Earnings are in freefall. 4Q20 EBITDA reported on 19 March was a negative EUR 7.6m, meaning that average annual EBITDA over the past three years has been just EUR 36.7m. Management hope the vaccine situation can eventually spark a rebound in crack spreads but in the meantime operations could remain tough. 

On a brighter note, liquidity is a saving grace. The company had a EUR 174m cash position at 4Q20 while it also has a EUR 77.7m drawn EUR 100m receivables financing facility and EUR 49.7m drawn of its uncapped Macquarie inventory facility. But EUR 64m of its cash position was boosted by deferred taxes, which will eventually have to be paid, while the company has also delayed scheduled plant turnarounds. 

Two factors can help sweeten any refinancing attempt, which will be tough given new HY investors could be reluctant to participate in the name due to its depressed earnings. Firstly, Heide could appeal to ESG investors given its Westkuste 100 energy transition green hydrogen project. Secondly, sponsor Klesch could support the refi plans given it has taken out EUR 359m of dividends since the start of 2016 and collects annual management fees on top. 

Raffinerie Heide’s Caa2/CCC+ rated EUR 250m 6.375% senior secured 2022s are indicated today (30 March) at 88-mid yielding 14.6%, according to Markit. Are the bonds a pull-to-par story as the group manages to pull off what currently looks a challenging refi, or will operations be unable to recover in time?