Almaviva - 1.825% - What are we waiting for?
All,
Please find our unchanged analysis here.
We wonder why despite the company’s client concentration this bond has not been refinanced yet. Yes, maturity is only in October 2022 and yes, the final leg of 1.825% protection is only running out in four months, but if we were CFOs of Almaviva, we’d thoroughly consider taking the bird in hand now. The re-tender for the dominant Italian rail contract may have been postponed, but preparing for the crippling tail risk of trouble flaring up again before October might be worth the E5m cash hit. Anyhow, the tender seems to be the only risk remaining for now and other investors' faith in management’s judgement shall be rewarded.
Almaviva released its Q1 results this afternoon with conference call afterwards. In summary, the Company continues to marginally outperform previous quarters and with the additional €26m of proceeds from the Almawave IPO in March, leverage has reduced to 1.7x.
Again, the Gruppo Ferrovie Dello Stato tender process has been extended and it’s unlikely all four tenders will be progressed by end of the year. Almaviva continue to take costs out of the business, especially in CRM Europe, which is now LTM EBITDA break-even.
Out with the old:
We are dropping this name from our coverage list, but remain happy to discuss.
Tomás
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