Pizza Express - Beyond the CVA / fundamentals, timing, positioning

All,

Please refer to our analysis and all new model of Pizza Express here.

Ahead of today's creditor meeting we have modelled Pizza Express going forward on the basis proposed in the LUA and CVA documentation. We understand that there has been good engagement from landlords and the general expectation appears to be positive. The fixed element on the B,C and D sites has been well received and there are no dominant landlords who could exercise undue muscle. 

Fundamentals:

In conclusion, the operating case proposed by management appears achievable - if one assumes a return to LfL revenues of -10% of 2019 levels. While that sounds ambitious, it is helped by the positive selection of the remaining sites post CVA as well as by the Future Express refurbishment program. 

Timing:

Unlike past physical creditor meetings it may be possible to adjourn a virtual meeting and we may therefore not hear of the success or failure of the CVA until next week. 

Positioning:

With the short-term uncertainty, we have not been buyers ahead of the CVA, but given the positive feelings expressed by parties involved in the negotiation today, we might as well seek a medium sized position in the SSNs around 60 p/£ in the short term, depending on levels and liquidity. 

Wolfgang