Rekeep (Manutencoop) – new bond issue and new position
All,
Please refer to our unchanged analysis here.
The new bond issue confirms our positive view on Rekeep. In the current market context, 7%-8% would still be attractive for Rekeep, given the significant progress it has made over the past 2 years on earnings improvement and the legal+compliance front. We would therefore roll our 6% position into the new bond at these levels to maintain some basic yield positions on the book.
At the new initial guidance of a EUR350m 8% coupon, Rekeep’s coupon payments would decrease by just EUR2m vs its 9% on the current EUR334m of outstanding principal. Rekeep also announced the conditional redemption of the existing bonds at the current call price of 104.5, which will cost around EUR15m on-call premiums. The interest savings are likely to be generated mostly at the facilities level. The existing EUR50m RCF, maturing in June 2022 and carrying a margin of E+425bp, will also be refinanced and increased to EUR75m, with the margin likely to go down materially.
The company will hold an investor call at 11 am UK time, with meetings running through 20 Jan and pricing expect on 21 Jan.
The new bonds will be positioned at the same level of the existing ones, behind the asset-backed debt such as the super senior RCF and the factoring facilities.
Feel free to reach out if you would like to exchange ideas on the name.
Juliano
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E: jtorii@sarria.co.uk
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