KME - Extension of the EUR395m and EUR150m facilities.

All,

Please find our unchanged analysis here.

KME announced overnight the one-year extension of the EUR395m inventory-backed facility, and the EUR150m Factofrance factoring facility. The EUR395m was the crucial one, as it had a Feb 21 maturity and is almost fully drawn for LCs. 

The extension is in line with our expectations, as we previously discussed. It provides more time for KME to wait for the bounce-back of its EBITDA post-Covid in 2021 and 2022, to potentially finalize the state-backed SACE facility, and to execute further disposals. 

We currently have a 5% long position on the bonds.  With the risk of any near-term liquidity accidents effectively eliminated by the extension, KME may get more attention from yield-chasing real money investors. 

Juliano

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