State Aid to High Yield and Leveraged Loans Companies in Europe

An Acuris Company

Special Report

STATE AID TO HIGH YIELD AND LEVERAGED LOANS COMPANIES IN EUROPE

PRIMARY AUTHORS

Aparna Rane Shivangi Dattani Bobby Kabli Chiara Elisei Robert Schach Credit analyst Manger– EMEA Credit Research (Offshore) Head of Research- European Deputy Editor - Restructuring Managing Editor Debtwire Europe [email protected] [email protected] [email protected] [email protected] [email protected]

Debtwire.com State aid to HY and Lev Loans companies in Europe An Acuris Company Overview

The Debtwire State Aid report tracks all European HY and leveraged loan issuers that have applied or are considering applying for state aid to help fight the impact of the COVID-19 pandemic.

EU member states and the UK have all promoted various schemes aimed at boosting the liquidity of companies affected by the coronavirus, in the form of state-guaranteed loans, direct grants and other measures.

To date, European issuers tracked by Debtwire have applied for over EUR 34bn worth of state aid. Transportation, unsurprisingly, took the lion's share so far, accounting for 43.39% or EUR 14.875bn-equivalent of the total across 15 issuers, closely followed by automotive with EUR 12.384bn-equivalent or 36.12% across six issuers.

Country-wise, France has been leading, with 14 domestic issuers taking up 43.56% or EUR 14.936bn-equivalent of the overall state aid deployed so far. Italy came second at 19.48% or EUR 6.68bn-equivalent across four issuers, with Fiat Chrysler Automobiles NV being granted nearly all the state aid disbursed in Italy to date.

The top three companies by amount of state aid raised comprise French airline Air France-KLM SA (EUR 7bn), and automotive groups Fiat Chrysler Automobiles NV (EUR 6.3bn) and Renault SA (EUR 5bn).

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Sector Amount (EURm) No. of issuers Country Amount (EURm) No. of issuers(1)

Transportation 14,875 15 France 14,936 14

Automotive 12,384 6 Italy 6,680 4

Leisure 2,324 6 Germany 4,684 6 Industrial products and services 1,135 3 UK 3,471 9 Consumer: retail 790 4 Spain 2,234 13 Construction 745 4 Ireland (Republic) 671 1 Services (other) 630 3 Finland 600 1 Consumer: foods 378 1 Hungary 335 1 Industrial: electronics 330 1 Norway 277 2 Energy 250 1

Financial services 230 1 Denmark 157 1

Consumer: other 150 1 Sweden 157 1

Manufacturing (other) 50 1 Belgium 71 1

Media 16 1 Switzerland 14 1

Grand total 34,286 48 Grand Total 34,286 55

SECTOR-WISE DISTRIBUTION OF STATE AID COUNTRY-WISE DISTRIBUTION OF STATE AID

0.96% 0.73% Transportation 0.67% 0.81% 0.46% 0.46% France 1.10% 0.98% 0.44% Automotive 0.21% 1.84% 1.75% Italy 0.05% Leisure 1.96% 2.17% 0.04% Germany 2.30% Industrial products and services 0.15% 6.52% UK 3.31% Consumer: retail Spain Construction 6.78% 10.12% Ireland (Republic) Services (other) 43.56% Finland 43.39% Consumer: foods Hungary Industrial: electronics 13.66% Energy Norway Financial services Denmark 36.12% 19.48% Consumer: other Sweden Manufacturing (other) Belgium Media Switzerland

Source: Debtwire, company filings. 1) Higher number than sector-wise distribution as some companies have received financing aid from multiple countries.

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Five year loan under the Spanish government Abengoa Bioenergy NR NR 250 20-May-20 Energy Spain 250 - - guarantee scheme via tha Instituto de Credito Corp Oficial

A French state-backed loan of EUR 4bn granted by a syndicate of nine banks to Air France-KLM and Air France. The French state is guaranteeing Air France-KLM SA NR NR 4,000 24-Apr-20 Transportation France 3,600 12,955 30.9% this loan up to 90%, and it has a maturity of 12 months, with one extension option of 1 year or 2 years, exercisable by Air France-KLM

A direct shareholder’s loan of EUR 3bn from the French state to Air France-KLM with a maturity Air France-KLM SA NR NR 3,000 24-Apr-20 Transportation France n/a 12,955 23.2% of four years, with two consecutive one-year extension options exercisable by Air France- KLM.

Atalian is entitled to c. EUR 300m of which 80% Atalian Servest Group B B 300 29-May-20 Services (other) France 240 1,475 20.3% would be guaranteed

Atalian is finalizing the documentation for an early June closing with three banks, for an Atalian Servest Group B B 50 29-May-20 Services (other) France 50 1,475 3.4% amount of EUR 50m, of a bank loan secured by a French State guarantee

Cassa Depositi e Prestiti, which in 2017 agreed to provide the subsidiary with a credit facility, of Atlantia SpA BBB- BB- 200 24-May-20 Construction Italy n/a - - which EUR 1.3bn remains to be used, has so far turned down ASPI’s request to draw down funds amounting to EUR 200m at the beginning of April

The company has since taken further steps to improve liquidity including drawing GBP 300m 335 (EUR 335m) under the UK's Covid Commercial British Airways plc BBB BB 20-May-20 Transportation UK n/a 15,940 2.1% (GBP 300m)(1) Financing Facility and extending its USD 1.46bn Revolving Credit Facility for one year from 23 June 2020 to 23 June 2021.

Burger King France B- B- 123 21-Apr-20 Leisure France n/a 724 16.9% Talks with PGE still ongoing

Source: Debtwire, company filings. 1) Oanda.com

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Amount of Total Previous Current Guaranteed state aid as state aid Countries company Issuer rating rating Release date Sector part % of total Comments/notes approved involved debt (S&P) (S&P) (EURm) debt (EURm) (EURm) The company applied for a state guaranteed loan of EUR 80m and have reached a preliminary Burger King France B- B- 80 27-May-20 Leisure France n/a 724 11.0% agreement with three banks to put this loan in place in June. The EUR 75m facility would be split in two tranches of EUR 51m and EUR 24m, respectively, Industrial maturing on 31 March 2021 and would come Celsa Group NR NR 75 07-May-20 products and Spain 53 - - with personal guarantees up to 70% granted by services ICO. Proceeds would be used to meet payrolls and pay suppliers, as well as fund working capital and other liquidity needs The company has secured credit committee approval to apply for an additional USD 45m (EUR 41m) through the CLBILS loan scheme in the UK and expects shortly to commence a Cineworld Group Plc BB- CCC+ 41 07-Apr-20 Leisure UK n/a 3,295 1.2% process to access USD 25m through the US government CARES Act; Cineworld expects that this additional liquidity, to the extent required, will provide it with sufficient headroom to support the Group Secured a EUR 1.05bn syndicated facility via the CMA CGM SA B- B- 1,050 13-May-20 Transportation France 735 10,904 9.6% French government's 70% guarantee scheme. The company reached out to some of its relationship lenders seeking a roughly EUR 80m Comdata SpA NR NR 80 22-May-20 Services (other) Italy 56 - - facility, of which – under the Italian Liquidity Decree of 8 April 2020 – 70% would be guaranteed by Italian credit export agency SACE In the form of a State-guaranteed EUR 550m public loan granted via the German development Condor Flugdienst NR NR 550 27-Apr-20 Transportation Germany 550 - - bank Kreditanstalt für Wiederaufbau (KfW); GmbH partly compensate the damage suffered by the airline due to the coronavirus outbreak The airline received a GBP 600m (EUR 670.9m) 671 easyJet Plc BBB+ BBB- 20-May-20 Transportation UK n/a 2,127 31.5% short-term loan repayable at rates of between 0.2 (GBP 600m)(1) and 0.6%. A EUR 220m term loan, signed with the Group’s main French and international banks, benefiting from a 90% guarantee from the French State via Europcar Mobility Bpifrance (Prêt Garanti par l’Etat). A EUR 20m B- CCC+ 240 04-May-20 Transportation France 218 4,259 5.6% Group SA(2) Incremental RCF tranche (to increase the facility from EUR 650-670m) - provided by French banks which have obtained a guarantee from Eurazeo through a sub-risk participation.

Source: Debtwire, company filings. 1) Oanda.com 2) includes 90% of EUR 220m term loan and EUR 20m incremental RCF tranche

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New financing facilities for the Group’s Spanish subsidiaries (Europcar Spain and Goldcar Spain), totalling EUR 81m , signed over the last 2 weeks Europcar Mobility with Bankia, BBVA and Bankinter benefiting from B- CCC+ 81 04-May-20 Transportation Spain 57 4,259 1.9% Group SA a 70% guarantee from the Spanish State. These new facilities will have a 3-year maturity and proceeds are expected to fund both fleet & corporate needs.

FCA Italy has initiated a process with the Italian Fiat Chrysler Government to obtain a guarantee from SACE in BB+ BB+ 6,300 17-May-20 Automotive Italy n/a 14,200 44.4% Automobiles NV support of a credit facility designed to help the automotive chain in Italy

Finnair secured EUR 600m pension premium loan, 90% of which is guaranteed by Finland Finnair NR NR 600 20-May-20 Transportation Finland 540 1,755 34.2% Government. Finnair plans to draw part of the pension premium loan in 2Q20 The Group has applied for a EUR 200m loan guaranteed by the French state. The discussions Fives SA B+ B- 200 26-May-20 Services (other) France 200 826 24.2% involving our French commercial banks are progressing, with a targeted availability of the loan in June. The facility is guaranteed by Instituto de Credito Oficial (ICO); forms part of a far-reaching Spanish Consumer: Fluidra SA BB BB 150 20-Apr-20 Spain 150 600 25.0% Government-backed scheme to support domestic other companies in withstanding the dramatic negative impacts of COVID-19 Finalised EUR 500m term loan facility with a pool of banks including Arkéa Banque, Bred, BNP Consumer: Paribas, CIC, Crédit Agricole CIB, La Banque Fnac Darty SA BB+ BB 500 20-Apr-20 France 350 2,029 24.6% retail Postale, LCL, Natixis CIB and Société Générale CIB. The facility is guaranteed by the French State. For April, it was EUR 10-11m (personnel) with UK/France/ support from UK, France, Germany. Evaluating Grupo Antolin Irausa B B- 11 28-May-20 Automotive n/a 1,183 0.9% Germany eligibility for governmental aid programs across all geographies On 1 May, Iberia Airlines and Vueling of IAG group signed EUR 750m and EUR 260m IAG NR NR 1,010 01-May-20 Transportation Spain 707 14,453 7.0% syndicated financing with 70% guarantee from Spanish Government

Source: Debtwire, company filings.

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The below-investment-grade rating makes JLR ineligible for the UK government's large scale Jaguar Land Rover B+ B 1,118 25-May-20 Transportation UK 1,118 6,822 16.4% support scheme while the large sums being sounded are far beyond Whitehall's recently established GBP 200m loan programme

KfW putting up 80% of the funding. The credit facility led by BNP Paribas, Commerzbank and Kion Group AG BB+ BB+ 1,000 25-May-20 Automotive Germany n/a 2,098 47.7% UniCredit; It has a term of twelve months and two extension options, each of six months

EUR 2.3m of government grant received. Kongsberg Automotive B B- 2 28-Apr-20 Automotive Norway n/a 391 0.6% Company classifies EUR 4m (government grant and loan) as likely sources of funding in FY20

Secures EUR 60m loan through France’s state- Industrial guaranteed loan scheme (Prêt Garanti Etat) the Latecoere NR NR 60 22-Apr-20 products and France n/a 150 40.1% Group has signed PGE loans with a consortium of services banks under the French government’s state- guaranteed loan scheme

New EUR 40m 3.5% 4-year state guaranteed term loan; EUR 10m 4.5% 3-year state Manufacturing guaranteed term loan; an underwriting proposal Lecta SA NR NR 50 28-May-20 Spain 50 485 10.3% (other) from Apollo, Cheyne and Tikehau Capital (the G3) and additional securityholders for 100% of the EUR 100m new liquidity injection

New EUR 330m operating loan with core banks, Industrial: Leoni NR NR 330 20-Apr-20 Germany 297 1,397 23.6% 90% of which is backed by a large-scale German electronics federal and state government guarantee

In France, Loxam received credit approval from Financial Loxam SAS BB- B 230 30-Apr-20 France 230 - - its banks for a EUR 230m loan, and funding will services take place in the upcoming days.

This support scheme of GBP 50m offers the prospect of accredited Lenders (of whom we have Matalan Finance 57 Consumer: 46 two in our RCF group) providing additional B- CCC 27-May-20 UK 610 9.4% Limited (GBP 50m)(1) retail (GBP 40m) funding with a Government-backed partial guarantee of 80% against the outstanding balance of the new facility.

Source: Debtwire, company filings. 1) Oanda.com

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Amount of Total Previous Current Guaranteed state aid as state aid Countries company Issuer rating rating Release date Sector part % of total Comments/notes approved involved debt (S&P) (S&P) (EURm) debt (EURm) (EURm) The Group is pleased to announce that it has secured access to the HM Treasury and Bank of England Covid Corporate Financing Facility McCarthy and Stone NR NR 335 02-Jun-20 Construction UK n/a 13 n.m. ('CCFF') and has put in place a GBP 300m commercial paper programme under this scheme. The facility will be used to provide additional liquidity should it be required. Secured EUR 52m of state-backed financing and Naviera Armas B B- 52 07-Apr-20 Transportation Spain n/a 682 7.6% will continue seeking liquidity opportunities from other institutions To finance its operational needs in the current global economic scenario; has received the concession of the guarantee by the Instituto de Crédito Oficial (ICO); The loan contemplates the NH Hotel Group SA B B- 225 06-Apr-20 Leisure Spain 225 744 30.2% possibility of a EUR 25 million extension, to reach a total financing of EUR 250 million euros through the eventual incorporation of new entities The Company has entered into a NOK 2,992m (EUR 275m) state supported term facility 248 275 agreement arranged by DNB Bank ASA (DNB). Norwegian Air Shuttle NR NR 20-May-20 Transportation Norway (NOK 5,657 4.9% (NOK 2,992m)(1) Garantiinstituttet for eksportkreditt (GIEK) acts 2,693m)(1) as guarantor according to the state guarantee scheme with liability (including interest) limited The measure notified by France will take the form of a state guarantee covering 90% of a EUR 71m Novares Group SAS NR NR 71 02-May-20 Automotive Belgium 64 - - loan granted to Novares by several commercial banks Much-needed liquidity from its relationship lenders under the umbrella of a Spanish public sector guarantee scheme via the Instituto de Obrascon Huarte Lain NR NR 140 06-Apr-20 Construction Spain 140 729 19.2% Credito Oficial (ICO); Santander, CaixaBank, Bankia, Sabadell, SG and Credit Agricole as participants In order to overcome the increase of inventory following the period of stores closure, OVS is Consumer: completing the process in order to obtain a new OVS SpA NR NR 100 27-May-20 Italy 100 1,257 8.0% retail credit line for EUR 100m (e.g. waiting for the Government approval). This line has a duration of 4 years and 3 months The additional liquidity raised should enable to Parques Reunios group to last through to April 2021 in the Servicios Centrales SA NR NR 35 18-May-20 Leisure Spain 35 635 5.5% extreme case scenario, and end with around EUR (2) 200m of liquidity under its base case. Source: Debtwire, company filings . 1) Oanda.com 2) Leveraged loan

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Amount of Total Previous Current Guaranteed state aid as state aid Countries company Issuer rating rating Release date Sector part % of total Comments/notes approved involved debt (S&P) (S&P) (EURm) debt (EURm) (EURm) European Commission has approved a French aid measure consisting of a EUR 5bn loan guarantee Renault SA BBB BB+ 5,000 03-Jun-20 Automotive France 5,000 11,802 42.4% to the Renault group to mitigate the economic impact of the coronavirus outbreak Ireland-based Ryanair has received GBP 600m (EUR 671m) from the United Kingdom’s Covid 671 Ireland Ryanair Holdings Plc(1) BBB+ BBB 20-May-20 Transportation n/a 3,965 16.9% Corporate Financing Facility (CCFF). This move (GBP 600m)(1) (Republic) comes as the low-cost carrier’s CEO has been critical of state aid to airlines. Secured SEK 3.3bn (EUR 313m) three year revolving credit facility, 90% of which is guaranteed by Swedish and Danish governments 313 Sweden/ 282 SAS(1) B+/B1 B/B2 28-May-20 Transportation 2,823 11.1% up to SEK 1.5bn (EUR 142m) by each (SEK 3.3bn)(1) Denmark (SEK 1.5bn)(1) government; Company is in discussion to avail additional guaranteed funding up to SEK 1.5bn from Norwegian government. During April, the Group also secured access to a France/ number of additional smaller liquidity lines, 41 Consumer: 41 SSP Group Plc(1) NR NR 20-Apr-20 Spain/ 2,586 1.6% including government-backed facilities in France, (GBP 37m)(1) foods (GBP 37m)(1) Switzerland Spain and Switzerland, providing a further GBP 37m (EUR 41m). At the beginning of April, we announced that the Bank of England had confirmed that SSP had 337 Consumer: 337 SSP Group Plc(1) NR NR 05-Jun-20 UK 2,586 13.0% secured access to the CCFF, under which facility (GBP 300m)(1) foods (GBP 300m)(1) the Group is permitted to draw up to GBP 300m (EUR 337m). Granted within the PGE framework; this one- year maturity loan benefits from an extension Tarkett SAS NR NR 70 26-May-20 Construction France 63 - - option ranging from one to five years and is set- up with the seven banks of the club deal Telepizza announced that it would need EUR 95- Telepizza SAU NR NR 20 04-Jun-20 Leisure Spain - 382 5.2% 115m of additional funding to maintain adequate liquidity and implement its turnaround plan 70% guarantee via a Spanish government scheme involving the Instituto de Credito Oficial; Secured EUR 132.5m of which EUR 122.5m is syndicated senior facility agreement (Spanish and French Consumer: Tendam B+ B- 133 11-May-20 Spain 93 845 15.7% banks) and EUR 10m is a bilateral loan, which is retail 70% backed by Instituto de Crédito Oficial, E.P.E. (public band) as approved by Spanish government proceeds would be used to fund working capital needs and operating expenses

Source: Debtwire, company filings. 1) Oanda.com

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Industrial Credit line of EUR 1bn from the KfW special Thyssenkrupp AG BB BB- 1,000 05-May-20 products and Germany n/a 9,757 10.2% program (state-programme) with a consortium of services KfW and other banks

Commitment from the German Federal Government; TUI AG BB- B- 1,800 13-May-20 Leisure Germany 1,800 4,900 36.7% conditions of the KfW loan is that TUI de facto waives dividend payments for the term of the credit line Virgin Atlantic is looking for a loan on commercial terms from the government and for the state to Virgin Atlantic(1) NR NR 573 25-May-20 Transportation UK 573 - - guarantee additional cash owed to the airline by credit card issuers 335 Wizz Air has been approved for a soft loan of GBP Wizz Air Holdings Plc(2) NR NR 21-Apr-20 Transportation Hungary n/a 2,039 16.4% (GBP 300m) 300m (EUR 335m) The Group's banking institutions in France have not yet responded favourably to a request to grant Ymagis State-guaranteed loans. However, these loans are 90% guaranteed by the public Ymagis Group SA NR NR 16 29-May-20 Media France n/a 72 22.3% authorities, leaving the banks with a low residual risk, the principal representing less than 5% of the total interest paid by the Group to the banks for ten years.

Source: Debtwire, company filings . 1) Leveraged loan. 2) Oanda.com

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Contacts

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Denitsa Stoyanova Angus Codd Jillian Maresco Senior Credit Analyst Head of Sales, Fixed Income, EMEA CRM, Americas +44 20 3741 1223 +44 (0)20 3741 1002 +1 646 412 5306 [email protected] [email protected] [email protected]

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Theo Mordecai Credit Analyst

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Aparna Rane Credit analyst

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Debtwire is an Acuris company

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Disclaimer

We have obtained the information provided in this report in good faith from sources that we consider to be reliable, but we do not independently verify the information. The information is not intended to provide tax, legal or investment advice. We shall not be liable for any mistakes, errors, inaccuracies or omissions in, or incompleteness of, any information contained in this report. All such liability is excluded to the fullest extent permitted by law. Data has been derived from company reports, press Debtwire.com releases, presentations and Debtwire intelligence.