Kongsberg Automotive ASA (KOA) Earnings Call Transcript & Summary

Thank you, everyone, for connecting and dialing into the Kongsberg Automotive Business Update in conjunction with the impact that the coronavirus has in our business. We've had a little bit of difficulty setting up this call. So as opposed to what we normally do, which is to open up for Q&A with voice, after we're done presenting, instead of that, we'll have to only interface questions and answers through the web. So if you do have questions, please post the questions on the web, and I will try to answer those as they come in after we're done with essentially going through our verbal presentation. We -- I'm here together with Norbert Loers, our CFO, and we did post a press release this morning, which, in our opinion, is a pretty dramatic press release. As you're all aware, the whole economy is extremely impacted by the coronavirus. That is, of course, also, and in my opinion, especially true for the global automotive industry with this various complex and chained supply chains. So essentially, when one place starts closing down, most other places close down as a result of lack of supply of parts. This whole thing -- I mean, we all know how the coronavirus started. Luckily, we have a little bit of a -- whatever, what should I call it, intelligence from what has happened in China, which was out a couple of months before, let's call it, the western world, and we've seen what has taken place there and how fast or slow China has been back into production, which luckily now is actually going reasonably well. That being said, due to the more complex infrastructures and interfaces of the western world and also the extreme discipline that was exercised by China, we do expect that getting back to normal life will probably be a slightly slower process than what we saw in China. If you look at what happened to Kongsberg Automotive and our end markets, essentially, the big trigger for the shutdowns that we are experiencing at our customers started out with some countries and regions imposing government-mandated closures. And that had an extremely fast ripple effect throughout most of the western world. And just to give a little bit of a blend of sequence of events here. In the second week of March, we basically had, what I would call, normal revenues. They probably weren't as high as what we had forecasted, but they were stable. Go into the third week of March and the revenues basically declined initially by somewhere between 10% and 15%. And then into the fourth week of March, and that's where we basically saw an immediate drop of approximately 50% from the week before, and that decline continued into the week starting on March 30, where there was an additional, give or take, 20 percentage points decline in revenues from the week before. That's a sign of basically what's happening to our customers. The way we do business is that customers order, they send in so-called EDIs. We produce to those, then the customers pick up at our facilities and that's when essentially the sales take place. This came very, very fast. And the way the OEMs dealt with this was that they did not really have time to adjust the EDIs, but rather, the truck stopped showing up, and obviously, they did not pick up their goods. And consequently, our revenues go down. The big question that everyone has is how long is this going to last? And I don't think anyone has the answer to that. If we did have the answer to that, I don't think we would see the type of volatility that you see in the financial markets and the companies would certainly have a much easier time as far as planning, et cetera. All that being said, we have worked out various scenarios as far as how long the shutdown takes, whether it is regional differentiated or it's one for all. And we have estimated that from a liquidity need, we're just not in the position of being able to go out with revenues and profitability figures because that's even more uncertain than the cash flow figures. But what we're seeing is, from a liquidity standpoint, we are going to need somewhere between EUR 90 million and EUR 150 million in additional liquidity as a direct result of this coronavirus pandemic. To help you understand a little bit what kind of underlying assumptions there are, in very, very broad terms, best case scenario is that the shutdown scenario, as we see it today, last for, give or take, 1.5 months. And the worst-case scenario, the way we have formulated it, is that it will last for approximately 3.5 months with obviously some slower pickup rates. Once it's over, we're not assuming that this thing is going to be like flicking the switch and we're going to be back to normal? From sort of -- if you try to do the incremental calculation here and you say, okay, 1 month more or less, I think you pretty much have the answer. It's a span of EUR 60 million for 2 months' worth of additional shutdown period, and that is pretty accurate in terms of modeling. If it lasts for 1 month longer, the impact on liquidity will be approximately EUR 30 million. There's some start-up costs, so to speak, in that you can never react fast enough to these things. We have taken out a lot of costs. We have gotten into some detail as far as telling you what we've done with our headcount, where today, as we speak, we have approximately 1/3 of our headcount on full time and 2/3 in a combination of short-time work, furloughs and similar types of measures. The reason that we still have 1/3 is that most of our factories are actually still open. We do have some limited customer orders from customers that have not had shutdowns. And we need to keep operating our plants in order to supply those customers, partly because of business relationships, and we need to continue to serve our customers if we can. It's obviously important revenues. Unfortunately, that leads to operating those plants at very inefficient levels, but nevertheless, the only plants that we have that are completely shut down are 4 plants as we speak today. So the remainder of our plants are partially open, except for China, where all our plants are fully open, and operating, I wouldn't say, at normal levels, but somewhere in the 80% to 90% range of pre-corona times. So that pretty much spells out our liquidity needs. Now obviously, we need to have a plan and intention as far as how we want to secure that we have sufficient financing for getting through this period. We did increase our RCF with Danske Bank by EUR 20 million. We're extremely grateful for Danske reaching out for us during this period, which is obviously not easy for us and not easy for the economy in general. In addition to that, we do intend to go out and do a capital increase through a combination of convertible bonds and straight capital increase of approximately EUR 100 million. Obviously, in this type of market, that will probably lead to some level of discount in order to ensure that we actually get the full amount subscribed to. In addition to that, we are relatively far as far as negotiating a loan for an additional EUR 20 million, which is going to be guaranteed by assets, which is something that we can do under our bond agreement. And on top of that, we have an additional room for EUR 10 million worth of additional RCF. And we also see that we can do financing based on either factoring or supply chain financing somewhere, and it's a very broad range, somewhere in the range of EUR 15 million to EUR 40 million. On top of that, which is less meaningful, we do see that we are probably going to qualify for government support. But realistically speaking, that will probably be no more than somewhere in the EUR 10 million to EUR 15 million range, and the timing is extremely uncertain. We could most likely go for more government financing or government-backed financing. But in our home country in Norway, that will be excessively expensive because that would typically be done in the form of unsecured bonds, which at the current pricing levels, would probably not be a prudent decision to sign up for, for a -- somewhere between 3 and 7-year period. That would put a big burden on the company for the future once we get this past us and we can get back to normality. With that, we think we've taken a relatively prudent approach to securing that we're going to get through this crisis. We believe that with the measures that we have initiated, that we're pretty confident that we're going to succeed with -- including the capital increase, that we will be sufficiently funded through this crisis. And there's probably a little bit of room even if the crisis and the shutdown situations last for somewhat longer, not a whole lot longer, but somewhat longer than what we have estimated in our scenarios. For the purpose of the capital increase, we've engaged a law firm for that. We have also engaged a -- an investment bank for that. It may very well be that we do assign one more adviser on the capital raise in order to get as broad coverage as possible, thereby making it, I should probably use the term, somewhat less difficult to get the capital increase through. Earlier, we've mentioned that, yes, we are pursuing selling some of our noncore assets in the form of some of our business units. Obviously, this is not a particularly good environment to sell in. Nevertheless, we do have indications of interest from some parties on this. We're obviously continuing to pursue that. But realistically speaking, in this type of market, whether it's also going to happen or not, that that's more going to be lottery, and we certainly do not believe that we can base our funding through this period on proceeds from that and whether we're going to be able to close out some of those deals in this calendar year. Right now, we see that as unlikely. You never know, but I would certainly not count on it to put it that way. As far as when we return to normality, I don't know. I don't think anyone knows. I think we're all extremely eager. We certainly have 2/3 of our workforce being extremely eager to return to work and then to produce again. The only thing I can say is that once the world is ready for it, we are certainly going to be ready for it. All our headcount measures are of temporary nature. So it should be a relatively easy thing to get back to normality. That pretty much sums up what the situation is, what we're planning to do. As I said earlier, I think we've taken a pretty prudent approach to this. I think that this is the way to have a reasonable degree of security that we are going to be financed through this period of extreme difficulty both from a health standpoint and from a customer's being shutdown standpoint. Luckily, we have been relatively spared as far as employees being infected. As of right now, the total number of employees among our more than 11,000 employees before this started, we have less than 5 cases of infected people in the company itself. Those have obviously been isolated. There are 2 of them that are actually in the hospital. Luckily, they both seem to be recovering fairly well. That being said, most of our sites, obviously, production sites, but also all our office sites, including our tech centers, are either shut down or we have home office type arrangements, which is usable for a certain part of our workforce, but we will have also furloughed a lot of our office staff around the world. That pretty much concludes what we had to say today. I'll try to cover most of the questions. I've seen that there's been a couple of questions coming in.

One question is whether I can talk through a little bit of labor cost savings in each jurisdiction and also in light of government measures, such as short-time work furloughs, et cetera. And it is an extremely mixed bag. Generally speaking, if you look at sort of the wealth of the different countries where we have operations, the benefits are typically somewhat proportionate to that. If we start off with our home country, in our home country, we can furlough people, we essentially pay for the first 2 days. And after that, the government picks up the bill for the furloughs. It's similar in Germany. It's similar in Switzerland. It's actually fairly similar in all of the Western European world. The exception to that is France, which has an even richer type scenario, where there's basically 100% coverage. Although from a cash flow standpoint, it comes with a month delay. If we go to the low-cost countries, it's a whole different story. And in some countries, we actually -- we can furlough people. The most extreme is that we got to continue to pay 100% of their salaries. That's similar to what happened during the shutdowns in China, where we also continue to pay 100% of the salaries. We have a couple of those types of countries. It's somewhat staggered time-wise. Those countries will be Slovakia and Mexico, the most dominant. And then on a sliding scale, Poland is slightly more favorable, as seen from the employer side. Hungary is somewhere in between. And Mexico, once you get past the first month, where we need to pay 100%, then we basically get to a point where we need to pay 65% of the salaries and 75% of the fringe benefits. So generally speaking, and then this is a total paradox, the lower labor cost you have, the less financial benefits you get from furloughing and short-time working people. I think that should answer that question. We have another question on liquidity level on March 31, and what are the components of EUR 90 million to EUR 150 million in liquidity number you cite? I think I pretty much answered that. At the end of Q4, we said that we had EUR 62.5 million worth of liquidity, how does that work out? Well, right now, we're obviously in, what I would call, liquidity buttoning down mode. So we've been extremely tight on payments. Consequently -- and these figures are not yet published but we have a total net cash flow in the first quarter that is somewhat better than what we forecasted back in our earnings call when we did the fourth quarter earnings call. I don't want to go out with that number, but it certainly is significantly better than that. And then today, we're at April 3rd. So the numbers aren't totally final yet. As to the overall EUR 90 million to EUR 150 million breakdown, as I said, I think I've done that. Norbert, I don't want to know if you want to run quickly through starting the year with EUR 62.5 million, and then we basically estimated that we're going to have a EUR 23 million negative in Q1, primarily due to seasonality that was before corona. Q1 from a cash standpoint was not too impacted by corona because even though we took measures starting mid-March, and certainly towards the end of March, there's no significant cash flow effect from that before we get into the late April time frame. From a cost standpoint, there is, but from a cash flow standpoint, there is not. So you have kind of very complex effect here of cash flows versus business activities. And Norbert, do you want to comment on that?

Yes. From a liquidity and immediate cash flow perspective, we had liquidity reserves of EUR 62.5 million at the end of the year. We had forecasted a negative cash flow of EUR 22 million for the first quarter. We have significantly better cash flows in the first quarter due to all kinds of measures. And remarkable measure is that we could reduce significantly our value positions with customers. We also achieved the increase on the RCF of EUR 20 million. So for the months of April and May, we see ourselves in a very sufficient liquidity position.

It's a very long string of questions. Actually, there's 2. Is the equity or convertible bond rates underwritten? No, it's not underwritten. We have had some very indicative discussions without wall crossing as far as our biggest shareholders. And generally speaking, there has been support expressed for capital raise, if that is necessary. Most people are expressing that, yes, they support that, but it's got to be under the condition that it's relatively equal opportunity for all shareholders, which it certainly will be. But no, it is not underwritten. And we have no hard commitments because we have not intended to wall cross investors and then thus, we have not done that yet. As far as estimated cash burn rate, under current conditions, I sort of indirectly gave you that figure, give or take. The longer the shutdown period lasts, the burn rate under those conditions, assuming that the total shutdown period will not be longer than 6 months, which is a limit for many of these short-term labor measures, the cash burn is somewhere in the neighborhood of EUR 30 million a month on an incremental basis. Next question is -- give me a second here, and I'm trying to edit as I speak. Next question is relating to whether we can comment on discussions we have with largest equity holders to date and others stakeholders in relation to the proposed capital raise. I think we have pretty much answered that question as well. Questions rolling in here. Just give me one sec. Next question is, can you clarify whether the leverage restriction on the RCF is waived so the full EUR 40 million plus EUR 20 million on the RCF is available? We have not sought waivers. We are comfortable as far as our RCF position at the end of Q1, which will be -- where the RCF will be drawn no more than 40% of the RCF that we had available on the end of the quarter, that would be March 31. So there'll be no covenant testing for Q1. As to Q2, the covenant testing will obviously take place at the end of that quarter, depending on the capital increase and the timing of that, which we're intending to complete by no later than the first half of May, we do believe that we're going to have that, too, and thus, the discussion on potential -- potentially having to test for covenants would not be there under the assumption that we do get the capital increase committed to at that point in time. If for some reason, we do have more headwind on the capital increase, then we would obviously enter into those discussions with the RCF lenders at that point in time. Can I indicate any splits of the EUR 100 million between the convertible bond and the equity financing? No, I cannot. Basically, some of the feedback that we've gotten from reaching out to some investors is that some investors are very interested in a convertible bond. Other investors are not just very interested, but somewhat limited in their mandate as far as their ability to invest in a convertible bond. That's the reason we're doing a mixture of the 2. There's obviously a pricing mechanism that needs to be set, so that both have pricings that are compatible with each other. So that one group of investors does not get a huge, let's say, benefits from a pricing standpoint over the other group. We have no hard feelings as far as how much comes in from either part. More detail on that when we obviously go out in the market, which we are expecting to be somewhere in the late April, early May time frame, probably more likely in the last week of April. Let's see. Sorry for being a little bit less fluent here, but I'm scrolling through a lot of questions. Is your RCF fully drawn now? And is the calculated liquidity need in excess of the current utilization, the RCF is not fully drawn? At the end of the quarter, it was drawn to the level, if my memory serves me right, of, give or take, EUR 20 million. And the total available RCF was EUR 50 million. The RCF total facility today is of EUR 70 million, and that's obviously something that's going somewhat up and down, depending on the day but we've certainly drawn slightly more than that. But no, we have not done like many others have done, which is to draw the full amount of the RCF available. Another question here. There's one question that seems -- there's one that keeps scrolling. You mentioned the possibility of raising a bond loan and said that it would be too expensive in Norway. Does this mean that you mean that the recreation of [Foreign Language] fund to you, there's nothing to help your business? I don't want to get into politics here. That being said, pre corona, we had a credit rating of B-. So technically speaking, we will be sort of on the border line as far as qualifying for the Norwegian government package for big companies through [Foreign Language] fund. The kicker on that financing is that the Norwegian government demands that you basically go out there in the market and raise approximately 1/3 of the proceeds from that bond in the open market. And that the pricing of that will basically set the pricing of the whole issue. If you look at our bond price today, we're trading at, give or take, 50 with a yield to maturity of somewhere in the range of 18% to 19%. So realistically speaking, we would get a similar pricing to that. Maybe it will be somewhat more favorable because that would fund the company properly. But it wouldn't be down into the types of ranges that we're talking about as acceptable for medium to long term in order to really have the company well capitalized and affordably capitalized for the future. We never know what kind of economy is going to hit us after we recover from corona and sort of restart the economy. So as long as we have a choice, we would certainly prefer to stay away from that because we feel that, that would actually almost be a disadvantage to us. As an example, for the secured loans, obviously, the rate for the RCF is significantly lower. That does have a super senior status. So that's justifiable. Same thing for the additional EUR 20 million loan that we're trying to negotiate with a third party, which is also going to be asset-backed, and you're talking basically interest rates somewhere in the 5% to 7% range, which is certainly much more affordable. So long story short, I would say that the package offered to the [Foreign Language] fund is from a competitiveness standpoint and from a truly, helpful assistance standpoint, at this point in time, not the most favorable option for us. There's another question, and it's coming in a small format. So I'll just read the question because it's a little bit on the complex side. It basically starts with thanks for taking time. I think it's reason to question some of the moves you're making here. Kongsberg Automotive free cash flow the last 5 years is, on average, minus EUR 2 million. The proposed restructuring today will increase the debt and increase interest payments. You have a large bond loan and a large RCF with negative cash flow in the business. Over time, you're using debt to repay debt. So the question from bondholder perspective is, do you see the new and more leveraged balance sheet as a long-term solution? Well, actually, it continues. Well, let's take that one first. I mean, first of all, this is a little bit of a crisis measure. If we go back to our cash flows, yes, we have had negative cash flows over the past couple of years, and it's been intended. One reason for it was the restructuring and taking out costs and improving profitability. And just to refresh everyone's mind, back in 2016, we had an adjusted EBIT of EUR 23 million for the full year. We were at -- if my memory serves me right, that's, give or take, 2.7% EBIT rate. We doubled the EBIT -- adjusted EBIT in 2017 to EUR 50 million. We increased that again to approximately EUR 75 million in 2018 and pretty much maintained in a very difficult market an EBIT rate of -- or an EBIT of, I believe it was EUR 72 million, but I could be slightly wrong on this in 2019. So the moves that we've done have certainly had tremendous effect. Now why did we have negative cash flow last year? Why? What's the main reason for that? Well, the main reason for that is that we're investing heavily into our business for growth. We've been very successful at new business wins, and the market broke somewhat away from us, which basically turned our expected cash flow for last year from positive into negative. There's a couple of other reasons, too. And I mean, I'm not trying to hide away that some of that was probably also related to execution. But generally speaking, the main reason for us not delivering cash last year was that we started seeing the top line declines, and we basically got less benefit out of net less -- net benefit out of the new programs than what we expected to. We're a little bit prisoner to that strategy because there is a lag from when you win a business to when you actually start earning revenues on it and producing cash. And we are still in that growth mode with many new programs that start up this year. Is this financing going to take us over that hump? Well, we certainly believe so. We also believe that, yes, we are going to say -- I mean, when the economy restarts, we are going to take additional market share in the coming years as a result of our new business wins. They do require a certain level of CapEx. Yes, we have cut some of the CapEx. Yes, we have delayed some of the CapEx in order to be cash prudent. Taking a little bit of an operational risk on that. But our speculation is that probably most customers are also going to be delayed because they have the same types of shutdowns as we do. So in terms of this initiative, as far as raising capital, as far as undertaking new loans, that is basically a measure to deal with this crisis and assuming that life is going to return to some level of normality within a reasonable period of time. Another follow-up question on essentially from the same asker or question. With respect to balance sheet impairments, what can we expect to see in Q1 with negative free cash flow? Is the balance sheet of EUR 927 million a best estimate? I cannot go into details on that. But given that some of our impairment testing at year-end had very small security margins. I would not be surprised to see if we take a noncash impairment on some of our intangible assets, whether that is something that's done in Q1, in Q2 or at year-end, that's probably more a question to our auditor. But again, I would not be surprised if I -- if you saw an impairment taking place. As far as the new debt, the new debt will subordinate the bonds with negative free cash flow. How do you expect to repay the bond debt? The bond debt is essentially intended to be -- or is not just intends to be, it's planned to be a convertible bond. And it will probably have a maturity of somewhere in the 3-year range. It will obviously not be bigger than EUR 100 million. We estimate that the appetite for that instrument will be somewhat limited in the marketplace. So we're estimating that, that will probably come in at somewhere between EUR 30 million and EUR 50 million, and we do believe that that's going to be able to -- that we're going to be able to repay that through our future cash flow. Also, a question on -- can you please elaborate on your biggest customers and any payment declines that we see there? Generally speaking, we have not yet, at least, seen any delays in payments from our big customers, with the exception of one, which basically has its whole payables department working from a home office and from a system standpoint, they claim that they're not able to process payments. We are in investigations on that one and see how that's going to work. On CapEx. How much CapEx do we see in 2020? Basically, what we're saying is that we're reducing CapEx compared to the original plan, which was somewhere around in the EUR 60 million time frame, that we're going to reduce that by somewhere in the EUR 9 million range is our current assumption. A lot of detailed questions here. Target net debt to free cash flow multiple in the world with optimal financing? That I'm actually not able to answer on the fly. I think you'll have to have Norbert come back to you on that at a later stage. Let me just see that we have your contact information, and we do. How much do sales increase -- sales need to increase in order for you to be free cash flow positive in 2020? I don't think there is a scenario where I could see that as happening, to be totally frank with you. Depending a little bit on the closure durations and severities under the various scenarios, we are looking at a decline in revenues that is dramatic. And from a range standpoint, we're probably talking about best, best, best case scenario, that our revenues will be EUR 160 million lower than the original estimates. And the worst-case scenario, that it'll be something like EUR 330 million lower. So under that scenario, even under the best case scenario, I don't think that, that is something that can be made up in 2020. Then I have a series of questions from Petter at Sparebanken. So what you say is that on the current run rate, the monthly cash burn is approximately EUR 30 million, that is affirmative? Effects on working capital when customers do not pick up the product. Well, the effect on working capital is that you get more finished goods and you get less receivables, and ultimately, those receivables then turn later into cash because that finished goods is essentially going to sit on the shelves until the customers pick it up. How many plants in total? I'm not clear on what you mean by how many -- how many total plants we have? We have 30.

26.

26 plants. So 4 total closures. And of the remainder, they're all partly open, except for one, which is completely open in addition to the Chinese plants, which are 3. How will KA look like post-2020, 3 segments, less complexity, focused on value created business units such as specialty products? Well, that's certainly the plan. I mean I've been pretty clear that noncore assets, such as some of our non-specialty units -- business units would be natural choices for us to divest. I made it pretty clear already back in 2016 that from a total portfolio standpoint, we probably need to trim our portfolio and expand it where we want to expand it and basically sell off and divest where that makes sense. The current environment is obviously not the best for sales of business units, as I said, even though we have a couple of indication of interest. So if post-2020 means 2021, I don't think the change is going to come that fast. But hopefully, post-2020, we get into an environment where the sentiment is somewhat more positive, and we can make those portfolio moves and turn the company into, let's say, a more specialty products-alike company and hopefully even expand on that business at the same time as we divest some of our other business units. Will the government -- more questions from Petter, will the government come -- cover some of the fixed costs, given the announcement yesterday with companies experiencing more than 30% revenue drop? The answer is we certainly are applying for that. The program isn't completely ready for it. The qualifier is more than 20% decline in revenues in March and more than 30% decline in revenues following March. We certainly qualify for that part, and we are planning to basically get into that program for that. And that would primarily then be for truly fixed costs such as utilities, such as rent. It would not cover labor. It would cover those types of fixed costs. But again, that program is limited to Norway only. So yes, we're planning to apply for that one. How much can noncore assets give in cash? Well, if I had the answer to that, Petter, I would love to give it to you, but I just don't have that. Currency and write downs? Well, given that the Norwegian krone has declined so much lately, we are going to see -- and these numbers are not final. But in Q1, I would estimate that we're going to see some significant positive nonrealized gains on intercompany loan valuations, therefore, go into the net financial items in our P&L. This is noncash. So for all practical purposes, it has no meaning. But you will see some positives coming from that. Let's see. As far as write-downs, I think I answered that question earlier, if the meaning with that question was potential impairments. What is the total liquidity that the company currently has to work with? We have an RCF of EUR 70 million. That was drawn at March month end by...

EUR 20 million.

EUR 20 million. So that means that there's liquidity reserve there of EUR 50 million. On top of that, there's a little bit of cash balance above and beyond what we need in order to run the business. So give or take, a little bit more than EUR 50 million worth of available liquidity at the end of March would be the answer to that question. And if you then start applying the run rate, then you can basically see...

It's more than EUR 50 million.

Do you want to comment on that, Norbert?

Yes. Yes. I mean we just went through these numbers already. We have, at Q1 month-end, EUR 20 million drawn of total EUR 70 million available. So there's EUR 50 million from the RCF plus liquidity in the business, which is in the range between EUR 20 million and EUR 30 million.

Okay. Good, good. Can you comment on the working capital development during the period with shutdowns? That is actually an incredibly difficult question to answer. The reason that it's so difficult is that you have many moving parts. In the very, very short term, collections from customers will be the same because you have those outstanding receivables. However, the receivables are obviously being filled up at a much lower pace. So go 2 months into the future, and you're going to see much lower cash collections from that. As far as inventories, inventories will go up short term. The reason inventories go up short term is that there's a lot of incoming material with long lead times. We obviously shut down pretty much all our incoming material, except for the material that we know that we're going to need for the few customers that are still open. And that we did in the last couple of weeks of March, and we continue to do that in April. But there's still material coming in over the course of the next weeks due to the long lead times and in some cases, also due to long transportation routes. For example, the sea route from China where stuff is on the way. So inventories will go up and our ability to take those inventories pass down is obviously very limited, given that the usage is very limited. On payables, in the very short term, it won't change a thing. But very soon, obviously, since we're buying less material, depending on how long the shutdown period lasts, payables will go down. And as a net-net effect in the very short term, there's going to be fairly little happening on working capital. Then you're going to get a spike in working capital and then you basically work that down on a net-net basis over time, but the recovery rate is slow because the business activity is slow until the economy basically restarts. I hope that was not too general an answer. If you do have specific questions, please get back to either [ Holsten ] and Norbert on that after the call. Not too many more questions left, and I'm running up against a little bit of a hard time line here. Let's see. We answered that question. Can you comment on liquidity as of the end of March? Trying to get a sense as to when the capital raise will need to occur. I think I've done that, and I've also given you a time line for the capital increase, which we intend to complete pretty much end of April, beginning of May. The preference would probably be to complete it at the end of April. You'll see more details on that when we invite for an extraordinary shareholders' meeting, and that date will probably be somewhere in the time frame of April 28, April 29. And ideally, we would have -- that meeting would then complete the capital increase. One more question here. How dependent are cross-Atlantic automotive supply chains? To what extent will prolong shutdowns in the U.S. is going to postpone production recovery in Europe? I can't answer the question in detail, but the interdependency on a cross-Atlantic basis is huge, both for components and for modules. So I would be surprised -- except for certain portions of the truck industry, I'd be surprised if it's not a fairly coordinated timing as far as startup on both sides of the Atlantic. Another question is, are you in the situation to cope with the EUR 275 million bond? The fundamental answer to that is, yes, we believe that our current plan and our current, let's call it, recapitalization plan will give us sufficient flexibility to cope with that, to use as the same word as the question, basically say to deal with that, yes. Are your customers able to get out of signed contracts from 2019? No, they cannot get out of the contract. The contracts are not cancelable because of force majeure. There are some delivery commitments, et cetera, that are force majeure-driven. But as to the contract themselves, no, there are -- this would not pose a reason unless we do a significant breach to those contracts, which I cannot see happening at this stage. Will you need to take a charge for deferred tax assets this year? Fundamentally speaking, the answer to that is no. The only significant but to that, that we see on the horizon right now is if countries start decreasing the corporate tax rates, that will obviously lead to a corresponding write-down in deferred tax assets. But if that doesn't happen, and unless this crisis goes on for a very long time and/or the recovery economy is taking place at significantly lower levels, I do not see that happening. Can I comment on inventory days or levels for the end of March? And what is the run rate of sales for your aftermarket operations? Aftermarket is actually running pretty much as before. In some cases, it's a little bit above; in some cases, a little bit below. But generally speaking, it's running at the same rate as the inventory days or levels when you ended March. We're actually in the middle of March closing. Today is April 3rd. I don't think we have those figures before April. I think it's 8th, Norbert, in a final basis with all the balance sheet detail. So no, I'm not able to answer that question for you right now. Is the capital base 100% underwritten? I think I've answered that question. It's not even -- it's basically not underwritten. And the last one comment here is thank you. So you're welcome. The aggregate book value of the noncore assets that are considered for divestiture. That is a complicated question, but you're probably somewhere in the range, including intangibles, of somewhere in the EUR 150 million to EUR 200 million range. I'll have to take a condition on that one as far as accuracy. Minimum cash needed in the business. I think that question was answered by Norbert. And I think that pretty much answers most of the questions. There's one question here remaining that I don't think I've answered. Sorry, again. On working capital, business had large working capital. Why we don't see reversal of cash inflows when sales are down? Could you please slowly, again, go over all the 3 big parts with inventory, receivables, et cetera? I don't think we can properly go through that in this type of setting, because then I have to put some numbers in front of you. But the fundamental mechanic is the following. Our typical average payment days for receivables is somewhere around the 65 days mark. For payables, it's approximately the same, but it comes with a delay because of the lead times on incoming material. And inventory balances basically fluctuate as a result of MRP systems ordering according to order book up until when you flick the switch over to manual, which is what we did in the second half of March. So that's sort of creating its own dynamic. If there is interest for that, as far as details, we can certainly get to that at a later stage. But that's probably the best I can do as far as answering that one sort of on the fly. Let's see. Trying to make sure that I've covered all the questions before we finish. How much of sales is aftermarket? We are -- I would estimate that our aftermarket sales...

EUR 50 million or EUR 60 million.

In -- for a full year is somewhere in the EUR 35 million to EUR 45 million range, give or take. Last question we have time for. I understand the capital need relative to your current market cap makes it difficult to raise equity. But what we have seen as -- from investors is that convertible bonds often lead to volatility in the underlying share price due to the short hedging. And typical convertible bond investors are hedge funds, not the best long-term investors. Have you taken these issues into account? Absolutely. And that's why we're thinking about sort of capping the amount of convertible debt as a percentage of the total, but we're not that far in the thinking, but I totally understand what you mean. And it also sort of put some pressure in our -- or introduces basically a barrier to share price once you start trading in a more normal type environment. I think that's just about the questions that we're able to answer in this call. Obviously if there are [Audio Gap] I can probably take the last one here, and that's related to the convertible. The question is what kind of interest rates on the convertible bond do you think you can support? The idea is to have the convertible bond basically being a very low coupon-type bond. So look for that in either low single digits. It could even be a 0 coupon. I think that's pretty much it as far as our ability to answer questions. Very grateful for all of you having taking the time and taking the interest. We have a large number of callers on this one today, which doesn't surprise me because it is very unusual times. It's actually exceptional times. I've been, a lot of years, in this industry, and let me tell you I have never seen anything like this before. I hope I don't need to see anything like this in the future either. Had someone told me 0.5 year ago that the biggest challenge you're going to have in the next 6 months is caused by a virus, I would've thought that, that was not a very serious comment. Now we find ourselves in the middle of it. We got to find a good way out of it. And we believe that we have a reasonable plan to get out of that and take it from there and then basically get ready for when the economy restarts and get going, flying and take it from there. So thank you very much for your input. Thank you very much for your participation and interest. And I'm sure we will talk again fairly soon.