/raid1/www/Hosts/bankrupt/TCREUR_Public/181106.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, November 6, 2018, Vol. 19, No. 220


                            Headlines


D E N M A R K

PRIMERA AIR: Arion Writes Off Nearly ISK2.5BB Due to Bankruptcy


F R A N C E

CMA CGM: Moody's Affirms B1 CFR, Revises Outlook to Negative


G E R M A N Y

KLOECKNER PENTAPLAST: Bank Debt Trades at 3% Off
MOLOGEN AG: Reaches Agreement with Creditors on Bond Waiver Terms


M O L D O V A

MOLDOVA: Moody's Affirms B3 LT Issuer Ratings, Outlook Stable


R U S S I A

CB RUBLEV: Liabilities Exceed Assets, Assessment Shows
GAZBANK JSC: Liabilities Exceed Assets, Assessment Shows
LSR PJSC: Fitch Affirms 'B' LT FC IDR, Revises Outlook to Pos.
UGI INT'L: Fitch Assigns EUR350MM Bond BB+ Sr. Unsec. Rating


U K R A I N E

NAFTOGAZ NJSC: Fitch Rates Prop. Loan Participation Notes B-(EXP)


U N I T E D   K I N G D O M

CARPETRIGHT PLC: Series of Store Closures Hit Sales Performance
CRAWSHAW GROUP: Appoints E&Y Executives as Joint Administrators
DEBENHAMS PLC: Moody's Lowers CFR to Caa1, Outlook Stable
HERCULES PLC 2006-4: Fitch Withdraws 'D' Ratings on 3 Tranches
INSPIRED EDUCATION: Moody's Assigns B2 CFR, Outlook Stable

MABEL TOPCO: S&P Places 'B' Long-Term ICR on CreditWatch Positive


                            *********


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D E N M A R K
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PRIMERA AIR: Arion Writes Off Nearly ISK2.5BB Due to Bankruptcy
---------------------------------------------------------------
Johann Pall Astvaldsson at Iceland Review, citing RUV, reports
that Arion Bank has had to write off close to ISK2.5 billion
(US$20.6 million, EUR18.1 million) due to the bankruptcy of
airline Primera Air.

Arion Bank released the information in a quarterly report of the
third quarter of the year, which was released on Nov. 3, Iceland
Review relates.

According to Iceland Review, the quarterly report states that
Arion Bank's current credit risk connected to the aviation
industry stands at ISK4.3 billion (US$35.5 million, EUR31.2
million) to a couple of customers.  Although the bank cannot
disclose which airline operators are in business with the bank,
it is known that one of Arion Bank's customers is the airline WOW
Air, Iceland Review notes.

Arion Bank profits in the third quarter of the year were ISK1.1
billion (US$9.1 million, EUR7.9 million), compared to ISK0.1
billion (US$827,000, EUR726,000) in the same quarter last year,
Iceland Review discloses.  The bank states that Primera Air's
downfall affected profit and yield substantially, Iceland Review
relates.

"The profits in the third quarter of the year were lower than
projections, and the bankruptcy of Primer Air is the biggest
factor, but the bank had to write off assets due to that.  The
basis of the bank's operations is still strong", Iceland Review
quotes the the bank as saying in a statement.

Primera Air group, which has flown from Iceland with an air
operating certificate (AOC) from Latvia, became bankrupt in the
beginning of October, Iceland Review recounts.

Primera Air Scandinavia A/S, trading as Primera Air, was a Danish
leisure airline owned by the Primera Travel Group.


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F R A N C E
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CMA CGM: Moody's Affirms B1 CFR, Revises Outlook to Negative
------------------------------------------------------------
Moody's Investors Service affirmed the B1 corporate family
rating, B1-PD probability of default rating and B3 senior
unsecured rating of CMA CGM S.A. and revised the rating outlook
to negative from positive. This rating action reflects CMA CGM's
announcement on October 25, 2018 of its intention to make a
tender offer to the shareholders of CEVA Logistics AG (B1 stable)
at CHF 30 per share.

"Our decision to change the rating outlook on CMA CGM's ratings
to negative reflects significant uncertainty associated with the
proposed transaction, as well as broad downside risks in the
container shipping industry, such as US/China trade tensions,"
says Maria Maslovsky, a Moody's Vice President -- Senior Analyst
and the lead analyst for CMA CGM.

RATINGS RATIONALE

The negative outlook reflects the uncertainty associated with the
ultimate structure of the transaction and the consideration CMA
CGM offers to CEVA's shareholders. CMA CGM plans to sell its
CCLog logistics business to CEVA for an amount to be determined
and also to make an offer to CEVA's shareholders at CHF 30 per
share. Moody's estimates that CMA CGM's leverage may increase to
mid-5x range on a pro forma basis as a result of this offer,
including Moody's Standard Adjustments, although the precise
figure will depend on the final share of CEVA capital acquired
and the company's performance.

CMA CGM further expects to create new commercial opportunities
with CEVA through its international commercial network; it also
anticipates creating economies of scale from combining CCLog with
CEVA's freight management business and bringing CMA CGM's
operational expertise to expedite CEVA's strategic plan. Moody's
sees the vertical integration with CEVA as strategically positive
for CMA CGM because it will allow CMA CGM to offer door-to-door
service to its key customers. Still, smooth execution will be key
to the success of the transaction and will be focussed on
delivering operational improvements for a combination of two low-
margin businesses: container shipping and logistics.

CMA CGM's core business of container shipping, as the rest of the
industry, has been pressured in the first half of 2018 by low
freight rates in the wake of vessel oversupply combined with
increasing bunker costs and delayed pass-through of fuel price
increases to customers. Container shipping industry as a whole,
including CMA CGM, is facing significant downside risks stemming
from the US/China trade tensions, rising fuel costs and upcoming
IMO 2020 low sulphur fuel regulation.

CMA CGM's liquidity is good with $1.6 billion of cash and $1.2
billion of undrawn RCF available to the group at June 30, 2018.
In addition, the company had approximately $1 billion of
unencumbered vessels. Also positively, CMA CGM has no bullet
maturities until 2020; debt maturities in 2018 and 2019 are
primarily those of secured bank debt and are expected to be
refinanced similarly on a secured basis.

Positively, CMA CGM stated that it has seen growing trading
volumes in the third and fourth quarters; importantly, this
includes the Transpacific trades that could potentially be
affected by the tariffs. In addition, bunker fuel cost pass-
through to customers has improved. Still, it is difficult to
determine if the good volumes reflect customers bringing orders
forward in anticipation of increased tariffs.

Following the completion of the offer, the outlook on CMA's
rating could be stabilised if CMA CGM's leverage measured as
debt/EBITDA remains close to or below 5x and its coverage
measured as funds from operations plus interest expense over
interest expense exceeds 3x on a sustained basis. Good liquidity
would also be needed to maintain the rating as would consistent
positive free cash flow generation.

Downward rating pressure could develop if leverage were sustained
at substantially above 5x for an extended period of time and
funds from operations interest expense coverage were below 3x on
a consistent basis. Any liquidity challenges would also be viewed
negatively as would persistent negative free cash flow.

The principal methodology used in these ratings was Shipping
Industry published in December 2017.

CMA CGM is the fourth-largest provider of global container
shipping services. The company operates primarily in the
international containerised maritime transportation of goods, but
its activities also include container terminal operations,
intermodal, inland transport and logistics. CMA CGM recorded
revenues of $21 billion in 2017.


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G E R M A N Y
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KLOECKNER PENTAPLAST: Bank Debt Trades at 3% Off
------------------------------------------------
Participations in a syndicated loan under which Kloeckner
Pentaplast SA is a borrower traded in the secondary market at
96.56 cents-on-the-dollar during the week ended Friday, October
26, 2018, according to data compiled by LSTA/Thomson Reuters MTM
Pricing.  This represents a decrease of 0.62 percentage points
from the previous week.  Kloeckner Pentaplast pays 425 basis
points above LIBOR to borrow under the $83 million facility. The
bank loan matures on June 17, 2022.  Moody's rates the loan 'B3'
and Standard & Poor's gave a 'B' rating to the loan.  The loan is
one of the biggest gainers and losers among 247 widely quoted
syndicated loans with five or more bids in secondary trading for
the week ended Friday, October 26.

Kloeckner Pentaplast SA is a Germany-based packaging company.  It
is a large supplier of films for pharmaceutical, medical devices,
food, electronics, and general packaging. Its first production
facility outside Germany was opened in 1979 in Gordonsville,
Virginia, United States.


MOLOGEN AG: Reaches Agreement with Creditors on Bond Waiver Terms
-----------------------------------------------------------------
The Executive Board of MOLOGEN AG (ISIN DE000A2LQ900, SIN A2L
Q90) (the "Company") reached on Oct. 26, with the approval of the
Supervisory Board, an agreement with the majority creditor of the
(i) EUR2,540,000 6% convertible bond 2016/2024 (ISIN
DE000A2BPDY4) issued by the Company and (ii) the EUR4,999,990 6%
convertible bond 2017/2025 (ISIN DE000A2DANN4) with respect to
the waiver of terminations and an adjustment of the terms and
conditions of both convertible bonds.  The adjustment of the
terms and conditions of the convertible bond 2017/2025 is to be
submitted to the creditors for approval at a Creditors' Meeting
to be convened shortly.

As announced in the Company's ad-hoc notification dated
October 8, 2018, the Company has entered into negotiations with
major creditors of the convertible bonds against the background
of the termination option provided for in the terms and
conditions of the convertible bonds 2016/2024 and 2017/2025, in
order to avoid an immediate maturity of both convertible bonds in
the total amount of approximately EUR6.6 million and the
resulting potential threat of insolvency of the Company.

The negotiations with the principle bondholder, who holds all
bonds of the convertible bond 2016/2024 and more than 75% of the
outstanding bonds of the convertible bond 2017/2025, were
concluded on Oct. 26.  Following the agreement reached, the
principle bondholder waives its right to exercise the currently
existing special termination right, which currently exists due to
the capital reduction carried out by the Company in summer 2018
under the terms of both convertible bonds.  This will avert the
immediate maturity of both convertible bonds and the associated
immediate repayment obligation of approximately EUR6.6 million.
In return, the Company offers to amend the terms and conditions
of the bonds as follows:

With regard to the convertible bond 2016/2024, (i) the conversion
price shall be reduced from EUR7.50 to EUR2.74 (equivalent to 89%
of the volume-weighted average of the market prices of the
Company's shares in XETRA trading on the Frankfurt Stock Exchange
over the last 10 trading days), (ii) to increase the interest
rate from 6% to 8% and (iii) in the event of a change of control
of the Company, to grant bondholders the right to demand
repayment of 103% of the principal amount of the bonds.  This
right granted in the event of a change of control corresponds to
the conditions already applicable today for the convertible bond
2017/2025.

With regard to the 2017/2025 convertible bond, the conversion
price is to be reduced from EUR7.61 to EUR2.46 (equivalent to 80%
of the volume-weighted average value of the Company's share price
in XETRA trading on the Frankfurt Stock Exchange over the last 10
trading days).

In addition, a special right of termination is to be included in
the terms and conditions of both convertible bonds in the event
that the described adjustments to the terms and conditions of the
bonds are not effectively implemented by June 30, 2019, at the
latest.

In November 2018, the Company intends to convene a Creditors'
Meeting on the convertible bond 2017/2025 in order to present the
agreement reached with the principal creditor to all creditors of
the convertible bond 2017/2025 for voting.

Berlin-based MOLOGEN AG is a biopharmaceutical company and
considered a pioneer in the field of immunotherapy on account of
its unique active agents and technologies.


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M O L D O V A
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MOLDOVA: Moody's Affirms B3 LT Issuer Ratings, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service has affirmed the Government of
Moldova's B3 long-term foreign and local currency issuer ratings.
The outlook remains stable.

The decision to affirm the ratings and maintain the stable
outlook balances the following key rating factors:

(1) Strong economic growth balanced by low wealth levels and
structural economic challenges;

(2) A moderate government debt burden and strong debt
affordability metrics;

(3) Improving institutional capacity amid governance challenges
and low policy predictability;

(4) Moderate political risk drives exposure to event risk, while
banking sector risk has diminished.

Moldova's long-term foreign currency bond and deposit ceilings
remain unchanged at B2 and Caa1, respectively. The local currency
bond and deposit ceilings remain unchanged at B2.

RATINGS RATIONALE

AFFIRMATION OF B3 LONG-TERM ISSUER RATINGS

The decision to affirm the B3 ratings balances Moldova's credit
challenges, which include low GDP per capita and a narrow
economic and export base, and limited institutional strength,
against a moderate debt burden and high debt affordability. It
also takes into account the significant progress achieved under
the IMF program to address the vulnerabilities in the banking
sector.

FIRST DRIVER: STRONG ECONOMIC GROWTH BALANCED BY STRUCTURAL
ECONOMIC CHALLENGES

The first driver for the rating affirmation is Moldova's low
economic strength, which balances improving long-term growth
prospects with relatively low per capita income, volatile growth
dynamics and structural challenges, including its limited
diversification. The relatively high reliance on the agricultural
sector and remittances exposes the economy to adverse climatic
conditions and external shocks. Structural impediments, such as
labor shortage due to persistent emigration, also weigh on the
country's economic strength.

The economy experienced strong growth in the first half of 2018,
with real GDP expanding by 4.5% year-on-year compared with 2.9%
in the same period last year. Growth has been broad-based, driven
by robust private consumption supported by remittances and
increasing investment. Export growth has been robust, reflecting
a favorable external environment and increasing trade integration
with EU, although the contribution of net exports remained
negative due to stronger import growth. The growth momentum is
expected to continue in 2019, albeit at a slower pace. Moody's
expects real GDP growth to remain relatively high at close to 4%
in 2019-20, supported by continued robust private consumption.

That said, Moldova's economic profile remains constrained by the
very small economic size, and a GDP per capita of less than
$7,000 in PPP terms in 2017, which is well below the European B-
rated peers and below the median for B3-rated sovereigns. Growth
has been robust but also more volatile than for peers, reflecting
the country's susceptibility to environmental events and external
developments.

SECOND DRIVER: MODERATE GOVERNMENT DEBT BURDEN AND STRONG DEBT
AFFORDABILITY

The second factor considered in the affirmation of the rating at
B3 is Moldova's moderate fiscal strength, balancing favorable
debt burden and debt affordability metrics with a large share of
foreign currency-denominated debt. Moldova's debt burden is
relatively low with a government debt-to-GDP ratio at 31.5% of
GDP at end-2017, well below the B-rated median of 56% of GDP.
Moody's projects the debt-to-GDP ratio to increase only
gradually, remaining below 35% of GDP until 2020, although the
debt dynamics remain exposed to the risk of weaker than expected
growth and exchange rate depreciation. Nevertheless, after
appreciating significantly in 2017 on the back of stronger
remittances and capital inflows, the exchange rate has remained
broadly stable in 2018. Debt affordability metrics are strong and
compare favorably with the B-rated peers. The government's
interest payment burden, with interest payments absorbing about
less than 4% of revenue in 2017, is very low and compares very
favorably to the B-rated median (9.3% of GDP in 2017), reflecting
a high share of concessional debt.

Moldova's fiscal performance has been characterized by small
budget deficits, though in part reflecting under-execution of
capital expenditure. However, revenue performance has improved in
2017 and 2018 due to robust economic growth but also improvements
in tax administration. Fiscal policy is expected to remain
prudent, supported by the new fiscal rule that came into effect
this year, although the recently introduced capital amnesty could
potentially undermine efforts in fighting corruption and reduce
tax compliance.

THIRD DRIVER: IMPROVING INSTITUTIONAL CAPACITY AMID GOVERNANCE
CHALLENGES AND LOW POLICY PREDICTABILITY

The authorities have made notable progress under the IMF program,
in particular in addressing the vulnerabilities of the banking
sector by strengthening the regulation and supervisory capacity.
The measures include a new banking law, a new bank recovery and
resolution law and anti-money laundering law. At the same time,
the governance structure of the central bank has improved and its
legal powers and operational capacity have been expanded.

Despite these improvements, institutional strength, as measured
by the Worldwide Governance Indicators, remains weak,
particularly as concerns control of corruption. Despite progress
in implementing reforms agreed with international institutions
over the past two years, implementation risks have increased
ahead of the upcoming parliamentary election, while policy-making
remains unpredictable, as highlighted by the recent adoption of a
package of credit negative fiscal measures in late July 2018,
while limited progress as concerns the judicial system reforms
led to the cancellation of the related EU budget support program
last year.

FOURTH DRIVER: MODERATE POLITICAL RISK DRIVES EXPOSURE TO EVENT
RISK, BANKING SECTOR RISK HAS DIMINISHED

The fourth driver is the moderate political risk score, driven by
a somewhat volatile domestic political environment and, to a
lesser extent, by geopolitical risk related to the unresolved
conflict in the separatist region of Transnistria. Despite the
recent stability, the domestic political environment remains
fragile, particularly ahead of the general elections scheduled in
February 2019. Weaknesses in the domestic political environment
also entail fiscal risks, as exemplified by the recent suspension
of the EU Macro-Financial Assistance after the invalidation of
the capital's mayoral elections. That said, the risks of renewed
tensions in Transnistria have diminished somewhat over recent
years and more recently, the dialogue has become more
constructive, with steps to address some long-standing issues
such as the Protocol decision on vehicles registration.

The banking system risk has diminished and substantial progress
has been made in addressing the vulnerabilities of the financial
sector under the aegis of the IMF program, in particular with
reference to the transparency of the bank shareholders - with the
transfer of two systemic banks to fit and proper shareholders
completed this year - the assessment of the related party lending
and the improvement of corporate governance. Nevertheless, the
continuation of the reform momentum is key to preserving
financial stability over the longer term.

RATIONALE FOR STABLE OUTLOOK

The stable outlook balances Moldova's reform progress, in
particular in the financial sector, against a somewhat volatile
political landscape and policy unpredictability ahead of the
elections in early 2019 that could hamper the reform momentum or
result in a less prudent fiscal policy, as well as structural
economic challenges, including a narrow economic and export base,
that continue to constrain the country's credit profile.

WHAT COULD CHANGE THE RATING - UP

Upward pressure on the rating could arise if the progress of
financial sector reforms continues, along with a strengthening of
the country's governance profile. Addressing long-standing
structural economic impediments, including for example the weak
business climate and labour shortage, is also key to the
emergence of upward rating pressure.

WHAT COULD CHANGE THE RATING - DOWN

Moldova's government rating could be downgraded if there were an
increase in political risk that resulted in a slowdown or
reversal of the reform progress achieved under the IMF program
and/or in a less prudent fiscal stance that could erode the
government's relatively favorable fiscal metrics. Although not
likely, Moldova's rating could also be downgraded if conditions
in the Transnistria region were to deteriorate rapidly.

GDP per capita (PPP basis, US$): 6,687 (2017 Actual) (also known
as Per Capita Income)

Real GDP growth (% change): 4.5% (2017 Actual) (also known as GDP
Growth)

Inflation Rate (CPI, % change Dec/Dec): 7.3% (2017 Actual)

Gen. Gov. Financial Balance/GDP: -0.8% (2017 Actual) (also known
as Fiscal Balance)

Current Account Balance/GDP: -5.9% (2017 Actual) (also known as
External Balance)

External debt/GDP: 72.9% (2017 Actual)

Level of economic development: Low level of economic resilience

Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.

On October 30, 2018, a rating committee was called to discuss the
rating of the Government of Moldova. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have increased. The issuer's
institutional strength/framework have improved but remain weak.
The issuer's fiscal or financial strength, including its debt
profile, has not materially changed. The issuer's susceptibility
to event risks has not materially changed.

The principal methodology used in this rating was Sovereign Bond
Ratings published in December 2016.


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R U S S I A
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CB RUBLEV: Liabilities Exceed Assets, Assessment Shows
------------------------------------------------------
The provisional administration to manage JSC CB RUBLEV
(hereinafter, the Bank) appointed by Bank of Russia Order No. OD-
1595, dated June 27, 2018, following the banking license
revocation, in the course of the inspection of the Bank's
financial standing established that the Bank's management
conducted operations to divert funds through lending to borrowers
with dubious creditworthiness or which might knowingly default on
their liabilities.

The provisional administration estimates the value of the Bank's
assets to be no more than RUR3.7 billion, whereas its liabilities
to creditors stand at RUR13 billion.

On September 25, 2018, the Arbitration Court of the City of
Moscow recognized the Bank as insolvent (bankrupt) with the state
corporation Deposit Insurance Agency appointed as a receiver.

The Bank of Russia submitted the information on the financial
transactions bearing the evidence of criminal offence conducted
by the Bank's executives to the Prosecutor General's Office of
the Russian Federation, the Ministry of Internal Affairs of the
Russian Federation and the Investigative Committee of the Russian
Federation for consideration and procedural decision-making.

The current development of the bank's status has been detailed in
a press statement released by the Bank of Russia.


GAZBANK JSC: Liabilities Exceed Assets, Assessment Shows
--------------------------------------------------------
The provisional administration to manage JSC JSCB GAZBANK
(hereinafter, the Bank) appointed by Bank of Russia Order No. OD-
1741, dated July 11, 2018, following the banking license
revocation, in the course of the inspection of the Bank's
financial standing established that the Bank's management
conducted operations to divert funds by replacing high quality
liquid assets with illiquid securities.

The provisional administration estimates the value of the Bank's
assets to be no more than RUR17.4 billion, whereas its
liabilities to creditors exceed RUR21.8 billion.

On September 25, 2018, the Arbitration Court of the Samara Region
recognized the Bank as insolvent (bankrupt) with the state
corporation Deposit Insurance Agency appointed as a receiver.

The Bank of Russia submitted the information on the financial
transactions bearing the evidence of criminal offence conducted
by the Bank's executives to the Prosecutor General's Office of
the Russian Federation, the Ministry of Internal Affairs of the
Russian Federation and the Investigative Committee of the Russian
Federation for consideration and procedural decision-making.

The current development of the bank's status has been detailed in
a press statement released by the Bank of Russia.


LSR PJSC: Fitch Affirms 'B' LT FC IDR, Revises Outlook to Pos.
--------------------------------------------------------------
Fitch Ratings has revised the Outlook on PJSC LSR Group's
Long-Term Foreign-Currency Issuer Default Rating (IDR) to
Positive from Stable and affirmed the IDR at 'B'. Fitch has also
affirmed the senior unsecured rating of the outstanding bonds
issues at 'B'/RR4.

The revision of the Outlook reflects the expected deleveraging
trend due to the reduction in the working capital outflow and
subsequent positive free cash flow (FCF) generation.

KEY RATING DRIVERS

Positive Mortgage Market Dynamics: Given the challenging economic
environment, householders are likely to rely more heavily on the
mortgage market, which will in turn support housebuilders.
Despite the latest increase in the mortgage interest rates, they
are still at historically low levels (below 10% as of October-
2018) due to the Central Bank of Russia's (CBR) low key rate. The
current volume of mortgages has surpassed the levels in 2014,
although the level of mortgage penetration within the Russian
market still lags that of the more developed markets of the EU
and the UK.

Working Capital Outflow to Reduce: Fitch expects a reduction in
the working capital outflow for LSR over 2019-2021, as the
company is due to finish the required investments into its
largest projects. The associated infrastructure spend for these
large scale projects was the main reason for the significant
working capital outflows in the past few years. This is expected
to lead to positive FCF generation over the same period and a
decrease in the company's FFO leverage to below 3.0x by 2020,
from the forecasted level of 3.3x at end-2018.

Prominent Market Position in Russia: LSR is one of the top-three
real estate developers in the highly fragmented Russian
residential construction market. The company is the largest
homebuilder for high-end residential real estate, and is also one
of the leading mass-market real-estate companies in St.
Petersburg and Moscow. LSR is also one of the leading producers
of building materials in Northwest Russia, which offsets some of
its construction risk by diversifying its revenues streams.

Scale Enables Sector Outperformance: Some smaller Russian
housebuilders are continuing to struggle, despite cuts in
interest rates supporting the mortgage market. This allows larger
housebuilders, such as LSR, to increase market share, as
customers, banks and construction companies prefer to use
established companies. Smaller housebuilders have typically
tended to be more opportunistic, leading to weaker financial
profiles and resulting in a number of bankruptcies. Because of
its size, LSR is in a stronger position to develop more lucrative
projects, especially in Moscow, and to attract more customers who
are looking for premium products provided by historically stable
housebuilders.

Diversified Portfolio: The majority of LSR's real-estate
portfolio is located in St. Petersburg (68% of the net sellable
area and 59% of the market value). With the acquisition of ZILART
and other smaller projects, LSR has become one of the largest
companies in the most lucrative Russian markets including Moscow.
LSR has also increased its share of higher-end "business class"
projects, which provide higher revenue and margins. Fitch views
the further diversification into the Moscow region and higher-end
projects as credit positive for the company, as Fitch considers
the Moscow housing market to be the most stable in Russia.

New Legislative Impact Neutral: New legislation adopted in 2018
stipulates that the housebuilders in Russia have to create an
escrow bank account for each construction project, so that the
funds received in a given project are not used to fund others.
This would prevent smaller and less reliable housebuilders from
financing new projects with the current ones and therefore this
should decrease the competition and benefit larger housebuilders,
like LSR, in the medium term.

Average Recoveries: LSR's senior unsecured bonds do not benefit
from guarantees from the operating companies. The waterfall
results in the 31% recovery for the bondholders, which
corresposnds to 'RR4'. This primarily results from its
expectation of the liquidation approach with conservative advance
rates. Should its assessments of the recoveries move to below
average (30% or below), Fitch may considers downgrading the
senior unsecured rating.

DERIVATION SUMMARY

LSR is one of the leading Russian housebuilders with a major
focus on the most lucrative areas - St. Petersburg and Moscow -
with a large portfolio of projects. The company compares well
with other Russian housebuilders on scale, geographical
diversification and financial profile. Operating and regulatory
environments vary significantly across EMEA, making comparisons
hard. Miller Homes (BB-/Stable), a UK housebuilder, operates in a
more stable environment. LSR is negatively impacted by the
industry cyclicality and capital intensity, high execution risk
should the company develop too many projects simultaneously, lack
of medium-term certainty over project development, and higher-
than-average risks associated with the Russian business
environment and jurisdiction.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within its Rating Case for the Issuer

  - Slight revenue reduction in 2019 with low single digit growth
for 2020-2021

  - EBITDA margin steadily growing to around 20% by FY21

  - Large working capital outflow in 2019 due to the completion
of infrastructure requirements in some of the largest projects.
Signifiantly lower working capital outflow in further years

Key Recovery Rating Assumptions under Fitch's Corporates Notching
and Recovery Ratings Criteria

  -- The recovery analysis assumes that the company would be
liquidated in bankruptcy rather than be considered a going
concern.

  -- A 10% administrative claim.

  -- The liquidation estimate reflects Fitch's view of the value
of inventory and other assets that can be realised in a
reorganisation and distributed to creditors.

  -- Its estimated liquidation value under a distressed scenario
for LSR is approximately RUB62.5 billion.

  -- Fitch estimates the total amount of debt for claims at
RUB72.7 billion.

  -- The waterfall results in a 31% recovery corresponding to
'RR4' for senior unsecured bonds.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - Sustainable improvement in the financial metrics leading to
EBIT margin above 15%.

  - FFO-adjusted gross leverage below 3x for a sustained period.

  - Positive FCF generation on a sustained basis.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - Market deterioration leading to EBIT margin below 10% and/or
worsened liquidity.

  - FFO-adjusted gross leverage sustainably above 4x.

  - The senior unsecured rating on the bonds would be downgraded
if its assessment of recoveries move from Average to Below
Average.

LIQUIDITY AND DEBT STRUCTURE

Strong Liquidity: Following the refinancing of the bank loans,
LSR's short-term debt as of 1H18 was RUB21 million, while the
company's cash position was RUB37 billion. Coupled with available
undrawn credit facilities of RUB48 billion from the major Russian
banks, this is more than sufficient to cover working capital and
other liquidity requirements. The company does not pay commitment
fees for the undrawn credit facilities, which is a common
practice in Russia. The company is not exposed to FX risk, as all
debt is raised in roubles.


UGI INT'L: Fitch Assigns EUR350MM Bond BB+ Sr. Unsec. Rating
------------------------------------------------------------
Fitch Ratings has assigned UGI International, LLC's (UGII;
BB+/Stable) EUR350 million 3.25% bond due in 2025 a 'BB+' final
senior unsecured rating. The final rating is in line with UGII's
Long-Term Issuer Default Rating.

The bond is guaranteed by certain UGII's subsidiaries and ranks
pari passu with the EUR300 million unsecured loan and EUR300
million revolving credit facility, which share the same
guarantors. UGII plans to use the net proceeds from the notes
together with new loan for the repayment of the existing loans at
operating companies and for general corporate purposes.

The 'BB+' IDR is underpinned by UGII's leading market position as
a liquefied petroleum gas (LPG) distributor in the European
market, with a solid business profile, good record of managing
unit margin under various operating conditions, adequate
financial profile with financial flexibility, positive free cash
flow (FCF) generation and comfortable liquidity. UGII's credit
profile is constrained by limited organic growth potential,
reflecting its concentration of operations in the EU and its
scale compared with investment grade rated corporates.

KEY RATING DRIVERS

Leading European LPG Distributor: UGII is a leading distributor
of LPG in Europe with an advantage of scale compared with many
competitors and a moderate degree of geographic diversification.
However, France represents approximately 65% of revenue (for the
year ended September 30, 2017) as UGII is the leading LPG
provider in that country. Growth was mostly achieved through
acquisitions of oil majors' (BP, Shell, Total in 2015) LPG
businesses. The company expects additional acquisitions and those
could further enhance UGI's scale and operating profile. However,
debt-financed transactions could adversely affect the credit
profile.

Fitch views Europe's less volatile operating and stronger
governance environment compared with that of emerging markets, as
mitigating the weak demand trend there.

Further Expansion Plans: UGII's strategy envisages further market
consolidation in the LPG industry as key to achieve growth. This
would enable cost savings by acquiring and optimising supply and
distribution channels in existing markets. LPG is a by-product
and not a focus market of the major energy companies, which
continue to divest their LPG marketing operations. Further
expansion opportunities are also considered in markets currently
not served by UGI.

Acquisition Funding: Fitch does not incorporate any acquisitions
into its rating case since none are currently clearly identified
and agreed, although the ratings recognise UGII's potential to be
acquisitive. The company tends to fund acquisitions with a
combination of cash on hand, RCF drawings and potential equity
contributions from parent UGI Corp (for large acquisitions only),
targeting leverage of 2.0x-2.5x net debt/EBITDA. However, credit
metrics would weaken towards Fitch's guidelines for negative
rating action if the company executes debt funded expansion
without offsetting contribution to earnings.

Stable Margins Despite Volatility: Propane price volatility can
have an impact on short-term margins and thus the company's
profitability. Fitch views UGII's management as experienced and
focused on cost efficiency, which helps to pass through input
price changes. Long-term segment margins have been fairly stable
despite volume and pricing volatility with higher margins in
retail and tighter mark-up for bulk customers. The majority of
UGII's customers are contracted under pricing arrangements where
prices fluctuate with changes in the propane spot price.
Approximately 10% of UGII's profits are derived from fixed-for
price contracts, for which the company hedges the sold volumes
using forward contracts.

Credit Positive Characteristics:  UGII has good security of
supply, strong brand recognition, a well-established distribution
network and a low customer churn rate (average 3%-4% in Europe).
UGII has a higher percentage of longer-term customer contracts in
most of its markets than its competitors including AmeriGas
Partners, L.P. (APU, BB/Stable).

Business Risks: Fitch views the retail LPG industry as generally
possessing a fair amount of business risk due to concerns demand
destruction -- due to fuel switching prompted by price
competition -- and conservation. Additionally, propane and butane
prices can be volatile, given their strong correlation to crude
prices; retail propane prices could spike, and margins could
contract from current levels. Demand can be volatile and heavily
influenced by weather. Customer conservation and increased
efficiency of appliances or heating equipment can also have a
negative impact on demand.

Moderate Capex, Solid Credit Metrics: UGII's ratings are
underpinned by the company's adequate credit metrics, solid
financial profile with flexible capex and dividends. Fitch
expects the company to remain well placed relative to its Fitch-
rated peers based on funds from operations (FFO) net adjusted
leverage of below 2.0x (2.1x in 2017) and FFO fixed charge
coverage above 6.0x (9.1x) over 2018-2022. Given UGII's moderate
capex, Fitch estimates the company to generate steady cash from
operations above USD200 million per year (USD253 million for
2017), and a post-dividends FCF of around USD45 million annually
over 2018-2022. In addition, UGII does not have set dividend
policy, which adds to the financial flexibility.

Rating on Standalone Basis: The IDR reflects UGII's standalone
credit profile as Fitch assesses the legal, operational and
strategic ties between the company and its ultimate majority
shareholder UGI Corp to be moderate in accordance with Fitch's
"Parent and Subsidiary Linkage" methodology. While UGI Corp has a
strong operational control over UGII, the legal ties are limited
as the new financing of EUR350 million notes and EUR300 million
term loan are non-recourse to ultimate parent UGI Corp, with no
guarantees or cross default provisions. Although UGII raises debt
independently, the parent has in the past supported its growth
funding.

UGI Corp contributed EUR140 million equity (USD165 million out of
USD500 million total deal price) to UGII's largest acquisition --
of Totalgaz in France in 2015 --  which doubled the
company'spresence in its key market. For most recent acquisitions
in 2017, including of DVEP in the Netherlands and Italian
Univergaz, UGI Corp allowed UGII to skip a dividend payment of
EUR115 million. It also contributed USD38 million in equity in
September 2017. Fitch understands from the company that further
equity funding may be provided if needed for large acquisitions.

DERIVATION SUMMARY

Fitch considers Fitch-rated fuel retail operators such as Vivo
Energy plc (Vivo, BB+/Stable), Puma Energy Holdings Pte Ltd
(Puma, BB/Negative) and EG Group Limited (EG Group, B/Stable) as
UGII's peers. Vivo and Puma have more diversified businesses with
integrated downstream and midstream operations. Puma is more
geographically diversified, if in emerging markets. EG Group is a
leading independent petrol station operator in Europe.

UGII has a stronger financial profile with lower FFO net adjusted
leverage of around 2.0x compared with Puma's average of around
5.0x and EG Group's average of around 6.0x. Vivo Energy has
slightly lower leverage than UGII with around 1.0x for 2017-
2021F. All three peers are less capital intensive than UGII, but
Fitch expects Puma to incur higher capex in its midstream
infrastructure. UGII has strong cash-generative profile with
neutral to positive FCF (after dividends) and higher average
EBITDA margin of around 16% compared with peers' average of
around 4.5% for 2017-2021F, which is justified by higher margin
associated with retail propane/LPG sales (for home heating and
cooking as well as industrial use) versus Puma's and Vivo's
primarily focused on highly competitive and low margin retail
motor fuel sales.

UGII is also better positioned compared with its sister company
APU, which is also a large propane retailer, however operates in
a highly fragmented US market with about 15% market share. APU
has negative FCF, higher Fitch-estimated leverage of around 5.0x
for 2017-2021F, but stronger EBITDA margin of above 20% for the
same period. APU's margin benefits from its ability to roll up
small retail propane distributors in the US and use its size and
scale to lower or eliminate overhead costs while maintaining
sales. Additionally, APU has become very adept at managing EBITDA
margins and gross margins, even in a contracting sales and
volatile propane price environment. Wholesale propane prices in
the US have generally been low given increased US natural gas
liquids production and APU has been able to keep retail prices
high and markedly grow its gross margin per gallon as a result.
KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for UGII

  -- Eurozone GDP growth of 1.8% in 2019 and 1.6% in 2020;
inflation of 1.7% in 2019, 1.9% in 2020

  -- EUR/USD and GBP/USD rates of 1.10 and 1.30 for 2018-2020,
respectively

  -- LPG volumes decline at CAGR of around 1% over 2018-2022,
which is in line with management's forecasts

  -- Net sales by unit decline at CAGR of around 3% over 2018-
2022

  -- Dividends of average USD108 million annually over 2018-2022,
lower than the management's forecasts

  -- Annual average capex of less than USD97 million on over
2018-2022, lower than management's forecast

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  -- Increased scale of business while maintaining solid market
shares within the countries it operates in, and without impairing
group profitability.

  -- Maintenance of FFO net adjusted leverage below 2.0x on a
sustained basis.

  -- Maintenance of FFO fixed charge cover above 6x.

  -- Sustainable positive FCF generation with FCF margin of above
5%.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  -- Sharp deterioration in sales volume, signaling heightened
competition, leading to sustained EBITDA erosion below USD300
million and negative FCF.

  -- Weaker-than-expected financial performance or aggressive
mostly debt funded M&A, leading to FFO net adjusted leverage
persistently higher than 3.0x and FFO fixed charge coverage below
4.0x.

LIQUIDITY AND DEBT STRUCTURE

Comfortable Liquidity: As of June 2018, UGII held cash and cash
equivalent balances of USD246 million and undrawn committed
credit lines of USD456 million, available until April 2020 and
October 2020. This compared with 2018 maturities of USD0.3
million and USD71 million for 2019, as well as Fitch expected
positive FCF of USD137 million for 2018. The new debt structure
assumes the repayment of the existing loans at operating
companies of USD734 million maturing in 2020 from new debt
proceeds raised directly by UGII, extended the debt repayment
schedule. UGII issued EUR350 million senior unsecured notes due
in 2025. The notes rank equally with new unsecured EUR300 million
loan with a bullet repayment in 2023. In addition, liquidity is
also supported by a new EUR300 million RCF due in 2023.

Debt Guarantees: All three instruments share the same guarantors,
UGII's subsidiaries representing 77% of consolidated adjusted
EBITDA for the LTM ending June 30, 2018 with the two main French
guarantors making-up around 66%. There is no significant prior-
ranking debt at the operating companies or UGII, with an
exception of EUR17.5 million note payable due in August 2022.

Manageable FX Exposure: The bond placement was euro-denominated -
the same currency as most of its revenues is generated in.
However UGII is facing FX risk, as its financials are reported in
US dollars. In order to reduce the volatility in net income
associated with UGII operations, resulting in FX changes between
US dollars, pound sterling and euros, UGII has entered into
forward foreign currency exchange contracts from 2016.


=============
U K R A I N E
=============


NAFTOGAZ NJSC: Fitch Rates Prop. Loan Participation Notes B-(EXP)
-----------------------------------------------------------------
Fitch Ratings has assigned Kondor Finance plc's proposed loan
participation notes an expected senior unsecured 'B-(EXP)' rating
and Recovery Rating of 'RR4'. The LPNs will be issued by Kondor
Finance on a limited recourse basis for the sole purpose of
funding a loan to NJSC Naftogaz of Ukraine (Naftogaz, B-/Stable).
The proceeds from the loan are expected to be used by Naftogaz
for general corporate purposes.

The final rating is contingent upon the receipt of final
documentation conforming materially to information already
received and details regarding the amount and tenor of the notes.

KEY RATING DRIVERS

Expected 'B-(EXP)' Notes Rating: The LPNs are expected to be
rated at the same level as Naftogaz's Issuer Default Rating (IDR)
of 'B-' as the repayment of the principal amount under the loan
will rank at least pari passu with other unsecured and
unsubordinated creditors of Naftogaz. The loan from Kondor
Finance to Naftogaz will constitute a direct, unconditional and
unsecured obligation of Naftogaz. Noteholders will rely on
certain covenants, the credit and financial standing of Naftogaz
in respect of payments under the notes and the performance by
Naftogaz of its obligations under the loan agreement with Kondor
Finance. Noteholders will benefit from the change of control
provision and certain financial covenants, including the net debt
to EBITDA ratio of 3x.

Rating Aligned with Sovereign: Fitch aligns Naftogaz's rating
with that of Ukraine under Fitch's Government Related Entity
(GRE) Rating Criteria. This reflects its view of status,
ownership and control, support track record and expectations and
financial implications of a potential default of Naftogaz as
strong under the criteria. Fitch assesses the socio-political
implications of a potential default of Naftogaz as very strong.

Naftogaz is wholly state-owned and is strategically important to
Ukraine as it is the country's largest natural gas production,
wholesale, transmission and trading company. The state still
guarantees a significant part of Naftogaz's debt, eg, at June 30,
2018 such guarantees covered 25% of the company's gross debt. In
2012-2015, the government provided direct support to Naftogaz of
around UAH141 billion. Naftogaz's financial performance is
closely monitored by the IMF, Ukraine's major lender, which
incentivises the government to ensure that Naftogaz is adequately
funded.

'B-' Standalone Credit Profile: Naftogaz's 'B-' standalone credit
profile captures its gas transit and distribution monopoly status
in Ukraine and improved financial profile and liquidity. It also
reflects uncertainties and potential volatility in its operating
and financial profile after 2019. In its view, Naftogaz's
stronger financial performance in 2016-1H18 may be not
sustainable in the long term, as it depends on external factors
for which Fitch has limited visibility, such as future domestic
gas prices and increasing accounts receivable from distribution
intermediaries.

Ukraine Affirmed at 'B-': On October 26, 2018, Fitch affirmed
Ukraine's Long-Term Foreign-Currency IDR at 'B-' with a Stable
Outlook. In Fitch's view, Ukraine's IDR balances weak external
liquidity, high external financing needs driven by sovereign
external debt repayments and structural weaknesses, in terms of a
weak banking sector, institutional constraints and geopolitical
and political risks, against improved policy credibility and
consistency, improving macroeconomic stability, declining
government debt and a track record of bilateral and multilateral
support.

Favourable Arbitration Ruling: In late 2017-early 2018 the
arbitral tribunal under the auspices of Arbitration Institute of
the Stockholm Chamber of Commerce effectively ruled in favour of
Naftogaz in two multi-billion dollar cases involving PJSC Gazprom
(BBB-/Positive). As a result of these positive rulings, Fitch
believes that there are no longer risks to Naftogaz's financial
position stemming from the arbitration. Fitch conservatively does
not incorporate in its forecasts the USD2.6 billion net award
plus interest in favour of Naftogaz since its timing is
uncertain. Since the ruling announcement, Gazprom has appealed
the court's decision in the Gas Transit Arbitration, while
Naftogaz has proceeded with enforcing the arbitration ruling in
several jurisdictions.

Disputes with Gazprom Continue: Naftogaz does not currently
purchase natural gas from Gazprom following the latter's refusal
to resume supplies in March 2018. Fitch believes that Naftogaz
should be able to buy the required volumes of gas from European
suppliers as in 2016-17. Gazprom depends on Naftogaz for gas
transit to Europe and Fitch expects it to honour its obligations
under the transit agreement in the near term. However, this
dependency will be significantly reduced if the Nord Stream II
and TurkStream pipelines are built and fully operational starting
from 2020-21.

Improved Cash Flows and Leverage: Naftogaz's cash flow generation
significantly improved in 2016-1H18 as the state raised natural
gas prices and supported some of the company's customers via
subsidies. In 2017, Naftogaz's funds from operations (FFO) was
UAH80 billion and free cash flow (FCF) was UAH35.6 billion and in
1H18 its FFO was nearly UAH40 billion. Naftogaz used FCF to repay
debt and as a result, its gross debt at June 30, 2018 was down to
UAH43 billion from UAH70 billion at end-2016. Future domestic gas
prices and cash collection are increasingly important factors for
Naftogaz's financial profile.

Regulatory Risks Lessen: The recent decree of the Cabinet of
Ministers of Ukraine provides for a 26% increase in household gas
prices from November 1, 2018, further increases in 2019 and then
the move to full market pricing from January 1, 2020. Until May
1, 2020, Naftogaz is obliged to supply gas to municipal heat
utilities and distribution intermediaries under the public
service obligation (PSO) regime. Naftogaz is legally required to
continue supply to some of its non-paying customers under certain
conditions, which negatively affects the collectability of
receivables as long as the PSO regime is in operation. Although
Naftogaz estimates that the state owes it significant
compensation under the PSO for supplying gas to customers at
below market prices, Fitch conservatively excludes any such
compensation from its forecasts.

Planned Gas Transit Unbundling: Ukraine's government has
committed to reform the energy sector, in line with the EU third
package. This implies market liberalisation and unbundling of the
gas transmission function (TSO) from gas production and supply.
Naftogaz does not expect this unbundling to take place until
2020, after the current gas transit contract with Gazprom
expires, which is also its assumption. Naftogaz expects that
Ukrtransgaz PJSC, which handles gas transit, will remain its
subsidiary until then and will pay dividends to the parent.

Post-2019 Challenge to Gas Transit: Gazprom is currently working
on two pipeline projects, Nord Stream II to western Europe and
TurkStream, to bypass Ukraine as a gas transit country to Europe
and Turkey. The projected capacity of 55 bcm Nord Stream II and
31.5 bcm TurkStream, both of which Gazprom expects to complete in
2019, would be sufficient to dramatically reduce gas transit via
Ukraine from the 2017 levels once the new pipelines ramp up their
utilisation.

DERIVATION SUMMARY

Naftogaz is Ukraine's principal natural gas production, wholesale
and transit company. In 2017, it produced 16.4 billion cubic
meters (bcm) of gas, imported 8.7 bcm from the EU and transported
93.5 bcm of Russian gas to Europe and Turkey. Naftogaz's rating
is aligned with that of Ukraine under its GRE criteria.

Naftogaz operates in a weaker operating environment than other
Fitch-rated EMEA gas transmission and distribution companies,
e.g., eustream a.s. (A-/Stable), KazTransGas JSC (BBB-/Stable)
and KazTransGas Aimak JSC (BBB-/Stable). While some of Naftogaz's
projected financial metrics for 2018-2019 are strong relative to
peers, its standalone credit profile of 'B-' reflects potential
cash flow volatility as the forecasts are sensitive to the
continued indexation of domestic gas prices in Ukraine,
collectability of accounts receivable and the impact of
unbundling of the company's gas transit business expected post-
2019.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer

  - UAH / USD exchange rate of 27.4 for 2018, 30.7 for 2019 and
32.3 for 2020

  - 9% increase in domestic gas prices in 2019-2020, below
management expectations

  - Unbundling of gas transit and gas storage from 2020

  - Dividends of about UAH25 billion per year on average in 2018-
2021

  - No compensation from the state for PSO regime or for expected
unbundling

  - No cash received from Gazprom arbitration award

Fitch's key assumptions for bespoke recovery analysis include:

  - Fitch's bespoke recovery analysis considers Naftogaz's value
on a going-concern basis in a distressed scenario and assumes
that the company would keep its operations and would be
restructured rather than liquidated.

  - Fitch has applied a 30% discount to 2020 EBITDA, post-
unbundling, reflecting its view of a sustainable, post-
reorganisation level upon which Fitch bases the valuation of the
company. The discount reflects risks associated with the
regulatory framework, potential weakening of financial profile
and other adverse factors.

  - A 2.5x multiple is used to calculate a post-reorganisation
enterprise value. It is below the mid-cycle multiple for oil &
gas companies in the EMEA region. It captures higher-than-average
business risks in Ukraine, reflects Naftogaz's lack of unique
characteristics allowing for a higher multiple, or significant
undervalued assets.

  - Fitch has taken 10% off the EV to account for administrative
claims. Fitch has also treated all banking debt as prior-ranking.
The noteholders' expected recoveries are capped at 50% or 'RR4'
(soft cap), in line with its criteria as Naftogaz's physical
assets are located in Ukraine.

RATING SENSITIVITIES

The following rating sensitivities are for Naftogaz's IDR:

Developments That May, Individually or Collectively, Lead to
Positive Rating Action

  - As the ratings of Naftogaz and Ukraine are aligned, positive
rating action on Ukraine would be reflected on Naftogaz's rating.

Developments That May, Individually or Collectively, Lead to
Negative Rating Action

  - A negative rating action on Ukraine would be reflected on
Naftogaz's rating.

  - Significant deterioration of Naftogaz's financial profile or
liquidity that would change its assessment of the company's
linkage with and support from Ukraine.

The following rating sensitivities are for Ukraine:

The main factors that could, individually or collectively,
trigger positive rating action, are:

  - Increased external liquidity and external financing
flexibility.

  - Improved macroeconomic performance and sustained fiscal
consolidation leading to improved debt dynamics.

The main factors that could, individually or collectively,
trigger negative rating action, are:

  - Re-emergence of external financing pressures and increased
macroeconomic instability, for example stemming from delays to
disbursements from, or the collapse of, the IMF programme.

  - External or political/geopolitical shock that weakens
macroeconomic performance and Ukraine's fiscal and external
position.

LIQUIDITY

Short-Term Maturities, Secured Debt: At June 30, 2018, Naftogaz
had UAH33.8 billion in short-term debt, which was nearly fully
covered by cash on hand of UAH33.5 billion. After the planned
notes issuance, Fitch forecasts that Naftogaz will maintain a
significant share of short-term borrowings in its portfolio.

Naftogaz reported that all of its borrowings at June 30, 2018
were secured on inventory, fixed assets and future sales
proceeds. Fitch expects that post-issuance these mainly short-
term loans from Ukrainian state-owned will be rolled over at
similar terms and loan security will remain in place. Based on
its recovery calculations, Fitch does not forecast that prior
ranking debt affects recovery estimates for the planned notes.

Fitch notes that the FX risks will increase post unbundling as
gas transit revenues, Naftogaz's main foreign currency source,
will no longer be available to service USD-denominated gas
purchases and interest costs.


===========================
U N I T E D   K I N G D O M
===========================


CARPETRIGHT PLC: Series of Store Closures Hit Sales Performance
---------------------------------------------------------------
Federica Cocco at The Financial Times reports that struggling
flooring retailer Carpetright said on Nov. 1 that its sales had
been dented as a result of a series of store closures and major
disruption as the company restructures.

According to the FT, like-for-like performance "remained
negative" in the six months ending in October, the company said,
adding that there had been "an improvement in the trend".

In the spring, the company agreed a company voluntary arrangement
with its landlords to reduce rents on marginally profitable
stores and close lossmaking ones, the FT recounts.  It said it
would close or exit leases of at least 92 shops, which would
affect around 300 jobs, the FT notes.

In its latest trading update, the retailer said that during this
period they had closed 67 underperforming stores, 65 of which
were in the UK, while the remaining two in Europe, the FT
relates.  A further six stores are expected to close by the end
of the year, the FT states.


CRAWSHAW GROUP: Appoints E&Y Executives as Joint Administrators
---------------------------------------------------------------
Arathy S Nair at Reuters reports that Crawshaw Group plc said two
Ernst & Young LLP executive were appointed as joint
administrators, after the UK meat retailer said last week it did
not have sufficient cash to restructure.

The company said the administrators, Robert Hunter Kelly --
hkelly@uk.ey.com -- and Charles Graham John King --
cking1@uk.ey.com -- have offered its business and assets for sale
and have entered into discussions with interested parties with a
view to agreeing a sale over the coming weeks.

The Rotherham-based butcher also said on Nov. 5 it cut 354 jobs
as it shut 35 stores, while it would continue to employ 261
people to run its 19 open stores, Reuters relates.

Crawshaw, whose shares have plunged 80% this year before being
suspended from trading on Nov. 2, was launched in Yorkshire in
1954 and had 42 of its 54 stores trading on the High Street, with
the rest in the Midlands and North of England, Reuters recounts.


DEBENHAMS PLC: Moody's Lowers CFR to Caa1, Outlook Stable
---------------------------------------------------------
Moody's Investors Service has downgraded the long-term corporate
family rating of the UK's largest department store group
Debenhams plc to Caa1 from B2. Concurrently, Moody's has
downgraded the probability of default rating to Caa1-PD from B2-
PD and the senior unsecured ratings on the GBP200 million notes
due in 2021 to Caa1 from B2. The outlook on the ratings is
stable.

"Downgrading Debenhams to Caa1 reflects the challenges it faces
to improve its credit quality during 2019 in order to achieve a
timely and cost effective refinancing of its current debt
facilities," says David Beadle, a Moody's Vice President --
Credit Officer and lead analyst for Debenhams. "In the meantime
however, we expect the company to at least stabilise
profitability, materially improve net cash generation, and for
its liquidity to remain adequate," he added.

RATINGS RATIONALE

Debenhams debt structure is comprised of a GBP320 million
revolving credit facility maturing in June 2020 and of GBP200
million senior notes due in July 2021. Moody's believes that in
light of its debt maturity schedule commencing in mid 2020 a
refinancing ahead of the publication of the company's fiscal 2019
audited accounts would be the company's preference.

However, several factors point to the risk of diminishing access
to capital at, or before, a refinancing: the emergence of changes
to the lenders in the company's RCF, further deterioration in the
company's share price since Moody's downgraded Debenhams CFR to
B2 on August 1, and ongoing reports of credit insurers to the
company's suppliers reducing cover.

Debenhams results for the year to September 1, 2018 (fiscal
2018), announced last week, were in line with Moody's
expectations at the time of the August downgrade. However, the
rating agency sees a higher downside risk to its forecast
profitability for Debenhams, most notably over the upcoming
Christmas season, than previously anticipated, as the competitive
environment remains highly challenging. Moody's expects pricing
strategies of direct department store peers to remain very
aggressive. For example House of Fraser, which emerged from
administration in mid-August, now plans to keep more stores open
than envisaged under previous ownership and the rating agency
expects it to be focused on reinvigorating its appeal to
customers.

The significant exceptional expenses in Debenhams fiscal 2018
results totaling more than GBP500 million mostly relate to asset
impairments and are non-cash in nature. As such, these expenses
do not adversely affect key earnings driven credit metrics,
although they signal the company does not expect to regain its
past level of earnings. The positive drivers of various Debenhams
Redesigned initiatives and cost saving measures will counter-
balance the promotional marketplace which will continue curbing
revenue growth. Nevertheless, Moody's expects that the company's
leverage (adjusted gross debt to adjusted EBITDA each as defined
by Moody's) will remain elevated at around 7.0x over the next 12-
18 months as profits stabilise.

Debenhams plans to reduce capex to around GBP70 million in fiscal
2019, compared to more than GBP130 million in fiscal 2018. As
such, and factoring in the cancellation of dividends, Moody's
expects that Debenhams will generate positive free cash flow
(before changes in debt) of up to GBP50 million in fiscal 2019
compared to a negative GBP38 million in fiscal 2018. Moody's
considers the company's freshly announced plans to reduce the
number of UK stores materially in the next 3 to 5 years as credit
positive. This strategy acknowledges the changes which will
continue to occur in the way people shop, with an ever increasing
proportion online negatively impacting in-store profitability.
However, the rating agency cautions that changes to the store
portfolio will take time, carry execution risk, and in due course
could need to be even more significant than currently envisaged
by the company.

The rating agency believes the magnitude of Debenhams future
borrowing requirements will be influenced by the company's
potential disposal of the its Danish business, Magasin du Nord.
Moody's notes that for now there is no clarity on the timescale
or the likely price level if this transaction did proceed.

Debenhams Caa1 rating reflects (1) increasing risks around a
timely and cost-efficient refinancing of debt; (2) high operating
and financial leverage owing to long store leases; (3) a highly
competitive and promotional environment in the UK; and (4) recent
negative sales and margin developments in Debenhams's operations
in the UK.

On the other hand, the rating also reflects (1) Debenhams
established market position in the UK, backed by a portfolio of
well-invested department stores in prime locations; (2)
diversified product ranges including clothing and non-clothing
products; (3) growing online and international sales; (4) the
progress being made in respect of the Debenhams Redesigned
strategy; and (5) plans to pursue disposals of non-core assets
and to rationalise the UK store portfolio.

LIQUIDITY ANALYSIS

Debenhams liquidity profile has historically been good and
subject to a stable working capital profile, which Moody's
expects to remain consistent. At the fiscal 2018 year end, the
company had cash of GBP43 million and access to a GBP320 RCF, of
which GBP159 million was undrawn.

Debenhams has no short-term debt maturities, with its RCF
maturing in June 2020 and GBP200 million senior notes due in July
2021. However, Moody's does not expect the company to request the
one year extension to the RCF maturity built into the
documentation; the request would be for consideration by
individual lenders. As such, Moody's believes the company's
preference will be to progress with refinancing plans before
publication of fiscal 2019 audited accounts.

The RCF has two maintenance covenants tested quarterly: a net
leverage and a fixed-charge coverage ratio covenant. Earlier this
year the company agreed with lenders amendments to the the fixed
charge covenant test level and as such, Moody's expects that
Debenhams will continue to retain full access to the RCF, despite
the weakened operating performance. As such, the rating agency
believes that Debenhams liquidity will remain solid even if some
working capital absorption were to emerge in light of credit
insurers' desire to limit their exposure to the UK retail sector.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook reflects Moody's expectations of Debenhams
recording relatively stable profitability and an improvement to
the company's cash flow dynamics during fiscal 2019.

WHAT COULD CHANGE THE RATING UP/DOWN

Positive rating pressure is not expected in the short to medium
term. However, the rating could be upgraded in the event that a
timely refinancing appears achievable and/or if Debenhams returns
to profitability growth and positive free cash flow is expected
to be sustained.

Conversely, further negative rating pressure could occur if
Debenhams fails to renew or refinance debt facilities due to
mature in 2020 and 2021 on a timely basis, most likely in summer
2019. A deterioration in liquidity due to, for example, adverse
development of working capital levels, or if free cash flow
remained negative in fiscal 2019 , could also lead to a
downgrade, as could a deterioration in performance such that
profitability weakens further.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Retail
Industry published in May 2018.


HERCULES PLC 2006-4: Fitch Withdraws 'D' Ratings on 3 Tranches
--------------------------------------------------------------
Fitch Rating has downgraded Hercules plc, as follows:

GBP5.4 million class C (XS0276412375) downgraded to 'Dsf' from
'CCCsf'; Recovery Estimate (RE) 100%; withdrawn

GBP50.9 million class D (XS0276413183) downgraded to 'Dsf' from
'CCsf'; RE revised from 80% to 65%; withdrawn

GBP28.9 million class E (XS0276413340) downgraded to 'Dsf' from
'Csf'; RE 0%; withdrawn

KEY RATING DRIVERS

The notes remained outstanding at their legal final maturity on
October 25, exposed to two loans, GBP13.6 million Welbeck and
GBP71.6 million Ashbourne. This is a note event of default, and
is reflected in the rating actions. Fitch has no further
information on any prospective sales from either portfolio or on
underlying property operational performance.

The Ashbourne loan is secured by 68 care homes spread across the
UK. While six sales have completed in the last six months,
fetching GBP6.9 million, none of this was distributed to the
notes as principal, prolonging uncertainty as to what note
distributions can be achieved from the portfolio and when.

Despite having a reported interest coverage ratio of 2x, surplus
rental income (after floating rate interest and net swap
payments) from Welbeck have not been used to amortise the loan,
but rather, according to the special servicer, to cover borrower
operational expenses, with any leftover retained for potential
property improvement works proposed by the borrower. The borrower
swap expires in July 2021, five years after loan maturity, and
has therefore been a drag on cash flows available for debt
service.

The Welbeck swap mark to market (under GBP2 million according to
the special servicer) has been deducted from Fitch's assumed net
sale proceeds for a portfolio consisting of arcades and bingo
halls skewed towards the north of England. Alongside increased
regulation in the gaming sector, diminishing demand for
secondary/tertiary UK retail property has reduced its Recovery
Estimates (RE) for the loan, which is reflected in the lower
class D RE. Fitch estimates ultimate note proceeds to be around
GBP40 million.

Fitch has withdrawn the ratings on all notes following the note
event of default.

RATING SENSITIVITIES

Not Applicable.

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.

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pool and the transaction. There were no findings that 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.

Fitch did not undertake a review of the information provided
about the underlying asset pool ahead of the transaction's
initial closing. The subsequent performance of the transaction
over the years is consistent with the agency's expectations given
the operating environment and Fitch is therefore satisfied that
the asset pool information relied upon for its initial rating
analysis was adequately reliable.

Overall, Fitch's assessment of the information relied upon for
the agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.


INSPIRED EDUCATION: Moody's Assigns B2 CFR, Outlook Stable
----------------------------------------------------------
Moody's Investors Service has assigned a B2 Corporate Family
Rating and a B2-PD Probability of Default rating to Inspired
Education Holdings Limited, the private education group.
Concurrently, Moody's has assigned B2 instrument ratings to the
EUR450 million equivalent Term Loan B due 2025 and EUR75 million
Revolving Credit Facility due 2024, borrowed by Inspired Finco
Holdings Limited. The outlook on all ratings is stable.

The proceeds from the TLB will be used, together with equity
contributions, to pay the acquisition consideration for Academic
Colleges Group, a private education K-12 group operating in New
Zealand, Vietnam and Indonesia, as well as to refinance existing
debt.

The rating action reflects the following drivers:

  - Established player in the fragmented private-pay primary and
secondary education market, with a geographically diversified
portfolio of 43 schools in 17 countries.

  - Exposure to changes in the political, legal and economic
environment in emerging markets, which represent 46% of group net
revenue for the fiscal year 2018, ended August 31, 2018, pro-
forma for the ACG acquisition..

  - Inspired's leverage, as measured by Moody's-adjusted
debt/EBITDA, is high at 6.8x as of fiscal 2018, pro-forma for the
completion of the ACG acquisition transaction.

  - Moody's expectation that the group will reduce leverage in
the next 12-18 months driven by strong enrolment pipeline and fee
increases above inflation in all countries.

RATINGS RATIONALE

The B2 corporate family rating is supported by its (1) well
established market position as one of the consolidators in a
highly fragmented, but structurally growing, market, (2) strong
revenue visibility from committed student enrolments with tuition
payments largely in advance and average student tenures over
eight years driven by high proportion of local students, (3)
barriers to entry through regulatory requirements, brand
reputation and purpose built real-estate in attractive locations
and (4) solid cash flow generation.

Conversely the rating is constrained by (1) relatively high
Moody's-adjusted debt/EBITDA of 6.8x for fiscal 2018, pro-forma
for the completion of the ACG acquisition, (2) exposure to
changes in the political, legal and economic environment in
emerging markets, which represent 46% of group net revenue, (3)
aggressive acquisition and capacity expansion strategy that could
impact deleveraging and free cash flow generation going forward,
and (4) continuous investment required in schools and campuses
(while remaining stable and relatively limited as a % of sales)
as well as in obtaining/maintaining accreditations.

LIQUIDITY PROFILE

Moody's considers that Inspired benefits from good liquidity
position pro forma for the acquisition. Cash balances at closing
are expected to be around EUR75 million, further supported by the
undrawn EUR75 million revolving credit facility due 2024. There
is one springing senior secured net leverage maintenance covenant
on the RCF, tested if drawings under the RCF exceed 40%. Moody's
expects the group to retain sufficient headroom under the
covenant.

While Moody's expects Inspired to generate positive free cash
flow on an annual basis, its cash flow profile is heavily
influenced by the academic year. The large majority of revenue is
from tuition fees that are received generally on a term basis.

The majority of the group's cash is currently held in Europe
(c.72% of total cash balances) and there are no significant
restrictions in accessing cash in other locations. The group
intends to drawn a part of the TLB in New Zealand Dollar,
providing a natural currency hedge to mitigate FX exposure.

STRUCTURAL CONSIDERATIONS

The B2 ratings assigned to the TLB and RCF, in line with the
corporate family rating (CFR), reflect the all senior capital
structure, with modest local debt (EUR15 million) kept in place
post completion. The security package provided to the first lien
lenders is relatively weak and limited to a pledge over shares,
bank accounts, and intercompany receivables, as well as
guarantees from operating companies (80% guarantor test) and a
floating charge provided by English borrower(s).

RATING OUTLOOK

Moody's views Inspired as solidly positioned within the rating
category. The stable outlook reflects Moody's expectations that
Inspired will continue to grow EBITDA from both increased student
numbers and tuition fee growth, and cement the integration of the
recent acquisitions within the group. Moody's expects that the
group will pursue growth and acquisitions in a prudent manner and
benefit from positive free cash flow generation and an adequate
liquidity profile.

FACTORS THAT COULD LEAD TO AN UPGRADE

Upward pressure on the ratings could develop over time if Moody's
adjusted debt/EBITDA declines and is sustained below 6x, with an
established track record of free cash flow generation resulting
in free cash flow to debt sustained above 5% while maintaining an
adequate liquidity profile.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Downward pressure on the ratings could arise if Moody's adjusted
debt/EBITDA declines below 7x on a sustainable basis or if free
cash flow to debt reduces towards zero, or liquidity weakens. Any
material negative impact from a change in any of the group's
schools regulatory approval status could also pressure the
ratings.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.


MABEL TOPCO: S&P Places 'B' Long-Term ICR on CreditWatch Positive
-----------------------------------------------------------------
S&P Global Ratings placed its 'B' long-term issuer credit rating
on Mabel Topco Ltd. (Wagamama), the parent of U.K.-based
restaurant chain Wagamama, on CreditWatch with positive
implications.

S&P also placed its 'B' long-term issue rating on the group's
senior secured debt on CreditWatch with positive implications.

The rating action follows the announcement that The Restaurant
Group plc (TRG) has conditionally agreed to purchase Wagamama for
a cash payment of GBP357 million. The CreditWatch placement
reflects that S&P expects Wagamama will benefit from TRG's
stronger credit quality should the acquisition and associated
equity rights issue be successful.

TRG is a significant player in the U.K. casual dining market,
operating over 500 restaurants and pubs, which include Frankie
and Benny's, Chiquito, Coast to Coast, Garfunkel's, Firejacks,
Brunning & Price, and Joe's Kitchen. It also operates a
concession business that trades over 60 outlets across more than
30 brands, primarily in U.K. airports. In 2017, TRG reported
total revenues of GBP680 million and adjusted EBITDA of GBP95
million (differs from S&P's calculation of adjusted EBITDA).

Wagamama is primarily based in the U.K. and operates in the
highly fragmented eating-out market. The group manages about 130
restaurants specializing in fresh pan-Asian cuisine under its own
brand name in prime locations across the country. In addition,
there are about 57 franchised restaurants located in Europe and
Middle East, so overall Wagamama operates around 190 restaurants.
In the fiscal year ending April 29, 2018, the group reported
revenues of GBP298 million and GBP46 million in adjusted EBITDA
(differs from our adjusted EBITDA). The acquisition of Wagamama
by TRG will therefore create a large casual dining restaurant
group in the U.K.

The proposed transaction comes amid continued margin pressure
that U.K. casual dining restaurants, such as Wagamama and TRG,
are experiencing in the context of continuous rising cost
pressures, primarily due to the increasing national living wage,
food and drinks costs, and utilities expenses. In addition, the
U.K. casual dining segment, which has seen many new entrants and
strong growth over the past few years, is now overcrowded, making
inflationary costs increasingly difficult to pass on to
customers. The rising costs and severe competition have resulted
in certain well-known and smaller-scale competitors, such as
Prezzo, Byron, Jamie's Italian, and Carluccios, entering into
company voluntary arrangements with sizable store closures.

In S&P's view, the combined group's credit standing should be
stronger than Wagamama's stand-alone credit profile. Should the
transaction continue as planned, we believe that the combined
group will benefit from a greater diversity of brands and food
concepts, and negotiation power with landlords for rent and also
with suppliers. This could help moderate the recently weakening
operating margins at Wagamama and TRG, combined with estimated
potential cost and site-conversion synergies of GBP22 million.

TRG plans to acquire 100% of the outstanding share of Mable Topco
and repay the outstanding shareholder loan for a total
consideration of GBP357 million. Funding is planned through a
GBP315 million equity rights issue and a GBP120 million drawing
on a newly planned GBP220 million revolving credit facility. TRG
also plans to acquire the GBP225 million of outstanding senior
secured notes issued at Wagamama Finance PLC that S&P currently
rates 'B'.
The issue ratings would also benefit from the acquisition, but
the precise impact also depends on the notes' future position
within the newly employed capital structure.

S&P said, "We believe that the relevant credit metrics driving
our rating on Wagamama will improve from recent levels. We
consider that the S&P Global Ratings-adjusted debt to EBITDA of
around 7.2x that we expected for 2018 (excluding the shareholder
loans) could improve to about 5.0x pro forma the transaction. In
our view, in addition to the additional transparency on financial
policy of the wider group due to TRG's listed status, credit
metrics will mainly benefit from the potential equity right issue
and low levels of reported debt at TRG. At the same time, we
expect the combined group's credit metrics would also be
constrained by substantial operating lease commitments at both
Wagamama and TRG that we capitalize as part of our adjusted
credit metrics.

"The positive CreditWatch placement reflects our expectation that
the planned transaction would improve Wagamama's credit profile.
We believe the increase in scale and potential synergies from the
combination will help offset some of the cost pressures being
faced by casual dining restaurant operators in the U.K. and would
strengthen the combined business' competitive advantage.

"We understand that Wagamama will be run as an autonomous
division within the wider group. However, based on our initial
view of the potential strategic importance of Wagamama to TRG's
operations, we expect to fully integrate our assessment of
Wagamama's existing stand-alone business and financial risk
profiles into our assessment of the wider TRG's credit profile
and our rating.

"The eventual capital structure of the combined group will
determine whether we raise our ratings on Wagamama by up to one
notch or affirm the 'B' ratings. This will also depend on the
successful completion of the planned equity rights issue by TRG
to fund the Wagamama acquisition.

"We note that the terms of refinancing of different classes of
debt could impact the recovery prospects. For instance,
additional prior-ranking debt, or debt secured with collateral,
could have negative implications for the rating on Wagamama's
existing bonds.

"We expect to resolve the CreditWatch following an evaluation of
the eventual capital structure of the wider group on completion
of the acquisition, which we currently expect to occur by mid-
December 2018."



                            *********

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
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Each Tuesday edition of the TCR contains a list of companies with
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                            *********


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-
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Copyright 2018.  All rights reserved.  ISSN 1529-2754.

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