Pizza Express - Biggest Hurdle taken

All,

Please refer to our slightly updated analysis of Pizza Express here. 

With the CVA having been successfully accepted, the largest remaining hurdle to a smooth restructuring is the agreement with the SUNs who - aside from a chance to invest up to £30m alongside Hony in the PE China group - have been offered as little as 1% in the UK and Ireland estate and only if adhering to the restructuring agreement. Also on a more technical note, the challenge period to the CVA ends only on October 2nd, although we do not expect any unsurmountable difficulties in the face of the comfortable margins by which the CVA has been accepted and the evident need for it in the first place.

As regards the agreement with the SUNs, the non-payment of the coupon has created an event of default, which should trigger the CDS. As for the SUNs themselves, the realistic options are down to challenging either the process or the fairness of the restructuring. Neither amounts to more than nuisance value. The SUNs have until the 18th to decide on any participation in the China group going forward.

As per our note on Friday, a positive CVA result may have been widely expected, but from our perspective - likely or not - a major downside scenario has been all but averted.

Wolfgang