KCA - getting closer

All,

We are considering a position in KCA - pending some further announcements. Please find our in-depth analysis here.

There are various ways of valuing the business, but one that we like creates the Offshore business at 5x (debt capacity really) and another 70+ rigs at £10m each. Also, on a simple going concern level we have become more comfortable with the name.

While the documentation and structure are relatively straight forward, there are concerns around the Dalma business’ dependency on the goodwill of its former owner. But at current valuations bonds are providing for that - to an extent.

We are therefore looking for a good entry point into the name as restructuring / refinancing events unfold over the coming months.

Tomas is your analyst.

Wolfgang