REG - Eros Media World PLC - Launch of Repurchase and Consent Solicitation
08/03/2023 14:00
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RNS Number : 3293S Eros Media World PLC 08 March 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED (THE "UK
MARKET ABUSE REGULATION").
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR TO ANY PERSON
LOCATED OR RESIDENT IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE,
PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT.
EROS MEDIA WORLD PLC
(formerly, EROS STX GLOBAL CORPORATION)
ANNOUNCES REPURCHASE AND CONSENT SOLICITATION IN RESPECT OF ITS
£50,000,000 8.50 PER CENT. UNSECURED BONDS DUE 2023
(the "Bonds")
(ISIN: XS1112834608)
8 March 2023
Eros Media World PLC (formerly, Eros STX Global Corporation) (incorporated as
a limited company and registered in the Isle of Man under the Companies Act
2006 (Isle of Man) with company number 007466V) (the "Company") today
announces the launch of (i) a Repurchase and (ii) a Consent Solicitation (each
as defined below) in respect of the Bonds on the terms set out in the
repurchase and consent solicitation memorandum in respect of the Bonds (the
"Repurchase and Consent Solicitation Memorandum") dated today's date and
prepared by the Company.
Capitalised terms used but not defined herein shall have the same meanings as
in the Repurchase and Consent Solicitation Memorandum.
Details of the Consent Solicitation
The Company has today invited holders of the Bonds:
(a) to offer for repurchase on 15 April 2023 up to £25,000,000 in aggregate
nominal amount of the Bonds for cash (the "Repurchase") at the Purchase Price
specified below; and
(b) to approve certain modifications (as further described in the Repurchase
and Consent Solicitation Memorandum) to (i) the terms and conditions of the
Bonds (the "Conditions") contained within the trust deed dated 15 October 2014
as supplemented by a first supplemental trust deed dated 10 April 2017 and a
second supplemental trust deed dated 20 September 2021, each between the
Company and U.S. Bank Trustees Limited as Trustee (together, the "Trust
Deed"), (ii) the Trust Deed and (iii) the agency agreement dated 15 October
2014 made between, inter alios, the Company and the Trustee relating to the
Bonds, as previously supplemented by a supplemental agency agreement dated 20
September 2021 between, inter alios, the Company and the Trustee in relation
to the Bonds (together the "Agency Agreement"), and the waiver of the breach
of certain provisions of the Conditions and of the Trust Deed and any related
Event of Default or Potential Event of Default; and to approve the appointment
of a new trustee to replace U.S. Bank Trustees Limited as Trustee (and waiver
of any actual or potential breach of related provisions of the Trust Deed),
all as further described in the Repurchase and Consent Solicitation Memorandum
(the "Consent Solicitation", and together with the Repurchase, each an
"Invitation" and together the "Invitations") for approval by Extraordinary
Resolution at a meeting of Bondholders (such meeting being the "Meeting").
This announcement does not contain details of the full terms and conditions of
the Repurchase and the Consent Solicitation, which are contained in the
Repurchase and Consent Solicitation Memorandum. Holders of the Bonds may
obtain a copy of the Repurchase and Consent Solicitation Memorandum from Kroll
Issuer Services Limited, who is acting as Tender, Tabulation and Information
Agent in connection with the Repurchase and the Consent Solicitation and whose
contact details are set out at the end of this announcement.
Holders of the Bonds are advised to carefully read the Repurchase and Consent
Solicitation Memorandum and are reminded that the below is a summary only of
the terms of the Consent Solicitation.
Details of the Bonds
Description of the Bonds Common Code/ISIN Current Maturity Date(1) Outstanding nominal amount Purchase Price(2) Consent Fee(3)
£50,000,000 8.50 per cent. Bonds due 2023 111283460/ 15 April 2023 £50,000,000 £60 per £100 in nominal amount £0.50 per £100 in nominal amount]
XS1112834608
(1) For the avoidance of doubt, all Bondholders (including any Bondholders
whose Bonds are accepted for repurchase in the Repurchase) shall receive the
interest payment falling to be paid on 17 April 2023 (15 April 2023 being a
Saturday).
(2) Bondholders whose Bonds are accepted for repurchase in the Repurchase will
receive the Purchase Price but will not receive any interest for the period
from (and including) 15 April 2023 to the Payment Date (which is expected to
be no later than 21 April 2023).
(3) Bondholders who submit (and do not revoke) either (i) valid Repurchase
Instructions, or (ii) valid Voting Instructions (voting for the Extraordinary
Resolution), in each case which are received by the Tender, Tabulation and
Information Agent on or before the Final Deadline, will be eligible to receive
the Consent Fee if the Extraordinary Resolution is passed and the Proposals
are implemented.
The Meeting
A notice (the "Notice") convening the Meeting to be held at 10.00 a.m. (London
time) on 30 March 2023 via teleconference has been given to Bondholders in
accordance with the Trust Deed on the date of this announcement. At the
Meeting, Bondholders will be invited to consider and, if thought fit, pass an
extraordinary resolution (the "Extraordinary Resolution") to approve the
Proposals as more fully described in the Notice.
The quorum required for the Meeting is two or more persons present holding or
representing not less than 75 per cent. in aggregate nominal amount of the
Bonds for the time being outstanding. To be passed, the Extraordinary
Resolution requires a majority in favour of at least 75 per cent. of the votes
cast in respect of the Extraordinary Resolution at the Meeting. If passed, the
Extraordinary Resolution shall be binding on all Bondholders, whether present
or not present at the Meeting and whether or not voting.
The implementation of the Extraordinary Resolution, if passed, is conditional
on the Company not having previously terminated the Consent Solicitation in
accordance with the provisions for such termination set out in the Repurchase
and Consent Solicitation Memorandum under the heading "Amendment and
Termination".
Under the Trust Deed, subject to all other provisions therein, the Trustee may
prescribe such further regulations regarding the holding of meetings of
Bondholders and attendance and voting at them as the Trustee may in its sole
discretion determine. For the purpose of the Meeting, the Trustee has
prescribed certain virtual meeting guidelines and regulations.
The Meeting will be held via teleconference using a platform hosted by the
chairman of the Meeting to allow attendees to participate electronically.
Details for accessing the Meeting (or any adjourned Meeting) will be made
available to proxies who have been duly appointed under a block voting
instruction, or to holders of voting certificates issued, in accordance with
the procedures set out in the Repurchase and Consent Solicitation Memorandum.
Such proxies and holders of voting certificates will be contacted by the
Tender, Tabulation and Information Agent (whose contact details are set out in
the Repurchase and Consent Solicitation Memorandum) at least 24 hours before
the Meeting in order to ensure that they are provided with the necessary
information for attending and communicating their votes during the Meeting via
teleconference.
Participating in the Repurchase
To participate in the Repurchase, a holder of the Bonds should deliver, or
arrange to have delivered on its behalf, via the relevant Clearing System and
in accordance with the requirements of such Clearing System, a valid
Repurchase Instruction to be received by the Tender, Tabulation and
Information Agent by 4.00 p.m. (London time) on 27 March 2023 (the "Final
Deadline").
By participating in the Repurchase through the submission of valid Repurchase
Instructions at or prior to the Final Deadline, such Bondholders will
automatically instruct the Tender, Tabulation and Information Agent to arrange
for the appointment of one or more representatives of the Tender, Tabulation
and Information Agent as a proxy to vote in favour of the Extraordinary
Resolution at the Meeting (or any adjourned Meeting).
Bondholders who submit (and do not validly revoke) Repurchase Instructions
before the Final Deadline will be deemed to have voted in favour of the
Extraordinary Resolution, and accordingly will be eligible to receive the
Consent Fee (as defined herein) (even if not all of the Bonds in respect of
which a Repurchase Instruction is given are accepted for repurchase by the
Company). It is not possible to submit a Repurchase Instruction and vote
against the Extraordinary Resolution.
The Company will not accept offers of Bonds for repurchase (or pay the Consent
Fee) if the Extraordinary Resolution is not passed and the Proposals are not
implemented.
The Company proposes to repurchase in cash up to £25,000,000 in aggregate
nominal amount of Bonds offered for repurchase in the Repurchase. As at the
date of this announcement, the Company expects to repurchase not less than
£15,000,000 in aggregate nominal amount of the Bonds, but the Company
reserves the right to determine, in its sole discretion, the aggregate nominal
of Bonds to be repurchased depending on (among other things) the aggregate
nominal amount of the Bonds that are offered for repurchase. The Company shall
give notice of the aggregate nominal amount of the Bonds to be repurchased
(the "Repurchase Total") as soon as practicable after the Final Deadline. If
the aggregate nominal amount of Bonds offered for repurchase is greater than
the Repurchase Total, the Company shall scale back all acceptances received on
a pro rata basis.
Participating in the Consent Solicitation
To participate in the Consent Solicitation, a holder of the Bonds should
deliver, or arrange to have delivered on its behalf, via the relevant Clearing
System and in accordance with the requirements of such Clearing System, a
valid Voting Instruction, to be received by the Tender, Tabulation and
Information Agent by the Final Deadline.
Any Bondholder may be eligible, on the terms and conditions set out in the
Repurchase and Consent Solicitation Memorandum, to the extent permitted by
applicable laws and regulations, to receive an amount of £0.50 per £100 in
nominal amount of the Bonds in respect of which the relevant Bondholder
submits a Voting Instruction voting for the Extraordinary Resolution in
accordance with the procedure described below and in the Repurchase and
Consent Solicitation Memorandum (the "Consent Fee").
To be eligible for the Consent Fee, such Voting Instructions must be received
by the Tender, Tabulation and Information Agent from Bondholders on or before
the Final Deadline. Voting Instructions must be submitted in respect of a
minimum principal amount of the Bonds of no less than £100, being the minimum
denomination of the Bonds.
Holders of the Bonds that do not deliver a Repurchase Instruction or Voting
Instruction in accordance with the preceding paragraphs, but who wish to
attend and vote at the Meeting in person or to be represented or otherwise to
vote at the Meeting, must make the necessary arrangements in accordance with
the Notice and the Meeting Provisions (as defined in the Repurchase and
Consent Solicitation Memorandum) by the Final Deadline. Such holders will not
be eligible to receive the Consent Fee.
Payment of the Consent Fee is subject to (i) the delivery of a valid Voting
Instruction in respect of the Extraordinary Resolution to the Tender,
Tabulation and Information Agent on or before the Final Deadline, (ii) such
Voting Instruction not being revoked (in the limited circumstances in which
such revocation is permitted described in "Amendment and Termination - Consent
Solicitation Revocation Rights" in the Repurchase and Consent Solicitation
Memorandum), (iii) the Extraordinary Resolution being duly passed and the
Proposals implemented and (iv) the Company not having previously terminated
the Consent Solicitation or the Proposals in accordance with the provisions
for such termination set out in "Amendment and Termination" in the Repurchase
and Consent Solicitation Memorandum.
Repurchase Instructions and Voting Instructions will be irrevocable except in
the limited circumstances described in the Repurchase and Consent Solicitation
Memorandum under the heading "Amendment and Termination".
Indicative timetable for the Offers
Set out below are the indicative timetables applicable to the Repurchase and
the Consent Solicitation. The Principal Timetable applies where the Meeting is
quorate on the date on which it is first held, and the Alternative Timetable
applies where the Meeting is not quorate on the date on which it is first held
and is therefore adjourned. Bondholders should note that these timetables will
depend, among other things, on timely receipt (and non-revocation) of
instructions, the right of the Company to extend, re-open, amend and/or
terminate the Repurchase or the Consent Solicitation (other than the terms of
the Extraordinary Resolution) as described in the Repurchase and Consent
Solicitation Memorandum not being exercised, and the passing of the
Extraordinary Resolution at either the first Meeting or (if applicable) any
adjourned Meeting. Accordingly, the actual timetable may differ significantly
from either of the timetables below.
Principal Timetable
The following timetable assumes that the Meeting is quorate on the date on
which it is first held.
Date and time Event
8 March 2023 Launch Date
Repurchase and Consent Solicitation announced and Repurchase and Consent
Solicitation Memorandum available from the Tender, Tabulation and Information
Agent, subject to offer and distribution restrictions.
Notice of Repurchase and Consent Solicitation published via Regulatory News
Service ("RNS") and by delivery of notices to the Clearing Systems.
27 March 2023 at 4.00 p.m. (London time) Final Deadline
Deadline for (i) receipt by the Tender, Tabulation and Information Agent of
(a) valid Repurchase Instructions in respect of the Repurchase or (b) valid
Voting Instructions voting for the Extraordinary Resolution, (ii) receipt by
the Tender, Tabulation and Information Agent of valid Voting Instructions
voting against the Extraordinary Resolution or (iii) Bondholders to make any
other arrangements to attend or be represented at, or to vote on the
Extraordinary Resolution at, the Meeting.
30 March 2023 at 10.00 a.m. (London time) Meeting
Meeting to be held via teleconference.
Expected to be as soon as reasonably practicable after the Meeting Announcement of Results
Announcement by the Company of the results of the Meeting and the aggregate
nominal amount of Bonds to be repurchased, published via RNS.
As soon as reasonably practicable after the Meeting Execution of the Third Supplemental Trust Deed and the Second Supplemental
Agency Agreement
If the Extraordinary Resolution is passed at the Meeting, subject to the
conditions described in the Repurchase and Consent Solicitation Memorandum,
execution of the Third Supplemental Trust Deed and the Second Supplemental
Agency Agreement.
Upon execution of the Third Supplemental Trust Deed and the Second
Supplemental Agency Agreement, the modifications to the Conditions, the Trust
Deed and the Agency Agreement, the waiver of the relevant provisions of the
Conditions and the Trust Deed and any related Event of Default or Potential
Event of Default will become effective.
17 April 2023 Payment of interest
Payment to all Bondholders of interest payable for the interest period ending
15 April 2023 (15 April 2023 being a Saturday).
Expected to be no later than 21 April 2023 Payment Date
Subject to the Consent Solicitation being approved and implemented, date on
which payment of the Purchase Price for the Bonds accepted for repurchase and
settlement of such repurchases is expected to be made.
No later than 30 calendar days after the date on which the Proposals have been Payment of the Consent Fee.
approved
Alternative Timetable
The following table sets out the timetable as from 30 March 2023 if the
Meeting is not quorate on the date on which it is first held and, accordingly,
it is adjourned.
Date and time Event
30 March 2023 Notice of adjourned Meeting published via RNS and by delivery of notices to
the Clearing Systems.
13 April 2023 at 10.00 a.m. (London time) Adjourned Meeting
Meeting to be held via teleconference.
Expected to be as soon as reasonably practicable after the Meeting Announcement of Results
Announcement by the Company of the results of the adjourned Meeting and the
aggregate nominal amount of Bonds to be repurchased, published via RNS.
As soon as reasonably practicable after the Meeting Execution of the Third Supplemental Trust Deed and the Second Supplemental
Agency Agreement
If the Extraordinary Resolution is passed at the adjourned Meeting, subject to
the conditions described in the Repurchase and Consent Solicitation
Memorandum, execution of the Third Supplemental Trust Deed and the Second
Supplemental Agency Agreement.
Upon execution of the Third Supplemental Trust Deed and the Second
Supplemental Agency Agreement, the modifications to the Conditions, the Trust
Deed and the Agency Agreement, the waiver of the relevant provisions of the
Conditions and the Trust Deed and any related Event of Default or Potential
Event of Default will become effective.
17 April 2023 Payment of interest
Payment to all Bondholders of interest payable for the interest period ending
15 April 2023 (15 April 2023 being a Saturday).
Expected to be no later than 21 April 2023 Payment Date
Subject to the Consent Solicitation being approved and implemented, date on
which payment of the Purchase Price for the Bonds accepted for repurchase and
settlement of such repurchases is expected to be made.
No later than 30 calendar days after the date on which the Proposals have been Payment of the Consent Fee.
approved
Bondholders are advised to check with any bank, securities broker or other
intermediary or nominee institution (including through CDIs in CREST) through
which they hold Bonds whether such intermediary would require to receive
instructions to participate in the Consent Solicitation before the deadlines
specified above. The deadlines set by any such nominee, CREST and each
Clearing System for the submission of Repurchase Instructions or Voting
Instructions will also be earlier than the relevant deadlines above.
Rationale for and background to the Repurchase and the Consent Solicitation
On 20 September 2021, the Company (then known as Eros STX Global Corporation)
obtained consent from the requisite majority of Bondholders to extend the
maturity date of the Bonds to 15 April 2023, in order to give the Company
sufficient time to access additional liquidity to fund its operations and to
allow it to continue trading as a going concern while its film business,
particularly in India, recovered from the COVID-19 pandemic. The Company also
obtained Bondholder consent to certain other waivers, including in relation to
the timing of provision to the Trustee of copies of its annual financial
statements for the year ended 31 March 2021 and financial statements for the
six months ended 30 September 2021. As part of the consent process, the rate
of interest on the Bonds was increased from 6.50 per cent. per annum to 8.50
per cent. per annum.
On 7 December 2021, the Company entered into a definitive agreement to sell
its STX Entertainment subsidiary ("STX Entertainment") to an affiliate of The
Najafi Companies ("Najafi"), with Najafi acquiring all issued and outstanding
shares of common stock of a parent entity of STX Entertainment and repaying an
outstanding senior credit facility of STX Entertainment (the "Senior Credit
Facility"). The sale of STX Entertainment to Najafi and repayment of the
Senior Credit Facility and other subordinated credit facilities were completed
on 25 April 2022. Following the sale of STX Entertainment, the Company was
renamed "Eros Media World PLC" on 25 May 2022.
The sale of STX Entertainment was necessary to enable the Company to pursue
its long-term strategy and to maximise long-term value for its shareholders,
but it has left a legacy of complex financial reporting and other transition
issues. While the Company has been diligently working to address such issues,
the remaining transition and financial reporting issues have caused a delay in
the Company's timely filing of annual and semi-annual reports and other
reporting obligations. This has also had a significant impact on the financial
position of the Company, which the Company has been working hard to improve
ever since.
Ongoing impact of the COVID-19 outbreak on the Company
The COVID-19 outbreak caused significant disruptions to the Company's global
operations by restraining the production and distribution of film content,
particularly in the Company's primary market of India. The pandemic affected
how film content was distributed to various distribution channels due to the
closure of cinemas in the United States, India and international territories.
There was, however, an increase in streaming and digital licensing revenue for
the Company's films due to the closure of cinemas.
As measures to mitigate the spread of COVID-19 have eased or been removed in
most countries, the Company is working on a business transformation,
recognising the growth in digital businesses driven by the pandemic and
emergence of technologies such as blockchain and non-fungible tokens ("NFT").
The number of online video users in India has grown to over 500 million users
in 2022, with a 52 per cent. increase in time spent as compared to
pre-pandemic levels. Going forward, the Company will be focused on leveraging
the value of its content library (one of the world's largest Indian language
film libraries with over 3,000 titles), monetising the library to meet the
demand for content across streamers, cable and satellite companies and
resurgent theatrical window in India. The Company will also continue to focus
on direct-to-customer relationships through its Eros Now streaming platform,
with a view of improving overall penetration and distribution of Eros Now as a
service to further regions in India, and migrating existing subscribers to
higher average revenue per user (ARPU) plans. This business transformation
will take time to implement fully.
Rationale for the Invitations
As part of the Company's efforts to optimise its debt structure and cost of
capital, the Company is offering to repurchase for cash up to £25,000,000
nominal amount of Bonds at the Purchase Price on 15 April 2023 as further
described below, using cash made available from the realisation of contracted
receivables due from the Company's subsidiaries.
The Company is also inviting Bondholders to approve (1) the Company making
certain modifications to (i) the terms and conditions of the Bonds (the
"Conditions") contained within the Trust Deed, (ii) the Trust Deed and (iii)
the Agency Agreement, (2) the waiver of the breach of certain provisions of
the Conditions and of the Trust Deed and any related Event of Default or
Potential Event of Default and (3) the appointment of a new trust corporation
to replace U.S. Bank Trustees Limited as Trustee (and waiver of any actual or
potential breach of related provisions of the Trust Deed).
The Company is offering the Consent Fee to any Bondholder that either (i)
offers its Bonds for repurchase in the Repurchase (even if not all of the
Bonds in respect of which a Repurchase Instruction is given are accepted for
repurchase by the Company), or (ii) votes in favour of the Extraordinary
Resolution in the Consent Solicitation. Bondholders who vote against the
Extraordinary Resolution, or abstain from voting on the Extraordinary
Resolution, or fail to submit Repurchase Instructions or Voting Instructions,
or who submit but then validly revoke Repurchase Instructions or Voting
Instructions, will not be eligible to receive the Consent Fee. The Consent Fee
will only be payable if the Extraordinary Resolution is passed and the
Proposals are implemented.
1. Extension of the maturity of the Bonds and increase in rate of interest
payable on the Bonds
The Company is proposing to extend the maturity of the Bonds to enable it to
access the liquidity that is required to fund its operations and allow it to
continue its business transformation following the COVID-19 pandemic and the
sale of STX Entertainment.
The Company is also offering an increase in the rate of interest payable on
the Bonds from 8.50 per cent. to 9.00 per cent. per annum.
2. Introduction of new covenant restricting Eros International Media Limited
(India) from incurring or maintaining indebtedness in excess of the Debt Limit
The Company is proposing the introduction of an additional covenant
restricting Eros International Media Limited (India), one of its biggest
subsidiaries, from, for so long as any Bonds remaining outstanding, having
indebtedness outstanding in excess of the Debt Limit. The "Debt Limit" means
(i) in the period from (and including) 15 April 2023 to (but excluding) 31
March 2024, £40,000,000; and (ii) at any time on or after 31 March 2024,
£15,000,000.
3. Waiver of requirement to provide financial statements for the year ended 31
March 2022 by 31 July 2022, to provide financial statements for the six months
ended 30 September 2022 by 30 November 2022, to provide financial statements
for the year ended 31 March 2023 by 31 July 2023 and to provide financial
statements for the six months ended 30 September 2023 by 30 November 2023
The Company is proposing a waiver of:
1) any Event of Default resulting from the failure to provide to the
Trustee copies of:
a) its annual financial statements for the year ended 31 March 2023 (the
"2023 Audited Financial Statements") within four months after the end of its
financial year (i.e. by 31 July 2023); and
b) its financial statements for the six months ended 30 September 2023
(the "H1 2024 Financial Statements") within two months after 30 September 2023
(i.e. by 30 November 2023),
as well as
2) any prior or ongoing Event of Default resulting from its failure to
complete and provide the Trustee with (a) its 2021 Audited Financial
Statements by 31 July 2021, (b) its H1 2022 Financial Statements by 30
November 2021, (c) its annual financial statements for the year ended 31 March
2022 (the "2022 Audited Financial Statements") by 31 July 2022, and (d) its
financial statements for the six months ended 30 September 2022 (the "H1 2023
Financial Statements") by 30 November 2022,
provided that copies of the 2021 Audited Financial Statements, the 2022
Audited Financial Statements, the 2023 Audited Financial Statements and the H1
2024 Financial Statements are furnished to the Trustee by 30 June 2023, 30
September 2023, 31 December 2023 and 31 March 2024, respectively (each, a
"Relevant Deadline").
The Company's financial year ends on 31 March in each year. The terms and
conditions of the Bonds require the Company to deliver to the Trustee copies
of (i) its annual financial statements within four months after the end of the
financial year, i.e. by 31 July in each year, and (ii) its interim financial
statements for the six months ended 30 September in each year within 2 months
after that date, i.e. by 30 November in each year.
The Company had previously not satisfied (and had received a waiver from the
Bondholders from satisfying) this requirement in respect of its 2021 Audited
Financial Statements and its H1 2022 Financial Statements.
The Company announced on 25 April 2022 that it has completed the sale of STX
Entertainment, which has resulted in complex financial reporting and
transition issues, leading to a delay in completing its financial audits. The
Company has worked diligently to resolve such issues, and has engaged with its
new auditors to complete and publish the 2022 Audited Financial Statements as
soon as practicable. This may also impact on the Company's ability to complete
and provide the Trustee with the 2023 Audited Financial Statements by the
deadline imposed by the terms and conditions of the Bonds.
The Company is therefore proposing a waiver of any Event of Default resulting
from the failure to provide copies of the 2023 Audited Financial Statements
and the H1 2024 Financial Statements by the deadlines specified above, as well
as any prior or ongoing Event of Default resulting from its failure to provide
the Trustee with the 2021 Audited Financial Statements, the H1 2022 Financial
Statements, the 2022 Audited Financial Statements and the H1 2023 Financial
Statements, provided that copies of the 2021 Audited Financial Statements, the
2022 Audited Financial Statements, the 2023 Audited Financial Statements and
the H1 2024 Financial Statements are provided to the Trustee by the Relevant
Deadline. The Company does not currently publish any other interim financial
statements.
4. Waiver of an Event of Default relating to the Company's failure to add its
Subsidiary, Eros Worldwide FZE, as a Subsidiary Guarantor in respect of the
Bonds in accordance with the requirements of the Conditions (provided that it
is added as a Subsidiary Guarantor by no later than 30 June 2024)
The Company is also proposing a waiver of any Event of Default under Condition
8(b) (Breach of Other Obligations), and any related breach of the Trust Deed,
arising as a result of its failure to add its Subsidiary, Eros Worldwide FZE,
as a Subsidiary Guarantor in accordance with the requirements of the Trust
Deed and Condition 2(c) (Addition of Subsidiary Guarantors).
Condition 2(c) requires, in summary, that a Subsidiary of the Company which
becomes a borrower, or provides a guarantee or indemnity in respect of,
certain indebtedness must unconditionally and irrevocably guarantee, on a
joint and several basis, the due payment of all sums expressed to be payable
by the Company under the Trust Deed, the Bonds and the Coupons.
The Company, together with its Subsidiaries Eros Network Limited and Eros
International USA Inc., has been a guarantor under an overdraft facility
provided by the Bank of India (the "Bank of India Facility") to its Subsidiary
Eros International Limited since before the Bonds were first issued. In May
2020, the Company's Subsidiary, Eros Worldwide FZE, was added as a guarantor
in respect of the Bank of India Facility. At that point in time the Company
was very busy dealing with the merger of STX Entertainment and inadvertently
failed to comply with its obligation to add this Subsidiary as a Subsidiary
Guarantor, or to notify the Trustee of the same, as required by Condition 2(c)
(Addition of Subsidiary Guarantors). The Company is now proposing to add this
Subsidiary as a Subsidiary Guarantor, pursuant to and as required by Condition
2(c) (Addition of Subsidiary Guarantors), by no later than 30 June 2023, and
accordingly is proposing a waiver of any Event of Default under Condition 8(b)
(Breach of Other Obligations), and any related breach of the Trust Deed, for
having failed to do so previously (including its failure to notify the Trustee
of the same), provided that this Subsidiary is added as a Subsidiary
Guarantor, pursuant to and as required by Condition 2(c) (Addition of
Subsidiary Guarantors), by no later than 30 June 2023.
5. Waiver of an Event of Default and a Potential Event of Default in
connection with a default under a Subsidiary's financing agreement
The Company is also proposing a waiver of an Event of Default under Condition
8(c) (Cross-Default), as well as any Events of Default under Conditions 8(d)
(Enforcement Proceedings) and 8(e) (Security Enforced), and any related breach
of the Trust Deed, in each case arising (or which may arise) as a result of a
repayment default in respect of the Bank of India Facility.
On 15 February 2023, Eros International Limited entered into administration
following a repayment default under the Bank of India Facility. While this
repayment default and administration has triggered a cross-default scenario
under Condition 8(c) and a Potential Event of Default under Conditions 8(d)
and 8(e), the Company and Eros International Limited are actively working with
the relevant parties to remedy this Event of Default and to ensure that the
Potential Events of Default do not become Events of Default. The Company will
give notice to Bondholders as soon as practicable after agreement has been
reached with the relevant parties (both to reschedule the Bank of India
Facility, and to return the control of Eros International Limited to its board
of directors). Accordingly, in order to give the Company time to remedy these
matters the Company is proposing a waiver of an Event of Default under
Condition 8(c) (Cross-default), as well as any Event of Default that has
arisen or may arise under Conditions 8(d) (Enforcement Proceedings) and 8(e)
(Security Enforced), and any related breach of the Trust Deed, as a result of
the relevant repayment default.
6. Waiver of breach of financial covenants
The Company is also proposing a continued waiver of the requirement to comply
with the covenants set out in Condition 3(b) (Financial Covenant (Leverage
Ratio)) and Condition 3(c) (Financial Covenant (Fixed Charge Cover Ratio))
(together, the "Financial Covenants") until 31 March 2024.
Due to the continued delay in finalisation of the 2021 Audited Financial
Statements and the 2022 Audited Financial Statements as well as the expected
delay in the finalisation of the 2023 Audited Financial Statements, as
described above, the Company is currently unable to confirm compliance with
the Financial Covenants. Furthermore, due to the impact of the COVID-19
pandemic and the sale of STX Entertainment on the restatement of the Company's
financials and the Company's financial position, the Company anticipates that,
even if it were able to test compliance with the Financial Covenants upon the
publication of the 2022 Audited Financial Statements or the 2023 Audited
Financial Statements, it would be in breach of the Financial Covenants when
the 2022 Audited Financial Statements or the 2023 Audited Financial Statements
are published. The Company anticipates that it may be unable to comply with
the Financial Covenants until the publication of the Company's 2024 Audited
Financial Statements.
Accordingly, the Company is proposing a waiver of any breach of the Financial
Covenants (and any resultant Event of Default or Potential Event of Default)
until 31 March 2024.
7. Replacement of Trustee
In light of a change in business operations within the Trustee, the Trustee
has informed the Company of its wish to resign as Trustee for the Bonds. The
Company is currently in the process of onboarding and appointing a replacement
trustee, which is expected to occur on or before 15 April 2023. Accordingly,
the Company is seeking the approval of Bondholders to the appointment of a
trustee corporation to replace U.S. Bank Trustees Limited as trustee for the
Bondholders. As the appointment process is ongoing as at the date of this
Repurchase and Consent Solicitation Memorandum and is not expected to be
completed until after the Meeting, the Company is unable to confirm to the
Bondholders of the identity of the replacement trustee at this time. As such,
the Company is also seeking a waiver of any actual or potential breach of
Clause 14.1 of the Trust Deed relating to Bondholders approving the
appointment of a specific new trustee. The Company will give notice to
Bondholders of the formal appointment of the replacement trustee in accordance
with the provisions of the Trust Deed.
Other Developments
Undertaking to create security
To enhance value for Bondholders, the Company is proposing, as a separate and
ancillary matter (not forming part of the Proposals) that it will, by no later
than 30 June 2023 (the "Security Deadline"), procure the creation of security
(the "Security") over certain intellectual property and other intangible
rights (the "Secured Assets") described in the Repurchase and Consent
Solicitation Memorandum and held by its wholly-owned subsidiary, Eros
Worldwide FZE, for the benefit of the Trustee (acting as security trustee) on
behalf of the Bondholders. Once created, the Security will remain in place for
so long as any Bond remains outstanding, save that the Company (or Eros
Worldwide FZE) shall be permitted to dispose of all or any part of the Secured
Assets (and release the Security accordingly) provided that at least 50% of
the net proceeds of any such disposal are used to repay the Bonds (either in
full or in part, as the case may be).
The Company is working with its advisers to make arrangements for the creation
of the Security by no later than the Security Deadline, and will give notice
to the Bondholders by RNS and by delivery of a notice to the Clearing Systems
once the Security has been created.
General
Details of how to participate in the Repurchase and the Consent Solicitation
are set out in the Repurchase and Consent Solicitation Memorandum. Bondholders
may obtain a copy of the Repurchase and Consent Solicitation Memorandum by
contacting the Tender, Tabulation and Information Agent, the contact details
of whom are set out below.
Notices throughout the Repurchase and Consent Solicitation will be published
in accordance with the Trust Deed and all applicable rules and regulations as
follows:
(a) a notice in Euroclear Bank SA/NV and Clearstream Banking S.A. for
communication to Direct Participants; and/or
(b) an announcement released on the RNS service of the London Stock
Exchange, and by any other means as the Company may, in its absolute
discretion, consider appropriate.
Disclaimer
The Repurchase and Consent Solicitation Memorandum contains important
information which should be read carefully before any decision is made in
respect of the Offers.
If you are in any doubt as to the action you should take, you are recommended
to seek your own financial advice, including in respect of tax consequences,
immediately from your stockbroker, bank manager, solicitor, accountant or
other independent financial adviser authorised under the Financial Services
and Markets Act 2000 as amended (if you are in the United Kingdom) or from
another appropriately authorised independent adviser (if you are not).
Before making a decision with respect to the Repurchase and/or the Consent
Solicitation, Bondholders should carefully consider all of the information in
the Repurchase and Consent Solicitation Memorandum and, in particular, the
risk factors described therein.
No person is authorised in connection with the Repurchase or the Consent
Solicitation to give any information or to make any representation not
contained in the Repurchase and Consent Solicitation Memorandum, and any such
information or representation must not be relied on as having been authorised
by or on behalf of the Company, the Trustee, the Tender, Tabulation and
Information Agent or the Principal Paying Agent or any of their respective
affiliates. None of the Tender, Tabulation and Information Agent, the Trustee
or the Principal Paying Agent or their respective affiliates has separately
verified the information contained herein. Accordingly, no representation,
warranty or undertaking, express or implied, is made and no responsibility nor
liability is accepted by the Trustee, the Tender, Tabulation and Information
Agent or the Principal Paying Agent or any of their respective affiliates as
to the accuracy or completeness of the information contained in the Repurchase
and Consent Solicitation Memorandum or any other information provided by it in
connection with the Repurchase and/or the Consent Solicitation.
The Company has retained Kroll Issuer Services Limited to serve as Tender,
Tabulation and Information Agent with respect to the Repurchase and the
Consent Solicitation. At any time, the Tabulation Agent may trade Bonds for
their own accounts or for the accounts of customers and, accordingly, may have
a long or short position in the Bonds.
None of the Trustee, the Tender, Tabulation and Information Agent or the
Principal Paying Agent or any of their respective directors, employees and
affiliates assume any responsibility for the accuracy or completeness of the
information concerning the Repurchase, the Consent Solicitation, the
Extraordinary Resolution, the Company or any of its affiliates or the Bonds in
the Repurchase and Consent Solicitation Memorandum or for any failure by any
of them to disclose events that may have occurred and may affect the
significance or accuracy of such information and the terms of any amendment to
the Repurchase and/or the Consent Solicitation.
None of the Company, the Trustee, the Tender, Tabulation and Information
Agent, the Principal Paying Agent or any director, officer, employee, agent or
affiliate of any such persons are acting for any Bondholder, or will be
responsible to any Bondholder for providing any protections which would be
afforded to its clients or for providing advice in relation to the Repurchase,
the Consent Solicitation or the Extraordinary Resolution, and accordingly none
of the Company, the Trustee, the Tender, Tabulation and Information Agent, the
Principal Paying Agent or any director, officer, employee, agent or affiliate
of any such persons, make any recommendation whether Bondholders should
participate in the Repurchase or the Consent Solicitation or otherwise
participate at any Meeting and none of the Trustee, the Tender, Tabulation and
Information Agent, the Principal Paying Agent or any director, officer,
employee, agent or affiliate of any such persons, make any representation
whatsoever regarding the Repurchase or the Consent Solicitation.
The distribution of the Repurchase and Consent Solicitation Memorandum in
certain jurisdictions may be restricted by law. Persons into whose possession
the Repurchase and Consent Solicitation Memorandum comes must inform
themselves about and observe any such restrictions.
Questions and requests for assistance in connection with the Consent
Solicitation may be directed to the Company:
Eros Media World PLC
First Names House
Victoria Road
Douglas IM2 4DF
Isle of Man
Attention: Investor Relations Team
Email: Investors@ErosIntl.com
Questions and requests for assistance in connection with the delivery of
Repurchase Instructions or Voting Instructions may be directed to the Tender,
Tabulation and Information Agent:
TENDER, TABULATION AND INFORMATION AGENT
Kroll Issuer Services Limited
The Shard
32 London Bridge Street
London SE1 9SG
United Kingdom
Telephone: +44 20 7704 0880
Attention: Owen Morris
Email: eros@is.kroll.com (mailto:eros@is.kroll.com)
Website: https://deals.is.kroll.com/eros (https://deals.is.kroll.com/eros)
This announcement is released by Eros Media World PLC and contains inside
information for the purposes of Article 7 of the UK Market Abuse Regulation,
encompassing information relating to the Repurchase and the Consent
Solicitation described above. For the purposes of the UK Market Abuse
Regulation, this announcement is made by the Investor Relations team at Eros
Media World PLC.
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
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