REG - Zegona Comms. - General Meeting & further info re the Transaction
31/10/2023 09:30
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RNS Number : 8577R Zegona Communications PLC 31 October 2023
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31 October 2023
Zegona Communications plc ("Zegona" or the "Company")
General Meeting and further information about the Transaction
Further to the announcement on 31 October 2023 regarding the acquisition of
Vodafone Group plc's Spanish business, a Circular containing a Notice of
General Meeting has today been posted to Zegona Shareholders.
Further key information in relation to the Transaction is set out below.
Capitalised terms used and not defined in this Announcement have the meaning
given to them in the Appendix.
Key Information about the Transaction
Pursuant to the Acquisition Agreement, the consideration payable by the
Company is €5 billion which is subject to adjustments as set out in the
Acquisition Agreement. The purchase price is based on an enterprise value of
€5 billion.
The enterprise value of €5 billion represents a multiple of 3.9x FY23
Business EBITDAaL(1) of approximately €1.3 billion. This valuation
benchmarks attractively to precedent European telecoms transaction multiples
such as the sale of Euskaltel to MásMóvil in 2021 and the Orange/MásMóvil
merger announced on 23 July 2022.
Background to, and reasons for, the Transaction
The Zegona Group has significant relevant experience in the Spanish
telecommunications market, including through its ownership of Telecable and
shareholding in Euskaltel. Having followed the business closely for some time,
Zegona views Vodafone Spain with the same enthusiasm it had for Telecable and
Euskaltel.
Zegona's investment thesis for Vodafone Spain rests on five key pillars to
enable Vodafone Spain to continue to compete effectively, deliver its
strategic objectives and drive shareholder value:
(a) An increasingly attractive, highly developed Spanish telecommunications
market, underpinned by strong fundamentals and supported by convergence and
consolidation tailwinds;
(b) Leading integrated operator with strong market positions in
Consumer and B2B markets, a diversified product offering and highly converged
customer base across the value spectrum;
(c) High quality next generation mobile and fixed-line networks
supported by strong spectrum positioning, attractive active network sharing
arrangements to drive efficiency and extensive nationwide reach through
wholesale agreements;
(d) Resilient cash flow, with significant upside driven by underlying
growth and bottom-up revenue, cost and capex optimisation opportunities
driving strong margin expansion; and
(e) Potential for Vodafone Spain to benefit from Zegona's extensive
experience driving growth and cost optimisation in the Spanish market.
An increasingly attractive, highly developed Spanish telecommunications
market, underpinned by strong fundamentals and supported by convergence and
consolidation tailwinds
The prospect of entering the highly developed Spanish telecommunications
market represents a compelling investment opportunity to Zegona with the
Spanish economy having a strong outlook for the coming years, expected to grow
at approximately 2 per cent., well above the European average (Source:
European Commission GDP Growth Forecast 2024).
The Spanish telecommunications market features attractive characteristics
including highly developed fixed-line and mobile services which have undergone
material growth in total customer numbers and usage over the past decade, and
is expected to continue to grow, underpinned by strong underlying demand,
supportive regulatory policies and the highly converged customer base.
Services growth has been driven by the growing penetration of digital devices,
adoption of video streaming services and the additional capacity of mobile
networks from the rollout of 5G. Furthermore, over the past decade the Spanish
telecommunications market has been characterised by a degree of consolidation
and the rapid transition towards convergence. Both market churn and
portabilities have declined materially since 2014, stabilising average revenue
per user, partially reflecting the lower churn of customers subscribing for
converged services.
Price increases have been introduced by the majority of major market players
and certain operators in the value segment have also reduced discounts offered
on services. In addition, some operators have also introduced or have
announced an intention to introduce CPI escalator clauses in new contracts.
Leading integrated operator with strong market positions in Consumer and B2B
markets, a diversified product offering and highly converged customer base
across the value spectrum
Vodafone Spain is well-positioned across the Consumer Mobile, Fixed BB, Fixed
voice and Pay TV markets in Spain with a multi-brand strategy allowing it to
offer services which are tailored to the needs of different customers from
premium to value sections of the market through the Vodafone, Lowi and
Finetwork brands. The Vodafone Spain brand commands a premium, with customers
valuing the brand's premium fixed-line, mobile, TV and digital market
offering. In the context of growing demand for value offerings in the Spanish
Consumer segment, Vodafone Spain's Lowi brand is well perceived by customers
which is reflected in Lowi's recent marked expansion of subscribers from
approximately 800,000 to approximately 1,100,000 in the last 2 financial
years.
A differentiating factor of Vodafone Spain's offering in the Consumer segment
compared to peers is its Pay TV service. Vodafone Spain is the only player in
Spain integrating all major OTT platforms including Disney+, Amazon Prime, HBO
and Netflix, with a strong track record of continued expansion of its
offering, positioning Vodafone Spain to grow its market share in this
important segment of the market.
Vodafone Spain's business segment is characterised by a diversified customer
and product base, with significant market share in mobile and fixed broadband
and leading positions in SOHO and SME. Vodafone Spain is also a strong
challenger in the corporate and public administration segments, where new
business lines have demonstrated good growth potential.
Vodafone Spain has a strong converged offering, with over 90 per cent. of
fixed subscribers converged as at 31 March 2023. Convergence is a strategic
focus of Vodafone Spain and will remain so for the Enlarged Group due to the
beneficial effects that a highly converged customer base brings to churn and
ARPU levels. Converged offerings demonstrate: a) lower churn rates, increasing
customer stickiness and value generation as convergence grows, and b) positive
effects on pricing with ARPU being significantly higher for converged products
compared to single-service customers.
High quality next generation mobile and fixed-line networks supported by
strong spectrum positioning, attractive active network sharing arrangements to
drive efficiency and extensive reach through wholesale agreements
Vodafone Spain owns and operates a leading mobile network in Spain with
extensive 4G and 5G coverage supported by strong spectrum holdings and
value-optimising active and passive network sharing agreements. Vodafone
Spain's mobile network has been the recipient of the umlaut connect Mobile
Benchmark "Best in Test" award for seven consecutive years between 2015 and
2022. Vodafone Spain's mobile network also benefits from sizeable spectrum
holdings, with approximately 26 per cent. of total market spectrum across the
high, mid and low frequencies as at 31 January 2023. Sizeable spectrum
holdings allow Vodafone Spain to provide a higher quality network experience
for its customers, by avoiding congestion and providing broader coverage. In
addition, Vodafone Spain benefits from a passive and active network sharing
arrangement with Orange, which was most recently renewed in 2019 and which
runs through to 2038, enabling network efficiencies and faster 5G deployment.
It also benefits from infrastructure and equipment sharing arrangements
entered into with Telefónica and Orange in March 2017 and July 2018,
respectively.
Vodafone Spain is able to offer customers access to an extensive fixed-line
network through its own high-speed network and wholesale agreements with other
operators. Approximately 10.7 million of these homes are supported by Vodafone
Spain's owned high-speed network, of which 6.8 million were on hybrid fibre
co-axial cable and 3.2 million had full fibre-to-the-home (with an additional
0.7 million homes having converged services with both technologies). The
fixed-line network supports gigabit speeds and covers more than 28.9 million
premises representing approximately 95 per cent. of Spanish households and
businesses as of March 2023.
Resilient cash flow, with significant upside driven by underlying growth and
cost and capex optimisation opportunities to drive improved margins
Vodafone Spain has demonstrated an improving cash generation profile, with
Business Cash Flow growing between FY21 (€185 million) and FY23 (€411
million). This increase has been driven predominantly by a reduction in
capital expenditure, principally reflecting lower network expenditure as
efficiency improvements were made and the benefits from the active network
sharing arrangement with Orange were realised.
The Directors see challenges faced by Vodafone Spain, including what the
Directors believe to be a high-cost structure (which includes, high spending
on technology and discretionary capex (approximately €1 billion and €102
million (unaudited), respectively, in Vodafone Spain's FY23)). Further, Zegona
sees operational opportunities to empower staff to make decisions and reduce
bureaucracy.
The Directors believe there is a clear opportunity to drive improved margins
in the Vodafone Spain business as set out in more detail below.
Potential for Vodafone Spain to benefit from Zegona's extensive experience
driving growth and cost optimisation in the Spanish market
The Zegona management team has a deep knowledge of the Spanish telecom market
and a proven track record in executing telecom transactions, complementing the
highly experienced Vodafone Spain management team. Zegona management has been
centrally involved in operating multiple telecommunication businesses,
improving the business profile while delivering returns to shareholders.
Further, following Completion, Zegona intends to strengthen the Vodafone Spain
senior management team, including proposing José Miguel García for
appointment as CEO of Vodafone Spain (which is subject to contract).
For example, while Zegona was the largest shareholder of Euskaltel from 2017
to 2021, and also held two board seats, it implemented fundamental changes in
relation to management roles, efficiency savings and geographical expansion.
Overall, Zegona generated, at its exit from Euskaltel in 2021, an 87 per cent.
return on Net Invested Capital for shareholders from 2015. This return also
benefitted from favourable movements in the Euro/pound sterling exchange rate
in the relevant period since 2015.
Further, Zegona management were instrumental in the delivery of 42 per cent.
shareholder return in less than 2 years during Zegona's ownership from 2015 to
2017 of Telecable, where Telecable was sold to Euskaltel for €187 million in
cash and a 15 per cent. stake in the combined business.
Zegona strategic priorities for Vodafone Spain
Stabilise revenues with new commercial initiatives
Zegona also intends to work to stabilise revenues through delivering on new
commercial initiatives. For example, Zegona intends to:
· drive increases in convergence of Vodafone brand customers and
increased bundling of value-added services into customer offers which is
expected to increase customer loyalty, decrease customer churn and continue to
stabilise and grow ARPU;
· seek to grow its market share in the value segment of the Spanish
market, by strengthening the Vodafone Spain value offerings such as the Lowi
brand through leveraging areas of differentiation which other providers' value
brands cannot easily replicate, such as adding 5G and TV to the Lowi offering
· focus on core service differentiators in its advertising and
customer acquisition activities that work to the Vodafone brand's advantage
within the Spanish market, such as focusing on the breadth of its TV content
and applications, the quality of its mobile network relative to other players
and its customer service excellence (including empowering its people to create
a culture of customer service champions);
· discontinue 12-month discount periods which end at the same time
customer contracts come up for renewal to decrease churn and increase ARPU
across Vodafone Spain's consumer offering; and
· bring a greater focus to wholesale relationships, which made up only
approximately 4 per cent. (unaudited) of Vodafone Spain revenue in the
financial year ended 31 March 2023 and which delivers higher margins than many
other customer segments.
Furthermore, in the SME segment, Vodafone Spain may be able to benefit from
the Spanish government's allocation of funding from the European Union's
Recovery and Resilience Facility.
Inject highly experienced senior management team
The Zegona management team have a deep knowledge of the Spanish telecom market
and a proven track record from operating telecommunications businesses in
Spain, including Euskaltel and Telecable and will apply this experience to
Vodafone Spain. Zegona also proposes the appointment of José Miguel García
as CEO of the Vodafone Spain business following Completion (which is subject
to contract).
José Miguel García has a strong track record of creating value in the
Spanish telecommunications market with Zegona management as CEO of Euskaltel
and previously as the CEO of Jazztel.
Improve business efficiency through reducing complexity and driving
productivity
Zegona intends to simplify and drive the Vodafone Spain business away from a
complex, high-cost nature operation. The Directors do not believe, given the
different size, geographical spread and product mix of the Vodafone Spain and
Euskaltel businesses, it would be possible to achieve the same cash flow
margin achieved at Euskaltel. However, by way of illustration, if Vodafone
Spain's Business Cash Flow Margin could be improved by 50 per cent. of the
difference versus Euskaltel's, that would represent annual cost savings of
approximately €320 million that could be achieved over the medium to longer
term.
Vodafone Spain management has implemented certain cost saving actions during
the three financial years to 31 March 2023, which have benefitted Vodafone
Spain's FY23 EBITDAaL by up to €150 million (unaudited). Further actions to
reduce complexity and drive productivity may be able to be taken (or
accelerated) in order to bring Vodafone Spain's Business Cash Flow Margin
closer to that of Euskaltel for the nine months ended 30 September 2020.
The identified potential actions include, among other matters, reducing
customer subscriber acquisition costs, implementing greater controls around
distribution, renegotiating content deals, using the Lowi value segment brand
to expand the TV subscriber base, simplifying the Vodafone Spain IT systems
and networks, optimising bad debt collections and seeking to negotiate
improved network access costs.
Implement potential fixed line "NetCo" transaction
Vodafone Spain is able to offer customers access to an extensive fixed-line
network through its own high-speed network and wholesale agreements with other
operators. Vodafone Spain's fixed-line network supports gigabit speeds and
covers approximately 10.7 million premises as of March 2023. Zegona sees a
potential opportunity to monetise the Vodafone Spain owned network in the
future. Such opportunity could potentially take the form of either (1) a sale
to an infrastructure investor, and/or (2) a combination with an existing
Spanish network operator.
Management considers precedent transactions suggest the best opportunity could
potentially deliver gross proceeds of up to c.€3.5 billion.
Potential upside linked to announced MásMóvil/Orange merger
The Orange/MásMóvil merger announcement reported material target run-rate
synergies of €450 million if such transaction was completed. If the
Orange/MásMóvil merger does not complete, it may be possible to reach
agreement to merge the Enlarged Group with MásMóvil which could produce
significant opportunities for similar synergies to be achieved between
MásMóvil and the Enlarged Group. Zegona believes there is an opportunity
for such a transaction to not be subject to European competition approvals
particularly given the fact that both MásMóvil and the Enlarged Group would
have almost the entirety of their operations based in Spain.
Summary information on Vodafone Spain
Vodafone Spain provides fixed-line, mobile, TV and digital market services
delivering voice, data and value-added services to approximately 13.5 million
mobile customers and 2.9 million fixed broadband customers as at 31 March 2023
and has approximately 19.7 per cent. total revenue market share as at 31
December 2022.
Through its Consumer segment, Vodafone Spain generated €2,453 million
(unaudited) of consumer total revenue in FY23 representing approximately 63
per cent. of total revenue and through its Business segment, Vodafone Spain
generated €1,292 million (unaudited) of business total revenue in FY23
representing approximately 33 per cent. of total revenue. Vodafone Spain has
achieved an increasingly converged customer base, with approximately 75 per
cent. of fixed broadband subscribers buying bundled and converged products
driving higher ARPU and a lower level of churn.
In its financial years ended 31 March 2023, 2022 and 2021, Vodafone Spain had
total revenue of €3.9 billion, €4.2 billion and €4.2 billion,
respectively. Vodafone Spain had Business EBITDAaL of €1.3 billion
(unaudited) in each of its financial years ended 31 March 2023, 2022 and 2021.
Vodafone Spain had operating losses of €94.6 million, €224.8 million and
€60.5 million for the financial years ended 31 March 2023, 2022 and 2021,
respectively.
Over the past three financial years ended 31 March 2021, 2022 and 2023,
Vodafone Spain had the following number of customers across the below range of
service offerings:
(EoP '000s) FY23 FY22 FY21
Mobile Customers 13,490 13,590 13,244
Contract Mobile Customers 11,089 11,416 11,418
Prepaid Mobile Customers 2,401 2,174 1,826
Fixed Broadband Customers 2,908 3,029 3,193
TV Customers 1,459 1,515 1,560
Consumer Converged Customers 2,185 2,212 2,302
Source: Vodafone Group published results
Summary Financial Information
The table below sets out the summary financial information of Vodafone Spain
for the three financial years ended 31 March 2021, 2022 and 2023 and the
three-month periods ended 30 June 2022 and 2023.
Summary Consolidated Statement of Comprehensive Loss
Three months ended Year ended
30 June 2023 30 June 2022 31 March 2023 31 March 2022 31 March 2021
€'000
(unaudited)
Revenue 964,782 987,527 3,906,713 4,180,058 4,166,421
Supplies (260,102) (287,331) (1,079,518) (1,101,587) (1,088,421)
Corporate costs (71,130) (69,192) (257,968) (347,194) (282,319)
Other expenses (293,276) (259,971) (996,310) (1,132,738) (1,075,098)
Net credit losses on financial assets (24,303) (31,200) (34,862) (115,484) (125,855)
Depreciation, amortisation and impairment losses (410,789) (416,782) (1,632,634) (1,707,815) (1,655,230)
Operating loss (94,818) (76,949) (94,579) (224,760) (60,502)
Finance income 14 26 15,685 13,053 -
Finance costs (48,599) (19,774) (119,377) (67,808) (78,182)
Loss for the period before income tax (143,403) (96,697) (198,271) (279,515) (138,684)
Income tax credit - - 169 30,989 17,161
Loss for the period attributable to equity holders of the parent (143,403) (96,697) (198,102) (248,526) (121,523)
Summary Consolidated Statement of Financial Position
As at As at
30 June 2023 31 March 2023 31 March 2022 31 March 2021
€'000
(unaudited)
Total non-current assets 5,926,813 6,011,463 6,440,816 6,452,481
Total current assets 818,096 1,081,647 1,026,280 1,118,627
Total assets 6,744,909 7,093,110 7,467,096 7,571,108
Total equity attributable to equity holders of the parent 692,654 835,779 1,036,283 1,287,849
Total non-current liabilities 4,453,388 4,465,867 4,476,871 4,268,560
Total current liabilities 1,598,867 1,791,464 1,953,943 2,014,699
Total equity and liabilities 6,744,909 7,093,110 7,467,096 7,571,108
Summary Consolidated Statement of Cash Flows
Three months ended Year ended
30 June 2023 30 June 2022 31 March 2023 31 March 2022 31 March 2021
€'000
(unaudited)
Cash inflows from operating activities 56,924 101,285 1,359,284 1,386,530 1,550,056
Cash inflows/(outflows) from investing activities 56,879 (72,877) (1,017,361) (1,212,485) (1,056,736)
Cash outflows from financing activities (113,151) (30,958) (342,086) (176,022) (493,173)
Net cash inflow/(outflow) 652 (2,550) (163) (1,977) 147
Cash and cash equivalents at beginning of the financial year/period 4,479 4,642 4,642 6,619 6,472
Cash and cash equivalents at the end of the financial year/period 5,131 2,092 4,479 4,642 6,619
Key terms to the Transaction
On 31 October 2023, the Seller, the Buyer, the Company and Zegona Limited
entered into the Acquisition Agreement pursuant to which the Buyer has agreed
to acquire, and the Seller has agreed to sell, the entire issued share capital
of Vodafone Spain, subject to the terms and conditions of the Acquisition
Agreement.
Completion of the Acquisition is subject to the satisfaction (or waiver, where
applicable) of a number of conditions, including, amongst other things, the
approval of the Council of Ministers (Consejo de Ministros) of the Spanish
Government in respect of foreign direct investment into Spain, the approval of
the Spanish Competition Authority (Comisión Nacional de los Mercados y la
Competencia) in respect of Spanish merger control, the approval of the Spanish
Secretariat under the Spanish Ministry of Economic Affairs and Digital
Transformation of the transfer of relevant concessions for the private use of
the public radioelectric domain, the European Commission issuing (or having
been deemed to issue) a decision in respect of the EU Foreign Subsidies
Regulation (Regulation (EU) 2022/2560) and Zegona Shareholder approval being
granted to resolutions approving (i) the allotment and issue of the new shares
in Zegona to be issued pursuant to the Conditional Subscription; (ii) the
waiver of rule 9 of the City Code on Takeovers and Mergers required to
implement the Conditional Subscription, and (iii) the entry into and
performance of the Buyback Agreement.
The total consideration for the Acquisition is €5 billion (subject to
adjustments after Completion by way of a standard completion accounts mechanic
to allow for changes in cash, debt, working capital, intercompany payables and
intercompany receivables). A portion of the consideration (up to a maximum of
€900 million) will be funded pursuant to the Vodafone Financing.
The Seller has given certain warranties to the Buyer that are customary for a
transaction of this nature and size. These include, among other things,
warranties that the Seller owns the shares in Vodafone Spain free and clear
from any encumbrances and that the Seller has the requisite power and
authority to enter into and perform the Acquisition Agreement. The Seller's
warranties also include statements regarding the accounts, material contracts,
insolvency, compliance with laws, litigation, intellectual property,
information technology, real estate, employment, pensions and tax affairs.
The Buyer, the Company and Zegona Limited have given certain warranties to the
Seller that are customary for a transaction of this nature and size. These
include, among other things, warranties that the Buyer, the Company and Zegona
Limited have the requisite power and authority to enter into and perform its
obligations under the Acquisition Agreement.
The Seller has given indemnities over certain contingent liabilities to the
Buyer.
The Acquisition Agreement also contains undertakings from the Company:
· not to amend or waive its rights under the Conditional Subscription
and Relationship Agreement, Assignment and Set-Off Deed, Vodafone Financing
Subscription Agreement, the Buyback Agreement or the Promissory Note without
the Seller's consent or enter into any other arrangement with Newco;
· not to propose a resolution to its shareholders in respect of any
buyback of its shares unless it has obtained a waiver from the Panel in
respect of Newco's obligation to make a mandatory offer pursuant to Rule 9 of
the Takeover Code to the extent required;
· to use reasonable endeavours to distribute or return to its
shareholders any net cash proceeds following a disposal of assets which is
material in the context of the Zegona Group (including a disposal of assets
for consideration of over €100 million) subject to the Company retaining any
cash required pursuant to its reasonable business plan requirements and
satisfying the requirements of its banks as required in connection with any
refinancing of its debt, provided the refinancing is on customary market terms
and is required to optimise the leverage of the Buyer's group at a level which
would be reasonably expected to support an investment grade credit rating from
two of Standard & Poors, Moody's and Fitch;
· not to undertake any action or transaction which would result in: (a)
NewCo's rights as a shareholder in the Company being subordinated to other
equity shareholders, (b) the issue of ordinary shares at more than a 10 per
cent. discount to the volume-weighted average market price from time to time,
(c) the creation of a new class of equity securities which have preferential
rights to Newco's shares in the Company; and
· not to issue any ordinary shares within the 12 months immediately
following Completion at a price per ordinary share of less than £1.50.
The Acquisition Agreement may be terminated if the conditions described above
are not satisfied on or before the Long Stop Date. The Acquisition Agreement
may also be terminated by either the Seller or the Buyer if the other party
fails to comply with its completion obligations under the Acquisition
Agreement.
Intercompany arrangements
Following Completion, members of the Enlarged Group will enter into certain
Intercompany Agreements with the Vodafone Group for the provision of services
to the Enlarged Group. The Intercompany Agreements include a transitional
services agreement, a brand licence and a procurement services agreement.
Vodafone will provide a brand licence agreement which permits Zegona to use
the Vodafone brand in Spain for up to 10 years post Completion. The
Directors believe that total costs of the Intercompany Agreements (comprised
of fixed and variable costs) in the first full financial year following
Completion will not exceed €110 million. Where the Enlarged Group is
receiving services under any of the Intercompany Agreements, it will have the
right (subject to any applicable minimum contract periods) to give notice to
cease obtaining the services and, accordingly, to stop paying the relevant
fees. Where the Intercompany Agreements involve the provision of facilities,
services and support by Vodafone Group to the Enlarged Group post-Completion,
Vodafone Group is required to provide these to an appropriate standard which
is consistent with previous practice.
Financing of the Transaction
Zegona intends to finance the Acquisition through a mixture of debt and
equity.
Debt Financing
Zegona has agreed to an underwritten financing package of up to €4.2 billion
with its Debt Underwriters. The financing package consists of (i) a term loan
A facility in an aggregate principal amount of up to €0.5 billion, and (ii)
a corporate bridge facility in an aggregate principal amount of up to €3.7
billion, in each case on a customary certain funds basis. In addition, Zegona
has also obtained binding commitments for an additional revolving credit
facility in an aggregate principal amount of up to €0.5 billion. The coupon
on the debt arrangements will be tied to a margin over EURIBOR, subject to a
ratings-based ratchet (with higher step-ups at lower ratings). On Completion,
Zegona estimates that the senior debt outstanding to FY23 Business EBITDAaL of
the Enlarged Group as at Completion will be approximately 2.9x assuming new
equity issued of €600 million(2). The Directors believe the financing
package provides Zegona with an attractive cost of capital, and allows Zegona
Shareholders to benefit from levered returns, in line with the approach taken
to Zegona's prior investments in Telecable and Euskaltel.
The Company intends to replace the corporate bridge facility, potentially
prior to Completion, through longer-term alternative debt financing, subject
to market conditions at the time of refinancing as well as to the rights of
the Debt Underwriters to reduce the leverage within the borrower group.
Vodafone Financing
In addition to the financing package described above, up to €900 million of
new equity share capital will be subscribed for in Zegona via a conditional
subscription and relationship agreement which has been entered into by NewCo,
a new company established for the purposes of providing funding for this
Transaction. Pursuant to the Conditional Subscription, NewCo has undertaken to
Zegona to subscribe for up to €900 million of New Zegona Shares using the
proceeds of the Vodafone Financing to be provided through an investment in
Vodafone Preference Shares. The New Zegona Shares subscribed for by Newco in
the Conditional Subscription, which forms part of the Offer, will be issued at
the Offer Price per New Zegona Share (converted to Euro at the Exchange Rate).
The amount of the Vodafone Financing, and therefore the amount of New Zegona
Shares issued to Newco in the Conditional Subscription, will decrease by €1
for every €2 of gross proceeds raised in the Placing above €400 million
(e.g., if the Placing raises €600 million of gross proceeds, the amount of
the Vodafone Financing will be €800 million).
The proceeds of any distributions or proceeds of sale received by Newco on the
Zegona Shares it holds are required to be applied to pay accrued dividends on
the Vodafone Preference Shares (subject to agreed retentions relating to
costs, fees and expenses), with any excess cash flow at NewCo to be applied to
the redemption of Vodafone Preference Shares.
Newco has irrevocably undertaken not to vote any of its Zegona Shares at any
time (other than in connection with a takeover where the consideration is in
cash, provided that in exercising its voting rights in such a scenario, Newco
shall at all times take into account the Holder's interest in the Vodafone
Preference Shares and Newco's ability to redeem the Vodafone Preference
Shares). Zegona Shareholders should be aware that, upon any transfer of the
Zegona Shares to a third party (including the Holder), the transferee shall be
entitled to exercise the voting rights attached to those Zegona Shares in
full.
Newco has agreed with the Company pursuant to the Conditional Subscription and
Relationship Agreement that during (i) the period which is six months
following Completion, and (ii) at any time during which any loan or commitment
under the corporate bridge facility is outstanding, it will not, without the
prior written consent of the Company and subject to other limited customary
lock-up exceptions, sell or contract to sell, grant any option over or
otherwise dispose of or encumber any Zegona Shares it holds immediately
following Admission and Re-Admission (or any interest therein) or enter into
any transaction with the same economic effect as any of the foregoing.
Following the expiry or earlier waiver of these lock-up restrictions, and the
further lock-up restrictions and orderly market provisions described below,
Newco will be entitled to sell the Zegona Shares it holds in the market and
would use the proceeds of any sale to pay accrued dividends on and /or redeem
the Vodafone Preference Shares.
Provided that no loan or commitment under the corporate bridge facility is
outstanding, the Holder is entitled to transfer the Vodafone Preference Shares
to any third party (subject to that third party fulfilling certain tax-related
requirements and the Holder providing 30 days' notice to the Company).
Following a transfer of the Vodafone Preference Shares to a party outside the
Vodafone Group, Newco will be prohibited from disposing of any of its Zegona
Shares for a period of six months from the date of such transfer (subject to
limited exceptions and provided that such period shall not exceed the date
that is three years after Completion). For the first two years following
expiry of the applicable lock-up period, Newco will be entitled to dispose of
its Zegona Shares provided that it (i) appoints a broker from a list
pre-agreed with the Company in connection with such disposal; and (ii) only
disposes of the Zegona Shares in accordance with the advice of such broker to
ensure that the proposed disposal does not prejudice the maintenance of an
orderly market of the Zegona Shares. Such restrictions shall cease to apply
after expiry of the two year period or, three years following Completion if
earlier.
Placing and retail offer
Zegona intends to target a raise of between €300 million and €600 million
via an institutional placing of New Zegona Shares to investors in the near
term which is expected to be launched prior to Completion, subject to market
conditions. Zegona will also consider an offer of up to €8 million of New
Zegona Shares via the PrimaryBid platform. The Company is proposing to issue
New Zegona Shares to provide funding for the Acquisition at £1.50 per New
Zegona Shares. The equity raise is not a condition of the transaction.
Vodafone has agreed to provide up to €900 million to NewCo through the
Vodafone Financing to support that fundraising demonstrating its continued
confidence in the business. The amount of the Vodafone Financing will decrease
by €1 for every €2 of gross proceeds raised in the Placing above €400
million. Zegona will make a further announcement in relation to the equity
fundraising in due course.
Dividend policy
Following Completion, Zegona intends to pay a 2 per cent. initial dividend
yield target with a progressive dividend policy(3).
General Meeting
The issue of the New Zegona Shares in the Conditional Subscription and the
Placing requires the approval of Zegona Shareholders. In addition, given the
Conditional Subscription may result in NewCo holding up to 98.83 per cent. of
the Zegona Shares upon Re-Admission (if the Placing has not occurred before
then) and a minimum of 56.59 per cent. of the Zegona Shares upon Re-Admission,
the issue of New Zegona Shares to NewCo in the Conditional Subscription
requires the Rule 9 Waiver to be approved by Independent Zegona
Shareholders.
Details of the General Meeting and the circular will be available on Zegona's
website, www.Zegona.com (http://www.Zegona.com) in due course.
Shareholder support for the Acquisition
The Directors and management have given irrevocable undertakings to vote in
favour of the Transaction Resolutions which in aggregate represent 25.83 per
cent. (0.03 per cent. in respect of the resolution relating to the Rule 9
Waiver) of the entire issued share capital of Zegona.
Board recommendation for the Acquisition
The Boards of Directors of both Zegona and Vodafone have unanimously approved
the Transaction and the Board of Directors of Zegona has resolved to recommend
that the Zegona Shareholders (and, in respect of the Rule 9 Waiver, the
Non-executive Directors of Zegona recommend to the Independent Zegona
Shareholders only) vote in favour of the Transaction Resolutions.
Suspension of Listing
Should the Acquisition complete, it will constitute a reverse takeover under
the Listing Rules and accordingly the Company will need to apply for the
re-admission of its shares to the standard listing segment of the Official
List and the Main Market of the London Stock Exchange on the basis that the
FCA approves the eligibility of the Company, following completion of the
Acquisition as a result of the reverse takeover, in accordance with Listing
Rule 5.6.21. As the Company is currently unable to provide a full disclosure
under Listing Rule 5.6.15, the admission of the Existing Zegona Shares to the
standard listing segment of the Official List and trading from the London
Stock Exchange remains suspended pending the publication of a prospectus
providing further detail on Vodafone Spain and the Company's group as enlarged
by the Acquisition.
Reverse Takeover
Should the Acquisition complete, it will constitute a reverse takeover under
the Listing Rules and accordingly the Company will need to apply for the
re-admission of Zegona Shares to the standard listing segment of the Official
List and the Main Market of the London Stock Exchange on the basis that the
FCA approves the eligibility of the group, as enlarged by the Acquisition as a
result of the reverse takeover, in accordance with Listing Rule 5.6.21.
The Company intends in due course to publish a Prospectus in connection with:
· the Admission of the New Zegona Shares; and
· the Re-Admission of the issued and to be issued Zegona Shares
upon Completion.
Deutsche Numis is acting as lead financial advisor to Zegona. ING Bank, UBS
and UniCredit Bank also advised Zegona. Deutsche Bank Aktiengesellschaft, ING
Bank N.V., Sucursal en España and UniCredit Bank AG are leading the financing
in connection with the Acquisition and acting as bookrunners and Deutsche Bank
AG, Filiale Luxembourg, ING Bank N.V., Sucursal en España and UniCredit Bank
AG are acting as underwriters of the debt financing. Deutsche Numis is acting
as global co-ordinator and joint bookrunner, with Canaccord, ING and UniCredit
acting as joint bookrunners in connection with the planned equity fundraising.
Zeus Capital Limited provided advice to the Non-executive Directors of Zegona
in connection with the Rule 9 Waiver.
Travers Smith LLP is acting as legal counsel to Zegona in connection with the
Acquisition and Milbank LLP is acting as legal counsel to Zegona in connection
with the debt funding. Allen & Overy LLP is acting for the bookrunners and
underwriters in connection with the debt funding and Simmons & Simmons LLP
is acting for the global co-ordinator and joint bookrunners in connection with
the planned equity fundraising.
Non-IFRS financial information
Vodafone Spain uses, and the Enlarged Group will use, certain measures to
assess the financial performance of its business. Certain of these measures
are termed ''non-IFRS'' measures because they exclude amounts that are
included in, or include amounts that are excluded from, comparable financial
measures calculated and presented in accordance with IFRS, or are calculated
using financial measures that are not calculated in accordance with IFRS.
These non-IFRS measures include:
"Business Cash Flow" is defined as Business EBITDAaL less capex (excluding
license and Spectrum fees). The calculation of Business Cash Flow is set out
below:
Year ended
31 March 2023 31 March 2022 31 March 2021
Business EBITDAaL 1,286,264 1,314,458 1,312,640
Capex (883,110) (1,397,667) (1,136,162)
Adjusted for license and Spectrum fees(1) 8,001 366,575 8,514
Business Cash Flow 411,155 283,366 184,992
(Note:)
1. In FY22, Vodafone Spain received the concession for the exclusive
use of 700 MHz for the expansion of 5G services for a period of 20 years and
automatically renewable for a further 20 years for a concession fee amounting
to €350 million. Because Spectrum auctions are infrequent and no 5G auctions
are expected in the foreseeable future, Business Cash Flow has been adjusted
to exclude license and Spectrum fees from capex in order to present what the
Directors believe is a more normalised view of the underlying cash generating
performance of the business during the period under review.
"Business Cash Flow Margin" is defined as Business Cash Flow divided by total
revenue.
"Business EBITDAaL" is defined as Vodafone Group Spain segment's reported
Adjusted EBITDAaL adjusted in line with Zegona's accounting policy relating to
subscriber acquisition costs. Business EBITDAaL is a different measure to
Vodafone Spain's Adjusted EBITDAaL and is a measure Zegona management
considers appropriate to assess the underlying operating performance and
profitability of Vodafone Spain.
A reconciliation of Business EBITDAaL to Adjusted EBITDAaL as reported in the
historical financial information prepared for the purposes of the Transaction
is set out below:
Three months ended
Year ended
31 March 2023 31 March 2022 31 March 2021
€'000
Vodafone Group Spain segment's Adjusted EBITDAaL(1) 946,800 957,376 968,152
Add: Alignment to Zegona Group's accounting policy relating to subscriber 339,464 357,082 344,488
acquisition costs
Business EBITDAaL 1,286,264 1,314,458 1,312,640
Add: Sundry and Vantage adjustments(2) 59,075 40,438 116,520
Less: Intercompany recharges for certain services and for the use of certain (243,469) (252,026) (223,800)
Vodafone Group assets(3)
Adjusted EBITDAaL 1,101,870 1,102,870 1,205,360
Notes:
(1) Reflects the Adjusted EBITDAaL(4) for the Vodafone
Group Spain segment. For the financial year ending 31 March 2021, Vantage
remained part of the Vodafone Group Spain segment for the full year, resulting
in a further €76 million of Adjusted EBITDAaL in the reported results which
is not reflected in the base figures presented above. From the financial year
ending 31 March 2022 and onwards, Vantage was reported as a standalone
operating segment under the new Vodafone Group segmental reporting structure,
therefore there is no difference between the figures presented above and the
Vodafone Group Spain segment result for 2022.
(2) Sundry and Vantage adjustments relate to:
incorporation of the result of Vantage up to the date of disposal by Vodafone
Group; amortisation of the gain on disposal of Vantage (credited in the
Vodafone Group financial statements to "Other expenses"); and an adjustment to
reflect the reduced depreciation charge of Vantage right-of-use assets
impaired in the Vodafone Group financial statements, as well as other minor
adjustments.
(3) Intercompany recharges for the use of certain
Vodafone Group services are recorded as an expense in the historical financial
information of Vodafone Spain and relate to Vodafone Group recharges for the
use of certain assets (utilised by Vodafone Spain but owned by other entities
within the Vodafone Group) use of brand, interagency fees, insurance services
and margin included in the Vodafone Group financial statements. These items
are recognised below Adjusted EBITDAaL in the Vodafone Spain segment's
historical financial information. Post-Completion, certain of these services
provided by other Vodafone Group companies will be covered by the Intercompany
Agreements, certain services are expected to be procured from other third
parties and certain services will be terminated. Total costs of the
intercompany agreements (comprised of both fixed and variable costs) in the
first full financial year following Completion are not expected to exceed
€110m. The services to be provided under the Intercompany Agreements going
forward were historically included within the Vodafone Group Spain Segment
Adjusted EBITDAaL.
(4) The cost structure post-Completion is expected to
differ as some of these services will be provided on a different basis and
others will be terminated, as negotiated under the Intercompany Agreements.
This Announcement also refers to Zegona's return on "Net Invested Capital".
Return on Zegona's Net Invested Capital was calculated as the percentage by
which Zegona's underlying asset value implied by the sale of Euskaltel to
MásMóvil exceeded Zegona's Net Invested Capital at that time. Zegona's Net
Invested Capital represented the net amount of all shareholder subscriptions
less all returns to shareholders, including dividends, capital returns and
share buy-backs since Zegona's initial quotation on the AIM Market of London
Stock Exchange in March 2015 until the business day before announcement of the
offer by MásMóvil to acquire Euskaltel. As at 26 March 2021, Zegona's Net
Invested Capital was £198.5 million. Zegona's underlying asset value implied
by the sale of Euskaltel to MásMóvil was £1.70 per Zegona Share, which was
calculated as the pound sterling equivalent of the value of Zegona's
investment in Euskaltel at the sale price of €11.17 per share, an amount of
contingent consideration payable to Zegona of €8.654 million and Zegona's
estimated cash and cash equivalents net of its bank borrowings as at 26 March
2021, divided by the total number of Zegona Shares outstanding at the time of
216,004,975, translated where relevant using a £/€ exchange rate of 1.168.
Notes to announcement:
1. Business EBITDAaL is a non-IFRS measure and is defined as
Vodafone Group Spanish segment's Adjusted EBITDAaL adjusted in line with
Zegona's accounting policy relating to subscriber acquisition costs. Business
EBITDAaL is a different measure to Vodafone Spain's Adjusted EBITDAaL and is a
measure Zegona management consider appropriate to assess the underlying
operating performance and profitability of Vodafone Spain. A reconciliation to
Adjusted EBITDAaL can be found at the end of this Announcement.
2. 2.9x leverage based on €3.7bn senior debt and FY23
Business EBITDAaL of €1.3bn (assuming equity issue size of €600 million);
3.0x leverage based on €3.9bn senior debt and FY23 Business EBITDAaL of
€1.3bn (assuming equity issue size of €300 million)
3. This is a target and not a forecast. Zegona intends to pay
a stable initial dividend in the first two financial years following
Completion, depending on, amongst other things, the performance of the
business and regulatory and financing requirements. Zegona is targeting an
initial level of dividend which would provide a yield of 2 per cent. per annum
based on an offer price of £1.50 in this initial period.
4. Defined as operating profit after depreciation on
lease-related right of use assets and interest on lease liabilities but
excluding depreciation, amortisation and gains/losses on disposal of owned
assets and excluding share of results of equity accounted associates and joint
ventures, impairment losses, restructuring costs arising from discrete
restructuring plans, other income and expense and significant items that are
not considered by management to be reflective of the underlying performance of
the Vodafone Group.
Defined Terms:
Acquisition the acquisition of Vodafone Spain by the Buyer pursuant to the Acquisition
Agreement;
Acquisition Agreement the sale and purchase agreement entered into on 31 October 2023 between the
Company, Zegona Limited, the Buyer and the Seller in respect of the
Acquisition;
Admission the admission of the New Zegona Shares to the standard listing segment of the
Official List and to trading on the Main Market;
Announcement this announcement;
ARPU Average Revenue Per User;
Banks Deutsche Bank, Deutsche Bank, Filiale Luxembourg, Deutsche Numis, UBS,
Canaccord, ING and UniCredit;
Buyer Zegona Bidco, S.L.U., a company registered before the Commercial Registry of
Madrid under Volume 45,651, Page 60, Sheet M-802,704, with Spanish Tax ID
Number (CIF) B56308877, which has been incorporated for the purposes of
entering into the Acquisition Agreement;
Canaccord Canaccord Genuity Limited;
Circular the Zegona Shareholder circular in respect of the General Meeting;
Completion completion of the Acquisition;
Conditional Subscription the conditional subscription for New Zegona Shares by Newco pursuant to the
Conditional Subscription and Relationship Agreement;
Conditional Subscription and Relationship Agreement the conditional subscription and relationship agreement dated 31 October 2023
between the Company and Newco;
Debt Funding the new debt funding arrangements in respect of the Acquisition;
Debt Underwriters Deutsche Bank, Filiale Luxembourg, ING Bank N.V., Sucursal en España and
UniCredit Bank AG;
Deutsche Bank Deutsche Bank AG;
Deutsche Numis Deutsche Bank AG, acting through its London branch (which is trading for these
purposes as Deutsche Numis);
Enlarged Group the Zegona Group, as at and from Completion, as enlarged by Vodafone Spain;
Euskaltel Euskaltel, S.A.;
EV enterprise value;
Exchange Rate the pound sterling/Euro exchange rate on the date prior to the closing of the
Placing or, if the Placing does not complete, such rate on the date prior to
Completion;
Existing Zegona Shares the existing Zegona shares of £0.01 each in issue as at the date of this
Announcement;
FCA the Financial Conduct Authority of the United Kingdom or any successor body;
FTTH fibre to the home;
General Meeting the general meeting of the Company expected to be held at 11 a.m. on 15
November 2023 at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A
2AL;
Holder the holder of Vodafone Preference Shares from time to time;
IFRS the International Financial Reporting Standards;
Independent Zegona Shareholders the Zegona Shareholders, other than Newco, the directors of Newco (including
their close relatives and the related trusts of any of them) and the
shareholder of Newco;
ING ING Bank N.V. and ING Bank N.V., Sucursal en España;
Intercompany Agreements the transitional services and other agreements to be entered into in
connection with the Acquisition, full details of which will be set out in the
Prospectus;
Listing Rules the listing rules of the FCA made in accordance with section 73A of FSMA as
amended from time to time;
London Stock Exchange London Stock Exchange plc;
Main Market the Main Market of the London Stock Exchange;
MásMóvil MásMóvil Ibercom, S.A.;
NewCo EJLSHM Funding Limited, a new company incorporated in England and Wales with
company number 15228873, solely for the purposes of the funding of the
Acquisition;
New Zegona Shares the new Zegona Shares to be issued in connection with the Offer;
Offer the offer of New Zegona Shares pursuant to the Conditional Subscription and,
if made, the Placing;
Offer Price £1.50 per New Zegona Share;
Official List the Official List of the FCA;
Orange Orange S.A. and its subsidiaries;
Placing the institutional placing of New Zegona Shares;
PRA Prudential Regulatory Authority or any successor body;
Promissory Note the promissory note issued by Newco in favour of Zegona in connection with the
subscription for the New Zegona Shares in the Conditional Subscription;
Prospectus the prospectus to be published by the Company in connection with the Admission
and Re-Admission;
Re-Admission the re-admission upon Completion of all the Zegona Shares in issue immediately
prior to Completion, including the New Zegona Shares, to the standard listing
segment of the Official List and to trading on the Main Market;
Rule 9 Waiver the ordinary resolution to approve the waiver of any requirement under Rule 9
of the City Code for Newco to make a general offer to Zegona Shareholders as a
result of obtaining Zegona Shares representing up to 98.83 per cent. of the
enlarged ordinary share capital of the Company as at Admission;
Seller Vodafone Europe B.V., a company incorporated in the Netherlands with company
number 27166573, being the seller under the Acquisition Agreement;
Telecable Parselaya, S.L.U. and its subsidiaries;
Transaction the Acquisition and related transactions, including the Separation, the Offer
and Admission;
Transaction Resolutions the resolutions to be voted on by Zegona Shareholders at the General Meeting;
UBS UBS AG, London Branch;
UniCredit UniCredit Bank AG, Milan Branch;
United States the United States of America, its territories and possessions, any state of
the United States, and the District of Columbia;
US Securities Act the U.S. Securities Act of 1933, as amended;
Vantage Vantage Towers, S.L.U.;
Vodafone Financing the Vodafone financing to be provided through an investment in Vodafone
Preference Shares, the proceeds of which will be used to subscribe for Zegona
Shares at £1.50 per share;
Vodafone Group Vodafone Group Plc and its subsidiaries but excluding, from Completion,
Vodafone Spain;
Vodafone Preference Shares the cumulative preference shares in NewCo to be issued to the Seller pursuant
to the preference share subscription agreement executed by Newco on 31 October
2023;
Vodafone Spain Vodafone Holdings Europe, S.L.U and its subsidiaries;
Zegona Group the Company and its subsidiaries from time to time;
Zegona Shareholders a holder of Zegona Shares; and
Zegona Shares the Existing Zegona Shares together with the New Zegona Shares.
IMPORTANT INFORMATION
This Announcement is an announcement and not a circular or prospectus or
equivalent document and prospective investors should not make any investment
decision on the basis of its contents. A shareholder circular containing the
Transaction Resolutions to be voted on by Zegona Shareholders and a notice of
General Meeting is expected to be sent to Zegona Shareholders today and the
Prospectus in relation to Admission and Re-Admission will be published in due
course.
Neither this Announcement nor any copy of it may be taken or transmitted
directly or indirectly into or from any jurisdiction where to do so would
constitute a violation of the relevant laws or regulations of such
jurisdiction. Any failure to comply with this restriction may constitute a
violation of such laws or regulations. Persons into whose possession this
Announcement or other information referred to herein should inform themselves
about, and observe, any restrictions in such laws or regulations.
Nothing in this Announcement constitutes an offer of securities for sale in
any jurisdiction. Neither this Announcement nor any part of it constitutes or
forms part of any offer to issue or sell, or the solicitation of an offer to
acquire, purchase or subscribe for, any of the Company's securities in the
United States, Canada, Australia, Japan or South Africa or any other
jurisdiction in which the same would be unlawful. The securities of the
Company may not be offered or sold in the United States absent registration
under the US Securities Act, or an exemption therefrom. The securities
referred to herein have not been and will not be registered under the US
Securities Act or under the securities laws of any state or other jurisdiction
of the United States, and may not be offered or sold, taken up, resold,
transferred or delivered in the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
US Securities Act and in accordance with any applicable securities laws of any
state or other jurisdiction of the United States. There has not been and will
be no public offer of the Company's securities in the United States.
'Deutsche Numis' is a trading name used by certain investment banking
businesses of Deutsche Bank AG ("Deutsche Bank"), Numis Securities Limited and
Numis Europe Limited in the United Kingdom and Ireland, Numis Securities
Limited and Numis Europe Limited are members of the group of companies
controlled by Deutsche Bank AG. Deutsche Bank AG is a stock corporation
(Aktiengesellschaft) incorporated under the laws of the Federal Republic of
Germany, with its principal office in Frankfurt. It is registered with the
district court (Amtsgericht) in Frankfurt am Main under No HRB 30 000 and
licensed to carry on banking business and to provide financial services. The
London branch of Deutsche Bank AG is registered in the register of companies
for England and Wales (registration number BR000005) with its registered
address and principal place of business at Winchester House, 1 Great
Winchester Street, London EC2N 2DB. Deutsche Bank AG subject to supervision by
the European Central Bank (ECB), Sonnemannstrasse 22, 60314, Frankfurt am
Main, Germany, and the German Federal Financial Supervisory Authority
Bundesanstalt für Finanzdienstleistungsaufsicht or BaFin), Graurheindorfer
Strasse 108, 53117 Bonn and Marie-Curie-Strasse 24-28, 60439 Frankfurt am
Main, Germany. With respect to activities undertaken in the United Kingdom,
Deutsche Bank AG is authorised by the Prudential Regulatory Authority (the
"PRA"). It is subject to regulation by the FCA and limited regulation by the
PRA. Details about the extent of Deutsche Bank AG's authorisation and
regulation by the PRA are available from Deutsche Bank AG on request. Numis
Securities Limited is authorised and regulated by the FCA in the United
Kingdom. Numis Europe Limited trading as Numis is regulated by the Central
Bank of Ireland. UBS AG London Branch ("UBS") is authorised and regulated by
the Financial Market Supervisory Authority in Switzerland and authorised by
the PRA and subject to regulation by the FCA and limited regulation by the PRA
in the United Kingdom. UBS is authorised and regulated by the Financial Market
Supervisory Authority in Switzerland and authorised by the PRA and subject to
regulation by the FCA and limited regulation by the PRA in the United Kingdom.
Canaccord is authorised and regulated by the FCA in the United Kingdom. ING
Bank N.V. is supervised by the European Central Bank (ECB). The Dutch
Central Bank (De Nederlandsche Bank) and the Netherlands Authority for the
Financial Markets (AFM). UniCredit Bank AG is a universal bank with its
registered office and principal place of business in Arabellastrasse 12,
Munich, Germany. It is entered under HRB 42148 in the B section of the
Commercial Register Maintained by Munich Local Court. UniCredit Bank AG is an
affiliate of UniCredit S.p.A., Milan, Italy (ultimate parent company).
UniCredit Bank AG is subject to regulation by the European Central Bank and
Federal Financial Supervisory Authority (BaFin). UniCredit Bank AG, Milan
Branch is regulated by Banca d'Italia, the Commissione Nazionale per le
Società la Borsa (CONSOB) and the Federal Financial Supervisory Authority
(BaFin). Details about the extent of UniCredit Bank AG's regulation are
available on request.
Each of the Banks is acting exclusively for the Company and no one else in
connection with the Acquisition, the contents of this Announcement or any
other matters described in this Announcement. None of the Banks will regard
any other person as its client in relation to the Acquisition, the content of
this Announcement or any other matters described in this Announcement and nor
will any of them be responsible to anyone other than the Company for providing
the protections afforded to its clients or for providing advice to any other
person in relation to the Acquisition, the content of this Announcement or any
other matters referred to in this Announcement.
Zeus Capital Limited, which is authorised and regulated in the United Kingdom
by the FCA, is acting exclusively for Zegona in connection with the Rule 9
Waiver and for no one else in connection with the matters described in this
Announcement and will not be responsible to anyone other than Zegona for
providing the protections afforded to its clients or for giving advice in
relation to such transactions.
Certain statements contained in this Announcement are forward-looking
statements and are based on current expectations, estimates and projections
about the expected effects of the Transaction on the Zegona Group, Vodafone
Spain and the Enlarged Group, the anticipated timing and benefits of the
Transaction, the Zegona Group's and Vodafone Spain's anticipated standalone or
combined financial results and outlook, the industry and markets in which the
Zegona Group, Vodafone Spain and, the Enlarged Group operate and the beliefs,
and assumptions made by the Directors. Words such as "expects", "should",
"intends", "plans", "believes", "estimates", "projects", "may", "targets",
"would", "could" and variations of such words and similar expressions are
intended to identify such forward-looking statements and expectations. These
statements are based on the current expectations of the management of the
Company, Vodafone Spain or Vodafone Group (as the case may be) and are subject
to uncertainty and changes in circumstances and involve risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in such forward-looking statements. As such,
forward-looking statements should be construed in light of such factors.
Neither the Company, Vodafone Spain, nor any of their respective associates or
directors, proposed directors, officers or advisers, provides any
representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this Announcement
will actually occur or that if any of the events occur, that the effect on the
operations or financial condition of the Company, Vodafone Spain or the
Enlarged Group will be as expressed or implied in such forward-looking
statements. 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 necessarily continue in the future. In addition,
these statements are based on a number of assumptions that are subject to
change. Such risks, uncertainties and assumptions include, but are not limited
to: the satisfaction of the conditions to the Transaction and other risks
related to Completion and actions related thereto; the Company's and Vodafone
Group's ability to complete the Transaction on the anticipated terms and
schedule; the tax treatment of the Transaction; risks relating to any
unforeseen liabilities of the Company or Vodafone Spain; future capital
expenditures, expenses, revenues, earnings, synergies, economic performance,
indebtedness, financial condition, losses and future prospects of the Company,
Vodafone Spain and the Enlarged Group; business and management strategies and
the expansion and growth of the operations of the Company, Vodafone Spain and
the Enlarged Group; the ability to successfully realise expected operational
improvement from the Transaction; the effects of government regulation on the
businesses of the Company, Vodafone Spain or the Enlarged Group; the risk
that disruptions from the Transaction will impact the Vodafone Spain
business; and the Company's, Vodafone Group or Vodafone Spain plans,
objectives, expectations and intentions generally, as well as other factors
described in the Risk Factors to be set out in the Prospectus, once published.
However, it is not possible to predict or identify all such factors.
Consequently, while the list of factors presented here is considered
representative, no such list should be considered to be a complete statement
of all potential risks and uncertainties. The forward-looking statements
contained in this Announcement speak only as of the date of this Announcement.
The Company, its directors, the Banks, their respective affiliates and any
person acting on its or their behalf each expressly disclaim any obligation or
undertaking to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise, unless
required to do so by applicable law or regulation, the FCA or the London Stock
Exchange.
This Announcement refers to "Business EBITDAaL" and "Business Cash Flow", the
calculation of which will differ from the methodology of calculating EBITDAaL
and cash flow used by other firms of companies in the Zegona Group's and
Vodafone Spain's industry.
No statement in this Announcement is intended to be a profit forecast or
profit estimate for any period, and no statement in this Announcement should
be interpreted to mean that earnings, earnings per share or income, cash flow
from operations or free cash flow for the Company or Vodafone Spain for the
current or future financial years would necessarily match or exceed the
historical published earnings, earnings per share or income, cash flow from
operations or free cash flow for the Company or Vodafone Spain.
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Announcement.
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adviser for legal, financial, business or tax advice.
Completion of the Transaction is subject to the satisfaction (or waiver, where
applicable) of a number of conditions as referenced elsewhere in the
Announcement, Consequently, there can be no certainty that Completion will be
forthcoming.
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