On October 21, Siemens Gamesa bought select key assets from Senvion for EUR 200m, indicatively confirming our return targets of 100-150%.
Background: Being and investments invested in Senvion's debt at 35 cents on the EUR in April 2019, in the midst of a restructuring process, expecting 70-90 cents on the EUR at exit (link from April 2019: https://www.beingandinvestments.com/post/a-~100-150-potential-in-less-than-a-year). We subsequently managed to average down our cost to ~30 cents before liquidity of the bond dried up. The news: On October 21, 2019, Siemens Gamesa bought ~60% of Senvion's service business (measured in GW, or 8,9 GW of an estimated total of 14,4 GW under service), a blade factory in Portugal, and its intellectual property portfolio, for a total of EUR 200m.
Key take-away: Although the price includes the rotor blade factory in Portugal, and the intellectual property rights, the acquired service contracts (European) are likely older, meaning they have shorter contracted duration and higher maintenance requirements, than the remaining 40% of GWs under service. Assuming the rest of the service contracts are sold for the same price per GW, the total liquidation value of Senvion could go up to EUR ~320m, or the equivalent of ~80 cents on the EUR.
Regardless, in our view about 50 cents on the EUR have now been monetized, or about 66% return, with any further sales of Service contracts taking us closer to our return target.
Going forward, we are following the company and three key parameters: restructuring costs, continued further monetization of the turbine order book, and further sales of service-contracts to third parties.
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Note: Historic returns are no guarantee for future returns. The value of invested capital may fall as well as rise.