Being and investments' latest investment: the debt of Senvion SA, at ~35 cents on the EUR, in the midst of a restructuring.
"If you do not feel comfortable investing a significant amount of capital in an investment, you should probably not do the investment at all"
Wind turbine manufacturers like Senvion have two very distinct and different segments: the turbine manufacturing/installation on the one hand (volatile with questionable economic profit), and the maintenance of the installed wind parks on the other (a fantastic business). In a way it has come to resemble the razor-razorblade business model, with the turbine manufacturing/installation being the razor, and the maintenance segment being the razorblade, but imagine the customers are obliged under contract to buy the same razorblade for more than ten years.
The restructuring is ongoing, with Anchorage Capital Group holding 50% of the debt. We believe the debt will trade against par, and we don't mind converting part of it to equity.
Although we see the face-value of debt reasonably well protected by the maintenance segment, we sincerely hope for a quick resolution, so that Senvion can also continue its turbine segment operations.
Note: Historic returns are no guarantee for future returns. The value of invested capital may fall as well as rise.