Technicolor has successfully completed its refinancing transaction, allowing the company to borrow new funds at a lower interest rate, effectively extend its debt maturity profile to 2020 and benefit from significantly greater covenant flexibility.
The amendments and consents sought pursuant to its consent solicitations have become effective. Tech Finance has accepted all notes tendered and all loans submitted pursuant to its offers to purchase and has funded the purchase mainly through an aggregate principal amount of €838 million borrowed under a new term loan at an average nominal interest of 7.3 per cent.
Tech Finance purchased an aggregate principal amount of €905 million of Technicolor’s outstanding senior debt in the offers to purchase, corresponding to almost all of the outstanding notes and 61 per cent of Credit Agreement participations. The average nominal interest of the purchased debt amounted to 8.4 per cent, while the average nominal interest of the total existing senior debt amounted to 8.2 per cent. As of today, the remaining existing senior debt not held by Tech Finance, amounts to €282 million with a bullet debt maturing in 2017 in the amount of €218 million (compared to €890 million before the refinancing).
As a result of the refinancing transaction, the total consolidated amount of senior gross debt bears interest at an average nominal rate of 7.4 per cent, an 80 basis point improvement, leading to a pro-forma reduction of €14.8 million in overall annual interest charges. The company’s debt structure is now based almost entirely on loans and the final maturity of the majority of debt has been extended to 2020.
The refinancing transaction also provides additional covenant flexibility following the amendment of Technicolor’s senior debt documentation and the new covenant-light loan. Many of the existing debt’s operating and financial covenants have been removed, while other terms, including mandatory prepayments requirements and economic terms, remain the same.
Frederic Rose, Chief Executive Officer of Technicolor stated: “The successful completion of our refinancing, notwithstanding challenging financial market conditions, marks another important step in Technicolor’s financial structure improvement. We have been able to reduce our average interest expense, effectively extend the maturity of our debt, and gain greater operating flexibility to deliver on our Amplify 2015 objectives.”