Technicolor, a major supplier of cable modems, gateways, set-tops and video streaming devices, has pushed the go button on a restructuring plan that aims to obtain about €420 million ($472.68 million) in new financing that provides the company with the liquidity needed to turn the ship around.
In addition to the new financing, the proposed plan, released Monday, also paves the way for deleveraging through €660 million ($742.78 million) of debt equitization and support a new framework that is shooting for long-term stability and sustainability at the struggling Paris, France-based company. The total capital increase is set up in two €330 million ($371.39 million) tranches – a rights issue tranche and a reserved capital increase tranche.
Technicolor said the plan requires two thirds majority approval of existing shareholders and has set a vote on the restructuring plan for July 20. Technicolor hopes to get court approval of the accelerated financial safeguard procedure plan by the end of July and launch the capital increases and allocation of warrants in September.
If all goes well, Technicolor expects to receive €240 million ($270.05 million) of net proceeds from the new financing proposal by mid-July.
Technicolor's presentation (PDF) of the plan also outlined how different parts of its business have been hurt by the pandemic.
Stability at Connected Home
Revenues tied to visual effects for film and episodic content has been damaged by the temporary stoppage of live-action sports and general production. However, COVID-19 has not severely impacted its business centered on animation and games. Technicolor's DVD services unit is also under pressure from the delay in new theater releases, amplifying a general decline in that market as consumers continue to pivot away from physical media.
The bright spot amid the gloom is that Technicolor's Connected Home unit has been stable during the pandemic so far.
"Despite early March supply chain disruption due to COVID-19, the Connected Home division is headed for a good year driven by strong demand in the US," the company noted.
Technicolor expects the Connected Home division to remain stable and resilient through the duration of the restructuring plan (driven by growth in gateway and broadband-related sales), with revenues being flat or growing by as much as 3% through 2022.
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— Jeff Baumgartner, Senior Editor, Light Reading