Pro-Gest - Deadline To File Counter-Arguments On Mantua Plant Increased EIA Authorization Extended. Buy
Massimiliano Zanetti Bottarelli & Rupesh Tailor, Everest Research, 30 October 2019

• According to the local newspaper “La Gazzetta di Mantova” (see here), Pro-Gest has been granted a further extension by the Province of Mantua to file its counter-arguments to the rejection of its application for an increased EIA¹ authorization for its Mantua containerboard mill ( to operate at 400k tons per year from the current 200k tons per year authorization). The deadline has been extended from 28.10.19 to 12.11.19

• In order to gain the favour of the authorities, Pro-Gest is working on a relevant modification of the original proposal that was preventively denied on 11.10.19. Rumours suggest that Pro-Gest will scrap the incinerator from the plan, a change that would significantly reduce the prospective emission profile of the mill operating at its proposed increased capacity

• We believe this is a significant change that materially improves the probability of Pro-Gest obtaining the revised EIA authorization. It is clear that both parties are constructively negotiating – Pro-Gest by making concessions and the authorities by providing more time. According to our model and note, the impact of doubling production, even without the incinerator, would be very positive for Pro-Gest's  3.25% 2024 senior unsecured notes (expected recovery both in bear and base case of 100% if the Mantua plant's application to double its capacity is approved). As such, we increase our position in the “model portfolio” by a further 1% of our model portfolio "AUM" at a price of 46.85 (21.5% yield), taking our average to 3% at a price of 47.94. See our note for further details

1. EIA = Integrated Environmental Authorization

Contact Rupesh Tailor at Everest Research to discuss: rupesh.tailor@everestresearch.co.uk

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