CONSUMER CYCLICALS: Ontex (ONTEX; B2/B) sells Brazilian business
The personal hygiene product manufacturer has sold its Brazilian business (flagged it would this year) for ~€110m to Softys - the same buyer of its Mexican business in 2023. After fees expected to see cash proceeds of €82m (€18m to be held in escrow, close expected 1H25).
The Brazilian business generated €97m in sales (11% of group) and adj. EBITDA of €13m (12%) in the 1H. Türkiye business has also been tabled for sale (~this year) - they were together valued at €141m under assets held for sale.
It seemed keen to refi the single €580m 26s closer to maturity given raters had turned more constructive recently; growth returned and margins have dug themselves out from lows. Net leverage is at 2.5x (co reported) and it has indicated happy there/in 2-2.5x range. Ex. sale impact we see gross leverage in mid 3-handle but Moody's is harsher (likely on the treatment of one-offs). We see Moody's main concern around the lack of FCF still - the turnaround has required cost investments and statutory bottom line was still ~breakeven in 1H. We will circle back on the name and encourage prospective investors to have a firm view on remaining core business given levels on 26s (3.9%/Z+150).
Presser here