PRESS RELEASE
TECHNICOLOR ANNOUNCES 2020-2022 STRATEGIC
PLAN SUPPORTED BY A COMPREHENSIVE STRENGTHENING OF THE CAPITAL
STRUCTURE INCLUDING A C. €300M CAPITAL INCREASE
- 2020-2022 Strategic Plan
will pave the way for a sound and sustainable future for
Technicolor, allowing it to better serve clients, take advantage of
market opportunities, deliver profitable growth and create value
for shareholders
- Following an in-depth
review of the business, Technicolor has identified several
initiatives to drive the financial and operational transformation
of the company
- Comprehensive strengthening
of the capital structure enhancing strategic flexibility:
- Proposed c. €300m capital
increase with shareholders' preferential subscription rights (the
“Rights Issue”):
- Extension of the Revolving
Credit Facility (“RCF”) maturity from December 2021 to June 2023
and of the Wells Fargo facility maturity from September 2021 to
March 2023
- An extensive overview of
the Strategic Plan and new initiatives for Technicolor will be
presented during a Capital Markets Day scheduled for February 19th,
2020
- Update on full year 2019
Group Performance
Paris (France), February 13th,
2020 – Technicolor (Euronext Paris: TCH, OTCQX: TCLRY)
(“Technicolor” or the “Company”)
announces today its 2020-2022 Strategic Plan concurrently with
three transactions aimed at strengthening its capital structure and
restoring strategic flexibility:
- Capital increase with preferential subscription rights for
shareholders for a total gross amount of c. €300 million, issue
premium included;
- Extension of credit lines (RCF and bi-lateral ABL with Wells
Fargo), originally maturing in 2021, to 2023 subject to the
successful completion of the Rights Issue; the RCF will be reduced
from €250m to €225m starting from January 1st, 2021 and to €202.5m
starting from December 22nd, 2021;
- New $110m short-term facility providing additional liquidity
headroom.
Technicolor 2020-2022 Strategic
Plan
Technicolor’s new CEO Richard Moat, along with a
renewed Board of Directors and the top management team, have
designed a 2020-2022 Strategic Plan focused on prioritising
profitable growth opportunities, adopting a more disciplined
approach to business selection whilst continuing to provide market
leading products and services, all of which will cement the group’s
long-held position as the best partner across its three activities.
Additionally, Technicolor will endeavour to streamline all
operations. A number of these initiatives are already in progress
and the Strategic Plan will benefit all of our stakeholders:
shareholders, employees, clients, suppliers and lenders.
Actionable initiatives and priorities for each
of Technicolor’s divisions have been identified. In Production
Services, Technicolor is well placed to benefit from the burgeoning
growth of streaming platforms and the unprecedented demand for
original content and is well positioned to capture outsized market
share in Film & Episodic, Advertising, and Animation. DVD
Services has already started creating a more resilient business
model through its ongoing cost optimization efforts and the renewal
of key major customer contracts under volume-based pricing schemes.
Finally, in Connected Home, Technicolor will focus on Broadband
gateway activities, which are experiencing an improved trading
environment.
Strengthening of Technicolor’s Capital
Structure
In order to regain strategic flexibility and
operate in a sustainable environment, Technicolor is announcing a
comprehensive reinforcement of its capital structure comprising of
c. €300m of new equity through a Rights Issue and the concurrent
extension of its RCF (which will be progressively reduced from
€250m to €225m starting January 1st, 2021 and to €202.5m starting
December 22nd, 2021) and Wells Fargo facility to 2023, conditional
on the successful execution of the Rights Issue. The company has
also secured a new $110m short-term facility providing additional
liquidity headroom.
C. €300m
Rights Issue
An Extraordinary General Meeting of Shareholders
will be held on March 23rd, 2020 which will vote on resolutions
related to the Rights Issue. It is anticipated that the equity
issuance will be launched in Q2 2020, subject to approval from
Technicolor’s shareholders, regulatory authorities, and market
conditions.
RCF and Wells Fargo Facility Extensions
Concurrently, Technicolor announces that it has
reached an agreement for a 18-month extension of its existing RCF
from December 2021 to June 2023, conditional on the successful
execution of the Rights Issue. Similarly, the Wells Fargo facility
will be extended by 18 months from September 2021 to March
2023.
The following committed facilities will
therefore remain available to Technicolor:
- Revolving Credit Facility:
- €250m until December 31st, 2020;
- €225m from January 1st, 2021 until December 21st, 2021;
- €202.5m from December 22nd, 2021 until June 30th, 2023;
- $125m bilateral facility with Wells Fargo until March 31st,
2023.
$110m Short-Term Facility
Technicolor has secured an additional $110m
short-term facility which has been arranged by J.P. Morgan. The
facility will provide additional liquidity headroom and will be
repayable following the receipt of proceeds of the Rights
Issue.
Update on Full Year 2019 Group
Performance
All figures and data for 2019 disclosed in this
Press Release are estimated, the 2019 Financial Statements being
currently audited. The Board of Directors will approve the 2019
Financial Statements on February 18, 2020
- Sales of c. €3.8bn reflecting double digit growth in Production
Services, more than offset by a decline in the North American video
segment in Connected Home and replication volume decline in DVD
Services (as anticipated);
- Adjusted EBITDA of c. €246m reflecting solid improvement in
Connected Home vs the first half 2019 as anticipated, driven mainly
by margin recovery as a result of improvements in memory costs and
benefits from our transformation plan;
- Adjusted EBITA of c. €36m due to high rendering costs consumed
in Production Services Film and Episodic Visual Effects in an
intense period of deliveries and higher D&A linked to the
investments in Film & Episodic Visual Effects;
- Free cash flow1 of c. -€161m: as expected, and communicated in
the 2019 third quarter press release, working capital at the end of
the year was negatively affected by downgrades by the rating
agencies in 2019. The impact is estimated to be -€95m, mainly
explained by a one-off reduction in payment terms;
- Net Debt of c. €961m (3.9x Net Debt / Adjusted EBITDA);
- Credit lines fully undrawn as of 31 December 2019.
Timeline of the Offering Process
Proposed to the Extraordinary General Meeting
The proposed c. € 300m Rights Issue will be
subject to Technicolor Extraordinary General Meeting (EGM)
approval. The EGM is convened for March 23rd, 2020. Resolutions to
be voted at the EGM will include:
- A reverse split: the existing shares (the "Old Shares") will be
exchanged into new ones (the "New Nominal Value Shares");
- A share capital reduction for reasons other than for losses, by
reducing the par value of the shares
- A capital increase with a preferential subscription right to be
detached from the New Nominal Value Shares (the “Rights Issue”);
the new shares issued in the Rights Issue are referred to as the
“New Shares”.
Conference Call and Investors
Presentation
Technicolor will host a conference call for analysts and
investors at 7:45 pm CET on February 13th, 2020
(www.technicolor.com/webcastFebruary2020). A presentation will be
made available on the Technicolor website shortly ahead the start
of the call.
Technicolor will host its Capital Markets Day on
February 19th in London. Details to be shared via the Technicolor
website.
Note: The English version of this press release
may differ from the French version for regulatory reasons.
###
About Technicolor:
www.technicolor.com
Technicolor shares are on the Euronext Paris
exchange (TCH) and traded in the USA on the OTCQX marketplace
(OTCQX: TCLRY).
Investor Relations
Christophe Le Mignan: +33 1 88 24
32 83
christophe.lemignan@technicolor.com
Media Contact
Laurent Poinsot: +33 1 53 70 74 77
lpoinsot@image7.fr
Nathalie Feld: +33 1 53 70 94 23
nfeld@image7.fr
Financial Calendar
FY 2019 Results |
18 February 2020 |
Capital Markets Day |
19 February 2020 |
Extraordinary General Meeting |
23 March 2020 |
Q1 Trading Update |
29 April 2020 |
Annual Shareholders Meeting |
30 April 2020 |
DISCLAIMER
This press release includes certain projections
and forward-looking statements with respect to the anticipated
future performance of Technicolor.
Such information is sometimes identified by the
use of the future tense, the conditional mood and forward-looking
terms such as “think,” “aim,” “expect,” “intend,” “should,” “has
the ambition of,” “consider,” “believe,” “wish,” “could” and so
forth. This information is based on data, assumptions and estimates
that Technicolor considers reasonable. Actual results could differ
materially from those projected or forecast in the forward-looking
statements, in particular due to uncertainties inherent to any
business activity and to the economic, financial, competitive and
regulatory environment. All forward-looking statements contained in
this press release are expressly qualified in their entirety by the
cautionary statements contained or referred to in this disclaimer.
Each forward-looking statement speaks only as at the date of this
press release. Technicolor makes no undertaking to update or revise
any information or the objectives, outlook and forward-looking
statements contained in this press release or that Technicolor
otherwise may make, except pursuant to any statutory or regulatory
obligations applicable to Technicolor.
No statement in this press release is intended
as a profit forecast or estimate for any period. Persons receiving
this document should not place undue reliance on forward-looking
statements. Past performance is not an indicator of future results
and the results of Technicolor in this document may not be
indicative of, and are not an estimate or forecast of, the future
results of Technicolor.
Moreover, readers should consult the
registration document of Technicolor, filed with the French
Autorité des marchés financiers (the “AMF”) under no. D. 19-0223 on
29 March 2019 (the “Registration Document”), which is available
free of charge from the AMF’s website at www.amf-france.org and
from Technicolor's website at
www.technicolor.com/investor-center/regulated-information. The
Registration Document includes a detailed description of
Technicolor, its business, strategy, financial condition, results
of operations and risk factors. Readers’ attention is drawn to
Chapter 3 “Risk factors” of the Registration Document. The
materialization of all or any of these risks may have an adverse
effect on Technicolor's operations, financial conditions, results
or objectives, or the market price of Technicolor shares.
This press release does not constitute an offer
to acquire, purchase, subscribe for, sell or exchange (or the
solicitation of an offer to acquire, purchase, subscribe for, sell
or exchange), any securities in any jurisdiction.
Any offer of Technicolor securities may only be
made in France pursuant to a prospectus having received the
approval of the AMF or, outside of France, pursuant to an offering
document prepared for such purpose in accordance with applicable
laws. Any investment decision shall only be made on the basis of
such prospectus and/or offering document.
This document does not constitute an offer to
sell or the solicitation of an offer to buy the securities of
Technicolor in the United States. The securities referred to herein
may not be offered or sold in the United States unless such
securities are registered under, or pursuant to an exemption from
registration under, the US Securities Act of 1933, as amended. The
Issuer has not registered, and does not intend to register, any of
the securities referred to herein in the United States and does not
intend to conduct a public offering of the securities in the United
States.
This press release does not constitute an offer
or a solicitation to sell or subscribe requiring a prospectus
within the meaning of Regulation (EU) 2017/1129 of the European
Parliament and of the Council of 14 June 2017 (the “Prospectus
Regulation”). This press release is not a prospectus within the
meaning of the Prospectus Regulation or otherwise.
This press release includes only summary
information and does not purport to be comprehensive. No
representation, warranty or undertaking, express or implied, is
made by Technicolor as to, and no reliance should be placed on the
completeness of the information and/or opinions contained herein or
in any connected written or oral communications.
1 Free cash flow defined as: Adj. EBITDA – (net
capex + restructuring cash expenses + change in pension reserves +
change in working capital and other assets & liabilities + cash
impact of other non-current result + net financial interests +
exchange result + other financial results and income tax)
- 2020-02-13 Strategic Plan VUS Short version