Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) announced on May 26 that the prolonged uncertainty in global market conditions, as well as the impact of the COVID-19 crisis on its business in the short term, have limited the ability of the company to launch its previously announced €300 million rights issue.
The company says it has therefore engaged in discussions with some of its financial lenders and third-party investors in an effort to obtain new financing. To date, the company says it has received indicative offers from a third-party investor and from one of its existing lenders, and negotiations are on-going.
Richard Moat, CEO of Technicolor, stated: “On February 13th, we announced our 2020-2022 strategic plan and a c. €300m rights issue. Since then the world and our industries have faced an unprecedented crisis due to the COVID-19 pandemic. We have been working tirelessly to guarantee safety for our employees, whilst ensuring the smooth continuity of our activities. Nevertheless, the current situation has limited our capacity to launch the envisaged rights issue, and so we have recently entered into discussions with some of our creditors and with third party investors to obtain a new €400 million financing more adapted to the group’s current situation."
Moat's statement continued, "To facilitate the implementation of this financing, we are now soliciting consents from our creditors to have the option to open a conciliation proceeding. This additional financing, together with a restructuring of our balance sheet, should reinforce the group and its ability to serve its clients and trade with its suppliers in the long term. Whilst this is in progress, the business will continue as usual, with no impact on our operations and the quality of service we deliver to our clients, and we intend to maintain our workforce of talented people to enable the delivery of all our services and products.”
Technicolor said that the new financing, which would amount to c. € 400 million, would allow the company to: pay off the $110 million short-term bridge facility granted by JP Morgan in March 2020 and due on July 31st 2020; and to finance the liquidity needs of the group as from July 2020. In addition to seeking the new financing, Technicolor says it intends to implement a long term sustainable financial structure for the company, including by way of debt to equity swap, depending of course on the discussions with its existing creditors in this respect.
In this context, to facilitate discussions with all stakeholders, the company says it wishes to have the ability to request the opening of conciliation proceedings in France on Technicolor SA, which are amicable and consensual, in order to facilitate discussions with its creditors and implementation of the new financing under the aegis of a court-appointed conciliator. This would require the prior agreement of the relevant majority of creditors, in accordance with the applicable credit facilities.
"The market will be informed in due course of the outcome of these discussions," stated Technicolor.