Arqiva Financing PLC Announcement of Consent Solicitation (4611M)

TIDM20CA

RNS Number : 4611M

Arqiva Financing PLC

11 May 2020

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ARQIVA FINANCING PLC ANNOUNCE A CONSENT SOLICITATION

11 May 2020

Overview

Arqiva Financing plc (the "Issuer") today announced a consent solicitation in respect of the following series of bonds (the "Bonds"):

(i) GBP350,000,000 4.04 per cent. Notes due 2035 (with an expected Maturity Date in June 2020) (ISIN: XS0895821055);

   (ii)       GBP400,000,000 4.882 per cent. Notes due 2032 (ISIN: XS0895820834); and 

(iii) GBP164,000,000 5.340 per cent. Notes due 2037 (ISIN: XS1024447010) (with an expected maturity date in June 2030).

Capitalised terms used in this announcement and not defined herein have the meanings ascribed to them in the STID Proposal Memorandum dated 11 May 2020 (the "STID Proposal Memorandum").

Background

As more fully set out in the STID Proposal, Arqiva Group Limited (formerly Arqiva Broadcast Holdings Limited) and its subsidiaries (together, the "Arqiva Group") have undertaken a corporate reorganisation of the Senior Financing Group, by separating its telecommunications towers business ("Tower Assets") from its other businesses and consolidating the Tower Assets into an existing entity within the Senior Financing Group, Arqiva Services Limited ("ASL") and certain subsidiaries of ASL (the "Reorganisation"). Arqiva Holdings Limited ("AHL") has entered into a share purchase agreement with a third-party purchaser (the "Purchaser") dated 8 October 2019 (the "SPA") and has agreed, subject to the satisfaction of certain conditions, to dispose of ASL and its subsidiaries at completion under the SPA (the "Disposal"). The assets not being disposed of (being all assets other than Tower Assets) (the "Retained Assets") will remain within the Senior Financing Group within certain existing Arqiva Group entities which are Obligors ("NetworkCo") and, to facilitate this, ASL has, pursuant to the Reorganisation, transferred various Retained Assets to Arqiva Limited ("AL") (or its wholly owned subsidiaries). The remaining business (NetworkCo) will consist of the Media Networks business which incorporates the Terrestrial Broadcast TV and Radio, Digital Platforms, Satellite products, as well as the Group's M2M business. For further information in relation to NetworkCo (the remaining business) of the Arqiva Group following the Disposal, see the Supplementary Information to the bondholder presentation prepared in connection with the STID Proposal, of which

Bondholders are invited to access read-only copies by

visiting

https://www.arqiva.com/documentation/credit-investors/.

AHL is an Obligor and is bound by the covenant package contained in the Common Terms Agreement, which includes a restriction on disposals. Pursuant to paragraph 7 (Disposals), Schedule 2 Part 2 to the Common Terms Agreement, no Obligor may enter into a single transaction, or series of transactions to sell or otherwise dispose of any asset or all or part of its business or undertaking without the prior written consent of the Obligor Security Trustee, other than Permitted Disposals.

It is in this context that Arqiva Financing No 1 Limited (the "Borrower") is proposing the STID Proposal.

The Disposal would not fall within any of limbs (a) to (o) of the Permitted Disposal definition, however, limb (p) of the definition of Permitted Disposals provides for the following being a Permitted Disposal:

"...any sale, lease, licence, transfer or other disposal which:

(p) is a disposal made with the prior written consent of the Obligor Security Trustee". The STID Proposal

As more fully set out in the STID Proposal and as described above, the consent of the Obligor Security Trustee is therefore being sought in connection with the Disposal. It is in this context that the Borrower is proposing the STID Proposal. For detailed information on the STID Proposal see the form of the STID Proposal (appended at the Schedule to the STID Proposal Memorandum).

Arqiva has engaged with USPP investors and several other private lenders to discuss the transaction. Arqiva has received broad-based supportive feedback from these discussions and is hence confident to proceed with announcing the STID Proposal today.

Each Bondholder shall have one vote in respect of each GBP1 of Principal Amount Outstanding of Bonds held in respect of which the relevant Bondholder has delivered an Electronic Voting Instruction. All votes in favour of, and against, the STID Proposal by the relevant Bondholders are considered on an aggregated basis, irrespective of whether a majority of such Bondholders are in favour of or against the STID Proposal. The aggregate Outstanding Principal Amount of all Qualifying Debt as at the date of the STID Proposal is approximately GBP3.2 billion.

Secured segregated proceeds account to be used for paying down Senior Debt within Prepayment Period

In connection with the STID Proposal, and subject to the Disposal taking place, the Borrower will undertake the following:

(i) the Borrower will open the Segregated Proceeds Account and shall procure that an amount equal to GBP1.779 billion (the "Minimum Proceeds") will be deposited into the Segregated Proceeds Account for a period of up to 180 days from the date of Disposal (being the "Prepayment Period);

(ii) pursuant to the undertaking deed to be entered into substantially in the form of Appendix 5 of the STID Proposal (Form of Prepayment Undertaking Deed), the Minimum Proceeds shall be used in full during the Prepayment Period (subject to it being permitted that if there is a residual amount of no greater than GBP100,000, such residual amount does not need to be so used and can be released to the Borrower) towards the prepayment, repayment, purchase, close-out, redemption or discharge, scheduled payments, scheduled repayments or amortisations, as applicable, in part or in full of one or more classes of Senior Debt (such classes and amounts paid to such classes are to be chosen in the sole discretion of the Borrower), together with any accrued interest thereon, applicable Repayment Costs, swap breakage, make-whole amounts or other associated fees and expenses; and

(iii) as more fully set out in the STID Proposal, pursuant to the security document to be entered into substantially in the form of Appendix 3 of the STID Proposal (Form of Segregated Proceeds Account Security Document), the Segregated Proceeds Account will be subject to fixed security, with such security to be released following the satisfaction of the Prepayment Undertaking and shall be operated by the Borrower, prior to an Obligor Enforcement Notice being served, in accordance with the Prepayment Undertaking Deed, which requires the Borrower to certify to the Obligor Security Trustee that any proceeds being withdrawn are withdrawn in compliance with the Prepayment Undertaking Deed.

Additional Covenants

In connection with the STID Proposal, and subject to the Disposal taking place, the Borrower undertakes to enter into, and procure entry into by the other Obligors (other than each TowerCo Company), the additional covenants deed, substantially in the form of Appendix 6 to the STID Proposal (Form of Additional Covenants Deed).

For further details, Bondholders are directed to the Additional Covenant Deed, substantially in the form of Appendix 6 to the STID Proposal (Form of Additional Covenants Deed).

Comfort Package

As more fully set out in in Appendix 1 to the STID Proposal (Comfort Package), among other things, the Borrower will deliver to the Obligor Security Trustee in respect of the Disposal consent process a certificate confirming that, as at the most recent Test Date (being 31 December 2019), among other things, no Trigger Event or Obligor Event of Default has occurred, after giving pro forma effect to the Transaction, and that the Transaction is not expected (on the basis of the Borrower's engagement with and written confirmation from each of S&P and Fitch) to result in the existing notes ceasing to be rated at least "BBB" or equivalent by each of S&P and Fitch.

For detailed information on the STID Proposal see the form of the STID Proposal (appended in the Schedule to the STID Proposal Memorandum).

Instruction Fees

Subject to the conditions set out in the STID Proposal Memorandum, the approval of the STID Proposal, the announcement by the Obligor Security Trustee of such approval and the Disposal having occurred and the Minimum Proceeds having been paid into the Segregated Proceeds Account, the Issuer will pay to a holder of the Bonds who has delivered a valid Electronic Voting Instruction in respect of the STID Proposal which has been received by the Tabulation Agent at or prior to the Instruction Fee Deadline, which has not been validly withdrawn or revoked and which remains in full force and effect until the announcement of the results of the STID Proposal, the Instruction Fee equal to 0.15 per cent. of the Principal Amount Outstanding of such Bonds the subject of the relevant Electronic Voting Instruction. The Instruction Fee will be paid on the Payment Date via the relevant Clearing System for onward payment to the cash account of an eligible holder of the Bonds in such Clearing System. The payment of any such amounts to the relevant Clearing System will discharge the obligations of the Issuer in respect of the Instruction Fee to all such relevant Bondholder(s).

Holders of Bonds will not be eligible to receive the Instruction Fee if they do not submit a valid Electronic Voting Instruction which has been received by the Tabulation Agent at or prior to the Instruction Fee Deadline or if they revoke their instructions after the Instruction Fee Deadline (in the limited circumstances in which such revocation is permitted) or their Electronic Voting Instruction does not remain in full force and effect until the announcement of the results of the STID Proposal by the Obligor Security Trustee.

It is a condition to the Issuer's obligation to pay or procure the payment of the Instruction Fee to relevant holders of Bonds that: (i) the STID Proposal has been approved; and the Obligor Security Trustee has announced such approval and (ii) the Disposal has occurred and the Minimum Proceeds have been paid into the Segregated Proceeds Account. Such condition(s) are waivable at the discretion of the Issuer.

Expected Timetable

   Event                                                                        Date 

Announcement and delivery of the STID Proposal. 11 May 2020

STID Proposal Memorandum and draft Implementation Documents to be made available at the specified office of the Tabulation Agent (copies of which are obtainable by Bondholders upon request, free of charge).

Instruction Fee Deadline : Latest time and date for receipt of Electronic Voting Instructions by the Tabulation Agent through the Clearing Systems for holders to be eligible for payment of the Instruction Fee.

Expiration Time : Latest time and date for receipt of valid Electronic Voting Instructions by the Tabulation Agent through the Clearing Systems.

4.00 p.m. (London time) on 20 May 2020

4.00 p.m. (London time) on 28 May 2020

STID Voting Deadline. 1 June 2020

3 June 2020 or earlier, subject to the STID Proposal, should the Obligor Security Trustee have received votes in favour of the STID

   Proposal                  from 
   Participating        Secured 
   Creditors       representing 

more than 50 per cent. of the total Outstanding Principal Amount of Qualifying Debt.

On the Implementation Date - currently expected to occur within two Business Days of the delivery of the notice of approval of the STID

   Event                                                     Date 

Proposal and, with the

   exception       of          the 
   Segregated        Proceeds 

Account Bank Agreement and the notice of approval of the STID Proposal, the Implementation

Documents shall take effect from the Effective Time.

 
 If the conditions to payment of the Instruction      On the Payment Date 
  Fee are satisfied                                    which is expected 
  Payment of the Instruction Fee to those holders      to be on or about 
  who are eligible for payment in accordance with      the tenth Business 
  the conditions set out in this STID Proposal         Day following the 
  Memorandum.                                          later of (i) STID 
                                                       Proposal having 
                                                       been approved and 
                                                       the Obligor Security 
                                                       Trustee having announced 
                                                       such approval and 
                                                       (ii) the occurrence 
                                                       of the Disposal 
                                                       and the Minimum 
                                                       Proceeds having 
                                                       been paid into the 
                                                       Segregated 
                                                       Proceeds Account. 
                                                       Currently Arqiva 
                                                       Financing No 1 Limited 
                                                       expects the Payment 
                                                       Date to be on or 
                                                       around 14 July 2020. 
 

All of the above dates are subject to earlier deadlines that may be set by the Clearing Systems or any intermediary.

General

Subject to applicable law and as provided herein, the Issuer may, in its sole discretion, amend the terms of (including the extension or amendment of any of the deadlines relating to the STID Proposal Consent Solicitation), terminate or withdraw the STID Proposal Consent Solicitation at any time up to the Solicitation Amendment Deadline.

Bondholders are advised to check with the bank, securities broker, trust company, custodian, Clearing System or other intermediary through which they hold their Bonds whether such intermediary will apply

different deadlines for participation to those set out in the STID Proposal Memorandum and, if so, should adhere to such deadlines if such deadlines are prior to the deadlines set out in the STID Proposal Memorandum.

In relation to the delivery or revocation of Electronic Voting Instructions, in each case, through the Clearing Systems, Bondholders holding Bonds in Euroclear or Clearstream, Luxembourg should note the particular practice of the relevant Clearing System, including any earlier deadlines set by such Clearing System.

Only direct accountholders in Euroclear or Clearstream, Luxembourg may deliver Electronic Voting Instructions. Bondholders who are not direct accountholders in Euroclear or Clearstream, Luxembourg should arrange for the accountholder through which they hold their Bonds to deliver an Electronic Voting Instruction on their behalf to the relevant Clearing System as more particularly described in the STID Proposal Memorandum. The deadlines specified by the relevant Clearing System may be earlier than the Expiration Time.

Bondholders are advised to read carefully the STID Proposal Memorandum for full details of and information on the procedures for participating in the STID Proposal Consent Solicitation.

A complete description of the terms and conditions of the STID Proposal Consent Solicitation will be set out in the STID Proposal Memorandum. Bondholders are invited to access read-only copies of an investor presentation prepared in connection with the STID Proposal by visiting https://www.arqiva.com/documentation/credit-investors/.

For Further Information:

Further details on the STID Proposal Consent Solicitation can be obtained from:

The Solicitation Agents

Banco Santander, S.A.

2 Triton Square

Regent's Place

London NW1 3AN

United Kingdom

   Telephone:       [phone] 
   Email:              [e-mail] / [e-mail] 
   Attention:         Liability Management 

Merrill Lynch International

2 King Edward Street

London EC1 1HQ

United Kingdom

   Telephone:       [phone] 
   Email:              [e-mail] 
   Attention:         Liability Management Group 

Further details on the STID Proposal Consent Solicitation and copies of the STID Proposal Memorandum can be obtained from:

The Tabulation Agent

Lucid Issuer Services Limited

Tankerton Works

12, Argyle Walk

London WC1H 8HA

   Telephone:       [phone] 
   Email:              [e-mail] 
   Attention:         Oliver Slyfield/David Shilson 
   Website:           https://portal.lucid-is.com/deals/arqiva/library 

Disclaimer

This announcement must be read in conjunction with the STID Proposal Memorandum. The STID Proposal Memorandum contains important information which should be read carefully before any decision is made with respect to the STID Proposal Consent Solicitation. If any Bondholder is in doubt as to the action it should take, it is recommended to seek its own financial, legal or other advice, including as to any tax consequences, from its stockbroker, bank manager, solicitor, accountant, independent financial adviser authorised under the Financial Services and Markets Act 2000 (if in the United Kingdom) or other appropriately authorised financial adviser. Any individual or company whose Bonds are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to participate in the STID Proposal Consent Solicitation. This announcement is issued by Arqiva Financing plc. None of the Solicitation Agents, the Tabulation Agent, the Obligor Security Trustee or the Bond Trustee accepts any responsibility for the contents of this announcement.

This announcement is released by Arqiva Financing plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), encompassing information relating to the proposals described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Jeremy Mavor (Secretary) at Arqiva Financing plc.

Legal Entity Identifier number:

Arqiva Financing plc- 213800HHECW72RW2QH41

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(END) Dow Jones Newswires

May 11, 2020 03:55 ET (07:55 GMT)