Sectors > Top Reports > Boparan Memo 040220

Boparan Memo 040220

Improving. Path To 90-100 Cents Recovery On SSNs Either Through Refinancing Or Break-Up. But Wait To Buy
PUBLISHED: 04 February 2020
PAGES: 306
SUBMARKET: Boparan, Top Reports, Top Reports,


Why Read?

  • Understand how refinancing is possible in spite of Q1 20 LTM PF net leverage of 7.4x or 10.8x including the consolidated pension deficit and Q1 20 LTM Adj FCF of -£113m (excluding disposal proceeds)
  • Understand hidden value within Boparan’s Poultry segment that could be unlocked in a UK (pre-pack) administration that breaks up the Group if refinancing fails
  • Understand the priority of Boparan’s pension deficits relative to its Senior Secured Notes (SSNs) in a UK administration
  • Understand who the likely buyers would be of each of Boparan’s businesses in a break-up of the Group and on what valuations

What’s New?

  • Entity-by-entity deconstruction of solo company financials comprising the Boparan Holdings Limited (BHL) Restricted Group (RG) and application in distressed sum of the parts (SOTP) valuation
  • Listed and transactions comparable multiples across Poultry, Meals and Bakery (biscuits) segments and application in distressed SOTP valuation
  • Analysis of major opportunities to increase Adj EBITDA
  • Analysis of Mr Boparan’s business empire outside of BHL, access to cash and potential strategies with respect to BHL

Questions Answered

  • How can the key FY 20 Poultry Adj EBITDA margin guidance of 3.5-4.0% (from 2.2% at Q1 20) LTM be met?
  • How does Boparan’s cost structure and production footprint compare with UK poultry competitors, Moy Park and Avara, and what opportunities does this create?
  • Who would be the likely buyers of each of Boparan’s businesses in a break-up of the Group and on what valuations?
  • What is the combined access to cash of Mr Boparan and his other key businesses outside of BHL and what strategies might Mr Boparan pursue and with what impact on SSNs holders?
  • Why is there hidden value in the Poultry business and how can it be unlocked?
  • Which major opportunities exist across the Group to increase Adj EBITDA?
  • How much of the deterioration in Poultry’s LFL Adj EBITDA since FY 17 is down to feed cost inflation and can this now be recovered?
  • Why do UK poultry competitors now have higher Adj EBITDA margins than Boparan?
  • What would be the likely priority of Boparan’s various pension deficits relative to its SSNs in a UK administration and what alternative scenarios are possible here?
  • Where do we see recovery on the SSNs across a range of administration scenarios?
  • How is Boparan’s Adj EBITDA made up entity-by-entity?
  • How much could Fox’s Biscuits be sold for and to whom? Same for Holland’s Pies?
  • How sensitive is Boparan’s Adj EBITDA to poultry feed costs post implementation of a high degree of contractual customer pass-through?
  • How vulnerable is Boparan to the scheduled increase in the national living wage?
  • Does Boparan have an adequate liquidity run-way to attempt a refinancing or orderly break-up of the Group via a pre-pack administration?
  • What are the key entities across Mr Boparan’s business empire?
  • Is vertical integration an advantage in poultry?
  • Are business disposal proceeds coming through fully in the cash flow or are payables balances being paid down pre-disposal?
  • How has Boparan done on its acquisition of Northern Foods and subsequent unwind of significant parts of this?

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