REG - Digital 9 Infrastr. - Lenders' Consent to Verne Sale & RCF amendment

Digital 9 InfrastructureAnnouncement

04/03/2024 07:00

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RNS Number : 3676F  Digital 9 Infrastructure PLC  04 March 2024

4 March 2024

 

DIGITAL 9 INFRASTRUCTURE PLC

 

("D9" or the "Company" and, together with its subsidiaries, the "Group")

 

Lenders' Consent to Verne Transaction and Revolving Credit Facility amendment

 

The Board of D9 (the "Board") today provides a progress update to shareholders
on closing conditions required for the sale of the Verne Global group of
companies ("Verne Global") to funds managed or advised by Ardian France SA or
any of its affiliates (the "Buyer") ("Verne Transaction").

 

The Board is pleased to note that Revolving Credit Facility ("RCF") lenders
have granted their approval to proceed to completion of the Verne Transaction
(the "RCF Completion Consent"), and that lenders under the debt facility in
respect of the Icelandic branch of Verne Global (the "Verne Facility") granted
conditional consent to the change of control (the "Change of Control
Consent"). As a result, closing of the Verne Transaction is now conditional on
applicable merger control approval in Iceland and on Foreign Direct Investment
("FDI") approval in Finland.

 

The Company has also entered into an amendment letter regarding the RCF terms
(the "RCF Amendment Letter") which defines the range of the anticipated RCF
repayment following completion of the Verne Transaction (excluding receipt of
the potential earn-out payment). The Verne Transaction's closing will enable
the Company to accelerate its balance sheet deleveraging and deliver the cash
resources necessary for the Company and Group to strengthen their position.

 

More details on each of the closing conditions are enclosed in this
announcement.

 

Closing Conditions

 

As announced by the Company on 27 November 2023, the closing of the Verne
Transaction is conditional on the receipt of:

 

1.    Applicable merger control approval in Iceland and Finland and FDI
approval in Finland;

2.   Consent of the lenders under the Group's £375 million RCF (to which
the Company is a party) to certain elements of the Verne Transaction; and

3.  Consent of the lenders under the Verne Facility to the change of control
which will arise following completion of the Verne Transaction.

 

Change of Control Consent and RCF Completion Consent

 

The Company has successfully obtained the RCF lender's Completion Consent and
the Change of Control Consent from lenders under the Verne Facility. Although,
at this stage, the Change of Control Consent is still conditional, the Company
is confident that all conditions which will need to be met have either already
been satisfied or will be satisfied shortly before completion of the Verne
Transaction.

 

Regulatory Approvals

 

In Finland, FDI approval is pending while the unconditional merger control
approval has already been granted, per the Company's announcement dated 29
January 2024.

 

In Iceland, per the Company's announcement dated 8 February 2024, all
customary representations have been filed for merger control approval in
Iceland and the phase II investigation is ongoing. The Board continues to
monitor this process and will provide an update to shareholders in due
course.

 

RCF Amendment

 

Alongside the RCF Completion Consent, the Group has also entered into an RCF
Amendment Letter, which stipulates the minimum repayment and cancellation
amount of the RCF following the completion of the Verne Transaction. The exact
repayment and cancellation amount will vary depending on the timing of
completion and various other factors arising from the SPA of the Verne
Transaction, including the $25 million (approximately £20 million) deferred
consideration linked to the negotiation by Verne Global of new power
agreements (the "Deferred Consideration") and the possible arrangement of
insurance to cover certain indemnification provisions (the "Insurance").

 

Verne Global is actively engaged with the Icelandic power provider to agree
new power agreements. In the event that the power agreements will not be in an
agreed form 12 business days before completion of the Verne Transaction, the
SPA stipulates that the Deferred Consideration is then due on the later of 26
April 2024 or four weeks after completion of the Verne Transaction.

 

With this in mind, and assuming that the Insurance is not procured prior to
closing, the range of repayment and cancellation amount including Deferred
Consideration will be approximately £284 million to £294 million, subject to
the exact timing of completion of the Verne Transaction. Given current SONIA
rates, this would result in an assumed annualised net interest expense saving
of £25 million to £26 million and Group debt in aggregate 1  (#_ftn1)
between £250 million and £260 million, based on the Group's position as of
31 January 2024 disclosed in the Company's announcement dated 28 February
2024.

 

If the Insurance is procured, the indemnification provisions will fall away
and a higher portion of the RCF will be repaid and cancelled utilising the
proceeds which would otherwise be held back to cover the indemnification
provisions for prudent capital management, either at the time of completion or
at the time the Insurance is procured; whichever is later.

 

The RCF Amendment Letter, amongst other things, also includes a wider set of
amendments around the RCF's financial covenants post-completion of the Verne
Transaction. The amendments will allow the Company to operate within a bespoke
set of financial covenants which include a fully funded interest reserve
account to be used for interest payment, based on its residual RCF drawn
balance which will remain in place post completion of the Verne Transaction,
until fully repaid.

 

As previously announced, the Company intends to use equity proceeds generated
by the recently announced and proposed Managed Wind-Down of the Company's
remaining portfolio, after completion of the Verne Transaction, to fully repay
and cancel the residual RCF.

 

ENDS.

 

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

 

   Triple Point Investment Management LLP           +44 (0)20 7201 8989

   (Investment Manager)                             D9contact@triplepoint.co.uk

   Diego Massidda

   Ben Beaton

   Arnaud Jaguin
   J.P. Morgan Cazenove (Joint Corporate Broker)    +44 (0)20 7742 4000

   William Simmonds

   Jérémie Birnbaum
   Peel Hunt (Joint Corporate Broker)               +44 (0) 20 7418 8900

   Luke Simpson

   Huw Jeremy

 

About Digital 9 Infrastructure plc:

Digital 9 Infrastructure plc (DGI9) is an investment trust listed on the
London Stock Exchange and a constituent of the FTSE All-Share, with the ticker
DGI9. The Company invests in the infrastructure of the internet that underpins
the world's digital economy: digital infrastructure.

 

The Investment Manager is Triple Point Investment Management LLP ("Triple
Point") which is authorised and regulated by the Financial Conduct Authority.
For more information on the Investment Manager please
visit www.triplepoint.co.uk
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Furldefense.com%2Fv3%2F__http%3A%2Fwww.triplepoint.co.uk__%3B!!O2kDR7mm-zSJ!q-IhiRmOFrs2QYD7gmr9EcM8ukutg1_xde5Fce9GgBpHkvhSc3nlYhW7glbEiZG--1yRCrGc2K4WAjub3ANF%24&data=05%7C01%7CHelen.Richardson%40triplepoint.co.uk%7C736257c2b4244d9b148e08dbce910edc%7Ccde8812e0dbd4dc3b4463655beb81efb%7C0%7C0%7C638330894771285360%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=2SpCRgIybR8ARfciJBsE4bOmxNcDDFvRX9K9FehSEto%3D&reserved=0)
. For more information, please visit www.d9infrastructure.com
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Furldefense.com%2Fv3%2F__http%3A%2Fwww.d9infrastructure.com__%3B!!O2kDR7mm-zSJ!q-IhiRmOFrs2QYD7gmr9EcM8ukutg1_xde5Fce9GgBpHkvhSc3nlYhW7glbEiZG--1yRCrGc2K4WArD5RA1-%24&data=05%7C01%7CHelen.Richardson%40triplepoint.co.uk%7C736257c2b4244d9b148e08dbce910edc%7Ccde8812e0dbd4dc3b4463655beb81efb%7C0%7C0%7C638330894771285360%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=%2Fd%2FuhyGQHTb%2Ft4t2e4NW5UNYk%2FYmW1xyb%2B%2BalYftf5I%3D&reserved=0)
.

 

 

 1  (#_ftnref1) Group includes D9 Group and portfolio companies, pro‐rata D9
ownership. Unaudited figures as provided by the Investment Manager.

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