Branicks - comment

Success, almost. Branicks are busy today: Three things need to go right today: 100% SSD/NSV accession by close of business, Schultheis onto the management board as CRO and Gerhard Schmidt out. That's still meaningful execution risk. At 60.4% Ad Hoc Group coverage on the notes, the SchVG 75% threshold for material amendments is not yet secured. Even harder, the announced lock-up has (only) 90% backing of the SSDs and Namensschuldverschreibungen; German Law has no cram-down mechanism, and they need to achieve 100%. Otherwise, we think the disclosed structure is within the range of expectations. Our base case foresaw a third party extending the VIB debt and potentially putting in enough to grease the wheels of this transaction with a little cash. The split into new 65% SSNs and 38% New Subs (incl. accrued) was not immediately on our radar. It helps pass Germany's overindebtedness test and, in theory, makes no difference if everybody holds a stapled strip. So how it trades after the transaction will matter. We sold our position back in February at 72c/€ and will consider buying back in now.