Post the Q3 2024 results, our analysis has evolved around how sustainable the growth is in the top line for the various segments of Cerba. Can the company continue to maintain margins in the face of the tariff cuts and the loss of high margin Covid related business? Is the business burning cash or generating cash to service its large debt load? How strong are management's levers to generate free cash flow and maintain liquidity? What can shareholders do if a par refinancing is not possible? We have modelled the credit and its undertying drivers and have discussed this at investment committee. We have made a decision on how to play the situation through the year.
After OHLA produced its Q3 results today, we investigated whether we need to alter our forecast and investment stance. We have assessed where results have deviated from our expectations and explained why this has happened. We have followed OHLA since the 2021 restructuring and operationally the company has met our forecasts. The current restructuring also broadly follows expectations and overall our positioning has been deeply in the money.
How will Adler Pelzer fare next year, and what do we think of it in the context of its bonds? We initiate on Adler Pelzer (an old favourite) and look at the product portfolio's strategic positioning, global trade, volumes by region and its cost structure. Since the 2023 refinancing, management have made a valiant effort to raise volume and margins. However, what does the company's balance sheet really look like, and how will that influence conversations when its time to refinance? We have made our analysis and have taken a position.
We have updated our model following the Q3 2024 results and have consequently altered our positioning in the name. Our main focus has been on the progress of the turnaround in the situation since the sharp decline in the bonds earlier this year. We have reviewed the key operating metrics to see if there have been any improvements since the previous quarter's results and whether the market's perception of a structural decline due to Al still holds water. We have also examined the staying power of the group by looking at the trends in their liquidity profile. Lastly we have examined if there has been any reaction from the key stakeholders around this situation and how that could impact its refinancing prospects in the future.
We allocated a full risk position to Branicks SUNs March 24 near the historic lows; since then, Branicks and VIB have been busy selling assets internally and externally, so we have looked at the prices received and what our analysis points to for future asset sales. Reviewing the sales data, we updated our analysis to refine our investment stance. We also build the maturity profile into our assessment, and calculate what actions Branicks needs to take and when they need to take them to maximise value.
We have updated our model with the Q3 quarterlies, which, in particular, have doubled our experience with the new size of the servicing arm. That has allowed us to sharpen our valuation of that segment. When taken together with a slightly revised valuation of the back-book, we arrive at our conclusions on the value of the bonds as the company enters its Prepack CH11 / Swedish company reorganisation process.
We have updated our model following the Q2 24/25 results and consequently have again altered our positioning in the name. Having changed positioning already once this year, we have taken significant time to track every development we are able to observe in the retailer and have scrutinised our assumptions for 2025 and 2026. As ever, the bag is mixed, but based on what we are able to observe now and nearly two decades of experience with the name, we have taken a view.
Following our change in positioning the other week, we have updated our model and fed it into a recapitalisation table, which allows us to gauge the recoveries to the capital structure layers - before particular negotiation dynamics come into play. Accordingly, we arrive at two consecutive rounds of dilution: a fresh cash injection and a favourite allocation of new bonds, cash and equity to the various classes.
Following the Q3 financials, we have updated our model as we build on our previous work around the growth of the Italian and Polish businesses. The performance since the last refinancing has been poor, with limited underlying deleveraging, and we consider important shifts in the capital structure over the lifetime of the bond. Q3 numbers were in line with our model and we maintain our investment stance, especially after adjusting for the changes in on- and off-balance sheet liabilities.
We assess the restructuring proposal from OHLA and determine how it should influence our positioning in the debt of the company. We evaluate the options open to creditors and calculate the value of the package the company is offering. We also investigate the various scenarios for executing the agreement with bondholders and the impact on our bond valuation.
We assess how ASDA's latest quarterly results impact our investment positioning and how we view levers the company has to affect performance in the near term. We look at the influence of recent management action on the ability of the company to meet its market challenges.
We have updated our model following the Q3 results, which were in line with our expectations. For H125, our model was previously at odds with guidance and management's correction should narrow the gap. We examine the Company's new guidance for the full year 2025 and balance sector demand with recent contract wins AMS Osram have achieved. The Company provided new detail on the core business, and we have used these data points to further evaluate FY25 projections.
We have discussed the below in our investment committee and have positioned ourselves in the capital structure. Eutelsat has just reported a high-level trading update for Q1 2025 which was weaker than the market expected. However, management will give a more detailed update for H1 2025 in mid-February 2025. Given that Eutelsat is in the middle of a strategic pivot, we have modelled the impact of the decline in its legacy business and discuss whether its new focus on Connectivity will compensate for that decline in terms of EBITDA and cash flow and what the rate of the cash burn will be in the interim. We have also examined the capex requirements of the strategy going forward and the maturity schedule of its existing debt to understand what options the company has to tackle its debt as it comes due and pay for its cape at the same time. We arrive at our investment strategy when discussing the nature and timing of certain catalysts and how the dynamics in the global satellite services industry impact Eutelsat's business in the medium term.
Victoria Plc will report shortly a continuation of weaker-than-expected top-line demand in their H1 numbers. We have modelled the impact of this continued decline on earnings and more importantly cash flow, especially considering upcoming maturities. We differ from the Company guidance on operational leverage, affecting our projections on any turnaround in underlying demand.
As regards structural tactics, we have examined the terms of the preference shares and their impact on any future balance sheet restructuring. In our investment discussion, we are therefore considering the possible refinancing options available to the Company including layering and limitations that these approaches have.
Having modelled the business through 2026, we arrive at fair value at maturity and reflect the difference to today's levels and future cashflows in our investment stance. We discuss the nature and timing of certain catalysts, analyse the industry dynamics in Germany, build them into our assessment of the capital structure and play with commercial and legal scenarios around the maturity of the bonds.
We have modelled recapitalisation scenarios for both restructurings under both proposals and for both classes of bonds. On the basis of our DC of the company, considering fines, totex, etc. we come to a set of conclusions that allow us to put goalposts around a possible entry into the structure. Naturally, we have made significant assumptions around our expectation of WACC and Ofwat's requirements and we are weighing November news flow against fees.
OHLA's capital-raising exercise is taking shape, so we look at what has been achieved so far, what still needs to be done, and how that impacts our investment stance in the SSNs. We also consider the probabilities for the rest of the capital raise and how this could further influence our investment view.
We have changed our approach to assessing the credit quality of Clariane, creating an OpCo and PropCo structure. Assuming a rental charge to adjust EBITDA for the operating Company we have arrived at leverage and interest coverage statistics for the Operating entity. This is a prudent approach and doesn't adjust for the potential equity value within the property segment. We assess the impact on the credit of delays in executing the fourth pillar of the restructuring plan. However, for the operating entity, occupancy rates and staffing costs remain the fulcrum assumptions in future profitability of Clariane.
We are unwinding our position in the name and are preparing to see the situation from the other angle as the developments we have been looking for have not materialised. We have, therefore, adjusted our forecasts and reviewed again certain structural aspects of the business that we believe will become important as we explore the levers available to management in the next twelve months.
The 15% for 15% is very simple. Or is it? We have analysed the bonds' term structure and debated the underlying game theory to settle for a favourite route of negotiations from here. We think this simple Intrum inspired offer can be built upon in a variety of ways that are worth considering upfront. We have not updated our model, but our thinking has moved on.