/raid1/www/Hosts/bankrupt/TCREUR_Public/190919.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                          E U R O P E

          Thursday, September 19, 2019, Vol. 20, No. 188

                           Headlines



F R A N C E

AIGLE AZUR: French Government Hopes for Improved Offers


G E R M A N Y

TLG IMMOBILIEN: S&P Rates New Unsecured Sub. Hybrid Notes 'BB+'


G R E E C E

FOLLI FOLLIE: UBS May Face Suit Over Role in 2017 Debt Sale


I R E L A N D

BARING EURO 2019-1: Moody's Rates EUR8.8MM Class F Notes 'B3'
BARINGS EURO 2019-1: Fitch Assigns B-sf Rating on Class F Debt
HAYFIN EMERALD III: Moody's Rates EUR10MM Cl. F Notes 'B3'
QED EQUITY: To Undergo Liquidation, Creditors to Be Paid in Full
ST. PAUL'S DAC II: Fitch to Rate Class E-RRR Debt 'BB(EXP)'



I T A L Y

PRO-GEST SPA: S&P Lowers ICR to 'BB-', On CreditWatch Negative


L U X E M B O U R G

PIOLIN II: Moody's Assigns B2 CFR, Outlook Stable


N E T H E R L A N D S

ASR NEDERLAND: S&P Assigns 'BB+' Long-Term Rating to RT1 Notes


S P A I N

SANTANDER EMPRESA 2: Fitch Withdraws D Rating on Class F Notes


T U R K E Y

TURKCELL FINANSMAN: Fitch Affirms B+ LT IDRs, Outlook Negative


U K R A I N E

NAFTOGAZ: Fitch Raises LT Foreign Currency IDR to B


U N I T E D   K I N G D O M

CONNECT FINCO: Moody's Rates US$1.125B Sec. Notes 'B1'
DONCASTERS GROUP: Moody's Lowers CFR to Caa3, Outlook Negative
GVC HOLDINGS: Fitch Assigns BB+(EXP) Rating to EUR1,125MM Term Loan
IVC ACQUISITION: Fitch Rates EUR108MM Term Loan 'B+'
NEWGATE FUNDING 2007-1: S&P Raises Class F Notes Rating to 'B'

SIRIUS MINERALS: 1,200 Jobs at Risk if Mine Financing Fails
SOUTHERN PACIFIC 06-1: S&P Affirms B- Rating on Class FTc Debt
THOMAS COOK: Files Chapter 15 Bankruptcy Protection in New York
TRINITY SQUARE 2015-1: Moody's Affirms Ba1 on GBP23MM Cl. E Notes
WEST LOTHIAN: Council Explores Options if Rescue Plan Fails

ZARA UK: Moody's Alters Outlook on B2 CFR to Negative

                           - - - - -


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F R A N C E
===========

AIGLE AZUR: French Government Hopes for Improved Offers
-------------------------------------------------------
Sudip Kar-Gupta at Reuters reports that the French government is
hoping for improved offers for insolvent airline Aigle Azur and
that any offer from Air France will save as many Aigle Azur jobs as
possible, junior transport minister Jean-Baptiste Djebbari said on
Sept. 17.

Privately held Aigle Azur was put under bankruptcy protection on
Sept. 2 and eventually had to halt operations, after the airline --
like others in its sector -- suffered from the effects of higher
fuel costs and tough competition, Reuters recounts.

Both Air France and EasyJet have expressed an interest in putting
in rescue offers for Aigle Azur, Reuters discloses.

According to Reuters, Mr. Djebbari said that the French government,
which has a 14.3% stake in Air France KLM, was making "serious
demands" on Air France so that any offer it made for Aigle Azur
would result in the maximum number of jobs being saved.

Air France, which submitted an initial proposal last week, has
agreed to combine its bid with Air Caraibes parent Dubreuil group,
two sources told Reuters earlier, Reuters relates.

The CFDT and CFTC trade unions which together represent a majority
of Aigle Azur's 800 French staff have also offered to renegotiate
contracts with Air France and Air Caraibes, Reuters states.




=============
G E R M A N Y
=============

TLG IMMOBILIEN: S&P Rates New Unsecured Sub. Hybrid Notes 'BB+'
---------------------------------------------------------------
S&P Global Ratings said that it has assigned its 'BB+' long-term
issue rating to the proposed deferrable, subordinated hybrid notes
to be issued by TLG Finance Sarl and fully guaranteed by TLG
Immobilien (BBB/Stable/--).

The completion and size of the transaction will be subject to
market conditions, but S&P anticipates that it will be benchmark
size. TLG plans to use the proceeds to fund its growth in the next
few months.

S&P said, "We classify the proposed notes as having intermediate
equity content until their first call dates in 2024, and at least
five years from the date of issuance. This is because they meet our
criteria in terms of their subordination, permanence, and optional
deferability during the period.

"Consequently, in our calculation of TLG's credit ratios, we will
treat 50% of the principal outstanding and accrued interest under
the hybrids as equity rather than debt. We will also treat 50% of
the related payments on these notes as equivalent to a common
dividend. Both treatments are in line with our hybrid capital
criteria."

S&P arrives at its 'BB+' issue rating on the proposed notes by
deducting two notches from its 'BBB' ICR on TLG. Under S&P's
methodology:

-- S&P deducts one notch for the subordination of the proposed
notes, because the ICR on TLG is investment grade ('BBB-' or
above); and

-- S&P deducts an additional notch for payment flexibility to
reflect that the deferral of interest is optional.

S&P said, "The notching reflects our view that there is a
relatively low likelihood that the issuer will defer interest.
Should our view change, we may increase the number of notches we
deduct to derive the issue rating."




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G R E E C E
===========

FOLLI FOLLIE: UBS May Face Suit Over Role in 2017 Debt Sale
-----------------------------------------------------------
Irene Garcia Perez at Bloomberg News reports that UBS Group AG
could face a lawsuit from bond investors over its role arranging a
2017 sale of Swiss franc-denominated debt for retailer Folli Follie
Group that has since defaulted.

Alcimos, a services company, has hired law firm Quinn Emanuel
Urquhart & Sullivan to pursue a potential compensation case in
Swiss courts on behalf of investors, Bloomberg discloses.  Folli
Follie has been struggling to survive since a short seller
questioned the accuracy of its financial statements last year,
triggering a bond and share price collapse, Bloomberg relates.

According to Bloomberg, Volker Rosengarten, a partner at Quinn
Emanuel, said if financial statements in the prospectus of the
CHF150 million (US$151 million) bonds contain inaccuracies,
investors may have a claim against UBS.

He added that the law firm is in advanced talks with bondholders
representing around 30% of the Swiss franc bonds, Bloomberg notes.

Alcimos, an independent firm not invested in the notes, will win a
fee if the process is successful, Bloomberg states.

Bondholders are being offered 28% of their investments under a
restructuring proposal aimed at keeping the Greek company out of
insolvency, Bloomberg relays.

The retailer, which discovered its Asia sales were overstated by
90%, also has EUR249.5 million in defaulted bonds that were issued
in 2014, three years before the Swiss franc debt, according to
Bloomberg.




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

BARING EURO 2019-1: Moody's Rates EUR8.8MM Class F Notes 'B3'
-------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to notes issued by Barings Euro CLO
2019-1 Designated Activity Company:

EUR242,000,000 Class A Senior Secured Floating Rate Notes due 2032,
Definitive Rating Assigned Aaa (sf)

EUR22,200,000 Class B-1 Senior Secured Floating Rate Notes due
2032, Definitive Rating Assigned Aa2 (sf)

EUR19,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2032,
Definitive Rating Assigned Aa2 (sf)

EUR14,400,000 Class C-1 Senior Secured Deferrable Floating Rate
Notes due 2032, Definitive Rating Assigned A2 (sf)

EUR12,000,000 Class C-2 Senior Secured Deferrable Fixed Rate Notes
due 2032, Definitive Rating Assigned A2 (sf)

EUR26,400,000 Class D Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned Baa3 (sf)

EUR23,600,000 Class E Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned Ba3 (sf)

EUR8,800,000 Class F Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned B3 (sf)

RATINGS RATIONALE

As described in its methodology, the ratings analysis considers the
risks associated with the CLO's portfolio and structure. In
addition to quantitative assessments of credit risks such as
default and recovery risk of the underlying assets and their impact
on the rated tranche, its analysis also considers other various
qualitative factors such as legal and documentation features as
well as the role and performance of service providers such as the
collateral manager.

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 approximately 90% ramped as of the
closing date and to comprise 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.

Barings (U.K.) Limited 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 four and a half
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.

In addition to the eight classes of notes rated by Moody's, the
Issuer will EUR 38.8m 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 400,000,000

Diversity Score: 48

Weighted Average Rating Factor (WARF): 2930

Weighted Average Spread (WAS): 3.65%

Weighted Average Coupon (WAC): 5.50%

Weighted Average Recovery Rate (WARR): 43.0%

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.


BARINGS EURO 2019-1: Fitch Assigns B-sf Rating on Class F Debt
--------------------------------------------------------------
Fitch Ratings has assigned BARINGS EURO CLO 2019-1 DAC final
ratings.

BARINGS EURO CLO 2019-1  is a securitisation of mainly senior
secured obligations (at least 90%) with a component of senior
unsecured, mezzanine, and second-lien loans. Net proceeds from the
issuance of the notes have been used to fund a portfolio with a
target par of EUR400 million. The portfolio is managed by Barings
(U.K) Limited. The CLO envisages a 4.5 year reinvestment period and
an 8.5-year weighted average life (WAL).

BARINGS EURO CLO 2019-1 DAC

Class A;    LT  AAAsf  New Rating;   previously at AAA(EXP)sf
Class B-1;  LT  AAsf   New Rating;   previously at AA(EXP)sf
Class B-2;  LT  AAsf   New Rating;   previously at AA(EXP)sf
Class C-1;  LT  Asf    New Rating;   previously at A(EXP)sf
Class C-2;  LT  Asf    New Rating;   previously at A(EXP)sf
Class D;    LT  BBB-sf New Rating;   previously at BBB-(EXP)sf
Class E;    LT  BB-sf  New Rating;   previously at BB-(EXP)sf
Class F;    LT  B-sf   New Rating;   previously at B-(EXP)sf
Sub Notes;  LT  NRsf   New Rating;   previously at NR(EXP)sf

KEY RATING DRIVERS

'B' Portfolio Credit Quality

Fitch considers the average credit quality of obligors to be in the
'B' range. The Fitch weighted average rating factor of the
identified collateral portfolio is 31.85.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured obligations.
Recovery prospects for these assets are typically more favourable
than for second-lien, unsecured and mezzanine assets. The Fitch
weighted average recovery rating (WARR) of the identified
collateral portfolio is 67.39%.

Diversified Asset Portfolio

The transaction features different matrices with different
allowances for exposure to both the 10 largest obligors and
fixed-rate assets. The manager is able to interpolate between these
matrices. The transaction also includes limits on maximum industry
exposure based on Fitch industry definitions. The maximum exposure
to the three largest (Fitch-defined) industries in the portfolio is
covenanted at 40%.

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

RATING SENSITIVITIES

A 125% default multiplier applied to the portfolio's mean default
rate, and with this increase added to all rating default levels,
would lead to a downgrade of up to three 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.


HAYFIN EMERALD III: Moody's Rates EUR10MM Cl. F Notes 'B3'
----------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following definitive ratings to notes issued by Hayfin Emerald CLO
III DAC:

EUR2,000,000 Class X Senior Secured Floating Rate Notes due 2032,
Definitive Rating Assigned Aaa (sf)

EUR248,000,000 Class A Senior Secured Floating Rate Notes due 2032,
Definitive Rating Assigned Aaa (sf)

EUR29,000,000 Class B-1 Senior Secured Floating Rate Notes due
2032, Definitive Rating Assigned Aa2 (sf)

EUR10,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2032,
Definitive Rating Assigned Aa2 (sf)

EUR24,500,000 Class C Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned A2 (sf)

EUR27,500,000 Class D Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned Baa3 (sf)

EUR21,000,000 Class E Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned Ba3 (sf)

EUR10,000,000 Class F Senior Secured Deferrable Floating Rate Notes
due 2032, Definitive Rating Assigned B3 (sf)

RATINGS RATIONALE

As described in its methodology, the ratings analysis considers the
risks associated with the CLO's portfolio and structure. In
addition to quantitative assessments of credit risks such as
default and recovery risk of the underlying assets and their impact
on the rated tranche, its analysis also considers other various
qualitative factors such as legal and documentation features as
well as the role and performance of service providers such as the
collateral manager.

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 approximately 56% ramped as of the
closing date and to comprise 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.

Hayfin Emerald Management LLP 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 four and a half
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.

Interest and principal amortisation amounts due to the Class X
Notes are paid pro rata with payments to the Class A notes. The
Class X Notes will amortise by EUR 250,000 over eight payment dates
starting on the 2nd payment date.

In addition to the eight classes of notes rated by Moody's, the
Issuer will issue EUR 1.0m of Class M Notes and EUR 37.8m of
Subordinated Notes both of 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 400,000,000

Diversity Score: 44

Weighted Average Rating Factor (WARF): 2865

Weighted Average Spread (WAS): 3.75%

Weighted Average Coupon (WAC): 4.75%

Weighted Average Recovery Rate (WARR): 43.8%

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.


QED EQUITY: To Undergo Liquidation, Creditors to Be Paid in Full
----------------------------------------------------------------
Mark Paul at The Irish Times reports that businessman Dermot
Desmond has moved to formally wind up his QED Equity financial
business, which provided advice to international banks.

According to The Irish Times, restructuring expert Declan de Lacy
-- D.deLacy@pkf.ie -- a partner in PKF O'Connor, Leddy & Holmes
accountants, has been appointed as liquidator of QED Equity in a
solvent liquidation initiated by the company's shareholders, which
include an Isle of Man entity controlled by Mr. Desmond.

The directors of QED Equity include Mr. Desmond and also Michael
Walsh, who was formerly chairman of Irish Nationwide Building
Society, The Irish Times notes.

QED Equity was also prominent in the case of a former official of
the National Asset Management Agency (Nama), Enda Farrell, The
Irish Times states.

In 2016, Mr. Farrell received a two-year suspended sentence for
leaking information about the Nama valuations of properties in 2012
to QED Equity and Canaccord Genuity, The Irish Times recounts.

The liquidator, Mr. De Lacy, declined to comment on Sept. 17, apart
from highlighting that QED is a solvent liquidation and that "all
creditors will be paid", The Irish Times relates.


ST. PAUL'S DAC II: Fitch to Rate Class E-RRR Debt 'BB(EXP)'
-----------------------------------------------------------
Fitch Ratings assigned St.Paul's CLO II DAC's refinancing notes
expected ratings.

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

St. Paul's CLO II DAC is a securitisation of mainly senior secured
obligations. Net proceeds from the refinancing notes & newly issued
class X notes will be used to redeem the existing notes, except the
subordinated notes, which are not being refinanced. The portfolio
is managed by Intermediate Capital Managers Limited. The CLO
features a two-year reinvestment period and a 6.5-year weighted
average life (WAL).

St. Paul's CLO II DAC Reset

Class A-RRR;  LT  AAA(EXP)sf;  Expected Rating  
Class B-RRR;  LT  AA(EXP)sf;   Expected Rating  
Class C-RRR;  LT  A(EXP)sf;    Expected Rating  
Class D-RRR;  LT  BBB(EXP)sf;  Expected Rating  
Class E-RRR;  LT  BB(EXP)sf;   Expected Rating  
Class F-RRR;  LT  B-(EXP)sf;   Expected Rating  
Class X;      LT  AAA(EXP)sf;  Expected Rating

KEY RATING DRIVERS

'B'/'B-' Portfolio Credit Quality

Fitch places the average credit quality of obligors in the 'B'/'B-'
range. The Fitch-weighted average rating factor (WARF) of the
identified portfolio is 33.8.

High Recovery Expectations

At least 90% of the portfolio comprises senior secured obligations.
Recovery prospects for these assets are typically more favourable
than for second-lien, unsecured and mezzanine assets. The
Fitch-weighted average recovery rating (WARR) of the identified
portfolio is 66.5%.

Diversified Asset Portfolio

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

Portfolio Management

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

Cash Flow Analysis

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




=========
I T A L Y
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PRO-GEST SPA: S&P Lowers ICR to 'BB-', On CreditWatch Negative
--------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Italian packaging group Pro-Gest SpA to 'BB-' from 'BB'. S&P also
lowered its issue-level rating on its fixed-rate senior unsecured
notes to 'BB-' from 'BB'. At the same time, S&P placed the ratings
on CreditWatch with negative implications.

The downgrade follows the release of the company's half-year 2019
results, which showed large unexpected working capital outflows and
weaker-than-expected EBITDA generation.

S&P said, "When we upgraded Pro-Gest in November 2018, we expected
the group to generate revenues for 2019 in excess of EUR550
million, S&P Global Ratings' adjusted EBITDA of at least EUR125
million, and positive free operating cash flow of EUR34 million.
Our adjusted debt to EBITDA expectation for December 2019 was 2.2x,
with FFO to debt of 30%-35%.

"The unexpected underperformance in the first six months of 2019,
combined with the announcement of a material fine that might be
payable in the next 12 months, as well as the build-up of
inventories, led to a material worsening of our financial risk
assessment. Leverage is now likely to exceed 5x, and liquidity is
weaker than expected. We also note that all available credit lines
are uncommitted. In addition to this, the company seems likely to
breach a leverage covenant under bilateral debt agreements and
mini-bonds.

"The CreditWatch placement allows us time to better understand the
company's plans to address the potential covenant breach and debt
repayments due in December 2019, as well as its inventory
management and liquidity strategy.

"We also lowered the issue-level rating on the company's EUR250
million 3.25% senior unsecured notes due 2024 to 'BB-' from 'BB'.
The recovery rating remains '4'. The recovery rating indicates our
expectation of average (30%-50%; rounded estimate 40%) recovery of
principal in the event of payment default.

"Our CreditWatch negative placement reflects a one-in-two
likelihood that we will further lower the issuer credit rating by
one or more notches. We expect to update the CreditWatch status in
the coming weeks, as we receive further clarifications from the
company."




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

PIOLIN II: Moody's Assigns B2 CFR, Outlook Stable
-------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating and
a B2-PD Probability of Default Rating to Piolin II S.a.r.l, the
holding company for Parques Reunidos. Concurrently, Moody's has
assigned to Piolin Bidco, S.A.U. a B2 rating to the proposed EUR692
million and EUR268 million Term Loans (B1 and B2) as well as the
EUR200 million RCF falling due in 2026. The outlook on both
entities is stable.

Proceeds from the proposed term loans will be primarily used to
repay existing debt and partially finance the LBO acquisition of
Parques.

"The B2 rating reflects Parques' leading market position in
regional parks and its diversified portfolio, which partly
mitigates the volatility that can be caused by unpredictable
weather patterns. The overhaul of the company's strategy should not
only grow earnings, but also improve earnings predictability", says
Jeanine Arnold, an Associate Managing Director and lead analyst for
Parques.

"Leverage is high, and Parques' free cash flow generation will be
under some pressure initially, but liquidity is considered
adequate. If the company can evidence meaningful deleveraging
combined with the realization of stronger free cash flow through
successfully implementing its proposed strategy, then there could
be some positive rating momentum in the nearer term" added Jeanine
Arnold.

RATINGS RATIONALE

Parques is strongly positioned in the B2 rating. The B2 CFR
incorporates the company's (1) leading market position in regional
parks as the second largest operator of recreational infrastructure
in Europe and the fifth largest regional park operator globally;
(2) its relatively diversified portfolio in terms of its park
offerings including theme parks, animal and water parks, as well as
geographical diversification, which partly mitigate the volatility
that can be caused by unpredictable weather patterns; (3) good
projected growth fundamentals assuming the company's newly proposed
strategy is successfully executed; and (4) strong barriers to
entry, which are typical of the industry.

Moody's gross adjusted leverage at the outset is high at just over
5.5x based on Moody's calculations, with deleveraging highly
contingent on the successful implementation of its strategy to grow
revenues and especially earnings because Moody's expects limited to
no debt amortization. For example, in terms of its new strategy,
Parques aims to grow visitor numbers through more effective and
variable pricing based on analytical rather than manual pricing.
The use of mobile applications to enhance the customer experience
as well as grow the amount each customer spends through better
merchandising, investment and marketing initiatives are also
initiatives aimed at growing profitability and cash flow.

The new management and shareholders will look to address
operational challenges of some parks, particularly some US parks,
which have witnessed a deterioration in recent earnings. Earnings
performance has tended to be weaker than the company and market
expected. EBITDA in H1-2019 declined relative to H1-2018 on a
like-for-like basis, though management has explained that there was
some catch-up in the months of July and August, meaning it should
achieve its structuring EBITDA of EUR200 million in 2019 (EUR203
million in 2018 pro forma the Tropical Islands acquisition among
other adjustments).

Execution risk could delay any deleveraging over the next 12-18
months including the improvement of metrics such as RCF/net debt,
which at mid-single digits in percentage terms is considered weak.
Liquidity is adequate, though cash on balance sheet of around EUR10
million immediately post the closing of the transaction could mean
that the company needs to draw down for a longer period of time
than is typical on its EUR200 million RCF.

Following the acquisition of Parques by the consortium comprising
EQT Infrastructure (EQT) and Parques' main shareholders prior to
the transaction - Corporacion Financiera Alba (Alba, unrated) and
Groupe Bruxelles Lambert (GBL, unrated) - the company will be
majority-owned by private equity at 53.13%. Private equity
ownership tends to create some uncertainty around a company's
future financial policy. Often in private equity sponsored deals,
owners tend to have higher tolerance for leverage, a greater
propensity to favour shareholders over creditors as well as a
greater appetite for M&A to maximise growth and their return on
their investment. Moody's understands that the consortium is
committed to delever with no intention to receive any dividends
from Parques. With the continued ownership of Alba and GBL, Moody's
also expects that there will be a strong focus on longer-term value
creation. EQT has explained that it has funds available to support
Parques if necessary.

LIQUIDITY

Parques' liquidity is adequate. At closing, Moody's expects cash
balances of EUR10 million but that the current drawings on it
EUR200 million RCF, amounting to EUR92 million, will be repaid
through the proposed debt raise. This should ensure that the
company maintains sufficient liquidity in excess of EUR100 million
throughout the year. The nature of the industry means that there
can be sizeable seasonable swings in cash flow. Liquidity would
benefit from a greater amount of cash on balance sheet to finance
these seasonal cash flow movements to provide the company with
greater financial flexibility and limit increases in gross
leverage.

STRUCTURAL CONSIDERATIONS

The senior secured credit facilities are rated B2 in line with the
CFR as they are the only class of debt in the capital structure.
The credit facilities will be secured, but will only include
security over material intercompany receivables of obligors, shares
in each obligor and material company and bank accounts of each
obligor.

OUTLOOK

The stable outlook reflects the company's solid business profile
including its good market positions and diversification as well as
good prospects to grow its earnings following proposals to
meaningfully change the company's operational strategy. This should
allow for a gradual improvement in key credit metrics, which
Moody's would also expect to be supported by a financial policy
that considers the interests of creditors to a greater degree than
Moody's might ordinarily assume for a typical LBO transaction.

FACTORS THAT COULD LEAD TO AN UPGRADE

The strong positioning with the current B2 rating means that should
the company evidence a strong commitment to deleveraging and focus
on cash flow generation then there could be some positive rating
momentum, should for example Moody's gross adjusted leverage
sustainably improve to below 5.5x, RCF/net debt sustainably above
10% and if cash on balance sheet returns to previous levels of
around EUR50 million so as to limit drawings on its RCF.

FACTORS THAT COULD LEAD TO A DOWNGRADE

Negative rating action could materialize if there is a
deterioration in the company's market position, or a marked decline
in earnings and margins, for example a continued weakening of its
US operations or material adverse weather effects such that they
drive a deterioration in Moody's gross adjusted leverage to in
excess of 6.5x. Negative free cash flows beyond those Moody's
expects the company to incur in 2019 will also be ratings negative,
especially if they contribute to a weakening in the company's
liquidity from current levels.




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

ASR NEDERLAND: S&P Assigns 'BB+' Long-Term Rating to RT1 Notes
--------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' long-term issue rating to the
RT1 notes to be issued by ASR Nederland N.V., holding company of
ASR Group. The issue rating is subject to S&P's receipt and review
of the notes' final terms and conditions.

The rating on the RT1 notes is three notches below the long-term
issuer credit rating (ICR) on ASR Nederland N.V. (BBB+/Stable/--).
S&P notches down from the ICR:

-- One notch to reflect the notes' subordination to the company's
senior obligations;

-- One notch to reflect the risk of a potential temporary
write-down of principal; and

-- One notch to reflect the payment risk created by the mandatory
and optional coupon-cancellation features.

S&P said, "The notching to derive the rating on the RT1 notes is
wider than that which we apply for ASR Group's other subordinated
instruments because noteholders face a potential loss of principal
if the mandatory conversion to equity trigger is breached.

"Regarding payment risk, this is in line with other hybrid
instruments, because the group's solvency capital requirement (SCR)
coverage has been strong and we expect it to remain so, with
limited sensitivity or volatility. SCR coverage stood at 197% on
Dec. 31, 2018. Consequently, we consider the possibility of
mandatory interest deferral to be remote."

S&P's rating and equity content assessment takes into account its
understanding that:

-- The notes are subordinated to senior creditors.

-- The issuer has discretion to cancel interest payments.

-- Interest cancellation is mandatory under certain circumstances:
i) if the SCR is not met; ii) if, under the EU's Solvency II
Directive, ASR Nederland's own funds (capital resources) are
insufficient to meet either the SCR or minimum capital requirement
(MCR); or iii) upon insufficient distributable items.

-- The notes will be eligible as RT1 capital under Solvency II.

-- The notes will convert into ordinary shares in the event that:
i) the amount of own-fund items eligible to cover the SCR is equal
to or less than 75% of the SCR; ii) the amount of own-fund items
eligible to cover the MCR is equal to or less than the MCR; or iii)
a breach of the SCR has occurred and such breach has not been
remedied within three months of the date on which the breach was
first observed.

S&P understands that the notes are perpetual, but are callable at
par after at least eight years and on any interest payment date
thereafter. The notes carry a fixed interest rate which will be
reset on the first call date and on each reset date thereafter as
the sum of the applicable five-year mid-swap rate plus 3.789%.
There is no step-up in the coupon rate if the notes are not called
at the first call date.

ASR Nederland has the option to redeem the notes at par before the
first call date under specific circumstances, such as for changes
in tax, regulatory, or rating agency treatment. Any redemption,
prior to the third (or in some cases the fifth) anniversary of the
issue date, must be replaced by an instrument of at least the same
quality.

S&P said, "We expect to classify the notes as having intermediate
equity content, subject to our receipt and review of the final
terms and conditions. Hybrid capital instruments with intermediate
equity content can comprise up to 25% of total adjusted capital
(TAC), which is the basis of our consolidated risk-based capital
analysis of insurance companies. The inclusion of TAC is also
subject to the issuance being considered eligible for regulatory
solvency regarding both the amount, and terms and conditions.

"We expect that ASR Nederland will use the proceeds of the RT1
notes for the group's general corporate purposes, which may include
refinancing debt. We project that this additional debt will have a
neutral impact on ASR Group's financial leverage and will slightly
improve the fixed-charge coverage, given that the RT1 issuance has
a lower coupon than the grandfathered tier 1 issues from 2009."




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

SANTANDER EMPRESA 2: Fitch Withdraws D Rating on Class F Notes
--------------------------------------------------------------
Fitch Ratings downgraded and withdrawn FTA, Santander Empresas 2
and FTA, Santander Empresas 3 class F notes as follows:

  Santander 2, Class F: downgraded to 'Dsf' from 'Csf';
  Recovery Estimate of 0%; and withdrawn.

  Santander 3, Class F: downgraded to 'Dsf' from 'Csf';
  Recovery Estimate of 0%; and withdrawn.

Fitch is withdrawing the ratings following default. Accordingly,
Fitch will no longer provide ratings or analytical coverage for
Santander 2 and Santander 3.

The transactions were granular cash flow securitisations of secured
and unsecured loans to small and medium-sized enterprises in Spain
serviced by Banco Santander, S.A. (A-/Stable/F2).

KEY RATING DRIVERS

No Remaining Assets

On the last payment date of each transaction the remaining assets
backing the notes were sold. The overall sale proceeds were used to
pay in full some mezzanine tranches but were insufficient to redeem
the class F notes, which crystallised a full principal loss. The
class F notes were issued at closing to finance the creation of
cash reserve funds, and were solely collateralised by the permitted
release amounts of the reserve funds.

Issuers Ceased to Exist

Santander 2 and Santander 3 were terminated and ceased to exist on
20 May and April 16, 2019, respectively, as part of an early
termination procedure implemented by the transactions' trustee
Santander de Titulizacion SGFT, SA.

RATING SENSITIVITIES

Not applicable.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10

Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.

DATA ADEQUACY

Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. For Santander 2 and Santander 3, the
transaction payment reports sourced from the trustee (Santander de
Titulizacion SGFT, SA) do not reconcile with Fitch's understanding
of the contractual terms with respect to the release of the reserve
fund amounts. Fitch has taken the transaction payment reports as
input for its analysis to substantiate the Recovery Estimate on the
class F notes.

Fitch has not reviewed the results of any third party assessment of
the asset portfolio information or conducted a review of
origination files as part of its ongoing monitoring. Overall and
together with the assumptions referred, Fitch's assessment of the
information relied upon for the agency's rating analysis according
to its applicable rating methodologies indicates that it is
adequately reliable.




===========
T U R K E Y
===========

TURKCELL FINANSMAN: Fitch Affirms B+ LT IDRs, Outlook Negative
--------------------------------------------------------------
Fitch Ratings has affirmed Turkcell Finansman A.S.'s Foreign- and
Local-Currency Long-Term Issuer Default Ratings at 'B+' and its
National Long-Term Rating at 'AA-(tur)'. The Outlooks are Negative
on the IDRs and Stable on the National Rating.

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS AND SENIOR DEBT

TFS's ratings are based on potential support from its parent -
Turkcell Iletisim Hizmetleri A.S (Turkcell; BB-/Negative). Fitch
believes Turkcell would have a strong propensity to support TFS
given (i) its 100% stake and full operational control; (ii) the
close integration of the subsidiary with its parent; and (iii)
TFS's role in helping Turkcell to acquire customers.

The one-notch difference between the ratings of Turkcell and TFS
reflects the company's still short operational record and modest
contribution to group's overall performance. In Fitch's view, in
the case of TFS's default, these factors reduce moderately the
potential reputational risk for the parent or the potential
negative impact on other parts of the Turkcell group.

In 4Q18, TFS' regulator (the Banking Regulation and Supervision
Agency, BRSA) introduced restrictions on loans for the purposes of
purchasing mobile phones, tablets and computers. The restrictions
limit the maximum loan maturity to six months for loans above
TRY3,500 (around USD600) and to 12 months for smaller loans below
that threshold.

The regulatory changes had a significant impact on the domestic
mobile phone market, with consumer purchases dropping by about 70%,
according to TFS. As a result, the loan book of TFS shrank by 19%
in 1H19 to TRY3.4 billion at end-1H19. Correspondingly, total
assets of TFS declined to TRY4.2 billion as of end-1H19. Despite
the smaller asset size, TFS still accounted for a material 9% of
Turkcell's assets as of end-1H19 (but a smaller 5% of equity as
well as around 11% of 1H19 pre-tax profit).

TFS provides Turkcell retail customers with small-ticket unsecured
loans to purchase mobile phones, tablets and other devices. TFS
sells its products directly via Turkcell's network across Turkey
with 3,300 sales-points. The business model, which relies heavily
on digital integration with shops, allows TFS to limit fixed costs.
In Fitch's view, the recently imposed regulatory restriction on
loan maturities limits TFS's short- to medium-term growth
potential.

While TFS's current leverage (gross debt/equity of 3.4x at
end-1H19, which is lower yoy due to a shrinking loan book) was
adequate for its business model, management's leverage limit of 10x
indicates in Fitch's view an appetite for increasing leverage in
the medium term once lending conditions in the domestic market
improve (TFS's gross debt/equity ratio was 5.3x at end-2018).

Despite rapid deleveraging, TFS was able to maintain adequate
profitability underpinned by healthy margins. Return on average
assets and return on average equity were strong at 4.4%
(annualised) and 25.4% (annualised), respectively, for 1H19. Fitch
expects TFS's profitability to weaken over 2H19 as the balance
sheet continues to shrink and its interest margin narrows.

Asset quality weakened in 2018 and 1H19 reflecting the
deteriorating operating environment. TFS's impaired loan ratio
increased to around 9% at end-1H19 additionally affected by the
base effect from its shrinking loan book. Fitch expects asset
quality metrics to weaken further in 2H19 and in 2020 in line with
Turkish macroeconomic trends, tighter payment schedules, and a
smaller loan base.

TFS' funding profile benefits from parental guarantees on much of
its outstanding debt. While third-party bank loans have fallen in
importance compared with the preceding two years, TFS intends to
maintain bank loans as a core funding source for the near to medium
term. TFS's asset duration is relatively short (around 11 months at
end-1H19) and will likely decrease further due to regulatory
restrictions. Asset duration is comfortably matched by bank
funding. TFS does not plan to attract any parental funding due to
tax implications.

RATING SENSITIVITIES

IDRS, NATIONAL RATINGS AND SENIOR DEBT

As TFS's IDRs are notched off Turkcell's, any change to Turkcell's
Long-Term IDR (including an Outlook change) would likely be
reflected at TFS. The IDR of Turkcell is currently rated in line
with Turkey's sovereign IDR of 'BB-'.

A longer record of TFS successfully operating under its relatively
recently established business model, tighter integration with and
increasing relevance for the parent's core activities, and
increasing earnings contribution to the parent's overall earnings
base could lead to an equalisation of TFS's and Turkcell's IDRs.
Evidence that parental funding support through debt guarantees is
available in the long term (and, in particular, in times of stress
in funding markets) could also support equalisation.

Any indication that TFS's is becoming less strategically important
for Turkcell, or a weakening of Turkcell's propensity to support,
could result in wider notching and hence a downgrade of TFS's
IDRs.

TFS's National Long-Term Rating is primarily sensitive to changes
in Turkcell's ability or propensity to provide support.

The rating actions are as follows:

Long-Term Local- and Foreign-Currency IDRs: affirmed at 'B+',
Outlooks Negative

Short-Term Local- and Foreign-Currency IDRs: affirmed at 'B'

National Long Term Rating: affirmed at 'AA-(tur)', Outlook Stable

Support Rating: affirmed at '4'




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

NAFTOGAZ: Fitch Raises LT Foreign Currency IDR to B
---------------------------------------------------
Fitch Ratings upgraded National Joint Stock Company Naftogaz's
Long-Term Foreign-Currency Issuer Default Rating to 'B' from 'B-'.
The Outlook is Positive.

The upgrade follows that of Ukraine's sovereign rating (B/Positive)
on September 6, 2019 and the application of Fitch's
Government-Related Entities Rating Criteria. Fitch equalises
Naftogaz's ratings with those of sovereign, reflecting the
company's strong links with the sovereign and our assessment of the
company's standalone credit profile (SCP) at 'b-'.

The rating also takes into account Naftogaz's weak liquidity
profile but overall low leverage and also some uncertainty related
to domestic gas prices, the unbundling of the international transit
business and political risk.

KEY RATING DRIVERS

Ratings in Line with Sovereign: Fitch views the overall linkage of
Naftogaz with the sovereign as strong, which is reflected in a
score of 40 under our GRE criteria. Fitch assesses as 'Strong' the
company's status, ownership and control, record of support from the
state, and expectations and financial implications of a default of
Naftogaz. Fitch views the socio-political implications of a default
of Naftogaz as 'Very Strong'.

Strong Links with State: Naftogaz is 100% state-owned and is
strategically important to the government as Ukraine's largest
natural gas production, wholesale, transmission and trading
company. Dividends, taxes and levies paid by Naftogaz represented
14.9% of Ukraine's revenue in 2018. Historically the state also
guaranteed almost a third of the company's gross debt, which
Naftogaz repaid in May 2019. Between 2012 and 2015, the government
provided about UAH141 billion in direct support to Naftogaz.
Naftogaz's financial performance is closely monitored by the IMF,
Ukraine's main lender, which incentivises the government to ensure
that Naftogaz is adequately funded.

Standalone Credit Profile: The 'b-' SCP of Naftogaz captures its
monopoly in gas transit and domestic transportation by main
pipelines in Ukraine and improved financial profile and liquidity,
although the latter remains weak. It also reflects uncertainties
and potential volatility in its operating and financial profiles
after 2019, post the unbundling of its gas transmission business.
In our view, Naftogaz's stronger financial performance in 2016-2018
may not be sustainable in the long term, as it depends on external
factors on which Fitch has limited visibility, such as domestic gas
prices and increasing accounts receivable from distribution
intermediaries, as well as the unbundling of the transit division.

Ukraine Upgrade: Fitch expects that improving macroeconomic
stability in Ukraine and reduced domestic political uncertainty,
reflected in the recent upgrade of Ukraine's IDRs to 'B'
(Positive), are likely to result in lower pressure from the local
operating environment on Naftogaz's ratings.

Regulatory Risks to Ease: Fitch expects regulatory risk to ease
when the Public Service Obligation (PSO) regime ends in May 2020.
Under PSO, Naftogaz is legally obliged to provide gas to municipal
heat utilities and distribution intermediaries at below-market
prices determined by PSO. Due to low market prices, which are lower
than PSO-determined prices, prices of gas for PSO customers
decreased in June 2019 by 7.3%. Naftogaz is legally required to
continue supplying some of its non-paying customers under certain
conditions, which may negatively affect the collection of
receivables as long as the PSO is in operation.

Naftogaz estimates that the state owes it significant compensation
under the PSO for supplying gas to customers at below market
prices, but Fitch conservatively excludes any compensation in our
forecasts.

Earnings Loss from Planned Unbundling: Ukraine's government has
committed to reforming the energy sector, in line with the EU's
third package. This implies market liberalisation and unbundling of
the gas transmission function (TSO) from gas production and supply.
Naftogaz expects this unbundling to take place in 2020, which is
also our assumption, after the gas transit contract with Gazprom
PJSC (BBB/Stable) expires. Naftogaz expects Ukrtransgaz PJSC, which
handles gas transit, to remain its subsidiary until then, but Fitch
assumes no revenue from transit or any compensation for the
unbundled assets.

Focus on Domestic Markets: After 2020, Naftogaz will focus on
domestic gas sales, storage, domestic petrol products and LNG
sales, gas production and service legal agreements with a newly
unbundled gas transit company. Fitch expects funds from operation
(FFO) gross adjusted leverage to average 1.0x over 2019-2022,
assuming lower earnings due to unbundling. Fitch also expects
increased capex to boost domestic gas production by 2021, both
through greenfield and brownfield investments. Naftogaz accounts
for about 80% of Ukraine's domestic gas production.

Favourable Arbitration Ruling: In 2017 and 2018, the Arbitration
Institute of the Stockholm Chamber of Commerce effectively ruled in
favour of Naftogaz in two multi-billion-dollar cases involving
Gazprom. As a result, Fitch believes the risks to Naftogaz's
financial position stemming from the arbitration are eliminated.
Fitch does not incorporate the USD2.6 billion net award in favour
of Naftogaz in our forecasts since its timing is uncertain.

Gazprom has appealed the award in the gas transit arbitration case
but Naftogaz has proceeded with enforcing the arbitration ruling
and is assessing alternatives to recover the award from Gazprom.
Fitch does not include any proceeds from arbitration outcomes in
our base case.

Disputes with Gazprom Continue: Naftogaz does not purchase natural
gas from Gazprom following the latter's refusal to resume supplies
in March 2018. Fitch believes that Naftogaz should be able to buy
the required volumes of gas from European suppliers as in
2016-2018. Gazprom depends on Naftogaz for gas transit to Europe
and Fitch expects it to honour its obligations under its transit
agreement until 2020. However, gas transit volumes could materially
reduce from 2020 when alternative pipelines Nord Stream II and
TurkStream are ramped up.

DERIVATION SUMMARY

Naftogaz operates in a weaker operating environment than other
Fitch-rated EMEA gas transmission and distribution companies, such
as eustream, a.s. (A-/Stable) and KazTransGas JSC (BBB-/Stable).

While Naftogaz's projected financial metrics for 2019 are strong
relative to peers', the company's SCP of 'b-' reflects potential
cash flow volatility arising from sensitivity to the continued
indexation of domestic gas prices in Ukraine, collectability of
accounts receivable and the impact of unbundling of the company's
gas transportation business expected post-2019. The rating of
Naftogaz is at the same level as Ukraine under our GRE Criteria.

KEY ASSUMPTIONS

  - Ukrainian GDP to increase around 3.4% annually over 2019-2022

  - Ukrainian CPI of 5.7%-8.5% over 2019-2022

  - No gas transit and transportation revenue post-2020 due to
    unbundling and the expiry of contract with Gazprom

  - Domestic sales of gas volumes to increase by 2021

  - Declining profitability across most segments from 2019

  - Capex of average USD1 billion annually over 2019-2022

  - Dividends payment in line with management estimates

KEY RECOVERY RATING ASSUMPTIONS

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

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

  - A 3x multiple is used to calculate a post-reorganisation
enterprise value (EV). It is below the mid-cycle multiple for EMEA
oil and gas companies. It captures higher-than-average business
risks in Ukraine, reflects Naftogaz's lack of both unique
characteristics allowing for a higher multiple, or significant
undervalued assets.

  - Fitch has taken 10% off the EV to account for administrative
claims. Fitch has also treated all banking debt as prior-ranking.
The principal waterfall analysis output percentage is capped at 50%
or the 'RR4' band, in line with our criteria as Naftogaz's physical
assets are located in Ukraine.

RATING SENSITIVITIES

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

  - Further positive rating action on Ukraine would be mirrored in
Naftogaz's rating due to rating equalisation. This is provided
Naftogaz's SCP remains up to three notches below the sovereign's
rating and the links with the state do not weaken.

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

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

  - Significant deterioration of Naftogaz's financial profile or
liquidity following the planned reorganisation with simultaneous
weakening of links with the state.

The following rating sensitivities are for Ukraine:

The main factors that could, individually or collectively, lead to
an upgrade are:

  - Increased foreign currency reserves and external financing
flexibility.

  - Improvement of structural indicators, such as governance
standards.

  - Higher growth prospects while preserving improved macroeconomic
stability.

  - Further declines in government indebtedness and improvements in
the debt structure.

The main factors that could, individually or collectively, lead to
the Outlook being revised to Stable are:

  - Re-emergence of external financing pressures or increased
macroeconomic instability, for example stemming from failure to
agree an IMF programme or delays to disbursements from it.

  - External or political/geopolitical shocks that weaken the
macroeconomic performance and Ukraine's fiscal and external
position.

  - Failure to improve standards of governance, raise economic
growth prospects or reduce the public debt-to-GDP ratio.

LIQUIDITY AND DEBT STRUCTURE

Tight but Manageable Liquidity: At 1 August 2019, Naftogaz had
USD1,438 million in short-term debt, with freely available cash of
USD1,478 million. A UAH12.5 billion loan from the World Bank
guaranteed by the Ukrainian government was repaid on 8 May 2019.
Most of its total indebtedness USD1.7 billion out of USD2.7 billion
is bank borrowings from Ukrainian state banks such as JSC State
Savings Bank of Ukraine (Oschadbank), Public Joint-Stock Company
Joint Stock Bank Ukrgasbank and JSC The State Export-Import Bank of
Ukraine (Ukreximbank). The remaining USD1 billion is senior
unsecured euro- and US dollar- denominated bonds maturing in
2022-2024.




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

CONNECT FINCO: Moody's Rates US$1.125B Sec. Notes 'B1'
------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the USD1.125
billion worth of senior secured notes (due 2026) being issued by
Connect Finco Sarl and Connect U.S. Finco LLC, the debt issuing
subsidiaries of Connect Bidco Limited (Connect Bidco; B1, Corporate
Family Rating), the top-entity of the ring-fenced group that will
ultimately own Inmarsat plc (Inmarsat; Ba2, RUR-down) once it is
acquired by private equity groups Apax and Warburg Pincus alongside
Canada's CPPIB and Ontario Teachers' Pension Plan Board.

RATINGS RATIONALE

The B1 rating on the USD 1.125 billion of bond debt reflects its
pari-passu ranking with the B1 rated USD2.7 billion term loan B and
the B1 rated USD700 million of revolving Credit Facility (RCF, due
2024) being issued by the same entities. Upon consummation of the
Inmarsat acquisition transaction, all rated debts will be secured
by material fixed assets and is guaranteed by operating
subsidiaries accounting for no less than 80% of consolidated
EBITDA.

Connect Bidco's B1 CFR reflects (1) Inmarsat's well-established
global dual-constellation satellite network of 13 geostationary
satellites (including 4 Global Xpress (GX) satellites; and 8 more
to follow between 2019-2023) with multiple redundancies; (2) the
company's strong market position in the maritime connectivity
market, its relatively young GX fleet as well as its European
Aviation Network (EAN); (3) continued opportunities for strong
revenue growth, over the next few years in the aviation
connectivity segment, particularly outside North America; (4) high
proportion of recurring (80% of revenues contracted/ subscription
based) and diversified revenue base with near-term growth supported
by a backlog of in-flight connectivity (IFC) contracts and Very
Small Aperture Terminals (VSAT) commitments (5) significant
switching costs for customers and a well-diversified customer base;
(6) flexible capital investment strategy from 2021 supporting
positive free cash flow generation; and (7) an experienced
management team and financial sponsors.

The rating is constrained by (1) high Moody's adjusted pro-forma
gross leverage of 5.9x expected by the end of 2019, assuming the
full anticipated loss of nearly USD130 million of high-margin
revenue from Ligado from January 2019 onwards; (2) high capex until
2020, likely to result in negative free cash flow generation (3)
risk of intensification of competition/ oversupply and pricing
pressure resulting from significant planned incoming capacity from
new GEO (geostationary earth orbit) / LEO / MEO constellations
planned for launch from 2022/23 in the mobility space, although
Inmarsat is likely to benefit from a first-mover advantage until
the new constellations become fully operational (4) challenged
revenue growth prospects for maritime due to pricing pressure,
competition from low-end VSAT players, like KVH, and from Iridium
Communications Inc. (B2, stable) new CERTUS terminals (facilitated
by its new satellite constellation Iridium NEXT), although
continued take-up of technologically-advanced VSAT by large and
mid-sized vessels is likely to provide some offset.

RATING OUTLOOK

The stable ratings outlook reflects Moody's expectation that the
company will continue to grow its revenues and EBITDA in line with
its business plan and carry out its scheduled satellite launches in
a timely manner.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Moody's considers the ratings at the outset to be weakly positioned
and therefore no upward pressure is expected in the near term.
Positive pressure on the ratings could develop over time, should
(1) Inmarsat demonstrate sustained solid revenue and EBITDA growth;
(2) its gross debt/EBITDA (Moody's-adjusted) decreases sustainably
and materially below 5.0x; and (2) the company reaches and sustains
positive free cash flows (FCF, Moody's adjusted) on a normalized
basis.

Downward ratings pressure would materialize if (1) Inmarsat's
revenue and EBITDA come under pressure from increasing competition
(2) its debt load increases relative to EBITDA, such that its gross
leverage (Moody's-adjusted gross debt/EBITDA) remains materially
above 5.5x beyond 2020; and/ or (3) its free cash flow (FCF)/gross
debt (Moody's-adjusted) remains materially negative beyond 2021.
There would also be downward rating pressure if the company's
liquidity were to significantly deteriorate.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Communications
Infrastructure Industry published in September 2017.

COMPANY PROFILE

Connect Bidco Limited will ultimately own Inmarsat plc.
Headquartered in London, U.K., Inmarsat is a market leader in
global mobile satellite communication services. The company has an
in-orbit fleet of 13 owned and operated satellites in geostationary
orbit and provides a comprehensive portfolio of global mobile
satellite communications services for customers on the move or in
remote areas for use on land, at sea and in the air. In its fiscal
year ended December 31, 2018, Inmarsat plc reported revenue of $1.5
billion and EBITDA of $770 million.


DONCASTERS GROUP: Moody's Lowers CFR to Caa3, Outlook Negative
--------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating of
Doncasters Group Ltd (Doncasters or the company) to Caa3 from Caa1,
and downgraded the probability of default rating to Ca-PD from
Caa1-PD. Concurrently Moody's has downgraded the ratings of the
first lien senior secured facilities (B and C) issued by Doncasters
Finance US LLC to Caa3 from Caa1 and the senior secured second lien
facilities, also issued by Doncasters Finance US LLC, to C from
Caa3. The outlook on both entities remains negative.

The rating action reflects:

  -- Continued deterioration in Doncaster's trading
     performance

  -- The company's high leverage and near-term debt maturities

  -- Expectation of an imminent restructuring with material
     impairment of the debt facilities

RATINGS RATIONALE

The Caa3 CFR takes into consideration: (1) the company's
unsustainable capital structure with Doncasters' Moody's-adjusted
leverage of around 17x as of June 2019; (2) near-term debt
maturities with the company's ABL revolving credit facility (RCF)
expiring in January 2020, the first lien debt maturing in April
2020 and the second lien in October 2020; (3) expectations that the
company's financing will be restructured leading to a default, with
limited recoveries for the second lien and impairment of the first
lien debt; (4) declining profitability caused by new product
introductions and manufacturing issues; (5) a highly competitive
market place, with much larger operators than Doncasters, including
Precision Castparts Corporation (A2, stable) and Arconic Inc. (Ba2,
stable).

These negative factors are only partly offset by: (1) diversified
end-market exposure as the company supplies industries with
different macroeconomic cycles; (2) long-term arrangements in the
largest segments of Aerospace and industrial gas turbines (IGT)
which typically allow for the pass-through of metal price changes;
and (3) the potential to realise substantial value from operational
turnaround and disposals.

Doncasters has experienced trading challenges for an extended
period, with weak or variable demand for IGT since 2015; and
production difficulties and margin compression from transitioning
from legacy to new generation platforms within aeroengine and IGT
markets since 2016. Trading has deteriorated further in 2018 and in
the first half of 2019, driven by a continuation of these factors
alongside operational problems and high scrap rates within the
company's superalloys division. Despite growth in revenues as new
aerospace programmes ramp up, underlying EBITDA margins fell by 4.1
percentage points to 9% in 2018.

Doncasters has been executing a disposal strategy since 2017 when
it agreed the sale of its Fasteners division for $426 million. The
breakup and disposal strategy is likely to continue following the
expected restructuring. Achieving significant recoveries for
lenders will be contingent on the turnaround and sale of some of
the remaining business units which have not yet been successfully
sold. Moody's considers that the business contains a mix of
strategically valuable and more commoditised operations and there
are likely to be challenges to achieve disposals across the entire
portfolio, which will limit overall recovery potential.

Accordingly, whilst there is limited granularity to consider
disposal valuations on a business unit level, and a range of
outcomes may be achieved, Moody's assesses that second lien
recoveries will be minimal, whilst first lien recoveries are
assumed to be in the range 65% to 85%. These recovery levels are
commensurate with ratings of Caa3 for the first lien and C for the
second lien. The probability of default rating of Ca-PD reflects
the high likelihood of a default in the near term.

Governance risks that Moody's considers in Doncasters' credit
profile include: (1) recent changes in the management are credit
positive with the appointment of a turnaround and restructuring
specialist as CEO, notwithstanding the team's short tenure at the
company; (2) financial irregularities in one entity in 2017, which
could indicate weaknesses of financial control in the context of a
disparate group; (3) high levels of adjustments to EBITDA leading
to lack of clarity of underlying performance; and (4) inherent
challenges in implementing effective governance within a lender-led
transaction post restructuring, mitigated by the alignment of
equity and debt holders interests and the near term disposal
strategy.

LIQUIDITY

The company's liquidity is weak. As at June 30, 2019 Doncasters had
cash balances of GBP13 million and availability under its ABL RCF
of around GBP24 million. Before disposals and financing cash flows,
Doncasters reported negative free cash flow and Moody's expects
further cash outflows in 2019. The ABL RCF maturity will need to be
extended or replaced by January 2020 in order to preserve liquidity
headroom and depending on the company's ability to realise further
disposal proceeds, new financing may be required to support the
company following a restructuring.

OUTLOOK

The negative outlook reflects the expectation that the company will
enter a restructuring process in the near term, which is highly
likely result in a default. Given the high leverage and weak
liquidity Moody's expects material impairment of the company's debt
facilities.

WHAT COULD CHANGE THE RATING UP / DOWN

The ratings could be upgraded if the restructure of the company's
balance sheet is resolved with expectations of only limited
impairment to the existing debt, or if an alternative transaction
is implemented leading to limited impairment.

The ratings could be downgraded if recoveries on the existing debt
are likely to be are lower than expected as a result of the pending
restructuring.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global
Manufacturing Companies published in June 2017.

COMPANY PROFILE

Doncasters is a vertically integrated manufacturer of high quality
engineered precision components for aero engines, industrial gas
turbines, and other specialist high performance applications. It
serves as a tier 1 and 2 supplier to a diversified industry base
including the aerospace, energy, commercial vehicle and
petrochemical markets. As at December 31, 2018 the company operated
23 principal manufacturing facilities in the UK, US, Germany,
Belgium, China and Mexico. In 2018 Doncasters reported revenues and
EBITDA from continuing operations of GBP459 million and GBP33
million respectively.


GVC HOLDINGS: Fitch Assigns BB+(EXP) Rating to EUR1,125MM Term Loan
-------------------------------------------------------------------
Fitch Ratings assigned GVC Holdings Limited's EUR1,125 million
first lien term-loan B facility an expected rating of 'BB+(EXP)'
with a Recovery Rating of 'RR3'.

GVCG is a wholly-owned subsidiary of GVC Holdings PLC (GVC,
BB+/Stable) and an existing original guarantor under GVC's senior
facilities agreement (SFA). The new senior secured loan facility
will rank pari passu with all existing senior secured debt within
GVC and will benefit from the same security and cross guarantees
package as the original TLB facilities.

This new facility will refinance GVC's GBP175 million TLB due March
2024, the EUR300 million TLB due March 2023 and EUR625 million TLB
due March 2024. The latest facility will consolidate these existing
TLBs into one larger tranche, which will now mature in March 2024.
While the conversion of the GBP facility into a new euro facility
marginally increases currency risk at GVC, which reports in
sterling pounds, it is likely to be compensated for by the
increasing euro-denominated revenue the gaming group is now
generating. The transaction is neutral to GVC's leverage and has
the same maturity as the original TLB.

The assignment of the final rating is subject to the receipt of
final documentation being in line with the information already
received.

KEY RATING DRIVERS

Strong Business Profile: The combination of GVC with Ladbrokes
created one of the world's leading gaming operators. The enlarged
group benefits from owning multiple brands providing betting and
gaming services across multiple geographies in Europe, as well as
sizeable operations in Australia. It also holds licences in the US
and announced in July 2018 a JV with MGM Resorts International
(BB/Stable), positioning the group firmly for the liberalisation of
this market.

The business's size allows the group to benefit from economies of
scale in an industry that is becoming more competitive and tightly
regulated, whether through further consolidation or taking market
share from less competitive, smaller operators.

M&A Record Reduces Execution Risks: The management teams of GVC and
Ladbrokes have a strong record of integrating mergers and
acquisitions, and Fitch has therefore factored into our ratings
reduced integration risks in the realisation of potential
synergies. However, given the size of the merger as well as the
gaming machines review outcome in the UK on the new stake limit
Fitch does not rule out a slower pace of savings, although there is
good progress so far, with UK online migrations having begun in
2H19.

Diversified End-Markets: GVC's business profile benefits from good
geographic diversification, with more than 90% of revenue generated
from regulated or taxed markets, following the disposal of GVC's
Turkish operations in 2018. The addition of Ladbrokes to the group
adds a strong market position in the UK and good positions in Italy
and Australia. This reduces the risks associated with regulatory
changes in individual jurisdictions, providing greater visibility
on profits, despite a new consumption tax imposed in Australia.

Synergies from Multi-channels: The enlarged group combines retail
and digital betting, enhancing its ability to improve brand and
product awareness, as well as customer retention through enhanced
multi-channel and marketing initiatives. Ladbrokes's strong
multi-channel capabilities could provide more growth opportunities
for GVC, which has had impressive growth over the past years.

Potential Profitability Increase: Management has guided to roughly
GBP130 million of cost savings from the merger to be phased in over
the next four years. The major component relates to technology
savings, given GVC's own proprietary technology. Fitch forecasts
that cost savings, along with some additional revenue growth,
should drive combined pro-forma EBITDA margin toward 24.5% by
end-2020 from 21.3% in 2018.

Uncertain UK Regulatory Environment: Last year saw a number of
regulatory changes whose implementation has affected all gaming
operators. Given the high political scrutiny, more changes are in
prospect. The UK gaming machines Triennial Review leading to a
reduction in the stake limit on B2 machines to GBP2 from GBP100 is
affecting all large retail operators in the UK. Fitch assumes an
impact of GBP145 million on EBITDA by 2020 without any meaningful
compensation measures. However, the group has advised at its 1H19
results publication that the full-year negative impact on profits
from the Triennial Review will be GBP10 million lower than
originally forecast.

In addition GVC will now only close 900 Ladbrokes/Coral shops, as
opposed to 1,200 identified originally. While the rise in remote
gaming duty to 21% from 15% has affected GVC's UK online business,
this has been compensated for by strong growth of online revenues
(net gaming revenues (NGR) up 17% in 1H19).

Mounting Pressure for Responsible Gaming: The political pressure on
gaming operators to put in effective safeguards for problem
gamblers continues unabated. In the UK the Gambling Commission has
recently fined GVC subsidiary Ladbrokes Coral Plc GBP5.9 million
for not protecting vulnerable customers and lapses in its money
laundering measures before the merger between 2014 and 2017.
Although the amount is insignificant for credit metrics, it has led
GVC to actively review its player protection measures to fully meet
its regulatory requirements. GVC has also significantly increased
its funding of responsible gaming initiatives, agreed to further TV
and stadium perimeter advertising restrictions and rolled out safer
gaming tools and behavioural tracker systems.

Other Regulatory Risks on the Rise: The introduction of a
state-wide consumption tax in Australia will affect profitability,
while licence renewals in Italy could lead to some uncertainty and
lumpy capex. GVC was also fined roughly EUR187 million dating back
to 2010-2011 for tax issues at Sportingbet in Greece, with around
GBP80 million to be paid in 2019. In addition there is a
possibility that German Lander states may regulate in-play
betting.

Large Growth Market in US: More positively in the US, the May 2018
legalisation of sport betting opens up a large potential market,
with GVC well-placed to take advantage of its growth, since it
holds Nevada and New Jersey licences, as well as the JV with MGM
Resorts International. In New Jersey GVC has just launched an
online sports betting operation for the start of the National
Football League.

Satisfactory Cash-Generating Capability: Fitch forecasts GVC should
be able to generate satisfactory free cash flow (FCF) for the
current rating by end-2022, after dividends. This allows for
reasonably good deleveraging prospects. Fitch expects that the main
driver will be revenue growth, coupled with enhanced profitability,
with low working capital and capex requirements. Given expectations
of steady capex in 2019 Fitch expects post-dividend FCF margins
could exceed 4%-5% by 2021.

Dividend Target and Leverage Commitment: GVC has a record of paying
special dividends. Fitch expects that management will remain
committed to its public target of a 10% annual increase in
dividends. Given management's commitment to a net debt/EBITDA
target of below 2.0x in the long term, Fitch believes the group may
look to repay debt to achieve this.

Improving Financial Headroom: Fitch forecasts that GVC will be able
to deleverage by 2021, given the group's good cash-generating
capability, with funds from operations (FFO) adjusted net leverage
falling to around 3.5x by 2021 from a high of 4.9x in 2019. Fitch
expects that FFO fixed-charge coverage will be strong for the
rating, rising to around 4.5x by 2021. This will be driven by a low
cost of debt and lower future rental expenses, as the group
increasingly moves online while closing shop units in the UK
following the Triennial Review decision.

DERIVATION SUMMARY

The combined GVC/Ladbrokes Coral group created the largest European
gaming operator, combining a mature retail channel with a growing
online product. The group's business profile is commensurate with a
higher rating category, supported by strong profitability and
financial flexibility. GVC's expected EBITDAR margin at 23%-25%
with moderate volatility through an average downturn is solid
relative to other 'BB' category-rated peers at 15%. However the
group's leverage is high for the 'BB+' rating, and slightly higher
than that of closest UK-based peer William Hill Plc, as well as
other gaming operators Crown Resorts Limited (BBB/Stable) and Las
Vegas Sands Corporation (BBB-/Positive).

KEY ASSUMPTIONS

Fitch's Key Assumptions within our Rating Case for the Issuer

  - Good revenue growth in the group's online businesses only
    partly offsetting lower stakes in the retail business. A
    significant reduction in machines staking from 2019 onwards,
    as a result of the lower B2 staking limit of GBP2 effective
    from April 1, 2019.

  - Margin contributions from online services fall to around
    40%, reflecting expected tax increase in the UK, Australia
    and Ireland for 2019-2020.

  - Combined group pro-forma EBITDA margin improving to 24.5%
    by end-2020 from about 21% in 2018, as synergies are
    realised and the group sees organic growth outpacing
    an increase in the cost base. Fitch assumes that the
    group achieves synergies of GBP100 million by 2021 out
    of the planned GBP130 million. Fitch expects a negative
    impact of around GBP145 million on EBITDA by 2020 from
    the GBP2 B2 maximum stake implementation in April 2019.

  - Capex for the combined group at between GBP160 million
    and GBP220 million over the next three years. This is
    conservatively higher than the current guidance from
    management for 2019-2020.

  - A 10% annual increase in dividends.

RATING SENSITIVITIES

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

  - Successful integration of the two businesses and realisation
    of planned synergies resulting in profitability (EBITDAR   
    margin above 27%) exceeding Fitch's rating case projections

  - FFO adjusted net leverage trending towards 3.0x (gross
    towards 3.5x).

  - FFO fixed-charge coverage remaining above 3.5x

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

  - Evidence that the group is not realising the expected
    synergies or facing other difficulties, such as increased
    competition or tighter regulation leading to weaker-than-
    forecast profitability (for example EBITDAR margin at or
    below 22%)

  - FFO adjusted net leverage remaining above 4.0x (gross
    above 4.5x) in the next three years

  - Increased shareholder returns that limit the group's
    deleveraging path

LIQUIDITY AND DEBT STRUCTURE

Adequate Liquidity: Fitch forecasts that GVC's liquidity will
remain adequate under our base case scenario, with a GBP550 million
revolving credit facility (RCF) remaining undrawn.

Apart from the contemplated leverage-neutral refinancing into a new
unified euro-denominated TLB, GVC's current debt structure includes
Ladbrokes' outstanding GBP100 million 2022 retail bond and GBP400
million 2023 senior secured notes, as well as its USD800 million
TLB (of which GBP4.7 million-equivalent was repaid in 2018) due in
2024. All debt ranks pari passu, and includes
guarantees/cross-guarantees and share pledges from key group
subsidiaries representing at least 75% of group EBITDA.

All Senior Debt Capital Structure: The capital structure is
characterised by an all-senior debt structure (ie no second-lien
debt). The nature and size of the asset base comprises principally
limited sizeable tangible assets, resulting in limited additional
credit enhancement arising from the security package at the 'BB+'
IDR level. Fitch would expect recovery prospects to be "good" for
secured and guaranteed creditors in a default, but not sufficient
to merit a single-notch uplift.


IVC ACQUISITION: Fitch Rates EUR108MM Term Loan 'B+'
----------------------------------------------------
Fitch Ratings assigned IVC Acquisition Limited's incremental GBP100
million and EUR108 million term loan B a final rating of 'B+' with
a Recovery Rating of 'RR3', following receipt of the loan
documentation conforming to information already received.

In addition Fitch is merging the added-on debt tranches to the
existing rated debt instrument, and affirming the 'B+'/'RR3' on the
enlarged GBP982 million (in euros and sterling-equivalent) senior
secured TLB instrument.

The rating of IVC (B/Stable Outlook) remains supported by its
satisfactory market positions as an emerging pan-European
veterinary care business and by strong sector fundamentals offering
growth and consolidation opportunities. However, the rating is
constrained by high leverage, an only emerging track record of the
business in its current form, as well as moderate execution risks
around the group's business integration and future external
growth.

The Stable Outlook reflects its view of continued shareholder
support as evidenced by concurrent equity and payment-in-kind (PIK)
debt increase in addition to accelerated debt-funded growth. This
should provide moderate deleveraging capacity, aided by solid sales
growth prospects, expected productivity improvements, as well as
satisfactory free cash flow (FCF) generation.

The expected instrument rating was withdrawn due to internal data
clean-up as the final rating refers to the enlarged debt facility.

KEY RATING DRIVERS

Accelerated Growth Strategy: Fitch views the 'B' rating as being
currently constrained by high financial indebtedness with funds
from operations (FFO) adjusted gross leverage (post TLB placement)
just above 8.5x (adjusted for acquisitions). This is despite an
estimated GBP186 million in new equity and PIK debt contribution to
fund an accelerated external growth strategy in the UK and selected
continental European markets.

While Fitch views this leverage as high for the rating, Fitch
nevertheless assumes a moderate deleveraging capacity, based on its
assumption of a financially-disciplined, targeted, yet ambitious
growth strategy, combined with productivity enhancements and
satisfactory cash conversion. Hence Fitch projects FFO adjusted
gross leverage trending below 7.0x over its four-year rating
horizon to 2023, which is still high but more commensurate with
IVC's ratings.

Satisfactory Profitability and Cash Conversion: The rating is
supported by IVC's satisfactory and improving profitability. Fitch
expects EBITDA margin to improve towards 15% by 2023, resulting in
an annual FCF margin between 4% and 7%, supported by modest working
capital requirements and the low capital intensity of the group's
asset-light business model. Fitch also projects FFO fixed charge
cover trending towards 2.0x in its rating case, indicating adequate
financial flexibility for the 'B' rating.

Defensive, Diversified, and Customer-Centric Operations: The rating
is underpinned by IVC's satisfactory market position as an emerging
pan-European veterinary care service business, with a strong
medical and customer focus. IVC's business plan is focused on
growing economies of scale, consolidating the fragmented animal
health care market and creating regionally leading veterinary
chains across western Europe. These regional operations will be
supported by common head office functions realising scale benefits.
Strong market positions in selective markets (the UK & Nordics) and
scalable operations should, in its view, allow IVC to diversify the
business internationally, improving underlying profitability and
optimising its mix of service offerings.

Increasing Execution Risks: Fitch views execution risks associated
with implementing IVC's ambitious growth strategy as moderate,
albeit rising given the group's accelerated external growth
ambitions and limited track record as a pan-European business. The
centralised head office function, including procurement and
centralised financial management, in its view, requires strict
implementation of financial discipline and controls to scale up
regional operations to a pan-European level. This is partly
mitigated by the satisfactory performance and good track record of
IVC so far in managing its expansion strategy. Fitch views growing
scale and consolidation benefits as further upside to its rating
case.

Consolidation Potential, M&A-driven Growth: Its rating assumes a
continuation of IVC's 'buy-and-build' strategy, operating as an
active participant in consolidating the fragmented European
veterinary care market. As such its rating case, based on
management guidance, assumes a total of up to GBP1.2 billion of
additional acquisitions between 2020 and 2023. This would require
additional funding within approximately two years as current
liquidity is insufficient to support aggressive external growth. In
its view, a key prerequisite to successful implementation of the
acquisition strategy is a disciplined approach to asset selection
and acquisition. If executed prudently, the acquired assets could
enhance the deleveraging prospect of the wider group despite being
debt-funded initially.

Unregulated Business Risk Profile: Compared with human health care
services, animal care services remain unregulated, with pet owners
having to privately fund treatments and or with insurance policies.
Fitch nevertheless views IVC's business risk profile as defensive,
offering scale benefits from the group's leading market position
and potential to introduce retail offerings to create customer
awareness and loyalty.

DERIVATION SUMMARY

Fitch bases its rating assessment of IVC on its Generic Navigator
framework, overlaying it with considerations of underlying animal
care and consumer service characteristics, which drive its business
profile. IVC's strategy of consolidating a fragmented care market
and generating benefits from scale and standardised management
structures is similar to strategies currently implemented by other
Fitch-rated health care operations such as laboratory services and
dental/optical chains. The key difference is that the animal care
market is not regulated compared with human health care, which
allows for greater operational flexibility, but also introduces a
higher discretionary characteristic to an otherwise defensive
spending profile.

Based on its peer analysis IVC's 'B' rating is well positioned
within the European health care service providers with
adequate-to-strong market positions in each of the group's region
of operations, benefitting from attractive underlying market
fundamentals and consolidation opportunities.

IVC is positioned well against other 'B' rated credits, despite a
FFO adjusted gross leverage of just above 8.5x, underpinned by
expected EBITDA margin improvement of around 120bp by 2021 and
satisfactory FCF generation. Compared with some of IVC's high-yield
peers such as Finnish private health operator Mehilainen Yhtym Oy
(B/Stable), and pan-European Laboratory testing company Synlab
Unsecured Bondco PLC (B/Stable), they exhibit a similar financial
risk profile to IVC's. However, IVC shows a less mature business
model and, at present, a limited track record of successfully
implementing its rapid consolidation outside its Nordic and UK core
markets.

KEY ASSUMPTIONS

  - Organic revenue at CAGR 4% and total revenue growth at CAGR 24%
including acquisitions.

  - EBITDA margin improving towards 14.6% by financial year to
September 2023 from 13.1% FY19. No rebate impact is forecasted.

  - Positive change in working capital representing 0.5% of sales,
driven by more flexibility in term contracts.

  - Limited capital intensity, with total capex representing on
average 3% of revenue over the rating horizon to FY23.

  - Cumulative bolt-on acquisitions of up to GBP1.2 billion to
FY23, which require additional funding.

  - No dividends.

Key Recovery Assumptions

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

Fitch applies a discount of 30% to the FY20 forecast EBITDA
(adjusted for 12-month contribution of all announced acquisitions
but not fully reflective of synergies) leading to a
post-restructuring EBITDA of GBP136 million, which Fitch believes
should be sustainable post-restructuring. The EBITDA discount is
slightly higher than that of some laboratories such as Synlab
(20%), which reflects potentially higher underlying volatility in
IVC's aggregated earnings profile than labs that are exposed to
higher regulated tariffs.

Fitch assumes a 5.5x distressed enterprise value (EV)/ EBITDA
multiple. The distressed multiple reflects lower scale, but
stronger geographical diversification, relative to its healthcare
portfolio (averaging at 6.0x distressed multiple).

The assumptions result in a distressed EV of about GBP750 million.

Based on the payment waterfall Fitch has assumed the GBP200 million
revolving credit facility (RCF) to be fully drawn with both the RCF
and the TLB (GBP982 million in euros and sterling-equivalent
including the added-on TLB tranche) ranking pari passu. Therefore,
after deducting 10% for administrative claims, its waterfall
analysis generates a ranked recovery for the senior secured debt in
the 'RR3' band, indicating a 'B+' instrument rating. The waterfall
analysis output percentage on current metrics and assumptions was
57% (previously 55%) for the enlarged senior debt facilities.

RATING SENSITIVITIES

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

  - Ability to further integrate operations, build scale and
profitability leading to FFO adjusted gross leverage to below 6.5x
(adjusted for acquisitions), EBITDA margin above 17% (FY18: 9.6%),
and FCF generation in high single-digit percentages on a sustained
basis

  - Satisfactory financial flexibility with FFO fixed charge cover
sustainably above 2.5x

  - Demonstration of an established business model, characterised
by enhanced diversification and greater scale with revenue trending
toward GBP2 billion

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

  - Erosion of profitability from failure to integrate and develop
the operations leading to EBITDA margin falling below 12%

  - Negative FCF, potentially as a result of an unsuccessful
acquisition strategy driving weaker credit metrics such as FFO
adjusted gross leverage above 8.0x (adjusted for acquisitions)

  - FFO fixed charge coverage below 1.5x on a sustained basis

LIQUIDITY AND DEBT STRUCTURE

Improved Near-term Liquidity: Fitch views IVC's near-term liquidity
position as improving as a result of the completed recapitalisation
which will result in estimated GBP177 million cash on balance sheet
as of end-September 2019, on top of an undrawn existing GBP200
million RCF. Liquidity is further supported by the non-amortising
nature of the TLB with no debt maturity before 2025.

While the RCF is available to fund acquisitions, Fitch expects
additional funding requirements before 2022 to support IVC's
ambitious acquisition strategy, as the group continues to favour
growth over deleveraging.


NEWGATE FUNDING 2007-1: S&P Raises Class F Notes Rating to 'B'
--------------------------------------------------------------
S&P Global Ratings raised its credit ratings on the class Ba, Bb,
Cb, Db, E, and F notes and affirmed its ratings on the class A3,
Ma, and Mb notes issued by Newgate Funding PLC series 2007-1.

In this transaction, S&P's ratings address timely receipt of
interest and ultimate repayment of principal for all classes of
notes.

S&P said, "The rating actions follow the application of our revised
criteria and our full analysis of the most recent transaction
information that we have received, and they reflect the
transaction's current structural features.

"Upon revising our criteria for assessing pools of residential
loans, we placed our ratings on all of the transaction's classes of
notes under criteria observation. Following our review of the
transaction's performance and the application of these criteria,
our ratings on the notes are no longer under criteria observation.

"In our opinion, the performance of the loans in the collateral
pool has improved since our previous full review. Since then, total
delinquencies have decreased to 20.7% from 23.7%.

"The presence of capitalized arrears in the pool was mitigated in
our weighted-average foreclosure frequency (WAFF) calculations by
the greater proportion of loans in the pool receiving the maximum
seasoning credit as well as the lower percentage of loans in
arrears. Our weighted-average loss severity (WALS) assumptions have
decreased at all rating levels as a result of higher U.K. property
prices, which triggered a lower weighted-average current
loan-to-value ratio."

  WAFF And WALS Levels
  Rating level WAFF (%) WALS (%)
  AAA        41.25  35.82
  AA           35.04  29.08
  A           31.19  18.02
  BBB        26.81  12.13
  BB         22.19  8.68
  B            21.03  6.19

Credit enhancement levels have increased for all rated classes of
notes since S&P's previous full review.

  Credit Enhancement Levels
  Class CE (%) CE as of previous review (%)
  A3   37.2   36.6
  Ma   31.8   31.2
  Mb    31.8   31.2
  Ba    18.1   17.5
  Bb    18.1   17.5
  Cb   10.0   9.4
  Db   4.6    4.0
  E     3.5     2.9
  F     2.4     1.8
  CE--Credit enhancement.

The notes benefit from a liquidity facility and a reserve fund,
neither of which are amortizing as the respective cumulative loss
triggers have been breached.

S&P said, "Our operational, legal, and counterparty risk analysis
remains unchanged since our previous full review. The bank account
provider (Barclays Bank PLC; A/Stable/A-1) breached the 'A-1+'
downgrade trigger specified in the transaction documents, following
our lowering of its long- and short-term ratings in November 2011.
Because no remedial actions were taken following our November 2011
downgrade, our current counterparty criteria cap the maximum
potential rating on the notes in this transaction at our 'A'
long-term issuer credit rating (ICR) on Barclays Bank.

"Our credit and cash flow analysis indicates that the available
credit enhancement for the class A3, Ma, Mb, Ba, and Bb notes is
commensurate with higher ratings than those currently assigned.
However, given the ratings on all the notes are capped at the
long-term ICR on Barclays Bank, we have raised to 'A (sf)' from
'BBB (sf)' our rating on the class Ba and Bb notes, and we have
affirmed our 'A (sf)' ratings on the class A3 to Mb notes.

"Our analysis also indicates that the available credit enhancement
for the class Cb, Db, E, and F notes is commensurate with higher
ratings than those currently assigned. However, given the presence
in the pool of loans with capitalized arrears (14.1%) and the tail
risk in the transaction due to the low pool factor and the high
percentage of interest-only loans, we have limited the upgrade of
the rating on the class Cb notes to two notches, to 'BB+ (sf)' from
'BB- (sf)'. For the same reasons, and also because of their junior
position in the capital structure, we have raised our ratings on
the class Db, E, and F notes by one notch, to 'B (sf)' from 'B-
(sf)'."

Newgate Funding 2007-1 is a U.K. RMBS transaction, which closed in
March 2007 and securitizes a pool of nonconforming loans secured on
first-ranking U.K. mortgages.

  Ratings List

  Newgate Funding PLC (Series 2007-1)  
  Class Rating to Rating from
  A3   A (sf) A (sf)
  Ma   A (sf) A (sf)
  Mb   A (sf) A (sf)
  Ba   A (sf) BBB (sf)
  Bb   A (sf) BBB (sf)
  Cb   BB+ (sf) BB- (sf)
  Db   B (sf) B- (sf)
  E    B (sf) B- (sf)
  F    B (sf) B- (sf)


SIRIUS MINERALS: 1,200 Jobs at Risk if Mine Financing Fails
-----------------------------------------------------------
Neil Hume and Chris Tighe at The Financial Times report that 1,200
jobs could be lost if Sirius Minerals fails to secure financing for
the US$5 billion potash mine it is developing in one of the UK's
most economically deprived areas, according to the company's chief
executive Chris Fraser.

Shares in the London-listed miner crashed by more than 50% on Sept.
17 after it decided to cancel a US$500 million bond issue, which
was required to unlock a US$2.5 billion financing package for the
Woodsmith mine on the North York Moors, the FT relates.

According to the FT, the company now has six months to put in place
fresh funding, otherwise it will run out of money and work on the
project, which includes an export facility on Teesside, will come
to a halt.

"If we go all the way to March and we have not brought additional
funding into the project, then obviously at that point in time we
will be down to a minimal number of staff," the FT quotes Mr.
Fraser as saying in an interview, adding the uncertainties around
Brexit had hampered its ability to issue the US$500 million bond.

Mr. Fraser, as cited by the FT, said he still believed the UK
government was supportive of the project even though it refused a
fresh request last month to provide a loan guarantee.

Sirius, the FT says, is hoping to find a strategic partner to a
stake in the project.  According to Mr. Fraser that would allow the
company to issue a bond and ultimately secure the funding necessary
to complete the Woodsmith mine from US bank JPMorgan, the FT
notes.

Mr. Fraser said a sovereign wealth fund, a potash producer like
EuroChem, or a big mining group like BHP would be acceptable
partners, the FT relates.

In spite of the latest setback, Mr. Fraser said he was confident
the mine, scheduled to start production in 2021, would be
developed, the FT notes.


SOUTHERN PACIFIC 06-1: S&P Affirms B- Rating on Class FTc Debt
--------------------------------------------------------------
S&P Global Ratings raised its credit ratings on seven classes and
affirmed its ratings on 17 classes from four Southern Pacific U.K.
RMBS transactions (Southern Pacific Financing 05-B PLC, Southern
Pacific Securities 05-3 PLC, Southern Pacific Financing 06-A PLC,
and Southern Pacific Securities 06-1 PLC).

S&P said, "The rating actions follow the implementation of our
counterparty criteria and assumptions for assessing pools of
residential loans. They also reflect our full analysis of the most
recent transaction information that we have received and these
transactions' structural features.

"Upon revising our counterparty criteria and assumptions for
assessing pools of residential loans, we placed our ratings on all
classes of notes from these transactions under criteria
observation. Following our review of the transactions' performance,
the application of our updated structured finance counterparty
criteria, and our updated assumptions for rating U.K. RMBS
transactions, our ratings on these notes are no longer under
criteria observation.

"Our ratings on these transactions' notes are capped at our 'A'
long-term issuer credit rating on the bank accounts' provider,
Barclays Bank PLC, following its short-term rating falling below
the documented replacement trigger and its failure to take the
expected remedy action.

"After applying our updated U.K. RMBS criteria, the overall effect
in our credit analysis results is a marginal decrease in the
weighted-average foreclosure frequency (WAFF) at higher rating
levels. This is mainly due to the loan-to-value (LTV) ratio we used
for our foreclosure frequency analysis, which now reflects 80% of
the original LTV and 20% of the current LTV. The WAFF has
nevertheless increased at lower rating levels following our updated
arrears analysis in which the arrears adjustment factor is now the
same at all rating levels, reflecting the high level of severe
arrears in these deals. Our weighted-average loss severity
assumptions have generally decreased at all rating levels driven by
lower current LTVs, the revised jumbo valuation thresholds, and the
introduction of a separate Greater London category.

"We have determined that our assigned ratings on the classes of
notes should be the lower of the rating as capped by our
counterparty criteria and the rating that the class of notes can
attain under our U.K. RMBS criteria.

"Our cash flow analysis of series 05-B's class E, series 06-A's
class D1, series 05-3's classes D1a and D1c, and series 06-1's
classes D1a and D1c indicate a rating higher than those we have
assigned. When determining our ratings, however, we considered that
these transactions are exposed to tail-risk because their pool
factors are approaching 10% of their initial balances, and the pool
composition could migrate to a higher proportion of lower-quality
assets.

"We consider the available credit enhancement for series 06-A's
class E, series 05-3's class E1c, and series 06-1's class E1c to be
commensurate with our 'B- (sf)' rating. Available credit
enhancement has increased in these transactions as the reserve fund
remains static and the notes' amortization continues, albeit at a
slow pace. Furthermore, we do not expect these classes to
experience interest shortfalls in the short term because there are
considerable liquidity facility lines in the four deals, which
would also be available to cover potential interest shortfalls if
the reserve funds were to deplete. We have therefore affirmed our
'B- (sf)' ratings on these notes.

"We have also affirmed our rating on series 06-1's class FTc at 'B-
(sf)'. The class FTc notes repay principal and interest using
excess spread. Their outstanding balance has decreased by more than
GBP1 million in the last two years in line with our expectations
for a 'B- (sf)' rating stress."

Southern Pacific's series are U.K. nonconforming RMBS transactions
originated by Southern Pacific Mortgage Ltd. and Southern Pacific
Personal Loans Ltd.

  Ratings List

  Southern Pacific

  Series Class Rating to Rating from
  05-B   D A (sf)   A- (sf)
  05-B   E BBB (sf) BB+ (sf)
  06-A   D1 BBB+ (sf) BB+ (sf)
  05-3   D1a A- (sf)   BBB+ (sf)
  05-3   D1c A- (sf)  BBB+ (sf)
  06-1   D1a BBB (sf) BB+ (sf)
  06-1   D1c BBB (sf) BB+ (sf)

  Series Class Rating
  05-B   A A (sf)
  05-B   B A (sf)
  05-B   C A (sf)
  06-A   A A (sf)
  06-A   B A (sf)
  06-A   C A (sf)
  06-A   E B- (sf)
  05-3   B1a A (sf)
  05-3   B1c A (sf)
  05-3   C1a A (sf)
  05-3   C1c A (sf)
  05-3   E1c B- (sf)
  06-1   B1c A (sf)
  06-1   C1a A (sf)
  06-1   C1c A (sf)
  06-1   E1c B- (sf)
  06-1   FTc B- (sf)


THOMAS COOK: Files Chapter 15 Bankruptcy Protection in New York
---------------------------------------------------------------
Irene Garcia Perez and Katie Linsell at Bloomberg News report that
Thomas Cook Group Plc has filed for Chapter 15 court protection in
the U.S. as part of a broader debt restructuring for the U.K.
travel agent.

According to Bloomberg, court papers dated Sept. 16 show the
company's Chapter 15 petition was filed in the Southern District of
New York.  Law firm Latham & Watkins is representing the company,
Bloomberg relays, citing the documents.

The filing may also trigger the payout of default insurance on
Thomas Cook debt, Bloomberg notes.

The travel agent's creditors are set to vote on Sept. 27 on a
proposed scheme of arrangement, a U.K. court procedure that will
allow Chinese investor Fosun Tourism Group to lead a planned rescue
of the company, Bloomberg discloses.

The documents said Thomas Cook proposed to swap GBP1.67 billion
(US$2.07 billion) of bank debt and bonds for 15% of the equity and
at least GBP81 million of new subordinated notes, which will pay
interest with more debt, Bloomberg relates.  After the injection of
at least GBP900 million of new money, Fosun will hold 75% of the
shares of the tour operator arm and up to 25% of the airline,
according to Bloomberg.


TRINITY SQUARE 2015-1: Moody's Affirms Ba1 on GBP23MM Cl. E Notes
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of 6 Notes in
Trinity Square 2015-1 plc and TRINITY SQUARE 2016-1 PLC. The rating
action reflects the increased levels of credit enhancement for the
affected Notes.

Moody's affirmed the ratings of the Notes that had sufficient
credit enhancement to maintain current ratings on the affected
Notes.

Issuer: Trinity Square 2015-1 plc

GBP1253M Class A Notes, Affirmed Aaa (sf); previously on Mar 23,
2018 Affirmed Aaa (sf)

GBP37.75M Class M Notes, Affirmed Aaa (sf); previously on Mar 23,
2018 Affirmed Aaa (sf)

GBP71.72M Class B Notes, Upgraded to Aaa (sf); previously on Mar
23, 2018 Upgraded to Aa1 (sf)

GBP45.3M Class C Notes, Upgraded to Aa2 (sf); previously on Mar 23,
2018 Upgraded to A1 (sf)

GBP33.97M Class D Notes, Upgraded to Baa1 (sf); previously on Mar
23, 2018 Affirmed Baa2 (sf)

GBP22.65M Class E Notes, Affirmed Ba1 (sf); previously on Mar 23,
2018 Affirmed Ba1 (sf)

Issuer: TRINITY SQUARE 2016-1 PLC

GBP656.1M Class A Notes, Affirmed Aaa (sf); previously on Feb 24,
2016 Definitive Rating Assigned Aaa (sf)

GBP19.77M Class M Notes, Affirmed Aaa (sf); previously on Feb 24,
2016 Definitive Rating Assigned Aaa (sf)

GBP37.55M Class B Notes, Upgraded to Aaa (sf); previously on Feb
24, 2016 Definitive Rating Assigned Aa2 (sf)

GBP23.72M Class C Notes, Upgraded to Aa2 (sf); previously on Feb
24, 2016 Definitive Rating Assigned A2 (sf)

GBP17.79M Class D Notes, Upgraded to Baa1 (sf); previously on Feb
24, 2016 Definitive Rating Assigned Baa2 (sf)

GBP11.86M Class E Notes, Affirmed Ba1 (sf); previously on Feb 24,
2016 Definitive Rating Assigned Ba1 (sf)

RATINGS RATIONALE

The rating action is prompted by the increased levels of credit
enhancement for the affected Notes and by enhancements in its cash
flow modeling approach that allow greater refinement in assessing
certain structural features, such as the support provided by the
liquidity reserve in this transaction.

The rating action also took into account the increased uncertainty
relating to the impact of the performance of the UK economy on the
transaction over the next few years, due to the on-going
discussions relating to the final Brexit agreement.

Increase in Available Credit Enhancement

Sequential amortization and reserve funds that have reached their
floor of 2% of the initial balance of Classes A to F, led to the
increase in the credit enhancement available in both transactions.

For Trinity Square 2015-1 plc, the credit enhancement for Classes
B, C and D affected by the rating action increased from 12.7% to
19.7%, from 9.7% to 14.7% and from 7.5% to 10.9% respectively since
closing.

For TRINITY SQUARE 2016-1 PLC, the credit enhancement for Classes
B, C and D affected by the rating action increased from 12.7% to
19.0%, from 9.7% to 14.1% and from 7.5% to 10.5% respectively since
closing.

The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
July 2019.

The analysis undertaken by Moody's at the initial assignment of
ratings for RMBS securities may focus on aspects that become less
relevant or typically remain unchanged during the surveillance
stage.

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

Factors or circumstances that could lead to an upgrade of the
ratings include: (1) performance of the underlying collateral that
is better than Moody's expected; (2) deleveraging of the capital
structure; and (3) improvements in the credit quality of the
transaction counterparties;

Factors or circumstances that could lead to a downgrade of the
ratings include: (1) an increase in sovereign risk; (2) performance
of the underlying collateral that is worse than Moody's expected;
(3) deterioration in the Notes' available credit enhancement; and
(4) deterioration in the credit quality of the transaction
counterparties.


WEST LOTHIAN: Council Explores Options if Rescue Plan Fails
-----------------------------------------------------------
Stuart Sommerville at The Scotsman reports that West Lothian
Council has options for its arms length leisure trust if a newly
agreed rescue plan fails.

Chief executive, Graham Hope, told councillor Chris Horne the
council theoretically had three options -- none of which were
expected to be used, The Scotsman relates.

West Lothian Leisure (WLL), which runs swimming pools and sports
centres, has faced hardship since 2016 due to increased private
sector competition, The Scotsman discloses.

According to The Scotsman, the council has agreed a financial
re-profiling deal with the trust to help meet redundancy costs.
Hours have already been reduced across the service, The Scotsman
relays.

At a meeting of the council's Risk and Governance committee the WLL
financial picture still scored a red light as a high risk, The
Scotsman notes.

Mr. Hope, as cited by The Scotsman, said: "I would support what the
head of Finance has said, but theoretically there are options were
there to be a failure.

"Firstly the board itself is not synonymous with the organization.
It would be up to the council to appoint a new board.

"A second option would be to appoint a third party organization to
take on the activities and the third option would be for these
activities to revert to the council."


ZARA UK: Moody's Alters Outlook on B2 CFR to Negative
-----------------------------------------------------
Moody's Investors Service changed the outlook to negative from
stable on Zara UK Midco Limited (Zara or the company), the top
entity of the borrowing group of a leading European flower and
premium vegetables producer and distributor with farm operations in
Kenya, Ethiopia and South Africa. At the same time the rating
agency affirmed Zara's B2 corporate family rating (CFR), B2-PD
probability of default rating (PDR) and B2 instrument rating of the
EUR280 million senior secured term loan B and EUR30 million senior
secured revolving credit facility (RCF) borrowed by Zara UK Midco
Limited.

The rating action is driven by the following considerations:

  - Financial metrics weaker than expected due to the operating
    performance impacted by unfavourable weather, cost increases
    and other factors, some of which are of non-recurring nature.

  - The expected recovery in performance may take longer due to
    lack of visibility and higher than anticipated volatility
    in performance.

RATINGS RATIONALE

The company's financial performance for the last twelve months of
June 2019 was negatively impacted by unusually bad weather across
both Ethiopia and Kenya, increase in both labour and raw material
costs, some of which is expected to be reversed, as well as some
product mix and FX impact. Moody's adjusted gross debt/EBITDA
increased to 6.1x, much higher than anticipated. The rating agency
expects leverage to decline towards 5.0x within the next 12-18
months, however given the demonstrated volatility in financial
performance Moody's is concerned about the company's ability to
execute the improvement.

The B2 CFR reflects Zara's (i) limited product diversification;
(ii) exposure to demand volatility stemming from the customer
preferences and retailer promotional activity as well as potential
margin volatility due to pricing pressure in UK retail and ability
to pass through cost increase; (iii) political risk arising from
operating in Kenya and Ethiopia which account for most of its own
production; (iv) vulnerability to weather and crop disease risk
inherent in the industry leading to potential margin volatility;
(v) concentration of the customer base (with the top five customers
accounting for c. 60% of the combined entity sales) and of
Flamingo's third-party supplier base.

Zara's ratings also reflect (i) strong market position, albeit in
narrow product segments: cut flowers and premium vegetables in the
UK and sweetheart roses globally, supported by the company's cost
advantage in sweetheart roses production; (ii) a degree of vertical
integration combining its own production with third-party sourcing
leading to ability to meet fluctuations in demand; (iii)
positioning in the product segments with favourable growth trends
in otherwise mature core markets; (iv) long-term relationships with
leading retail customers across the value spectrum and with
third-party suppliers.

The company's liquidity pro forma for the transaction is adequate,
supported by GBP25 million cash on balance sheet as of June 30,
2019 and c. EUR12 million availability under its EUR30 million RCF.
Moody's expect the company to continue to generate positive free
cash flow due to reduced capex requirements following significant
investments in the past several years and limited working capital
outflows. The company is subject to some intra-year seasonality in
demand and working capital swings in the Flamingo flower business
and may be affected by payment terms with its key customers.

Zara's business is exposed to a range of environmental and social
risks, such as extreme changes in weather, environmental impact
from flowers and vegetables production, water and labour shortage.
Moody's notes that sustainable production and employment are high
on the company's agenda and these concerns are partially mitigated
by a number of measures, such as Zara's usage of biological pest
control, water efficiency initiatives in Kenya and contribution to
a wide range of social and local community projects.

OUTLOOK RATIONALE

The negative outlook reflects heightened execution risks related to
Moody's expectation of continued growth in the two businesses
supported by volume growth at Afriflora and margin expansion at
Flamingo as well as some moderate synergies from combining the two
businesses.

WHAT COULD MOVE THE RATINGS UP/DOWN

Positive rating pressure could develop if Moody's adjusted debt/
EBITDA ratio falls sustainably below 4.0x and EBIT margin improves
towards a high-single digit in percentage terms while free cash
flow generation remaining solid. Downward rating pressure could
develop if the company's leverage stays above 5.0x, EBIT margin
declines below 5% or free cash flow becomes negative or liquidity
concerns arise.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Global Packaged
Goods published in January 2017.

Pro forma for the acquisition of Afriflora Zara UK Midco Limited is
a leading European supplier of flowers and premium vegetables to
retail and wholesale customers with 66% of sales generated in the
UK. The company runs farming operations primarily in Kenya and
Ethiopia as well as in South Africa with 630 hectares of combined
greenhouse production capacity. In 2018 the combined entity
generated revenues of GBP535 million and adjusted EBITDA of GBP55.7
million.



                           *********


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

Troubled Company Reporter-Europe is a daily newsletter co-
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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.

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