Baltic stock exchange weekly highlight: ‘Grigeo’ share price already reflects the most pessimistic scenario

As court proceedings continue in the Curonian Lagoon pollution case involving Grigeo Klaipėda, PLY Analytics co-founder Vitalij Šostak commented to Verslo žinios on how likely the maximum fine is and what impact it could have on the company’s financial results.

“The requested fine, although significant, is far from devastating,” V. Šostak says in his assessment of the impact on the issuer.

According to V. Šostak, the current EV/EBITDA multiple is absurdly low – around 4x – and “it very much appears that the current market price already reflects the most pessimistic scenario.” Modelling a situation in which the company would need to borrow in order to pay the fine and compensation, “the EV/EBITDA multiple would increase to approximately 5.9–6x. That would already reflect market averages much more adequately.”

“Even in the most pessimistic case, if the company had to take on additional debt to pay the maximum fine, this would increase the net debt-to-EBITDA ratio to around 3x – assuming EBITDA remains unchanged and investment plans are not adjusted. Although this would already represent a fairly significant level of indebtedness, the company has reached such levels multiple times in its history, so such a scenario would be entirely manageable.”

Assessing the impact of the fine on Grigeo dividend payments, V. Šostak states that if the maximum fine were imposed, the company might have to review its dividend policy, but adds: “the probability is not particularly high; although the risk of a significant dividend reduction does exist from the perspective of the company’s financial capacity, it is not very large.”

The full article is available in Verslo žinios: Baltijos biržos savaitės aktualija: „Grigeo“ akcijos kaina įskaičiuoja pesimistiškiausią scenarijų.