Europcar - Sauvegarde Game Theory and Opco/Propco Model

All,

Please refer to our updated analysis of Europcar here.

We have in particular focussed on the legal analysis and the game theory before the background of a possible Consiliation / Sauvegarde filing as well as built differentiated cashflow forecasts for the fleet and the corporate.

We are considering selling our position. Unless the bonds can reach a consensual deal with Eurazeo / shareholders in Consiliation, they may not be invited to form a creditor c’tree if only EMGSA files, which is likely. In that case the bonds would be unable to prevent a term-out and the Gov’t g’teed loans would effectively layer the bonds as they’d be in the bank group.

So we see a tangible chance of these bonds going to 30c/E with the upside being restricted by the bond’s relatively weak negotiating position being so glaringly obvious to Eurazeo. It is well possible the sponsor may prefer a consensual deal, but their ability to deliver a debt / equity swap is limited by their size and an ugly balance sheet can be fixed post Sauvegarde with a Dutch auction. 

Happy to discuss,

Wolfgang