Renta 4: According to press reports, SEPI (the State-owned industrial holding company) could grant a convertible loan to Talgo to unblock the entry of the Basque consortium in the capital of the rolling stock manufacturer.
The operation would consist of a convertible loan amounting to €120 million to cover the fine of €116 million imposed by Renfe on Talgo for the delay in the supply of the 30 AVRIL trains. In addition, this fine would have a six-year grace period, starting to be paid in 2031 over the following seven years.
Assessment: Positive news for the following reasons: 1) the change of the company’s main shareholder would come to an end, unblocking decision making, 2) the refinancing with creditor banks is unblocked, and 3) the presence of the Spanish government in the shareholding would give Talgo greater credibility to access relevant contracts.
We reiterate our recommendation and target price of Under Review.
