Last week’s Q4 results are now reflected in our investment stance on ASDA. We have assessed the impact of Allan Leightons’ turnaround plan, its progress and our forecast for the adequacy of the company’s liquidity. Our analysis considers the changes in timing of operational improvements and how this could impact the cash position of the company.
Air Baltic is obviously a brave bet these days, but this process will have its moments, and it was very worthwhile thinking through the scenario tree and associated recap gamut. Separating out the two divisions helps with quantifying some of the outcomes, while it’s good to understand the underlying problem - neither fuel prices nor the recent cost inflation quite strikes at the core of the situation. It’s on that basis that we construct our operating scenarios and ultimately the base valuation for any position we may wish to take going forward.
Ongoing pressure on mature consumer staples categories and the reliance on price-led growth continue to shape outcomes across leveraged food credits. In that context, we revisit our positioning on Flora Group following the FY25 results, focusing on what recent disclosures imply for the underlying cash-generative core of the business. To form our view, we look beyond headline stability to assess how business mix, restructuring drag, and cash conversion interact, and what this means for risk and value across the capital structure.
We have updated our investment view and have built the repayment of the Proman loan and the new TL B into our forecast to gauge scenarios. We measure our liquidity estimate against our forecast cash flow to determine if funding is adequate, and we measure the contribution the new Nitrogen stakes will bring.
Rising geopolitical risk and renewed uncertainty around the interest-rate outlook have begun to reprice real estate credits across Europe, prompting a reassessment of structures previously viewed as stable. Against this backdrop, we have assessed the optimal trading strategy in AroundTown, examining how macro shocks, capital allocation choices, and balance-sheet positioning interact across the capital structure. Our analysis also considers the implications of the proposed transaction with Grand City Properties and the renewed focus on shareholder returns, and what these dynamics mean for risk and value should market conditions tighten further.
We have built the Q3 2025 results into our model to assess whether we should review our investment stance and to identify the stress points that will make us review our view in the near term. Our analysis gauges current liquidity and its adequacy; to form our investment stance, we also look at the additional liquidity levers the company can pull and the likelihood with which management would proceed.
The restructuring has been done, so we revisit the capital structure of Ardagh Group to determine how the instrument valuations should be reflected in our investment stance. Our analysis looks at how we expect liquidity to evolve and its adequacy. We assess the equity value of Ardagh Group, and when we expect investors will be able to monetise it, as we are looking to define an investment opportunity for ourselves.
On the cusp as this refinancing is, these financials deserve scrutiny. We have been following this name in great depth for over a year and have identified several adjustment screws that have contributed to the Q425 performance. Some we think are sustainable, some we think are not. Our positioning is, however, mostly a result of considerations that survive April 2027.
Having exited our shadow position late last year, the current rights issue is a good moment to reset expectations for Worldline. We have updated our model drivers and forecast, compared those to management’s guidance, including to 2030, in that context reconsidered its strategic position (and importance) and have dwelled on the make-up of the value available to investors. In the end, the conclusion was the easy part.
We have updated our analysis to reflect the impacts of tariffs in FYE 2025 and what we expect to see in 2026. Our evaluation builds in our free cash flow view, including the investment plans announced by the company, and how this will impact leverage and coverage statistics over the coming years, and how the capital structure should advise our investment stance.
We have updated our modelling on ASDA to reflect the changing competitive environment in the UK grocery market, and we have updated our DCF calculation to look at the EV vs the debt stack to see whether we should change our investment stance. We also looked at the progress of the recovery plan instigated by the company and how that might impact our tactical view of the credit. Our positioning remains unchanged for now.
We have made a change to our positioning in the name. Ongoing weakness in the chemicals cycle and rising macro uncertainty continue to shape outcomes across leveraged capital structures, particularly where balance sheets rely on liquidity rather than earnings recovery. Against this backdrop, we have revisited our work on Ineos Quattro, analysing how recent liquidity measures and shareholder actions have influenced pricing across the bond curve. Our analysis considers whether the recent rally reflects durable improvement or transient technical support, and where risk and value now sit across maturities.
Who are these new bonds for now? Having done well to come out of several years of inflationary pressure, Punch is in a new situation, and our focus is shifting accordingly. We have adjusted our model and forecasts, but no longer defined by yesterday’s metrics, the bonds will trade in a new paradigm, and from our fundamental viewpoint, we think we will experience that soon enough.
Armed with further divisional detail, we have built out our model driver to start quantifying the potential effects of the Spanish Sustainable Mobility Law and have refined assumptions across all segments for the next three years. However, the effect on valuation has ultimately been muted, and so we are also maintaining our positioning, even though the game theory around the treatment of the Perps has been shifting. Taking note of the inaction around the call date, we have altered our preferred route and timing for the company’s handling of its balance sheet.
AMS Osram has been a successful trade for us, and following the announced asset sale we have revisited our analysis to assess whether value remains within the capital structure. We look beyond the headline deleveraging and consider what a post-transaction refinancing could entail, evaluating the outstanding bonds with particular focus on call protection and potential yield across the structure. To assess the refinancing case, we have refreshed our assumptions for the remaining business, which differ from the company’s own presentation, and examined how these feed into refinancing incentives and outcomes. Despite the shift in the credit profile, we continue to see selective opportunities within the capital structure of AMS Osram.
Given the maturity profile, we have examined how and when a refinancing of Iceland Foods could unfold. Our work assesses the interaction between operating performance, cash deployment, and call dynamics across a range of refinancing scenarios, and considers what this implies for risk and value as the company approaches its next funding event. We also map the options available to management and frame how leverage and interest coverage evolve under different funding costs.
Following the cluster of announcements made on Friday we have reassessed our positioning around the name in detail, assessing what has genuinely changed beneath the headline extensions and structural adjustments. While the company has bought itself time, the underlying strategic direction has narrowed, and recent disclosures sharpen the focus on execution risk, creditor positioning, and cash realisation rather than growth or refinancing optionality. Our oppinion is based on how the latest amendments, operational updates, and counterparty dynamics interact, and what they imply for value as the company moves closer to the inevitable endgame.
While separate analysis of the two segments primarily accentuates the differences between the two, it is key to forming our understanding of the dynamics of the situation. Forming our expectations on that basis has resulted in us taking a high conviction position and provided us with a strategy for the year, as we look across to industry peers to place our forecast DCF in context.
It is worth understanding Fedrigoni’s unique positioning and corresponding operating assets when looking across to the luxury and packaging industries. Historically adjusting each segment to reflect acquisitions on an LTM basis allows for a much more granular understanding of the trajectory of the company and its leverage ratio. We decide what we are looking for before altering our investment stance.
Building on our previous initiation on INEOS Quattro, we have now completed our work on INEOS Group. Our analysis focuses on the Group’s underlying businesses and how its European plants are positioned in a sector that is suffering from structural overcapacity. We pay particular attention to overall liquidity and resilience, should demand for chemicals remain at historic lows for a prolonged period. In that context, we have examined the structural and legal framework of the capital structure and the options available to the Group should liquidity come under pressure. We also assess the potential impact of the new Antwerp facility and highlight areas of uncertainty around how its commissioning may affect INEOS’ earnings profile and wider industry margins.