TIDMZEG
RNS Number : 5420E
Zegona Communications PLC
19 October 2018
NOT FOR DISTRIBUTION, PUBLICATION OR RELEASE, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES
OR TO ANY US PERSON, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF
SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION,
PUBLICATION OR RELEASE WOULD BE UNLAWFUL.
This document is an advertisement and does not constitute a
prospectus in connection with an offering of securities of the
Company. Investors must neither accept any offer for, nor acquire,
any securities to which this document refers, unless they do so on
the basis of the information contained in the applicable prospectus
to be published by the Company. The subscription or purchase of
ordinary shares of the Company is subject to specific legal or
regulatory restrictions in certain jurisdictions. Persons
distributing this communication must satisfy themselves that it is
lawful to do so. The Company assumes no responsibility in the event
there is a violation by any person of such restrictions.
ZEGONA COMMUNICATIONS PLC
LEI: 213800ASI1VZL2ED4S65
ZEGONA TO INCREASE INVEStment IN EUSKALTEL
London, England, 19 October 2018 - Zegona Communications PLC
("Zegona" or the "Company") announces a proposed partial tender
offer for up to 14.9% of Euskaltel, S.A. ("Euskaltel") at a price
of EUR7.75 per share
Zegona today announces that it intends to make a partial tender
offer in cash to acquire up to 14.9% of the outstanding shares of
Euskaltel at a price of EUR7.75 per share (the "Tender Offer"). The
offer price represents a premium of 18% over the closing price on
18 October 2018. Zegona currently owns 15.0% of Euskaltel and would
increase its ownership to 29.9% if the Tender Offer were accepted
in full.
The Tender Offer will be funded through a non pre-emptive
institutional placing, which has been fully underwritten by
Barclays Bank PLC ("Barclays"), of ordinary shares in the capital
of Zegona (the "New Zegona Shares") to raise up to GBP225 million
(the "Placing").
As Zegona has previously stated, Euskaltel is a strategically
attractive business with a strong competitive position in its home
markets and a range of opportunities to deliver profitable growth.
Zegona believes there is potential to create significant additional
value by driving efficiency improvements[1], increasing revenue
growth in existing regions[2] and accelerating expansion outside
the current footprint.
With increased ownership, Zegona anticipates greater
participation on the board of directors of Euskaltel. This creates
the opportunity for Zegona's senior management to apply its
extensive sector knowledge and experience to contribute additional
value to the business and help realise its full potential.
Eamonn O'Hare, Zegona's Chairman and CEO, commented:
"We are delighted today to announce our intention to make an
offer to acquire up to 14.9% of Euskaltel at a price of EUR7.75 per
share. If this offer were accepted in full, Zegona would almost
double its ownership in the business to 29.9%. This significant
incremental investment not only provides Euskaltel shareholders
with a very attractive 18% premium but also reinforces Zegona's
commitment and underlines our belief in the future potential of the
Euskaltel business. In addition, we see opportunities where our
industry knowledge and experience can be valuable to Euskaltel, and
we look forward to continuing our constructive relationship with
the leadership team to help return the business to growth."
Enquiries
Tavistock (Public Relations adviser - UK)
Tel: +44 (0)20 7920 3150
Jos Simson - jos.simson@tavistock.co.uk
Llorente y Cuenca (Public Relations adviser - Spain)
Tel: +34 (0) 91 563 7722
Jorge López-Zafra - jlopez@llorenteycuenca.com
Further Details on the Proposed Transaction
Zegona today announces that its board has resolved to increase
its investment in Euskaltel and that it intends to make a partial
tender offer in cash to acquire up to 26,620,000 of the outstanding
shares of Euskaltel (the "Euskaltel Shares"), representing
approximately 14.9% of the outstanding shares, at a price of
EUR7.75 per share. The offer price represents a premium of 18% over
the closing price on 18 October 2018, the last trading day before
this announcement. Zegona currently owns 15.0% of the outstanding
Euskaltel Shares and would reach a stake of 29.9% if the Tender
Offer were accepted in full.
Eligible Euskaltel shareholders may tender up to their entire
holding, but in the event that more than 26,620,000 Euskaltel
Shares are tendered in aggregate, then the amount of Euskaltel
Shares purchased from each eligible Euskaltel shareholder will be
reduced according to Spanish legislation as will be set out in the
prospectus relating to the Tender Offer.
The Tender Offer will be funded through a non pre-emptive
placing to institutional investors of New Zegona Shares to raise up
to GBP225 million. The proceeds of the Placing will also be used
for transaction expenses and to provide funds for general corporate
purposes. The Placing has been fully underwritten by Barclays[3].
Zegona targets to issue New Zegona Shares within a price range
based on the look-through value of Zegona's 15.0% shareholding in
Euskaltel. Currently the target price range is GBP1.23 to GBP1.44
per New Zegona Share based on the closing price of Euskaltel Shares
of EUR6.58 on 18 October 2018 and the tender offer price of
EUR7.75[4].
The New Zegona Shares will, when issued and fully paid, rank
pari passu in all respects with each existing ordinary share of
GBP0.01 each in Zegona, including the right to receive all
dividends or other distributions. Applications will be made to the
UKLA and to the London Stock Exchange for the New Zegona Shares to
be admitted to the Official List with a standard listing and to
trading on the London Stock Exchange's Main Market for listed
securities, respectively. For the foreseeable future, Zegona
intends to pass through the Euskaltel dividends it receives to its
shareholders in full.
The offer of New Zegona Shares to persons resident in, or who
are citizens of, or who have a registered address in countries
other than, the United Kingdom may be affected by the laws of the
relevant jurisdiction. Those persons should consult their
professional advisers as to whether they require any governmental
or other consents or need to observe any other formalities to
enable them to subscribe for New Zegona Shares pursuant to the
Placing.
The Tender Offer and the Placing will be conditional on receipt
of regulatory approvals and the Placing will require approval by
Zegona shareholders. Zegona expects to launch the Placing and
publish a circular, including the notice of a general meeting,
during the fourth quarter of 2018.
Barclays is acting as global co-ordinator and underwriter in
connection with the Placing; Oakley Advisory Limited is advising
Zegona and is acting as co-bookrunner for the equity placing.
Additional Information
Euskaltel: Euskaltel is the leading quadplay provider of
telecommunications in Northern Spain with 2.2 million homes passed
and approximately 663 thousand residential customers in the Basque
Country, Galicia and Asturias under the Euskaltel, R Cable and
Telecable brands. Euskaltel was created by the Basque Government
and three savings banks in 1995 to be the Basque Country's
alternative telecommunications operator and acquired R Cable in
November 2015 and Telecable from Zegona in July 2017.
Total revenue for the six months ended 30 June 2018 as reported
by Euskaltel was EUR349.3m and declined on a proforma basis by 0.8%
compared to the six months ended 30 June 2017. Adjusted EBITDA for
the six months ended 30 June 2018 as reported by Euskaltel was
EUR168.8m and declined on a proforma basis by 0.2% compared to the
six months ended 30 June 2017[5].
Zegona: Zegona was established in 2015 with the objective of
investing in businesses in the European Telecommunications, Media
and Technology ("TMT") sector and improving their performance to
deliver attractive shareholder returns. Zegona is listed on the
standard listing segment of the Official List of the Financial
Conduct Authority and the Main Market for listed securities of the
London Stock Exchange, and is led by former Virgin Media executives
Eamonn O'Hare and Robert Samuelson.
Zegona acquired Telecable, the leading quadplay cable
telecommunications operator in the Asturias region of Spain in
August 2015. Zegona sold Telecable to Euskaltel in July 2017 and
since that time has owned 15.0% of Euskaltel. As part of that
transaction, Robert Samuelson was appointed to Euskaltel's board of
directors and its committees. Zegona also entered into a standstill
agreement with Euskaltel that limited it to acquiring no more than
1.5% of Euskaltel for one year post the closing of the sale of
Telecable. This standstill arrangement has now come to an end.
Zegona's senior management has a wide-ranging network of
contacts across the international telecommunications sector, giving
it access to capabilities that can benefit Euskaltel and ensure it
remains a leading Basque business. This network enabled Zegona to
propose Jon James, previously COO of ComHem and currently CEO of
Tele2 Netherlands, as a new independent board member of Euskaltel.
Jon was appointed a director of Euskaltel in June 2017. Over recent
months, Zegona has discussed Euskaltel with the ex-Jazztel CEO,
José Miguel García, and believes his skills and experience could
also be a valuable addition to the Euskaltel leadership. Similarly,
Zegona's senior management has a long-standing relationship with
the Virgin Group and Zegona believes there is the opportunity for
Euskaltel to use the well-known Virgin brand on attractive terms
for its expansion into new regions[6].
Important Notice
This announcement contains inside information. It has been
issued by, and is the sole responsibility of, the Company.
This announcement has been prepared in accordance with English
law, the Listing Rules and the Disclosure Guidance and Transparency
Rules and information disclosed may not be the same as that which
would have been prepared in accordance with the laws of
jurisdictions outside England.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Certain information in this announcement is based on management
estimates. By their nature, estimates may not be correct or
complete. Accordingly, no representation or warranty (express or
implied) is given that such estimates are correct or complete or
founded on reasonable grounds. No representation or warranty
(express or implied) is given that such estimates are founded on
reasonable grounds. Zegona does not undertake any obligation to
correct or complete any estimate whether as a result of being aware
of information (new or otherwise), future events or otherwise.
The information contained in this document is for background
purposes only and does not purport to be full or complete. No
reliance may be placed by any person for any purpose on the
information contained in this document or its accuracy, fairness or
completeness. All information in this announcement in respect of
Euskaltel and its group has been obtained from publicly available
information and has not been verified.
This document may not be published, distributed or transmitted
by any means or media, directly or indirectly, in whole or in part,
in or into the United States (including its territories and
possessions, any State of the United States and the District of
Columbia) or any other jurisdiction where to do so would constitute
a violation of the relevant laws of such jurisdiction. This
document does not constitute or form a part of any offer to sell,
or a solicitation of an offer to buy or subscribe for, securities
in the United States. The securities in this document have not
been, and will not be, registered under the U.S. Securities Act of
1933, as amended (the "Securities Act"). Securities may not be
offered or sold within the United States absent (i) registration
under the Securities Act or (ii) an available exemption from
registration under the Securities Act. All offers and sales of
securities outside of the United Sates will be made in reliance on,
and in compliance with, Regulation S under the Securities Act.
There is no intention to register the securities mentioned herein
in the United States or to make a public offering of such
securities in the United States.
This document is only addressed to and is only directed at
persons in member states of the European Economic Area (the "EEA")
who are "qualified investors" within the meaning of Article 2.1 of
the Prospectus Directive as amended and to the extent implemented
in the relevant member state (Directive 2003/71/EC) ("Qualified
Persons"). In addition, in the United Kingdom, these materials are
directed solely at Qualified Persons: (i) who have professional
experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the "Order"); (ii) who are
persons falling within Article 49(2)(a) to (d) of the Order; or
(iii) to whom it may lawfully be communicated without any further
action by the Company (all such persons in (i) to (iii) together
being referred to as "relevant persons"). Any investment or
investment activity to which these materials relate is available
only to, and will be engaged in only with, Qualified Investors in
member states of the EEA and, in the United Kingdom, to Qualified
Investors who are also relevant persons.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"envisages", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
variations or comparable terminology. These forward-looking
statements include matters that are not facts. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. A number of factors
could cause actual results and developments to differ materially
from those expressed or implied by the forward-looking statements,
including, without limitation: Euskaltel's failure to adopt
Zegona's plan, a condition to the Placing or Tender Offer not being
satisfied, expected synergy savings not being realised, changing
demands of consumers of telecommunications services, the increasing
adoption of free-to-home and direct-to-home television services,
changing business or other telecommunications market conditions,
and general economic conditions. These and other factors could
adversely affect the outcome and financial effects of the plans and
events described in this announcement. Forward-looking statements
contained in this announcement based on past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. Subject to any requirement
under the Listing Rules, the Prospectus Rules, the Disclosure
Guidance and Transparency Rules or other applicable legislation or
regulation, Zegona does not undertake any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Investors should not place
undue reliance on forward-looking statements, which speak only as
of the date of this announcement.
Barclays Bank PLC and Oakley Advisory Limited
Barclays Bank PLC which conducts its UK investment banking
activities through its Investment Bank and which is authorised in
the United Kingdom by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority ("FCA") and the
Prudential Regulation Authority, is appointed as the Company's
global co-ordinator and underwriter only and is therefore acting
only for the Company in connection with the matters described in
this announcement and is not acting for or advising any other
person, or treating any other person as its client, in relation
thereto and will not be responsible for providing the regulatory
protection afforded to clients of Barclays or advice to any other
person in relation to the matters contained herein. Neither
Barclays nor any of its directors, officers, employees, advisers or
agents accepts any responsibility or liability whatsoever for this
announcement, its contents or otherwise in connection with it or
any other information relating to the Company, whether written,
oral or in a visual or electronic format.
Oakley Advisory Limited, which is authorised and regulated in
the United Kingdom by the FCA, is appointed as the Company's
financial advisor and co-bookrunner only and is therefore acting
only for the Company in connection with the matters described in
this announcement and is not acting for or advising any other
person, or treating any other person as its client, in relation
thereto and will not be responsible for providing the regulatory
protection afforded to clients of Oakley Advisory Limited or advice
to any other person in relation to the matters contained herein.
Neither Oakley Advisory Limited nor any of its directors, officers,
employees, advisers or agents accepts any responsibility or
liability whatsoever for this announcement, its contents or
otherwise in connection with it or any other information relating
to the Company, whether written, oral or in a visual or electronic
format.
Company Website
Neither the content of the Company's website, nor the content on
any website accessible from hyperlinks on its website for any other
website, is incorporated into, or forms part of, this announcement
nor, unless previously published by means of a recognised
information service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
The person responsible for arranging for the release of this
announcement on behalf of Zegona is Dean Checkley, whose business
address is 20 Buckingham Street, London, WC2N 6EF.
[1] Zegona estimates cost savings of circa EUR40 million per
annum are achievable from a range of operating and mobile access
integration measures
[2] Including expanding the network to up to 200,000 new homes
in existing Euskaltel regions, which Zegona believes can deliver a
3 year payback (based on market information), and investing in
customer-focused service upgrades, such as gigabit broadband
access
[3] The standby underwriting agreement contains customary
representations and warranties as well as other conditions. The
parties will enter into a Placing Agreement in advance of the
publication by Zegona of the prospectus in connection with the
Placing.
[4] Look-through value per Zegona share calculated based on 26.8
million Euskaltel shares currently held by Zegona, total existing
Zegona shares outstanding of 126.2 million and a EUR/GBP exchange
rate of 1.14
[5] Adjusted EBITDA is as defined by Euskaltel in its 2017
Annual Report. Proforma numbers are as reported by Euskaltel and
have been adjusted to include Telecable's full year performance in
2017
[6] Zegona considers a brand license fee at a rate of 2% or less
of branded revenues to be attractive
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFMMMGMRGGRZZ
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