Technicolor refinances, wraps tender for nearly all outstanding notes

By Susanna Moon

Chicago, July 12 - Technicolor said it accepted all notes tendered under its offers and funded the purchase with €838 million drawn under a new term loan at an average nominal interest of 7.3%.

Tech Finance & Co. SCA purchased an aggregate €905 million principal amount of Technicolor's outstanding senior debt, which amounts to almost all of the outstanding notes and 61% of credit agreement participations, according to a company press release.

The average nominal interest of the purchased debt amounted to 8.4%, while the average nominal interest of the total existing senior debt amounted to 8.2%.

As of Friday, the remaining existing senior debt not held by Tech Finance was €282 million with a bullet debt maturing in 2017 in the amount of €218 million, compared with €890 million before the refinancing, the release noted.

As a result of the refinancing, the total consolidated amount of senior gross debt bears interest at an average nominal rate of 7.4%, an improvement of 80 basis points, leading to a pro-forma reduction of €14.8 million in overall annual interest charges.

The company said its 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 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, the company said.

"The successful completion of our refinancing, notwithstanding challenging financial market conditions, marks another important step in Technicolor's financial structure improvement," Frederic Rose, chief executive officer of Technicolor, said in the press release.

"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."

Consents obtained

The amendments and consents sought under the company's solicitations also have become effective, the company said Friday.

Technicolor said on July 10 that it secured consents from holders of about 54% of the aggregate principal amount of notes to refinance its outstanding senior secured debt.

The company also obtained consents for about 99% of the aggregate principal amount of participations under its credit agreement.

As announced June 11, Technicolor sought to refinance participations in its credit agreement and notes issued under a note purchase agreement. As of May 31, the debt totaled €1.19 billion and had an average interest rate of 8.2%.

The company solicited consents to complete the refinancing and to make some changes to the terms of its existing debt.

The lender and noteholder consent solicitations expired at 11:59 p.m. on July 9.

The company previously said that if the proposed amendments become effective, each noteholder will receive a 1% consent fee regardless of whether they consented to the amendments.

Lenders under the credit agreement that consented to the proposed amendments by 5 p.m. ET on June 24 and are lenders when the proposed amendments become effective will receive a 1% consent fee.

Tender offer

Separately from Technicolor's consent solicitation, Tech Finance offered to acquire any and all of Technicolor's outstanding notes and outstanding participations in its credit agreement. Tech Finance is an independent, standalone special-purpose vehicle.

The tender offer ended at 6 p.m. ET on July 11.

As of 5 p.m. ET on June 24, investors had tendered about 61% of the aggregate principal amount of participations under the credit agreement, according to the July 10 press release.

As of 11 a.m. ET on July 9, about 99% of the aggregate principal amount of notes had been tendered under the noteholder offer to purchase.

Noteholders who tendered prior to 5 p.m. ET on June 24 will receive 114% of par. Those who tendered after the early deadline but prior to 11:59 p.m. ET on July 9 will receive 111% of par.

The company will also pay accrued interest up to but excluding the settlement date, which was expected to be July 12 for notes tendered by the early deadline and July 15 for notes tendered after that. The settlement date was extended from July 11.

Lenders who submitted their participations under the credit agreement for purchase prior to June 24 will receive 100.5% of par on or about July 12, extended from July 11.

Conditions

The tender offer was conditioned on the proposed amendments becoming effective and Tech Finance receiving enough financing.

The proposed amendments were conditioned on the receipt of consents of more than two-thirds of the total participations under the credit agreement and at least 50.1% of the principal amount of outstanding notes, more than two-thirds of the total participations under the credit agreement being submitted for purchase, at least 50.1% of the notes being tendered in the tender offer and Tech Finance receiving adequate financing for the tender offer.

Tech Finance expected to fund the tender offer with $330 million of senior notes due 2020 and a €745 million senior secured term loan due 2020.

The dealer managers and solicitation agents were J.P. Morgan Securities plc, Goldman Sachs International and Morgan Stanley & Co. LLC.

Technicolor is a Paris-based provider of video technologies, systems, finished products and services to the media and entertainment industry.

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