EUR 200.00 For Business Accounts Only

OHL: CLOSES AGREEMENT FOR THE RESTRUCTURING OF ITS DEBT (ANÁLISIS BANCO SABADELL)

The company has closed an agreement (57% support) for the restructuring of its bonds (€ 593 M; ~82% of NFD) that includes (i) 2 rights issuances, with the first one totalling € 35 M (~18% of market cap) with preferential subscription rights, and the second one totalling up to € 36 M, which would be reserved for the Amodio family (-48% vs. trading levels) and Tyrus. The Amodio family and Tyrus will underwrite the first rights issuance, and have pledged to provide the company with as much as € 37 M and € 5 M, respectively, meaning that both issuances would total between € 42 M and € 71 M (21%/36% of market cap). Secondly, (ii) the company offers its bond holders the possibility of choosing between two alternatives: a debt haircut of 10% or a mix of a debt haircut and a the capitalisation of 30% of the debt at € 0.74/sh. (+7% vs. share price), which in our base-case scenario (and also OHL’s) means debt capitaliation of € 68 M (~11% of total debt and 34% of market cap), and a debt haircut of € 36 M (~6% of debt). In any case, we do not expect the Amodio to exceed the threshold of 30% of the share capital (they confirmed their stake would continue to stand below that level) and we rule out a TOB aimed at minority shareholders. According to the official calendar, the transaction will be closed in May 2021.
We welcome the restructuring agreement, as it guarantees OHL’s financial viability, although we highlight that the terms are less advantageous tan initially expected (which we believe explains today’s share price reaction; -15% vs. IBEX). In any case, as we wait for confirmation of the size of the rights issuances, the agreement has little impact on our T.P. (the positive effect on the debt haircut is offset with the large discount in the rights issuances), and although we will raise our estimates for the Construction business, we see little margin for improvement on the T.P. level given its limited weight on valuation (39% of EV), and we condition an estimate upgrade on the delivery of recurring positive FCF by the company. We set our T.P. Under Revision and maintain our SELL recommendation.