Rallye Casino - the price of control

All,

Further to our mail on the Term-Out the other day:

While a 10 year Term-Out is the worst Sauvegarde can do, we are already in a good position. Bonds have doubled since we bought our piece and the bonds are effectively a levered equity option from here.

Clearly the release was little more than an opening shot to commence negotiations.

But now bondholders be (uncharacteristically) wise to give up some principal in return for a degree of negative control and pledge for themselves and perhaps a shorter maturity. Without the ability to exercise some form of control, bonds will remain unprotected and subject to further value erosion, or an overly coercive offer from Mr. Naouri in the future.

Towards the end of Sauvegarde, bonds will have sufficiently traded to afford bondholders that opportunistic perspective and Mr. Naouri will be aware of it.

Wolfgang