Slideshow - Iliad

Dec 20, 2017 - Rationale: Geographic diversification in a country with favorable market trend – ability to share expertise and know-how ... Incumbent operator with high quality infrastructure and strong operating cash flow generation. A transaction in ... Leading provider of broadband and converged telecom solutions for ...
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Strategic investment in eir December 20, 2017

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Disclaimer This document has been prepared by Iliad S.A. (the "Company”) and is being furnished to you solely for your information and personal use. This presentation includes only summary information and does not purport to be comprehensive. The information contained in this presentation has not been subject to independent verification. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of Iliad S.A., its affiliates or its advisors, nor any representatives of such persons, shall have any liability whatsoever (in negligence or otherwise) for any loss arising from any use of this document or its contents or otherwise arising in connection with this document or any other information or material discussed.

This presentation contains forward-looking statements relating to the business, financial performance and results of Iliad S.A. These statements are based on current beliefs, expectations or assumptions and involve unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those described in such statements. Factors that could cause such differences in actual results, performance or events include changes in demand and technology, as well as the ability of Iliad S.A. to effectively implement its strategy. Any forward-looking statements contained in this presentation speak only as of the date of this presentation. Iliad S.A. expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained in this presentation to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based unless so required by applicable law.

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Transaction Highlights

A 31.6% minority investment of c.€320m in eir alongside NJJ (Xavier Niel’s private holding company) and existing shareholders (Anchorage Capital Group, L.L.C. and Davidson Kempner Capital Management LP) Option to take control with a call option exercisable in 2024 to acquire 80% of NJJ’s stake (i.e. 26.3% of eir’s capital) at a 12.5% discount to fair value, as determined by an independent expert Incumbent operator with high quality infrastructure and strong operating cash flow generation Acquisition price: c.6.5x EV / 18e EBITDA – strong value creation potential Rationale: Geographic diversification in a country with favorable market trend – ability to share expertise and know-how A transaction in accordance with best governance practices (specific committee composed of the independent Board members exclusively and issuance of a fairness opinion by an independent expert) Transaction subject to approval of the relevant authorities – closing expected in H1 2018

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eir – An Integrated Incumbent Operator with a Challenger Position on Mobile  Incumbent operator with nationwide high quality fixed network  Largest fiber access network in Ireland with 1.7 million fixed retail and wholesale lines(3)

Revenue of €1,299m (1)

 Challenger in mobile with 18% market share and 1.1 million subscribers in the Irish mobile market (3)

Adj. EBITDA of €520m (1)(2) (40% margin)

 Strong operating cash flow generation

2 Business 28%

 Leading provider of corporate connectivity solutions (incl. eir Northern Ireland and Tetra)

1 Consumer  Leading provider of broadband and converged telecom solutions for residential customers

47%

3 Open eir 25%

 Strategic partner of choice for wholesale services  Sole infrastructure provider in many parts of Ireland

Retail fixed broadband

Retail mobile (4)

Other

Other

10% 12%

#1

#3

9%

32%

18%

38%

19% 27%

35%

(1) Underlying revenue and EBITDA figures consolidating Tetra on a proportional basis and excluding (i) non-cash share incentive related provisions, (ii) storm costs and (iii) other one-off expenses / (2) Adjusted EBITDA is earnings before interest, taxation, amortisation, depreciation, non-cash pension charge, non-cash lease contracts, exceptional items and profit on disposal of property, plant and equipment / (3) As of June 2017 / (4) Includes mobile broadband and M2M

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Financial Overview and Value Creation

 Non-controlling indirect stake of 31.6% in eir to be accounted for under the equity method

Accounting method

– in accordance with IFRS standards (IFRS 10, IFRS 11 and IAS 28)  eir’s debt will not be consolidated

 A limited investment of c.€320m enabling Iliad to preserve its balance sheet structure as it will have a limited impact on leverage (c.0.2x EBITDA)

Limited impact on balance sheet

 Iliad retains its financial and business agility to: + Pursue expansion plan in Italy + Invest in France, in particular FTTH + Participate in further consolidation moves in France as the case may be  An acquisition price at c.6.5x EV / 18e EBITDA  Medium-term: Investment expected to generate dividend stream and yield a double-digit

Value creation

return on equity  Medium to long-term: Option to take over control of a first-class asset - call option on 26.3% of eir’s capital, exercisable in 2024 at a 12.5% discount to fair value, as determined by an independent expert

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Applying Best Governance Practices This transaction constitutes a related-party transaction and Iliad intends to apply the highest governance standards throughout the process Specific committee composed exclusively of Iliad’s independent Board members and appointment of an independent financial expert

A related-party transaction

Approved by the Board of Directors based on a fairness opinion of an independent expert and to be ratified by the shareholders at a simple majority of the votes cast

Parties concerned by the transaction (Xavier Niel and Olivier Rosenfeld), did not vote at Board level and will not vote in their capacity as shareholders

Best governance practices

Review of the transaction by a specific committee composed exclusively of Iliad’s independent Board members

Best Governance Practices

Appointment by the Board of an independent financial expert and a legal advisor: •

Finance: Finexsi



Legal: BDGS

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Structuring of the Transaction NJJ 49%

51%

NJJ / Iliad Holding

35.5% +

NJJ grants a call option exercisable by Iliad in 2024 to acquire 80% of NJJ’s stake (i.e. 26.3% of eir’s capital) at a 12,5% discount to fair market value

Existing shareholders (Anchorage Capital and Davidson Kempner) retain a 35.5% stake in eir and grant a non-recourse loan instrument to purchaser until end of 2024

64.5% Anchorage Capital / Davidson Kempner

NJJ and Iliad invest pari passu in a 51/49 holding, which itself will own 64.5% of eir

Holding (Ireland)

Non-recourse Loan instrument

100%

Existing debt of eircom remains in place

EBITDA 17A: Net Debt 17A: Leverage :

€520m €2,071m 4.0x

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Conclusion

A first-class asset at an attractive price

Minority stake with an option to take control in the medium / long term

Geographic diversification in a country with positive market trends

Retained agility for Iliad

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