Rekeep - where to now?

All,

Please refer to our unchanged analysis here.

The announcement at the weekend of Rekeep acquiring a 60% stake in a €10m annual revenue business has prompted us to re-examine our long position in the bonds. The acquisition, which the price is not disclosed, is not significant in itself but reminds us of the structure of Rekeep and the lack of any potential positive catalyst in the coming months.

Rekeep is a 100% cooperative, with 370 worker shareholders and 263 financial shareholders with the financial shareholders limited to 33% of the overall voting class. The structure is of predominately mutualistic cooperative in compliance with Italian law, with each shareholder having one vote regardless of the number of shares.

Following the refinancing in early January extending the maturity of the bonds with a 5NC2 2026 bonds, coupled with the shareholding structure, there is limited scope for any positive event risk. (Negative event risk is always present with Rekeep, although nothing visible). Bonds trade 107-108 range (4.5-5% yield) and in the current yield environment coupled with call protection, remain relatively attractive.

However, our thesis has played out now and the bonds have become mostly a beta name. We are marking the position for exit following Q1 results on the 13th of May.

Happy to discuss.

Tomás
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