Infogrames Entertainment (NASDAQ:ATAR) (Paris:IFG)
announces today its final debt restructuring plan.
On September 8, 2006, the Company concluded an agreement with its
main bank creditors and bondholders, thus allowing to set up a
financial restructuring plan (the 'Plan'), the purpose of which is
to significantly reduce its financial indebtedness, to restore its
equity and to provide a cash level appropriate to its operating needs.
This agreement comes within the framework of the action plan
announced by the Company on February 9th, 2006 implying a program of
asset disposals and a renegotiating of the bank debt whose agreement
was announced on the April 21st, 2006.
The Company estimates that the achievement of the Plan, whose
implementation is subject to conditions described hereafter, will
allow to stop the warning procedure engaged by the auditors in
accordance to the article 234-1 alinea 3 of the French commercial code
(the special report by the auditors is available upon request at the
head offices of the Company), to insure the operating continuity of
the Company and to provide sufficient means necessary to its financial
reversal.
The Company entrusted with Associes en Finances (223 rue Saint
Honore, 75001 Paris), acting as independent expert, the mission to
confirm the equitable nature of the plan for all the involved parties
thereto. Their report will be available prior to the general meeting
of the shareholders.
The Plan hinges on 5 steps:
Step number 1: EUR 25m extension and rescheduling of the short
term loan
Within the framework of an amendment to the existing bank
agreements, Banc of America Securities Limited agrees with the
Company:
-- a EUR 25m increase of the short term loan (the 'Short Term
Loan') thus increasing its amount from EUR 20m to EUR 45m
-- an extension of the maturity from March 31st, 2007 to December
31st, 2008
This loan will be redeemable up to EUR 10m by the Capital Increase
mentioned in Step number 4, the balance being repaid on December 31st,
2008.
Step number 2: Modification of certain terms of the 2006/2008
Bonds
The Company convened on September 29th, 2006 the holders of the
2006/2008 bonds (6% coupon, nominal value of EUR 14, maturity on March
15th, 2008 - hereafter the '2006/2008 Bonds' whose value amounts
to EUR 33.7m) to approve the postponement of the normal redemption
date of the first tranche to February 15th, 2007 and to amend the
terms of early repayment.
The main holder of the 2006/2008 Bonds, a fund managed by Boussard
et Gavaudan Asset Management LP, holds 75.8% of the 2,403,772
outstanding 2006/2008 Bonds and is committed to vote those
resolutions.
Step number 3: Modification of certain terms of the 2003/2009
Oceane
The Company convened on September 29th, 2006 the holders of the
bonds maturing on April 1st, 2009 convertible and/or exchangeable into
new or existing shares (hereafter the "2003/2009 Oceane" whose value
amounts to EUR 124.3m) to approve (i) the postponement of the final
maturity from April 1st, 2009 to April 1st, 2020, (ii) the reduction
of the coupon from 4.0% to 0.01%, and (iii) the cancellation of the
early redemption clause in case of default.
The funds managed by GLG Partners and Bluebay Asset High Yield
(Master Fund) (together the 'Investors') holding 67.8% of the
1,185,658 outstanding 2003/2009 Oceane, are committed to vote those
resolutions.
Step number 4: Shareholders General Meeting / Share Capital
Increase / Early repayment of all the outstanding 2006/2008 Bonds /
Free reserved allocation of Warrants
The Company plans to conduct a capital increase amounting to EUR
74m (issue premium included) with maintenance of the preferential
subscription right for the existing shareholders at a subscription
price of EUR 0.15 per share (the "Capital Increase"). EUR 33.7m of the
proceeds will be affected to the repayment of all the outstanding
2006/2008 Bonds, EUR 10m to the partial reimbursement of the Short
Term Loan and EUR 30m to the operating financing of the Company.
The main holder of 2006/2008 Bond and the Investors are
irrevocably committed to subscribe, respectively up to EUR 33.7m and
EUR 40m, the shares which would not be subscribed by the existing
shareholders at the end of the subscription period. Those commitments
are conditional upon usual terms for this type of transaction and to
the granting of an exemption to launch a mandatory Takeover Bid.
In consideration for their contribution to the structuring and to
the implementation of the Plan, warrants will be freely attributed to
the Investors and the main holder of 2006/2008 Bond following the
Capital Increase (the "Warrants"). The Warrants will have a 3-year
maturity, and allow subscribing to one new share at EUR 0.15,
representing for the Investors and the main holder of 2006/2008 Bond
respectively a total of 15% and 3% of the capital post Capital
Increase and Exchange Offer as described in Step number 5.
In this respect, the Board of directors of the Company will
propose to the shareholders at their annual general meeting - stating
on the annual accounts of the Company - convened on September 29th,
2006 (first convening) to vote on the following resolutions:
(i) reduction of the nominal of the shares to one cent of Euro
(0.01 Euro),
(ii) reverse-split of the shares: attribution of one new share
with one Euro (1 Euro) nominal for hundred (100) shares with
one cent of Euro (0.01 Euro) nominal,
(iii) renewal of the financial authorisations in order to allow
the Capital Increase described above and the Exchange Offer on
the 2003/2009 Oceane, as described in Step number5,
(iv) issuance of Warrants reserved to Boussard Gavaudan Asset
Management LP and The BlueBay High Yield (Master Fund), and
(v) appointment of two additional directors proposed by Bluebay
Asset Management Limited.
Step number 5: Exchange Offer on the 2003/2009 Oceane
Subsequently to the Capital Increase (Step number4), the Company
will launch an Exchange Offer ("offre publique d'echange simplifiee")
on the 2003/2009 Oceane, where each tendered 2003/2009 Oceane will be
exchanged into 32 new shares of the Company. On the basis of a share
price of EUR 0.15 (i.e. the subscription price of the Capital
Increase), the Exchange Offer represents a price of EUR 4.80 per
2003/2009 Oceane, i.e. a discount of around 37.5% (coupon included)
compared to the redemption price of EUR 7.53 per 2003/2009 Oceane.
Investors agreed to tender to the Exchange Offer the 11,185,658
2003/2009 Oceane they hold, i.e. 67.8% of the outstanding Oceane.
Suspensive Conditions
The completion of the Plan (except step number1) is conditional
upon the approvals by the holders of 2006/2008 Bond and 2003/2009
Oceane at their respective meetings, on the approval by the
shareholders at the extraordinary general meeting and on
authorisations and exemptions required from the market authorities.
The agreement provides that the Capital Increase must be launched
before December 30th, 2006 or February 15th, 2007 in case a new
shareholders extraordinary general meeting has to be reconvened due to
the failure to meet the quorum requirements. In addition, the
amendment to the terms of the 2003/2009 Oceane is conditional upon the
completion of the Exchange Offer on April 30th, 2007 at the latest
Impact of the plan on current shareholders of the Company
On an indicative basis, assuming that all the 2003/2009 Oceane are
tendered and exchanged into new shares of the Company, the impact of
such conversion on a shareholder holding 1% of the share capital
before the Capital Increase and the Exchange Offer would be as follow:
-0-
*T
Shareholder
stake
---------------------------------------------------------- -----------
Before Capital Increase 1%
---------------------------------------------------------- -----------
After Capital Increase and before conversion of the Oceane 0.28%
---------------------------------------------------------- -----------
After Capital Increase and conversion of the Oceane 0.16%
---------------------------------------------------------- -----------
After Capital Increase and conversion of the Oceane and
exercise of the Warrants 0.13%
---------------------------------------------------------- -----------
*T
A shareholder holding 1% of the share capital on June 30, 2006 who
would participate to the Capital Increase would be diluted as follow:
-0-
*T
Shareholder
stake
---------------------------------------------------------- -----------
Before Capital Increase 1%
---------------------------------------------------------- -----------
After Capital Increase and before conversion of the
2003/2009 Oceane 1%
---------------------------------------------------------- -----------
After Capital Increase and conversion of the Oceane 0.56%
---------------------------------------------------------- -----------
After Capital Increase and conversion of the Oceane and
exercise of the warrants 0.48%
---------------------------------------------------------- -----------
*T
Impact of the plan on the net debt of the Company
IFRS net debt of the Company is of EUR 173.2m (audited accounts)
as of March 31, 2006 and of EUR 191,4m as of June 30th, 2006 (non
audited estimated data). Based on this data, net debt will be reduced
to EUR 126m after the Capital Increase and to EUR 24m after the
Exchange Offer, assuming all the 2003/2009 Oceane are tendered and
converted.
Not taking into account costs specific to the Short-Term Loan and
to the transaction, the plan generates EUR 55m of cash.
Assuming all the Warrants are exercised, the net debt would be
reduced to EUR (8)m
-0-
*T
Net debt as Net debt as Impact
of of of the
31/03/2006 30/06/2006 bridge Capital
(in EUR m) (1) (2) loan increase
---------------------------- ----------- ----------- ------- ---------
Oceane 2011 5 5 5 5
Bonds 2003/2009 33 34 34 -
Oceane 2003/2009 100 102 102 102
Production funds 27 20 20 20
Financial leasing 6 5 5 5
OThers (bank debt) 45 44 44 44
Bridge loan - - 25 15
Debt 216 210 235 191
Cash 43 19 41 65
Net debt 173 191 194 126
100% of the
warrants
exercised
----------------
Impact of the
Impact of the exercice of the
(in EUR m) exchange offer warrants
------------------------------------ ---------------- ----------------
Oceane 2011 5 5
Bonds 2003/2009 - -
Oceane 2003/2009 - -
Production funds 20 20
Financial leasing 5 5
OThers (bank debt) 44 44
Bridge loan 15 15
Debt 90 90
Cash 65 98
Net debt 24 ( 8)
*T
(1) Audited data as of March 31th, 2006 - IFRS convention
(2) Non audited estimated data as of June 30th, 2006 -IFRS
convention
Conclusion
All the Board members of the Company voted in favor of these
transactions which, if they are successfully put in place, will permit
the Company to have a new industrial investment capacity to cope with
interactive leisure challenges.
About Infogrames Entertainment and Atari
Infogrames Entertainment (IESA), the parent company of the Atari
Group, is listed on the Paris Euronext stock exchange (ISIN code:
FR-0000052573) and has two principal subsidiaries: Atari Europe, a
privately-held company, and Atari, Inc., a United States corporation
listed on NASDAQ (ATAR).
The Atari Group is a major international producer, publisher and
distributor of interactive entertainment software for all market
segments and in all existing game formats (Microsoft, Nintendo and
Sony) and on CD-ROM for PC. Its games are sold in more than 60
countries.
The Atari Group's extensive catalogue of popular games is based on
original franchises (Alone in the Dark, V-Rally, Test Drive, Roller
Coaster Tycoon, etc.) and international licenses (Matrix, Dragon Ball
Z, Dungeons & Dragons, etc.).
