Technicolor announced it will launch an incremental term loan to partially finance the acquisition of the Connected Devices division of Cisco and The Mill and a capital increase with preferential subscription rights. The combination of the incremental term loan and of the rights offering would allow Technicolor to maintain a healthy balance sheet pro forma for the acquisitions of Cisco Connected Devices and The Mill and appropriate financial flexibility for future growth.
The envisaged financing transactions should result in a pro forma expected leverage (Net Debt to Adjusted EBITDA) of 1.7x at end 2015 and include:
- An incremental term loan of €375 million ($426 million) maturing in 2020, fully underwritten by Goldman Sachs, the syndication of which will start in the coming days;
- A rights offering of up to €225 million ($256 million), which Technicolor will launch after the publication of its Q3/15 revenues. Banks have been appointed and are committed to underwrite the rights offering, subject to customary conditions; and
- Approximately €100 million ($114 million) of cash-on-hand will also be used to finance the acquisitions.
The incremental term loan: Concurrent with the announcements of the strategic acquisitions of Cisco Connected Devices on July 23, 2015 and of The Mill today, Technicolor will launch an incremental term loan in U.S. dollars and Euros of €375 million ($426 million) equivalent aggregate principal amount, to help fund those transactions in conjunction with the planned rights offering and cash on hand. The incremental term loan is being led by Goldman Sachs International as sole lead arranger and bookrunner.