Atalian - comment

Company management is under pressure to engage with investors on bond refinancing. Atalian has a timing dilemma. The company expects YE leverage to fall to 5.4x (6.4x in our model). However, the leverage drop depends on a turnaround in France and Atalian stemming the bleeding in the US business. An improvement in performance will not be easy to show before Q3. Some investors pushed back on management’s promise to engage with bondholders on refinancing the May-24/May-25 bonds so late in the year. The new CEO will be on the Q1 call (which will be before the end of May) and will need to throw investors a bone either around results or refinancing) or the bonds will remain in the doldrums. A tough task for a CEO that only started last week.