Adler Pelzer is an old HY favourite, and this is not the first time we have had to kick its tyres. Following our sceptical initiation last year, the company in many ways outperformed our expectations - as has the sector overall. Now that its RCF has gone current, we have updated our model, considered sector data, forecast its cash flows, valued it by various methods and played through recap tables. The answer even surprised us ourselves.

We review our investment stance to build in the latest operational results and refinancing. Our model now reflects the changed current and medium-term environment for Morrisons; it builds in the potential liquidity levers for the company and the likelihood of them being needed. We also look at how regulatory issues are evolving and the potential impact for Morrisons’ owners to seek an exit.

We maintain that the best way to analyse Clariane is to construct a theoretical PropCo and OpCo structure, which enables greater clarity regarding the risks and opportunities across the capital stack. This approach allows us to isolate the operational leverage within the structure, informing our investment decision.

As part of our analysis, we have discussed a variety of upcoming decisions facing the Company, associated options and their impact on the theoretical OpCo and PropCo entities.

Having been short this name earlier in the year, we have been following its developments with a keen interest in certain areas of its operations. Interestingly, not all has gone to model, which indicates a new angle for us and investors. We have updated our investment memo, making some significant changes to our outlook, and are taking action accordingly.

Following the profit warning, we have reassessed our investment stance based on the new guidance. We will evaluate Aston Martin’s upcoming disclosures and specify what information is necessary before making further decisions. Our updated analysis provides revised unit sales forecasts, required cash levels, and Aston Martin’s options to raise capital.

We continue to highlight the growing divergence between equity and credit perspectives, but the question now is whether credit investors can afford to overlook the latest moves in the equity market. Our analysis explores the Company’s strategic pathways and assesses the feasibility of a 2027 refinancing, examining how each option could reshape trading levels across both equity and credit. With refreshed forecasts for FY26 and FY27, we take a close look at how potential asset divestments may influence revenue trajectories and future cash flow, offering a clear view of the opportunities and risks ahead.

This name is not like other HY issuers, and we have taken a position to reflect that ahead of its Q325 reporting and the CMD in November. Having built a deeper understanding of one of its divisions' structure, we find its risk/return profile very much skewed in the short term. Unrelated to that, we have spent more time on this acquirer’s cash balance, holdco overdraft, and interest income.

Having followed this name for some time, our model has been accurate - until recently. As results increasingly deviate from our forecast, we are not following up our current position with the planned second leg. Instead, we may first reduce this position before deciding how to proceed from here. Our rebuilt projections suggest a change in base-case scenario in 2027, and we have reasoned through its implications for our positioning today.

We are amending our investment position in Ocado, having assessed the recent evolution in the online grocery market and the recently announced strategy review at Kroger. Our analysis dissects this progression to separate timing issues from fundamental problems; we have updated our model, cash flow expectations, and liquidity analysis to reflect these changes.

We have updated our analysis post the Q2 numbers, which has raised some potential trading opportunities across the capital structure. We lean on our extensive analysis of Cerba to inform us on our market expectations for BioGroup. Acknowledging that BioGroup has a different leverage starting point, enabling management to have some flexibility to further improve shareholder value. As we explore these options and overall French tariff expectations, we form our ultimate investment decision. 

Having delved deeply into the payments industry’s structure and dynamics, we initiate on Worldline, the embattled French acquirer. Having already given some of the pertinent questions more than just a first pass, we continue to work carefully to understand certain structural conundrums ahead of its CMD in November. This name is not like other HY names, and we look forward to seeing you on Wednesday.

Having successfully traded the Boparan capital structure over a number of years, we have analysed the recent results against our forecast and assessed how we expect costs to have evolved since April 2025 so as to update our investment stance. Based on that and on our understanding of how the shareholder is embedded in the structure, we have updated our DCF to ascertain the debt coverage, what level of equity cushion there is for creditors, and how these metrics may evolve over the next four quarters. 

Having published earlier in the week, the 8pt decline in bond pricing has prompted us to close out our position early. Our short-term thesis has played out quicker than anticipated, prompting us to take profit. We continue to monitor the name and extend our work on our liquidity expectations for the coming quarters.

At 60%, Isabel Marant bonds continue to trade without clear direction. Our analysis remains focused on the legal structure of the company and its bond instruments. We devote our attention to the risks associated with a the company’s structure and bond documentation.

From an operational perspective, our assessment considers Isabel Marant’s two business segments and the distinct challenges each faces. We have updated our financial model for the coming quarters, with an emphasis on projected cash flow prior to bond maturity.

Despite the model’s forecasts, the core investment debate remains centred on the structure and documentation and their implications on any potential restructuring.

Recent trading activity in Pasubio bonds has renewed investor focus on the credit. In response, we analysed PAI’s strategic push into the luxury segment of the leather industry.

Our model centres on the core automotive business, which continues to drive the company’s performance, alongside an evaluation of the potential within the luxury segment. The assessment considers the realistic strategic options available to PAI in light of the current bond maturity profile and takes into account the structural considerations around future acquisitions, focusing on how PAI might accommodate roll-over equity within the existing legal framework while observing covenants in the bond documentation.

We have updated our investment stance on Modulaire Group to reflect the operational and cash flow performance in H1, along with our expectations for H2. Our analysis also reflects the liquidity position currently, and how we expect it to evolve. We identify the KPI moves that would prompt us to revisit our opinion, and how these might be reflected in cash generation.

Having dug further into the news presented in the Q2 results, we have worked our findings into our forecasts and have consequently adjusted our positioning in the name. We are looking forward to two events, the second of these being the key driver of our investment thesis.

Project Nord is all but finished, and cost savings programs are reportedly on target. But is cash going to last to see this turnaround? What if Pfleiderer needs more fresh liquidity than its €50m priority basket foresees? Should the sponsor just inject it, or should he barter? What would be the creditors’ position, and how do bonds compare now? We have given our model a big update, have used different methods to triangulate an EV, and have been playing with recap tables in case anything but the best case should materialise.

Sarria | Pfleiderer - Client Call Thursday, 18 September, 3 pm UK time | 10 am EST. For more information, please contact info@sarria.co.uk.

Following the 1H 25 results, we have revisited our investment stance in Consolidated Energy (CONSEN). Our analysis of the Q2 results and updated forecast tackles 2025/26 cash flow, upcoming bond maturities, and the loan made to CONSEN’s parent. We have updated our expectations for 2025 volumes and pricing and reflected them in our model. The work we have done includes a review of the performance of our position so far, our expectations for the next 12 months, and the factors that could impact that performance. 

Unfortunately, due to a lack of available borrow, we have exited our short position in Kem One. When we took our short position, borrow was available, but we are closing now to reflect the reality of the market. We have updated our model and further expanded on our analysis of what the next steps will be for the Company and bondholders.