Following the completion of the financial restructuring operations carried out in 2016 and 2017, the group's financial debt had been restructured in the form of a bond issue, to the benefit of certain financial creditors of the company, for a total amount of €397,834,585, whose settlement and delivery took place on 14th March 2017 (the "Bonds" and the holder of a Bond, a "Bondholder").
In accordance with the amended accelerated financial safeguard plan approved by the Bondholders’ meeting held on 13th July 2020 and approved by a judgment of the Nanterre Commercial Court on 6th August 2020 (the "Amended Safeguard Plan"), the total principal amount of the Bonds has been increased on August 6th, 2020 from €397,834,585 to €429,329,823 by incorporating accrued interests and unpaid coupons bond since 15th March 2020 into the principal amount (including approximately €29.8 million of unpaid coupons and accrued interests and approximately €1.7 million of accrued interest between 15th September to 30th September 2020).
As part of the financial restructuring operations provided for in the Amended Safeguard Plan and decided by the general meeting of the shareholders held on 24th July, 2020, Solocal Group carried out various capital increase operations (for more details, see the company's press releases of 3rd July, 10th September, and 2nd October 2020), including a share capital increase with preferential subscription rights carried out on 6th October 2020 via the issuance of 11,198,586,929 new shares (the "New Shares") at a subscription price of €0.03 (including issuance premium), which represents an amount of €335,957,607.87 (including issuance premium) (the "Capital Increase with Preferential Subscription Rights") that was subject to certain cash and set-off subscription commitments by the Bondholders. In particular, and pursuant to the Amended Safeguard Plan, all Bondholders were required to subscribe to the New Shares not subscribed by the public and/or, pursuant to the cash subscription commitment granted by certain members of the ad hoc committee of the Bondholders, by set-off against a portion of their receivables under the Bonds.
As a result, following the completion of the various financial restructuring operations, including the Capital Increase with the Preferential Subscription Rights (and taking into account the execution of the subscription commitments by way of set-off provided for in the Amended Safeguard Plan), the total principal amount of the Bonds has been reduced to €168,454,208, corresponding to 334,125,321 Bonds with a face value of € 0.50416472146 each.
Pursuant to the Amended Safeguard Plan, the terms and conditions governing the existing Bonds are essentially as follows, in force since August 6th, 2020:
- Interest rates (as from 1st October 2020):
- Euribor with Euribor floor 1% + 7% spread (no less than 8%), half of which will be payable in cash, and the other half will be compounded and capitalized until 15th December 2021;
- Euribor with Euribor floor 1% + 7% (no less than 8%) payable fully in cash going forward;
- Maturity date: extension of the final maturity date of the bonds from 15th March 2022 to 15th March 2025, with 2.5 non call years from 6th August 2020 to 6th February 2023;
- Permission to grant security interests to guarantee tax and social liabilities;
- Permission for members of the group to incur certain new financial indebtedness, including State-guaranteed loan(s) (PGE), an Atout loan (Prêt Atout) granted by BPIfrance Financement or bridge loans, for a maximum total cumulative amount of 32 million euros in cash (excluding the original issue discount);
- Modification of the required majority to pass decisions in Bondholders general meetings to reduce such majority to 662/3% for decisions currently requiring a 90% majority.
The main other features of the Bonds remain unchanged and include, notably :
- Listing: listed on the official listing of the Luxembourg Stock Exchange and admission to trading on the Euro MTF market;
- Late payment interest: 1% increase in the applicable interest rate;
- Early redemption or buy-back :
- Solocal Group may, at any time and in multiple instalments, redeem all or part of the Bonds at a redemption price equal to 100% of the principal amount plus accrued and unpaid interests;
- in addition, the Bonds will be subject to mandatory early redemption (subject to certain exceptions) in whole or in part, in case of certain events occurring, such as a change of control, a disposal of assets (Assets Sale), or receipt of Net Debt Proceeds or Net Receivables Proceeds. Mandatory prepayments are also expected from funds derived from a percentage of excess cash flows, based on the level of the Company’s Consolidated Net Leverage Ratio.
- Financial commitments :
- the consolidated net leverage/Consolidated Leverage/ Consolidated EBITDA ratio should be lower than 3.5: 1;
- the interest coverage ratio (Consolidated EBITDA/Consolidated Net Interest Expense) should be greater than 3.0: 1; and
- if the Consolidated Net Leverage Ratio exceeds, on December 31st, of the previous year, 1.5:1, capital expenditure (excluding growth transactions) (Capital Expenditure) relating to Solocal Group and subsidiaries is limited to 10% of consolidated revenue of Solocal Group and its subsidiaries.
- The terms and conditions of the Bonds also contain certain undertakings not to conduct certain actions, prohibiting Solocal Group and its subsidiaries, subject to certain exceptions, from, in particular :
- bearing additional financial debt;
- granting security interests;
- paying dividends or making distributions to shareholders; as an exception, the payment of dividends or distributions to shareholders is permitted if the Consolidated Net Leverage Ratio does not exceed 1.0: 1.
The restrictions contained in the terms and conditions of the Bonds and described above could affect the group’s ability to carry out its activities and limit its ability to react to market conditions or to seize commercial opportunities that may arise. For example, such restrictions could affect the group’s ability to finance the investments of its activities, restructure its organizational structure or finance its capital needs.
In addition, the group’s ability to comply with these covenants could be affected by events that are beyond its control, such as economic, financial and industrial conditions. A breach by the group of its commitments or restrictions may result in a default under the above-mentioned agreements.
Should a default not be remedied or waived, the Bondholders may require all outstanding amounts to become immediately payable. This could activate the cross default clauses of other group loans. This type of event could have a material adverse effect for the group, leading to insolvency or liquidation of the group.
Moreover, the Group may not be able to refinance its indebtedness or obtain additional financing on satisfactory terms.
The Amended & Restated terms and conditions of the Obligations, dated 6th August 2020 adopted in application of the Amended Safeguard Plan are available here
It is specified that a Pool Factor on the Bonds has been set up at the time of the partial repayment by way of set-off that occurred on 6th October 2020 which displays the reduction of the amount in principal of each of the 334,125,321 Bonds at €0.5041647472146.