AMS Osram - comment

The recapitalisation plan presented by AMS Osram management is more comprehensive than we had expected with the Company planning to raise €800m in a discounted rights issue and €800m in new HY bonds, coupled with a sale and leaseback of €300m which will deal with upcoming maturities in FY23-25.  

Timing is subject to an EGM on the 20th October to approve the discounted rights issue, with a launch of the High Yield bonds thereafter.  The Company intend to put any money raised in any bond issuance into escrow subject to the rights issue being successful.  Any issuance will be accompanied with active liability management "e.g. concurrent tender offer to buy back existing senior notes”, which may mean at a discount to par.  We don’t see them tendering for the 0% convertibles that mature in March 2025, and they are definitely not tendering for the 2.125% Convertible bonds due in November 2027.

We are selling both our positions in the two 2025 issues today, but this is no doubt a positive step by the Company - just got to go and execute it now. Email to follow.