AlmaViva - Refinancing in Q1 2021 most likely

All,

Please find our updated analysis here.

We hold no position in the bonds. We firmly believe a refinancing of these bonds is likely in Q1 2021 next year, with the Company explicitly stating they wish to wait for Q4 numbers before refinancing, subject to market conditions.

However, at present levels, 102%, with the bonds currently callable at 101.81%, the bonds have no upside, except the carry, and albeit there is only a small risk that the Company lose their railways contract, the upside/downside risk is not attractive enough for us to invest. The Italian rail operator is by far the largest client and given the age of the contract is most likely responsible for an even more disproportionate share of EBITDA. In a scenario where RFI contract is lost, we are concerned that Almaviva would struggle to maintain positive NCF and be unable to refinance. We remain on the sidelines.

Operationally, the Company continue to diversify their client base, having previously won a railways contract in the UK and this quarter announcing a further win the US. The Latam business continues to grow (albeit currency fluctuations dampens the impact on a group basis).

We continue to follow the company but fully expect that its next announcement in February/March time will be a refinancing.

Happy to discuss.

Tomás
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E: tmannion@sarria.co.uk
T: +44 20 3744 7009

M:+44 7786 705 806
www.sarria.co.uk