Advanced Television

Technicolor Creative Studios progressing in recovery plan

April 3, 2023

Technicolor Creative Studios has announcesdan update of the implementation of its refinancing.

  • New chapter of Technicolor Creative Studios’ Refinancing:
    • Execution on March 27, 2023, of a conciliation protocol by its lenders and main shareholders
    • First tranche refinancing drawdown early April in aggregate principal amount of €85,000,000 and second tranche in aggregate principal amount of €85,000,000 expected by the end of Q2 2023
    • Approval by a judgment of the Commercial Court of Paris dated March 29, 2023, which puts an end to the conciliation procedure opened on January 20, 2023

Caroline Parot, Chief Executive Officer of Technicolor Creative Studios, said: “Reaching an agreement on the refinancing of Technicolor Creative Studios has been pivotal in establishing the foundations of our long-term growth. I am delighted that the process is progressing well with the execution of a conciliation protocol in line with the established schedule. We are extremely grateful for the confidence and support of our key creditors and shareholders, as we strive to achieve Technicolor Creative Studios’ full value potential. I would also like to thank all the teams for the great work they have done so far and are preparing to do throughout the year. Their talent, creativity, and dedication are the reasons why our Company is trusted by so many in the industry.”

A NEW CHAPTER FOR REBOUND WITH THE EXECUTION OF THE CONCILIATION PROTOCOL

Following the agreement in principle reached on March 8, 2023, Technicolor Creative Studios is pleased to announce (i) the execution on March 27, 2023 of a conciliation protocol (the “Conciliation Protocol”) by its lenders and shareholders showing their support in the rebound of the Company and (ii) its approval by a judgment of the Commercial Court of Paris dated March 29, 2023 which puts an end to the conciliation procedure opened on January 20, 2023.

In accordance with the terms of the agreement in principle dated March 8, 2023, the Conciliation Protocol provides that the refinancing will include (i) a new money financing in aggregate principal amount, net of original issue discount and underwriting fee, equal to c.€170 million and (ii) the reinstatement of the existing indebtedness (the “Refinancing”).

The implementation of the Refinancing pursuant to the terms of the Conciliation Protocol is detailed hereafter.

  • A first tranche refinancing drawdown early April in aggregate principal amount of €85,000,000 through:
    • the issuance of bonds notes in a principal amount equal to thirty million euros (€30,000,000) subscribed by its major shareholders: Angelo Gordon, Bpifrance Participations, Briarwood and Barclays (the “Equity First Tranche Participants”). This bond issue (the “Equity First Tranche Refinancing”) will be refinanced by way of set off with the subscription price of the Convertible Notes issue (described below);
    • a first tranche super senior credit facility granted by the main lenders (the “New Money Lenders”) for an amount of approximately fifty million euros (€50,000,000) plus approximately five million dollars ($5,000,000) (in each case net of original issue discount (OID) and underwriting fee).
  • A second tranche of the refinancing for an aggregate principal amount of €85,000,000 will be granted by the end of the second quarter of 2023:
    • a second tranche of super senior credit facility (in addition to the first tranche credit facility described above) fully underwritten by New Money Lenders for an amount of approximately fifty million euros (€50,000,000) plus approximately five millions dollars ($5,000,000) (in each case net of OID) will be drawn by the end of the second quarter of 2023, concurrently with the issue of the Convertible Notes. Share warrants entitling to 11% of the PF Fully Diluted Share Capital (as such term is defined hereafter) will be granted to the New Money Lenders in proportion to their exposure to the New Money Facility.
    • the issuance of convertible bonds (the “Convertible Notes”) for sixty million euros (€60,000,000) (net of OID), by way of issuances reserved to the Equity First Tranche Participants and Vantiva. The Convertibles Notes will be subscribed in part up to €30,000,000 by way of set off of the Equity First Tranche Refinancing described above. Conversion of 100% of the Convertible Notes will give holders of those notes an aggregate amount of 33% of the share capital of the Company on a fully diluted basis pro forma for: (i) such conversion and (ii) the issuance of certain warrants to be granted to New Money Lenders and existing senior secured lenders of the Company, in each case, as described in this announcement.
  • Existing indebtedness would be reinstated and capitalized as follows:
    • the multicurrency Revolving Credit Facility would be reinstated for its total amount of €40 million (the “RCF”);
    • the c.€621 million first lien facility (the “First Lien Facility”) would be reinstated for a total amount of approximatively c.€421 million;
    • a portion in principal of the First Lien facility will be converted into a subordinated instrument stapled with the reinstated First Lien Facility for a total amount of c.€170 million;
    • a debt to equity will be carried out through capital increases reserved to the benefit of the First Lien Facility lenders, to be subscribed by way of set-off of receivables including a portion in principal of the First Lien facility of €30 million.

The implementation of the Refinancing will be subject to approval by the general meeting (expected to be held during the second quarter of 2023) and to the visa of the Autorité des Marchés Financiers under applicable regulation.

The impact of these transactions on the Company’s share capital is described in Appendix I.

  • Evolution of the governance of the Company

The Conciliation Protocol provides that the governance of the Company will be set up as follow:

  • The Board of Directors would in principle be composed of at least five independent directors, up to four of them may be proposed by the major shareholders;
  • A reorganization of the special committees of the Board of Directors including the creation of a new Strategy Committee;
  • New observers may be appointed upon proposal of the major shareholders.
  • Other undertakings under the Conciliation Protocol
    • In order to fully support the Company until the implementation of the Refinancing and thereafter, shareholders agreed not to transfer their Company securities until completion of the Refinancing and in addition to this undertaking the main lenders, in their capacity as shareholders, have undertaken not to transfer their shares in the Company and for a period of 12 months (subject to standard exceptions and a respiration right up to 15% of their initial shareholding in the six months following the implementation of the Restructuring and an additional 35% in the following six months).
    • The Company will also benefit from a right of first offer in the event of a sale of shares by its main shareholders to competitors.
    • The Company will undertake a strategic review over the next 24 months to explore options to maximize value for all stakeholders. The Company will also consider its options for a possible delisting from Euronext Paris in the short term.

The implementation of the Restructuring will be subject to certain conditions precedent which include the following key points

  • the usual regulatory approvals that may be required.
  • the approval of the required resolutions by the general meeting which is expected to be held in the second quarter of 2023.
  • the satisfaction of the conditions precedent provided in the financing documentation.

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