Why Read?

• Understand KP’s refinancing prospects and hypothetical restructuring analysis, including SSNs, TLs, RCF and SNs recovery prospects
• Understand: our estimates for how much raw material cost inflation KP has experienced since polymer prices started rising from Aug-20 and how they compare with company-disclosed estimates; how much has been passed on to customers; the impact of cost inflation on KP’s EBITDA from FY 21 onwards and whether this will reverse if polymer prices stay flat or decline going forwards given the time lag in cost pass-through; how KP’s sales price to cost spread per tonne has developed through time, going back to FY 02; historic relationships between KP’s raw material costs, sales price to cost spread per tonne, EBITDA, Brent crude prices, sales volume and added value
• Understand KP’s Jun-12 debt restructuring and EV development through time across transactions, attempted sponsor exits and as implied by debt refinancings
• Understand recent polymer price development and outlook

What’s New?

• Detailed cost inflation and pass-through analysis
• Financial projections, DCF valuation and sensitivities; comparables valuations; SSNs, TLs, RCF and SNs recovery rates and prospective IRRs when purchasing at current prices – base, bull and bear cases

Questions Answered

• What is KP worth and what recovery rates and prospective IRRs are achievable on its SSNs, TLs, RCF and SNs if purchased at current prices?
• Would it make sense for the sponsor to inject equity to support a refinancing?
• Is KP’s net leverage trajectory compatible with refinancing into a higher interest rate environment – base, bull and bear cases?
• How have KP’s sales volumes, added value, sales price to cost spread per tonne and EBITDA developed in previous downturns?
• How does polymer cost inflation seen since Aug-20 compare with previous periods of sharply rising polymer prices and how did KP’s EBITDA behave in such periods historically compared to since FY 21?
• How low has KP’s market-implied EV / EBITDA multiple been historically?