EUR 203.58 For Business Accounts Only

Astaldi - Weak 3Q17 in terms of working capital, disappointment at the financial plan

Astaldi, the Italian construction engineering firm, reported its 3Q17 results which showed a large negative impact from Venezuela. The results were scheduled for a week ago but last Thursday Astaldi announced that it was considering a €200m capital increase to strengthen its capital structure and continue its process of long-term debt refinancing. More details were awaited by the market and yesterday’s presentation and earnings call were clearly disappointing. The shares and the bonds continued to decline strongly today. While Astaldi delivered on the adverse impact from Venezuela, taking a 53% write-down on its €433m exposure, it was a miss for the capital increase. Indeed, the €200m capital increase, supported by the majority shareholder (the Astaldi family), would not be executed before 1Q18, and appears to have become more problematic in light of Astaldi’s current market cap of €207m. At the same time the company is looking at a potential issuance of a further €200m in equity-linked capital and to engage with banks to roll-over maturities in particular in Y18. Finally, Astaldi continues to present a refinancing program including the €700m notes maturing in 2020 which is out of order in light of the collapse of the bonds prices. In our view, the only positive news was a new committed RCF of €120m from a syndicate of several Italian and international banks.