/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/190508.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, May 8, 2019, Vol. 20, No. 92 Headlines G E O R G I A GEORGIAN LEASING: Fitch Alters Outlook on 'B+' LT IDR to Stable G E R M A N Y ANTIN AMEDES: S&P Assigns 'B-' Issuer Credit Rating, On Watch Pos. HAMBURG COMMERCIAL: Institutional Investors Won't Back Financing G R E E C E NAVIOS MARITIME: S&P Alters Outlook to Stable & Affirms 'B+' ICR I T A L Y DECO 2019: DBRS Assigns Prov. BB(low) Rating on 2 Note Classes DECO 2019: Fitch Gives B+(EXP) Rating on EUR8.22MM Class E Debt INTERNATIONAL DESIGN: Fitch Assigns 'B+' LT IDR, Outlook Stable PIAGGIO AEROSPACE: Administrator Invites Expressions of Interest K O S O V O KOSOVO TELECOM: On Brink of Bankruptcy, Contracts Investigated M O N T E N E G R O ATLAS BANKA: FZD Starts Paying Guaranteed Deposits to Customers N O R W A Y B2HOLDING ASA: S&P Affirms 'BB-' LT ICR on Proposed Refinancing R U S S I A CREDIT UNION: S&P Raises ICR to 'BB+' on Sustained Lack of Leverage ROSGOSSTRAKH PJSC: S&P Ups ICR to BB- on Improved Capital Position U N I T E D K I N G D O M DEBENHAMS PLC: CVA Expected to Hit Small Landlords DREAMR: Files for Insolvency; Owes HMRC GBP250,000 FOUR SEASONS: Administration Exposes Private Care Home Risks GOURMET BURGER: CVA Costs Hit Famous Brands' Earnings LEHMAN BROTHERS EUROPE: Nears Wind-Up Years Following Collapse - - - - - ============= G E O R G I A ============= GEORGIAN LEASING: Fitch Alters Outlook on 'B+' LT IDR to Stable --------------------------------------------------------------- Fitch Ratings has revised Georgian Leasing Company Ltd's Outlook to Stable from Positive, while affirming the company's Long-Term Issuer Default Rating at 'B+'. KEY RATING DRIVERS IDRS AND SUPPORT RATING Georgian Leasing Company's IDRs and Support Rating are driven by support from Bank of Georgia (BoG, BB-/Stable). Fitch's view of probability of support is based on full ownership, close integration and a record of capital and funding support. The company operates solely in Georgia, the group's domestic market. It provides financial leasing and focuses on corporate clientele of BoG as well as retail-type leasing to SME, microbusinesses and individuals. Georgian Leasing Company's clients are often higher-risk borrowers when compared with BoG's, although this is mitigated by availability of a liquid collateral and higher yield. Georgian Leasing Company, which is 100%-owned by BoG, aligns its strategy and risk policies to those of its parent, although the company's management is independent in operational decisions. Georgian Leasing Company also benefits from access to some of BoG's systems, including risk management and IT/back-office functions. RATING SENSITIVITIES IDRS AND SUPPORT RATING Fitch expects Georgian Leasing Company's ratings to move in line with the parent's IDR. A significant and sustained improvement of the company's performance and prospects, and a greater strategic alignment within the parent group would, in Fitch's view, increase BoG's propensity to support the company and could drive the equalisation of the ratings with the parent. A material weakening of BoG's propensity or ability to support the company might result in a wider notching differential from the parent. This could be driven by an increase of support cost for BoG, a greater risk of regulatory restrictions on support, a waning of Georgian Leasing Company's strategic importance, or depletion of BoG's headroom (ie safety cushion) over regulatory required capital. The rating actions are as follows: Long-Term Foreign- and Local-Currency IDRs affirmed at 'B+'; Outlook revised to Stable from Positive Short-Term Foreign-Currency IDR affirmed at 'B' Support Rating affirmed at '4' ============= G E R M A N Y ============= ANTIN AMEDES: S&P Assigns 'B-' Issuer Credit Rating, On Watch Pos. ------------------------------------------------------------------ S&P Global Ratings assigned its 'B-' issuer credit rating to Germany-based medical diagnostics company Antin Amedes and placed it on CreditWatch with positive implications, and assigned an issue rating of 'B' on the proposed debt with a recovery rating of '3' (50%). Rating Action Rationale The CreditWatch placement reflects S&P's view that the issuance of the proposed TLB, along with currently stronger operating performance, will improve Antin Amedes' capital structure and relieve liquidity pressures for at least the next 12-18 months. The company is proposing to repay its existing debt of about EUR437 million with the proceeds from the new EUR420 million TLB and available cash. The new TLB will be governed by financial maintenance covenants, which include maximum debt to EBITDA of 8.8x. If the company remains on its path of revenue and profitability growth, it should maintain adequate headroom under these covenants. Under S&P's base case, it projects that the company will deliver revenue of close to EUR400 million in 2019, S&P Global Ratings-adjusted EBITDA of EUR67 million in 2019 and up to EUR74 million in 2020, and free operating cash flow (FOCF) of about EUR18 million in 2019 and EUR10 million in 2020, a slight decline due to higher working capital requirements and capital expenditure (capex). This should enable the company to reduce adjusted debt to EBITDA slightly below 7x by 2019 and comfortably below 7x by end-2020. A deviation from this base case would put pressure on the rating. S&P said, "In our debt calculation for 2019, we include the EUR420 million TLB and around EUR20 million of other short-term debt, and EUR57 million of leases. We consider the around EUR370 million shareholder loan and related capitalized interest equity-like, in line with our treatment of non-common equity criteria, and supported by our view that Antin Investment Partners is a strategic sponsor. We do not net the surplus cash of about EUR20 million, in line with our criteria, due to the weak business risk profile. "We continue to assess the liquidity as less than adequate due to limited headroom under existing debt. If the refinancing is successful, we will assess liquidity as adequate." In 2016, Antin Amedes' operating performance suffered because of exceptional turnover in physicians, which led to a drop in revenue and EBITDA. The owners put in place new management and embarked on a turnaround strategy, which has seen operating metrics gradually improve. The company's reported revenue increased about 3.3% to EUR369 million in 2018, with organic revenue growth of 1.6%. Reported EBITDA increased by 19% to about EUR58 million in the same period. The turnaround is the result of a ramp-up in new physician hires and sales initiatives, the launch of new innovative tests, and cost saving plans, which reduced costs by EUR4.7 million in 2018. We understand that management has been maintaining a balance between cost savings and work environment. Several personnel-related measures have been implemented, such as training systems, medical steering committees, and a group-wide system for surcharges and overtime. The company achieved this positive performance despite the adverse effect of the tariff cuts introduced by the 2018 EBM reform, and a labor agreement in Germany in April 2016 that increased costs by EUR9.2 million. Antin Amedes' competitive advantage is supported by its leading positions in the gynecology and endocrinology segments in Germany and an established laboratory network backed by growing clinical practices. The company also operates specialty diagnostics (genetics, pathology, cytology). Germany offers relatively low reimbursement rates, constrained by budgetary rigor, but S&P also considers further price cuts are unlikely. The group also benefits from a good level of exposure to private insurance reimbursements and out-of-pocket payments. S&P said, "We believe the company's main weakness is its relatively small size in terms of revenue and EBITDA and limited geographical diversification, with operations only in Germany and Belgium, and only partial coverage of the former. Furthermore, about 15% of lab activity comes through volumes generated in clinical centers, which are dependent on the retention of key physicians. "Although we believe Antin Amedes' management has achieved a successful turnaround of the business, the current capital structure would see ratings remain under pressure due to ratcheting down covenants and limited headroom, which we estimate to be less than 10%." CreditWatch S&P said, "The CreditWatch placement indicates that we will likely raise the ratings if the company successfully places the proposed debt, which will allow it to address its covenant headroom over the next 12-24 months, alleviating liquidity pressures. In our view, the upgrade potential is limited to one notch, reflecting the extent of projected improvements in EBITDA, deleveraging to about 7x adjusted debt to EBITDA." HAMBURG COMMERCIAL: Institutional Investors Won't Back Financing ---------------------------------------------------------------- Charles Barker Corporate Communications GmbH on May 7 issued a press release on behalf of the group of creditors. The statement is as follows: Two groups of more than 35 institutional investors (the "Creditors") and their affiliates who manage in aggregate more than EUR850 billion announced that they will not participate in Hamburg Commercial Bank AG's ("HCOB" or the "Bank") upcoming senior bond financing. The Creditors include multiple German insurance companies as well as investment funds based in Germany, elsewhere in Europe and the United States. The two creditor groups collectively own over EUR1.4 billion of tier 1 instruments issued by HCOB and are separately advised by the law firms of Quinn Emanuel Urquhart & Sullivan, LLP and BRP Renaud & Partner mbB. This statement is in reaction to news that the Bank is holding a series of fixed-income investor meetings across Europe over the next two weeks following which HCOB plans to issue new senior-ranking debt. In the Creditors' view, the Bank, over many years and continuing today, has exhibited a total disregard for creditors' rights and the rule of law. To make matters worse, in the Creditors' opinion, HCOB's management has knowingly misled investors. The recent actions of the Bank under its new private equity owners, who include Cerberus Capital Management, L.P., J. C. Flowers & Co., and GoldenTree Asset Management LP (together the "New Owners"), have only further increased the Creditors' concerns. In the opinion of the Creditors, HCOB's actions adverse to its creditors include: -- Using illegal accounting practices with the objective of artificially creating losses. This was achieved, in part, by impermissible increases to its reserve (§ 340g of the German Commercial Code). -- Violating numerous contractual provisions starting in 2009 with the objective of harming creditors. -- Impermissibly using losses carried forward to write down its tier 1 instruments multiple times with the same loss. -- Selling an NPL portfolio to certain affiliates of its New Owners below market value at the expense of creditors. -- Terminating its tier 1 instruments unlawfully thereby purportedly crystallizing the above impermissibly- generated losses and providing a windfall to the New Owners. The Creditors also have no confidence that disclosures by the Bank in its prospectuses and statements made by HCOB's management can be relied upon. HCOB, including its CEO Stefan Ermisch and the CFO Oliver Gatzke, has, in the opinion of the Creditors, made statements which were self-serving, incorrect and misleading about the Bank's accounting, its outlook and planned actions. As late as November 26, 2018, HCOB made a disclosure that could only be read to suggest that its tier 1 instruments would be written-up to par and would pay coupons in the future. Yet a few days after this date, the tier 1 instruments were terminated. Hamburg Commercial Bank is a commercial bank in northern Europe with headquarters in Hamburg as well as Kiel, Germany. It is active in corporate and private banking. =========== G R E E C E =========== NAVIOS MARITIME: S&P Alters Outlook to Stable & Affirms 'B+' ICR ---------------------------------------------------------------- S&P Global Ratings revised the outlook on Navios Maritime Partners to stable from positive and affirmed its 'B+' long-term issuer credit rating. The outlook revision reflects weak charter rate conditions in the dry bulk shipping industry due to a combination of factors. These include subdued demand for major dry bulk commodities from China (the world's largest importer), disruptions in iron ore trades following the collapse of Vale's tailings dam in Brazil in late January 2019, and bad weather conditions in Australia limiting the country's iron ore exports. The effect is the most notable for large Capesize vessels, which saw a sharp 25% decline in time charter rates to an average of about $14,000 per day (/day) between January and April 2019, compared with $18,600/day between January and April 2018. S&P said, "Given the weak year-to-date trading conditions and our view that dry bulk fleet growth will likely moderately exceed dry bulk trade growth, we revised downward our charter rate assumptions. We now expect Capesize vessels to reach an average of about $16,500/day and Panamax vessels about $11,500/day in 2019, compared with our previous forecasts of $19,000/day and $12,500/day, respectively. We expect this negative trend to reverse in the typically seasonally stronger second half of 2019 and charter rates continuing to recover in 2020. This expectation assumes that China's imports of dry bulk commodities will stabilize and the global fleet expansion will slow thanks to the all-time low order book (it currently accounts for 11% of global fleet) and boost from the IMO 2020 sulfur cap taking effect from January 2020. "Based on our revised charter rates and contrary to our previous expectations, we now forecast Navios Partners' credit metrics will fall short of our guidelines for an upgrade, which would require S&P Global Ratings-adjusted funds from operations (FFO) to debt of 25% or higher. Instead, our current base-case indicates the ratio of adjusted FFO to debt of 16%-17% in 2019 (down from 18% in 2018) improving to about 23% in 2020 as dry bulk trade recovers. These credit metrics are commensurate with our 'B+' rating on Navios Partners and justify a stable outlook. "Our business assessment is constrained by Navios Partners' relatively narrow scope and diversity, with a focus on the volatile dry-bulk and container shipping industries and a fairly concentrated and low-quality customer base. We also believe that the dry-bulk and container shipping sectors have less favorable characteristics in general than those for oil and gas shipping. This is because the credit quality of the oil and gas shipping sectors' customer base is stronger. Dry bulk and containership time charters are also typically more fragile, and we continue to observe more charter defaults on those contracts than in other shipping segments." The key credit support to Navios Partners' competitive position comes from its time-charter profile, with an average remaining charter duration of about two years. The company had chartered out about 68% of available days for 2019 and about 33% for 2020 (including index-linked charters). This adds to earnings visibility, provided the charterers honor their original commitments, which S&P incorporates into its base case. Furthermore, Navios Partners benefits from competitive and predictable running costs. S&P said, "The stable outlook reflects our view that dry bulk charter rates will gradually recover from their low levels over the next 12 months. This will allow Navios Partners to maintain the rating-commensurate credit metrics underpinned by its medium-term time-charter profile and competitive cost structure. "Given the inherent volatility of the shipping sector, we view the company's maintenance of adequate liquidity coverage with sources-to-uses of at least 1.2x and manageable loan-to-value (LTV) covenant compliance tests, supported by available ample cash for early debt prepayments to ensure compliance if needed, as important contributors to a stable outlook. We also factor in a timely refinancing of the term loan B due September 2020. 'We could upgrade Navios Partners if charter rates for Capesize and Panamax ships improve to or exceed $18,000/day and $12,000/day, respectively. This would (i) strengthen Navios Partners' financial measures such that they align with a higher rating, with adjusted FFO to debt improving to and staying at 25% or higher; and (ii) support a sustained robust cash flow generation providing a cushion for discretionary spending." An upgrade would also depend on the company pursuing a balanced dividend distribution while investing in fleet expansion or rejuvenation, and maintaining adequate liquidity sources over uses. S&P said, "We would lower the rating if charter rates appear to perform below our base case because of weaker than expected commodities' imports or the aggressive ordering of new vessels posing a risk to the industry's demand-and-supply equilibrium. We would also consider a downgrade if the company unexpectedly made largely debt-funded vessel acquisitions or substantial shareholder returns. These developments could result in our adjusted FFO to debt falling below 12% for an extended period. "Furthermore, we would downgrade Navios Partners if it fails to refinance the outstanding term loan B due September 2020 in a timely manner, which we consider to be at least 12 months ahead of maturity." Rating pressure would also arise if the underlying vessel values fell significantly, resulting in diminishing loan-to-value covenant headroom. This would translate into an inevitable, large cash drain on Navios Partners' liquidity to prepay the loan and prevent the LTV covenant from breaching. ========= I T A L Y ========= DECO 2019: DBRS Assigns Prov. BB(low) Rating on 2 Note Classes -------------------------------------------------------------- DBRS Ratings GmbH assigned provisional ratings to the following classes of Commercial Mortgage-Backed Floating-Rate Notes due August 2031 (collectively, the Notes) to be issued by Deco 2019 - Vivaldi S.R.L. (the Issuer): -- Class A Notes rated A (high) (sf) -- Class B Notes rated A (low) (sf) -- Class C Notes rated BBB (low) (sf) -- Class D Notes rated BB (low) (sf) -- Class E Notes rated BB (low) (sf) All trends are Stable. The transaction is a securitization of approximately 95% interest of three Italian refinancing facilities (e.g., the Palmanova loan, the Valdichiana loan and the Franciacorta loan) each backed by a retail outlet village managed by Multi-Outlet Management Italy (Momi). The borrowers of Franciacorta and Valdichiana loans are the combination of the property company (PropCo) and holding company (HoldCo) borrowers, which are Franciacorta Retail Srl and Valdichiana Propco Srl as PropCo borrowers and Frankie Retail HoldCo Srl and Valdichiana HoldCo Srl as HoldCo borrowers. The Palmanova loan's borrower is the Palmanova PropCo Srl alone. The borrowers are ultimately owned by the funds of Blackstone LLP (the Sponsor) and are managed by Kryalos SGR S.P.A. The aggregate balance of the senior loans is EUR 360.99 million, the majority of which (EUR 342.9 million or 95% of the total senior loan amount) will be funded via the CMBS issuance. The senior loans for Valdichiana and Franciacorta are divided into two tranches, term facilities A and B, which will be advanced to the relevant PropCo and HoldCo of the respective loan. Each loan has a two-year term with three one-year extension options, subject to certain conditions and that there is no default covenant for a loan's event of default. The sponsor has planned to restructure the borrower structure of the Valdichiana and Franciacorta loans within six months after issuance; however, the first interest payment will be paid out as usual in August 2019, three months after the expected closing date. Until the restructuring is completed, the HoldCos will not have sufficient cash to service their portion of the loan and will not benefit from the security on the assets. In the unlikely scenario of a loan defaulting during that time and the start of an insolvency proceeding under the Italian law, they will rank junior to any unsecured creditors of the relevant PropCos. To mitigate such risk, the sponsor will establish two irrevocable letters of credit, which will be provided by Wells Fargo and Bank of America Merrill Lynch in the favor of Frankie Retail Holdco Srl and Valdichiana Holdco Srl, respectively. These commitments will be sized to cover the HoldCo portion's fully extended five-year interest payments based on the final pricing of the CMBS bonds to be issued. The letters of credit will expire on 26 April 2020 but can be renewed at least three months prior to its expiration. The collateral securing the loans comprises three retail outlet villages located in northern Italy. These retail outlet villages, together with another two properties in Mantua and Puglia, are marketed under the "Land of Fashion" brand. The retailers in the outlet villages are predominately mid- or high-level national and international brands with little presence of high-end luxury brands. The majority of the retailers are fashion retailers complemented by accessory, food and beverage and homeware retailers. In each outlet village, one retailer occupies one unit, which is generally located on the shopping route within the outlet village. The build-out of each retail village is very similar, featuring a two-floor facade decorated with windows and a variety of bright colors and an open-air "shopping-street" linking all the retail units. There are also facilities such as an information point and playground available on site for the convenience of the shoppers. As of February 1, 2019 (the cut-off date), the outlet villages were well let at 93.4% physical occupancy and generated a total EUR 31.0 million gross rental income (GRI), together with another EUR 2.0 million sundry income. The total rental income amounts to EUR 33.1 million. Translating into a day-1 gross debt yield (DY) of 9.2% based on the EUR 360.99 million senior loans. It should be noted that the Franciacorta asset has recently opened its Phase III (12.5% of the asset's total lettable area) and according to the sponsor, its occupancy is expected to reach 90%+ by year-end 2019. CBRE has valued the portfolio at a total EUR 515.7 million on 28 February 2019 bringing the overall loan-to-value ratio to 70.0%, of which 58.4% is from the PropCo debts and 11.6% from the HoldCo debts. The DBRS net cash flow (NCF) for the entire portfolio is EUR 26.6 million, which represents a 19.7% haircut to the sponsor's total gross rent. DBRS applied the capitalization rates ranging from 6.65% to 7.0% to the underwritten NCF and arrived at a DBRS stressed value of EUR 388.7 million, which represents a 24.6% haircut to the market value provided by the appraiser. The loan structure does not include any financial default covenant and only the non-payment and major damage can trigger a loan event of default. The cash trap covenants are set at 80% LTV for all three loans while the DY cash trap covenants are set with 10% headroom based on day-1 DY. There is no amortization scheduled before the permitted change of control, after which a 1% annual amortization will take effect. The permitted change of control is defined as a property/platform sale to a qualified transferee without repaying the loan/transaction provided that the transferee has a total market capitalization or asset under management of no less than EUR 5 billion or the transferee with an advisor with an aggregate commercial real estate market value of (1) no less than EUR 2 billion in Europe, or (2) EUR 5 billion worldwide. It is expected that to hedge against increases in the interest payable under the loans resulting from fluctuations in the three-month Euribor, within ten business days of the Issue Date each Borrower will enter into hedging arrangements satisfying different conditions, including: (1) 100% of the outstanding principal amount; (2) the hedge counterparty having the requisite rating satisfying DBRS' criteria; (3) the term of the hedging being in line with the maturity date of the loan; and (4) the projected interest coverage ratio at the strike rate not being less than 150% at the date on which the relevant hedging transaction is contracted. The transaction is supported by a EUR 15 million liquidity facility to be provided by Deutsche Bank AG, London Branch. The liquidity facility can be used to cover interest shortfalls on the Class A and B notes. At issuance, it is expected that the liquidity reserve facility will be fully drawn and deposited on an account under the control of the Issuer. Class E is subject to an available funds cap where the shortfall is attributable to an increase in the weighted-average margin of the notes. The final legal maturity of the Notes is expected to be in August 2031, seven years after the third one-year maturity extension option under the loans' agreements. If necessary, DBRS believes that this provides sufficient time, given the security structure and jurisdiction of the underlying loan, to enforce on the loan collateral and repay the bondholders. To maintain compliance with applicable regulatory requirements, DB, will retain an ongoing material interest of not less than 5% by selling 95% interest of the securitized senior loans. Notes: All figures are in euros unless otherwise noted. DECO 2019: Fitch Gives B+(EXP) Rating on EUR8.22MM Class E Debt --------------------------------------------------------------- Fitch Ratings has assigned DECO 2019 - VIVALDI S.r.L.'s floating-rate notes expected ratings as follows: EUR174.8 million class A: 'A+(EXP)sf'; Outlook Stable EUR47.7 million class B: 'A-(EXP)sf'; Outlook Stable EUR68.6 million class C: 'BBB-(EXP)sf'; Outlook Stable EUR43.6 million class D: 'BB-(EXP)sf'; Outlook Stable EUR8.22 million class E: 'B+(EXP)sf'; Outlook Stable The transaction is a 95% securitisation of three commercial mortgage loans totalling EUR342.9 million to Italian borrowers sponsored by Blackstone funds. The loans are all variable-rate (with variable margins) and secured on collateral consisting exclusively of Italian retail outlets. A merger of propcos and holdcos is expected for retail outlets Franciacorta and Valdichiana. The final ratings are contingent upon the receipt of final documents conforming to the information already received. KEY RATING DRIVERS Weakening Macro-economic Environment Italian GDP growth has stalled as domestic policy uncertainty and weaker external demand have dragged down investment, while private consumption growth has also lost momentum. The risk of this filtering into asset performance is reflected in Fitch's base market value declines (MVDs) all being greater than 20%, with no ratings above the 'Asf' category. Sound Collateral Stabilises Income The portfolio is generally of good quality, attracting solid occupational demand. The catchment areas support stable sales from customers who view these outlets as attractive leisure destinations. This mitigates the characteristically short weighted average lease to break of 2.4 years and the predominantly unrated tenant base. High Leverage Weighs on Ratings With a loan/value of 70% for each loan facility and no scheduled amortisation, the key risk is the transaction's high senior leverage, reflected in more than EUR50 million of sub-investment-grade debt. Franciacorta's debt yield of 7.5% is particularly low, although this outlet is in the largest catchment area and has seen strong rental growth over recent years, due in part to investment in expanding the centre. Pro-Rata Principal Pay All principal is repaid pro-rata prior to loan default, exposing noteholders to rising concentration risk. While there is limited scope for adverse selection (and none from disposals), various prepayment scenarios constrain all note ratings. Pre-merger Risk Some EUR60 million of Franciacorta's and Valdichiana's debt is to parent holdcos. The mortgaged propcos cannot pay dividends before the holdcos and propcos are merged. This means excess rent will be trapped, building credit enhancement as long as parents pay interest by drawing on letters of credit. Once mortgages are discharged and all propco debt is settled, parents can receive liquidation proceeds net of any unsecured creditors of the propcos. No unsecured creditors affect Fitch's rating analysis. INTERNATIONAL DESIGN: Fitch Assigns 'B+' LT IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has assigned International Design Group S.p.A. a final Long-Term Issuer Default Rating of 'B+' with Stable Outlook. The ratings of IDG reflects its high leverage as well as its position as the largest global operator by revenue in the fragmented high-end furnishing design market, with a portfolio of premium lighting and furnishing groups Flos, B&B Italia and Louis Poulsen. The group is further supported by its proven management, strong cash conversion and moderate deleveraging profile. IDG was incorporated by private equity houses Investindustrial and The Carlyle Group. It completed its issue of EUR720 million senior secured notes and contracted a revolving credit facility in late November 2018, alongside a corporate reorganisation that brought together Flos, B&B Italia and Louis Poulsen under the group . It has seen a management change in the beginning of 2019, with the appointment of a new group CEO and CFO . 3Q18 trading showed flat revenue compared with 2017, as a strong performance by Flos was offset by lower-than-expected trading from both Louis Poulsen and B&B. LTM EBITDA was broadly in line with its forecasts, which do not factor in adjustments for future synergies that were indicated in the financial documentation. KEY RATING DRIVERS Sustainable Market Growth: IDG's rating reflects its expectations of solid growth in the global luxury market, including the designer furniture segment. Its forecasted sales, growing at about 5% CAGR for the period 2017-2021, are derived from the organic expansion potential for the company's platform, since luxury goods have historically proven resilient to economic cycles, especially for premium rather than aspirational brands. During economic downturns premium brands have maintained growth and profit generation. Strong Brand Positioning: IDG's key brands are widely appreciated for their design excellence and premium quality. Premium brand quality supports longstanding and resilient pricing, as most of the group's products sit between the high end of the aspirational segment and the luxury space. Several products in the catalogue enjoy iconic status, having been originally designed and brought to market in the 1950s/1960s, and as early as the 1930s, benefitting from the identity of both the brand and the designer. Fragmentation in various product markets and low barriers to the design process create constant pressure on innovation and consumer appeal. High Leverage, Strong Cash Conversion: Fitch estimates leverage pro-forma for the senior notes issue and RCF at end-2018 to have been high at 7.5x on a funds from operations adjusted basis. While it projects a reduction to 6.5x for 2019, these metrics are more compatible with a 'B' rating in the consumer and business services sub-sector. Notwithstanding high opening leverage the credit profile exhibits deleveraging capacity. Fitch calculates free cash flow at 6.8% of sales on average from 2019-2021. This is underpinned by moderate capex and low working capital requirements. Outsourcing and Wholesale Raise Risks: The high share of outsourced production and the predominance of the wholesale channel provide cost flexibility for the group. In addition, the group controls the supply and distribution chains, through the intermediation of a network of shared architects among the group of about 15,000 professionals. IDG remains exposed to risks of counterfeiting and pricing inconsistencies at retailers that are not contractually bound by the group's pricing strategies. Limited Synergistic Potential: Under the newly incorporated IDG, premium lighting and furnishing groups Flos, B&B Italia and Louis Poulsen will maintain their independence and current management teams. A certain degree of diversity among corporate cultures and clientele of the brands may limit the potential for synergies, although this is not a core strategic emphasis for IDG . Fitch believes that the synergies factored into the business plan by management are prudent. Consequently, Fitch sees some headroom for the rating in its more conservative rating case, mainly on cross-selling expectations, albeit at a slower pace than expected by management. IDG will fund potential bolt-on acquisitions with equity. DERIVATION SUMMARY The rating of IDG reflects its premium brands portfolio, healthy cash conversion, moderate deleveraging capacity as well as its high opening leverage pro forma for the recent debt issues. Comparison of IDG with rated big luxury brands such as Tiffany & Co. (BBB+/Stable), Pernod Ricard S.A. (BBB/Stable) and Michael Kors Holdings Limited (BBB-/Stable) is limited due to the smaller size of the company and material differences in the capital structure. IDG's leverage is low compared with the highly leveraged 'B+' ratings of its European leveraged credit portfolio, such as Latino Italy S.p.A. (B+/Stable) and Evergood 4 APS (B+/Stable). However, it compares less favourably in the size of its business and its exposure to more competitive fragmented markets. This is reflected in its downgrade sensitivities with a 1.5x difference in FFO adjusted gross leverage between IDG and 'B+' peers. KEY ASSUMPTIONS - Revenue to grow 4.9% CAGR in 2017-2021, underpinned by organic expansion and marginal effect from synergies - EBITDA to grow 6.8% CAGR in 2017-2021, driven by costs savings, revenue and costs synergies with an average EBITDA margin of 22.5% - Additional synergy revenue of up to about EUR20 million in 2022 and EUR9 million from 2021 (about one-third of management assumptions) - EUR12 million of cumulative cash outflow from working capital over 2018-2021 - Approximately EUR117 million of capex over 2018-2021 - No dividends or M&A RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - FFO adjusted gross leverage lower than 4.5x - Increase in scale with sales higher than EUR800 million and EBITDA greater than EUR200 million Developments That May, Individually or Collectively, Lead to Negative Rating Action - FFO adjusted gross leverage remaining higher than 6.5x by 2020, either due to under-performance or material debt-funded acquisitions - FFO fixed-charge coverage lower than 2.5x on a sustained basis (2018: 2.7x) - FCF margin lower than 5% ( 2019E: 6.8%) - EBITDA margin lower than 20% (2018: 22%) LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity: At the closing of the bond and RCF issuance in November 2018, the available cash balance was estimated to have been close to zero. However, IDG has an undrawn RCF of EUR100 million and sound cash-flow generation. After the transaction s, the company will retain about EUR6 million of short-term financial liabilities on its balance sheet. Its financial debt will all be long-dated maturities, given a seven-year tenor on its bond and 6.5-year tenor on the RCF. Based on Fitch's rating case projections, refinancing risks should be manageable due to strong cash-flow generation. PIAGGIO AEROSPACE: Administrator Invites Expressions of Interest ---------------------------------------------------------------- FlightGlobal reports that Piaggio Aerospace's administrator is looking to sell the company, and is inviting expressions of interest to acquire part, or all of the Italian firm. In a bid to evaluate market interest, Piaggio, which has since last December been in extraordinary receivership - a process in Italy specifically aimed at industrial insolvency and company restructuring - has placed notices in two leading financial newspapers, FlightGlobal says citing the Financial Times of the UK and Italy's Il Sole 24 Ore. FlightGlobal relates that the notice, issued on April 30, calls for expressions of interest to acquire the whole company or either its aircraft or engine business units. The deadline has been set for May 15, with proposals to be submitted to government-appointed "extraordinary commissioner" Vincenzo Nicastro, who is overseeing the administration process. "We want to begin exploring the demand in the market to better understand those who are currently potentially interested," the report quotes Mr. Nicastro as saying. This announcement comes less than a week after Piaggio secured an agreement with the Italian government on a strategy to relaunch the company and, Mr. Nicastro said, "present itself as an attractive opportunity for potential buyers". FlightGlobal says the plan, secured on April 24, calls for production ramp-up of the P180 Avanti Evo, with an order for 10 of the twin-pushers from undisclosed Italian state-owned institutions. Piaggio currently has a backlog of four Evos which are now in various stages of production at its Villanova D'Albenga factory near Genoa. Two examples are scheduled for delivery "in the coming weeks" to customers in Africa and Europe, says Piaggio. The company has also secured a deal to retrofit 19 first-generation Avantis for various Italian operators including, the air force, coast guard and the police. The agreement also includes completing certification of the P1HH HammerHead -- an unmanned surveillance variant of the Avanti and the subsequent acquisition of two systems (four aircraft and two ground stations), with more to follow. HammerHead development has been on hold since the company entered receivership. A 10-year plan has been devised for the engine maintenance business, including basing the activity out of a single hub. Piaggio said the long-term objective is to have capabilities in the company to allow it to participate in international military projects such as the European medium-altitude long-endurance, UAV programme, along with industrial partners, adds FlightGlobal. =========== K O S O V O =========== KOSOVO TELECOM: On Brink of Bankruptcy, Contracts Investigated -------------------------------------------------------------- Telecompaper reports that Kosovo's Minister of Economic Development, Valdrin Lluka, has said that Kosovo Telecom is on the verge of bankruptcy. Mr. Lluka also announced that some of the signed contracts are being investigated, Telecompaper relays, citing local portal Lajmi.net. According to Telecompaper, Mr. Lluka pointed out that, with the implementation of the +383 code, annual revenues amount to EUR5 million, but Kosovo Telecom is still operating with a loss of EUR15 million. He also announced that the Kosovo Telecom license expires in July, Telecompaper discloses. =================== M O N T E N E G R O =================== ATLAS BANKA: FZD Starts Paying Guaranteed Deposits to Customers --------------------------------------------------------------- Radomir Ralev at SeeNews reports that Montenegro's Deposit Protection Fund (FZD) started the payment of guaranteed deposits to the customers of insolvent Atlas Banka on April 24. SeeNews relates that the guaranteed deposits will be paid at the offices of Societe Generale Montenegro, Hipotekarna banka, NLB Podgorica and Crnogorska Komercijalna Banka, FZD said in a statement on April 23. Earlier in April, Montenegro's central bank launched insolvency proceedings against Atlas BankA after a public call for the recapitalisation of the lender drew no bids. According to SeeNews, the bank's interim administrator, Tanja Teric, said no investors had subscribed for any of the 88,710 new ordinary shares of Atlas Banka under the public call for recapitalisation until the expiry of the March 29 deadline. On March 11, the interim administrator launched a public call for a EUR22 million (US$24.7 million) recapitalisation, inviting investors who are not existing shareholders of Atlas Banka to subscribe for shares from the new issue, the report recalls. Montenegro's central bank placed Atlas Banka and Invest Banka under its temporary administration in December due to their poor financial condition, after an audit showed that the capital of the two lenders did not meet the minimum risk requirements, SeeNews notes. =========== N O R W A Y =========== B2HOLDING ASA: S&P Affirms 'BB-' LT ICR on Proposed Refinancing --------------------------------------------------------------- S&P Global Ratings affirmed its 'BB-' long-term issuer credit rating on Norway-based debt purchaser B2Holding ASA. The outlook is stable. S&P said, "At the same time, we assigned our 'BB-' issue rating to the proposed senior unsecured bond due 2024 to be issued by B2Holding ASA, with a minimum issuance volume of EUR200 million -- Norwegian krone (NOK) 1,944 million. The recovery rating on the proposed debt is '3', indicating our expectation of average recovery prospects of 50%-70% (rounded estimate: 60%) in the event of a payment default. The rating is subject to our review of the notes' final documentation. "The rating actions reflect our view that the proposed partial repayment of two bonds (international securities identification numbers NO0010753072 and NO0010775166) and issuance of a new bond does not affect our rating on the group or its financial risk profile. "We expect the company's credit metrics to remain in line with our existing expectations despite some potential for improving financial metrics, reflecting the expected EBITDA inflow over 2019 following strong portfolio purchases in second-half 2018." S&P projects the following: -- Gross debt to S&P Global Ratings-adjusted EBITDA of 3x-4x (adjusted EBITDA is gross of portfolio amortization). -- Funds from operations (FFO) to total debt of 20%-30%. -- Adjusted EBITDA coverage of interest expense of 6x-10x. S&P said, "When calculating our weighted-average ratios for B2Holding, we apply a 20% weight to end-2018 figures and 40% weights to year-end projections for both 2019 and 2020. "We expect these weighted-average metrics to remain within the stated ranges over our outlook horizon, albeit trending toward a better assessment, indicating deleveraging and improving debt-servicing capabilities. We expect our leverage metric to fall below 3x toward end-2019, from 3.7x at end-2018. However, continuing growth in portfolio purchases could push it above 3x again, absent any additional capital increases. While the publicly stated target of net interest-bearing debt to cash EBITDA of below 3x by 2021 provides support for a further deleveraging, we remain cautious on the trajectory. "Nevertheless, we acknowledge the ambitious leverage target that, if achieved on a sustainable basis, could differentiate B2Holding's financial risk profile from its European competitors. We expect the company to slow its high acquisition growth of previous years in favor of organic growth and the improving efficiency of its existing platforms. "For 2019, we expect B2Holding to generate about NOK4,500 million in FFO, including amortization of owned portfolios, that can be used to purchase additional portfolios without incurring additional debt. "The stable outlook reflects our view that B2Holding will constrain its appetite for new investment growth, materially slow down its acquisitive growth, and continue its deleveraging track. "We could raise the ratings in the next 12 months if B2Holding's S&P Global Ratings-adjusted leverage and FFO to debt metrics sustainably trend below 3x and above 30% respectively. B2Holding's back book, especially its 2018 portfolio purchases, could generate higher cash EBITDA than we currently expect, which combined with lower portfolio purchases and improving self-financing potential, could result in such an improvement. Although less likely over the coming 12 months, an upgrade could also result from further improving geographic diversification and complementary growth in its credit management services business. "We could lower the ratings in the next 12 months if we saw a weakening in B2Holding's credit or profitability metrics, indicating weakening investment discipline or significant increases in competitive pressure. Specifically, we could lower the ratings if gross debt to adjusted EBITDA was in excess of 4.0x, or FFO to debt fell below 20%. Adverse changes in the regulatory environment for debt purchasers in the jurisdiction where the group has material exposures could also lead us to lower the ratings." =========== R U S S I A =========== CREDIT UNION: S&P Raises ICR to 'BB+' on Sustained Lack of Leverage ------------------------------------------------------------------- S&P Global Ratings revised its group credit profile for CFT to 'bb+' from 'bb' and raised its long-term issuer credit rating on core subsidiary Credit Union Payment Center (RNKO) to 'BB+' from 'BB'. In addition, S&P is affirming the 'B' short-term rating on RNKO. S&P said, "The upgrade reflects our view that CFT Group benefits from a moderately stable operating environment and resilient operating performance through the cycle. We believe the group will continue benefiting from recovery of the remittance market in Russia and the Commonwealth of Independent States (CIS), and the improving competitive strength in its information technology (IT) business segment." In recent years, despite a relatively unsupportive macroeconomic backdrop, CFT Group's average margins remained robust at about 30%. Margins in the processing sector are at the upper end of the average range for its international peers (Western Union, MoneyGram, and Euronet), and margins in IT are above average for international peers in banking software (SS&C, Fiserv, and Intiviti Group). We also understand that in its key markets of Russia and the CIS, CFT Group remains a leader in both segments. Considering the recent stabilization of macroeconomic conditions in Russia and the CIS, and revitalization of remittances in the region, S&P expects that this solid financial performance will continue. Moreover, in recent years CFT Group's financial risk profile is consistently unleveraged. The company has no outstanding debt, and we expect that it will not issue any debt through 2021. In S&P's base case for CFT Group, it assumes: - Revenue will moderately increase 4%-6% in the next three years. - CFT Group will maintain its leading market position in the money transfer industry, especially in Russia and the CIS region, where it has a 70% market share. This somewhat offsets the high country risk in the region. CFT Group is the third-largest global money transfer company, behind Western Union and MoneyGram. - The group will maintain its established position in the banking software development and maintenance segment, which includes the development, sale, installation, and maintenance of software products primarily related to automated banking systems and the sale of related equipment. CFT Group is the leader (close to 30%-40% market share) in the Russian core banking software market and has a strong customer base that includes Russia's top-tier banks. The software business represented 22% of group revenues at year-end 2018, while amounting to about 36% of EBITDA. - It will issue no debt in 2019-2021, since the group has comfortable liquidity to cover day-to-day needs, and S&P expects no material acquisitions in the next 12-24 months. CFT already has leading market positions in both segments in which it operates. - Dividends for the next four years will be about 30%-40% of expected net profits. S&P said, "Our rating on RNKO reflects our view of it as a core subsidiary of CFT Group, which owns 100% of the group's settlement center for money transfer and payment systems. RNKO's business, operations, and strategy are closely integrated with those of the group. We view RNKO as an infrastructure vehicle whose primary goal is to secure the settlement of transactions in CFT Group's payment systems. We consider that CFT Group has no incentive to sell RNKO, since this would disrupt payment flows. The creation or purchase of another settlement center would be costly and time-consuming, in our view. "The stable outlook reflects our opinion that CFT Group will maintain its competitive position, financial performance, and resilience in the group's financial risk profile in the next 12-18 months. "We could consider taking a negative rating action over the next 12-18 months if, contrary to our expectations, CFT Group's operating conditions or growing competition from banks or other players entering cross-border remittance market materially reduce revenues and profit substantially weakens. We could also lower the ratings in the unlikely event that CFT Group raises significant debt, such that debt to EBITDA exceeds 2x. "A positive rating action is unlikely at this stage. Notwithstanding the group's leading market positions and good profitability, we see the ratings as fairly positioned relative to those on peers, given the group's modest size and diversification globally and the high country risk in its principal markets." ROSGOSSTRAKH PJSC: S&P Ups ICR to BB- on Improved Capital Position ------------------------------------------------------------------ S&P Global Ratings raised its financial strength and issuer credit ratings on Russia-based insurer Rosgosstrakh PJSC to 'BB-' from 'B+'. The outlook is stable. S&P said, "We are upgrading Rosgosstrakh because we believe its capital adequacy further improved in 2018, supported by the company's first profits since 2014. More stringent underwriting standards introduced from second-quarter 2017 led to an improved technical performance and profitable insurance operations in 2018. We note that Rosgosstrakh has reported positive underwriting results since the first quarter of 2018 on a quarterly basis, reporting a net combined ratio of 96% in 2018 versus over 130% in 2016 and 2017. That said, we note Rosgosstrakh has yet to build a track record of sustainably improved capital and operating results. "The upgrade further reflects our view of the improved credit quality of Rosgosstrakh's portfolio, as well as that of Bank Otkritie Financial Co., Rosgosstrakh's shareholder and major investor. Rosgosstrakh's motor portfolio posted positive technical results in 2018, following segmentation of the insurance portfolio to focus on more profitable lines. This led to an almost threefold reduction of premium in the obligatory motor third party liability insurance segment in 2019-2020. We expect Rosgosstrakh will continue to operate with a combined ratio of below 100%, supported by improved underwriting, improved claim settlement practices, reduced court expenses, reduced administration costs, somewhat less pronounced risk in its motor third party liability insurance business line, and recent legislative changes. Furthermore, we do not expect any one-off impairments in investments because portfolio quality has improved. We also expect Rosgosstrakh's premiums will increase in 2019-2020, based on the positive trend we observed in the second half of 2018. "The average credit quality of Rosgosstrakh's investments has improved to the 'BB' category from 'B'. We note that the portfolio's exposure to Russian sovereign investment grade bonds was about 43% of the total investment portfolio as of end-2018. Concentration on parent BOFC is still high, at about 33% of all investments, including bank deposits. However, this is an improvement from almost 70% in 2017. "We still believe Rosgosstrakh will continue to benefit from its ownership by BOFC and its ultimate shareholder the Central Bank of Russia (CBR). We believe BOFC group's credit quality has improved, supporting that of Rosgosstrakh. Due to Rosgosstrakh's ownership structure, we view the insurer as a government related entity, but do not add any additional notches for support to the rating. While we do not anticipate Rosgosstrakh will require any additional financial support in 2018-2019, we expect BOFC and CBR would provide support to Rosgosstrakh in the case of need. "Considering Rosgosstrakh's improved capital and operating performance, we include possible dividend distribution from Rosgosstrakh to BOFC in the coming three years in our base case. "The stable outlook reflects our expectation that Rosgosstrakh will continue to maintain strong capital over the next 12 months, while more stringent underwriting practices will gradually reduce earnings and capital volatility. We expect positive business growth in 2019-2020, while asset allocation will remain mostly unchanged over the same period. "An upgrade is currently remote over the next 12 months in our view. It would depend on positive credit developments at BOFC group level, combined with sustainably improved premiums volumes and underwriting performance, with Rosgosstrakh maintaining current capital adequacy levels. "A downgrade would depend on a significantly weaker-than-expected underwriting performance or an unexpected deterioration of capital adequacy. We could also lower the rating if BOFC group 's credit quality were to deteriorate." =========================== U N I T E D K I N G D O M =========================== DEBENHAMS PLC: CVA Expected to Hit Small Landlords -------------------------------------------------- Emily Sutherland at Drapers reports that Debenhams plc will ask small landlords and councils to slash rents and business rates if the struggling department store chain's creditors approve its proposed company voluntary arrangement (CVA) this week. According to Drapers, The Sunday Times reported that only a quarter of the retailer's stores earmarked for closure and those where it is requesting the highest rent cuts are owned by big property companies. Around 30 local councils will also be asked to accept a 50% cut in business rates bills, Drapers notes. Landlords are likely to vote in favor of the proposed CVA, property experts told Drapers last week. Debenhams has earmarked for 22 stores for closure and a further 105 for rent reductions, Drapers discloses. About Debenhams plc Debenhams is a British multinational retailer operating under a department store format in the United Kingdom and Ireland with franchise stores in other countries. As reported by the Troubled Company Troubled Company Reporter on April 22, 2019, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based department store retailer Debenhams PLC to 'D' from 'SD' (selective default). The downgrade follows Debenhams's filing for administration on April 9, 2019. The group continues to operate, with only the publicly listed parent (Debenhams PLC) appointing administrators. These administrators immediately sold the parent's entire holding of the group's operating subsidiaries to a company controlled by its lenders in a pre-packaged sale. DREAMR: Files for Insolvency; Owes HMRC GBP250,000 -------------------------------------------------- Manchester Evening News reports that Manchester app developer Dreamr, founded by Mylo Kaye and business partner Jack Mason, has filed for insolvency after owing HM Revenue Customs (HMRC) hundreds of thousands of pounds. The firm, which was founded in June 2017 and employs eight staff, filed a company voluntary arrangement (CVA) in late April with the help of accountancy firm Royce Peeling Green, the report says. Latest files show Dreamr owed HMRC GBP250,000, Manchester Evening News discloses. The CVA means the company will be able to continue trading and pay back the creditors over due course. Although Mr. Kaye is no longer with Dreamr having left 12 months ago, it's the second time a business the pair have founded together has filed for a CVA in recent years, the report notes. Their previous company, Redfishmedia, which was registered with Companies House in September 2014, was put into liquidation two years ago owing more than GBP150,000, of which GBP136,000 was also due to HMRC. "We have recently entered into a CVA in order to fully honour 100% of creditor debts. 2018 led to numerous challenges in a very competitive market and Brexit uncertainty hasn't helped," the report quotes Mr. Mason as saying. "We have developed a refined, leaner service offering for 2019. The introduction of complementary marketing and start-up support, leaves us in a far better financial position, which led to full support and approval from creditors on the CVA. "I felt it highly important to honour our obligations and pay creditors in full, and safeguard as many jobs as possible." Both Messrs. Kaye and Mason are well known to Manchester's business community, the report says. FOUR SEASONS: Administration Exposes Private Care Home Risks ------------------------------------------------------------ Sarah Neville, Gill Plimmer and Javier Espinoza at The Financial Times report that the descent into administration of Four Seasons Health Care, the care home provider, has exposed the risks of relying on the private sector to deliver a vital state-funded service. The company will continue to operate as usual as it seeks a buyer by the end of the year, the FT relays, citing a stock exchange announcement last week. However, its difficulties have revived memories of the collapse eight years ago of Southern Cross, then Britain's biggest residential care provider, which had been previously owned by Blackstone, the private equity group, the FT notes. They have also raised questions over whether the UK's approach is ripe for a rethink -- or retains its basic appeal for investors eager to reap a demographic dividend from rising numbers of elderly people while delivering for the ageing population, the FT states. Four Seasons was bought by Terra Firma in 2012 in an GBP825 million debt-fuelled deal, the FT recounts. But for more than a year it has in effect been in the hands of H/2 Capital Partners, the Connecticut-based hedge fund that owns most of the chain's GBP525 million net debt, the FT relates. The shift in effective ownership took place in December 2017 when Capital Partners agreed to defer a GBP26 million interest payment within hours of it being due to be paid by Terra Firma, the FT discloses. Such recent difficulties have led to concerns that the private equity model is not suitable for the acquisition of businesses with huge social responsibilities, the FT says. Four Seasons, meanwhile, is confident that its business could be profitable -- if it was unburdened of debt interest payments, according to the FT. The company argues that it will find a buyer because "once you take the debt out, you have a fundamentally strong business", the FT notes. H/2 may even take over the care homes themselves, according to the FT. GOURMET BURGER: CVA Costs Hit Famous Brands' Earnings ----------------------------------------------------- Sandile Mchunu at IOL reports that JSE-listed food franchisor Famous Brands has flagged that it expected to report further losses in the year to end February, negatively impacted by its UK subsidiary Gourmet Burger Kitchen (GBK), which had failed to deliver since its acquisition in 2016. According to IOL, the group told investors in a trading guidance on May 6 that GBK would record an operating loss before non-operational items of GBP4.6 million (ZAR86.86 million) from last year's GBP3.7 million. Famous Brands said the fall in GBK profits would result in a basic loss a share of between 432 cents a share and 528c compared to last year's basic earnings per share of 22c, IOL relates. Famous Brands acquired GBK for GBP120 million in October 2016 in a move the group explained as furthering its goal to diversify its earnings and expand its geographical footprint, IOL discloses. The group, as cited by IOL, said that the expected losses were a result of once-off costs of ZAR17.2 million for professional fees and redundancy costs related to the company voluntary arrangement (CVA) completed at GBK during the period and an impairment of ZAR25.5 million recognized in an associate company in which the group has a minority stake. In October last year, Famous Brands took measures to turn around GBK operations by initiating a CVA in an effort to improve its financial stability, IOL recounts. In the UK GBK has come under pressure as a result of lower consumer confidence following the Brexit talks and a tough competition in the food sector, IOL relays. LEHMAN BROTHERS EUROPE: Nears Wind-Up Years Following Collapse -------------------------------------------------------------- Marion Dakers at Bloomberg News reports that Lehman Brothers is finally leaving Canary Wharf, almost a dozen years after the Wall Street giant's collapse. The bank's European arm, which has been in the hands of administrators since September 2008, now takes up just a corner of the 23rd floor of Citigroup Inc.'s tower on Canada Square in London's eastern financial district, Bloomberg discloses. This is where administrators from PwC pick over the last few claims from creditors, and the accountants have given notice that they'll leave the office by June 2020, Bloomberg states. According to Bloomberg, Russell Downs, PwC's joint administrator, said in an interview the departure is a "significant mark" in the process of finally wrapping up Lehman's legacy. Fewer than 20 people from PwC are now working to wind up Lehman Brothers International Europe, down from about 750 during the first few years after the financial crisis, Bloomberg discloses. They are waiting for the outcome of a handful of legal cases in U.K., U.S. and German courts before the final assets can be released, Bloomberg, notes. According to the latest update, creditors of the European unit have received GBP26.4 billion (US$34.6 billion), and many have been repaid with interest, Bloomberg, relays. The American parent bank, meanwhile, continues to make payments to its creditors, Bloomberg says. About Lehman Brothers UK Lehman Brothers International (Europe) is the UK subsidiary of Lehman Brothers Holdings Inc, a financial services group that had gone in Chapter 11 bankruptcy proceedings. The Debtor entered administration in the UK on Sept. 15, 2008. The Debtor is now the subject of proceedings currently pending before the Chancery Division (Companies Court) of the High Court of Justice of England and Wales concerning a scheme of arrangement under part 26 of the Companies Act 2006 of England and Wales. As of May 14, 2018, 100% of the outstanding equity interests in the Debtor are owned by LB Holdings Intermediate 2 Limited (in administration), a company incorporated in England and Wales. LBHI2 is an indirect wholly-owned subsidiary of Lehman Brothers Holdings Inc. Russell Downs, in his capacity as the duly authorized foreign representative, filed a Chapter 15 petition for Lehman Brothers Europe on May 14, 2018 (Bankr. S.D.N.Y. Case No. 18-11470). The Hon. Shelley C. Chapman presides over the Chapter 15 case. Robert H. Trust, Esq., Amy Edgy, Esq., Christopher J. Hunker, Esq., at Linklaters LLP, is serving as counsel in the U.S. case. ********* 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 2019. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *