Hema - Aggressive

All,cThe Ramphastos and the Ad-Hoc group were not able to agree on terms, despite the gap between implicit valuations arguably not justifying the incremental headache that SSNs now have to deal with. Ramphastos are giving way - also because its their home market. But their strategy of “asset-light growth” was generally the right one. So how much more value bondholders are extracting now vs. costs to implement etc. remains to be seen. 

HEMA's restructuring ended up on the aggressive side, with the SSNs sticking to their plan to take the equity. Fundamentally, that could be good for HEMA and any solution was going to be good for the SSNs today. 

With gross debt down to E422m post transaction and a E42m injection of fresh cash, Hema will still not be swimming in liquidity. We are surprised at the small injection. But the lower interest payments going forward of E30m (E20m lower) should provide crucial breathing room. Also, Moelis will be contacting those parties who recently expressed interest in the company and its stores and try to conduct a sales process for HEMA that may result in an early exit.

We note that the CLA agreement runs out at the end of the year, which should allow for further cost cuts in the stores. The problem the company faces from rising rent expense cannot be addressed by the restructuring. 

The company hosts a call at 2pm, looking for further signatures to the lock-up agreement. 

Wolfgang