Rekeep - Follow up with management
All,
Please find our unchanged analysis here.
A short note following up on our exchange with Rekeep management. Details are below but briefly, Rekeep will draw in full the new Reverse Factoring facility (€60m) and gradually reduce other outstanding factoring over the remainder of FY23. This formalises the Reverse factoring facilities, but more importantly, the fact that the provider is a state-controlled entity, marking the end of the “litigation period”. The second issue was confirmation the accrued tax credits will be used in FY23, which will boost FY23 by c.€25m.
New Reverse Factoring Facility:
- Reverse Factoring Confirming Agreement consists of a €60m credit line, backed by a guarantee issued by the Italian insurance-financial company SACE SpA, a State-controlled entity
- Rekeep is going to draw down on the facility in full, likely in Q2. The funds will be used to gradually reduce the utilisation of more expensive credit lines.
- The new facility won’t impact leverage stats, as it will substitute other outstanding credit lines over the year.
- The new facility is cheaper in terms of pricing and will lower the overall Group financing costs.
- Note, the provider, SACE, is an Italian state-owned bank, and it has been sensitive to providing Rekeep with financing in the past, due to outstanding litigation. Rekeep viewing this as marking the formal end of the litigation status.
Tax Credits:
- We sought clarity on the timeframe for using the tax credits that Rekeep have accrued. As a reminder, a new law was introduced in Italy to compensate for the increase in energy prices concerning Q2 ’22 - Q1 23. Rekeep has received tax credits totalling €43.8 to March 23 with c. €1-2m in Q2 23. Tax credits can only be used to offset payments due to social security payments (employee income and withholding taxes).
- In addition, they have accrued, but not used a further €26.7m of tax credits.
- The deadline to use the Tax Credits is scheduled for the end of 2023. Rekeep expects to have completed the utilisation by c. Oct/November. This is ahead of our assumptions, as we had modelled some of the tax credits expiring unused.
Happy to discuss.
Tomás
E: tmannion@sarria.co.uk
T: +44 20 3744 7009
www.sarria.co.uk