KME - comment

We noted on the Q122 conference call that KME management expects to announce in Q3 how it is going to refinance the outstanding €110m SSNs (maturing in February 23). We are puzzled by the decision to pay €190m to bondholders from the Specials sale proceeds. The maturity of the Borrowing Base Facility (BBF) will also need to be extended beyond the current November 22 maturity date. Receivables moves in Q1 have only increased our unease. A Q4 inflow of €42m gave us some belief that tolling arrangements might be growing, but the Q122 reversal (and some) brings that into question. KME needs a strong story for its banks and potentially new bondholders, but we are not seeing it yet.