Takko: Still watching
All,
It’s been stop and go at Takko. Although we were informed that despite some of the bad spillage into the press, talks with the NRW government might continue, management have opted for a commercial solution involving its current creditors.
Dominant CoCom:
The bonds are dominated by a CoCom of two funds, one of which more aggressive than the other and together holding well north of 50% of the bonds. Because that allows these funds to largely dictate negotiations and accept their own solutions without reference to smaller holders, we are not fans of owning a smaller share in the bonds - for fear of not participating in any upside of what might have been a restructuring (...and might yet become one).
Liquidity
Despite recent claims to the contrary, the deal confirms that the company needed the cash quite urgently. Now Takko should have enough liquidity to make it over their classic spring WC hump and recover trading in the summer.
Takko benefits from a relatively crisis-proof LC facility, which is a more manageable equivalent to trade insurance but sits super sr.
Positioning:
At current prices, we find it too early to buy these bonds and too expensive to short on the off-chance of further lock-downs (see Italy). So we remain watching the name from the sidelines.
Wolfgang
________________
E: wfelix@sarria.co.uk
T: +44 203 744 7003