Almaviva - just waiting for the refinancing

All,

Please find our updated model here.

We had expected this bond to be refinanced in Q1 2021. Obviously, this has not happened, but we remain confident that the Company will refinance in the next 6 weeks either pre or in conjunction with Q1 release in late May. The management explicitly stated the aim to refinance, with a bond, in the coming month(s).

There was only three questions on the call (we wonder how many will be on the roadshow of any new deal!).

We do not currently have a position in the name as the downside risk of loss of RFI (Italian Railways) contract remains a (very small) possibility. The current contract has been extended, with new tenders to be issued later this year. The base case is AlmaViva will prolong their full relationship in which case the bonds are covered.

However, at the current level, at 102%, there is no upside, apart from carry, and doesn't compensate for the admittedly low probability scenario of AlmaViva not maintaining its contract share of the renewed railways contract. The Italian rail operator is by far the largest client and given the age of the contract is most likely responsible for an even more disproportionate share of EBITDA. In a scenario where RFI contract is lost, we are concerned that Almaviva would struggle to maintain positive NCF and be unable to refinance. We remain on the sidelines.

Separately, the Company listed c.26% of the Almawave entity in early March, raising €30m of additional capital. €15m of this capital was used to repay inter-company loans to AlmaViva SpA and the remainder to be used for acquisition CAPEX. Note, the Company will continue to fully consolidate Almawave, as it owns 73.91% of the listed entity.

Happy to discuss, but going forward, we are likely to drop coverage of this name.

Tomás
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E: tmannion@sarria.co.uk
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www.sarria.co.uk