Our 'CCC' issuer and issue ratings on Cabonline Group Holding AB (publ) (Cabonline) are unchanged following the publication of its second-quarter results.
Quarterly results significantly affected by COVID-19
Cabonline reported revenues of SEK 800m in the second quarter of 2020, compared with SEK 1.4bn in the previous quarter and SEK 1.7bn in the second quarter of 2019, with organic growth down by 52% year on year. The company-adjusted EBITA margin was minus 0.4% for the quarter. Revenues were significantly affected by COVID-19 as demand for Cabonline's services has effectively halved during the pandemic.
Cabonline has made considerable operational and financial changes; about 80% of personnel have been furloughed and the company is continually focusing on cutting costs by relocating call centres and cutting non-critical investments. The company says it has lost 20% of the cars in its fleet since the outbreak of the pandemic but notes that most of these losses are due to larger transporters reducing their car numbers but not actually leaving the Cabonline system. Cabonline has reported a recent increase in demand and expects some transporters to return as the market improves.
Bond covenants successfully amended
Since the end of the second quarter, Cabonline has successfully amended the terms and conditions of an outstanding senior secured SEK 1.8bn bond. The amended terms and conditions include an agreed waiver of a required net debt to EBITDA metric for the four quarters ending 30 Sep 2021 and a monthly liquidity maintenance test requiring the company to hold an average minimum cash balance of SEK 125m. Under the amended terms, the company now has access to a readily available ownership loan of SEK 140m if it breaches the liquidity maintenance test in the waiver period. If used, the ownership loan would rank pari-passu with the senior secured bond.
Cabonline had SEK 384m in liquid assets (cash on balance sheet less restricted cash of SEK 6m) as of end-June, including a fully drawn revolving credit facility of SEK 125m. Negative equity increased to 403m as of end-June from SEK 333m at end-March.
This commentary does not constitute a rating action.
If you have any questions, please contact:
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com