That (under certain assumptions) enterprise value is independent of capital structure cuts both ways. What follows is that (under certain other assumptions) EV alone won’t suffice to price your capital structure. A case in point is now Branicks. Whereas the 2025 bet was all about asset value (read EV), the 26/27/28 bet will be very different. We have entirely renewed our analysis of Branicks, its cash flows above VIB, its portfolio, VIBs portfolios and more. But even though the fundamentals stack up as expected, we now find our decision swayed entirely by another factor.
Our updated work on Aston Martin focuses on three key questions: how much additional funding will be required, by when, and how Round 2 will be structured? The NewCo transaction has fundamentally undermined creditor protections we had previously assumed strong enough, with important implications for recovery values. Meanwhile, the broadly in-line Q2 results allow us to update and extend our model through 2029 and assess whether the recent sell-off has created an attractive entry point for us.
The times they are a changing… Momentum is now with the company, but the substance doesn’t yet add up. So any analysis worth its salt will have to dissect both and overlay each with the complex legal and capital structure that would play its own part in preventing a refinancing. In weighing up the prospects, the finite timing, the substance, structure and the requirements, we come to a conclusions we have never reached before on this name. We’ve positionned ourselves accordingly.
We have materially overhauled our modelling and, in the process, have changed our minds on the name. It’s one of those cases where fundamentals and technicals drift apart. We have also taken a new approach to our legal analysis, which opens a wide gulf of scenarios. The only thing that did not change is our positioning
Re-listening to the conference call for a second time gives a different impression. In light of the poor disclosure on distributions and buybacks, and the steps taken to shorten the call, we felt it was worth probing when, contrary to management’s assertions, capital market access would perhaps be required before 2028. The result was within expectations, and we maintain our positioning.
Freshly extended, the bonds offer a slightly cleaner bet than they did before, even if the nature of the bet remains the same. Yet the bond price is not reflecting the fundamental earnings and the CapEx plan to which management has committed. So even if it didn’t change our positioning in the name, but rather confirmed our previously held view, it’s been a worthwhile exercise to ground some 12 different P&L drivers in the rich history we have of the retailer and extrapolate them with a fair amount of confidence.
Having had an opinionated understanding of the company for years and having expressed our views and desires ahead of the restructuring allows us to readily understand the result and instantly back up our thoughts with a new position today. Our well-running model forecast and fundamental drivers remain similar, safe for the updated quarters, but the new capital structure ultimately has its implications.
Following a rotation of analysts, we revisited Morrisons to reassess the balance between improving operating performance, elevated leverage, and downside protection across the capital structure. Our work examines the sustainability of EBITDA and cash flow improvements, the resilience of liquidity, and the available balance sheet levers, including further sale-and-leaseback capacity and the value of the retained Motor Fuel Group (MFG) stake. We updated our operating assumptions and cash flow projections to reflect the latest performance, but our broader conclusions on credit risk and downside protection remain unchanged.
Sarria | Rino Mastrotto Client Call - Thu, 9 July, 3 pm UK time | 10 am EST. For more information, please contact info@sarria.co.uk.
Following client requests and as a natural extension of our earlier work on Pasubio, we initiated coverage on Rino Mastrotto. Our work breaks down operating performance by end market, isolates margin pressure from structurally higher labour costs, and examines liquidity and cash flow resilience alongside the dynamics of private equity ownership and continued family influence. Recent rating actions, leverage trends, and the absence of near-term catalysts frame how risk and optionality evolve as the credit enters a more challenging phase.
As we are seeing somewhere in Spain right now, Pari Passu doesn’t mean equal recovery. But there is a difference, both in the documentation and in the jurisdiction that sends Emeria down a different path. Considering what we're hearing through the grapevine, we have reworked our assumptions and model of the next years and given a legal analysis and game theory a full revision. We find that one has changed more than the other, but not enough to prevent us from dipping our toes in the name.
Graanul has completed its second non-deal roadshow in six months, reflecting confidence in its ability to refinance the already extended bonds. We reworked our analysis with a focus on volume visibility beyond FY26 and the impact that potential supply imbalances could have on pricing, leverage, and the capital structure. This work stress tests recent market optimism and frames how near-term technical support contrasts with longer-term fundamentals as the credit evolves. The roadshow has provided further insight into the supply dynamic but fundamentally, our view remains the same.
The Assassin’s Game Theory update includes a full revision of the model, developments and valuation, but focuses on how to put pressure on the bonds. Having debated the structure with many of you as well as with our internal tools, we have explored two paths in further depth and have sharpened our thoughts significantly. Ultimately, despite or because of it, our position remains unchanged.
Having successfully traded Boparan's capital structure over the years, we maintain a detailed understanding of the business, its capital structure and the shareholder' role within it. Following the latest results, we reviewed performance against our forecasts, reassessed how relationships with key customers are influencing margins, and updated our expectations for earnings and cash generation. On that basis, we have refreshed our DCF analysis to evaluate debt coverage and the equity cushion available to creditors, incorporating our view of how the shareholder is positioned within the structure. This work underpins our updated investment stance and our assessment of how this name will develop over the next two years.
We revisited Pasubio after the Q1 results and the London non-deal roadshow, prompting a reassessment of refinancing risk versus underlying credit fundamentals. We challenged our assumptions on leverage, segment diversification, capex, and EBITDA adjustments, and stress-tested cash flow under weaker automotive volumes and delayed execution in Fashion. This work clarified the balance between near-term technical support and medium-term balance sheet risk and informed our decision to maintain our current positioning.
We’ve taken a new position in the Intrum bonds again, but not the way we usually do it. This iteration of our Intrum analysis marks quite a departure from previous years and the company has changed profoundly. A few events we’ve had an eye out for have not materialised, which prompts this unusual decision. The trade itself is very simple and fundamentally backed by two adjustments we make in our model.
Following the Q1 results and the recent amend and extend, we reassessed BioGroup and the implications of its shift to an all-senior capital structure. Our work examined how this change affects downside protection, yield compensation, and trading opportunity, set against uncertainty around upcoming French healthcare pricing negotiations. Despite continued operating improvement, regulatory outcomes now dominate near-term risk and return and frame how we think about the credit from here.
Heading into this restructuring, we have reasoned through various scenarios and settled for our favourite. However, our decision is not actually based on a specific scenario after all. Instead, it has to do with how the restructuring will likely be organised, what debt haircuts will be required and how the equity will be distributed. In the process, we have updated our DCF and underlying forecast Model to pinpoint how much fresh cash is needed, who is likely to provide it, and when it needs to arrive.
A blast from the past, these assets are back after funds took them over in the meltdown of Aggregate in 2023. We expect a new bond to be offered following the current reorganisation and have taken a look at the assets ahead of it and have concluded wha developments we want to see before we’d take a bite.
We have adjusted our positioning in Ineos Quattro following recent price action and a material shift in operating conditions. The business has benefited significantly from Middle East supply disruptions, prompting a reassessment of liquidity, earnings durability, and leverage in the context of sharply higher EBITDA. Our updated work focuses on how much of this earnings uplift can convert into lasting balance sheet improvement as supply dynamics and geopolitics eventually normalise.
European Directive or not, the game theory under a Spanish restructuring plan can be surprisingly complex, even when all major creditors are supposedly pari passu. In that context, not all coop groups are created equal, and so after reasoning through it again, we have changed our minds about the trade we intended to put on.