Premiere AG / Capital Reorganisation
23.12.2008
Release of a Adhoc News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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This ad hoc release does not constitute an offer of securities for sale or
a solicitation of an offer to purchase securities in the United States. The
shares of Premiere AG (the 'Shares') may not be offered or sold in the
United States under the U.S. Securities Act of 1933, as amended, absent
registration or an exemption from registration. No public offering of
shares will be made in the United States.
Premiere, its bank syndicate and News Corp have agreed on a new long-term
financing structure
Renegotiated debt facilities of 525m conditional on new equity of 450m
450m rights issues to be backstopped by News Corp
News Corps commitment is subject to certain conditions, most importantly
to the availability of the new debt facilities and an exemption by BaFin
from the requirement to submit a mandatory takeover offer in the event News
Corps shareholding in Premiere reaches or exceeds 30 percent
A leading independent international public accounting firm has confirmed
the need for financial restructuring and the feasibility of the business
plan
Premiere to make considerable investments in programming, customer facing
technology, marketing and customer service to enhance the offer and attract
new subscribers
In 2009 negative cash flow in a range of 250m to 275m and significant
EBITDA loss expected
Proceeds of the capital increase will be used to execute new strategic
plan with expected EBITDA and cash flow break-even by the end of 2010
Premiere targets to be profitable from 2011 onwards
Munich, 23 December 2008 Premiere, its bank syndicate and News Corp agreed
on a new financing structure to secure Premieres funding needs. This would
enable Premiere to implement its new business plan resulting from the
strategic review. The business plan is designed to secure the future of the
company by growing the number of monthly contract subscribers and
increasing their average program revenue per subscriber to achieve
sustained profitability. News Corp and the bank syndicate fully support the
financial restructuring based on the business plan.
The management of Premiere believes that the successful implementation of
the financing structure that Premiere has agreed with its bank syndicate
and News Corp is a prerequisite to the survival of the company.
Under the new financing arrangement, the existing debt facilities would be
replaced by new long-term facilities with a total amount of 525m,
conditional upon two capital increases which are intended to provide
Premiere with new equity in the amount of 450m.
The first capital increase, which is intended to satisfy short-term funding
needs, is structured as a rights offering and involves the issue of up to
approximately 10.2m shares of authorized capital and is expected to raise
at least 25m. News Corp has agreed to take up such number of shares at a
minimum subscription price of 3.19 to ensure gross proceeds of not less
than 25m without increasing its shareholding above 29.9 percent. The bank
syndicate has also agreed to provide up to an additional 25m short-term
bridge funding in January 2009 which will be reduced to the extent the
proceeds of the first capital increase exceed 25m. These short-term
financing measures in combination are intended to provide 50m to satisfy
funding needs through to the completion of the second capital increase.
The second capital increase, which will also be structured as a rights
issue, is intended to raise the amount necessary in order to reach a total
of 450m new equity. News Corp has agreed to backstop the second equity
raising. This commitment is subject to certain conditions, most importantly
the availability of the new long-term bank facilities and an exemption from
the requirement to submit a mandatory takeover offer by BaFin in the event
News Corps shareholding in Premiere reaches or exceeds 30 percent. News
Corps commitment is further subject to the absence of a material adverse
change in Premieres business and the subscription price being at 1, the
legally required minimum price or a higher price agreed between Premiere
and News Corp prior to the rights offering. The second capital increase
will require the approval of an extraordinary shareholders meeting which
is planned for the first quarter of 2009. News Corp has agreed, subject to
certain conditions, to vote in favor of the capital increase. Premiere
expects to receive the funds from the second capital increase in the second
quarter of 2009.
The replacement debt facilities of 525m consist of a term loan of 275m
with a duration until December 2013 and a revolving credit and guarantee
facility of 250m, with a duration until June 2013.
New long-term financing to ensure Premiere continues as a going concern
Due to Premieres negative operating profits and cash flows, the company
was unable to remain within its financial covenants, resulting in the need
to obtain a waiver from its lenders. Without a new financing agreement,
Premieres bank syndicate could have requested immediate repayment of the
existing bank facilities at expiry of the covenant waiver. This could also
occur in the event that the new financing agreement cannot be implemented
due to non fulfillment of any of the conditions.
A leading independent international public accounting firm has confirmed
the need for restructuring. It has also reviewed and confirmed the
feasibility of Premieres new business plan as supported by the new
financing arrangements.
Premiere to make considerable investments in programming, customer facing
technology, marketing and customer service
The new business plan is based on a fundamental overhaul of the business in
order to reach sustainable growth and profitability. It comprises four core
elements:
First, Premiere will invest in improving its programming offer by expanding
the number and variety of channels as well as increasing the high
definition offering.
Second, Premiere will invest in customer facing technology to improve
usability and convenience of the overall service. A step change in
navigation and the introduction of user friendly PDR type recording devices
will dramatically increase the usability of the service and thus the
subscriber experience.
Third, Premiere will invest in a clear and simple package and pricing
structure and migrate all subscribers to this new structure. The new
packaging and pricing will be based on a buy-through model where all
subscribers first access the breadth and compelling variety of programs and
channels available on Premiere, then have the possibility to access
additional premium movies and sports packages. The migration of subscribers
to the new packaging structure will considerably reduce complexity and
costs as well as enabling much more effective customer communications.
Fourth, Premiere will overhaul the customer experience by reducing
complexity at every step and delivering faster and more responsive customer
service.
In order to accelerate monthly contract subscriber growth, these changes
will be supported by significantly enhanced marketing and sales execution
by optimizing retail sales, including merchandising and promotional
support, and developing direct sales channels.
EBITDA and cash flow targets to break even by the end of 2010 and
profitability targeted from 2011 onwards
The subscriber base has remained broadly stable during Q4 2008 as stronger
sales compared to Q4 2007 were offset by the loss of heavily discounted and
Flex subscribers. Whilst the loss of these low ARPU subscribers has
increased average ARPU of the customer base, churn for Q4 will be slightly
higher than in Q3 as a result.
For 2008, Premiere expects a reported EBITDA loss in the range of 40m to
60m. The 2008 EBITDA result includes one-time gains of approximately 60m.
Net debt at the end of 2008 is expected to increase to approximately 320m
from 307m at the end of the previous quarter.
In order to cover operating losses and to make the necessary investments,
considerable funds will be required in 2009. Thus Premiere expects a
negative cash flow in the range of 250m to 275m and a significant EBITDA
loss in 2009. Revenue growth is expected to be limited to approximately
50m in 2009, excluding the impact from divesting Home of Hardware.
Additional expenditure is necessary in 2009, comprising approximately 35m
additional costs of Bundesliga and sports programming, an increase in other
programming costs of approximately 40m, additional sales & marketing costs
of approximately 65m and higher transmission and other costs of
approximately 10m.
Premiere targets to achieve EBITDA and cash flow break even by the end of
2010 and to be profitable from 2011 onwards.
First capital increase from existing authorized capital to fund short-term
liquidity needs
The first capital increase will make use of the existing authorized capital
and increase the registered share capital of Premiere by up to 10,226,636
shares from 112,460,000 to 122,683,636 shares.
Existing Premiere shareholders will be granted subscription rights with a
subscription ratio of 1 new share for each 11 existing shares. The minimum
subscription price will be 3.19 per new share. It will be increased if the
volume-weighted average share price of Premiere from the beginning of the
subscription period on 30 December 2008 until close of trading on 8 January
2009, less a discount of 2 percent, is higher than 3.19. The final
subscription price will be published on 8 January 2009 after close of
trading.
The subscription offer for the first capital increase will be published on
29 December 2008 and will be available on Premieres website. The
subscription period is expected to begin on 30 December 2008 and to end on
12 January 2009. No subscription rights trading and therefore no public
offer will take place. The new shares are expected to be included in
trading on 15 January 2009.
ABN AMRO Bank N.V. and UniCredit (Bayerische Hypo- und Vereinsbank AG) will
lead manage the first capital increase. The parent company of ABN AMRO Bank
N.V., The Royal Bank of Scotland plc, and UniCredit (Bayerische Hypo- und
Vereinsbank AG) are also lenders to Premiere AG.
This ad hoc release is available on the Internet at info.premiere.de
Contact for press:
Torsten Fricke
Vice President Corporate Communications
Tel.: +49 89/99 58-63 50
torsten.fricke@premiere.de
Contact for investors and analysts:
Christine Scheil
Vice President Investor Relations
Tel.: +49 89/99 58-10 10
christine.scheil@premiere.de
This ad hoc release contains statements regarding future developments that
have been based on current evaluations and have been made to best of the
knowledge of the management of Premiere AG. Such statements with regard to
future developments are subject to known and unknown risks, uncertainties
and other factors that could cause the profit situation, profitability,
value development or the performance of Premiere AG or the success of the
media industry to diverge from those profit situations, profitability,
value development or performance results that are assumed expressly or
implied or described in these statements regarding the future. Considering
these risks, uncertainties and well as other factors, readers of these
documents should not rely in an incommensurate manner on these statements
dealing with future developments. Premiere AG has no obligation to behave
in keeping with such statements regarding future developments or to alter
its behavior to accommodate future events and developments.
DGAP 23.12.2008
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Language: English
Issuer: Premiere AG
Medienallee 4
85774 Unterföhring
Deutschland
Phone: +49 (0)89 9958-02
Fax: +49 (0)89 9958-6239
E-mail: ir@premiere.de
Internet: www.premiere.de
ISIN: DE000PREM111
WKN: PREM11
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, Hamburg, München, Stuttgart
End of News DGAP News-Service
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DGAP-Adhoc: Premiere AG: Premiere announces long-term financing structure to support new strategic plan
| Source: EQS Group AG