Gemsa
📉 The company faces a critical situation due to significant debt incurred for building power plants before generating revenue.
💡 Despite recent production starts improving its outlook, a potential Camesa penalty might have caused its current liquidity issues, delaying payments.
🤔 Uncertainty remains; while the situation might improve over time, a default isn’t ruled out, making current investment decisions complex without more information.
@ClaveBursatilTV:
“Now that you mention Gemsa, let’s get into that a bit. Honestly, I don’t want to spoil too much to see if more information comes out this week, but let’s see if it does. I have a strategy with Gemsa, but I can’t talk much because it’s an illiquid paper, and it’s an illiquid paper, and the reality is, well, I left it for channel members because, well, in fact, I show my personal portfolios, my total personal cartera, and well, I said I’ll make it private. Mauro, I know he doesn’t have time to edit it because he’s around, and besides, being low volume, it’s good that I discuss it with clients first, and then we’ll see. Eh, but for the moment, eh, I’m not interested in buying more, that much I can tell you. Maybe if it reaches a parity of 30-40, I might dare, but not here. I don’t have much more to say than that, and I can’t because it would be unfair to clients. Look, what I might conclude without having any information, truly zero, is that I previously spoke a lot with the people from Generación Mediterránea and understood the business being carried out. That’s why I was a bit surprised today and started drawing conclusions about why this might be happening. It’s a company that had to take on massive debt to start producing the power plants. It’s like it had to have a very, very large liability to simply start building the hardware. So, being in debt to start building and not generating anything. That’s why it was and is in such a critical situation for so many years. Only last year did it start production; many of the plants began operating. And this, well, that generated a path for the company to start saying, ‘Okay, what’s best for me to reprofile debt and eh, poder empezar a pagarlo, ¿no?’ This was a timeline where after 2030, you’d stop having eh debt, eh, you’d stop having such high liabilities, right? So, basically, the debt-to-EBITDA ratio started to drop. Why? Because the plants began operating, the EBITDA grew annually, and that caused the debt to decrease year by year. With that reasoning, you’d say, ‘Well, the massive exchange done last year starts to make a bit more sense,’ and the outlook was good. That’s why you say, ‘Well, more or less,’ and now I don’t remember the exact number of how much EBITDA each plant was estimated to generate, but the numbers eh added up, and the company was effectively functioning. And if you also considered potentially removing regulations in 2026-27 and Camesa not being the sole client, that also generated much more potential. So today, what is the last thing I heard, which was last year, today I say, ‘Well, what happened?’ So, what I might think is the whole economic situation in general, which hasn’t benefited any particular industry, and it’s like, well, everything is a bit more complex, meant they don’t have that liquidity today, and that’s why they aren’t paying. So, what I might think is, ‘Well, they could be in a bad spot today, but it could improve over time.’ Now, if a default actually happens, which would be moving to CISA’s situation, for example, well, then yes, it would be starting to, like now also with Celulosa, besides, grab and start seeing, well, if a type, if the debt is reprofiled, see the price you’re entering at, how much is it, eh, how much could you potentially gain if it recovers later. Of course, because they are not in default yet. Let’s understand that, no, no, not yet. So, they are delayed with the payment. But for me, what happened was the Camesa issue; it charged them a fine by withholding payments and left them without liquidity. It seems that was it.”
Watch the exact part of the video where @ClaveBursatilTV talks about Generación Mediterránea S.A. here:
Watch the video on YouTube
Read more articles analyzing Generación Mediterránea S.A. (Gemsa) at the following link. Gemsa stock.