Technicolor board rebuffs revised offer from JPMorgan

UPDATED: The board of directors at French firm Technicolor has rejected proposals submitted by JPMorgan subsidiary Jesper Cooperatief to amend some details of the contracts signed last month involving the acquisition of a 30% stake in Technicolor by JPMorgan.

Technicolor’s board of directors viewed “very favourably” JPMorgan’s willingness to increase the subscription price of the shares to be issued under the reserved capital increase from €1.6 to €1.9 per share.

This would have meant that the total capital increase proceeds would have been comprised between €169mn and €179mn, compared to the total proceeds implied by the previously-agreed contract of €147mn to €158mn.

However, the amended proposal also included new terms that Technicolor deemed to be unfavourable, including a break-up fee and a clause that freed JP Morgan from its obligations if a new resolution was approved by shareholders.

Therefore, Technicolor’s board of directors has concluded the originally agreed deal of May 2nd to be more beneficial to the company and its shareholders, and that the uncertainty created by the new condition outweighs the benefits of an increase in share price.

The company will therefore continue in its efforts to convince shareholders of this when they meet for the General Shareholders’ Meeting on June 20th.

Technicolor recently confirmed that its set-top box manufacturing facility in the French city of Angers (Maine-et-Loire department) had become insolvent, and petitioned the Nanterre Commercial Court (France) to open rehabilitation proceedings (“redressement judiciaire”) for Thomson Angers, which owns the facility. More details here.

In its latest results, Technicolor reported that the turnaround plan for its Connected Home division (which produces set-top boxes) started to generate some improvements: fixed costs at its Manaus, Brazil facility were cut by two percentage points, and non quality costs are expected to decrease over the course of the year.

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