Sarria noted they were short earlier in the year thinking they would run out of cash, and it was “astonishing” they didn’t. “The franchise is unimpaired and the move to online still stops at their price bracket, but they are now more levered than before – despite appearances,” they commented. “The EUR 100m cashflow in June only shows that the Takko had good sales and management said as much. We can rest assured that the EUR 150m [cash balance] won’t be around at quarter end.”
Read More“To the 2024s, this announcement makes no difference,” said Sarria, an independent special situations firm. “The economics of the deal remain the same.”
Read More“This was one of our most successful trades last year and it wasn’t Covid-related – it did well for fundamental reasons. But we did not participate in the new bond as it became clear that feed prices would eat up much of the pro forma adjusted EBITDA this year,” independent special situations firm Sarria said. “The company has good liquidity and the labour shortages may be in part transitory, but EBITDA will fall further.”
Read More“This is a bet on control of the delta variant and if there is no control then they are in trouble – along with half the economy. Another lockdown would be tough but if the UK finally opens next month, then Matalan have all to play for,” independent special situations firm Sarria commented. “The second
Read More“Even though we had been long the name for most of last year, we [were] more than sceptical on just how long the run would last. Chickens don’t fly and neither does Boparan,” Sarria commented. “Last year Boparan was one of our favourite fundamental trades, but part of this was probably borrowed from the future in terms of who pays for what and when along the supply chain.”
Read MoreOnline growth will be strong, this is what supports the credit story, said Wolfgang Felix from Sarria, the credit opportunities desk. The company previously held back on its online rollout on fears of self-cannibalisation. But by the same token it has a captive customer base and will be pushing hard to maximise its IPO valuation, he said.
Read MoreWolfgang Felix at Sarria acknowledged that Douglas’ online business was now a powerful attraction for investors, but said the group would need to demonstrate more online growth and post-COVID stability before CVC could cash in on an IPO.
Read MoreAs the 2024 ad hoc group holds just north of 10% of the 2021 notes, the consent achieved as of early February means that a number of smaller 2021 investors didn’t sign up to the lock-up agreement, which is surprising given it is a really good deal for the 2021s, noted Sarria, an independent special situations firm. These holders could give consent at a later stage, but even with them on board, the company will probably fail to reach the 90% threshold, Sarria added.
Read More“The option to partially exchange for 49% of that Dutch NewCo entity doesn’t sound like a great idea," said an analyst as special situations firm Sarria. "You would have no trigger point for that paper and Intralot entertains inter-company dealings between its Greek and US entities. If instead you decide to remain 100% a creditor of the group, you would not only earn more coupon, but also have both, an implicit economic claim to the 51% of that same entity and on everything else too. While some consider the remaining group a net liability, we would certainly choose the hard maturity over theoretical economics here.”
Read More“If they are trying to restructure creditors, there would be no way the CEO would be talking in the press about a 2022 IPO," independent special situations firm Sarria said. “It is important they paid the coupon and the CEO talks about EUR 1bn online sales and Christmas sales being down less than 10% plus the 2022 IPO. None of this would happen if they were kicking off Germany’s biggest test of its new insolvency regime. It wouldn’t happen in this order – they could do an A&E.”
Read More“Post pandemic this should be a GBP 80m-100m EBITDA company again and it's not overly levered on that basis,” Sarria continued. “Give it time and they will be alright. Nobody gains from pulling the plug. If you take a long term view, the first liens continue to be covered, but the second liens might be testing [shareholder and founder John] Hargreaves’ resolve one more time.”
Read MoreThe impact guided in 2Q20 was an expected fall in orders in 3Q20 and this is exactly what happened. In this context, 3Q20 was unusually good as there was a stronger EBITDA and better than expected results against a 10%-17% guided order intake decline, special opportunities firm Sarria said. “The order intake has already [gone] to normal levels and 4Q20 should return to previous EBITDA and revenue levels,” they added.
Read More“This is KKR’s third management team,” said a source at Sarria, an independent special situations firm. “It's a difficult sell that this time the story is different.”
Read MoreSpecial opportunities firm Sarria had three of its theses confirmed from today’s call. Firstly, that other debt collectors have written down portfolios and Lowell could next quarter. Secondly, that management seem confident the equity injection will stay, and they want the business to grow. Thirdly, that the company may have accelerated collections, either through selling NPLs or offering deals to delinquents for one-off payments.
Sarria had been looking to bring a group of bondholders together to structure a refinancing plan, as reported. It also previously held a conference call for noteholders, as reported.
Read MoreWater utilities are highly regulated entities and under the recently-agreed budget, the company has good visibility of its future earnings and must manage expenses accordingly, special opportunities desk Sarria noted.
Read MorePlease find the link to the recording of the full conference, which includes our presentation, here:
https://www.youtube.com/watch?v=CQsC5WZvjWA&feature=youtu.be
Read MoreIn 2019 there was a major short on the name but this was due to heavy one-offs and cashflow generation coming purely from factoring and inventory facilities, Sarria noted. But while there could be a 3Q EBITDA
Read More“Simply put, a takeover bid will involve a degree of deleveraging, which is a positive for the B notes. And if no bid happens, the company will pursue alternative methods to deleveraging, either rights issue or more likely an equitisation of the B notes. That’s when the differing motivations of the B note holders will become apparent,” Sarria said.
Read MoreIndependent buy-side desk Sarria is looking to bring together a group of Lowell bondholders and additional funds and structure a refinancing plan that it aims to take to the UK-headquartered debt purchaser, according to two sources familiar with the situation. The initiative was started by Sarria together with a sizeable client, with the aim of relaunching the refinancing process that stalled after talks with a group of wall-crossed funds broke down in July.
Read More“The CABB business is resilient in this kind of COVID environment and there is revenue visibility on contracts. The end-markets are mostly in the relatively stable agrochemical sector, with the remainder of the exposure also very diversified,” Sarria noted.
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