The markets of corporate high yield bond and leveraged loan are facing a ticking clockwork bomb that may blast in the hands of m&a operators as well (see here a previous post by BeBeez). On 15 March, Sunday, the Federal Reserve (Fed) poured a huge amount of liquidity on the market for facing the issue and received the endorsement of US President Donald Trump. The Fed’s Governor Jerome Powell said that the bank is ready to use any tool for supporting the credit flow for families and businesses and for achieving its targets of employment and price stability. The bank set the interest rate for the Fed Funds at between 0% and 0,25% and pointed out that it will implement a bond purchase programme of at least 700 billion US Dollars (Fed Press Release). Furthermore, the Fed is going to cut by 25 basis points the spread paid on liqidity swap lines through an action that will implement together with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank (Fed Press Release). In November 2018, Edward Altman, a full Professor at NYU Stern School of Business, warned market participants that the bubble of leveraged loans and high yield bonds was set to burst. Altman founded Wiserfunding, a London-based fintech that provides rating services for European unlisted SMEs that borrow money through loans and bonds, together with Italian investors. A report of OECD said that at the end of 2019 the stock of corporate bonds globally amounted to 13.5 trillion US Dollars.
Milan-listed troubled contractor Astaldi said that 73.2% of the investors in its 750 million euros senior notes (maturity in 2020 and 7.125% coupon) rejected the company’s proposal for debt restructuring (see here a previous post by BeBeez). Astaldi’s unsecured liabilities amount to 3.5 billion. The company owes 1.3 billion to banks (about 153 million to Unicredit and in the region of 107 million to Intesa Sanpaolo) and, further to the mentioned senior notes, 140 million to the holders of an equity-linked bond due to mature in 2024. On 25 February, Tuesday, these investors accepted Astaldi’s debt restructuring proposal. All bondholders should meet on 26 March, Thursday, before Rome’s Court Judge Angela Coluccio. On 11 February, Astaldi’s judicial commissioners accepted the company’s restructuring proposals as for unsecured creditors they were more convenient than a receivership. The plan doesn’t make distinctions among unsecured creditors and by 120 days since the restructuring approval, the company said to be willing to: 1) Issue new publicly traded shares for unsecured creditors (12,493 shares for 100 euros of credit); 2) Issue Debt and equity instruments (one instrument for each euro of credit). Unsecured creditors may receive 38% of their dues (1.3 billion, 600 million in shares and 700 million in debt and equity instruments).
Ad Hoc Group (AHG) the vehichle that groups Carlyle, GLG, and Stellex Capital Management, the bondholders of Officine Maccaferri, agreed for a change of the rules of the company’s 190 million euros bond for allowing the injection of fresh resources for 70 million euros and realunching the business (see here a previous post by BeBeez). As part of the forbearance agreement that the company signed with the bondholders at the end of 2019, Officine Maccaferri will issue further bonds amounting to 0.78 million that AHG will subscribe. On 13 March, Friday, the majority of the bondholders appointed Ernesto Apuzzo, a corporate lawyer, as their representative. On the same day, Seci, the controlling holding of the Maccaferri Group, analysed the turnaround offer that Carlyle and its associated tabled in early March. The investors purposed to pour resources in Seci (10 million), Samp (up to 25 million), and Officine Maccaferri (60 million). On the other side, once the court accepts the companies’ receivership plans, the firms may repay the loans through the issuance of a super senior post restructuring finance facility with warranties for all loans. Seci may keep only 4% of Officine Maccaferri, while AHG gets 96% of the company. Maccaferri accepted Carlyle’s turnaround proposal and may include it in its receivership application that will send to Bologna Court. Maccaferri reportedly attracted the interest of Oxy and Hps, Fortress Investment Group, and Quattro R. In February 2020, Bonfiglioli Riduttori tabled a bid for Sampingranaggi, a subsidiary of Samp that is in receivership since late 2019.
For 2019, Amco (Asset Management Company, fka SGA) has assets under management for 23.8 billion euros (10 billion of Utps and 13 billion of bad loans) (see here a previous post by BeBeez). In late 2019, Amco recently carried on the securitization of a portfolio of NPEs worth 297 million of Banca del Fucino. Furthermore, it acquired a 2.3 billion portfolio of NPLs from Banca Carige (that may sell in 2020 another portfolio worth 500 million), an amount of high risk NPLs for 700 million, and distressed mortgages amounting to 47 million from Istituto di Credito Sportivo. In 2019, Amco posted net profits of 39.9 million (16.1% down yoy), an of 44.3 million (+49.3% yoy). Amco’s turnover is of 86.6 billion (+48% yoy) (55% from servicing activities and 45 from investments).
Credit servicer Intrum Italy will publicize the adverts for its real estate assets on and digital platform Immobiliare.it (see here a previous post by BeBeez). Intrum Italy will advertize a portfolio of about 3,000 assets of direct ownership or under auction. Carlo Balbiani, the head of transaction Management Real Estate of Intrum Italy, said that such partnership will make the credit recovery process more efficient. Antonio Intini, the Chief Business Development Officer of Immobiliare.it, said that such a partnership has a scalable business model. In February 2020, Intrum Italy started to hold exclusive talks for the acquisition of Cerved Group’s credit management division.
City Green Light, a provider of public lighting services that belongs to Fondo Italiano per l’Efficienza Energetica (57%) and to paneuropean infrastructure fund Marguerite (39%) since February 2018, received a 55 million euros financing facility from UBI Banca, Cassa di Risparmio di Bolzano, and Mps Capital Services (see here a previous post by BeBeez). City Green Light orders book is worth 500 million and will invest such proceeds in its organic development. Gemmo has 4% of the company but can reinvest further in the business. Alessandro Visentin is the ceo of City Green Light which has sales of 55 million, an ebitda of 17.6 million, and net cash of 19 million.
Frigiolini & Partners Merchant and its subsidiary Fundera are launching two basket bonds named Pluribond Liquidity Provider and Pluribond Restart Italy respectively for supporting the companies that are facing issues related to the coronavirus (see here a previous post by BeBeez). Leonardo Frigiolini, the ceo and founder of Frigiolini & Partners Merchant, previously said to BeBeez that he was working on such initiatives (see Beez Peak – 9 March). Pluribond Liquidity Provider aims to support the cash flow of businesss for 12-24 months. The bond is callable. Pluribond Restart Italy is minibond with a 3-5 years maturity that aims to support those companies that are facing a production stall. Frigiolini aims to involve 3,000 or more SMEs with the issuance of Pluribond Liquidity and 1,000-1,500 companies with Restart Italy. The median value of each short term (12-24 months) issuance could be of 0.3 million euros and of 0.5 – 1 million for each (long term 3 – 5 years). Both Pluribonds will target SMEs with a turnover of at least 2 million and 10 workers. Crowdfunding portal Fundera will carry on the placement procedure.
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