Topic: The Austrian company Robau Beteiligungsverwaltung GmbH, controlled by Stefan Pierer and Red Bull heir Mark Mateschitz, intends to fully subscribe to the planned capital increase under exclusion of subscription rights.

Robau intends to subscribe to 3.4m new no-par value bearer shares (50% of existing shares) at an issue price of € 35 per share, presumably until the end of 2024. The gross amount of € 119m would lift the equity ratio to a healthier level (eNuW: 28% end of FY24e) and with that well above the covenant of 20% by December 31, 2024.

Already in FY23 Rosenbauer had difficulties meeting its covenants of an equity ratio above 20% and a net debt to EBITDA ratio below 6 (equity ratio end of FY23: 15.7%; net debt to (EBITDA: 6.3). In March 2024, the company reached a multilateral refinancing agreement with its major lenders and promissory note holders which runs until November 3^rd, 2025. Part of the agreement was a capital increase in FY24e, the suspension of dividend payments, and an excess cash sweep, which is supposed to take place in FY25e. Furthermore, a share of the proceeds from the capital increase needs to be paid directly to the lenders as an unscheduled repayment in FY24.

Promising mid-term prospects: As soon as the capital increase has taken place, one should refocus on the bright operating business. Rosenbauer has largely overcome the challenging supply chain situation in FY22 & FY23 and demonstrated a successive improvement in its profitability. Due to mostly normalized chassis lead times and significant price increases, we expect an EBIT margin of 4.7% in FY24e after the transition year FY23 (FY23: 3.5%; FY22: -1.1%).

Order intake remains strong: Order intake in Q1 2024 came in at € 362m, an increase of 24% yoy supported by structural trends such as global warming, an aging population and the electrification of fire trucks. Furthermore, order backlog rose to a record high of € 1.94bn, giving Rosenbauer enough fuel for future growth.

Despite the dilution of existing shareholders and the harsh conditions of the multilateral refinancing agreement, the fact that Rosenbauer has come to a solution to secure the future financing of the company can be interpreted as positive news flow. BUY with an unchanged € 50.00 PT based on DCF.