Naviera Armas - €45m less
All,
Please find our unchanged analysis here.
While we are waiting for the next update from the company, what we are hearing from its surroundings sounds very positive. Naviera Armas (NA) are close to selling the Balearic part (vast majority) of Trasmediteranea to Grimaldi of Italy for the staggering sum of €375m. Staggering, because in 2018 NA bought Trasmed for €420m - including the routes to North Africa, which are remaining with NA. The North African routes are currently heavily impaired due to Covid 19 restrictions and therefore likely unsellable.
Only 45m less:
- The Italians are seemingly buying substantially all infra structure relating to the balearics, including routs and terminal rights from/to Barcelona and Valencia.
- The high valuation for Trasmed is in part owing to the substantial fleet Grimaldi are buying. The carrying value equates approximately to what NA bought in 2018, but the Grimaldi deal includes only the five RoPax vessels: Ciudad de Palma, Ciudad de Granada, Ciudad de Mahón, Volcán del Teide y Volcán de Tijarafe. However, the vessels have an average age of less than 15 years and a carrying value of approx: €260m. By comparison, NA had bought 10 vessels with twice the average age. So NA will be stuck with a lot of rust buckets and part with some of the younger, valuable ships it operates in the Canaries.
Very positive:
- The acquisition of Trasmed had saddled NA with excessive debt and its turnaround and integration ultimately proved too big a challenge for the scant management capacity it had. The sale of most of it now is a positive turning point for the company. NA will have further ships to sell after this transaction and the liquidity will go a long way to paying down some of the most restrictive debt as well as providing NA with the liquidity it may require through next year.
- We do not know of the timing of any payments to be made, if there are vendor liabilities attached or other “detail". But the amount would be sufficient to retire all debt except the bonds and have €100m liquidity remaining.
- We are reading in the press, that Grimaldi are to take over some liabilities directly, but we have no further detail on that.
Positioning:
We continue to hold a 5% of NAV position in the 24s in what remains a key re-opening trade and are looking forward to the conclusion of the restructuring, although are wondering if this transaction will have any effect on the deal agreed so far.
Wolfgang
E: wfelix@sarria.co.uk
T: +44 203 744 7003