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       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, May 28, 2019, Vol. 20, No. 106

                           Headlines



G E R M A N Y

IHO VERWALTUNGS: Fitch Give BB+(EXP) Rating to PIK Toggle Notes
IHO VERWALTUNGS: Moody's Assigns Ba1 Rating on New Sr. Sec. Notes
IHO VERWALTUNGS: S&P Assigns 'BB+' Rating on New PIK Toggle Notes
LSF10 XL INVESTMENTS: Moody's Affirms B2 CFR, Outlook Negative
NOVEM GROUP: Moody's Assigns Ba3 CFR, Outlook Stable

XELLA: S&P Affirms 'B+' Long-Term ICR on Planned Debt Add-On


L U X E M B O U R G

ANACAP FINANCIAL: S&P Alters Outlook to Negative & Affirms BB- ICR
MALLINCKRODT INTERNATIONAL: Moody's Cuts CFR to B2, Outlook Neg.


N E T H E R L A N D S

GLOBAL UNIVERSITY: Moody's Affirms B3 CFR, Outlook Positive


N O R W A Y

NORWEGIAN AIR: Egan-Jones Lowers Senior Unsecured Ratings to B


R U S S I A

IPOTEKA BANK: S&P Affirms 'B+/B' ICRs, Outlook Still Stable
ROSCOMSNABBANK PJSC: Bankruptcy Hearing Scheduled for June 3


S P A I N

TENDAM BRANDS: S&P Hikes ICR to B+' on Solid Cash Flow Generation


U N I T E D   K I N G D O M

ARCADIA GROUP: Pensions Committee Chair Criticizes CVA Plan
BRITISH STEEL: Outcome of Sale Process Remains Uncertain
CAMELOT UK: Moody's Hikes CFR to B2 Following Recent Deleveraging
COLOUR BIDCO: Moody's Lowers CFR to Caa1, Outlook Stable
DLG ACQUISITIONS: S&P Affirms 'B' Long-Term ICR, Outlook Stable

FILMORE AND UNION: Cash Flow Problems Prompt Collapse
LENDY LTD: Financial Woes Prompt Administration
MADISON PARK XIV: Fitch Assigns B-(EXP) Rating on Class F Debt
MADISON PARK XIV: Moody's Assigns (P)B2 Rating on Cl. F Notes
MICRO FOCUS: S&P Alters Outlook to Stable & Affirms 'BB-' ICR

MONSOON ACCESSORIZE: Founder Seeks CVA to Avert Collapse
THOMAS COOK: Fitch Lowers LongTerm Issuer Default Rating to 'CCC+'

                           - - - - -


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G E R M A N Y
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IHO VERWALTUNGS: Fitch Give BB+(EXP) Rating to PIK Toggle Notes
---------------------------------------------------------------
Fitch Ratings has assigned IHO Verwaltungs GmbH's (IHO-V) proposed
senior secured PIK Toggle notes an expected senior secured debt
rating of 'BB+(EXP)' and affirmed IHO-V's Long-Term Issuer Default
Rating (IDR) at 'BB+' with a Stable Outlook.

Fitch has also affirmed German automotive and industrial supplier
Schaeffler AG's (Schaeffler) Long-Term IDR at 'BBB-' with a Stable
Outlook.

IHO-V is Schaeffler's immediate parent and 75.1% owner.

The proposed notes are rated at the same level as IHO-V's Long-Term
IDR, assuming average rates of recovery available to creditors in
the event of bankruptcy, corresponding to 31%-50% range (RR4).

The assignment of the final ratings is conditional on the receipt
of final documentation conforming to the information already
received to date.

IHO-V expects to issue EUR2.1 billion of notes split into three
tranches denominated in Euros or US dollars.

The proposed notes will be senior secured obligations of IHO-V,
ranking pari passu with its existing notes and obligations under
the senior facilities agreement. The security consists of pledges
over common shares held by IHO-V, being 50% plus one share of the
total share capital of Schaeffler and around 41.9 million shares in
Continental AG (Continental, BBB+/Stable). The new and existing
notes will not benefit from a guarantee by any subsidiary of IHO-V,
including the Schaeffler Group, as of the issue date. These notes
will be structurally subordinated to any existing and future
indebtedness of any non-guarantor subsidiary of IHO-V.

The proceeds from the new notes are planned to be used to partly
fund a cash tender offer for the outstanding euro and US-dollar
denominated notes due in 2021 and 2023, for a total nominal amount
of EUR1.5 billion and USD1 billion. Fitch expects the average
maturity to increase and lower maturity concentration. Fitch also
assumes that the repayment of the notes will be partly funded with
available cash, therefore lowering outstanding gross debt.

Schaeffler's IDR reflects its solid business risk profile, adequate
financial structure and significant financial flexibility. IHO-V's
IDR reflects the weaker financial risk profile of the consolidated
group (IHO-V: full consolidation of Schaeffler and the dividend
stream from IHO-V's 36% direct holding in Continental) relative to
Schaeffler's standalone financial risk profile. Leverage metrics of
the consolidated group are significantly higher than those of
Schaeffler.

The Stable Outlook reflects Fitch's projections that Schaeffler's
weak free cash flow (FCF) and IHO-V's high leverage metrics are
temporary and will improve to levels more commensurate with the
ratings by end-2021. Fitch also assesses FCF in combination with
leverage, with the former expected to remain in line with the
rating for the consolidated group and the latter for Schaeffler.

KEY RATING DRIVERS

Strong Business Profile: Schaeffler's ratings are underpinned by a
business profile that Fitch views as commensurate with the 'BBB'
category. The company benefits from its large scale in the markets
covered, a positioning on high value-added parts, a top-ranking
position in high quality and reliability-driven market segments,
and a solid track record of innovation. Fitch expects Schaeffler's
longstanding relationships with large and renowned original
equipment manufacturers (OEMs) and the company's sound end-market
diversification to continue. Schaeffler has a global reach thanks
to a broad industrial footprint, with a presence in developed and
emerging markets, matching OEMs' production hubs.

Positioned to Benefit From Electrification: The extent and the
speed of transition from hybrid to fully electric vehicles will be
critical for Schaeffler because of its focus on mechanical parts
for drive trains. Schaeffler's longstanding relationships with
major OEMs, strong innovation ability and global manufacturing
footprint position the company favorably to maintain growth in line
with the industry. Schaeffler already has several customer projects
and series contracts for its hybrid modules and e-axles and
forecasts that its E-Mobility unit will generate 10% of sales by
2020.

Solid Growth Prospects: Fitch expects Schaeffler to outperform
vehicle production growth over the foreseeable future. Schaeffler
has demonstrated a capacity to sustainably increase the value of
its content per vehicle by enhancing existing products, developing
integrated systems and bringing innovative solutions into the
markets in response to accompanying changes in requirements and
standards. In China, Fitch also expects the company to benefit from
its greater exposure to fast-growing local OEMs than its peers
(above 30% of local sales compared with typically 15%-20%).

Strong organic growth is also likely in the aftermarkets
businesses. Fitch expects the Automotive Aftermarket division to
benefit from stricter car inspection rules and increasing car
complexity. Large increases in car sales in several emerging
markets, notably in China since the early 2000s, also provide
opportunities to increase aftermarket revenue over the coming
years.

Temporary Weak Operating Profitability: Fitch expects Schaeffler's
EBIT margin to fall temporarily below our negative sensitivity with
margin slightly below 8% in 2019. Lower global vehicle production
volume and resulting restructurings add to ongoing pressures from
greater R&D intensity, higher ramp-up costs and strong growth in
the still unprofitable E-Mobility division. Profitability is
projected to improve as the group adjusts its costs base to the new
growth environment, vehicle production growth turns positive and
systems sold to electrified drive trains gradually reach
profitability on higher volume. Mid-cycle EBIT margin of more than
8% is also supported by the high added value of the group's
production, a high level of vertical integration and exposure to
the more profitable aftermarket businesses.

Medium-Term FCF Pressure: Fitch expects FCF generation to remain
negative in 2019 and 2020. This is below our expectations for a
'BBB-' rating. The FCF margin is constrained by continuously high
investments to support the company's growth strategy and a generous
shareholder return policy relative to peers. Nonetheless, weak FCF
is partly mitigated by robust funds from operations (FFO) margins
for the rating. The FFO margin is expected to remain above 11% on
better cash conversion due to lower net interest paid and cash tax.
"We believe that the FCF margin will recover to more than 1% in
2021 as the investment cycle reached its peak in 2020 and
underlying operating profitability improve beyond 2019," Fitch
said.

Higher Spending on Acquisition: "We believe Schaeffler will play a
more active role in growing M&A activity across the auto-supply
sector. Fitch expects the company will favor acquisitions of a few
hundred million Euros to acquire technologies. Our rating case
includes several acquisitions for a total of around EUR0.2 billion
each year. We also believe that management could consider a large
debt-funded acquisition under the right circumstances. Any major
acquisition or numerous bolt-on acquisitions would constitute event
risk and would be assessed on a case-by-case basis, reflecting the
impact on the company's business risk profile and credit metrics,"
Fitch said.

Schaeffler's Adequate Financial Structure: Fitch expects
Schaeffler's FFO adjusted net leverage to increase slightly to 2.2x
at end-2019 from 2.1x in 2018 and 1.7x in 2017 due to higher net
debt because of negative FCF generation and cash absorbed by a few
small acquisitions. The forecast improving cash generation should
lead to FFO adjusted net leverage of around 2x beyond 2020, despite
further use of cash on acquisitions. Current and expected leverage
is below our negative sensitivity of 2.5x, although leaving only
moderate headroom in the rating for additional leverage.

IHO-V's High Leverage: Consolidated FFO-adjusted net leverage was
3.9x at end-2018, a level more commensurate with the Auto Supplier
Navigator 'B' mid-point. This level of net leverage is weaker than
forecast and above our negative guideline. Higher leverage for the
Schaeffler group and dividend paid to IHO Beteiligungs GmbH (IHO-B)
led the deterioration. However, deleveraging capacity is
significant under our assumptions of around EUR600 million of
dividend flows each year with cash upstreamed to IHO-B limited to
40% of these flows. Combined with improving cash flow generation at
Schaeffler, this is expected to drive down FFO net leverage below
3.5x by 2021. Larger than assumed return to IHO-B before adequate
deleveraging could put pressure on IHO-V's and Schaeffler's
ratings.

Marketable Assets Support Ratings: IHO-V's 36% equity stake in
Continental AG (valued at about EUR9.3 billion at mid-May 2019) is
a significant asset. The value of this minority stake is not
explicitly reflected in Fitch's credit metrics, only the dividends
received. Fitch would expect that a partial stake in this listed
company could be sold down fairly swiftly, which could allow IHO-V
to repay all its gross debt. The presence of this potential
liquidity source supports the weaker leverage metrics for the
consolidated group.

Parent-Subsidiary Linkage Established: Schaeffler's 'BBB-' ratings
incorporate a one-notch uplift from the consolidated group (IHO-V)
rating of 'BB+', due to Schaeffler's higher underlying rating and
the weak to a moderate linkage between Schaeffler and IHO-V.
Limited documentary constraints on up streaming of dividends do not
ring-fence Schaeffler from additional leverage at IHO-V. Fitch
expects dividend payments to remain predictable, and to support
modest deleveraging at Schaeffler.

No Notching Uplift from IHO's IDR: "We have not notched the senior
secured debt rating higher than IHO-V's IDR. The debt is secured by
a pledge on common shares and not by a pledge on readily saleable
hard assets or intangible assets. We acknowledge that the current
value of pledged shares considerably exceeds the first-lien debt
amount. However, the pledge is partly made of common shares of
Schaeffler, the solely controlled assets of IHO-V, which is the
main driver of IHO-V's IDR. Financial stress at the level of the
holding (IHO-V) is likely to be linked to financial stress at the
level of Schaeffler, therefore to lower value of the pledged
shares. IHO-V's indebtedness is also structurally subordinated to
the Schaeffler Group's indebtedness, potentially impairing recovery
prospects of IHO-V's creditors," Fitch said.

Average Recovery Assumed: The process of establishing ratings for
the obligations of issuers rated between 'AAA' and 'BB-' refers for
the most part to aggregate recoveries on the defaulted bond market
as a whole, and not to issuer-specific analysis. For corporate
entities rated 'BB-' and above, the rating assigned to an issuer's
senior unsecured debt instrument assumes an average recovery
available to creditors in the event of bankruptcy, corresponding to
the 31%-50% range, 'RR4'. When average recovery prospects are
present, IDRs and debt instrument ratings are equal, with no
notching.


IHO VERWALTUNGS: Moody's Assigns Ba1 Rating on New Sr. Sec. Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned Ba1 ratings to the new
senior secured notes issued by IHO Verwaltungs GmbH (IHO-V). The
outlook remains stable.

RATINGS RATIONALE

On 21 May 2019, IHO-V announced a EUR3.1 billion refinancing
transaction, which will result in a gross debt reduction of
approximately EUR500 million and an extension of its debt
maturities. The refinancing comprises the issuance of new senior
secured bonds with a total Euro-equivalent volume of approximately
2.1 billion. With the proceeds from the new notes, which will
consist of individual tranches with maturities in six, eight and
ten years as well as currency denominations in EUR and USD, IHO-V
will refinance existing senior secured notes due in 2021 and 2023,
totaling 2.4 billion EUR-equivalent. In addition, IHO-V announced
the refinancing and extension of its existing EUR750 million bank
loans due 2022 with new EUR600 million loans due 2024. Finally,
Schaeffler also announced the increase and prolongation of its
revolving credit facility (RCF) to EUR400 million, which will now
mature in 2024.

The Ba1 rating of the new senior secured notes reflects their pari
passu ranking will the existing bank debt and the remaining EUR1.2
billion senior secured notes due 2026. All senior debt instruments
are secured with pledges over 333.0 million shares in Schaeffler AG
(Baa3 stable) and 41.9 million shares in Continental AG (Baa1
stable). IHO-V's senior debt is, however, not guaranteed by any of
IHO-V's subsidiaries and is therefore structurally subordinated to
debt at the subsidiary level.

IHO-V's liquidity remains good. Prior to the transaction, IHO-V's
cash position amounted to approximately EUR1.1 billion, including
the recent proceeds from annual dividend payments of Schaeffler AG
and Continental AG totaling to approximately EUR600 million. The
gross debt reduction related to the transaction can therefore be
financed with existing cash. IHO-V's liquidity will also benefit
from increased and undrawn RCF.

IHO-V's market value-based net leverage is in line with
expectations for a Ba1 rating. Prior to the transaction, the gross
debt amounted to approximately EUR4.3 billion. Based on the closing
share prices of Schaeffler AG (EUR7.20) and Continental AG (EUR131)
on 15 May 2019, the market value-based net leverage amounted to
approximately 25%, well in line with Moody's expectation of 20%-30%
for the Ba1 rating. Based on the current share prices and after
transaction-related cost, operating cost, interest payments and
shareholder distributions, Moody's expects the market-value based
net leverage to increase to approximately 28% at the end of 2019,
which is still in line with expectations.

RATIONALE FOR STABLE OUTLOOK

The stable outlook reflects Moody's expectation that IHO-V will
maintain a good liquidity profile and credit metrics as indicated
by market value-based net leverage of around 25% and FFO interest
cover above 3.0x in the next 12-18 months.

WHAT COULD CHANGE THE RATING UP/DOWN

An upgrade of IHO-V's ratings would require (1) a clearly
formulated financial policy aimed to preserve a conservative
capital structure, (2) a market value-based net leverage of 20% or
less, and (3) FFO interest cover above 3.0x. An upgrade would also
require (4) Moody's adjusted debt/EBITDA to be sustained below 2.5x
(2.4x for 2017) and Moody's adjusted EBITA margin to be improved to
around 12% (10.9% in 2017), both based on INA-Holding Schaeffler
GmbH & Co. KG's financial statements that fully consolidate
Schaeffler AG and Continental AG. An upgrade would also require (5)
improved reporting at IHO-V level.

Moody's could downgrade IHO-V's ratings if its (1) net market
value-based leverage sustainably deteriorates above 30%; (2) FFO
interest cover deteriorates below 3.0x on a sustained basis; (3)
Moody's adjusted debt/EBITDA exceeds 2.5x sustainably and Moody's
adjusted EBITA margin deteriorates towards 10%, both based on
INA-Holding Schaeffler GmbH & Co. KG statements that fully
consolidate Schaeffler AG and Continental AG; or (4) liquidity
deteriorates.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global
Automotive Supplier Industry published in June 2016.

COMPANY PROFILE

Headquartered in Herzogenaurach, Germany, IHO Verwaltungs GmbH
(IHO-V) is a holding company owning 75% of share capital (and 100%
of voting rights) at Schaeffler AG and 36% of share capital in
Continental AG. Both assets are leading automotive suppliers in
Europe. IHO-V is ultimately owned through a holding structure by
two members of the Schaeffler family.


IHO VERWALTUNGS: S&P Assigns 'BB+' Rating on New PIK Toggle Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue rating to the proposed
senior secured payment-in-kind (PIK) toggle notes to be issued by
IHO Verwaltungs GmbH (IHO), a company holding 75.1% of Schaeffler
AG and 36% of Continental AG. IHO plans to issue about EUR2.0
billion in total, including a mix of U.S. dollar- and
euro-denominated instruments with various maturities ranging from
six to 10 years.

S&P said, "We have assigned our 'BB+' issue rating to all IHO's
proposed tranches. This is one notch lower than our long-term
issuer credit rating on IHO (BBB-/Stable/--), reflecting the
contractual and structural subordination to all outstanding debt at
Schaeffler (about EUR4.9 billion gross financial debt as of March
31, 2019).

"At the same time, we note that IHO has amended and extended its
current senior facility and syndicated revolving credit facility
(RCF) agreement. The amended facility will mature in May 2024 and
comprise a EUR600 million term loan (reduced from EUR750 million)
and EUR400 million RCF (increased from EUR250 million)."

S&P expects IHO to use the proceeds from the proposed notes--along
with cash on hand--for the following purposes:

-- To redeem about EUR2.4 billion outstanding under the existing
    2021 and 2023 PIK toggle notes.

-- To reduce its existing term loan to EUR600 million from EUR750
    million.

-- To pay about EUR50 million redemption premiums and transaction

    costs (including hedging) of about EUR60 million.

-- S&P will withdraw the ratings on the outstanding 2021 and 2023
    PIK toggle notes once they have been redeemed in full.

The new bonds and facilities will be secured by the same collateral
that secures the existing notes and facilities, on a pari passu
basis. The collateral comprises a pledge over 333 million voting
shares in Schaeffler--equaling 50% plus one share of total capital
stock-- and a pledge of 41.9 million shares in Continental
AG--representing 21.0% of the total share capital.

The new bonds will not be guaranteed by any of IHO's subsidiaries
and will be structurally subordinated to all existing and future
indebtedness of any of the issuer's subsidiaries (in particular,
Schaeffler and its subsidiaries).

The amended loan agreement is similar to the new bonds'
documentation and defines the operating companies, Schaeffler and
its subsidiaries, as unrestricted subsidiaries. These subsidiaries
will not provide any collateral or guarantee to the benefit of the
notes or the facilities, and will not be subject to the covenants
under IHO's debt documentation. There will be no cross-default
between IHO's debt instruments and Schaeffler's bonds and
facilities.

The documentation provides that certain debt incurrence covenants,
which currently limit debt raises and on-lending for shareholder
distribution, would fall away if the notes are upgraded to
investment grade by S&P Global Ratings and Moody's and no default
has at that time occurred. This would include the limit on the
combined coverage ratio, events of default, and restrictions on
granting of loans and credits.

The proposed bonds' documentation includes a PIK toggle option,
which allows the company to capitalize interest if liquidity falls
below a certain level.

The proposed notes are non-callable until June 2021, with the
current 2026 bonds non-callable until September 2021. Following the
close of this transaction, IHO may only make debt repayments on its
bank loan until the first non-call date.


LSF10 XL INVESTMENTS: Moody's Affirms B2 CFR, Outlook Negative
--------------------------------------------------------------
Moody's Investors Service has affirmed the Corporate Family rating
and Probability of default rating of LSF10 XL Investments S. a r.l.
('Xella') at B2 and B2-PD respectively. Concurrently, the agency
has affirmed the B2 senior secured rating of EUR1,574 million of
senior secured term loan B and EUR175 million senior secured
revolving credit facility issued by LSF10 XL BidCo SCA and
guaranteed by LSF10 XL Investments S.a r.l. The outlook remains
negative.

RATINGS RATIONALE

The rating affirmation follows the analysis of the rating impact of
Xella and its private equity owner's decision to use excess cash on
balance sheet to pay a EUR130 million dividend to Xella's
shareholder and to raise an additional EUR100 million under the
company's senior secured term loan B.

The proposed dividend is not very material in the context of
Xella's overall EBITDA and operating cash flow generation but comes
at a time when credit metrics of the group are already fairly
stretched for the current rating category with a Moody's adjusted
Debt/EBITDA of 6.8x (5.6x net debt / EBITDA) at year-end 2018.
Pro-forma of the add-on under the term loan B, pro-forma
Debt/EBITDA would stand at 7.2x (6.1x net debt/EBITDA), a very
elevated level for the current rating, but somewhat mitigated by a
high cash balance of around EUR272 million as per 31st March 2019,
which we understand is higher than what the business needs.

The dividend will also be executed when Xella will have to fund a
EUR49 million cash out for the implementation of Xcite, its new
cost reduction and top line growth programme. Moody's said, "As a
result, we expect only modest free cash flow generation in 2019
despite a robust operating outlook for the year. Lastly, the
dividend payout is being pursued late in the cycle when we would
have expected Xella to build headroom under its current rating to
weather a potential deterioration in market conditions in 2020 or
beyond."

Moody's said, "In the context of the comments made above the
affirmation of the B2 Corporate Family rating mainly reflects our
positive assessment of the solid market prospects for Xella's key
European markets in 2019. After a challenging fiscal year 2018
earmarked by harsh weather in the winter season and material cost
inflation, we expect a robust year in 2019 after a very strong
start in Q1 2019. We also note that European markets have picked up
momentum compared to the US market in 2018 and early 2019, whilst
the US had outperformed Europe for many years following the global
financial crisis. As such, we would expect Xella to mitigate some
of the negative impact from the dividend payout through solid
operating earnings growth and positive underlying free cash flow
generation (adjusted for the dividend payout), despite the elevated
capex levels to fund the Xcite programme."

The weak point-in time and pro-forma credit metrics of Xella are
also partly mitigated by the group's very solid liquidity position.
Xella maintained cash on balance sheet of more than one turn of
2018 EBITDA at 31st March 2019, at a time of already high seasonal
working capital consumption.

RATIONALE FOR THE NEGATIVE OUTLOOK

Pro-forma of the cash distribution to its ultimate owner, Xella's
credit metrics will be very weak for the current rating category.
There is therefore very little scope for underperformance versus an
ambitious but achievable 2019 budget and no tolerance for any
further debt financed dividend payments at this juncture. Any
deviation from a path to bringing down leverage towards 6.0x over
the next 12 to 18 months would put negative pressure on the
ratings.

LIQUIDITY

Xella's liquidity profile is strong. The group had around EUR272
million of cash on balance sheet at 31st March 2019 and full
availability under the group's revolving credit facility. This is
more than sufficient to cover all liquidity uses over the next 12
months including the net EUR30 million cash out for the dividend
(after the EUR100 million add on to the term loan B), a further
seasonal working capital increase, a EUR49 million cash out for
Xcite and normal maintenance capex. Moody's also notes that Xella
has a covenant lite debt structure with a financial covenant that
will only be tested if the group's revolver is drawn by more than
35%, which is unlikely to be the case over the next 12 to 18
months.

WHAT COULD CHANGE THE RATING UP / DOWN

Positive rating pressure is not envisaged in the short term.
Positive pressure would build on the rating if Moody's adjusted
Debt/EBITDA would move towards 5.0x and Moody's adjusted FCF/Debt
towards 5%.

Conversely negative rating pressure would build if Moody's adjusted
Debt/EBITDA would stay sustainably above 6.0x and negative free
cash flow generation would lead to a weakening of the group's
liquidity profile.


NOVEM GROUP: Moody's Assigns Ba3 CFR, Outlook Stable
----------------------------------------------------
Moody's Investors Service has assigned a Ba3 corporate family
rating (CFR) and a probability of default rating (PDR) of Ba3-PD to
the Germany-based automotive supplier Novem Group GmbH (Novem).
Concurrently, Moody's has assigned a Ba3 rating to the new EUR375
million senior secured notes due 2024 to be issued by Novem. The
outlook is stable.

RATINGS RATIONALE

Novem's Ba3 Corporate Family Rating (CFR) reflects as positives:
(a) the company's leading position in the decorative interior trims
market for premium cars, with long-standing relationships to
premium automotive original equipment manufacturers (OEMs), (b)
history of revenue growth in excess of global light vehicle
production while preserving strong profitability, and (c) solid
financial metrics compared to our expectations for a Ba3 rating, a
conservative financial policy and good liquidity. Pro forma for the
transaction, Novem's debt/EBITDA (Moody's adjusted) in the last
fiscal year ending March 2019 amounted to 3.1x with prospects of
solid free cash flow generation.

The rating is constrained by Novem's: (a) relatively small size,
with revenues of around EUR0.7 billion in FY2018/19, (b) its
exposure to the cyclicality of the automotive industry environment,
which faces a number of headwinds and (c) customer concentration to
some large premium OEMs.

The stable outlook reflects the expectation that Novem will be able
to generate organic revenue growth at least in the low to
mid-single digits in percentage terms, even in the currently
challenging automotive industry environment with stagnating global
light vehicle unit sales. The stable outlook is also predicated on
stable margins (Moody's adjusted EBITA) in the mid-teens in
percentage terms and positive free cash flows, which should sustain
debt / EBITDA (Moody's adjusted) in a range of 3.0-3.5x within the
next 12 to 18 months.

STRUCTURAL CONSIDERATIONS

The EUR375 million senior secured notes are issued by Novem Group
GmbH, the parent company of the Novem Group. The notes rank junior
to the EUR75 million super senior revolving credit facility (RCF),
which is expected to remain undrawn. Apart from minor pension
liabilities (EUR25 million, as of March 2019), and capitalized
lease liabilities mainly relating to rent (estimated at EUR40
million, based on Moody's global standard adjustments), there is no
other financial debt within the group. The bond rating is in line
with the CFR.

LIQUIDITY

Novem's liquidity is excellent and reflects the company's
consistently positive free cash flow generation and its available
liquidity sources, which comfortably exceed liquidity uses in the
next 12-18 months. Even in an unexpected scenario of a severe
cyclical downturn, Moody's expects the company to be able to
weather adverse working capital swings and service its debts.

At closing of the transaction, the company is expected to have a
cash balance of around EUR60 million. In addition, the company has
access to a EUR75 million super senior revolving credit facility
due in 2024, which is fully undrawn and which is not expected to be
utilized. Liquidity sources, including expected funds from
operations, are well in excess of expected uses, comprising of
capex spending, working cash needs and a working capital outflow,
while no dividend payments are expected in the near-term. After the
refinancing, the group is not facing any significant upcoming debt
maturities until 2024.

WHAT COULD CHANGE THE RATING UP/DOWN

Moody's would consider a rating upgrade, if (i) EBITA margins
(Moody's adjusted) were sustained in the high teens in percentage
terms through the cycle, (ii) Debt / EBITDA (Moody's adjusted)
declined to below 3.0x sustainably, and (iii) RCF/Net debt
sustained above 30%. Moreover, an upgrade would require Novem to
(iv) successfully build new OEM relationships and thus diversify
its customer mix.

Moody's would consider a rating downgrade, if (i) EBITA margins
(Moody's adjusted) fell below 14%, (ii) Debt / EBITDA (Moody's
adjusted) increased towards 4.0x, (iii) free cash flows turned
negative, or (iv) the liquidity profile weakened.

PINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global
Automotive Supplier Industry published in June 2016.

COMPANY PROFILE

Headquartered in Vorbach, Germany, Novem is a specialized supplier
of interior trim elements for the premium automotive industry and
is the market leader in its niche market. The company was founded
in 1947 and is owned by Bregal (86%), an investment business of
Swiss COFRA Holding AG, which was established to consolidate and
manage direct investments of the Brenninkmeijer family and the
company's management and other co-investors (14%). Novem operates
10 production sites across eight countries in Europe, Americas and
Asia. In the last fiscal year ending March 2019, Novem generated
net sales of approximately EUR705 million.


XELLA: S&P Affirms 'B+' Long-Term ICR on Planned Debt Add-On
------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' long-term issuer credit rating
on Germany-based building products manufacturer Xella.

Xella, via its holding company LSF10 XL Investments, is planning to
increase its term loan by EUR100 million to fund a EUR130 million
distribution to its shareholders. At the end of 2018, the term loan
amounted to EUR1.57 billion, after Xella prepaid EUR100 million at
the end of January 2018, using the proceeds from the lime business
disposal that the company completed in 2017.

The planned distribution will take the form of a EUR33 million
preferred equity certificate (PEC) repayment, with the remaining
EUR97 million as a dividend. Under our adjusted debt calculation at
the end of 2018, S&P adds EUR480 million related to PECs, EUR48
million for operating leases, EUR104 million for pension
liabilities, and EUR15 million for asset retirement obligation.

S&P said, "We note that this new distribution comes after Xella
returned a sizable EUR650 million to shareholders in 2018,
following a sizable assets disposal. We reflect such
shareholder-friendly actions in our FS-6 financial policy
assessment, which indicates that we expect that the company may
carry out further distributions without materially weakening its
leverage trajectory.

"Our revised credit metrics remain broadly unchanged following the
dividend recap, mainly because adjusted debt at the end of 2018 was
lower than we expected due to lower pension liabilities and lower
debt assumed as part of acquisitions. As such, adjusted debt in
2019 stands at EUR2.3 billion. We do not net cash for our adjusted
debt calculation, given the private equity ownership by Lone Star
Funds. However, we note that Xella has sizable cash balances of
about EUR272 million on its balance sheet at the end of the first
quarter (Q1) of 2019. Its liquidity position therefore remains
quite healthy, further supported by full availability under the
EUR175 million revolving credit facility (RCF).

"Xella performed strongly in 2018, and we expect that 2019 will be
another year of solid results. Although the economic environment in
Europe is softening, demand from end-markets is supporting revenue
expansion, as demonstrated when volume and pricing drove revenue
growth of 10% in Q1 2019. Expansion was strong in both of Xella's
divisions--building materials and insulation--with particularly
good results in Germany and Eastern Europe.

"However, we note that profitability in 2018 remained below the 18%
threshold we expect Xella to achieve this year, and which underpins
our current satisfactory business risk profile assessment. Adjusted
EBITDA is EUR248.6 million, with a 16.6% margin."

The company's reported EBITDA--normalized, excluding various
one-off costs such as restructuring--increased by 11% in 2018 to
EUR275 million. The company started a new efficiencies and growth
program, "X-cite", that it estimates will increase EBITDA by EUR52
million, to be fully achieved in 2020. S&P said, "Given
management's solid track record of improvement under the company's
previous program, we partly include these benefits in our projected
adjusted EBITDA of EUR296 million in 2019 and EUR330 million in
2020. We note that costs associated with this program will be
included in operating expenses and capital expenditure (capex) in
2019, thereby depressing FOCF generation in 2019."

S&P said, "The stable outlook reflects our forecast that Xella will
demonstrate solid revenue and EBITDA growth in 2019, despite the
softening market conditions in Europe, and will be able to
efficiently implement price increases. We therefore expect that the
company's adjusted EBITDA margin will strengthen above 18%. We also
model that the company will continue to generate positive free
operating cash flow (FOCF) despite higher capex in 2019, partly due
to cost efficiencies program that will further increase its
EBITDA.

"We could downgrade Xella, likely by one notch, if margin expansion
to 18% were slower than anticipated, leading us to reassess our
business risk profile. We would also consider a downgrade if
further debt-funded shareholder distributions hindered Xella's debt
reduction or weighed on its funds from operations (FFO) cash
interest coverage metrics. Specifically, we could downgrade Xella
if FFO cash interest coverage were to fall below 2x. We could also
consider a downgrade if the company's liquidity were to
deteriorate.

"In our view, the probability of an upgrade over our 12-month
rating horizon is limited due to the company's highly indebted
capital structure. Furthermore, the track record of sizable
distributions to Xella's private equity owners increases
uncertainty regarding the possibility of future shareholder
returns, and could trigger changes to the company's capex,
acquisition, and disposal strategy."

Xella manufactures and markets wall-building and insulation
materials. The company is headquartered in Duisburg, Germany. It
operates 98 production plants in 20 different countries, and
employs about 7,000 people. Lone Star Funds, a private equity firm,
has owned Xella since 2017. Xella generated EUR1.5 billion in sales
in 2018.

The company has a strong presence in Germany--about 28% of
sales--and other Western European countries, including the
Netherlands and Belgium--together accounting for 14% of sales. It
also operates in many Central and Eastern European countries such
as the Czech Republic and Poland, and in select regions of Russia.

Xella is organized into two business divisions:

Building materials (about 70% of sales and 76% of Xella's
normalized EBITDA in 2018): production and sale of materials used
for wall-building in new construction projects as well as
renovation, remodeling, and modernization projects.

Insulation (about 30% of sales and 24% of Xella's normalized EBITDA
in 2018): production and distribution of a wide range of building
insulation products under the URSA brand--mainly glass mineral wool
and extruded polystyrene products.

In S&P's base case for 2019, it assumes:

-- Softening of economic expansion in the eurozone to about 1.1%
in 2019, recovering to 1.4% in 2020.

-- Solid revenue growth of about 8% to EUR1.62 billion,
benefitting from the company's leading market positions, efficient
pricing increases, and some capacity expansion.

-- Adjusted EBITDA margin slightly exceeding 18%;

-- Capex of up to EUR120 million, which includes investments in
the new cost reduction program;

-- No further major acquisitions or divestitures; and

-- No further dividend distributions to shareholders.

Based on these assumptions, S&P arrives at the following credit
measures:

-- Adjusted debt to EBITDA of about 6.0x-6.5x, excluding PECs that
S&P treats as debt (or 7.5x-8.0x including PECs);

-- Positive but weak FOCF to debt of less than 5%, reflecting the
capital-intensive nature of the business (typical for building
materials companies); and

-- Adjusted FFO cash interest coverage of more than 3x over the
12-month rating horizon.




===================
L U X E M B O U R G
===================

ANACAP FINANCIAL: S&P Alters Outlook to Negative & Affirms BB- ICR
------------------------------------------------------------------
S&P Global Ratings said that it revised the outlook on
Luxembourg-domiciled debt purchaser AnaCap Financial Europe S.A. to
negative from stable. S&P affirmed the long-term issuer credit
rating at 'BB-'.

S&P said, "We have also affirmed our 'BB-' issue-level rating on
AFE's senior secured bonds. The '3' recovery rating reflects our
expectation of 50%-70% recovery prospects (rounded estimate: 50%)
in the event of a payment default.

"The rating action reflects our expectation of AFE's persistently
high leverage, with gross debt to EBITDA likely above 4.5x in 2019,
and our concerns around the visibility and volatility of cash flows
for AFE. We consider that this creates the potential for pressure
on the rating over the next 12 months.

"Under our revised base-case scenario, we expect to see our core
debt metrics for AFE deteriorate in 2019 to levels that are
relatively high for the current rating. As AFE's capital deployment
from 2018 flows through into cash results in 2020, we expect to see
cash EBITDA growing some EUR50 million year-on-year, precipitating
deleveraging to 3.0x-3.5x.

"However, we do not expect that the group's cash flows will
meaningfully diversify before 2021 by vintage, with potential
volatility given AFE's revenue concentration in its back-book. This
leaves the group with little flexibility to absorb unexpected
events. In aggregate, we believe that the combination of the
persistently high leverage we forecast for year-end 2019 and a
relatively uncertain, lumpy cash flow profile in the next 12-18
months creates prospective pressure on the rating."

AFE has confirmed that it has purchased EUR10 million of face value
bonds on the open market for a cash consideration of approximately
EUR9 million. The bond buy-back has not materially reduced the
leverage burden of the group. However, in place of these
instruments, S&P expects to see AFE shifting greater emphasis onto
its existing securitization facility and revolving credit facility
(RCF) to fund portfolio growth.

S&P said, "Our rating also reflects AFE's niche strategic position
in the European distressed debt market with a focus on relatively
small, secured asset portfolios across Southern and Eastern Europe.
The broader AnaCap group has extensive experience pricing and
managing financial services assets across these geographies, giving
a degree of advantage to AFE, which serves as an important rating
support. Overall, however, we believe that AFE remains moderately
more vulnerable to fluctuations in market dynamics, with a less
secure footprint, than the larger, more institutional players that
we rate in AFE's core markets.

"The negative outlook on AFE reflects our view that the company's
leverage and debt-service metrics will remain volatile, and
relatively high for the rating level over the coming 12 months.

"We could lower the rating on AFE if the group fails to manage the
volatility of its leverage and coverage ratios in the next 12
months. Specifically, if we expect AFE's adjusted gross
debt-to-EBITDA ratio at year-end 2019 to sit above our target range
of 4.5x-4.75x we would likely lower the rating to 'B+'.

"We could revise the outlook back to stable if AFE is able to
demonstrate a degree of stabilization in its cash flows, with
noticeably lower swings in its leverage and quarterly cash flows as
collections diversify by vintage and geography. Additional support
to this would likely come from an improvement in AFE's financial
flexibility, with the business demonstrating an ability to
sustainably fund its investments, and manage capacity across its
RCF and securitization facilities."


MALLINCKRODT INTERNATIONAL: Moody's Cuts CFR to B2, Outlook Neg.
----------------------------------------------------------------
Moody's Investors Service downgraded Mallinckrodt International
Finance SA's Corporate Family Rating ("CFR") to B2 from B1 and
Probability of Default Rating ("PDR") to B2-PD from B1-PD. Moody's
downgraded the senior secured revolver and term loans to Ba3 from
Ba2, the guaranteed senior unsecured notes to B3 from B2, and the
unguaranteed senior unsecured notes to Caa1 from B3. The
Speculative Grade Liquidity Rating was affirmed at SGL-2. The
outlook remains negative.

The ratings downgrade follows Mallinckrodt's announcement that it
filed suit against the Center for Medicare and Medicaid Services
(CMS) due to a significant reduction in the Average Manufacturer
Price upon which Medicaid will reimburse Mallinckrodt's Acthar if
the suit is unsuccessful. The potential impact is both retroactive
and prospective. Medicaid accounts for roughly 10% of Acthar's $1.1
billion of sales at very high EBITDA margins. Moody's believes
Mallinckrodt's EBITDA will decline over the next 12 months
resulting in debt/EBITDA sustained above 4.5 times. In addition,
Moody's believes a potential spin of Mallinckrodt's generics
business later this year is unlikely to be deleveraging.

Mallinckrodt's debt/EBITDA is high in the context of its business
risks. These include revenue concentration in Mallinckrodt's
largest product, Acthar, and opioid related litigation. Further,
the company faces a number of headwinds over the next several years
including the loss of patent exclusivity on Ofirmev in January 2021
and rising competitive pressures in Mallinckrodt's largest
franchises. Absent significant progress in its pipeline, Moody's
believes Mallinckrodt will face multiple years of earnings
stagnation or declines.

The rating outlook is negative, reflecting increasing uncertainty
regarding Acthar reimbursement and pricing and the risk of up to
$600 million in retroactive payments to Medicaid as a result of
CMS' price changes to Acthar. The outlook also reflects the
potentially negative impact on the credit profile if Mallinckrodt
completes a spin-off of its generics business into an independent
public company. Moody's believes it would likely be a leveraging
transaction besides reducing scale and diversity of the company,
although its exposure to opioid litigation would be reduced.
Mallinckrodt expects the spin-off to be completed in the second
half of 2019.

Ratings downgraded:

Mallinckrodt International Finance SA:

  Corporate Family Rating to B2 from B1

  Probability of Default Rating to B2-PD from B1-PD

  Senior unsecured notes to Caa1 (LGD6) from B3 (LGD6)

Mallinckrodt International Finance SA and co-borrower Mallinckrodt
CB LLC:

  Senior secured term loan B due 2024 and 2025 to Ba3 (LGD2)
  from Ba2 (LGD2)

  Senior secured revolver expiring 2022 to Ba3 (LGD2) from
  Ba2 (LGD2)

  Guaranteed unsecured notes to B3 (LGD5) from B2 (LGD5)

Rating affirmed:

  Speculative Grade Liquidity Rating at SGL-2

Outlook Actions:

  Outlook remains negative

RATINGS RATIONALE

Mallinckrodt's B2 CFR reflects its elevated financial leverage and
high earnings concentration in one drug, Acthar. Mallinckrodt faces
challenges to return Acthar to long term revenue growth due in part
to significant hurdles that patients face to get their insurance
company to pay for the drug. In addition, Mallinckrodt faces risk
of lower reimbursement from payors that will reduce revenue over
time. At the same time, the company's business profile will undergo
significant change over the next few years, as Mallinckrodt
continues to exit non-branded segments, and faces potential generic
competition on several of its largest franchises. Given these
challenges, Moody's anticipates that debt/EBITDA will increase and
remain above 4.5 times through 2020 and will increase in 2021.
Mallinckrodt's ratings are supported by its moderate scale in
specialty branded pharmaceuticals, its growing hospital-based
business and good late-stage pipeline. The rating is also supported
by the company's good free cash flow and demonstrated commitment to
repay debt.

The SGL-2 Speculative Grade Liquidity Rating reflects Moody's view
that Mallinckrodt's liquidity will be good over the next 12 months.
Mallinckrodt had $226 million of cash at March 29, 2019. It has a
$900 million revolver that expires in early 2022 and had $405
million drawn as of March 29, 2019. Moody's expects good cash
generation in excess of $450 million in 2019 (including the generic
segment). Mallinckrodt has $950 million of debt that matures
through July 2020, including its $250 million fully drawn accounts
receivable facility. The revolver has a springing 5x net leverage
covenant if more than 25% of the facility is drawn. Moody's
believes the covenant will not be tested later in 2019 with
revolver borrowings falling below 25%.

Based on Mallinckrodt's existing business profile, Moody's could
downgrade Mallinckrodt's ratings if it believes that debt/EBITDA
will be sustained above 5.5x or if Acthar revenue declines are
protracted. Cash outflows, including any litigation-related
payments that slow the pace of deleveraging could also result in a
downgrade. Although unlikely in the near term, Moody's could
upgrade the ratings if the company can meaningfully improve its
earnings diversity, reduce opioid-related litigation, while
expected to maintain debt/EBITDA below 4.5x.

The principal methodology used in these ratings was Pharmaceutical
Industry published in June 2017.

Luxembourg-based Mallinckrodt International Finance SA is a
subsidiary of Staines-upon-Thames, UK-based Mallinckrodt plc
(collectively "Mallinckrodt"). Mallinckrodt is a specialty
biopharmaceutical company with reported revenues of approximately
$3.2 billion.




=====================
N E T H E R L A N D S
=====================

GLOBAL UNIVERSITY: Moody's Affirms B3 CFR, Outlook Positive
-----------------------------------------------------------
Moody's Investors Service has affirmed the B3 corporate family
rating (CFR), B3-PD Probability of Default Rating of Global
University Systems Holding B.V. (GUS, or the company) a private
higher education provider, as well as Markermeer Finance B.V.'s B3
instrument ratings. Concurrently, Moody's has assigned a B3 rating
to the new EUR230 million senior secured term loan (TLB) due 2024
issued by Markermeer Finance B.V.. The outlook remains positive.

The proceeds from the EUR230 million senior secured TLB will be
used to fund the acquisition of a number of higher education
service companies, as well as affiliation with two higher education
providers in India, as well as to increase cash on balance sheet to
support future acquisitions. As part of the transaction the senior
secured revolving credit facility (RCF) due 2023 has been upsized
to GBP120 million.

RATINGS RATIONALE

The B3 CFR of GUS reflects the company's: (i) position as a global
private higher education provider with a strong base in Europe,
particularly the UK; (ii) solid growth through both acquisitions
and organically whilst maintaining good margins; (iii) revenue
visibility from committed student enrollments and supporting
underlying growth drivers for the private-pay education market;
(iv) solid degree of revenue diversification by institution and
study fields.

Conversely, the rating is constrained by GUS's: (i) exposure to the
highly competitive and fragmented higher education market with
requirements to comply with rigorous regulatory standards; (ii)
relatively high Moody's-adjusted debt/EBITDA of 5.7x for the 12
months ended 28 February 2019, pro-forma for the transaction; (iii)
risks inherent to the recruitment services division, including its
working capital outflows and limited visibility on EBITDA and cash
flow contribution; (iv) debt funded M&A strategy.

RATING OUTLOOK

The positive outlook reflects Moody's expectation that GUS will
continue to improve its credit metrics in the next 12 months,
driven by continued revenue growth on an organic basis, and sound
positive free cash flow generation, allowing for some de-leveraging
trajectory. The positive outlook also reflects Moody's expectation
that each GUS brand will maintain its current regulatory approval
status, including the University title and degree awarding powers.

FACTORS THAT COULD LEAD TO AN UPGRADE

The rating could be upgraded if Moody's-adjusted Debt/EBITDA
remains around or below 5.5x, and free cash flow to debt improves
towards 5.0%, whilst maintaining an adequate liquidity profile.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Conversely, the ratings could be downgraded if earnings were to
weaken such that Moody's-adjusted Debt/EBITDA increases above 7x,
or if free cash flow to debt reduces towards zero, or liquidity
weakens. Any material negative impact from a change in any of the
company brands' regulatory approval status, degree awarding powers
or University title could also pressure the ratings.

LIQUIDITY PROFILE

Moody's continues to view GUS's liquidity as good. As of 28
February 2019 pro forma for the transaction, the company had GBP229
million of cash on balance sheet and access to a senior secured
committed GBP120 million RCF due 2023. Some cash balances (c.22% of
total) will be held at local operations in India and thus not
readily available to support general liquidity. There is a net
senior leverage maintenance covenant, under which Moody's expect
the company to retain sufficient headroom.

STRUCTURAL CONSIDERATIONS

The B3 ratings on the GBP787 million equivalent, senior secured
term loans and the RCF are aligned with the CFR as they rank pari
passu and represent the major debt instruments in the capital
structure. The instruments are guaranteed by subsidiaries
representing at least 80% of consolidated EBITDA and security
includes debentures for UK subsidiaries.

PRINCIPAL METHODOLOGY

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

CORPORATE PROFILE

GUS is a private higher education provider offering accredited
academic under- and postgraduate degrees, vocational and
professional qualifications and language courses at its
institutions but also through its online platform . GUS is
headquartered in the Netherlands but the UK is its main country of
operation, along with Ireland, Germany, Canada, Singapore, Israel
and India. The company also provides marketing, recruitment,
retention and online services to third party higher education
institutions. Founded in 2003 the company is controlled by its
founder Aaron Etingen. GUS generated around GBP433 million of
revenue and GBP144 million of adjusted EBITDA in the 12 months
ended 28 February 2019, including the Indian transaction and the
pending R3 acquisition in the US.

LIST OF AFFECTED RATINGS

Assignments:

Issuer: Markermeer Finance B.V.

  -- BACKED Senior Secured Bank Credit Facility, Assigned B3

Affirmations:

Issuer: Global University Systems Holding B.V.

  -- Probability of Default Rating, Affirmed B3-PD

  -- Corporate Family Rating, Affirmed B3

Issuer: Markermeer Finance B.V.

  -- BACKED Senior Secured Bank Credit Facility, Affirmed B3

Outlook Actions:

Issuer: Global University Systems Holding B.V.

  -- Outlook, Remains Positive

Issuer: Markermeer Finance B.V.

  -- Outlook, Remains Positive




===========
N O R W A Y
===========

NORWEGIAN AIR: Egan-Jones Lowers Senior Unsecured Ratings to B
--------------------------------------------------------------
Egan-Jones Ratings Company, on May 16, 2019, downgraded the foreign
currency and local currency senior unsecured ratings on debt issued
by Norwegian Air Shuttle ASA to B from B+. EJR also downgraded the
rating on commercial paper issued by the Company to C from A3.

Norwegian Air Shuttle ASA, trading as Norwegian, is a Norwegian
low-cost airline and Norway's largest airline.




===========
R U S S I A
===========

IPOTEKA BANK: S&P Affirms 'B+/B' ICRs, Outlook Still Stable
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B+/B' long- and short-term issuer
credit ratings on Uzbekistan-based Ipoteka Bank. The outlook
remains stable.

S&P said, "The affirmation reflects our view that over the next
12-18 months Ipoteka Bank will maintain its solid market position
and good asset quality, and will continue playing an important role
for Uzbekistan's economy by providing financing to a number of
government-related entities (GREs) and by implementing
government-led projects in the construction and mortgage sectors.
We also think that Ipoteka Bank may gradually improve some
characteristics of its risk profile by increasing diversity and
reducing dollarization of its loan portfolio, and will continue to
benefit from ongoing government support in the form of funding and
state guarantees."

In 2018, Ipoteka Bank increased its loan portfolio by 64% by
financing a government housing program and expanding its business
with small and midsize enterprises (SME). Despite rapid asset
growth, the bank maintains relatively good asset quality
indicators, with a cost of risk of close to 0.7% and Stage 3 loans
making up only about 1.7% of total loans. The bank also made
progress in reducing single-name concentrations in its loan book,
with top-20 loans representing about 55% of total loans at year-end
2018 versus 65% a year earlier. Meanwhile, loans denominated in
foreign currency reduced to 39%, which is significantly below the
system average of 57%.

S&P said, "We expect that Ipoteka Bank will continue gradually
improving the granularity of its loan book in the next one to two
years, as the bank expands its mortgage business and SME lending.
In particular, we expect that the share of mortgage loans will
increase to 20%-25% of its loan book in the next two years, while
the share of top-20 loans reduce to 40%-45%, which is better than
the system average, but remains high in an international context.
We also expect that lending growth will likely slow down close to
the system average (35%-40%) on the back of a lower share of
directed lending. That said, we note that over the past five years,
Ipoteka Bank demonstrated superior credit loss experience and
better asset quality than other large state-owned banks. We,
therefore, believe that further improvement in risk profile
characteristics and maintaining good asset quality may support the
bank's credit profile in the medium term.

"In the first quarter of 2019, the bank received $50 million of
capital support from the Uzbek Fund for Reconstruction and
Development (UFRD) to finance development of the country's fishery
sector. Although the capital support boosted the bank's
capitalization, we expect that the bank's capital position will
remain neutral to its ratings. This reflects our forecast
risk-adjusted capital (RAC) ratio of about 5.2%-5.4% in the next
12-18 months. We expect the bank's earnings capacity will likely
improve, with the return on average equity increasing to 20%-25% in
the next two years from 13.0% for 2018. This reflects the bank's
improving net interest margin and operating efficiency, and
contained credit losses. However, we also expect that the bank will
pay dividends of about Uzbekistani sum (UZS) 100 billion-150
billion ($12 million-$20 million) annually in 2019-2020, and that
there will be no new capital injections by the government.

"We expect the bank's funding profile will remain stable, with a
predominant share of funds provided by various government
structures as well as state and public organizations. As of
year-end 2018, funds from UFRD, Uzbek Ministry of Finance, and
other state organizations represented another 46% of the bank's
liabilities. In our view, this highlights the bank's involvement in
various government-led projects and its dependence on ongoing
funding from the government. We think that the bank's liquidity
management will remain prudent, with sufficient liquidity sources
to meet payments. As of April 1, 2019, cash balances, short-term
placements with the Uzbek central bank, and government securities
covered about 6.0% of liabilities, which is a sufficient liquidity
buffer taking into account the large share of project-related funds
in the bank's liabilities.

"The stable outlook on Ipoteka Bank reflects our view that the
bank's close ties with the government, along with its involvement
in a number of state-sponsored programs, and capital provided by
the government to date, would support the bank's credit profile at
the current level without material changes in the next 12-18
months.

"We could revise the outlook to positive in the next 12-18 months
if Ipoteka Bank moderated credit growth to no higher than the
system average, further reduced the single-name concentrations in
its loan portfolio, and continued to demonstrate superior credit
losses and better asset quality than peers. Prudent capital and
liquidity management is also necessary for us to consider a
positive outlook.

"We could revise the outlook to negative or lower our ratings if
the bank expands significantly more than we currently expect, with
growth not supported by additional capital from the government,
leading the RAC ratio to fall below 3.0% or regulatory capital
adequacy ratios to drop below the minimum regulatory requirements.
Similarly, we could consider a negative rating action if the bank's
high asset growth puts pressure on its risk profile and liquidity
position."


ROSCOMSNABBANK PJSC: Bankruptcy Hearing Scheduled for June 3
------------------------------------------------------------
The provisional administration to manage ROSCOMSNABBANK (PJSC)
(hereinafter, the Bank) appointed by virtue of Bank of Russia Order
No. OD-475, dated March 7, 2019, following the banking license
revocation, in the course of the inspection of the Bank established
that the Bank's officials conducted operations to divert funds
through lending to borrowers incapable of meeting their
obligations.

The provisional administration estimates the value of the Bank's
assets to equal RUR4.4 billion, whereas its liabilities to
creditors stand at RUR23.1 billion.

On March 27, 2019, the Bank of Russia applied to the Court of
Arbitration of the Republic of Bashkortostan to declare the Bank
insolvent (bankrupt).  The hearing is scheduled for June 3, 2019.

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




=========
S P A I N
=========

TENDAM BRANDS: S&P Hikes ICR to B+' on Solid Cash Flow Generation
-----------------------------------------------------------------
S&P Global Ratings revised its ratings on Spain-based apparel
retailer Tendam Brands S.A.U. (Tendam) and its outstanding senior
secured notes to 'B+' from 'B' and raised its issue rating on the
super senior revolving credit facility (RCF) from 'BB-' to 'BB'.

S&P said, "The upgrade reflects our expectation that Tendam will
report lower leverage for the financial year ending February 2019
(FY2019) thanks to its recent open-market debt repurchases and
solid FOCF. The upgrade also assumes that Tendam will continue its
financial policy focus on further deleveraging in preparation for a
potential IPO.

"For the year ended February 2019, we expect Tendam's reported
EBITDA to remain fairly stable compared to the previous year. We
expect the second half of the year to offset the negative
like-for-like growth in the first half, which stemmed from
unfavorable market conditions. We also think Tendam will improve
its market share in most of its segments and post a strong growth
in online sales, in line with third-quarter results. Despite flat
revenues and EBITDA growth, we expect Tendam to increase its FOCF
thanks to reduced interest expenses, improved working capital
management, and lower capital expenditure (capex). We expect
operating lease expenses to be broadly in line with the FY2018
figure, leading to EBITDAR cover of 1.7x."

S&P's assessment of Tendam's business continue to be supported by
its position as one of the largest Spain-based apparel retailers.
It has four major well-recognized brands that each target a
different customer demographic. Tendam also has a broad geographic
presence with operations in 85 countries supporting around 55% of
its EBITDA outside of Spain. By contrast, other rated apparel
peers--such as GAP, Next, and Takko Fashion--generate most of their
revenues in their home countries. Tendam's brand and geographic
diversity gives it access to a broader customer base and somewhat
protects it against the risk of significant changes in
tastes/affluence within any one demographic or unfavorable
macroeconomic movements in any region.

Since 2016, Tendam has successfully executed a turnaround program
under which it has implemented a new merchandising strategy; closed
unprofitable stores; set up a stock clearance channel; and
repositioned Cortefiel and Pedro del Hierro to refocus on its
traditional core customer segment. Sales have grown by about 3%,
including positive like-for-like performance across all four brands
and the EBITDA margin rising to 14% in FY2019 from 7% in FY2017,
suggesting that these measures have translated into sustainably
higher profitability.

Tendam currently has a higher EBITDA margin than most diversified
retailers, such as El Corte Ingles and Marks & Spencer, and broadly
in line with other apparel retailers such as Next, PVH (Tommy
Hilfiger), L Brands and Takko Fashion. Although Tendam's reported
profitability margins have been very volatile in the past,
primarily due to a change in merchandising strategy and
restructuring costs, the company has managed to stabilize this over
the last two years.

Tendam's operations are constrained by the fiercely competitive
apparel market, the company's limited overall scale, and its
relatively weak e-commerce penetration compared to global peers.
S&P anticipates that competition will remain fierce, exacerbated by
pressure from competitors expanding--in particular value
retailers--and the continued shift in consumer spending online.
This, and Tendam's modest scale compared with larger apparel
retailers such as Next, Gap, or Inditex, coupled with its exposure
to demand volatility stemming from the largely discretionary nature
of clothing, makes the group susceptible to changes in customer
tastes and purchasing power.

Tendam's e-commerce operations increased by almost 30% during the
first nine months of FY2019, but they still contribute only about
6% of total sales, partly due to low e-commerce penetration in the
Spanish retail market. S&P views these operations as weaker than
those of some other specialty retailers, such as GAP, Inditex, or
Uniqlo, which generate 10%-20% of their sales online. This
comparative lack of channel diversity somewhat compounds the risks
posed to the group by the seasonality of the business model and
high degree of operating leverage.

S&P's assessment of Tendam's financial position mainly reflects the
company's aggressive financial policy and high operating leases,
resulting in sustainably high leverage, albeit lower than other
financial sponsor-owned retailers. The group's moderate financial
debt and relatively low cash interest expense enhance positive cash
flow generation, which has allowed the group to pay down some of
its financial debt. However, its significant operating lease
commitments, at about EUR800 million, comprise over half of S&P
Global Ratings-adjusted debt and constrain the credit metrics. S&P
expects its adjusted leverage at about 4.0x in FY2019 and FY2020
while its EBITDAR cover ratio, calculated as EBITDA plus rents to
cash interest plus rents, will likely stay at 1.7x. The latter
metric is weaker than Tendam's similarly rated peers such as Peer
Holding at 2.3x-2.5x.

S&P said, "The stable outlook on Tendam Brands S.A.U. reflects our
expectation of revenue growth of around 3%, with broadly stable
EBITDA margin, and solid reported FOCF generation over the next 12
months. Growth is expected to come from the positive industry
outlook for Tendam's main markets for 2019, new store openings in
existing markets, and higher e-commerce sales as online penetration
steps up in Spain. We expect adjusted leverage to remain about
4.0x, EBITDAR coverage around 1.7x, and reported FOCF EUR60
million-EUR80 million, while the financial sponsors retain their
commitment to a financial policy that supports those credit
metrics.

"We could take a negative rating action if Tendam's operating
performance deteriorated resulting in an adjusted leverage rising
toward 4.5x, EBITDAR interest cover falling to 1.6x, or reported
FOCF becoming materially weaker than our base case forecast. This
could occur if the company encountered setbacks in the execution of
its strategy, failing to at least preserve its market share or if
market conditions deteriorated leading to considerably lower
earnings, profitability, or cash generation than we anticipate."

Evidence of a more-aggressive financial policy focused on
debt-financed shareholder remuneration or acquisitions could also
lead to a sustained weakening of Tendam's credit metrics and
therefore a negative rating action.

S&P said, "We see rating upside as unlikely over the next 12
months, given Tendam's limited scale and high operating leases
limiting substantial deleveraging. However, we could consider an
upgrade if Tendam increased its scale of operations by growing its
revenues and profitability margin substantially quicker than we
currently anticipate, while generating strong FOCF." This, among
other factors, should improve EBITDAR cover to above 2.2x and
further decline in leverage. This would need to be accompanied by a
clear commitment from the owners to maintain this financial policy
and adequate liquidity.




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

ARCADIA GROUP: Pensions Committee Chair Criticizes CVA Plan
-----------------------------------------------------------
Alice Hancock at The Financial Times reports that the chair of the
House of Commons pensions committee has added his voice to the
backlash against Sir Philip Green's planned restructuring of his
ailing retail empire.

According to the FT, in a letter to Sir Philip, Frank Field MP
called on the retailer to increase the contribution from his
personal fortune to reduce the pension deficit at Arcadia Group in
order to avoid the "similarly grim situation [that] arose for BHS
pension scheme members".

Arcadia, the retail group that Sir Philip bought in 2002 and that
includes UK high-street brands including Topshop and Dorothy
Perkins, revealed plans to close 23 of its 566 stores in the UK and
Ireland on May 22 and cut rents at a further 194 as it struggles to
compete with changing customer shopping habits and declining high
street footfall, the FT relates.

As a further cost-saving measure, Arcadia has also proposed cutting
the annual contributions it makes to clear the deficit on its
defined benefit pension scheme from GBP50 million to GBP25 million
for a period of three years, the FT states.

Mr. Field wrote that the deficit on the Arcadia pension fund
remained "worryingly high" and that "if the benefits of scheme
members reach a stage where they are at serious risk the Pensions
Regulator will have no choice but to take action", the FT
discloses.

The company voluntary arrangement for Arcadia, which includes
details of the cuts to the pension contributions, has also received
fierce opposition from the Pension Regulator, which is pushing for
Sir Philip and his wife Tina, who is the legal owner of the
business, to pay more than the GBP100 million they have so far
pledged, according to the FT.

As a creditor of Arcadia group, the Pension Protection Fund, on
behalf of the trustees of the pension scheme, has the ability to
reject the proposed company voluntary arrangement, the FT says.

Arcadia Group Ltd. is the UK's largest privately owned fashion
retailer with seven major high street brands: Burton, Dorothy
Perkins, Evans, Miss Selfridge, Topshop, Topman and Wallis, along
with its out-of-town fashion destination Outfit.  


BRITISH STEEL: Outcome of Sale Process Remains Uncertain
--------------------------------------------------------
Jim Pickard at The Financial Times reports that attempts to find a
buyer for British Steel could be abandoned by midsummer despite
reassurances to trade unions that the government would prop up the
business indefinitely, according to Whitehall sources.

More than 4,000 jobs are hanging in the balance after the company
entered into insolvency on Wednesday, May 22, three years after
private equity group Greybull Capital bought it from India's Tata
Steel for GBP1, the FT states.

According to the FT, the Official Receiver is now working alongside
EY to seek a new owner for the group.  So far there have been no
formal approaches, according to people close to the situation,
although a wide range of potential buyers have expressed an
interest, the FT notes.

Unite the Union said that Greg Clark, business secretary, had
promised the government would underwrite British Steel's
receivership, paying suppliers and employee wages until a buyer was
found, the FT relates.

The Official Receiver is appointed by the court and is independent
by law, meaning that ministers cannot issue directions to him or
her, the FT states.

One ally of Mr. Clark, as cited by the FT, said the Official
Receiver could keep the process going for as long as they believed
there might be a sale.

But three other government figures have told the FT that it would
not be unusual for the Official Receiver to wrap up the process
within a few months.

Mr. Clark told the House of Commons on May 22 that potential buyers
had come forward within hours of the administration, the FT
recounts.

According to the FT, possible bidders could include the UK-based
private equity fund Endless and Liberty House, the industrial
conglomerate run by Sanjeev Gupta, which is monitoring
developments. India's JSW may also be interested, the FT relays,
citing one person familiar with the situation.

The business secretary has proposed that the government could act
as a cornerstone investor in a private consortium to buy the plant
as a going concern, the FT discloses.

British Steel has about 5,000 employees.  There are 3,000 at
Scunthorpe, with another 800 on Teesside and in north-eastern
England.  The rest are in France, the Netherlands and various sales
offices round the world.


CAMELOT UK: Moody's Hikes CFR to B2 Following Recent Deleveraging
-----------------------------------------------------------------
Moody's Investors Service upgraded Camelot UK Holdco Limited's
(d/b/a "Clarivate Analytics" "Clarivate" or the "company")
Corporate Family Rating (CFR) to B2 from B3, Probability of Default
Rating (PDR) to B2-PD from B3-PD, senior secured credit facilities
to B1 from B2 and senior unsecured notes to Caa1 from Caa2. The
outlook is unchanged at stable.

Upgrades:

Issuer: Camelot UK Holdco Limited (d/b/a "Clarivate Analytics")

  Corporate Family Rating, Upgraded to B2 from B3

  Probability of Default Rating, Upgraded to B2-PD from B3-PD

Issuers: Camelot Finance SA (Co-Borrowers: Camelot US Acquisition
LLC, Camelot US Acquisition 1 Co. and Camelot US Acquisition 2
Co.)

  $850.2 Million outstanding (previously $1,480.2 Million)
  Senior Secured Term Loan B due 2023, Upgraded to B1 (LGD3) from
  B2 (LGD3)

Issuers: Camelot US Acquisition LLC (Co-Borrower: Camelot UK Bidco
Limited)

  $175 Million Gtd Senior Secured Revolving Credit Facility due
2021,
  Upgraded to B1 (LGD3) from B2 (LGD3)

Issuerr: Camelot Finance SA

  $500 Million 7.875% Gtd Senior Unsecured Global Notes due 2024,
Upgraded
  to Caa1 (LGD5) from Caa2 (LGD5)

RATINGS RATIONALE

The upgrade of Clarivate's CFR to B2 reflects its reduced financial
leverage and Moody's expectation for continued deleveraging over
the rating horizon as a result of improved earnings quality and
positive free cash flow generation, which Moody's anticipates will
be used for further debt reduction.

Following Clarivate's recent term loan repayment, Moody's estimates
financial leverage on a pro forma basis decreased to 5.2x total
debt to EBITDA from 7.4x at LTM 31 March 2019 (including Moody's
standard and non-standard adjustments for one-time items) and will
decline to 4.9x by year end 2019. The substantial decline in
leverage was facilitated by Clarivate's receipt of cash
consideration following its merger with Churchill Capital Corp.
("Churchill"), a special purpose acquisition company (SPAC) that
raised $690 million in cash via an IPO in September 2018. After the
merger closed on 13 May 2019, Clarivate used Churchill's capital
raise to repay $650 million of gross debt (consisting of $630
million of the $1.48 billion outstanding term loan B and $20
million of outstanding revolver borrowings).

Moody's expects earnings and cash flow quality to improve given
that separation-related cash costs will meaningfully decline this
year and Clarivate will start benefiting from run-rate cost
savings. Moody's EBITDA calculation uses non-GAAP EBITDA comprised
of sizable addback adjustments totaling around $115 million that
Moody's recognizes (or nearly 40% of Moody's adjusted EBITDA).
These EBITDA adjustments are primarily associated with one-time
cash costs for the Transition Services Agreement (TSA) and
carve-out expenses that have been incurred to separate from
Clarivate's former parent, Thomson Reuters Corporation, and operate
as a standalone entity. However, these cash costs will diminish
considerably this year following the carve-out completion in Q1
2019, six months ahead of schedule. Clarivate estimates contractual
TSA expenses will fall to roughly $10 million in FY19 and cease
entirely in 2020, while remaining modest carve-out costs were fully
expensed in the March 2019 quarter.

The rating upgrade also reflects Moody's expectation for positive
free cash flow generation this year following two consecutive years
of negative free cash flow. This is driven by interest expense
savings from the reduced debt quantum and substantial reduction in
cash costs, despite slightly higher capital expenditures.

The B2 rating is supported by Clarivate's leading global market
positions across its core scientific/academic research and
intellectual property businesses. It also considers the high
proportion of subscription-based recurring revenue (>80% of
revenue) and high switching costs derived from Clarivate's
proprietary data extraction methodology, which facilitates
development of value-added databases that are considered the
"gold-standard" among its clients. Given that its mission-critical
subscription products are embedded in customers' core operations
and research workflows, customer renewals and retention rates have
remained above 90%. Clarivate also benefits from good
diversification across end markets, geography and customers and
relatively high EBITDA margins in the 30-35% range (Moody's
adjusted, excluding one-time cash items). With meaningful reduction
of one-time cash costs, the company's low net working capital and
"asset-lite" operating model should facilitate good conversion of
EBITDA to positive free cash flow.

Factors that constrain the rating include Clarivate's low
single-digit percentage organic growth rate, influenced by
transactional revenue declines partially offset by subscription
revenue growth. The rating also reflects competitive challenges
from industry players that are amassing scale as well as new
technology entrants, and regulatory changes that could restrict
Clarivate's access to data. Low single-digit percentage revenue
growth at North American universities coupled with consolidation
across the pharmaceutical industry could lead to customer budget
constraints in the future. The B2 rating is also influenced by
event risks related to private equity ownership, such as sizable
debt-financed cash distributions to shareholders or
growth-enhancing acquisitions, which could pose integration
challenges and lead to volatile credit metrics.

Over the near-term, Moody's expects Clarivate will pursue small
tuck-in acquisitions. To facilitate debt reduction from free cash
flow generation, Moody's anticipates the company will avoid
dividend recapitalizations and shareholder distributions. Moody's
projects Clarivate will maintain good liquidity.

Rating Outlook

The stable rating outlook reflects Moody's view that Clarivate will
capitalize on good industry growth prospects in the range of
3-5%/annum, realize cost savings and implement actions to improve
its product offerings, go-to-market strategy and product
time-to-market with more focused investment to move up the value
chain and expand market share from new client wins and further
penetration into existing accounts. Barring another leveraging
event, this should allow Clarivate to sustain leverage in the
4.5x-5.5x range (Moody's adjusted), generate solid free cash flow
and maintain good liquidity.

Factors That Could Lead to an Upgrade

-- Organic revenue growth in the mid-single digit range.

-- EBITDA expansion that leads to consistent and growing free
    cash flow generation of at least 6% of total debt (Moody's
    adjusted).

-- Sustained reduction in total debt to EBITDA leverage below
    4.5x (Moody's adjusted).

-- Exhibit prudent financial policies and good liquidity.

Factors That Could Lead to a Downgrade

-- Total debt to EBITDA leverage sustained above 6.5x (Moody's
adjusted).

-- Free cash flow were to materially weaken below 2% of total
   debt (Moody's adjusted).

-- Market share erosion, liquidity deterioration, Clarivate
experiences
    sustained client losses or the company engages in debt-financed

    acquisitions or shareholder distributions resulting in
leverage
    sustained above Moody's downgrade threshold.

With principal offices in Philadelphia, PA, Clarivate Analytics
provides comprehensive intellectual property and scientific
information, decision support tools and services that enable
academia, corporations, governments and the legal community to
discover, protect and commercialize content, ideas and brands that
are important to them. The company's portfolio includes Web of
Science, Derwent Innovation, Cortellis, CompuMark Watch and
MarkMonitor Domain Management. Formerly the Intellectual Property &
Science unit of Thomson Reuters Corporation, Clarivate was a
carve-out purchased by Onex and Baring Asia for approximately $3.55
billion in October 2016. Following the May 2019 merger with
Churchill Capital Corp., Clarivate operates as a publicly traded
company and its management and private equity sponsors retained
100% of their investment and converted it to 74% of the combined
entity's outstanding shares with the remaining 26% held by
Churchill's public shareholders and founders. GAAP revenue for the
twelve months ended 31 March 2019 was $965.5 million (includes the
deferred revenue adjustment).


COLOUR BIDCO: Moody's Lowers CFR to Caa1, Outlook Stable
--------------------------------------------------------
Moody's Investors Service has downgraded all the ratings of UK
payroll and HR software and services provider Colour Bidco Limited
(Zellis, formerly known as NGA UK) to Caa1 from B3, including the
corporate family rating and the instrument ratings on the senior
secured first lien facilities. Moody's has also downgraded the
probability of default rating to Caa1-PD from B3-PD. The outlook is
stable.

The downgrades were driven by:

  Significantly negative free cash flow generation in the
  last twelve months to January 2019

  A weaker than expected liquidity position as of the end
  of January 2019

  A further increase in Moody's adjusted leverage to 8.0x
  as of January 2019

RATINGS RATIONALE

"The downgrade to Caa1 primarily reflects Zellis' negative free
cash flow so far in the fiscal year 2019 (ending 30 April 2019) and
its weakened liquidity position as a result, compounded by an
almost fully drawn GBP40 million revolving credit facility (RCF)"
says Frederic Duranson, a Moody's Assistant Vice President and lead
analyst for Zellis. "We expect that Zellis' liquidity position is
unlikely to improve in fiscal 2020 because of further exceptional
costs and sizeable interest payments due in fiscal Q1 2020" Mr
Duranson adds.

For the last twelve months (LTM) ended January 2019, Moody's
estimates that Zellis generated approximately (GBP20) million free
cash flow (FCF) owing to significant year-to-date cash exceptional
items of (GBP19) million related to transformation activities
following the LBO closed in early 2018 and the separation from NGA
HR. FCF so far this year has also been constrained by an adverse
change in working capital items and annual interest payments are
also high, around GBP20 million.

For the full fiscal year 2019, the rating agency projects
significantly negative FCF and no improvement versus the LTM Q3,
because of further one-off cash items in fiscal Q4 in relation to
the group's new ERP implementation and ongoing investments in
automation for example. This represents a material underperformance
versus Moody's most recent forecast of breakeven FCF in fiscal
2019.

For fiscal 2020, Moody's forecasts that revenue and EBITDA will
show modest growth but the anticipated decline in cash exceptional
items will likely not result in positive FCF, contrary to previous
projections. As such, the rating agency expects that the liquidity
position of the group will come under further stress in fiscal
2020, particularly in Q1 and Q3 when interest payments are due.
Without liquidity sources other than cash and RCF, there is a risk
that Zellis may not be able to honour its interest payment
obligations in fiscal Q3 2020 in particular.

Zellis' liquidity profile is weak. Liquidity sources have reduced
to GBP12 million at the end of January 2019 versus GBP19 million at
the end of July 2018 and included GBP7 million of cash on balance
sheet plus GBP5 million availability under the RCF, because of
GBP13 million additional drawings in fiscal Q3 to fund cash
outflows. In light of Moody's expectation for cash flow generation
in fiscal Q4 and into fiscal 2020, the liquidity position will
further deteriorate to well below GBP10 million in the short-term.
However, the rating agency anticipates that Zellis will remain in
compliance with its springing senior secured net leverage covenant,
whose test level of 9.05x still provides some headroom.

Following a (5%) decline in revenues and EBITDA in fiscal 2018,
trading in the year-to-date Q3 has stabilised with revenues and
management-adjusted EBITDA growing at +4% organically. Despite
improvements in new business sold, product revenue in Mid-Market, a
key driver of operating performance, has declined so far this year,
principally due to churn on legacy products. Other revenue lines
within Mid-Market, such as outsourcing, and the other divisions SMB
and Benefex are showing satisfactory growth however. At the end of
January 2019, Moody's adjusted debt/EBITDA stood at 8.0x and the
rating agency does not anticipate any decline by the end of fiscal
2019. This compares to previous projections of around 7.3x and
reflects the additional RCF drawings since fiscal Q1. Any reduction
in Moody's adjusted leverage could be limited in the next 12 months
because of the potential utilisation of debt baskets within the
credit agreement to alleviate liquidity pressures or if exceptional
items became more recurring in nature and were expensed in Moody's
adjusted EBITDA calculation.

STRUCTURAL CONSIDERATIONS

The Caa1-PD PDR is in line with the CFR because Moody's assumes a
50% family recovery rate. It reflects the two-lien debt structure
as well as the cov-lite debt package.

RATING OUTLOOK

The stable outlook on Zellis' ratings balances the weak liquidity
position of the group, which will come under further stress because
of continued negative FCF generation, and the improving fundamental
performance of the business, particularly revenues.

WHAT COULD CHANGE THE RATING UP/DOWN

Upward rating pressure could materialise should Zellis (1) put in
place additional sources of liquidity, in particular if these were
not accretive to debt and interest, (2) return to positive FCF
generation (after interest and exceptional items) on a trailing 12
months' basis, and (3) reduce Moody's adjusted gross debt/EBITDA
(after the capitalisation of software development costs)
sustainably towards 7.0x.

Conversely, Zellis' ratings could be downgraded if (1) no actions
were taken to address the lack of liquidity sources, (2) the pace
of cash burn did not reduce in the coming quarters, including as a
result of EBITDA decline or because of exceptional items, and (3)
chances of a default increased.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Software
Industry published in August 2018.

Zellis (fka NGA UK), based in England, provides payroll and HR
software, as well as outsourcing services underpinned by its
proprietary software, to private and public sector clients in the
UK and Ireland. In the twelve months ended 31 January 2019, the
group had GBP148 million of revenue and GBP47.6 million of pro
forma adjusted EBITDA. Zellis is owned by financial investor Bain
Capital.


DLG ACQUISITIONS: S&P Affirms 'B' Long-Term ICR, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings affirmed its long-term issuer credit rating on
DLG Acquisitions at 'B' and its existing debt, and assigned its 'B'
issue and '3' recovery ratings to the proposed EUR400 million
first-lien senior secured term loan and GBP50 million revolving
credit facility.

S&P said, "We affirmed the ratings because we expect the proposed
refinancing of All3Media's capital structure will allow the group
to extend its debt maturities. The group plans to issue a EUR400
million first-lien senior secured term loan due in 2026 and a GBP75
million second-lien term loan due in 2027. It will use the proceeds
to redeem the existing GBP290 million senior secured first-lien
term loan and EUR100 million senior secured second-lien term loan
due in 2021. The group also plans to arrange a new GBP50 million
RCF due in 2025; this will increase its flexibility to finance its
working capital needs. All3Media's capital structure will remain
highly leveraged, and we estimate adjusted debt to EBITDA will
exceed 6.0x in 2019-2020.

"In 2018, the group performed in line with our expectations and
delivered strong 12% revenue and EBITDA growth on the back of
global demand for content and contribution from acquisitions that
it completed in 2017-2018.

"We expect that in 2019-2020, strong demand for scripted and
unscripted content from video-on-demand platforms such as Amazon
and Netflix will continue to support All3Media's organic revenue
and EBITDA growth. At the same time, demand from traditional
free-to-air broadcasters, especially in the U.K., could soften if
the macroeconomic and political uncertainty continues, leading to
lower advertising revenue. We also expect the group to make further
bolt-on acquisitions, primarily financed by the group's
shareholders. This should allow All3Media to gradually reduce debt
to EBITDA to about 6.6x in 2019, falling toward 6.0x in 2020." At
the same time, free operating cash flow (FOCF) generation will
remain weak due to investment in new scripted content, creative
talent, and expanding digital and distribution business.

The rating continues to reflect All3Media's operations in the
highly competitive and fragmented television program production and
distribution market. The nature of the industry is volatile, and
the group's operating performance and credit metrics are subject to
the unpredictable tastes of TV audiences and potential delays in
timing of show delivery and financing. The group's modest size
compared with larger vertically integrated peers, such as ITV PLC
(owner of ITV studios) and RTL Group S.A. (owner of Freemantle),
and independent studios such as MediArena Acquisitions B.V.
(Endemol) also constrains the ratings.

Positively, All3Media benefits from leading positions in its main
markets in the U.K. and Germany, and is expanding its presence in
the buoyant U.S. market. It has a balanced mix of scripted (about
30%) and nonscripted content across numerous genres and its Top 10
shows accounted for about 30% of total revenue in 2018. Over the
past years, the customer mix has been shifting from traditional
free-to-air broadcasters toward pay-TV and video-on-demand
platforms. Although it helps to grow and diversify the customer
base, some deals have longer payment terms where cash is received
later than revenues are recognized, which leads to higher working
capital outflows.

The stable outlook indicates that, over the next 12 months,
continued strong international demand for All3Media's content will
support adjusted EBITDA increasing toward GBP80 million. S&P sai,
"At the same time, we forecast negative FOCF due to working capital
outflows and investment in new content production. As a result, we
expect only a gradual reduction in adjusted leverage, to about
6.5x. The outlook also assumes that the group will maintain its
adjusted EBITDA to interest coverage at about 2.0x and liquidity
will remain adequate."

S&P said, "We could lower the rating if we perceived a decline in
the likelihood of shareholder support, or if All3Media was unable
to continue delivering successful shows and retain creative talent
and market share in the face of increasing competition. This could
lead us to view the capital structure as unsustainable over the
long term due to weaker EBITDA, significantly negative FOCF for a
sustained period, and higher adjusted debt. Weakening liquidity,
including tighter covenant headroom due to higher leverage, could
also put pressure on the ratings.

"In our view, an upgrade is currently unlikely. Over the longer
term, a positive rating action would depend on the group's ability
and willingness to reduce leverage and maintain debt to EBITDA of
less than 5x and EBITDA interest coverage ratio at least 2x on a
sustainable basis. This could happen if the company generated
sufficient EBITDA and meaningful FOCF that offered it the
flexibility to self-finance strategic growth initiatives and
investment in working capital. An upgrade would also require
continued shareholder support and that the group's liquidity remain
at least adequate."


FILMORE AND UNION: Cash Flow Problems Prompt Collapse
-----------------------------------------------------
BBC News reports that Filmore and Union, the firm behind a chain of
cafes, has collapsed blaming severe cash flow problems and poor
trading conditions.

According to BBC, the chain operated 17 sites in Yorkshire and the
North East and employed around 230 people.

Administrators were appointed on May 24 and have arranged the
partial sale of the production kitchen and 10 stores, BBC relates.

That plan aims to safeguard 150 jobs, but the remaining sites have
ceased trading with the loss of 80 posts, BBC states.

According to BBC, Phil Pierce, from the administrators FRP Advisory
LLP, said the company's outlets included stand-alone cafes,
in-store and train station cafes, as well as the head office and
production kitchen in Wetherby, West Yorkshire.

He said he was pleased to have disposed of some sites to
Coffeesmiths Collective Ltd, in a deal "which crucially protects a
large number of jobs", BBC notes.


LENDY LTD: Financial Woes Prompt Administration
-----------------------------------------------
Business Sale reports that Lendy Limited, a peer-to-peer (P2P)
banking firm has collapsed into administration following a steep
decline in buyer demand and as a result of severe cash flow
difficulties.

The company, a P2P lending marketplace, was forced to call in
professional insolvency specialists RSM Restructuring Advisory LLP
to handle the administration, with partners Damian Webb, Phillip
Rodney Sykes -- phillip.sykes@rsmuk.com -- and Mark John Wilson
appointed as joint administrators, Business Sale relates.

The administrators, however, were also appointed for two further
unregulated firms, Lendy Provision Reserve Limited, and Saving
Stream Security Holding Limited, Business Sale notes.

Lendy Limited was regulated by the Financial Conduct Authority
(FCA), with an ongoing investigation by the British financial
watchdog leading to the company's collapse, Business Sale
discloses.  Lendy was put on the FCA's watch list in January when
its troubles appeared to be mounting, Business Sale recounts.

Prior to administration, it became clear that Lendy had acquired an
unsustainable level of defaults on its development loans and a
subsequent unsatisfactory level of recoveries, forcing the company
into administration, Business Sale states.

Its outstanding loan portfolio amounts to roughly GBP150 million,
GBP90 million of which are in default, Business Sale relays.


MADISON PARK XIV: Fitch Assigns B-(EXP) Rating on Class F Debt
--------------------------------------------------------------
Fitch Ratings has assigned Madison Park Euro Funding XIV DAC
expected ratings.

The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.

Madison Park Euro Funding XIV DAC is a securitization of mainly
senior secured loans (at least 90%) with a component of senior
unsecured, mezzanine and second-lien loans. A total expected note
issuance of EUR520.7 million will be used to fund a portfolio with
a target par of EUR515 million. The portfolio will be managed by
Credit Suisse Asset Management Limited. The CLO envisages a
4.5-year reinvestment period and an 8.5-year weighted average
life.

Madison Park Euro Funding XIV DAC

A-1 LT AAA(EXP)sf  Expected Rating  
A-2 LT AAA(EXP)sf  Expected Rating  
B-1 LT AA(EXP)sf  Expected Rating  
B-2 LT AA(EXP)sf  Expected Rating  
C-1 LT A(EXP)sf  Expected Rating  
C-2 LT A(EXP)sf  Expected Rating  
D LT BBB-(EXP)sf Expected Rating  
E LT BB-(EXP)sf Expected Rating  
F LT B-(EXP)sf  Expected Rating  

VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

'B' Portfolio Credit Quality

Fitch places the average credit quality of obligors in the 'B'
range. The Fitch-weighted average rating factor (WARF) of the
identified portfolio is 31.9, while the indicative covenanted
maximum Fitch WARF for assigning the expected ratings is 33.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured obligations.
Fitch views the recovery prospects for these assets as more
favorable than for second-lien, unsecured and mezzanine assets. The
Fitch-weighted average recovery rate (WARR) of the identified
portfolio is 62.52%, while the indicative covenanted minimum Fitch
WARR for assigning expected ratings is 61.5%.

Limited Interest Rate Exposure

Up to 12.5% of the portfolio can be invested in fixed-rate assets,
while fixed-rate liabilities represent 9.2% of the target par.
Fitch modelled both 0% and 12.5% fixed-rate buckets and found that
the rated notes can withstand the interest-rate mismatch associated
with each scenario.

Diversified Asset Portfolio

The covenanted maximum exposure to the top 10 obligors for
assigning the expected ratings is 20% of the portfolio balance. The
transaction also includes limits on maximum industry exposure based
on Fitch's industry definitions. The maximum exposure to the three
largest (Fitch-defined) industries in the portfolio is covenanted
at 40%. These covenants ensure that the asset portfolio will not be
exposed to excessive concentration.

Adverse Selection and Portfolio Management

The transaction features a 4.5-year reinvestment period and
includes reinvestment criteria similar to other European
transactions. Fitch's analysis is based on a stressed-case
portfolio with the aim of testing the robustness of the transaction
structure against its covenants and portfolio guidelines.

Cash Flow Analysis

Fitch used a customized proprietary cash flow model to replicate
the principal and interest waterfalls and the various structural
features of the transaction, and to assess their effectiveness,
including the structural protection provided by excess spread
diverted through the par value and interest coverage tests.

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to two notches for the rated notes.
A 25% reduction in recovery rates would lead to a downgrade of up
to four notches for the rated notes.


MADISON PARK XIV: Moody's Assigns (P)B2 Rating on Cl. F Notes
-------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by Madison Park
Euro Funding XIV DAC (the "Issuer"):

-- EUR300,865,000 Class A-1 Senior Secured Floating Rate Notes
    due 2032, Assigned (P)Aaa (sf)

-- EUR15,835,000 Class A-2 Senior Secured Fixed Rate Notes due
    2032, Assigned (P)Aaa (sf)

-- EUR35,190,000 Class B-1 Senior Secured Floating Rate Notes
    due 2032, Assigned (P)Aa2 (sf)

-- EUR15,010,000 Class B-2 Senior Secured Fixed Rate Notes due
    2032, Assigned (P)Aa2 (sf)

-- EUR18,060,000 Class C-1 Senior Secured Deferrable Floating
    Rate Notes due 2032, Assigned (P)A2 (sf)

-- EUR16,740,000 Class C-2 Senior Secured Deferrable Fixed
    Rate Notes due 2032, Assigned (P)A2 (sf)

-- EUR30,900,000 Class D Senior Secured Deferrable Floating
    Rate Notes due 2032, Assigned (P)Baa3 (sf)

-- EUR29,600,000 Class E Senior Secured Deferrable Floating
    Rate Notes due 2032, Assigned (P)Ba3 (sf)

-- EUR12,200,000 Class F Senior Secured Deferrable Floating
    Rate Notes due 2032, Assigned (P)B2 (sf)

Moody's issues provisional ratings in advance of the final sale of
financial instruments, but these ratings only represent Moody's
preliminary credit opinions. Upon a conclusive review of a
transaction and associated documentation, Moody's will endeavour to
assign definitive ratings. A definitive rating (if any) may differ
from a provisional rating.

RATINGS RATIONALE

The rationale for the rating is based on a consideration of the
risks associated with the CLO's portfolio and structure as
described in Moody's methodology.

The Issuer is a managed cash flow CLO. At least 90% of the
portfolio must consist of senior secured obligations and up to 10%
of the portfolio may consist of senior unsecured obligations,
second-lien loans, mezzanine obligations and high yield bonds. The
portfolio is expected to be 70% ramped as of the closing date and
to comprise of predominantly corporate loans to obligors domiciled
in Western Europe. The remainder of the portfolio will be acquired
during the 6-month ramp-up period in compliance with the portfolio
guidelines.

Credit Suisse Asset Management Limited ("CSAM") will manage the
CLO. It will direct the selection, acquisition and disposition of
collateral on behalf of the Issuer and may engage in trading
activity, including discretionary trading, during the transaction's
4.5-year reinvestment period. Thereafter, subject to certain
restrictions, purchases are permitted using principal proceeds from
unscheduled principal payments and proceeds from sales of credit
risk obligations or credit improved obligations.

In addition to the nine classes of notes rated by Moody's, the
Issuer will issue EUR46.3 million of Subordinated Notes which are
not rated.

The transaction incorporates interest and par coverage tests which,
if triggered, divert interest and principal proceeds to pay down
the notes in order of seniority.

Methodology underlying the rating action:

The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
March 2019.

Factors that would lead to an upgrade or downgrade of the ratings:

The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.

Moody's modeled the transaction using CDOEdge, a cash flow model
based on the Binomial Expansion Technique, as described in Section
2.3 of the "Moody's Global Approach to Rating Collateralized Loan
Obligations" rating methodology published in March 2019.

Moody's used the following base-case modeling assumptions:

- Par Amount: EUR 515,000,000
- Diversity Score: 48
- Weighted Average Rating Factor (WARF): 2850
- Weighted Average Spread (WAS): 3.65%
- Weighted Average Coupon (WAC): 4.75%
- Weighted Average Recovery Rate (WARR): 42.5%
- Weighted Average Life (WAL): 8.5 years

Moody's has addressed the potential exposure to obligors domiciled
in countries with local currency ceiling (LCC) of A1 or below. As
per the portfolio constraints and eligibility criteria, exposures
to countries with LCC of A1 to A3 cannot exceed 10% and obligors
cannot be domiciled in countries with LCC below A3.


MICRO FOCUS: S&P Alters Outlook to Stable & Affirms 'BB-' ICR
-------------------------------------------------------------
S&P Global Ratings revised the outlook on Micro Focus to stable
from negative. S&P is affirming its 'BB-' long-term issuer credit
rating on Micro Focus and 'BB-' issue rating on the senior secured
bank facilities, with a recovery rating of '3' (recovery
expectation: 60%).

The outlook revision primarily reflects that Micro Focus achieved
stronger than expected cash flow generation in pro forma fiscal
year 2018, and S&P's anticipation of a lower decline in sales in
fiscal 2019, coupled with the gradual integration of HPE Software.

Revenues declined by about 5% during fiscal 2018, compared with our
previous base case of 8%. This reflects pro forma revenue decline
of 7% excluding Suse. Micro Focus is now on track to meet
management's guidance of 4%-6% revenue decline in fiscal 2019,
despite the sale of quickly expanding subsidiary Suse, which
completed earlier this year. Micro Focus improved revenue
performance through better sales execution during the second half
of the year by increasing its customer-facing sales staff after a
higher than ordinary turnover following the acquisition and
integration of HPE Software. S&P expects to see a continued effect
on license and SaaS sales in fiscal 2019, as new staff members are
fully trained. Recent investments in IT systems should also support
Micro Focus in its go-to-market strategy.

Adjusted EBITDA before exceptional costs improved by about 9% in
pro forma fiscal 2018 thanks to cost efficiencies achieved by the
integration of HPE Software. S&P anticipates a further increase in
EBITDA before exceptional costs of about 3% in fiscal 2019 on a
like-for-like basis, but this will be more than offset by the loss
of Suse, which contributed approximately 8% of the group's EBITDA
before exceptional costs.

S&P said, "We see Micro Focus' solid EBITDA generation as a key
supporting factor for the rating, and expect free cash flow
generation to exceed $700 million in fiscal 2019. This reflects a
free cash flow to debt ratio of more than 15% and will help Micro
Focus reduce leverage to its target net debt to adjusted EBITDA of
2.7x.

"The rating remains constrained by the risks related to the
integration of HPE Software (although we expect full integration by
fiscal 2020), and Micro Focus' ability to reduce revenue declines
to 1%-2%. The company will do this by further cross-selling some of
its expanding product lines to offset revenue declines from
customers transitioning from legacy software. The rating is also
constrained by the high level of exceptional costs anticipated to
remain at $400 million-$450 million in fiscal 2019 as Micro Focus
continues the integration process.

"Our assessment of Micro Focus' business risk profile continues to
reflect its exposure to mature infrastructure software with limited
or declining organic growth prospects (about 80% of revenues). We
believe that this results in pressure to seek revenue and EBITDA
growth through acquisitions and cost-saving initiatives, which may
involve further execution risks and result in releveraging and
exceptional costs." In addition, Micro Focus competes in the global
enterprise software market with some larger and financially
stronger players like Oracle, SAP, and IBM.

On the other hand, due to its mission-critical software, Micro
Focus benefits from a recurring revenue base of about 70% and
estimated 80%-90% renewal rates in regards to its maintenance
revenue base. The group also has strong market positions as the
leading or No. 2 player in various business segments including
off-mainframe common business oriented language and host
connectivity. Micro Focus also maintains good product and
geographical diversification.

The stable outlook reflects S&P's expectation that recovery in
license and SaaS sales, along with gradually declining exceptional
costs in coming quarters until fiscal 2020, should enable Micro
Focus to maintain an FOCF-to-debt ratio of comfortably more than
15% in fiscal 2019 and 2020. S&P also expects these factors to
reduce adjusted leverage to less than 3.5x excluding exceptional
costs in 2019, and toward 3x by 2020.

S&P said, "We could lower the rating if Micro Focus employed a more
aggressive than anticipated financial policy, did not reduce
exceptional costs after 2019, or if challenging market conditions
resulted in FOCF to debt to decline toward 10% and adjusted
leverage of sustainably above 4x.

"We could raise the rating if Micro Focus successfully completes
its integration process and significantly reduces its exceptional
costs as well as its revenue decline toward 1%-2% on an annual
basis, implying a significant improvement in license sales. In
particular, we could raise the ratings if improved performance
supports an increase in FOCF to debt to about 20% and reduces
adjusted leverage to less than 3x."


MONSOON ACCESSORIZE: Founder Seeks CVA to Avert Collapse
--------------------------------------------------------
Rob Davies at The Guardian reports that the founder of the fashion
chain Monsoon Accessorize is ready to inject GBP34 million into the
struggling company in an effort to convince landlords to agree to
rent cuts as part of a deal designed to thwart its collapse.

According to The Guardian, Peter Simon is seeking a company
voluntary arrangement (CVA) for the business, a form of insolvency
procedure that has proved unpopular with property owners because
they are asked to accept lower income to ensure that shops stay
open.

Mr. Simon is understood to have promised to stump up the cash in a
show of faith designed to win landlords over, The Guardian
discloses.

The money would be injected into the business to improve its
resilience to tough conditions on the high street, in return for
rent cuts on about two-thirds of its 271 shops, The Guardian
states.

It is thought the proposals do not include immediate closures,
unlike several recent CVAs, The Guardian notes.

Monsoon Accessorize, which declined to comment, has performed
poorly recently, losing GBP10.5 million before tax in 2017 on sales
of nearly GBP424 million, The Guardian relates.

It emerged in April that the accountancy firm Deloitte had been
hired to help the retailer secure a CVA, The Guardian recounts.


THOMAS COOK: Fitch Lowers LongTerm Issuer Default Rating to 'CCC+'
------------------------------------------------------------------
Fitch Ratings has downgraded Thomas Cook Group plc's (TCG)
Long-Term Issuer Default Rating to 'CCC+' from 'B' and placed it on
Rating Watch Negative. Fitch has also placed on Rating Watch
Negative (RWN) and downgraded the senior unsecured rating to
'CCC+'/'RR4' from 'B+'/'RR3' for the bonds issued by TCG and Thomas
Cook Group Finance Plc.

The downgrade reflects the tight liquidity Fitch expects TCG to
face towards the end of 2019 should it not sell its airline
division or be able to draw on the planned GBP300 million senior
secured facility based on the currently agreed mandate letter and
term sheet.

Fitch expects EBIT and profitability to be lower than its previous
forecasts as the company faces lower bookings in its main markets,
continuing the fierce competition and Brexit uncertainty. Fitch
also expects free cash flow (FCF) will again be negative this year.
Group leverage is now forecast to remain above 6.5x over the next
three years, which is commensurate with a 'CCC+' rating.

KEY RATING DRIVERS

Liquidity Crunch Looms: Fitch believes that TCG may have
insufficient liquidity at end-2019 if it is not able to draw down
on the new GBP300 million secured bridge financing facility or sell
its airline business as existing revolving credits and readily
available cash may be insufficient to cover liabilities, reflected
in the RWN. Its lack of liquidity may be worsened if GBP94 million
of uncommitted commercial paper on the balance sheet as of
end-March 2019 is not rolled over and available at end-2019.

The company's poor liquidity position is also accentuated from
negative FCF, which Fitch forecasts for the current financial year
to end-September 2019 (FY19), resulting from negative working
capital given the capacity reduction.

Airline Review Critical: TCG is considering a partial or full sale
of its airline division to boost finances. The group's debt
structure provides it with little financial flexibility and leaves
insufficient funds to develop the higher-margin own-hotel concepts
and its online platform. While TCG owns attractive slots at
airports in the UK and Germany, there is some uncertainty around
the airline sale as well as the valuation and application of the
net proceeds.

Time Pressure: The company is under pressure to conclude a sale of
its airline operations by the end- September to shore up liquidity
unless the group finds alternative financing sources, including
drawing down on the planned GBP300 million senior secured facility.
Fitch would expect proceeds to be used for a combination of debt
repayment, capex re-investment and improving the liquidity position
over the winter low point. Nevertheless, Fitch believes financial
metrics will not be materially different.

Relentless Competition: In both the tour operator and airline
markets, competition remains fierce both from incumbents such as
TUI and British Airways (BBB-/ Stable), as well as from disruptors
such as Booking.com, Easyjet and On the Beach Group. These
disruptors benefit from lower costs, in some cases due to their
digital-only business model, and greater financial flexibility.
This gives them the ability to price aggressively.

Reduced Capacity, Prices Rising: TCG has reduced its holiday
package and airline seat capacity by 11% in the 2019 summer season
to better manage the risk to its pricing structure and cost base.
Such a decline in capacity largely matches the reduction in summer
tour operator bookings by 12%, whilst average selling prices are 2%
higher. Airline bookings have also reduced due to lower capacity
through lower aircraft "wet leases" take up, while the average
ticket selling price is 2% higher.

Fitch acknowledges that uncertainty over Brexit has led to UK
customers cutting back on holiday spending or delaying purchases.
Overall, Fitch expects a fall in group revenue to end-September
2019 of around 6% and a lower EBIT margin to about 1.9% (2.6% in
FY18).

Slow EBIT Margin Recovery, Deleveraging: Under Fitch's revised
forecasts, TCG EBIT margins recover more slowly than Fitch
forecasted in February 2019, increasing to 2.2% only by 2022. This
is below Fitch's previous sensitivity of 3% for a 'B' rating and
this will also impact its ability to generate FCF and de-leverage.

Fitch expects to deleverage to be slow, and in any case subject to
meaningful execution risks, with FFO lease-adjusted gross leverage
not reducing below 6.5x until FY22, according to Fitch's revised
estimates. Fitch also anticipates FFO fixed-charge cover to stay
weak at 1.3- 1.4x by FY22, against Fitch's prior negative
sensitivity set at 2.0x for maintaining the 'B' rating.

Exposure to External Risks: As a tour operator, TCG's business
remains vulnerable to a high level of risks, including geopolitical
events, macroeconomic pressure and changing weather patterns. TCG
is also exposed to fuel price risk, although 100% of 2019 fuel
costs are already hedged (90% for winter 2019/2020). These risks
are reflected in Fitch's view of Thomas Cook's overall intact
business model.

Resilience Tested, Brand Differentiation: TCG benefits from a
strong and trusted brand and is the world's second-largest tour
operator. The ratings reflect the high risk inherent in the tour
operator sector, but the group has consistently demonstrated its
flexibility in coping with external shocks and high competition.

European Diversification: This risk is also reduced by the group's
diversification of source markets in Europe, with the UK business
now only contributing roughly one-third to operating profit. In
addition, the group is expanding its differentiated own brand and
higher-margin hotel concepts such as Casa Cook and Cook's Club.
Resolving its immediate liquidity issues would allow the group to
continue to execute this strategy.

DERIVATION SUMMARY

TCG is the second-largest tour operator in the world, behind TUI AG
based on revenue. It is less geographically diverse than TUI, which
also has a more varied and resilient product base including cruise
ships. TCG's FFO margin is also significantly lower than Expedia's
(BBB/Stable) and traditional hotel operators such as NH Hotels
(B+/Stable) and Radisson (B+/Stable). Due to weaker sales and lower
margins, TCG now has negative FCF, along with a weakening FFO
charge cover ratio. Its airline operations include both short- and
long-haul destinations. Its operating margin is however low by peer
standards.

TCG's business risk is higher than the internet or a hotel operator
due to the need to efficiently manage its cost base (fuel costs, FX
because of its own fleet of aircraft) and seasonality. However,
TCG's business risk is somehow lower than pure airline companies
thanks to its more flexible operating model. It is more asset-light
than a pure airline company, has flexibility in reducing capacity
and rerouting customers, along with inbuilt passenger capacity and
multi-channel operations.

KEY ASSUMPTIONS

Decrease in revenue in the financial year to end-September2019 and
2020 by 6% and 1%, respectively, following the capacity reduction
at its airline and tour operator divisions. Stable growth
thereafter at around 0.6% annually to September 2021 and 2022;

EBIT margin at 1.9% in FY19, improving towards 2.2% by FY22;

Capex of around GBP145 million over the next four years, equal to
1.6% of sales;

GBP300 million of additional revolving credit facilities available
by October 2019 to June 2020;

No dividends.

Recovery Assumptions

- "Our recovery analysis assumes that TCG would be treated as a
going concern in restructuring and that the group would be
reorganized rather than liquidated. We have assumed a 10%
administrative claim. TCG's going-concern EBITDA is based on
expected FY19 EBITDA of GBP390 million. Given the going-concern
assumption, we deduct the present value of finance leases payable
in FY19 of GBP34 million as well as finance costs of GBP17
million.- After these deductions and implying a stressed discount,
we arrive at an estimated post-restructuring EBITDA available to
creditors of GBP300 million. We then apply a conservative
distressed enterprise value (EV)/EBITDA multiple of 4.5x, resulting
in an EV of GBP1,215 million.- In terms of the distribution of
value, unsecured debtholders (including bonds and pension
obligations) would recover 42% in the event of default consistent
with a Recovery Rating of 'RR4' and an instrument rating of 'CCC+'.
In this analysis, we assume that the full amount under TCG's RCF
will be drawn. In addition, we also consider the new GBP300 million
bridge facility fully drawn and we treat it as senior to the
unsecured debt," Fitch said.

RATING SENSITIVITIES

Developments That May, Individually or Collectively, Lead to a
Stable Rating Action

- Disposal of the airline on satisfactory terms or completion of
new
   GBP300 million secured bridge financing, along with
stabilization in
   sales, profit, and cash flow performance.

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

- Delay in the sale of the airline division, or inability to draw
down
   on credit facility lines leading to further liquidity concerns
for
   example if liquidity headroom was below GBP50 million;

- Competitive pressures and deterioration in airlines
profitability
   resulting in EBIT margins remaining continually below 1.5%;

- FFO-adjusted gross leverage remaining above 7.5x on a sustained
basis;

- FFO fixed-charge covers staying below 1.2x on a sustained
basis.

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

- Disposal of the airline on satisfactory terms or completion of
new
   GBP300 million secured bridge financing. Liquidity headroom of
at
   least GBP150 million through the winter 2019/2020 season.

- Continued improvements in the group's business model and profit

   resilience resulting in EBIT margin remaining above 3% on a
sustained
   basis; and continuing positive FCF.

- Maintenance of a conservative capital allocation policy and use
of the
   majority of disposal proceeds to repay financial debt, both to
be
   reflected in FFO lease-adjusted gross leverage (including
additional
   GBP200 million RCF drawing) falling consistently below 6.5x.

- A reduction in overall interest expenses and enhanced
profitability
   leading to FFO fixed-charge cover rising to above 1.5x on a
sustained
   basis.



                           *********


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
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Information contained herein is obtained from sources believed to
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