Naviera Armas - Entry Point?
All,
Please refer to our unchanged analysis here.
As anticipated, the company has reached an agreement with its 72% ad-hoc group of bondholders for a bridge facility and equitisation terms that will allow it to avoid insolvency. This may be the entry point we have been waiting for.
The terms outlined appear reasonable and as comprehensive as was to be expected before the backdrop of Spanish insolvency, with the family retaining control and bondholders through the restructuring effectively subordinating a large part of their claims. As written before, we do not see Naviera Armas as a fundamentally impaired business proposition, but the company had been over-leveraged to begin with.
Details so far are limited to a press release:
1) Fresh equity from the family of E40m
2) A two-tranche bridge facility of E100m, of which the E35m first tranche is given immediately and the remainder is subject to signature of a LUA. This facility will be made available by the members of the core group only (Bain, Bearings, JPM, Cheyne). We assume this facility will rank super sr. and will be attractive, siphoning value from the bonds.
3) Equitisation of E240m of bonds into equity of Bahía de las Isletas, S.L. (group). The equity will be split into A and B shares where the family will continue to control the group with 51% of A (voting) shares, but hold only 35% of economic shares. The remaining 49% of A-shares and 65% of B shares will presumably be available for bondholders. Bondholders will return these shares to the family following recovery of par + accrued and hold only 50% of the economic shares thereafter.
The restructuring appears comprehensive enough and liquidity of E140m should be sufficient to see operations through the pandemic and make the most necessary investments into the fleet. We will make further enquiries and are ready to step into the situation if our expectations are confirmed.
Wolfgang
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E: wfelix@sarria.co.uk
T: +44 203 744 7003