/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/241122.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 20, 2024, Vol. 25, No. 233 Headlines F R A N C E COOPER CONSUMER: Fitch Affirms 'B' LongTerm IDR, Outlook Stable SEQUANS COMMUNICATIONS: Releases Prelim Q3 2024 Financial Results I R E L A N D ARBOUR CLO VII: Fitch Assigns 'B-sf' Final Rating to Cl. F-R Notes NORTH WESTERLY IX: S&P Assigns Prelim B- (sf) Rating to F Notes I T A L Y BPER BANCA: Moody's Assigns Ba3(hyb) Rating to EUR500MM AT1 Notes DEDALUS SPA: Fitch Affirms 'B-' LongTerm IDR, Outlook Negative S W E D E N INTRUM AB: Seeks Confirmation of Prepackaged Restructuring Plan U N I T E D K I N G D O M ASCENSION HEALTHCARE: AlixPartners Named as Joint Administrators CLEANBRIGHT SERVICES: Leonard Curtis Named as Joint Administrators DAVIS COMMERCIAL: SFP Restructuring Named as Administrators DOWSON PLC 2022-2: Moody's Ups Rating on GBP17.9MM E Notes to B1 EG GROUP: Moody's Affirms 'B3' CFR & Alters Outlook to Stable EUROPEAN LIVING: Seneca IP Named as Administrators IT SKILLS: CG Recovery Named as Joint Administrators JAEVEE SPV1009: SFP Restructuring Named as Administrators JUST WASTE: Cromwell Insolvency Named as Administrators KIKI CONCEPTS: Marshall Peters Named as Administrators MORTIMER BTL 2023-1: Fitch Affirms 'BB+sf' Rating on Two Tranches PBB DEVICES: AlixPartners Named as Administrators RENALYTIX PLC: Icahn School of Medicine Owns 10.68% Ordinary Shares S4 CAPITAL: S&P Alters Outlook to Negative, Affirms 'B+' ICR SOPHOS INTERMEDIATE II: Moody's Alters Outlook on B2 CFR to Neg. TROY CENTRAL: Grant Thornton Named as Joint Administrators - - - - - =========== F R A N C E =========== COOPER CONSUMER: Fitch Affirms 'B' LongTerm IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Cooper Consumer Health's (Cooper) Long-Term Issuer Default Rating at 'B' with a Stable Outlook. Fitch has also affirmed the existing first-lien and second-lien senior secured instrument ratings at B+ with Recovery Ratings of 'RR3' and'RR6', respectively. The 'B' IDR balances Cooper's high leverage and aggressive financial policy with the solid business risk profile of its enlarged operations following the transformational acquisition of Viatris's European over-the-counter (OTC) drug portfolio completed mid-2024, high profitability and strong free cash flow (FCF) generation. The Stable Outlook reflects its expectation of gradual deleveraging towards 6.5x by end-2026 from 7.6x in 2023. The announced TLB add-on of EUR100 million, the proceeds of which will be used to repay an equivalent amount of second-lien debt marginally reduces the estimated recovery rate to 59% from 62%, but leaves the issuance rating firmly at 'B+'/'RR3'. Key Rating Drivers Acquisition Improves Business Profile: Fitch expects the EUR1.64 billion acquisition of Viatris's European OTC assets, which closed on 3 July 2024, to materially improve Cooper's business risk profile. The transformational acquisition has doubled Cooper's scale and improved its market position and product and geographic diversification within Europe. It has also reduced its reliance on the French market and strengthened its position in countries where it previously had a sub-scale presence. Fitch views the acquired brands as a good fit for the group's portfolio, as they are consumer OTC products mostly sold through retail pharmacies. High Leverage Constrains Rating: The rating is constrained by Cooper's high financial leverage, which in isolation would be incompatible with the 'B' IDR. The Stable Outlook is contingent on gradual deleveraging towards Fitch's negative sensitivities of 6.5x EBITDA leverage, with completion of the integration by end-2026, which is contingent on a slight recovery of margins. Fitch expects gross EBITDA leverage to remain around 7.5x in 2024 on a pro-forma basis (assuming annualisation of the contribution from Viatris's OTC assets), aided by a sizeable equity cofounding of EUR0.5 billion. The rating is predicated on steady and timely deleveraging, bringing EBITDA gross leverage towards 7.0x by end-2025 and 6.5x by end-2026. This incorporates its assumption of financial discipline and conservative capital allocation with no additional sizeable debt-funded acquisitions to 2026. Delays in deleveraging would signal weaker execution or increased operational risks and put pressure on the ratings. Execution Risk and Inflation: Fitch sees moderate execution risks in the integration of such a large and transformational acquisition, which could lead to lower margins or higher one-off costs than expected, particularly in the first two years from closing. Cooper has a successful record of acquisitive growth and integration of bolt-on acquisitions. The group was able to increase prices successfully in 2023 in the face of inflationary cost pressures, but the pricing sensitivity of customers remains to be tested in the face of weaker discretionary spending. Growth, Stable Margins Expected: Cooper's performance has been resilient, with stable demand during the pandemic and the ability to pass on cost inflation through price increases in 2023, which led to 6.2% growth. Fitch expects mid-single-digit organic revenue growth over 2025-2027, helped by volume growth, price increases and new product launches. Fitch projects stable EBITDA margins in 2024 at around 28.5%, followed by a gradual improvement toward 29.5% by 2026 as inflation eases. This should support solid cash generation, with FCF margins in high-single digits. Defensive Business; Secular Growth: Cooper has established strong market positions in selected regional OTC consumer health markets, and its specialist brand portfolio has access to protected and regulated retail channels as a supplier to pharmacies. These strengths balance its limited scale and geographic diversification. Market growth should continue to be supported by positive secular industry trends driving increasing demand for OTC consumer-health products, such as growing healthcare consumerism, an ageing population, and a focus on disease prevention and healthy lifestyle. Fitch believes that Cooper´s organic growth will also be driven by the optimisation its portfolio and commercialisation capabilities, as well as brand development. Protected and Regulated Market: Fitch views the continental European pharmacy sector, Cooper's main retail channel, as highly fragmented with small specialist local operators. Its core markets (France, the Netherlands, Italy and increasingly Iberia) are highly regulated and protected, offering barriers to entry and protecting Cooper's business model. Cooper's business model is subject to regulatory risk affecting the sector and risks from developing retail channels for its products, including online. However, Fitch views these risks as limited and projects a stable regulatory environment for Cooper's core markets in the medium term. Derivation Summary Fitch rates Cooper using its Ratings Navigator framework for consumer companies, while applying some aspects specific to healthcare. Under this framework, Fitch recognises that its operations are driven by marketing investments and a well-established relationship with a diversified pharmacy-based distribution network. Fitch compares Cooper with European asset-light pharmaceutical companies focused on off-patent branded and generic drugs, including Pharmanovia Bidco Limited (B+/Stable), CHEPLAPHARM Arzneimittel GmbH (B+/Stable) and ADVANZ PHARMA HoldCo Limited (B/Stable). Fitch also compares it with the larger generic drug manufacturer Nidda BondCo GmbH (Stada, B/Stable). CHEPLAPHARM and Pharmanovia have one notch higher ratings due to their lower leverage, higher profitability and stronger FCF margins, despite their structurally lower organic growth. ADVANZ has better organic growth potential than these two peers due to its internal pipeline, but it has lower margins and higher leverage. Stada benefits from more sizeable and cash-generative operations, but has a more aggressive financial risk profile than Cooper. Fitch also compares Cooper with consumer product company THG PLC (B+/Negative), a UK-based nutrition and beauty products manufacturer and distributor, which is rated one notch higher than Cooper given its more conservative financial risk profile, while its business risk profile is exposed to retail related risks with much weaker margins. Key Assumptions - Revenue growth of around 99% in 2024 (on a pro-forma basis) as a result of the acquisition of Viatris's European OTC products - Revenue growth around 5%-6% over 2025-2027, with organic growth around 3% supported by bolt-on acquisitions of EUR100 million a year - EBITDA margin at 28.4% in 2024, gradually improving towards 29.5% by 2027 - Capex at around 2.5%-3.0% of sales over 2024-2027 - No dividends Recovery Analysis The recovery analysis assumes that Cooper would remain a going concern (GC) in a restructuring and that it would be reorganised rather than liquidated. Fitch has assumed a 10% administrative claim in the recovery analysis. Following completion of the Viatris transaction, Fitch assumes a post-restructuring pro-forma EBITDA of EUR270 million, on which Fitch bases the enterprise value. Fitch assumes a distressed EBITDA multiple of 6.0x, reflecting the group's premium market positions and protected business model, especially in the French market. Fitch assumes Cooper's multi-currency revolving credit facility (RCF) of EUR295 million would be fully drawn in a restructuring, ranking equally with the rest of the senior secured first-lien loan. Its waterfall analysis generates a ranked recovery indicating a 'B+'/'RR3'/59% senior secured instrument rating on completion of the TLB add-on of EU100 million to refinance the second lien, one notch above the IDR. The recovery estimates for the second-lien debt tranches, the amount of which will reduce to EUR247million after the TLB add-on completion, remains in the 'RR6' band, indicating a 'CCC+' instrument rating, two notches below the IDR, reflecting their junior ranking behind first-lien creditors with a recovery percentage under its waterfall of 0%. If the final amount of TLB add-on is increased to repay the second-lien debt in full, the estimated first-lien recovery rate would remain above 50% in 'RR3'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Deteriorating organic or unsuccessful inorganic growth leading to a gradual weakening of EBITDA margins and low single-digit FCF margins - Continuing aggressive financial policy resulting in failure to deleverage to total debt/EBITDA below 6.5x by 2026. - EBITDA interest coverage below 2.0x on a sustained basis Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Profitable business organic growth, leading to robust EBITDA margins at around 30% - Solid profitability supporting continued strong cash conversion, with healthy FCF margins in high single digits - A more conservative financial policy leading to total debt/EBITDA at below 5.5x on a sustained basis. - EBITDA interest coverage above 3.0x on a sustained basis Liquidity and Debt Structure Strong Liquidity: Fitch views Cooper's liquidity as strong, supported by projected FCF margins at mid-to-high single digits for 2025-2027 and EUR295 million in committed undrawn RCFs. In its liquidity analysis Fitch excludes EUR25 million of cash Fitch deems as restricted for daily operations and intra-year working-capital requirements, and therefore not available for debt service. Cooper's debt maturities are long-dated, with EUR295 million RCFs maturing in May 2028, EUR2,075 million TLBs in November 2028 and EUR235 million and EUR112 million second-lien loans in November 2029. Issuer Profile Cooper is a leading European OTC consumer healthcare specialist managing a diversified portfolio of brands sold mainly in retail pharmacies. 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 ----------- ------ -------- ----- Cooper Consumer Health LT IDR B Affirmed B senior secured LT B+ Affirmed RR3 B+ Senior Secured 2nd Lien LT CCC+ Affirmed RR6 CCC+ SEQUANS COMMUNICATIONS: Releases Prelim Q3 2024 Financial Results ----------------------------------------------------------------- Sequans Communications S.A. announced preliminary financial results for the third quarter ended September 30, 2024. "We are excited about our position in the IoT market following the successful closure of our Qualcomm deal, which significantly strengthened our balance sheet," said Georges Karam, CEO of Sequans. "As we look ahead, we anticipate growth in product revenue beginning in the fourth quarter of 2024 and continuing into 2025. With operating expenses targeted to decrease in 2025, we expect to reach breakeven in 2026." Dr. Karam continued, "Our financial stability ensures that customers can rely on us for their multi-year application deployments, securing our design wins pipeline and accelerating its growth. With proven technology leadership, an experienced team, and a strategic go-to-market approach tailored for the IoT market, we are more confident than ever in our competitive edge, which we intend to maintain with an innovative product strategy that includes enhancements to our existing 4G IoT platforms and the introduction of next-generation 5G RedCap/eRedCap products." * Q4 2024 Outlook Management anticipates approximately 10% sequential growth in Q4 2024. Product revenue is expected to double from Q3, and licensing and services revenue will remain significant, including a licensing component related to the Qualcomm deal. * Third Quarter 2024 Financial Summary: Revenue: Revenue was $10.1 million, an increase of 4.2% compared to the second quarter of 2024 and an increase of 29.5% compared to the third quarter of 2023. Product revenue was $2.4 million, flat compared to the second quarter of 2024 and an increase of 144.5% compared to the third quarter of 2023. License and services revenue was $7.7 million, largely driven by the recognition of a portion of the Taurus 5G license to Qualcomm as part of the overall transaction. This compares to $7.2 million in the second quarter primarily related to Monarch 2 manufacturing license agreement announced on June 18, 2024. Gross margin: Gross margin was 82.5% compared to 84.0% in the second quarter of 2024 and 85.8% in the third quarter of 2023. Operating profit (loss): Operating profit was $87.0 million compared to operating losses of ($3.7 million) in the second quarter of 2024 and ($7.8 million) in the third quarter of 2023. Operating profit in the third quarter of 2024 includes the net gain on sale of the 4G IP assets to Qualcomm for $152.7 million, partially offset by a $56.6 million loss on the impairment of 5G Taurus assets and operating expenses of $17.5 million. Net profit (loss): Net profit was $72.3 million, or $2.61 per diluted ADS, compared to net losses of ($0.9 million), or ($0.04) per diluted ADS, in the second quarter of 2024 and ($9.6 million), or ($0.41) per diluted ADS, in the third quarter of 2023. Non-IFRS profit (loss) and diluted profit (loss) per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value, the effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net profit was $80.5 million, or $2.91 per diluted ADS, compared to non-IFRS net losses of ($5.8 million), or ($0.23) per diluted ADS in the second quarter of 2024, and ($6.8 million), or ($0.29) per diluted ADS, in the third quarter of 2023. Cash: Cash and cash equivalents at September 30, 2024 totaled $173.6 million compared to $13.1 million at June 30, 2024. Subsequent to September 30, 2024, $85 million in matured convertible debt, related party loans and accrued interest was repaid. 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. ============= I R E L A N D ============= ARBOUR CLO VII: Fitch Assigns 'B-sf' Final Rating to Cl. F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Arbour CLO VII DAC reset notes final ratings, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Arbour CLO VII DAC A XS2092169817 LT PIFsf Paid In Full AAAsf A-R XS2936116966 LT AAAsf New Rating B-1 XS2092171045 LT PIFsf Paid In Full AAsf B-2 XS2092171128 LT PIFsf Paid In Full AAsf B-R XS2936116883 LT AAsf New Rating C XS2092171805 LT IFsf Paid In Full Asf C-R XS2936117261 LT Asf New Rating D XS2092172449 LT PIFsf Paid In Full BBB-sf D-R XS2936117188 LT BBB-sf New Rating E XS2092173173 LT PIFsf Paid In Full BB-sf E-R XS2936117345 LT BB-sf New Rating F XS2092173330 LT PIFsf Paid In Full B-sf F-R XS2936117428 LT B-sf New Rating Transaction Summary Arbour CLO VII 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 have been used to redeem all the existing notes apart from the class M notes and the subordinated notes, and to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by Oaktree Capital Management (Europe) LLP. The collateralised loan obligation (CLO) has a two-year reinvestment period and a six-year weighted average life (WAL) test at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'. The Fitch weighted average rating factor of the identified portfolio is 25.3. 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 of the identified portfolio is 61.7%. Diversified Asset Portfolio (Positive): The transaction includes two Fitch matrices effective at closing, corresponding to a WAL covenant of six years and two fixed-rate asset limits at 5% and 12.5%. The transaction also includes various concentration limits, including a top-10 obligor concentration limit at 20% and 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 two-year reinvestment period, which is governed by reinvestment criteria that are 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): Strict reinvestment conditions are envisaged by the transaction after its reinvestment period. These include passing the coverage tests and the Fitch 'CCC' maximum limit, as well as a WAL covenant that progressively steps down over time. In Fitch's opinion, these conditions would reduce the effective risk horizon of the portfolio during stress periods. However, the Fitch-stressed portfolio is modelled at the WAL covenant since it is already at the floor of six years as stipulated in Fitch's criteria. 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 result in no rating impact on the class A-R and B-R notes and a downgrade of one notch for the class C-R to E-R notes and to below 'B-sf' for the class F-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 to F-R notes have a rating cushion of two notches. 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 result in a downgrade of up to three notches for the class A-R, B-R, C-R, and E-R notes, up to two notches on the D-R notes and to below 'B-sf' for the F-R 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 three notches, except for the 'AAAsf' notes, which are at the highest level on Fitch's scale and cannot be upgraded. 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 Arbour CLO VII 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. NORTH WESTERLY IX: S&P Assigns Prelim B- (sf) Rating to F Notes --------------------------------------------------------------- S&P Global Ratings assigned its preliminary credit ratings to North Westerly IX ESG CLO DAC's class A-loan and class A to F European cash flow CLO notes. At closing, the issuer will also issue unrated class M-1, M-2, and subordinated notes. Under the transaction documents, the rated notes and loan will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period ends approximately 5.1 years after closing, and its non-call period ends two years after closing. The issuer will subscribe for the class F notes at closing. Following the issue date, the subordinated noteholders may direct the sale of the class F notes, at which point the sale proceeds will be paid to the subordinated noteholders. For so long as the issuer is still holding of the class F notes, they shall be deemed not to be outstanding for all purposes. The preliminary ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises 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 co-managers, which we expect to comply with our operational risk criteria. -- The transaction's legal structure, which we expect to be bankruptcy remote. -- The transaction's counterparty risks, which we expect to be in line with our counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,735.89 Default rate dispersion 495.61 Weighted-average life (years) 4.87 Weighted-average life (years) extended to cover the length of the reinvestment period 5.06 Obligor diversity measure 127.05 Industry diversity measure 22.38 Regional diversity measure 1.25 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.00 Target 'AAA' weighted-average recovery (%) 37.74 Target weighted-average spread (net of floors; %) 4.13 Target weighted-average coupon (%) 4.21 Rationale S&P said, "Our preliminary ratings reflect our assessment of the preliminary collateral portfolio's credit quality, which has a weighted-average rating of 'B'. We consider that the portfolio will be well-diversified as of the closing date, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (4.00%), the covenanted weighted-average coupon (3.00%), the covenanted weighted-average recovery rates of 37.00% at the 'AAA' rating level, and the target weighted-average recovery rates at all other rating levels, as indicated by the collateral co-managers. 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. "We have modeled both capital structures envisaged in the transaction's documents (one with the class F notes held by the issuer, and one assuming the class F notes are sold at closing), together with their corresponding waterfalls and coverage tests. We have assigned our preliminary ratings based on the most conservative results. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1 to F notes benefits from break-even default rate and scenario default rate cushions that we would typically consider commensurate with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings assigned to the notes. The class A-loan and class A notes can withstand stresses commensurate with the assigned preliminary ratings. "Until the end of the reinvestment period on Jan. 15, 2030, the collateral co-managers may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral co-managers may through trading deteriorate the transaction's current risk profile, as long as the initial ratings are maintained. "Under our structured finance sovereign risk criteria, we expect that the transaction's exposure to country risk will be sufficiently mitigated at the assigned preliminary ratings as of the closing date. "We expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote. The issuer is expected to be a special-purpose entity that meets our criteria for bankruptcy remoteness. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for the class A loan and class A to F notes. "In addition to our standard analysis, to provide an indication of 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 A-loan and class A to E 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 notes." The transaction securitizes a portfolio of primarily senior secured leveraged loans and bonds, and it will be co-managed by North Westerly Holding B.V. and Aegon Asset Management UK PLC. Ratings Prelim. Prelim. Amount Credit Class rating* (mil. EUR) Interest rate§ enhancement (%) A AAA (sf) 163.00 3mE +1.30% 38.00 A-loan AAA (sf) 85.00 3mE +1.30% 38.00 B-1 AA (sf) 29.00 3mE +2.00% 27.00 B-2 AA (sf) 15.00 5.05% 27.00 C A (sf) 24.00 3mE +2.50% 21.00 D BBB- (sf) 28.00 3mE +3.40% 14.00 E BB- (sf) 17.00 3mE +6.00% 9.75 F B- (sf) 13.00 3mE +8.64% 6.50 M-1 NR 15.00 N/A N/A M-2 NR 35.00 N/A N/A Sub NR 42.77 N/A N/A *The preliminary ratings assigned to the class A-loan and class A, B-1, and B-2 notes address timely interest and ultimate principal payments. The ratings assigned to the class C to F 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. NR--Not rated. N/A--Not applicable. 3mE--Three-month Euro Interbank Offered Rate. ========= I T A L Y ========= BPER BANCA: Moody's Assigns Ba3(hyb) Rating to EUR500MM AT1 Notes ----------------------------------------------------------------- Moody's Ratings has assigned a Ba3(hyb) rating to the EUR500 million Additional Tier 1 (AT1) non-viability contingent capital instrument to be issued by BPER Banca S.p.A. (BPER, Baa1 Stable/Baa3 Stable, baa3). RATINGS RATIONALE BPER is in the process of raising EUR500 million of AT1 notes, that will be a standalone issuance, not part of an Euro Medium Term Notes programme. The notes are unsecured and perpetual, with a call option after five years and have an optional non-cumulative coupon suspens mechanism as well as a low trigger (Common Equity Tier 1 (CET1) ratio dropping below 5.125%) principal write-down feature. The AT1 securities are contractual non-viability preferred securities. In a bank resolution they rank senior only to junior obligations, including ordinary shares and CET1 capital. Coupons are cancelled on a non-cumulative basis at the bank's discretion, and on a mandatory basis subject to availability of distributable funds and breach of applicable regulatory capital requirements. The Ba3(hyb) rating assigned to the notes is based on (1) the standalone creditworthiness of BPER as expressed by the bank's baa3 Baseline Credit Assessment (BCA); (2) the high loss-given-failure under Moody's Advanced Loss Given Failure (LGF) analysis, resulting in one notch downward adjustment from the BCA; and (3) the higher payment risk associated with the non-cumulative coupon skip mechanism, resulting in a further two notches of downward adjustment. The Advanced LGF analysis also takes into consideration the principal write-down feature, in combination with the AT1 notes' deeply subordinated status in liquidation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The rating of the notes is mainly driven by BPER's baa3 standalone BCA which reflects the bank's good asset quality and sound capital, as well as its increased ability to generate profit and its robust funding. The BCA also considers BPER's long-term growth strategy by way of acquisitions which involves significant execution risks. Because BPER's BCA is at the same level as Italy's Baa3 sovereign debt rating, an upgrade is unlikely unless Italy's government bond rating is upgraded. Conversely, any downgrade of the bank's BCA would likely result in a downgrade of the Ba3(hyb) rating assigned to this security. PRINCIPAL METHODOLOGY The principal methodology used in this rating was Banks Methodology published in March 2024. DEDALUS SPA: Fitch Affirms 'B-' LongTerm IDR, Outlook Negative -------------------------------------------------------------- Fitch Ratings has affirmed Dedalus SpA's Long-Term Issuer Default Rating (IDR) at 'B-', with a Negative Outlook. It has also affirmed Dedalus Finance GmbH's EUR1,225 million senior secured term loan B (TLB) at 'B'. The Recovery Rating remains at 'RR3'. The Negative Outlook reflects slow deleveraging progress and high execution risks around the company's growth strategy that can only be achieved with new contract wins or additional service volumes from up- and cross-selling while deleveraging would also require tight cost control. Fitch expects Fitch-defined EBITDA leverage to be close to 10x at end-2024, before it declines to below 8.5x in 2025, with weak interest cover metrics. Key Rating Drivers High Leverage: Fitch expects stronger deleveraging in 2025, after slow progress this year. It will be supported by higher revenue growth and improving profitability as benefits of significant restructuring efforts at end-2023 and 2024 will start to be realised. Fitch projects gross leverage to fall to slightly below 8.5x at end-2025, which would be consistent with the 'B-' rating. Gross EBITDA leverage for 2024 is forecast at close to 10x, as bolt-on divestments dented EBITDA generation but were not accompanied by an overall debt reduction. Limited Pricing Flexibility: Like many of its European peers, Dedalus has only limited flexibility to increase prices, likely in the low single-digit range per annum. The downside of its long-term contract relationships is that price increases are capped and prices cannot be easily raised, which is particularly relevant for healthcare providers relying on public funding such as hospitals. Fitch expects pricing flexibility to increase as contracts are renewed in the medium term. Supportive Longer-Term Sector Trend: Dedalus benefits from increasing expenditure on healthcare and rising sector digitalisation both in Europe and globally, including through government-sponsored initiatives such as the Hospital Future Act in Germany and 'Segur de la sante' in France. Some industry experts (such as Grand View Research and Data Bridge Market Research) estimate a double-digit CAGR in global healthcare information systems and pharmacy information systems markets in 2024-2030. Fitch believes, at least high single-digit revenue growth should be achievable in the short-to-medium term. Improving Efficiency: Fitch expects Dedalus's EBITDA (after deducting lease costs and capitalised R&D) margin to improve from 2025, as the company streamlines its operations, exits unprofitable markets, stabilises its R&D and G&A costs, improves productivity and reduces headcount. Management is targeting a roughly 2% annual increase in its company-defined cash EBITDA margin in 2025. Dedalus exited non-core US and Chinese markets under its strategy in 2024, and more non-core exits may follow unless a rapid turnaround is achieved. Improving operational KPIs such as lower backlog of severe tickets and higher net promoter score should facilitate cross- and up-selling and new contract wins. High Execution Risk: Fitch believes Dedalus is facing significant execution risks in its strategy to achieve strong double-digit revenue growth. With low capacity for voluntary price increases, growth can only be achieved from new contract wins and expanded service volumes. However, growth may be constrained by delays in government initiatives but also limited healthcare budgets due to a sluggish European economy. Enduring Customer Relationships: Dedalus benefits from low single-digit customer churn and a high share of recurring revenues (66% in 8M24), leading to good cash flow visibility and stability. The critical nature of healthcare software products, combined with significant barriers to entry including high switching costs, large initial R&D, rigorous medical regulations, the long-term nature of contracts (three to six years), as well as low technological risk underpin strong customer-base sustainability. Strong Position in Fragmented Markets: Dedalus has strong positions in its typically fragmented markets, with its share varying from 20% to 80% across key targeted sub-segments. Its main competitive advantages are a dedicated focus on the healthcare industry, strong R&D capabilities and a reasonably large size that allows it to offer and maintain a broad range of healthcare systems in compliance with local regulation and international best practice. Dedalus's market positions and growth are helped by larger competitors SAP and Oracle Cerner discontinuing support for some of their key legacy products in Europe, essentially ceding opportunities to dedicated healthcare IT providers. Fewer Cash-Flow Benefits: Fitch expects fewer cash flow benefits in 2025 as Dedalus has largely completed collecting old accounts receivables after fixing its ERP functionality and divested a few non-core assets. The cash flow contribution from these two factors was significant in 2024 at EUR65 million, which helped fund over EUR30 million of restructuring costs and improve liquidity headroom. Declining Interest Payments: Fitch expects Dedalus to reduce its interest payments after it acquired a number of hedging instruments in 2024. Overall, interest savings could amount to around EUR10 million in 2025 and another EUR10 million in 2026, thereby supporting cash flow. Break-Even Cash Flow: Fitch expects Dedalus's cash flow to turn slightly positive in 2025 on stronger EBITDA generation, with the majority likely to be spent on continuing restructuring. Cash flow generation may improve in 2026 assuming the company can keep its R&D investments under control and achieve additional profitability improvement. Derivation Summary Dedalus's close Fitch-rated peers (providers of healthcare revenue-cycle-management (RCM) or other healthcare-related software) FinThrive Software Intermediate Holdings, Inc. (FinThrive; CCC+), Waystar Technologies, Inc. (Waystar; BB-/Positive) and athenahealth Group Inc. (B/Negative) benefit from significantly stronger EBITDA margins and higher organic revenue growth driven by conducive US healthcare market fundamentals. With the exception of Waystar, these companies' ratings, similar to Dedalus's, are constrained by high leverage. Dedalus's broader Fitch-rated peers in Europe include TeamSystem S.p.A. (B/Stable), a leading Italian provider of ERP and accounting software for SMEs, and Unit4 Group Holding B.V. (B/Stable), an ERP provider for medium-sized people-centric organisations across Europe. These peers also benefit from healthy market trends and a sustainable customer base but have notably higher churn. Their leverage is lower than Dedalus's. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - High-single-digit revenue growth in 2024-2027 - Fitch-defined EBITDA margin at 15% in 2024, gradually improving to above 17% in the medium term - Recurring exceptional costs of EUR5 million per annum deducted from EBITDA to 2027 - No cash flow from working capital to 2027 after an above EUR40 million inflow in 2024 - Capex at 2% of revenue to 2027 - Capitalised R&D costs treated as cash expenses and deducted from EBITDA - Factoring facility of EUR60 million utilised and treated as debt - No acquisitions or dividends to 2027 Recovery Analysis The recovery analysis assumes that Dedalus would be reorganised as a going concern (GC) in a bankruptcy rather than liquidated. Fitch estimates that its post-restructuring EBITDA would be around EUR135 million. Fitch would expect a default to come from a fall in revenue and EBITDA following software problems, unfavourable changes in regulation, reputational damage or intensified competition. The EUR135 million GC EBITDA is 16% lower than its Fitch-defined 2025 EBITDA forecast. An enterprise value (EV) multiple of 6x is applied to the GC EBITDA to calculate a post-reorganisation EV. The multiple is in line with that of other similar software companies that exhibit good pre-dividend FCF, a high share of recurring revenues and low customer churn. Fitch deducts a 10% of administrative claim from the EV to account for bankruptcy and associated costs. Fitch estimates the total amount of secured debt for claims at EUR1,385 million, which includes a EUR1,225 million senior secured TLB and assume that Dedalus's equally ranked EUR160 million revolving credit facility (RCF) is fully drawn. Fitch does not include in total debt Dedalus's payment-in-kind (PIK) notes, which are outside of the scope of the restricted group, and Fitch treats them as equity, in line with its criteria. Similarly, Fitch does not include factoring facilities in the total claims estimates as Fitch believes the factoring programme will continue to be available through bankruptcy. Fitch estimates expected recoveries for senior secured debt at 53%. This results in the senior secured debt rating of 'B', one notch above the IDR. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to an Upgrade - EBITDA leverage below 6.5x - Cash from operations (CFO) less capex/gross debt at above 5% - Continued strong market leadership and strong FCF generation - EBITDA interest coverage above 2.5x Factors That Could, Individually or Collectively, Lead to the Outlook Being Revised To Stable - Visibility that EBITDA leverage is trending below 8.5x - Improvement in EBITDA interest coverage and FCF turning positive Factors That Could, Individually or Collectively, Lead to a Downgrade - EBITDA leverage above 8.5x - CFO less capex/gross debt persistently negative - EBITDA interest coverage persistently below 2x - A weakening market position manifested in slowing revenue growth - Eroding liquidity prompted by continuously weak or negative FCF with the RCF constantly drawn by a significant amount Liquidity and Debt Structure Tight Liquidity: Dedalus estimated cash on its balance sheet at approximately EUR50 million, supported by around EUR70 million remaining headroom under its total EUR160 million RCF facility at end-September 2024. Management expects to increase cash generation by around EUR30 million and reduce RCF utilisation by the same amount by end-2024. Dedalus's TLB is due in May 2027. Issuer Profile Dedalus is a leading pan-European provider in a fragmented healthcare software market, formed in May 2020 from the merger of Dedalus's operations in Italy and France and Aceso, a carve-out of the healthcare software business from Agfa-Gevaert with operations in Germany, Austria, Switzerland and France. 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 ----------- ------ -------- ----- Dedalus SpA LT IDR B- Affirmed B- Dedalus Finance GmbH senior secured LT B Affirmed RR3 B =========== S W E D E N =========== INTRUM AB: Seeks Confirmation of Prepackaged Restructuring Plan --------------------------------------------------------------- Swedish debt collector Intrum AB filed for Chapter 11 protection in Houston, Texas, with a prepackaged plan of reorganization that would extend maturities of debt owed to revolving lenders and bondholders and grant bondholders 10% of the equity in the company. Intrum is one of Europe's largest credit management companies. The Company serves more than 80,000 clients across 19 countries and employs approximately 10,000 individuals across 22 countries. In 2022 alone, more than four million customers across Europe became debt-free with the Company. While Intrum AB's origins are in traditional debt collection on a client's behalf, today the Company offers a wide range of additional services thanks to development and the Company's innovation and acquisitions. Through its servicing line of business, the Company provides clients with tailored debt collection strategies and solutions to maximize cash flow streams from loans and other overdue receivables. The Company also offers value-added services and alternative solutions prior to loans and other receivables becoming overdue, including credit information and analysis, data extraction, and accounts receivable services. Through its portfolio investing line of business, the Company purchases portfolios of loans and other overdue receivables at a discount and then services those portfolios using its own debt collection measures. In the months leading up to the Petition Date, the Company faced numerous challenges from the broader macroeconomic market. High inflation, reduced access to capital markets, and a slowing European economy all put downward pressure on the Company. European central banks sharply increased interest rates to combat high inflation, with the European Central Bank only beginning to cut rates in June 2024. The combination of slow growth and high inflation has placed significant stress on households and businesses throughout Europe: "Stage 2" loans, or loans where credit risk has increased significantly, were almost 60% higher in 2023 than compared to 2019. These challenges, in turn, negatively impacted Intrum AB's business and led to market speculation concerning Intrum AB's ability to repay its 2024 and 2025 debt maturities. In January 2024, Intrum AB announced that it would receive a liquidity boost from a major sale of a portfolio of assets. The markets, however, reacted negatively to the announcement of the sale, and in February 2024 Intrum AB began experiencing a series of downgrades by rating agencies. Following these events, Intrum AB's share price also dropped significantly. The Company recognized the significant risk of not being able to address its debt liabilities on the capital markets, which fell in successive years from 2024 through 2028 -- including $3.497 billion in 2025 and 2026 alone -- and that its debt was jeopardizing the future health of the Company. To help address these challenges, in the second quarter of 2024 Intrum AB approached creditors regarding potential restructuring transactions. It thereafter engaged in months of extensive, good faith negotiations with two separate groups of creditors as well as its lenders under its revolving credit facility (the "RCF"), and discussions with an ad hoc group of its noteholders eventually culminated on July 10, 2024, with entry into a Lock-Up Agreement (the "Lock-Up Agreement") with beneficial holders of a majority by principal amount of the notes issued by the Company. Overwhelming Support for Plan Given the extensive negotiations with its lenders in advance of the Petition Date and significant lender support for the Restructuring, the Debtors elected to pursue a prepackaged restructuring and have entered these chapter 11 cases with a fully-solicited Plan. Lenders holding 100% by principal amount of voting claims under the RCF and holders of approximately 82% by principal amount of voting claims under the Debtors' nine unsecured notes issuances have voted to accept the Plan. "I believe that the Plan will not only help stabilize the reorganized Debtors' business in the near-term but will position them to operate successfully and be competitive within their industry in the long-term. As a result of the Plan, I believe the Debtors will emerge from these Chapter 11 Cases as a stronger enterprise, with a sustainable capital structure that is better aligned with the Debtors' present and future operating prospects," Andres Rubio, CEO of Intrum AB said in the U.S. Court filing. Prepetition Capital Structure The Debtors have incurred funded debt through three primary types of debt instruments: (i) the RCF; (ii) the Senior Secured Term Loan Facility; and (iii) nine unsecured notes issuances. The aggregate principal indebtedness as of the Petition Date is as follows: Facility Principal Balance Outstanding -------- ----------------------------- RCF $1.116 billion Senior Secured Term Loan Facility $95 million 2025 Eurobonds $843 million 2026 Eurobonds $840 million 2027 Eurobonds $870 million 2028 Eurobonds $473 million PPNs $79 million SEK 1.1b 2025 MTNs $100 million SEK 400m 2025 MTNs $36 million SEK 1.25b 2025 MTNs $114 million SEK 1b 2026 MTNs $91 million -------------- Unsecured Notes (aggregate) $3.445 billion -------------- Total $4.656 billion Dissenting Bondholders In March, Intrum AB announced that it hired Milbank LLP and Houlihan Lokey to assist it in undertaking a review of its debt capital structure. Two bondholder groups formed: a group of short-dated bondholders holding primarily 2024- and 2025-maturing notes represented by Weil Gotshal & Manges LLP (the "Minority Ad Hoc Group"), and a group of bondholders holding widely across Intrum AB's notes issuances represented by Latham & Watkins LLP (the "Notes Ad Hoc Group"). Shortly thereafter, each of the Minority Ad Hoc Group and Notes Ad Hoc Group shared two very different transaction proposals with Intrum AB. With the Minority Ad Hoc Group, Intrum AB negotiated the terms of a potential uptiering refinancing transaction that would have refinanced the 2024 and/or 2025 notes on a secured basis, using existing capacity under Intrum AB's notes indentures. The potential transaction would have required Intrum AB to (i) refinance the entirety of the 2025 notes maturities, (ii) obtain consent from the lenders under the RCF, and (iii) deleverage, through refinancing 2025 notes at a discount and/or buying back longer dated notes maturities at a discount. Negotiations with the Minority Ad Hoc Group ultimately stalled, as Intrum AB reached an agreement in principle with the Notes Ad Hoc Group and perceived that the likely benefits of the transaction on the terms the Minority Ad Hoc Group was willing to offer did not outweigh the significant complexity and risk of undertaking the transaction. With the Notes Ad Hoc Group, Intrum AB negotiated the terms of a potential pari passu transaction, which ultimately resulted in the Restructuring. Unlike the potential transaction with the Minority Ad Hoc Group, the Restructuring addressed Intrum AB's entire maturity profile and delivered deleveraging to the business by capturing discount. It also benefitted from being a less complex transaction, which Intrum AB perceived would improve its ability to agree to a maturity extension with the RCF lenders and build broad based support. On July 10, 2024, Intrum AB entered into the Lock-Up Agreement with beneficial holders of a majority by principal amount of the Notes issued by Intrum AB. On the same day, the Lock-Up Agreement was publicly launched via a website set up and maintained by Kroll Issuer Services Limited, in its capacity as Information Agent. Throughout May, June, July, and August, the Company also engaged in negotiations with a group that collectively holds approximately 76% of the total commitments under the RCF (the "RCF Steerco Group"). On August 15, 2024, the Company and a requisite majority of consenting noteholders reached agreement with the RCF Steerco Group on revised terms of the Restructuring; most notably, the revisions included a contemplated reduction in total RCF commitments to $1.1 billion, a two-year maturity extension subject to certain springing maturities, and adjustments to the payment waterfall and application of proceeds with respect to the new money notes. The parties' agreement was documented in an amendment and restatement agreement to the Lock-Up Agreement. Following the amendment and restatement to the Lock-Up Agreement, the Company sought support from additional creditors, and as of the Petition Date, lenders holding approximately 97% by value of the total commitments represented by the RCF and 73% in principal amount of the Notes have agreed to support the Restructuring and vote to accept the Plan by executing the Lock-Up Agreement. Despite the significant increase in creditor support during the period from the signing of the initial Lock-Up Agreement in July 2024 until the signing of the amended and restated Lock-Up Agreement in August 2024, two separate minority ad hoc groups of Noteholders -- the Minority Ad Hoc Group and another group represented by Ropes & Gray LLP -- have refused to support the Restructuring and accede to the Lock-Up Agreement. Holdings of both groups are understood to be primarily in the 2025 Eurobonds and 2025 MTNs. Notwithstanding months of good faith discussions with these dissenting ad hoc groups to encourage their support of the Restructuring, as of the date hereof, the dissenting groups have not agreed to support the Restructuring and are not party to the Lock-Up Agreement. The concerns of the dissenting noteholders appear to be primarily focused on the pari passu nature of the Restructuring as it relates to the Debtors' notes issuances: regardless of maturity, pursuant to the Plan each noteholder receives its pro rata share of the exchange notes and noteholder equity allotment with no distinction based on the various maturities. But the dissenting noteholders have been unable to offer the Debtors an actionable restructuring alternative compared to the Restructuring that enjoys such broad-based support throughout the capital structure. Accordingly, given the significant support for the Debtors' restructuring, the Debtors elected to pursue a prepackaged restructuring to maximize value by minimizing both the costs of restructuring and the impact on the Debtors' businesses Terms of Chapter 11 Plan The Lock-Up Agreement and Plan contemplate, among other things: (i) an approximately two-year extension of the RCF maturity to June 30, 2028 (subject to certain springing maturity rights) and a reduction of the overall RCF from $1.962 billion to $1.116 billion (equivalents) in exchange for certain fees, pricing increase, and an enhanced collateral package; (ii) reinstatement of the Senior Secured Term Loan; (iii) the exchange of all existing unsecured notes issuances into second-lien exchange notes at a 10% discount to face value with staggered maturity dates from 2027-2030 (each existing unsecured notes issuance to be allocated proportionately across each exchange notes maturity), in exchange for, among other things, 10% of post-dilution equity and certain fees payable to consenting noteholders; (iv) a fully-backstopped new money injection of approximately EUR526 million ($573 million equivalent)11 in new secured notes to be utilized for discounted buy-backs; and (v) payment in full of all general unsecured claims. The Plan contemplates the following stakeholder recoveries: * Each Holder of an Allowed RCF Claim will receive, in full and final satisfaction, settlement, release and discharge of such Claim its pro rata share of the SSRCF; provided, that notwithstanding the foregoing, all Ancillary Facility Claims shall be Reinstated and each Ancillary Facility shall continue in accordance with its terms and constitute an ancillary facility under the SSRCF in accordance with the terms of the SSRCF Credit Agreement. For the avoidance of doubt, each Holder of an Ancillary Facility Claim shall retain its rights and claims under the applicable Ancillary Facility; * The Senior Secured Term Loan Claim will be Reinstated or otherwise paid in full in cash; * Each Holder of an Allowed Notes Claim will receive, in full and final satisfaction, settlement, release, and discharge of such Claims (i) its pro rata share of the Exchange Notes; and (ii) its pro rata share of the Noteholder Ordinary Shares. Holders of Allowed Notes Claims will also receive their pro rata share of the Subscription Rights in accordance with the Lock-Up Agreement and the Rights Offering Documents; * Each Holder of an Allowed General Unsecured Claim will receive either: (i) Reinstatement of such Allowed General Unsecured Claim; or (ii) payment in full in cash on (a) the Effective Date, or (b) the date due in the ordinary course of business in accordance with the terms and conditions of the particular transaction giving rise to such Allowed General Unsecured Claim; * All Allowed Other Secured Claims and Allowed Other Priority Claims will be rendered Unimpaired; and * The Existing Equity Interests will be reinstated on the Effective Date. In connection with the Restructuring, it is also proposed that the Company's corporate structure will be reorganized and all assets and liabilities of Intrum AB hived down to newly created subsidiaries of Intrum AB. Under the new structure, Intrum AB will have no material functions other than acting as the entity with listed shares. Intrum AB's direct subsidiary, Intrum Investments and Financing AB ("HoldCo"), will become the borrower under the RCF and the issuer of the new money notes and the exchange notes. HoldCo's direct subsidiary, Intrum Group Operations AB ("MidCo"), will assume all operational functions of the Company and become the immediate parent of the rest of the group. As part of the Company reorganization, it is also proposed that certain regulated entities of the Company will be moved from their existing position in the corporate structure to be held directly by MidCo, subject to ongoing tax and regulatory analysis, and obtaining all necessary regulatory approvals. The steps required to implement the Company reorganization will be set out in a steps plan, agreed between the Debtors, the Majority Participating Lenders and the Majority Core Noteholder Company (as such terms are defined in the Disclosure Statement). About Intrum Intrum AB is a provider of credit management services with a presence in 20 markets in Europe. By helping companies to get paid and supporting people with their late payments, Intrum leads the way to a sound economy and plays a critical role in society at large. Intrum has circa 10,000 dedicated professionals who serve around 80,000 companies across Europe. In 2023, income amounted to SEK 20.0 billion. Intrum is headquartered in Stockholm, Sweden and publicly listed on the Nasdaq Stockholm exchange. On the Web: http://www.intrum.com/ On November 15, 2024, Intrum AB and U.S. affiliate Intrum AB of Texas LLC each filed a voluntary petition for the relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (Bankr. S.D. Tex. Lead Case No. 24-90575) to seek confirmation of their Prepackaged Reorganization Plan. The cases are pending before the Honorable Christopher M. Lopez. Milbank LLP and Porter Hedges LLP are serving as counsel in the U.S. restructuring. Houlihan Lokey is the advisor to Intrum. Kroll Issuer Services Limited is the information agent. Kroll Restructuring Administration is the claims agent. Brunswick Group is also serving as advisers to Intrum. Latham & Watkins LLP and Latham & Watkins (London) LLP, and Advokatfirmaet Schjodt AS, are advising a group of bondholders holding widely across Intrum AB's notes issuances (the "Notes Ad Hoc Group"). PJT Partners (UK) Limited is financial advisor to the noteholder ad hoc group. Weil Gotshal & Manges LLP is representing a group of short-dated bondholders holding primarily 2024- and 2025-maturing notes ("Minority Ad Hoc Group"). Ropes & Gray LLP is representing another minority group of bondholders. Clifford Chance US LLP is counsel to the group that collectively holds approximately 76% of the total commitments under the RCF (the "RCF Steerco Group"). =========================== U N I T E D K I N G D O M =========================== ASCENSION HEALTHCARE: AlixPartners Named as Joint Administrators ---------------------------------------------------------------- Ascension Healthcare Development Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales Insolvency and Companies list (ChD), Court Number: CR-1014-006534, and Clare Kennedy, Alastair Beveridge and Benjamin Browne of AlixPartners UK LLP, were appointed as joint administrators on Nov. 8, 2024. Ascension Healthcare specializes in research and experimental development on natural sciences and engineering. Its registered office is at 4th Floor Phoenix House, 1 Station Hill, Reading, Berkshire, RG1 1NB, in the process of being changed to 6 New Street Square, London, EC4A 3BF. Its principal trading address is at 27 Hill Street, Mayfair, London, W1J 5LP. The joint administrators can be reached at: Clare Kennedy Alastair Beveridge Benjamin Browne AlixPartners UK LLP 6 New Street Square, London EC4A 3BF Further details contact: The Joint Administrators Email: creditorreports@AlixPartners.com CLEANBRIGHT SERVICES: Leonard Curtis Named as Joint Administrators ------------------------------------------------------------------ Cleanbright Services Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Manchester, Company & Insolvency List (ChD), Court Number: CR-2024-MAN-001409, and Mike Dillon and Rochelle Schofield of Leonard Curtis were appointed as joint administrators on Nov. 7, 2024. Cleanbright Services specializes in the general cleaning of buildings. Its registered office and principal trading address is at Business First Centre Ribble Court, Meade Way, Padiham, Lancashire, BB12 7NG. The joint administrators can be reached at: Mike Dillon Rochelle Schofield 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 DAVIS COMMERCIAL: SFP Restructuring Named as Administrators ----------------------------------------------------------- Davis Commercial Services Engineering Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2024-006803, and David Kemp and Richard Hunt of SFP Restructuring Limited, were appointed as administrators on Nov. 11, 2024. Davis Commercial Services specializes in the installation and repair of industrial machinery and equipment. Its registered office is at SFP, 9 Ensign House, Admirals Way, Marsh Wall, London, E14 9XQ. Its principal trading address is at 1st Floor, 10 Hill Avenue, Amersham, HP6 5BW. The administrators can be reached at: David Kemp Richard Hunt SFP Restructuring Limited 9 Ensign House, Admirals Way Marsh Wall, London, E14 9XQ For further details, contact: David Kemp Tel No: 0207 538 2222 DOWSON PLC 2022-2: Moody's Ups Rating on GBP17.9MM E Notes to B1 ---------------------------------------------------------------- Moody's Ratings has upgraded the ratings of 7 notes in Dowson 2022-1 plc and Dowson 2022-2 Plc. The rating action reflects the increased levels of credit enhancement for the affected notes. Moody's affirmed the ratings of the notes that had sufficient credit enhancement to maintain their current ratings. Issuer: Dowson 2022-1 plc GBP31.5M Class B Notes, Upgraded to Aaa (sf); previously on Dec 21, 2023 Affirmed Aa1 (sf) GBP28.6M Class C Notes, Upgraded to Aa1 (sf); previously on Dec 21, 2023 Affirmed A1 (sf) GBP15.7M Class D Notes, Upgraded to A2 (sf); previously on Dec 21, 2023 Affirmed Baa3 (sf) GBP12.9M Class E Notes, Affirmed B1 (sf); previously on Dec 21, 2023 Downgraded to B1 (sf) GBP11.5M Class F Notes, Affirmed Caa3 (sf); previously on Dec 21, 2023 Downgraded to Caa3 (sf) Issuer: Dowson 2022-2 Plc GBP35.8M Class B Notes, Upgraded to Aaa (sf); previously on Mar 8, 2024 Affirmed Aa1 (sf) GBP26.9M Class C Notes, Upgraded to Aa1 (sf); previously on Mar 8, 2024 Affirmed A2 (sf) GBP14.9M Class D Notes, Upgraded to Aa3 (sf); previously on Mar 8, 2024 Affirmed Baa3 (sf) GBP17.9M Class E Notes, Upgraded to B1 (sf); previously on Mar 8, 2024 Downgraded to B2 (sf) GBP14.9M Class F Notes, Affirmed Caa3 (sf); previously on Mar 8, 2024 Affirmed Caa3 (sf) Dowson 2022-1 plc and Dowson 2022-2 Plc are static cash securitisations of agreements entered into for the purpose of financing vehicles to obligors in the United Kingdom by Oodle Financial Services Limited ("Oodle") (NR). RATINGS RATIONALE The rating action is prompted by an increase in credit enhancement for the affected tranches. Increase in Available Credit Enhancement Sequential amortization led to the increase in the credit enhancement available in the transactions. For instance, for Dowson 2022-1 plc the credit enhancement for the upgraded Class B, C and D Notes increased to 91.70%, 53.79% and 32.71% from 51.98%, 30.42% and 18.5% since last rating action. For Dowson 2022-2 Plc the credit enhancement for the upgraded Class B, C, D and E Notes increased to 82.95%, 53.18%, 36.53% and 16.72% from 51.55%, 32.99% and 22.6% and 10.37%, respectively, since last rating action. Key Collateral Assumptions As part of the rating action, Moody's reassessed its default probability and recovery rate assumptions for the portfolio reflecting the collateral performance to date. The performance of the transactions has deteriorated slightly since last year. For Dowson 2022-1 plc and Dowson 2022-2 Plc respectively, total delinquencies have decreased in the past year, with 90 days plus arrears currently standing at 1.84% and 1.73% of current pool balance slightly down from 2% and 2.06% last year. Cumulative defaults currently stand at 15.09% and 14.16% of original pool balance up from 9.94% and 7.88% a year earlier for Dowson 2022-1 plc and Dowson 2022-2 Plc respectively, and pool factor decreased significantly to 26% from 51% for Dowson 2022-1 plc and to 30% from 59% for Dowson 2022-2 Plc since last year. Moody's maintained the current default probability assumption at 21% of the current portfolio balance and the assumption for the fixed recovery rate at 30% for both transaction. Moody's also maintained the portfolio credit enhancement for both transactions at 40%. Counterparty Exposure The rating actions took into consideration the Notes' exposure to relevant counterparties, such as servicer, account bank or swap provider. Moody's considered how the liquidity available in the transactions and other mitigants support continuity of Note payments, in case of servicer default, using the CR assessment as a reference point for servicers. Both transactions have reserves for the Classes B, C, D, E and F Notes, which will be available to cover shortfalls related to the corresponding Notes. Moody's also considered in Moody's analysis that there is no principal to pay interest in case of shortfall. The ratings of Class C Notes in both Dowson 2022-1 plc and Dowson 2022-2 Plc are constrained by operational risk due to insufficient liquidity. The principal methodology used in these ratings was "Moody's Global Approach to Rating Auto Loan- and Lease-Backed ABS" published in August 2024. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement and (3) improvements in the credit quality of the transaction counterparties. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. EG GROUP: Moody's Affirms 'B3' CFR & Alters Outlook to Stable ------------------------------------------------------------- Moody's Ratings has affirmed the B3 long term corporate family rating of UK-based global independent fuel forecourt retailer EG Group Limited (EG, EG Group or the company) and its B3-PD probability of default rating. Concurrently, Moody's have affirmed the B3 and Caa2 ratings on EG's senior secured bank credit facilities and second lien term loans and senior secured instrument ratings issued by its subsidiaries EG Finco Limited, EG Global Finance plc. and EG America LLC. The outlook was changed to stable from negative reflecting: -- EG's operational performance has improved, with a focus on the US and has resulted in EBITDA growth, around 7% year-to-date to September 30, 2024, and improved leverage and interest coverage. Pro forma for the recently completed disposal of the remaining UK assets to Zuber Issa and the disposal of the UK KFC business, Moody's adjusted debt/EBITDA has decreased to around 6x from 7.4x in 2023, driven by proceeds used to repay debt and EBITDA growth. Interest coverage, as measured by Moody's adjusted EBITDA - capex/ interest expense is expected to be above 1x, from below 1x. Moody's expect further improvement in credit metrics to come from EBITDA growth and the company will continue deleveraging towards its company defined 4.5x leverage target. -- The completion of the sale of the remaining UK assets to Zuber Issa on October 31, 2024, and the focus of Mohsin Issa as sole CEO and stepping down from other executive roles, alleviates some of Moody's governance concerns and therefore governance is a key driver for this rating action. As such, Moody's have revised the assigned governance score to G-4, from G-5. Moody's do not expect any material near-term acquisitions and expect that any acquisitions would be bolt-on and not re-lever the business. -- Moody's expectation that EG will maintain adequate liquidity with no material upcoming maturities until 2027. RATINGS RATIONALE EG's B3 CFR continues to reflect its strong position as a large, independent motor-fuel forecourt operator. The company owns multiple networks of petrol stations, convenience stores and foodservice outlets across the US, Europe, and Australia. The business has grown rapidly through a series of acquisitions to become one of the leading independent motor-fuel forecourt and convenience stores operators across several regions. The sector benefits from broadly stable patterns as favourable trends in convenience shopping and foodservice largely offset the gradually falling fuel demand due to increased vehicle fuel efficiency and rising electric vehicle penetration. EG's B3 CFR also reflects its significant operating leverage due to the prevalence of the company owned, company operated (COCO) business model compared to other operating models. EG has a history of rapid, large and debt funded acquisitions, although the pace of external growth has materially reduced over the last few years and Moody's expect the focus to be on organic growth and smaller bolt-ons. Based on Moody's adjusted earnings, Moody's expect Moody's adjusted free cash flow to be negative over the next 12-18 months. However, Moody's note that growth capex spend is a lever management can, and has pulled in the past, to preserve cash if earnings growth falls below its expectation to ensure its free cash flow remains positive in line with its financial policy. Moody's also recognise the longer term challenge the company faces to manage the transition to alternative fuel and the associated investment requirements, noting the company is exploring energy transition and electric vehicle initiatives. ENVIRONMENTAL, SOCIAL & GOVERNANCE CONSIDERATIONS EG's ESG Credit Impact Score of CIS-4 indicates the rating is lower than it would have been if ESG risk exposures did not exist. EG's CIS-4 is driven by Moody's assessment that environmental, social and governance all have an impact on the current ratings. High carbon transition related risks are the main driver of EG's exposure to environmental risk. Social risks are mainly driven by increasing demographic and social pressures affecting future fuel demand in light of the electrification of vehicles. Governance risk exposure reflects the majority private equity ownership and historically aggressive financial strategy, with a history of debt funded acquisitions. Governance risks are somewhat mitigated by the progress made over the past three years during which EG has appointed independent directors to its board, improved internal controls and published consolidated accounts with an unqualified opinion by its auditors since 2021. LIQUIDITY Moody's consider EG's liquidity to be adequate, with cash on balance sheet of $238 million in addition to its $457 million undrawn revolving credit facilities (RCF), as of September 30, 2024. Moody's expect the company to draw on its RCF to meet its cash flow requirements. EG has a substantial freehold portfolio valued at around $4 billion, providing further financial flexibility. The ability of the company to make use of its asset portfolio as an alternative source of liquidity was demonstrated by the sale and leaseback transaction in the US completed in May 2023. STRUCTURAL CONSIDERATIONS The B3 rating of the backed senior secured instruments is in line with the CFR and reflects the fact that they represent most of the debt in the capital structure and the relatively smaller portion of second lien debt is rated Caa2, reflecting its position behind the first lien instruments in the event of a default. RATING OUTLOOK The stable outlook reflects EG's improved operational performance and credit metrics. The stable outlook factors continued earnings growth which will lead to further deleveraging and that free cash flow will not remain negative for a prolonged period. The stable outlook also assumes that liquidity will remain adequate. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if the company is able to reduce leverage, as evidenced by Moody's adjusted gross debt to EBITDA, sustained well below 6.0x improving interest coverage, as measured by adjusted EBITDA - CAPEX / interest expense, sustainably above 1.5x, and achieve significant positive free cash flow generation. An upgrade would also require the company to maintain at least adequate liquidity. EG's ratings could be downgraded if it is unable to grow its EBITDA, resulting in leverage not decreasing, free cash flow remains negative or Moody's adjusted EBITDA - CAPEX/ interest expense remains below 1.0x for a prolonged period. LIST OF AFECTED RATINGS Issuer: EG Group Limited Outlook actions: Outlook, Changed To Stable From Negative Affirmations: Probability of Default, Affirmed B3-PD LT Corporate Family Rating, Affirmed B3 Issuer: EG America LLC Outlook actions: Outlook, Changed To Stable From Negative Affirmations: Senior Secured Bank Credit Facility (Local Currency), Affirmed B3 Backed Senior Secured Bank Credit Facility (Local Currency), Affirmed B3 Issuer: EG Finco Limited Outlook actions: Outlook, Changed To Stable From Negative Affirmations: Senior Secured Bank Credit Facility (Foreign Currency), Affirmed Caa2 Backed Senior Secured Bank Credit Facility (Local Currency), Affirmed B3 Backed Senior Secured Bank Credit Facility (Foreign Currency), Affirmed B3 Issuer: EG Global Finance plc. Outlook actions: Outlook, Changed To Stable From Negative Affirmations: Senior Secured (Foreign Currency), Affirmed B3 PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Retail and Apparel published in November 2023. COMPANY PROFILE EG Group is a global retailer operating petrol stations, convenience stores and foodservice outlets in Europe, the United States and Australia. The group was created through the merger of Euro Garages and European Forecourt Retail (EFR) Group in 2016. EG has evolved through a series of acquisitions to become one of the leading independent motor-fuel forecourt operators in Europe, the US and Australia. Pro forma for recent disposals of the company's remaining UK business reported revenue was $24 billion and company adjusted EBITDA $1.1 billion (excluding IFRS 16) for the last twelve months to September 30, 2024. The group is headquartered in Blackburn, England and is owned equally by funds managed by TDR Capital LLP and the two brothers who founded Euro Garages, Mohsin and Zuber Issa. EUROPEAN LIVING: Seneca IP Named as Administrators -------------------------------------------------- European Living Retail Limited was placed into administration proceedings in the Glasgow Sheriff Court, No. of 2024, and John Hedger of Seneca IP Limited was appointed as administrator on Nov. 8, 2024. European Living, trading as BoConcept of Scotland, specializes in the retail of furniture, lighting and similar items in a specialized store. Its registered office is at Unit 11/12 West Street Trading Estate, West Street, Glasgow, G5 8LG to be changed to c/o Rennie Mcinnes LLP, Douglas House, 42 Main St. Milngavie, G62 6BU. Its principal trading address is at Unit 11/12 West Street Trading Estate, West Street, Glasgow, G5 8LG. The administrators can be reached at: John Hedger Seneca IP Limited Speedwell Mill, Old Coach Road Tansley, Matlock, DE4 5FY For further details, contact: Ben Leaney Email: ben.leaney@seneca-ip.co.uk Tel No: 01629 761700 IT SKILLS: CG Recovery Named as Joint Administrators ---------------------------------------------------- IT Skills Learning Centre Ltd was placed into administration proceedings in the the High Courts of Justice, Business and Property Courts, No CR-2024-006771, and Edward M Avery-Gee and Daniel Richardson of CG&Co were appointed as joint administrators on Nov. 11, 2024. IT Skills Learning specializes in the development of building projects. Its registered office address is at Coach House, Station Road, Ashbourne, DE6 1AA. Its principal trading address is at Beresford Arms Hotel, Station Road, Ashbourne, DE6 1AA. The joint administrators can be reached at: Edward M Avery-Gee Daniel Richardson CG&Co 27 Byrom Street, Manchester, M3 4PF For further details, contact: Natalie Clark Email: info@cg-recovery.com Tel No: 0161 358 0210 JAEVEE SPV1009: SFP Restructuring Named as Administrators --------------------------------------------------------- Jaevee Spv1009 Ltd was placed into administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Court Number: CR-2024-006818, and David Kemp and Richard Hunt of SFP Restructuring Limited, were appointed as administrators on Nov. 12, 2024. Jaevee Spv1009 specializes in the buying & selling of own real estate, and letting & operating of own or leased real estate. Its registered office is at SFP, 9 Ensign House, Admirals Way, Marsh Wall, London, E14 9XQ. Its principal trading address is at 86-90 Paul Street, London, EC2A 4NE. The administrators can be reached at: David Kemp Richard Hunt SFP Restructuring Limited 9 Ensign House, Admirals Way Marsh Wall, London, E14 9XQ For further information, contact: David Kemp Tel No: 0207 538 2222 JUST WASTE: Cromwell Insolvency Named as Administrators ------------------------------------------------------- Just Waste Oil Ltd was placed into administration proceedings in the High Court of Justice Business and Property Courts in Birmingham, Insolvency and Companies List (CHD), Court Number: CR-2024-BHM-000623, and Kieran Bourne of Cromwell Insolvency Limited was appointed as administrator on Nov. 8, 2024. Just Waste Oil fka Just Waste Oil T/A Alfemo Home Concept Ltd specializes in the collection of non-hazardous waste. Its registered office is at c/o Cromwell Insolvency Limited, 5 Mercia Business Village, Torwood Close, Coventry, CV4 8HX. Its principal trading address is at 5H Nobel Road, London, N18 3BH. The administrators can be reached at: Kieran Bourne Cromwell Insolvency Limited 5 Mercia Business Village, Torwood Close Coventry, CV4 8HX Further Details Contact: Jennifer Verdon E-mail: info@cromwellinsolvency.co.uk Tel No: 0800 061 4002 KIKI CONCEPTS: Marshall Peters Named as Administrators ------------------------------------------------------ Kiki Concepts Limited T/A Menagerie was placed into administration proceedings in the High Court of Justice, Court Number: CR-2024-MAN-0013, and Paul Palmer of Marshall Peters was appointed as administrator on Nov. 7, 2024. Kiki Concepts operates licensed restaurants. Its registered office is at New Bailey, Bridge Street, Salford, M3 5AY. Its principal trading address is at New Bailey, Ground One, New Bailey St, Salford, M3 5JL. The administrators can be reached at: Paul Palmer Marshall Peters Heskin Hall Farm, Wood Lane Heskin Preston, PR7 5PA Tel No: 01257 452021 For further information, contact: Liv Roy Marshall Peters Heskin Hall Farm, Wood Lane Heskin, Preston, PR7 5PA Email: livroy@marshallpeters.co.uk Tel No: 01257 452021 MORTIMER BTL 2023-1: Fitch Affirms 'BB+sf' Rating on Two Tranches ----------------------------------------------------------------- Fitch Ratings has affirmed Mortimer BTL 2023-1 PLC's notes with Stable Outlooks, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Mortimer BTL 2023-1 plc A XS2712034466 LT AAAsf Affirmed AAAsf B XS2712034540 LT AAsf Affirmed AAsf C XS2712034623 LT A+sf Affirmed A+sf D XS2712034979 LT BBBsf Affirmed BBBsf E XS2712035190 LT BB+sf Affirmed BB+sf X XS2712035430 LT BB+sf Affirmed BB+sf Transaction Summary Mortimer BTL 2023-1 PLC is a securitisation of buy-to-let (BTL) mortgages originated in England, Wales and Scotland by LendInvest BTL Limited (LendInvest), which entered the BTL mortgage market in December 2017. LendInvest is servicer of the pool with day-to-day servicing activity delegated to Pepper (UK) Limited. KEY RATING DRIVERS Strong Asset Performance: Arrears greater than one-month total 0.48% and there have been no losses in the pool, although the weighted average (WA) seasoning of the pool is only at 28 months. The transaction has so far performed better than the Fitch UK BTL index average. This reflects the prime nature of the collateral pool. All loans underwritten had a full valuation and the current WA interest coverage ratio for the pool is 99.4%. The strong asset performance supports the affirmation of the notes. Fixed Loans Reversions Affect CPR: The pool includes 62.5% of fixed rate loans reverting to Bank of England base rate (BBR). The rest is made up of floating-rate loans linked to BBR. The majority of the fixed-rate loans have a tenor of five to 10 years, with a limited amount of loans reverting in the next few years. Considering high early repayment charges, Fitch expects prepayments (CPR) to remain low until 2027. This limits the potential excess spread compression and the risk of over-hedging arising from high CPR over the coming years. Fitch has considered alternative high CPR assumptions for the next four years of the transaction's life, assuming 10pp lower CPR for the first three years compared with the standard assumptions and a 40% spike in year four. In a sample of UK RMBS transactions, Fitch has observed that CPR tend to follow a portfolio reversion schedule. This represents a criteria variation to the UK RMBS Rating Criteria. Fixed Hedging Schedule: There is a swap in place to hedge the interest rate risk arising from fixed-rate mortgage loans prior to their reversion date. The swap will be based on a defined schedule assuming no defaults or prepayments, rather than the balance of fixed-rate loans in the pool. If loans prepay or default, the issuer will be over-hedged. The excess hedging is beneficial to the issuer in a rising interest-rate scenario and detrimental when interest rates are falling. 'BB+sf' Class X Notes Cap: The class X notes rely entirely on excess spread and the model-implied rating (MIR) of the notes is highly sensitive to cash flow modelling assumptions, especially prepayment rates. Consequently, Fitch has capped the rating of the notes at 'BB+sf'. Class D Deviation from MIR: The class D notes have been affirmed one notch below their MIR. This is due to their sensitivity to increasing levels of delinquencies and defaults. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Material increases in the frequency of defaults and loss severity on defaulted receivables producing losses greater than Fitch's base case expectations may result in negative rating action on the notes. Fitch's analysis revealed that a 15% increase in the WA foreclosure frequency (FF), along with a 15% decrease in the WA recovery rate (RR), would imply downgrades of up to two notches for the class B notes, two notches for the class D notes and three notches for the class C and E notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE and potentially upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the WAFF of 15% and an increase in the WARR of 15%. The impact on the notes could be upgrades of up to one notch for the class B and E notes and two notches for the class D notes. The class A and X notes are already at their highest achievable rating level and therefore cannot be upgraded. CRITERIA VARIATION Fitch applied a criteria variation to its UK RMBS Rating Criteria to the high CPR assumptions applied in the cash flow modelling. This is based on historical data observed that suggest prepayment rates may remain low for fixed rate loans until they approach their contractual reversion date. As a result, Fitch amended the high CPR assumptions for the next four years, assuming 10 pp lower CPR for the first three years compared with the standard assumptions and a 40% spike in year four. The result is a positive MIR impact of one notch for the class B notes, two notches for the class C notes, three notches for the class D and E notes and four notches for the class X 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 Mortimer BTL 2023-1 plc 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. Prior to the transaction closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Prior to the transaction closing, Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. 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. PBB DEVICES: AlixPartners Named as Administrators ------------------------------------------------- PBB Devices Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Insolvency and Companies list (ChD), Court Number: CR-2024-006536, and Clare Kennedy, Alastair Beveridge and Benjamin Browne of AlixPartners UK LLP, were appointed as administrators on Nov. 8, 2024. PBB Devices specializes in manufacturing medical instruments and supplies, and technical testing and analysis. Its registered office is at 4th Floor Phoenix House, 1 Station Hill, Reading, Berkshire, RG1 1NB, in the process of being changed to 6 New Street Square, London, EC4A 3BF. Its principal trading address is at 27 Hill Street, Mayfair, London, W1J 5LP. The administrators can be reached at: Clare Kennedy Alastair Beveridge Benjamin Browne AlixPartners UK LLP 6 New Street Square, London EC4A 3BF Email: creditorreports@AlixPartners.com RENALYTIX PLC: Icahn School of Medicine Owns 10.68% Ordinary Shares ------------------------------------------------------------------- Icahn School of Medicine at Mount Sinai disclosed in a Schedule 13/A filed with the U.S. Securities and Exchange Commission that as of November 1, 2024, along with Mount Sinai Health System, Inc. and Mount Sinai Hospital, it beneficially owned 35,653,477 Ordinary Shares of Renalytix PLC, representing approximately 10.68% of the 333,637,612 Ordinary Shares outstanding as of November 1, 2024 (after taking into account the transactions described in this Amendment No. 2), as reported by Renalytix plc on October 1, 2024. A full-text copy of Icahn's SEC Report is available at: https://tinyurl.com/yhbbk64h About Renalytix Headquartered in United Kingdom, Renalytix (LSE: RENX) (NASDAQ: RNLX) -- www.renalytix.com -- is an artificial intelligence enabled in-vitro diagnostics and laboratory services company that is the global founder and leader in the field of bioprognosis for kidney health. In late 2023, the Company's kidneyintelX.dkd test was recognized as the first and only FDA-authorized prognostic test to enable early-stage CKD (stages 1-3b) risk assessment for progressive decline in kidney function in T2D patients. By understanding how disease will progress, patients and clinicians can take action earlier to improve outcomes and reduce overall health system costs. As of June 30, 2024, the Company had $7.9 million in total assets, $15.8 million in total liabilities, and $7.9 million in total stockholders' deficit. New York, New York-based CohnReznick LLP, the Company's auditor since June 2024, issued a "going concern" qualification in its report dated September 30, 2024, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. S4 CAPITAL: S&P Alters Outlook to Negative, Affirms 'B+' ICR ------------------------------------------------------------ S&P Global Ratings revised the outlook on its rating on S4 Capital PLC to negative from stable. At the same time, S&P affirmed its 'B+' long-term ratings on S4 Capital PLC and its debt. The negative outlook indicates that if S4 Capital's organic revenue and EBITDA do not recover as forecast and it fails to generate sufficient positive FOCF, its credit metrics may not be sufficient to support the current rating in 2025. S&P may also reassess its view of S4 Capital's business profile if the group's top line and profits continue to decline. S&P said, "We revised the outlook to negative because S4 Capital PLC may not be able to restore its credit metrics in 2025 to a level that supports the 'B+' rating. The company announced weaker-than-expected third-quarter operating and financial results for 2024, and its guidance indicates a double-digit decline in organic revenue and a slight decline in company-adjusted EBITDA in 2024. As a result, we have materially lowered our forecast for S4 Capital's revenue, profits, and free cash flow in 2024." Spending by S4 Capital's technology clients has declined sharply since 2022 and is yet to show signs of recovery. This segment accounts for about 44% of the group's revenue. In addition, one of the group's large clients in the financial industry has also materially scaled back spending on technology services. S&P said, "We now predict that the group's organic revenue will shrink by about 13% in 2024 (compared with our previous forecast of a 5% decline). At the same time, the S&P Global Ratings-adjusted EBITDA margin is forecast to drop to about 9%, from 10% in 2023. This implies that our adjusted leverage metric could jump to about 4.8x--well above our downgrade threshold of 4x for the 'B+' rating--before dropping back below the threshold in 2025. We also expect S4 Capital's FOCF to debt to decline to about 6% in 2024, from 8% in 2023; again, this is below our 10% threshold for the rating." S&P said, "In our view, S4 Capital's long-term growth prospects are at greater risk than those of its peers. The organic revenue and profit growth forecast for 2024 shows that, for the second year in a row, S4 Capital will materially underperform its peers in the digital advertising and marketing industry. Primarily, we attribute this to its significant exposure to technology clients. Due to a push for efficiency, many of these clients cut their marketing budgets in 2022-2023 and have yet to restore them. Among S4 Capital's peers, Publicis and Omnicom, which are both large advertising agency holding groups, are expected to post substantial organic revenue growth of about 4%-5%. WPP, where technology clients account for just under 20% of revenue, is likely to achieve broadly flat organic revenue versus 2023. Stagwell, which we consider to be a closer peer to S4 Capital, is forecast to post organic revenue growth of about 7% in 2024, supported by strong growth in its advocacy services, which benefit from spending on political ads." S4 Capital's ability to strengthen its credit metrics in 2025 and 2026 will largely depend on whether it can achieve sustainable organic revenue growth. In particular, it will need to successfully capitalize on its new go-to-market propositions: Orchestration Partner, Real-Time Brands, and Glass Box Media. These are intended to help the group simplify its offering and make marketing spending more transparent and efficient for its clients. S&P expects the strong operating results reported by the large tech companies and a fall in interest rates to support a gradual increase in marketing spending by S4 Capital's clients during in 2025. Some clients in the U.K. and the U.S. had been delaying their spending until fourth-quarter 2024 due to elevated political uncertainty in these markets. If S4 Capital's top line continues to decline beyond 2024, or it loses key clients and fails to win sufficient new business, this could indicate structural issues with its operating performance. In turn, this could harm its reputation with existing and potential clients, leading S&P to assess the group's business position as weaker than that of peers. S4 Capital's profitability is already below the peer average--adjusted EBITDA has only been about 10% for the past three years. S&P said, "Nevertheless, we expect S4 Capital to generate positive FOCF and to retain cost flexibility, which supports the rating. S4 Capital has continued to reduce its cost base, mainly by reducing headcount to about 7,500 in the third quarter, from about 7,700 at the start of 2024. Despite the material drop in revenue, we expect company-adjusted EBITDA to decline by only a modest amount, in line with the company's guidance. The reduction in S&P Global Ratings-adjusted EBITDA will be more substantial, due to exceptional costs (mainly related to severance and cost optimization initiatives). We predict that our adjusted EBITDA metric will improve in 2025, as the top line recovers. S4 Capital's low capital intensity and relatively stable working capital support its robust FOCF, which positively differentiates the company's credit metrics from lower-rated peers. "In our view, S4 Capital's management and governance is moderately negative. The group has a negative track record in the capital markets and the multiple profit warnings has issued in the past two years caused its share price to decline materially. Executive chairman and founder, Sir Martin Sorrell, also has a significant degree of control over decision-making at the group. These deficiencies will depress the group's standing in the capital markets, constrain its ability to pursue growth through acquisitions, and weaken its overall growth prospects. "The negative outlook indicates that if S4 Capital's organic revenue and EBITDA do not recover as forecast and it fails to generate sufficient positive FOCF, its credit metrics may not be sufficient to support the current rating in 2025. We may also reassess our view of S4 Capital's business profile if the group's top line and profits continue to decline." S&P could lower the rating after gaining greater clarity regarding performance in the fourth quarter 2024 and guidance for 2025. Specifically, S&P would lower the rating if: -- Adjusted leverage remains above 4x and FOCF to debt remains below 10% because S4 Capital's technology clients do not restore their spending and therefore organic revenue and EBITDA show a weaker rebound than currently forecast; or -- The group's top line continues to decline or a loss of existing contracts increases uncertainty regarding its long-term growth prospects, and this leads us to view S4 Capital's business position as weaker than those of peers. S&P said, "We could revise the outlook to stable if S4 Capital returns to solid organic revenue and EBITDA growth based on increased spending by existing clients and new contract wins. A stable outlook would depend on adjusted debt to EBITDA being below 4.0x and FOCF to debt above 10%. "Governance factors are a negative consideration in our credit rating analysis of S4 Capital. In our view, the group has a negative track record in the capital markets, given audit issues in 2022 and multiple profit warnings in the past two years." In addition, Sir Martin Sorrell has a significant degree of control over decision-making at the group based on his ownership of about 9% of the group's listed shares and of a special class B share that provides him with enhanced rights. Sir Sorrell's experience and relationships in the media industry support S4 Capital's ability to attract and retain new business, exposing the group to key person and succession risk. SOPHOS INTERMEDIATE II: Moody's Alters Outlook on B2 CFR to Neg. ---------------------------------------------------------------- Moody's Ratings has affirmed the B2 corporate family rating and B2-PD probability of default rating of Sophos Intermediate II Limited (Sophos or the company). Concurrently, Moody's affirmed the B2 ratings on the backed senior secured first lien term loan and the backed senior secured first lien revolving credit facility (RCF) issued by Sophos Holdings, LLC. The outlook on all entities was revised to negative from stable. Sophos is raising $650 million incremental term loan fungible into the existing $1.8 billion equivalent senior secured first lien term loan. Proceeds from the issuance together with available cash on balance sheet will be used to finance the acquisition of Secureworks Inc. (Secureworks). The change of the outlook to negative reflects the weaker financial profile of the enlarged group and the risk that Sophos' key credit metrics will exceed Moody's requirements for the B2 rating for longer than currently expected. Deleveraging towards metrics commensurate with the B2 largely relies on the delivery of significant cost synergies, which entail execution risk. RATINGS RATIONALE Sophos is in the process of acquiring Secureworks in an all-cash transaction for an enterprise value of $859 million. Subject to regulatory approvals and customary closing conditions, the transaction is expected to close in the first quarter of 2025. Moody's recognise the strategic rationale of the acquisition, which will enhance Sophos' scale and existing security portfolio while also offering cross-sell opportunities into the combined customer base. Secureworks' proprietary Taegis platform is highly complementary to Sophos' managed detection and response (MDR) capabilities and received a number of recognitions from third-party industry research providers. However, the acquisition of Secureworks will be Sophos' largest acquisition to date and its contribution to EBITDA in fiscal 2025, ending March 2025, will be negligible. As a consequence, Moody's expect Moody's-adjusted debt/EBITDA on a cash EBITDA basis to increase above 10x, after unrealized FX losses and other items the company deems exceptional, and to remain elevated for the next 12-18 months until planned synergies are achieved. Moody's had previously stated that the B2 rating would come under negative pressure if Moody's-adjusted gross leverage on a cash EBITDA basis increases above 6.5x for a sustained period of time. Furthermore, cash flow coverage, measured as Moody's-adjusted free cash flow to debt, will likely decrease towards the low single digit percentages from 6.5% in fiscal 2024. Secureworks reported declining revenues and negative EBITDA over the past few years, as the company transitioned from the legacy managed services offering to the new Taegis platform. However, the process is now complete and Moody's expect an acceleration in bookings momentum in the coming quarters, underpinned by a shift in the go-to-market strategy towards channel partners. Sophos' billings growth was also muted over the past 18 months, partially due to the implementation of a business systems transformation project which caused significant disruptions during the go-live period. The company's new leadership team has launched a number of initiatives aimed at improving renewal rates and regaining sales momentum, hence Moody's expect a recovery in billings growth towards the solid mid-single digit percentages over the next 12-18 months. The affirmation of the B2 rating takes into account the significant cost synergies arising from the business combination. Moody's currently anticipate that the company, with the support of Thoma Bravo, will be able to achieve meaningful synergies and cost savings. As a consequence, Moody's expect EBITDA to grow materially over the next 24 months, driving a reduction in Moody's-adjusted leverage on a cash EBITDA basis below 7.0x by the end of fiscal 2026. Similarly, Moody's anticipate the company's free cash flow generation to be impacted by restructuring costs over the next 12-18 months, before moving to a more normalised level once the integration process will be completed. The B2 CFR also reflects: Sophos's strong position in the cybersecurity sector and wide range of converged product offering in endpoint and networks security; the increased exposure to the fast growing MDR market; the company's high revenue visibility, with over 90% of its base being recurring in nature; Moody's expectation of organic revenue and EBITDA growth coupled with significant cost synergies; and good liquidity, supported by positive free cash flow generation and access to an ample revolving credit facility which will also be extended until December 2026 as part of the transaction. Counterbalancing these strengths are: the aggressive financial policy and increase in Moody's-adjusted leverage to above 10x in fiscal 2025, although expected to rapidly decline towards 7x over the next 12 months; the execution risk related to the business integration and delivery of cost synergies; the exposure to the very competitive and fast changing cybersecurity market, which requires constant investments in R&D and marketing to enhance the product offering and the brand awareness across end-customers; and the reliance on channel partners for the execution of its sales strategy. ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS The rating action reflects corporate governance considerations associated with the company's financial strategy and risk management. The acquisition will be largely debt-funded, illustrating the group's aggressive financial policy and tolerance for high leverage. LIQUIDITY Moody's view Sophos' liquidity as good. Following the transaction, Moody's expect the group to have a cash balance of approximately $200 million and access to a fully undrawn $125 million committed revolving credit facility (RCF) due in December 2026. The RCF has a springing first lien net leverage covenant set at 7.25x, which is tested when 35% or more of the facility is utilised. Moody's estimate the headroom under the covenant to remain ample. Sophos has no significant debt maturities in the near term, with the $2.5 billion equivalent first-lien term loan maturing in March 2027. The first-lien term loan includes an amortisation mechanism of 1% per year. STRUCTURAL CONSIDERATIONS The B2-PD probability of default rating reflects Moody's assumption of a 50% family recovery rate given the covenant-lite structure of the term loan. The B2 instrument ratings assigned to the senior secured first lien term loan and the RCF are in line with the corporate family rating, reflecting the pari passu capital structure of the company. Moody's consider the security package as reasonably weak because security primarily consists of material assets of the company's US operations, as well as guarantees from material subsidiaries (accounting for at least 80% of consolidated EBITDA). RATIONALE FOR NEGATIVE OUTLOOK The negative outlook reflects the weaker financial profile of the company following the transaction and the risk that Sophos' key credit metrics will exceed Moody's requirements for the B2 rating for longer than currently expected. It also reflects the execution risk related to the integration of the acquired company and the delivery of a significant cost take-out programme. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Whilst unlikely in the near term, positive pressure on Sophos' ratings could arise if: -- The company successfully integrates Secureworks and achieves the synergy targets, delivering a consistent and sustainable improvement in the underlying operating performance; and -- Moody's-adjusted FCF/debt improves sustainably towards 15%; and -- Moody's-adjusted debt/EBITDA (on a cash-EBITDA basis) declines well below 5x. Conversely, Moody's would consider a rating downgrade if: -- Sophos' operating performance were to weaken significantly or the company fails to integrate the acquired business or to realize synergies as outlined; or -- Moody's-adjusted FCF/debt remains below 5% after fiscal 2026; or -- cash-based Moody's-adjusted leverage remains above 6.5x for a sustained period or liquidity weakens. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Software published in June 2022. COMPANY PROFILE Headquartered in Abingdon-on-Thames, United Kingdom, Sophos is a global provider of endpoint, network, email and cloud security technologies as well as managed detection and response and incident response services. Primarily focused on the SME market, Sophos sells its products and services to approximately 585,000 organizations worldwide through its channel of more than 60,000 partners. In fiscal 2024, Sophos reported revenues of $1,1 billion and company-adjusted EBITDA of $320 million. The company is owned by private equity investor Thoma Bravo after the completion of a leveraged buy-out in March 2020. TROY CENTRAL: Grant Thornton Named as Joint Administrators ---------------------------------------------------------- Troy Central Limited was placed into administration proceedings in the High Court Of Justice, Business & Property Courts, Insolvency & Companies List Chd, No 006625 of 2024, and Daniel R W Smith and Oliver Haunch of Grant Thornton UK LLP, were appointed as joint administrators on Nov. 5, 2024. Troy Central is a refurbishment contractor. Its registered office is at C/O Grant Thornton UK LLP, 11th Floor, Landmark St Peter's Square, 1 Oxford St, Manchester, M1 4PB. Its principal trading address is at 2 Cornhill, 1st Floor, Bury St Edmunds, Suffolk, IP33 1BE. The joint administrators can be reached at: Daniel R W Smith Oliver Haunch Grant Thornton UK LLP 30 Finsbury Square, London, EC2A 1AG Tel No: 020 7184 4300 For further information, contact: CMU Support Grant Thornton UK LLP 30 Finsbury Square, London, EC2A 1AG Email: cmusupport@uk.gt.com Tel No: 0161 953 6906 ********* 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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