Tuesday 24 April 2018 by FIIG Research Company updates

Company updates – Dicker Data, IMF Bentham, Liberty Financial, Merredin Energy, Plenary, Tesco

This week, Dicker Data 1Q18 results, IMF Bentham funds Brambles class action, Liberty RMBS upgrades, Plenary seeks holders’ approval to amend terms of 2021 notes, Merredin Energy research update and Tesco sterling bond offerings. We have updated Factsheets for Asciano, MPC, Qantas and Sprint Corp

Dicker Data market update

On 24 April 2018, Dicker Data (Dicker) released results for 1Q18. Key points are:

  • Revenue was AUD319.6m, 14.4% higher than the previous quarter. Dicker states that this was partly a result of realising full value of new vendors introduced during 2017, and strong performance with existing vendors
  • Profit before tax finalised at AUD9.2m, up 22.8% compared to 4Q17. Pretax profit margin improved to 2.9% from 2.7% for the previous quarter

The Dicker Data AUD BBSW+4.40% March 2020 bond is available at a yield to worst of 4.98%pa. Read the Dicker Data research compendium report*

IMF Bentham class action against Brambles

On 23 April 2018, IMF Bentham Limited (IMF) announced that it decided to fund, on a conditional basis, a new matter that will be financed through its Rest of the World Funds (Fund 2 and Fund 3).

The new investment involves a proposed class action against Brambles Limited (Brambles) by certain current and former shareholders of Brambles. The proposed claim will allege that Brambles breached its obligations of continuous disclosure, and made misleading and deceptive representations to the market concerning its expected revenue and sales growth for the financial year ending 30 June 2017.

IMF is currently taking registrations from persons interested in participating in any class action against Brambles.

The IMF Bentham AUD 7.40% June 2020 bond is available at a yield to worst of 3.98%pa (at 30 June 2019 call date). Read the IMF research compendium report here*.

Liberty 2016-1 and 2016-3 ratings upgrades

On 19 April 2018, Fitch Ratings upgraded the ratings of four classes of notes from two Liberty Financial residential mortgage backed transactions. The upgrades were prompted by an increase in credit enhancement available for the specific notes. In addition, the transaction portfolios have been performing within Moody's expectations.

The upgrades were:

  • Liberty 2016-1 Class B to Aaa from Aa1
  • Liberty 2016-3 Class C to Aa3 from A1, Class D to Baa1 from Baa2, Class E to Ba1 from Ba2.

We have Liberty 2016-3 Class C in custody (upgraded to Aa3 from A1).

Merredin Energy update

We have provided an update for Merredin Energy (Merredin) and reiterate our recommendation on its 2022 notes. Please see the full update on the FIIG website here available to wholesale clients only.

Some key points are:

  • Merredin’s operational and financial performance in 1H18 is in line with the Research Team’s expectations, with EBITDA for FY18 on track against our forecasts
  • Expected low point in debt service coverage in December 2018, as the delayed impact of the excess generation capacity experienced in the last two years

The Merredin AUD 7.50% November 2022 bond is available at a yield to worst of 6.60%pa. Read the Merredin Energy research compendium report*

Plenary consent event

Holders of Plenary Bond Co’s (Plenary) 7.50% notes due 16 June 2021 will have received a Notice of Circulating Resolution and Explanatory Memorandum regarding Plenary seeking approval to amend certain terms of the notes.

The purpose of the requested amendments is to enable Plenary to refinance its existing notes in an efficient manner and ensure continued compliance with its covenants while not negatively affecting the noteholders.

The requested amendments are:

  • The approval to allow Plenary to incur additional debt is conditional on this new debt being used to repay the notes
  • The shorter notice to redemption and early actual redemption has no cash impact on noteholders as they will receive an amount equal to what they would receive if no changes were made (including the 103% premium due as a result on a redemption ahead of maturity), but shortens the period during which both the notes and the new debt would be outstanding concurrently

Please contact your relationship manager should you have any inquiries regarding the consent event.

Tesco sterling bond tenders

On 19 April 2018, Tesco plc. (Tesco) announced tenders for all of its fixed coupon sterling bonds, following the company’s FY2018 Preliminary reports. The maximum acceptance amount is GBP500m versus its accurate aggregate nominal amount of GBP1.9bn. The company can upsize the amount to be accepted and change the timetable.

The tender offer covers seven sterling bonds (the 2019s, the 2022s, the 2023s, the 2029s, the 2033s, the 2042s and the 2057s). Bond holders are being offered between 17bps (2042s) and 40bps (2022s) to take up the tenders.

The following Tesco GBP bonds are mentioned above and are available to trade:

  • Tesco 5.5% January 2023 bond; rated BB+ at a yield to worst of 3.89%pa
  • Tesco 5.0% November 2020 bond at a yield to worst of 1.19%pa

Updated Factsheets

Research has updated the following Factsheets available to wholesale clients only:

Asciano Finance

MPC Funding

Qantas Airways

Sprint Corporation

Please note all indicative yield to worst yields are accurate as of 24 April 2018, subject to change. S&P ratings are shown for some bonds.

*This content requires a wholesale client login.