Maxeda - Do you sell sunglasses?

All,

Please find our updated analysis of Maxeda here.

Surviving line from our previous analysis: "Until recently a restructuring looked inevitable, whereas, with the savings from energy (and a little bit more luck), a lighter A&E may become an option." Well, the sun has been shining on Maxeda. Faced with the choice of a steep downside or a light A&E, the bonds are asking the shareholders for a proposal; Moelis are hired, and all is set. But should we own the bonds - now or after the A&E? And at what price? We might need some sunglasses.

Investment Considerations:

- We are not taking another position in Maxeda before the refinancing and as to whether we take a position afterwards will depend on available borrow. 

- The A&E is coming, perhaps before, but more likely after the June Q126 reporting, which should have further positive data. The weather is still sunny and as long as that continues Maxeda want to hold out. The refi won't be dependent on the HY market anyway.

- We don't expect a haircut, but the bonds are today fully valued into a situation where we expect a small sub-5% cash pay-down and a term-out of the remainder of the bond with little other incentive. We expect the future bond to fall back into the mid-80s before the year is out, as the company remains overleveraged. 

- If we add 4c/€ of cash to a price of 86c/€ on the surviving bonds (which equates to 82c.€ on the bonds today - outstanding and not in the company's possession) of we arrive at 86c/€, which is below today's price.

- We think we have included about every conceivable upside in our forecast operating case. The only headwind is a -€8m WC outflow in H226 as a little bit of window dressing could unwind. 

- The exchange is probably close enough to par to avoid a big SD disaster from ratings agencies. 

- In a restructuring, we see the SSNs recover only 65c/€ in cash and new debt and another 20c/€ in equity, which should travel for free. So the bonds should be throwing themselves at the A&E.

Key Conclusions:

- Die another day: We expect the company to propose an amend-and-extend (A&E) transaction with a modest €20m cash pay-down and cancellation of the recently repurchased bonds. This would reduce gross leverage and allow for a smaller bond of around €430m. Leverage would remain excessively high, limiting the scope for a higher cash coupon. The old bonds would not need a haircut, but the new bonds would not trade at par. (See Refinancing Table.)

- Maxeda appears to have deferred CapEx for several years and the transaction would require further asset sweating; we estimate long-term maintenance CapEx at around €40m. (See DCF.)

- The combination of favourable weather, a fourth week and recovering Dutch housing transactions provides the incremental tailwind needed for a consensual A&E. (See Current Trading section.) However, neither the 14th week (well flagged by management), nor the strong sales in weather-related categories indicate a structural shift or change in trajectory. (See Model section.) The Dutch housing transactions give hope. (See Industry Section.)

- Despite shrinking inventory, payables remained flat ahead of refinancing, implying a potential €8m payable stretch. This may be due to the new year-end date in February, but some post-refinancing liquidity pressure remains possible. (See Working Capital section.)

- Larger players in bigger markets tend to carry less debt. Maxeda’s high leverage has constrained competitiveness, leading to continued market share loss in the Netherlands and Belgium. The ultimate exit for investors would be a sale to one of the larger competitors in adjacent markets: France, Germany, and Britain. Financing transactions should keep in mind a discount to their trading values. (See Industry Section.) Meanwhile, poor cash conversion requires a low leverage multiple. (See Model section)

- The most likely jurisdiction for a restructuring (we don't say it is needed) is the Netherlands under WHOA. Alternatively, with sufficient bondholder support, the UK RP may be preferred for its simplicity and precedents. In either case, bondholders would dominate the single fulcrum class. (See Legal section.)

Summary: 

- Headquartered in Amsterdam, Maxeda is the largest DIY chain in Belgium and the Netherlands with market shares of c. 45% and 22% respectively and c. 30% combined. Formats include City (c. 300m2), Medium (c. 3,000m2) and Big Box (c. 9,000m2). City and medium cater to the less experienced DIYer (e.g. basic painting and gardening), while Big Box caters to those engaging in big indoor and outdoor projects (e.g. bathrooms, kitchens). The three main brands include: Brico and Brico Planit in Belgium (150 stores) and Praxis in the Netherlands (184 stores). 

- Maxeda restructured in 2017, and holders of the 2L mezzanine assumed control and reduced low-margin SKUs to focus on higher margin specialist items. The pandemic ushered in unprecedented performance (e.g. €165m of EBITDA in FY20/21) enabling the company to refinance the 2022 bonds rewarding the new shareholders with a €90m dividend.

- Since then, consumer confidence (see charts below) deteriorated again. This initially caused negative LFL trends in the Netherlands and management responded by closing unprofitable stores. 

- Although Belgium has historically performed better, LFLs have been negative in 2024 and 2025 - in line with the market, led especially by weakness in Big Box BricoPlanit as DIYers scale down on big projects. Note that the Belgian business has been for sale for over a decade, but has failed to gain any serious interest because of anti-trust issues and its geographic limitation.

- Unlevered FCF is thin and, weighed down by heavy interest payments, Maxeda has been unable to invest enough to grow into its balance sheet. However, it might just have done enough to amend and extend.

Here to discuss this name with you,

Wolfgang

E: wfelix@sarria.co.uk
T: +44 203 744 7003
www.sarria.co.uk