Loewen Play - Uncertainty remains but bonds have rallied back.

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We have updated our model on Loewen Play here.

We remain on the sidelines and frankly amazed that the bonds have traded back up into the 90's.  The business has returned to some stability with all arcades now reopened.  However, the business is going to continue to be impacted by changing legislation and the uncertainty surrounding any transition period linked to the new law in June 2021.  The Company has sufficient liquidity to trade through 2020 and there is no trigger in sight.  A reduction of GGR to €90/machine/day would result in the business being cash neutral. Any further reduction would see leverage increase rapidly. 

It should be noted that 50% of the AWP machines LoewenPlay have operate without locking cards.  Starting February 2021, operators will be prevented from operating machines without locking cards.   AWPs with locking cards have significantly lower GGR per machine per day than those without locking cards. 

We have gained very little traction with clients on this name, and in the meantime will keep a courtesy eye on the Company.  Happy to discuss with clients. 

Tomás 
___________________
Tomás Mannion
2 Stephen Street
London W1T 1AN
E: tmannion@sarria.co.uk
T: +44 20 3744 7009

M:+44 7786 705 806
www.sarria.co.uk