Report
Carole Braudeau

Bourbon : Bourbon is seeking approval from TSSDI bondholders to defer by one year forthcoming interest payment due in April 2018 of about € 3.9m.

Friday 6 April 2018 - - In a statement posted yesterday on Bourbon's website, holders of TSSDI (undated deeply subordinated bonds) are convened to a general meeting on 20 April 2018 in Marseilles. - In the context of the discussions that Bourbon has initiated with its banks (non-compliance with covenants at the end of 2017 and intention to extend maturities), the group is seeking the consent of the general meeting of holders of TSSDI to defer by one year the next interest payment on the TSSDI for an approximate amount of € 3.87m due on 24 April 2018 on 24 April 2019 which shall bear interest from 24 October 2018 (included) to 24 April 2019 (excluded) at the rate corresponding to the applicable rate to the bonds. - This is at odds with what the CFO told us when we contacted her before publishing our special comment on 19 March, 2018. Indeed, she assured us that the coupon would be paid in April (conversely, she did not confirm the coupon payment in October, which made sense to us since the group decided to suspend the payment of dividends). - Following a telephone contact with the company today, we note the following points: - 1/ questioned about the reasons for postponing this coupon, our contact told us that the negotiations with banks (a total of 40 banks many of which are foreign) were very tough. - In particular, a number of French banks are opposed to the idea of Bourbon paying € 3.9m to TSSDI holders, which they consider as costs. To ease the discussions with its banks, Bourbon has decided to convene these holders to request a deferral by one year the next interest payment date in April. - 2/ the statement refers to interest payment for a six-month period (from 24 October 2018 to 24 April 2019) whereas a one-year deferral is requested: "defer by one year the next interest payment date due under the Bonds for an approximate amount of €3.867 million due on April 24, 2018 on April 24, 2019, which shall bear interest from October 24, 2018 (included) to April 24, 2019 (excluded) at the rate corresponding to the applicable rate to the Bonds". - - This is due to the fact the interest payment due on the April coupon is treated differently because of its deferral. Indeed, this deferred coupon bears interest only at the end of the one-year period. This coupon, which ran from 24 October 2017 to 24 October 2018, will be paid in April 2019. Interest on the amount due on this coupon will, in turn, will accrue on a period of six months (October 2018 - April 2019) and not one year. - In that respect, our contact clarified an important point. Whenever the deferral of coupons due is requested, a legal interest rate is applicable (which is 0.9%). However, in this case, Bourbon will apply a zero-interest rate over the first six-month period and then an interest rate of 7% on the TSSDI over the second six-month period, which is more favourable for bondholders.
Underlying
Bourbon

Bourbon and its subsidiaries are engaged in the manufacture and sale of sweets, snacks, beverages and foodstuffs. Co.'s principal products are cookies, wheat flour crackers, bean snacks, candies, rice crackers, snacks, chocolates, chewing gums, mineral water, coffee, cocoa beverages, other soft drinks, powdered cocoa, among others. In addition, Co. sells rice and liquor through mail order only, and bread and instant ramen noodles through vending machines only.

Provider
Oddo BHF
Oddo BHF

​Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.

Analysts
Carole Braudeau

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