Topic: Rosenbauer reached a multilateral refinancing agreement with its major lenders and promissory note holders. Further, the Austrian vehicle manufacturer announced to be planning a capital increase of at least 3.4m shares to strengthen its balance sheet.

Successful refinancing: During FY23, Rosenbauer had difficulties meeting its covenants of an equity ratio above 20% and a net debt to EBITDA ratio below 6. At the end of 9M FY23, the equity ratio stood at 14.3% and the net debt to EBITDA ratio at 15. The company now announced a refinancing agreement, which runs until November 3^rd, 2025. All covenants in existing agreements will be suspended and redefined for the duration of the refinancing agreement (so far no details disclosed). For the term of the refinancing agreement, any dividend payments are suspended (eNuW old: € 1.0 per share).

Material capital increase: Rosenbauer intends to issue at least 3.4m new shares (50% increase) during 2024 to strengthen its balance sheet and paying bondholders. Assuming a 30% discount to yesterday’s closing price of € 27.60, potential gross proceeds could reach roughly € 66m. € 35m of the proceeds and additionally any excess cash in 2025 (cash sweep) shall be used for repayments.

Healthy operating business: Rosenbauer has largely overcome the challenging supply chain situation in FY22 & FY23 and showed a successive improvement in its profitability during FY23. The EBIT margin in Q1 came in at -2.6% and climbed to 2.1% in Q2, 4.4% in Q3 and 7.2% in the preliminary final quarter, which was seasonally the strongest quarter. Due to largely normalized chassis lead times and significant price increases from Rosenbauer, we expect an EBIT margin of 4.6% in FY24e (FY23: 3.5%). Further FY23 order intake increased 18% yoy to € 1.45bn, leading to a record high order backlog of € 1.79bn. Backed by restored profitability, continued strong demand and an improved supply chain, Rosenbauer should be able to deliver solid FY24e results (eNuW FY24e: Sales € 1.16bn/+8.6% yoy; EBIT € 53m/+41% yoy).

Despite the high debt ratio and stock dilution, Rosenbauer’s operating business remains intact. The agreement with bondholders and the capital increase are necessary steps to secure the future financing of the company. Thus, the fact that the company has come to a solution with its bondholders can be interpreted as positive news flow. Reiterate BUY with an unchanged € 54.00 PT, based on DCF.