Intralot - Staying the course
All,
Please refer to our unchanged analysis of Intralot here.
If the thin market prices for the 24s are anything to go by these days, it is worth noting that to the 21s the agreement per the LUA relative to a pari passu treatment should be worth little more than it might cost to achieve it. We remain of the opinion that the company and the 21s can substantially execute the transaction without the agreement of the 2024s. But given the narrowing benefits to the 21s must also cover for the credibly threatened litigation from the 24s, we continue to hold the 24s on the thesis that the 24s will wrest substantial concessions.
Negotiations:
We were never going to find much detail on the plans in the annual financials, but in the going concern section we do find the below, which is essentially repeated on the second to last page of the document under subsequent events.: “... INTRALOT has already since January 2021 entered into a Lock-Up Agreement (the Lock-Up Agreement) with an ad hoc group of noteholders, holding in excess of 75% of outstanding principal amount of the €250m Senior Unsecured Notes due 2021 (2021 Notes). The Lock-Up Agreement provides either for the consensual exchange of 2021 Notes with new notes of a total principal amount of €205m, due 2025, to be issued by the Group subsidiary Intralot Inc., if noteholders holding at least 90% in outstanding principal amount of the 2021 Notes would sign or accede to the Lock-Up Agreement, or the recourse to an English law scheme of arrangement, with the consent of the Ad Hoc Group. Following the Expiration Time set in the Lock-Up Agreement, Noteholders holding 82,76% of the outstanding principal amount of the 2021 Notes. The Company believes that this outcome is an important step towards the implementation of the proposed transaction. On the basis of the current high level of support of the Lock-Up Agreement by the holders of the 2021 Notes, the Company is convinced that it may implement the exchange of the 2021 Notes by a consensual process. According to the above, it has entered during the last months into negotiations with the Ad Hoc Group with the aim of reaching an alternative agreement that will allow the parties to restructure the 2021 Notes without recourse to a scheme of arrangement. Such negotiations are already at an advanced stage and the Company believes that it will be able to make a new announcement on the matter soon. “
Fundamentals (last and least):
Q4 EBITDA was E2m higher than expected and cash balance is E10m lower, as the company repaid US leasing arrangements and made pay-downs under the RCF at global holdings. The pay-down of US lease liabilities is of course further value being moved into the US subsidiary, but that is not the key section we have been looking for.
Happy to discuss,
Wolfgang
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E: wfelix@sarria.co.uk
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