TIDMERO1
RNS Number : 0785I
Eros STX Global Corporation
10 August 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT
FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018, AS AMED (THE "UK MARKET ABUSE
REGULATION").
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR TO
ANY PERSON LOCATED OR RESIDENT IN ANY JURISDICTION WHERE IT IS
UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT.
EROS STX GLOBAL CORPORATION
(formerly, EROS INTERNATIONAL PLC)
ANNOUNCES CONSENT SOLICITATION IN RESPECT OF ITS
GBP50,000,000 6.50 PER CENT. BONDS DUE 2021 (the "Bonds")
(ISIN: XS1112834608)
10 August 2021
Eros STX Global Corporation (formerly, Eros International Plc)
(incorporated as a limited company and registered in the Isle of
Man under the Companies Act 2006 (Isle of Man) with company number
007466V) (the " Company ") today announces the launch of a Consent
Solicitation (as defined below) in respect of the Bonds on the
terms set out in the consent solicitation memorandum in respect of
the Bonds (the "Consent Solicitation Memorandum") dated today's
date and prepared by the Company.
Capitalised terms used but not defined herein shall have the
same meanings as in the Consent Solicitation Memorandum.
Details of the Consent Solicitation
The Company has today invited holders of the Bonds to approve
certain modifications (as further described in the Consent
Solicitation Memorandum) to (i) the terms and conditions of the
Bonds (the " Conditions ") contained within the trust deed dated 10
April 2014 as supplemented by a first supplemental trust deed dated
10 April 2017 each between the Company and U.S. Bank Trustees
Limited as trustee (together, the " Trust Deed "), (ii) the Trust
Deed and (iii) the Agency Agreement, as well as the waiver of a
breach of certain provisions of the Conditions and of the Trust
Deed and any related Event of Default or Potential Event of Default
(as defined in the Conditions), in each case as proposed by the
Company (the " Proposal ") for approval by Extraordinary Resolution
at a meeting of Bondholders (such meeting being the " Meeting ")
(such invitation being the " Consent Solicitation ").
This announcement does not contain details of the full terms and
conditions of the Consent Solicitation, which are contained in the
Consent Solicitation Memorandum. The Company has also prepared and
made available today an investor presentation providing further
information in relation to the Company and the Proposal (the "
Investor Presentation "). Holders of the Bonds may obtain a copy of
the Consent Solicitation Memorandum and the Investor Presentation
from Lucid Issuer Services Limited, who is acting as Tabulation
Agent in connection with the Consent Solicitation and whose contact
details are set out at the end of this announcement.
Holders of the Bonds are advised to carefully read the Consent
Solicitation Memorandum and are reminded that the below is a
summary only of the terms of the Consent Solicitation.
Details of the Bonds
Description of the Current Maturity Outstanding Early Voting
Bonds Common Code/ISIN Date nominal amount Fee(1, 2)
------------------- ----------------------- -------------------- ------------------- -------------------
GBP50,000,000 6.50 111283460/XS1112834608 15 October 2021 GBP50,000,000 GBP0.50 per GBP100
per cent. Bonds in nominal amount
due 2021
------------------- ----------------------- -------------------- ------------------- -------------------
(1) Qualified Bondholders who submit (and do not revoke) valid
Voting Instructions received by the Tabulation Agent on or before
the Early Deadline will be eligible to receive the Early Voting Fee
if the Extraordinary Resolution passes and the Proposal is
implemented.
(2) Retail Bondholders who submit (and do not revoke) valid
Voting Instructions received by the Tabulation Agent on or before
the Final Deadline will be eligible to receive the Early Voting Fee
if the Extraordinary Resolution passes and the Proposal is
implemented.
The Meeting
A notice (the " Notice ") convening the Meeting to be held at
4.30 p.m. (London time) on 3 September 2021 via teleconference has
been given to Bondholders in accordance with the Trust Deed on the
date of this announcement. At the Meeting, Bondholders will be
invited to consider and, if thought fit, pass an extraordinary
resolution (the " Extraordinary Resolution ") to approve the
Proposal as more fully described in the Notice.
The quorum required for the Meeting is two or more persons
present holding or representing not less than 75 per cent. in
aggregate nominal amount of the Bonds for the time being
outstanding. To be passed, the Extraordinary Resolution requires a
majority in favour of at least 75 per cent. of the votes cast in
respect of the Extraordinary Resolution at the Meeting. If passed,
the Extraordinary Resolution shall be binding on all Bondholders,
whether present or not present at the Meeting and whether or not
voting.
The implementation of the Extraordinary Resolution, if passed,
is conditional on the Company not having previously terminated the
Consent Solicitation in accordance with the provisions for such
termination set out in the Consent Solicitation Memorandum under
the heading " Amendment and Termination ".
Under the Trust Deed, subject to all other provisions therein,
the Trustee may prescribe such further regulations regarding the
holding of meetings of Bondholders and attendance and voting at
them as the Trustee may in its sole discretion determine. For the
purpose of the Meeting, the Trustee has prescribed certain virtual
meeting guidelines and regulations.
The Meeting will be held via teleconference using a platform
hosted by the chairman of the Meeting to allow attendees to
participate electronically. Details for accessing the Meeting (or
any adjourned Meeting) will be made available to proxies who have
been duly appointed under a block voting instruction, or to holders
of voting certificates issued, in accordance with the procedures
set out in the Consent Solicitation Memorandum. Such proxies and
holders will be contacted by the Tabulation Agent (whose contact
details are set out in the Consent Solicitation Memorandum) at
least 24 hours before the Meeting in order to ensure that they are
provided with the necessary information for attending and
communicating their votes during the Meeting via
teleconference.
Participating in the Consent Solicitation
To participate in the Consent Solicitation, a holder of the
Bonds should deliver, or arrange to have delivered on its behalf,
via the relevant Clearing System and in accordance with the
requirements of such Clearing System, a valid Voting Instruction,
to be received by the Tabulation Agent by 4.00 p.m. (London time)
on 1 September 2021 (the " Final Deadline ").
Any Bondholder may be eligible, on the terms and conditions set
out in the Consent Solicitation Memorandum, to the extent permitted
by applicable laws and regulations, to receive an amount of GBP0.50
per GBP100 in nominal amount of the Bonds in respect of which the
relevant Bondholder submits a Voting Instruction in accordance with
the procedure described below and in the Consent Solicitation
Memorandum (the "Early Voting Fee").
To be eligible for the Early Voting Fee, such Voting
Instructions (whether voting for or against the extraordinary
resolution) must be received by the Tabulation Agent from (i)
Qualified Bondholders on or before the Early Deadline specified
below and (ii) Retail Bondholders on or before the Final Deadline.
Voting Instructions must be submitted in respect of a minimum
principal amount of the Bonds of no less than GBP100, being the
minimum denomination of the Bonds.
Holders of the Bonds that do not deliver a Voting Instruction in
accordance with the preceding paragraphs, but who wish to attend
and vote at the Meeting in person or to be represented or otherwise
to vote at the Meeting, must make the necessary arrangements in
accordance with the Notice and the Meeting Provisions (as defined
in the Consent Solicitation Memorandum) by 4.00 p.m. (London time)
on 3 September 2021. Such holders will not be eligible to receive
the Early Voting Fee.
Voting Instructions will be irrevocable except in the limited
circumstances described in the Consent Solicitation Memorandum
under the heading "Amendment and Termination".
Indicative timetable for the Consent Solicitation
Set out below is an indicative timetable showing one possible
outcome for the timing of the Consent Solicitation and the
Proposal, which will depend, among other things, on timely receipt
(and non-revocation) of instructions, the Meeting not being
adjourned, the right of the Company to extend, re-open, amend
and/or terminate the Consent Solicitation and the Proposal (other
than the terms of the Extraordinary Resolution) as described in the
Consent Solicitation Memorandum not being exercised, and the
passing of the Extraordinary Resolution at the Meeting.
Accordingly, the actual timetable may differ significantly from the
timetable below.
The timetable is subject to any extension, re-opening or
termination of the Consent Solicitation as provided in the Consent
Solicitation Memorandum. The relevant deadlines set by any
intermediary or clearing system will be earlier than these
deadlines.
Date and time Event
10 August 2021 Launch Date
Consent Solicitation announced and Consent
Solicitation Memorandum available from the
Tabulation Agent, subject to offer and distribution
restrictions.
Notice of Consent Solicitation published
via Regulatory News Service (" RNS ") and
by delivery of notices to the Clearing Systems.
24 August 2021 Early Deadline
at 4.00 p.m. Deadline for receipt by the Tabulation Agent
(London time) of valid Voting Instructions in respect
of the Extraordinary Resolution (whether
voting for or against the Extraordinary
Resolution) for Qualified Bondholders to
be eligible for the Early Voting Fee.
1 September 2021 Final Deadline
at 4.00 p.m. Deadline for (i) receipt by the Tabulation
(London time) Agent of valid Voting Instructions in respect
of the Extraordinary Resolution (whether
voting for or against the Extraordinary
Resolution) for Retail Bondholders to be
eligible for the Early Voting Fee, (ii)
receipt by the Tabulation Agent of any other
Voting Instructions and (iii) making any
other arrangements to attend or be represented
at, or to vote on the Extraordinary Resolution
at, the Meeting.
3 September 2021 Meeting
at 4.30 p.m. Meeting to be held via teleconference.
(London time)
Expected to be Announcement of Results
as soon as reasonably Announcement by the Company of the results
practicable after of the Meeting, published via RNS.
the Meeting
As soon as reasonably Execution of the Supplemental Trust Deed
practicable after and the Supplemental Agency Agreement
the Meeting If the Extraordinary Resolution is passed
at the Meeting, subject to the conditions
described in the Consent Solicitation Memorandum,
execution of the Supplemental Trust Deed
and the Supplemental Agency Agreement.
Upon execution of the Supplemental Trust
Deed and the Supplemental Agency Agreement,
the modifications to the Conditions, the
Trust Deed and the Agency Agreement and
the waiver of the relevant provisions of
the Conditions and the Trust Deed described
in the Consent Solicitation Memorandum and
any related Event of Default or Potential
Event of Default will become effective.
Expected to no Consent Solicitation Payment Date
later than five Subject to the Proposal being approved and
Business Days implemented, settlement of the Early Voting
following the Fee.
date on which
the Proposal
has been approved
Bondholders are advised to check with any bank, securities
broker or other intermediary or nominee institution (including
through CDIs in CREST) through which they hold Bonds whether such
intermediary would require to receive instructions to participate
in the Consent Solicitation before the deadlines specified above.
The deadlines set by any such nominee, CREST and each Clearing
System for the submission of Voting Instructions will also be
earlier than the relevant deadlines above.
Rationale for and background to the Consent Solicitation
Impact of the COVID-19 pandemic on the Company
The COVID-19 outbreak caused significant disruptions to the
Company's global operations by restraining the production and
distribution of film content, particularly in the Company's primary
markets of India, the United States, the United Kingdom and
Ireland. Governments and businesses around the world took
unprecedented actions to mitigate the spread of COVID-19, including
imposing restrictions on movement and travel, such as quarantines
and stay-at-home requirements, or nationwide lockdowns, as well as
restricting or prohibiting outright some or all commercial and
business activity, including the closure of some or all cinemas,
and disrupting the production of film and TV content.
The pandemic affected how film content is distributed to various
distribution channels due to the closure of cinemas in the United
States, India and international territories. There was, however, an
increase in streaming and digital licensing revenue for the
Company's US films due to the closure of cinemas. The pandemic also
affected the production of new content for both film and TV due to
the closure of productions.
While the measures to mitigate the spread of COVID-19 have
recently been eased or removed in most countries, the film
production delays during the peak of the COVID-19 pandemic have
negatively impacted the Company's pipeline of new film releases. In
addition, the recovery from COVID-19 in India has lagged most other
countries following a resurgence of COVID-19 in India earlier this
year driven by the emergence of a more transmissible Delta
variant.
In the twelve months ended 31 March 2021 (" fiscal 2021 "), the
Company's Indian film studio released one film, down from 30 films
in the 12 months ended 31 March 2020 (" fiscal 2020 "). Indian
cinemas closed in March 2020 and reopened in October 2020 with a
50% capacity limit. In February 2021 Indian cinemas were permitted
to operate at 100% capacity. The resurgence in COVID-19 cases in
India starting in March 2021 and peaking in May 2021 resulted in
cinemas closing down again. Going forward, the Company is shifting
its India content budget from theatrical films to original episodic
series that will be exclusively distributed on the Eros Now
streaming platform to help drive additional subscriber revenue.
The Company's US film studio released six films in fiscal 2021,
mostly via video streaming platforms, down from nine films in
fiscal 2020. Despite US cinemas being closed for the majority of
2020, the Company was able to profitably shift its distribution of
films from cinemas to direct-to-streaming platforms. Going forward,
the Company expects to release approximately 10 US films per year,
consistent with the pre-pandemic plan, but now expects between two
and five films to be released in cinemas and between five and eight
films to be distributed direct-to-platform.
Rationale for the Proposal
As detailed above, the COVID-19 pandemic has had a significant
impact on the Company's operations. The Company's audit committee
is also in the process of undertaking a formal internal review of
certain accounting practices and internal controls related to
certain of its subsidiaries. As a result, the Company is seeking
the approval of Bondholders to make certain modifications to (i)
the Conditions contained within the Trust Deed, (ii) the Trust Deed
and (iii) the Agency Agreement and the waivers in respect of the
breach of certain provisions of the Conditions and of the Trust
Deed and any related Event of Default or Potential Event of
Default. A description of the proposed modifications and waivers,
and the rationale for them, is set out below.
1. Extension of the maturity of the Bonds and increase in rate
of interest payable on the Bonds
The Company is proposing to extend the maturity of the Bonds to
enable it to access additional liquidity that is required to fund
its operations and allow it to continue trading as a going concern
while its film business, particularly in India, recovers from the
COVID-19 pandemic.
The Company is also offering an increase in the rate of interest
payable on the Bonds from 6.50 per cent. to 8.50 per cent. per
annum in return for the Bondholders agreeing to the Proposal.
2. Waiver of requirement to provide financial statements for the
year ended 31 March 2021 by 31 July 2021, and to provide financial
statements for the six months ended 30 September 2021 by 30
November 2021
The Company is proposing a waiver of the requirement to provide
to the Trustee copies of:
(i) its annual financial statements for the year ended 31 March
2021 (the "2021 Audited Financial Statements") within four months
after the end of its financial year (i.e. by 31 July 2021), and
(ii) its financial statements for the six months ended 30
September 2021 (the "H1 2022 Financial Statements") within two
months after 30 September 2021 (i.e. by 30 November 2021),
as well as any related Event of Default or Potential Event of
Default resulting from the failure to provide copies of the 2021
Audited Financial Statements or the H1 2022 Financial Statements by
the deadlines specified above.
The Company's financial year ends on 31 March in each year. The
terms and conditions of the Bonds require the Company to deliver to
the Trustee copies of (i) its annual financial statements within
four months after the end of the financial year, i.e. by 31 July in
each year, and (ii) its interim financial statements for the six
months ended 30 September in each year within 2 months after that
date, i.e. by 30 November in each year. The Company has not
satisfied this requirement in respect of the 2021 Audited Financial
Statements for the reasons specified in the following paragraph,
and is therefore proposing an extension of this requirement (in
respect of the 2021 Audited Financial Statements) until 30 November
2021. The Company expects that it will be unable to satisfy this
requirement in respect of the H1 2022 Financial Statements for the
same reasons specified below and is therefore proposing an
extension of this requirement (in respect of the H1 2022 Financial
Statements) to 31 January 2022. The Company will endeavour to
publish the 2021 Audited Financial Statements earlier than 30
November 2021 and the H1 2022 Financial Statements earlier than 31
January 2022, to the extent possible. The Company does not
currently publish any other interim financial statements.
The Company (which, in its current form, was the result of a
merger that occurred on 30 July 2020 between Eros International Plc
and STX Filmworks, Inc. (the " Merger ")) announced on 3 August
2021 that its audit committee is currently conducting a formal
internal review of certain accounting practices and internal
controls related to certain of its legacy Eros subsidiaries.
Significant revenue from these subsidiaries may not have been
appropriately recognised during the fiscal year ended 31 March
2020. Furthermore, a significant portion of the receivables
associated with such revenue was valued at zero for the six months
ended 30 September 2020, as part of the Company's preliminary
purchase price allocation for the Merger (as disclosed by the
Company in a regulatory filing on 31 March 31, a copy of which is
available at https://sec.report/Document/0001171520-21-000150 (the
" Form 6-K ")). The Company's audit committee has not yet completed
the internal review.
Even though the internal review has not been completed, the
Company currently expects that substantially all of the intangible
assets and goodwill reflected in the Form 6-K are likely to be
impaired and that one or more material weaknesses in internal
controls over financial reporting are likely to be reported. The
Company cannot determine at this time when it will conclude the
remaining work necessary to complete the preparation of the 2021
Audited Financial Statements and assessment of its internal
controls over financial reporting, and this may also result in a
delay in the preparation of the H1 2022 Financial Statements.
Accordingly, the Company is proposing the waivers referred to
above.
3. Waiver of breach of financial covenants
The Company is also proposing a waiver of the requirement to
comply with the covenants set out in Condition 3(b) ( Financial
Covenant (Leverage Ratio) ) and Condition 3(c) ( Financial Covenant
(Fixed Charge Cover Ratio )) (together, the " Financial Covenants
")) until the earlier of (i) the date of publication of the
Company's financial statements for the 6 months ended 30 September
2022 (the " H1 2023 Financial Statements "), and (ii) 30 November
2022 (which is the deadline for the provision of a copy of the H1
2023 Financial Statements to the Trustee pursuant to the
Conditions).
Due to the delay in finalisation of the 2021 Audited Financial
Statements, as described above, the Company is currently unable to
confirm compliance with the Financial Covenants. Furthermore, due
to the impact of the COVID-19 pandemic on the Company's financial
position, the Company anticipates that, even if it were able to
test compliance with the Financial Covenants upon the publication
of the 2021 Audited Financial Statements, it would be in breach of
the Financial Covenants when the 2021 Audited Financial Statements
are published. The Company anticipates that it may be unable to
comply with the Financial Covenants until the publication of the
Company's Financial Statements for the year ended 31 March 2022 or,
at the latest, the publication of the H1 2023 Financial
Statements.
Accordingly, the Company is proposing a waiver of any breach of
the Financial Covenants (and any resultant Event of Default or
Potential Event of Default) prior to the earlier of (i) the date of
publication of the H1 2023 Financial Statements and (ii) 30
November 2022, being the deadline for the provision of a copy of
such financial statements to the Trustee pursuant to the
Conditions.
General
Details of how to participate in the Consent Solicitation are
set out in the Consent Solicitation Memorandum. Bondholders may
obtain a copy of the Consent Solicitation Memorandum by contacting
the Tabulation Agent, the contact details of whom are set out
below.
Notices throughout the Consent Solicitation will be published in
accordance with the Trust Deed and all applicable rules and
regulations as follows:
(a) a notice in Euroclear Bank SA/NV and Clearstream Banking
S.A. for communication to Direct Participants; and/or
(b) an announcement released on the RNS service of the London
Stock Exchange, and by any other means as the Company may, in its
absolute discretion, consider appropriate.
Disclaimer
The Consent Solicitation Memorandum contains important
information which should be read carefully before any decision is
made in respect of the Proposal.
If you are in any doubt as to the action you should take, you
are recommended to seek your own financial advice, including in
respect of tax consequences, immediately from your stockbroker,
bank manager, solicitor, accountant or other independent financial
adviser authorised under the Financial Services and Markets Act
2000 as amended (if you are in the United Kingdom) or from another
appropriately authorised independent adviser (if you are not).
Before making a decision with respect to the Consent
Solicitation, Bondholders should carefully consider all of the
information in the Consent Solicitation Memorandum and, in
particular, the risk factors described therein.
No person is authorised in connection with the Consent
Solicitation to give any information or to make any representation
not contained in the Consent Solicitation Memorandum, and any such
information or representation must not be relied on as having been
authorised by or on behalf of the Issuer, the Solicitation Agent,
the Trustee, the Tabulation Agent or the Principal Paying Agent or
any of their respective affiliates. None of the Solicitation Agent,
the Tabulation Agent, the Trustee or the Principal Paying Agent or
their respective affiliates has separately verified the information
contained herein. Accordingly, no representation, warranty or
undertaking, express or implied, is made and no responsibility nor
liability is accepted by the Solicitation Agent, the Trustee, the
Tabulation Agent or the Principal Paying Agent or any of their
respective affiliates as to the accuracy or completeness of the
information contained in the Consent Solicitation Memorandum or any
other information provided by it in connection with the Consent
Solicitation.
The Company has retained Peel Hunt LLP to serve as Solicitation
Agent and Lucid Issuer Services Limited to serve as Tabulation
Agent with respect to the Consent Solicitation. At any time, the
Solicitation Agent and the Tabulation Agent may trade Bonds for
their own accounts or for the accounts of customers and,
accordingly, may have a long or short position in the Bonds.
None of the Solicitation Agent, the Tabulation Agent, the
Trustee, the Principal Paying Agent or any of their respective
directors, employees and affiliates assume any responsibility for
the accuracy or completeness of the information concerning the
Consent Solicitation, the Extraordinary Resolution, the Company or
any of its affiliates or the Bonds in the Consent Solicitation
Memorandum or for any failure by any of them to disclose events
that may have occurred and may affect the significance or accuracy
of such information and the terms of any amendment to the Consent
Solicitation.
None of the Company, the Solicitation Agent, the Tabulation
Agent, the Trustee, the Principal Paying Agent or any director,
officer, employee, agent or affiliate of any such persons are
acting for any Bondholder, or will be responsible to any Bondholder
for providing any protections which would be afforded to its
clients or for providing advice in relation to the Consent
Solicitation or the Extraordinary Resolution, and accordingly none
of the Company, the Solicitation Agent, the Tabulation Agent, the
Trustee, the Principal Paying Agent or any director, officer,
employee, agent or affiliate of any such persons, make any
recommendation whether Bondholders should participate in the
Consent Solicitation or otherwise participate at any Meeting and
none of the Solicitation Agent, the Tabulation Agent, the Principal
Paying Agent or any director, officer, employee, agent or affiliate
of any such persons, make any representation whatsoever regarding
the Consent Solicitation.
The distribution of the Consent Solicitation Memorandum in
certain jurisdictions may be restricted by law. Persons into whose
possession the Consent Solicitation Memorandum comes must inform
themselves about and observe any such restrictions.
Questions and requests for assistance in connection with the
Consent Solicitation may be directed to Peel Hunt LLP
SOLICITATION AGENT
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
Attention: Stuart Galvin
Email: erosstx@peelhunt.com
Telephone: +44 20 7418 8900
Questions and requests for assistance in connection with the
delivery of Voting Instructions may be directed to the Tabulation
Agent
TABULATION AGENT
Lucid Issuer Services Limited
Tankerton Works
12 Argyle Walk
London WC1H 8HA
United Kingdom
Telephone: +44 20 7704 0880
Attention: David Shilson / Owen Morris
Email: eros@lucid-is.com
This announcement is released by Eros STX Global Corporation and
contains inside information for the purposes of Article 7 of the UK
Market Abuse Regulation, encompassing information relating to the
Consent Solicitation described above. For the purposes of the UK
Market Abuse Regulation, this announcement is made by Andy Warren
(Chief Financial Officer) at Eros STX Global Corporation.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
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Policy.
END
MSCPLMBTMTBMTAB
(END) Dow Jones Newswires
August 10, 2021 02:00 ET (06:00 GMT)
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