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Elis (ELISGP; Ba1 Pos/BBB-) Reuters reports offer made to Vestis

CONSUMER CYCLICALS
  • Elis has €400m cash on hand (will have tad more by year end on seasonality). Still cash short-fall currently is north of €1.4b to the Vestis market cap. - i.e. assuming it does not refi out Vestis debt. Vestis only has loans.
  • This is a pro-forma 1.7x uptick in leverage. Elis standalone currently runs net 2.4x (it reports lower but is excluding leases).
  • In 1H results (late July) it revised up FY24 guidance to organic growth of 5.2-5.5% (prev. 5%), adj. EBITDA margin between 35.2%-35.5% (prev. 35%). FCF guidance was left unch at €340m, and deleveraging of 0.2x on its net reported (EBTIDA growth will do most of that).
  • Vestis for comparison runs 12% EBITDA margins with guidance for headline growth falling -1% to flat for year ending September. Deleveraging was a priority for it with reported net leverage at 4x

Elis equity holders are not happy about it. Vestis operating performance looks well lacking vs. it so "synergies" will have to come in to do the legwork. ELISGP28s are -0.6pts/+25bps at Z+128 (3m par call only). Note convertible as well {2029 at 132.8 and -17pts today} and is a euro only issuer.

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