Set-top box maker and audiovisual specialist Technicolor has announced the completion of its refinancing transaction, extending its debt maturity profile to 2020 and reducing its overall interest expense.
Via its stand-alone special purpose vehicle Tech…
Set-top box maker and audiovisual specialist Technicolor has announced the completion of its refinancing transaction, extending its debt maturity profile to 2020 and reducing its overall interest expense.
Via its stand-alone special purpose vehicle Tech Finance, the Paris-based company secured an €838m dual-denominated 7-year senior secured term loan B. The debt is split between a US$830m tranche paying approximately 600bp over Libor and a €200m tranche paying 625bp over Euribor. The principal amount for the new loan will be amortized by 5% every year.
JP Morgan, Goldman Sachs and Morgan Stanley were mandated lead arrangers on the facility.
Proceeds from the loan, as well as €67m of cash, have been used to fund the tender offer Tech Finance launched in mid-June for any of the company’s outstanding notes and senior loans. Approximately €905m of Technicolor’s senior debt was subsequently repurchased, corresponding to almost all of the outstanding notes and 61% of credit agreement participations.
The remaining existing senior debt now amounts €282m and consists almost entirely of participations under the 2010 credit agreement that matures 2017.
The company also noted that the new debt is covenant-light with a number of the previous debt’s operating and financial requirements having been removed.
As part of the refinancing transaction, Technicolor has secured a €100m 5-year revolving credit facility.
Frederic Rose, Technicolor’s chief executive officer commented: “The successful completion of our refinancing, notwithstanding challenging financial market conditions, marks another important step in Technicolor’s financial structure improvement. We have been able to reduce our average interest expense, effectively extend the maturity of our debt, and gain greater operating flexibility to deliver on our Amplify 2015 objectives.”
Over the past three years Technicolor has undergone a substantial restructuring process in order to rapidly delever and turn the company profitable. Having successfully done so through a series of asset sales, debt-for-equity swaps and capital increases, the company announced in 2012 its Amplify 2015 strategic roadmap. This plan focused on further de-levering and increasing both EBITDA and free cash flow generation.
To that end, as of year end 2012 Technicolor’s leverage was down to 1.41 times and its EBITDA up 7.8% to €512m.
