Sectors > Top Reports > Hema Memo 041119

Hema Memo 041119

Hema. Liquidity Unsustainably Tight By Q2 2020. Restructuring Likely. € Senior Secured FRN 7/2022 Recovery Likely c. 20%. Sell
PUBLISHED: 04 November 2019
PAGES: 183
SUBMARKET: Hema, Top Reports, Top Reports,


Why Read?

  • Understand how tight Hema’s liquidity is likely to get by Q2 2020 and why the limitation on liens makes provision of additional funding by Ramphastos challenging 
  • Understand how Hema would likely be restructured under Dutch bankruptcy proceedings or a pre-pack sale thereunder
  • Understand the likely new money financing needed in any debt restructuring at Hema and why recovery even on Hema’s senior secured notes is likely to be just c. 20 cents
  • Understand why liquidation is a non-negligible possibility 
  • Understand why the previous turnaround from FY 15 will be difficult to repeat this time around
  • Understand the extent to which and why Hema’s business has been structurally deteriorating since 2010, in spite of significant capex over FY 17 – FY 18

What’s New?

  • Restructuring analysis of Hema
  • Detailed liquidity and cash flow projections with sensitivities
  • Detailed valuation of Hema – both based on comparable multiples and DCF
  • Wholesale bakery / food supply business multiples analysis applied to Hema’s bakery business
  • Comparison of Hema’s current predicament to that in FY 15

Questions Answered

  • How is Hema’s liquidity likely to evolve?
  • What is Hema’s bakery business likely to be worth and what are the prospects for selling it?
  • What scope do the notes indentures provide for Ramphastos to safely provide additional secured funding to Hema?
  • How do Dutch insolvency proceedings work and how would Hema likely be restructured?
  • What is the risk of maintenance covenant breach on Hema’s RCF and cross-default / cross-acceleration through to Hema’s senior secured and senior notes?

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