Sparc Group initiates a written procedure to amend the terms and conditions of its existing senior secured bonds 2025/2028 and provides update on expected EBITDA and leverage ratio for Q4

Sparc Group has launched a written procedure to amend its SEK1.1bn senior secured bonds (maturing March 2028) after 2025 revenue and EBITDA declines, reporting pro forma adjusted EBITDA of about SEK206m and an expected year-end leverage of ~6.0x. The proposal seeks temporary covenant relief—net debt/EBITDA at 6.50x for Q4 2025 stepping down to 5.00x by Q3 2026—with remedies including a SEK10m subordinated shareholder loan by 31 Jan 2026, a guaranteed H1 2026 equity issue of at least SEK10m, a prohibition on acquisitions/dividends during the reset period, tighter incurrence tests, enhanced reporting and a board strengthening. Bondholders representing >50.5% have committed to support the package, which offers up to 0.75% cash in fees, and if approved is designed to avert covenant breaches and buy time to stabilise operations, though leverage will remain elevated and execution risk persists.

Analysis

Sparc Group has launched a written procedure to amend terms on SEK 1,100m of senior secured floating-rate bonds maturing March 2028 after 2025 revenue and EBITDA declines; management reports pro forma adjusted EBITDA for full-year 2025 of approximately SEK 206m and an expected year-end leverage of roughly 6.0x. The Group cites general market conditions and operational difficulties and lists mitigation actions including strengthened project management, stricter cost controls, legal support and wind-downs of underperforming subsidiaries.

The proposal seeks temporary covenant relief (net debt/EBITDA at 6.50x for Q4 2025 then stepping down to 5.00x by Q3 2026, reverting to original terms from Q4 2026) and includes remedies: a SEK 10m subordinated shareholder loan by 31 January 2026, a guaranteed H1 2026 share issue of at least SEK 10m, bans on acquisitions/dividends during the reset, a <3.0x incurrence test for new debt, enhanced reporting and a board addition. Bondholders representing >50.5% have committed and the package offers early-bird and consent fees totaling up to 0.75% of nominal.

If approved, the amendments likely avert immediate covenant breach but leave material credit risk: the proposed cash support (up to SEK 20m of direct shareholder/issuance support) is small versus SEK 1.1bn debt and elevated 6x+ leverage, so execution of cost cuts, EBITDA recovery and receipt of pledged funding are critical near-term triggers to avoid default or refinancing pressure. Investors should monitor the written procedure outcome, receipt of the SEK 10m loan and equity proceeds, monthly reporting and the auditor-reviewed quarterly updates as primary indicators of covenant cure and credit stabilisation.

Key Decisions for Investors

• Reduce or hedge bond exposure until the Written Procedure vote is concluded and the SEK 10m shareholder loan and guaranteed SEK 10m equity are confirmed, given the elevated ~6.0x leverage and execution risk
• If you hold bonds and meet the December record-date eligibility, consider voting before the early-bird deadline (vote prior to 16:00 CET on 18 December 2025) to capture the 0.25% early-bird payment and the consent fee mechanics
• Do not add material new long-duration exposure pre-approval; wait for post-approval covenant documentation and at least one auditor-reviewed quarterly report (Q1 or Q2 2026 as applicable) showing EBITDA stabilization before accumulating
• Monitor as immediate triggers the receipt of the subordinated SEK 10m loan by 31 January 2026, completion of the guaranteed H1 2026 share issue, and adherence to enhanced monthly reporting; if any of these fail, consider accelerating reductions or activating hedges