Technicolor, the French audiovisual group and STB maker, has announced plans to refinance its €1.186bn of existing senior secured debt in order to substantially lower its interest rate payments and extend its maturity profile to 2020.
Under the plan,…
Technicolor, the French audiovisual group and STB maker, has announced plans to refinance its €1.186bn of existing senior secured debt in order to substantially lower its interest rate payments and extend its maturity profile to 2020.
Under the plan, Technicolor has formed an independent, stand-alone special purpose vehicle called Tech Finance that is seeking to raise US$330m of senior notes due 2020 and €745m of senior secured term loans, also due 2020.
Proceeds from the financing will then be used to fund Tech Finance’s offer to purchase in cash any and all of the company’s outstanding notes and participations in its credit agreement.
In parallel, Technicolor is seeking the consent of its creditors to modify the terms of their debt to enable the refinancing. The company requires the consent of approximately two thirds of the senior term loan lenders and a 50.1% majority of the noteholders.
Both the consent solicitation and the debt purchase offer were launched on 11 June. The deadline for the credit agreement purchase offer is 24 June while the deadline for the note tender offer is 9 July. The final settlement date is 15 July.
JP Morgan, Goldman Sachs and Morgan Stanley are lead arrangers, dealer managers and solicitation agents for the transaction.
The refinancing marks quite a turnaround for Technicolor, which back in 2009 was on the verge of going bankrupt. With the recession having led to significant losses, Technicolor was struggling to avoid defaulting on it €2.48bn debt burden. It therefore proposed a debt restructuring plan that would reduce its leverage by around half.
At the beginning of 2010, the company received shareholder approval for a debt-for-equity swap, a E348n capital increase and a series of asset sales. Two years later having sold five of its businesses, Technicolor had approximately €957m of net debt and leverage of 1.97 times net debt to adjusted EBITDA.
In 2012 the company then announced its “Amplify 2015” strategic roadmap, which outlined plans to further de-lever while increasing both adjusted EBITDA and free cash flow generation. It’s stated 2015 goals were a leverage of below 1.2 times, adjusted EBITDA of over €600m and free cash flow of more than €400m between 2012 and 2015.
To help progress this plan, in August 2012 Technicolor raised €191m through a dual-tranche capital increase led by US technology investment firm Vector Capital. The proceeds were used to pay down debt.
In its full year 2012 results, the company reported a 2.2% increase in revenues to €3.5bn while adjusted EBITDA was up 7.8% to €512m. As of year end, Technicolor’s net debt was approximately €839m and its leverage 1.41 times.
