Sectors > Top Reports > Hema Memo 040420

Hema Memo 040420

Hema. Liquidity Shortfall c. €100m By Q2 20? A Restructuring Pitchbook For SSNs Holders. Ramphastos & Jumbo To Team-Up? Buy SSNs At c. 33 Cents But Beware Liquidation
PUBLISHED: 04 April 2020
PAGES: 115
SUBMARKET: Hema, Top Reports, Top Reports,


Why Read?

  • Understand why, in spite of a substantial liquidity shortfall we estimate in Q2 20, at levels of c. 33 cents we see good return potential in Hema’s Senior Secured Notes (SSNs) via various possible restructuring implementations
  • Understand our assessment of probabilities and SSNs recoveries across scenarios – various restructuring scenarios; a scenario where Ramphastos injects new money and targets an eventual sale of Hema to Jumbo; liquidation

What’s New?

  • Coronavirus-updated quarterly liquidity shortfall estimates and analysis of liquidity swing factors
  • Full coronavirus-updated financial projections, valuation and sensitivity analysis
  • Restructuring pitchbook for SSNs holders – act fast and what to do (rationalization and other initiatives; new money need); potential recoveries / IRRs / money multiples
  • A strategy for Ramphastos to deleverage Hema rapidly and sell out to Jumbo – potential IRR and money multiple for Ramphastos 
  • Liquidation analysis
  • Recent general retail store footfall data in Hema’s key markets
  • Legal background – Dutch Bankruptcy Act; UK schemes of arrangement; UK pre-pack administration; indenture analysis

Questions Answered

  • How are Hema’s revenue and expenses likely to adjust during the coronavirus lockdowns?
  • What ability does Hema have to flex expenses and / or benefit from government employment subsidies?
  • How tight is Hema’s liquidity already and what liquidity shortfalls to we project by quarter in FY 20?
  • Is the RCF minimum EBITDA covenant likely to be breached?
  • What is the risk of cross acceleration via a default on the PIK to the RCF and in turn to the SSNs and Senior Notes (SNs)?
  • Why is it essential that Hema’s SSNs holders prepare pro-actively to restructure and inject new money into Hema?
  • How should SSNs holders look to restructure Hema? Jurisdictional analysis and legal implementation. Business turnaround initiatives. Exit possibilities. Recoveries, IRRs and money multiples
  • What can Ramphastos do to profit from the current situation and preserve a potential exit sale to Jumbo after weathering the coronavirus storm?
  • What would the SSNs recovery rate be in liquidation and what are the key swing factors?
  • Why should Hema’s landlords be worried and which actions should they expect Hema to take going forward?
  • What risks does Hema pose to its franchisees and vice versa?

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