Independent 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.

While 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.”

n 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.

“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.”

“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.”

“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. “

Wolfgang 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

… 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

Intrum’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

Saahil 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.”

"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. 

“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 …

“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

“They've managed to get the tender away. It is true there was not enough cash at the Vivion level and Amir Dayan had to give up some of Golden’s cash pile to keep control of Vivion,” independent special situations firm Sarria said. “Cash is king these days and this will cost him access to some future opportunities, but it’s an obvious choice.”

Sarria noted that Vivion can deal with the 2024 stub through raising debt on unencumbered hotels, or by selling hotels, one of the few asset classes currently worth anything in the UK. Sarria argued Vivion have got half a chance there and raiding Golden again is now more of a fallback option. 

“We are still talking about the UK’s number two pizza chain and if this is the nadir of the affordability crisis, then the capital expenditure and inflation might allow for sales growth of 10% per annum now. To then refi in two years they’d also need to produce a margin uplift of 5%,” independent special situations firm Sarria said.

Independent special situations firm Sarria are cautious on Boparan. While Sarria remain relatively unconcerned on the competitive threats they noted that labour and electricity costs are increasing and that non-food cost inflation is not covered under existing pass-through arrangements. Additionally, the 2025 bond maturity is not so far away.