Sectors > Transport & Logistics > Naviera Armas (ATG) Memo 170320

Naviera Armas (ATG) Memo 170320

Naviera Armas (ATG) Coronavirused. Brace For Potential Impact. Still See Value. SSNs Attractive Entry Points At €40 Or Lower Now
PUBLISHED: 17 March 2020
PAGES: 356
SUBMARKET: Naviera Armas, Top Reports, Top Reports,


Why Read?

  • Price and route comparison across Naviera Armas / Trasmediterranea (ATG) vs competitors Fred Olsen Express and Balearia and vs airlines
  • Coronavirus (COVID-19) impact analysis – updated base, bear and bull case financial projections and liquidity analysis / remaining liquidity levers in COVID-19 world
  • Understand how ATG’s fuel hedging derivatives work and how its hedges and current fuel costs impact the Group’s competitive position in the new COVID-19 world
  • Understand possible restructuring framework under the Spanish Insolvency Act
  • Business analysis – segments, regions, clients, suppliers, substitutes, subsidies
  • Industry overview and competitors analysis
  • Trasmediterranea acquisition analysis
  • Understand EBITDA potential of the business and decomposition of where EBITDA has fallen short vs pro-forma levels (plus synergies) at the time of the Trasmediterranea acquisition
  • IMO 2020 and lower fuel prices impact – customer pricing, scrubbers EBITDA impact, hedging derivatives impact and scrubber financing
  • Valuation – DCF & asset based
  • Understand carve-outs for additional secured debt and what mitigates priming risk
  • Detailed fleet analysis – vessels owned, chartered in and chartered out; charter rates; transactions; valuation and encumbrance
  • Waterfall analysis and expected recovery rates across the capital structure
  • Analysis of the capital structure, legal documentation of each debt instrument and bond pricing


What’s New?

  • COVID-19 impact on ATG – updated base, bear and bull case financial and liquidity projections
  • Detailed port infrastructure analysis – port locations, distance from airports etc. 
  • Detailed price and route comparison analysis vs competitors – pricing vs direct competitors and airlines and orphan / monopoly routes
  • Fuel cost hedging deep dive


Questions Answered

  • What is the potential impact of COVID-19 on ATG?
  • How are lower fuel prices affecting ATG and its competitive positioning?
  • Under what circumstances would liquidity break and which additional liquidity levers remain?
  • How does restructuring work under the Spanish Insolvency Act?
  • Will the business be able to deleverage to the extent needed to refinance?
  • What recovery can be expected on the Senior Secured Notes (SSNs)? Business and fleet-based valuations

  1. View, Variant Perception & Recommendations

  2. Business Overview

  3. Industry Overview

  4. Ports

  5. Price & Route Comparison & Analysis

  6. Industry Regulation – IMO 2020

  7. Fuel cost hedging

  8. M&A – Trasmediterranea acquisition

  9. Historic Financial Analysis

  10. Group Structure & Capitalization

  11. Trading Update – ER Q319

  12. Coronavirus

  13. Forecast − Base Case

  14. Forecast − Bear Case

  15. Forecast − Bull Case

  16. Other Valuation Methods

  17. Liquidity, Capital Markets And Restructuring

  18. Investment Considerations


Naviera Armas


Fred Olsen