“The company said it would raise guidance as it had fixed German operations but it didn’t raise guidance by quite as much as we thought. Perhaps it didn’t pull the whole rabbit out the hat, perhaps the UK problems sit deeper. There will be a an LME approach in 2H26 and we expect the whole capital structure will tackled all-in-one,” independent special situations desk Sarria told Debtwire.
Read More“This name is on the cusp and could go either way. The concern is the path to a clean refi is narrow. The company has to grow and this isn't a company that can just turn a factory switch and churn out more cookies,” independent special situations desk Sarria told Debtwire. “The story of reduced costs and AI is believable but it’s an equity story, so it deserves equity pricing, and the bond yields ought to be wide. We like this but it needs to be nervously watched.”
Read MoreSarria noted there is no reason to believe any of the bonds are cheap to buy and the lack of free cashflow does not allow for a sensible DCF valuation of the company, adding that will make it difficult for stakeholders to agree on a valuation on which to restructure the balance sheet. Sarria added that Antolin has little debt capacity.
Read MoreSarria noted that putting merchandise into its stores early in the season will increase commercial risk a little but stressed that this does not make Matalan the same as peer New Look. Sarria added that the business is “coming out of its shell”, describing the strategy as a return to what Matalan should have been had it taken greater commercial risk in prior years.
“There is more to it than meets the eye, but the strategy makes sense and the new CEO should give us further confidence,” Sarria said.
Read MoreIndependent special situations desk Sarria held a webinar on Tuesday (7 October) assessing legal risks and opportunities for the perpetual notes. The webinar included panellists Stephen Phillips from FreiLibertas, as well as Tom Astle and Alex Kay from Hogan Lovells.
Read MoreWhile the firm’s net leverage remains high after the US school bus sale, Mobico has strong asset coverage and “its Spanish division alone would pay off the company’s debt,” Wolfgang Felix, founder of credit research firm Sarria, told investors on a call Wednesday.
Regarding the RCF, Felix said he doesn’t think it will be drawn to pay down bonds coming due, because “that just makes no sense this early in the game.”
Read Moren a wide-ranging Mobico webinar discussion, independent special situations desk Sarria noted Spanish ALSA operations were carrying the company with the UK franchising contract model shift being a margin rather than a revenue issue. While the German operations are suffering, the public focus on Deutsche Bahn’s half year earnings could help. Ultimately, Sarria noted Mobico is a GBP 1.8bn enterprise value business, albeit with debt carrying capacity covering only 83% of senior secured debt (gross), while a sale of ALSA could cover the entire debt stack. Perpetual noteholders could ask for cash to amend and extend and SUNs may accept some leakage if it addressed the perpetual note maturity problem, Sarria stated.
Read More“We’ve been positively surprised by the cost-cutting discipline and this improvement was not down to window-dressing,” independent special situations desk Sarria told Debtwire. “These are positive developments, but the purchasing gross money multiples need to remain high. The servicing margin is performing as forecast. Intrum is a smaller company now trying to service the same cost of debt that the bigger company couldn’t in the first place.”
Read More“At the industry level, these solar companies face a big problem,” said Wolfgang Felix, founder of credit research firm Sarria. “The US has walked away from Paris Agreement and people are abandoning the goals. The drive to roll out new projects is waning. Meanwhile, European governments are trying to save money. All of this is having the effect of slowing demand for these products.”
Read More“Matalan had a mountain to climb on costs over the past 18 months. This is now behind the company and freight surcharges are less of a pressure. There is a built-in tailwind for 2025 now,” independent special situations desk Sarria told Debtwire. “
Read MoreWolfgang Felix, founder and senior analyst at credit research firm Sarria “This increase in supply will reduce the price of the solar panels in Europe,” Felix said, adding that panels are made in large factories with minimum loads, which cannot just turn off production
Read MoreAltice France Holding creditors have achieved a more generous deal than expected given their precarious position in the capital structure, noted Tomas Mannion, senior analyst at Sarria, in a quick take published just after the announcement.
Read More… Sarria said last week. “It’s been death by a lot of cuts for Matalan, and Jo Whitfield’s departure somewhat documents that, although we think the company could have performed even worse. The 18% yield suggests
Read MoreIntrum’s proposed restructuring is interesting as it shows what happens when the debt credit curve is spread over time and holders of the shortest-dated bonds end up being in a much stronger position than holders of the longest-dated notes, despite the pari passu provisions, points out Sarria's Felix
Read MoreSaahil Dey, senior investment analyst at Sarria, said the bonds still look attractive in the low 80s because earnings should improve as Pfleiderer recovers from the impact of falling interest rates, describing the issuer a “good company with a bad structure.”
Read More"We had expected a larger debt forgiveness at the original announcement so today’s announcement tallies with our numbers. Q1 numbers are not that bad and despite the lower book-to-bill ratios, the further debt forgiveness may reflect new money providers expecting more favourable terms at the expense of existing creditors and shareholders," Tomas Mannion, senior analyst at Sarria, commented after the call.
Read More“The existing bonds in the high 90s clearly signal their belief in the refi. Following last week’s reporting, management will be looking to estimate interest among the bondholder community, but they might just have to post some more improvements before they can deal elegantly with the whole cap stack via a normal refinancing,” independent special situations desk Sarria said. “The second liens don’t …
Read More“It’s a matter of cash flow and making sure you can afford your capital structure going forward, create a cushion for your operations,” said Wolfgang Felix, founder of independent special situations firm Sarria. “Even after the Apollo transaction, there won’t be a lot of room in the financials with the current debt levels and as a creditor, you want to be confident that the future instruments are covered.”
“The Matalan performance is in striking contrast to Pizza Express, who don’t suffer from the same FX headwind, but are more discretionary than Matalan,” Sarria noted. “We expected Pizza Express to
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