Amara NZero - positioning

We are shooting first and will ask questions later. Having followed the name for some time now and being satisfied with our predictions so far, the business can manage its costs and has the liquidity and flexibility under its documentation to trade through maturity in three years’ time. While the bonds provide a 20% running cash yield, we don’t anticipate a straight refinancing in late 2027, but to lose money, the recovery would have to be less than 30c/€, which means EV of less than €200-250m (assuming some fresh cash and layering), which is unlikely for a business operating in what is usually a growth sector. Risk comes from further deterioration of EBITDA without corresponding cost cuts, but Cinven have reacted well and we have some confidence in the new management additions. Also, the large coupon should protect the bonds from trading down to an extent as at a minimum we expect two years of coupon and something more than option value then. Q1 has gone less badly than we feared. We will be sending the update soon.