AMS Osram - comment

AMS Osram has delivered on its promise, deleveraging the business substantially. Infineon are buying the non-Optical Analog/Mixed-Signal Sensor Business for €570m. This segment generated c.€220m revenue and c.€60m EBITDA, implying a 9.5x multiple. The transaction should close by June 2026, with the cash proceeds to be used to to repay the 2027 Convertible Bonds. 

With leverage now at 2.5x, focus will be on a refinancing of the 2029 bonds. These bonds are callable in March at 105.25, but we are doubtful the Company will refinance at the earliest option. The call steps down in March 2027 to 102.625%, which is when we expect the refinancing. There was a brief comment from management stating a full refinancing in FY27. 

We are maintaining our position at 106%, benefiting from the 10.25% coupon. The yield to March 26 is 4.8% but to our expected March 27 refinancing is 7.3%. 

Full numbers are due next Tuesday 10th, so we will update our model then. Some information was disclosed last night including:

- EBITDA at €600m (€25m higher than expected) 

- Cash balance at year-end, €1,483m, €500m higher than expected. €227m CHIPS state Aid from Austrian government, plus changes to the German Pension, releasing cash. 

- Osram Licht puts reduced to €505m, which should have reduced cash amount.