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Ultimate Machines

30 September 2019 by jbchevrel

Novafives S.A.S. (NVFVES) is a French industrial engineering Group that designs and supplies machines, equipment and production lines for industrial groups (metals, autos, aerospace, cement, energy..). Historically, it has contributed to the first steam locomotives, the Alexandre III bridge, the metal framework of Orsay station (now museum) and the elevators for the Eiffel Tower. The company is private and has ~€425m shareholder equity. A crossover member since s22 included, the CDS (closed 770bp today) is the #5 widest name in s32. The 5y CDS has widened by +60bp since our Friday European close, after Moody’s downgraded the company by one notch to B3 - negative outlook, citing weak cash flow, still weak liquidity position (~€150m cash), declining orders and rising leverage (Co has a turnover of about €2b, generating an ebitda of ~€125m vs €700m debt so ~€575m net debt so ~4.5x net leverage). The previous downgrade by Moodys was in Sept 2016, to B2. Other than that, S&P has them rated B+. Consistently with the CDS widening, the cash sold off, a tad more than 3 points on the 5% June 2025s. In terms of debt split maturity split, it has ~€100m maturing in 2024 and the biggest part of it, €600m in 2025 (5% coupon €325m fixed rate and €275m floating rate). The name displays a negative basis, but which is ~in line with other € HY peers. The june 2025 CDS is paying ~800bp vs a Z spread of 840bp for the 5% 15Jun25s.