Chemours: Higher Risk But Some Buffers To Working-Capital Accounting Issue

Chemours {CC US Equity} EUR bond trading slightly better today. Looks idiosyncratic risk issue (not sectoral) and, with USD1bn of net cash, c.USD3.9bn of gross debt and just USD1.1bn of equity this is a higher risk situation but it’s rare for a working capital-based accounting issue to be meaningful enough to wipe out those former two layers of protection.

• Company initially delayed 4Q23 results on 13-Feb (were due on 14-Feb), supposedly to 29-Feb. This was due to needing to evaluate “its internal control over financial reporting” and those forms of words are rarely ever good.
• On 29-Feb, the CEO, CFO and principal accounting officer were suspended, and interims were appointed to cover those roles. The suspension notice alluded to “reports made to the Chemours Ethics Hotline”, “managing working capital… related impact on… Company’s incentive plans” and “material weaknesses… over financial reporting”. This is quite an upgrade to the language from two weeks prior.
• Mgmt is delaying 4Q23 results further now but did issue some unaudited figures which indicated a net loss of USD225-235m (consensus has 179m loss) and net cash of USD1.2bn (in line with consensus).
• Chemours only has one meaningful EUR bond outstanding (CC 4 05/15/26) whose price gapped down from 96 to 93 yesterday. It is streaming slightly better today.