PAYZ Payzone

 

TIDMPAYZ 
 
RNS Number : 7941G 
Payzone plc 
05 February 2010 
 

  5 February 2010 
Payzone Plc 
      Group restructuring and investment from funds managed by Duke Street 
                          New, stronger Group to emerge 
 
 
Introduction 
 
Payzone plc (the "Company"), together with its subsidiaries (the "Group"), 
announces today that agreement has been reached between Duke Street and the 
Group's banking syndicate (the "Syndicate") on the terms of a debt and share 
capital restructuring (the "Restructuring"), which will provide the business 
with a more appropriate long-term capital structure. The restructuring will 
involve the appointment of receivers to the Company and the disposal of the 
direct subsidiaries of the Company to a newly formed company. 
 
Following the Restructuring, Duke Street will have a controlling stake in the 
business and the amount of debt owing to the Syndicate will be reduced from 
EUR320m to EUR82m. Shareholders in Payzone plc will not have an ongoing interest in 
the business. 
 
The Restructuring will be implemented by means of a disposal of the subsidiaries 
of the Company to a newly formed company. Accordingly, the Syndicate has 
appointed Alan Hudson, David Hughes and Niall Coveney of Ernst & Young LLP as 
joint receivers to the Company (the "Joint Receivers") under the terms of the 
current security agreements. The Joint Receivers will execute the transaction 
described below. 
 
Trading in the Company's ordinary shares on the Alternative Investment Market of 
the London Stock Exchange ("AIM"), was suspended earlier this morning, and is 
expected to be cancelled, following the completion of the transaction. 
 
The Joint Receivers have entered into agreements to dispose of the entire issued 
share capital of the two subsidiaries of the Company, Cardpoint Limited and 
Alphyra Holdings Limited, and to novate the intercompany debt owed to the 
Company by its subsidiaries to a newly-formed group of companies, controlled by 
Duke Street (the "Purchasing Group") in return for the consideration and 
assumption of part of the Group's debt as described below.  On completion, the 
Purchasing Group will be the new owner of all the operating subsidiaries of the 
Company (the "Continuing Group"), which will continue to trade as usual and will 
maintain existing relationships with customers, suppliers and employees.  None 
of the Company's subsidiaries have been placed into administration or any other 
insolvency process. 
 
As part of the Restructuring, Duke Street will invest EUR45m in the Continuing 
Group. The Continuing Group will assume approximately EUR109m of bank debt and 
guarantees owed to the Syndicate, of which EUR27m will be repaid by the Continuing 
Group out of the funds invested by Duke Street. The funds invested by Duke 
Street will also provide working capital to the Continuing Group in addition to 
EUR11m of headroom in the form of an RCF provided by the Syndicate. The Syndicate 
will acquire a 16% interest in the Purchasing Group, with the balance being held 
by Duke Street (69%) and by certain of the current senior management of the 
Company (15%). 
Completion is subject to satisfaction of certain conditions precedent, including 
clearance from the Irish and German competition authorities. 
 
Mike Maloney, Chief Executive of the Company, said: 
"The actions announced today, in conjunction with the steadfast support of the 
banking syndicate and our new investor, Duke Street, will safeguard the future 
of the Company's operating companies, secure over 500 jobs and allow our 
operations, our suppliers and our customers to continue with business as normal. 
 
"The transaction will bring to a conclusion a period of restructuring that 
included the sale of the Company's German, Polish and Dutch Mobile 
Top-Up businesses and the sale of its Dutch Electronic Funds Transfer business. 
Regrettably, it has not been possible to provide existing shareholders with an 
ongoing interest in the business. 
 
"We believe that the Continuing Group has a bright future ahead and we look 
forward to guiding it into a period of growth as our markets start to recover. 
The support of Duke Street and the banks demonstrates their faith in the 
strength of the underlying business." 
 
Background to the Restructuring 
 
As noted in the AGM Statement released by the Company on 12 March 2009, given 
the challenging market conditions the Company appointed Rothschild to seek new 
finance for the business and instigated discussions with its finance providers 
to consider a range of financing options with a view to establishing a more 
appropriate long term capital structure. 
 
In addition, the Company implemented a vigorous operational restructuring of the 
business, cutting costs and eliminating loss-making contracts. 
 
In order to reduce debt and assist in refocusing the business on its core 
markets, the Company disposed of its Mobile Top-Up businesses in Germany, Poland 
and the Netherlands and its Electronic Funds Transfer business in the 
Netherlands. 
 
The Company has followed a strategy aimed at maximising value for all 
stakeholders whilst at the same time ensuring certainty of outcome. 
 
However, following a period of due diligence conducted by interested parties, 
the value of the Company was assessed to be significantly below its existing 
senior debt level, being EUR320m, and accordingly the Restructuring is unable to 
provide any value to existing shareholders. 
 
Restructuring overview 
 
The Restructuring is designed to put in place an appropriate long-term capital 
structure to enable the business to trade through the current adverse economic 
conditions and to have the capability to grow as its markets recover. 
 
The Board believes that the proposed transaction represents the only realistic 
route to achieving a long-term sustainable capital structure for the business in 
current market conditions. 
 
Duke Street and the Syndicate have notified the Company that the key terms of 
the transaction are: 
·     EUR45m cash investment by Duke Street (through the Purchasing Group) in the 
Continuing Group, being used for part repayment of bank debt being assumed by 
the Continuing Group and for working capital purposes of the Continuing Group 
·     The transfer of the shares in Cardpoint Limited and Alphyra Holdings 
Limited to the Puchasing Group and the novation of inter company debt owed by 
Cardpoint Limited and Alphyra Holdings Limited to the Company to the Purchasing 
Group 
·     The assumption of approximately EUR109m of bank debt and guarantees owed to 
the Syndicate by the Continuing Group, of which EUR27m will be prepaid by the 
Continuing Group out of the funds invested by Duke Street 
·     A member of the Purchasing Group will issue a deferred consideration note 
in favour of the Syndicate, payments under which are capped at EUR6m and are 
contingent upon performance over the three years following completion 
·     An additional RCF of EUR11m to be provided by the Syndicate to fund the 
Continuing Group's working capital requirements 
·     Immediately following the transaction, in each case through the Purchasing 
Group, Duke Street will hold a 69% interest in the Continuing Group, with the 
Syndicate holding a 16% interest and certain of the senior management holding a 
15% interest 
 
The proposals are conditional upon, amongst other things, no material adverse 
change occurring in the Continuing Group and first phase unconditional 
competition clearance by the Irish and German competition authorities. 
Applications for clearances are expected to be made promptly. 
 
Future of Payzone plc 
 
Following the completion of the Restructuring, the Company, which is a holding 
company, will have divested the all of its subsidiaries, with certain funds set 
aside to satisfy certain liabilities of the Company, and will cease to trade. It 
is expected that the listing of the Company's ordinary shares on AIM will be 
cancelled following the completion of the transaction. 
 
+-----------------------------------+--------------------------+ 
|                                                              | 
| Enquiries:                                                   | 
+--------------------------------------------------------------+ 
| Payzone                           | Tel: +353 (1) 207 6600   | 
+-----------------------------------+--------------------------+ 
| Mike Maloney / Nigel Bell         |                          | 
+-----------------------------------+--------------------------+ 
| Rothschild                        | Tel: +44 (0) 20 7280     | 
|                                   | 5000                     | 
+-----------------------------------+--------------------------+ 
| Ed Welsh / Dev Tanna / Niall      |                          | 
| McBride                           |                          | 
+-----------------------------------+--------------------------+ 
| Panmure Gordon                    | Tel: +44 (0) 20 7459     | 
|                                   | 3600                     | 
+-----------------------------------+--------------------------+ 
| Hugh Morgan / Stuart Gledhill     |                          | 
+-----------------------------------+--------------------------+ 
| Ernst & Young                     | Tel: +44 (0) 20 7951     | 
|                                   | 2000                     | 
+-----------------------------------+--------------------------+ 
| Alan Hudson / Martin Trott        |                          | 
+-----------------------------------+--------------------------+ 
| Powerscourt                       | Tel: +44 (0) 20 7250     | 
|                                   | 1446                     | 
+-----------------------------------+--------------------------+ 
| Paul Durman / Rory Godson         |                          | 
+-----------------------------------+--------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCTAMTTMBMMTLM 
 

Payzone (LSE:PAYZ)
Historical Stock Chart
Von Okt 2024 bis Nov 2024

Payzone (LSE:PAYZ)
Historical Stock Chart
Von Nov 2023 bis Nov 2024