Why is Eurona developing a Restructuring Plan?
Eurona is about to leave behind a first development stage characterized by growth – as it has expanded both organically and by acquiring other companies – backed mostly through external financing. The company is presently entering a new era where the synergy of the recent acquisitions is starting to materialize, and where management is focusing on making the business profitable, as well as on achieving sustained growth. Due to its high debt, Eurona needs a new capital structure that will enable the company to work on a healthy balance and with the necessary liquidity. The Restructuring Plan aims to guarantee the economic stability Eurona needs to focus on operating profitability and sustainable growth.
What regards the Restructuring Plan?
The restructuration of the debt along with the changes in the capital and corporate structures will ensure the financial stability needed to undertake the main guidelines of the 2018-2022 Business Plan and to achieve operating profitability.
Furthermore, the plan – which was adopted unanimously by the Management Board – also entails a significant financial injection. Not only did some of Eurona's main creditors accede to hold their early termination and resolution rights, but they also agreed to pump new resources that could amount up to 30 million Euros that will serve successfully meet the Business Plan's objectives.
What does this mean for Eurona's shareholders? Will their rights and guarantees be weakened?
No. The shareholders will not be weakened. In fact, if they keep their stocks, they could benefit from potential increases of the share price due to the liquidity injection that will secure successfully meet the Business Plan's objectives. The Group's estimated value generation for 2020 is of around 200 million Euros.
What if the Plan is not accepted by the majority of the shareholders?
To be implemented, the Restructuring Plan must be ratified by 50.01% of the shareholders at the Extraordinary General Meeting taking place on July 24th. According to the latest data, the commitment level for shareholders is of 34%, of 70% for bondholders, and of 65% for promissory notes holders. Nevertheless, it is absolutely essential for a majority to endorse the Plan. We trust it will be adopted, as it is a pivotal aspect to fulfill the Business Plan and to ensure financial stability and profitable growth.
Why is a new company started to which the capital from Satellites, Wifi and Fixed Wireless businesses is transferred?
The new corporate structure, NewCo, is designed to reassure the contributors of new money, who will become shareholders of the new company. In addition, the company will also promote Eurona's competitiveness in the market on the grounds of the resulting balance structure.
Why is voice business not included in the new company?
Because of the lack of synergy between the Wholesale business and the other businesses included in the NewCo. Also, the Business Plan noted a moderate growth for this activity during the next few years; therefore, its development would not need additional financing.
What is a Lock-Up Agreement?
It is an agreement by which Eurona's main financial creditors have agreed on withdrawing their early termination and resolution rights until the restructuring has taken place. The estimated maximum period for its conclusion is February 28th, 2019. The agreement also studies a liquidity injection on the short term by Magnetar Capital LLC of up to 20 million Euros, of which the first fund provision was made. The cash injection was vital to face the treasury needs the group was facing in the short term.
Is debt relief being considered?
No, debt relief is not being considered.
What amount is the contribution of new money?
The new money will amount to a maximum of 30 million Euros and will be supplied by Magnetar Capital LLC and other institutions for NewCo through loan agreements. A part of the new loan funding will be used to fully repay the 20 million Euro Liquidity Line provided by Magnetar.
What share of the new society will be owned by Eurona's creditors?
As defined in the agreements signed with Magnetar Capital concerning the 20 million Euro liquidity loan, Magnetar will own up to 25% of NewCo's share capital. In addition, following the new funding injection, the creditors will acquire 60% of Newco's share capital.
Why has Eurona decided to sell its 3.5 GHz band radio license?
On behalf of the restructuring, and following its divestment on non-relevant assets strategy, Eurona is considering the clearance of some non-strategic assets for the new Business Plan operations. This license is not strategic anymore for the company. The revenue generated by its sale will be used to pay Magnetar's loan.
What will Eurona's debt level after the new loans?
The adopted Business Plan anticipates that the Group's debt will remain within reasonable and frequent ratios for Eurona's size and industry.