EMLNA TL 1L USD, EMLNA TL 2L USD (Update)

Endemol Shine

Credit, TMT


Please note, this is an update to: EMLNA TL 1L USD, EMLNA TL 2L USD – Long, which was originally presented on Sept 20, 2016 at 91 and 73, respectively.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Apollo Global Management LLC (APO), Apple Inc (AAPL), Sky PLC (SKY LN), Twenty-First Century Fox Inc (FOXA), Verizon Communications Inc (VZ)

Highlights

The presenter remains long Endemol Shine’s first- and second-lien Term Loans, and has increasing conviction in his position. The risk/ reward setup for what now appears to be the fifth largest publishing company in the world has improved, and the first- and second-lien Term Loans are trading at ~94 and ~81, respectively. He briefly reviewed the capital structure, explaining that the EV is roughly $7bn (50% owned by Fox, 50% by Apollo), a portion of the first-lien is euro-denominated (235mm) and the remainder is USD (~780mm), and the second-lien is ~$450mm. At its current market value, he now sees the company levered roughly 5x on the first-lien (assuming EBITDA of $200mm), and 6.5-7x on the second-lien (which is relatively more attractive at a 16% yield). Given the caliber and backgrounds of the executive team at Endemol Shine, he believes Fox is likely to acquire the company following the closure of the ~$15bn Sky acquisition.

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