Intrum - As the dust settles.

All,

Please find the updated model on Intrum here.

Even though fundamentally this is only an incremental update - beyond the admirable cost control, we find few incremental insights - this is a major update financially. Following the conclusion of the restructuring, even if we are still waiting for the tender, we have plugged in the new capital structure and have replaced the legal section entirely. The new model we introduced a month ago has worked well and is updated.

Any positioning, however, has to wait until the dust settles.

Investment Rationale:

- Since successfully trading the curve of Intrum's bonds last year, we have not stepped back into this capital structure again, even though that means we've missed the rally since the start of 2025.

- Although we consider the company just about able to service its future interest burden, 1) our FCF / Interest Coverage of only 1.2x is too low, 2) the uncertainty of future projections after much accounting upheaval too great and 3) the asset coverage of merely ~25% is too irrelevant to trade the bonds at these prices. 

- We are considering shorting these bonds, but will at least have to wait until the tender.

- On the upside, we see little potential. The Exchange Notes are expensive as they await a funded tender offer in the coming two months.

- On the downside, however, asset coverage is now only 25% and the market agrees that the mere 10% debt reduction was insufficient to put the company on a stable footing.

- Without a CEO in place, Intrum could lose focus on its cost control, which could send the bonds down 10 cents/€ as this is the primary pivot between being paid par one day and having to restructure again. 

Tender:

- The restructuring has been completed, but the company has until the second half of September to use some remaining €275m of the €400m New Money Notes to tender for the Exchange Notes. 

- This tender lets the Exchange Notes trade high, and any positioning in the name - likely short - will have to wait until after that. 

Outlook:

- The bond documentation is now very strong. 

- Cost control has been very good in the last two quarters. We wonder if that is down to window dressing and if, therefore, costs will bounce now that the restructuring is complete. A return of costs would weigh on the bonds with some 10 points.

Here to discuss this name with you,

Wolfgang

E: wfelix@sarria.co.uk
T: +44 203 744 7003
www.sarria.co.uk