Pro-Gest - 2020's most sensible refi

All,

Please refer to our unchanged analysis here.

The first leg of the refinancing is coming.

As we previously wrote, Credit Suisse had been looking to find investors for a refinancing of Pro-Gest’s atomised capital structure.

Initial refinancing:

Carlyle Global Credit will be taking 2025 private placements for E125m (E90m and E35m for Villa Lagarina and Tolentino respectively) to take out much of the uncommitted short term lines. We are not entirely sure yet which lines will be repaid, but for context, the company has E240m of loans and mini-bonds outstanding, of which some E127m have at least a short-term portion. So we think the Carlyle notes will be sufficient to stabilise the current situation.

Additional commitment:

Somewhat beyond our expectation, Carlyle have committed another E75m of p.p. notes to take the total issue to E200m. The additional cash is to provide the company with further buffer for the ramp-up of its operations as well as “future growth" ambitions.

Waterfall:

The p.p. notes are to be secured and therefore - we expect - should rank largely ahead of the 24s, despite their longer maturity and in line with the structural seniority of most of the debt they will be replacing. However, we currently have no information where the new notes will be issued. We think that issuing them from Pro-Gest SPA - structurally p.p. to the 24s would be long-term desirable and at least Villa Lagarina is not among the guarantors of the 24s, nor may be any new subsidiaries to be acquired. So until we learn otherwise, we assume the entire issue to be effectively sr. to the 24s.

Overall:

This refinancing makes a lot of sense for both the company and Carlyle - and certainly for the 24s. We feel our investment thesis may have come to an end far sooner than anticipated. We will monitor the position possibly through the refinancing and make a decision accordingly.

Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003

www.sarria.co.uk

Wolfgang FelixPROGEST