High debt-to-equity conversion and successful capital increase

Henry Wendisch19 Jun 2024 05:48

Topic: in May, LAIQON's 20/24 convertible showed a 80% conversion rate and a 5.3% cash capital increase has been placed successfully at a premium. Both capital measures underpin the investor's appetite for LAIQON's equity story.

High debt to equity conversion: the conversion window of the outstanding 20/24 convertible bond (A289BQ) closed on 31th May and 80% of bond holders chose to convert it to equity. This implies the issuance of 618k new shares, but also a small cash outflow (repayment + interest) of € 1.28m (eNuW)  on July 17th for the remaining 20%. In our view, the decision of the vast majority of bondholders to convert into equity signals that LAIQON's shares are more attractive than a debt repayment.

Capital increase successfully placed: out of the plannend 1m shares, 928k new shares at € 6.25 per share have been placed to investors, leading to gross proceeds of € 5.8m for LAIQON. While 356k new shares (38%) have been subscribed by members of the management and supervisory board, 572k new shares (62%) were subscribed by other existing or new investors. The fact that the subscription price noted a 20% premium to the market price (as of announcement date on 4th May) also underpins the mispricing of LAIQON's shares, in our view.

In sum, both capital measures increase the number of shares by 8.8% (i.e. 1.546m shares). Thus, we changed our per share estimates accordingly, while our P&L forecast remained unchanged. Moreover, this should also slightly improve the net debt position to € 36m per Y/E'24 (vs. € 37m as of Y/E'23).

Looking ahead, FY'24e EBITDA should still remain negative at € -2.2m (eNuW; excluding performance fees), but nevertheless show improvements over last year (€ -4.7m EBITDA). Currently, some of LAIQON's funds are approaching new HWMs increasing the likelihood of performance fees. Thanks to the high fix-cost base of LAIQON's business, FY'25e should see further substantial improvements thanks to 1)  sales growth (+19% yoy) driven by the promising Union Investment cooperation and 2) continued OPEX efficiency (eNuW: +2% yoy), leading to an overall positive EBITDA of € 3.4m (eNuW; +5.6m yoy).

Thus, we reiterate our BUY recommendation and keep our fair equity value unchanged, but lower our PT to € 8.70 (old: € 10.00) due to the inreased number of shares.


Latest Research


Frederik Jarchow

Equity Research

Latest News

Best-in-class research on selected German and European small caps. Immediately at publication and 100% free of charge.

To learn how we process your data, visit our Privacy Notice.