(Debtwire) Mobico strategic and financial plans can aid deleveraging as bond prices have value
03 Aug 2026 | 15:39 BST
by Adam Samoon, Jou Yu, David Orbay-Graves andPriyanka Kotadia
Mobico's 15M25/26 results show GBP 464.8m adjusted EBITDA
Mobico’s bonds could have future upside potential if the company succeeds with its plans to aid deleveraging, though the number of options add uncertainty according to an analyst, an independent special situations desk and five buysiders.
The UK-based transport company’s (formerly National Express) capital structure includes B2/BB rated GBP 250m 3.625% senior unsecured 2028 notes indicated at 93.75-mid with an 6.7% yield on IHS Markit, rising around 1.75 points versus 27 July. The B2/BB rated EUR 500m 4.875% senior unsecured 2031s are indicated at 86.5-mid with an 8.2% yield, up around five points versus 81.625-mid levels on 27 July.
Mobico’s Caa1/B+ rated GBP 500m 4.25% subordinated unsecured perpetual notes are indicated at 65.5-mid, up around four points from 61.625-mid levels on 27 July. The company is listed and has a roughly GBP 148m market capitalisation.
The company on 29 July reported 15 month results for period-end 31 March (after it extended its fiscal-year end to 31 March 2026) and noted in its investor presentation that the company is “working closely with advisors to evaluate all strategic and financial options to accelerate deleveraging, with a further update to be provided later in the year.”
Management on the 15M25/26 earnings call added that it is “not ruling anything out” when an analyst asked whether the company would rule out an equity issuance to aid deleveraging.
The company also held meetings with investors following its 15M25/26 results according to two buysiders.
“Once it completes its UK Bus sale in the next couple of months, the company can go to the banks to start refi discussions,” the first buysider said. “Alsa and WeDriveU [businesses] together command a high valuation. The bear-case says the concessions renewal in Spain in 2027 could lead to lower margins for long-haul services but the company has said this can be offset by passenger volume growth. If the perpetual notes are equitised, there’s more equity cushion, which is better for the 2028s and 2031s.”
The second buysider noted the Board will meet in September, then decide what to do about debt.
Mobico was examining options to optimise its future capital structure, as management disclosed targeted deleveraging actions at an April NatWest conference, Debtwire reported on 11 May.
The company long-term debt advisor is Rothschild and the company is also working with law firm Freshfields as its legal counsel, as reported. The Rothschild and Freshfields mandates are focused on considering its capital structure as a whole.
“Something will happen on the capital structure. It may refi and the 2028s could be par paper but there could also be a restructuring. The company does not need a holistic solution to address the perpetual notes though. The fact is all options are on the table,” a third buysider said. “The company on the call did not exclude the option of raising equity and its strategic options seem to be selling assets, but nothing here is the basis for a refi or restructuring.”
The third buysider noted the next steps for the company are to finalise the German legacy liability and then the West Midlands operations need to be solved, adding the West Midlands asset also has a large lease liability even if it is operational.
“The company is trying to get in a position to refi. The company continue to have good results and the bonds are rallying,” a fourth buysider said. “The company need three or four more good quarters but then it can do a straight refi of the 2028s. The yield on the 2028s mean it could be done.”
Mobico walls approaching
Mobico has upcoming debt maturities (see chart below). The company has paid its hybrid note coupon for 2026 but the hybrid note was not redeemed at the first call date, the investor presentation notes. The company has GBP 242m net cash on hand and its RCF facility of GBP 600m is undrawn as of 31 March 2026 (FY25/26), according to its investor presentation.
Source: 15 months to 31 March 2026 investor presentation
M&A direction potential
The company top shareholders at FY25/26 (31 March 2026) were Cosmen family-linked European Express Enterprises with 23% of voting rights then the next largest shareholder is Aberforth Partners with 5.42%.
The Cosmen family were the original founders of the National Express-owned Spanish business Alsa. Jorge Cosmen is a Nominations Committee Chair member, according to the FY25/26 annual report.
“One solution could be to take private. The market capitalisation is way too small to do a rights issue even if it is highly dilutive,” the third buysider said. “Spanish construction company OHL once did a dilutive rights issue even with a small market capitalisation but the best solution is to take this private. There is too much debt and a new money need.”
The perpetual note bond prospectus states that if the issuer does not elect to redeem the notes following a change-of-control event, then the perpetual notes’ interest rate shall increase by 5% per year. A change-of-control event would occur if more than 50% of shares are acquired. The UK takeover code prevents an investor from acquiring more than 30% of a company without making a mandatory offer for the remainder of the business.
“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. “The company need a solution for the perpetual notes. This could be with issuing shares or an uptier [rise in seniority], but it’s hard to imagine both. If the perpetual notes become debt it can’t be more than 50%, if they are swapped into shares the family may want to protect its voting rights. The 2028s and 2031 will probably sit pretty.”
The third buysider noted that if you are in the perpetual notes you can equitise and the company may have equity value given it has long-term contracts that can boost the EV/EBITDA multiple. That buysider added the next action could be to stop the coupon on the perpetual notes and then the perpetual notes trade down but the company may not want distressed loan-to-own funds in the perpetual notes, stating the first step could be to restructure the perpetual notes and extend the rest with better coupons and then a refi.
“The company can uptier but that’s not necessarily a bad thing for bondholders. Alsa is worth 6-7x EV/EBITDA and a bulk of the EBITDA came from Alsa. The company can uptier and pay off front end, which means it can refi by issuing a loan or bond at the Alsa level,” the first buysider said. “Uptiering is only bad when a business is overlevered but Alsa is not overlevered. So even if backend debt is left at corporate level, it’s fine.”
Deleveraging steer
The company FY25/26 (15 month results to 31 March 2026) results reported a covenant gearing ratio (net leverage) of 2.9x at the end of FY25/26. The company has guided towards a small reduction in its covenant gearing ratio by 31 December 2026.
The company adjusted EBITDA for 15M25/26 was GBP 464.8m, up versus GBP 434.1m for FY24 (a twelve-month period).
Mobico generated thin free cashflow in FY25 (calendar year twelve months) excluding its North America School Bus operations. The company generated an FY25 reported EBITDA of GBP 341.8m, benefitted from a GBP 22.4m working capital inflow but then faced GBP 132.6m maintenance capex, a GBP 7.8m pension deficit outflow, GBP 73.4m interest, GBP 37.2m taxes and GBP 37.6m growth capex and M&A, which meant rough estimates of GBP 75.6m free cashflow after growth capex and M&A, according to the FY25/26 investor presentation.
Mobico in 15M25/26 derived around 54.1% of revenues from continuing operations from Alsa, 15.8% from WeDriveU, 21.4% from the UK (UK Bus and UK Coach), and 8.7% from Germany, according to the FY25/26 annual report.
Mobico’s Alsa Spanish long-haul operations face headwinds from the Sustainable Mobility Law that prioritises low carbon public-focused transport with Alsa expecting to maintain most of its existing concessions at a lower margin due to reduced fares which will be balanced by passenger growth over the medium-term. Mobico notes in its financial report that the majority of contract renewals are expected in 2027 and 2028 with the financial impact expected from 2028.
The company US WeDriveU business will benefit from the end of two loss-making contracts though overall adjusted operating profit in calendar year 2026 is expected to remain in-line with FY25 levels of GBP 20.2m.
The company UK Coach business is expected to record a loss in FY26 while the company UK Bus business may be monetised as Mobico explores strategic options. The West Midlands bus network is expected to have a franchising business model following a decision from Transport for West Midlands (TfwM).
In Germany, National Express is the second largest rail operator in North Rhine-Westphalia and one of the top five operators in Germany, with three contracts: RME, RRX 1 and RRX 2/3. In June, revised rail contracts were signed with the five German PTAs to implement structural changes to RME and RRX contracts.
“It raised guidance, which is helping the bonds. But I'm not sure - my question is, is all of the improved guidance from the German contract renegotiation,” a fifth buysider said. “The cost of that settlement was already taken as a provision, so it would be an unwind in the provision, which is good, but if all the improvement is coming from them no longer making a loss on German contracts then it isn't such a great improvement.”
One analyst noted the results were good, adding the company want to do something with its cash balance and it can address the perpetual note.
Debtwire published an FY25 credit report on Mobico on 28 April. The report stated that initial 2026 profit guidance was expected to be revised upwards, while Mobico has a favourable fuel hedging policy, and its 2028 notes could be refinanced at par.
Mobico’s 15M25/26 capital structure as of 31 March 2026 is broken down below (see Debtwire analyst calculations).
Mobico declined to comment.
by Adam Samoon, Jou Yu, David Orbay-Graves andPriyanka Kotadia