Elior – Moving to the shelf
All,
Please find our slightly changed analysis here.
Following the successful refinancing of its bonds earlier in January, we have decided to move Elior to the shelf. Elior has successfully pushed most of its maturities to 2029, and with the bonds Yielding under 6%, it is no longer in the distressed universe. We were too slow to warm up to the name as the bonds improved towards par. If there are headwinds in the future, we hope our timing is better.
Investment Considerations.
- The H223 performance by Elior was impressive, and following annualisation of these figures we were unsurprised to see a successful refinance of the €550m SUNs at 5.625% earlier this month. The company has tendered for the SUNs at par.
- Elior has emerged from the inflation crisis, and margins are being restored. It has successfully negotiated price rises in the private sector and increasingly in the public sector.
- The new SUNs are in a weak position with an €800m securitisation line and a €450m RCF senior to the SUNs. We expect Elior will pursue acquisitions in the near term.
- If food inflation did return, we could see Elior bonds becoming interesting again, but for now, we are placing the name on the shelf.
The new deal removes any maturity concerns.
- The new 5.625% €500m 2029 SUNs replace the previous 3.75% €550m SUNs.
- A €450m 2029 RCF will replace the previous €350m RCF, which we estimate is c€100m drawn.
- A significant change is the increase in the securitisation facility from €360m to €800m. The company will now have a lot of firepower to layer SUN holders.
- For now, we expect improving margins to continue the de-levering process.
Aengus
T: +44 203 744 7055