Sarria: OHL - Model, Valuation and Positioning

All, 

Please find our updated analysis on OHL here. 

With key support of the banks to the restructuring, as well as the Amodios and the vast majority of bondholders, we see minimum risks for the deal going forward.  

Positioning: 

We are buying a position in the OHL 2022 unsecured bonds for 6% of NAV, at 72 cents. We estimate that the package has an intrinsic value of  80 Euro cents, before any pop from the restructuring itself. We would be opting for Alternative 2 (the partial equitisation option), although we recognise that we are likely to be constrained for the 38.25% maximum allocation to this alternative.   

New Instruments: 

Under Alternative 2, we see the bonds fully covered. We would receive 2 cents in cash and pay an implicit 2 cents for the share package, which might average around a 20% share for bondholders going forward, depending on total bondholder election, and therefore worth 3x as much per rights issue price of 36 cents, which we think the shares might exceed post-restructuring in the coming months. 

Happy to discuss, 

Juliano

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