House of HR - comment

We will have to drop our revenue projections for the year and also trim EBITDA in the near term. The turnaround is taking longer, and the cost reduction program is all but finished, safe for another €12m to be more visible in H226. A solid improvement in care ratio would bring an incremental €25m EBITDA, but cannot be relied upon / is more equity than debt story. We also have yet to insert the tax catch-up payments in our model, which are going to further weigh on the picture. Management guidance remains unchanged, but we expect the rating agencies to react to the slower than expected turnaround. Our most recent legal analysis points to a €900m LME risk, and the substantial growth to grow into the debt stack will have to compress into an ever shrinking time window. We would expect the bonds to feel heavy again after this call.