Ymagis S.A announces unanimous financial restructuring agreement with its bondholders and bank creditors

Press release
Paris (France) – December 2, 2019, 6:15 pmYmagis S.A announces unanimous financial restructuring agreement with its bondholders and bank creditorsFinancial debt write-off of between €13.9m and €16.2mIssuance of €9.2m of convertible bonds based on ordinary shares with an implied price of €3.00 per ordinary shareRescheduling of €26.8m of residual debt over seven yearsYmagis presents its strategic plan and details of its financial restructuring plan in an appendix on its website www.ymagis.comYmagis Group (FR0011471291, MAGIS, PEA-PME), the European specialist in digital technologies for the cinema industry, today announced that an agreement has been reached with all its bondholders and bank creditors for a financial restructuring plan (the “Restructuring Agreement”) that meets the three objectives set by the Company during talks with its creditors:Reduce the total amount of the Group’s net financial debt;Further strengthen the capital of the Company and the Group;Rescheduling the repayment of the residual debt.The Restructuring Agreement has been unanimously approved by its bondholders and bank creditors.Evolution of the financial restructuring processOn 23 February 2019, Ymagis S.A. (“Ymagis” or the “Company”) decided to enter into discussions with its bond creditors with a view to reducing the volume and burden of its debt and more generally strengthening its balance sheet.Following its communication on 26 February 2019, the Company opened talks with its bondholders and their respective advisors, supervised by an ad hoc representative, Maître Jonathan El Baze, after signing confidentiality agreements. Ymagis SA’s bank creditors then joined these talks.During the negotiation period, the Company carried out in-depth reviews with support from its advisors in order to redefine a business plan and a sustainable level of debt, in line with the Group’s prospects. The key elements of the new business plan are presented as an appendix on its website www.ymagis.com.After several standstill agreements had been granted to the Company by its creditors, the talks resulted in the Restructuring Agreement, supported by (i) the Company and (ii) all of the Company’s bondholders and bank creditors.The Restructuring Agreement safeguards the Company’s interests by maintaining the integrity of the Group, providing a sustainable framework for its activities, its employees and its customers, and offering the current shareholders the opportunity to participate in the Company’s  recovery.The Restructuring Agreement, detailed in the appendix, has the following main features:A.    All the Company’s bondholders and bank creditors are entitled to equal opportunities, the various options having been offered to each of them.B.    The total amount of financial debt covered by the Restructuring Agreement represents €52.1m.C.    The debt will be written off, converted or rescheduled based on the following conditions:€23m will be subject to:A debt write-off of between €13.9m and €16.2m¹, representing 60% to 70% of the initial amount outstanding, andAn exchange of €6.9m of debt which will be (i) rescheduled over the period from 2020 to 2022 and (ii) will benefit from, if the Waterfall presented below is implemented, priority treatment over all the other residual financial debt (the “Super Senior Debt”).€9.2m will be exchanged for convertible bonds that can be bought back by the Company (the “ORAR bonds”). Each ORAR bond will have a value of €1,000 and will be redeemed on 30 September 2024 into 333 ordinary Company shares (excluding interest, with the ORAR bonds issued based on a price of €3 per ordinary Ymagis share). The Company will have the right to buy back all or part of the ORAR bonds in cash under certain conditions, linked in particular to the Company’s available liquidity (see Appendix), and the ORAR bond holders, which will be subject to a 12-month lock-up period, will have the right to decide to convert their ORAR bonds twice a year at the end of the 18-month period following their issue.The ORAR bonds accrue annual interest of 3% payable through the transfer of five new or existing shares per ORAR bond every six months.€16.6m will be rescheduled, with maturities in 2023 and 2024 with a possible extension to 2025 if no refinancing has been put in place by 2024 ( “Senior Debt 1”).€3.2m will be repayable by the Company in 2026, with a possible extension of maturity until 2027 ( “Senior Debt 2”).Certain creditors, holding a total of €0.3m of Senior  Debt 1 and €0.2m of Senior  Debt 2, thus €0.5m in total, have also opted for early repayment if the Waterfall presented below is put in place, with this early repayment to be automatically accompanied by a write-off of 80% of this debt for the Company ( “Senior Debt with Super Senior Option”).D.    The existing shareholders on the date that the Restructuring Agreement takes effect will be entitled to a free award of one equity warrant for each existing ordinary share, with two warrants allowing them to subscribe for one new ordinary share at a price of €3 per ordinary share.If the Company sells assets, the proceeds from their sale will be allocated as follows to the various stakeholders in the Restructuring Agreement (the “Waterfall”):
 Up to a total of €7m of proceeds from sales, which will remain under the Company’s control to cover operational financing  needs;Any amount above the first €7m will be allocated first to the early repayment of the Super Senior Debt, representing a maximum of €6.9m, and then to the early repayment of the non-written off share of the Senior Debt with Super Senior Option, representing €0.1m.Any amount exceeding these first amounts will be allocated based on 50% to the early repayment of the Senior  Debt 1, with the balance remaining under the Company’s control to finance its development.In total, this agreement results in the following treatment for the €52.1m of debt subject to the negotiations:* Between €13.9m and €16.2m of debt reduction through debt write-offs on the date when the operations are carried out
* €9.2m of convertible bonds based on ordinary shares with an implied price of €3.00 per ordinary share which the Company will be able to buy back in cash under certain conditions
* €26.8m of residual debt repayable from 2020 to 2026This agreement therefore allows the Company to significantly reduce its net financial debt to reach levels that will enable it to continue moving forward with its development. More specifically, Ymagis will be able to (i) manage the development of CinemaNext capitalizing on the market’s natural growth due to the renewal of projection equipment, (ii) continue with the rationalization of Eclair, while looking into relevant partnerships for this entity’s various activities, and (iii) accelerate the development of Illucity, primarily through a licensing policy with partners, in particular cinema exhibitors. These key areas are presented in the document appended to this press release.The Restructuring Agreement has been approved by the Company’s Board of Directors. It remains subject to:The finalization of the documentation required for (i) the issuing of new convertible bonds subscribed for by certain bond creditors, and (ii) the issuing of equity warrants which will be awarded to the existing shareholders.
 The approval of the resolutions required by a general meeting of the Company’s shareholders, which will be convened within the next few weeks.
 The approval of the financial restructuring plan by the Paris Commercial Court (Tribunal de Commerce de Paris).If the applicable conditions precedent are met or waived, the Restructuring Agreement will come into effect by 29 February 2020 at the latest. The Company indicates that a prospectus will be prepared and will need to be approved by the French Financial Markets Authority (AMF) with a view to the admission of the equity warrants and the ordinary shares resulting from the exercising of the warrants and the conversion of the ORAR bonds.Appendix published on www.ymagis.com: Detailed presentation of the financial restructuring planTrading of Ymagis shares to resume on 3 December 2019As requested by the Company, trading of Ymagis shares (code ISIN FR0011471291 MAGIS) was suspended on 25 November. The Company is asking Euronext Paris today to resume trading in its shares for start of trading on the Paris stock market on 3 December 2019.
¹ A 70% debt write-off is granted for the outstanding financial debt converted to Super Senior Debt subject to repayment in 2020, this write-off being reduced to 60% for the outstanding financial debt converted to Super Senior Debt subject to repayment after the 2020 fiscal year, with the 10% difference to be paid by the Company in 2026, for a maximum of €2.3m.
AttachmentYmagis_PR_RestructFin_20191202_ENvdef