/raid1/www/Hosts/bankrupt/TCREUR_Public/240508.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, May 8, 2024, Vol. 25, No. 93
Headlines
I R E L A N D
ARES EUROPEAN XII: Fitch Affirms 'B-sf' Rating on Class F Notes
AVOCA CLO XXX: Fitch Assigns 'B-sf' Final Rating to Class F Notes
MAN GLG I: Moody's Affirms B2 Rating on EUR12MM Class F Notes
SCULPTOR EUROPEAN V: Fitch Affirms 'B-sf' Rating on Class F Notes
I T A L Y
YOUNI ITALY 2024-1: Fitch Assigns 'Bsf' Final Rating to Cl. E Notes
L U X E M B O U R G
CHRYSAOR BIDCO: Moody's Assigns 'B3' CFR, Outlook Positive
EP BCO: S&P Affirms 'BB-' 1st-Lien Term Loan Rating, Outlook Stable
INTELSAT SA: Fitch Puts 'BB-' LongTerm IDR on Watch Positive
M A L T A
TACKLE GROUP: Moody's Affirms 'B2' CFR, Outlook Remains Stable
R O M A N I A
LIBRA INTERNET: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
S W I T Z E R L A N D
GARRETT MOTION: S&P Rates $500MM Senior Unsecured Notes 'B'
U N I T E D K I N G D O M
ALEXANDRITE MONNET: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable
ATLANTIC STEEL: Goes Into Administration
GINGER FOX: Collapses Into Administration
GO PLANT: Bought Out of Administration
ITHACA ENERGY: Moody's Puts 'B1' CFR on Review for Upgrade
KEIRAN BROWN: Collapses Into Administration
SELINA HOSPITALITY: Amends Osprey Subscription Deal
SELINA HOSPITALITY: Saba Entities Disclose 9.74% Equity Stake
WEMBLEY EMPIRE: Falls Into Administration
WESTCOMBE HOUSE: Goes Into Administration
- - - - -
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I R E L A N D
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ARES EUROPEAN XII: Fitch Affirms 'B-sf' Rating on Class F Notes
---------------------------------------------------------------
Fitch Ratings has upgraded Ares European CLO XII DAC class D notes
and affirmed the others, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
Ares European
CLO XII DAC
A-R XS2391578155 LT AAAsf Affirmed AAAsf
B-1-R XS2391578742 LT AAsf Affirmed AAsf
B-2-R XS2391579559 LT AAsf Affirmed AAsf
C-R XS2391580052 LT Asf Affirmed Asf
D-R XS2391580649 LT BBBsf Upgrade BBB-sf
E XS2034052865 LT BB-sf Affirmed BB-sf
F XS2034054135 LT B-sf Affirmed B-sf
TRANSACTION SUMMARY
Ares European CLO XII DAC is a cash flow CLO comprising mostly of
senior secured obligations. The transaction is outside of its
reinvestment period and the portfolio is actively managed by Ares
European Loan Management LLP.
KEY RATING DRIVERS
Better Asset Performance: The transaction is passing all collateral
quality, portfolio profile and coverage tests, as per the last
trustee report dated 10th April 2024. The transaction is also
slightly above target par.
The rating actions reflect the transaction's resilient performance
with portfolio losses below rating cases, combined with manageable
near- and medium-term refinancing risk, with only one asset
maturing in 2024 and 2.68% of assets maturing in 2025.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The weighted average rating
factor (WARF) of the current portfolio is 25.35, as reported by the
trustee.
High Recovery Expectations: Senior secured obligations comprise
99.5% of the portfolio as calculated by the trustee. Fitch views
the recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch-calculated
weighted average recovery rate of the current portfolio as reported
by the trustee was 61.1%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration is 12%, and no obligor represents more than 1.32% of
the portfolio balance, as calculated by Fitch.
Transaction Outside Reinvestment Period: The transaction exited its
reinvestment period in April 2024, but the manager can still make
trades subject to strict post reinvestment period criteria. It has
not paid down any of its notes. Given the manager's ability to
continue to reinvest, Fitch's analysis is based on a stressed
portfolio and tested the notes' achievable ratings across the Fitch
matrix, since the portfolio can still migrate to different
collateral quality tests.
Cash Flow Analysis: Fitch used a customised proprietary cash flow
model to replicate the principal and interest waterfalls and the
various structural features of the transaction, and to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par-value and interest-coverage
tests.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Downgrades may occur if the build-up of the notes' credit
enhancement following amortisation does not compensate for a larger
loss expectation than initially assumed, due to unexpectedly high
levels of defaults and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may also occur if the portfolio quality remains stable and
the notes start amortising, leading to higher credit enhancement
across the structure.
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 performance of the asset pool
and the transaction. 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.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied uponfor the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for Ares European CLO
XII DAC. In cases where Fitch does not provide ESG relevance scores
in connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose in the key rating drivers
any ESG factor which has a significant impact on the rating on an
individual basis.
AVOCA CLO XXX: Fitch Assigns 'B-sf' Final Rating to Class F Notes
-----------------------------------------------------------------
Fitch Ratings has assigned Avoca CLO XXX DAC's final ratings, as
detailed below.
Entity/Debt Rating
----------- ------
Avoca CLO XXX DAC
Class A-L LT AAAsf New Rating
Class A-N XS2791003283 LT AAAsf New Rating
Class B-1 XS2791003440 LT AAsf New Rating
Class B-2 XS2791003796 LT AAsf New Rating
Class C XS2791003952 LT Asf New Rating
Class D XS2791004174 LT BBB-sf New Rating
Class E XS2791004331 LT BB-sf New Rating
Class F XS2791004505 LT B-sf New Rating
Sub Note XS2791004760 LT NRsf New Rating
TRANSACTION SUMMARY
Avoca CLO XXX DAC is a securitisation of mainly senior secured
obligations (at least 90%) with a component of corporate-rescue
loans, senior unsecured, mezzanine, second-lien loans and
high-yield bonds.
Net proceeds from the note issuance have been used to fund a
portfolio with a target par of EUR400 million. The portfolio is
actively managed by KKR Credit Advisors (Ireland) Unlimited Company
(KKR). The collateralised loan obligation (CLO) has a 4.5-year
reinvestment period and a seven-year weighted average life (WAL)
test.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'/'B-'. The Fitch weighted
average rating factor (WARF) of the identified portfolio is 25.5.
High Recovery Expectations (Positive): At least 90% of the
portfolio comprises senior secured obligations. Fitch views the
recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch weighted
average recovery rate (WARR) of the identified portfolio is 61.4%.
Diversified Portfolio (Positive): The transaction includes two
Fitch matrices effective at closing corresponding to a top-10
obligor concentration limit at 20%, fixed-rate asset limits at 5%
or 12.5%, and a seven-year WAL. The transaction also includes
various concentration limits, including a maximum exposure to the
three-largest Fitch-defined industries in the portfolio at 40%.
These covenants ensure that the asset portfolio will not be exposed
to excessive concentration.
Portfolio Management (Neutral): The transaction has a 4.5-year
reinvestment period and includes reinvestment criteria similar to
those of other European transactions. Fitch's analysis is based on
a stressed portfolio with the aim of testing the robustness of the
transaction structure against its covenants and portfolio
guidelines.
WAL Step-Up Feature (Neutral): The transaction can extend the WAL
by one and a half years at the step-up date, which is one and a
half years after closing. The WAL extension is at the discretion of
the manager, but is subject to conditions including fulfilling the
portfolio-profile, collateral-quality, coverage tests and meeting
the reinvestment target par with defaulted assets at their
collateral value.
Cash Flow Modelling (Positive): The WAL used for the transaction's
Fitch-stressed portfolio analysis is 12 months less than the WAL
covenant, to account for structural and reinvestment conditions
after the reinvestment period, including passing the
over-collateralisation (OC) and Fitch 'CCC' limitation tests, among
other things. This, combined with Fitch's loan pre-payment
expectations, ultimately reduces the risk horizon of the
portfolio.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A 25% increase in the mean default rate (RDR) and a 25% decrease in
the recovery rate (RRR) across all the ratings of the identified
portfolio would lead to a downgrade of no more than two notches for
the class B, C, D and E notes, and to below 'B-sf' for the class F
notes.
Downgrades, which are based on the identified portfolio, may occur
if the loss expectation is larger than initially assumed due to
unexpectedly high levels of defaults and portfolio deterioration.
Owing to the identified portfolio's better metrics and shorter life
than the Fitch-stressed portfolio, the class B, D, E and F notes
display a rating cushion of two notches, and the class C notes one
notch.
Should the cushion between the identified portfolio and the
Fitch-stressed portfolio be eroded, either due to manager trading
or negative portfolio credit migration, a 25% increase in the mean
RDR and a 25% decrease in the RRR across all the ratings of the
Fitch-stressed portfolio, would lead to downgrades of up to three
notches for the rated notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A 25% reduction in the RDR and a 25% increase in the RRR across all
the ratings of the Fitch-stressed portfolio would lead to upgrades
of up to three notches for the rated notes, except for the 'AAAsf'
rated notes.
During the reinvestment period, upgrades, which are based on the
Fitch-stressed portfolio, may occur on better-than-expected
portfolio credit quality and a shorter remaining WAL test, leading
to the ability of the notes to withstand larger-than-expected
losses for the remaining life of the transaction.
After the end of the reinvestment period, upgrades, except for the
'AAAsf' notes, may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread to cover losses in the remaining portfolio.
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
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for Avoca CLO XXX DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose in the key rating drivers
any ESG factor which has a significant impact on the rating on an
individual basis.
MAN GLG I: Moody's Affirms B2 Rating on EUR12MM Class F Notes
-------------------------------------------------------------
Moody's Ratings has upgraded the rating on the following note
issued by Man GLG Euro CLO I Designated Activity Company:
EUR 6,000,000 Class C Deferrable Mezzanine Floating Rate Notes due
2030, Upgraded to Aa2 (sf); previously on Jun 19, 2023 Affirmed A1
(sf)
Moody's has also affirmed the ratings on the following notes:
EUR219,000,000 (current outstanding balance EUR141,793,891) Class
A-1 Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf);
previously on Jun 19, 2023 Affirmed Aaa (sf)
EUR15,000,000 (current outstanding balance EUR9,711,910) Class A-2
Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf);
previously on Jun 19, 2023 Affirmed Aaa (sf)
EUR42,000,000 Class B-1 Senior Secured Floating Rate Notes due
2030, Affirmed Aaa (sf); previously on Jun 19, 2023 Affirmed Aaa
(sf)
EUR13,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2030,
Affirmed Aaa (sf); previously on Jun 19, 2023 Affirmed Aaa (sf)
EUR22,000,000 Class D Deferrable Mezzanine Floating Rate Notes due
2030, Affirmed Baa1 (sf); previously on Jun 19, 2023 Affirmed Baa1
(sf)
EUR22,200,000 Class E Deferrable Junior Floating Rate Notes due
2030, Affirmed Ba2 (sf); previously on Jun 19, 2023 Affirmed Ba2
(sf)
EUR12,000,000 Class F Deferrable Junior Floating Rate Notes due
2030, Affirmed B2 (sf); previously on Jun 19, 2023 Downgraded to B2
(sf)
Man GLG Euro CLO I Designated Activity Company, issued in April
2015 and refinanced in July 2017 and April 2018, is a
collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured/mezzanine European loans. The
portfolio is managed by GLG Partners LP. The transaction's
reinvestment period ended in April 2022.
RATINGS RATIONALE
The rating action on the Class C notes are primarily a result of
the significant deleveraging of the Class A notes following
amortisation of the underlying portfolio since the last rating
action in June 2023.
The Class A notes have paid down by approximately EUR75.3 million
[1] (33%) since the last rating action in June 2023 and EUR82.5
million (35%) since closing. As a result of the deleveraging,
over-collateralisation (OC) has increased. According to the trustee
report dated April 2024 [1] the Class A/B, Class C, Class D, Class
E and Class F OC ratios are reported at 145.7%, 129.4%, 118.2%,
108.7% and 104.2%, compared to May 2023 [2] levels of 135.0%,
123.6%, 115.4%, 108.1% and 104.5% respectively.
The affirmations on the ratings on the Class A-1, A-2, B-1, B-2, D,
E and F notes are primarily a result of the expected losses on the
notes remaining consistent with their current rating levels, after
taking into account the CLO's latest portfolio, its relevant
structural features and its actual over-collateralisation ratios.
Key model inputs:
The key model inputs Moody's uses in its analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers.
In its base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR300.3 million
Defaulted Securities: EUR1.9 million
Diversity Score: 58
Weighted Average Rating Factor (WARF): 3014
Weighted Average Life (WAL): 3.2 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.7%
Weighted Average Recovery Rate (WARR): 43.8%
Par haircut in OC tests and interest diversion test: None.
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporates these default and recovery
characteristics of the collateral pool into its cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
December 2021.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank, using the
methodology "Moody's Approach to Assessing Counterparty Risks in
Structured Finance methodology" published in October 2023. Moody's
concluded the ratings of the notes are not constrained by these
risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
If the deal is in the amortisation period (also include if the deal
is close to the end of the reinvestment period):
-- Portfolio amortisation: The main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
-- Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assumes have
defaulted can result in volatility in the deal's
over-collateralisation levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's analysed
defaulted recoveries assuming the lower of the market price or the
recovery rate to account for potential volatility in market prices.
Recoveries higher than Moody's expectations would have a positive
impact on the notes' ratings.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
other Moody's analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
SCULPTOR EUROPEAN V: Fitch Affirms 'B-sf' Rating on Class F Notes
-----------------------------------------------------------------
Fitch Ratings has upgraded Sculptor European CLO V DAC's class B-1,
B-2-R and D-R notes and affirmed the others. The Outlooks are
Stable.
Entity/Debt Rating Prior
----------- ------ -----
Sculptor European
CLO V DAC
A-R XS2405128823 LT AAAsf Affirmed AAAsf
B-1 XS1904642375 LT AA+sf Upgrade AAsf
B-2-R XS2405129631 LT AA+sf Upgrade AAsf
C-R XS2405130308 LT Asf Affirmed Asf
D-R XS2405131025 LT BBB+sf Upgrade BBB-sf
E XS1904643423 LT BB-sf Affirmed BB-sf
F XS1904643340 LT B-sf Affirmed B-sf
TRANSACTION SUMMARY
Sculptor European CLO V DAC is a cash flow CLO comprising mostly
senior secured obligations. The transaction is actively managed by
Sculptor Europe Loan Management Limited and exited its reinvestment
period in July 2023.
KEY RATING DRIVERS
Performance Better Than Expected Case: Since Fitch's last rating
action in June 2023, the portfolio's performance has been stable.
Based on the last trustee report dated 15 March 2024, the
transaction is passing all of its collateral quality and portfolio
profile tests. Exposure to assets with a Fitch-derived rating of
'CCC+' and below is 0.8%, according to the trustee report, versus a
limit of 7.5%. It has are approximately EUR7.7 million of reported
defaulted in the portfolio, or 1.9% of the current portfolio, and
the transaction is currently 0.8% below target par. However, total
par loss is well below its rating case assumptions.
Limited Refinancing Risk: The transaction has manageable exposure
to near- and medium-term refinancing risk, with 0.5% of the assets
in the portfolio maturing before 2024 and 3.9% in 2025, as
calculated by Fitch, in view of large default-rate cushions for
each class of notes. The transaction's stable performance has
resulted in larger break-even default-rate cushions versus the last
review. This has led to today's rating actions.
High Recovery Expectations: Senior secured obligations comprise
95.3% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate (WARR) of the current portfolio is 63%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration, as calculated by Fitch, is 15.1%, and no obligor
represents more than 2.2% of the portfolio balance. Exposure to the
three-largest Fitch-defined industries is 29.8% as calculated by
the trustee. Fixed-rate assets currently are reported by the
trustee at 8.2% of the portfolio balance, which compares favourably
to a limit of 10%
Transaction Outside Reinvestment Period: Although the transaction
exited its reinvestment period in July 2023, the manager can
reinvest unscheduled principal proceeds and sale proceeds from
credit-risk obligations after the reinvestment period, subject to
compliance with the reinvestment criteria. Given the manager's
ability to reinvest, Fitch's analysis is derived from stressing the
portfolio's Fitch-calculated WAL, Fitch-calculated weighted average
rating factor, Fitch-calculated WARR, weighted average spread,
weighted average coupon and fixed-rate asset share to their
covenanted limits.
Cash Flow Analysis: Fitch used a customised proprietary cash flow
model to replicate the principal and interest waterfalls and the
various structural features of the transaction, and to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par-value and interest-coverage
tests.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
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 performance of the asset pool
and the transaction. 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.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for Sculptor European
CLO V DAC. In cases where Fitch does not provide ESG relevance
scores in connection with the credit rating of a transaction,
programme, instrument or issuer, Fitch will disclose in the key
rating drivers any ESG factor which has a significant impact on the
rating on an individual basis.
=========
I T A L Y
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YOUNI ITALY 2024-1: Fitch Assigns 'Bsf' Final Rating to Cl. E Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Youni Italy 2024-1 S.r.l.'s asset-backed
securities final ratings, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
Youni Italy 2024-1
S.r.l.
A IT0005593352 LT AAsf New Rating AA(EXP)sf
B IT0005593360 LT A-sf New Rating A-(EXP)sf
C IT0005593378 LT BBB-sf New Rating BBB-(EXP)sf
D IT0005593386 LT BBsf New Rating BB(EXP)sf
E IT0005593394 LT Bsf New Rating B(EXP)sf
F IT0005593402 LT NRsf New Rating NR(EXP)sf
R IT0005593428 LT NRsf New Rating NR(EXP)sf
X IT0005593410 LT NRsf New Rating NR(EXP)sf
TRANSACTION SUMMARY
Youni Italy 2024-1 S.r.l. is a static true-sale securitisation of a
pool of unsecured consumer loans granted to Italian borrowers by
Younited S.A. acting through the Italian branch (Younited).
KEY RATING DRIVERS
Score-band Driven Assumptions: Fitch expects a portfolio weighted
average (WA) lifetime default rate of 4.4% and a WA recovery rate
of 20.0%. The assumptions reflect the portfolio composition, which
is about 64% by current balance composed of loans in the two best
score bands with assigned default base cases of 1.4% and 3.2%,
respectively.
Portfolio Median Default Multiple: Fitch has assigned a median
'AAsf' default multiple to the portfolio, which takes into account
Younited's revised scoring model and new credit policies. In
setting the default multiple, the agency acknowledges that the
performance data provided is affected by some volatility from
recent scoring model updates and score band modifications.
Sensitivity to Pro-Rata Length: Under the Fitch expected case, a
switch to sequential amortisation is unlikely during the first four
years, given its portfolio performance expectations relative to the
transaction's defined triggers. It leaves the investment-grade
notes more sensitive to the length of pro-rata amortisation. A
mandatory switch to sequential pay-down when the outstanding
collateral balance falls below a certain threshold mitigates tail
risk.
Servicing Continuity Risk Mitigated: Younited acts as sub-servicer
and Zenith Global S.p.A acts as master servicer for the
transaction. IQera Italia S.p.A. is the appointed back-up servicer
at closing, mitigating servicing discontinuity risk. The
transaction also envisages a cash reserve that Fitch believes will
mitigate payment interruption risk.
Interest-Rate Risk Mitigated: A swap agreement is in place at
closing to hedge interest-rate risk between the fixed rate of the
assets and the floating rate of the rated class of notes. The
issuer pays the swap rate to the swap counterparty and receives
one-month Euribor payable to the rated class of notes.
Sovereign Cap: The rating of the class A notes is limited to 'AAsf'
by the cap on Italian structured finance transactions of six
notches above the rating of Italy (BBB/Stable/F2). The Stable
Outlook on the notes' rating also reflects the Outlook on Italy's
Issuer Default Rating (IDR).
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The class A notes are sensitive to changes in Italy's Long-Term
IDR. A downgrade of Italy's IDR and a revision downwards of the
'AAsf' rating cap for Italian structured finance transactions would
trigger downgrades of the notes rated at this level.
An unexpected increase in the frequency of defaults or a decrease
in the recovery rates could produce larger loss levels than the
base case. For example, a simultaneous increase in the default base
case by 25% and a decrease in the recovery base case by 25% would
lead to downgrades of two notches for the class A to E notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of Italy's IDR and a revision upwards of the 'AAsf'
rating cap for Italian structured finance transactions could
trigger upgrades of the notes rated at this level. This is provided
sufficient credit enhancement is available to withstand stresses at
a higher rating. An unexpected decrease in the frequency of
defaults or an increase in the recovery rates could produce smaller
losses than the base case. For example, a simultaneous decrease in
the default base case by 25% and an increase in the recovery base
case by 25% would lead to upgrades of up to three notches for all
the notes.
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 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.
Fitch conducted a review of a small targeted sample of the
originator's 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, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
DATE OF RELEVANT COMMITTEE
12 April 2024
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
===================
L U X E M B O U R G
===================
CHRYSAOR BIDCO: Moody's Assigns 'B3' CFR, Outlook Positive
----------------------------------------------------------
Moody's Ratings assigned a B3 long-term corporate family rating and
B3-PD probability of default rating to Chrysaor Bidco S.a r.l
("Alter Domus" or "the company"), the new financing entity
consolidating the operations of Alter Domus. The outlook is
positive.
Concurrently, Moody's Ratings assigned a B3 instrument rating to
the proposed EUR1.35 billion equivalent senior secured term loan B
(TLB) as well as to the proposed EUR200 million senior secured
revolving credit facility (RCF) to Chrysaor Bidco S.a r.l. The
instruments are part of the financing structure following Cinven's
announced acquisition of a majority stake in Alter Domus. The
transaction is expected to close by year end 2024.
RATINGS RATIONALE
The assignment of a B3 CFR and positive outlook balances the strong
market fundamentals and organic growth potential of Alter Domus
with the high financial leverage and risk of debt-funded growth
following Cinven's proposed acquisition of a majority stake in the
company.
Alter Domus benefits from solid end-market growth, especially in
the alternative fund administration space (74% of 2023 revenue).
Funds' sizes and total assets under management in the company's
both major end markets of Luxembourg (37% of 2023 revenue) and
North America (41% of 2023 revenue) have been continuously
increasing and shown resilience despite fund flow volatility in
recent years. Moreover, these asset managers tend to outsource a
higher share of their back and middle office administrative work to
specialized providers such as Alter Domus. Alter Domus' revenues
are recurring, as they usually service a fund over its lifetime (on
average 12-15 years) and have managed to gain share of wallet with
its customers due to good quality of service. These trends as well
as successful inflation pass-through have supported a 19% organic
annual revenue growth between 2016-2023. Moody's Ratings expects at
least double-digit growth p.a. in the mid-term as well.
On the other hand, Alter Domus exhibits high financial leverage pro
forma for the transaction of above 8.0x Moody's-adjusted gross
leverage as well as around 1% FCF/Debt (pro forma for FY2023). The
fund administration industry is very highly fragmented with peers
often following aggressive M&A or costly restructuring initiatives
to grab market share and increase profitability. Business
valuations often above 15x EV/EBITDA imply potentially very
expensive debt-funded growth. Alter Domus' leverage flexibility
under the documentation as well as their financial policy would
allow the company to pursue similar debt-funded growth that could
delay expected deleveraging from organic EBITDA generation
increase. Moody's Ratings estimates that the company's policy of
net leverage below 5.0x translates to around 6.5x Moody's-adjusted
gross leverage or around 2% Moody's-adjusted FCF/Debt. An upgrade
to B2 would require a financial policy and track record of
operating comfortably below these thresholds. This expectation is
also reflected in the positive outlook supported by the company's
strong organic deleveraging capacity.
The B3 CFR also reflects Alter Domus' solid profitability, although
some volatility is expected due to fast topline ramp-up; leadership
position especially in Luxembourg; solid liquidity profile as well
as the risk of increased competition in the consolidating
industry.
ESG CONSIDERATIONS
Governance considerations have been a primary driver of this rating
action, reflecting Alter Domus' high financial leverage and
ownership change following Cinven's debt-funded acquisition of
majority stake in the company. Previous majority owners, Alter
Domus' founders and management, as well as minority shareholder
Permira remain as minority shareholders in the new structure.
The transaction reflects the expected aggressive financial policy
for Alter Domus going forward also given potential debt-funded
growth and high financial flexibility for further leveraging under
the documentation. Alter Domus' company-defined net leverage policy
of below 5.0x except for transitionary M&A financing somewhat
softens these risks.
OUTLOOK
The positive outlook reflects Moody's Ratings expectations that
Alter Domus will continue its strong organic growth above double
digit p.a., sustain and improve margins and generate positive FCF
in the next 12-18 months. Moody's Ratings expects gradual decrease
in leverage through earnings generation well below 6.5x as well as
EBITA/Interest above 2.0x and FCF/Debt at least at mid-single digit
percentage level latest by FY2025.
Furthermore, the positive outlook incorporates Moody's Ratings'
expectation that Alter Domus will continue consolidating their
market share in the funds administration industry, which could
result in a delay in deleveraging trajectory if growth or M&A is
funded with a high debt share.
LIQUIDITY
Alter Domus' liquidity is adequate. It benefits from the proposed
EUR200 million RCF maturing 6.5 years after transaction close. The
company has a minimum required restricted cash of around EUR25
million. The company may use its RCF as liquidity source initially.
However, Moody's Ratings expects positive FCF generation and cash
build-up in the next 12-18 months. There are no significant
short-term maturities, the proposed EUR1.35 billion TLB is expected
to mature in 2031 earliest.
The RCF is constrained by a springing senior secured net leverage
covenant at 10.2x if drawn by more than 40%. Moody's Ratings
expects compliance with the covenant.
STRUCTURAL CONSIDERATIONS
Moody's Ratings rates the proposed EUR1.35 billion equivalent TLB
and EUR200 million RCF at B3 in line with the CFR. They rank pari
passu and share the same security, including mainly share pledges
and intercompany receivables and are guaranteed by 80% of company's
EBITDA. Alter Domus is contemplating an additional EUR100 million
delayed drawn term loan to be available for 24 months after closing
and be fungible to the TLB if drawn. Moody's Ratings understand
there will be no other significant debt instrument in the structure
and the above instruments account for the majority of debt.
COVENANTS
Moody's Ratings has reviewed the marketing draft terms for the new
credit facilities. Notable terms include the following:
Guarantor coverage will be at least 80% of EBITDA (determined in
accordance with the agreement) generated in Luxembourg and USA,
and will include all companies in those countries representing 5%
or more of total EBITDA. Security will be granted over key shares,
bank accounts and receivables, and all assets security will be
granted in USA.
Unlimited pari passu debt is permitted provided the senior secured
net leverage (SSNL) ratio is 5.7x or less. Unlimited unsecured debt
is permitted provided the total net leverage ratio is 7.7x or less
or the fixed charge cover ratio is 2.0x or higher. Available RP
capacity and contribution debt capacity are both set at 200%.
Any restricted payments is permitted if total secured leverage is
5.2x or less, and any investment is permitted if total net leverage
5.7x or less. Asset sale proceeds are only required to be applied
in full if SSNL is 5.45x or more.
Adjustments to consolidated EBITDA include the full run rate of
cost savings and synergies, with no cap and no deadline for
realization.
The proposed terms, and the final terms may be materially
different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade:
-- Track record of business growth supported by prudent financial
policy and M&A activity
-- Debt / EBITDA is sustained well below 6.5x
-- EBITA/ Interest being above 2.0x
-- Positive FCF/Debt at mid-single digit percentage levels
Factors that could lead to a downgrade:
-- Structural margin deterioration from current levels signaling
losing market share, increased competition or service quality
issues
-- Debt / EBITDA remains above 8.0x without prospects of swift
deleveraging
-- EBITA/ Interest remains well below 1.5x on a sustained basis
-- Negative FCF generation or deteriorating liquidity
-- More aggressive financial policy or M&A activity
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
COMPANY PROFILE
Chrysaor Bidco S.a r.l (Alter Domus) is a Luxemburg based provider
of middle and back office solutions for fund administration (mainly
alternatives) and debt capital markets as well as data analytics.
It is majority owned by private-equity firm Cinven after a buyout
in 2024. Minority shareholders include the founders, management as
well as private-equity firm Permira who share the remaining
ownership.
The company's service covers 23 countries and it employs around
5,000 people. The company generated around EUR715 million of
revenues and around EUR219 million of EBITDA (company adjusted) in
2023.
EP BCO: S&P Affirms 'BB-' 1st-Lien Term Loan Rating, Outlook Stable
-------------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' ratings on EP Bco S.A., its
first-lien term loan, and its revolving credit facility (RCF). S&P
also affirmed its 'B' issue rating on the second-lien term loan.
The stable outlook continues to reflect S&P's expectations that EP
Bco will continue to expand its business and improve its operating
performance over 2024-2026.
The rating action follows the publication of S&P Global Ratings'
new criteria, "Sector-Specific Corporate Methodology," on April
4, 2024. S&P has revised some of the conditions for applying the
benchmark volatility tables in the transportation infrastructure
sector.
S&P now applies the medial volatility benchmarks to EP Bco's credit
metrics, versus the low volatility table previously applied.
S&P said, Our current approach reflects some degree of volatility
in EP Bco's earnings compared with that of its peers in the ports
industry and in the broader infrastructure sector. This is mainly
due to EP Bco's relatively high exposure to commodities demand and
price risks and more volatile earnings from its freight forwarding
& transport business Manuport Logistics (about 20% of total EBITDA
in 2023). These factors have been partially mitigated by EP Bco's
diversified commodity exposure, its ability to secure long-term
contracts representing approximately 50% of total revenue based on
top twenty terminal business customers (with a typical length of
five years), and longstanding relationships with a diverse
industrial customer base.
"The change to the medial volatility table impacts EP Bco's
financial risk profile negatively by one category. However, we now
apply a positive comparable ratings analysis modifier to the
rating, capturing our expectations that the company's FFO to debt
will improve to 8%-9% on average over 2024-2026, driven by robust
operating performance in the next 12-18 months. This is consistent
with the higher end of the range for our highly leveraged financial
risk category. These revisions do not result in a change to the
rating or outlook on EP Bco.
"The stable outlook reflects our expectations that EP Bco will
continue to expand its business and improve its operating
performance. This will be thanks to EP Bco's global terminal
platform, which has a diversified commodity exposure and customer
base, growing logistics services, and a variable cost base. EP Bco
should be able to maintain a credit profile commensurate with our
'BB-' rating. We expect EP Bco will maintain an S&P Global
Ratings-adjusted FFO to debt consistently above 8% and debt to
EBITDA of up to 6.5x.
"We also factor in minority shareholders' active participation and
the strong shareholder agreement that balances EP Bco's
decision-making process and limits the power of majority
shareholders. Still, we think EP Bco presents a highly complex
group structure, potentially increasing its credit risk."
S&P could lower the issuer credit rating on EP Bco if:
-- The company fails to sustain its strong operating performance,
or the business is more volatile than S&P anticipates;
-- FFO to debt falls below 8% and debt to EBITDA increases above
6.5x on average over 2024-2026. This could result from a setback in
operating performance in connection with a shortfall in volumes
from key customers, a failure to contain earnings pressures, or
higher-than-expected debt-funded acquisitions and investments that
are not sufficiently compensated by EBITDA growth;
-- The financial policy does not support deleveraging because of
its acquisitive appetite and dividend distributions when allowed
under the financial covenants;
-- There is a change in the shareholder agreement or a detrimental
change to the governance, leading S&P to reassess its rating
approach and to delink EP Bco's credit quality from that of its
indirect parent, Cycorp;
-- S&P's view of information transparency at group level
weakens--for instance, because of information misstatements or
restatements making the leverage assessment more difficult because
of additional financial debt or debtlike instruments as part of the
structure up to Thaumas N.V.;
-- EP Bco's access to capital markets or bank support diminishes,
reducing financial flexibility and the company's ability to
maintain at least adequate liquidity; or
-- There is a risk of a breach of the springing leverage-based
financial covenant, which is tested if RCF drawings exceed 40%.
S&P said, "We see limited ratings upside over the next 12-18
months. We could upgrade EP Bco if the company maintains a stable
and predictable operating performance that enables it to keep FFO
to debt consistently above 10% and debt to EBITDA below 5.5x
combined with an improved track record of information transparency
at group level."
INTELSAT SA: Fitch Puts 'BB-' LongTerm IDR on Watch Positive
------------------------------------------------------------
Fitch Ratings has placed the 'BB-' Long-Term Issuer Default Ratings
(IDRs) of Intelsat S.A. and Intelsat Jackson Holdings S.A.
(collectively, Intelsat), and all issue level ratings on Rating
Watch Positive (RWP).
The RWP reflects Fitch's expectations that SES S.A.'s acquisition
of Intelsat, announced on April 30, 2024, will be a credit
positive, given SES's (BBB/Stable) stronger financial and credit
profile. The total enterprise value (EV) of the transaction is
reported at approximately $5 billion and the transaction is
expected to close in the second half of 2025, following regulatory
and other customary approvals.
The announcement follows the increased M&A activity in the industry
in the last couple of years, as satellite companies combine to
combat the increasing competition from low earth orbit (LEOs)
satellite companies, particularly Starlink. The SES Intelsat
combination results in the combined fleet of more than 100
Geostationary Earth Orbit (GEO) and 26 Medium Earth Orbit (MEO)
satellites, resulting in enhanced coverage, greater network
resiliency and complementary spectrum holdings.
Fitch expects to resolve the RWP once the transaction is complete
under the announced terms, which is expected to take longer than
six months, with expected close in 2H2025.
KEY RATING DRIVERS
SES Acquisition of Intelsat: SES will acquire 100% of Intelsat's
equity for a cash consideration of $3.1 billion (EUR2.8 billion)
and certain contingent value rights (total EV of $5 billion). The
transaction will be financed from existing cash and equivalents and
the issuance of new debt, including hybrid bonds. The transaction
is subject to regulatory clearances and is expected to close in
2H25.
The combination of SES and Intelsat will create a leading global
satellite operator with strong scale and a multi-orbit, multi-band
constellation that will better position the businesses to meet
future competitive threats. The combination will also improve
geographic diversification with a more balanced portfolio spread,
spanning North America (about 47% of proforma revenues), Europe
(28%) and other markets (APAC, MEA and LATAM: 25%).
Scale and Contractual Revenue Benefits: The combined company will
benefit from a gross backlog of EUR9 billion, revenue of EUR3.8
billion, and Adjusted EBITDA of EUR1.8 billion. The merger results
in the combined fleet of more than 100 GEOs and 26 MEO satellites.
Intelsat is one of the largest fixed satellite service operators,
with a fleet of 57 satellites providing service on a global basis.
The company's revenue is derived from customers in media, mobility,
network services and government. Intelsat's backlog, which provides
some insight into future revenues, was $4.4 billion at Dec. 31,
2023.
Executable Synergies: SES expects the acquisition will unlock about
EUR2.4 billion of net present value in synergies from cost savings.
These comprise EUR210 million of run-rate annual operating spending
savings and EUR160 million of run-rate capex savings; 70% of which
are delivered within three years of transaction close. The
cost-based nature of synergies raises confidence in the ability of
management to deliver them.
Fitch's base case assumes more conservative assumptions to the
delivery of the bulk of the synergies over a contemplated time
horizon of three to four years, even though Fitch assumes that most
cost savings are achievable.
Deleveraging Expectations: Fitch forecasts SES will have a
pro-forma Fitch defined EBITDA net leverage of 3.4x and cashflow
from operations (CFO) less through-the-cycle average capex (EUR800
million)/gross debt of 6% at closing in 2H25, which would be weak
for the rating. However, Fitch expects such metrics will improve to
2.5x and around 11%-12%, respectively, within 18 to 24 following
completion of the acquisition, which is more consistent with the
'BBB' rating.
Intelsat rapidly deleveraged to its target net leverage of below 3x
when it received $3.7 billion in accelerated relocation payments
(ARPs) associated with Phase II of clearing its C-Band spectrum.
Proceeds were used to repay about $2.8 billion of a term loan in
full in late 2023. The ARP receipt and additional $1.2 billion
reimbursement eliminated the risk of major U.S. wireless carriers
acquiring C-Band spectrum not fulfilling their obligation to make
clearing payments, and receipt of all payments.
Intelsat received the $1.2 billion of ARPs associated with Phase I
of the clearing plan in December 2021 and January 2022. The FCC's
final order for the C-Band auction provided for ARPs to all C-Band
operators of up to $9.7 billion, of which Intelsat received $4.87
billion, in two tranches in 2022 (approximately $1.2 billion was
received) and 2023 (approximately $3.7 billion was received ahead
of schedule). The order also provided for cost reimbursements of
approximately $1.7 billion ($1.2 billion received through 2023).
Increased Financial Flexibility: Intelsat's standalone financial
flexibility is enhanced materially due to significant debt
reduction, lower leverage and increased cash levels. Fitch has not
assumed further debt reduction, and expects EBITDA leverage near
mid-3x (on a standalone basis). However, net leverage is expected
to be significantly lower given strong liquidity with over $1
billion of cash levels and full availability of the revolver over
its rating horizon. Intelsat standalone (CFO-capex)/debt is
projected to average in the low- to mid-single digits over the
rating horizon.
Stable Revenue and EBITDA Profile: On a combined basis, Fitch
expect EUR3.8 billion of annual revenue and EUR1.7 billion of
combined Fitch-defined EBITDA (pre-IFRS16) on a pro-forma basis for
2025.
Intelsat standalone has experienced secular pressure on certain
revenue streams, particularly the media and network business.
Government business has been relatively stable. Fitch expects the
mobility business, particularly commercial aviation, to be a
significant driver of growth, potentially offsetting pressures in
other areas of the business. The company posted two years of
organic revenue growth in 2022 and 2023.
EBITDA margins have declined over the last few years given the
addition of the commercial aviation (CA) business (acquisition of
Gogo's CA business in Dec 2020) and expansion of managed services
in the product portfolio. The opportunity to expand margins from
current levels will arise as Intelsat consolidates capacity onto
its own satellites, including new software defined satellites.
DERIVATION SUMMARY
Intelsat's rating reflects the company's leading scale and
geographic reach, as well as capital-intensive business model.
There are significant barriers to entry due to the limited number
of orbital slots and the material costs associated with
constructing and launching a satellite fleet. The mobility line of
business is an avenue for growth, and the government business is
stable with high rates of renewal. The media and network businesses
are exposed to secular pressures.
SES's standalone rating (before the Intelsat purchase) reflects a
mixed credit profile with some infrastructure qualities. This
reflects reasonably good revenue visibility based on long contract
durations in the direct-to-the-home (DTH) video segment, a
cash-generative business model and barriers to entry from regulated
orbital positions.
This is offset by risks from increasing competition in some
segments, technology-driven increases in industry capacity,
obsolescence and substitution. The retention of financial
flexibility is thus important for operators in the 'BBB' rating
category. Fitch believed risks in relation to satellite failure or
destruction in orbit is remote. Furthermore, satellite launch
failures tend to be largely covered by insurance.
In the satellite services business, as a provider of communications
infrastructure, Intelsat's peers are Eutelsat Communications
(Eutelsat; B+/Negative), Viasat Inc. (Viasat; BB-/Negative),
Iridium Communications Inc. (Iridium; BB/Stable) and Telesat Canada
(Telesat). Eutelsat and Telesat are the most directly comparable
companies, given that they, along with Intelsat, are three of the
top four global fixed satellite services providers. Iridium is
smaller in scale, has a stronger revenue growth profile and has
similar EBITDA leverage as Intelsat.
Fitch expects Eutelsat's net leverage to approximate 4x in FY24
(ending in June) and up to 4.5x over the medium term. The company's
medium-term target is to reduce net debt/EBITDA
(company-definition) to 3x. Fitch expects Viasat's leverage to
gradually decline to mid-4x by FY26 (ending in March). Unlike
Intelsat, Eutelsat and Telesat, Viasat provides services directly
to consumers in its satellite services segment, is vertically
integrated as a satellite services provider/manufacturer and has
other business lines.
KEY ASSUMPTIONS
If the acquisition is completed according to plan, and on a
pro-forma basis as of 2025:
- Combined revenue of EUR3.8 billion;
- Combined Fitch-defined EBITDA (pre-IFRS16) of EUR1.7 billion;
- Capex of EUR1.1 billion (2025), or 29% of sales, declining
towards high-single digits by 2028;
- Cash dividends of about EUR200 million with a stable to
progressive dividend policy;
- Retained strong liquidity profile: EUR450 million-EUR500 million
of cash and cash equivalents on the balance sheet and undrawn,
committed revolving credit facility (RCF) and EIB facilities (of
EUR1.4 billion-EUR1.5 billion in total) at least two years from the
date of the completion of the transaction;
- EBITDA net leverage peaks at 3.4x (2025) reducing towards 2.5x
(2027);
- CFO less average capex (based on an average annual capex of
EUR800 million) at 6% of gross debt (2025) improving to about 12%
(2027).
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Fitch expects to resolve the RWP once the transaction is complete
under the announced terms. Fitch will likely equalize the ratings
with SES upon close assuming high operational and strategic
incentives combined with low legal incentives under Fitch's PSL
criteria.
Independent of the Transaction:
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA leverage sustained below 3x, combined with revenue and
EBITDA growth;
- (CFO-Capex)/Debt sustained above 7.5%.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- EBITDA leverage sustained above 4.5x, with the higher leverage
stemming from weaknesses in sales/EBITDA, debt-funded shareholder
returns, or a significant increase in capex, leading to increased
debt issuance;
-(CFO-Capex)/Debt sustained below 3%.
LIQUIDITY AND DEBT STRUCTURE
Robust Liquidity: Intelsat's liquidity is supported by high cash
balances and a fully available $500 million, super priority
first-lien senior secured revolver. Additional liquidity has been
provided by ARPs and reimbursements for C-Band clearing costs
received in 2022 and 2023. Intelsat received $3.7 billion of ARPs
in 2023; a part of which was utilized to fully pay down the term
loan.
The company has also received a total of $1.2 billion of
reimbursements payments through 2023, and expects an additional
$450 million-$500 million in 2024. With the repayment of term loan,
there is no significant maturity during its forecast period of
2024-2027.
Capital Structure: The company emerged with a five-year, $500
million super-priority first-lien RCF (S+275) maturing in February
2027, a seven-year, $3.19 billion first-lien term loan B (S+425)
maturing in February 2029 and $3 billion of eight-year, 6.5%
first-lien notes due in 2030. The term loan was repaid in full in
4Q23, as discussed above.
Maturities: The RCF (undrawn) matures in 2027. The nearest maturity
of the outstanding debt is in 2030 when the senior notes are due.
ISSUER PROFILE
Intelsat provides service through a global fleet of 57 satellites
and 66 teleports, and is the largest fixed services satellite (FSS)
operator in the world, covering 99% of the world's populated
regions.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Intelsat Jackson
Holdings S.A. LT IDR BB- Rating Watch On BB-
super senior LT BB+ Rating Watch On RR1 BB+
senior secured LT BB+ Rating Watch On RR2 BB+
Intelsat S.A. LT IDR BB- Rating Watch On BB-
=========
M A L T A
=========
TACKLE GROUP: Moody's Affirms 'B2' CFR, Outlook Remains Stable
--------------------------------------------------------------
Moody's Ratings has affirmed Tackle Group S.a r.l.'s (Tipico or the
company) B2 long-term corporate family rating and its B2-PD
probability of default rating. Concurrently, Moody's has affirmed
the B2 instrument rating on the EUR1,455 million senior secured
term loan B ("TLB") due 2028 and EUR25 million senior secured
revolving credit facility ("RCF") due 2027, both issued by Tackle
S.a r.l. The outlooks on Tipico and Tackle S.a.r.l. remain stable.
"The rating affirmation reflects Tipico's leading position in the
German sports betting sector and its track record of adapting well
through the major regulatory evolutions of the German gaming market
in recent years, balanced by sizeable cash outflows into its US
business and limited diversification in terms of product offering
and geography." says Lola Tyl, a Moody's Analyst and lead analyst
for Tipico.
RATINGS RATIONALE
The affirmation of Tipico's ratings reflects the company's leading
market position in the sports betting industry in Germany and good
operating performance. Tipico's credit profile benefits from the
group's high brand recognition in Germany, its multichannel
strategy with high exposure to the online segment and the largely
reduced regulatory risk given the German gaming market is now fully
regulated.
At the same time, Tipico's credit profile is constrained by the
company's shareholder friendly financial policy, sizeable cash
outflows to fund the group's activities in the US, which are
outside of the term loan restricted group, limited diversification
in terms of product offering and geography and its exposure to
unpredictable sports results.
In 2023, Tipico's net gaming revenue after taxes and
company-adjusted EBITDA grew respectively by around 6% and 8%
(excluding the impact of the unrestricted US division), driven by a
strong growth of Tipico's retail activity and despite some
significant new regulatory requirements becoming effective in the
course of 2022 and beginning of 2023.
In the next 12-18 months, Moody's expects Tipico's Moody's-adjusted
EBITDA to grow in the high single digit range, supported by the
reduced operating loss in the US combined with low single digit
growth in EBITDA in the group's operations in Germany and Austria.
As a result, Moody's expects the company's Moody's-adjusted gross
leverage to be trending below 4.5x, leaving the company strongly
positioned in the rating category.
Moody's expects Tipico to continue to distribute sizeable amounts
of cash to its shareholders and, therefore, Moody's projects that
free cash flow ("FCF") after dividend payments will remain at low
levels or breakeven. Dividends have been a regular feature, and
while there has been no dividend payment in 2023 and before that
dividends have typically been paid through excess cash generated in
the year, FCF after dividend payments has historically been low or
negative.
LIQUIDITY
Tipico's liquidity is good, supported by close to EUR281 million of
cash on balance sheet as of December 2023; EUR25 million fully
undrawn revolving credit facility; Moody's expectation of FCF in
the range of EUR150 million to EUR160 million in the next 12-18
months before shareholder distributions, and after taking account
of the cash leakage in respect of funding the development of the US
division, which is outside of the restricted group; and the absence
of significant debt maturities before 2028.
The debt facilities have a minimum EBITDA covenant of EUR20
million, which is tested on a quarterly basis. Moody's expects
Tipico to very comfortably comply with this covenant.
STRUCTURAL CONSIDERATIONS
The probability of default rating is B2-PD, in line with the
corporate family rating ("CFR"), reflecting Moody's assumption of a
50% recovery rate, as is typical for capital structures with bank
debt and a loose maintenance covenant. The debt facilities are all
rated B2 because they rank pari passu; are secured by pledges over
shares, bank accounts and intercompany receivables; and guaranteed
by core subsidiaries representing at least 80% of consolidated
EBITDA.
RATIONALE FOR STABLE OUTLOOK
The stable outlook reflects Moody's view that Tipico will maintain
Moody's-adjusted leverage below 5.0x in the next 12-18 months,
while generating significant cash flow before shareholder
distributions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on the ratings would develop if the company's
operating performance continues to improve such that its
Moody's-adjusted leverage falls below 4.5x on a sustained basis;
FCF/debt trends towards 10%; and liquidity remains good.
Downward rating pressure could develop if the company's performance
weakens as a result of adverse regulatory changes, increased
competition or a more aggressive financial policy. A downgrade
could be considered if Tipico's Moody's-adjusted leverage rises
above 6.0x, FCF before shareholder distributions turns negative or
liquidity risks arise.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Gaming
published in June 2021.
COMPANY PROFILE
Tackle Group S.a r.l. is the parent and indirect holding company of
the German sports betting and gaming operator Tipico. Headquartered
in Malta, Tipico offers sports betting and online gaming in Germany
and Austria via 1,087 outlets (most in franchises), dedicated
websites and applications. Tipico launched operations in the US in
2020. In 2021, the US business was excluded from the restricted
group under Tipico's term loan debt documentation. In 2023, the
company reported net revenue (net gaming revenue (NGR) less gaming
taxes and franchise commissions) of EUR686.5 million (consolidated,
including the US division) and company-adjusted EBITDA of EUR400.2
million (excluding the impact of the unrestricted US division).
Tipico has been majority owned by CVC Capital Partners (CVC) since
August 2016. CVC holds a 60% stake in the company, while the
remaining 40% is owned by the company's founders.
=============
R O M A N I A
=============
LIBRA INTERNET: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Romania-based Libra Internet Bank S.A.'s
(Libra) Long-Term Issuer Default Rating (IDR) at 'BB-' with a
Stable Outlook, and Viability Rating (VR) at 'bb-'.
KEY RATING DRIVERS
Small Bank, Reasonable Performance: Libra's ratings reflect its
small size and narrow franchise in Romania. They also reflect a
business model that has delivered high returns and reasonable asset
quality, but is relatively untested through economic cycles. The
ratings also reflect high exposure to real estate and agribusiness
against a small nominal capital base, alongside appetite for high
loan growth.
Moderate Business Prospects: The strength of the Romanian economic
environment is moving towards CEE levels, improving Romanian banks'
moderate opportunities to consistently do profitable business. The
sector's reasonable financial metrics and growth prospects are
balanced against potential volatility in Romania's macroeconomic
variables. Banks' high exposure to the Romanian sovereign
(BBB-/Stable), meaningful sector fragmentation, low financial
inclusion and higher-than-peers' euroisation of the economy are key
structural weaknesses.
Niche Franchise: Libra has a narrow footprint in the competitive
Romanian banking sector, with less than 2% share of sector assets.
The bank's business concentrations by obligor and industry are due
to its focus on servicing real estate developers, agribusiness and
professional individuals, but also reflect its limited scale.
High Credit Concentrations: Libra's risk appetite is higher than
the industry average, given the significant proportion of lending
in real estate and agriculture, as well as relatively large
single-name exposures. The bank's higher risk exposures yield
higher returns, while its disciplined underwriting supports a low
share of impaired loans and good recoveries on problematic
exposures. The bank is planning to grow through less
capital-intensive activities, such as municipalities and
state-guaranteed retail lending, although this will take time to
reduce concentrations, in its view.
Reasonable Asset Quality: Libra's impaired loans ratio has been
largely stable at close to 2% over the past four years, although
this should be viewed in light of rapid loan growth. Fitch expects
impaired loans ratio to increase moderately by end-2025, given the
lagged effects of the challenging macroeconomic environment and
loan seasoning. Coverage of impaired loans by all loan loss
allowances (more than 100%) is sound, particularly in light of the
bank's conservative collateral requirements and valuations.
Profitability at Cyclical High: Operating profit/risk-weighted
assets (RWAs) spiked at 5.7% in 2023 (2022: 4.6%), supported by
margin expansion and low loan impairment charges. Libra's earnings
are dominated by net interest income, and its profitability
benefits from a net interest margin that is wider than domestic
peers. Fitch expects risk-adjusted profitability to remain
reasonable over the medium term, underpinned by high interest rates
and loan growth.
Moderate Capitalisation: Fitch views the bank's common equity Tier
1 (CET1) ratio (end-2023: 16.9%, excluding 2023 profit) as only
moderate, in view of the bank's high credit concentrations, risk
appetite and small absolute size of capital. Fitch estimates the
CET1 ratio is likely to increase to closer to about 20% with profit
retention (net of dividend payouts), and Fitch expects the bank to
operate at similar levels over the medium term.
Mainly Deposit-Funded: The bank is mainly customer deposit-funded,
but with weaker customer relationships and more price-sensitive
deposit base than at larger peers. Liquidity is supported by a
comfortable loans/deposits ratio of 70%-75% over the past four
years. Refinancing risks related to third-party funding are limited
and liquidity needs are well-covered by available buffers largely
held at the central bank or invested in Romanian government bonds.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Libra's ratings could be downgraded if Fitch expects the bank to
record a sustained deterioration in the impaired loans ratio close
to 5%, particularly given loan concentrations, and if this was
accompanied by a material weakening in operating profitability or a
protracted weakening in the bank's CET1 ratio toward 14%.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upside to the ratings is limited in the near term, given the bank's
small size, narrow franchise and risk profile. Over the medium to
long term, an upgrade of Libra's ratings would require a material
improvement in its business and risk profile, predominantly through
a material strengthening of franchise and scale, and a significant
reduction in concentrations to higher-risk sectors, while
maintaining financial metrics well within the 'bb' thresholds.
SUPPORT: KEY RATING DRIVERS
No Support: Libra's Government Support Rating (GSR) of 'no support'
primarily considers the Romanian resolution legislation, which
requires senior creditors to participate in losses, if necessary,
instead of a bank receiving sovereign support. Libra's ratings also
do not factor in any support from its ultimate owner, private
equity investor New Century Holdings, as, in Fitch's' view, this
support cannot be relied upon.
SUPPORT: RATING SENSITIVITIES
An upgrade of the GSR would require a higher propensity of
sovereign support. While not impossible, this is highly unlikely,
in Fitch's view.
VR ADJUSTMENTS
The operating environment score of 'bb+' is assigned below the
implied category score of 'bbb' for Romania due to the following
adjustment reason: macroeconomic stability (negative).
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Libra Internet
Bank S.A. LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
Viability bb- Affirmed bb-
Government Support ns Affirmed ns
=====================
S W I T Z E R L A N D
=====================
GARRETT MOTION: S&P Rates $500MM Senior Unsecured Notes 'B'
-----------------------------------------------------------
S&P Global Ratings assigned its 'B' rating to the proposed $500
million senior unsecured notes to be issued by Garrett Motion
Holdings Inc. and Garrett LX I S.a.r.l., subsidiaries of Garrett
Motion Inc. (GMI; BB-/Stable). The recovery rating is '6'. At the
same time, S&P placed its 'BB-' issue ratings on the company's
senior secured loans and revolving credit facility (RCF) on
CreditWatch with positive implications.
Auto supplier GMI intends to use the proceeds from the proposed
notes to partially repay its outstanding senior secured loans.
Specifically, it will:
-- Repay in full its $400 million 2023-2028 facility; and
-- Pay down $100 million of its 2021-2028 facility.
S&P said, "The CreditWatch placement indicates that we anticipate
raising our ratings on the secured loans to 'BB' if the group
successfully raises its targeted amount of $500 million and
completes the planned refinancing. If the group materially upsized
the proposed issuance and repaid more of its secured debt, we could
raise the ratings by up to two notches. Such an upgrade would
indicate the stronger recovery prospects for secured lenders if the
amount of secured debt was lower and lower-ranking liabilities are
added to the capital structure, in the form of the proposed
unsecured notes. In our view, the proposed transaction is leverage
neutral for GMI.
"Demand for light vehicles has softened and the ongoing decrease in
demand for diesel cars makes GMI's product mix less favorable. We
therefore predict that the group will generate free operating cash
flow (FOCF) of $300 million-$350 million in 2024 and 2025, down
from the $393 million generated in 2023.
"We forecast that GMI's still-robust FOCF generation will help it
reduce leverage to close to 2x. Although, in principle, the
recently announced $350 million share repurchase program is
unfavorable for creditors, we anticipate that solid free cash flow
generation will allow GMI to continue to balance leverage reduction
against its target for shareholder returns, as demonstrated in
April 2024, when it reduced its gross debt by $100 million.
"We plan to resolve the CreditWatch on the existing senior secured
debt as soon as the planned refinancing closes."
===========================
U N I T E D K I N G D O M
===========================
ALEXANDRITE MONNET: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has assigned Alexandrite Monnet UK Holdco plc
(Alexandrite Monnet) a first-time Long-Term Issuer Default Rating
(IDR) of 'B+' with a Stable Outlook and its planned EUR350 million
secured bond an expected senior secured rating of 'BB-(EXP)' with a
Recovery Rating of 'RR3'. The assignment of the final ratings is
contingent on the receipt of final documents conforming to
information already reviewed. Alexandrite Monnet owns 100% of
Befimmo Group FIIS.
The Befimmo group's (which includes assets outside Befimmo Group
FIIS) EUR2.8 billion end-2023 portfolio is characterised by robust
demand for its high-quality Brussels offices, with solid occupancy
of 96%. Public-sector tenants represent 56% of rent ensuring
sustained cash flow with a weighted average lease term to earliest
break (WALB) of 9.5 years, and an indexation-related like-for-like
(lfl) rental increase of around 10% in 2023. This stability
positions the group favourably versus its and peer group's other
central business district (CBD) office portfolios.
Befimmo Group FIIS's standalone net debt/EBITDA of 16.7x at
end-2023 - inflated by the pre-let development called Zin that
became income-producing in 1Q24 - is projected to decline to
approximately 12.5x in 2025, in line with the 'bb' rating category.
Alexandrite Monnet adds a layer of EUR350 million subordinated
debt, whose debt service relies on the dividends from Belgian FIIS
(fonds d'investissement immobiliers spécialisés, a
REIT-equivalent) entities owned by Befimmo Group FIIS.
KEY RATING DRIVERS
IHC Criteria Approach: Fitch rates Alexandrite Monnet and the
planned five-year EUR350 million senior secured debt under its
Investment Holding Companies (IHC) Criteria, acknowledging its sole
purpose of indirectly owning 100% of Befimmo Group FIIS's shares,
and its reliance on cash dividends from the asset-holding Befimmo
Group FIIS entities to service its debt. While senior secured in
ranking at the Alexandrite Monnet level, this debt is structurally
subordinated to debt incurred by Befimmo group property
subsidiaries.
Befimmo Office Portfolio: Fitch assesses, on a standalone basis,
excluding Alexandrite Monnet's non-recourse debt, Befimmo Group
FIIS's creditworthiness at 'bb'. The group's end-2023 portfolio
totaled EUR2.8 billion, mainly offices in Brussels (75% by value),
and 56% of rent was from public-sector tenants on long-dated leases
(WALB 11.2 years). As an ever-adapting CBD, the Brussels office
market is split between prime and secondary (the Befimmo group's
being prime) locations and 53% of its offices were at end-2022
under 10 years old, with public transport links, a history of high
occupancy, indexed rents (2023: +10%), reversionary potential,
albeit with capital city and tenant concentrations, and
ESG-focused.
Dividend Up-streamed: Alexandrite Monnet is reliant on cash
dividends from Befimmo Group FIIS (itself the recipient from its
three main companies: Befimmo, Fedimmo and Zin). As FIISs, they
have to declare a dividend of at least 80% of their rental-derived
profits. Upon breach of their secured financings' respective
loan-to-value (LTV) or interest coverage ratios, if uncured, any of
the three secured financings (without cross-default or
cross-collateralisation) could restrict its cash dividend being
ultimately up-streamed to Alexandrite Monnet. Existing covenant
headroom is adequate.
Alexandrite Monnet Interest Coverage: Alexandrite Monnet can access
a six-month letter of credit-backed interest expense reserve in
case of dividend interruption. Relative to the Befimmo group
entities' pro-forma dividend capacity for 2024, Fitch calculates
standalone Alexandrite Monnet's interest coverage at around 1.4x.
Fitch expects this to remain around 1.5x during 2024-2028.
Significant Collateral Value: The attributable value of Befimmo
Group FIIS's net asset value (NAV, its shareholding) was EUR1.4
billion at end-2023, relative to Alexandrite Monnet's EUR0.35
billion debt (27% LTV). Adopting the IHC criteria's "stressed gross
LTV" (three times standard deviation of the month-on-month
percentage change in the average share price observed over 10
years, when Befimmo SA/NV was listed) the NAV decreases 22% (31%
LTV). Compared with other IHC equity stake values based on variable
EBITDA and multiples, fixed assets with long-dated rents (paid by
public-sector bodies) have fundamentals with less vulnerability to
default and asset-valuation change. The Fitch-calculated Befimmo
Group FIIS LTV at end-2023 was 62% (group covenant: 70%).
Befimmo's Public Sector-Weighted Portfolio: Under Brookfield
ownership since 2023 the portfolio has been simplified, with the
disposal of EUR124 million of Fedimmo's 30 smaller regional offices
(at risk of future tenant location consolidation) to enable
management to focus on central, transport-connected, large offices
including those under long-dated (15-18 years) public-sector income
streams, and other multi-tenanted offices where rents are being
pushed higher.
Belgian Régie des Bâtiments: The Belgian Buildings Agency
(representing some 50% of the Befimmo group's leases) procures
offices from landlords such as Befimmo entities for various
government departments. It signs long-dated leases (it can move
departments around according to changing requirements) and
co-ordinates/promotes the ongoing consolidation of office
workforces into efficient, modern, green buildings. This is a core
backbone of rental income for the Befimmo group.
Brussels Office Market: The eight-largest office market in Europe,
Brussels is dominated by Belgian public-sector tenants and EU
Commission and Parliament bodies (34% of 2023's market take-up was
public-sector tenants), but including head offices of Belgian and
global entities and banks. Befimmo Group FIIS's tenant base is
resilient with 56% from the public sector and the remainder from a
diversified private sector. Despite inherent 2022 uncapped 10%
CPI-related rent increases, the market's low vacancy rates, and
limited oversupply, Fitch does not assume a significant rise in
rents.
Already Tackling WFH: Brussels has a lack of Grade A office space,
which has resulted in rising rents on recent transactions for prime
new office space, including for the Befimmo group. Part-work from
home (WFH) is also practiced in Brussels, but consolidation of
space has been ongoing for some time, and Befimmo's long-term
leases (and public-sector tenants) make immediate vulnerability of
this income stream unlikely. The group's retained SilverSquare
(co-working) and Sparks (conference services) operations show that
management is acutely aware of keeping office environments and
amenities fresh to make vibrant offices and locations.
Main Property Development - ZIN: ZIN, with EUR466 million of total
investment, by far the largest of Befimmo's three currently ongoing
development projects (EUR574 million combined investment volume),
is a multifunctional building in Brussels North with 85,000 sqm of
office space, 111 rented apartments and 200 hotel rooms. More than
95% of the office space is pre-let to the Flemish government on an
18-year lease. ZIN's office space is recently completed and
providing rental income.
DERIVATION SUMMARY
The Befimmo group's portfolio is highly concentrated in Brussels,
with only a couple of assets in other Belgium cities and in
Luxembourg. Brussels has proven to be more resilient to the
challenges European office markets are facing in valuation
(interest-rate recalibration) and occupancy (WFH). Besides, Befimmo
has high-quality offices with good ESG credentials that are less
threatened by the ongoing trend of "flight to prime".
None of Fitch-rated peers share the Befimmo group's key portfolio
strengths of (i) its tenant base (56% public bodies); (ii) the
longevity of its cash flow (9.5-year WALB), and (iii) 53% of
end-2022's buildings were 10 years or younger. Other traits - a
focus on the prime end of the office CBD market, high occupancy,
high rent collection during Covid-19, focus on increasing rents and
ESG credentials - are consistent with peers' portfolios with their
respective concentrations within London, Paris, Stockholm or
Brussels.
In terms of office assets, its closest rated peer is the pan-sector
M&G European Property Fund (IDR: A-/Stable, EUR1.6 billion office
within a EUR4.0 billion pan-sector portfolio) with similarly
low-yielding offices in the CBDs of Paris, Munich, Berlin.
Düsseldorf and Frankfurt. In contrast to the Befimmo group, this
fund had very low leverage (11% LTV and 0.7x net debt/EBITDA) and
minimal development risk. Other peers are Land Securities PLC
(Short-Term IDR 'F1'; EUR14 billion office and retail portfolio)
and The British Land Company PLC (Long-Term IDR: A-/Stable; EUR12.8
billion office and retail, at share) but both are only in the UK.
Besides geographic footprint, Befimmo Group FIIS is significantly
different to these peers due to its standalone leverage and
financial flexibility, which underpin its 'bb' rating category
creditworthiness.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case
Befimmo Group FIIS
- Moderate 4% rental growth from indexation in 2024 (following
inflation-driven 10% in 2023), and around 2% from 2025 onwards
- Fitch uses full-year rental contribution from development
completions (2024: EUR20.5 million for Zin office, thereafter
EUR4.4 million for completed rented apartments, then hotel and a
residual office). Visibility is provided by high levels of pre-let
and expected demand for the residential in that location
- Year-on-year 2023 cost base reduction due to de-listing,
re-organisation and new asset management contract for non-FIIS
owned operations
- Using policy rates derived from Fitch's Global Economic Outlook,
interest-rate hedging reduces nominal interest costs by EUR20
million in 2024 and EUR7.7 million in 2025 when existing
interest-rate hedging expires
Alexandrite Monnet
- Dividends from Befimmo Group FIIS are calculated as 80% of profit
before taxes (reflecting the FIIS status of its three main
property-owning subsidiaries). Fitch assumes EUR32 million interest
expense for the EUR350 million subordinated debt
- Issue of five-year EUR350 million secured notes
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Material improvement in Befimmo Group FIIS's operational and
financial profile
- Alexandrite Monnet's standalone interest coverage of 2.0x on a
sustained basis (based on cash dividends from Befimmo Group SIIF
entities)
- The 'RR3' Recovery Rating, informing the senior secured rating,
is unlikely to be revised higher
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Deterioration of Befimmo Group FIIS's operational and financial
profile
- Alexandrite Monnet's standalone interest coverage below 1.2x
(based on cash dividends from Befimmo Group IIF entities and their
senior secured funding potentially triggering cash lock-ups)
- Alexandrite Monnet's standalone LTV above 60%
LIQUIDITY AND DEBT STRUCTURE
Post-2027 Debt Maturities: Befimmo Group FIIS had EUR35 million
readily available cash at end-2023. Fitch expects cash outlays to
committed developments of EUR96.4 million in 2024 and EUR39.9
million in 2025, for which Befimmo Group FIIS has committed bank
facilities to cover. It has no scheduled debt maturities before
December 2027.
Almost all of Befimmo Group FIIS's consolidated EUR1.4 billion of
debt at end-2023 is secured, with the exception of the Fedimmo
EUR47 million mezzanine loan. Its subsidiaries' pledged portfolios
are in four separate grouping of companies and their assets are not
cross-collateralised.
Shortened Interest-Rate Hedging: Befimmo Group FIIS's end-2023 debt
was 100% hedged in interest rates, averaging 2.2%, although the
bulk of this will expire in 3Q25. This will expose the cost of debt
to floating rates from 4Q25 onwards when, based on the current
derivatives book, the hedging coverage will drop to 15%. Management
stated that it will progressively hedge nearer to end-2025 when
rates are expected to decrease.
If interest rates stay high, Fitch would expect inflation to remain
high, which would be reflected in the annual CPI uplifts applied at
each lease's anniversary (the bulk of which occurs at the start of
the year). Thus in Befimmo Group FIIS's rental income, 2022's 10%
CPI uplifts were reflected in its 2023 rental income, and 2023's
3.5% government-capped uplift in its 2024 rental income.
In 2023 Befimmo Group FIIS monetised its previous advantageous
long-dated derivatives book beyond 2028, fixing at less than 0.8%
EURIBOR, thereby making a profit and using proceeds to deleverage.
Alexandrite Monnet Liquidity Covers Notes' Interest: Fitch views
Alexandrite Monnet's six-month letter of credit-backed interest
expense reserve, supported by Brookfield, as accretive to its
liquidity profile as it would cover interest payments for the
EUR350 million senior secured bond, should dividends from Befimmo
Group FIIS (routed from its FIIS subsidiaries) be interrupted.
Criteria Variation
Under the IHC criteria, senior debt is rated the same as the
issuer's IDR with a Recovery Rating capped at 'RR4' to reflect the
lower predictability of recovery prospects. Given the Befimmo
group's underlying quality property portfolio and high recovery
estimates under various scenarios, Fitch has applied a criteria
variation to rate Alexandrite Monnet's senior secured rating one
notch above the IDR at 'BB-' with a 'RR3' recovery estimate.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery
----------- ------ --------
Alexandrite Monnet
UK HoldCo Plc LT IDR B+ New Rating
senior secured LT BB-(EXP) Expected Rating RR3
ATLANTIC STEEL: Goes Into Administration
----------------------------------------
Alistair Houghton at Business Live reports that a steel firm has
closed with the loss of dozens of jobs after going into
administration.
Atlantic Steel Processing, based on the dockside in Birkenhead,
called in administrators from FRP Advisory after suffering a fall
in sales and after an attempt to sell the company fell through,
Business Live relates.
The business has now closed and most of its 41 staff have now lost
their jobs, Business Live discloses.
The 23-year-old business supplied steel products across the UK and
Ireland. It specialised in steel decoiling, taking rolled steel
and uncoiling it to press it into flat sheets so it could be used
in industry.
Richard Goodall and Martyn Rickels, of specialist business advisory
firm FRP Advisory, were appointed as joint administrators on May 3,
Business Live states.
According to Business Live, they said: "The company faced
challenging trading conditions primarily due to a reduction in
demand which resulted in cash flow difficulties and impacted its
ability to operate."
"After an accelerated M&A process yielded no transacting partners
for a going concern sale, the Company ceased trading and was placed
into administration as part of an orderly wind down."
FRP, as cited by Business Live, said most employees were made
redundant soon after administration "with a small number retained
temporarily to assist the joint administrators with the wind-down
process". The remaining assets of the business are being sold by
property agency Sanderson Weatherall, Business Live notes.
"Unfortunately, mounting external pressures, most notably a
reduction in demand and movements in commodity prices, resulted in
the business being unable to meet its financial obligations.
Regrettably, this meant the necessary closure of the business,"
Business Live quotes Richard Goodall, director at FRP, as saying.
"We are now supporting the employees affected to file claims with
the Redundancy Payments Services and would encourage any parties
with an interest in acquiring the assets to make contact with us as
soon as possible."
GINGER FOX: Collapses Into Administration
-----------------------------------------
Business Sale reports that Ginger Fox Games Limited, a retailer and
maker of board and card games, fell into administration last month,
with Gary Shankland and Irvin Cohen of Begbies Traynor appointed as
joint administrators.
According to Business Sale, in the company's accounts for the year
to May 31, 2022, its fixed assets were valued at close to
GBP118,000 and current assets at nearly GBP3.4 million. At the
time, its net assets amounted to GBP1.3 million, Business Sale
discloses.
GO PLANT: Bought Out of Administration
--------------------------------------
Business Sale reports that a Leicestershire-based supplier of
specialist plant and vehicle hire to local authorities and the
private sector has been acquired out of administration.
Go Plant Limited and Go Plant Fleet Services filed a notice of
intention to appoint administrators (NOI) on May 2, Business Sale
relates.
The following day, Mike Denny and Jonny Marston of Alvarez & Marsal
were appointed as joint administrators of the Bardon Hill-based
group, Business Sale discloses. The joint administrators
subsequently completed the sale of several depots owned by Go Plant
Limited to companies owned by Berkshire-based Sweeptech
Environmental Services, Business Sale notes.
The deal has secured the future of these sites, along with 116
jobs, but the remaining sites were closed following the appointment
of administrators as no buyer could be found, leading to an
undisclosed number of redundancies, Business Sale states.
According to Business Sale, Mike Denny, joint administrator and
Managing Director at Alvarez and Marsal, commented: "The companies
had been heavily impacted by challenging market conditions, in
particular cost pressures and a subdued UK house building market."
Mr. Denny continued: "We are delighted to have completed a sale of
certain depots across the north of England to a strategic buyer,
preserving substantial employment. We will work closely to support
those unfortunately made redundant following the appointment of
administrators."
Go Plant is one of the UK's leading suppliers of fleet servicing
and maintenance solutions, providing services including waste
management and road sweeper hire. In the company's financial
accounts for the year to the end of June 2022, it reported turnover
of close to GBP45 million, but fell to an operating loss of GBP3.2
million, Business Sale relays. At the time, the company employed
more than 400 staff, according to Business Sale.
ITHACA ENERGY: Moody's Puts 'B1' CFR on Review for Upgrade
----------------------------------------------------------
Moody's Ratings has placed on review for upgrade the B1 corporate
family rating and the B1-PD probability of default rating of Ithaca
Energy plc ("Ithaca"). Moody's also placed on review for upgrade
the B3 instrument rating of the $625 million backed senior
unsecured notes issued by Ithaca Energy (North Sea) plc, a
wholly-owned subsidiary of Ithaca. Previously, the outlook for both
entities was stable.
On April 23, 2024, Ithaca announced it has agreed to a proposed
combination with substantially all of Eni S.p.A. (Eni, Baa1
stable)'s upstream assets in the UK for an all-share consideration
of approximately GBP750 million at the date of the announcement. At
completion, Eni will own around 38.5% of the fully diluted issued
share capital of Ithaca subject to adjustment in respect of certain
share option rights. Closing is expected during the third quarter
of 2024 and remains subject to shareholder and regulatory
approvals.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The rating action is driven by Moody's expectations of:
I. a material increase in Ithaca's average daily production and
reserve base from completion;
II. the entity's retention of robust financial metrics and
liquidity, supported by the cashflow-generative nature of the
enlarged producing asset base and the de-leveraging effect of the
transaction at completion;
III. continued commitment to conservative financial policies;
IV. greater diversification within Ithaca's shareholding structure
and board composition following Eni's acquisition of a material
stake in the combined entity.
The enlarged Ithaca would have produced 120 thousand barrels of oil
equivalent per day in 2023 and around 105-108 kboepd in 2024,
assuming 12 months of contribution from Eni's assets: these values
represent a considerable increase over Ithaca's standalone volumes
(2023: 70 kboepd) and commensurate with Moody's requirements for a
higher rating.
The debt-free nature of the transaction implies an overall
de-leveraging effect on Ithaca's financial profile. At the end of
2023, pro forma Moody's-adjusted gross debt / average daily
production would have declined to $9,400/boe versus Ithaca's
standalone levels of $16,100/boe. Going forward, Moody's expects
gross leverage to remain below $15,000 aided by Ithaca's renewed
commitment to prudently manage its balance sheet on account of the
inherent volatility of the oil and gas industry alongside the
persistent fiscal uncertainty in the UK.
The complementarity between asset bases, as well as Ithaca's good
track record in managing inorganic growth mitigate execution and
integration risks typically associated with transformational
acquisitions.
That said, the enlarged entity will continue to have a somewhat
smaller scale than Ba3-rated peers, single-basin concentration in
the UK and rising outflows for growth investments and dividends.
The review will focus on: (i) the transaction concluding as planned
upon receipt of shareholder approvals; (ii) any conditions placed
on the combined company in order to obtain approval from relevant
authorities and (iii) an assessment of the combined entity's
ability to maintain metrics commensurate with a stronger credit
quality on a sustained basis. Based on current information, Moody's
anticipates that an upgrade of Ithaca's CFR will be limited to one
notch at the conclusion of the review. Structural considerations at
the conclusion of the review will guide Moody's assessment of the
senior unsecured rating positioning.
As Moody's has previously stated, Ithaca's CFR could be upgraded to
Ba3 should Ithaca achieve and maintain: (i) a large reserve base
that supports production above 100 kboepd and high single-digit
proved reserve life; (ii) sustained positive free cash flow
generation (iii) gross leverage (Moody's-adjusted) below $15,000
per produced barrel of oil equivalent (boe) and (iv) a strong
liquidity profile.
Conversely, the CFR would be downgraded to B2 should Ithaca fail to
maintain: (i) average daily production sustainably above 50,000
barrels of oil equivalent per day (boepd); (ii) gross leverage
below $25,000/boe; (iii) adherence to its conservative set of
financial policies that support robust underlying cashflow
generation, or (iv) an adequate liquidity position, including the
retention of sufficient borrowing capacity under its reserve-based
lending (RBL) facility as well as timely management of refinancing
needs. In addition, any significant weakening of its parent Delek
Group Ltd.'s (Delek) credit profile could put negative pressure on
Ithaca's ratings.
ESG CONSIDERATIONS
Governance considerations were a key driver of the rating action
and include Ithaca's:
1. Stated commitment to its conservative financial policies that
prioritise balance sheet strength over shareholder remuneration.
Ithaca's ambition to distribute up to $500 million to shareholders
in each of 2024 and 2025 represents a material step up from the
$400 million amount declared over 2023 results. That said, Moody's
views the company's ambition as commensurate with the stated
capital allocation framework, supported by the cashflow-generative
nature of Eni's assets and the robust commodity price environment.
2. Greater diversification within Ithaca's shareholding structure
and board composition following Eni's acquisition of a material
stake in the combined entity. The enlarged Ithaca will enter
separate relationship agreements to safeguard its ability to
operate independently of both Eni and Delek Group Ltd. (Delek).
Environmental and social considerations also remain relevant,
including increasing regulatory risks facing upstream companies as
the world moves towards cleaner energy mix, in particular as far as
carbon emissions are concerned and given the company's operational
concentration within the European region. The envisaged shift
towards a balanced pro-forma commodity mix (2023: 51% liquids / 49%
gas) partially mitigates the high exposure to carbon transition
risks.
Moody's expects a modest increase in the quantum of Ithaca's
decommissioning liabilities upon completion of the transaction.
Despite the significant uncertainties relating to the estimated
costs for decommissioning, Moody's does not expect costs associated
with asset retirement obligations to have a significant adverse
effect on the group's operating and financial performance in the
next few years and within the context of the overall cash
generating capacity.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Independent
Exploration and Production published in December 2022.
COMPANY PROFILE
Ithaca is a UK-focused independent oil and gas exploration and
production (E&P) company. In 2023, it produced on average 70.2
thousand barrels of oil equivalent per day (kboepd; 66% liquids and
34% natural gas), generating revenue of $2,320 million and
Moody's-adjusted EBITDA of $1,715 million. Ithaca is listed on the
premium segment of the London Stock Exchange and is majority-owned
by Delek, an Israeli holding company with primary exposure to E&P
activities in Israel and the UK.
KEIRAN BROWN: Collapses Into Administration
-------------------------------------------
Business Sale reports that Keiran Brown Building Services Limited,
a Staffordshire-based mechanical and electrical services provider,
fell into administration on April 19, with the Gazette confirming
the appointment of Emily Ball of Sterling Advisory as administrator
on April 30.
According to Business Sale, in the company's accounts for the year
to January 31, 2021, its fixed assets were valued at GBP568,733 and
current assets at GBP2.3 million. At the time, the company's net
assets amounted to GBP189,371, Business Sale discloses.
SELINA HOSPITALITY: Amends Osprey Subscription Deal
---------------------------------------------------
Selina Hospitality PLC disclosed in a Form 6-K Report filed with
the U.S. Securities and Exchange Commission that on April 23, 2024,
the Company and Osprey International Limited entered into the First
Amendment to Subscription Agreement, to amend certain terms and
conditions of the Subscription Agreement dated January 25, 2024
between the Company, as issuer, and Osprey, as investor, in respect
of Osprey's $12 million subscription for 60 million ordinary shares
of the Company.
Prior to the First Amendment, Osprey had funded $6 million of the
$12 million and Selina had paid its $4 million contribution towards
its investment in FutureLearn Limited, a joint venture between
Osprey and Selina, as required under the Subscription Agreement.
The remaining $6 million payable by Osprey under the Subscription
Agreement was to be paid in six monthly instalments of $666,667
each followed by three monthly instalments of $666,666 each.
Under the First Amendment and at the Company's request to help
expedite certain of the Company's liability restructuring and
path-to-profitability initiatives, Osprey has agreed to fund the
remaining $6 million of investment on an expedited basis via four
monthly installments of $1.5 million each, with the first of the
payments having been previously made and the final payment due in
July 2024. Osprey and the Company have mutually agreed that the
funds may be used for commercial costs, marketing costs,
property-level maintenance capital expenditures, and general
corporate purposes, subject to the terms of the First Amendment.
In addition to the First Amendment, the Company and Bet on America
LLC, the former sponsor of BOA Acquisition Corp., the special
purpose acquisition company that merged with and into a subsidiary
of the Company to effectuate the closing of the business
combination and listing of the Company in October 2022, have
entered into a Warrant Exchange Agreement on April 24, 2024,
pursuant to which Bet on America will return to the warrant agent
for cancellation the 6,575,000 private placement warrants to
purchase Ordinary Shares of the Company at an exercise price of
$11.50 per share, currently held by Bet on America, in exchange on
a four-for-one basis for the issuance by the Company to Bet on
America of 1,643,750 Ordinary Shares. The implementation of the
warrant exchange was previously approved by the Company's Board of
Directors in connection with the closing of the fundraising and
liability restructuring transactions announced by the Company on
January 26, 2024, which approval also authorized the Company to
exchange the 7,666,511 outstanding public warrants for Ordinary
Shares, in addition to the Bet on America warrant exchange, at the
same warrant-to-share exchange ratio.
As of April 26, 2024, the Company had 543,668,969 Ordinary Shares
issued and outstanding.
Further issuances are expected as part of the Transactions, as
disclosed in the Report on Form 6-K issued on January 26, 2024,
including (without limitation) potential issuances of up to
1,073,572,583 Ordinary Shares or more pursuant to:
* the exercise of warrants held by Osprey, which warrants
allow Osprey to acquire 380,677,338 Ordinary Shares at an exercise
price equal to the nominal value of the shares (although the
exercise price may be offset against amounts owed to Osprey by the
Company);
* the conversion of $21.6 million principal amount of
convertible debt that continues to be held by Osprey into
approximately 215,555,550 Ordinary Shares (based on a conversion
price of $0.10 per share);
* the $20 million optional investment that may be made by
Osprey and/or holders of the $65.4 million principal amount of 6%
Senior Secured Notes due 2029 to acquire 200,000,000 Ordinary
Shares (at a price of $0.10 per share);
* the $12.5 million in incremental investment the Company is
seeking to raise, via the subscription for approximately
171,232,877 Ordinary Shares at an estimated acquisition price of
$0.073 per share;
* the exercise of 83,606,818 unexercised warrants held by the
2029 Noteholders; and
* the payment of the remaining $4.5 million left to be funded
by Osprey under the Subscription Agreement for the purchase of
22,500,000 Ordinary Shares (at a price of $0.20 per share).
Additional issuances also may be made to Osprey and 2029
Noteholders pursuant to certain anti-dilution rights under their
warrants.
In addition to the issuances described, the Company may issue
Ordinary Shares under the general authority obtained by the Board
of Directors of the Company at the meeting of shareholders held on
March 26, 2024 to issue up to 200,000,000 Ordinary Shares for
further fundraising and/or liability restructuring initiatives.
About Selina Hospitality PLC
United Kingdom-based Selina (NASDAQ: SLNA) is one of the world's
largest hospitality brands built to address the needs of millennial
and Gen Z travelers, blending accommodation with co-working,
recreation, wellness, and local experiences -- from urban cities to
remote beaches and jungles. Founded in 2014, Selina serves
customers in 24 countries on six continents.
In December 2023, the Company missed certain payments due under an
Indenture with Wilmington Trust, National Association, as trustee,
dated as of Oct. 27, 2022, in respect of 6% Convertible Senior
Notes due 2026. The Company announced on Feb. 5, 2024, that it had
received a notice from a holder of more than 25% of the principal
amount of the 2026 Notes informing the Company that the holder was
purporting to exercise its right under the Indenture to accelerate
the outstanding principal amount of, premium (if any) on and
accrued and unpaid interest due under all of the 2026 Notes. The
Company said in March it has engaged with relevant noteholders to
discuss potential settlement arrangements and is assessing its
legal position. "There can be no assurances that such discussions
will result in a successful outcome and the Company may need to
consider formal restructuring options in relation to the
indebtedness due under the 2026 Notes and its other liabilities,"
the Company warned.
SELINA HOSPITALITY: Saba Entities Disclose 9.74% Equity Stake
-------------------------------------------------------------
Saba Capital Management, L.P., Saba Capital Management GP, LLC, and
Mr. Boaz R. Weinstein disclosed in a Schedule 13G Report filed with
the U.S. Securities and Exchange Commission that as of April 22,
2024, they beneficially own 52,928,595 shares of Selina's common
stock, representing 9.74% of class which is calculated based upon
543,668,969 shares of common stock outstanding as of April 29,
2024, as disclosed in the company's 6-K filed April 29.
Saba Capital Management, L.P. can be reached at:
Saba Capital Management, L.P.
405 Lexington Avenue, 58th Floor
New York, NY 10174
Tel: 212-542-4635
A full-text copy of the Report is available at
https://tinyurl.com/mus3sv9t
About Selina Hospitality PLC
United Kingdom-based Selina (NASDAQ: SLNA) is one of the world's
largest hospitality brands built to address the needs of millennial
and Gen Z travelers, blending accommodation with co-working,
recreation, wellness, and local experiences -- from urban cities to
remote beaches and jungles. Founded in 2014, Selina serves
customers in 24 countries on six continents.
In December 2023, the Company missed certain payments due under an
Indenture with Wilmington Trust, National Association, as trustee,
dated as of Oct. 27, 2022, in respect of 6% Convertible Senior
Notes due 2026. The Company announced on Feb. 5, 2024, that it had
received a notice from a holder of more than 25% of the principal
amount of the 2026 Notes informing the Company that the holder was
purporting to exercise its right under the Indenture to accelerate
the outstanding principal amount of, premium (if any) on and
accrued and unpaid interest due under all of the 2026 Notes. The
Company said in March it has engaged with relevant noteholders to
discuss potential settlement arrangements and is assessing its
legal position. "There can be no assurances that such discussions
will result in a successful outcome and the Company may need to
consider formal restructuring options in relation to the
indebtedness due under the 2026 Notes and its other liabilities,"
the Company warned.
WEMBLEY EMPIRE: Falls Into Administration
-----------------------------------------
Business Sale reports that Wembley Empire Development Limited, a
property development company based in Wembley, London, fell into
administration in late April, with the Gazette posting the
appointment of James Saunders and Geoffrey Bouchier of Kroll
Advisory as joint administrators on May 1.
In the company's accounts for the year to December 31 2022, its
current assets were valued at GBP15.5 million, Business Sale
discloses. However, its debts at the time left the company with
net liabilities totalling close to GBP410,000, Business Sale
notes.
WESTCOMBE HOUSE: Goes Into Administration
-----------------------------------------
Business Sale reports that Westcombe House Developments Limited, a
luxury property developer based in London, fell into administration
in late April, with James Saunders and Geoffrey Bouchier of Kroll
Advisory appointed as joint administrators.
According to Business Sale, in the company's accounts for 2022, its
current assets were valued at GBP9.2 million, but its debts meant
that net liabilities amounted to just under GBP598,000.
*********
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