/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/200218.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 Tuesday, February 18, 2020, Vol. 21, No. 35 Headlines D E N M A R K DKT HOLDINGS: S&P Cuts Issuer Credit Rating to 'B', Outlook Stable F R A N C E BANIJAY GROUP: Fitch Lowers LT IDR to B, Off Watch Negative G E R M A N Y EO TELEVISION: Motorvision Group Takes Over Operation of eoTV I R E L A N D SMURFIT KAPPA: Fitch Alters Outlook on BB+ LT IDR to Positive I T A L Y A-BEST 14 SRL: Fitch Affirms Class E Debt at 'BBsf' MOBY SPA: Reaches Deal with Bondholders to Delay Interest Payment MOBY SPA: S&P Cuts ICR to 'SD' on Announced Standstill Agreement L U X E M B O U R G SK INVICTUS II: Moody's Lowers CFR to B3, Outlook Stable N O R W A Y ENDUR ENERGY: Board Opts to File Bankruptcy Petition R U S S I A YAROSLAVL REGION: Fitch Upgrades LT IDRs to BB, Outlook Stable T U R K E Y ATLASJET HAVACILIK: Applies for Bankruptcy U K R A I N E [*] UKRAINE: Creditors of Insolvent Banks Get Over UAH10BB in 2019 U N I T E D K I N G D O M FAMILY DOCTOR: To Close Following 'Financial Viability' Concerns INVERCLYDE & NORTH: CSN Care Takes Over Business, 200 Jobs Saved LAURA ASHLEY: Scrambles to Secure More Funding After Sales Slump LENDY LTD: Investors Crowdfund Legal Challenge to Administrators NORTHERN POWERHOUSE: Receives Offers for Three North Wales Hotels REDWOOD BUSINESS: Court Winds Up Debt Collection Company TOWD POINT 2020-AUBURN 14: Fitch Assigns CC Rating on Cl. E Debt TOWD POINT 2020-AUBURN: S&P Rates Class XA Notes 'B' - - - - - ============= D E N M A R K ============= DKT HOLDINGS: S&P Cuts Issuer Credit Rating to 'B', Outlook Stable ------------------------------------------------------------------ DKT Holdings ApS, parent of Danish telecom operator TDC A/S, has indicated heavier investments in 2020 than S&P Global Ratings forecast, reflecting aggressive fiber layout and conversion of its entire mobile network to fifth-generation ready technology. Therefore, S&P has revised its forecast of S&P Global Ratings-adjusted debt to EBITDA to 6.7x (excluding shareholder loans) in 2020, compared with its previous expectation of less than 6.0x. S&P is therefore lowering its ratings on DKT Holdings to 'B' from 'B+'. The stable outlook reflects S&P's expectation of stable EBITDA in 2020, due in particular to lower non-recurring costs and content cost savings, and that management would consider cutting discretionary outlays if needed to keep leverage in check. S&P said, "We believe TDC will substantially increase investments in fifth-generation (5G) and fiber layout acceleration in 2020. In our view, Danish telecommunications network operator TDC's capital expenditure (capex; excluding spectrum payments) will shoot up to about Danish krone (DKK) 5.9 billion for full-year 2020, representing 35% of sales, as the company accelerates its fiber network layout and builds its 5G network to confront fierce domestic competition and alternative infrastructure operators." However, capex is likely to substantially deflate in 2021. TDC's aggressive financial policy will spike in 2020, but it should, however, recede slightly from 2021. S&P said, "The combination of considerably higher debt-funded network investments and a likely outlay for 5G spectrum leads us to forecast S&P Global Ratings-adjusted leverage of 6.7x in 2020 (9.6x including shareholder loans), up from about 6.2x in our 2019 estimates, compared with our previous expectation of less than 6.0x in 2020 and gradually trending down toward 5.5x thereafter." S&P said, "Due to these heavy investments, we expect TDC's free operating cash flow (FOCF) will further deteriorate from an already negative level in 2019 following the 4G spectrum investment. FOCF should improve substantially in 2021, however, based on our assumption of EBITDA turnaround and considerably lower investments after the temporary spike in 2020. It may remain negative after lease payments in 2021, but we think management has the flexibility to cut outlays after 2020, depending on its EBITDA trajectory, which will support its objective of reducing leverage after 2020. "We expect TDC will post about-flat S&P Global Ratings-adjusted EBITDA in 2020 due to lower costs and a relatively sound subscriber trend. We expect lower content-related costs in 2020 due to the end of the Discovery contract, as well as reduced expenditure on the pending network separation process. This, combined with other savings and potential commercial traction, or at least better client retention in TV from sports and own content investments, should substantially reduce the drag on EBITDA. In addition, fiber take up should help improve the customer mix and raise prices, while we foresee steady performance in the consumer fixed broadband and mobile segments." TDC's position as the leading telecom operator in Denmark, its well-invested mobile and cable network, and its sound, yet temporarily weakened EBITDA margins, support our view of DKT Holdings' business risk profile. Thanks to recent investments, TDC's 4G coverage wasextended to more than 99.5% of the Danish population at the end of 2019. Furthermore, 100% of its own cable network was recently upgraded to 1GB broadband speeds. The on-going fiber rollout and the 5G mobile swap should further support the group's position in the longer term. TDC's exposure to the tough market conditions in the fragmented Danish market represents a key weakness. The company continues to face fierce competition in the Danish telecoms market. TDC competes with three other mobile network operator's in the same Danish market, as well as utility companies that are deploying and commercializing fiber. S&P said, "The stable outlook reflects our expectation that the company's EBIDTA will stabilize in 2020 thanks to lower operating and exceptional costs, resilient mobile and fixed broadband revenue, and some traction from its extended fiber footprint and content investments. It also reflects our forecast of S&P Global Ratings-adjusted senior debt leverage for DTK Holdings of less than 7x in 2020, receding slightly thereafter, and considerably improving FOCF in 2021 on the back of lower investments and increasing EBITDA." The ongoing initiatives carry meaningful execution risk, given the combination of heavy network and content investments, the separation process, and a fiercely competitive market. S&P could downgrade DKT Holdings if: -- EBITDA fails to stabilize in 2020; -- S&P Global Ratings-adjusted debt to EBITDA increases to more than 7x (or more than 10x including shareholder loans) in 2020; -- EBITDA cash interest cover weakens to less than 3x; or -- FOCF fails to dramatically recover in 2021. S&P views rating upside as remote given the company's more aggressive financial policy than previously anticipated. It would require, in particular, adjusted senior debt leverage at or below 5.5x (8.5x including shareholder loans). =========== F R A N C E =========== BANIJAY GROUP: Fitch Lowers LT IDR to B, Off Watch Negative ----------------------------------------------------------- Fitch Ratings downgraded Banijay Group SAS's Long-Term Issuer Default Rating to 'B' with a Stable Outlook and removed it from Rating Watch Negative. Fitch has also assigned a senior secured debt rating of 'B+'/'RR3'/58% to Banijay Entertainment SAS and Banijay Entertainment Holdings US, Inc. and assigned a senior unsecured debt rating of 'CCC+'/'RR6'/0% to Banijay Group SAS. Fitch has removed the RWN because Fitch now believes Banijay's acquisition of Endemol Shine Group (Endemol) will complete by mid-2020, with the proposed capital structure fully in place. The downgrade reflects Fitch's expectation that Banijay's funds from operations (FFO) adjusted net leverage will be consistently higher than the downgrade threshold for a 'B+' rating of 5.5x following the planned acquisition of Endemol. Endemol's enterprise value of EUR1.9 billion, together with Banijay's existing debt refinancing, will be funded by EUR275 million capital increase from Banijay's shareholders and a combination of term loan B, senior secured notes and senior unsecured notes. Fitch believes there is a strong rationale for the acquisition and expects Banijay to extract meaningful synergies from the deal. However, the high portion of debt funding in the new capital structure will increase the pro-forma FFO adjusted net leverage to 6.8x in the financial year to end-December 2020 (FY20) before deleveraging to 5.6x in FY22, which is more consistent with a 'B' rating. The transaction is transformative as it entails some significant execution risk to integrate Endemol, which is twice as big as Banijay in terms of revenue. The senior secured debt rating of Banijay Group SAS was withdrawn with the following reason: Bonds Were Called KEY RATING DRIVERS Strategic Acquisition, More Debt: Banijay's EUR1.9 billion acquisition of Endemol has a strong strategic rationale. The enlarged Banijay will become the largest independent TV production firm globally and will enhance its geographical presence and intellectual property (IP) diversification. However, taking into account the high portion of debt funding in the new capital structure, Fitch expects the transaction to increase Banijay's pro-forma FFO adjusted net leverage to 6.8x by FY20 , which is well above the downgrade leverage threshold of 5.5x. High Leverage Leads to Downgrade: On a pro-forma basis, Fitch expects Banijay's FFO adjusted net leverage to peak at 6.8x at FY20 after the acquisition closes, before deleveraging to 6.2x in FY21 from EBITDA growth and realised synergies. This would bring FFO adjusted net leverage into the 5.5x-6.5x range consistent with a 'B' rating. The enlarged Banijay will have about 70% production revenue contributed by recurring shows. However, the inherent volatility of content production segment remains relevant and will not be substantially mitigated by its increased size. Positive Free Cash Flow: Fitch expects the enlarged Banijay's post-dividend free cash flow (FCF) margin to be 1.6% in FY20, before returning to above 4%. This expectation takes into account extra interest costs for Endemol's existing debt until deal closure and one-off transaction and integration costs. It also reflects Fitch's view that the company needs to absorb the transaction and integration costs while post-merger cost synergies gradually feed through over the next two to three years. Synergy Plan and Integration Costs: The acquisition should result in significant savings in overheads and operational costs in countries in which Banijay and Endemol are both present. The company has identified about EUR60 million of cost synergies to be realised in 2020-2022, which should sustainably increase EBITDA. Fitch believes a meaningful amount of the expected synergies are likely to be achieved, despite some implementation risk. Fitch expects the company to incur one-off integration-related costs of about EUR60 million, to be spread over 2020 and 2021. Senior Secured Debt Rating: The term loan B and senior secured notes issued by Banijay Entertainment SAS and Banijay Entertainment Holdings US, Inc. to finance the acquisition rank pari passu to each other and rank senior relative to the unsecured notes issued by the parent, Banijay. Given the much larger amount of debt in the new capital structure, the recovery prospect of senior secured debt is at 58%, which is consistent with an instrument rating of 'B+'/'RR3'. Senior Unsecured Debt Rating: The senior unsecured notes issued by Banijay Group SAS are structurally and contractually subordinated to the term loan B and senior secured notes. Given the substantial amount of prior-ranking debt, Fitch views it unlikely that in a potential default situation any recovery value would remain for the unsecured notes, once the secured creditor claims have been met. Therefore, Fitch rated the unsecured instrument at 'CCC+'/'RR6'. Supportive Market Growth: Fitch expects the global TV production market to continue growing at about 2% a year in 2019-2022. Customers in Europe and the US continue to consume content via online streaming platforms. The popularity of these platforms supports strong demand for both scripted and non-scripted content. This is positive for the organic growth of production companies, like Banijay and Endemol, which are at the heart of content creation. DERIVATION SUMMARY After acquiring Endemol, Banijay will be the largest independent TV production firm globally. Its primary competitors remain ITV Studios, Fremantle Media and All3Media. Banijay has a greater proportion of unscripted content than its peers, although the acquisition of Endemol will further increase its exposure to scripted content. Fitch covers several UK and US peers in the diversified media industry, such as Twenty-First Century Fox, Inc. (A/Stable; now owned by The Walt Disney Company) and NBC Universal Media LLC (A-/Stable; now owned by Comcast Corp.). They are much larger and more diversified, occupy stronger competitive positions in the value chain and are less leveraged than the enlarged Banijay. Compared with these investment-grade names, Banijay's profile is more consistent with a 'B' rating. KEY ASSUMPTIONS - Combined group's revenue to reach just over EUR3 billion in FY20 on a pro-forma basis and growing at a low-single-digit percentage thereafter - EBITDA margin to increase from 11.6% by about 100bp during 2020-2022 (including synergies) - Acquisition-related integration costs estimated at about EUR60 million spread over 2020 and 2021 - Fitch conservatively assumes run-rate synergies of about EUR40 million a year by 2022, compared with the management's target of EUR60 million by 2022. Key Recovery Rating Assumptions - Fitch uses a going-concern approach for the enlarged Banijay in its recovery analysis, assuming that the company would be considered a going-concern in the event of a bankruptcy - A 10% administrative claim - Post-restructuring going-concern EBITDA estimated at EUR265 million, 25% below its 2020 forecast EBITDA, reflecting distress caused by loss of top shows - Fitch uses an enterprise value (EV) multiple of 5.5x to calculate a post-restructuring valuation - Recovery prospects are 58% for the senior secured debt at Banijay Entertainment, comprising EUR939 million equivalent of notes and EUR869 million equivalent of term loan B. In its debt claim waterfall, Fitch assumes EUR90 million of local facilities issued by Banijay's non-guarantor subsidiaries and EUR61 million of factoring rank prior to the senior secured debt. Ranking pari passu to the senior secured notes and TLB, Fitch assumes a fully drawn RCF of EUR170 million and EUR39 million of local facilities at guarantor subsidiaries. EUR400 million of senior unsecured notes issued by Banijay Group SAS have 0% recovery prospects. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - FFO adjusted net leverage declining below 5.5x - Growth of EBITDA and FCF with continued demand for non-scripted and scripted content without a significant increase in competitive pressure Developments That May, Individually or Collectively, Lead to Negative Rating Action - FFO adjusted net leverage rising above 6.5x - FFO fixed-charge coverage sustained below 2.5x - Failure to renew leading shows and delays in increasing distribution and secondary revenue LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity: Fitch expects the enlarged Banijay to have EUR110 million cash on balance sheet at end-2020. Together with positive FCF generation and a EUR170 million RCF fully undrawn, Fitch views the liquidity position of Banijay as comfortable. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. ============= G E R M A N Y ============= EO TELEVISION: Motorvision Group Takes Over Operation of eoTV ------------------------------------------------------------- Broadband TV News reports that Motorvision Group has acquired TV channel eoTV on Feb. 1, 2020, which will continue to be broadcast as a free-to-air service in the German-speaking countries. The channel, which launched in December 2015 under the motto 'European Originals', shows European series and films. In February 2019, operating company EO Television GmbH had to file for insolvency. According to the report, the new broadcaster of eoTV is MV Sendebetriebsgesellschaft UG, a wholly-owned subsidiary of MV International GmbH (Motorvision Group). As part of an asset deal, the company will take over the brand rights, programme licences, technical equipment and existing employees of the insolvent EO Television. The channel will continue to be based in Munich. Raimund Kohler, managing director of pay-TV broadcaster Motorvision TV, will take over the management of the business, the report says. Together with his team he wants to realign the programme structure of eoTV in the coming months and expand it with additional programme genres. "In the past, Motorvision TV and eoTV have already cooperated successfully and screened reports as well as racing series such as the Isle of Man TT during the European Sportsnight," Broadband TV News quotes Mr. Kohler as saying. "We want to build on this basis and, together with our new colleagues from eoTV, offer viewers on German free-TV an even greater variety of programmes. The preparations are already in full swing." Broadband TV News says the marketing of advertising time for eoTV will be handled in-house with immediate effect under the leadership of Andreas Schaefer, sales director of Motorvision Group. Branded Motorvision.TV, Motorvision Group operates pay-TV channels in Germany and over 100 countries in Europe, Africa and Asia. There are no plans to change Motorvision.TV's distribution model, according to the broadcaster, Broadband TV News adds. ============= I R E L A N D ============= SMURFIT KAPPA: Fitch Alters Outlook on BB+ LT IDR to Positive ------------------------------------------------------------- Fitch Ratings revised the Outlook on Ireland-based packaging company Smurfit Kappa Group plc's Long-Term Issuer Default Rating to Positive from Stable and affirmed the IDR at 'BB+'. Fitch has also affirmed the senior unsecured ratings of Smurfit Kappa Acquisitions, Smurfit Kappa Treasury Funding and Smurfit Kappa Treasury Unlimited Company at 'BB+'. The revision of the Outlook reflects SKG's continued solid financial and operating performance with EBITDA margin supported by favorable market conditions and continued strong free cash flow generation. It also reflects improving geographical diversification beyond Europe, a stronghold of SKG, which continues to account for more than 75% of its revenue, and its vertical integration into containerboard. SKG's stable dividend policies, moderate leverage, capex flexibility and the ability to generate positive free cash flow (FCF) amid high capex also support the rating. SKG is the European leader in paper-based packaging, including corrugated, containerboard and bag-in-box. In 2019, it generated EUR1,603 million in EBITDA. KEY RATING DRIVERS Continued Margin Improvement: SKG continued to achieve revenue growth in FY19 and has further improved its EBITDA margins to around 17.7%. The improvement in the margins was mainly due to favourable market conditions, as raw material prices were lower than its expectations in 2019. A further positive impact came from the recent acquisitions and growth capital expenditure both in Europe and the Americas. SKG passes through the costs of raw materials to the end-consumers with a lag of around six months and therefore Fitch expects the EBITDA margins to slightly decrease to just below 17% over 2020-2023. The pass-through mechanism is similar for all packaging companies, although in some cases (mainly rigid plastic packaging) the lag could be shorter than that of SKG. Leading Packaging Company: SKG's ratings are supported by its leading position in corrugated containers and exposure to the broadly stable packaging markets. The credit profile is further supported by SKG's vertical integration into containerboard, providing some margin protection against raw material cost inflation. In addition, around 60% of the group's revenue is generated by customers in the fast-moving consumer goods sector, which provides stability to SKG's financial performance. Strong FCF Generation: Fitch views the stability of margins, stable dividend policy and positive FCF generation as positive features of SKG's credit profile. Despite a slight decrease in the EBITDA margins and gradual increase in dividend payments, Fitch forecasts SKG to continue generating positive FCF. This is further supported by the expected reduction of capital expenditure from the historical highs, as the company concludes its medium-term plan adopted in 2018. Positive FCF generation has resulted in SKG's FFO adjusted net leverage improving to 2.6x in FY19 from 3.3x in FY16. Fitch expects it to decrease to below its positive rating sensitivity of 2.5x by 2021-2022, which is one of the main drivers of the Outlook revision. Lack of FCF Volatility: Fitch views the very low volatility of SKG's FCF margins to be highly supportive of the rating. The company can reduce capex and manage working capital during unfavourable market conditions. This is despite some volatility in the EBITDA margins, which can be attributed to the lag in the raw materials pass-through costs to the end-customer, High Capital Intensity: Fitch views SKG's capital intensity, which is calculated as capital expenditure to revenue, to be somewhat higher than that of packaging peers and other sectors. However, this is compensated by moderate dividend payments, which ensure SKG can produce consistently strong FCF. DERIVATION SUMMARY SKG's ratings are supported by its leading packaging market position, stable and diversified customer base, strong FCF generation and sound liquidity. Its closest Fitch-rated peer is Stora Enso Oyj (Stora; BBB-/Stable), which in its view has a slightly better business profile due to the higher geographical diversification and product mix, as well Fitch's expectations of lower leverage, hence the one-notch difference in the ratings. US-based packaging peers, such as Berry Global Group, Inc., Ball Corporation (WD), Crown Holdings, Inc., although comparable in size, operate in different packaging segments (plastic, bottle and glass manufacturing, respectively) and can exhibit somewhat different market dynamics and customer mix. The US-based packaging companies' leverage is higher than that of SKG and Stora, which is more consistent with non-investment grade ratings. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Low single-digit revenue growth over 2020-2023 - EBITDA margin at around 16-17% - Dividend growth at around 15% annually - Net acquisitions around EUR150 million annually over 2021-2023 - Capex around EUR550 million over 2020-2023 RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Increased geographic and product diversification leading to reduced business risk - FFO-adjusted net leverage sustainably below 2.5x - FCF margin sustainably above 2.5% (2019: 3.2%) Developments That May, Individually or Collectively, Lead to Negative Rating Action - Larger-than-expected acquisitions or increased shareholder returns that result in FFO adjusted net leverage above 4.0x on a sustained basis - FCF margin sustainably below 1% LIQUIDITY AND DEBT STRUCTURE Strong Liquidity Position: At end-2019 SKG had EUR203 million in cash and short-term deposits (of which Fitch views EUR110 million as restricted for working-capital and other operational requirements) and around EUR1 billion of undrawn committed credit facilities, while short-term maturities stood at EUR118 million. Expected positive FCF generation over the next 12 months should also provide ample coverage for debt service. SUMMARY OF FINANCIAL ADJUSTMENTS - Restricted cash of EUR114 million for working capital and operational needs. ESG CONSIDERATIONS SKG has an ESG Relevance Score of 4 for Exposure to Social Impacts due to consumer preference shift towards renewable packaging, which has a positive impact on the credit profile, and is relevant to the ratings in conjunction with other factors. ========= I T A L Y ========= A-BEST 14 SRL: Fitch Affirms Class E Debt at 'BBsf' --------------------------------------------------- Fitch Ratings has affirmed Asset-Backed European Securitisation Transaction Fourteen S.r.l., as follows: Asset-Backed European Securitisation Transaction Fourteen S.r.l. (A-Best 14) - Class A IT0005187072; LT AAsf Affirmed - Class B IT0005187080; LT Asf Affirmed - Class C IT0005187098; LT BBB+sf Affirmed - Commingling Facility; LT BBB+sf Affirmed - Class D IT0005187106; LT BB+sf Affirmed - Class E IT0005329708; LT BBsf Affirmed TRANSACTION SUMMARY The notes are backed by a pool of Italian auto loan receivables originated and serviced by FCA Bank S.p.A. (FCAB, BBB+/Stable/F1). The transaction originally closed in May 2016. It was first restructured in November 2016 and then in April 2018. It is a revolving securitisation of fixed-rate auto loans advanced to Italian borrowers, including VAT individuals (ie professionals and artisans). The revolving period is scheduled to end on the May 2020 payment date. KEY RATING DRIVERS Transaction Still Replenishing The deal is in the final stage of its revolving period. As a result, credit enhancement for the rated notes is unchanged. As of January 2020, the portfolio composition was broadly in line with the restructuring of April 2018. Used cars account for 15% of the portfolio and VAT borrowers for 19% compared with the maximum allowed limit of 16% and 20%, respectively, while the share of southern debtors is 30%, below the covenanted 35%. However, given that migration to a different pool mix is possible until the end of the revolving period, Fitch has maintained its default and recovery assumptions. Asset Performance Within Expectations As of January 2020, cumulative defaults were 0.3% of the cumulative purchased assets since closing in 2016. Loans in arrears for 30 days or more are still at very low levels (0.4%), despite being on an increasing trend since the last restructuring in April 2018. Ratings Capped at 'AAsf' The class A notes are rated 'AAsf', the maximum achievable rating for Italian structured finance transactions, six notches above Italy's Long-Term Issuer Default Rating (IDR; BBB/Negative/F2).The Outlook on the class A notes mirrors that on the sovereign. RATING SENSITIVITIES These rating sensitivities are as of the latest run of the cash-flow analysis, dated April 2018. Rating sensitivities to increased default rate assumptions (class A / B / C / D / E): - Current rating: 'AAsf' / 'Asf' / 'BBB+sf' / 'BB+sf' / 'BBsf' - Increase in default rate by 10%: 'AA-sf' / 'A-sf' / 'BBBsf' / 'BB+sf' / 'BB-sf' - Increase in default rate by 25%: 'A+sf' / 'BBB+sf' / 'BBB-sf' / 'BBsf' / 'B+sf' - Increase in default rate by 50%: 'A-sf' / 'BBBsf' / 'BB+sf' / 'B+sf' / 'Bsf' Rating sensitivities to reduced recovery rate assumptions (class A / B / C / D / E): - Current rating: 'AAsf' / 'Asf' / 'BBB+sf' / 'BB+sf' / 'BBsf' - Decrease in recovery rate by 10%: 'AAsf' / 'Asf' / 'BBB+sf' / 'BB+sf' / 'BBsf' - Decrease in recovery rate by 25%: 'AAsf' / 'Asf' / 'BBB+sf' / 'BB+sf' / 'BB-sf' - Decrease in recovery rate by 50%: 'AA-sf' / 'Asf' / 'BBB+sf' / 'BB+sf' / 'BB-sf' Rating sensitivities to multiple factors (class A / B / C / D / E): - Current rating: 'AAsf' / 'Asf' / 'BBB+sf' / 'BB+sf' / 'BBsf' - Increase in default rate and decrease in recovery rate by 10%: 'AA-sf' / 'A-sf' / 'BBBsf' / 'BB+sf' / 'BB-sf' - Increase in default rate and decrease in recovery rate by 25%: 'Asf' / 'BBB+sf' / 'BBB-sf' / 'BB-sf' / 'B+sf' - Increase in default rate and decrease in recovery rate by 50%: 'BBB+sf' / 'BBB-sf' / 'BBsf' / 'B+sf' / Not Rateable ('NRsf') Rating Sensitivity for the Commingling Reserve Facility (CRF) The CRF rating is the lower of FCAB's IDR, the account bank's IDR (Elavon Financial Services DAC, AA-/Stable) and the maximum achievable rating to ensure timely payment of interest due on the CRF. As such, any change in the relevant counterparty's IDR as well as any significant improvement or deterioration of the portfolio performance beyond expectations may trigger a downgrade or upgrade of the CRF rating. CRITERIA VARIATION Under its Global Structured Finance Rating Criteria, Fitch foresees that certain structured finance transactions which are dependent on the credit quality of an underlying entity may be credit-linked to those entities. However, the issuer's ability to repay the commingling facility depends on a combination ('weakest link') of counterparty (ie, the exposure towards FCAB and the account bank) and portfolio risk (cash flows deriving from the securitised pool for the interest payments) rather than any of the two separately. The assessment of the two risks combined is a criteria variation that the agency deemed necessary to properly address credit characteristics of the commingling facility. Without this criteria variation, Fitch could have not rated the commingling reserve facility loan. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC 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 asset pool and the transaction. There were no findings that affected the rating analysis. 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. Prior to the transaction closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Prior to the (first) transaction restructuring, Fitch conducted a review of a small targeted sample of the origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the transaction, either due to their nature or to the way in which they are being managed by the transaction. MOBY SPA: Reaches Deal with Bondholders to Delay Interest Payment ----------------------------------------------------------------- Antonio Vanuzzo at Bloomberg News reports that Italian ferry operator Moby SpA reached an agreement with a group of bondholders to delay a EUR12 million (US$13 million) interest payment while it negotiates a debt restructuring. The company said in an emailed statement the moratorium is valid until the end of the month, Bloomberg relates. According to Bloomberg, Moby also asked for a standstill on amortization payments due mid February related to EUR260 million of loans. Moby, which links Sardinia and Sicily with Italy's mainland, has been in talks with creditors for months as it's struggling amid increasing regulation, tougher competition and weak freight traffic volumes, Bloomberg discloses. The ferry operator fended off an attempt by hedge funds holding its bonds to have it declared insolvent, Bloomberg relays. The funds filed an insolvency petition with a Milan court in September, seeking to prevent Moby selling ships pledged as guarantees on debt, Bloomberg recounts. The court rejected the request in October but urged Moby to take action in boosting its financial strength, according to Bloomberg. In November, the company hired PricewaterhouseCoopers LLP to draw up proposals for reducing indebtedness, people familiar with the matter said at the time, Bloomberg notes. MOBY SPA: S&P Cuts ICR to 'SD' on Announced Standstill Agreement ---------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on Moby SpA to 'SD' from 'CCC-' and its issue ratings on the company's senior secured debt to 'D' from 'CCC'. The downgrade follows Moby's announcement of a standstill agreement with an ad-hoc group of bondholders and a further standstill request to SFA lenders. Moby decided to defer payments on its EUR300 million notes due 2023 and EUR200 million term loan and EUR60 million revolving credit facilities due 2021, which we now rate 'D'. The recovery rating on these obligations remains unchanged at '2' and continues to reflect our expectation of material (85%) recovery in the event of a conventional default. =================== L U X E M B O U R G =================== SK INVICTUS II: Moody's Lowers CFR to B3, Outlook Stable -------------------------------------------------------- Moody's Investors Service downgraded SK Invictus Intermediate II S.a.r.l.'s Corporate Family Rating to B3 from B2 and Probability of Default Rating to B3-PD from B2-PD. Moody's also downgraded SK Invictus Intermediate II S.a.r.l.'s first lien senior secured credit facility to B2 from B1 and second lien senior secured term loan to Caa2 from Caa1. The outlook is stable. "The downgrade reflects significantly elevated leverage and lack of free cash flow generation despite relatively strong margins and attractive market positions in both the Fire Safety and Oil Additives businesses" said Domenick R. Fumai, Moody's Vice President and lead analyst for SK Invictus Intermediate II S.a.r.l. Downgrades: Issuer: SK Invictus Intermediate II S.a.r.l. Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Secured 1st Lien Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, Downgraded to Caa2 (LGD6) from Caa1 (LGD6) Outlook Actions: Issuer: SK Invictus Intermediate II S.a.r.l. Outlook, Remains Stable RATINGS RATIONALE Perimeter Solutions' B3 CFR rating is constrained by a substantial increase in leverage over the last year due to significant underperformance in its Fire Safety business as a result of slower wildfire activity in California and softness in the company's Oil Additives segment due to production issues at one customer, lower industry volumes, as well as the impact of trade tariffs that resulted in much lower EBITDA and free cash flow generation versus Moody's expectations. Perimeter Solutions also increased balance sheet debt by using its revolving credit facility and an incremental first lien term loan to finance several acquisitions, including First Response in 2019. Although Moody's expects 4Q19 financial results to demonstrate improvement due to increased wildfire activity in Kincade, California and Australia, as well as more normalized earnings in the Oil Additives segment, Moody's nonetheless estimates Total Debt/EBITDA of approximately 10.0x for fiscal year ended December 31, 2019. The rating also incorporates the company's lack of scale and limited product diversity, with a substantial portion of earnings attributed to the Fire Safety segment, which is affected by the uncertainty of natural disasters. Private equity ownership and associated governance risk is another factor constraining the rating. Perimeter Solutions rating is supported by strong industry positions in both of its segments. Fire Safety's Phos-Chek®, Fire-Trol® and Auxquimia® brands hold leading market shares. Perimeter Solutions is the sole supplier of fire retardants to the US government and a leading supplier to key state and municipal fire agencies as well as Canadian provinces. In the Oil Additives segment, Perimeter Solutions benefits from an industry which has a limited number of suppliers and the company's position as the only supplier with operations in both North America and Europe. Both segments are characterized by high barriers to entry including extensive qualification requirements, require highly specialized formulations and have long-term customer relationships. Moody's also considers environmental, social and governance factors in the rating. As a specialty chemicals company, environmental risks are categorized as moderate. However, several of Perimeter Solutions' products may result in significant future risks. Phosphorous pentasulfide (P2S5) used in the preparation of oil additives is extremely reactive and is classified as an explosion hazard. Perimeter Solutions, which also manufactures Class B firefighting foams, states it is not currently involved in any litigation related to PFAS. However, given the stability of the fluorine-based products utilized, Moody's will actively monitor this risk as any litigation could be material to the company's financial status. Nonetheless, its aerial fire retardants are important products in fighting and containing large wildfires to limit personal injury of both inhabitants and firefighting personnel in the surrounding areas, confine property damage and minimize destruction of the environment. Governance risks are above-average due to the risks associated with private equity ownership, which include a limited number of independent directors on the board, reduced financial disclosure requirements as a private company and more aggressive financial policies compared to most public companies. The stable outlook assumes that Perimeter Solutions will preserve sufficient liquidity to maintain current operations, that Fire Safety experiences a return towards a more typical wildfire season in the US, incremental volume from the Australian wildfires and financial results in the Oil Additives segment are more commensurate with historical performance, thereby restoring consolidated EBITDA growth and positive free cash flow generation. Under this scenario, Moody's expects Total Debt/EBITDA to improve in FY 2020 towards mid-7x as the company is able to generate over $10 million in free cash flow and reduce outstanding borrowings on the revolving credit facility. Moody's would likely consider a downgrade if adjusted leverage is sustained above 8.0x, free cash flow remains negative for a sustained period of time, or available liquidity falls below $20 million. Although unlikely in the medium-term, Moody's could upgrade the ratings if adjusted leverage is below 6.0x on a sustained basis in a weak wildfire season, if free cash flow-to-debt is sustained above 5%, and the sponsor commits to more conservative financial policies. Liquidity is adequate with modest cash balances, expectations for positive free cash flow generation in 2020 and limited availability under its revolving credit facility until leverage per the credit facility calculation falls below 8.0x. The credit agreement for the revolving credit facility contains a springing first lien net leverage ratio covenant that is triggered if revolver borrowings exceed $35 million. Moody's does not expect that the covenant will be triggered in 2020. The first and second lien senior secured term loans do not contain financial maintenance covenants. Debt capital is comprised of a $100 million first lien senior secured revolving credit facility, approximately $553 million first lien senior secured term loan B, and a $170 million second lien senior secured term loan. The B2 ratings on the first lien senior secured credit facilities, one notch above the B3 CFR, reflect a first lien position on substantially all assets. The Caa2 rating on the second lien term loan, two notches below the B3 CFR, reflects the preponderance of first lien credit facilities in the capital structure. Perimeter Solutions is a specialty chemical producer operating in two segments: Fire Safety and Oil Additives. The fire safety business involves formulating and manufacturing fire safety chemicals, including Phos-Chek® fire retardants, Class A and B foams, and water enhancing gels for wildland, military, industrial, and municipal fires. The oil additives business produces phosphorus pentasulfide used in the preparation of ZDDP-based lubricant additives used for anti-wear properties in engine oils and to prolong the useful life of engines. Perimeter Solutions was acquired by private equity firm, SK Capital Partners, through a carve-out from Israel Chemicals, Ltd. in 2018 The principal methodology used in these ratings was Chemical Industry published in March 2019. =========== N O R W A Y =========== ENDUR ENERGY: Board Opts to File Bankruptcy Petition ---------------------------------------------------- Hari Govind at Bloomberg News reports that Endur Energy Solutions said the company's board concluded there is no longer any basis for continued operations and resolved a petition for bankruptcy. According to Bloomberg, the company said the petition will now be filed with Stavanger Tingrett. Significant deterioration in operating results during the fourth quarter made finding an alternative solution difficult. Based in Norway, Endur Energy Solutions provides maintenance, modification, construction, installation, fabrication and conversion of oil and gas installations both onshore and offshore sectors. =========== R U S S I A =========== YAROSLAVL REGION: Fitch Upgrades LT IDRs to BB, Outlook Stable -------------------------------------------------------------- Fitch Ratings upgraded the Russian Yaroslavl Region's Long-Term Foreign- and Local-Currency Issuer Default Ratings to 'BB' from 'BB-'. The Outlook is Stable. The upgrade follows a re-assessment of the region's risk profile to 'Low Midrange' from 'Weaker'. KEY RATING DRIVERS Fitch has re-assessed Yaroslavl's risk profile to 'Low Midrange' from 'Weaker', following the revision of the region's revenue robustness attribute to 'Midrange' from 'Weaker'. Revenue Robustness: Midrange A combination of a strong regional economy in the Russian context and low concentration on volatile economic sectors supported its re-assessment of the attribute to 'Midrange'. This also reflects increasing stability of the region's revenue proceeds during the last four years and gradual improvement of the region's revenue-generating capacity following stabilisation of the local economy. Yaroslavl's economy was strong in the Russian context with per capita GRP at 108% of the national median (2017). The economic profile of the region is diversified with a developed industrial sector, which leads to overall low volatility of tax proceeds. The region managed to shrink the budget deficit to 1%-2% of total revenue during 2017-2019 from a large average deficit of 8.4% in 2014-2016. Fitch expects Yaroslavl to maintain a prudent approach in managing its finances in the medium term. Revenue Adjustability: Weaker Fitch assesses Yaroslavl's ability to generate additional revenue in response to possible economic downturns as limited. The federal government in Russia holds significant tax-setting authority, which limits local and regional governments' (LRG) fiscal autonomy and revenue adjustability. The regional governments have rate-setting power only over three regional taxes: corporate property tax, transport tax and gambling tax, albeit with limits set in the National Tax Code. The proportion of these taxes was about 10% of Yaroslavl's total revenue in 2019. Expenditure Sustainability: Midrange Yaroslavl's administration exercises prudent control over expenditure, as spending growth has closely followed that of revenue in 2014-2018. Like other Russian regions, Yaroslavl has responsibilities in education, healthcare, provision of some types of social benefits, public transportation and road construction. In line with other Russian regions, Yaroslavl is not required to adopt anti-cyclical measures, which would inflate expenditure on social benefits in a downturn. At the same time, Russian regions' budgets are subject to the discretion of the federal authorities, which could lead to acceleration of expenditure. Expenditure Adjustability: Weaker Like most Russian regions, Fitch assesses Yaroslval's expenditure adjustability as low. The majority of spending responsibilities are mandatory for Russian subnationals; this leaves little room for Yaroslavl to manoeuvre in response to potential revenue shortfalls. Yaroslavl's flexibility to cut capex is also limited, particularly by the low proportion of capex, which averaged 8.3% in 2014-2018. Additionally, the region's ability to cut expenditure is constrained by the low level of per capita expenditure compared with international peers'. Liabilities and Liquidity Robustness: Midrange The assessment is supported by a national budgetary framework with strict rules on regional debt management. Russian LRGs are subject to debt stock limits and new borrowing restrictions as well as limits on annual interest payments. Use of derivatives is prohibited for LRGs in Russia. Limitations on external debt are very strict and in practice no Russian region borrows externally. Liabilities and Liquidity Flexibility: Midrange The region's liquidity is supported by federal treasury loans covering intra-year cash gaps. Fitch assesses Yaroslavl's access to domestic capital market as reasonable allowing the region to borrow in case of need, as evidenced by its record of domestic bond issues. Nonetheless, as the counterparty risk associated with domestic liquidity providers is rated 'BBB', Fitch assesses this risk factor as 'Midrange'. Debt Sustainability Assessment: 'a' Under its Rating Criteria for International Local and Regional Governments, Fitch classifies Yaroslavl, like other Russian LRGs, as a Type B LRG, due to debt service from cash flow on an annual basis. The assessment of debt sustainability is driven by a debt payback ratio (net adjusted debt/operating balance), of 9x and 13x under Fitch rating case over the five-year forecast period. DERIVATION SUMMARY Fitch re-assessed Yaroslavl's standalone credit profile (SCP) as 'bb-' from 'b+', following its re-assessment of the region's risk profile to 'Low Midrange' from 'Weaker', combined with an unchanged 'a' debt sustainability. The SCP also reflects comparison with Yaroslavl's peers. Fitch continues to apply a single-notch upward adjustment for potential extraordinary support in the form of ad-hoc intergovernmental loans from the federal government, based on past support. In Fitch's view such ad-hoc support would be provided at the discretion of the federal government. The region's IDRs are upgraded to 'BB' from 'BB-'. KEY ASSUMPTIONS Qualitative assumptions and assessments and their respective weight in the rating decision: Risk Profile: Low Midrange, high weight Revenue Robustness: Midrange, high weight Revenue Adjustability: Weaker, medium weight Expenditure Sustainability: Midrange, medium weight Expenditure Adjustability: Weaker, medium weight Liabilities and Liquidity Robustness: Midrange, medium weight Liabilities and Liquidity Flexibility: Midrange, medium weight Debt sustainability: 'a' category, medium weight Extraordinary Support: +1 notch, medium weight Asymmetric Risk: n/a Fitch's rating case scenario is a "through-the-cycle" scenario, which incorporates a combination of revenue, cost and financial risk stresses. It is based on the 2014-2018 figures and 2019-2023 projected ratios. The key assumptions for the scenario include: - 2019 revenue outturn close to the region's budget - Tax revenue to grow in line with the local economy's nominal growth in 2020-2023 - Operating expenditure growth in line with inflation - Capex to average 8.5% of the region's total expenditure over 2020-2023 Fitch's rating case envisages the following stress compared with the base case: - Annual 4.7% increase in operating revenue on average in 2019-2023, including 4.9% increase in taxes, 3.9% increase in non-tax revenue and 4% increase in current transfers; - Annual 7% increase in operating spending on average in 2019-2023; Figures as per Fitch's sovereign actual for 2018 and forecast for 2020, respectively: - GDP per capita (US dollar, market exchange rate): 11,291.4 and 12,260 - Real GDP growth (%): 2.3 and 2 - Consumer prices (annual average % change): 2.9 and 3.3 - General government balance (% of GDP): 2.9 and 0.9 - General government debt (% of GDP): 14.6 and 15.9 - Current account balance plus net FDI (% of GDP): 5.5 and 2.8 - Net external debt (% of GDP): -32.8 and -36.3 - IMF Development Classification: EM - CDS Market-Implied Rating: n/a RATING SENSITIVITIES Sustainable improvement in debt payback towards 11 years debt service coverage above 1x according to Fitch's rating case could lead to an upgrade. Deterioration of the region's fiscal debt payback to beyond 13x during most of the forecast period under Fitch's rating case or change in Fitch's expectation of ad-hoc support by central government could lead to a downgrade. LIQUIDITY AND DEBT STRUCTURE Yaroslavl's debt policy is aimed at maintaining manageable debt at affordable costs of debt servicing. In 2019, the region's debt was largely stable at RUB37.5 billion, which was below 60% of current revenue -a moderate fiscal debt burden from international perspective. The region's life of debt runs till 2034, while 88% of the debt stock is scheduled to mature in 2020-2025. As of end-2019, the debt stock was split between domestic bonds (52%) inter-governmental loans (37%), and bank loans (11%). The region's contingent's liabilities are low and well-controlled. ESG CONSIDERATIONS ESG credit relevance is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. =========== T U R K E Y =========== ATLASJET HAVACILIK: Applies for Bankruptcy ------------------------------------------ According to Bloomberg News' Taylan Bilgic, Atlasjet Havacilik AS has applied for bankruptcy, Milliyet newspaper reports on its website, citing the company's corporate communications department. Headquartered in Istanbul, Turkey, Atlasjet Havacilik AS provides scheduled flights for passengers and cargo. ============= U K R A I N E ============= [*] UKRAINE: Creditors of Insolvent Banks Get Over UAH10BB in 2019 ------------------------------------------------------------------ Interfax Ukraine reports that claims of creditors of insolvent banks in the amount of UAH10.135 billion were paid in 2019, the Deposit Guarantee Fund has said on its website. According to the report, UAH12.99 million was received by second-level priority tier creditors, UAH4406.66 million by third-level priority tier creditors, UAH248.02 million by fourth-level priority tier creditors, UAH173.15 million by fifth-level priority tier creditors, UAH0.001 million by sixth-level priority tier creditors, UAH3.853 billion by seventh-level priority tier creditors, UAH43.44 million by eighth-level priority tier creditors, UAH298.13 million by ninth-level priority tier creditors, UAH99.59 million and by tenth-level priority tier creditors. Of the total amount of payments UAH3.369 billion were allocated for early payments on claims of secured creditors, including UAH3.104 billion to the National Bank of Ukraine (NBU), the news agency discloses. In order to meet the claims of secured creditors in December 2019, UAH222.35 million was sent, including UAH209.21 million to the NBU. Early payments by the NBU were made by Finance and Credit Bank - UAH158.58 million, Delta Bank - UAH46.27 million, Nadra Bank - UAH1.78 million, VAB Bank - UAH1.36 million, Kyivska Rus Bank - UAH1.12 million, Rodovid Bank - UAH0.08 million, and Bank Cambio - UAH0.02 million, according to Interfax Ukraine. The total amount of claims of creditors of insolvent banks satisfied over the entire period as of January 1, 2020 amounted to UAH44.675 billion, of which UAH11.501 billion was paid to secured creditors, including UAH10.408 billion to the NBU, the report notes. =========================== U N I T E D K I N G D O M =========================== FAMILY DOCTOR: To Close Following 'Financial Viability' Concerns ---------------------------------------------------------------- Eleanor Philpotts at Pulse Today reports that the Family Doctor Association, representing small GP practices, has announced it is to close because it is 'not a financially viable entity in the long term'. Pulse Today says the membership organisation, which has supported grassroots GPs and practices since 1985, said dwindling income from members - due to increasing number of GPs retiring and practices closing - was to blame. It said there was a risk the charitable organisation would become insolvent later this year and so it agreed at a meeting last month to wind up the organisation, a decision that will be formally ratified in March, according to Pulse Today. Pulse Today relates that in a statement issued by Family Doctor Association chairman and trustee Dr Peter Swinyard on Feb. 4, he described the association's 'deepest regret' at having to close and not being a 'financially viable entity in the long term'. "This decision was not made lightly. It is the duty of the charity trustees to ensure financial balance and probity; it is clear that, while not insolvent yet, there is risk we would become so later this year," said the statement, co-written by Dr Swinyard, vice chairman and trustee Dr Claire Rushton, treasurer and trustee Dr Rauf Kukaswadia, and trustee Dr Michael Taylor, Pulse Today relays. The four GPs said there had been a 'disappointing response' to raising subscription fees last year. They said: 'Traditionally, as a membership organisation, the bulk of our income has been from member subscriptions, topped up with commercial sponsors and some income from educational meetings. 'These sources are drying up as the membership demographic shows increasing numbers of retirements and practice amalgamations and closures,' Pulse Today relays. The Family Doctor Association grew from its origins as the Small Practices Association, largely under the 26-year leadership of chief executive Moira Auchterlonie, who was praised by the trustees for her 'energy, enthusiasm and amazing abilities'. INVERCLYDE & NORTH: CSN Care Takes Over Business, 200 Jobs Saved ---------------------------------------------------------------- Hamish Burns at insider.co.uk, citing Scottish Business Insider, reports that two care sector investors have stepped in to take over Greenock-based service provider Inverclyde & North Ayrshire Care Services (INACS), which went into liquidation. Scott Christie and Craig Hendry are directors of Glasgow-based CSN Care Group, which has taken on the business of INACS, insider.co.uk discloses. Begbies Traynor in Glasgow was appointed as provisional liquidator "following a period of adverse trading and a deteriorating financial position", insider.co.uk relates. It said all 200 staff had been retained and that continuity of care had been secured for the care provider's customers, insider.co.uk notes. According to insider.co.uk, joint provisional liquidator Ken Pattullo said: "While it is very sad to see the demise of INACS, it is good news that CSN Care Group has been able to take over its operations, securing the jobs of 200 employees and the continued care of hundreds of vulnerable people across the region." LAURA ASHLEY: Scrambles to Secure More Funding After Sales Slump ---------------------------------------------------------------- Simon Foy at The Telegraph reports that fears are growing for the future of Laura Ashley as it scrambles to secure more funding after another slide in sales. According to The Telegraph, the struggling retailer's majority shareholder MUI Asia and US bank Wells Fargo are in talks about a possible cash injection to keep the fashion and home furnishings business afloat amid a crisis on the high street. Sales fell to GBP109.6 million in the last half of 2019, down 11% on a year earlier, The Telegraph discloses. Laura Ashley blamed the drop in part on weaker consumer spending, and said all options are now on the table in a battle for survival, The Telegraph relates. Shares plunged 42pc, valuing Laura Ashley at less than GBP14 million, The Telegraph notes. The stock has fallen more than 90% since Laura Ashley's heyday as a trend-setter in the mid-1990s, The Telegraph states. LENDY LTD: Investors Crowdfund Legal Challenge to Administrators ---------------------------------------------------------------- James Hurley at The Times reports that people who lent money via a failed peer-to-peer platform have turned to crowdfunding to finance a legal challenge to what they believe is the "injustice" of how the insolvency is being handled. According to The Times, representatives of investors are seeking advice on how they can oppose administrators' plans for the distribution of recoveries from the estate of Lendy, which collapsed last May. The Times relate that administrators from RSM Restructuring concede that their approach appears to conflict with what Lendy told investors when it took their money, but they argue that their hands are tied by how the company's directors structured loans. Lendy, authorised by the Financial Conduct Authority, began to crowd-source funds from retail investors to write secured loans to property developers in 2014. As reported in the Troubled Company Reporter-Europe on May 28, 2019, Business Sale said Lendy Limited collapsed into administration following a steep decline in buyer demand and as a result of severe cash flow difficulties. The company, a P2P lending marketplace, was forced to call in professional insolvency specialists RSM Restructuring Advisory LLP to handle the administration, with partners Damian Webb, Phillip Rodney Sykes and Mark John Wilson appointed as joint administrators. The administrators, however, were also appointed for two further unregulated firms, Lendy Provision Reserve Limited, and Saving Stream Security Holding Limited, Business Sale said. NORTHERN POWERHOUSE: Receives Offers for Three North Wales Hotels ----------------------------------------------------------------- Owen Hughes at NorthWalesLive reports that offers have been made for three North Wales hotels that have been in administration for several months. Gavin Woodhouse's company Northern Powerhouse Development (NPD) saw its hotels in Llandudno and the Conwy Valley go into the hands of administrators Duff & Phelps last summer, NorthWalesLive relates. It followed a probe into the finances of NPD's hotel chain, NorthWalesLive notes. The seaside resort hotels Llandudno Bay Hotel, Queens Hotel and The Belmont Hotel in Llandudno have continued to trade while Caer Rhun Hall near Ty'n-y-Groes closed after Christmas, NorthWalesLive recounts. Now administrators have confirmed that they have received offers for the three Llandudno sites, NorthWalesLive discloses. Negotiations are now taking place with the hope deals can get over the line before the season gets into full swing this spring, NorthWalesLive states. REDWOOD BUSINESS: Court Winds Up Debt Collection Company -------------------------------------------------------- Redwood Business Management Ltd, based in Newcastle upon Tyne was wound-up in the public interest on Feb. 3, 2020 at the High Court in Manchester before Deputy District Judge Brightwell. The Official Receiver has been appointed liquidator of the company. The court heard that Redwood Business Management was incorporated in June 2017 with registered offices in Shieldfield, Newcastle Upon Tyne. The Insolvency Service became aware of concerns regarding Redwood Business Management's trading activities and instigated confidential enquiries. Investigators established that the company, trading under the name 'Rojen Recovery Services', had cold-called prospective clients offering to collect outstanding debts that were due to them. The company charged a fee of 18.5% of the outstanding debt, with that fee supposedly being added to the amount that Redwood would recover from the debtor. Almost GBP1 million was paid into Redwood Business Management's bank account between June 2017 and August 2019. This was made up of recoveries made by Redwood Business Management from debtors, as well as payments from clients for court fees and other charges which, Redwood Business Management claimed, were necessary to pursue recovery claims on behalf of the clients concerned. While the accounting records of Redwood Business Management were not sufficient to properly account for the monies received by the company, investigators were able to establish that Redwood had collected debts that had not been paid over to its clients. The court wound-up the company on the ground that it traded with a lack of commercial probity because it made false and misleading statements to its clients, failed to account for monies collected on behalf of clients, charged fees to clients in circumstances where no such fees were due and charged excessive fees to clients. The court also accepted that the company, and the individuals in control of it, failed to cooperate fully with the investigation and failed to keep adequate accounting records. David Hope, Chief Investigator for the Insolvency Service, said: "Redwood Business Management operated in a cynical manner throughout its trading history. It charged clients substantial fees for services that were not required or not provided and at the same time, collected debts that it did not pay on to its clients. Thankfully, the court has now put a stop to the company's activities, preventing further harm." All public enquiries concerning the affairs of the company should be made to: The Official Receiver Public Interest Unit 2 Floor, 3 Piccadilly Place London Road, Manchester, M1 3BN Email: piu.north@insolvency.gsi.gov.uk TOWD POINT 2020-AUBURN 14: Fitch Assigns CC Rating on Cl. E Debt ---------------------------------------------------------------- Fitch Ratings assigned Towd Point Mortgage Funding 2020 - Auburn 14 final ratings as follows. RATING ACTIONS Towd Point Mortgage Funding 2020 - Auburn 14 Cl. A XS2109385679; LT AAAsf New Rating; previously at AAA(EXP)sf Cl. B XS2109385836; LT AAsf New Rating; previously at AA(EXP)sf Cl. C XS2109386057; LT Asf New Rating; previously at A(EXP)sf Cl. D XS2109386214; LT BB+sf New Rating; previously at BB+(EXP)sf Cl. E XS2109386487; LT Bsf New Rating; previously at B(EXP)sf Cl. XA XS2109387378; LT CCsf New Rating; previously at CC(EXP)sf TRANSACTION SUMMARY This transaction is a securitisation of buy-to-let (BTL) and owner-occupied (OO) residential mortgage assets originated by Capital Home Loans Limited (CHL) and secured against properties in England, Wales, Scotland and Northern Ireland. The assets were previously securitised in TPMF 2017 - Auburn 11 plc. KEY RATING DRIVERS Seasoned Loans: The portfolio consists of 13-year seasoned loans originated by CHL, of which 93.3% (by current balance) are BTL loans that have performed in line with other UK BTL pools. When setting the originator adjustment for the portfolio, Fitch took into account the historical performance of the TPMF 2017 - Auburn 11 plc transaction and the short remaining term of the loans. This resulted in an originator adjustment of 1.0x. Low Prepayments: All loans in the portfolio have exceeded the mortgages' reversion dates, thus they currently pay variable rates. The weighted average (WA) margin of these loans is relatively low at 1.3%. Refinancing incentives for these borrowers are very limited at the current UK BTL market conditions; therefore Fitch expects low prepayments rates. Interest-Only Concentration: The BTL proportion has a material concentration of interest-only (IO) loans maturing within a three-year period during the lifetime of the transaction, peaking at 49.4% between 2031 and 2033. Where a concentration is present, Fitch derives an IO concentration WA foreclosure frequency (FF) and applies in its the analysis the higher of this WAFF and the standard portfolio WAFF for each rating level. For the BTL pool, Fitch has applied the FF based on the IO concentration WAFF. Low Margins, Favourable Affordability: 99.8% of the loans track the Bank of England base rate (BBR). The WA margin of these loans is relatively low at 1.3%. This results in a relatively high interest coverage ratio of 135.6% for the BTL pool and a low debt-to-income of 20.6% for the OO pool, implying higher affordability for borrowers and therefore lower FF assumptions. Unhedged Basis Risk: As the notes pay daily compounded SONIA the transaction is exposed to basis risk between BBR and SONIA. Fitch stressed the transaction cash flows for basis risk, in line with its criteria. Combined with the low asset margins, this resulted in limited excess spread in Fitch's cash flow analysis. 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 'AAA'sf. CRITERIA VARIATION Under the UK RMBS Rating Criteria, loan margins and rates will be input into the multi-asset cash flow model on a bucketed basis where the portfolio contains wide dispersion in margins and rates. The cash flow model will apply a yield compression over time by application of 100% of defaults and 80% of prepayments to the receivables within the higher-yielding buckets. These legacy loans (originated between 2005 and 2008) have exceeded the mortgages' fixed rate reversion dates, and as such are paying a variable rate. The WA margin of these loans is fairly low at 1.3% meaning that borrowers within this portfolio have no incentives to refinance, given the product offerings currently available for BTL loans. Additionally, as the assets were previously securitised in the TPMF 2017 - Auburn 11 plc transaction, Fitch analysed the historical WA margins over the Bank of England Base Rate of the securitised portfolio, which showed to be stable since closing. Along with Fitch's expectations of low prepayments rates, this led to no yield compression applied to voluntary prepayments in the agency's cash flow analysis. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. TOWD POINT 2020-AUBURN: S&P Rates Class XA Notes 'B' ---------------------------------------------------- S&P Global Ratings has assigned credit ratings to Towd Point Mortgage Funding 2020 - Auburn 14 PLC's (Towd Point's) class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, and XA-Dfrd notes. At closing, Towd Point also issued unrated class Z1 and Z2 notes and XB certificates. S&P based its credit analysis on a pool of GBP847.623 million (as of Jan. 31, 2020). The pool comprises mainly first-lien U.K. buy-to-let residential mortgage loans that Capital Home Loans Ltd. (CHL) originated. CHL is the servicer. The backup servicer is Homeloan Management Ltd. S&P said, "We rate the class A notes based on the payment of timely interest. Interest on the class A notes is equal to the daily compounded Sterling overnight index average (SONIA) plus a class-specific margin. "We treat the class B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, and XA-Dfrd notes as deferrable-interest notes in our analysis. Under the transaction documents, the issuer can defer interest payments on these notes. Our ratings on these classes of notes address the ultimate payment of principal and interest. Once the ultimate interest notes become the most senior, interest can still be deferred, but all deferred interest is due on or prior to maturity. "Our ratings reflect our assessment of the transaction's payment structure, cash flow mechanics, and the results of our cash flow analysis to assess whether the notes are repaid under stress test scenarios. Subordination and excess spread provide credit enhancement to the class A to E-Dfrd notes that are senior to the unrated notes and certificates. Taking these factors into account, we consider that the available credit enhancement for the class A to E-Dfrd notes is commensurate with the ratings assigned." The class XA-Dfrd notes are uncollateralized and will be paid from any excess spread available after the payment of more senior items in the revenue waterfall. Ratings List Class Rating* Amount (mil. GBP) A AAA (sf) 720.479 B-Dfrd AA+ (sf) 31.785 C-Dfrd AA (sf) 19.071 D-Dfrd A+ (sf) 21.190 E-Dfrd A (sf) 8.476 Z1 NR 37.297 Z2 NR 9.325 XA-Dfrd B (sf) 1.000 * The ratings address timely receipt of interest and ultimate repayment of principal for the class A notes. The ratings assigned to the class B-Dfrd to E-Dfrd and XA-Dfrd notes are interest-deferred ratings and address the ultimate payment of interest and principal. Dfrd--Deferred. NR--Not rated. ********* 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 2020. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *