/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/191030.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, October 30, 2019, Vol. 20, No. 217 Headlines D E N M A R K SGLT HOLDING I: Fitch Assigns B- LT IDR, Outlook Stable F I N L A N D NOKIA OYJ: Moody's Downgrades CFR to Ba2, Outlook Stable G R E E C E GREECE: EU Okays Early Repayment of EUR2.7-Bil. IMF Debt I R E L A N D CAPITAL FOUR I: S&P Assigns Prelim B- Rating on Class F Notes I T A L Y GAMENET GROUP: S&P Puts 'B+' Issuer Credit Rating on Watch Neg. TELECOM ITALIA: S&P Affirms 'BB+/B' ICRs, Outlook Stable K A Z A K H S T A N KAZAKHYMS INSURANCE: Fitch Affirms BB- IFS Rating, Outlook Stable P O L A N D NB TRICITY: Files for Bankruptcy After OMG-G-S Deal Termination ZABRZE CITY: Fitch Affirms BB+ LongTerm IDRs, Outlook Stable R U S S I A BANK PRIME: Bankruptcy Hearing Scheduled for Oct. 30 CB ASSOTSIATSIYA: Liabilities Exceed Assets, Assessment Shows CREDIT EUROPE: Moody's Alters Outlook on B1 Deposit Ratings to Pos. SVYAZ-BANK JSCB: Fitch Withdraws BB- Issuer Default Rating [*] RUSSIA: Central Bank to Soften Capital Buffer Requirements S P A I N GRIFOLS SA: S&P Affirms 'BB+' Rating on Senior Secured Facilities S W I T Z E R L A N D EUROCHEM GROUP: Fitch Affirms BB LongTerm IDR, Outlook Stable U N I T E D K I N G D O M BBA AVIATION: Moody's Rates Proposed $650MM Unsec. Notes 'Ba2' FINSBURY SQUARE 2019-2: Fitch Raises Class F Debt Rating to CCCsf FINSBURY SQUARE 2019-3: Fitch Assigns CCCsf Rating on Cl. F Debt GOALS SOCCER: Hands Evidence to SFO in Accounts Investigation THOMAS COOK: Nordic Business Reaches Deal with Buyer - - - - - ============= D E N M A R K ============= SGLT HOLDING I: Fitch Assigns B- LT IDR, Outlook Stable ------------------------------------------------------- Fitch Ratings assigned SGLT Holding I LP a Long-Term Issuer Default Rating of 'B-' with a Stable Outlook and a final senior secured rating of 'B-'/'RR4' to the bonds issued by SGL TransGroup International A/S, which is a subsidiary of SGLT Holding I LP. The senior secured rating takes into account the consolidated group profile. The ratings reflect SGLT's asset-light business model and fairly diversified operations by geography, mode and end-customer sectors. The company operates in a highly competitive and fragmented freight forwarding market, but focuses on more complex projects, which supports its competitive position in this niche market. Key rating constraints are the company's small scale of operations, execution risk pertaining to its growth strategy that is driven by organic expansion and M&A, and high leverage and low margins. The ratings also take into account SGLT's relatively short-term nature of its contracts (one to three years), which is somewhat offset by a high customer retention rate, and some customer concentration at EBITDA level despite a large pool of customers. Fitch forecasts funds from operations (FFO) gross adjusted leverage to remain high at above 7x in 2019-2020 with gradual deleveraging towards 6.5x by 2021. Fitch expects the company to turn free cash flow positive from 2020. KEY RATING DRIVERS Small Company in Specialty Niche: SGLT is a small company in the overall freight forwarding market, which is a rating constraint. SGLT operates in all main modes of transport. It focuses on forwarding complex transportation projects and non-standardised goods in a few chosen sectors, including food ingredients and additives, fashion and retail, and specialty automotive. Its niche focus reduces its direct competition with larger peers, but it remains exposed to the highly competitive nature of the freight forwarding sector, which is reflected in thinner margins than for larger companies. Some Resilience Against Downturns: Fitch considers freight forwarding to be less volatile than shipping with some margin resilience against economic downturns. The asset-light business models of freight forwarders provide flexibility to adapt to market conditions. However, sustainability of this trend is dependent on healthy growth in trade, which Fitch expects to slow. SGLT's strategy focuses on complicated and time-critical deliveries instead of price-sensitive bulk assignments. In addition, SGLT provides forwarding services to non-governmental organisations through its Aid, Development & Projects division, which tends to be less cyclical than the commercial segments. Strategy Includes Execution Risk: The company's strategy involves expansion through M&A with a focus on central Europe and APAC, and ambitious organic growth initiatives. This risk is mitigated by a good record of recent acquisitions, with smooth integration and synergies. While aggressive expansion through M&A may strengthen SGLT's market position through a wider station network and increased brand awareness, its scale is likely to remain limited compared to larger peers. High Leverage Metrics: The rating reflects the company's weak, though improving, credit metrics. Fitch forecasts FFO gross adjusted leverage to decline to above 7x in 2019 from 9.3x in 2018 driven by EBITDA growing to EUR38 million from EUR31 million. This is based both on organic growth and M&A, and pro forma LTM EBITDA at end-June 2019 was EUR36.4 million. Fitch expects FFO gross-adjusted leverage to decline towards 6.5x by 2021 and to around 6x in 2022-2023, but this is dependent both on organic and acquisitive growth. Fitch expects FFO fixed-charge coverage to improve close to 2x in 2022-2023 from 1.2x in 2018. Despite the forecast improvement, Fitch anticipates the EBITDA margin will stay in low to mid-single-digits. Asset-Light Business; Positive FCF Expected: SGLT's business model is asset-light and capex requirements are limited, but working-capital swings related to larger projects can be material. The cost structure is flexible with a high share of variable costs (mainly purchases of freight capacity). If it achieves the projected growth, and avoids material working-capital swings, SGLT will become FCF-positive (pre-acquisitions) from 2020 in its rating case. DERIVATION SUMMARY Fitch sees SGLT's credit metrics in line with 'B-' rated peers. SGLT's credit profile is supported by market growth exceeding GDP growth rates and further acquisitions, which should allow the financial profile to start deleveraging in the next few years towards a level commensurate with 'B' rated peers. Fitch considers SGLT's earnings as less volatile than sole carriers, such as shipping companies, but its small size constrains SGLT's debt capacity. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - GDP growth and CPI according to Fitch Sovereign forecasts for US, eurozone, Sweden and Denmark - Organic revenue growth of around 4% in 2020, declining to around 2% by 2023 - Fairly constant gross margin - Staff costs and operating leases rising by 2% annually, other expenses projected as share of revenue consistent with historical average - Capex according to management guidance - External acquisition capex according to management guidance and assuming a 5x EBITDA multiple and 3.5% EBITDA margin on companies acquired - EBITDA contribution from internal acquisitions according to management guidance Key Recovery Assumptions - The recovery analysis assumes that SGLT would be considered a going concern in a bankruptcy and that the company would be reorganised rather than liquidated - Fitch has assumed a 10% administrative claim - A multiple of 5.0x and a 10% discount to June 2019 LTM EBITDA broadly in line with peers - Super senior working capital facility drawdown of USD38 million and a USD10 million factoring facility - Its waterfall analysis generated a ranked recovery in the 'RR4' band, indicating a 'B-' instrument rating for the EUR215 million senior secured notes. The waterfall analysis output percentage on current metrics and assumptions was 39%. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - Successful implementation of the growth strategy, resulting in FFO adjusted gross leverage consistently below 6.5x - FFO fixed-charge coverage above 2.0x - Positive FCF generation - EBITDA margin above 3.5% Developments that May, Individually or Collectively, Lead to Negative Rating Action - FFO adjusted gross leverage consistently above 8.5x - FFO fixed-charge coverage below 1.0x - Negative FCF through the economic cycle LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: At end-2018, SGLT had USD35 million of unrestricted cash available. Short-term debt consisted of outstanding working-capital facilities of USD23.1 million, which are subject to an annual clean-down provision. The company recently issued a EUR215 million senior secured callable bond, due in November 2024 with an interest of Euribor + 6.75%. Liquidity is further supported by a working-capital facility of a maximum amount of EUR35 million. ============= F I N L A N D ============= NOKIA OYJ: Moody's Downgrades CFR to Ba2, Outlook Stable -------------------------------------------------------- Moody's Investors Service downgraded Nokia Oyj's corporate family rating to Ba2 from Ba1. Concurrently, Moody's has downgraded the probability of default rating to Ba2-PD from Ba1-PD, the senior unsecured long-term ratings to Ba2 from Ba1, and the senior unsecured medium term note programme rating to (P)Ba2 from (P)Ba1. Moody's has also affirmed the Not Prime short-term ratings on Nokia and Nokia Finance International B.V.. The outlook is stable. The rating action follows Nokia's downward revision of its earnings outlook for 2019 and 2020. According to the new outlook, non-IFRS operating margin will be 8.5% in 2019 (plus or minus 1%), revised down from 9%-12%, and 9.5% in 2020 (plus or minus 1.5%) down from 12%-16%. The company also announced that it will not distribute the third and fourth quarterly instalments of the dividend for the financial year 2018, which would result in a cash saving of around EUR600 million. "The downgrade to Ba2 reflects our view that Nokia's operating performance in 2020 will recover more slowly than we previously expected, due to increased margin pressure in the mobile access business and additional investments to support its competitive position in the upcoming 5G technology cycle," says Ernesto Bisagno, a Moody's Vice President -- Senior Credit Officer and lead analyst for Nokia. Prior to Nokia's revision of its earnings outlook, the rating was already weakly positioned in the Ba1 category with a negative outlook. "While Nokia's key credit metrics will be weaker than our previous forecasts, we positively note the company's decision to halt the dividend payment, which will support cash flow and preserve liquidity, providing some headroom within the Ba2 rating category," adds Mr Bisagno. RATINGS RATIONALE Following Nokia's revision of its earnings outlook announced on October 24, the expected recovery in operating performance will be delayed, and credit metrics will deteriorate to levels not commensurate with the previous Ba1 rating category. Over 2019-20, Moody's expects revenues to increase in the low-mid single digit range, in line with the growth of the RAN markets. The rating agency also expects the company's adjusted operating margin (non-IFRS) will be in line with the company's lowered earnings outlook. While Nokia's Moody's-adjusted operating cash flow will improve sequentially in the fourth quarter of 2019, it will remain negative at around EUR500 million for the full year, owing to significant working capital outflows mainly associated with new contracts and the impact of restructurings costs. As a result, Moody's expects a negative free cash flow after dividends of around EUR1.5 billion - EUR1.7 billion in 2019. The agency expects free cash flow to improve significantly and to turn positive in 2020, assuming that the dividend will remain suspended, and a significant improvement in working capital management and cash conversion. Moody's forecasts that Nokia's adjusted debt/EBITDA will remain stable at around 3.7x in 2019 (3.8x in 2018), with potential for some improvement towards 3.0x in 2020, mainly driven by a modest improvement in EBITDA. However, leverage in both years will be above Moody's previous expectations, and the 2.25x threshold for downward pressure on the former Ba1 rating. In addition, due to the competitive intensity in the Mobile Access business, and the increased needs for investments, Moody's believes there is potential for additional pressure on Nokia's margin in 2019 and 2020. Despite a material reduction in cash in the first half of 2019, Nokia's liquidity remains strong, reflecting (1) a cash balance of EUR4.8 billion as of September 2019; (2) a EUR1.5 billion revolving credit facility (fully undrawn as of September 2019), maturing in 2024 with no financial covenants and material adverse change conditions for drawdowns, and a EUR500 million 5-year fully undrawn EIB loan facility; (3) the expected positive free cash flow generation in the fourth quarter of 2019 and over 2020 (assuming no significant shareholder distributions); and (4) the manageable debt maturity profile over the next 18 months, mainly including a EUR500 million bond maturing in March 2021. Moody's has factored into Nokia's ratings the following governance considerations. The decision of temporarily halting the dividend is credit positive as it favours creditor protection over shareholder remuneration at a time of operating underperformance and will help to support Nokia's ongoing investments in 5G and its strategic focus areas of enterprise and software, as well as preserve its net cash position. Nokia's Ba2 rating reflects: (1) the company's significant scale and relevance, with a top three global market position in wireless and fixed networks equipment; (2) focused business strategy centered on end-to-end network solutions, including enterprise services and software, and the development and licensing of intellectual property rights; (3) strong geographical diversification, with sales well spread across all major regions; and (4) its strong liquidity and balanced financial policy. The rating is constrained by (1) Nokia's moderate leverage of 3.7x by YE 2019 on a Moody's gross adjusted debt basis; (2) the cyclicality of the telecom equipment industry; (3) the company's exposure to intense competition and technology risk; (4) the high investment needs and R&D costs, combined with material restructuring costs; and (5) Moody's expectation of limited free cash flow generation despite the decision to temporarily halt the dividend. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's expectation that credit metrics will remain broadly stable in 2019 and to improve marginally in 2020, driven by stronger profits. The company's decision to temporarily halt dividends supports cash flow generation and liquidity, while it provides some headroom at the Ba2 rating level. WHAT COULD CHANGE THE RATING UP/DOWN Positive pressure on the rating is unlikely to materialize in the next 12-18 months due to the profitability challenges. However, upward pressure could develop if (1) operating margins and free cash flow after shareholder distributions recover towards the high single digit range; and (2) Moody's-adjusted debt/EBITDA trends towards 2.25x. The rating could be lowered if the company's operating performance does not improve, reflecting sustained market share losses and inability to regain the competitive position of its products in the upcoming 5G cycle. Quantitatively, downward pressure would arise if (1) Moody's adjusted operating income turns negative on a sustained basis, (2) Moody's-adjusted debt/EBITDA remains above 3.5x (although a reduction in the cash balance would also reduce the leverage tolerance), (3) free cash flow after shareholder distributions remains negative; or (4) liquidity deteriorates materially. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Diversified Technology published in August 2018. LIST OF AFFECTED RATINGS Downgrades: Issuer: Nokia Oyj Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD LT Corporate Family Rating, Downgraded to Ba2 from Ba1 Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba2 from (P)Ba1 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from Ba1 Senior Unsecured Shelf, Downgraded to (P)Ba2 from (P)Ba1 Affirmations: Issuer: Nokia Oyj Commercial Paper, Affirmed NP Other Short Term, Affirmed (P)NP Issuer: Nokia Finance International B.V. Backed Commercial Paper, Affirmed NP Outlook Actions: Issuer: Nokia Oyj Outlook, Changed To Stable From Negative Issuer: Nokia Finance International B.V. Outlook, No Outlook COMPANY PROFILE Headquartered in Espoo Finland, Nokia Oyj is a leading provider of radio access/mobile broadbank wireless and fixed equipment, software and services to telecommunication operators as well as to enterprises. The company also operates a licensing, brand and technology development business. Nokia has three main segments - Networks, Nokia Software and Nokia Technologies - and reported total group net sales of EUR22.6 billion and EBITDA of EUR1.4 billion in 2018. =========== G R E E C E =========== GREECE: EU Okays Early Repayment of EUR2.7-Bil. IMF Debt -------------------------------------------------------- Reuters reports that the euro zone's rescue fund, the European Stability Mechanism, agreed on Oct. 28 to allow Greece to pay back earlier some of its debt to the International Monetary Fund, the ESM said in a statement. According to Reuters, the move, which concerns loans worth around EUR2.7 billion (GBP2.3 billion), allows Athens to reduce its debt-servicing costs, because IMF loans carry higher interest than Greece would now pay on the market. The decision followed a Greek government request to the ESM in September to repay some of its loans to the IMF, which were worth about EUR9 billion, Reuters notes. ============= I R E L A N D ============= CAPITAL FOUR I: S&P Assigns Prelim B- Rating on Class F Notes ------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to the class A to F European cash flow CLO notes issued by Capital Four CLO I DAC. At closing, the issuer will issue unrated subordinated notes. The preliminary ratings reflect S&P's assessment of: -- The diversified collateral pool, which consists primarily of broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. S&P said, "Under the transaction documents, the rated notes will pay quarterly interest unless there is a frequency switch event. Following this, the notes will permanently switch to semiannual payment. Upon full redemption of the class A notes and only following a frequency switch event, any nonpayment of the next senior-most classes of notes will lead to an event of default. "Our preliminary ratings reflect our assessment of the preliminary collateral portfolio's credit quality, which has a weighted-average 'B' rating, with an S&P Global Ratings' weighted-average rating factor of 2,609. We consider that the portfolio on the effective date will be well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR375 million target par amount, the covenanted weighted-average spread (3.80%), the covenanted weighted-average coupon (4.50%), and the covenanted weighted-average recovery rates for all rating levels. As the portfolio is being ramped, we have relied on indicative spreads and the portfolio's recovery rates. Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1 to E notes could withstand stresses commensurate with higher rating levels than those we have assigned. However, as the CLO will be in its reinvestment phase starting from closing, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings assigned to the notes. "Under our structured finance ratings above the sovereign criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned preliminary rating levels. "The Bank of New York Mellon, London Branch is the bank account provider and custodian. At closing, we anticipate that the documented downgrade remedies will be in line with our current counterparty criteria. "At closing, we consider that the issuer will be bankruptcy remote, in accordance with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for each class of notes." Ratings List Capital Four CLO I DAC Class Prelim. Prelim. Amt. Subordination Interest rate Rating (mil. EUR) (%) ----- ------- ------------ ------------- ------------ A AAA (sf) 233.30 37.79 Three/six-month EURIBOR plus 0.93% B-1 AA (sf) 22.50 27.79 Three/six-month EURIBOR plus 1.75% B-2 AA (sf) 15.00 27.79 2.25% C A (sf) 25.50 20.99 Three/six-month EURIBOR plus 2.55% D BBB (sf) 23.60 14.69 Three/six-month EURIBOR plus 4.00% E BB- (sf) 19.50 9.49 Three/six-month EURIBOR plus 6.47% F B- (sf) 8.60 7.20 Three/six-month EURIBOR plus 9.25% Sub notes NR 37.00 N/A N/A NR--Not rated. N/A--Not applicable. EURIBOR--Euro Interbank Offered Rate. ========= I T A L Y ========= GAMENET GROUP: S&P Puts 'B+' Issuer Credit Rating on Watch Neg. --------------------------------------------------------------- S&P Global Ratings placed its 'B+' issuer credit and issue ratings on gaming company Gamenet Group S.p.A (Gamenet) and its senior secured notes on CreditWatch with negative implications. The CreditWatch placement follows the announcement on Oct. 23, 2019, that Apollo reached an agreement with existing Gamenet investors, TCP Lux Eurinvest S.a r.l. and Intralot Italian Investments B.V. for the acquisition of a stake representing 48,67% issued shares. Upon completion of the acquisition, which is subject to regulatory approval, Apollo will be required to make a mandatory takeover offer for the remaining shares, with the aim of ultimately delisting the group S&P said, "Apollo's proposed financial policy and capital structure for Gamenet have not been disclosed. However, we believe that under financial-sponsor ownership there is the potential for a more aggressive financial policy and ultimately for credit metrics to weaken. Our current base-case forecast is for Gamenet's adjusted debt to EBITDA to be in the 3x-4x range. "We could lower our rating on Gamenet by at least one notch upon the completion of the transaction and finalization of our analysis of the final capital structure." The deal is expected to be completed in first-quarter 2020, once competition clearances and necessary regulatory approvals are obtained and the delisting is achieved. S&P said, "We expect to resolve the CreditWatch within the next three-to-six months, upon completion of the acquisition and after assessing Gamenet's financial risk profile pro forma the transaction, with emphasis on the company's prospective financial policies and credit metrics. "We may lower our ratings by at least one notch if the proposed acquisition is completed and the new financial-sponsor owner implements a more aggressive financial policy." TELECOM ITALIA: S&P Affirms 'BB+/B' ICRs, Outlook Stable -------------------------------------------------------- S&P Global Ratings affirming our 'BB+/B' ratings on Telecom Italia SpA (TIM). S&P said, "We expect adjusted leverage will temporarily peak in 2019 at 4.2x, above our range for the rating. We have decided to expand our downside rating trigger for TIM to 4x to reflect the non-operating accounting impact of IFRS16 on adjusted leverage, which is in line with peers, and a proforma deconsolidation of Inwit." The increase in leverage is driven by weaker domestic EBITDA on an organic basis (pre-IFRS16 adjustments) due to competitive pressures in the Italian mobile market after Iliad's entrance. It also reflects higher debt arising from IFRS16 lease capitalization, which S&P expects will add about EUR3.6 billion to our adjusted debt figures. Although slightly offset by an accompanying EBITDA add-back of about EUR700 million, the net impact still adds about another 0.1x leverage versus 2018. S&P said, "We forecast top-line revenue stabilization in 2020 and sustained lower capex driving strong cash flow-led deleveraging to levels sustainably and materially below 4x. The Italian mobile market is stabilizing and all the main carriers have increased prices in 2019, repairing some of the market turbulence created by Iliad's entry last year. We expect recent trends of increasing mobile average revenue per user (ARPU) and declining mobile number portability will continue, allowing TIM to finish 2019 with stabilized operating trends in Italy. We expect contributions from the Brazilian operations, which have been consistently strong on an organic basis, will benefit from lower macroeconomic and currency headwinds in our forecast, driving a positive net contribution to consolidated revenue. Combined with sustainably lower capex of EUR3.6 billion-EUR3.7 billion, incremental profitability improvements, and reduced working capital needs after a spike in 2019, we expect recurring FOCF before spectrum of at least EUR2 billion will materially deleverage TIM below 4x adjusted. "We are expanding our leverage threshold to 4.0x from 3.8x. This is both because we do not think the 2019 IFRS16 adjustment is reflective of a change in credit quality, and because our prior, tighter threshold was partially to offset the favorable impact of consolidating Inwit despite minority ownership. Deconsolidation removes this need. Upon deconsolidation we will apply our operating lease adjustment to TIM's master service agreements with Inwit, increasing pro-forma adjusted leverage a further 0.1x in 2020. This is consistent with our ratios and adjustments criteria guidance for tower master service agreements, despite their being expensed under IFRS16 accounting principles. However, our assumptions on dividends and proceeds from a further sell-down to 25% of Inwit ownership, as well as a deconsolidation of Inwit's IFRS16 debt, primarily arising from ground leases, is likely to fully offset our operating lease adjustment. "The stable outlook reflects our expectation of adjusted leverage falling materially and sustainably below 4x in 2020 and adjusted funds from operations (FFO) to debt rising to 20% from 18% in 2019-2020. Improvements in that range will come mainly from improvements in recurring FOCF which we expect to rise sustainably toward 10% of adjusted debt in 2020. "We could lower the rating if we no longer expected adjusted leverage to improve sustainably below 4x. This could stem from higher-than-anticipated capex or working capital requirements that constrain FOCF below EUR2 billion beyond 2019. It could also be the result of operational factors like an unexpected return to unsustainable mobile competition that depresses ARPU or causes churn levels to spike, or from longer-term fixed-line deterioration under pressure from Openfiber. If, contrary to our current expectations, TIM moved to relinquish control over its fixed-line network, we could also consider a downgrade based on a weaker business profile, unless offset by material deleveraging. "We could raise the rating if we expect sustainable adjusted leverage comfortably below 3.5x, and an increase in FFO to debt toward 25% and FOCF to debt sustainably above 10%. Further progress in strengthening governance at the board level, such that there is long-term clarity in the company's strategic priorities, asset plans, and financial and shareholder policies, will also be required for ratings upside." =================== K A Z A K H S T A N =================== KAZAKHYMS INSURANCE: Fitch Affirms BB- IFS Rating, Outlook Stable ----------------------------------------------------------------- Fitch Ratings affirmed JSC Kazakhmys Insurance Company's Insurer Financial Strength Ratings at 'BB-' and National IFS at 'BBB+(kaz)'. The Outlook on the ratings is Stable. The ratings have been removed from Rating Watch Negative, on which they were placed in June 2019. KEY RATING DRIVERS The removal of the RWN follows the return by the Kazakh insurance regulator to looser reserving standards from September 30, 2019. This means that Kazakhmys Ins's prudential metrics will not be negatively affected by the requirement to set the reinsurers' share in technical reserves at zero for a number of lines. Between June 2019 and September 2019 the National Bank of Kazakhstan, which acts as the regulatory and supervisory body for the local insurance sector, required local non-life insurers to set the reinsurers' share in technical reserves at zero for a number of lines, including general third-party liability (GTPL) and financial risks, unless those risks are ceded to any reinsurance pool or require reinsurance due to their catastrophic nature. At the same time the regulator did not introduce any direct barriers to purchase reinsurance for those kinds of risks. If the tighter reserving regulations are not withdrawn, Kazakhmys Ins could be exposed to the risk of non-compliance with its prudential metrics, including solvency margin and coverage of net technical reserves by certain classes of liquid assets. Kazakhmys Ins was one of the most affected local non-life players by the new regulations due to its focus on general third-party liability insurance (GTPL) (36% of gross premiums written in 2018) and more than 90% reinsurance cessions for the line. Before the withdrawal of the tighter regulations became known, Kazakhmys Ins had cut its GTPL to 1% in 5M19 and supported the business volumes with cargo risks in 1H19 and accident risks in 3Q19. At end-3Q19 Kazakhmys Ins's solvency margin stood at a very strong 224% and the coverage of net technical reserves with liquid assets at 4.79x. Fitch believes that the risk of non-compliance with the regulatory prudential metrics has decreased significantly and the insurer could return to its regular business mix. Kazakhmys Ins's written premiums fell 15% on a gross basis but grew 15% on a net basis (after the reinsurance) in 3Q19 from 3Q18. The insurer reported a net income of KZT1 billion in 3Q19, a notable weakening from KZT2.5 billion a year earlier, although the latter was supported by one-off FX gains of KZT0.6 billion and also notable releases of the incurred-but-not-reported loss reserves. RATING SENSITIVITIES The ratings could be upgraded if Kazakhmys Ins reduces its dependence on reinsurance, provided that the company achieves a repositioning of its business mix and maintains asset risk at the present level. The ratings could be downgraded if the credit quality of Kazakhmys Ins's investment portfolio deteriorates, the regulatory solvency margin falls below 120% on a sustained basis, or if the quality of the reinsurance protection worsens. =========== P O L A N D =========== NB TRICITY: Files for Bankruptcy After OMG-G-S Deal Termination --------------------------------------------------------------- Reuters reports that Nextbike Polska SA said Metropolitan Area Gdansk-Gdynia-Sopot terminated the deal for management of Metropolitan Bicycle System OMG-G-S with NB Tricity, the company's wholly-owned unit. According to Reuters, the metropolitan area has requested that the unit pay contractual penalty of PLN22.2 million. The company also said that the metropolitan area has voted against arrangement with creditors under prepackaged arrangement proceedings, Reuters relates. In a different statement, the company said that as a result of becoming insolvent and unable to conclude arrangement with its creditors, the unit has resolved to file for bankruptcy, Reuters discloses. ZABRZE CITY: Fitch Affirms BB+ LongTerm IDRs, Outlook Stable ------------------------------------------------------------ Fitch Ratings affirmed the Polish City of Zabrze's Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'BB+' and National Long-Term Rating at 'BBB+(pol)'. The Outlooks are Stable. The affirmation reflects Fitch's unchanged view that that despite expected modest operating results in the medium term, Zabrze's debt ratios will remain in line with a 'BB+' rating. Fitch assesses Zabrze's standalone credit profile at 'bb+'. Zabrze is a medium-sized city by Polish standard, located in the Slaskie region and is part of the Silesia Metropolis (more than two million inhabitants). It benefits from its location at a crossroads of the main Polish rail and road corridors. Zabrze's tax base is diversified but weaker than other Polish cities'. GDP per capita in 2016 (last available data) for the Gliwicki sub-region, where Zabrze is located was 123% of the national average but this probably overestimates Zabrze's performance. Zabrze's local economy is dominated by industry and construction (48% of the sub-region's gross value added in 2016), above the Polish average of 35%. KEY RATING DRIVERS Revenue Robustness Assessed as Midrange Zabrze's revenue sources are stable with revenue growth prospects in line with national GDP growth. Current transfers accounted for almost 47% of operating revenue in 2018, with the majority of transfers from the state budget (A-/Stable). Tax revenue accounted for almost 40% of Zabrze's operating revenue in 2018, based on moderately cyclical economic activities. Personal income tax accounts for 25% of operating revenue, local taxes at 13% while corporate income tax, a more volatile revenue item, accounts for only 1%. Zabrze's tax base is diversified but weaker than other Polish cities', which translates into slower growth of tax revenue (CAGR of 5.4% in 2014-2018) and of operating revenue (CAGR of 5.3%) in comparison with wealthier cities (about 7% and up to 8%, respectively). Revenue Adjustability Assessed as Weaker Fitch assesses Zabrze's ability to generate additional revenue in response to possible economic downturn as limited, in line with the majority of Polish cities. Income tax rates are set by the central government, as well as the majority of current transfers. Where Zabrze has flexibility on certain local taxes (13% of operating revenue), this flexibility is limited by rate ceilings set within national tax regulation. As its tax revenue per capita is lower than the average for other Polish cities, Zabrze is entitled to receive equalisation subsidy. However, the amounts received are low in relation to the city's budget, ie. PLN20 million in 2019, or only 2% of operating revenue. The city could increase its revenue with asset sale (on average PLN30 million of proceeds in 2014-2018, ie. about 4% of total revenue), but this source of revenue may prove unsustainable in an economic downturn. Expenditure Sustainability Assessed as Midrange The city's expenditure sustainability is underpinned by non-cyclical responsibilities such as education, public transport, municipal services, administration and others. However, due to a higher share of inflexible costs than in other cities, Zabrze's operating margin is more prone to volatility, especially when central government decisions, eg. the teachers' salary increases in 2018-2019, place pressure on operating spending. Zabrze aims to keep operating spending growth broadly in line with operating revenue growth over the long term. Such an approach resulted in an average operating balance of 5%-6% of operating revenue in 2014-2018. In light of the availability of non-returnable EU grants, Fitch expects the city's capex to rise in 2019-2023. However, Fitch expects part of this capex to also be financed with debt, thereby leading to a budget deficit of up to 5% of total revenue. Expenditure Adjustability Assessed as Midrange The city can scale back a significant part of its capex and more than 10% of its operating expenditure. Capex (PLN120 million in 2018 or 12.6% of total expenditure) is almost equally split between investments and contributions to the city's companies. While Zabrze has scope to scale back capex in case of need, it has much lower flexibility with respect to capital injections into the city's companies. Liabilities and Liquidity Robustness Assessed as Midrange The city's loan portfolio is dominated by bonds (60% of the total with maturity up to 10 years at end- June 2019), preferential loans and loans from local banks (8%) and a European Investment Bank (EIB; AAA/Stable) loan (31%)). The EIB loan helps support a long-term and smooth repayment schedule until 2042, mitigating repayment risk. The city's debt is in Polish zloty and at floating rates, which exposes the city to interest rate risk as Polish cities are not allowed to use derivatives. Zabrze partially mitigates this risk by budgeting higher amounts than necessary for debt service. Under its new Local and Regional Government (LRG) Criteria Fitch includes the debt of the city's football stadium company as other Fitch-classified debt of Zabrze. This is because the company's debt was raised to build a facility on behalf of Zabrze and is effectively the city's obligation. Fitch also includes liabilities stemming from the sell-and-buy back transaction of the football club company. However, the transactions are modest (PLN179 million at end-2018) in relation to the city's budget and are budgeted for in the city's long-term projections for capex. Liabilities and Liquidity Framework Flexibility Assessed as Midrange Fitch assesses the city's liquidity framework as 'Midrange' given the absence of emergency liquidity support from upper tiers of government but takes in account available liquidity under a committed liquidity line provided by ING Bank Slaski S.A. (A/Stable). Zabrze frequently uses its low-cost liquidity lines (with a limit of PLN50 million) to manage liquidity during the year and to postpone the drawdown of more costly long-term debt closer to year-end. This policy results in low levels of cash at year-end, which covered only 15% of annual debt service in 2017-2018. Fitch assumes this will continue in the following years. Debt Sustainability Assessment: 'bbb' Under its rating case, Fitch projects the city's debt payback ratio (net adjusted debt-to-operating balance) will rise to about 14.7x for 2019-2023 from about 13x in 2018. Fitch's rating case also projects that the fiscal debt burden will remain strong during the forecast period, falling to 65% in 2023 from about 78% in 2018. The strong fiscal debt burden ratio counterbalances the city's weak synthetic and actual debt service coverage ratios of about 1x. All these metrics underpin the city's debt sustainability assessment at 'bbb'. DERIVATION SUMMARY Fitch assesses Zabrze's SCP at 'bb+', which results from a 'Midrange' risk profile and a 'bbb' debt sustainability assessment. Zabrze's SCP assessment also factors in peer comparison in the same rating category. The city's IDRs are not affected by any asymmetric risk or extraordinary support from the Polish state. KEY ASSUMPTIONS Fitch's Key Assumptions within its Rating Case for the Issuer Include: - Operating revenue CAGR of 3.8% over 2019-2023 - Operating expenditure CAGR of 4.1% over 2019-2023 - Capital revenue and capex lower than administration's long-term projections based on historical trend of underspend - Interest rates paid on debt higher than in base case by 0.25pp annually from 2020 - Declining other Fitch-classified debt in line with the repayment schedule (no new debt-financed investments undertaken by GRE as envisaged by the city). RATING SENSITIVITIES The ratings could be upgraded if Zabrze improves its debt payback ratio to below 13 years on a sustained basis and its debt service coverage ratios to above 1x under Fitch's rating case. The ratings could be downgraded if Zabrze's debt payback ratio deteriorates towards 16-18 years on a sustained basis under Fitch's rating case. =========== R U S S I A =========== BANK PRIME: Bankruptcy Hearing Scheduled for Oct. 30 ---------------------------------------------------- The provisional administration to manage Bank Prime Finance Public Limited Company, or Bank Prime Finance PLC (hereinafter, the Bank) appointed by virtue of Bank of Russia Order No. OD-1303, dated June 6, 2019, following its banking license revocation, in the course of its inspection of the Bank, established evidence suggesting that the Bank's owner and executives conducted operations to either siphon off funds or conceal assets previously siphoned off -- by theft of funds or abuse of authority. The provisional administration estimates the value of the Bank's assets to be insufficient for it to meet its liabilities. The Bank of Russia applied to the Court of Arbitration of Saint Petersburg and the Leningrad Region to declare the Bank insolvent (bankrupt). The hearing is scheduled for October 30, 2019. The Bank of Russia submitted the information on financial transactions evidencing criminal offence to the Prosecutor General's Office of the Russian Federation and the Investigative Committee of the Ministry of Internal Affairs of the Russian Federation for consideration and procedural decision-making. CB ASSOTSIATSIYA: Liabilities Exceed Assets, Assessment Shows ------------------------------------------------------------- The provisional administration to manage JSC CB Assotsiatsiya (hereinafter, the Bank) appointed by virtue of Bank of Russia Order No. OD-1759, dated July 29, 2019, following the banking license revocation, in the course of the inspection of the Bank established that the Bank's officials conducted operations to divert funds through lending to borrowers incapable of meeting their obligations, and to conceal these operations and information about the real financial standing of the Bank. The provisional administration estimates the value of the Bank's assets to be no more than RUR9.6 billion, whereas its liabilities to creditors exceed RUR11.3 billion. On September 19, 2019, the Arbitration Court of the Nizhny Novgorod Region recognized the bank as bankrupt. The State Corporation Deposit Insurance Agency was appointed as receiver. The Bank of Russia submitted the information on the financial transactions suspected of being criminal offences that had been conducted by the Bank's officials to the Prosecutor General's Office of the Russian Federation and the Investigative Committee of the Ministry of Internal Affairs of the Russian Federation for consideration and procedural decision-making. CREDIT EUROPE: Moody's Alters Outlook on B1 Deposit Ratings to Pos. ------------------------------------------------------------------- Moody's Investors Service changed the issuer outlook on Credit Europe Bank Ltd. and the outlook on its long-term local and foreign-currency deposit ratings to positive from stable, affirming the bank's B1 long-term deposit ratings, its b1 Baseline Credit Assessment and Adjusted BCA, Ba3(cr) long-term Counterparty Risk Assessment and Ba3 long-term local and foreign-currency Counterparty Risk Ratings. The bank's B2 subordinated debt rating, its Not Prime short-term deposit ratings and CRRs and its Not Prime(cr) short-term CR Assessment were also affirmed. The positive outlook acknowledges the bank's solid financial fundamentals and the potential for a higher BCA and ratings. RATINGS RATIONALE The positive outlook acknowledges CEBL's consistently solid financial performance in the recent years, which Moody's expects to be sustained in the next 12-18 months, its strong loss absorption capacity and the recent strengthening of the bank's market franchise. The bank has a solid capital buffer (Basel I Tier 1 of 15.0% as of June 30, 2019), which Moody's expects to strengthen further in the next 12-18 months, on the back of no planned loan book growth and partial capitalization of earnings. CEBL has remained profitable through the cycle, with its return on average assets (ROAA) recently stabilizing at 1-1.5%. Moody's expects that the bank's pre-provision income (2.8% in the first half of 2019) will be supported by the reduction of both funding and operating costs and will remain more than sufficient to absorb the forecasted cost of risk. CEBL's loan book is well diversified by segment: as of June 30, 2019, its portfolio was roughly equally split between corporate loans, unsecured and secured consumer loans. CEBL's problem loan ratio stood at 7.3% as of June 30, 2019, and Moody's expects this ratio to increase moderately in the next 12-18 months, as the loan book seasons after 38% growth in 2018. However, Moody's expects the negative impact to be contained, since management has conservatively stopped the bank's growth in unsecured consumer lending. CEBL's exposure to the relatively risky segments of corporate lending, such as foreign-currency denominated loans and loans to real estate developers, has also considerably decreased in the recent years: as of June 30, 2019, the bank's foreign-currency denominated loans stood at 11% of gross loans (down from 18% as of year-end 2016) and real estate and construction segments accounted for 23% of gross loans (down from 35% as of year-end 2016). CEBL's funding and liquidity profile is solid, with its dependence on wholesale funding consistently below 10% of tangible assets in the recent years, and liquid assets covering more than 20% of total liabilities as of June 30, 2019. The bank's franchise has strengthened recently, in particular, in its key business segment of car lending. As of June 30, 2019, the bank ranked 6th by the size of its car loan book, and Moody's expects this position to be sustained in the next 12-18 months. CEBL has a concentrated ownership structure (the bank is ultimately controlled by a single individual, Mr. Husnu Ozyegin, which entails key-man risk. However, Moody's does not apply any corporate behaviour adjustment to the bank, given that it does not issue loans to related parties, consistently reporting zero credit exposure in the recent years. WHAT COULD MOVE THE RATINGS UP/DOWN The ratings of CEBL could be upgraded, if the bank sustains its strong profitability and capital adequacy metrics and demonstrates an ability to contain the negative pressure on its asset quality, which stems from the loan book seasoning and the growing consumer leverage in Russia. A downgrade of CEBL's ratings is unlikely over the next 12-18 months, given the positive outlook. However, the outlook could be changed to stable, if the bank's asset quality or profitability deteriorates beyond Moody's current expectations. LIST OF AFFECTED RATINGS Issuer: Credit Europe Bank Ltd. Affirmations: Adjusted Baseline Credit Assessment, Affirmed b1 Baseline Credit Assessment, Affirmed b1 Long-term Counterparty Risk Assessment, Affirmed Ba3(cr) Short-term Counterparty Risk Assessment, Affirmed NP(cr) Long-term Counterparty Risk Ratings, Affirmed Ba3 Short-term Counterparty Risk Ratings, Affirmed NP Long-term Bank Deposit Ratings, Affirmed B1, Outlook Changed To Positive From Stable Short-term Bank Deposit Ratings, Affirmed NP Subordinate Regular Bond/Debenture, Affirmed B2 Outlook Action: Outlook Changed To Positive From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in August 2018. SVYAZ-BANK JSCB: Fitch Withdraws BB- Issuer Default Rating ---------------------------------------------------------- Fitch Ratings maintained PJSC JSCB Svyaz-Bank's Long-Term IDRs of 'BB-' on Rating Watch Positive and upgraded the Viability Rating to 'b' from 'b-'. Fitch has simultaneously withdrawn all ratings and will no longer provide rating and analytical coverage of SB. The ratings were withdrawn for commercial reasons. KEY RATING DRIVERS IDRS AND SUPPORT RATING The IDRs of SB are maintained on RWP to reflect its ongoing transfer to Promsvyazbank (PSB), which Fitch expects to be completed by year-end. PSB is a state-owned universal bank primarily responsible for servicing state defence orders and other large state contracts. According to the Russian authorities, after the transfer SB will be merged with PSB. In Fitch's view, the potential ability of PSB to support SB is underpinned by the former's strategic state ownership and its own likely access to state support in case of need. In September 2019, SB's ownership was temporarily transferred from VEB.RF (VEB, BBB/Stable) to Rosimushchestvo, a Russian government body managing state-owned assets, after VEB had purchased the distressed legacy assets from SB and provided it with capital support. The law prescribes Rosimushchestvo to pass the bank to PSB by end-2019. SB's IDRs and '3' Support Rating are based on institutional support from PSB rather than the sovereign, due to (i) already high operational integration between SB and PSB, and (ii) SB's imminent transfer to PSB, with Rosimushchestvo serving only as an intermediary to facilitate the transfer. VR The VR upgrade reflects substantial improvement of SB's financial profile following a clean-up by VEB. VEB's buyout of problem assets worth RUB27 billion in August 2019 and the bank setting aside additional impairment charges on residual impaired loans have significantly reduced asset quality risks. As assessed by Fitch, aggregate high-risk exposures, net of reserves, fell to 0.3x of FCC at end-1H19 from 1.1x at end-2018. The bank's capitalisation was bolstered by a RUB12.8 billion common equity injection by VEB in August 2019. Adjusted for this recap, end-1H19 FCC would have increased to 15.3% of regulatory risk-weighted assets (RWAs) from 8.3% . Regulatory Tier 1 and Total capital ratios also improved to 15% and 22% of regulatory RWAs at end-3Q19 from 10% and 15% at end-1H19, exceeding the minimum required ratios including additional buffers (8.125% and 10.125%, respectively). However, the bank continues to demonstrate weak performance, burdened by a historically high cost of funding (5.7% in 1H19) and low operational efficiency (cost-to-income ratio of 127% in 1H19). These were exacerbated by one-off impairment and litigation charges, leading to a net loss (return on average asset (ROAA) of -8%). SB remains predominantly customer-funded (86% of total liabilities at end-1H19). Despite a moderate 10% outflow of both retail and corporate deposits in 1H19, the bank's liquidity cushion (RUB60 billion at end-1H19, or 24% of total assets) was well above planned repayments for the next 12 months (RUB20 billion), with residual liquid assets covering 20% of customer accounts. RATING SENSITIVITIES Not applicable. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS The maintenance of the RWP on SB's IDRs reflects Fitch's view that PSB will have a high propensity to support the bank once the ownership transfer is completed. [*] RUSSIA: Central Bank to Soften Capital Buffer Requirements -------------------------------------------------------------- Tatiana Voronova at Reuters reports that the Russian central bank is set next year to slightly soften capital buffer requirements on banks that assess their own credit risk, deputy governor Vasily Pozdyshev told Reuters, in a bid to encourage more lenders to take up the practice. According to Reuters, the move comes as the Russian central bank presses for banks to conduct in-house risk assessments, saying it allows for better management of banks' capital cushions and could cut the cost of borrowing. The softened regulations at this stage would apply to Sberbank and the Russian unit of Raiffeisenbank, the only two lenders the Russian central bank has authorized to calculate their own credit risk using what is called an internal ratings-based (IRB) approach, which is used under global banking regulations, Reuters discloses. Under the reform, the central bank plans to slightly reduce the minimum amount of capital these banks must keep in their reserves to limit the risk of insolvency, Reuters states. This means they would have more flexibility to use funds that would otherwise be shelved, Reuters notes. Other banks in Russia calculate their credit risk according to central bank criteria, despite wanting to base their capital allocations on ratings by domestic ratings agencies, according to Reuters. Many banks believe risk assessments based on domestic ratings would not be as harsh as those made by the central bank and allow them to free up more capital for lending, Reuters relays. But the central bank says domestic rating agencies lack expertise for risk assessments and allows some banks to establish their own in-house risk assessment practices, which must be approved by the central bank, Reuters notes. ========= S P A I N ========= GRIFOLS SA: S&P Affirms 'BB+' Rating on Senior Secured Facilities ----------------------------------------------------------------- S&P Global Ratings affirmed its issue rating on Grifols S.A.'s senior secured facilities at 'BB+'. The unchanged '2' recovery rating indicates its expectation for meaningful recovery (50%-70%; rounded estimate: 70%) in the event of a payment default. As part of its refinancing, Grifols will: -- Increase by $200 million its revolving credit facility (RCF), to $500 million, and extend its maturity to 2025 from 2023. -- Replace its existing $3.0 billion term loan A maturing in 2023 with a new term loan B (TLB) maturing in 2027 for a total of $2.85 billion. -- Replace its existing $3.0 billion TLB maturing in 2023 with a new $3.0 billion TLB maturing in 2027. -- S&P recognizes that Grifols' larger RCF will bolster its liquidity options and help the company fund its rapid growth. S&P also acknowledges that the company does not currently have any outstanding borrowings under the revolver. Similarly, S&P expects Grifols to benefit from a lower cost of debt on its new issuances, and hence a lower interest burden. All of S&P's other ratings on Grifols (BB/Stable/--) remain unchanged. Issue Ratings – Recovery Analysis Key analytical factors -- S&P is affirming the 'BB+' issue rating of Grifols' senior secured instruments, including the new $500 million RCF, $3 billion TLB, $1.6 billion TLB, and $1.25 billion senior secured notes. -- The comprehensive security package, higher valuation prospects, and higher expected operating performance continue to support the recovery rating of '2'. The significant amount of senior secured debt in the capital structure continues to constrain the recovery rating. S&P's recovery expectations are in the 70%-90% range (rounded estimate: 70%). -- S&P affirms the 'B+' issue rating on the EUR1 billion senior unsecured notes with a recovery rating of '6', reflecting their subordination to the senior secured loans and the unsecured nature of the debt. -- S&P's simulated default scenario contemplates a payment default in 2024, attributable to a loss of market share and margin contraction, driven by increased competition along with potential regulatory risk. -- S&P values Grifols as a going concern, given its view of its strong market position in an industry with limited players and generally high barriers to entry. Simulated default and valuation assumptions -- Year of default: 2024 -- Jurisdiction: U.S. and Spain Simplified recovery waterfall -- Emergence EBITDA: EUR640 million. Capex represents 3.5% of average sales; 0% cyclical adjustment in line with standard assumptions for the industry; and 5% operational adjustment due to positive market dynamics in the plasma industry. -- EBITDA multiple: 6.5x -- Gross recovery value: EUR4,161 million -- Net recovery value for waterfall after administrative expenses (5%): EUR3,953 million -- Estimated first-lien senior secured debt claims: EUR5,619 million* -- First-lien recovery range: 70%-90% (rounded estimate: 70%) -- Recovery rating: 2 -- Estimated total unsecured claims: EUR2,880 million -- Unsecured recovery range: 0%-10% -- Recovery rating: 6 *All debt amounts include six months of prepetition interest. ===================== S W I T Z E R L A N D ===================== EUROCHEM GROUP: Fitch Affirms BB LongTerm IDR, Outlook Stable ------------------------------------------------------------- Fitch Ratings affirmed Switzerland-based holding company EuroChem Group AG's Long-Term Issuer Default Rating at 'BB' with a Stable Outlook. The affirmation of the rating captures the group's enhanced operational profile following the completion of its Kingisepp ammonia plant and ramp-up of the Usolsky potash mine, and a higher-than- anticipated debt load resulting from a USD0.8 million share buyback in October 2019. Fitch forecasts the group's funds from operations (FFO)-net adjusted leverage at 3.3x at end-2019, compared to 2.9x under its previous base case and 3.1x at end-2018. Eurochem's diversification into all three nutrients (nitrogen, phosphate and potash), vertical integration and strong cost position support a business profile commensurate with an investment grade rating. In recognition of the underlying improvement in the group's cash flow generation capacity, Fitch has relaxed its positive net leverage sensitivity to 3.5x from 3.0x. While this threshold is expected to be met in the absence of any shareholder distributions, a positive rating action would be contingent on a reduction in the group's absolute debt level and on more clarity on its financial policy. KEY RATING DRIVERS Business Profile Enhanced Beyond 2020: Fitch assumes that EuroChem's Northwest ammonia project in Kingisepp and Usolskiy potash mine will start contributing materially to earnings in 2020. The new capacity more than covers EuroChem's internal needs and enhances its vertical integration and product diversification with a presence in all three major nutrients. Both projects are located on the first quartile of the cash cost curve. The NorthWest ammonia plant is expected to generate positive EBITDA from 2019, producing at above capacity to date. The project targets almost one million tonnes per annum of ammonia, a figure that could be reached next year. The Usolskiy potash mine is expected to produce 1.1 million tonnes out of a designed capacity of 2.3 million tonnes in 2019, with a possible further design expansion to 2.9 million tonnes in two years. The Group sells its potash products to the Brazilian market through its own distribution network. Volatile Market Environment: EuroChem's sales and EBITDA increased respectively by 14% and 21% yoy in 1H19 as favourable prices in potash, urea and iron ore offset weaker ammonia and phosphate prices. In the medium term, Fitch expects phosphates and potash to face supply-driven price volatility, offset by the robust trends in nitrogen markets on the back of limited capacity additions and cost increase for non-integrated producers. Fitch believes that EuroChem's scale, market reach and strong cost position should support profitability and cash flow generation through the cycle. Fitch expects expansion into the high-margin potash segment and the self-sufficiency in ammonia to maintain new EBITDA margins at around 30% in the next four years compared to 27% in 2018. Further Delays to The VolgaKaliy Potash Project: The VolgaKaliy flotation plant is in commissioning mode and the first marketable products have been delayed by one year to 2020. VolgaKaliy is one of the four largest deposits of potash ore in Russia with a total capacity of 4.3mt (Phase 1: 2.3mt post-2022; Phase 2: 2.0mt by 2026). It is characterised by favourable logistics but complicated by deep potash layer (1,000+ meters) with three water layers above. The group is currently conducting the 3D seismic survey to improve mine planning. Normalised Capex to Support FCF: Out of about USD8 billion dedicated to the potash and ammonia projects, around USD6.0 billion has been spent, with the remaining USD2.5 billion mostly earmarked for completion of VolgaKaliy and further expansion of Usolskiy over the next four years. Its base case assumes capex levels to remain high at over USD1 billion in 2019-2020 and to gradually decrease to USD700 million by 2022. This also includes several small and medium-sized investments across the range of EuroChem's fertiliser production and trading facilities. Production ramp-up and decreasing investments should support positive pre-dividend FCF generation from 2020. Return of Cash Flow to Shareholders: The group's debt load at end-2019 is forecast to be higher than previously anticipated due primarily to EuroChem's mostly debt-funded purchase of a 10% minority stake from its former CEO for USD0.8 million. Fitch understands from the management that there are no plans to sell or cancel this stake in the near term. In the absence of specific guidance, Fitch assumes that some of the group's FCF will only be upstreamed to the shareholder once net debt/EBITDA decreases to 2.5x, which Fitch expects to occur by end-2021. In 2016, the group signed an agreement for a perpetual shareholder loan of up to USD1 billion, of which USD250 million was outstanding in 2016 and USD850 million at end-2018. The loan has been treated as equity under Fitch's methodology. The 2018 drawdown was used towards the repayment of the Usolskiy project finance facility. Strong Business Fundamentals: EuroChem has a strong presence in CIS, including Russia, and European fertiliser markets (more than 50% of 2018 sales) with around a 15% share of premium fertiliser sales. It is the seventh-largest EMEA fertiliser company by total nutrient capacity and aims to join the top three in the world with capacity in all three primary nutrients. The group also has access to the premium European compound fertiliser market, with production in Antwerp, and trademarks and third-party sales (around 25% of sales) distributed through its own network. EuroChem's Russia-based phosphate and nitrogen production assets are comfortably placed in the first quartile of their respective global cost curves, supported by the weaker rouble. Project Financing Consolidated: EuroChem procured project financing for its Usolskiy Potash project (repaid) and its Baltic ammonia project in 2014 and 2015, respectively. Even though the financing is specific to the projects and has non-recourse features that separate it from EuroChem's outstanding debt, Fitch continues to consolidate the debt because of the strategic importance of the investments and the inclusion of a cross-default clause in the financing agreement. DERIVATION SUMMARY EuroChem's scale is on a par with that of large fertiliser peers, such as CF Industries Holdings, Inc. (BB+/Stable), Israel Chemicals Ltd. (ICL, BBB-/Positive) and OCP S.A. (BBB-/Stable). The group's level of diversification across complex fertilisers is similar to that of PJSC PhosAgro (BBB-/Stable), ICL and PJSC Acron (BB-/Stable). EuroChem also has some exposure outside the fertiliser market (iron ore) but it remains limited compared with ICL's bromine-based specialty chemicals and OCI N.V.'s (BB/Stable) industrial chemicals. EuroChem ranks behind OCP and PhosAgro in terms of leadership in the phosphates market, and behind Uralkali PJSC (BB-/Positive) in the more concentrated potash segment. EuroChem's partial vertical integration underpins a cost position on the lower part of the global urea and diammonium phosphate (DAP) cost curves, but substantial trading operations dilute the group's EBITDA margins (27% in 2018). This is below other cost leaders', such as Uralkali (2018: 53%), Acron (34%), CF Industries (36%) or PhosAgro (32%), but comparable with OCP (30%) and OCI (29%). EuroChem's ratings also incorporate FFO adjusted net leverage forecast below 3.5x from 2020 onwards, ranking below most of its peers excluding Uralkali, OCI and OCP. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Nitrogen fertilisers pricing to increase over the rating horizon while potash and iron ore decrease gradually; phosphate to remain under pressure in the medium term; - Potash (Usolsky) and ammonia project (Kingisepp) to start to add production volumes from 2019, Volgalkaly from 2021; - RUB/USD at 65.6 in 2019, 66.6 in 2020 and 67.3 from 2021; - Capex (including capitalised costs) at USD1.2 billion in 2019 decreasing to USD700 million in 2022; - No distribution to shareholders. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Positive FCF and reduction in absolute amount of debt leading to FFO-adjusted net leverage sustainably below 3.5x; - More clarity on financial policy; Developments That May, Individually or Collectively, Lead to Negative Rating Action; - Continued aggressive capex or shareholder distributions translating into FFO-adjusted net leverage sustainably above 4x. LIQUIDITY AND DEBT STRUCTURE Manageable Liquidity: At 1H19, EuroChem had cash balances of USD328 million, undrawn committed credit facilities of about USD225 million and USD150 million undrawn portion under the USD1 billion shareholder loan and USD726 million of short-term debt. Fitch believes that EuroChem's liquidity remains manageable and is supported by a combination of uncommitted revolving facilities of about USD1.4 billion at 1H19, and by the group's proven and continued access to international and domestic funding. EuroChem issued a USD700 million five-year Eurobond in March 2019 and RUB52 billion rouble bonds during the first nine of months of 2019. SUMMARY OF FINANCIAL ADJUSTMENTS 123456789012345678901234567890123456789012345678901234567890123456 - USD7 million operating lease expense capitalised using 6x multiple; - USD121 million off-balance-sheet non-recourse factoring added to debt, deducted from trade receivable; - USD55 million cross-currency interest-rate swap reclassified as debt; - USD135 million liability from contingent consideration related to business combination adjusted to debt. =========================== U N I T E D K I N G D O M =========================== BBA AVIATION: Moody's Rates Proposed $650MM Unsec. Notes 'Ba2' -------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the proposed $650 million senior unsecured notes due 2028 to be issued by BBA U.S. Holdings Inc., a subsidiary of BBA Aviation plc. Concurrently Moody's has affirmed the Ba2 corporate family rating and Ba2-PD probability of default rating of BBA Aviation plc, and the Ba2 rating on the existing $500 million senior secured notes due 2026 issued by BBA U.S. Holdings Inc. The outlook on both entities has been changed to negative from stable. The rating action reflects the expected completion of the sale of BBA's Ontic division, with the proceeds utilized to partially repay the company's debt facilities and to make a dividend payment to shareholders. In conjunction with this transaction the company is proposing to issue the new senior unsecured notes to refinance the company's existing bank debt. RATINGS RATIONALE BBA's Ba2 CFR reflects the company's: (1) strong competitive position as the leading fixed base operator (FBO) in the US following the Landmark acquisition in 2016; (2) integration of EPIC on track, with further strategic synergies to be captured over the next 12-18 months; (3) relatively conservative reported net leverage targets, with further transformational debt-funded expansion considered unlikely; (4) history of consistent positive organic revenue growth in its core business since 2010; (5) the company's solid track record through the last cycle. The rating also reflects: (1) relatively high Moody's-adjusted leverage of 4.9x, pro forma for the transaction, including the substantial operating lease commitments; (2) high cyclicality of the business and general aviation market; (3) relatively high dividend payout ratio, which constrains free cash flow generation. As a result of the proposed transaction BBA will reduce gross reported debt by $250 million. Pro forma for the transaction Moody's-adjusted leverage at June 2019 increases by approximately 0.3x to 4.9x, or 3.5x excluding the effects of long-term operating leases, which are capitalized under IFRS 16 at a multiple of approximately 9x the annual expense. Moody's considers leverage to be high for the rating category, while recognising that the higher leverage metric is driven by the operating lease adjustments. As the rating is expected to remain relatively weakly positioned in coming quarters, the outlook has been changed to negative. Following the sale of Ontic and expected disposal of the company's ERO division, BBA will be focused almost entirely on its Flight Support activities through its Signature Fixed Base Operator and EPIC fuel services businesses. Whilst the disposals will reduce the diversity of the company's revenues, it will allow BBA to focus on operational effectiveness and driving synergies across its network. The remaining businesses are the most cash generative parts of the group which partially mitigates an increase in Moody's-adjusted leverage as a result of the transaction. The company retains a financial policy to maintain company-adjusted net leverage, excluding operating lease adjustments under IFRS 16, of between 2.5x and 3x, with a progressive dividend increasing in line with growth in underlying earnings. This has lead to the distribution of the majority of free cash flow, resulting in Moody's-adjusted free cash flow (FCF) to debt remaining in the low single digit percentages. However the company retains the financial flexibility to scale back shareholder distributions to accommodate acquisitions or in case of a cyclical downturn. Given the financial policies and relatively flat current market conditions, Moody's expects limited deleveraging over the next 12-18 months. Moody's believes that BBA may continue to be acquisitive, however, this will be limited to bolt-on acquisitions. The rating is supported by the company's solid track record, with positive organic growth in each year since 2010, and outperforming the market over the last downturn. Governance considerations that Moody's incorporates in BBA's credit profile include: 1) BBA was in compliance throughout 2018 with all relevant provisions of the UK Corporate Governance Code (except that the external Board evaluation has been delayed for one year); 2) the company maintains a target net reported leverage in the range 2.5x to 3.0x; and 3) dividend distribution is high relative to its profit and operating cash flow generation. STRUCTURAL CONSIDERATIONS The new $650 million and existing $500 million senior unsecured notes are rated Ba2 in line with the CFR. This reflects their pari passu ranking with the company's $400 million revolving credit facility and all senior unsecured debt structure. However the notes do not have guarantees from operating companies and are therefore structurally subordinated to meaningful operating company level liabilities including trade payables and operating leases which leaves the instrument ratings relatively weakly positioned. OUTLOOK The negative outlook reflects the fact that the rating is weakly positioned with relatively high leverage. It also reflects the risk that further releveraging may occur, particularly through acquisitions or disposals and in the context of a competitive market with low growth over the next 12-18 months. The outlook assumes that BBA's organic growth rates and margins will remain relatively stable, that adequate liquidity is maintained and that there are no changes to the company's financial policies. WHAT COULD CHANGE THE RATING UP / DOWN The outlook could be stabilized if Moody's-adjusted debt/EBITDA reduces sustainably below 4.5x, whilst the company continues to achieve positive organic growth and stable margins. The ratings could be upgraded if Moody's-adjusted debt/EBITDA reduces well below 4.0x on a sustainable basis, with Moody's-adjusted EBITA / interest expense above 3.0x, and Moody's-adjusted free cash flow / debt increasing to the high single digit percentages. An upgrade would also require continued positive organic revenue growth at or above the market, with at least stable margins. The ratings could be downgraded if Moody's-adjusted debt/EBITDA increases above current levels on a sustained basis, if Moody's-adjusted EBITA / interest expense reduces below 2.5x or there is a material decline in free cash flow generation. The ratings could also be downgraded if organic revenue growth is materially below market, if there a decline in margins or if liquidity concerns arise. LIQUIDITY BBA's liquidity is good, supported by cash on balance sheet of $117 million as at June 30, 2019, and a $400 million revolving credit facility expiring in 2024 (reducing from $650 million on completion of the sale of Ontic) of which $149 million was drawn as at June 30, 2019. There are no near term debt maturities and substantial headroom is expected under the maintenance covenants attached to the RCF. LIST OF AFFECTED RATINGS: Issuer: BBA Aviation plc Affirmations: LT Corporate Family Rating, Affirmed Ba2 Probability of Default Rating, Affirmed Ba2-PD Outlook Action: Outlook, Changed To Negative From Stable Issuer: BBA U.S. Holdings Inc. Affirmation: BACKED Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 Assignment: BACKED Senior Unsecured Regular Bond/Debenture, Assigned Ba2 Outlook Action: Outlook, Changed To Negative From Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. COMPANY PROFILE BBA Aviation plc, headquartered in London and with shares listed on the London Stock Exchange, has around 400 fixed base operator locations at general aviation airports, with the US being the largest market followed by Europe. An FBO is a commercial business granted the right by an airport to operate on the airport and provide aeronautical services. FINSBURY SQUARE 2019-2: Fitch Raises Class F Debt Rating to CCCsf ----------------------------------------------------------------- Fitch Ratings upgraded six tranches and affirmed one tranche of Finsbury Square 2019-2 plc. Finsbury Square 2019-2 PLC Current Rating Prior Rating Class A XS2021448886; LT AAAsf Affirmed; previously at AAAsf Class B XS2021449421; LT AA+sf Upgrade; previously at AAsf Class C XS2021449694; LT A+sf Upgrade; previously at Asf Class D XS2021449777; LT Asf Upgrade; previously at BBBsf Class E XS2021449850; LT BBB+sf Upgrade; previously at BB+sf Class F XS2021449934; LT CCCsf Upgrade; previously at CCsf Class X XS2021450437; LT BB+sf Upgrade; previously at CCCsf TRANSACTION SUMMARY The transaction is a securitisation of residential mortgages originated by Kensington Mortgage Company Limited. KEY RATING DRIVERS UK RMBS Rating Criteria This rating action takes into account the new UK RMBS Rating Criteria dated October 4, 2019. The note ratings are no longer Under Criteria Observation. Error Correction The upgrades to the class B, C, D, E, F and X notes is due partly to a correction of an analytical error. In its previous assignment of ratings Fitch incorrectly modelled the interest margins earned on the pre-funded assets. This resulted in reduced revenue funds being available to the issuer in Fitch's analysis to cover interest payments to note holders and to credit any principal deficiency ledger entries. Prefunding Mechanism The transaction's prefunding mechanism means further loans may be sold to the issuer, with proceeds from the over-issuance of notes at closing standing to the credit of the prefunding reserves. Fitch has received loan-by-loan information on additional mortgage offers that could form part of the collateral, once advanced by the seller. However, Fitch assumed the additional pool was based on the constraints outlined in the transaction documents. Self-employed Borrowers Kensington may lend to self-employed individuals with only one year's income verification completed or the latest year's income if profit is rising. Fitch believes this practice is less conservative than that at other prime lenders. Fitch applied a 30% increase to the foreclosure frequency for self-employed borrowers with verified income instead of the 20% specified in criteria. Liquidity Access Constrains Class C Rating The class C note is able to access amounts standing to the credit of the general reserve but is unable to access the liquidity reserve. In a payment interruption event, and if the general reserve is insufficient to meet interest payments to the class C after paying senior items in the revenue priority of payments, the class C notes would defer interest. Fitch requires all 'AAsf' category rated notes and above to be able to withstand a payment interruption event; in this case the liquidity provisions are insufficient for the class C to achieve a rating above 'A+sf'. RATING SENSITIVITIES The transaction remains in its prefunding period when further loans can be sold to the issuer. Fitch has assigned ratings to the transaction by reference to the prefunding conditions outlined in the transaction documents, which represents the limit to which certain characteristics of the pool may deteriorate. In the event that loans sold to the issuer have stronger credit characteristics than those assumed upgrades to tranches other than the class A and C may result. Many loans in the pools currently pay a fixed rate of interest and all will eventually revert to an interest rate linked to Libor. Once this has occurred borrowers will be exposed to increases in market interest rates, which would put pressure on affordability, and potentially cause deterioration of asset performance. Should this result in defaults and losses on properties sold in excess of Fitch's expectations, Fitch may take negative rating action on the notes. FINSBURY SQUARE 2019-3: Fitch Assigns CCCsf Rating on Cl. F Debt ---------------------------------------------------------------- Fitch Ratings assigned Finsbury Square 2019-3 plc's notes final ratings. Finsbury Square 2019-3 PLC Cl. A XS2053549056; LT AAAsf New Rating; previously at AAA(EXP)sf Cl. B XS2053549130; LT AA+sf New Rating; previously at AA(EXP)sf Cl. C XS2053549304; LT A+sf New Rating; previously at A+(EXP)sf Cl. D XS2053549569; LT Asf New Rating; previously at A-(EXP)sf Cl. E XS2053549643; LT A-sf New Rating; previously at BBB+(EXP)sf Cl. F XS2053549726; LT CCCsf New Rating; previously at CCC(EXP)sf Cl. X XS2053550492; LT BB+sf New Rating; previously at B(EXP)sf Cl. Z XS2053550658; LT NRsf New Rating; previously at NR(EXP)sf TRANSACTION SUMMARY Finsbury Square 2019-3 PLC is a securitisation of owner-occupied (OO) and buy-to-let (BTL) mortgages originated by Kensington Mortgage Company Ltd in the UK. The transaction features recent originations of both OO and BTL loans originated up to September 2019 and the residual origination of the Finsbury Square 2016-2 PLC transaction. KEY RATING DRIVERS Pre-funding Mechanism The transaction's pre-funding mechanism means further loans may be sold to the issuer, with proceeds from the over-issuance of notes at closing standing to the credit of the pre-funding reserves. Fitch has received loan-by-loan information on additional mortgage offers that could form part of the collateral, once advanced by the seller. However, Fitch assumed the additional pool was based on the constraints outlined in the transaction documents. Product Switches Permitted Eligibility criteria govern the type and volume of product switches, but these loans may earn a lower margin than the reversionary interest rates under their original terms. Fitch has assumed that the portfolio quality will migrate to the weakest permissible under the product switch restrictions. Help-to-Buy, Young Professional Products Up to 12.5% of the prefunding pool may comprise loans in which the UK government has lent a proportion (up to 40% inside London and 20% outside London) of the property purchase price in the form of an equity loan. This allows borrowers to fund a 5% cash deposit and mortgage the remaining balance. When determining these borrowers' foreclosure frequency (FF) via debt-to-income (DTI) and sustainable loan-to-value (sLTV), Fitch has taken the balances of the mortgage loan and equity loan into account. In addition, a product targeting young professionals, launched in October 2018, could be included in the pre-funding pool (up to 5%). Self-employed Borrowers Kensington may lend to self-employed individuals with only one year's income verification completed or the latest year's income if profit is rising. Fitch believes this practice is less conservative than that at other prime lenders. An increase of 30% to the FF for self-employed borrowers with verified income was applied instead of the 20% specified in criteria. RATING SENSITIVITIES Material increases in the frequency of defaults and loss severity on defaulted receivables producing losses greater than Fitch's base case expectations may result in negative rating action on the notes. Fitch's analysis revealed that a 30% increase in the WAFF, along with a 30% decrease in the WA recovery rate, would imply a downgrade of the class A notes to 'A+sf' from 'AAAsf'. GOALS SOCCER: Hands Evidence to SFO in Accounts Investigation ------------------------------------------------------------- Oliver Gill at The Telegraph reports that the accounting scandal surrounding Goals Soccer Centres has deepened after the five-a-side operator called in fraud investigators. According to The Telegraph, evidence has been handed over to the Serious Fraud Office (SFO) just days after the company's stock was delisted from the London Stock Exchange amid problems with its accounts. In August, Goals uncovered "improper behavior within the company", The Telegraph relates. This followed its shares being suspended in March after unearthing an unpaid VAT bill of at least GBP12 million, The Telegraph notes. Goals' board put the company up for sale during the summer is it struggled to get to the bottom of what it termed "historical accounting errors", The Telegraph discloses. THOMAS COOK: Nordic Business Reaches Deal with Buyer ---------------------------------------------------- Helena Soderpalm at Reuters reports that the Nordic business of collapsed travel firm Thomas Cook has reached a deal with a buyer, a company spokesman said on Oct. 29. The Nordic operations, also known as Thomas Cook Northern Europe, said last month that it was looking for new owners, Reuters recounts. It is a separate legal entity and aims to continue to operate as usual, Reuters notes. According to Reuters, Fredrik Henriksson, head of communications at Thomas Cook Northern Europe/Ving, said the firm would unveil the buyer today, declining to give further details. The business said on Oct. 28 it had attracted several bids and interest from over 10 parties, Reuters relates. About Thomas Cook Group Thomas Cook Group Plc is the ultimate holding company of direct and indirect subsidiaries, which operate the Thomas Cook leisure travel business around the world. TCG was formed in 2007 following the merger between Thomas Cook AG and MyTravel Group plc. Headquartered in London, the Group's key markets are the UK, Germany and Northern Europe. The Group serves 22 million customers each year. The Group operates from 16 countries, with a combined fleet of over 100 aircraft through five entities holding air operator certificates in the UK, Germany, Denmark and Spain. The Group has 2,800 owned and franchised retail outlets (including 555 shops in the UK) and operates 199 own-brand hotels across the world. As of Dec. 31, 2018, the Group had 21,263 employees, including 9,000 in the U.S. The travel agent originally proposed a restructuring. It was scheduled to ask creditors Sept. 27, 2019, for approval of a scheme of arrangement that involves (a) substantially deleveraging the Group by converting GBP1.67 billion of RCF and Notes debt currently outstanding into new shares (15%) and a subordinated PIK note (at least GBP81 million) to be issued by the recapitalized Group in proportions still to be agreed; and (b) the transfer of at least a 75% interest in the Group Tour Operator and an interest of up to 25% in the Group Airline to Chinese investor Fosun Tourism Group. Representatives of the company filed a Chapter 15 petition in New York on Sept. 16, 2019, to seek U.S. recognition of the UK proceedings as foreign main proceeding. The Chapter 15 case is In re Thomas Cook Group Plc (Bankr. S.D.N.Y. Case No. 19-12984). Latham & Watkins, LLP is the counsel. But after last-ditch rescue talks failed, on Sept. 23, 2019, Thomas Cook UK Plc and associated UK entities announced that they have entered Compulsory Liquidation and are now under the control of the Official receiver. The UK business has ceased trading with immediate effect and all future flights and holidays are cancelled. All holidays and flights provided by Thomas Cook Airlines have been cancelled and are no longer operating. All Thomas Cook's retail shops have also closed. Separate from the parent company, Thomas Cook's Indian, Chinese, German and Nordic subsidiaries will continue to trade as normal. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2019. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. 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