/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/250116.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, January 16, 2025, Vol. 26, No. 12 Headlines G E R M A N Y [*] GERMANY: Struggled With Worst Bankruptcy Wave in 2024 S W E D E N SERNEKE SVERIGE: Files for Bankruptcy Over Financial Deterioration T U R K E Y TURKIYE: Inflation Slows to 44.3% in December U N I T E D K I N G D O M FABLINK (WOLVERHAMPTON): Ernst & Young Named as Administrators IT HARDWARE: Leonard Curtis Named as Administrators PENTON LODGE: FRP Advisory Named as Administrators PRICE & FRETWELL: Opus Restructuring Named as Administrators ROSE & GREY: Leonard Curtis Named as Administrators THAMES WATER: Seeks New Bids From Investors by Feb. 10 UNITED KINGDOM: Inflation Falls to 2.5% in December VEDANTA RESOURCES: Moody's Hikes CFR to B1 & Unsecured Bonds to B2 WORCESTERSHIRE COUNTY: Bankruptcy Looms Over GBP33MM Funding Gap - - - - - ============= G E R M A N Y ============= [*] GERMANY: Struggled With Worst Bankruptcy Wave in 2024 --------------------------------------------------------- Globalinsolvency.com, citing AL24News.com, relates that Germany is grappling with its worst wave of bankruptcies since the 2008 financial crisis, as 364 major companies declared bankruptcy in 2024, marking a dramatic 30% increase from the previous year. The economic downturn has also led to a hiring freeze across many industries, with fewer German companies recruiting new employees. Meanwhile, the number of firms implementing job cuts is rising steadily, affecting nearly every sector, the report notes. =========== S W E D E N =========== SERNEKE SVERIGE: Files for Bankruptcy Over Financial Deterioration ------------------------------------------------------------------ Mutares SE & Co. KGaA announced that its portfolio company Serneke Sverige AB files for bankruptcy at the Gothenburg District Court following drastic financial deterioration during the second half of 2024 compared to when the company was agreed to be acquired in July 2024. Following the acquisition of Serneke Sverige AB from Serneke Group AB (publ), Mutares' clear plan was to turn around the business and build on its position as a leading general contractor offering its services throughout Sweden given the challenging market situation in the Swedish construction and real estate industry. However, at the closing of the transaction at the end of November 2024, Serneke Sverige AB's financial situation had deteriorated significantly. This was primarily due to a substantial loss of receivables and significantly damaged relationships to main customers and main suppliers resulting in negative spillover effects across the business, including a downgraded credit rating. Since the closing of the transaction, Mutares has worked intensively with the Management Team of Serneke Sverige AB to find a solution to the financial problems. The bankruptcy filing was a well-considered decision that has been made in the best interests of the shareholders and investors. The developments at Serneke Sverige AB have no significant impact on Mutares' business operations or its other portfolio companies. Serneke Sverige is a Swedish construction firm. =========== T U R K E Y =========== TURKIYE: Inflation Slows to 44.3% in December --------------------------------------------- Agence France Presse reports that Turkey's annual inflation rate slowed for the seventh consecutive month in December, official figures showed. Consumer prices rose by 44.3 percent last month, down from 47.1 in November, the Turkish statistics agency said. The figure was largely in line with the central bank's estimation, after a year in which price increases slowed less than expected despite higher interest rates. In late December 2024, Turkey's central bank lowered its key interest rate for the first time in nearly two years, dropping it to 47.5 percent from 50 percent, AFP relates. The last cut was in February 2023. The central bank had said it was expecting inflation to reach 44 percent by the end of 2024, up from a previous estimate of 38 percent it had given in August. The official figures are disputed by the ENAG group of independent economists, which publishes its own numbers every month and said year-on-year inflation stood at 83.4 in December, according to AFP. Turkey has experienced double-digit inflation since 2019, with the annual rate peaking at 85.5 percent in October 2022, making life increasingly difficult for millions of families, AFP relates. The government has also pushed through a moderate increase to Turkey's minimum wage, raising it by 30 percent to 22,104 lira ($600) from January 1, AFP reports. The figure was far below that demanded by the workers' union, which had pushed for a 70-percent increase. =========================== U N I T E D K I N G D O M =========================== FABLINK (WOLVERHAMPTON): Ernst & Young Named as Administrators -------------------------------------------------------------- Fablink (Wolverhampton) Limited was placed in administration proceedings in the High Court of Justice Business and Property Courts, Company & Insolvency List (ChD) Court Number: CR-2024-007885, and Daniel Christopher Hurd and Lucy Winterborne of Ernst & Young LLP were appointed as administrators on Jan. 7, 2025. Fablink (Wolverhampton) fka ENSCO 2 Limited and AGHOCO 2312 Limited is a manufacturer of metal structures and parts of structures. Its registered office is at 1 Colmore Square, Birmingham, B4 6HQ. Its principal trading address is at Evenwood Plant, Evenwood Lane, Bishop Auckland, DL14 9NJ. The joint administrators can be reached at: Daniel Christopher Hurd Ernst & Young LLP 1 Colmore Square Birmingham, B4 6HQ -- and -- Lucy Winterborne Ernst & Young LLP The Paragon Counterslip, Bristol, BS1 6BX For further details, contact: The Joint Administrators Email: fablinkadministration@uk.ey.com Alternative contact: Catriona Lynch IT HARDWARE: Leonard Curtis Named as Administrators --------------------------------------------------- IT Hardware and Software limited was placed in administration proceedings in the High Court of Justice Business and Property Courts in Manchester, Insolvency & Companies List (ChD) Court Number: CR-2024-MAN-001698, and Andrew Knowles and Mike Dillon of Leonard Curtis were appointed as administrators on Jan. 2, 2024. IT Hardware specializes in the wholesale of computers, computer peripheral equipment, and software. Its registered office and principal trading address is at Unit 11, Bury South Business Park Riverview Close, Dumers Lane, Radcliffe, Manchester, M26 2AD. The joint administrators can be reached at: Andrew Knowles Mike Dillon Leonard Curtis, Riverside House Irwell Street, Manchester M3 5EN For further details, contact: The Joint Administrators Tel: 0161-831-9999 Email: recovery@leonardcurtis.co.uk Alternative contact: Avery Lewis PENTON LODGE: FRP Advisory Named as Administrators -------------------------------------------------- Penton Lodge Estate LLP was placed in administration proceedings in the High Court of Justice, Insolvency & Companies List (ChD), Court Number: CR-2024-7608, and Alexander Kinninmonth and James Prior of FRP Advisory Trading Limited were appointed as administrators on Jan. 2, 2025. Penton Lodge is a historic Georgian manor house, offering exclusive use weddings and events in the picturesque Hampshire countryside. Its registered office is at Mountbatten House, Grosvenor Square, Southampton, SO15 2RP. Its principal trading address is at Penton Park Chalkcroft Lane, Penton Mewsey, Andover, SP11 0RD. The joint administrators can be reached at: Alexander Kinninmonth James Prior FRP Advisory Trading Limited Mountbatten House Grosvenor Square Southampton, SO15 2JU For further details, contact: The Joint Administrators Tel No: +44 (0)2381 448 200 Alternative Contact: Susannah Pyne Email: cp.southampton@frpadvisory.com PRICE & FRETWELL: Opus Restructuring Named as Administrators ------------------------------------------------------------ Price & Fretwell Limited was placed in administration proceedings in the High Court of Justice, Court Number: CR-2024-00720, and Louise Williams and Paul Mallatratt of Opus Restructuring LLP were appointed as administrators on Dec. 30, 2024. Price & Fretwell specializes in the processing and preserving of meat. Production of meat and poultry meat products. Its registered office and trading address is at 1 Primwell Court, Sawpit Industrial Estate, Tibshelf, Derbyshire, DE55 5NH. The administrators can be reached at: Louise Williams Ian McCulloch Opus Restructuring LLP Mount Suite, Rational House 32 Winckley Square, Preston PR1 3JJ For further information, contact: The Joint Administrators Tel No: 0115 666 8230 Alternative contact: Precious Bakare ROSE & GREY: Leonard Curtis Named as Administrators --------------------------------------------------- Rose & Grey Limited was placed in administration proceedings in the High Court of Justice Business and Property Courts in Manchester, Company & Insolvency List (ChD), Court Number: CR-2024-MAN-001670, and Mike Dillon and Rochelle Schofield of Leonard Curtis were appointed as administrators on Jan. 3, 2025. Rose & Grey engages in retail sale via mail order houses or via Internet. Its registered office and principal trading address is at 31 Atlantic Street, Broadheath, Altrincham, WA14 5FA. The joint administrators can be reached at: Andrew Knowles Mike Dillon Leonard Curtis Riverside House Irwell Street Manchester, M3 5EN For further information, contact: The Joint Administrators Email: recovery@leonardcurtis.co.uk Tel No: 0161 831 9999 Alternative contact: Nicola Carlton THAMES WATER: Seeks New Bids From Investors by Feb. 10 ------------------------------------------------------ Giulia Morpurgo and Lucca De Paoli of Bloomberg News report that potential investors in Thames Water will have to submit new bids for the water utility by Feb. 10, according to people familiar with the matter, as the beleaguered firm seeks an urgent injection of equity to boost its finances. The highly indebted company told bidders to take industry regulator Ofwat's December ruling about the scope for bill increases and investor returns into account for their submissions, said the people, who asked not to be identified because the matter is private, according to Bloomberg News. Thames Water declined to comment when contacted about the bidding process, Bloomberg News relates. Thames Water has been looking to raise at least GBP3.3 billion (US$4.1 billion) in new equity after its existing shareholders declared the business "uninvestible" and kicked off a formal bidding process. The company is set to run out of cash by end-March and would likely be forced to apply for special administration -- a form of temporary nationalization -- without new funding. The utility had previously received two indicative offers following an initial deadline in December, one from Castle Water Ltd. and another from infrastructure investor Covalis Capital. The deadline, however, came before Ofwat determined that shareholders will get a return of 5.1% over the next five-year period, at the lower end of the range of what was requested, Bloomberg News cites. A tariff increase of 35% over the same period also fell short of the 52% asked for by the company. The company -- the biggest provider of water and sewerage service in the UK -- is also looking to raise as much as GBP3 billion of emergency debt through a parallel process that is facing opposition from junior creditors. In December, the firm asked a London judge to sanction this funding, backed by Class A creditors. The plan will be put to a vote later this month, with the court set to make a decision early in February, Bloomberg News adds. About Thames Water Thames Water is the largest of the ten main water and sewerage companies in England and Wales by both RCV (GBP20 billion at March 2024) and number of customers served. The company provides drinking water to around nine million customers and sewerage services to around 15 million customers in London and the Thames Valley. UNITED KINGDOM: Inflation Falls to 2.5% in December --------------------------------------------------- Sam Fleming, Ian Smith, Lucy Fisher and Anna Gross of The Financial Times report that UK inflation unexpectedly slowed to 2.5 per cent in December, easing pressure on chancellor Rachel Reeves and clearing the path for the Bank of England to press ahead with cutting interest rates next month. The consumer price inflation figure, which was below November's 2.6 per cent reading and pulled lower by restaurant and hotel prices, triggered the biggest one-day rally in gilts in more than a year, FT relates. Analysts had expected inflation to hold steady last month. Wednesday's data will provide some relief for Reeves, who is contending with higher borrowing costs fuelled by fears the UK economy could be entering a period of stagflation, in which sluggish growth is accompanied by persistent price pressures, FT cites. The recent increase in UK government borrowing costs, which last week hit a 16-year high, has threatened to blow a hole in the chancellor's promise to balance day-to-day spending with tax receipts by 2029, FT avers. But Wednesday's UK inflation data sparked a rally in gilts, which strengthened after a lower than expected US core inflation reading later in the day, FT says. The yield on 10-year gilts fell 0.16 percentage points to 4.73 per cent, their best day since late 2023, FT cites. The pound rose 0.1 per cent on the day to $1.222, FT adds. The report, from the Office for National Statistics, comes as the BoE's Monetary Policy Committee prepares to hold its first meeting of 2025 next month. FT adds that Wednesday's data showed that services inflation, which is closely watched by the BoE as a gauge of underlying price pressures, slowed sharply to 4.4 per cent from 5 per cent previously. It was also below the 4.9 per cent reading expected by economists. Core inflation, which excludes food and energy, dropped to 3.2 per cent from 3.5 per cent, FT reports. VEDANTA RESOURCES: Moody's Hikes CFR to B1 & Unsecured Bonds to B2 ------------------------------------------------------------------ Moody's Ratings has upgraded Vedanta Resources Limited's (VRL) corporate family rating to B1 from B2. Concurrently, Moody's have upgraded to B2 from B3 the rating on the senior unsecured bonds issued by VRL and VRL's wholly-owned subsidiary, Vedanta Resources Finance II Plc, which are guaranteed by VRL. Moody's have maintained the stable outlook on the entities. Moody's have also assigned a B2 rating to VRL's proposed senior unsecured bonds to be issued by Vedanta Resources Finance II Plc, which are guaranteed by VRL. The bond proceeds will be used to refinance existing notes. The rating upgrade and assignment of the proposed senior unsecured bonds ratings are dependent upon the successful completion of the bond issuances and repayment of existing notes. A failure of meeting these conditions will pressure the ratings. "The rating upgrade reflects a significant reduction in VRL's refinancing risks following the proposed US dollar bonds and $300 million in syndicated bank facilities, which will be used for refinancing existing debt. This gives VRL an extended and well-laddered debt maturity profile, with the next bond maturity of $300 million in June 2028" says Nidhi Dhruv, Moody's Ratings Vice President and Senior Credit Officer. "The bond issuances in quick succession also solidifies Vedanta's access to capital markets and demonstrate increasing investor confidence in the company. The recent transactions underscore management's proactive approach to liability management, which positively impacts Moody's assessment of Vedanta's governance scores" adds Dhruv, who is also Moody's lead analyst for VRL. RATINGS RATIONALE The proceeds from the notes will finance the redemption, at par value, of the company's remaining $460 million December 2028 notes and a tender offer for its $600 million April 2026 notes at 100.5%. Upon repayment, the company will have successfully retired all high-interest (13.875%) notes. Moody's does not consider the latest transaction as a distressed exchange because (1) it does not serve as a means to avoid default, given the bonds are due more than one year from now; and (2) it does not result in an economic loss for investors because the bonds are offered to be repurchased at their full value or more. VRL's recent liability management initiatives - which encompass debt reduction and refinancing using proceeds from newly issued bonds, dividends received from subsidiaries and proceeds from the sale of stakes in subsidiaries - have led to significant debt reduction and extension of debt maturity profile at the holding company. Debt at VRL's holding company level reduced to $4.8 billion as of September 2024 from $9.1 billion as of March 2022. Lower debt at VRL holding company also results in reduced reliance on dividends from the operating companies. Moody's expects the Holdco to receive dividends of $700 million - $800 million going forward, a reduction from $1.5 billion for the fiscal year ended March 31, 2024. Despite reducing dividends, Moody's expect the coverage ratio of dividends and management fees from operating companies to interest expense at the holding company will remain over 2x. The company's B1 CFR reflects its large-scale and diversified low-cost operations; exposure to a wide range of commodities such as zinc, aluminum, iron ore, oil and gas, steel and power; strong position in key markets, enabling it to command a pricing premium; and history of relative margin stability through commodity cycles. These strengths are counterbalanced by its complex organizational structure, with the company owning less than 100% of its key operating subsidiaries, and its historically weak financial management and liquidity. Moody's forecasts for VRL are based on Moody's price sensitivities for metals ($0.90-$1.10 per pound (lb) for aluminum, $0.95-$1.25/lb for zinc and $18-$22 per ounce for silver). As for oil and gas, Moody's forecasts are based on a crude oil assumption of $55-$75 per barrel. These price sensitivities will translate into consolidated adjusted EBITDA of $5.3 billion-$5.4 billion and cash flow from operations of $2.8 billion-$3.0 billion for FY2024-25 and FY2025-26. Meanwhile, the company's annual capital expenditure of $2.5 billion will likely require it to raise some additional borrowings, especially since the operating companies will need to continue to pay annual cash dividends of $1.4 billion-$1.6 billion (including minority interests). VRL's senior unsecured bonds are rated B2, one notch lower than the B1 CFR, reflecting Moody's view that bondholders are in a weaker position relative to the operating subsidiaries' creditors. The one-notch differential reflects the structural subordination of the holding company's bondholders to creditors at the rest of the group. Furthermore, majority of the debt at the operating companies is secured. Moody's estimate the operating company's claims are around 75% of total consolidated claims as of March 2024, with the remaining claims distributed across VRL and its intermediate holding companies that have a direct shareholding in VDL. OUTLOOK The rating outlook is stable, reflecting Moody's expectation that VRL's credit profile will remain commensurate for its B1 rating and the company will continue to address its debt maturities in a timely manner. LIQUIDITY VRL is a pure holding company with operations held at various subsidiaries and step-down subsidiaries. Its cash sources comprise dividends and management fees for the use of the Vedanta brand from its subsidiaries. Following the planned notes issuance, VRL's cash sources should be largely sufficient to cover its interest and debt servicing needs through September 2026. VRL has demonstrated a track record of upstreaming dividends from its operating subsidiaries. Even so, liquidity at its operating subsidiaries has, over the past few years, thinned substantially. As of September 2024, its operating subsidiaries held $2.6 billion in cash, down from $4.2 billion at March 2022. Liquidity at VRL's subsidiaries will remain weak as cash flows are used for dividends requiring them to continue borrowing to fund their capital expenditure, as well as roll over debt and retain their reliance on short-term working capital facilities. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS Vedanta's governance risk considerations (G-4) largely reflect its concentrated ultimate ownership by Volcan Investments Ltd, weak consolidated liquidity, and historically aggressive financial risk management practices. However, there have been significant improvements in recent months as the company has proactively managed its liabilities. Vedanta's CIS-4 reflects Moody's views that ESG attributes are overall considered to have negatively impacted VRL's current ratings, which is mainly driven by the company's exposure to environmental (E-5), social (S-5) and governance (G-4) considerations. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade VRL's ratings if its financial metrics remain strong, including (1) adjusted debt/EBITDA staying below 4.0x; and (2) EBIT/interest coverage above 2.5x on a sustained basis. A reduction in overall gross debt, coupled with a consistent record of proactive refinancing and effective liquidity management at the consolidated and Holdco levels, will be essential for an upgrade. While unlikely over the next 12months, downward ratings pressure could emerge if commodity prices soften substantially and reduce VRL's EBITDA and free cash flow generation, resulting in a sustained weakening of its credit metrics, such that adjusted debt/EBITDA above 4.5x or EBIT/interest coverage below 1.5x on a sustained basis. Any difficulties encountered by the Holdco in accessing cash flows from the opcos, or a reduction below 1.5x in the coverage ratio of opcos dividend plus management fees to Holdco interest, will also result in a downgrade. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Mining published in October 2021. COMPANY PROFILE Vedanta Resources Limited (VRL) is headquartered in London and is a diversified resources company with interests mainly in India. Its main operations are held by Vedanta Limited (VDL), a 56.4%-owned subsidiary. Through VRL's various operating subsidiaries, the group produces oil and gas, zinc, lead, silver, aluminum, iron ore, steel and power. In September 2023, VDL announced its demerger into six separate listed entities, subject to the relevant approvals. Its shareholders will receive one share in each of the six companies upon completion of the demerger, while VDL and the six companies will have the same shareholding; i.e. VRL will hold a 56.4% stake in VDL and the six new companies. VRL delisted from the London Stock Exchange in October 2018 and is now wholly owned by Volcan Investments Ltd. VRL's founder and chairman Anil Agarwal and his family are Volcan's key shareholders. For the 12 months ended September 2024, VRL generated revenues of $17.2 billion and an adjusted EBITDA of $5.2 billion. WORCESTERSHIRE COUNTY: Bankruptcy Looms Over GBP33MM Funding Gap ---------------------------------------------------------------- bbc.com reports that Worcestershire County Council is to ask the government for a "capitalisation direction" -- described by the Institute for Government as a move that allows them to sell assets or borrow to fund day-to-day costs. Papers for a cabinet meeting on January 16 said the council needed GBP33.6 million in 2025-26 and a further GBP43.6m in 2026-27, bbc.com relays. The Ministry of Housing, Communities and Local Government (MHCLG) said it was injecting GBP69 billion of funding into council budgets across England, according to the report. The council report said: "If MHCLG do not grant the dispensation request, the council will not be able to balance the 2025-26 budget." It said the situation would then "force" council officers to issue a Section 114 notice, which is where an authority effectively declares itself bankrupt. Local authorities technically cannot go bankrupt, but under an S114 they cannot commit to any new spending and must come back with a new budget. When that happens, it often means severe cuts to frontline services. bbc.com cites that Worcestershire's report said it was facing "relentless demand and cost pressures" in three key areas -- children's social care placements, home to school travel and adult social care. The authority said its income from government was increasing by GBP17.6 million in 2025-26, but GBP5.8 million was allocated to changes in waste regulations, and the remaining GBP11.8 million was "nowhere near in keeping pace". The draft budget gap was GBP48.6 million, it said, which could be reduced with the use of GBP15 million of reserves, leaving "an unmitigated gap of GBP33.6 million." ********* 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 2025. 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. 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