Ny oppdatering fra ABG :

BUY, LUMI.OL: SP, NOK 7.70; TP NOK 19.00


Bank deal secured

Equity issue avoided – agreement reached with bank
Covenants waived for H2, headroom for H1’23
Should be a relief – stock to trade up
Equity issue not needed
Last night Lumi announced a financing update saying that an agreement has been reached with its bank (Nordea) that will allow for headroom for the coming school year 2022/2023. This was needed as Lumi would have breached covenants in Q3. The announced deal, will, in our view, effectively remove the need for an equity issue and enables mgmt. to focus on operations. Also, this means that Nordea has evaluated Lumi’s cost cuts as realistic, supporting our stand and our estimates (Sonans targeting NOK 60m-65m for the ’22/’23 school year)

Covenant headroom for next 12 months
The new financing terms include: (1) a waiver for leverage covenant in Q3 and Q4 of 2022, (2) new NIBD/EBITDA (excl leases) covenants for Q1’23 (4.0x) and Q2’23 (5.0x), (3) allowance for adjustment of EBITDA of up to 30%, and (4) no amortization the next 12 months. On our estimates we currently forecast an NIBD/adj EBITDA ex IFRS 16 of 3.1x in Q1’23 and 4.5x in Q2’23, i.e., with headroom to updated covenants.

Should be a relief – stock set to trade up
While we have argued an equity issue was not likely, we believe this announcement should be a relief for investors and expect the stock to trade up following the update. Including the press release last week saying that final student intake was marginally better, has, in our view, have de-risked the equity case materially. BUY, TP of NOK 19