Intrum AB (publ)

And welcome to the interim report for the quarter of July to September 2024. We're coming to

you live from sunny and blue-skied Athens. We are here because today actually commemorates the five-year anniversary of our partnership with Paredes. Paredes is one of our biggest clients, the most important

partners globally. And selected members of management, including Johan and myself, as well as selected members of the board are here to mark this occasion. I'd also like to, before I jump into the heart of the presentation, welcome Johan. This is, as many of you know, he agreed to join us earlier this year. He's been on the ground for the last few weeks. And I can assure everyone that even though he's only been here a few weeks, he's already making a very direct and significant mark on the business. So welcome, Johan. Thank

you.

If we can go to the next page, please. I want to jump right into it. The third quarter. Everyone knows that the third quarter is

seasonally

weak. It's probably seasonally

our weakest quarter. And this quarter was slightly behind what we expected

on a few fronts, which we'll go into. But ultimately, because of our performance in the first and second quarter, generally speaking, as it relates to servicing definitely, and to a lesser degree to investing, we are on track year to date. And we are very focused to get into the fourth quarter and finish the year very strong. But more so than kind of the aggregate performance in particular, given the transition, what I think and I would like to have everyone focus on is that we are showing real progress on our plan. As everyone knows, we articulated it a year ago. Our plan is to develop and improve our servicing business, our client service business, to transition to capital light, to be more efficient on an operational basis. This quarter shows real progress on all three fronts. And then on top of that, we obviously have our remaining work to do on our capital structure and our recapitalization. But starting with servicing on the bottom left, while top line in aggregate was slightly down, our EBIT increased 45% versus last year. The most important figure that I point to as to the health of our business in servicing is that margin figure, the second bullet point on the bottom left. A year ago, we had 12%, today we have 18. So 600 basis points margin versus last year, quarter on quarter. Year to date, we're at 17, as you'll see later. And we expect to hit by end of the year with a strong fourth quarter, close to 19%. I think our objective is just under 19%. So very positive EBIT margin. That is a function of efficiencies, focus. Also, I'll get into cost in a bit. We have had growth in the north and middle of Europe, dragged by the lack of growth in southern Europe, which is a common phenomenon that I'll get into more later. And we continue to see our clients signing up for our services as they need us more than ever with a very strong quarter in ACV signing. So servicing on all fronts, particularly that margin, and this is broad based, is quite healthy. On investing, we collected at 98% in the quarter, 100% year to date, you'll see that later. But importantly, that 98% represents 106% versus original forecast. So we continue to meaningfully outperform our original forecast at the time of putting these portfolios on our balance sheet. Our cash income in EBITDA decreased slightly different by the smaller book and the lower investment pace. We did invest probably less than I would like, certainly less than my CIO would like at 311 million, but we did invest at a very attractive IRR at 20% during the quarter. But more importantly for investing and how we're transforming this business, it is the second bullet point under strategic initiatives on the top right. We've agreed during the quarter, we have yet to close, but we've agreed to acquire five portfolios in our partnership with servers. This is an aggregate investment of in excess of 150 million euros, you'll see later for the translation of that into SEC, and we have 30% of that, but more importantly than our 30% share of the investing on that, we get meaningful investment management revenues and we get meaningful servicing revenues from that. So that is an initiative to leverage our investment and investing capability with third party capital, which brings in fees on investment management, which we have not had previously in the history of the company, and it grows our servicing business further, adding to the already strong performance in servicing. So investing is transitioning successfully, which shows real progress with the service partnership. Servicing is improving on the margin. Top left, cost, we're becoming more operationally efficient. We have identified as everyone knows since late last year, a total of 1.5 billion of run rate cost savings. We've realized through the third quarter 1.1, we'll get the other 0.4 in the end of 2024 and into 2025. Our cost income ratio decreased 2% during the quarter, and as you'll see particularly later on in one of the O-Hon slides, our cost in aggregate year on year is down about 8%. So we continue to perform, and our efforts in cost reduction are really starting to bear fruit, which as we've said from the beginning is a fundamental pillar of our strategy. We need to attack and be mindful of cost and continue to improve our margins and our overall operational efficiency. And then there's ultimately more work to do still. Leverage ratio and capital structure. So leverage ratio was at 42 in the quarter, a year ago it was 44, but higher than the second quarter this year, 39. As we indicated then, it's gonna fluctuate at or about four times plus or minus for the next few quarters. And as we get through the next few quarters, as we continue to de-lever and we get through the recapitalization transaction, we will then see I think a steady progress, at least we have planned a steady progress down to our target, which as many of you know, and all of you know, I presume, is three and a half times or lower during 2026. And then finally, on the operational front, I'll talk about it later, but we continue to roll out transformative technologies such as Ophelos. We rolled it out in Netherlands and Belgium and Spain. We're about to roll it out in France. I'll get more about that later. And then I'm sure everyone is mindful of our announcement last week where we announced the initial steps towards a recapitalization and a pre-packaged chapter 11. I'll get more into that later. And I'm sure more questions on that will come out in our Q&A, but that's a meaningful step towards realigning our capital structure to our business plan and to give us the time to deliver on our business plan, which I think this quarter already shows tangible results in terms of that direction. Next page, please. So on the recapitalization transaction, last Friday, we announced the solicitation of creditor's support or creditor votes, not support, for a pre-packaged chapter 11. I'm actually extremely pleased, and we've already announced this, to demonstrate overwhelming creditor support for our plan and for the extension and amendment of our capital structure. 73% of our note holders, 97% of our banks or RCF leaders have supported the plan. What's important is that with this level of support, those creditors who have signed a lockup agreement now will confirm their votes in favor of a pre-packaged chapter 11. Pre-package is the operative word. We will only go into it when we know that we have confirmed all the votes. And we, as a result of that, we'll know the outcome. We'll have certainty on the outcome. It is very important to note that this isn't something that the company chose to directly address this capital structure. We're entering into a chapter 11 as a deliberate step to affect a capital structure change with the overwhelming support of our creditors. So we know we'll get in and out by the end of the year. We will then subsequently do a Swedish reorganization to give effect to the chapter 11 decision in Sweden and we'll complete our capital structure changes as early as possible in 2025. I'm sure there will be more questions later that we can answer during the Q and A. Next page. So now transitioning to the market. I think this page is fascinating because I think because of interest rates starting to moderate and inflation starting to moderate, I think there's a little bit less focus on the distress that the consumers felt over the last years. We're not seeing that. We continue to see a very fragile and stressed consumer. Top left, 37% of Europeans based on our surveys. Borrow on a regular basis to meet their monthly requirements. So the same theme we've seen for the last year to two years of consumers having income. This isn't an unemployment crisis yet but they don't have enough income to meet their cost of living. Top right, you can see that it remains incredibly fragile as well with almost 40% of borrowers not being able to fund an unexpected expense of as little as 200 euros. So today as we sit here, the consumers buy no means out of the woods and we think this will continue to drive stage two loans and non paid invoices and MPLs which will then feed into the need for our services. What's really interesting on the bottom half of this page is that there's also a structural or generational shift in the borrowers or in those people with whom we have to deal with to collect from. 31% of millennials on the bottom left just don't pay their bills on time. They don't lend as much importance as baby boomers did for example in the smaller print below it. That's a structural or mindset or generational change that will lead to unpaid invoices and unpaid loans that we will have to help people with. What's really interesting, particularly relevant to how we want to transition to be a technology player and a technology based collector and remember we take 160 million actions a year of which 30 or 40 million are connected phone conversations a year. 25% of our surveyed individuals would feel more comfortable agreeing to a payment plan with an AI bot than a human being. Think about that. That's the reason we're making the shift we're making with Ophelos and in other ways to become more technological and interact with our customers and give them a better customer experience. The nice byproduct of that is it also allows us to collect just as much but at a lower cost because these technologies fundamentally reduce human capital intensity and also lower unit cost. So the market is evolving both structurally or generationally but also the market remains in terms of the consumer remains fragile. Next page please. The highlights before I jump into the two individual businesses are those that you've already somewhat heard from me 18 versus 12% margin last year. That is really the momentum. There is momentum in middle and north as well at the top line and that business continues to progress very nicely towards our target which Johan will go through at the end of his presentation of 25% during 2026. Top right, the real transformative activity in investing is the five portfolios. This is 155 million euros. It's not only gonna generate investment income but it's gonna kick off our investment management income and then it's going to contribute meaningfully to our servicing. And as we take that quarter and start stacking up results of these five portfolios plus subsequent quarters you're gonna see a meaningful ramp up of investment management and a meaningful addition to our servicing revenue. Bottom left cost, I've already talked about this, 8% lower year on year minus 2% cost income ratio. Our continued progress in cost savings will be visible in the coming quarters but I want to emphasize that we continue to look for efficiencies on a continuous basis. It's not like we have 1.5 billion and then we're done. No, we have to be staying on top of our cost base on a continual basis and we continue to look in every area for additional efficiency. And then obviously as I mentioned and already went through we launched our recap. So on the two businesses as well as our operational platform as well

as our capital structure we've made meaningful progress. Next page please. Here you see

servicing adjusted income on the top growing at 6% on a trailing 12 month basis and you see that bottom point of the margin in servicing in the first quarter of this year with that 10% quarterly margin leading to a low of about I think 15 and a bit. That's up to 17 on a trailing 12 month basis thanks to Q2 and Q3. If you look at Q2 and Q3 this year versus Q2 and Q3 last year there was a 300 basis points outperformance in Q2 and a 600 basis points based outperformance in margin in Q3 which I mentioned earlier. That shows that there's momentum on the margin. And that's why we're confident that we're gonna continue to potentially hit our target by the end of the year which is a shade of 119 on a trailing 12 month basis and we continue to progress towards that 25 a couple of years out. Just as important as that we look to continue to grow where we can grow and ultimately also add business that's up a higher margins. On the bottom you see organic growth on a trailing 12 month basis. Was higher in the quarter in Northern Europe but on the trailing 12 month basis is 1% so that shows momentum and was pretty much the same in middle of Europe on the trailing 12 month basis as it is in the quarter. But in both of those areas we're also adding this business or adding new business at meaningfully higher service line earnings margin. And then in Southern Europe we do have the headwinds of the fact that those markets are stock markets as opposed to flow markets. That means our collections are greater than new inflows. New inflows exist but our collections are greater given the large size of the books. And that creates a headwind at the top line but still Southern Europe is our highest margin as well as our highest cash flow market but we are trying to do things to mitigate the headwind of having a smaller and smaller AUM base. Nonetheless what we're doing there and the new business that we put on in Southern Europe is also at a meaningfully higher margin. Next page. Here you see trends in the three different movement trends in the three different regions. External servicing income growth across the board which is very interesting. This is external not internal servicing income growth. Very meaningful in middle Europe which I'm very happy about because that is our largest economic catchment area. Adjusted EBIT growth very meaningful in Northern and middle. Less so in Southern because although we grew in Southern Europe we do have certain headwinds particularly in our largest markets for example Greece which we're addressing but ultimately there's a structural decline there in margin over time. And then our margin expansion obviously correspondingly with the EBIT growth is significant in both Northern and middle and less so obviously in Southern Europe for the reasons I described and the reasons we discussed many times in the past. Next page. In investing this is an cast extraction exercise to reduce our financial risk recently. You can see that we've extracted on a trailing 12 month basis 7.4 billion. The vast majority almost that entire amount has gone to reduce debt. We espouse that strategy as of a year and a half ago and also as of exactly a year ago starting in Q3 you can see in the graph bottom of the bars we have settled in at a much lower investment base well below replacement rates. So therefore since the pink is bigger than the gray we are net extracting on a continual basis. Our current run rate is about a half a billion a quarter two billion a year. Our replacement value cap ex is more like three and a half or close to four billion. So for the foreseeable future we continue to extract until we see that investment management benefit from things like we're doing with servers really start taking off. And then I believe that this portfolio should start to stabilize over the coming quarters. But for now it's a lower level of investment and net extraction of cash to reduce debt and lower our financial risk. Next page please. So here you see collections on the top and then our collections performance on the bottom. Not surprisingly a slightly smaller bulk. So we have a slightly smaller collections aggregate collections. But importantly on the bottom since 2000 until 2022 we've been basically at or around 100%. We're at 98% a quarter. That's 106% against the historical forecast which is the more important figure. And the year to date we're at 100 and year to date we're at 110% against original forecast, 100 against active forecast. And if our revaluation process works correctly we will continue to outperform historical underwriting

forecast and

against active forecast we should be right at or

around 100% going forward. Next page.

So pivot to capital light. What have we done? We obviously sold the back book which is a big step forward. And then we've done the partnership. I've already talked about these five deals with Cerberus. Total capex when they translate the 155 million euros into sec is 1.757 billion and our portion is there on the 479 sec. That's what we will invest when we close these deals going forward. They're broad based Germany, Italy, Spain and the UK. They're not focused on anyone's geography. Also we have a very meaningful pipeline of future deals across almost our entire footprint. You can see on the second to last bullet point it's across several countries and almost our entire footprint. So we see more to come similar to these five deals. And the final documentation regarding the partnership which at this stage we're operating under a very detailed and agreed term sheet, but the final documentation will be completed by year and that's completely on track. The most important thing about this is that we will get our expected returns which will be in the high teens on that 479 million sec that we invest, but also and transitioning over to euros a bit. These five deals will generate up to around 10 million investment management revenues and over 30 million servicing revenue. So again, the benefit of having this partnership model to our investing allows us to create different types of revenues, investment management revenues, as I said, on these five deals, perhaps up to even 10 based on our projections over their life. And then also very meaningful increased servicing revenues and all that comes without having to increase our balance sheet, which is the fundamental purpose of our capital light strategy. Next page. Ofellos, Ofellos is critical. It's a transformative technology. It is an AI based collector that we purchased last year in the UK, we've talked about it many times in past quarterly results. They've now been meaningfully deployed in Netherlands and Belgium since Q3, since the beginning of Q3 and Q2 this year. We now see enough data there to see visible impact. So what we see there, and it's still on small scale but it continues to get bigger and more reliable every day but we see comparable recoveries at meaningfully lower costs. And we're talking about double digit reduces in cost 10 to 20%, roughly speaking, depending upon the nature of the asset. Imagine that a relationship or that impact when you extrapolated to our entire activities. We have in the third quarter on time, on schedule rolled out in Spain, although still very early days. There we're gonna see many more cases because that's just a fundamentally bigger market and a different market. You're gonna see more cases given to the platform. And we're rolling out in a few weeks in France. And the more important part of the rollout in France is that that's not just us pushing our new technology and digital collections capability into one of our biggest and most important markets. It's also there specifically a pull because one of our most important clients, in this case a utility company in France has actually insisted upon us giving them this technology and gave us a mandate as a result of our promise to give them this technology. So that's why we're rolling it out. So it's both push and pull on what is the transformative fundamental different operating methods as it relates to collections. So progress, more to come as we progress. Next page. And then finally, one of my favorite slides, you all have heard me say this before, this is my why slide. We helped a little bit under five million people in the last quarter. That's a consistent number around the five million mark. These are people who become debt free. These are people who are excluded from society. They're excluded from financial society, I should say. They can't get their bank account, they can't get a credit card, they can't get a loan until they become debt free and put their problems behind us. We do this on an industrial level, high volume, but on an individual level. We do this in a very sensitive time. Still get very good ratings from those consumers. We do all of this while still delivering for our clients, which we collected in the quarter of 124 billion, which is only about 10% is for our own book. The other 90% is for our clients. So we deliver for clients while doing right by customers. And also we do something that's very important for the financial stability and sustainability of the financial system and for society as a whole. So this is a very important why slide. We're certainly motivated, certainly for me, but also for many of our employees. Next page, please. So now I'll transition it over to Johan at the room. Go ahead, please.

Okay, thank you.

So looking a bit at the numbers. First of all, I mean, our income in our adjusted EBIT is down 5% compared to Q3 last year, whereas the total cost is significantly down versus last year. I think the cost trend is something that we expect to continue and we will continue even greater emphasis on that item. And I will talk more about that a bit later. We do have some big one-offs that is affecting EBIT. We have goodwill, a write down of 700 million that mainly relates to UK and Norway. And then we have a 400 one-off related transformation cost as part of the M&A processes that we are running integration on. And then the net financial items, they decreased 13%. This is on the back of lower debt and the leverage ratio slightly increased versus Q2. And this is mainly on the back of lower cash EBITDA after the same December. If we continue to the next slide, I think on the servicing, this just again illustrates the margin trend that is going in the right direction. Another thing that I like to highlight is also the fact that we are increasing and growing our business in North and Middle actually help us to diversify the whole servicing setup. So we basically get a better contribution from several countries rather than rely on a few, which is also part of the strategy going forward to make the whole income base much more reliant and stable. I think again, the EBIT impact is from goodwill to a large extent and most of that is actually related to servicing. I think again, here, if you look at the EBIT and how it trickles through, the good thing on servicing is that we actually compensate the slightly negative impact on income with cost reduction, which means that EBIT are on a quarter to quarter is up. And one more thing that we actually spend quite some time on when it comes to servicing is looking through repricing. So we are spending a lot of time looking at performance management of our accounts and looking at our client base and we have very intense discussions with many clients where we need to adjust the commercial terms. Moving on to the next page, which is investing. I mean, the 98% is slightly lower than we would have liked to have it, but again, we are still operating on a 106% basis if you take a lifetime and we don't see any major issues. Another good thing in the quarter is that proceeds from JVs is much better than Q2. It's lower than we would have wished for, but it's also a business that is not 100% linear and we expect a better, even better performance in Q4. I think Anders already mentioned that we invested 311 million and the underwriting IRR is 20%, which I think is very attractive.

Moving to page 18,

we can look at the cost. I think this one at least gives me a lot of confidence for that everything we do is giving us the effects that we actually have anticipated. So now in Q3, we can clearly see that the absolute cost base is going down. If you take a like for like and you do the adjust cost base quarter on quarter, it's down 8%. And you can also see here this between M&A and the underlying cost excluding M&A and it goes down even more. This is gonna be a continued focus and it's not only about cutting the cost sort of per se, it's also about thinking about our way of working, thinking about automation, digital, and also structural measures that we can do. So this will be a continued highlight in the next, well, probably foreseeable future. Page 19 is our net debt. You see the net that's slightly increasing, which might sound a bit counterintuitive, but what we do have is that we have a finest net that is affected by the fact that we do pay a large portion of our interest on a half year basis. So that obviously affects our cashflow. And then investing is higher than what we have signed up in the quarter, but this is because we have a couple of deals that rolled over in terms of payment from Q2. And then we have the cash effect and net net that gives us a leverage that increases slightly, but we will keep this on a stable level or maybe even decreasing going forward. Maturity profile, we put up on page 20 the way we will look once we have done with the refinancing. So what you can see is that the big stack that sits in 2025 almost gets fully pushed out, except for one small maturity. 26, we will have no matures in the new structure. And then in 27, 28, 29 and 30, it's evenly distributed apart from the RCF that has moved into 2028. And our interest rate sensitivity right now is at 520 million and our cash and cash equivalence is at 3.4 billion. And then just to be clear, we have repaid the 1.5 billion that was due on the 1st of October.

Wrapping up

with our medium term financial targets. So we are making better progress than expected on the servicing revenue growth, the external one. And we have to keep that up, even though this quarter was slightly down, but this is rolling 12 months. We are making progress on the margin. Even though we're below where we started, we have turned the trend around and we're making progress every quarter now to the last three quarters. On the investing, we're actually slightly below where we're supposed to be. This is also intentionally and gradually we will get back up to the 30, but it's also linked with the front book and our progress there. And then lastly on the leverage ratio, as we said, we are slightly higher now. We will probably remain at that level, but then gradually towards 26, we will hit 3.5. So I think with that, I will hand over to Anders again.

Perfect.

If we can go to the concluding final remarks to the next page, please. There. Just to sum up, significant cost reduction realized. You saw that particularly on Johan's page but more to come and also on a continuous basis, we need to continually look for efficiencies in extracting more from our operating platform. We did meaningfully progress in the quarter and I'm sure there's gonna be lots of questions in the Q&A on the recapitalization initiated by our announcement last Friday. We have an ambitious rollout for all fellows and then our two big businesses, improvement in profit and servicing and stable collecting while transforming, particularly with the front book deal, on investing. So we think that the third quarter, while overall seasonally slow, slower than we wanted, but overall -to-date were good, we're focused mostly on getting into and finishing the year strongly in the fourth quarter. But fundamentally, we're also putting real progress on the board as it relates to all our targets and our fundamental direction in transforming this business. I think now we'll transition over to Q&A before we do so. I wanted to just say that it's not just Johan and myself here but for purposes of the Q&A, in case there is something that both Johan and I cannot address or something of more technical nature, we have asked our advisors from Hula and Loki and Milbank to join us. So we have Sarah Levin from Milbank and we have Matteo Bezzini and Manuel Martinez from Hula and just to supplement anything that perhaps Johan and I cannot fully address in the Q&A. I'm also pretty aware before I hand it over to the operator to give you instructions that I'm pretty sure that Jakob Heselvik will be the first question. So Jakob, prepare your question. I think you're first up. But operator, please take over.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Jakob Heselvik from SEB. Please go ahead.

Good morning everyone. Apparently I was first. So that's good. Order is restored. Good

morning.

If we start on the investment side, portfolio collections of 98% is slightly worrying in my view. Can you give us details where the pockets of underperformance is derived from, i.e. which countries? And also was the performance of one of in this quarter or do you think you can recoup the performance or could we see an alteration of the collection forecast going forward?

I mean, thank you and good morning Jakob and thank you for your question. First off, as you know, our revaluation process is continual. We revalue things up and down on a net basis. We always end up higher than our original forecast. So put the 98 in the context. It is 106 as we've said two or three times on this call, but nonetheless, it is an underperformance relative to our active forecast. It is concentrated in a few portfolios. There was a portfolio in Portugal. There was another one in another Southern European country, but it's very like here and there. I am not worried about the 98% whatsoever. We're at 100 year to date. We expect to finish the year at around 100. If our revaluation process works the way it should, we should always be at around 100. Any drift below in us individual quarter is nothing I'm specifically worried about. But to be very specific also on those portfolios where we're underperforming, we're addressing that head on and actually deploying more resources and we're gonna correct it. But we should be at around 100 and I am not worried about a 98% in the quarter. And you need to put it in context also because it's 106 relative to underwriting forecast.

And if I may add, I think we already deployed extra resources in Q3 and you can see that in the cost base of investing is slightly higher and those effects will probably

trickle through fully into Q4. Yeah, exactly. Okay, thanks for the clue. I'm sure that's not your own question.

No, my next one is actually, if you can help me understand what triggered the goodwill write down and what was related to the in Norway, as you earlier said, I don't recall that the Northern region performs quite well. So what is not performing according to planning in Norway?

So Norway, the goodwill write down in Norway is very small. The bigger part of the goodwill write down relates to UK and UK we are going through the transformation program. And the trigger is for Norway, it's just that we did update our assumption our weighted average cost of capital and that triggered very small impact on the goodwill and on UK it's twofold. It's the weighted average cost of capital but it's also the performance given that the transformation is taking longer than we expected.

Yeah, and remember, Jakob, these goodwill write downs are non cash, the reductions in alignment of an intangible on our balance sheet with our business plan. We'd like to continue to be mindful of that. Going forward and we will be.

Yeah, but the goodwill write down in Norway is very minor.

Okay, thank you.

And then on the cost, the cost base decreased by 400 million in quarter which is a quite large decline actually and which is impressive. Was there a delay in recognizing the cost benefit from reducing the FDs by 13% during the year or what were the 400 million that you managed to get out in a single quarter? I mean, it's

a number of different things. I mean, first of all, what I just want to put up also, I mean, when you have a quarter where you have slightly lower collection that obviously has an impact on cost. So part of the cost reduction is not only related to our cost savings programs. On the cost savings programs, I think it's mainly FD related savings that is coming through in Q3. But on top of that, we're also reviewing external span. We're looking through projects. We're looking through basically everything we can review. I mean, we're looking also through the way we sit our footprint, but the main driver is that FD reductions are now starting to come through.

Yeah, and it's important that even though there's a volume effect, that cost income ratio, which takes into consideration income still went down 2%. And I want to be sure that emphasize something that Johan just said, we're looking under every single rock. We're looking at every opportunity to continue becoming more efficient and this trend should continue.

Yeah, that's good. You know, I've been a bit worried on your cost trajectory in the past. So hopefully it will turn around going forward. And before I just take too much time, investing in the quarter amounted to only 311 million. And you have invested 1.1 billion year to date, which is considerably below your target of 2 billion. So what do you project the full year number to be? Now, what do you expect for 2025?

Well, first off, since you've been concerned about our cost base, give us some credit now that we deliver, but let's move on to your question. So the 311 was lower. It should have been around 500 million, but I think you've heard me say many times that you cannot plan investing on a volume or market share basis. Ultimately, you have to see what is available in the market on a bilateral or auction basis. And you have to see where you think you have the proper risk versus return. And it doesn't, it's not linear. It never is linear. It never has been in my 20 years in this business. So some quarters will be lower just because I'd rather not do a deal here or someone else is willing to be more aggressive when I'm not. So that happens. The 1.1 is relative to what would have been, to what would have been 1.5 for the third quarter. We have a 2 billion run rate. We're at 1.1 versus 1.5 through three quarters, which if you just linearly distribute the 2 billion over four quarters, it's a half a billion a quarter. So you relate the 1.1 to 1.5. And I want to emphasize that one of the other reasons that we set up on our hands is because we want to see the right risk reward. Remember that the 311 is at 20%. Okay, that's meaningfully higher than we've invested in the past. And we view the current environment as requiring a higher level of IRR. And we're gonna be selective. We won't invest for investing sake. That's a recipe for disaster. We expect to finish the year close to our 2 billion, particularly these five deals that we just said that on with Cerberus come in and other things. The fourth quarter is always a strong quarter. I would suspect we're gonna end up really close or around the 2 billion. But again, it's gonna be dictated by what we see in the marketplace and whether we see attractive return relative to the risk.

Okay, thank you very much. Thank you,

Jacob. The next question comes from Erman Carrick from Carnegie. Please go ahead.

Good morning. Thanks for the presentation. For taking my question. So a few actually, if I may. Maybe if we could start with on the servicing. So we see the organic growth actually increasing, increasingly negative territory. And I think you talked for a while now about that we should see that turn around. And it's your Southern European business. That's a drag. What's out there? When do you think you can stop that bleeding or kind of get the other regions to grow enough to offset it?

I mean, it's a good question, Erman, and good morning. And thank you for participating today. The one, two punch of Jacob and Erman are consistent this quarter with past quarters. But in servicing growth, we're gonna have growth in middle and Northern Europe. They're flow markets. They're markets where we're expanding our perimeter, where AUM is growing. They're markets also that are more balanced between loans and invoices. So we're gonna see that and it's gonna continue. Ultimately in Southern Europe, as everyone knows, it's 99% loans. It's one time very large transfer of historical stock. And it's not fixed perimeter, because there are new flows, but new flows are limited. You see all the low cost of risks that exist across all the major banks in Southern Europe. So what we're trying to do there, and particularly here where we're sitting right now in Greece, for example, is trying to make sure we address what is an increasingly decaying core AUM that we do expect increased inflows. So that will mitigate some of the negative attrition on the AUM. And we're trying to add new businesses. We're trying to create an invoice business in Southern Europe to compliment our loan business. We're trying to make it more of a sustainable business. But some of these markets are going to decay and then they're gonna eventually land in a sustainable format. And over the next few years, we will see that. I don't have a specific timetable for you on when one is gonna offset the other. For now, I suggest we look at it on a disaggregated basis, because that indicates the health of our business. And then be mindful also that Southern Europe, although it's dropping on top line, is much higher margin and much greater cashflow. So it's still very significant.

All right,

thanks for

the

additional color. Then I think it's quite interesting that you talked about with the fellows and the rollout there. But could you give us any indication that you mentioned, for instance, some utility company kind of asking basically for having that service? How does the margin look? Because I suppose you put in much less effort, but can you retain that kind of efficiency gain or do you need to give that away to your clients?

No, it's a great question and thank you for that. Fundamentally, clients who we, we've now bought this about a year ago. We rolled it out to three countries, Belgium, Netherlands, and Spain. We're about to roll out to France. Obviously we have a very aggressive rollout plan. We'll roll it out probably between fourth quarter and early 2005 to all our remaining large countries and then eventually to almost all of them. When we talked and we're obviously talking to clients today engaging with them, making sure they understand what this means for them. What the feedback we get from clients, and this is across the board and I've received it directly from CEOs of some of our biggest clients is this is completely game changer. This is the future. A lot of people talk about it, but don't have it. We want it as soon as possible. And this one client in particular, and my head of France or our head of France is particularly persistent. So he got a big piece of business as a result of wanting to have being able to and promising that we would deliver this. Now get to your economics question. It's a really good question. If you look at this side by side and that's good for comparison purposes, that's not our operating model to be clear. But if you look at it side by side, purely our current collections architecture versus purely Othello's, we can collect the same. But when you look at the percentage of collections that drive higher margins, if we collect 80% of what we would collect normally with Othello's, we would do it at 50% less cost. It is the last 10 to 20% to get that collections to equivalent part that is higher cost. It's higher marginal cost. That's the way it is. You have low hanging fruit, easier collections and every marginal bit on a fixed perimeter comparatively is more difficult. So like for like, if you wanted to just use it side by side, as I said earlier, we can collect the same, but we do it probably between 10 and 20% cheaper. That's unit economics. Then you have to apply it to our activities and also recognize that this is not applicable to every single part of our claims. Any legalized claims, this doesn't apply to and it doesn't apply to any real larger secured claims. It really applies to what is the majority of our AUM, but still not all of our AUM that is consumer unsecured, literally small ticket. If you have a 15 or 20,000 consumer unsecured loan, it's less impactful, but it's very impactful on small ticket and it's very impactful on invoices, which could be a hundred euros, 200 euros. The benefit there could be quite dramatic. And what we see there is that clients to your point about is it a commodity? Are we giving that back or can we actually be viewed as differently by clients? The answer is the latter. Clients view us differently when we deploy this. They view us as more value add, more technological, and therefore we can maintain pricing while not having to give away the cost benefit. And the beauty of it also is that their clients or the consumers in this case, get a better customer experience. So this is really the Holy grail, so to speak of our business where we can collect just as much on a much greater margin and the customer has a better experience, the consumer in this case, as I say, customer. So that's the unit economics. And Norman, this is a longer topic. We can certainly talk offline more about this to get you more detail.

That sounds very exciting. Thanks, Grant. Then just one final question. You mentioned there that you've added a little bit more resources for collections during Q3 for the pockets you saw of underperformance. Could you tell us at what point you did that and how certain do you feel that this is a two-fold thing where you're working more, but you still end up with less collections, you know, partial macro environment

or something like that?

I mean, in general, if you add resources into, especially some of the more secured claims, you will collect quicker. And that's essentially what we've done. I mean, this is not a massive investment we put in. It's just that in some portfolios, when you see that they are not fully performing as I expected, you add a couple more resources and then you speed up the collection process and you get more focus and that's what we've done. So it's not a massive thing. It's just, we don't want to be at 98. And I'm pretty sure that next quarter we will come back to 100 again.

Yeah, and just to add to that, I mean, I think you all know, because you've followed our business long enough that collections is a function of what you do, but also how intensely you do it. And adding intensity, it does yield more collections. That's the point Johan just made. And also let's recognize that our portfolio, our proprietary portfolio is much older than what we get from clients. And so every day it becomes slightly harder to collect on a decaying portfolio. It's still throwing off a great amount of cash. It's still well above original underwriting. But it's not uniform. So if we see a slight underperformance, we increase intensity and that's what Johan was referring to.

Got it. Thank you. Thank you. Thank you, Herman.

The next question comes from Gustav Larsson from ArcGIS. Please go ahead.

Good morning and thank you for taking my question. Just to follow up here on the cost cutting and the real-life synergistic making. Finally, we're seeing very good results from the last quarter. Cost savings, does that mean you're getting more comfort in even more cost savings going forward? Do you think you can successfully aim for higher cost savings during 2075?

Good morning, Gustav, and thank you for the question. You read my mind. I didn't say that, but I did mean that earlier when I talked about continuing to be vigilant and make sure that we're maximizing the efficiency. Whether that's a formal program or just continual focus and ongoing cost cutting, we're not limiting ourselves to this 1.5 to be clear. We're going to go beyond that.

Okay, thank you very much. But do you think the organic growth in servicing is a negative? Do you think the cost cutting is counteracting on your potential to achieve organic growth? Can you do both at the same time?

That's a good question, actually. That's a very, very good question. I think the nature of the business in North and South, the answer is yes, I think we can do both because we can be more efficient. I think the answer is in the middle and the North, given the new flow, we still need to be more efficient, but it's a different business, which is why things like what we just addressed on Ophelos and things are more relevant because it's a more balanced business, invoices, loans, etc. I don't think we're cutting muscle. We're still cutting fat, in my opinion, and we're just getting better at doing what we do in the middle and the North. In the South, it's different. In the South, we need to be mindful of a decaying perimeter. We need to be mindful that it does get harder over time on a decaying perimeter to collect, but at the same time, we need to do things that are smarter. And here we're sitting in Greece. Greece hit its peak about a year ago or so, but we have much less people today than we did a year ago, for example, and we will continue to be efficient without sacrificing delivery for our partners here in Greece, but it's going to have to continue. Cost-cutting is a continual thing. I don't want to make it episodic like we've done in the past. I want to make it continual, and we will do more, and I think we can grow servicing. And let's recognize also that growth and servicing is going to benefit tremendously from the ramping up of the capital partnership, which has not been there for the last year or two years. That $30 million of revenue that could be generated over the life of these five deals that we just agreed to is meaningful increase. So we're not only going to increase from our existing clients, but we're also going to have that capital partnership ramp up, contribute to servicing growth.

So I

think we can do both, Gustav.

Perfect. Thank you. So I would like to go on to the recapitalization program. Just a few questions. You discussed it in the call here. I understand you have evaluated all potential routes. Can you comment on what made you settle for Chapter 11? And I understand the prepackaged Chapter 11 is a little bit cheaper than a traditional one. Can you also perhaps discuss what the estimated cost will be for this?

Yes. So we have been working

with our creditors for several months. We, as I said, have reached a position where we have overwhelming support, but not 100% support. We have 97% of our RCF lenders, and we have 73% of our note holders, which includes our senior unsecured notes, which are U.S. dollar-signed, one of the reasons Chapter 11 is available to us, as well as our Swedish medium-term notes. So 73% of our note holders in aggregate have supported this. That's an endorsement of the plan that we have, and that's an endorsement of the company, and that's an endorsement of the terms of the recap, the business plan and the recap. We have evaluated all alternatives. You have basically three alternatives. You have a consensual deal. We did not reach the level necessary

for a consensual deal. We would have to have gotten 100% of

RCF banks and more than 90% of our note holders. We did not reach that. We did reach overwhelming support, but we did not reach that. We have more than enough to do a Chapter 11. The alternative to Chapter 11 would have been the UK scheme of arrangement. However, that is a longer process and not as definitive a process. It is more open, and therefore we decided to go for a U.S. process. The U.S. process is incredibly efficient. If you have sufficient votes, which we're now confirming the votes we've already gotten commitment for, if we have the 73% and the 97%, which we fully expect to have, we will enter into and exit Chapter 11 in a question of weeks. We would think that this is going to be launched in November, and we would emerge by year end. It might fall into early next year, but it will not be extended. That's not the nature of the process. The core process in the U.S. is very efficient. And particularly for prepackaged, where you only go in once you have the votes, it is procedural and it's effectively just an implementation mechanism. It is not an insolvency. We have not missed any payments. We have not breached any covenants. We have chosen to do this to affect a change in our capital structure, along with the vast majority of our creditors. This is not a cheap exercise. It is cheaper than if we were going to do probably an extended scheme of arrangement or a Chapter 11 that was not fully supported. But it's going to be very, very meaningful. We'll come back with costs, but it's going to be a very meaningful cost. But in the grand scheme of things, given that we are getting the benefits that Johan outlined on the debt profile page, we're getting near-term maturities pushed meaningfully out, giving us a lot more time. We don't anticipate having any meaningful maturity really until 27. We don't expect, given our business plan, to have to refinance anything until 28. We're sitting in 24 right now, so that gives us ample time. And it's really what we said since the beginning of this process, which is aligning the capital structure with our business plan. Hopefully, I answered your question, Gustav.

Thank you very much. Just a follow-up there. Perhaps you can't answer already, but do you think you will provision it now in November when you start seeing disability on the costs, or would this be a 2025 exercise

on costs?

I think this will probably... I mean, this is related to... When we launch the process, we will not provision, but when we see that there's a high likelihood of the process is done, we might do so, but most likely this will all come at the close of the transaction. Exactly.

Okay, thank you very much.

I think that's the last question from me then.

Go ahead, Gustav.

Leverage is 4.2, and Johan, you said stable. We'll hear in the next few quarters. Do you think we should put the factory in and then be leveraging during 2025, or will this progress be backloaded to 2026?

No,

I think that given the things that are going on, given also how we hopefully start progressing even further on the business side and getting the operational leverage with costs and then growing more stable top line, and then when the capital light starts kicking in, we should definitely start seeing that the leverage ratio comes down. I think it will take a couple quarters.

Yeah, remember that there's also a structural downshift in our leverage as a result of closing the capitalization. There's a 10% haircut on all our notes, which is meaningful, obviously, or all our senior and secured notes. That's going to be a lowering of our leverage. We are progressing on the cost cutting, and the capital light is taking off. So I would say in the second half you're going to see more meaningful progress, but until mid-next year, it's going to be pretty stable around the four times.

I mean, the new structure would also have higher QFALSTM today. So there are many variables, but that's why I think it's the second half of next year where you start seeing impacts.

Okay. Thank you very much. That was all from me.

Thank you, Gustaf.

The next question comes from Angeliki Bairaktari from JP Morgan. Please go ahead.

Good morning. Thank you for taking my questions. Just a few follow-ups from me, please. So first of all, with regards to the servicing margin progression, what is the outlook for the first quarter and the full year 2024,

please? Then just a clarification on the goodwill impairment. Can I check, does that affect at all the ERC in the investing division? Does it have to do anything with sort of investing revenues, collections, or really not at all? It only affects servicing? Third question, with regards to Southern Europe, I mean, you said you are in Athens today. What is the likelihood of the partnership you have with Syriza being renewed beyond the next five years? And how should we think about pricing in Greece going forward? Because my understanding is also based on your servicing margin in Greece that it is currently quite high. So what is the likelihood that this remains high in the future? And fourth question, with regards to the recapitalization transaction, is there a risk that if there is litigation from those creditors outside of the 73% that are already in the lockup agreement, could that derail at all or postpone the recapitalization transaction process, the Chapter 11 process? Thank you.

Thank you, Angeliki. As always, several questions. I will address the first and the third one. I'll ask Johan to address the goodwill, and then I will ask my colleagues from Milbank to address the litigation point, although I'll give you my sense initially. So on servicing margin, I think you asked for the outlook on 24. As I said earlier, the full year outlook is, and on my page you see the quarterly for every quarter up until now, so the first three quarters, and the second and third quarters has been meaningfully higher than the equivalent quarters last year. By year end, we expect to get into the mid-18s close to the 19s. So I think it's 18.7 or 18.8 is the latest figure that we have at the end of the fourth quarter, and we have every confidence we should get there by full year. And then as you know, we have a target, and as Johan said earlier, of 25%, which by the way, exists in some markets, not all markets, which is why we're moving in that direction, and it is very broad-based. That's a very important point that Johan made earlier. But we have a goal of getting to 25, broadly speaking, across almost every market by 26, by 2026 as part of our median term financial targets. So that's the outlook on servicing margin for this year and also on the track that we're on over the next two years. On Southern Europe, and then I'll move over to Goodwill, and then we'll ask Sarah particularly to address the litigation point, but on Southern Europe, you talked specifically about Athens and Areas. I'll take a small step back, and I've talked about this before about Southern Europe. Southern Europe started in Spain, then in Italy, then in Greece. They were done at times where the respective banking systems were under stress. They were transactions that had an industrial element to it, i.e. outsourcing of meaningful activity. Also a financial element because there was payment, upfront payment, for all these contracts, mostly in Spain and then in Italy and most recently here in Greece. So they have a financial element, and as you correctly identified, they therefore have a higher margin than a pure industrial margin. Our margin here in Greece is in the 40s. But what I and every single one of these contracts, sorry, every single one of these markets, the theory is you do a contract and you build a business during the time of that contract, and then you continue the relationship. And that's what's happened, by the way. In Spain, there was an extension of the contract and a moderation of the original, some of the original contract, but most particularly my experience was there, where we lowered the margin, extended the contract period and also had some interim payments that were made to eliminate the financial element of it and isolate the industrial long-term relationship of us managing something that's important for the bank. It's the same process, a little bit delayed over Spain. And in Spain and in Athens, to address your question directly, I mean, obviously, I was with the CEO of Piraeus the other day. We talked to Piraeus obviously every day. They're one of our most important partners globally. It is a long-term partnership, and we would expect to have a relationship well beyond the next five years, although that specific contract goes through to 2029, with under certain arrangements and extension capability. But no matter what it says in a contract, I think eventually our margin here will move to a more industrial margin, and our relationship with Piraeus will extend well beyond whatever is a contractual period on the initial deal. Hopefully, I answered those two questions. Johan, do you want to address the will? On the

goodwill, no, it does not affect the ERCs. It's not related to ERCs. Again, as I said, the main trigger is that we changed some assumptions on our cost of capital, and that's mainly related to that we now have announced that we are going into the prepackaged Chapter 11, this pre-solicitation consent. And we had a long discussion with the auditors and we agreed that we update the cost of capital assumptions. So that was the main trigger. And then on top of that, the UK is going through transformation, so we haven't really seen the full benefits that we anticipated.

Yeah, and it's important that our goodwill in its entirety is attributable to our servicing business, not to our portfolio. Yes. It doesn't impact our ERC. And we want to, over time, continue to align and look with a very sharp eye at that goodwill amount to make sure we align it with our business. Last point, and I may ask, I'll ask Sarah to supplement my question, but you asked about what is the possibility of the non-supporting note holders. In particular, there's been a lot of news around a 15% holder, a 15% group of senior and secured notes, and a much smaller group of medium term notes. Every indication is that now that we've gone into Chapter 11, they are going to remain on the sidelines, so to speak. I anticipate us concluding this process with those creditors who have supported us to date, i.e. the 73, the 97. The 73 is more than enough to get through the process. If there's some formal and legal opposition from any one of those two groups, I think it's unlikely, but obviously theoretically possible. It could delay the process, but this is one of the reasons we chose Chapter 11, in that it's a very efficient process that even recognizes any kind of opposition. But with the numbers we have supporting, we'll still get through this very efficiently, more so than other markets, which is why we chose Chapter 11. So I would ask just to have my friend, colleague and advisor, Sarah, live in to add to anything I might have said in case I didn't fully address it.

Hi, yeah, look, not much to add from my perspective. What I would add is this, the objecting group is obviously, as Andres has alluded to, not a blocking minority. So in other words, the locked up creditors are sufficient to reach the required voting thresholds in each class of creditors that will vote. The Chapter 11 process, one of the benefits of the Chapter 11 process is for the legal requirements that the company will need to satisfy for the plan to be confirmed. There is an enormous body of law, which allows us to feel relatively confident about the process and allows the process to be pretty predictable. It is not our view that any objections that could be raised by the objecting group in that process would materially increase risk or increase the time in the process. But as Andres says, it's of course theoretically possible.

Thank you, Sarah. Angelique, I hope that answers your four

questions. Thank

you very much. Yeah, thank you. Maybe just, if I may, just a quick follow up on the Goodwill with regards to the UK. You acquired Arrow, the platform from Arrow in the UK last year.

Does the Goodwill environment reflect any of the purchase price for that or not really? It has to do with older legacy stuff.

No, well, remember that the Arrow deal was predominantly a PI deal. We bought half the book and then we had two small platforms that were a much smaller piece of the overall transaction. It really has to do with where we sit today and the future prospects of the combined interim plus Arrow platforms relative to the prior expectations and the impact on our intangible that's allocated to that business. I don't know if there's anything you want to add to that.

I mean, it's all related to the servicing.

Thank you. Thank you very much. Thanks a lot.

Thank you, Angelique. Next.

The next question comes from Alexander Coyford from Nordia. Please go ahead.

Yeah, hi. Thanks for taking my question and the presentation. Maybe just an additional question on Goodwill and Goodwill impairment. Just trying to get a sense of you see lower or higher risk that your auditors would start advocating for raising cost of capital requirements in other markets. That would be my first question. Second question, if you could just remind me on this 3.5 leverage target that I believe you set in place before this chapter 11 restructuring. So

can it be induced from that? That the target would be 10% lower as a result of 10% haircut. And then maybe just the third question, if I may, on Southern Europe. If you can describe how you compete here on your business and whether customers raise questions specifically or concerns on your credit rating. Thank you.

So

maybe

I'll

start on the Goodwill. I would say on the cost of capital I see less risk going forward. Because now when we are going into the prepackaged chapter 11, we assume that we will come out on the good end. That will actually help our cost of capital discussion. We know the cost of debt for the foreseeable future. And the equity part of the cost of capital will also be much more stable. So that is less of an issue. I think the bigger question will come on the performance. And that's always a discussion we have with Goodwill, looking at your projections. Exactly.

On the leverage target, the answer is no. The one-time haircut does not get us to 3.5. And as Johan predicted earlier, the new debt, while lower, does come with a higher ongoing cost. That's part of the agreement, although it gets significantly extended. We still believe in our target by 2026 to get to the 3.5. I would like to get lower than that over the time frame before we have any meaningful refinancing requirements, which as I said earlier, is probably not until 28. But the progress to get there doesn't materially change, but it does get lower risk profile in terms of getting there by virtue of the recapitalization.

And then on Southern

Europe, how do we compete? In Southern Europe, in some cases, we have contractual partners. And then we build around them and we compete based on the performance and cost. And that's less so here in Greece, where we have a larger concentration with one partner who is subject to a contract that is evolving. As I talked about earlier, in Italy, we have Intessa South Palo as our main partner, but we have significant broad-based clients around that. And then in Spain, it's probably the most diffused and it's the most industrial. There also, we did the acquisition of Aya, so there's a lot of moving pieces. And we're readjusting the platform. We did a very significant resource reduction earlier this year. We continue to make that platform more efficient. It's one of our biggest revenue, servicing revenue countries, but five or six companies there represent 90% of our revenue. So while concentrated, it is still more diversified than Italy or Greece, for example. So we compete on service and on cost, but largely speaking, in these three countries, because it's a more concentrated, a loan market as well. We compete on relationships as well.

Okay, fair enough. But if you get some sort of request for proposal or something like that, where a potential new customer reaches out, would they specifically have questions in relation to your solvency, credit rating, etc.? Or is that not typical? What do you think?

No, no, it's a good question. I forgot to address the rating question. It's a very, very good question. We have been in constant communication with our top clients. Our local market heads have been in constant communication with many of their clients, if not all of their clients, except the truly granular ones. We've also been in constant contact with all the regulators on this process, kept them informed of the direction it was going in a month ago, the formal decision more recently. And you know what? I'm actually it's an obvious question. I'm actually pleased to say that we have not had anywhere near as much noise, so to speak, on our process. I think we've explained it well. I think when the other thing about ratings is that people understand that during these times of change, like a recapitalization like we're undergoing, rating agencies take a very defensive posture. They immediately default to a very low rating. They do in discussions with us and in some cases with the market indicate that they will re-rate us immediately and that at a better level. Once we emerge from the recapitalization, there's a lot of moving pieces. There's the discount. There's repurchases, et cetera, et cetera. And when all that settles, I would expect us to be re-rated as well as to get on another path to get to a better rating. But right now, kind of, so to speak, in the eye of the storm, they become less relevant. And thankfully, we haven't had major concerns from clients, partly because of the nature of the situation, but also partly because we made a big effort to make sure to be proactive and over communicate with our external stakeholders, particularly clients, but also regulators and others.

So I would say, I mean, the question from clients are more related to the prepackaged Chapter 11 rather than the rating. Correct. And just recently, I mean, just yesterday, I got a question from a client explaining what it means, what it means for our subsidiaries in particular. And they're all going concerned. So, and so is also the holding. But I mean, we explain over and over again to our clients and they so far they understand and rating has not been the main topic.

Yeah, I think it's important to note and I want to touch upon it that this is a holding company capital structure adjustment. It's not impacting our local entities for the most part. It's not impacting our operations for the most part. It's not an operational restructuring. This is a financial restructuring and we will continue to deliver and regulators who are very worried about that understand that in the local markets and clients, largely speaking, want to know more. But haven't raised major concerns after they're informed.

Yeah. Okay, thanks. Appreciate it. Thank you.

As a reminder, if you wish to ask a question, please dial. Pound key 5 on your telephone keypad. The next question comes from Wolfgang Felix. Stereo limited please go ahead.

Yes, good morning, Andres and everyone. Thank you. Just one follow up question. I've been hesitating to ask, but I'm not sure you can fully answer it. But I was, to be honest, fully expecting that you'd reach an agreement with the Laza group. Now, obviously you've communicated you're going for chapter 11. Spent considerable time today explaining us where exactly you stand on this. But I was wondering, given you haven't yet actually applied. If I don't know, the group were to come and say, well, before you actually go through all that expense. Let's settle for something smaller that you find would be tolerable. And they'd therefore hand you that super majority. Would you, I guess, then stop going for chapter 11 still at the last hour, so to speak, and, you know, do it under the bond documentation?

Hi Wolfgang, thank you. And thank you for answering for the question. I want to be very clear here. We will always listen, obviously, to any one of our bondholders. But I also want to say very clearly that there that we have already launched this process. So it's going to take a lot for us to not complete on this process. Today we have more than enough to affect the overall recapitalization with the 73 percent. I'll note also in your math that the only way to avoid a process is to get above 90 percent across all of it. They do not get us there. They do not. So my operating assumption is our operating assumption is. What we initiated last Friday is what we're going to do. And I wouldn't assume that anything else is happening. And we are doing that with the creditors support that we have because it's more than sufficient to affect the recapitalization.

OK, well, that's thank you very much. Thank you, Wolfgang.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Excellent. Well, thank you all for your questions. Thank you for the support and the following of the company. We're obviously available outside of this forum as well. Please contact us. We have a lot going on at the company. But I think over the last certainly last few quarters, but really since probably the second quarter of 23, we have really started setting the foundation for the future interim and a better end. We did the back book sale. We did the prompt book arrangement. We're doing the recapitalization. That all sets us up for investing in the right way for setting up our capital structure. Our service focused is really bearing fruit. Our transformational technologies are starting to get rolled out. And we really think that's all going to contribute to an execution on our business plan and a reaching of our median term financial targets. But there's still a lot of work to do, and we need to continue to deliver and focus on delivery. And ultimately, we are here to answer any and all questions about that journey. And thank you for accompanying us on that journey. Have a great day.