Europcar - bond returns
All,
Please refer to our updated analysis of Europcar here.
Fleet model, CFs, recap and legal remain unchanged, but we have added a more concrete NPV and IRR on the current bonds / future equity.
By the company’s estimation, the bonds that will also participate in the fresh cash equity would recover par if the company trades at a 7x multiple then. We think that 7x will be very low for a company so quickly growing its EBITDA as the plan suggests, but we also think the plan is ambitious. 10x our 2022 projections yields a lower result but is still above 10% IRR (which would not be stellar equity return, but the company is now not that highly leveraged either).
As regards the forthcoming EGM in January, we are confident that the 2/3 majority of shareholders present or represented can be achieved, although Eurazeo alone are not big enough to deliver it.
Importantly, current bond prices reflect a variety of choices with respect to backstopping the various facilities and a clean bond-only price should be lower than what we are seeing. We are looking for the right moment to enter the post-reorg equity at a better price.
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003