Praktiker Bond – catalyst event (sort of…)

Interesting developement for my “special situation” investment, the 2016 Praktiker senior bond. In my analysis I had written the following:

Potential Catalyst:

In my opinion, something with regard to financing has to happen this year. So there might be a good chance that the bond reacts positively within a limited time frame if the refinancing package is hopefully finalized.

So fast forward to this weekend: The CEO and another board member have been fired and one oof the supervisory board members stepped in.

According to this Handelsblatt article, a new restructuring concept was presented by the largest shareholder which requires a lot less capital (120 mn EUR compared to 300 mn EUR) than initially announced.

There seems to be a new loan of 85 mn EUR and a capital increase in the pipeline, however no further details are available.

If one looks at the chart of the bond one can see that this was clearly positive news for the bond:

So where do we stand with regard to the initial scenario analysis ?

With this in mind, I think one can now try to analyse the different possible scenarios for bondholders, which in my opinion are

1) No bankruptcy – (unrealistic) best case: Take over within 1-2 year and early full pay out of bond
2) No bankruptcy – normal case: Bond pays out as scheduled
3) No bankruptcy – bad case: coupon gets reduced in second round of bondholders vote
4) bancruptcy – normal case: bond gets “fair” share of liquidation value 40% in 2016
5) bancruptcy – bad case: “DIP” financing reduces liquidation value significantly , value 10% in 201

I think at the moment, it is too early to fully assess the situation as the details of the financing are not available yet. Due to the bond covenants I asume the loan financing might be tricky.

So for the time being, I will hold the bond despite the quick 30%+ gain in only a few weeks. However if the bond goes above 60% without further news I will most likely sell as the intrinsic value of the negative (and cautious) scenario would have been fully realized.

Edit: On Praktiker’s homepage they issued a press release about this.

They talk of ” Vorrangiges Darlehen” which equals a senior secured loan. It will be interesting to see how they reralize this. As I have mentioned before, the bond contains a “negative pledge” covenant which should prevent any pledging of relevant assets. So this will be really interesting….

2 comments

  • JM 15. Mai 2012 um 07:14 | #1 Antwort | Zitat | Bearbeiten Auszug aus einer Bondboard-Diskussion zum Thema negative Pledge:

    …also so einfach können die hier Max Bahr oder sonstiges nicht verpfänden…

    … doch, dürfen sie! Die Schutzklauseln gelten nämlich nur für neue

    …wo steht das mit den “nicht börsennotiert”? Kapitalmarktverbindlichkeit bedeutet doch nicht zwangsweise börsennotiert? Gibt ja auch nen grauen Kapitalmarkt…der ist garantiert nirgendwo notiert..

    … das 85-Mio-Darlehen aus der gestrigen AdHoc-Mitteilung ist keine Kapitalmarktverbindlichkeit, sondern ein bilateraler Darlehensvertrag, der an keinem Kapitalmarkt gehandelt wird. Die Schutzklauseln verhindern die HTM-/HEAD-Lösung: ein neuer Senior-Secured-Bond parallel zum alten Senior-Unsecured-Bond ist nicht möglich.

    • JM,

      der Covenant untersagt explizit auch besicherte Namensschuldverschreibungen und Schuldschein Darlehen.

      D.h. es muss ein tasächlich bilaterales Darlehen sein. Das allerdings ist dann eigentlich nicht mehr handelbar und relativ uninteressant für Hedgefonds.

      MMI

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