Ahead of the second restructuring, we have tollowed our positioning mail last week with a significant update to our investment memo and analysis. While recovery value is one thing, it matters how much of it investors get to claim for which piece and fresh cash contribution. We have therefore overlayed our waterfall with a recap table and have reasoned through the game theory between the main negotiators. We are glad to find that the analysis confirms our thesis from last week.
Based on our analysis of the Q1 2024 results and internal discussion, we have taken a position. Our findings have focused on whether the company can survive. Can management be more efficient or will the company keep burning cash on low revenues and elevated capex? We have also investigated the timing of any return to growth and de-leveraging which would be required for a par refinancing of the bonds.
The loss of the Apple anchor order is a major issue for AMS Osram, but our model shows this mainly impacts the equity story, with the credit story more focused on the underlying existing businesses. We have refocused our model, adjusting for new realities post-abandonment of the videos with investment discussion available on the microLED project and assess the options available to AMS Osram for its upcoming maturities, including the 0% convertible in March 2025 and more importantly the Term Loan which matures this summer.
Our positioning is predicated on the relationship between the underwhelming guidance from management for Q2 and the changing cash requirements following the closure of the microLED project.
In light of the recent rescheduling of maturities we reassess our positioning and expected returns, taking account of the resulting liquidity and therefore the options available to Branicks. We have also adjusted our return expectations based on our evaluation of management's proposed asset disposal programme and the likelihood of successful execution. Sarria - Credit Opportunities runs a virtual and transparent book in European HY with a five year track record. Based on fundamental bottom-up analysis it's senior team of analysts follow issuers, generate original ideas and produce opinionated investment memos that are available to clients. For the team to reach its virtual investment decisions, the research utilises forecasting models and includes legal overlay and relevant game theory, providing clients with a clear and unbiased assessment of each situation.
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Investment Grade rating. Given the changes in the underlying rate environment, the "do nothing" option has diminished. We explore some options available to the Company and the impact these decisions would have on the trading levels of all instruments, including the unsecured and hybrids at Heimstaden Bostad. We also explored when the Company might make these decisions and the impact it will have on its hybrid bonds, with their impending deadline to call them. The headlines of their recent results were all positive in relation to the operational performance of Boosted but credit investors focus should be elsewhere.
We have followed up on our repositioning letter with a Q124 update to our trusted model and analysis. We continue to value the company on a sum-of-the-parts basis, although we have made some changes to each segment and were able to triangulate some previous assumptions with bits of data we found in the company's material.
The Q4 2023 results have demonstrated that there are deeper problems lurking at Cerba which management is trying to solve. Our analysis focuses on margins relative to tariff cuts as well as then medium-term impact of the loss of high margin Covid related business? When will growth pick up in the Research division? What will be the size and effect of the tariff cuts in Italy (Cerba's second largest market)? After a thorough internal debate, we have reached a conclusion on these questions and have altered our positioning.
So irrespective of the capital structure on it, what could be the value of Thames Water? We are using various approaches in conjunction with an array of plausible scenarios to narrow the goalposts from an investor's perspective. In doing so, we are taking into account both, going concern and break-up scenarios with respect to the whole business securitisation, are conjugating stakeholder incentives and are debating the resulting recoveries from this scenario tree at investment committee.
Our existing positions have run their course and to great effect. Adjusting our shadow book in a timely fashion was important to us, as well as communicating our reasoning while negotiations are ongoing. We have therefore closed out both positions and have since also followed up with the updated analysis.
Based on our existing analysis and hard-earned comfort in our numbers, we have taken a second position in the structure with a view to an early restructuring later this year. We have reasoned through the likely elements of the deal and thus chosen how we wish to be set up for the event. The full update of our analysis will come shortly, but the timing was important to us.
It's finally happening. We had been following this trend for some time before management nixed it all up with changes to product portfolio, mix and pricing. However, none of it will change the need for conversation later this year. We have updated our model projections quite significantly and have discussed how the forthcoming asset sale is likely to influence the negotiation positions.
Last month we felt very strongly about our analysis of Selecta and its year ahead. We thought we'd model audaciously. A month and one reporting later and we have gone a step further. In particular, we think the effect will be front-loaded and drive the market. The primary drivers for our thinking and positioning should become increasingly plain throughout the year.
Last time we looked at Maxeda, we got it right, but came too late and the name traded away trom us before we had time to commit. This time we've been determined not to repeat the blunder. But does it all stack up the way it did then? We've re-built our model entirely, scraped through the Benelux DIY landscape again and have identified the drivers and signs we are looking for.