AlmaViva - Refinancing on the way

All,

Refinancing on the way - as guided, strong Company performance with healthy cashflow generation, we are expecting a refinancing in Q4.  The bonds call protection step down in October 2020 to 101.8125% and with CRM Europe finally turning positive on the quarter, the Company are likely to aim for a refinancing as soon as possible.  

The issues are the same - the contract with Gruppo Ferrovie dello Stato (Italian Railways) has been delayed and although AlmaViva won a 52% of the 1st tender phase, the 2nd phase has been suspended and the 4th phase delayed.  The railway contract is a significant portion of the AlmaViva IT contracts business, AlmaViva continue to gain traction and contract wins elsewhere.  The current backlog is 2.9x LTM revenue.  

The other issue is the underperformance of the CRM Europe business.  This business has turned positive EBITDA for Q2, LTM €5.9m negative, the business has continued to downsize with staffing levels across the division declining try 15.7% since Jan 1st and over 50% since Jan 2016.  

Despite the two issues, the market is likely to refinance these bonds, focusing on the strong cash generation and low leverage, 2.3x on LTM basis versus 3.0x 12 months ago.  Outlook remains positive and it is very apparent the Company are gearing up for a refinancing.

Happy to discuss.

Tomas