Aggregate - Stuck - Positioning in time

All,

Please find our unchanged analysis here.

Sometimes the theory is good, but it just doesn’t come together. Such it has been with Aggregate. Even today - after Oaktree are enforcing against a holding company above QH - there is a chance of recovery. But we have got to admit that since we originally took this position, Adler has gone down (plaid that one well enough), rates have risen, the VIC is gone and now QH is lost too. The Fürst is the one remaining asset bondholders can now look to and at the risk of selling at the wrong moment (apparently the right moment is already behind us), we are not sticking around to witness the final act.

Investment Rationale:

-We are trying to sell our remaining position in the Aggregate holding 2025s where we see several quotes around the 16c/€ mark for the bid. However, we understand there to be in fact no bid, so for now we are stuck with the position.

- It’s been death by a thousand cuts at Aggregate. The company held strong assets and we knew about the leverage, but it’s been unable to hold together and we cannot justify holding out any further.

- VIC was a negotiation that was known to be on the edge for some time. Like the Adler / Vonovia situation, however, even if not entirely surprising, the potential loss of QH was not previously in the public domain.

- Even though we have been supportive, we have been surprised by the all to easy roll-over of the majority of the bonds 

QH Enforcement:

- Oaktree have enforced pledges against QH2 SCS, a holding company for Quartier Heidestraße Track, as well as well as in its GP QH2 GP SARL.

- The vehicles were only incorporated in early 2022 and in April last year received loans of €370m to replace a previous €110m loan at QH Holdco GmbH & Co. KG. We believe this to be the loan that Oaktree enforced. 

- According to the annual report 2021, this loan also carried an indemnity for €91m. 

Fürst:

- This is now the one remaining asset that seems like it might have equity value remaining. However, our confidence in the financing has dropped now and from all we know today, financings there could be accelerated tomorrow. 

Happy to discuss.

Wolfgang

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