30 July 2020 technicolor.com
contains certain statements that are based on constitute "forward-looking management's current expectations and statements", including but not beliefs and are subject to a number of limited to statements that are risks and uncertainties that could cause predictions of or indicate future actual results to differ materially from the events, trends, plans or objectives, future results expressed, forecasted or based on certain assumptions or implied by such forward-looking which do not directly relate to statements. historical or current facts. and description of such risks and uncertainties, refer to Technicolor’s filings with the French Autorité des marchés financiers.
A NEW FINANCIAL FRAMEWORK FOR LONG-TERM SUSTAINABILITY JULY 5: JULY 20: JULY 20: JULY 28: SAFEGUARD PLAN ALL RESOLUTIONS APPROVED RECEIPT OF THE APPROVAL OF THE APPROVED BY THE AT THE SHAREHOLDER FIRST TRANCHE OF ACCELERATED ~€240 MILLION OF MAJORITY OF ALL GENERAL MEETING FINANCIAL SAFEGUARD VOTING CREDITORS THE NEW MONEY BY THE PARIS Restructuring plan, including €330m ► rights issue and €330m reserved COMMERCIAL COURT € 420m new financing and ► capital increase, approved by the deleveraging through € EGM 660m of debt reimbursement and/or ► Existing shareholders will receive equitization free warrants enhancing their opportunity to participate in ► Addressing the liquidity Technicolor’s recovery and long - needs of the group and term value creation providing a new framework for long-term sustainability ► Lenders will receive free warrants in TECHNICOLOR’S for all Technicolor consideration of the lending of the LEADERSHIP €420m new financing stakeholders POSITIONS are key and valuable assets TECHNICOLOR IS NOW ON TRACK to and we have a great implement its financial restructuring plan, story to build for the providing a framework for long-term future sustainability for the company’s businesses, employees, customers and suppliers 4
H1 2020 KEY FIGURES FROM CONTINUING OPERATIONS REVENUES of €1,433 million, after a strong first quarter, activities have demonstrated good resilience to the Covid- 19 crisis in the second quarter Post IFRS 16 ADJUSTED EBITDA of €53 million, down 49% at constant rates, was impacted by lower business volumes in Film & Episodic Visual Effects and in DVD Services related to Covid-19 business interruption, partly compensated by operational and financial improvements across all divisions, particularly visible in Connected Home where EBITDA grew 126% compared to H1 2019 ADJUSTED EBITA of €(67) million was lower by €(23) million, mitigated by lower D&A and reserves FCF* of €(286) million was lower by €(24) million at current rate (*) Free cash flow defined as: Adj. EBITDA – (net capex + restructuring cash expenses + change in pension reserves + change in working capital and other assets & liabilities + cash impact of other non-current result + net financial interests + foreign exchange result + other financial results and income tax) 5
PRODUCTION SERVICES Revenues (in € million) Adjusted EBITDA (in € million) REVENUE HIGHLIGHTS: @ Current rate @ Current rate Series 1 DOWN 35.3% YOY AT CONSTANT RATE Driven primarily by the previously anticipated (pre-COVID-19) delays in awards coming from one key client, and by the subsequent pandemic- related impacts on production around the world 428 81 ANIMATION & GAMES: double-digit revenue growth compared to prior 279 year, due to higher volume in feature work-for-hire animation services. A&G maintains a strong pipeline from key clients 2 ADJUSTED EBITDA REDUCTION MAINLY DRIVEN BY FILM & H1 2019 H1 2020 H1 2019 H1 2020 EPISODIC VFX Film & TV Post Advertising Animation & Games VFX Production ► Approximately 20 ► 1,350+ commercials ► 178 TV/OTT ► Over 1,800 minutes of theatrical film projects series, mini- animation delivered for MPC won VFX Company of the ► series and/or TV and Film ► 30+ TV and non- Year (Ad Age Creativity Awards pilots (of which theatrical film projects 2020) 66 are streaming ► Contributed to over 40 only) commercials for Super Bowl 70+ theatrical ► projects 6
DVD SERVICES Revenues (in € million) Adjusted EBITDA (in € million) @ Current rate @ Current rate REVENUE HIGHLIGHTS: Series 1 VOLUME DOWN 27% YOY Limited amount of new releases due to Covid-19 impacting volumes; existing catalog showed resilience H1 REVENUE DECLINE OF 20% AT CONSTANT RATE 374 9 302 ADJ. EBITDA HIGHLIGHTS: AMOUNTED TO €1 MILLION AT CURRENT RATE 1 Broadly in line with expectations given the anticipated volume reduction and normal seasonal weakness in the first half H1 2019 H1 2020 H1 2019 H1 2020 DIVISION-WIDE INITIATIVES: H1 H1 YoY (in million units) As a result of ongoing industry-wide pressures, DVD Services 2019 2020 Change continued its structural division-wide initiatives to adapt distribution and replication operations, and related customer DVD 299 220 contract agreements in response to continued volume reductions (26)% Multiple successful contract renegotiations were announced in 2019, and similar efforts with other customers are ongoing Blu-ray ™ 118 88 (25)% 7
CONNECTED HOME Revenues (in € million) @ Current rate REVENUE HIGHLIGHTS: Title H1 REVENUE DECLINE OF 12.3% YOY AT 953 CONSTANT RATE 839 H1 REVENUES REMAINED STRONG IN NORTH 577 AMERICA DRIVEN BY THE BROADBAND BUSINESS Broadband 521 ADJ. EBITDA HIGHLIGHTS: 376 318 Video YOY IMPROVEMENTS: Adjusted EBITDA more than doubled mainly as a H1 2019 H1 2020 consequence of the significant cost efficiencies achieved Adjusted EBITA of €20 million improved by €37 million Adjusted EBITDA (in € million) @ Current rate compared to prior year at current rate CONNECTED HOME IS MAINTAINING ITS MARKET LEADERSHIP IN BROADBAND AND ANDROID TV- BASED SOLUTIONS 54 24 PROFITABILITY IMPROVEMENTS: This good evolution in profitability is the result of the transformation plan launched 2 years ago, increasing H1 2019 H1 2020 the division’s performance and drastically improving productivity 8
KEY TRANSACTION PRINCIPLES NEW MONEY CASH INJECTION OF €420M, UNDER A DEBT Gross debt evolution FORMAT, TO FUND THE COMPANY’S OPERATIONAL NEEDS AND REPAY THE $110M BRIDGE LOAN SET UP IN MARCH € 1,440m (2) 2020 BY JULY 31 ST , 2020 €400m fully underwritten by a group of lenders under the ► existing Term Loan B and RCF creditors and € 20m provided by Bpifrance Participations (1) € 1,140m (2) Maturity of this new financing will be June 2024 ► Term € 982m (2) Reinstated DEBT REDUCTION OF €660M ACROSS THE TERM LOAN B € 572m (2) Loan B TLB/RCF AND THE RCF ON A PARI PASSU BASIS Debt reduction to be implemented through (i ) a €330m rights ► issue backstopped by TLB/RCF creditors with commitment by Bpifrance Participations (1) to participate pro rata its current shareholding and (ii) a €330m reserved capital increase to New TLB/RCF creditors € 250m RCF € 457m financing Bridge $ 110m repaid REINSTATED TLB/RCF DEBT OF € 572M (2) EXTENDED TO $125m $125m Wells Fargo DECEMBER 2024 WITH A BULLET REPAYMENT 22-Jun-2020 Pro forma situation 1 2 REPAYMENT OF THE $110M BRIDGE FACILITY Notes: (1) Bpifrance Participations will subscribe to the rights issue in cash pro rata its current shareholding (~7.5%) for an aggregate amount of ~€ 25.5m MATURITY EXTENSION OF THE $125M WELLS FARGO (2) Rounded figure based on EUR/USD of 1.13. The amount of nominal debt in the current FACILITY TO DECEMBER 2023 situation was estimated as of 22-Jun-20, assuming a 100% drawdown of the Wells Fargo facility 10
CAPITAL INCREASE – KEY TERMS ► Total capital increase of € 660m in 2 tranches RIGHTS ISSUE TRANCHE ► € 330m (i.e. 50% of total capital increase) Amount ► € 2.98 per share Price ► Term Loan B and RCF lenders by way of set-off of claims Underwriting ► Cash proceeds to be used to repay Term Loan B and RCF at par Use of proceeds ► Commitment by Bpifrance Participations to participate in the rights issue pro rata its current shareholding Participation Undertaking ► Bpi France participations to maintain 1 board seat RESERVED CAPITAL INCREASE ► € 330m (i.e. 50% of total capital increase) Amount ► € 3.58 per share Price ► Term Loan B and RCF lenders pro rata by way of set-off of claims at par Subscribers ► No cash proceeds (by way of set-off of claims only) Use of proceeds 11
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