It has taken more than two years but French audiovisual group Technicolor is finally close to completing its financial restructuring after it received a binding offer from Ericsson for its broadcast services business.
The Swedish communications…
It has taken more than two years but French audiovisual group Technicolor is finally close to completing its financial restructuring after it received a binding offer from Ericsson for its broadcast services business.
The Swedish communications equipment vendor will pay an initial consideration of €19m in cash with a potential earn-out of up to €9m based on the unit’s 2015 revenues.
The sale is expected to close around mid-2012 and is subject to the relevant customary regulatory administrative approvals and consultations.
The transaction marks the final disposal of non-core assets by Technicolor which first began in early 2010 after the company, then known as Thomson SA, agreed to a debt restructuring plan with its creditors.
Technicolor had spent much of 2009 struggling to avoid defaulting on it €2.48bn debt burden as the difficult trading environment sharply increased its losses. In order to arrest the situation, the company proposed a debt restructuring plan that would reduce its leverage by around half.
To achieve this, Technicolor planned to carry out a debt-for-equity swap, a E348n capital increase and a series of asset sales. The plan was eventually approved by both the lenders and the shareholders in January 2010 and a year later the company completed its share issue and debt for equity swap.
Since the creditor agreement, Technicolor has sold five of it holdings, the first of which being its 50% stake in cinema advertiser Screenvision US, which it sold to Shamrock Capital Growth Fund II in October 2010. This was followed by the sale of its three Grass Valley businesses, with its broadcast unit being sold for US$100m to San Francisco-based private equity firm Francisco Partners in January 2011; its transmission business to German sponsor PARTER Capital Group for a non-material amount in April 2011; and finally its head-end operations, also known as Thomson Video Networks, to French capital development fund FCDE for an undisclosed amount in May 2011.
In late September 2009, Technicolor agreed to sell its 25.7% stake in ContentGuard Holdings, a licensor of digital rights management, to Pendrell Corporation, which was born out of the ashes of defunct mobile satellite operator ICO Global.
Technicolor stated that as with the previous disposals, proceeds from the sale to Ericsson are to be used to pay down debt. As of 31 December 2011, the company had approximately €957m of net debt and leverage of 1.97 times net debt to adjusted EBITDA.
Frederic Rose, CEO of Technicolor, declared: “This transaction is consistent with Technicolor’s strategy to focus on media monetization solutions, new growth businesses, and strengthen its balance sheet.”
Technicolor’s broadcast services activity provides play-out services, live production support and media asset management services. Its revenues were flat year-on-year in the fourth quarter of 2011 with Technicolor pointing to tough market conditions. However, the launch of new services in France and in the Netherlands in the year helped to offset a slight decline in revenues in the UK.
