/raid1/www/Hosts/bankrupt/TCREUR_Public/240925.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, September 25, 2024, Vol. 25, No. 193
Headlines
F R A N C E
AIR FRANCE-KLM: Egan-Jones Retains B- Senior Unsecured Ratings
IMERYS SA: Egan-Jones Retains BB+ Senior Unsecured Ratings
POSEIDON BIDCO: S&P Downgrades ICR to 'B-', Outlook Negative
SEQUANS COMMUNICATIONS: Issues $5MM Promissory Note to Qualcomm
G E R M A N Y
HUGO BOSS: Egan-Jones Retains BB+ Senior Unsecured Ratings
TELE COLUMBUS: EUR462.5MM Bank Debt Trades at 24% Discount
I R E L A N D
SONA FIOS III: S&P Assigns B-(sf) Rating on Class F-2 Notes
L U X E M B O U R G
SK MOHAWK: S&P Downgrades ICR to 'D' on Distressed Exchange
R U S S I A
AGROBANK: Fitch Gives BB-(EXP) Rating on Sr. Unsec. Eurobonds
S P A I N
BBVA CONSUMER 2024-1: Fitch Assigns 'BB+sf' Rating on Class Z Notes
GENOVA HIPOTECARIO IX: Fitch Hikes Rating on Class D Notes to BBsf
KRONOSNET CX: EUR870MM Bank Debt Trades at 33% Discount
S W E D E N
OREXO AB: Egan-Jones Lowers Senior Unsecured Ratings to CCC+
T U R K E Y
ING BANK: Fitch Assigns 'B+' Final Rating on USD150MM Tier 2 Notes
U N I T E D K I N G D O M
AK MIDLANDS: Quantuma Advisory Named as Administrators
ALDERLEY FARMS: Grant Thornton Named as Joint Administrators
BOBCO FISHING: Redman Nichols Named as Joint Administrators
DELTA TOPCO: Moody's Assigns 'Ba2' CFR, Outlook Stable
EMPIRE SPECIAL 1: MHA Named as Administrators
EMPIRE SPECIAL 2: MHA Named as Administrators
GALLANT BUILDING: CFS & Forvis Mazars Named as Joint Administrators
INEOS ENTERPRISES: Fitch Alters Outlook on 'BB-' IDR to Negative
ITHACA ENERGY: Fitch Keeps 'B+' LongTerm IDR on Watch Positive
J G CHATHAM: PricewaterhouseCoopers Named as Joint Administrators
NASSTAR GROUP: PricewaterhouseCoopers Named as Administrators
SCIENCE BOFFINS: Quantuma Advisory Named as Administrators
SPLASH SBS: Hudson Weir Named as Administrators
STOLT-NIELSEN LTD: Egan-Jones Retains B- Senior Unsecured Ratings
STREAMLINE PANELS: Interpath Advisory Named as Administrators
TWTG REALISATIONS: Interpath Advisory Named as Administrators
VODAFONE GROUP: Egan-Jones Retains BB+ Senior Unsecured Ratings
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F R A N C E
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AIR FRANCE-KLM: Egan-Jones Retains B- Senior Unsecured Ratings
--------------------------------------------------------------
Egan-Jones Ratings Company, on September 4, 2024, maintained its
'B-' foreign currency and local currency senior unsecured ratings
on debt issued by Air France-KLM. EJR also withdrew the rating on
commercial paper issued by the Company.
Headquartered in Tremblay-en-France, France, Air France-KLM
provides air transportation services.
IMERYS SA: Egan-Jones Retains BB+ Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on September 19, 2024, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Imerys SA. EJR also withdrew the rating on
commercial paper issued by the Company.
Headquartered in Paris, France, Imerys provides mineral-based
specialty solutions.
POSEIDON BIDCO: S&P Downgrades ICR to 'B-', Outlook Negative
------------------------------------------------------------
S&P Global Ratings lowered its ratings on Poseidon BidCo S.A.S.
(Ingenico) to 'B-' from 'B+'.
The negative outlook reflects the likelihood that the capital
structure could become unsustainable if the market demand does not
come back in the near term, leading to sustainably elevated debt to
EBITDA, negative FOCF generation, and further liquidity pressure.
S&P expects the company will materially underperform our latest
2024 and 2025 expectations, due to a sharp market decline and slow
recovery mainly in North America. The revenues in the first half of
2024 declined by about 40%, primarily driven by adverse effects
from POS hardware over-ordering during the end of 2022 and 2023 on
the back of recovery after Covid-19 and supply chain disruptions.
This was an industry-wide trend, particularly in North America, and
is expected to persist for a few more quarters. S&P said, "Despite
some improvement on a quarterly basis from the second half of 2024,
we forecast revenue to decline by 33% in 2024. This is materially
weaker than our previous forecast of a 1.4% decline in 2024. For
2025, we anticipate growth of about 6.0% in 2025 (compared with
3.7% previously) supported by normalization of customers' inventory
levels and a stabilization of orders. Ingenico's portion of Android
terminals will continue to expand and accelerate in the upcoming
quarters, contributing to double-digit growth. This will offset the
decline in traditional/legacy terminals that represent about 70% of
the hardware sales and decline double digit annually."
S&P said, "As a result of depressed EBITDA, leverage will spike in
2024 and we expect it to remain elevated in 2025.We forecast that
the EBITDA margin will shrink to about 7.5% in 2024 and only
recover to 15.0% in 2025 from 24.2% in 2023 (much weaker than our
previous forecast of about 24.0% for 2024-2025). This is primarily
driven by the topline decline, mainly in the higher margin North
American region, and the high fixed operating costs. Ingenico has
actioned cost-reduction strategies, and we anticipate that about
EUR40 million cost savings by end of 2025 on product cost
rationalization, streamlining of indirect purchasing, and operating
cost reduction through simplification. At the same time, about
EUR100 million of restructuring costs (mainly related to inventory
write-downs and headcount reduction plans) in 2024 and in 2025 will
also weigh on profitability. Comparatively lower nonrecurring cost
will drive margin improvement in 2025. Therefore, we forecast S&P
Global Ratings-adjusted leverage to increase to about 19.0x in 2024
and remain elevated at 8.7x in 2025, much higher than the
previously expected leverage to remain below 5.5x.
"Ingenico's liquidity has weakened because of negative FOCF and
some uncertainty about accessing cash as we expect a tight covenant
headroom under its RCF springing covenant. Due to significant
underperformance and reduced profitability, we anticipate that
reported FOCF will remain negative at approximately EUR156 million
in 2024 and about EUR43 million in 2025. This is considerably lower
than our previous forecast of positive FOCF ranging from EUR100
million-EUR160 million for 2024-2025. Although the company has
EUR168 million RCF available (out of a total RCF of EUR278
million), the springing leverage covenant of 5.6x would be tested
if 40% RCF is drawn. Currently, the company has already drawn
39.6%. Under our base case, we do not expect further drawings on
the RCF. However, we think that if tested, there would be very
little headroom under the springing covenant, but this will depend
on the speed and magnitude of the revenue turnaround.
"The negative outlook reflects that we expect Ingenico's revenue to
significantly decline by about 33% in 2024, followed by a
slower-than-anticipated recovery in 2025, due to still high levels
of customer inventory and the challenging macroeconomic
environment. We also expect the EBITDA margin to reduce
significantly and to lead to negative FOCF generation, reducing the
liquidity buffer over the next 12 months.
"We could lower the rating if Ingenico's FOCF and liquidity further
weaken because of a slower-than-expected recovery in its business,
such that we think its capital structure is unsustainable. This
could occur if the operating performance remained depressed for a
prolonged period, due to lower demand, increased competitive
pressure, and/or higher-than-expected restructuring costs, leading
to a deficit in sources and uses of cash or if leverage remains
very high.
"We could consider revising the outlook to stable if Ingenico's
revenues stabilized and its business prospects improved in the near
term, leading to an improved liquidity position, a path toward
positive FOCF generation, and deleveraging."
SEQUANS COMMUNICATIONS: Issues $5MM Promissory Note to Qualcomm
---------------------------------------------------------------
Sequans Communications S.A. disclosed in a Form 6-K Report filed
with the U.S. Securities and Exchange Commission that the Company
issued a short-term Promissory Note to Qualcomm Technologies, Inc.
with an authorized principal amount of up to $5,000,000 and a first
tranche of $3,000,000 drawn upon signature. The remaining
$2,000,000 may be drawn anytime during the term of the Note at the
Company's option.
The Note bears interest at a rate of 9.0% per annum. The
outstanding principal amount and all accrued and unpaid interest
under the Note are due on the earliest to occur of (x) the closing
under the asset purchase agreement entered into between the Company
and Qualcomm on August 23, 2024, as a reduction to the purchase
price, or (y) 90 days following the date of the termination of the
Purchase Agreement. The Note contains customary events of default.
The proceeds of the Note will be used to fund general operations of
the Company through the closing under the asset purchase
agreement.
About Sequans Communications
Colombes, France-based Sequans Communications S.A. is a fabless
semiconductor company that designs, develops, and markets
integrated circuits and modules for 4G and 5G cellular IoT devices.
Paris-La Defense, France-based Ernst & Young Audit, the Company's
auditor since 2008, issued a "going concern" qualification in its
report dated May 15, 2024, citing that the Company has suffered
recurring losses from operations, has a working capital deficiency,
and has stated that substantial doubt exists about the Company's
ability to continue as a going concern. Sequans Communications
incurred net losses of $9 million and $41 million in 2022 and 2023,
respectively. As of December 31, 2023, the Company had $109.2
million in total assets, $115.2 million in total liabilities, and
$6.1 million in total deficit.
Sequans Communications incurred net losses of $9 million and $41
million in 2022 and 2023, respectively. As of December 31, 2023,
the Company had $109.2 million in total assets, $115.2 million in
total liabilities, and $6.1 million in total deficit.
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G E R M A N Y
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HUGO BOSS: Egan-Jones Retains BB+ Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on September 4, 2024, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Hugo Boss AG. EJR also withdrew the rating on
commercial paper issued by the Company.
Headquartered in Metzingen, Germany, Hugo Boss AG retails apparel.
TELE COLUMBUS: EUR462.5MM Bank Debt Trades at 24% Discount
----------------------------------------------------------
Participations in a syndicated loan under which Tele Columbus AG is
a borrower were trading in the secondary market around 75.6
cents-on-the-dollar during the week ended Friday, Sept. 20, 2024,
according to Bloomberg's Evaluated Pricing service data.
The EUR462.5 million Term loan facility is scheduled to mature on
October 16, 2028. The amount is fully drawn and outstanding.
Tele Columbus AG provides cable services. The Company offers cable
television programming, telephone, and internet connection services
to homeowners and the housing industry. Tele Columbus operates
throughout Germany.
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I R E L A N D
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SONA FIOS III: S&P Assigns B-(sf) Rating on Class F-2 Notes
-----------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Sona Fios CLO III
DAC's class X, A, B, C, D, E, F-1, and F-2 notes. At closing, the
issuer also issued unrated subordinated notes.
The ratings reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
mainly broadly syndicated speculative-grade senior-secured term
loans and bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
-- The transaction's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,674.61
Default rate dispersion 504.37
Weighted-average life (years) 5.04
Obligor diversity measure 104.67
Industry diversity measure 20.84
Regional diversity measure 1.12
Transaction key metrics
CURRENT
Total par amount (mil. EUR) 450.00
Defaulted assets (mil. EUR) 0
Number of performing obligors 123
Portfolio weighted-average rating
derived from S&P's CDO evaluator 'B'
'CCC' category rated assets (%) 0.00
Targeted 'AAA' weighted-average recovery (%) 37.12
Targeted weighted-average spread net of floors (%) 4.21
This is a European cash flow CLO transaction, securitizing a pool
of mainly primarily syndicated senior secured loans or bonds. The
portfolio's reinvestment period ends approximately 4.50 years after
closing, and the portfolio's non-call period is 1.5 years after
closing. Under the transaction documents, the rated notes pay
quarterly interest unless there is a frequency switch event.
Following this, the notes will switch to semiannual payment.
The portfolio is well-diversified, primarily comprising mainly
broadly syndicated speculative-grade senior-secured term loans and
senior-secured bonds. Therefore, S&P has conducted its credit and
cash flow analysis by applying its criteria for corporate cash flow
CDOs.
S&P said, "In our cash flow analysis, we modeled the EUR450 million
target par amount, the covenanted weighted-average spread of 4.15%,
the covenanted weighted-average coupon of 4.50%, and the covenanted
weighted-average recovery rates. We applied various cash flow
stress scenarios, using four different default patterns, in
conjunction with different interest rate stress scenarios for each
liability rating category.
"Following the application of our structured finance sovereign risk
criteria, we consider the transaction's exposure to country risk to
be limited at the assigned ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria.
"The transaction's documented counterparty replacement and remedy
mechanisms mitigate its exposure to counterparty risk under our
current counterparty criteria.
"The transaction's legal structure is bankruptcy remote, in line
with our legal criteria.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B, C, D, E, F-1, and F-2 notes is
commensurate with higher ratings than those we have assigned.
However, as the CLO will have a reinvestment period, during which
the transaction's credit risk profile could deteriorate, we have
capped the assigned ratings.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe that our ratings are
commensurate with the available credit enhancement for each class
of notes.
"In addition to our standard analysis, to indicate how rising
pressures among speculative-grade corporates could affect our
ratings on European CLO transactions, we have also included the
sensitivity of the ratings on the class X to F-1 notes based on
four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F-2 notes."
Environmental, social, and governance factors
S&P said, "We regard the transaction's exposure to environmental,
social, and governance (ESG) credit factors as being broadly in
line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit assets deriving a material
portion of their revenues from the following: trade in endangered
or protected wildlife; opioid drug manufacturing and distribution;
hazardous chemicals, pesticides and wastes; ozone-depleting
substances; operation, management or provision of services to
private prisons; pornography, adult entertainment or prostitution;
casinos and/or online gambling platforms; extraction, storage and
transportation of oil and gas; controversial weapons; production of
palm oil and palm fruit products; thermal coal; tobacco;
speculative transactions of soft commodities; or payday lending.
Since the exclusion of assets related to these activities does not
result in material differences between the transaction and our ESG
benchmark for the sector, we have not made any specific adjustments
in our rating analysis to account for any ESG-related risks or
opportunities."
Ratings
AMOUNT CREDIT
CLASS RATING* (MIL. EUR) ENHANCEMENT (%) INTEREST RATE§
X AAA (sf) 2.00 N/A Three/six-month EURIBOR
plus 0.70%
A AAA (sf) 279.00 38.00 Three/six-month EURIBOR
plus 1.32%
B AA (sf) 50.40 26.80 Three/six-month EURIBOR
plus 1.95%
C A (sf) 26.10 21.00 Three/six-month EURIBOR
plus 2.30%
D BBB- (sf) 31.50 14.00 Three/six-month EURIBOR
plus 3.25%
E BB- (sf) 20.20 9.51 Three/six-month EURIBOR
plus 5.92%
F-1 B+ (sf) 5.60 8.27 Three/six-month EURIBOR
plus 7.74%
F-2 B- (sf) 7.90 6.51 Three/six-month EURIBOR
plus 8.50%
Sub NR 34.70 N/A N/A
*The ratings assigned to the class X, A, and B notes address timely
interest and ultimate principal payments. The ratings assigned to
the class C, D, E, F-1, and F-2 notes address ultimate interest and
principal payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
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L U X E M B O U R G
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SK MOHAWK: S&P Downgrades ICR to 'D' on Distressed Exchange
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on SK Mohawk
Holdings S.a.r.l. (doing business as SI Group) to 'D' from 'CCC'.
S&P said, "We also lowered all our issue-level ratings on its
existing debt, including the first-lien term loan, senior secured
RCF, and the senior unsecured notes to 'D'.
"We expect to reassess our ratings to reflect the company's revised
capital structure and credit profile once the exchange offer
process for nonparticipating lenders has completed and the new
capital structure is finalized."
This debt restructuring exercise affects the credit quality of a
substantial portion of the company's capital structure.
The restructuring will provide those existing lenders and unsecured
noteholders that choose to participate in the exchange transaction
a mix of new priority debt over any nonparticipating creditors. A
majority of such creditors have already exchanged their debt and
commitments in a private transaction and the remaining creditors
are offered to exchange their commitments on the same terms as the
initial transaction. As part of the initial transaction, consenting
lenders on the existing first-lien term loan represented around 41%
of the instrument and exchanged their principal at par, net of a
cash prepayment of between 7.5%-12.0% of face value of debt, for a
new first-lien second out term loan. The prepayment will be funded
by $100 million of new financial sponsor money. This new money,
coupled with the sponsor's share of the existing first-lien term
loan and unsecured notes, forms a new first-lien, third-out term
loan carrying a 17.5% payment in kind (PIK) coupon.
Consenting lenders on the cash flow RCF, which had $110 million
outstanding as of initial transaction close, represented around 95%
of the existing instrument and exchanged 80% of their commitments
at par into a new first-lien, first-out revolver and the remainder,
also at par, into the second-out term loan. Consenting noteholders
represented about 59% of the instrument and exchanged their
principal at a 35% discount--also for a share in the second-out
term loan. The maturities of all three existing debt classes are
being extended to the second half of 2028. S&P notes that the new
second-out term loan carries 75 basis points higher pricing (in the
form of a PIK toggle) relative to the existing first-lien term
loan.
Meanwhile, the nonparticipating lenders and noteholders now have
weaker credit protections and reduced claims on collateral.
Amendments to their debt documents also include the revision of
covenants and removal of other creditor protections. This group
also does not benefit from additional credit enhancements for the
new priority debt.
S&P views these transactions as coercive or distressed exchanges
and tantamount to general default.
This is because these transactions are restructuring a majority of
the company's debt, and lenders will receive less value than they
were originally promised under the securities. Specifically, the
exchange on the unsecured notes is at a material discount to par,
and we do not believe the monetary and structural compensations
offered for the multiyear maturity extensions are adequate given
the company's sizeable negative free cash flows, deteriorating
liquidity profile, and unsustainable leverage.
S&P expects its will reassess our ratings once the commenced
exchange offer closes.
S&P said, "We expect to review our ratings on SI Group after the
exchange offer to nonparticipating lenders and noteholders closes,
and the new capital structure is finalized. Our reassessment will
reflect the company's revised capital structure and our
forward-looking opinion of its creditworthiness. The proposed
capital structure appears to address certain credit benefits
including the extension of debt maturities, improved liquidity, and
a minimal reduction in annual cash interest expenses."
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R U S S I A
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AGROBANK: Fitch Gives BB-(EXP) Rating on Sr. Unsec. Eurobonds
-------------------------------------------------------------
Fitch Ratings has assigned Joint-Stock Commercial Bank Agrobank's
upcoming issue of US dollar-denominated senior unsecured Eurobonds
an expected long-term rating of 'BB-(EXP)'. The size of the issue,
the maturity of the issue and its coupon are yet to be determined.
The final rating is contingent on the receipt of final
documentation conforming to information already received.
Key Rating Drivers
The expected rating is in line with Agrobank's Long-Term
Foreign-Currency Issuer Default Rating (LTFC IDR) of 'BB-', as all
settlements will be in US dollars. The notes will represent direct,
unconditional and senior unsecured obligations of the bank, which
rank equally with its other senior unsecured obligations.
Agrobank's 'BB-' Long-Term IDRs reflect Fitch's view of a moderate
probability of support from the government of Uzbekistan, as
captured by its 'bb-' Government Support Rating. This view is based
on its majority state ownership, the bank's important role in the
government's economic and social policy, the low cost of potential
support relative to sovereign international reserves, and a record
of capital and liquidity support.
The terms of the proposed Eurobond include financial covenants
relating to Agrobank's compliance with regulatory capital ratios. A
put option gives bondholders the right to seek early repayment in
the event that the Republic of Uzbekistan ceases to control at
least 51% of the bank's issued and outstanding voting share
capital. The terms also contain provisions for a call option that
can be exercised by the issuer at any time prior to the maturity
date.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Agrobank's senior unsecured debt rating could be downgraded if the
bank's LTFC IDR is downgraded.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Agrobank's senior unsecured debt rating could be upgraded if the
bank's LTFC IDR is upgraded.
Public Ratings with Credit Linkage to other ratings
Agrobank's IDRs are linked to the IDRs of the Republic of
Uzbekistan.
ESG Considerations
Agrobank has an ESG Relevance Score of '4' for Governance Structure
as the state of Uzbekistan is highly involved in the bank at board
level and in the business. Its ESG Relevance Score of '4' for
Financial Transparency reflects delays in IFRS accounts
publications, which are prepared only on annual basis. Both factors
have a negative impact on the bank's credit profile and are
relevant for the ratings in conjunction with other factors.
In addition, the bank also has ESG Relevance Score of '3' for
Exposure to Environmental Impacts and Exposure to Social Impacts (a
deviation from the sector guidance of '2' for comparable banks),
given the bank's focus on subsidised lending to the agricultural
sector. This only has a minimal credit impact on the entity and
minimal relevance for the ratings.
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
----------- ------
Joint-Stock
Commercial Bank
Agrobank
senior unsecured LT BB-(EXP) Expected Rating
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S P A I N
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BBVA CONSUMER 2024-1: Fitch Assigns 'BB+sf' Rating on Class Z Notes
-------------------------------------------------------------------
Fitch Ratings has assigned BBVA Consumer Auto 2024-1 FT final
ratings.
The final ratings on the class A, C and D notes are one notch
higher than the expected ratings, mainly driven by the lower final
coupon rates payable to the noteholders and the lower interest rate
payable to the swap provider than initially considered in the
analysis. The final ratings on the class B and Z notes are the same
as the expected ratings.
Entity/Debt Rating Prior
----------- ------ -----
BBVA Consumer
Auto 2024-1 FT
Class A ES0305827000 LT AA+sf New Rating AA(EXP)sf
Class B ES0305827018 LT A+sf New Rating A+(EXP)sf
Class C ES0305827026 LT A-sf New Rating BBB+(EXP)sf
Class D ES0305827034 LT BBB+sf New Rating BBB(EXP)sf
Class Z ES0305827042 LT BB+sf New Rating BB+(EXP)sf
Transaction Summary
This transaction is a static securitisation of a portfolio of fully
amortising auto loans originated in Spain by Banco Bilbao Vizcaya
Argentaria, S.A. (BBVA, also the servicer, BBB+/Stable/F2) to
purchase new and used passenger cars.
KEY RATING DRIVERS
Asset Assumptions Reflect Mixed Portfolio: Fitch has assigned
portfolio base-case lifetime default and recovery rate assumptions
of 4.0% and 50.0%, respectively, considering the historical data
provided by BBVA, Spain's economic outlook and the originator's
underwriting and servicing strategies. At the class A notes'
'AA+sf' rating case, Fitch has assumed 15.6% and 30.5% default and
recovery rates respectively.
Static Pool and Pro-Rata Amortisation: The transaction does not
have a revolving period. The class A to D notes will be repaid
pro-rata from the first payment date, unless a sequential
amortisation event occurs. Key performance triggers are cumulative
defaults on the portfolio exceeding a certain dynamic threshold or
a principal deficiency greater than zero on two consecutive payment
dates.
A switch to sequential amortisation is unlikely during the first
years after closing, based on its expectations of portfolio
performance versus defined triggers. Fitch views the tail risk
posed by the pro- rata paydown as mitigated by a mandatory switch
to sequential amortisation when the portfolio balance falls below
10% of its initial balance.
Counterparty Rating Cap: The maximum achievable rating for the
transaction is 'AA+sf' following the application of Fitch's
counterparty criteria. The minimum eligibility rating thresholds
defined for the transaction account bank (TAB) of 'A-' and for the
hedge provider of 'A-' or 'F1' are insufficient to support 'AAAsf'
ratings.
Payment Interruption Risk Mitigated: Fitch views payment
interruption risk on the notes in a servicing disruption as
mitigated by the combination of liquidity protection (for the class
A to B notes) and the minimum rating of BBB' contractually defined
for the portfolio servicer, which is classified as an operational
continuity bank. As liquidity protection is not available for the
class C and D notes, their maximum achievable rating is 'A+sf', in
line with Fitch's criteria.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Long-term asset performance deterioration such as increased
delinquencies or reduced portfolio yield, which could be driven by
changes in portfolio characteristics, macroeconomic conditions,
business practices or the legislative landscape.
- For the class D notes, a combination of reduced excess spread and
late reception of recovery cash flows particularly at the tail of
transaction life. This considers the thin layer of credit
enhancement protection from subordination available to class D
notes that is only provided by the reserve fund.
This section provides insight into the model-implied sensitivities
the transaction faces when one assumption is modified, while
holding others equal. The modelling process uses the modification
of these variables to reflect asset performance in upside and
downside environments. The results below should only be viewed as
one potential outcome, as the transaction is exposed to multiple
dynamic risk factors. It should not be used as an indicator of
future performance.
Sensitivity to Increased Defaults:
Current ratings (class A/B/C/D/Z): 'AA+sf' / 'A+sf' / 'A-sf' /
'BBB+sf / 'BB+sf'
Increase defaults by 10%: 'AAsf' / 'A+sf' / 'A-sf' / 'BBB+sf /
'BB+sf'
Increase defaults by 25%: 'AA-sf' / 'Asf' / 'A-sf' / 'BBB+sf /
'BB+sf'
Increase defaults by 50%: 'A+sf' / 'A-sf' / 'BBBsf' / 'BBB-sf /
'BB+sf'
Sensitivity to Reduced Recoveries:
Reduce recoveries by 10%: 'AA+sf' / 'A+sf' / 'A-sf' / 'NRsf /
'BB+sf'
Reduce recoveries by 25%: 'AAsf' / 'A+sf' / 'A-sf' / 'NRsf /
'BB+sf'
Reduce recoveries by 50%: 'A+sf' / 'A-sf' / 'BBBsf' / 'NRsf /
'BB+sf'
Sensitivity to Increased Defaults and Reduced Recoveries:
Increase defaults by 10%, reduce recoveries by 10%: 'AAsf' / 'A+sf'
/ 'A-sf' / 'BBB+sf / 'BB+sf'
Increase defaults by 25%, reduce recoveries by 25%: 'A+sf' / 'A-sf'
/ 'BBBsf' / 'NRsf / 'BB+sf'
Increase defaults by 50%, reduce recoveries by 50%: 'BBB+sf' /
'BBB-sf' / 'BBsf' / 'NRsf / 'BB+sf'
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- For the senior notes, modified TAB and derivative provider
minimum eligibility rating thresholds compatible with 'AAAsf'
ratings as per Fitch's Structured Finance and Covered Bonds
Counterparty Rating Criteria
- Increasing credit enhancement ratios as the transaction
deleverages to fully compensate for the credit losses and cash flow
stresses commensurate with higher ratings
Sensitivity to Reduced Defaults and Increased Recoveries:
Reduce defaults by 10%, increase recoveries by 10%: 'AA+sf' /
'AAsf' / 'A+sf' / 'A+sf / 'BB+sf'
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.
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
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.
GENOVA HIPOTECARIO IX: Fitch Hikes Rating on Class D Notes to BBsf
------------------------------------------------------------------
Fitch Ratings has taken rating actions on four AyT Genova
Hipotecario Spanish RMBS transactions by upgrading two tranches and
affirming the rest. The Outlooks are Stable except for Genova VII
class C notes, which carry a Positive Outlook.
Entity/Debt Rating Prior
----------- ------ -----
AyT Genova Hipotecario
VII, FTH
Class A2 ES0312343017 LT AAAsf Affirmed AAAsf
Class B ES0312343025 LT AA+sf Affirmed AA+sf
Class C ES0312343033 LT Asf Affirmed Asf
AyT Genova Hipotecario
X, FTH
Class A2 ES0312301015 LT A+sf Affirmed A+sf
Class B ES0312301023 LT A+sf Affirmed A+sf
Class C ES0312301031 LT A-sf Affirmed A-sf
Class D ES0312301049 LT B+sf Affirmed B+sf
AyT Genova Hipotecario
IX, FTH
Class A2 ES0312300017 LT AA+sf Affirmed AA+sf
Class B ES0312300025 LT AAsf Affirmed AAsf
Class C ES0312300033 LT Asf Affirmed Asf
Class D ES0312300041 LT BBsf Upgrade B+sf
AyT Genova Hipotecario
VIII, FTH
Class A2 ES0312344015 LT AAAsf Affirmed AAAsf
Class B ES0312344023 LT AAAsf Affirmed AAAsf
Class C ES0312344031 LT AAsf Upgrade AA-sf
Class D ES0312344049 LT BBB-sf Affirmed BBB-sf
Transaction Summary
The RMBS transactions are Spanish residential mortgage
securitisations serviced by CaixaBank, S.A. (BBB+/Positive/F2) and
originated by Barclays Bank, S.A.
KEY RATING DRIVERS
Stable Asset Performance: The rating actions reflect the
transactions' broadly stable asset performance outlook, in line
with its neutral asset performance outlook for eurozone RMBS. The
transactions have a low share of loans in arrears over 90 days at
below 0.5% of outstanding pool balance as of the latest reporting
dates. They are also protected by substantial seasoning of the
portfolios of over 18 years and low current loan-to-value ratios
below 30%. The transactions' cumulative default balances are also
very limited at below 2%.
Ratings Capped by Counterparty Risks: The affirmations of Genova X
senior class notes at 'A+sf' with Stable Outlook reflect the rating
cap due to the account bank eligibility triggers being set at
'BBB+' and 'F2'. This limits the maximum achievable rating on the
notes to 'A+sf' under Fitch's Structured Finance and Covered Bonds
Counterparty Rating Criteria.
Genova VII class C notes' rating is capped at the transaction
account bank (TAB) provider's - Societe Generale S.A - 'A' deposit
rating. This reflects the excessive counterparty dependence on the
account bank holding the cash reserves that are a material source
of credit enhancement (CE) for the notes. A sudden loss of these
funds would result in a material reduction in CE available to these
notes and a multiple-notch downgrade, in accordance with Fitch's
Structured Finance and Covered Bonds Counterparty Rating Criteria.
CE to Continue Increasing: Fitch expects structural CE to continue
increasing in the short term for all transactions. This reflects
the mandatory sequential amortisation of the notes on AyT Genova
Hipotecario VII and VIII, and pro-rata amortisation after tranche
thickness (defined as note balance as a share of total notes
balance) targets on Ayt Genova IX and AyT Genova X have been met.
They also reflect the transactions' non-amortising reserve funds
being at their absolute floors.
Moreover, for the pro-rata amortising transactions, a mandatory
switch-back to sequential will occur once the portfolio reaches 10%
of its initial portfolio balance (currently at around 13%-14%).
Genova X's class A2 and B notes' ratings are capped by account bank
eligibility thresholds, which has a negative impact on the credit
profile, and is highly relevant to the rating, resulting in the
ratings being at least one notch lower.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The transactions' performance may be affected by adverse changes in
market conditions and the economic environment. Weakening economic
performance is strongly correlated to increasing levels of
delinquencies and defaults that could reduce CE available to the
notes.
For Genova VII's class A2 notes and Genova VIII's class A2 and B
notes, a downgrade to Spain's Long-Term Issuer Default Rating (IDR)
would decrease the maximum achievable rating for Spanish structured
finance transactions and lead to a corresponding downgrade of the
relevant notes. This is because these notes are rated at the
maximum achievable rating, six notches above the sovereign IDR.
In addition, Fitch found that 15% increase in weighted average
foreclosure frequency (WAFF) would lead to downgrades across all
transactions of no more than one notch.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Genova VII class A2 notes and Genova VIII class A2 and B notes are
rated at the highest level on Fitch's scale and cannot be
upgraded.
For Genova VII class C notes, an upgrade of the SPV TAB's long-term
deposit rating could trigger a corresponding upgrade of the notes,
provided CE is sufficient to withstand the stresses associated with
the higher rating. This is because the notes' ratings are capped at
the TAB's rating, given the excessive counterparty risk exposure.
Stable to improved asset performance driven by stable delinquencies
and defaults would lead to increasing CE levels and, potentially,
upgrades. A decrease in WAFF of 15% would lead to upgrades of no
more than one notch of 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 has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. 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.
Fitch did not undertake a review of the information provided about
the underlying asset pools ahead of the transactions initial
closing. The subsequent performance of the transactions over the
years is consistent with the agency's expectations given the
operating environment and Fitch is therefore satisfied that the
asset pool information relied upon for its initial rating analysis
was adequately reliable.
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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Genova VII class C notes´ratings are directly linked to their
TAB's long-term deposit rating due to excessive counterparty
dependence.
ESG Considerations
Genova X has an ESG Relevance Score of '5' for Transaction Parties
& Operational Risk due to account bank eligibility thresholds,
which has a negative impact on the credit profile, and is highly
relevant to the rating, resulting in the ratings being at least one
notch lower.
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.
KRONOSNET CX: EUR870MM Bank Debt Trades at 33% Discount
-------------------------------------------------------
Participations in a syndicated loan under which Kronosnet CX Bidco
2022 SL is a borrower were trading in the secondary market around
67.5 cents-on-the-dollar during the week ended Friday, Sept. 20,
2024, according to Bloomberg's Evaluated Pricing service data.
The EUR870 million Term loan facility is scheduled to mature on
October 25, 2029. The amount is fully drawn and outstanding.
Kronosnet CX Bidco 2022 SL operates as a special purpose entity.
The Company was formed for the purpose of issuing debt securities
to repay existing credit facilities, refinance indebtedness, and
for acquisition purposes.
===========
S W E D E N
===========
OREXO AB: Egan-Jones Lowers Senior Unsecured Ratings to CCC+
------------------------------------------------------------
Egan-Jones Ratings Company, on September 16, 2024, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Orexo AB to CCC+ from B-. EJR also withdrew the
rating on commercial paper issued by the Company.
Headquartered in Uppsala, Sweden, Orexo AB operates as a
pharmaceutical company.
===========
T U R K E Y
===========
ING BANK: Fitch Assigns 'B+' Final Rating on USD150MM Tier 2 Notes
------------------------------------------------------------------
Fitch Ratings has assigned ING Bank A.S.'s (INGBT; BB-/Stable)
USD150 million issue of Basel III- compliant Tier 2 notes a final
rating of 'B+'. The Recovery Rating is 'RR5'.
The assignment of the final rating follows the receipt of final
documents conforming to the information that Fitch has already
received.
The notes constitute direct, unsecured, and subordinated
obligations and rank equally with other subordinated obligations
but in priority to junior obligations. The notes qualify as Basel
III-compliant Tier 2 instruments and contain contractual
loss-absorption features, which will be triggered at the point of
non-viability of the bank. The notes are subject to permanent
partial or full write-down on the occurrence of a non-viability
event (NVE).. The notes are callable on any date in the period from
(and including) the date falling on the fifth anniversary of the
issue date to (and including) the date falling five years and three
months after the issue date.
Key Rating Drivers
The subordinated notes are rated one notch below INGBT's Long-Term
Foreign-Currency (LTFC) Issuer Default Rating (IDR) of 'BB-', in
accordance with Fitch's Bank Rating Criteria, for loss severity.
Fitch has not applied any notches for non-performance risk.
The anchor rating for the notes is INGBT's LTFC IDR, which reflects
its view that potential extraordinary shareholder support from
parent ING Bank N.V. (ING; AA-/Stable) is likely to flow through to
INGBT's subordinated noteholders.
The one notch for loss severity, rather than its baseline two
notches, reflects Fitch's view that shareholder support from ING
could help mitigate losses, and incorporates the cap on the bank's
LTFC IDR at 'B' due to its view of government intervention risk.
Fitch has not applied any notches for incremental non-performance
risk, as it believes that write-down of the notes will only occur
once the point of non-viability is reached and there is no coupon
flexibility prior to non-viability, as the notes do not incorporate
going-concern loss-absorption features.
The rating also reflects the likelihood that an INGBT default would
be driven by some form of transfer and convertibility restrictions,
rather than a loss of solvency or liquidity.
The notes' 'RR5' Recovery Rating reflects below-average recovery
prospects in a default.
An NVE is defined as occurring when the bank has incurred losses
and has become, or is likely to become, non-viable as determined by
the local regulator, the Banking and Regulatory Supervision
Authority (BRSA). The bank will be deemed non-viable when it
reaches the point at which either the BRSA determines that its
operating licence is to be revoked and the bank liquidated, or the
rights of shareholders (except to dividends), and the management
and supervision of the bank, should be transferred to the Savings
Deposit Insurance Fund on the condition that losses are deducted
from the capital of existing shareholders.
INGBT's LTFC IDR is driven by shareholder support from ING. Its
view of support reflects INGBT's strategic importance to, and role
within, the wider group, and its small size relative to ING's
ability to provide support.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
As the notes are notched down from INGBT's LTFC IDR, their rating
is sensitive to a downgrade of the LTFC IDR. The notes' rating is
also sensitive to an unfavourable revision in Fitch's assessment of
loss severity and non-performance risk.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The notes' rating is sensitive to an upgrade of INGBT's LTFC IDR.
Date of Relevant Committee
12 September 2024
Public Ratings with Credit Linkage to other ratings
INGBT's ratings are linked to ING's.
ESG Considerations
INGBT has an ESG Relevance Score of '4' for Management Strategy,
reflecting an increased regulatory burden on all Turkish banks.
Management ability across the sector to determine their own
strategy and price risk is constrained by regulatory burden and
also by the operational challenges of implementing regulations at
the bank level. This has a moderately negative impact on the bank's
credit profiles and is relevant to bank's ratings in combination
with other factors.
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
----------- ------ -------- -----
ING Bank A.S.
Subordinated LT B+ New Rating RR5 B+(EXP)
===========================
U N I T E D K I N G D O M
===========================
AK MIDLANDS: Quantuma Advisory Named as Administrators
------------------------------------------------------
AK Midlands Wholesale Ltd was placed in administration proceedings
in the High Court of Justice, Business and Property Courts of
England and Wales, Court Number: CR-2024-005400, and Nicholas
Simmonds and Chris Newell of Quantuma Advisory Limited were
appointed as administrators on Sept 16, 2024.
AK Midlands fka AK General Foods Ltd is involved in the sale of a
variety of goods.
Its registered office is at 124 City Road, London, EC1V 2NX (in the
process of being changed to 1st Floor, 21 Station Road, Watford,
WD17 1AP). The principal trading address is at 168 Adderley Road,
Birmingham, B8 1EH.
The joint administrators can be reached at:
Nicholas Simmonds
Chris Newell
Quantuma Advisory Limited
1st Floor, 21 Station Road
Watford, Herts, WD17 1AP
For further information, contact:
Laura Bodgi
Email: Laura.Bodgi@quantuma.com
Tel No: 01923 943494
ALDERLEY FARMS: Grant Thornton Named as Joint Administrators
------------------------------------------------------------
Alderley Farms Limited Ltd was placed in administration proceedings
in the High Court Of Justice Business And Property in Birmingham,
Insolvency & Companies List (Chd), No. 000534 of 2024. Alistair
Wardell, Rob A Parker, and Richard J Lewis of Grant Thornton UK LLP
were appointed as joint administrators on Sept. 11, 2024.
Alderley Farms is involved in mixed farming.
Its registered office is at Grant Thornton UK LLP, 11th Floor,
Landmark St Peter's Square, 1 Oxford St, Manchester, M1 4PB. Its
principal trading address is at Alderley House, Arnolds Field
Estate, The Downs, Wickwar, Wotton-Under- Edge, Gloucestershire,
GL12 8JD.
The joint administrators can be reached at:
Alistair Wardell
Grant Thornton UK LLP
6th Floor, 3 Callaghan Square
Cardiff, CF10 5BT
Tel No: 029 2023 5591
-- and --
Rob A Parker
Grant Thornton UK LLP
17th Floor, 103 Colmore Row
Birmingham, B3 3AG
Tel No: 0121 212 4000
-- and --
Richard J Lewis
Grant Thornton UK LLP
2 Glass Wharf, Temple Quay
Bristol, BS2 0EL
Tel No: 0117 305 7600.
For further information, contact:
CMU Support
Grant Thornton UK LLP
6th Floor, 3 Callaghan Square
Cardiff, CF10 5BT
Email: cmusupport@uk.gt.com
Tel No: 0161-953-6906
BOBCO FISHING: Redman Nichols Named as Joint Administrators
-----------------------------------------------------------
Bobco Fishing Tackle Limited was placed in administration
proceedings in` the High Court of Justice, Business and Property
Courts in Leeds, Insolvency and Companies List, Court Number:
CR2024 LDS000908, and John William Butler and Andrew James Nichols
of Redman Nichols Butler were appointed as administrators on Sept
17, 2024.
Bobco Fishing is involved in the retail of a comprehensive range of
fishing gear.
Its registered office is at The Chapel, Bridge Street, Driffield,
YO25 6DA. Its principal trading address is Unit 4b Torre Road
Industrial Estate, Torre Road, Leeds, LS9 7QL.
The joint administrators can be reached at:
John William Butler
Andrew James Nichols
Redman Nichols Butler
The Chapel Bridge Street
Driffield
YO25 6DA
For further details, contact:
Stephanie Coulter
Tel No: 01377 257788
DELTA TOPCO: Moody's Assigns 'Ba2' CFR, Outlook Stable
------------------------------------------------------
Moody's Ratings has assigned a Ba2 corporate family rating and a
Ba2-PD probability of default rating and a stable outlook to Delta
Topco Limited (Formula 1 or the company), the top entity of the
restricted group for Formula 1, that produces audited consolidated
results. Concurrently, Moody's has withdrawn the CFR and PDR of Ba2
and Ba2-PD respectively at Alpha Topco Limited, a subsidiary of the
holding company Delta Topco Limited to which Moody's had initially
assigned the ratings. At the time of withdrawal, the outlook was
stable.
Formula 1 has recently raised additional bank debt of USD1.0
billion, which together with some RCF drawings and a significant
portion of its cash and cash equivalents (USD1.46 billion as of
August 31, 2024) is likely in Moody's view to be up-streamed to its
Parent, Liberty Media Corporation (LMC) later this year in the form
of dividends. LMC will use dividends from Formula 1 to partly fund
its acquisition of Dorna Sports S.L., the exclusive commercial
rights holder of MotoGP World Championship, which management
expects to close by the end of 2024.
In April 2024, LMC had agreed to acquire 86% of MotoGP for an
enterprise value of EUR4.2 billion (equity value EUR3.5 billion)
and expects to fund it by a combination of cash (including a
portion of the recent public offering of series C Liberty Formula 1
common stock that resulted in gross proceeds of roughly $949.2
million) and debt with 14% funded by retained management equity.
LMC does not intend to pay any consideration in the form of shares
of FWONK to the sellers.
"With the additional debt raise, Moody's estimate Formula 1's
Moody's-adjusted gross debt/EBITDA will rise up to 4.1x by the end
of 2024 compared to 2.8x for the last twelve months ended June 30,
2024. While Formula 1's leverage will turn high for its Ba2 rating,
Moody's expect the company's strong free cash flow generation,
primarily driven by robust EBITDA growth, to support rapid
deleveraging over the next 12-18 months", says Gunjan Dixit, Vice
President – Senior Credit Officer at Moody's Ratings and lead
analyst of Formula 1.
RATINGS RATIONALE
Formula 1 has upsized and refinanced its Term Loan B to USD2.55
billion (from existing USD1.7 billion) while also extending its
maturity to 2031. It has also upsized its 2028 Term Loan A by
USD150 million and extended the maturity on its Revolving Credit
Facility and Term Loan A to a new 5-year 2029 maturity. In the
event the acquisition of Dorna Sports, S.L. does not close, Formula
1 will not incur the New Term Loan B and Term Loan A, whilst the
maturity of the RCF, Term Loan A and existing USD1.7 billion Term
Loan B will be extended independently of the acquisition. Formula 1
will not benefit from any EBITDA contribution from Dorna Sports,
which will continue to be a separate entity but Dorna Sports will
nevertheless be attributed to LMC's Formula 1 group tracker stock
(FWONK).
Moody's estimate that the debt issuance would increase Formula 1's
Moody's-adjusted gross debt/EBITDA to 4.1x in 2024, up from 3.1x in
2023. The company currently maintains a good amount of cash on
balance sheet. Moody's expect this cash balance to deplete due to
the significant dividends of around USD2.5 billion that LMC is
likely to extract from Formula 1 before the end of the year.
Despite the spike in leverage and a material reduction in the
company's liquidity, Moody's remain comfortable with the cash
generation and the de-leveraging prospects of the business over the
next 12-18 months. By the end of 2025, Moody's estimate Formula 1's
Moody's-adjusted gross debt/EBITDA to reduce to around 3.5x, well
within the leverage parameters defined for its Ba2 rating and its
liquidity position to also restore.
In 2023, Formula 1's revenues grew by 25%, significantly boosted by
the inaugural Las Vegas GP, and saw a further 29% year-on-year
increase to USD1.4 billion in the first half of 2024. Moody's
forecast a 10% revenue growth for Formula 1 in 2024, reaching
USD3.5 billion, supported by a 24-race calendar (compared to 22
races in 2023) including the Las Vegas GP in November 2024. With
multiyear contracts providing stable and predictable revenue,
Moody's expect Formula 1 to continue its revenue growth in 2025,
though at a slower pace of at least mid-single digit percentage.
Moody's estimate Formula 1's reported EBITDA margin to
incrementally improve to 25% over 2024/25, up from 23% in 2023,
which was principally impacted by the cancellation of the Imola
race and higher costs incurred in self-promoting the inaugural Las
Vegas race. Nevertheless, Moody's expect margins to remain strong
over 2024/25, supported by the favorable 2021 Concorde Prize Fund
mechanism under which the Prize Fund as a percentage of Pre-Team
EBITDA falls as Pre-Team EBITDA increases.
In 2023, Formula 1's Moody's-adjusted free cash flow/ debt (FCF/
Debt) deteriorated to 11%, down from 23% in 2022, primarily driven
by the USD300 million cash distribution to Liberty Media and
additional capex incurred related to the Las Vegas GP. For 2024,
Moody's expect this ratio to deteriorate materially and turn
negative driven by the material dividend outflows. However, before
dividends, the company's FCF/ Debt will remain positive at around
13%, down from 24% in 2023, driven by increased debt and negative
working capital movement driven by advanced receipts in 2023 of
early 2024 race fees. Moody's expect free cash flow generation to
be robust in 2025 and beyond, at around USD600 – USD700 million,
assuming no future dividend distribution to shareholders.
Formula 1 does not have a recent publicly stated medium-term
leverage target, which remains an important factor in Moody's
assessment. The company's decision to re-lever its balance sheet in
2024 falls well within its previously stated generous maximum
target of 5.0x net leverage set by its ultimate shareholder, LMC.
Following the expected significant dividend upstream in 2024 for
the MotoGP acquisition, Moody's understand that LMC has no current
intention to re-lever the Formula 1 balance sheet again or make
material shareholder distributions in the next 12-18 months.
RATING OUTLOOK
The stable outlook is based on Moody's expectation of consistent
growth in Formula 1's revenue and EBITDA, aligned with its business
plan, alongside maintaining strong race viewership and attendance.
It also anticipates successful reduction in company's leverage
meeting Moody's estimates over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if (1) the company's Moody's-adjusted
debt/EBITDA falls to around or below 2.5x, with Moody's-adjusted
free cash flow (after capex and dividends) /debt sustainably above
10%, whilst maintaining solid liquidity; (2) the company
articulates a well-defined conservative financial policy; and (3)
the renewal of the Concorde agreement for 2026 is made on overall
favorable terms for Formula 1.
The ratings could be downgraded if the company's Moody's-adjusted
debt/EBITDA increases sustainably above 4.0x and Moody's-adjusted
free cash flow weakens meaningfully.
LIQUIDITY
Moody's consider Formula 1's liquidity as overall good. As of
August 31, 2024, the company had a strong cash position of USD1.46
billion on balance sheet, which will deplete by year-end 2024
assuming USD2.5 billion shareholder distributions to LMC inclusive
of the USD1.0 billion of debt raise. Moody's liquidity assessment
also takes into consideration Formula 1's committed USD500 million
RCF which currently remains undrawn. In addition, a further USD246
million of cash and cash equivalents as well as USD50 million of
marketable securities are held (as of June 30, 2024) at the Formula
1 Group, a tracking stock group of LMC, which although outside the
restricted group, could provide further sources of liquidity if
required.
Following the extension of maturities of Term Loan A and the RCF by
one year and eight months, the company has no material debt
maturities until 2029 and 2030 when the outstanding balance of Term
Loan A and Term Loan B mature, respectively.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS
Governance considerations are a key driver for the rating action
given the significant shareholder distribution is likely to spike
leverage by the end of 2024. However this increase in leverage will
only be temporary as Moody's expect rapid deleveraging in the next
12-18 months, reflected in Moody's issuer profile score of G-3.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
COMPANY PROFILE
Delta Topco, controlled by Liberty Media Corporation, is the top
holding company for the group of companies that exploit the
commercial rights to the FIA Formula One World Championship. In
2023, Delta Topco generated revenue of around USD3.2 billion.
EMPIRE SPECIAL 1: MHA Named as Administrators
---------------------------------------------
Empire Special Situations 1 Limited was placed in administration
proceedings in the High Court of Justice, Court Number:
CR-2024-005265, and Michael Colin John Sanders and Georgina Marie
Eason of MHA were appointed as administrators on Sept. 11, 2024.
Empire Special specializes in the buying and selling of own real
estate.
Its registered office is at Empire House, 92-98 Cleveland Street,
Doncaster, DN1 3DP.
The administrators can be reached at:
Michael Colin John Sanders
Georgina Marie Eason
MHA
6th Floor
2 London Wall Place
London, EC2Y 5AU
For further information, contact:
Harry Sanders
Email: Harry.Sanders@mha.co.uk.
Tel No: 0207 429 0551
EMPIRE SPECIAL 2: MHA Named as Administrators
---------------------------------------------
Empire Special Situations 2 Limited was placed in administration
proceedings in the High Court of Justice, Court Number:
CR-2024-005267, and Michael Colin John Sanders and Georgina Marie
Eason of MHA were appointed as administrators on Sept 10, 2024.
Empire Special specializes in the buying and selling of own real
estate.
Its registered office is at Empire House, 92-98 Cleveland Street,
Doncaster, DN1 3DP.
The administrators can be reached at:
Michael Colin John Sanders
Georgina Marie Eason
MHA
6th Floor, 2 London Wall Place
London, EC2Y 5AU
For further information, contact:
Harry Sanders
Email: harry.sanders@mha.co.uk
Tel No: 0207 429 0551
GALLANT BUILDING: CFS & Forvis Mazars Named as Joint Administrators
-------------------------------------------------------------------
Gallant Building Services Limited was placed in administration
proceedings in the High Court of Justice, Court Number:
CR-2024-005264. Andrew J Cordon of CFS Restructuring LLP, and Scott
Bevan and Simon Chandler of Forvis Mazars LLP were appointed as
administrators on Sept. 11, 2024.
Gallant Building specializez in the installation and supply of air
conditioning.
Its registered office address and principal trading address is at
Unit 3 The Willows, Ransom Woods Business Park, Mansfield, NG21
0HJ.
The administrators can be reached at:
Andrew J Cordon
CFS Restructuring LLP
Church House,
13-15 Regent Street
Nottingham, NG1 5BS
-- and --
Simon Chandler
Scott Bevan
Forvis Mazars LLP
58 The Ropewalk,
Nottingham
NG1 5DW
For further details, contact:
Andrew J Cordon
Tel No: 0115 838 7330
-- and --
Simon Chandler
Scott Bevan
Tel No: 0115 964 4747
INEOS ENTERPRISES: Fitch Alters Outlook on 'BB-' IDR to Negative
----------------------------------------------------------------
Fitch Ratings has revised INEOS Enterprises Holdings Limited's (IE)
Outlook to Negative from Stable and affirmed its Long-Term Issuer
Default Rating (IDR) at 'BB-'. Fitch has also affirmed INEOS
Enterprises Holdings II Limited's euro term loan B (TLB) and INEOS
Enterprises Holdings US Finco LLC's US dollar term loan B (TLB) at
'BB+' senior secured ratings. The Recovery Ratings on the debt
instruments are 'RR2'.
The Negative Outlook reflects its view that IE's EBITDA net
leverage will remain high and well above its negative sensitivity
of 3.5x in 2024-2025, after peaking in 2023 at 5.4x. It also
reflects uncertainty over the timing and strength of its markets'
recovery.
Assuming that Fitch-defined EBITDA will recover to a mid-cycle
level of EUR472 million by 2026, Fitch forecasts that EBITDA net
leverage will return to 3.5x that year. As IE's free cash flow
(FCF) before dividends is structurally positive, a stronger-than
expected performance or lower shareholder distributions than Fitch
assumes could support faster deleveraging than its rating case.
Rating strengths are IE's diversification, comfortable liquidity,
robust EBITDA margins and consistently positive FCF before
dividends through the cycle.
Key Rating Drivers
Weaker-than-Expected Performance: IE's 2023 Fitch-defined EBITDA
was EUR275 million, around EUR100 million less than Fitch has
expected, as all segments underperformed its base case with
pigments and solvents being the worst performer. High US interest
rates weighed on demand for paints and coatings, the main
end-market for pigments. In solvents, weak demand in China has led
to oversupply and increased competition for IE's butanediol
business in the solvents segment.
While 1H24 EBITDA was up 40% on 2H23 it was down around 20%
year-on-year excluding M&A impact. Subsequently, Fitch has revised
down its 2024 forecast to around EUR310 million of Fitch-defined
EBITDA.
High Leverage: Weak earnings and increased dividend in 2024 will
drive IE's net debt to around EUR1.6 billion and Fitch-defined
EBITDA net leverage to around 5.2x, well above its negative rating
sensitivity of 3.5x. However, this is in line with the trend among
most Fitch-rated EMEA chemical companies, which are breaching their
negative sensitivity in 2023-2024 amid a severe industry slowdown.
Fitch forecasts IE's leverage to return marginally within its
rating sensitivities by 2026 as EBITDA recovers towards mid-cycle
levels.
Fitch assumes annual EBITDA improvement of around EUR80 million in
2025-2026, driven by pigments and composites, while performance is
expected to be moderate for solvents and chemical intermediates due
to structural challenges facing some of its assets.
Composites Robust: Strong margins of composites have been
offsetting declining volumes, resulting in steady EBITDA of about
EUR185 million per year in 2022-2024. Fitch expects it to improve
slightly as volumes recover and high margins are maintained due to
IE's specialisation and disciplined competition.
Pigments Suffer: Fitch expects the contribution from pigments to
remain below historical levels in 2024-2025 due to a weak US
housing market, before it recovers as decreasing US interest rates
support home sales. The segment will also benefit from IE's two
latest acquisitions of Tyssedal and KOH, which will increase the
business' vertical integration and improve earnings stability.
Structurally Positive FCF, Recurring Dividends: IE has shown
resilience in prolonged downturns by generating positive free cash
flow (FCF) before dividends even in a stressed environment as seen
in 2023-2024. Its satisfactory scale with mid-cycle EBITDA around
EUR500 million, diversification and strong liquidity underpin its
business profile and IE's 'BB-' rating despite its short-term high
leverage. Fitch expects IE to contain capex at close to maintenance
levels due to its high leverage, but to continue paying dividends,
in line with its past record.
Moderate Scale, Niche Segments: IE's operations are dispersed
across small- to medium-scale plants with limited integration or
intra-group operational overlaps. Its moderate, albeit expanding,
scale due to M&A-driven growth has allowed IE to hold leading
positions in certain niche markets, including as one of the top two
titanium dioxide (TiO2) producers in the US and top three globally
in its composites business. It also has strong regional leadership
in most products.
Cyclical Exposure: IE's pigments, composites, solvents and
intermediates offer diversification across regions and markets.
Diversification provides earnings stability as demand for medical
and personal hygiene or solvents offsets pressures in the
construction and automotive markets of pigments and composites.
Nevertheless, Fitch sees concentration, particularly in pigments
and composites, which jointly contribute roughly two-thirds of
consolidated EBITDA and are exposed to the construction market.
Derivation Summary
IE, Ineos Group Holdings S.A. (IGH, BB/Stable) and Ineos Quattro
Holdings Limited (BB/Negative) are independently managed
subsidiaries of INEOS Limited. All three companies have good
operational, regional and product diversification. Unlike IGH and
Ineos Quattro, IE is smaller in scale and is only a regional leader
in niche chemical markets, but with modestly higher margins.
IE's direct pigments peer is US-based Kronos Worldwide, Inc.
(B+/Stable), which is twice as large in pigment capacity but has
weaker margins, smaller business scale and less diversification.
However, Kronos's capital structure is more conservative than IE's.
Fitch expects Kronos's EBITDA leverage to recover to around 3.0x in
2024 on a moderate recovery in EBITDA, before it trends within its
historical range of around 2.0x-3.0x to 2027.
H.B. Fuller Company (BB/Stable) is a producer of adhesives with
comparable size to IE, but has more stable earnings, as
demonstrated by EBITDA growth of 5% in 2023 and an EBITDA margin of
15%. H.B. Fuller's EBITDA net leverage is forecast to remain at or
below 3.5x in 2024-2025.
IE and Synthos Spolka Akcyjna (BB/Stable) have similar scale, but
the latter's diversification is weaker, with its main assets
located in central Europe, whereas IE has meaningful exposure to
the US. However, Synthos benefits from stronger vertical
integration in energy and butadiene. Fitch expects Synthos's EBITDA
net leverage to remain below 3x in 2024-2025, supported by an
absence of dividends.
Key Assumptions
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Revenues to remain stable in 2024, rising 13% in 2025 and 10% in
2026 before stabilising in 2027-2028
- Fitch-defined EBITDA in 2024 slightly up at EUR310 million (2023:
EUR275 million) on improvements in pigments, before recovering to
around EUR470 million by 2026 on a further recovery in pigments,
improved contribution from Tyssedal and KOH and stable performance
in composites
- Capex averaging at 2.3% of revenues in 2024-2027
- Dividend of EUR150 million in 2024 (paid in 1H24), EUR100 million
a year in 2025 and 2026, and EUR115 million in 2027
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The Negative Outlook means a positive rating action is unlikely.
However, outperformance with a quicker return of EBITDA net
leverage to below 3.5x could lead to a revision of the Outlook to
Stable
- Significant improvement in scale or a record of a more
conservative financial policy underpinning EBITDA net leverage at
below 2.5x on a sustained basis would be positive for the rating
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Continued underperformance, sizeable M&A or shareholder
distributions leading to EBITDA net leverage above 3.5x on a
sustained basis
- Protracted market pressure translating into EBITDA margins at
below 14% on a sustained basis
Liquidity and Debt Structure
Strong Liquidity: IE has no immediate external debt needs. Its cash
on balance sheet stood at EUR295 million at end-June 2024 against
minimal short-term debt. Its EUR1.8 billion equivalent secured term
loans mature in 2030 with minimal amortisation of around EUR8
million a year and have no maintenance financial covenant. Its
EUR250 million securitisation facility (EUR95 million drawn)
expires in 2027. Its USD60 million (EUR38 million drawn) revolving
working capital facility at Tyssedal also expires in 2027.
Shareholder Loan Treated as Equity: IE has a subordinated
related-party loan (EUR211 million at end-2023) to INEOS Limited.
Fitch treats the loan as non-debt under Fitch's Corporate Rating
Criteria as the loan is unsecured and subordinated under an
intercreditor agreement for IE's secured term loans. Further,
interest on the loan may be accrued and can only be paid if it
complies with covenants and the loan only matures one year after
the latest maturity of the term loans. Fitch treats any voluntary
payments of capital and interest as dividends.
Summary of Financial Adjustments
- Fitch reclassifies interest on lease liabilities of EUR4.9
million and right-of-use assets depreciation of EUR22.5 million as
cash operating expenses, and excludes lease liabilities in the
calculation of financial debt
- Fitch treats the subordinated related-party loan of EUR211.2
million as of end-2023 as non-debt
- Fitch adds EUR37.5 million of debt issue costs back to financial
debt
- Fitch adds EUR30.4 million of non-recurring expenses back to
EBITDA
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
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
----------- ------ -------- -----
INEOS Enterprises
Holdings US Finco LLC
senior secured LT BB+ Affirmed RR2 BB+
INEOS Enterprises
Holdings Limited LT IDR BB- Affirmed BB-
INEOS Enterprises
Holdings II Limited
senior secured LT BB+ Affirmed RR2 BB+
ITHACA ENERGY: Fitch Keeps 'B+' LongTerm IDR on Watch Positive
--------------------------------------------------------------
Fitch Ratings is maintaining Ithaca Energy plc's (Ithaca) Long-Term
Issuer Default Rating (IDR) of 'B' and senior unsecured rating of
'B+' on Rating Watch Positive (RWP). The Recovery Rating is 'RR3'.
The RWP reflects Fitch's view that Ithaca's merger with Eni Spa's
(A-/Stable) UK assets will be credit-positive and could lead to an
upgrade of up to two notches following its expected completion in
early 4Q24. The Eni UK assets will increase Ithaca's scale and
operational diversification without adding any debt. Fitch expects
the combined Ithaca to benefit from improved financial flexibility,
aided by its low leverage and conservative financial policy. Fitch
forecasts Ithaca's EBITDA net leverage to remain low on average at
1x in 2024-2027.
These strengths are counterbalanced by combined Ithaca's short
reserve life relative to peers at around six years, concentrated
exposure to the mature UK Continental Shelf (UKCS) with high
operating costs of over USD20 per barrel of oil equivalent (boe)
and high taxation and a less predictable tax regime.
Fitch expects to rate Ithaca post-transaction on a standalone basis
given its envisaged diluted shareholding structure.
Fitch expects to resolve the RWP following the expected completion
of the merger in early 4Q24.
Key Rating Drivers
Assets to Boost Business Profile: The merger will boost Ithaca's
business profile by increasing its scale and operational
diversification. The projected 2024 pro-forma production is 100-110
thousand barrels of oil equivalent per day (kboe/d) with no single
asset/hub accounting for more than 20%. The target assets'
gas-weighted production will provide a better balance between
Ithaca's exposure to oil and gas prices with liquids/gas mix of
around 60%, versus 65% before the merger. Further, the target
assets' lower operating costs of around USD15/boe will stabilise
Ithaca's unit operating expenses.
Moderate Reserve Life: The combined reserve base will increase to
219 million barrels of oil equivalent (mmboe) on a proved (1P)
basis and to 342mmboe on a proved and probable basis (2P). However,
the reserve life is expected to be unchanged from Ithaca's reserve
life of around six years, which is lower than at peers. This is
partly mitigated by substantial contingent (2C) resources including
greenfield projects (e.g. Cambo) that could support Ithaca's
business profile in the long term and also brownfield projects
linked to existing assets that offer short payback periods.
Ithaca's low leverage should also allow for M&A to replenish
reserves.
Decommissioning Obligations Diluted: The Eni UK assets carry some
decommissioning obligations (USD8/1P boe), but these are lower and
longer term than Ithaca's (USD12/1P boe). This, combined with the
lower capital intensity of the Eni assets owing to their mostly
developed status (around 85% of 2P), should enable strong cashflow
generation in the short term.
Costs Remain High: Although typical for the UKCS, Ithaca's
pre-merger cost position of USD27/boe in 1H24 is high relative to
peers' and may be a disadvantage if oil prices fall. Beyond 2024,
Fitch expects operating spending to improve and average around
USD22/boe in 2025-2027 as a result of the lower-cost Eni assets,
brownfield production growth absorbing fixed costs and
decommissioning of older high-cost fields.
Standalone Production to Increase: Ithaca's production fell sharply
to 53kboe/d in 1H24 from 76kboe/d in 1H23 as a result of extended
turnaround activity in the wider UKCS in light of the UK
government's energy profit levy but also operational issues in
non-operated assets. Ithaca expects production to resume to around
60kboe/d as operational issues are resolved in 2H24.
For 2025-2026, excluding the merger impact, Fitch anticipates
production to be maintained at around 60kboe/d as brownfield
projects such as Captain contribute to production and around
70kboe/d in 2027 as Rosebank reaches first oil. Fitch expects the
combined business to maintain production at over 100kboe/d in
2025-2027.
Supportive Shareholders: Fitch views the addition of Eni as
Ithaca's shareholder a positive development. Eni will own around
38% of Ithaca's shares, reducing Delek's ownership to around 50%
from around 90%. Ithaca will also benefit from Eni's industry
expertise and capabilities as Eni will appoint the CEO, two
non-executive board members and other senior technical management
roles. Fitch believes the two shareholders are supportive of
Ithaca's independent strategy and financial policy. Fitch would
rate Ithaca on a standalone basis without any credit links to its
shareholders due to the diluted shareholding structure.
Disciplined Capital Allocation: Ithaca's capital-allocation
priorities have remained consistent since its IPO, with no changes
announced as part of the Eni UK deal. Fitch views these priorities
as credit-positive given management's commitment to low leverage
and a flexible dividend policy tied to cashflow and operational and
market conditions.
It prioritises capex to maintain production over 100kboe/d,
followed by a strong balance sheet with a debt ceiling of below
1.5x EBITDAX and common dividends at around 15%-30% of post-tax
cash flow from operations (CFO). Excess cashflows may be used for
special dividends or inorganic business growth.
Low Leverage: Fitch forecasts Ithaca's EBITDA net leverage to
remain low at around 0.7x in 2024-2025 and to rise to 1.2x in
2026-2027 as Fitch assumes hydrocarbon prices to decline towards
mid-cycle levels. Increased capex for Rosebank, decommissioning
costs, tax charges and dividend payments in line with Ithaca's
dividend policy will turn free cash flow (FCF) consistently
negative until 2027. Nonetheless, Fitch expects Ithaca to maintain
adequate rating headroom.
Tax Burden Manageable: Fitch believes the UK government's combined
tax rate of 78% following revisions in July 2024 will be manageable
for Ithaca, due to its material tax losses, which should allow
Ithaca to offset future profits. Fitch estimates annual tax charge
to average about USD290 million in 2024-2027 (or about 23% of
Fitch-defined EBITDA). However, the pending tax changes and lack of
clarity over their evolution reduce its longer-term cash flow
visibility. It can also affect its ability to secure partners for
large projects, such as Cambo, and influence investment decisions
on non-operated assets.
Derivation Summary
Following completion of the transaction Ithaca's scale (2023:
70.2kboe/d) will increase to around 100kboe/d for 2024 (on a
pro-forma basis) and its reserve base will increase to 219 mmboe
from 156 mmboe on a 1P basis and to 342 mmboe from 242 mmboe on a
2P basis. This yields a reserve life of around six years on a 1P
basis and around nine years on a 2P basis. Its operating costs will
improve due to the Eni UK assets' lower cost at around USD15/boe
based on 2024 guidance versus Ithaca's USD20.5/boe for 2023.
Ithaca's scale as measured by production will be larger than Kosmos
Energy Ltd.'s (B+/Stable; 2023: 63kboe/d) even after the latter
will ramp up production towards 80kboe/d at end-2024. Kosmos's 1P
reserves of around 280 mmboe and 1P reserve life of 11 years is
higher than that of Ithaca. However, Ithaca maintains lower
leverage metrics through the cycle than Kosmos.
Ithaca will be smaller by production than Harbour Energy plc
(BBB-/Stable) with pro-forma production of around 480kboe/d.
Harbour's 2P pro-forma reserve life of around eight years is
similar to that of Ithaca at around nine years after the Eni UK
transaction. Harbour's pro-forma operating cost is lower at around
USD13-USD14/boe versus Ithaca's USD20.5/boe as of end-2023.
Following ongoing divestitures Energean plc's (BB-/Stable) scale
(2023: 123kboe/d) will be comparable to Ithaca's. Energean benefits
from a longer reserve life of around 21.2 years on a 2P basis and
2024 pro-forma guidance production and lower production costs in
the low teens. However, it is less diversified by resources (mainly
gas after disposals) than Ithaca's balanced liquids/gas product
mix. Fitch expects Ithaca to maintain lower leverage in 2024-2025
than Energean.
Key Assumptions
Fitch's Key Assumptions within Its Rating Case for the Issuer
- Brent oil prices at USD80/bbl in 2024, USD70/bbl in 2025,
USD65/bbl in 2026-2027
- Title Transfer Facility gas prices at USD10/mcf in 2024-2025,
USD8/mcf in 2026, USD7/mcf in 2027
- Production increasing to 78kboe/d in 2024 on half-year
consolidation of Eni UK assets, averaging 104kboe/d in 2024-2027
including Rosebank full-year contribution in 2027
- Operating costs (excluding over/under lift, tariff income and
tanker costs) averaging USD23/boe in 2024-2027
- Annual capex averaging about USD610 million in 2024-2027
- Annual decommissioning costs averaging around USD130 million in
2024-2027
- Dividends in line with public dividend policy at 15%-30% of CFO
in 2024-2027 and at 30% in 2024-2025
Recovery Analysis
Key Recovery Analysis Assumptions:
- Its recovery analysis is based on a going-concern (GC) approach,
which implies that Ithaca will be reorganised rather than
liquidated in bankruptcy
- Its GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganisation EBITDA level on which Fitch bases the
enterprise valuation (EV)
- Fitch has increased Ithaca's GC EBITDA to USD480 million from
USD420 million previously to reflect incremental EBITDA from the
Rosebank development once it is operational. Its GC EBITDA assumes
no hedging and considers its assumption of a fall in oil prices,
followed by a moderate recovery
- Fitch used a distressed EV multiple of 3.5x, which reflects
Ithaca's high decommissioning obligations, uncertainty around the
tax regime and moderate reserve life
- Fitch treats its USD625 million senior unsecured notes as junior
to its USD925 million (excluding letter of credit portion)
reserve-based loan (RBL) and equally ranking with its USD100
million bp term loan and USD150 million capex facility (assumed
fully drawn) in the payment waterfall
- After deducting 10% for administrative claims, its analysis
generated a waterfall-generated recovery computation (WGRC) for the
USD625 million senior unsecured notes in the 'RR3' band, indicating
a 'B+' instrument rating. The WGRC output percentage on these
metrics and assumptions is 67%
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Completion of the merger could lead to an up to two-notch
upgrade
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- As the ratings are on RWP, Fitch does not expect negative rating
action in the short term. However, if the transaction was not to
complete, it would lead to removal of the RWP and Stable Outlook
being assigned
Liquidity and Debt Structure
Comfortable Liquidity: Based on its base case Ithaca is funded to
end-2025 with existing cash and committed debt facilities. Ithaca
held USD288 million of cash and USD740 million available under
undrawn committed facilities as of end-June 2024 against USD30
million of current debt. Ithaca has no maturities in 2025 but its
RBL has started amortising ahead of its 2026 maturity.
Low Refinancing Risk: Fitch believes Ithaca's refinancing risk is
low, supported by its projected low leverage metrics. Fitch expects
Ithaca to proactively manage its upcoming 2026 maturities of its
RBL and unsecured notes.
Issuer Profile
Ithaca is an exploration and production oil and gas company
focusing on the North Sea.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Ithaca has an ESG Relevance Score of '4' for Waste & Hazardous
Materials Management; Ecological Impacts due to high
decommissioning obligations relative to global peers', which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Ithaca has an ESG Relevance Score of '4' for GHG Emissions & Air
Quality due to the company's operations in a stringent
climate-related regulatory environment, high cost of production and
energy transition strategies focusing only on Scope 1 and 2
emissions. This has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
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
----------- ------ -------- -----
Ithaca Energy
(North Sea) Plc
senior
unsecured LT B+ Rating Watch Maintained RR3 B+
Ithaca Energy
plc LT IDR B Rating Watch Maintained B
J G CHATHAM: PricewaterhouseCoopers Named as Joint Administrators
-----------------------------------------------------------------
J G Chatham Limited was placed in administration proceedings in the
Business and Property Courts in Leeds Insolvency and Companies List
(ChD), Court Number: CR-2024-LDS-000894, and Edward Williams, Mark
James Tobias Banfield, and Timothy Higgins of
PricewaterhouseCoopers LLP were appointed as administrators on
Sept. 13, 2024.
J G Chatham is a developer of building projects.
Its registered office is at Unit 3000 Park Avenue Dove Valley Park,
Foston, Derby, England, DE65 5BT.
The joint administrators can be reached at:
Edward Williams
Mark James Tobias Banfield
PricewaterhouseCoopers LLP
One Chamberlain Square
Birmingham, B3 3AX
For further information, contact:
Email: uk_jgchatham_queries@pwc.com
Tel No: 0113 289 4000
NASSTAR GROUP: PricewaterhouseCoopers Named as Administrators
-------------------------------------------------------------
Nasstar Group Limited was placed in administration proceedings in
the High Court of Justice Business and Property Courts of England
and Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-005326, and Mark James Tobias Banfield and Zelf Hussain of
PricewaterhouseCoopers LLP were appointed as administrators on Sept
13, 2024.
Nasstar Group is a full-spectrum IT company that delivers
intelligent networks, cloud, transformative employee productivity,
and pioneering data-driven AI solutions.
Its registered office is at Melbourne House Brandy Carr Road,
Wakefield, West Yorkshire, United Kingdom, WF2 0UG.
The joint administrators can be reached at:
Mark James Tobias Banfield
Zelf Hussain
PricewaterhouseCoopers LLP
7 More London Riverside
London, SE1 2RT
For further information, contact:
Email: uk_nimbusrealisations_enquiries@pwc.com
Tel No: 0113 289 4000
SCIENCE BOFFINS: Quantuma Advisory Named as Administrators
----------------------------------------------------------
Science Boffins Ltd was placed in administration proceedings in the
High Court of Justice - Business and Property Courts in Birmingham
Court, Court Number: CR-2024-BHM-000554, and Richard Easterby and
Michael Kiely of Quantuma Advisory Limited were appointed as
administrators on Sept 16, 2024.
Science Boffins provide science parties for children and schools
throughout England, Scotland, and Northern Ireland.
Its registered office is at Devonshire House, Manor Way,
Borehamwood, WD6 1QQ and it is in the process of being changed to
c/o Quantuma Advisory Limited, 20 St Andrew Street, London, EC4A
3AG.
Its principal trading address is at Unit 4 Fernleigh Business Park
Blaby Road, Enderby, Leicester, LE19 4AQ.
The administrators can be reached at:
Richard Easterby
Michael Kiely
Quantuma Advisory Limited
7th Floor, 20 St. Andrew Street
London, EC4A 3AG
For further information, contact:
Archie Edmonds
Email: Archie.Edmonds@quantuma.com
Tel No: 0203 744 7234
SPLASH SBS: Hudson Weir Named as Administrators
-----------------------------------------------
Splash SBS Limited was placed in administration proceedings in the
High Court of Justice, Business & Property Courts, Insolvency and
Companies List (ChD), Court Number: CR-2024-005358. Nimish Patel
and Hasib Howlader of Hudson Weir Limited were appointed as
administrators on Sept. 13, 2024.
Splash SBS specializes in accounting and auditing activities and
management consultancy activities other than financial management.
Its registered office is at 299a Bethnal Green Road, London, E2
6AH.
The administrators can be reached at:
Nimish Patel
Hasib Howlader
Hudson Weir Limited
58 Leman Street
London, E1 8EU
For further details, contact:
Brandon Woodworth
Tel No: 020 7099 6086
STOLT-NIELSEN LTD: Egan-Jones Retains B- Senior Unsecured Ratings
-----------------------------------------------------------------
Egan-Jones Ratings Company, on September 2, 2024, maintained its
'B-' foreign currency and local currency senior unsecured ratings
on debt issued by Stolt-Nielsen Ltd. EJR also withdrew the rating
on commercial paper issued by the Company.
Headquartered in London, United Kingdom, Stolt-Nielsen Ltd. is a
global company with significant operations within various maritime
related industries.
STREAMLINE PANELS: Interpath Advisory Named as Administrators
-------------------------------------------------------------
Streamline Panels and Assemblies Limited was placed in
administration proceedings in the High Court of Justice, Business
and Property Courts in Birmingham, Insolvency and Companies List
(ChD), Court Number: CR-2024-BHM-000551, and Christopher Robert
Pole and Ryan Grant of Interpath Advisory were appointed as
administrators on Sept 12, 2024.
Streamline Panels manufactures bodies (coachwork) for motor
vehicles (except caravans).
Its registered office and principal trading address is at CMS
Cameron McKenna Nabarro Olswang LLP, 78 Cannon Street, London, EC4N
6AF.
The administrators can be reached at:
Christopher Robert Pole
Ryan Grant
Interpath Advisory,
2nd Floor
45 Church Street,
Birmingham B3 2RT
For further information, contact:
Nusrat Begum
Email: Fablink@interpath.com
TWTG REALISATIONS: Interpath Advisory Named as Administrators
-------------------------------------------------------------
TWTG Realisations Limited, trading as Thorite, Thorite Academy, was
placed in administration proceedings in the High Court of Justice
Business and Property Courts in Leeds Insolvency and Companies List
(ChD), Court Number: 000851 of 2024. HenHoward Smith and Richard
Harrison of Interpath Advisory, Interpath Ltd, were appointed as
administrators on Aug. 23, 2024.
TWTG Realisations, fka Thomas Wright/Thorite Group Limited, Thomas
Wright (Bradford) Ltd, is a wholesaler, distributor and installer
of compressed air equipment.
Its registered office and principal trading address is at Thorite
House Hillam Road, Off Canal Road, Bradford, BD2 1QN.
The administrators can be reached at:
Howard Smith
Richard Harrison
Interpath Advisory, Interpath Ltd
4th Floor, Tailors Corner
Thirsk Row, Leeds
LS1 4DP
Further details, contact:
Megan Orourke
E-mail: twtg@interpath.com
VODAFONE GROUP: Egan-Jones Retains BB+ Senior Unsecured Ratings
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Egan-Jones Ratings Company, on September 17, 2024, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Vodafone Group PLC.
Headquartered in Berkshire, United Kingdom, Vodafone Group PLC
provides wireless communication services.
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