Europcar - time to reassess
All,
Please refer to our unchanged analysis here.
As widely anticipated, the Paris Commercial Court has approved the Europcar SFA, which in any event was mostly consensual. Subject to today’s recognition hearing in the US this plan will go ahead. The prospectae for the new instruments are with the Autorité des Marches Financiers for final approval soon afterwards.
So far:- We have missed a rally in these bonds, but looking back, we had been reluctant to take the gamble on whether the bonds would inject enough fresh cash to keep the RCF at bay and the vaccine rally also played out elsewhere. - The bonds trade now where we’ve seen recovery value in 2022. That is in large part because they contain optionality and fees/discounts on all kinds of facilities we are not interested in. We prefer to invest in the post-reorg equity if we can comprehend the valuation - see below.
From here:- Booking levels for the summer are high and the chances of lock-downs over summer are receding - even if vaccine programs are likely to run through to autumn. - We expect the fleet to average just under 300k vehicles over the summer months, which should bring utilisation back to pre-pandemic levels at least in the second half of the summer.
Outstanding work:- We want to take a closer look at the working capital again - in particular with respect to the structure payments via travel agencies and airlines vs directly received as well as levels of deferred bookings. - We want to take another look at the overall EV valuation and compare that to the market valuation today. EVs have rallied everywhere and we have always said that tourism will come back, but we’ve been feeling a little out of touch with the Europcar rally.
Happy to discuss,
Wolfgang
________________
E: wfelix@sarria.co.uk
T: +44 203 744 7003