KCA Deutag - comment

KCA reported their Q1 numbers yesterday but that doesn’t tell half of the story. Although slightly lower than our expectations, the business continues to deleverage. However, due to staying in compliance with Russian sanctions, KCA Deutag have issued abandonment notifications for 9 of their 17 rigs in Russia and the balance are likely to be abandoned also. Therefore, although headline leverage is 1.1x, this includes EBITDA contribution from Russia. Adjusted leverage, excluding Russia is 1.3x.
Separately, the Company are pursuing the acquisition of the Saipem onshore assets, and have launched a new PIK and equity raise simultaneously yesterday.