Winding Up — Europe's economic malaise worsens amid trade war

Alessia Argentieri

14 February 2025•7 min read

Winding Up is 9fin's weekly newsletter, incorporating summaries and commentary from our European distressed coverage for the past week.

Three weeks after his return to the White House, Donald Trump has already escalated his promised trade war by announcing that he will impose 25% tariffs on all steel and aluminium imports into the US.

In response to his move, the EU has threatened tough countermeasures to protect European manufacturers, which export around €3bn of steel and €2bn of aluminium to the US.

“I deeply regret the US decision to impose tariffs on European steel and aluminium exports,” said European Commission President Ursula von der Leyen in a statement on Tuesday (11 February). “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures.”

Additional tariffs on automotive products from the EU are a significant risk and would affect around 15% of the EU’s exports to the US, according to a report from the CBI. Furthermore, if tariffs were also extended to critical imports, such as pharmaceuticals, electronics, and oil, it could expose around 40% of total EU exports to the US to additional charges.

This is likely to accelerate the decline of companies that are already flailing, impacted by lower demand, high energy prices, and competition from the Asian markets, such as automotive supplier ZF, carmaker Volkswagen, and the steel business of Thyssenkrupp.

Certain sectors might be hit hard by tariffs, but there could be some positives for credit fund managers. Overall, more government in markets can lead to bank retrenchment, which should create opportunities for fund managers to step in, boosting deal volume in the restructuring space, according to market experts.

Meanwhile, political turmoil continues to loom over some of the major European economies. In France, Francois Bayrou — the third prime minister since Macron called a snap election last summer — struggled to get the 2025 budget approved by parliament and had to use a constitutional provision that allows the government to pass legislation without a vote.

In Germany, voters will be heading to the polls next week to cast their vote in a snap election, after Scholz’s coalition government collapsed in November. The country could face months of political uncertainty, as the winning party — most likely the conservative CDU, which is headed by Friedrich Merz — will almost certainly have to form a coalition to secure a majority.

This is expected to further deteriorate Germany’s struggling economy, which is facing a third consecutive year of recession, with a gloomy outlook especially for the automotive, retail, and construction sectors.

The country counts the highest number of expected or live restructurings in Europe, according to 9fin data. Some of the hottest German assets in our tracker are automotive suppliers Huf Group, Standard Profil, and Webasto; teleshopping retailer HSE24, which was the topic of our latest analysis; and packaging company Kloeckner Pentaplast, which has just announced a refinancing agreement.

Let’s now take a closer look at this week’s news …

This week’s news

Altice France — The French telecommunications company is preparing to announce a deal with a group of its secured lenders as early as this week. The steer co group put forward a proposal to the French telco earlier this year. Now, 9fin sources say Altice France is close to a deal along those terms.

Altice International — Certain lenders to the cable and telecommunications company have organised with Gibson Dunn and are in the early days of considering a co-operation agreement. Lenders are organising in anticipation of Altice International’s looming 2027 maturity wall.

DigiCert — A senior secured loan issued by the company is trading with a co-operation agreement designation, according to a BWIC tracked by 9fin. The Clearlake Capital and TA Associates-backed company has $515m second lien 2029 term loan, which made the list of co-op paper that an Octagon Credit Investors CLO featured on 6 February.

Hertz — The rental car company is attempting to move forward with settling its makewhole and post-petition interest litigation with its former unsecured noteholders. This week Hertz filed its proposal and the counterproposal received from the noteholders. They differ on whether the debt should be unsecured or include a first lien and on the maturity date.

HSE24 — The German teleshopping retailer is at a breaking point. With no clear path to refinancing, the most viable outcome seems to be a creditor takeover. 9fin’s analysis unpacks HSE24’s business profile, its competitive positioning, and the performance of its largest peer. Most critically, we break down the restructuring options available to both sponsors and creditors.

Idorsia — The Swiss biopharmaceutical company and its creditors have intensified negotiations in an attempt to reach an out-of-court deal. The goal would be to find a consensual agreement and avoid a debt restructuring moratorium, the Swiss in-court insolvency procedure.

Just Eat — An ad hoc group of Just Eat bondholders has sent the Dutch takeaway company a letter aimed at opening negotiations over an alleged event of default. The letter was sent by the bondholder group’s legal advisors, Millbank and Loyens Loeff, on 23 January.

Kloeckner Pentaplast — The German plastic packager has found a solution for its unsecured debt but it still faces imminent maturities on around €1.7bn of secured loans and bonds. Lenders are keeping a keen-eye on the company’s earnings and expect support from the sponsor, Strategic Value Partners, to get a bigger A&E deal over the line.

NEP Group — The television production services company backed by Carlyle has disclosed a list of roughly three dozen firms that it can disqualify from purchasing its debt in the secondary market. Meanwhile, a group of the company’s term loan lenders have organised with Akin Gump.

SLV — The German lighting company has beat out its forecast in its preliminary full-year 2024 results. SLV told lenders that it had clocked in preliminary FY 24 EBITDA of €44.1m, 8% above its forecast. Revenues of €209m were also 1% above the company’s forecast.

Specialty Steel — The steelmaker has secured an up to five-week adjournment of its restructuring plan sanction hearing from the High Court while its parent organisation GFG Alliance hammers out a settlement with the administrators and creditors of defunct factoring firm Greensill Capital.

Thames Water — The distressed utility company has asked UK regulator the Competition & Markets Authority (CMA) to review its regulatory settlement for the next five years, unlocking £1.5bn in uncommitted funds as part of its restructuring plan.

Transcom — The Swedish operator of outsourcing centres experienced flat YoY revenue growth in FY 24, as it continues to face challenges achieving sustained or significant growth amid an AI-driven market disruption.

WHP Global — Investors that took part in the brand manager’s newly priced loan refinancing successfully pushed back on potentially precedent-setting language that would have prohibited lenders to the company from forming co-operation agreements.

Headlines

14 February — Transcom notes jump despite growing refinancing pressure — FY 24 earnings review (9fin)

14 February — Thames Water price-cap appeal unlocks another £1.5bn (9fin)

14 February — WHP strikes anti co-op language from new loan (9fin)

13 February — Specialty Steel sanction adjourned for settlement negotiations (9fin)

13 February — Cloud 9fin — Jane’s LME Addiction — Never been in Better Health (9fin)

12 February — Idorsia ramps up talks with creditors (9fin)

12 February — SLV pips 2024 forecast (9fin)

12 February — Altice International lenders organize ahead of 2027 maturities (9fin)

12 February — 9Questions — Kai Zeng, Paul Weiss — Making Europe American again (9fin)

12 February — Just Eat bondholders ask for takeout (9fin)

11 February — Defenses against co-op challenges — Do they need to work? (9fin)

11 February — Carlyle-backed NEP Group discloses DQ list as lenders organize (9fin)

11 February — Hertz settlement proposals with former noteholders differ primarily on security of new notes and maturity (9fin)

11 February — HSE24’s diminished value leaves few options but a creditor takeover — Analysis (9fin)

10 February — Altice France nears deal (9fin)

10 February — Kloeckner Pentaplast kicks off first leg of A&E deal (9fin)

7 February — Clearlake’s DigiCert among co-op paper disclosed in latest BWIC (9fin)

7 February — Navigating the triple-Cs — Relief for leveraged loan issuers (9fin)

Lateral moves

On 11 February, Akin Gump announced that Kevin Gilroy will rejoin the firm’s London office as a finance partner, focusing on special situations, restructurings, fund finance, and real estate finance transactions. Gilroy is currently a partner in King & Spalding’s finance and restructuring practice.

On 10 February, Davis Polk announced that Jifree Cader and Mark Knight have joined the firm as partners, to co-lead its London restructuring practice. The duo will be joined by several new counsel and associates and will continue to build out the European restructuring team over the coming months.