Tue 07/28/2020 14:30 PM
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French car rental group Europcar declined to comment on news reports that investment group Eurazeo seeking bidders for the company and a potential start restructuring discussions with creditors if bids fail to materialize by September. CEO Caroline Parot said she was surprised by the reports.

Management reiterated that the company is evaluating short and long-term alternatives to address its capital structure and liquidity constraints. It highlighted that the company has no major corporate deadlines in the next 12 months. Management clarified that based on assumptions and projections made today, it would feel comfortable with the group’s liquidity position at the end of the year.

Regarding state aid, the group confirmed that it received €341 million additional financing facilities of which €321 million is guaranteed by the French and Spanish states and that good progress is made in negotiations with Germany and Italy. The group said it expects to reach an agreement with Italy by the end of the summer and with Germany in the third quarter. All other negotiations will be closed by the end of the year. Management clarified that even without securing further state aid, its liquidity position is sufficient to sustain a recovery in 2021.

Commenting on debt capacity for state aid, management said it can take on another €30 million at the corporate level and the rest would have to be via fleet financing.

Europcar’s corporate EBITDA including IFRS 16 was negative €209 million in the six months period ending June 30 compared with positive €82 million year over year. Its revenue fell 43% year over year to €815 million in the six months period which reflected the full impact of Covid-19-related lockdowns.

While the company is taking a cautious view on demand over the rest of the year, management said there could be a shift in seasonality with September being more active than in previous years. The third quarter is usually a leisure quarter and with the activity expected to be low, management assumes overall revenue could stay at the current level, which is 50% lower than in previous years (based on the P&L statement revenue figure).

Management said it couldn’t give a breakdown of how much of revenue will come from leisure and other parts of the business. The CEO added there is a lot of variation between the regions with Germany and the Nordics seeing better activity than Southern European regions.

The company’s capital structure is below:
 
Europcar Groupe SA
 
06/30/2020
 
EBITDA Multiple
(EUR in Millions)
Amount
Maturity
Rate
Book
 
€500M EC Finance SSN's due 2022 1
500.0
Nov-15-2022
2.375%
 
€1.7B Senior Secured Asset Revolving Facility (SARF) due 2022 2
589.0
Jan-2022
E + 1.300%
 
FCT Notes, Capitalized Fees, Accrued Interest, and Other
307.0
 
 
 
Other Fleet Financing Facilities
1,222.0
 
 
 
Total Fleet Debt - Structurally Senior
2,618.0
 
3.1x
€670M Senior Secured RCF & €450M Commercial Paper Program 3
632.0
 
 
 
€600M SSN's due 2024 4
600.0
Nov-02-2024
4.125%
 
€450M SSN's due 2026 5
450.0
Apr-30-2026
4.000%
 
Total Corporate Debt - 2nd Lien
1,682.0
 
5.1x
State Guaranteed Loans 6
281.0
 
 
 
€50M Unsecured Credit Suisse Facility
50.0
 
 
 
Total Unsecured Corporate Debt
331.0
 
5.5x
IFRS 16 Lease Liabilities
399.5
 
 
 
Fleet Operating Lease Liabilities
84.0
 
 
 
Total Lease Liabilities
483.5
 
6.1x
Total Debt
5,114.5
 
6.1x
Less: Cash and Equivalents
(404.7)
 
Less: Other Net Debt Adjustments
(311.0)
 
Net Debt
4,398.8
 
5.3x
Plus: Market Capitalization
244.0
 
Enterprise Value
4,642.8
 
5.6x
Operating Metrics
LTM Reported EBITDA
835.7
 
 
Liquidity
RCF Commitments
2,400.0
 
Less: Drawn
(1,271.0)
 
Less: Letters of Credit
(150.0)
 
Plus: Cash and Equivalents
404.7
 
Total Liquidity
1,383.7
 
Credit Metrics
Gross Leverage
6.1x
 
Net Leverage
5.3x
 

Notes:
Capital structure is post IFRS-16. Market data as of July 28. LTM EBITDA is the company's adjusted consolidated EBITDA. Cash is as reported on the balance sheet. Other net debt adjustments include FCT junior notes, accrued interest not yet due, capitalised financing costs and others. Liquidity excludes amounts undrawn from €101M Spanish financing facilities as undrawn amounts are unknown. RCF Commitments comprise the €50M Credit Suisse Facility (fully drawn), the €1.7B Asset Revolving Facility and the €650M Cap under the NEU CP Program and the RCF, whereby total amount outstanding under the NEU CP Program and the RCF cannot exceed a total commitment of €650M.
1. Guaranteed by each of the company and ECI. Guarantees are unsecured obligations. The EC Finance Notes, are secured by the Security Fleet Security interests and since May 14, 2018 by the Gold fleet Security.
2. Guaranteed by each of the company and ECI. Guarantees are unsecured obligations.The EC Finance Notes, are secured by the Security Fleet Security interests and since May 14, 2018 by the Gold Fleet Security.
3. Comprised of a €650M secured facility and €450M NEU CP. The €650M facility has an interest rate at EURIBOR + 250bps, due 2022. €150M under the facility is for letters of credit. €650M RCF upsized to €670M provided by French banks which have obtained a guarantee from Eurazeo through a sub-risk participation. As of FY'19, total amounts under the NEU CP and RCF cannot exceed €650M.
4. Pledged on ECI shares held by Europcar Mobility Group S.A.
5. Pedged on ECI shares held by Europcar Mobility Group S.A. (Secured by certain subsidiaries).
6. Includes the €220M Term Loan, 90% guaranteed by the French State and a €101M facility which has a 70% guarantee from the Spanish State. Assumed to be unsecured.
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