Galapagos call

All,

The call was interesting, but did not contain anything groundbreaking (good), rather further detail on the presentation we received last week.

Sufficient majorities are in place (no wonder with E140m coming from Triton) to implement the plan and the company has moved its COMI to the UK to use a Scheme of Arrangement if no consensual agreement can be found with the SUNs

On the one hand there remains plenty of execution risk (company is imminently running out of cash) and with half the Triton cash to be consumed by the transaction / closure of Dry Cooling and the other half paying down the super sr. RCF, the SSNs at 89c/E are still not exactly a steal. Even if the new bonds come with 8.25% coupon for expected 4.3% leverage, there will still be significant guarantees outstanding and the short NC2 has some extra provisions to ensure bonds don’t trade up too far.

On the other hand the agreements are all set. The new group will have plenty of liquidity and the exit from Dry Cooling is provided for. The SSN coupon will be paid and the agreement of the SUNs is not absolutely needed. About a quarter of the customary guarantees will roll off next year and the synergies from merging Enexio into Kelvion are tangible, if not gigantic. Also the returns should be uncorrelated to any eventful trading this year, which is something we’ve been looking for.

So we will see if we can get our hands on some 8% of NAV of those SSNs around 90 tomorrow before everybody gets locked up. 

Wolfgang