Graanul - comment

We expect little immediate impact on trading levels from Graanul's reported Q2 results yesterday. The investor call scheduled for 1 pm BST today. The extensive pre-deal roadshow activity makes it clear that Apollo remains keen to refinance the capital structure, but bondholders are rightly holding out for a double-digit coupon and enjoy an 8.5% cash plus 2.5% PIK while waiting. 

Operationally, results were broadly in line with expectations, with sales volumes benefiting from stronger spot demand and higher premium pellet sales. Cash conversion remains a secondary issue for us despite the high CAPEX and interest burden. Graanul released €26m of working capital in H1, which is unlikely to be recurring.

The bigger concern is the shape of demand beyond 2027. Bondholders are better protected by retaining the existing 2029 maturity than accepting a new five-year instrument today. If Apollo are really so bullish on post '27, why are they rushing the fence on refinancing now?