French audiovisual group and STB maker Technicolor is to undertake a €158m capital increase in order to reduce its debt and stabilise its shareholder base.
The stake will be solely acquired by JP Morgan Chase via its private investment arm One Equity…
French audiovisual group and STB maker Technicolor is to undertake a €158m capital increase in order to reduce its debt and stabilise its shareholder base.
The stake will be solely acquired by JP Morgan Chase via its private investment arm One Equity Partners and JPMorgan Chase & Co, which already holds 1% of Technicolor’s equity.
The transaction is to take the form of a two-step capital increase with Technicolor initially issuing 72,280,964 shares at a price of €1.60 per share through a reserved capital increase to the Jesper Cooperatief, a jointly-owned unit of JPMorgan Chase & Co and One Equity Partners
Technicolor will then offer a further 26,912,732 shares to existing shareholders at a price of €1.56 per share. Jesper has irrevocably committed to acquire up to 75% of the rights issue.
The level of participation of existing shareholders in the rights issue will determine the final stake of Jesper in Technicolor, set at a minimum holding of 25% and a maximum 29.96%.
Technicolor stated that proceeds from the capital increase, anticipated to be between €147m and €158m, would be used reduce its debt, increase headroom on financial covenants and help fund the group’s “Amplify 2015” strategic roadmap, which outlines the company’s plans over the next three years to significantly de-lever while increasing both adjusted EBITDA and free cash flow generation.
Under the terms of Technicolor’s existing credit agreements, 80% of the net proceeds of the capital increase will be used to pay down debt. Post-repayment, Technicolor’s net debt would stand at between €813m and €823m. The company’s leverage level would be 1.7x 2011 net debt/EBITDA.
Frederic Rose, CEO of Technicolor, said: “I am delighted that JP Morgan plans to make a substantial investment in Technicolor to become a long-term shareholder in the company. The capital increase we are planning will provide the company with a stronger financial structure and a stable shareholder base to implement its growth strategy. The planned investment is a strong evidence of confidence in Technicolor and an endorsement of our strategy and growth potential.”
The reserved capital increase is slated to occur on the date of Technicolor’s AGM on 20 June, while the rights issue offer is expected to take place between 27 June and 3 July 2012.