/raid1/www/Hosts/bankrupt/TCREUR_Public/241003.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Thursday, October 3, 2024, Vol. 25, No. 199
Headlines
D E N M A R K
LIQTECH INTL: Inks $10-Mil. Securities Purchase Agreement
F R A N C E
SEQUANS COMMUNICATIONS: Board OKs Change in ADS Ratio to 1-for-10
VALEO SE: Moody's Assigns Ba1 CFR & Cuts Sr. Unsecured Debt to Ba1
I R E L A N D
CONTEGO CLO V: Moody's Affirms B2 Rating on EUR12MM Class F Notes
N O R W A Y
TGS ASA: Moody's Assigns 'Ba3' Long Term CFR, Outlook Stable
P O R T U G A L
CONSUMER TOTTA 2: Moody's Assigns Ba1 Rating to EUR15.4MM D Notes
U N I T E D K I N G D O M
BALLIE CARDIFF: Quantuma Advisory Named as Administrators
BROMHAM BIOGAS: Moorfields Named as Administrators
CX REINSURANCE: Proposes to Enter Into Scheme of Arrangement
FOLKESTONE FIXINGS: PricewaterhouseCoopers Named as Administrators
HUB ENGINEERING: Begbies Traynor Named as Administrators
IONA SCHOOL: FRP Advisory Named as Administrators
ISUPPLY GROUP: Leonard Curtis Named as Administrators
SAMBRO INT'L: Teneo Financial Named as Administrators
SPATIAL INITIATIVE: Ernst & Young Named as Administrators
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D E N M A R K
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LIQTECH INTL: Inks $10-Mil. Securities Purchase Agreement
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LiqTech International, Inc. disclosed in a Form 8-K Report filed
with the U.S. Securities and Exchange Commission that on September
27, 2024, the Company entered into a Securities Purchase Agreement
with certain investors, pursuant to which the Company agreed to
issue and sell an aggregate of:
(i) 3,630,129 shares of common stock, $0.001 par value per
share, 1,369,871 pre-funded warrants to purchase shares of Common
Stock; and
(ii) warrants to purchase up to an aggregate of 5,000,000
shares of Common Stock, for gross proceeds of up to $10,000,000.
The combined purchase price of one share of Common Stock and one
accompanying Warrant to purchase one share of Common Stock under
the Purchase Agreement is $2.00. The combined purchase price of one
Pre-Funded Warrant and one accompanying Warrant to purchase one
share of Common Stock under the Purchase Agreement is $1.999. The
Company agreed to issue the Shares, Warrants, and Pre-Funded
Warrants in two tranches:
(i) a first tranche comprised of 29,227 Shares and 555,302
Pre-Funded Warrants and Warrants to purchase an aggregate of
584,529 shares of Common Stock; and
(ii) a second tranche comprised of 3,600,902 Shares and 814,569
Pre-Funded Warrants and Warrants to purchase an aggregate of
4,415,471 shares of Common Stock.
In connection with the closing of the First Tranche, the Company
sold and issued the First Tranche Securities on September 27, 2024,
for gross proceeds of approximately $1.2 million. Under the
Purchase Agreement, issuance of the Second Tranche Securities may
occur only after the Company has obtained stockholder approval in
accordance with Nasdaq Listing Rule 5635(d).
The Company intends to use the net proceeds from the Transaction
for general corporate purposes, including working capital. The
Purchase Agreement contains customary representations and
warranties of the Company, certain indemnification obligations of
the Company, and ongoing covenants of the Company.
Subject to certain beneficial ownership limitations:
* each Pre-Funded Warrant is immediately exercisable and may
be exercised for $0.001 per share of Common Stock, subject to
adjustment under the terms of each Pre-Funded Warrant. A holder of
the Pre-Funded Warrant will not have the right to exercise any
portion of the Warrant if the holder together with Affiliates and
Attribution Parties (as such terms are defined in the Pre-Funded
Warrant) would beneficially own in excess of 9.99% of the number of
shares of Common Stock outstanding immediately after giving effect
to the exercise, as such percentage ownership is determined in
accordance with the terms of the Warrant. However, upon notice from
the holder to the Company, the holder may waive the beneficial
ownership limitation, provided that any waiver of the beneficial
ownership limitation will not take effect until 61 days following
notice to the Company, and provided further that such waiver will
not be effective to the extent such waiver would require the prior
approval of the Company's stockholders, unless such approval has
been obtained.
* each Warrant is immediately exercisable and may be
exercised for $2.00 per share of Common Stock, subject to
adjustment under the terms of each Warrant. The Warrants expire on
September 27, 2029. A holder of the Warrant will not have the right
to exercise any portion of the Warrant if the holder together with
Affiliates and Attribution Parties (as such terms are defined in
the Warrant) would beneficially own in excess of 9.99% of the
number of shares of Common Stock outstanding immediately after
giving effect to the exercise, as such percentage ownership is
determined in accordance with the terms of the Warrant. However,
upon notice from the holder to the Company, the holder may waive
the beneficial ownership limitation, provided that any waiver of
the beneficial ownership limitation will not take effect until 61
days following notice to the Company, and provided further that
such waiver will not be effective to the extent such waiver would
require the prior approval of the Company's stockholders, unless
such approval has been obtained.
Pursuant to the terms of the Purchase Agreement, and as a condition
to close the First Tranche, on September 27, 2024, the Company and
each investor simultaneously entered into a registration rights
agreement requiring the Company to file a registration statement
with the Securities and Exchange Commission within 60 days of the
Company's receipt of the investors' demand that the Company file a
registration statement to register for resale the Shares and the
shares of Common Stock underlying the Pre-Funded Warrants and
Warrants. The Registration Rights Agreement contains customary
terms and conditions, certain liquidated damages provisions for
failing to comply with the timing obligations for the filing and
effectiveness of the registration statement, and certain customary
indemnification obligations.
About LiqTech International
Ballerup, Denmark-based LiqTech International, Inc. is a clean
technology company that provides state-of-the-art gas and liquid
purification products by manufacturing ceramic silicon carbide
filters and membranes as well as developing industry-leading and
fully automated filtration solutions and systems.
Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2018, issued a "going concern" qualification in its
report dated March 21, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raises substantial doubt about its ability to continue as a
going concern.
Net loss for the year ended December 31, 2023 was $8,571,145
compared to $14,169,107 for the same period in 2022. As of June 30,
2024, LiqTech had $28,579,302 in total assets, $16,305,054 in total
liabilities, and $12,274,248 in total stockholders' equity.
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F R A N C E
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SEQUANS COMMUNICATIONS: Board OKs Change in ADS Ratio to 1-for-10
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Sequans Communications S.A. announced that its Board of Directors
has approved a change in the number of its ordinary shares
represented by American Depositary Shares, issued by the Bank of
New York Mellon as depositary, from 4 ordinary shares per ADS to 10
ordinary shares per ADS. The change in exchange ratio for the ADSs
will have the same effect as a 1-for-2.5 reverse stock split of the
ADSs. The ADSs will continue to trade on the New York Stock
Exchange under the same ticker SQNS but a new CUSIP will be
assigned. Sequans' ordinary shares are not affected by the change.
The Company's total outstanding share capital at present is
249,928,692 ordinary shares.
Georges Karam, Sequans CEO, said, "We are nearing the October 9th
deadline to increase our ADS price to meet the NYSE compliance
obligations. This could be resolved organically after closing the
recently announced asset sale to Qualcomm. However, we feel that
independent of the NYSE criteria, it would be beneficial for the
Company's ADS market price to be higher to enhance our appeal to a
broader range of investors. We believe this action will better
position our company for future growth. Furthermore, we are
thrilled about the transaction with Qualcomm, which we anticipate
closing soon, as the French government gave its clearance, and we
are working towards satisfying remaining closing conditions."
The new ADS to ordinary share ratio of 1 for 10 will be effective
prior to the commencement of trading on the New York Stock Exchange
on Wednesday, October 9, 2024. Because each ADS will represent 10
times the number of Sequans' ordinary shares after the ratio
change, and the total number of ordinary shares remains the same,
the trading price of the ADSs is expected to increase by
approximately the same multiple, enabling the company to regain
compliance with the New York Stock Exchange minimum price listing
requirement.
No fractional ADSs will be issued. Holders who would otherwise
receive fractional ADSs will receive a cash payment in lieu of such
fractional ADSs. The cash in lieu rate will be set when the
depositary sells the ADSs that would otherwise have been issued as
fractional ADSs in one or more market trades. ADS holders with ADSs
held in book-entry form or through a bank, broker or other nominee
are not required to take any action and will see the impact of the
change to the ADS ratio reflected in their accounts after October
9, 2024. Beneficial holders may contact their bank, broker or
nominee for more information. ADS holders with ADSs held in
certificate form will be required to exchange their certificates
for new book-entry ADSs at a rate of 2.5 old ADSs for 1 new ADS.
Shortly after October 9, 2024, such ADS holders will receive a
Letter of Transmittal and instructions for exchanging their
certificates from the depositary.
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.
VALEO SE: Moody's Assigns Ba1 CFR & Cuts Sr. Unsecured Debt to Ba1
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Moody's Ratings has downgraded the senior unsecured ratings of
French auto parts supplier Valeo S.E. ("Valeo" or "group") to Ba1
from Baa3. Concurrently, Moody's have withdrawn Valeo's long-term
issuer rating (previously Baa3) and assigned a Ba1 long term
corporate family rating and Ba1-PD probability of default rating to
the group. Moody's also downgraded the rating of Valeo's senior
unsecured Medium- Term Note Program to (P)Ba1, from (P)Baa3 and the
short-term commercial paper rating to Not Prime (NP) from Prime-3
(P-3). The outlook remains negative.
"The downgrade of Valeo's ratings is driven by a weaker automotive
market environment than Moody's had anticipated at the beginning of
this year, with lower and more volatile car production and lasting
sluggish consumer sentiment", says Goetz Grossmann, Moody's Ratings
lead analyst for Valeo. "While Moody's recognize Valeo's continued
efforts to improve profitability levels, profitability and credit
metrics remain below Moody's requirements for the previous rating
category with limited prospects for improvements amid the
challenging market environment, as reflected in the negative
outlook. The Ba1 rating continues to be supported, however, by
Valeo's substantial cash position and very good liquidity,
depending on a continued ability to generate positive free cash
flows", continues Mr. Grossmann.
RATINGS RATIONALE
The downgrade of Valeo's ratings reflects the recently slowing
automotive market environment, illustrated by stagnant global light
vehicle production in the first half of 2024 (H1 2024), lackluster
consumer sentiment, especially in the battery electric vehicle
(BEV) segment, and increased uncertainty as to improving production
in the forthcoming quarters. As a result, Moody's believe that
Valeo's credit metrics will take longer to recover and are unlikely
to reach adequate levels for the Ba1 rating category before 2025.
Moody's revised forecast mainly assumes lower volumes, constraining
topline and profit growth in 2024 and 2025. Given Moody's lower
earnings projections, Moody's expect Valeo's leverage to remain
high for its Ba1 rating over the next 12-18 months. Assuming no
debt repayments in 2024 and 2025, the group's Moody's adjusted
gross debt to EBITDA will likely persist around the current level
(5.1x for the last 12 months (LTM) ended June 2024) but should
reduce towards 3.5x in 2025, a level just in line with Moody's
defined 3.0x-3.5x range for a Ba1 rating. That said, Moody's
continue to acknowledge Valeo's substantial cash position (EUR3
billion as of June-end 2024), which supports its liquidity and much
lower net leverage.
The downgrade further mirrors Valeo's sustained slim profitability,
which has been lagging behind Moody's expectations for several
quarters. Moody's expect the group's Moody's adjusted EBITA margin
to weaken to 2.2% in 2024 from 2.7% in 2023 (2.3% as of LTM June
2024), driven by increased restructuring costs, production
inefficiencies due to erratic order call off and delivery schedules
at customers, as well as still-high research and development (R&D)
costs. In 2025, Moody's expect Valeo's EBITA margin to visibly
improve and to meet Moody's at least 3.5% guidance for a Ba1 rating
along the execution of existing orders with better embedded
margins, lower restructuring and reduced (capitalized) R&D
expenditures. Despite the improving profitability, however, Moody's
expect the group's Moody's adjusted free cash flow (FCF) to remain
constrained at around break-even in 2025, due to restructuring cash
needs, lower working capital reductions and assumed slightly
growing dividend payments.
Slowing economic growth, weakened industry conditions and consumer
sentiment and an increasingly competitive landscape in China pose
significant challenges for the auto supplier industry. As such,
Moody's consider that downside risks to Moody's forecasts are
currently high.
Credit challenges that continue to constrain the rating relate to
Valeo's exposure to the cyclicality of automotive production; low
profitability, also when compared with rated industry peers;
continued sizeable R&D investments that weigh on profits and cash
flows; a significant amount of trade payables utilized under a
reverse factoring program available to suppliers, which Moody's
qualitatively capture in Moody's leverage assessment for Valeo; and
execution risk around ongoing restructuring.
Factors supporting Valeo's rating include the group's positive
exposure to current trends in the automotive industry as to
electrification, tightening safety standards that fuel demand for
advanced driver assistance systems (ADAS), where Valeo holds a
leading market position, and the group's high level of innovation.
The rating also positively reflects Valeo's substantial size with
around EUR22 billion of group revenue as of LTM June 2024, its good
geographical and product diversification; conservative financial
policy, focused on reducing the reported net leverage ratio to 1.0x
by 2025 (from 1.5x at June-end 2024); and its excellent liquidity.
LIQUIDITY
Moody's regard Valeo's liquidity as very good. As of June 30, 2024,
the group had access to around EUR3 billion of cash and cash
equivalents and EUR1.6 billion available under its revolving credit
facility agreements (average maturity of 2.4 years at June-end
2024). Valeo's short-term debt maturities of around EUR1.9 billion
as of June 30, 2024 consisted mainly of a EUR600 million senior
unsecured bond due in June 2025, EUR700 million of commercial paper
debt, Schuldschein and various other bank debt.
Over the next 12 months, Moody's expect Valeo's funds from
operations (FFO) to exceed EUR2 billion and a continued reduction
in working capital that, together, should almost cover capital
spending of around EUR2.5 billion (including capitalized
development costs). Other cash uses comprise lease and dividend
payments that are included in Moody's adjusted FCF, which Moody's
expect to be modestly negative over the next 12-18 months.
ESG CONSIDERATIONS
As to governance considerations, the rating action reflects Valeo's
sustained high leverage, which exceeded Moody's expectations for
the previous Baa3 rating for several quarters and will continue to
constrain Valeo's rating over the next 12-18 months.
RATIONALE FOR THE NEGATIVE OUTLOOK
The negative outlook reflects Valeo's weak credit metrics at
present, also in the context of a recently worsened market
environment and very limited visibility into improving business
conditions over next year. We, therefore, believe it will be
challenging for Valeo to strengthen its EBITA margin to well above
3.5% and reduce its leverage to below 3.5x gross debt/EBITDA by
year end 2025.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider to downgrade the ratings, if Valeo's (1)
EBITA margin remained below 3.5% throughout 2025, (2) leverage
continued to exceed 3.5x gross debt/EBITDA, (3) retained cash flow
(RCF) to net debt weakened to below 15%, (4) FCF remained negative
beyond 2024 – all on a Moody's adjusted and sustainable basis.
Moreover, a substantial weakening in Valeo's currently very good
liquidity would lead to negative rating pressure.
Moody's might consider an upgrade of Valeo's rating, if its (1)
EBITA margin improved to at least 4.5%, (2) leverage was reduced to
below 3.0x gross debt/EBITDA, (3) retained cash flow (RCF) to net
debt remained well above 20%, (4) FCF turned positive – all on a
Moody's adjusted and sustainable basis.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
COMPANY PROFILE
Headquartered in Paris, Valeo S.E. is one of the leading global
suppliers of automotive components for new light vehicles (original
equipment) and the aftermarket (11% of group revenue in H1 2024).
In the 12 months through June 2024, Valeo generated revenue of
around EUR22 billion and reported EBITDA of over EUR2.7 billion
(12.4% margin). Valeo has three business divisions: POWER
(powertrain and thermal solutions for all powertrain
architectures), accounting for 51% of group revenue in H1 2024,
BRAIN (ADAS, electrical/electronic architectures, software; 23%),
and LIGHT (exterior and interior lighting and signaling systems;
26%). The group's product range consists of systems for advanced
driving assistance (software, sensors, computing units), exterior
and interior lighting modules, wiper and sensor cleaning systems,
electric machines and power electronics for hybrid and electric
vehicles, transmission systems, and temperature management systems
(air conditioning, battery thermal management, engine cooling).
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I R E L A N D
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CONTEGO CLO V: Moody's Affirms B2 Rating on EUR12MM Class F Notes
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Moody's Ratings has upgraded the ratings on the following notes
issued by Contego CLO V Designated Activity Company:
EUR10,000,000 Class B-1 Senior Secured Fixed Rate Notes due 2031,
Upgraded to Aaa (sf); previously on Feb 1, 2024 Upgraded to Aa1
(sf)
EUR30,000,000 Class B-2 Senior Secured Floating Rate Notes due
2031, Upgraded to Aaa (sf); previously on Feb 1, 2024 Upgraded to
Aa1 (sf)
EUR28,000,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2031, Upgraded to Aa3 (sf); previously on Feb 1, 2024
Upgraded to A1 (sf)
EUR20,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2031, Upgraded to Baa1 (sf); previously on Feb 1, 2024
Affirmed Baa2 (sf)
Moody's have also affirmed the ratings on the following notes:
EUR248,000,000 (current outstanding amount EUR210,559,280) Class A
Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf);
previously on Feb 1, 2024 Affirmed Aaa (sf)
EUR24,000,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2031, Affirmed Ba2 (sf); previously on Feb 1, 2024
Affirmed Ba2 (sf)
EUR12,000,000 Class F Senior Secured Deferrable Floating Rate
Notes due 2031, Affirmed B2 (sf); previously on Feb 1, 2024
Affirmed B2 (sf)
Contego CLO V Designated Activity Company, issued in July 2018, is
a collateralised loan obligation (CLO) backed by a portfolio of
mostly high-yield senior secured European loans. The portfolio is
managed by Five Arrows Managers LLP. The transaction's reinvestment
period ended in July 2022.
RATINGS RATIONALE
The rating upgrades on the Class B-1, B-2, C and D notes are
primarily a result of the deleveraging of the senior notes
following amortisation of the underlying portfolio since the last
rating action in February 2024 and a shorter weighted average life
of the portfolio which reduces the time the rated notes are exposed
to the credit risk of the underlying portfolio.
The affirmations on the ratings on the Class A, E and F notes are
primarily a result of the expected losses on the notes remaining
consistent with their current rating levels, after taking into
account the CLO's latest portfolio, its relevant structural
features and its actual over-collateralisation ratios.
The Class A notes have paid down by approximately EUR33.1 million
(13.4%) since the last rating action in February 2024 and EUR37.4
million (15.1%) since closing. As a result of the deleveraging,
over-collateralisation (OC) has increased across the capital
structure. According to the trustee report dated August 2024 [1]
the Class A/B and Class C, Class D, Class E and Class F OC ratios
are reported at 143.57%, 129.13%, 120.48%, 111.52% and 107.52%
compared to January 2024 [2] the Class A/B and Class C, Class D,
Class E and Class F OC ratios are reported at 138.52%, 126.23%,
118.70%, 110.78% and 107.20%, respectively.
The key model inputs Moody's use in Moody's analysis, such as par,
weighted average rating factor, diversity score and the weighted
average recovery rate, are based on Moody's published methodology
and could differ from the trustee's reported numbers.
In Moody's base case, Moody's used the following assumptions:
Performing par and principal proceeds balance: EUR359,410,296.95
Defaulted Securities: EUR2,000,000
Diversity Score: 44
Weighted Average Rating Factor (WARF): 3041
Weighted Average Life (WAL): 3.11 years
Weighted Average Spread (WAS) (before accounting for Euribor
floors): 3.61%
Weighted Average Coupon (WAC): 3.99%
Weighted Average Recovery Rate (WARR): 44.29%
Par haircut in OC tests and interest diversion test: 0%
The default probability derives from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The estimated average recovery rate on future
defaults is based primarily on the seniority of the assets in the
collateral pool. In each case, historical and market performance
and a collateral manager's latitude to trade collateral are also
relevant factors. Moody's incorporate these default and recovery
characteristics of the collateral pool into Moody's cash flow model
analysis, subjecting them to stresses as a function of the target
rating of each CLO liability it is analysing.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Collateralized Loan Obligations" published in
May 2024.
Counterparty Exposure:
The rating action took into consideration the notes' exposure to
relevant counterparties, such as account bank and swap providers,
using the methodology "Moody's Approach to Assessing Counterparty
Risks in Structured Finance methodology" published in October 2023.
Moody's concluded the ratings of the notes are not constrained by
these risks.
Factors that would lead to an upgrade or downgrade of the ratings:
The rated notes' performance is subject to uncertainty. The notes'
performance is sensitive to the performance of the underlying
portfolio, which in turn depends on economic and credit conditions
that may change. The collateral manager's investment decisions and
management of the transaction will also affect the notes'
performance.
Additional uncertainty about performance is due to the following:
-- Portfolio amortisation: The main source of uncertainty in this
transaction is the pace of amortisation of the underlying
portfolio, which can vary significantly depending on market
conditions and have a significant impact on the notes' ratings.
Amortisation could accelerate as a consequence of high loan
prepayment levels or collateral sales by the collateral manager or
be delayed by an increase in loan amend-and-extend restructurings.
Fast amortisation would usually benefit the ratings of the notes
beginning with the notes having the highest prepayment priority.
-- Recovery of defaulted assets: Market value fluctuations in
trustee-reported defaulted assets and those Moody's assume have
defaulted can result in volatility in the deal's
over-collateralisation levels. Further, the timing of recoveries
and the manager's decision whether to work out or sell defaulted
assets can also result in additional uncertainty. Moody's analysed
defaulted recoveries assuming the lower of the market price or the
recovery rate to account for potential volatility in market prices.
Recoveries higher than Moody's expectations would have a positive
impact on the notes' ratings.
In addition to the quantitative factors that Moody's explicitly
modelled, qualitative factors are part of the rating committee's
considerations. These qualitative factors include the structural
protections in the transaction, its recent performance given the
market environment, the legal environment, specific documentation
features, the collateral manager's track record and the potential
for selection bias in the portfolio. All information available to
rating committees, including macroeconomic forecasts, input from
Moody's other analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, can influence the final rating decision.
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N O R W A Y
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TGS ASA: Moody's Assigns 'Ba3' Long Term CFR, Outlook Stable
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Moody's Ratings has assigned Ba3 long term corporate family rating
and a Ba3-PD probability of default rating to TGS ASA (TGS).
Concurrently Moody's upgraded to Ba3 from B2 the USD450 million
backed senior secured notes (Nordic bond) issued by Petroleum
Geo-Services AS with a stable outlook, a fully owned subsidiary of
TGS. The B2 long term corporate family rating (and B2-PD
probability of default rating of TGS NewCo AS (formerly PGS ASA)
are withdrawn as a result of the merger between TGS ASA and PGS
ASA.
The outlook is stable on TGS ASA. Previously, the ratings for TGS
NewCo AS and Petroleum Geo-Services AS were on review for upgrade.
RATINGS RATIONALE
The rating assigned to TGS reflects the completion of the merger
with PGS ASA that occurred on July 1, 2024 and Moody's assessment
of the new strategy of the combined group, the expected synergies
from the merger, as well as the financial policy and liquidity
profile based on what management disclosed at the company's capital
market day on 29 August 2024.
TGS's Ba3 rating reflects the company's (1) ownership of the
largest global seismic multi-client library with data from all
active basins in both the western and eastern hemispheres; (2)
unique position as the only seismic data and imaging processor with
full data collection capabilities through proprietary vessels,
streamers and ocean bottom node (vertically integrated), as well as
an extensive multi-client data library, to deliver turnkey projects
to its clients; (3) meaningful cost synergies likely to be realized
from the integration with PGS ASA, estimated by management up to
USD130 million with an upfront cash cost of USD25 million, in
addition to the limited complexity of the integration with PGS
which is rather complementary; and, (4) historical track record of
operating with a conservative financial policy, and Moody's
expectation that net debt will be kept at the lower end of the
publicly announced $250-350million range.
On the other hand, the assigned rating takes into account (1) the
uncertainty around the sustainability of the seismic market
recovery and overall market size in the coming years; (2) the
potential for TGS to outsource the manufacturing of Ocean Bottom
Nodes (OBN), which is currently mostly performed in-house using
proprietary technology; (3) a highly competitive and fragmented
mid-to-deepwater data acquisition OBN market (TGS hold about 30-40%
market share) that has seen some recent pricing softness due to new
entrants; and, (4) a potentially constrained Moody's adjusted free
cash flow generation because of expected sizeable discretionary
investments in the multi-client library as well as investments in
seismic equipment required to maintain the company's leadership
position.
LIQUIDITY
TGS's liquidity is good. Liquidity is supported by a positive
Moody's adjusted free cash flow and a USD150 million senior secured
revolving credit facility (RCF) due in 2026. TGS has also obtained
from its RCF lenders an additional USD100 million tranche that will
mature in October 2025; concurrently TGS provided the former PGS AS
group with a USD100 million subordinated drawing facility that will
count as liquidity reserve according to the bond terms.
ESG CONSIDERATIONS
Moody's assessed that Governance risk was a relevant factor in
assigning the rating. TGS has closed its largest acquisition to
date and it is currently operating outside its stated net debt
leverage of USD250-350 million. Moody's expect compliance with its
financial policy from 2025 in line with the plan of a refinancing
of its capital structure.
TGS's environmental risk is largely related to its high exposure to
carbon transition risk as its earnings are almost entirely focused
on oil & gas customers and it relies on exploration and development
activities.
TGS's social risk is aligned with other oilfield services
companies, susceptible to high demographic & societal trend risk as
its earnings are dependent on oil producers who face a high risk
from societal trends.
STRUCTURAL CONSIDERATIONS
The Ba3 rating on the $450 million Nordic bond is in line with the
CFR.
The Nordic bond, however, is structurally subordinated to the
USD250 million RCF and is guaranteed solely by guarantors of the
former PGS group.
The TGS's RCF outstandings are largely related to the pre-payment
of the PGS term loan due in 2026 and Moody's expect to be repaid in
the next 12-15 months largely with cash generated from operations.
The RCF is secured only on the pre-merger assets of TGS and has a
number of financial maintenance covenants; net leverage need to be
no higher than 1.0x, equity ratio to be above 50% and a minimum
liquidity of USD75 million. If liquidity (as defined in the RCF
documentation cash and cash equivalent of the TGS Group) falls
below USD100 million, the company will also have to meet an EBITDA
minus operational capex above zero test.
RATIONALE FOR THE STABLE OUTLOOK
The stable rating outlook reflects Moody's expectations that the
seismic data market will continue to improve in 2025 and that
investments from oil producer in upstream exploration will start
growing again within the next 2-3 years.
Moody's also expect TGS to pause its M&A activity in the next 18-24
months as it focus on the integration of PGS ASA and TGS to attain
to the lower end of its stated net debt target of USD250-350
million
The stable outlook also reflects Moody's expectations of a
refinancing of the USD450 million bond within the next 12 months,
reducing the company's interest expenses and the refinancing of the
existing RCF.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded over time if TGS revenue stream
become less reliant from oil & gas activities and the company
revisits its financial policy with a lower level of debt. An
upgrade would also require the company to maintain a good liquidity
profile.
Ratings downgrade could occur if Moody's adjusted debt to EBITDA
increases above 1.5x or Moody's adjusted EBIT margin decline below
15% on a sustainable basis. Negative pressure on the rating could
also develop if Moody's assess that TGS's financial policy or M&A
activity has become more aggressive, or Moody's adjusted Free Cash
Flow becomes negative.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Oilfield
Services published in January 2023.
COMPANY PROFILE
TGS provides advanced data and intelligence to companies active in
the energy sector. The company is a technologically leading
oilfield services company specializing in reservoir and geophysical
services, including seismic data acquisition, processing and
interpretation, and field evaluation. It employs nearly 2,000
employees, with headquarters in Oslo and Houston and offices among
others in UK, Egypt, Brazil, Kuala Lumpur, and Perth. TGS is
publicly listed on the Oslo Stock Exchange.
The group, on a pro-forma basis, posted revenue of USD1.45 billion
and adjusted EBITDA of about USD691 million for full year ending
December 2023.
===============
P O R T U G A L
===============
CONSUMER TOTTA 2: Moody's Assigns Ba1 Rating to EUR15.4MM D Notes
-----------------------------------------------------------------
Moody's Ratings has assigned the following ratings to the Notes
issued by Consumer Totta 2 2024:
EUR320M Class A Floating Rate Notes due February 2034, Definitive
Rating Assigned Aaa (sf)
EUR15.4M Class B Floating Rate Notes due February 2034, Definitive
Rating Assigned Aa2 (sf)
EUR24.6M Class C Floating Rate Notes due February 2034, Definitive
Rating Assigned Baa1 (sf)
EUR15.4M Class D Floating Rate Notes due February 2034, Definitive
Rating Assigned Ba1 (sf)
Moody's have not assigned a rating to the subordinated EUR24.6M
Class E Floating Rate Notes due February 2034, the subordinated
EUR4.0M Class F Floating Rate Notes due February 2034, the
subordinated EUR1 Class R Notes due February 2034 and the
subordinated EUR1,000 Class X Notes due February 2034.
RATINGS RATIONALE
The Notes are backed by a 5-month revolving pool of Portuguese
unsecured consumer loans originated by Banco Santander Totta S.A.
("Santander Totta"), (A2/P-1 Bank Deposits; A2(cr)/P-1(cr)). This
represents the second ABS issuance originated by Banco Santander
Totta S.A.
The portfolio consists of approximately EUR400.0 million of loans
as of the 30 August 2024 pool cut-off date. The Reserve Fund will
be funded to 1.0% of the A to E Notes balance at closing and the
total credit enhancement for the Class A Notes will be 21%.
The ratings are primarily based on the credit quality of the
portfolio, the structural features of the transaction and its legal
integrity.
The transaction benefits from various credit strengths such as the
granularity of the portfolio, the financial strength and
securitisation experience of Santander group, subordination of the
Notes and significant excess spread. However, Moody's note that the
transaction features a number of credit weaknesses, such as a (i)
complex structure including interest deferral triggers for junior
Notes, (ii) pro-rata payments on all rated classes of Notes after
the end of the revolving period, (iii) a five months revolving
structure which could increase performance volatility of the
underlying portfolio, partially mitigated by early amortisation
triggers, revolving criteria both on individual loan and portfolio
level and the eligibility criteria for the portfolio, and (iv) the
high linkage to Banco Santander Totta, acting as originator and
servicer. These characteristics, amongst others, were considered in
Moody's analysis and ratings.
Moody's determined the portfolio lifetime expected defaults of
6.0%, expected recoveries of 15% and portfolio credit enhancement
("PCE") of 18% related to borrower receivables. The expected
defaults and recoveries capture Moody's expectations of performance
considering the current economic outlook, while the PCE captures
the loss Moody's expect the portfolio to suffer in the event of a
severe recession scenario. Expected defaults and PCE are parameters
used to calibrate Moody's lognormal portfolio loss distribution
curve and to associate a probability with each potential future
loss scenario in the ABSROM cash flow model to rate Consumer ABS.
Portfolio expected defaults of 6.0% are in line with the EMEA
Consumer Loan ABS average and are based on Moody's assessment of
the lifetime expectation for the pool taking into account: (i)
historical performance of the loan book of the originator, (ii) the
pool composition in terms of the exposure to certain products i.e.
pre-approved loans where the borrower was offered an unsecured
consumer loan up to a maximum amount without initiating an
application process, (iii) benchmark transactions, and (iv) other
qualitative considerations.
Portfolio expected recoveries of 15% are in line with the EMEA
Consumer Loan ABS average and are based on Moody's assessment of
the lifetime expectation for the pool taking into account: (i)
historical performance of the loan book of the originator, (ii)
benchmark transactions, and (iii) other qualitative
considerations.
PCE of 18% is in line with the EMEA Consumer Loan ABS average and
is based on Moody's assessment of the pool which is mainly driven
by: (i) the revolving period, and (ii) the relative ranking to
originator peers in the EMEA Consumer loan market. The PCE level of
18.0% results in an implied coefficient of variation ("CoV") of
34.5%.
The principal methodology used in these ratings was "Moody's
Approach to Rating Consumer Loan-Backed ABS" published in July
2024.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may cause an upgrade of the ratings of the Notes
include significantly better than expected performance of the pool
together with an increase in credit enhancement of the Notes.
Factors that would lead to a downgrade of the ratings include: (i)
increased counterparty risk leading to potential operational risk
of (a) servicing or cash management interruptions and (b) the risk
of increased swap linkage due to a downgrade of the swap
counterparty ratings; and (ii) economic conditions being worse than
forecast resulting in higher arrears and losses.
===========================
U N I T E D K I N G D O M
===========================
BALLIE CARDIFF: Quantuma Advisory Named as Administrators
---------------------------------------------------------
Ballie Cardiff Ltd was placed in administration proceedings in the
High Court of Justice Business and Property Courts of England and
Wales, Court Number: CR-2024-005210, and Andrew Andronikou and
Brian Burke of Quantuma Advisory Limited, were appointed as
administrators on Sept. 17, 2024.
Ballie Cardiff is a licensed restaurant and bar.
Its registered office is at 2nd Floor Grove House, 6 Meridians
Cross, Ocean Way, Southampton, SO14 3TJ and it is in the process of
being changed to c/o Quantuma Advisory Limited, 7th Floor, 20 St
Andrew Street London, EC4A 3AG. Its principal trading address is
at Unit 6-7, The Old Brewery Quarter, Cardiff, CF10 1FG.
The joint administrators can be reached at:
Andrew Andronikou
Brian Burke
Quantuma Advisory Limited
7th Floor, 20 St. Andrew Street
London, EC4A 3AG
For further details, contact:
Darren McEvoy
Email: darren.mcevoy@quantuma.com
Tel No: 020 3856 6720
BROMHAM BIOGAS: Moorfields Named as Administrators
--------------------------------------------------
Bromham Biogas Ltd was placed in administration proceedings in the
the High Court of Justice, Business & Property Courts of England &
Wales, Insolvency & Companies List, Court Number: CR-2024-005578,
and Andrew Pear and Milan Vuceljic of Moorfields were appointed as
administrator on Sept. 25, 2024.
Bromham Biogas engages in general public administration activities
and educational support services.
Its registered office is at 82 St John Street, London, EC1M 4JN.
Its principal trading address is at Bromham House Farm, Bromham,
Chippenham, Wiltshire, SN15 2DX.
The joint administrator can be reached at:
Andrew Pear
Milan Vuceljic
Moorfields
82 St John Street, London
EC1M 4JN
Tel No: 020 7186 1144
For further information, contact:
Tess Mitchell
82 St John Street, London
EC1M 4JN
Moorfields
Email: tess.mitchell@moorfieldscr.com
Tel No: 020 7186 1144
CX REINSURANCE: Proposes to Enter Into Scheme of Arrangement
------------------------------------------------------------
CX Reinsurance Company Limited (in administration) proposes to
enter into a scheme of arrangement pursuant to Part 26 of the
Companies Act 2006 with its creditors with claims arising in
respect of contracts of direct insurance. A contract of direct
insurance means, for these purposes, the cover provided by an
insurer to a non-insurer policyholder, as opposed to
reinsurance cover provided by an insurer to cover insurance risks,
written by another insurer.
The Company entered into administration proceedings on August 17,
2020, and now proposes the Direct Scheme for the purposes of
endeavouring to bring closure to the run-off of its direct
insurance business.
The Company has sent a letter to all known Direct Scheme Creditors
for which it has contact details, to inform them of its proposal to
seek the court's approval of a single class meeting for voting on
the Direct Scheme.
A copy of the Practice Statement Letter is available at:
https://www.ey.com/en_uk/administrations/cxreinsurancecompanydirectscheme
Any person who believes that they may be affected by the Direct
Scheme is invited to read the Practice Statement Letter, consider
its contents carefully and take legal advice if they consider it
appropriate to do so.
The Company will make an application to the Business and Property
Courts of England and Wales for an order granting
permission to it to convene a meeting of the Direct Scheme
Creditors to vote upon the proposed Direct Scheme. At the hearing
to consider that application, the Court will be invited to consider
the constitution of classes of Direct Scheme Creditors and
therefore the number of meetings of Direct Scheme Creditors that
should be held to vote on the Scheme. The application is expected
to be heard on
October 3, 2024.
If you have any questions in relation to the Direct Scheme, please
contact the Administrators at:
Contact: Prava Kuhendraruban
Telephone: +44 20 7951 2000
Email: CXReClaims@uk.ey.com
FOLKESTONE FIXINGS: PricewaterhouseCoopers Named as Administrators
------------------------------------------------------------------
Folkestone Fixings Limited, trading as FFX, was placed in
administration proceedings in the High Court of Justice, Business
and Property Courts in Leeds, Insolvency and Companies List (ChD),
Court Number: CR-2024-LDS-000911, and Jane Steer, Timothy Andrew
Higgins, and Mark James Tobias Banfield of PricewaterhouseCoopers
LLP, were appointed as administrators on Sept. 20, 2024.
Folkestone Fixings' agents are involved in the sale of timber and
building materials, wholesale of other machinery and equipment,
retail sale of hardware, paints and glass in specialized stores,
and retail sale via mail order houses or via Internet.
Its registered office and principal trading address is Dyna House
Lympne Industrial Estate, Lympne, Hythe, Kent, England, CT21 4LR.
The joint administrators can be reached at:
Jane Steer
Timothy Andrew Higgins
Mark James Tobias Banfield
PricewaterhouseCoopers LLP
Central Square,
29 Wellington Street
LEEDS, LS1 4DL
For further information, contact:
Email: uk_ffx_creditors@pwc.com
Tel No: 0113 289 4000
HUB ENGINEERING: Begbies Traynor Named as Administrators
--------------------------------------------------------
Hub Engineering Ltd was placed in administration proceedings in the
the High Court of Justice, Court Number: CR-2024-005056, and Craig
Povey and Gareth Prince of Begbies Traynor (Central) LLP were
appointed as administrator on Sept. 25, 2024.
Hub Engineering engages in engineering activities.
Its registered office is at Unit 2, Meadows Drive, Chesterfield,
S43 3LH.
The joint administrator can be reached at:
Craig Povey
Gareth Prince
Begbies Traynor (Central) LLP
11th Floor, One Temple Row
Birmingham, B2 5LG
For further information, contact:
Lucy Corbett
Begbies Traynor (Central) LLP
Email: birmingham@btguk.com
Tel No: 0121 200 8150
IONA SCHOOL: FRP Advisory Named as Administrators
-------------------------------------------------
Iona School Association was placed in administration proceedings in
the High Courts of Justice, Court Number: CR-2024-005529, and
Philip Harris and Nathan Jones of FRP Advisory Trading Limited were
appointed as administrators on Sept. 23, 2024.
Iona School Association specializes in primary education.
Its registered office is at Iona School, 310 Sneinton Dale,
Nottingham, NG3 7DN. Its principal trading address is at 2nd
Floor, Phoenix House, 32 West Street, Brighton, BN1 2RT
The administrators can be reached at:
Philip Harris
FRP Advisory Trading Limited
Suite 2, 2nd Floor, Phoenix House
32 West Street, Brighton
BN1 2RT
-- and --
Nathan Jones
FRP Advisory Trading Limited
First Floor, Ashcroft House
Ervington Court, Harcourt Way
Meridian Business Park
Leicester, LE19 1WL
For further details, contact:
The Joint Administrators
Tel No: 01273 916666
Alternative contact:
Gemma Rolandi
Email: cp.brighton@frpadvisory.com
ISUPPLY GROUP: Leonard Curtis Named as Administrators
-----------------------------------------------------
Isupply Group Ltd was placed in administration proceedings in the
High Court of Justice Business and Property Courts in Manchester,
Insolvency & Companies List (ChD), Court Number:
CR-2024-MAN-001233, and Mike Dillon and Andrew Knowles of Leonard
Curtis were appointed as administrators on Sept. 26, 2024.
Isupply Group is a provider of temporary labour.
Its registered office and principal trading address is at 22 Bold
Street, Warrington WA1 1JL.
The administrators can be reached at:
Mike Dillon
Andrew Knowles
Leonard Curtis
Riverside House, Irwell Street
Manchester, M3 5EN
For further details, contact:
The Joint Administrators
Email: recovery@leonardcurtis.co.uk
Tel No: 0161 831 9999
Alternative contact: Helen Hales
SAMBRO INT'L: Teneo Financial Named as Administrators
-----------------------------------------------------
Sambro International Limited was placed in administration
proceedings in the High Courts of Justice, Business and Property
Courts in Leeds, Insolvency and Companies List (ChD), Court Number:
CR-2024-LDS-000940, and Daniel James Mark Smith and Julian
Heathcote of Teneo Financial Advisory Limited were appointed as
administrators on Sept. 27, 2024.
Sambro International designs, manufactures and distributes
children's toys, games and art and craft products.
Its registered office is at c/o Teneo Financial Advisory Limited,
The Colmore Building, 20 Colmore Circus, Queensway, Birmingham B4
6AT.
The administrators can be reached at:
Daniel James Mark Smith
Julian Heathcote
Teneo Financial Advisory Limited
The Colmore Building
20 Colmore Circus Queensway
Birmingham, B4 6AT
For further details, contact:
The Joint Administrators
Email: jack.crutchley@teneo.com
Tel No: 0121 619 0120
Alternative contact: Jack Crutchley
SPATIAL INITIATIVE: Ernst & Young Named as Administrators
---------------------------------------------------------
Spatial Initiative 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-2024-005536, and Timothy Vance and Charles Graham John King of
Ernst & Young LLP of Ernst & Young LLP were appointed as
administrators on Sept 23, 2024.
Spatial Initiative is a developer of building projects.
Its registered office is at c/o Ernst & Young LLP, 12 Wellington
Place, Leeds, LS1 4AP. Its principal trading address is at 31
Copenhagen Road, Hull, East Yorkshire, HU7 0XQ.
The administrators can be reached at:
Timothy Vance
Charles Graham John King
Ernst & Young LLP
12 Wellington Place, Leeds
LS1 4AP
For further information, contact:
The Joint Administrators
Email: siladministration@uk.ey.com
Alternative contact: Laura Jones
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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Editors.
Copyright 2024. All rights reserved. ISSN 1529-2754.
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