Comment / Analysis: CEVA wants a happy ending, and you can take that to the banks

24/02/2017

Over the past few weeks I have had a number of conversations concerning the future of CEVA Logistics – and its very short-term financing needs.

To describe them as intriguing would be an understatement.

I am grateful to debt investors on both sides of the Atlantic who helped me investigate whether the logistics behemoth would actually manage to service its outstanding debt obligations next year, or whether a debt rollover is a more likely option – and if this transpires, then what ...

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Michael Webber
February 27, 2017 at 4:52 am
Very interesting analysis, Alessandro. Like many in the industry, I hear rumors but haven’t the time to commit to as thorough an analysis as you have provided here. So thank you, indeed.

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- Ale Pasetti
  February 27, 2017 at 10:25 am
  Thanks Michael for the great feedback.
  
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Peter
February 27, 2017 at 9:10 am
did you notice that result announcement was pushed to March now ?

Debt holders are animals in captivity..
Revenue has been consistently dropping in the last 3 years..

headroom is there from the bank only if you are performing…

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- Ale Pasetti
  February 27, 2017 at 10:32 am
  Thanks Peter. At the time of writing, its trading update was due on 28 Feb, but indeed now we have a new schedule:
  
  “CEVA Logistics Full Year 2016 Results – w/c 6 March 17 TBC”
  
  So, thanks much for flagging it.
  
  Re: “headroom is there from the bank only if you are performing…”
  
  I do not necessarily agree with your view, based on accommodative lending policies in many other troubled sectors (GLEN, to name one, was a good example in recent years, when its stock traded at 60p), but I have reason to believe CEVA is confident this refinancing will get wrapped up successfully, one way or another.
  
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  - Peter
    February 27, 2017 at 1:00 pm
    sure , they can refinance and the main reason will be TRAPPED debt holders ( have no choice but to keep air in the bubble) ..
    they have to fund this baby till they can on-sell this debt(or repackage ) to somebody else..
    It is becoming a Looooong term hold for them ..
    Not a good story on the revenue line as well…
    What about story for employees ( little increases + round of reductions) ?? other stakeholders?
    
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    - Ale Pasetti
      February 27, 2017 at 1:17 pm
      Those debt holders are receiving rich coupons (which could continue to help them justify the return on any additional equity capital investment), and if CEVA can push back its 2018 debts, it will have the time it needs to get the house in order. It’s not easy to grow in this market, true, but then if the cycle turns south it can also cut operating costs. I guess we’ll learn more shortly — I think we agree more equity would do no harm?
      
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    - Ale Pasetti
      February 28, 2017 at 5:43 am
      Peter, as far as the new reporting date is concerned, I understand it is business as usual as CEVA is putting the final touches on the numbers.
      
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Roland
March 02, 2017 at 11:47 am
In 2007 the target was sales of 10 billion euro from a starting position of 7. The company would stay for a maximum of 6 years in the hands of apollo. 10 years later, after a bankrupcy in 2012 (that year the result was a loss of 1 billion) and not a single profitable quarter, the sales are at the same level as in 2007. Even after debt restructurings that generated important losses at the shareholders today the situation is not improved. Over 2 billion debt. Negative equity.

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- Ale Pasetti
  March 13, 2017 at 12:57 pm
  That is one of the reasons why an IPO remains unlikely but would be the ideal way forward, IMO, Roland.
  
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