---

       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

          Friday, August 23, 2019, Vol. 20, No. 169

                           Headlines



I R E L A N D

MIZA IRELAND: Jack Kachkar Jailed in Florida for Fraud


R U S S I A

PETROPAVLOVSK PLC: Fitch Upgrades LT IDR to B-, Outlook Positive
TROIKA-D BANK: Declared Bankrupt by Moscow Arbitration Court


U N I T E D   K I N G D O M

AVOCET MINING: Enters Administration Amid Mounting Debt
FERGUSON MARINE: Jim McColl Criticizes Government Takeover
GAIA TECHNOLOGIES: Cash Flow Issues Prompt Administration
SPORTS DIRECT: Considers MHA MacIntyre, Mazars as New Auditors


X X X X X X X X

[*] BOOK REVIEW: AS WE FORGIVE OUR DEBTORS

                           - - - - -


=============
I R E L A N D
=============

MIZA IRELAND: Jack Kachkar Jailed in Florida for Fraud
------------------------------------------------------
Colm Keena at The Irish Times reports that a Canadian businessman
who was restricted from operating as a company director in the
State following the collapse of a business in Roscrea, Co
Tipperary, in 2002, has been jailed in the US for fraud.

The collapse of Miza Ireland (formerly Antigen) saw approximately
250 people lose their jobs and delivered an economic blow to
Roscrea from which it has struggled to recover, The Irish Times
discloses.

Antigen was placed in examinership in 2001 and bought by Canadian
company Miza Pharmaceuticals under a scheme of arrangement approved
by the courts, The Irish Times recounts.  However, within a year
the business collapsed, The Irish Times notes.

The scheme of arrangement under which the Tipperary business was
sold to Miza, a company founded by Canadian businessman Jack
Kachkar, was controversial as it involved some creditors being paid
prior to others, including banks, The Irish Times states. However,
the courts approved the scheme as it was feared the business would
otherwise collapse, The Irish Times relays.

Following the collapse of the business just a year after Miza took
it over, the liquidator, Tom Grace, sought the restriction of
Kachkar and others from operating as directors of Irish companies,
The Irish Times discloses.

Mr. Grace, as cited by The Irish Times, said in court that while
the business owed creditors EUR17.3 million at the time it was
taken over by Kachkar, the debt to creditors was EUR9 million
greater by the time it collapsed.
He also said that sums and assets worth approximately EUR2.8
million were transferred out of the Roscrea business at a time when
it was insolvent, The Irish Times relates.

According to The Irish Times, Judge Mary Finlay Geoghegan, in
granting Mr. Grace's application, said that on the basis of the
facts before the court the issue was not honesty but whether the
directors had acted responsibly.

Mr. Kachkar subsequently appealed the judgment to the Supreme
Court, at a time when he was making a bid to buy soccer club
Olympique de Marseille for EUR115 million, The Irish Times
recounts.  The bid for the club did not succeed, and nor did the
appeal, The Irish Times notes.

Last month, the now 56-year-old businessman was jailed by a court
in Miami, Florida, for 30 years for his part in a fraud that led to
the collapse of Westernbank, a Puerto Rico financial institution,
with the loss of 1,500 jobs, The Irish Times relays.



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

PETROPAVLOVSK PLC: Fitch Upgrades LT IDR to B-, Outlook Positive
----------------------------------------------------------------
Fitch Ratings has upgraded Petropavlovsk plc's Long-Term Issuer
Default Rating and senior unsecured rating to 'B-' from 'CCC'. The
Outlook is Positive. Fitch has also upgraded the guaranteed notes
issued by Petropavlovsk 2016 Limited, the group's main financing
vehicle subsidiary, to 'B-' from 'CCC'. The notes' Recovery Rating
is 'RR4'.

The upgrade reflects the significant strengthening in
Petropavlovsk's liquidity position due to the refinancing of the
convertible bond, repayment of the USD57 million in bridge loans by
affiliated iron ore producer IRC Limited and the increased
visibility for production due to the launch of the pressure
oxidation (POX) hub in November. However, Petropavlovsk's
operational and financial performance was weak in 2018 as a result
of management reshuffles. This has led leverage to increase further
to funds from operations (FFO) adjusted gross leverage of 7.8x in
2018. Fitch expects leverage to decrease to 6.9x FFO adjusted gross
leverage by the end of 2019 due to stronger EBITDA generation
following the ramping up of production from refractory ores, while
costs remain high.

The Positive Outlook reflects the potential for significant
deleveraging to take place by end-2020 based on higher production,
lower costs, and third party concentrate increasing the utilisation
of the POX hub. Fitch expects FFO adjusted gross leverage to
decline to 3.8x by end-2020 and remain under 4.0x thereafter,
bolstered by higher EBITDA and lower capital expenditures.

KEY RATING DRIVERS

POX Hub Commissioned: In November 2018 the company successfully
commissioned the POX hub at Pokrovskiy in the Far East of Russia.
First gold poured in early December and production will ramp up
over 2019. The POX hub consists of four autoclaves, which can each
process up to 125 thousand tonnes of refractory ore each per year.
At full capacity it is expected that all four autoclaves will be
working together simultaneously. Four autoclaves allow for
uninterrupted operation of the POX plant if maintenance of an
autoclave is required. Depending on the sulphur content of the
refractory ores, this corresponds to a production capacity of
400-500 k oz refined gold per year.

The first two autoclaves have been successfully operating in the
first half of the year using concentrate from the flotation plant
at Malomir. Third party ores obtained and flotation concentrate
from Pioneer starting Q4 2020 will increase capacity utilisation
and lower cash costs. All four autoclaves have been tested and
shown to be fully operational. Petropavlovsk plans to commission
autoclaves 3 and 4 in 2H19. The launch of the POX hub is a
transformative event for Petropavlovsk as it allows it to treat
refractory ores, representing 95% of reserves at Malomir and 80% at
Pioneer, or 68% of reserves across all three producing mines.

Convertible Loan Refinanced: Petropavlovsk successfully placed a
USD125 million convertible bond maturing in June 2024 with
investors with a coupon of 8.25%. The proceeds have gone toward
redeeming the outstanding 9% USD100 million convertible bond
maturing in March 2020. The incremental USD25 million is linked to
one of the baskets for permitted financial indebtedness under the
USD500 million bond indenture, which provides only limited scope to
raise additional debt outside of the ratio debt. The proceeds will
be used to accelerate the construction of the Pioneer flotation
plant to commence in 2H19. Fitch views the refinancing as a
significantly positive development as it improves the company's
liquidity profile over the next 12-18 months.

Cost Position Will Improve: In 2018 the all-in sustaining costs for
Petropavlovsk peaked at USD1,117/oz (USD963/oz in 2017) due to
higher capital expenditure and impairment of stockpiles at Albyn
related to sub-optimal organisation of mining works in 1H18. Total
cash costs (TCC) in 2018 were USD786/oz (USD743 in 2017). Fitch
expects TCC to stay high in 2019 at USD923/oz (vs management
guidance of USD850-950/oz). From 2020 Fitch expects TCC to
considerably decrease to USD724/oz due to higher grades at Malomir
(refractory and underground), Albyn (Elginskoye) and the processing
of third party ores enabling more efficient operation of the POX
hub.

IRC Bridge Loans Repaid: In March 2019 65% iron ore producer IRC
repaid bridge loans to Petropavlovsk for a total USD57 million plus
interest. IRC obtained the funds as part of a refinancing with
Gazprombank, which enables it to spread maturities over eight
years, albeit at a higher interest rate. The ramp-up of
Kimkano-Sutara (K&S; reaching 88% on average in 2Q19) combined with
a backdrop of strong pricing for iron ore over 2019-2020
significantly reduce the likelihood of further bridge loans from
Petropavlovsk to IRC in the short term.

Guarantees Remain: Petropavlovsk provided bridge loans as it was
the sole guarantor of Industrial and Commercial Bank of China's
(ICBC) project financing facility for K&S and continues to
guarantee a significant portion of the Gazprombank facility. The
guarantees consist of a USD120 million corporate guarantee until
2021 and three fixed term guarantees for USD40 million until 2024
and USD120 million from 2025 to 2026. Fitch views the likelihood of
these guarantees becoming payable by Petropavlovsk as rather low
and do not foresee further bridge loans in its rating case. Fitch
includes USD169 million of guarantees in gross debt for 2018 and
USD160 million for the forecast period. A potential sale of the
31.1% stake in IRC would include a release of the guarantees.

Deleveraging Post-2020: At end-2018, the group reported FFO
adjusted gross leverage of 7.8x, up from 6.6x at end-2017,
including the off-balance sheet guarantee. Fitch expects
Petropavlovsk's FFO gross adjusted leverage to improve to about 4x
by end-2020, which is a marked improvement from last year when
Fitch expected end-2021 at the earliest. This expected
de-leveraging is driven by a projected increase in FFO due to
higher production volumes following the POX's ramp-up throughout
2019, higher grades, the addition of third party ores and lower TCC
from 2020 onwards.

Prepayment Facilities Treated as Debt: As of December 31, 2018,
Petropavlovsk had gold prepayment facilities of USD163.8 million
outstanding with major Russian banks. Petropavlovsk has relied on
these gold prepayments to procure liquidity for i) bridge loans to
IRC that were required to avoid using the guarantee; and ii) capex
for the POX hub facility. This type of working capital funding is
generally permitted under the Euro bond indenture. For analytical
purposes, Fitch reclassifies gold prepayments received as financial
debt and include them in its leverage ratios. Fitch expects
Petropavlovsk to redeem these prepayment facilities by delivering
gold over the next 16 months.

Improved Corporate Governance: Since October 2018 Petropavlovsk
appointed two new independent non-executive directors and one
senior independent director to the board of directors. The board
now consists of five non-executive members out of seven, including
a non-executive chair. The directors were elected with a strong
majority at the annual general meeting in June 2019 and 65.9% of
shareholders voted. The dispersed share ownership has brought about
a significant number of changes in the board and management
composition over the past years. In August 2019, Roman Trotsenko
became the largest shareholder in Petropavlovsk by acquiring
Fincraft holdings from Kenges Rakishev.

DERIVATION SUMMARY

Petropavlovsk is smaller in scale and asset diversification than
higher rated Nord Gold SE (BB/Stable). Its scale is relatively
large for the 'b' category, but it lacks diversification across
mines. Its cost position is currently higher than Nord Gold but is
expected to improve to the third quartile, similar to Nord Gold.
Petropavlovsk is substantially larger than GeoProMining (B+/Stable)
but has no diversification across metals, a higher cost position
and higher leverage. Petropavlovsk is significantly smaller than
First Quantum Minerals, but is expected to deleverage faster due to
the launch of its POX hub.

KEY ASSUMPTIONS

Fitch's Key Assumptions Within Its Rating Case for the Issuer -
Gold price of USD1,277 in 2019 including hedges. Fitch gold price
deck of USD1,200/oz in 2020-2022 adjusted by outstanding hedges-
Total gold production of 615 koz on average in 2019-2022, including
third party ores - TCC for 2019 931USD/oz (management guidance of
850-950 USD/oz), declining to USD728/oz on average over 2020-2022 -
Capex of USD52 million in 2019, USD68 million in 2020 and USD30
million in 2021-2022- Dividend payments of 40% of net income
starting 2021

Fitch's Key Recovery Rating Assumptions

The recovery analysis assumes that Petropavlovsk would be
considered a going concern in bankruptcy and that the company would
be reorganised rather than liquidated. Fitch has assumed a 10%
administrative claim in the recovery analysis.

Petropavlovsk's recovery analysis assumes a post-reorganisation
EBITDA at USD164 million, or 25% above its 2018 EBITDA, to
incorporate the launch of the POX hub, which is coupled with higher
production and will lower costs. A distressed EV/EBITDA multiple of
4.0x has been used to calculate post-reorganisation valuation and
reflects a mid-cycle multiple. This is in line with other natural
resources 'B' category issuers, reflecting a higher third quartile
cost position on the global gold cost curve and adequate growth
prospects.

Its assumptions result in very high recoveries for the USD500
million notes. However, the Recovery Rating is capped at 'RR4' as
all of Petropavlovsk's physical assets are located in Russia.

RATING SENSITIVITIES

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

  - FFO adjusted gross leverage remaining sustained below 4x

  - Sustained mid-to- high single digit FCF margin with funds being
used for reduction of gross debt

  - Improvement of production volumes and cash costs in line with
expectations

  - Improvement in corporate governance, including for example i)
stability in board composition; ii) consistency in management
strategy; or iii) release of the guarantee provided to IRC limited
for the Gazprombank facility

Developments That May, Individually or Collectively, Lead to
Stabilisation of the Outlook

  - FFO adjusted gross leverage sustained above 4x over the
forecast horizon (end-2018:7.8x)

  - Aggressive dividend distributions from 2020 onwards

  - Deterioration of liquidity profile

  - Failure to improve production volumes and cash costs in line
with expectations

LIQUIDITY AND DEBT STRUCTURE

Improved Liquidity following Convertible Issue: In June 2019,
Petropavlovsk successfully placed USD125 million in convertible
bonds while concurrently repurchasing USD100 million guaranteed
convertible bonds due 2020 issued by Petropavlovsk 2010 Limited.
This addresses immediate liquidity risk by postponing the maturity
by several years and raises funds to finance a flotation plant at
Pioneer. Moreover, Petropavlovsk received USD57 million in March
2019 from bridge loans extended to IRC in 2018 .The only immediate
maturities Petropavlovsk faces in the next 12-18 months consist of
obligations under its prepayment facilities, which Fitch classifies
as debt. Its liquidity position is further bolstered by positive
free cash flow generation of around USD120 million over 2019-2020.

Refinancing risk for the USD500 million notes due in November 2022
has decreased as Fitch is forecasting FFO adjusted gross leverage
of 3.8x in 2021. If Petropavlovsk were to deleverage more slowly
than expected, the bulky nature of the Euro bond maturity would
significantly expose the company to market conditions.

TROIKA-D BANK: Declared Bankrupt by Moscow Arbitration Court
------------------------------------------------------------
The provisional administration to manage JSC TROIKA-D BANK
(hereinafter, the Bank) appointed by virtue of Bank of Russia Order
No. OD-862, dated April 17, 2019, following its banking license
revocation, established in the course of its inspection of the Bank
that the Bank's officials conducted operations to divert funds
through lending to borrowers incapable of meeting their obligations
and replacing individuals' liabilities with a promissory note of a
legal entity in a poor financial condition.

On July 3, 2019, the Arbitration Court of the city of Moscow
recognized the Bank as bankrupt.  The State Corporation Deposit
Insurance Agency was appointed as receiver.

In addition to the information sent earlier, the Bank of Russia
submitted information on 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 Department of the Ministry of Internal Affairs of the
Russian Federation for consideration and procedural
decision-making.




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

AVOCET MINING: Enters Administration Amid Mounting Debt
-------------------------------------------------------
Samantha Machado at Reuters reports that gold miner Avocet Mining
Plc on Aug. 21 appointed Paul Williams --
paul.williams@duffandphelps.com -- and Geoffrey Bouchier --
geoff.bouchier@duffandphelps.com -- from Duff & Phelps Ltd as joint
administrators, as it started its insolvency process.

The appointments, effective Aug. 21, come a few months after the
struggling gold miner said its board proposed voluntary liquidation
of the company as it faced mounting debt, Reuters notes.

Last week, the West Africa-focussed miner said it would pursue a
formal insolvency process by appointing administrators to the
company, but also remained open to exploring "viable funded
investment opportunities", Reuters relates.

However, no investment proposals were received, said the miner,
which has been relying on loans from hedge fund Elliott Management
Corp., Reuters discloses.




FERGUSON MARINE: Jim McColl Criticizes Government Takeover
----------------------------------------------------------
Mure Dickie at The Financial Times reports that the investor who
rescued the last civilian shipyard on the river Clyde has denounced
the Scottish government's handling of its collapse, claiming the
business was "effectively expropriated" and that ministers'
portrayal of it as requiring saving could deter potential bidders.


In his first public comments since the Scottish government took
management control of Ferguson Marine Engineering, Jim McColl,
whose Clyde Blowers Capital engineering group rescued the Port
Glasgow shipyard in 2014, told the FT he was "absolutely furious"
about the move.

The Scottish government took control of Ferguson Marine on Aug. 16
in a deal with administrators after the yard collapsed because of
the soaring cost of a bitterly disputed contract with a state-owned
ferry company, the FT relates.

The government said the action was essential to ensure delivery of
two hugely delayed and over-cost ferries and to secure the future
of the yard and about 300 jobs, the FT notes.

According to the FT, Mr. McColl, an economic adviser to the
Scottish government, accused Nicola Sturgeon, the first minister,
of failing to act during the past two years to resolve the contract
dispute and said Derek Mackay, the economy secretary, had created a
"circus" when he stepped in on Aug. 16.

Mr. McColl blamed late design changes by state-owned Caledonian
Maritime Assets Ltd (CMal) for what he now estimates to be a
doubling of the cost of building the two ferries, which were
ordered in 2015 under a GBP97 million fixed-price contract, the FT
notes.

The Clyde Blowers founder insisted that apart from CMal's refusal
to pay the extra costs, the yard was in good shape and that the
government's portrayal of it as requiring a turnround was
tantamount to "abusing their power" and could deter bidders, the FT
notes.

The Scottish government said it had sought commercial solutions for
the difficulties at Ferguson Marine for more than two years, but
there had been "serious concerns" that Mr. McColl's proposal for
the government to take a stake in the yard would have been unlawful
and it had offered no certainty on the final cost of the ferries,
the FT relays.

The Ferguson administrator is to offer it to private buyers during
the next four weeks, but the government does not expect a sale and
that it will end up taking full ownership, the FT discloses.


GAIA TECHNOLOGIES: Cash Flow Issues Prompt Administration
---------------------------------------------------------
Business Sale reports that thought to be one of the country's
leading ICT suppliers to schools, colleges, and universities around
the UK, Gaia Technologies Limited has collapsed into
administration.

The company has an estimated 500 education customers and is on the
Department of Education's approved list for ICT service supplier's
framework, Business Sale discloses.  However, falling victim to
cashflow issues, Gaia Technologies was forced to call in
restructuring specialists FRP Advisory LLP to handle the
administration process, with partners Ben Woolrych --
ben.woolrych@frpadvisory.com -- and Anthony Collier --
anthony.collier@frpadvisory.com -- appointed as joint
administrators, Business Sale relates.

Between 2007 and 2014, the company reported a 326% turnover
increase from GBP3.8 million to GBP16 million, Business Sale
states.

However, after considering the impact of the education budget
coming under pressure and the declining spending confidence amongst
schools, not to mention the potential effect of Brexit, Gaia's
accounts followed suit with cashflow difficulties, Business Sale
relays.

In spite of the administration, the joint administrators are
hopeful in that a buyer will step up to purchase the business, and
are inviting any offers of interest to come forth immediately,
Business Sale notes.


SPORTS DIRECT: Considers MHA MacIntyre, Mazars as New Auditors
--------------------------------------------------------------
Harriet Russell at The Telegraph reports that "challenger"
accountancy firms MHA MacIntyre and Mazars are in the running to be
Sports Direct's new auditors after its previous bookkeeper, Grant
Thornton, abruptly quit last week.

According to The Telegraph, the retail chain, founded by
billionaire Mike Ashley, is scrambling to avoid a possible
suspension of its shares from the London Stock Exchange if it fails
to find a new adviser.

The company has tapped a number of "mid-tier" firms about a
possible tender process, after the Big Four accountancy firms PwC,
Deloitte, KPMG and EY were understood to have turned down the work,
The Telegraph relates.

Mazars and MHA MacIntyre were both said to have taken part in
recent conversations with the company, as first reported by the
Evening Standard, The Telegraph notes.




===============
X X X X X X X X
===============

[*] BOOK REVIEW: AS WE FORGIVE OUR DEBTORS
------------------------------------------
Authors: Teresa A. Sullivan, Elizabeth Warren,
& Jay Westbrook
Publisher: Beard Books
Softcover: 370 Pages
List Price: $34.95
Order your personal copy today at https://is.gd/29BBVw

So you think you know the profile of the average consumer debtor:
either deadbeat slouched on a sagging sofa with a three day growth
on his chin or a crafty lower-middle class type opting for
bankruptcy to avoid both poverty and responsible debt repayment.
Except that it might be a single or divorced female who's the one
most likely to file for personal bankruptcy protection, and her
petition might be the last stage of a continuum of crises that
began with her job loss or divorce. Moreover, the dilemma might be
attributable in part to consumer credit industry that has increased
its profitability by relaxing its standards and extending credit to
almost anyone who can scribble his or her name on an application.

Such are among the unexpected findings in this painstaking study of
2,400 bankruptcy filings in Illinois, Pennsylvania, and Texas
during the seven-year period from 1981 to 1987. Rather than relying
on case counts or gross data collected for a court's administrative
records, as has been done elsewhere, the authors use data contained
in the actual petitions. In so doing, they offer a unique window
into debtors' lives.

The authors conclude that people who file for bankruptcy are, as a
rule, neither impoverished families nor wily manipulators of the
system. Instead, debtors are a cross-section of America. If one
demographic segment can be isolated as particularly debt prone, it
would be women householders, whom the authors found often live on
the edge of financial disaster. Very few debtors (3.7 percent in
the study) were repeat filers who might be viewed as abusing the
system, and most (70 percent in the study) of Chapter 13 cases fail
and become Chapter 7s. Accordingly, the authors conclude that the
economic model of behavior -- which assumes a petitioner is a
"calculating maximizer" in his in his decision to seek bankruptcy
protection and his selection of chapter to file under, a profile
routinely used to justify changes in the law -- is at variance with
the actual debtor profile derived from this study.

A few stereotypes about debtors are, however, borne out. It is less
than surprising to learn, for example, that most debtors are simply
not as well-off as the average American or that while bankrupt's
mortgage debts are about average, their consumer debts are off the
charts. Petitioners seem particularly susceptible to the siren song
of credit card companies. In the study sample, creditors were found
to have made between 27 percent and 36 percent of their loans to
debtors with incomes below $12,500 (although the loans might have
been made before the debtors' income dropped so low). Of course,
the vigor with which consumer credit lenders pursue their goal of
maximizing profits has a corresponding impact on the number of
bankruptcy filings.

The book won the ABA's 1990 Silver Gavel Award. A special 1999
update by the authors is included exclusively in the Beard Book
reprint edition.



                           *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.

Copyright 2019.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 215-945-7000.


                * * * End of Transmission * * *