… Sarria said last week. “It’s been death by a lot of cuts for Matalan, and Jo Whitfield’s departure somewhat documents that, although we think the company could have performed even worse. The 18% yield suggests
Read MoreIntrum’s proposed restructuring is interesting as it shows what happens when the debt credit curve is spread over time and holders of the shortest-dated bonds end up being in a much stronger position than holders of the longest-dated notes, despite the pari passu provisions, points out Sarria's Felix
Read MoreSaahil Dey, senior investment analyst at Sarria, said the bonds still look attractive in the low 80s because earnings should improve as Pfleiderer recovers from the impact of falling interest rates, describing the issuer a “good company with a bad structure.”
Read More"We had expected a larger debt forgiveness at the original announcement so today’s announcement tallies with our numbers. Q1 numbers are not that bad and despite the lower book-to-bill ratios, the further debt forgiveness may reflect new money providers expecting more favourable terms at the expense of existing creditors and shareholders," Tomas Mannion, senior analyst at Sarria, commented after the call.
Read More“The existing bonds in the high 90s clearly signal their belief in the refi. Following last week’s reporting, management will be looking to estimate interest among the bondholder community, but they might just have to post some more improvements before they can deal elegantly with the whole cap stack via a normal refinancing,” independent special situations desk Sarria said. “The second liens don’t …
Read More“It’s a matter of cash flow and making sure you can afford your capital structure going forward, create a cushion for your operations,” said Wolfgang Felix, founder of independent special situations firm Sarria. “Even after the Apollo transaction, there won’t be a lot of room in the financials with the current debt levels and as a creditor, you want to be confident that the future instruments are covered.”
“The Matalan performance is in striking contrast to Pizza Express, who don’t suffer from the same FX headwind, but are more discretionary than Matalan,” Sarria noted. “We expected Pizza Express to
Read More“They've managed to get the tender away. It is true there was not enough cash at the Vivion level and Amir Dayan had to give up some of Golden’s cash pile to keep control of Vivion,” independent special situations firm Sarria said. “Cash is king these days and this will cost him access to some future opportunities, but it’s an obvious choice.”
Sarria noted that Vivion can deal with the 2024 stub through raising debt on unencumbered hotels, or by selling hotels, one of the few asset classes currently worth anything in the UK. Sarria argued Vivion have got half a chance there and raiding Golden again is now more of a fallback option.
Read More“We are still talking about the UK’s number two pizza chain and if this is the nadir of the affordability crisis, then the capital expenditure and inflation might allow for sales growth of 10% per annum now. To then refi in two years they’d also need to produce a margin uplift of 5%,” independent special situations firm Sarria said.
Read MoreIndependent special situations firm Sarria are cautious on Boparan. While Sarria remain relatively unconcerned on the competitive threats they noted that labour and electricity costs are increasing and that non-food cost inflation is not covered under existing pass-through arrangements. Additionally, the 2025 bond maturity is not so far away.
Read More“It is dangerous to derive recovery from a valuation of the assets. This is a difficult situation and bondholder recovery will depend less on the fundamental value of the going concern and more on the constellation and number of suitors,” independent special situations firm Sarria, who last week hosted a Casino webinar, said. “All we know is that value will be transferred to the fresh cash.”
Sarria told Debtwire that if one goes back to the Teract plan, there was the EUR 500m valuation on a 15% stake, which reinforces the view that Casino French Retail should be worth around EUR 3bn in a going concern. But a further EUR 500m-EUR 600m of fresh cash is needed to bring operations up to the mark.
“The growth targets are fine. Letters of credit are the same story and every retailer has this problem. Supplier risk doesn’t always crystalise as a letter of credit but at least its manageable this way. One can adjust metrics for letter of credit but then one should adjust leverage for all retailers, but that wouldn’t achieve much,” independent special situations firm Sarria said. “That said, you can’t entirely ignore it, as usually that risk is compensated out of gross margin and not interest.”
Read More“The Teract deal is the only deal in town,” said Tomas Mannion, a senior investment analyst at Sarria Ltd., an independent credit research firm. “Apart from a white knight sale — which this one essentially is — there is no other way.”
Read More"The specific CS situation is mostly bedded down now, but it’s no time for complacency," said Wolfgang Felix, senior analyst at credit firm Sarria Limited. "Investors realise that these bonds contractually circumvent the concept of absolute priority to their own disadvantage."
Read More“It’s a recognition of the fact that you need the family onboard to fix future problems because they know the company and control its surroundings,” said Wolfgang Felix, co-founder of independent credit analysis firm Sarria,
Read More“It’s probably just a matter of catching a falling spoon,” independent special situations firm Sarria said. “But the spoon has two explosives attached, which we are very mindful of.”
Read More“We are not lawyers, but we struggle to see a legal angle for Akin Gump. Bonds are locked up under the Adler plan with over 75% on three issues and with clear majorities in the other three,” Sarria said. “In the German voting Adler’s plan received over 75% approval for all but the 2029s. That’s all more than enough for a cross-class cram down.”
Sarria added that either plan is flawed, but called the Adler plan a “sitter”.
Read More“They had significant write-downs on their Italian joint venture recently. CarVal’s sale of their stake, effectively resulted in a 90% write-down of the Italian SPV based on underlying assets,” independent special situations firm Sarria said. “This is an astonishing number and clearly far too much to apply across the back-book. But a number of questions linger from that episode.”
Read MoreCurrent trading is not much of a concern yet, Sarria noted. Cash is weaker than expected and some of it will be down to an outflow of payables, but pre-funding inventory is the big concern, even with Matalan’s cash balance.
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