/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/241213.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 Friday, December 13, 2024, Vol. 25, No. 250 Headlines F R A N C E ELIOR GROUP: Moody's Affirms 'B3' CFR & Alters Outlook to Positive I R E L A N D BASTILLE 2020-3: Fitch Assigns 'B-(EXP)sf' Rating to Cl. E-R Notes CAIRN CLO XIX: S&P Assigns Prelim B- (sf) Rating to Class F Notes GROSVENOR 2024-2: Fitch Assigns 'B-sf' Final Rating to Cl. F Notes GROSVENOR PLACE 2024-2: S&P Assigns B-(sf) Rating to Class F Notes I T A L Y A-BEST 25: Fitch Puts 'BB+sf' Final Rating to Class E and X Notes L U X E M B O U R G VENGA TOPCO: Moody's Affirms 'B2' CFR & Alters Outlook to Positive N E T H E R L A N D S STAMINA BIDCO: S&P Upgrades ICR to 'B+', Outlook Stable U N I T E D K I N G D O M AKJ ENTERPRISES: Springfields Advisory Named as Administrators BAMBINO MIO: BDO LLP Named as Joint Administrators CALEDONIAN LOGISTICS: Johnston Carmichael Named as Administrators COGNITIVE PUBLISHING: Begbies Traynor Named as Administrators COLT GROUP: Moody's Affirms 'Ba2' CFR & Alters Outlook to Stable CRAIGIE'S FARM: Interpath Ltd Named as Joint Administrators CYRIL LUFF: Armstrong Watson Named as Administrators DIGNITY FINANCE: Fitch Hikes Rating on Class B Notes to 'CCC' EOSEMI LIMITED: Begbies Traynor Named as Administrators HOMESLICE JAMES: Begbies Traynor Named as Joint Administrators LIBERTY STEEL: FRP Advisory Named as Joint Administrators SHERWOOD FINANCING: Fitch Puts 'B+' Final Rating to Sr. Sec. Notes TAZ ROCK: Leonard Curtis Named as Administrators TEAM TEX (UK): RSM UK Named as Administrators X X X X X X X X [*] BOOK REVIEW: Bailout: An Insider's Account of Bank Failures - - - - - =========== F R A N C E =========== ELIOR GROUP: Moody's Affirms 'B3' CFR & Alters Outlook to Positive ------------------------------------------------------------------ Moody's Ratings has changed to positive from negative the outlook on Elior Group S.A.'s (Elior) ratings. Concurrently, Moody's affirmed the company's B3 corporate family rating, its B3-PD probability of default rating and the B3 rating on the backed senior unsecured notes due July 2026. "The outlook change reflects the company's improved operating performance in 2024 and Moody's expectation that profitability will continue to further increase over the next 12-18 months, driving improvement in credit metrics," says Sarah Nicolini, a Moody's Ratings Vice President-Senior Analyst and lead analyst for Elior. "The positive outlook also incorporates Moody's expectation that the company will refinance its approaching debt maturities in a timely manner," adds Ms. Nicolini. RATINGS RATIONALE Elior's performance in fiscal 2024 (ending September 2024) was solid, with revenue growing organically by 5.1% year over year, and 15.9% overall, driven by sustained volume growth and pricing, coupled with positive new contracts. Price increases above inflation and continued efficiency gains have resulted in margin growth, with the company's Moody's adjusted EBITA margin increasing to 2.3%, from 1.1% in fiscal 2023. Concurrently, Elior's Moody's adjusted free cash flow (FCF) turned positive and reached EUR33 million, while the interest coverage metric (Moody's adjusted EBITA/interest) improved to 1.2x, compared to 0.6x in fiscal 2023. Similarly, Moody's adjusted debt/EBITDA decreased to 6x from 8.6x in fiscal 2023. Over the next 12-18 months, Moody's forecast that the company will continue to grow revenues by 4% per year, on an organic basis, driven by improved retention rates, price increases and new market entries. In addition, margins will improve owing to ongoing costs optimization and synergies. This will result in a Moody's adjusted EBITA margin in the 3%-4% range, similar to pre pandemic levels. Moody's forecast that the improved profitability will decrease Moody's adjusted debt/EBITDA towards 4.5x in the next 12-18 months; this metric will strongly position Elior in its rating category. While FCF generation will improve, this growth will not be material given the expected increase in capex to support investments. Elior's B3 rating continues to be supported by its leading market position in contract catering, its balanced end-market diversification and the continued pass-through of price increases to customers and cost optimization, which are sequentially improving profitability. The rating also reflects the company's still low margins relative to peers and the limited free cash flow generation owing to increased capex plans. This limits headroom for deviation in case operating performance does not improve as Moody's currently expect. It also reflects the company's approaching debt maturities, which Moody's expect it to address in the coming months. LIQUIDITY Elior's liquidity is currently adequate. At fiscal 2024 end, the company had EUR142 million of cash and EUR170 million available under its revolving credit facility (RCF) maturing in July 2026, out of a total committed of EUR350 million. Moody's forecast that the company will be FCF breakeven in 2025 and generate EUR45 million of FCF in 2026, on a Moody's adjusted basis. The company has recently signed a new receivable securitization programme amounting to EUR800 million that will expire in September 2027 and that Moody's expect to be almost fully used. Over the next 12 months, Elior will need to reimburse EUR56 million per year, related to the amortization of the EUR225 million French state-guaranteed loan, and EUR39 million in July 2025, related to the partial repayment of the RCF. The company repaid EUR61 million of the outstanding term loan in October. Thereafter, in July 2026, Elior will need to repay the remaining EUR40 million term loan, the EUR550 million backed senior notes and the drawn RCF. Moody's expect that the company will address the refinancing of the July 2026 debt maturities in a timely manner, and no later than 12 months before the maturity. The RCF and the term loan contain a maintenance net leverage covenant of 4.5x, tested semi-annually, that Moody's expect to be complied with over the next 12-18 months. STRUCTURAL CONSIDERATIONS The B3 rating on the backed senior notes, at the same level as the CFR, reflects their pari passu ranking with the RCF and the term loan. The backed senior notes, the RCF and the term loan are unsecured, but benefit from upstream guarantees from material subsidiaries that account for at least 80% of consolidated EBITDA. The backed senior notes, the RCF and the term loan are senior to the French state-guaranteed loan, which is unsecured and does not have guarantees from operating companies. RATIONALE FOR POSITIVE OUTLOOK The positive outlook reflects Moody's expectation that Elior will continue to improve its profitability and cash flow generation, which will in turn lead to stronger credit metrics. The positive outlook also incorporates Moody's expectations that the refinancing of the approaching debt maturities will be completed in a timely manner, and at a cost of debt that will not materially deteriorate its interest coverage ratio. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be upgraded if the company's operating performance in 2025 continues to be strong and in line with Moody's expectations such that its Moody's adjusted EBITA margin increases well above 2% on a sustained basis and this translates into a materially positive FCF generation from 2026. An upgrade would also require an interest coverage ratio (Moody's-adjusted EBITA/interest) increasing to at least 1.5x and a Moody's adjusted debt/EBITDA ratio remaining below 6.5x. An upgrade would require liquidity to remain at least adequate, with a sizeable, undrawn RCF, and a successful refinancing of the upcoming debt maturities. The rating could be downgraded if the company's operating performance and FCF deteriorate, thus weakening its liquidity, or if the company is unable to refinance its upcoming debt maturities. PRINICIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. COMPANY PROFILE Headquartered in France, Elior is a global player in contract catering and support services. In the fiscal year ended September 2024, the company generated revenue of around EUR6 billion and EBITA of EUR167 million. ============= I R E L A N D ============= BASTILLE 2020-3: Fitch Assigns 'B-(EXP)sf' Rating to Cl. E-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Bastille Euro CLO 2020-3 DAC Reset expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Bastille Euro CLO 2020-3 DAC Class X-R Notes LT AAA(EXP)sf Expected Rating Class A-1-R Notes LT AAA(EXP)sf Expected Rating Class A-2A-R Notes LT AA(EXP)sf Expected Rating Class A-2B-R Notes LT AA(EXP)sf Expected Rating Class B-R Notes LT A(EXP)sf Expected Rating Class C-R Notes LT BBB-(EXP)sf Expected Rating Class D-R Notes LT BB-(EXP)sf Expected Rating Class E-R Notes LT B-(EXP)sf Expected Rating Sub Notes LT NR(EXP)sf Expected Rating Transaction Summary Bastille Euro CLO 2020-3 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds will be used to purchase a portfolio with a target par of EUR300million and redeem the outstanding notes excluding the subordinated notes. The portfolio is actively managed by Carlyle CLO Partners Manager LLC, which is part of the Carlyle Group. The CLO has a 5.1-year reinvestment period and a nine-year weighted average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch considers the average credit quality of obligors to be in the 'B' category. The Fitch weighted average rating factor of the identified portfolio is 25.9. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the identified portfolio is 61.8%. Diversified Asset Portfolio (Positive): The transaction will include various concentration limits in the portfolio, including a fixed-rate obligation limit at 10%, a top 10 obligor concentration limit of 20% and a maximum exposure to the three largest Fitch-defined industries of 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction will have an approximately 5.1-year reinvestment period and it includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines Cash-flow Modelling (Positive): The WAL used for the transaction's stress portfolio analysis is 12 months less than the WAL covenant at the issue date (subject to a floor of six years), to account for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include, among others, passing the coverage tests and the Fitch 'CCC' bucket limitation test post reinvestment, as well as a WAL covenant that progressively steps down over time, both before and after the end of the reinvestment period. Fitch believes these conditions would reduce the effective risk horizon of the portfolio during the stress period. 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 have no impact on the class X-R and class A-1-R, and lead to downgrades of one notch for the class C-R notes, two notches for the class A-2-R, B-R and D-R notes and to below 'B-sf' for the class E-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. Owing to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class A-2-R and B-R notes display a rating cushion of one notch, and the class C-R, D-R and E-R notes a cushion of two notches. The class A notes display no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase in the mean RDR across all ratings and a 25% decrease in the RRR across all the ratings of the Fitch-stressed portfolio, would lead to downgrades of up to three notches for the class A-1-R notes, four notches for the class A-2-R to C-R notes and to below 'B-sf' for the class D-R and E-R notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction in the mean RDR across all ratings and a 25% increase in the RRR across all the ratings of the Fitch-stressed portfolio would lead to an upgrade of up to three notches for the rated notes, except for the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. During the reinvestment period, based on the Fitch-stressed portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations 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 Bastille Euro CLO 2020-3 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. CAIRN CLO XIX: S&P Assigns Prelim B- (sf) Rating to Class F Notes ----------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Cairn CLO XIX DAC's class A, B-1, B-2, C, D, E, and F notes. At closing, the issuer will also issue unrated subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payments. This transaction has a two year non-call period and the portfolio's reinvestment period will end approximately five years after closing. The preliminary ratings assigned to the notes reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows and excess spread. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,701.45 Default rate dispersion 662.34 Weighted-average life (years) 4.93 Weighted-average life (years) extended to match reinvestment period 5.21 Obligor diversity measure 121.89 Industry diversity measure 14.55 Regional diversity measure 1.22 Transaction key metrics Total par amount (mil. EUR) 450.00 Defaulted assets (mil. EUR) 0 Number of performing obligors 149 Portfolio weighted-average rating derived from our CDO evaluator B 'CCC' category rated assets (%) 1.35 'AAA' target portfolio weighted-average recovery (%) 37.39 Actual weighted-average spread (net of floors, %) 4.01 Actual weighted-average coupon (%) 4.16 Rating 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'. At closing, we consider that the portfolio will be well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we modelled the EUR450 million par amount, the covenanted weighted-average spread of 4.01%, the covenanted weighted-average coupon of 4.16%, and the target weighted-average recovery rates. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "We expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk limited at the assigned preliminary ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "We expect the transaction's legal structure to be bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1 and B-2 to F notes could withstand stresses commensurate with higher ratings than those we have assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we capped our preliminary ratings on the notes. The class A notes could withstand stresses commensurate with the assigned preliminary rating. "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 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." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to the following industries (non-exhaustive list): cluster weapons, anti-personnel landmines, tobacco, biological weapons, anti-personnel land mines, payday lending, pornography, prostitution, mining activities, the sale or extraction of oil sands, and gambling operations. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list Prelim. Prelim. Amount Credit Class rating* (mil. EUR) enhancement (%) Interest rate§ A AAA (sf) 279.00 38.00 Three/six-month EURIBOR plus 1.30% B-1 AA (sf) 42.60 26.76 Three/six-month EURIBOR plus 2.00% B-2 AA (sf) 8.00 26.76 4.80% C A (sf) 25.90 21.00 Three/six-month EURIBOR plus 2.40% D BBB- (sf) 31.50 14.00 Three/six-month EURIBOR plus 3.50% E BB- (sf) 20.20 9.51 Three/six-month EURIBOR plus 6.00% F B- (sf) 13.50 6.51 Three/six-month EURIBOR plus 8.52% Sub. Notes NR 36.25 N/A N/A *S&P's preliminary ratings on the class A, B-1, and B-2 notes address timely interest and ultimate principal payments. Our preliminary ratings on the class C, D, E, and 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. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. GROSVENOR 2024-2: Fitch Assigns 'B-sf' Final Rating to Cl. F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Grosvenor Place CLO 2024-2 DAC final ratings, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Grosvenor Place CLO 2024-2 DAC Class A Notes XS2925040128 LT AAAsf New Rating AAA(EXP)sf Class B Notes XS2925040474 LT AAsf New Rating AA(EXP)sf Class C Notes XS2925040987 LT Asf New Rating A(EXP)sf Class D Notes XS2925041100 LT BBB-sf New Rating BBB-(EXP)sf Class E Notes XS2925041365 LT BB-sf New Rating BB-(EXP)sf Class F Notes XS2925041522 LT B-sf New Rating B-(EXP)sf Sub Notes XS2925041878 LT NRsf New Rating NR(EXP)sf Transaction Summary Grosvenor Place CLO 2024-2 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 fund a portfolio with a target par of EUR400 million that is actively managed by CQS (UK) LLP. The CLO has an approximately 2.1-year reinvestment period and an approximately 6.1-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 (WARF) of the identified portfolio is 24. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-weighted average recovery rate (WARR) of the identified portfolio is 63.6%. Diversified Asset Portfolio (Positive): The transaction includes two matrices that are effective at closing with fixed-rate limits of 5% and 12.5%. Both matrices are based on a top-10 obligor concentration limit of 20%. The transaction also includes various other concentration limits, including a maximum exposure to the three-largest Fitch-defined industries in the portfolio at 40% and a maximum fixed-rate asset limit of 12.5%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a 2.3-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Analysis (Neutral): The WAL used for the Fitch-stressed portfolio and matrices analysis is six years, which is slightly shorter than the WAL covenant. While strict reinvestment conditions after the reinvestment period are envisaged in this transaction, including the satisfaction of over-collateralisation tests and Fitch's 'CCC' limit tests, together with a progressively decreasing WAL covenant, Fitch has not shortened the modelled risk horizon to under six years, in line with its CLO Criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on the class A, B, C and E notes, but would lead to a downgrade of one notch to the class D notes, and to below 'B-sf' for the class F notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B to F notes display a rating cushion of two notches. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to a downgrade of up to four notches for the rated notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to two notches for the rated notes, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, which are based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY 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 Grosvenor Place CLO 2024-2 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. GROSVENOR PLACE 2024-2: S&P Assigns B-(sf) Rating to Class F Notes ------------------------------------------------------------------ S&P Global Ratings assigned its credit ratings to Grosvenor Place CLO 2024-2 DAC's class A, B, C, D, E, and F notes. At closing, the issuer also issued unrated subordinated notes. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,653.50 Default rate dispersion 658.95 Weighted-average life (years) 4.31 Obligor diversity measure 90.26 Industry diversity measure 23.24 Regional diversity measure 1.16 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.50 Actual 'AAA' weighted-average recovery (%) 37.28 Actual weighted-average spread (net of floors; %) 4.01 Actual weighted-average coupon (%) 5.04 Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payments. The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, S&P has conducted its credit and cash flow analysis by applying its criteria for corporate cash flow CDOs. S&P said, "In our cash flow analysis, we used the EUR400 million target par amount, the actual weighted-average spread (4.01% ), the covenanted weighted-average coupon (5.00%), and the actual weighted-average recovery rates calculated in line with our CLO criteria for all classes of notes. 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. "Until the end of the reinvestment period on Jan. 15, 2027, the collateral manager may substitute assets in the portfolio as 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 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 manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our counterparty criteria, and the legal structure and framework is bankruptcy remote, in line with our legal criteria. "The CLO is managed by CQS (UK) LLP, and the maximum potential rating on the liabilities is 'AAA' under our operational risk criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe the rating is commensurate with the available credit enhancement for the class A notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B to E notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from closing--during which the transaction's credit risk profile could deteriorate--we have capped our ratings on the notes. "For the class F notes, our credit and cash flow analysis indicates that the available credit enhancement could withstand stresses commensurate with a lower rating. However, we have applied our 'CCC' rating criteria, resulting in a 'B- (sf)' rating on this class of notes." The ratings uplift for the class F notes reflects several key factors, including: -- The class F notes' available credit enhancement, which is in the same range as that of other CLOs S&P has rated and that have recently been issued in Europe. -- The portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 18.10% (for a portfolio with a weighted-average life of 4.31 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 4.31 years, which would result in a target default rate of 13.36%. -- S&P does not believe that there is a one-in-two chance of this note defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. -- Following this analysis, S&P considers that the available credit enhancement for the class F notes is commensurate with the assigned 'B- (sf)' rating. -- Given its analysis of the credit, cash flow, counterparty, operational, and legal risks, S&P believes its ratings are commensurate with the available credit enhancement for all the rated classes of notes. S&P said, "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we also included the sensitivity of the ratings on 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." Grosvenor Place CLO 2024-2 is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by speculative-grade borrowers. CQS (UK) LLP manages the transaction. Environmental, social, and governance S&P said, "We regard the transaction's exposure to environmental, social, and governance (ESG) credit factors as broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental and social credit factors is viewed as below average, while governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities, including but not limited to: anti-personnel mines, cluster weapons, depleted uranium, nuclear weapons, white phosphorus, biological or chemical weapons. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list Amount Credit Class Rating* (mil. EUR) Interest rate§ enhancement (%) A AAA (sf) 248.00 3M EURIBOR plus 1.24% 38.00 B AA (sf) 42.00 3M EURIBOR plus 2.00% 27.50 C A (sf) 26.00 3M EURIBOR plus 2.65% 21.00 D BBB- (sf) 28.00 3M EURIBOR plus 3.51% 14.00 E BB- (sf) 18.00 3M EURIBOR plus 6.40% 9.50 F B- (sf) 12.00 3M EURIBOR plus 8.53% 6.50 Sub. NR 32.00 N/A N/A *The ratings assigned to the class A and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, and 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. 3M--Three-month. EURIBOR--Euro Interbank Offered Rate. Sub.--Subordinated. NR--Not rated. N/A--Not applicable. ========= I T A L Y ========= A-BEST 25: Fitch Puts 'BB+sf' Final Rating to Class E and X Notes ----------------------------------------------------------------- Fitch Ratings has assigned Asset-Backed European Securitisation Transaction Twenty-Five S.r.l. (A-Best 25) final ratings. The class C, D and X notes' final ratings are one notch higher than their expected ratings due to a revised note margin and lower trade of the swap agreement. Entity/Debt Rating Prior ----------- ------ ----- Asset-Backed European Securitisation Transaction Twenty-Five S.r.l. (A-Best 25) A IT0005621880 LT AAsf New Rating AA(EXP)sf B IT0005621898 LT A+sf New Rating A+(EXP)sf C IT0005621906 LT A-sf New Rating BBB+(EXP)sf D IT0005621914 LT BBBsf New Rating BBB-(EXP)sf E IT0005621922 LT BB+sf New Rating BB+(EXP)sf M IT0005621930 LT NRsf New Rating NR(EXP)sf X IT0005621948 LT BB+sf New Rating BB(EXP)sf Transaction Summary A-Best 25 is a static securitisation of performing fixed-rate auto loans advanced to Italian individuals (including professionals) and SMEs by CA Auto Bank S.p.A. (CAAB, A-/Positive/F1), owned by Crédit Agricole Consumer Finance, part of Crédit Agricole S.A. (A+/Stable/F1). KEY RATING DRIVERS Non-Captive Origination, Higher Defaults: Historical default data for the most recent vintages are at the high end of Italian non-captive lenders and Fitch has assigned base-case defaults for new and used vehicles of 3.0% and 4.25%, respectively. Origination from new vehicles by former captives shows a stable performance trend and Fitch has assigned a 2.25% base case. As result, Fitch expects a weighted average (WA) lifetime default rate of 3.5%. Higher Base-Case Recoveries: CAAB's recovery rates are higher than other Italian non-captive lenders. Compared with the previous Italian A-Best deal, Fitch has maintained its base-case recovery rate for both new and used vehicles at 35% as well as a 50% 'AAsf' recovery haircut. Recoveries from defaulted loans rely mainly on borrowers' restored performance and loan settlements, rather than car sale proceeds, as Italian auto loans are unsecured. Initial Sequential Paydown Provides Support: The class A to M notes will switch from sequential to pro-rata paydown in August 2025. The initial sequential amortisation allows credit enhancement (CE) to build up to support the rated notes before the pro-rata amortisation is triggered. The notes will switch back to sequential if certain performance triggers are breached. Fitch views the principal deficiency ledger (PDL) trigger as tight enough to limit the length of the pro-rata period. 'AAsf' Sovereign Cap: The class A notes are rated at their highest achievable rating, six notches above Italy's sovereign rating (BBB/Positive/F2), the cap for Italian structured finance and covered bonds. The Positive Outlook on the class A notes reflect that on the sovereign. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade At the applicable rating cap, the notes' ratings are sensitive to changes to Italy's Long-Term IDR and Outlook. A revision of the Outlook on Italy's IDR to Stable would trigger similar action on the notes. Unexpected increases in the frequency of defaults or decreases in recovery rates that could produce larger losses than the base case could result in negative rating action on the notes. For example, a simultaneous increase in the default base case by 25% and a decrease in the recovery base case by 25% would have no rating impact on the class A notes and would lead to downgrades of up to two notches for the class B to E and X notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of Italy's IDR and the related rating cap for Italian structured finance transactions, currently 'AAsf', could trigger an upgrade of the class A notes if available CE is sufficient to withstand stresses associated with higher ratings. For the class B, C, D and E notes, an unexpected decrease in the frequency of defaults or increase in recovery rates that would produce smaller losses than the base case could result in positive rating action. For example, a simultaneous decrease in the default base case by 25% and increase in the recovery base case by 25% would lead to upgrades of up to three notches for the class B to E notes. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, and concluded that there were no findings that affected the rating analysis. 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. =================== L U X E M B O U R G =================== VENGA TOPCO: Moody's Affirms 'B2' CFR & Alters Outlook to Positive ------------------------------------------------------------------ Moody's Ratings has changed the outlook on Venga Topco S.a.r.l. ("Venga Topco" or "Marlink"), the top entity for the Marlink group (a leading IT and Communications managed services provider on the maritime and enterprise end-markets) and its facility issuing subsidiary, Venga Finance S.a.r.l. to positive from stable. At the same time, Moody's have affirmed the B2 long-term corporate family rating and a B2-PD probability of default rating at Venga Topco. Moody's have also affirmed the B2 ratings of the USD594 million Senior Secured Term Loan (TLB; due 2029) and EUR300 million Senior Secured Term Loan (TLB; due 2029) issued by Venga Finance S.a.r.l. and the USD150 million Senior Secured Revolving Credit Facility (RCF; due 2028) issued by Venga Finance S.a.r.l. "Marlink's B2 rating is strongly positioned within its category, supported by its continued robust performance in 2024 and the rapid reduction in leverage achieved through EBITDA growth. Moody's project the company's gross Moody's adjusted leverage to reach 4.6x by the close of 2024, with potential for continued de-leveraging, provided there are no significant debt-funded acquisitions or shareholder distributions," says Gunjan Dixit, Vice President -- Senior Credit Officer and lead analyst on Venga Topco. RATINGS RATIONALE Following exceptional growth in 2023 of 19%, Marlink has seen reported revenue growth of 2% over the first nine months of 2024 tempered by reduced data sales to Mass cruise customers. The Maritime segment, which contributes 68% (excluding the Bridge Electronics services business) to total revenue, saw a 5% underlying growth year-to-date, driven by VSAT (Very Small Aperture Terminal) broadband services (including LEO nand GEO technologies), but only grew 2% on a reported basis due to a drop in mass cruise capacity sales from the high levels of 2023. The EEG (Enterprise Energy Government) segment, accounting for 25% of revenue, achieved a 6% growth, primarily through VSAT revenue, offset by a slight MSS decrease compared to an exceptionally strong 2023. For 2024, Moody's anticipate an overall 5% organic revenue growth, reducing to 2% with mass cruise impact included. For 2025, Moody's expect a stronger revenue growth in the high single digits, buoyed by a weaker 2024 comparative and steady growth in the merchant shipping business (which represents around 50% of the overall Maritime business) as well as the EEG segment. Even though Starlink is emerging as a tough competitor in the maritime and cruise markets, Marlink has successfully capitalized on its partnership with Starlink since 2022, and expects to continue to attract customers by offering a combination of its own GEO VSAT and value added services with Starlink capacity. Marlink's reported post IFRS EBITDA has grown strongly at 9% year-on-year for the nine months to September 30, 2024, driven by top-line growth, network optimisation as well as an increase in monthly recurring connectivity and digital services which carry higher margins than hardware revenues and MSS services. For 2025, Moody's expect further EBITDA growth driven by higher revenue growth and continued investment in the expansion of value added and managed services. Therefore, the company's EBITDA margin (28% year-to-date) is likely to see further improvement. Marlink achieved significant deleveraging in the first nine months ending September 30, 2024 with a Moody's-adjusted gross leverage of 4.9x as of the last twelve months ending September 30, 2024, down from 5.3x in 2023. In June 2024, Marlink undertook a repricing and upsized its senior secured term loan by EUR50 million. Following the debt upsize and using surplus cash available, Marlink financed a divided distribution of USD57 million. However, Moody's understand that this dividend payment was a one-off and further dividend payments are unlikely in the next 12-18 months. For 2025, the company has potential to achieve further deleveraging, provided it refrains from executing debt-funded acquisitions or unexpected dividend payments. After moderately negative free cash flow (FCF, Moody's-adjusted) in 2023, Moody's expected FCF to turn positive in 2024, driven by a material reduction in exceptionals as well as lower capital expenditure (7% of revenue). However, the company's FCF will remain negative at around USD10 million as a result of the USD57 million dividend payout. In 2025, Moody's project FCF to turn positive, driven by strong top line growth, lower cash interest as a result of the debt repricing and reduced capital expenditure. The B2 CFR for Venga Topco takes into consideration (1) Marlink's position as a leading provider of satellite communications, network management, cyber security and digital solutions for the maritime and EEG sectors (2) the recurring nature of its revenue, underpinned by contracted revenue backlog and three to five-year customer contracts with high renewal rates and low churn rates; reliance on its partnership with Starlink, which is supportive of data volumes (3) the company's good revenue and customer diversification as well as healthy demand for its applications driven by need for improved connectivity in remote locations. The rating also considers (1) Marlink's reliance on satellite operators to provide its services to the end customers; (2) the competition in the industry especially with the growth in LEO (Low Earth Orbit) operators, in particular Starlink, and some risk of disintermediation by satellite network operators (3) the moderate exposure to cyclicality in some of Marlink's main end markets, such as cruises and (4) foreign exchange risk as around 50% of its operating expenses are EUR denominated though the company uses appropriate hedging to reduce structural foreign exchange exposure. Additonally, 93% of the group's senior debt is hedged against interest rate increase until November 2025. LIQUIDITY Venga Topco's liquidity profile is good. The company had $26 million of cash on the balance sheet as of the end of September 2024 and has further access to Venga Finance S.a.r.l.'s $150 million undrawn RCF. Marlink does not have significant debt maturities until 2028 when the RCF and 2029 when the TLBs come due. The RCF benefits from a springing financial covenant under which the company maintains adequate headroom. RATIONALE FOR POSITIVE OUTLOOK The positive outlook reflects Moody's expectation of continued deleveraging through EBITDA growth over the next 12-18 months. The outlook also reflects Moody's expectation that liquidity will remain good and that there will not be any significant debt-financed acquisitions or dividend recapitalization. If the company fails to concur with these expecations, the outlook could return to stable. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded should: (1) the company establish a track record of meeting its business plan translating into strong organic revenue and EBITDA growth; and (2) its Moody's-adjusted gross leverage fall sustainably below 4.5x; and (3) Marlink generate healthy Moody's adjusted free cash flow/ debt ratio of over 5% on a sustained basis. The positive outlook indicates that rating downgrades are unlikely over the next 12-18 months. However, the ratings could be downgraded if: (1) Moody's-adjusted gross leverage rises above 5.5x on a sustained basis; (2) the company's business profile weaken materially; or (3) liquidity deteriorate. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. COMPANY PROFILE Marlink is a leading global satellite communication solutions and managed digital services provider primarily focused on the maritime industry. In 2023, the group reported revenues of USD760 million and EBITDA of USD200 million. ===================== N E T H E R L A N D S ===================== STAMINA BIDCO: S&P Upgrades ICR to 'B+', Outlook Stable ------------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on Netherlands-based Synthon (operating company of Stamina Bidco B.V.) to 'B+' from 'B', and its ratings on its outstanding term loan B (TLB). The recovery rating on the TLB is '3', reflecting its expectation of 60% recovery prospects in the event of payment default. S&P said, "The stable outlook reflects our view that Synthon's operating performance should remain resilient thanks to organic revenue growth and long-term visibility over its revenue, underlined by solid B2B contract gains. Under our base-case scenario, we expect the company's S&P Global Ratings-adjusted debt to EBITDA will remain within 2.0x-3.0x over the next 12-18 months." The upgrade reflects Synthon's track record of maintaining S&P Global Ratings-adjusted debt to EBITDA at or below 5x, combined with healthy and recurring positive annual FOCF, which is expected to continue, assuming no-debt financed acquisitions. S&P said, "Our adjusted debt to EBITDA is forecast at about 2.7x in 2024, from 3.6x in 2023, considering two debt amortizations in 2024 totaling EUR50 million, using Synthon's own generated cash. In 2023, the company repaid another EUR50 million of its EUR360 million TLB, which now stands at EUR260 million as of year-end 2024. Our adjusted debt calculations also include approximately EUR3 million of adjustments related to lease liabilities, and other debts totaling about EUR5 million (including loans in Chile and Spain). We expect the company's adjusted debt to EBITDA to stand at 2.6x in 2025, considering no debt-financed acquisitions." S&P said, "We believe that Synthon's ability to voluntarily repay its debt, while continuing to organically increase its profitability, demonstrates solid operational performance and a prudent approach in terms of capital allocation policy, with the aim to focus on internal R&D projects and capital expenditure to support long-term growth. However, we believe that the ownership by a financial sponsor (BC Partners) might lead to an increase in leverage in the event of debt-financed acquisitions or debt recapitalization, which could derail the company's deleveraging path. We expect Synthon will continue to post positive FOCF of EUR30 million in 2024 and about EUR35 million-EUR40 million in 2025, in line with its track record, despite continual investment in growth capex of EUR25 million-EUR30 million per year over the next two years, including maintenance capex of EUR9 million. This demonstrates Synthon's ability to self-fund its internal projects and maintain long-term investments ahead of new products launching to market, while being able to keep reducing leverage. We do not deduct any cash from our leverage calculations, due to financial-sponsor ownership. "We expect Synthon's profitability to gradually increase over the next 12-18 months, backed by new product launches and greater focus on operation optimization. Our S&P Global Ratings-adjusted EBITDA margin should reach around 25% in 2024 and 25%-25.5% in 2025, benefiting from ongoing product launches, geographical expansion in new countries, and better use of capacity within Synthon's own manufacturing network, as well as third-party manufacturers'. We believe that the company's profitability will improve further beyond our current rating horizon, with significant new product launches being currently developed. In our base case, we account for capitalized R&D costs of EUR12 million-EUR13 million per year, which depreciates the company's S&P Global Ratings-adjusted EBITDA consisting of treating of capitalized R&D costs as expenses." Synthon invests most of its internally generated cash flows toward its R&D spending, spanning between EUR55 million-EUR60 million in 2024 and 2025, from previous levels of about EUR35 million on average in 2022-2023, demonstrating an acceleration of projects and in-house molecule development. The company's business model relies on investing any patent expiry well-ahead by multiple years to be the first-to-market, which creates a multi-year time lag between the period of investment and the topline contribution. S&P said, "Therefore, we assume Synthon will deliver adjusted EBITDA close to EUR100 million in 2024 and about EUR100 million-EUR105 million in 2025, after capitalized R&D costs. Our estimate reflects significant organic growth of about 16%-17% in 2024 and 3%-4% in 2025 thanks to solid visibility in terms of its topline, stemming from the B2B business covered by long-term contracts from customers, in addition the integrity of the 2025 pipeline products that are already filed or approved." This is combined with further expansion from the direct-to-market products, where Synthon operates in Mexico Chile and Argentina, with better product mix, despite currency exchange volatility. Synthon posted robust results as year-to-date September 2024, thanks to topline growth combined with lower operating costs. The company reported revenue of EUR304.9 million in the first nine months of the year, compared with the same period last year--a 22.6% increase stemming mainly from existing portfolio and new contracts gains in the B2B segment. It enjoyed this significant revenue increase despite the time lag of orders and an unfavorable foreign currency effect in Latin America (LATAM). Synthon reported EBITDA of EUR108.4 million for the year-to-date September 2024, improving by 48.4% compared with the same period last year, despite higher operating expenses, lower capitalized R&D, and some minor litigation costs. This was in addition to lower non-recurring items related to some reorganization and production disruptions. Therefore, Synthon's EBITDA margin has improved to 35.6% from 29.4% last year. In terms of cash flow generation, Synthon reported FOCF of EUR43.4 million as of September 2024, below budget by EUR8.7 million, due to unfavorable movement in working capital. As of September 2024, Synthon's cash balance remains solid, at EUR41.2 million at the end of the period. Therefore, S&P believes Synthon's year-to-date performance is in line with our expectations, with potential upside during the last quarter of 2024, which improves its view regarding its deleveraging path by year-end 2024. Synthon's intellectual property (IP) retention, vertically integrated business model, and revenue visibility are key credit strengths. The company is a niche, European, pharmaceutical finished-forms products manufacturer mainly focused on the B2B space (90% of its 2023 revenue). It serves more than 200 pharmaceutical companies with generic and patented drugs, which it manufactures in-house while holding IP rights. S&P also understands that the IP retention acts as a barrier for customers to switch to a contract development and manufacturing organization competitor. Synthon's retention rate is optimal, at more than 99%, thanks to its IP, but also to its quality, pricing, and safety considerations. Synthon operates in the business-to-customer (B2C) space (10%) in Mexico and Chile, launching its generics there before entering more regulated and high-margin markets such as Europe. Overall, this enables the company to assess its products' cost structure and market strength. Additionally, Synthon benefits from a vertically integrated business model with broad technology, offering capabilities in API development, formulation development, IP and regulatory services, manufacturing (active pharmaceutical ingredient [API] and finished products), and licensing and supply. Besides, Synthon shows solid revenue visibility thanks to long sales contracts and relatively high switching costs compared to potential customer savings. Its contracts have a five-year span, with usual binding volumes of three months before delivery. Therefore, S&P still believes that this ensures high revenue visibility regarding the existing products portfolio, although actual volumes could vary during the year, reflecting underlying product demand. S&P said, "The stable outlook reflects our view that Synthon's operating performance will remain resilient, stemming from a larger EBITDA base of about 25% in 2024, mitigating the effect of foreign exchange rates, as well as higher input costs. However, we expect FOCF to remain positive and slightly above EUR30 million in 2024, despite expansionary capex and higher working capital requirements. "From 2025, FOCF should improve slightly and stay above EUR35 million, mainly thanks to better operating leverage and lower working capital requirements. Under our base-case scenario, we forecast the company will maintain adjusted debt to EBITDA of 2.5x-3.0x and funds from operations (FFO) cash interest coverage of about 3.0x. "We could downgrade Synthon if its operating performance deteriorates significantly due to declining sales or lower profitability than anticipated, which would lead to S&P Global Ratings-adjusted debt to EBITDA above 5.0x. We could also take this action if FOCF fell substantially short of our base-case scenario. "We could also lower the rating if, for example, Synthon's financial policy becomes more aggressive than anticipated, leading to higher discretionary spending and weaker credit metrics. This could occur in case of a debt-financed acquisition or a dividend recapitalization, pushing debt to EBITDA above 5x. "We could consider an upgrade if Synthon provides a clear long-term commitment to keeping S&P Global Ratings-adjusted debt to EBITDA well below 4.0x, coupled with diversification of its shareholder base and tangible prospects of the private equity shareholder relinquishing control over the medium term." =========================== U N I T E D K I N G D O M =========================== AKJ ENTERPRISES: Springfields Advisory Named as Administrators -------------------------------------------------------------- AKJ Enterprises Limited was placed into administration proceedings in the High Court of Justice, Business and Property Courts, No BHM-00691 of 2024, and Situl Devji Raithatha of Springfields Advisory LLP, was appointed as administrator on Nov. 27, 2024. AKJ Enterprises specializes in the wholesale of household goods (other than musical instruments) n.e.c. Its registered office and principal trading address is at 1 Eden Road, Oadby, Leicester, LE2 4JP. The administrators can be reached at: Situl Devji Raithatha Springfields Advisory LLP 38 De Montfort Street Leicester, LE1 7GS Tel No: 0116 299 4745 For further information, contact: Sachin Raithatha Springfields Advisory LLP 38 De Montfort Street, Leicester LE1 7GS Tel No: 0116 299 474 Email: sachin.r@springfields-uk.com BAMBINO MIO: BDO LLP Named as Joint Administrators -------------------------------------------------- Bambino Mio Limited was placed into administration proceedings in the High Court of Justice, Business and Property Courts, Companies & Insolvency List (ChD), and Kiri Holland and Danny Dartnaill of BDO LLP, were appointed as joint administrators on Nov. 29, 2024. Bambino Mio Limited specializes in the marketing and sale of reusable nappies and other associated products. Its registered office is at 12 Staveley Way, Brixworth Industrial, Brixworth, Northampton, NN6 9EU. The joint administrators can be reached at: Kiri Holland BDO LLP 55 Baker Street London, W1U 7EU -- and -- Danny Dartnaill BDO LLP Thames Tower, Level 12 Station Road, Reading Berkshire, RG1 1LX Further Details Contact: Rebecca Kelly Email: BRCMTLondonandSouthEast@bdo.co.uk Tel No: +44 (0)758 723 3322 CALEDONIAN LOGISTICS: Johnston Carmichael Named as Administrators ----------------------------------------------------------------- Caledonian Logistics Limited was placed into administration proceedings in the Court of Session, No P1071, and Donald McNaught and Graeme Bain of Johnston Carmichael LLP, were appointed as administrators on Nov. 29, 2024. Caledonian Logistics Limited, fka M.B.A. 2000 Ltd (until 11 February 1999), offers freight transport by road services. Its registered office is at Raeburn Christie Clark & Wallace LLP, 12 - 16 Albyn Place, Aberdeen AB10 1PS. Its principal trading address is at Midmill Industrial Estate, Kintore, AB51 0UY; Colpy Road, Oldmeldrum, Inverurie, AB51 0BZ; 16 Carsegate Road North, Inverness, IV3 8EA; 29 - 47 Napier Road, Wardpark Industrial Estate, Cumbernauld, Glasgow, G68 0EF. The administrators can be reached at: Donald McNaught Graeme Bain Johnston Carmichael LLP 227 West George Street Glasgow, G2 2ND Further details contact: Catrina Mackay Tel No: 0141 222 5800 Email: catrina.mackay@jcca.co.uk COGNITIVE PUBLISHING: Begbies Traynor Named as Administrators ------------------------------------------------------------- Cognitive Publishing Limited was placed into administration proceedings in the Business and Property Courts in Manchester, Insolvency & Companies List (ChD), Court Number: CR-2024-MAN-001538, and Mark Weekes and Paul Stanley of Begbies Traynor, were appointed as administrators on Nov. 26, 2024. Cognitive Publishing is a publishing and events organiser based in Manchester. Its registered office is at 2nd Floor, 82 King Street, Manchester, M2 4WQ. The administrators can be reached at: Mark Weekes Paul Stanley Begbies Traynor (Central) LLP 340 Deansgate, Manchester M3 4LY For further information, contact: Jack Priestley Begbies Traynor (Central) LLP Email: jack.priestley@btguk.com Tel No: 0161 837 1700 COLT GROUP: Moody's Affirms 'Ba2' CFR & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Ratings has affirmed Colt Group Holdings Limited's (Colt or the company) Ba2 long term corporate family rating and Ba2-PD probability of default rating. The outlook has been changed to stable from negative. RATINGS RATIONALE The change in outlook to stable from negative is prompted by the continued track record of financial support from the company's controlling shareholders and the progress made in integrating the assets acquired from Lumen Technologies, Inc. (Caa1 positive). The outlook change is also supported by the successful extension of its revolving credit facility (RCF) to May 2029, previously set to expire in February 2025. The parental support was demonstrated by an equity injection of approximately EUR2 billion completed in 2024. This injection helped fund the acquisition of the EMEA assets of Lumen and capitalize a portion of the company's RCF drawdown. These measures enhance Colt's credit profile and mitigate uncertainties regarding its long-term financing structure amid ongoing negative free cash flow (FCF) generation. The integration of Lumen's EMEA assets continues to carry execution risks, which have however reduced thanks to progress on customer and data integration. In Moody's view, customer and data migration from Lumen will remain one of the main credit challenges for Colt in 2025. Moody's forecast Moody's-adjusted leverage to be around 2x in both 2024 and 2025, supported by the equity injection from the shareholders as well as the initial positive impact of cost synergies. Moody's anticipate that Moody's-adjusted FCF will remain negative over 2024/2025, driven by the high level of investments, as the costs to capture are likely to more than offset the ongoing positive impact of synergies. The overall dynamics will likely shift in 2026, when the costs to capture start to phase out, and negative Moody's-adjusted FCF will primarily be driven by the company's strategic focus on the expansion of its data centres segment. Colt's CFR reflects: (1) the company's fully-owned and managed pan-European fibre network; (2) the stronger business profile after the acquisition of the EMEA assets of Lumen; (3) Moody's assumption that operating performance will be supported by the ongoing achievement of cost synergies; and (4) a very supportive ownership strategy from the company's controlling shareholder, SHM Lightning Investors LLC (SHM). However, the rating is constrained by: (1) the very competitive nature of the business telecoms market in Europe; (2) continued revenue pressures in the Voice segment; (3) sustained negative FCF driven by high investments; and (4) residual execution risks associated with the integration of Lumen's EMEA assets. ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS Colt's CIS-3 indicates that ESG considerations currently have a limited impact on the credit rating, with the potential for a greater negative impact over time. This is primarily due to social challenges, such as industry-wide exposure to customer data security. Additionally, governance risks are present, as evidenced by the company's concentrated shareholding structure and the non-independence of its board of directors. However, these ESG constraints are mitigated by Colt's proven track record of conservative financial policy and its access to liquidity from shareholders, which supports its expansion strategy. ESG considerations were a driver of the rating action because of the financial support from the controlling shareholders over the course of 2024. LIQUIDITY Colt has adequate liquidity, supported by cash and cash equivalents of EUR135 million as of December 2023, as well as a $1.7 billion RCF lent by FMR LLC (FMR) and due in May 2029. The RCF has been partially drawn down, with the proceeds used to repay a previous RCF and to provide liquidity to cover Colt's ongoing negative FCF generation. Moody's assume continued support from its shareholders, should extraordinary funding needs arise. RATIONALE FOR STABLE OUTLOOK Colt's stable outlook reflects Moody's assumption that operating performance will remain on track over the next 12-18 months supported by the delivery of the targeted cost synergies post-acquisition of Lumen's EMEA assets in spite of a broadly stable organic revenue growth. Moody's forecast Moody's-adjusted leverage to be at around 2x in both 2024 and 2025, and FCF generation to remain negative. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Colt's ratings could be upgraded if the company: (1) achieves and maintains positive organic revenue growth, leading to substantial improvements in EBITDA and FCF; (2) keeps its Moody's-adjusted debt/EBITDA consistently below 1.75x; (3) improves its Moody's-adjusted FCF/debt to the low-double digits in percentage terms. Colt's ratings could be downgraded if: (1) the company's revenue growth, EBITDA growth and FCF generation turn materially negative on a sustained basis; or (2) the company's Moody's-adjusted debt/EBITDA increases sustainably above 2.75x. Clear signs of a more aggressive financial policy or significantly reduced support from SHM and/or FMR compared to Moody's current assumptions and expectations could also exert negative pressure on Colt's ratings. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Communications Infrastructure published in February 2022. COMPANY PROFILE Incorporated in the UK, Colt provides a range of information and communication technology services to enterprises across cities in Europe, Asia and North America, with a focus on network, voice and data centre services to businesses. The company has an extensive international next-generation network with deep local fibre access and co-location assets in key cities as well as information hubs. In 2023, Colt generated revenue of EUR1,664 million and company-adjusted EBITDA of EUR447 million. The company is fully owned by Lightning Investors Limited, which is owned by SHM. CRAIGIE'S FARM: Interpath Ltd Named as Joint Administrators ----------------------------------------------------------- Craigie's Farm Limited was placed into administration proceedings in the Court of Session, Court Number: P1095 of 24, and James Alexander Dewar and Alistair McAlinden of Interpath Ltd, were appointed as joint administrators on Nov. 28, 2024. Craigie's Farm Limited specializes in the retail sale of food in specialized stores. Its registered office is at Interpath Ltd, 130 St Vincent Street, Glasgow, G2 5HF. Its principal trading address is at West Craigie Farm, South Queensferry, West Lothian, EH30 9AR. The joint administrators can be reached at: James Alexander Dewar Alistair McAlinden Interpath Ltd, 5th Floor 130 St Vincent Street Glasgow, G2 5HF Further Details Contact: Meadow Lees Email: meadow.lees@interpath.com Tel No: 0141 648 4291 CYRIL LUFF: Armstrong Watson Named as Administrators ---------------------------------------------------- Cyril Luff (Metal Decorators) Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Leeds, No LDS-001142-2024, and Ed Connell and Mike Kienlen of Armstrong Watson LLP, were appointed as administrators on Nov. 26, 2024. Cyril Luff (Metal Decorators) is a manufacturer of light metal packaging. Its registered office and principal trading address is at Units 57/58, Springvale Ind Est, Cwmbran, Gwent, NP44 5BD. The administrators can be reached at: Ed Connell Mike Kienlen Armstrong Watson LLP Third Floor, 10 South Parade Leeds, West Yorkshire LS1 5QS Further Details Contact: Lucy Fowler Email: lucyfowler@armstrongwatson.co.uk. Tel No: 0113 221 1300 DIGNITY FINANCE: Fitch Hikes Rating on Class B Notes to 'CCC' ------------------------------------------------------------- Fitch Ratings has upgraded Dignity Finance Plc's class A notes to 'BBB' from 'BB+' and removed them from Rating Watch Negative. The Outlook is Stable. Fitch has also upgraded the class B notes to 'CCC' from 'C'. Entity/Debt Rating Prior ----------- ------ ----- Dignity Finance Plc Dignity Finance Plc/Project Revenues - Second Lien/2 LT LT CCC Upgrade C Dignity Finance Plc/Project Revenues - First Lien/1 LT LT BBB Upgrade BB+ RATING RATIONALE The upgrade of the class A notes reflects the significant deleveraging following their partial prepayment in 2024, resulting in robust coverage levels. Furthermore, the class A notes benefit from the support of the undrawn liquidity facility and strong structural protections embedded in the whole business securitisation (WBS) structure. These also make equity support likely if needed, as demonstrated in the recent past. However, the rating also reflects the ongoing recovery of the business and the challenging operating environment with price competition and cost pressures. Fitch has also upgraded the class B notes following the cancellation of Dignity's refinancing plans, which means that the planned repayment of the class B notes at 84.25% of their outstanding amount is no longer considered, which Fitch would have viewed as a distressed debt event. Therefore, Fitch no longer view default as imminent. However, debt service coverage post 2035, when the class B notes start amortising, remains low even after prepayment of the class A notes. The 'CCC' rating indicates a very low margin for safety, making default a real possibility. KEY RATING DRIVERS Industry Profile - Midrange Challenging Operating Environment Price competition, cost pressures and changing consumer behaviour for lower margin services highlight the growing exposure of the funeral business to discretionary spending. The pandemic facilitated a trend towards unattended funerals and simplified cremations, which together with increased price competition and transparency, represent structural changes to the sector, weakening Dignity's operating environment. Fitch views volume risk as limited, with predictable long-term demand. Operating Environment - Midrange; Barriers to Entry - Midrange; Sustainability - Stronger Company Profile - Midrange Declining Long-Term Stability Dignity's ability to increase tariffs across all business segments is limited as a consequence of consumers' price-conscious behaviour and the company's strategy to re-gain market share. The company's focus on cost control, including closures of less profitable funeral homes and a more standardised offering, has shown early success in 2024. However, Fitch expects margins to remain under pressure in the medium term. Financial performance - Weaker; Company Operations - Midrange; Transparency - Stronger; Dependence on Operator - Midrange; Asset Quality - Midrange Debt Structure - Class A - Stronger Solid Debt Structure The notes are fixed-rate and fully amortising, benefiting from a strong UK WBS security package as well as strong structural features such as a tranched liquidity facility and high thresholds for both restricted payment conditions and the financial covenant. Debt Profile - Stronger; Security Package - Stronger; Structural Features - Stronger Debt Structure - Class B - Midrange Contractually Subordinated Class B Notes Fitch assesses the class B notes' debt structure as weaker than that of the class A notes, reflecting their contractual subordination and late maturity in 2049. The interest-only period until the repayment of class A notes and the long-dated maturity of the class B notes makes them vulnerable to further re-shaping of the industry and Dignity's ability to adjust to improve its profitability. Debt Profile - Midrange; Security Package - Midrange; Structural Features - Stronger Financial Profile Under its rating case, Fitch assumes long-term FCF growth is less than the death rate forecast by the UK Office for National Statistics (ONS). This reflects the uncertain business environment and uncertainty around Dignity's ability to defend its market share and increase pricing. Furthermore, the death rate in 2024 has been approximately 4% lower than the ONS forecast. Therefore 2025 may be a year of catch-up with the general ONS trend. However, this is not reflected in the Fitch rating case. In 2025 and 2026, Fitch assumes FCF growth of around 2%. The rent-adjusted lower of the average and median FCF DSCR is robust at 1.9x for the class A notes, reflecting the material deleveraging during 2024. In contrast, the class B DSCR shows a cash flow shortfall from 2035, when the class A becomes fully repaid and principal amortisation starts for the class B notes, relying on the liquidity facility to meet debt service in full. PEER GROUP Dignity has no direct peers, but Fitch compares it with other transactions within the Fitch WBS universe. CPUK Finance Limited (class A notes: BBB/Stable) operates in the holiday and leisure industry and is therefore more exposed to discretionary spending, but in recent years Dignity has been facing much stronger competitive pressures, affecting volumes, prices and cash flow generation. The amount of Dignity's senior notes is now very small, resulting in strong coverage metrics, further supported by the tranched liquidity facility, which remains undrawn. This justifies the same rating as CPUK's senior notes. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Class A - Deterioration in the business profile or environment, leading to DSCRs consistently below 1.7x Class B - Deterioration in the business profile or operating environment, which would make a default probable Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Class A - An upgrade is unlikely in the near term, due to the evolving business profile and operating environment, which limits visibility of Dignity's long-term profitability Class B - Improvement in the cash-flow-generating ability of the business, improving the margin of safety to repay the class B notes in full TRANSACTION SUMMARY Dignity is a financing vehicle for a securitisation comprising 584 funeral homes and 44 crematoria as at September 2024. The Dignity group is a major provider of funeral and crematoria services in the UK. CREDIT UPDATE Business Resizing and Cost Savings: In 2024 Dignity continued closing the uneconomic branches of its funerals business. At end September, Dignity operated 584 funeral homes, compared with 690 at end-September 2023. Dignity has continued to implement cost control actions in 2024. It improved profitability in the funerals business, which had operating profit of GBP34.3 million at end-September 2024, compared with GBP20.8 million at end-September 2023. Class A Partial Prepayment: Dignity prepaid GBP82.6 million of the class A notes in 2024, which it funded from a funeral plan trust cash release as well as sales proceeds from funeral homes. Execution Risk Subsided: On 20 November 2023, the company launched a consent solicitation process, with a proposal to implement a refinancing to redeem the class A notes in full at 100% of the outstanding and class B notes at 84.25% of the outstanding and collapse the WBS structure. This consent solicitation process was approved by the noteholders. On 18 September 2024, Dignity announced that it no longer expects to implement this refinancing. Equity Cure: There was an equity cure of GBP15.4 million in the 12 months to September 2024. Before the equity cure, Dignity reported an EBITDA DSCR of 1.75x in the 12 months to September 2024, while the financial covenant is now at 1.5x and the restricted payment condition at 1.85x. The FCF DSCR stood at 1.13x with a restricted payment condition of 1.4x.After the equity cure, the EBITDA DSCR stood at 2.37x. SECURITY - First fixed security in respect of the issuers rights under the intercompany loan made to the borrower. - Floating charge over all the issuer's property, undertakings and assets. - First fixed charge over the borrower's and other obligors' assets and a floating charge over substantially all their property, undertakings and assets not subject to fixed charge security. - The first ranking qualifying floating charge in conjunction with a UK capital markets issuance over GBP50 million give right to appoint an administrative receiver over the borrower's business in the event of an unremedied borrower event of default. ESG Considerations Dignity Finance Plc has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. EOSEMI LIMITED: Begbies Traynor Named as Administrators ------------------------------------------------------- Eosemi Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Insolvency & Companies List (ChD), Court Number: CR-2024-MAN-001517, and Paul Stanley and Mark Weekes of Begbies Traynor, were appointed as administrators on Nov. 22, 2024. Eosemi Limited specializes in engineering research and experimental development. Its registered office is at Advance Manufacturing Park, Brunel Way, Rotherham, S60 5WG. The administrators can be reached at: Paul Stanley Mark Weekes Begbies Traynor (Central) LLP 340 Deansgate, Manchester M3 4LY For further information, contact: Warren Seals Begbies Traynor (Central) LLP E-mail: warren.seals@btguk.com Tel No: 0161 837 1700 HOMESLICE JAMES: Begbies Traynor Named as Joint Administrators -------------------------------------------------------------- Homeslice James Street Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2024-005894, and Dominik Thiel-Czerwinke and Louise Donna Baxter of Begbies Traynor (Central) LLP, were appointed as administrators on Nov. 28, 2024. Homeslice James specializes in Leisure - Bars and Restaurants. Its registered office is at 1066 London Road, Leigh On Sea, Essex, SS9 3NA. The administrators can be reached at: Dominik Thiel-Czerwinke Louise Donna Baxter Begbies Traynor (Central) LLP 1066 London Road, Leigh-on-Sea Essex, SS9 3NA For further information, contact: Rosie Thurwood Begbies Traynor (Central) LLP E-mail: Southendteamd@btguk.com Tel No: 01702 467255 LIBERTY STEEL: FRP Advisory Named as Joint Administrators --------------------------------------------------------- Liberty Steel East Europe (Holdco) Limited was placed into administration proceedings in the High Court of Justice, Court Number: CR-2024-005892, and David Hinrichsen and Chad Griffin of FRP Advisory Trading Limited, were appointed as joint administrators on Nov. 26, 2024. Liberty Steel manufactures steel. Its registered office is at C/O Marble Power Ltd, 1st Floor, 3 More London Place, London, SE1 2RE in the process of being changed to c/o FRP Advisory Trading Limited, 2nd Floor, 110 Cannon Street, London EC4N 6EU. The joint administrators can be reached at: David Hinrichsen Chad Griffin FRP Advisory Trading Limited 2nd Floor, 110 Cannon Street London, EC4N 6EU Further Details Contact: The Joint Administrators Tel No: 020 3005 4000 Alternative contact: Kavan Lidher Email: Kavan.lidher@frpadvisory.com SHERWOOD FINANCING: Fitch Puts 'B+' Final Rating to Sr. Sec. Notes ------------------------------------------------------------------ Fitch Ratings has assigned Sherwood Financing Plc's recent issues of 2029 senior secured notes - EUR397.1 million at a floating rate, EUR250 million at 7.625% and GBP250 million at 9.625% - each a final 'B+' rating. The final ratings are in line with the expected ratings Fitch assigned to the notes on 21 November 2024 (see 'Fitch Rates Sherwood Financing Plc's Senior Secured Notes 'B+(EXP)'). Key Rating Drivers Equalised with Long-Term IDR: The notes are guaranteed by Sherwood Parentco Limited (Arrow) among other group entities. As the senior secured notes in aggregate represent the majority of the group's debt, Fitch has equalised the notes' ratings with Arrow's Long-Term Issuer Default Rating (IDR), indicating average recoveries for the notes. The new notes extend the average tenor of the group's borrowings, with only a small increase in leverage. Equal Rank with Other Notes: The notes are principally being used to refinance previous issues of senior secured notes due in 2026 and 2027. Following the transaction, Arrow will have a total of EUR965 million of 2029 floating-rate notes, as the EUR397.1 million of new notes are supplemented by EUR567.9 million issued in exchange for previous notes. Small amounts of the earlier maturity notes will remain in place and rank equally with the new notes within the senior secured debt class. Shift Towards Capital-Light Model: Arrow is a UK-based investor in non-performing loans and other non-core assets. For the past several years, it has been transitioning away from deploying its own balance sheet to primarily managing funds that invest in similar asset classes, with Arrow acting as their servicer. Leverage Constrains Rating: Arrow's IDR reflects its continued material leverage, which weighs on its financial metrics in the current interest rate environment, even as it expands its fund management-based business model. The IDR also reflects its developing investor franchise and the long-term benefits expected from shifting to an asset-light strategy, setting it apart from traditional debt purchasers. Reducing Leverage Expectation: Fitch-calculated gross debt/adjusted EBITDA ratio was 3.7x at end-3Q24 (net leverage as calculated by Arrow at 3.6x). Arrow targets net cash flow leverage of 3.0x over the medium term. Fitch expects leverage to benefit from growing revenue in the company's integrated fund management business. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Arrow's Long-Term IDR would likely be mirrored in a downgrade of the senior secured notes. In addition, worsening recovery expectations, for instance, through a larger layer of structurally senior debt, could lead Fitch to notch down the notes' rating from the Long-Term IDR - Inability to keep leverage (gross debt/adjusted EBITDA) below 4.5x, or to demonstrate progress towards pre-tax profitability - Material collection underperformance, particularly if it leads to substantial portfolio impairments - Material increase in Arrow's risk appetite or weakening of its corporate governance Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of Arrow's IDR would likely be mirrored in an upgrade of the senior secured notes. In addition, improved recovery expectations, for instance, through a larger layer of junior debt, could lead Fitch to notch up the notes' rating from Arrow's Long-Term IDR - Sustained improvement in Arrow's gross leverage ratio to below 3.5x, alongside sound fund performance that facilitates ongoing investor support for investment in future funds, could lead to an upgrade of the IDR Date of Relevant Committee 20 November 2024 ESG Considerations Arrow has an ESG Relevance Score of '4' for Financial Transparency due to the significance of internal modelling to portfolio valuations and associated metrics such as estimated remaining collections. However, this is a feature of the debt-purchasing sector as a whole, and not specific to Arrow. This has a moderately negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Sherwood Financing Plc senior secured LT B+ New Rating B+(EXP) TAZ ROCK: Leonard Curtis Named as Administrators ------------------------------------------------ Taz Rock Ltd was placed into administration proceedings in the the High Court of Justice Business and Property Courts of England and Wales, Insolvency & Companies List (ChD), Court Number: CR-2024-000132, and Sean Ward and Siann Huntley of Leonard Curtis, were appointed as administrators on Dec. 2, 2024. Its registered office and principal trading address is at Unit 3 Hirwaun Industrial Estate, Hirwaun, Aberdare, Wales, CF44 9UP The administrators can be reached at: Sean Ward Siann Huntley Leonard Curtis, Sophia House 28 Cathedral Road Cardiff, CF11 9LJ Further Details Contact: Tel No: 02921 921 660 Email: recovery@leonardcurtis.co.uk Alternative contact: Charlotte Thompson TEAM TEX (UK): RSM UK Named as Administrators --------------------------------------------- Team Tex (UK) Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Leeds, Court Number: CR-2024-001181, and Lee Van Lockwood and Deviesh Raikundalia of RSM UK Restructuring Advisory LLP, were appointed as administrators on Nov. 29, 2024. Team Tex (UK) sells child car seats and safety belts. Its registered office and principal trading address is at Unit 5 Interlink Way East, Bardon Hill, Coalville, LE67 1LA. The administrators can be reached at: Lee Van Lockwood RSM UK Restructuring Advisory LLP Central Square, 5th Floor 29 Wellington Street Leeds, LS1 4DL -- and -- Deviesh Raikundalia RSM UK Restructuring Advisory LLP 2nd Floor, East West Building 2 Tollhouse Hill, Nottingham NG1 5FS Correspondence address & contact details of case manager: Ryan Marsh RSM UK Restructuring Advisory LLP Central Square, 5th Floor 29 Wellington Street, Leeds LS1 4DL Tel No: 0113 285 5053 Contact details of Administrators: Lee Van Lockwood Tel No: 0113 285 5000 -- and -- Deviesh Raikundalia Tel No: 07866 567061 =============== X X X X X X X X =============== [*] BOOK REVIEW: Bailout: An Insider's Account of Bank Failures --------------------------------------------------------------- Author: Irvine H. Sprague Publisher: Beard Books Soft cover: 321 pages List Price: $34.95 Order your personal copy at https://ecommerce.beardbooks.com/beardbooks/bailout.html No one is more qualified to write a work on this subject of bank bailouts. Holding the positions of chairman or director of the Federal Deposit Insurance Corporation (FDIC) during the 1970s and 1980s, one of Sprague's most important tasks was to close down banks that were failing before they could cause wider damage. The decades of the 1970s and '80s were times of high interest rates for both depositors and borrowers. Rates for depositors at many banks approached 10%, with rates for loans higher than that. The fierce competition in the banking industry to offer the highest rates to attract and keep depositors caused severe financial stress to an unusually high number of banks. Having to pay out so much in interest to stay competitive without taking in much greater deposits was straining the cash and other assets of many banks. The unprecedented high interest rates also had the effect of reducing the number of loans banks were giving out. There were not so many borrowers willing to take on loans with the high interest rates. With the disruptions in their interrelated deposits and loans, many banks began to engage in unprecedented and unfamiliar financial activities, including investing in risky business ventures. As well as having harmful effects on local economies, the widely reported troubles of a number of well-known and well-respected banks were having a harmful effect on the public's confidence in the entire banking industry. Sprague along with other government and private-sector leaders in the banking and financial field realized the problems with banks of all sizes in all parts of the country had to be dealt with decisively. Action had to be taken to restore public confidence, as well as prevent widespread and long-lasting damage to the U.S. economy. Sprague's task was one of damage control largely on the blind. The banking industry, the financial community, and the government and the public had never faced such a large number of bank failures at one time. The Home Loan Bank Board for the savings-and-loans associations had allowed these institutions to treat goodwill as an asset in an effort to shore up their deteriorating financial situations with disastrous results for their depositors and U.S. taxpayers. Such a desperate stratagem only made the problems with the savings-and-loans worse. The banks covered by the FDIC headed by Sprague were different from these institutions. But the problems with their basic business of deposits and loans were more or less the same. And the cause of the problem was precisely the same: the high interest rates. Faced with so many bank failures, Sprague and the government officials, Congresspersons, and leaders he worked with realized they could not deal effectively with every bank failure. So one of their first tasks was to devise criteria for which failures they would deal with. Their criteria formed what came to be known as the "essentiality doctrine." This was crucial for guidance in dealing with the banking crisis, as well as for explanation and justification to the public for the government agency's decisions and actions. Sprague's tale is mainly a "chronicle [of] the evolution of the essentiality doctrine, which derives from the statutory authority for bank bailouts." The doctrine was first used in the bailout of the small Unity Bank of Boston and refined in the bailouts of the Bank of the Commonwealth and First Pennsylvania Bank. It then came into use for the multi-billion dollar bailout of the Continental Illinois National Bank and Trust Company in the early 1980s. Continental's failure came about almost overnight by the "lightening-fast removal of large deposits from around the world by electronic transfer." This was another of the unprecedented causes for the bank failures Sprague had to deal with in the new, high-interest, world of banking in the '70s and '80s. The main part of the book is how the essentiality doctrine was applied in the case of each of these four banks, with the especially high-stakes bailout of Continental having a section of its own. Although stability and reliability have returned to the banking industry with the return of modest and low interest rates in following decades, Sprague's recounting of the momentous activities for damage control of bank failures for whatever reasons still holds lessons for today. For bank failures inevitably occur in any economic conditions; and in dealing with these promptly and effectively in the ways pioneered by Sprague, the unfavorable economic effects will be contained, and public confidence in the banking system maintained. As chairman or director of the FDIC for more than 11 years, Irvine H. Sprague (1921-2004) handled 374 bank failures. He was a special assistant to President Johnson, and has worked on economic issues with other high government officials. ********* 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. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *