Aldesa. China Railway To Take 75% Stake. CoC Put At 101
27 December 2019
high-yield
Aldesa. China Railway To Take 75% Stake. CoC Put At 101. Buy
James Moylan & Rupesh Tailor, Everest Research, 27 December 2019
- Aldesa announced late yesterday that, on 25/12/19, it “entered into an investment agreement with CRCC International Investment Group (CRCCII), a wholly-owned subsidiary of China Railway Construction Corporation Limited (CRCC)”, one of the largest construction companies in the world. “The transaction includes a capital increase from CRCCII into Grupo Aldesa, S.A. of c. EUR 250m. After the transaction, CRCCII will hold 75% of the share capital of Grupo Aldesa”. The current shareholders will retain the remaining 25% of the share capital. “The transaction is subject to customary conditions, including antitrust clearances, and it is expected to close during the second quarter of 2020.”
- We note the presence of a change of control (CoC) put at a price of 101 in the Aldesa 7.25% 2021 Senior Secured Notes (SSNs) which we believe will be triggered following consummation of CRCC’s 75% stake in Q2 2020. As per our last memo on Aldesa (dated 23/9/19, see here), we have a buy recommendation on and hold a long “position” of c. 6% of model “portfolio AUM” in the Aldesa SSNs at an average price of 51.63
- Whilst we anticipate Aldesa SSNs will head up closer to par in the near future, we flag our remaining buy recommendation in the construction sector, OHL (see latest memo from earlier December here), which we expect will benefit from a number of potential positive catalysts (impacts and timing quantified in the memo):
- Working capital reversal Q4 2019
- Amodio family taking just under a 30% stake in OHL via a capital increase plus 13% stake purchase from Grupo Villar Mir
- Sale (partial or full) of Canalejas / Old War Office real estate development assets
- Mayakoba cash in
- Successful sale of Cemonasa claim
- Repayment of shareholder loans
- Potential buybacks of 2022 and 2023 bonds
Contact Rupesh Tailor at Everest Research to discuss: rupesh.tailor@everestresearch.co.uk
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