(Debtwire) Casino creditors await IBR results as estimated recovery values provide possible uplift
“It is dangerous to derive recovery from a valuation of the assets. This is a difficult situation and bondholder recovery will depend less on the fundamental value of the going concern and more on the constellation and number of suitors,” independent special situations firm Sarria, who last week hosted a Casino webinar, said. “All we know is that value will be transferred to the fresh cash.”
Sarria told Debtwire that if one goes back to the Teract plan, there was the EUR 500m valuation on a 15% stake, which reinforces the view that Casino French Retail should be worth around EUR 3bn in a going concern. But a further EUR 500m-EUR 600m of fresh cash is needed to bring operations up to the mark.
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(Debtwire) Takko focuses on keeping leverage low following debt reduction plan as Apax retains minority stake
“The growth targets are fine. Letters of credit are the same story and every retailer has this problem. Supplier risk doesn’t always crystalise as a letter of credit but at least its manageable this way. One can adjust metrics for letter of credit but then one should adjust leverage for all retailers, but that wouldn’t achieve much,” independent special situations firm Sarria said. “That said, you can’t entirely ignore it, as usually that risk is compensated out of gross margin and not interest.”
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(Bloomberg) Paris Grocery Titan Naouri Turns to Protege to Save Empire
“The Teract deal is the only deal in town,” said Tomas Mannion, a senior investment analyst at Sarria Ltd., an independent credit research firm. “Apart from a white knight sale — which this one essentially is — there is no other way.”
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(Reuters) European bank shares rally, bonds battered after Credit Suisse debt wipeout
"The specific CS situation is mostly bedded down now, but it’s no time for complacency," said Wolfgang Felix, senior analyst at credit firm Sarria Limited. "Investors realise that these bonds contractually circumvent the concept of absolute priority to their own disadvantage."
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(Leveraged Commentary & Data - LDC) Frigoglass shareholders retain stake as lenders agree restructuring plan
“It’s a recognition of the fact that you need the family onboard to fix future problems because they know the company and control its surroundings,” said Wolfgang Felix, co-founder of independent credit analysis firm Sarria,
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(Debtwire) Oriflame liquidity and medium-term maturities provide room to execute on growth rebound target
“It’s probably just a matter of catching a falling spoon,” independent special situations firm Sarria said. “But the spoon has two explosives attached, which we are very mindful of.”
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(Debtwire) Adler Group restructuring plan faces challenge from alternative proposal ahead of 24 February convening hearing
“We are not lawyers, but we struggle to see a legal angle for Akin Gump. Bonds are locked up under the Adler plan with over 75% on three issues and with clear majorities in the other three,” Sarria said. “In the German voting Adler’s plan received over 75% approval for all but the 2029s. That’s all more than enough for a cross-class cram down.”
Sarria added that either plan is flawed, but called the Adler plan a “sitter”.
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(Debtwire) Intrum focuses on renewed deleveraging but recent write-downs impact operations – bond preview
“They had significant write-downs on their Italian joint venture recently. CarVal’s sale of their stake, effectively resulted in a 90% write-down of the Italian SPV based on underlying assets,” independent special situations firm Sarria said. “This is an astonishing number and clearly far too much to apply across the back-book. But a number of questions linger from that episode.”
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(Debtwire) Matalan December sale completion targeted, John Hargreaves bid in the works
Current trading is not much of a concern yet, Sarria noted. Cash is weaker than expected and some of it will be down to an outflow of payables, but pre-funding inventory is the big concern, even with Matalan’s cash balance.
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(Debtwire) Vivion rising coupon risk looms but unencumbered asset strength opens bond redemption prospect
They have good liquidity and decent assets with rent linked to CPI, independent special situations firm Sarria noted. “Raising rent can of course lead to vacancies, but that’s where it pays to hold attractive assets,” Sarria told Debtwire. “On the UK hotel portfolio, after the Queen’s funeral has been televised across the world, I assume the next ten years of UK tourism are safe.”
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(Debtwire) Upfield price increases drive sales growth but rapid deleveraging required ahead of approaching refi
Independent special situations firm Sarria had expected late 2022 or early 2023 would be the inflection point but noted it is now happening so much earlier. They were confident in
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(9fin) Douglas delivers no surprises but questions mount on future profitability - Q2 22 earnings review
Wolfgang Felix from Sarria told 9fin: “Management is currently prioritising getting customers into stores and driving up overall market share rather than increasing margins. This year’s objective is definitely to maximise revenue in preference to margins.”
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(Debtwire) Takko boasts low reported leverage and earnings growth potential but May 2023 maturities provide looming refi risks
Should any refinancing not materialise, then there remains a risk of a debt restructuring according to a 17 June desk note from independent special situations firm Sarria.
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(Debtwire) OHLA boosted by cash inflows as 2023 PIK coupon climb provides debt paydown incentive
“The Amodio’s have been to the Spanish regulator and there is now a co-operation agreement between CAABSA and OHL registered with the CNMV,” Sarria said. “If EU and US infrastructure spend takes off, then
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(Debtwire) Matalan operational recovery leaves refi opportunity open with potential second lien upside
“Matalan are somewhat anti-cyclical and have a track record of outperforming in crises. Last time in 2009, before the cotton spike, CVC even came with a GBP 1.5bn bid at 10x,” Sarria continued. “It’s a great performance any way you look at it. The subs are 3.5x leveraged on our math and are par paper.”
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(Debtwire) Aggregate Holdings makes progress on disposals though liquidity tight ahead of Vivion Furst and VIC put payments
“An update on liquidity would have been helpful, but it was clearly not something worth shouting about. Also the timing is now sensitive while negotiating at so many levels,” Sarria said.
They will receive a boost from the Corestate stake sale but most of the Corestate stake was held at Aggregate 2, which is separate and direct holdings were small, so that should strengthen [Aggregate shareholder] Walcher’s negotiating position, Sarria added.
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(Debtwire) Adler Group disposals salvage liquidity but greater Consus concentration points to rising interest burden
“Adler are marrying the pretty daughter first to generate liquidity for the treatment of the sickly daughter,” Sarria said. “They are selling good, fungible assets, which concentrates stakeholders on the riskier development book.”
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(CapitalStructure) Haya Real Estate bondholders urged to organise ahead of likely 'difficult' refinancing negotiations with company and sponsor.
Speaking on a real estate webinar today (14 October), Sarria analyst Tom Mannion said the refinancing negotiations would likely be "difficult" given
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(Debtwire) Adler Group governance risks intensify as HY real estate credits face pressure – sector review
Some of the [Viceroy] valuations seem accurate, according to Sarria. “We are looking at which property is in which entity and how much debt each guarantees as well as how much money each box makes or needs.”
Sarria will host a webinar at 3pm UKT this Thursday (14 October) to discuss the European high yield real estate sector. To attend, one can sign up here.
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(Debtwire) Vivion loan-to-value remains low as cash balance set to climb on bond tap, latest disposals and financial asset conversion
The market expected more cash coming in at once but it didn’t, independent special situations firm Sarria noted. “We see LTV well above the 39%, but what will they buy with the cash when it comes? Amir Dayan may have cash stashed elsewhere, but we’d really like to see the OpCos.”
“When I ride a rollercoaster, I have to have my eyes wide open,“ Sarria commented. “But some people like to go with their eyes closed. Vivion is for them.”
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