Intrum indeed won’t be able to refinance its 2028 second lien debt at a more moderate interest rate next summer if the total leverage ratio exceeds 3.5x (the covenant limit for the 2031 bond).
If earnings were to soften slightly (following revenue) such that RTM Cash EBITDA could still be kept at the current level through operational excellence cost savings, net debt would need to be reduced by ~SEK 5.5 billion by next summer. Out of this, free cash flow will probably cover around SEK 2–2.5 billion, meaning that roughly SEK 3–3.5 billion would need to be raised by selling debt portfolios / Spanish operations or, for instance, through a directed share issue (personally, I don’t consider a rights issue likely, and even a small directed share issue only as a last resort). That’s how I calculated it myself.
Based on management’s Q2 and Q3 comments (and rumors), I consider some kind of arrangement regarding the Spanish operations (Solvia/Haya) to be the most likely scenario. The transaction price is a question mark and it would bring an accounting capital loss/write-down, but in covenant calculations, only the cash hitting the account matters. Intrum does have options, but as is typical with covenants, management can’t just mess around—they actually have to think through solutions, and that’s a good thing.
And just as a general comment on the matter, having followed various forums: sometimes it surprises me how short of a perspective people generally have when investing in individual companies. Here, too, the share issue was just 4 months ago, and now everyone is already panicking and dumping their shares following the shorters and the German write-downs. One must remember that after the offering, there are new major owners behind the scenes who know what they got into and who have a strong interest in making the necessary strategic decisions for the company.