PizzaExpress - comment

The deal is done. The New Bonds, amounting to only £280m and soon to be paid down to £275m, are to receive 9.874% coupon and will mature in 2029. This still leaves a higher interest burden on the company than the previous structure and less cash, but the transaction gives PE time to turn around its business following the inflationary spike of recent years. The name also remains a bet on a come-back of the British consumer. Bain Capital are diluting shareholders with a £20m Fresh equity injection, while the majority of existing shareholders are injecting £5m. We still hold a small and shrinking equity position on our book from the restructuring and would have followed our rights in this situation. 

We note that Q4 was more cash-productive than we dared to assume and are putting this down to a Q4 WC inflow, which has become a seasonal feature but would generate a significant inflow for 2024 overall.