Vivion - Can Punting
All,
Please find our slightly amended analysis here.
Vivion has punted the bulk of its maturities down the road for a couple of years. Vivion has sufficient unencumbered assets to raise bank debt to finance the €183m remaining 2024 notes.
Once the €150m cash consideration is paid to bondholders, we expect that the Dayan family has the resources to cover the €50m cash shortfall we calculate at the Vivion Investments level.
Investment Rationale:
- We sold our 2.5% NAV position into the rally prompted by the exchange offer. We still see Vivion as an interesting investment and will look at how the new 2028/2029 bonds trade. However, for now, we will stay on the sidelines.
- Vivion has substantially dealt with its maturity issues through an amend and extend operation. The company has sufficient net assets to repay the remaining €183m, either through asset sales or bank debt.
- Currently, assets cover debt, and our valuation is still around 7% below Vivion's. However, LTV is now c55% at the Vivion Investments SARL.
We estimate an immediate €50m cash requirement at Vivion:
- We are satisfied that there are sufficient resources to cover the requirement given the Dayan family has resources outside the Vivion group. Alternatively, the level of unencumbered assets would allow for a bank overdraft.
- We calculate around €50m in cash shortfall at the Vivion Investments level once the €150m of payments to bondholders have been made.
- Management has said that our estimate of the proportion of cash held at the Golden subsidiary is excessive. Still, we cannot see how cash could have been repatriated from Golden without upsetting the proportionate holdings of the various partners.
Vivion has assets it could sell to redeem the 2024s:
Vivion still has €183m of 3.5% 2024 bonds outstanding. Cash will need to be raised as an unsecured bond would be a stretch.
- Vivion investments has €1.8bn of UK assets with <€250m of debt. Assets originally purchased for £660m secure the M&G loan. A sale of these Holiday Inn and Crowne Plaza assets, with the M&G debt remaining in place (35% LTV), would release up to €400m in cash.
- Alternatively, Vivion could raise bank debt on the other UK Hotel assets. Raising bank debt at 25% LTV on the remaining UK hotels would raise sufficient cash to repay the outstanding 2024 notes.
I look forward to discussing this with you all
Aengus
T: +44 203 744 7055