Boparan - Pensions now the last hurdle

All,

Boparan’s Q3 EBITDA was a cool £10m stronger than our model (built in March). Contrary to our recent thesis, however, the company does not attribute that increase to Coronavirus. It’s probably hard to isolate what’s been due to the pandemic and what hasn’t, but for the upcoming refinancing it's probably wiser this way anyhow.

We remain long the 5.5% bonds for 5% of NAV and look forward to any transaction.

Pensions: With the refinancing increasingly visible, the focus on the company’s large pension deficit might also fade into the background - pending review at the end of this month. If so, Boparan could have a chance to refinance genuinely - in the last minute.

Timing: On the call we heard slightly conflicting statements on exactly when the company would try and refinance (the presentation suggests later this year). We take the statement of "early 2021" as referencing the financial, not the calendar year. Certainly the exercise of having a third party validate the pro forma portion of the annualised EBITDA, as well as the overall urgency of the situation would suggest that this year is better timing than next. After all, what would Boparan be waiting for now?

Please let us know if you would like to discuss.

Wolfgang