Air Baltic - comment

We said months ago that we wouldn't touch these bonds north of 20c/€, and we feel no need to rush in now until we know where the €100m equity are coming from. In our humble opinion, this business plan cannot carry the capital structure advertised in the release, and we certainly would not make that investment even if offered to the bonds, which it won't be. The bonds are entirely passive deal takers in this restructuring, and our April analysis calculated a realistic liquidation value (downside protection) of merely 16c/€. Below is our calculation of the proposed deal, except that we don't believe in the €500m EV (DCF falls too far below to €350m) and that even at this valuation the new shareholder would have zero idiosyncratic incentive to take the risk - strategic only, which narrows the list of bidders to about two.