TIDMZEG
RNS Number : 8577R
Zegona Communications PLC
31 October 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT
CONSTITUTE A TAKEOVER OFFER OR AN OFFER OF SECURITIES. NO OFFER OR
SALE OF SECURITIES MAY OCCUR IN THE UNITED STATES UNLESS THE
TRANSACTION HAS BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933
OR IS EXEMPT FROM REGISTRATION THEREUNDER.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE UK VERSION OF THE MARKET ABUSE REGULATION (EU
596/2014) WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018.
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 EUR5 billion which is subject to adjustments as
set out in the Acquisition Agreement. The purchase price is based
on an enterprise value of EUR5 billion.
The enterprise value of EUR5 billion represents a multiple of
3.9x FY23 Business EBITDAaL(1) of approximately EUR1.3 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 (EUR185
million) and FY23 (EUR411 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 EUR1 billion and EUR102 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 EUR187 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 EUR320 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 EUR150
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.EUR3.5 billion.
Potential upside linked to announced MásMóvil/Orange merger
The Orange/MásMóvil merger announcement reported material target
run-rate synergies of EUR450 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 EUR2,453
million (unaudited) of consumer total revenue in FY23 representing
approximately 63 per cent. of total revenue and through its
Business segment, Vodafone Spain generated EUR1,292 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 EUR3.9 billion, EUR4.2 billion
and EUR4.2 billion, respectively. Vodafone Spain had Business
EBITDAaL of EUR1.3 billion (unaudited) in each of its financial
years ended 31 March 2023, 2022 and 2021. Vodafone Spain had
operating losses of EUR94.6 million, EUR224.8 million and EUR60.5
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
------------- ------------- -------------- -------------- --------------
EUR'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
------------- -------------- -------------- --------------
EUR'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
------------- ------------- -------------- -------------- --------------
EUR'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 EUR5 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
EUR900 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 EUR100 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 GBP1.50.
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 EUR110 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
EUR4.2 billion with its Debt Underwriters. The financing package
consists of (i) a term loan A facility in an aggregate principal
amount of up to EUR0.5 billion, and (ii) a corporate bridge
facility in an aggregate principal amount of up to EUR3.7 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
EUR0.5 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 EUR600 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
EUR900 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 EUR900 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 EUR1 for every EUR2 of gross proceeds raised in the
Placing above EUR400 million (e.g., if the Placing raises EUR600
million of gross proceeds, the amount of the Vodafone Financing
will be EUR800 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 EUR300 million and
EUR600 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 EUR8 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 GBP1.50 per
New Zegona Shares. The equity raise is not a condition of the
transaction. Vodafone has agreed to provide up to EUR900 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 EUR1 for every EUR2 of
gross proceeds raised in the Placing above EUR400 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 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 EUR350 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
-------------- -------------- --------------
EUR'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 acquisition costs 339,464 357,082 344,488
-------------- -------------- --------------
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 Vodafone Group
assets (3) (243,469) (252,026) (223,800)
-------------- -------------- --------------
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 EUR76 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 EUR110m. 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 GBP198.5 million. Zegona's underlying asset value
implied by the sale of Euskaltel to MásMóvil was GBP1.70 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
EUR11.17 per share, an amount of contingent consideration payable
to Zegona of EUR8.654 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 GBP/EUR 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 EUR3.7bn senior debt and FY23 Business
EBITDAaL of EUR1.3bn (assuming equity issue size of EUR600
million); 3.0x leverage based on EUR3.9bn senior debt and FY23
Business EBITDAaL of EUR1.3bn (assuming equity issue size of EUR300
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 GBP1.50 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 the conditional subscription and relationship
and Relationship agreement dated 31 October 2023 between
Agreement 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 the existing Zegona shares of GBP0.01 each
Shares 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 the Zegona Shareholders, other than Newco,
Shareholders 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 GBP1.50 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 GBP1.50 per share;
----------------------------------------------------
Vodafone Group Vodafone Group Plc and its subsidiaries
but excluding, from Completion, Vodafone
Spain;
----------------------------------------------------
Vodafone Preference the cumulative preference shares in NewCo
Shares 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.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
This Announcement has been issued by and is the sole
responsibility of the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by any
Bank or by any of their respective affiliates or any person acting
on its or their behalf as to, or in relation to, the accuracy or
completeness of this Announcement or any other written or oral
information made available to or publicly available to any
interested party or its advisers, and any liability therefore is
expressly disclaimed.
The contents of this Announcement are not to be construed as
legal, business, financial or tax advice. Each investor or
prospective investor should consult their or its own legal adviser,
business adviser, financial adviser or tax 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.
This Announcement has been prepared for the purposes of
complying with applicable law and regulation in the United Kingdom
and the information disclosed may not be the same as that which
would have been disclosed if this Announcement had been prepared in
accordance with the laws and regulations of any jurisdiction
outside the United Kingdom.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
NOGNKDBNFBDKAKN
(END) Dow Jones Newswires
October 31, 2023 05:30 ET (09:30 GMT)
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