/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/241106.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, November 6, 2024, Vol. 25, No. 223 Headlines I R E L A N D BLACKROCK EUROPEAN VI: Fitch Hikes Rating on Cl. F Notes to 'B+sf' CONTEGO CLO XI: Fitch Assigns 'B-(EXP)sf' Rating on Class F-R Notes L U X E M B O U R G LUX VELVET: Moody's Affirms 'B2' CFR & Alters Outlook to Negative U N I T E D K I N G D O M DOBBIES GARDEN: Creditors Court Meeting Scheduled for Nov. 13 UNIVERSAL INSURANCE: A.M. Best Reviews B(Fair) Fin. Strength Rating - - - - - ============= I R E L A N D ============= BLACKROCK EUROPEAN VI: Fitch Hikes Rating on Cl. F Notes to 'B+sf' ------------------------------------------------------------------ Fitch Ratings has upgraded BlackRock European CLO VI DAC's class B to F notes while affirming the class A notes. The Outlook on the class C and D notes is Positive. Entity/Debt Rating Prior ----------- ------ ----- BlackRock European CLO VI DAC A-1 XS1854556377 LT AAAsf Affirmed AAAsf A-2 XS1856350829 LT AAAsf Affirmed AAAsf B-1 XS1854556963 LT AAAsf Upgrade AA+sf B-2 XS1854557771 LT AAAsf Upgrade AA+sf C XS1854558407 LT AAsf Upgrade Asf D XS1854559397 LT BBB+sf Upgrade BBBsf E XS1854559553 LT BB+sf Upgrade BBsf F XS1854559983 LT B+sf Upgrade B-sf Transaction Summary BlackRock European CLO VI DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by BlackRock Investment Management (UK) Limited and exited its reinvestment period in April 2023. It has EUR40 million of cash in the principal account, according to the latest trustee report dated October 2024. KEY RATING DRIVERS Deleveraging Transaction: According to the trustee report of October 2024, the transaction is in breach of several collateral-quality and portfolio-profile tests, and is currently slightly below target par. It has approximately EUR5 million of defaulted assets in the portfolio. However, the transaction's deleveraging since July 2023 has allowed the repayment of the class A-1 notes by EUR106 million and the class A-2 notes by EUR5.6 million. The repayment has led to a notable increase in credit enhancement across the capital structure since the last review. The Positive Outlook on the class C and D notes reflects the potential for upgrade if the deleveraging continues and if refinancing risk does not materialise. 'B/B-' Portfolio: Fitch assesses the average credit quality of the transaction's underlying obligors at 'B'/'B-'. The weighted-average rating factor (WARF), as calculated by Fitch under its latest criteria, is 26.8. High Recovery Expectations: Senior secured obligations comprise 92.9% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The weighted average recovery rate (WARR), as calculated by Fitch, is 60.3%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 16.4%, and the largest obligor represents 1.8% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 26.0% as calculated by the trustee. Cash Flow Modelling: The transaction is currently failing Fitch's 'CCC' test, another agency's 'CCC' test, and another agency's WARF test, which need to be satisfied for the manager to reinvest. Other failing tests are the minimum fixed-rate assets limit and the weighted average life (WAL) test. The manager has not made any purchases since May 2024. For the upgrade analysis, Fitch has stressed the portfolio by downgrading assets with a Negative Outlook by one notch, with the WAL floored at four years to account for refinancing risk under its criteria. Deviation from MIR: The class C notes are rated two notches and the class D notes at three notches below their respective model-implied ratings (MIRs), while the class E and F notes are one notch below their MIRs. The deviation reflects insufficient default-rate cushions and refinancing risk that can erode the cushion at the MIRs. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for BlackRock European CLO VI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. CONTEGO CLO XI: Fitch Assigns 'B-(EXP)sf' Rating on Class F-R Notes ------------------------------------------------------------------- Fitch Ratings has assigned Contego CLO XI DAC reset notes expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Contego CLO XI DAC A-R LT AAA(EXP)sf Expected Rating B-1-R LT AA(EXP)sf Expected Rating B-2-R LT AA(EXP)sf Expected Rating C-R LT A(EXP)sf Expected Rating D-R LT BBB-(EXP)sf Expected Rating E-R LT BB-(EXP)sf Expected Rating F-R LT B-(EXP)sf Expected Rating Transaction Summary Contego CLO XI DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds will be to refinance all the existing notes and to fund a portfolio with a target par of EUR500 million. The portfolio is actively managed by Five Arrows Managers LLP. The collateralised loan obligation (CLO) has a 4.5-year reinvestment period and a 7.5-year weighted average life (WAL) test at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors to be in the 'B' category. The Fitch weighted average rating factor (WARF) of the identified portfolio is 25.7. High Recovery Expectations (Positive): At least 90% of the portfolio comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate (WARR) of the identified portfolio is 61.3%. Diversified Portfolio (Positive): The transaction has a concentration limit for the 10 largest obligors of 20%. The transaction will also include various concentration limits, including a maximum exposure to the three-largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a 4.5-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio and matrices analysis is 12 months less than the WAL covenant, to account for structural and reinvestment conditions post-reinvestment period, including the over-collateralisation test and Fitch 'CCC' limitation test post reinvestment, among others. This ultimately reduces the maximum possible risk horizon of the portfolio when combined with loan pre-payment expectations. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to a downgrade of one notch for the class C-R to E-R notes, to below 'B-sf' or below for the class F-R notes and would have no impact on the class A-R and B-R notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B-R, D-R and E-R notes display a rating cushion of two notches, the class F-R notes a cushion of three notches and the class C-R notes a cushion of one notch. The class A-R notes have no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to three notches for the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to four notches, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the transaction's remaining life. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Missing text ESG Considerations Fitch does not provide ESG relevance scores for Contego CLO XI DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. =================== L U X E M B O U R G =================== LUX VELVET: Moody's Affirms 'B2' CFR & Alters Outlook to Negative ----------------------------------------------------------------- Moody's Ratings has affirmed Lux Velvet Holding S.a.r.l.'s ("Axilone" or the "company") B2 corporate family rating and its B2-PD probability of default rating. Axilone is a supplier of premium packaging for lipsticks, fragrances and skincare products. Concurrently, Moody's have affirmed the B2 ratings on the EUR327 million senior secured term loan and USD23 million backed senior secured term loan due January 2028 borrowed by Axilone and Axilone Holdings USA, Inc. respectively, and the B2 rating on the EUR45 million senior secured multicurrency revolving credit facility (RCF) due July 2027 borrowed by Axilone. Moody's have also affirmed Axilone's B2 rating on the USD48.9 million (USD7 million outstanding) senior secured term loan due January 2025.The outlook on both entities has changed to negative from stable. "The outlook change reflects Axilone's weaker than expected operating performance during the first eight months of 2024 and the risk of prolonged weakness in market conditions which may prevent the company to improve its EBITDA and credit metrics to levels consistent with the B2 rating," says Donatella Maso, a Moody's Ratings Vice President – Senior Credit Officer and lead analyst for Axilone. RATINGS RATIONALE Market conditions in the packaging sector for premium cosmetic and beauty products have continued to be subdued in the first eight months of 2024 negatively impacting Axilone's operating performance, particularly in the lipstick and skin care segments. As a result, the company's YTD August 2024 reported revenue and EBITDA declined at double digit rate compared to prior year owing to softer consumer demand, mainly in Asia and in global travel retail, as well as ongoing customer destocking. The decline in EBITDA, which was partially mitigated by a strict cost control, led to an increase in the company's Moody's adjusted gross leverage to 6.1x based on LTM August 2024 EBITDA. These difficult conditions are expected to persist at least for the remainder of 2024 with further deterioration in the company's EBITDA and gross leverage, which will increase to around 6.5x by year-end, well outside the guidance for the B2 rating category. While it remains uncertain when the consumer demand will able to absorb the inventory within the value chain, Moody's base case scenario assumes a gradual improvement in trading environment from 2025, which will result in an improvement of its EBITDA towards 2023 levels over 2025-2026, a gradual deleveraging and neutral free cash flow (FCF), also supported lower capital expenditures since the company almost completed its expansion projects. The negative outlook reflects the limited visibility on the pace and time of recoveryof the demand for packaging of premium cosmetic and beauty products. Axilone's B2 rating continues to reflect the focused and discretionary nature of the company's product offering, limited to premium packaging for lipsticks, fragrances and skin care products; its relatively small scale compared with its concentrated blue-chip customer base; the exposure to a competitive and cyclical end-market reliant on new launches with relatively short product life cycles; the company's currency exposure given that a large portion of its revenue is generated in US dollars, while a significant part of its production is based in China and the reporting currency is the Euro; and the lack of contractual pass-through mechanisms for raw material price changes, despite the company's good track record of mitigating raw material price volatility. Axilone's B2 rating remains supported by its Moody's-adjusted EBITDA margin, which is higher than of its peers because of the company's cost-competitive, comprehensive and integrated production capabilities in China, and its focus on premium brands and products. The rating positively reflects the company's broad revenue footprint across Europe, the US and Asia; and the diversification, although marginal, into skin care and local Asian brands. LIQUIDITY Axilone's liquidity is adequate as it is underpinned by approximately EUR57 million of cash on balance sheet as of August 31, 2024; full availability under its EUR45 million RCF due July 2027; and no significant debt maturity until January 2028 when the term loan is due. The company has also an access to EUR15 million non-recourse factoring program, but uncommitted in nature. These sources of liquidity are deemed sufficient to cover its basic cash flow needs including working capital, expansion projects and interest expense. The RCF has one springing financial covenant (net senior secured leverage ratio), set at 9.8x, to be tested on a quarterly basis when the RCF is drawn by more than 40%, for which Moody's expect the company to maintain an ample buffer. STRUCTURAL CONSIDERATIONS The B2 instrument ratings on the debt facilities are in line with the CFR, because they represent the majority of the debt capital structure. Guarantors represent at least 80% of consolidated EBITDA and the security package is weak, comprising mainly of share pledges. The capital structure includes a c. EUR260 million shareholders loan (including accrued interests) which matures in July 2028 that benefits from equity credit treatment. RATIONALE FOR NEGATIVE OUTLOOK The negative outlook reflects the risk of a prolonged weakness in market conditions which may prevent Axilone to improve its credit metrics to levels consistent with the B2 rating. The outlook also incorporates Moody's expectation that Axilone will maintain an adequate liquidity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook, a rating upgrade is unlikely in the near term. However, positive pressure on the rating could arise over time if the business further grows and diversifies. An upgrade could be considered if the company reduces its Moody's-adjusted debt/EBITDA below 4.0x on a sustained basis; its Moody's-adjusted FCF/debt ratio increases above 5%; and it improves its liquidity profile. Negative pressure on the rating could develop if the company's operating performance continues to deteriorate, for example from customer or brand losses; its Moody's-adjusted debt/EBITDA leverage remains above 5.5x or its Moody's-adjusted EBITDA/interest expense remains below 2.5x on a sustained basis; its Moody's-adjusted FCF stays negative beyond 2024; or liquidity concerns arise. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass and Plastic Containers published in December 2021. COMPANY PROFILE Axilone is a supplier of premium packaging for lipsticks, fragrances and skincare products. The company is owned by Trustar Capital Partners, the private equity affiliate of the Chinese CITIC Group Corporation (A3 stable), since 2018. =========================== U N I T E D K I N G D O M =========================== DOBBIES GARDEN: Creditors Court Meeting Scheduled for Nov. 13 ------------------------------------------------------------- In a Petition presented to the Court of Session on October 16, 2024 at the instance of Dobbies Garden Centres Limited, a private limited company incorporated under the Companies Acts (Company No. SC010975) and with its registered office at Melville Nurseries, Lasswade, Midlothian, Scotland, EH18 1AZ, for sanction of a compromise or arrangement under Part 26A of the Companies Act 2006 and between the Plan Company and seven classes of creditors, by virtue of an order made by the Court dated October 18, 2024, the Court has ordered that meetings be convened of the Plan Creditors for the purposes of considering and, if thought fit, approving (with or without modification) the Restructuring Plan. As authorised by the Court Order, the Court Meetings have been fixed to be held by way of video conference on November 13, 2024, and will commence at 9:00 a.m. (London time) and continue in sequential order (and at the times) listed below: | * 9:00 am Secured Creditors Court Meeting; * 9:30 am Class B1 Landlord Creditors Court Meeting; * 10:00 am Class B2 Landlord Creditors Court Meeting; * 10:30 am Class B3 Landlord Creditors Court Meeting; * 11:00 am Class C Landlord Creditors Court Meeting; * 11:30 am General Property Creditors Court Meeting; and * 12:00 noon Business Rates Creditors Court Meeting. At the Court Meetings, the following resolution will be proposed: "THAT this Restructuring Plan Meeting approves, with or subject to any modification, addition or condition approved or imposed by the Court, the restructuring plan under Part 26A of the Companies Act 2006 between Dobbles Garden Centres Limited and the Plan Creditors as set out in Explanatory Statement dated [date of issue of Explanatory Statement] and published by Dobbies Garden Centres Limited, a copy of which has been submitted to this Court Meeting". A copy of the Restructuring Plan and of the Explanatory Statement, together with a Proxy Form for us at the Court Meetings, are available on the Plan Website at https:/Avww.ips-docs.com. Plan Creditors can obtain access to the Plan Website using the details provided in the letter accompanying the Practice Statement Letter sent to Plan Creditors by the Information Agent (FTI Consulting LLP) on September 30, 2024. Please contact the Information Agent at DGCL@fticonsulting.com if you have not received your log in details, or are unable to access the Plan Website using your log in details. Further details of the Restructuring Plan and instructions and guidance for Plan Creditors are set out in the Explanatory Statement. Plan Creditors are encouraged to read the Explanatory Statement carefully. Where otherwise undefined, terms used in this notice shall have the meaning given to them in the Explanatory Statement. There will not be a physical meeting of any class of Plan Creditors. References in the Explanatory Statement to attending a Court Meeting 'in person' should be read as joining the relevant video conference on November 13, 2024. By the Court Order, the Court has appointed Lindsay Hallam of FTI or, in the event Ms. Hallam is unable to so act, Ali Khaki of FTI, to act as chairperson of the Court Meetings and has directed that person to report the result of the Court Meetings to the Court. The Proxy Form to be valid, it must be completed, signed, dated and returned to the Information Agent in accordance with the instructions, which are in the Explanatory Statement and printed on the Proxy Form itself, prior to the Voting Record Time. The Chairperson of the Court Meetings is to have the power to accept a Proxy Form which does not comply with those requirements. Plan Creditors may vote in person or appoint a proxy (either the Chairperson or another person of their choice who is willing to attend the relevant Court Meeting, who need not be a Plan Creditor) to attend and vote in their place by completing and submitting a Proxy Form, in accordance with the instructions which are in the Explanatory Statement. . It is requested that Instructions to appoint either the Chairperson or someone else as proxy are submitted by the Plan Creditors to the Information Agent at DGCL@fticonsulting.com as soon as possible and in any event so as to be received by the Information Agent at DGCL@fticonsulting.com by no later than the Voting Instruction Deadline being 5:00 p.m. London time on November 12, 2024. The Voting Record Time is 5.00 pm London time on November 12, 2024. For the purpose of voting, Proxy Forms must be submitted such that they are received by the Information Agent (at DGCL@fticonsulting.com) before the Voting Instruction Deadline, being 5:00 p.m. London time on November 12, 2024. In order for a person to have the right to vote, as a Plan Creditor, at the Court Meeting of the class (or any adjournment of it), they must, at the Voting Record Time be in that class of Plan Creditors and must be admitted to vote, in respect of their rights against the Company and the obligations which the Company owes them at the Voting Record Time, by the Chairperson. A Plan Creditor which is a corporation has the right to attend, speak and vote at the Court Meeting by one or more corporate representatives, who have been appointed in writing, provided that no more than one corporate representative may be appointed in respect of the same Plan Claim. The Chairperson may require a corporate representative to produce to the Information Agent, on his or her behalf, written authority to attend and vote at the Court Meeting at any time before the start of the Court Meeting. The Restructuring Plan will be subject to the subsequent approval of the Court. For further information, please visit https:/Avww.ips-docs.com. UNIVERSAL INSURANCE: A.M. Best Reviews B(Fair) Fin. Strength Rating ------------------------------------------------------------------- AM Best has placed under review with negative implications the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of "bb" (Fair) of Universal Insurance Company (Guernsey) Limited (UIC) (Guernsey). These actions on the Credit Ratings (ratings) follow the capitalization in September 2024 of Protect Insurance PCC Limited (Protect), which is a fully owned subsidiary of Universal Holdings (Guernsey) Limited (UHL), UIC's parent company. This has significantly reduced the cash available at UHL's level, from GBP 7 million at fiscal year-end 2024 (June 3, 2024) to an estimated GBP 1 million at the end of September 2024. Protect has been set up as a new risk carrier in Gibraltar, in the form of a Protected Cell Company, as part of UHL's group restructuring. The ratings have been placed under review with negative implications as AM Best needs time to assess the impact of the UHL group's restructuring on UIC's credit fundamentals, which remain under pressure due to the uncertainty associated with its strategic direction. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2024. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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