Grifols: More Private Debt Placement Continues To Stabilise

Grifols (GRFSM: Caa1 neg/B/B- neg) issues another EUR300m of private debt to refi current revolvers. Results last month saw some minor improvements, the equity is up from the lows and cash bond prices have also recovered (1-4pts) in the last month. This remains a high risk situation but at least news appears to be incrementally positive.

• Grifols called the May-25 bond on 24-May just gone, as per previous mgmt guidance following the Apr raise of EUR1bn of private debt. Short seller Gotham Research has been vocal on this firm since 9-Jan and, after an accounting investigation, regulatory probe, changes of management and this debt repayment, this does feel like a rehabilitation situation.
• 1Q24 results were out on 14-May and the new CEO is explicitly targeting improved FY24 FCF guidance as priority one. Further, the CFO is leaving, and the chair is giving up the “executive” element of his title. Results have seen some very minor upgrades to estimates, but from a relatively low base, we fear.
• The equity is up 37% from the lows of Mar-24 but results have seen a small element of that performance slip away. The equity is still down near-40% YTD.