Original-Research: DEMIRE (von NuWays AG)

Original-Research: DEMIRE - from NuWays AG

Classification of NuWays AG to DEMIRE

Company Name: DEMIRE

Reason for the research: Update
Recommendation: Halten
from: 28.03.2024
Target price: EUR 1.20
Target price on sight of: 12 Monaten
Last rating change: 
Analyst: Philipp Sennewald

Mgmt confirms negotiations regarding bond restructuring
Topic: DEMIRE released an ad-hoc, stating that the company has entered
negotiations with a group of bondholders (Ad hoc Group), which is said to
hold “well over 50%' of the outstanding nominal amount, regarding the
restructuring of its unsecured corporate bond. Mind you, the corporate bond
is due on 15 October 2024 and has an outstanding nominal amount of € 499m
(€ 600m at issue date). The company also gave indications as to which
points a possible restructuring agreement could contain. In detail:
(1) Extension of the term until 31 December 2027 at an increased coupon as
well as additional compensation payments. While the company did not specify
on possible conditions, we estimate total annual costs of 6.5% to be in
line with the market, which would result in additional financial expenses
of c. € 23m given the current nominal amount.
(2) Mandatory repayments of the bond from the net sales proceeds of future
asset disposals. Considering a net-secured LTV of 12.5%, assets held for
sale to the tune of € 160m (as of 9M excl. LogPark), a 20% BV discount and
the net cash inflow from the LogPark sale (eNuW: € 65-70m) this figure
could amount to c. € 180m in 2024 alone.
(3) Obligation to waive dividends or other distributions to shareholders
during the extended term of the bond.
(4) Additional collateralization of the bond in favor of the bondholders,
likely via the company’s portfolio of unencumbered assets.
In addition, the company stated that one member of the Ad hoc Group intends
to dispose a position to the tune of c. 20% of the outstanding nominal
amount or c. € 100m. The company further stated that it considers
submitting a bid to acquire the corresponding position. Considering this to
be a highly distressed situation for the seller, DEMIRE would possibly be
able to acquire the position below market levels (64% as of yesterday's
Yet, as all the above is still subject to approval of the Ad hoc Group as
well as an external economic feasibility analysis, we keep our forecast
model unchanged for the time being.
Given the prevailing uncertainty regarding the investment case, we
reiterate HOLD with a € 1.20 PT.

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