AA - Value beneath the Bs

All,

Our initial take on the news this morning is decidedly positive. 

Offers under the UK code need to achieve 90%, which means convincing new shareholders such as DK to sell at a price. 

In other words at this stage there are a sufficient number of suitors lining up below the B-notes to - presumably - make our position whole, in line with the company’s wording around use of proceeds for debt reduction.

The order of events, given today is the start of a formal offer period, suggests an outright bid for the outstanding shares, as well as for shares “to be issued” (each a new commitment beneath the B-notes) - sufficiently successful to refinance the B-notes (part cash, part new issue). Clearly that refinancing needs to be sufficiently assured at the outset and may be aided with any equitisation of existing holdings by the winning party in those notes, but we have no clarity on that yet. 

We remain long the B-notes with a 4% of NAV position.

Tomas is your analyst, but is currently out. Until Thursday, please contact me directly.

Wolfgang