Graanul - comment

Graanul released its FY24 annual report yesterday but most of the numbers were already in its non-deal roadshow presentation in February. Despite optimism from management, there is still no clarity surrounding its Drax contract going forward. In management’s words, the deal is imminent, but without any confirmation a refinancing of the bonds is near impossible. The CEO was attempting to keep the discussion positive, outlining that the potential for retaliation tariffs on US wood producers may reduce supply in the European market. 

Separately, Graanul is pursuing a couple of M&A opportunities, but these will be small in size (€20-30m) and are likely to be funded from cashflow or drawing on the RCF.  

We remain cautious about the success of a refinancing but at current levels, it is difficult to short.