2017. By 2015, the transaction was in trouble. Cash flow from the properties was insufficient to support both Fairhold's liability to the noteholders, and its liability to two issuer swap counterparties, UBS and HBOS. Fairhold had entered into swaps with the banks to hedge its obligations under the notes. On October 2, 2015, UBS exercised its right to early termination, triggering a payment of GBP311 million. Subsequently, GLAS had replaced Deutsche Trustee Company Ltd. This was followed within days by a potential default event, when the issuer failed to pay the interest due on the notes. Fairhold then claimed to be entitled to rescind the swaps on the grounds that the banks had made fraudulent misrepresentations. At the same time, the parties had been discussing a possible restructuring, in the course of which the same group of noteholders incurred the GBP2.5 million professional fees at the centre of the dispute. Following an extraordinary meeting of the noteholders which resolved to direct the trustee to pay these fees, the trustee entered into an agreement to pay them as if they were 'trustee costs and expenses'. As trustee expenses, the fees had first priority under the payment waterfall at the expense of UBS. UBS therefore challenged the trustee's rights to pay the fees as a matter of interpretation of the trust deed and associated charge over the Fairhold's assets. Pending resolution of the dispute, no fees had been paid. The law firm of Simons and Simons said they represent UBS in the restructuring. OCADO GROUP: Fitch Affirms BB- IDR, Alters Outlook to Negative -------------------------------------------------------------- Fitch Ratings has revised the Outlook on Ocado Group PLC's (Ocado) Long-Term Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at 'BB-'. The affirmation reflects Ocado's improving business risk profile as its UK-based online food retail activities build scale and mature while it also accelerates its transformation into a logistics and technology provider, increasing geographical reach and diversification of its technology platform through an increasing number of partnerships with retailers. However, this business risk transformation increases Ocado's execution risks as the company's technology and manufacturing capabilities need to scale up over the medium term under its Solutions segment. Fitch therefore expects that the development of the solutions business will test Ocado's near-term cash flow strength, leading to additional funding requirements from 2020. Fitch acknowledges a variety of strategic options available to Ocado to manage these additional capital needs, but Fitch expects this could stretch leverage and financial policy metrics at least in the development phase, leading to a possible downside risk to the rating as reflected in the Negative Outlook. KEY RATING DRIVERS Funding Requirements, Execution Risks: The Negative Outlook reflects capital requirements to fund the accelerated growth of Ocado's Solution business and the execution risk associated with its delivery. In its view, the additional capital required from 2020 to fund the upfront costs of this growth will test the group's cash flow strength and financial policies. Historically, equity contributions have covered these cash flow deficits, and in its view, the funding mix used to support the group's strategic development, coupled with the underlying profitability of the individual technology contracts, will define Ocado's rating trajectory over time. Accelerated Transition to Solutions: Fitch views execution as the key driver of Ocado's business risk, as the company delivers its agreed contracts as logistics provider to strategic food retail partners. Ocado's increased efforts to scale up its Solutions business will accelerate its business transformation into a logistics and technology provider from a retail player, increasing geographical reach and diversification of the company's business. Evolving Cash Flow Profile: Fitch expects the transition towards a solutions business to result in investments with only moderate immediate fee contribution, as these contracts typically entail high upfront capex to tailor and fit out Ocado's smart platform, and only contribute cash flows within the following three to five years. This evolving underlying cash flow profile, drives its assumptions for negative free cash flow (FCF) margins over its four-year rating horizon. This will test Ocado's conservative net-debt to EBITDA target of around 2.5x policies, which has been underpinning the 'BB-' rating. UK Retail Business Matures: In its view, Ocado's UK retail platform is continuing to mature, resulting in the company bringing on new capacity from additional customer fulfilment centres (CFC). However, cash generation from the UK retail business at present remains insufficient to support upfront cash outlays for the various partnerships announced over the past year. UK Retail Margin to Stabilise: Fitch expects Ocado's retail margin to drop to 5.0% in FY18, after excluding income from MHE JV. This is the result of a lower gross margin, fuelled by price competition in the challenging UK grocery market, along with higher delivery and CFC costs. While Fitch expects gross margin to continue to decrease by 10bp per year, Fitch also forecasts a mild reduction of delivery costs up to 30bps from 12.5% of sales in FY17. CFC costs should start to decrease by 2019, when the Andover site will start to ramp up in terms of capacity having opened in November 2016, followed by Erith which started operations this summer. Therefore, Fitch anticipates the EBITDA margin will trend towards 5.2% by 2021. Continued Retail Growth: Fitch expects retail sales to increase at an average of 9% in the next four years. Since 2014, Ocado's growth has been largely in line with the UK online market growth in the food products category of between 12% and 16%, as calculated by the Office for National Statistics, and at a faster pace than direct online food competitors. As Ocado's proprietary UK operations mature and increase scale, future growth may be defined by available distribution capacity. Fitch therefore bases its retail growth assumptions on the capacity level introduced by Ocado's new fulfilment centres, Andover, and Erith. Amazon's Dual Threat: Amazon (A+/Stable) competes with Ocado in both the solutions and retail businesses. In 2017-18, the American group opened its online marketplace to Morrison and Casino, two customers of Ocado Solutions, and in 2016 started to sell grocery products online in the UK, competing with Ocado Retail. Although Amazon has the potential to disrupt the food- retail market, Fitch believes UK online sales will continue to show two-digit growth over the rating horizon, accommodating the expansion of both companies. On the other hand, Fitch believes Ocado Solutions offers the preferred long-term answer to the online channel needs of its partners. Nevertheless, as long as there are constrains in CFCs capacity, Amazon's service will continue to be complementary to Ocado's. Key Agreement Renewal: Ocado sources approximately 80% of its products through Waitrose, under an agreement set to expire in September 2020. Teaming up with a bigger retailer (Waitrose's sales in FY18 were GBP3.9 billion) gives Ocado stronger bargaining power with suppliers. Although Fitch expects this contract to be renewed, there may be a commercial rationale for Waitrose to hamper the growth of a competitor. If the contract expired, it would result in a lower EBITDA margin in the Retail division than the level Fitch projects for FY21 at 5.2%. Nevertheless, in FY21 Ocado is expected to reach a bigger scale with retail sales of GBP1.9 billion, partly offsetting the risk to source autonomously. Above-Average Senior Debt Recoveries: Fitch assumes a going concern recovery analysis, as Fitch believes sufficient value to be available as a growing online grocery retailer and a developing technology provider to attract enough interest from potential trade buyers in the event of distress. The existing bond and revolving credit facilities are first-lien and secured by pledges over all of the issued share capital of each guarantor. The collateral available for first-lien creditors results in the one-notch uplift from the IDR of 'BB-' to get to the 'BB' bond rating. DERIVATION SUMMARY The rating reflects Ocado's favourable market position and competitive advantages as a pure-play online grocery retailer, despite its small scale and the strong competition in food markets in the UK. A lean cost base supports the group's profitability as reflected in solid FFO margins, higher than peers such as Tesco (BB+/Stable) and Carrefour (BBB+/Stable). However, the high capex intensity deriving from the growth of Ocado's Solutions division translates into significantly negative FCF margins and a looser financial policy than food-retailer peers. KEY ASSUMPTIONS - Revenue growth averaging 9.5% p.a. in 2018-21, driven by the strong growth of online sales in the UK and increasing revenue from the Solutions division - FFO margin between of 3.2% in FY18, trending towards 5.0% thereafter - Net capex intensity increasing to mid-teens as percentage of sales between 2018-21, reflecting on the assumed cash flow profile of the announced Ocado Solutions partnerships. - FCF margins remain substantially negative over its rating horizon to 2021 mainly driven by capex requirements associated with its Solutions business RATING SENSITIVITIES Although Fitch does not anticipate an upgrade in the foreseeable future, developments That May, Individually or Collectively, Lead to Positive Rating Action include: -Increasing scale and diversification either linked to greater product mix or continuing growth of its customer base (market share) in the Retail division, along with a more mature profile of its Solutions division, leading to a positive cash flow contribution to the group (before discretionary capex). -FFO adjusted gross leverage trending to 3.5x on a sustained basis -Maintenance of solid financial flexibility including strong FFO fixed charge coverage and liquidity available -Prudent growth strategy reflected in higher share of capex funded either internally leading to neutral FCF, or via equity or equity-like instruments Developments That May, Individually or Collectively, Lead to Negative Rating Action - FFO margin erosion to below 3% indicating slower than expected new capacity take up, weaker pricing power and/or intensifying competitive pressure in its own grocery distribution platform - FFO adjusted gross leverage staying above 4.5x on a sustained basis - Diminished financial flexibility, reflected by a deterioration of the liquidity position as a result of higher capex leading to continuing negative FCF in the mid-single digits of sales, worse working capital turnover, or FFO fixed charge coverage below 2.5x on a sustained basis Developments That May, Individually or Collectively, Lead to a revision of the Outlook to Stable: - Diminishing cash flow needs driven by a maturing Solutions business (including a successful execution under its contract with Kroger for the first fullfilment centres) supported by steady profit and cash flow contribution from its own Retail platform - FFO adjusted gross leverage sustainably below 4.5x - FFO fixed charge cover staying above 2.5x LIQUIDITY AND DEBT STRUCTURE Funding Gap in 2020-21: As of June 3, 2018, Ocado's liquidity appears strong, on the back of reported GBP447.6 million of cash and cash equivalent, thanks to the equity injection from Kroger. Nevertheless, Fitch expects the company to exhaust its available cash in 2020-21, on the back of the capital needed to set up the new CFCs with international partners. Liquidity and debt structure are sensitive to changes based on the final agreement with Kroger, which Fitch expects will be finalised over the next three to six months. However, total current liquidity is more than sufficient to cover the amount of short-term debt, represented by Fitch-adjusted GBP19 million of capitalised leases maturing in FY18. SUMMARY OF FINANCIAL STATEMENT ADJUSTMENTS - GBP4 million deducted from reported cash as restricted cash held by the group's captive insurance company and by the employee benefit trust related to Ocado's employee share scheme in Poland - A multiple of 8x (given the company's location in the UK) used for capitalisation of around GBP23 million of annual rental payments - MHE JVCo: Fitch has excluded 50% of GBP94.1 million finance leases related to MHE JV Co to reflect Ocado's 50% share (retaining 50% share of capital and interest component of lease payments). Fitch also deducts non-cash elements from EBITDA (MHE lease income and share of MHE JVCo profits), as well as GBP7.6 million in dividend received from the JV from funds from operations. * 10% of UK Firms May Go Bankrupt Due to Brexit Border Delays ------------------------------------------------------------- Anna Isaac at The Telegraph reports that new research has claimed as many as 10% of UK businesses would face bankruptcy if goods were delayed by under 30 minutes as a result of Brexit trade friction. Businesses are also planning to stockpile goods in order to offset the impact of increased delays, The Telegraph discloses. Despite "scarce" and expensive warehousing, almost a quarter of companies are preparing to stockpile in the future and some 4% have already started to do so, The Telegraph relays, citing research from the Chartered Institute of Procurement and Supply (CIPS). According to The Telegraph, almost 40% of companies said they were unable to prepare at all for the impact of Brexit, as future trade arrangements were shrouded in political uncertainty. ********* 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. 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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 2018. 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. 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