Thread by @Plum_Capital

Quick update on my best idea and largest position (by cost basis) - $IEA

Things are working out as planned. Company priced the new HY notes as of Aug 6th. I had a few takeaways and thought this would be helpful for anyone following along

Most importantly, the $300mm Unsecured Notes priced at 6.625% with some OID - 98.483. This is a 6.875% yielding piece of paper. I was slightly disappointed, I thought this might price as tight as 5% given strength in the HY market

But 6.625% is definitely good enough. Recall that we are refinancing a Preferred with a dividend rate of 12% cash (and higher if PIK'ed!). The cash interest savings are gargantuan, and turns the busted cap stack to a more traditional one with a revolver, HY bond and public equity

Not going to bury the lede, the Company had to pay a hefty make-whole to Ares to make this happen. But I still believe this is a hugely value-creative deal, because it simplifies the capital structure dramatically. Removing the biggest overhang for the stock

And let's not forget that this transaction is going bring a LOT of new eyeballs to the stock. My suspicion is many buyside shops are actively doing work on this name as we speak, and possibly building positions already. It's a pretty liquid stock too, for a small-cap

If that isn't enough for you, $IEA will be a significant beneficiary of the infrastructure bill, which at this point seems like is in the bag. Even if the macro tailwinds take a while to materialize in the PnL, this provides a favorable outlook for the market to appreciate

The stock is still very very cheap, barely over 6x EV/EBITDA for an EPC that has all the macro tailwinds in the world. Generic public EPC comps all trade around 8-10x (best-in-class in the teens). I think $20/share is in the cards within the next 6-12 months

Full writeup linked below
plumcapital.substack.com/p/iea-plums-fa…

Update post regarding the recap linked below
plumcapital.substack.com/p/material-upd…