Maxeda - Ahead of the A&E

All,

Please find our updated analysis of Maxeda here.

We had expected to see the A&E already agreed by now, but it’s taking longer and for all the right reasons. All stakeholders would likely agree that investment in growth should be the best option, but none are willing to take the short-term pain to do the right thing. As a result, this name will remain strangled by its debt load even after this A&E and a long thesis will be hard to develop even after the refinancing.

Investment Considerations:

- We are not taking another position in Maxeda before the refinancing, and as to whether we take a position afterwards will depend on available borrow. 

- The A&E is coming, probably before the October Q226 reporting, but perhaps with the key numbers in hand, as the clock is running down ahead of the March '26 RCF maturity. The A&E won't be directly dependent on the HY market anyway.

- We don't expect a haircut, but the bonds are today fully valued into a situation where we expect a small sub-5% cash pay-down and a term-out of the remainder of the bond with little other incentive than the avoidance of pain. We expect the future bond to fall back into the mid-80s before the year is out, as the company remains overleveraged. 

- If we assume a haircut of 5% and assume the new bonds trade at par, then the current price of 95c/€ would be justified. However, if we assume a small 5% cash element, we have the surviving bond worth only 80c/€, no matter if it's structured with a haircut and at a fair coupon, or if the bonds prefer a larger principal and lower coupon. The company can only pay so much interest. Altogether, we think the structure is 10 points overvalued. The exchange is probably close enough to par to avoid a big SD disaster from ratings agencies, but we expect a fall afterwards.

- In a restructuring, we see the SSNs recover only 65c/€ in cash and new debt and another 20c/€ in equity, which should travel for free. So the bonds are throwing themselves at the A&E.

- We think we have included about every conceivable upside in our forecast operating case. We are not even including the payables outflow of -€8m, as that could be outweighed by further inventory efficiencies due to the Blue Yonder rollout.

Key Conclusions:

- Die another day: We expect the company to propose an amend-and-extend (A&E) transaction with a modest €20m cash pay-down and cancellation of the recently repurchased €31m bonds. This would reduce gross leverage and allow for a smaller bond of around €400m after considering fees. Leverage would remain excessively high, limiting the scope for a higher cash coupon. Depending on creditor preference, the old bonds would not need a haircut, but with a correspondingly low coupon, the new bonds would not trade at par. (See Recap Table.)

- Favourable weather and a 14th week supported trading in Q425–Q126, but gains are concentrated in Weather-related products and represent no structural uplift (Current Trading / Model).

- Maxeda’s leverage remains unsustainably high, leaving shareholders barely in the money; normalised CapEx is estimated at ~€40m, higher than recent spend, while payables management may mask some €10m liquidity pressure ahead of refinancing (DCF / Working Capital).

- Larger players in bigger markets tend to carry less debt. Maxeda’s high leverage has constrained competitiveness, leading to continued market share loss in the Netherlands and Belgium. The ultimate exit for investors would be a sale to one of the larger competitors in adjacent markets: France, Germany, Britain. Financing transactions should keep in mind a discount to their trading values. (See Industry Section.) Meanwhile, poor cash conversion requires a low leverage multiple. (See Model section)

- If parties can't agree, the most likely jurisdiction for a restructuring (we don't say it is needed) is the Netherlands under WHOA. Alternatively, with sufficient bondholder support, the UK RP may be preferred for its simplicity and precedents. In either case, bondholders would dominate the single fulcrum class. (See Legal section.)

- Housing transactions are rising in both markets, with Belgium showing exceptional strength in calendar Q125, likely boosted by new renovation requirements; we treat this as a potential one-off despite possible medium-term tailwinds (Housing Transactions).

Next steps:

- The RCF matures in March ’26, but could be extended a little, since it is undrawn. 

- If we were significant bondholders, we’d like to see more data than just the quarters with good weather and an extra week. However, the company should be keen to put the deal together as soon as possible, and all parties agree that an amend-and-extend is preferable to a confrontation.

- Q126/7 should look disappointing, as similarly good weather to Q125/6 will be unlikely, and there won't be a 14th week. We therefore have financial projections for FY2026/7 very similar to FY2025/6.

Wolfgang and Benicio

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