Technicolor: Forced to deleverage, Technicolor will split in two on the stock market

(BFM Bourse) – The French group Technicolor, which has been restructuring for years, presented a plan on Thursday to separate from its flagship video and visual effects activity, which it intends to list on the stock market in order to deleverage.

In great difficulty for years, the French specialist in technology for sound and image Technicolor announces a vast reorganization of its activities. In its annual publication, the group indicates this evening that it intends to evolve “into two independent listed companies, leaders in their markets, and each having the capacity to pursue their own strategic program in order to ultimately release their full potential for valuation. “.

The current scope of Technicolor’s activities will therefore be divided into: Technicolor Creative Studios (“TCS”) and Technicolor Non-TCS, which would include the Connected Home and DVD Services divisions.

Technicolor announces its intention to float TCS on the stock exchange through the distribution of 65% of the capital to Technicolor shareholders “to enable its continued growth and development in conjunction with strong market demand”. Technicolor will remain a listed entity on Euronext Paris and will retain a maximum stake of 35% in TCS after this in-kind distribution.

“After a thorough review, we have concluded that a partial distribution of the capital of TCS as well as the full refinancing of the existing debt is the solution that best aligns, for all of Technicolor’s stakeholders, the strategy, the creation of value and financial objectives” explains the group’s managing director Richard Moat, quoted in the press release. These companies “will be able to follow their own strategy, reach their full potential […] and ultimately obtain the market valuation that corresponds to their fundamentals”, added the Anglo-Irish veteran of telecoms, appointed in 2019 to carry out the restructuring of the former Thomson Multimedia. According to him, the current valuation of the group (around 630 million euros) is below its potential due to the lack of synergies between the activities.

Finalization scheduled for the end of 2022

In addition to advertising and video games, TCS will become “the leading visual effects provider for the film and series industry”, he said. With a well-filled order book, this activity, which generated revenue of 629 million euros in 2021, has 10,600 employees (+35% over one year), including a thousand in France mainly dedicated to films of animation.

The operation will be submitted at the end of June to the general meeting of shareholders, for a finalization expected at the end of the third quarter of 2022.

At the same time, Technicolor will launch a plan to refinance its debt, which reached more than one billion euros at the end of December. The group will issue 300 million euros of “convertible bonds” (MCN) at 2.60 euros per security, very close to the current stock market price (2.68 euros Thursday at the close of the Paris Stock Exchange). This refinancing “is supported by a group of shareholders who have committed to subscribe to all of the MCNs,” Technicolor said in a press release.

Finally, the group announces that it has received a “firm offer for the sale of its “Brand Licensing” activities (RCA and Thomson), for a total cash amount of around 100 million euros”, with a finalization expected during of the first semester. Technicolor will therefore initially retain 35% of TCS. “The objective is that when this stake is sold, the debt (of the two remaining branches) will be zero,” said Richard Moat.

The group reduced its net loss to 140 million euros in 2021 (compared to -211 million euros in 2020), for a turnover of 2.9 billion euros (-4%), affected in particular by the semiconductor crisis.

(with AFP)

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