LAGARDERE SCA announces a transaction
Corporate & other activities, Finance
Paris, April 4, 2006
Lagardère SCA announces the following transaction, which is being carried out in full co-ordination with all the shareholders involved:
- Issuance of a Mandatory Exchangeable Bond by Lagardère SCA, with a mechanism giving the issuer exposure to some upside in the EADS share price and redeemable for shares representing up to 7.5% of the capital of EADS. The issue has been subscribed for in full by IXIS CIB, which in turn has sold forward a large majority of the underlying EADS shares to a group of French institutional investors.
- The Lagardère transaction is being made in conjunction with another transaction entered into by DaimlerChrysler, involving a market placement of 7.5% of the capital of EADS.
- Lagardère SCA reaffirms its support for the development policy of EADS. The shareholders’ pact between the core shareholders of EADS is unchanged and they are committed – as demonstrated by their respective retained shareholdings – to continued involvement in and backing for the industrial success of EADS.
These transactions will increase the free float of EADS, thereby broadening access to the shares.
The terms of the transaction involving Lagardère SCA are as follows:
Issuance of a Mandatory Exchangeable Bond Redeemable for Shares
- Lagardère SCA is issuing a Mandatory Exchangeable Bond entirely subscribed for by IXIS CIB. In turn, IXIS CIB has sold forward a large majority of the underlying EADS shares to a group of French institutional investors.
- The EADS shares deliverable represent a maximum of 7.5% of the capital of EADS, or approximately 61 million shares.
- The reference EADS share price for this issue will be the price derived from the market placement entered into by DaimlerChrysler.
- Lagardère SCA will receive the proceeds from the issue on completion of the market placement.
- Lagardère SCA will redeem the bonds via three equal deliveries of EADS shares (subject to any adjustments relating to the upside exposure mechanism described below) on June 25, 2007, June 25, 2008 and June 25, 2009.
The Mandatory Exchangeable Bond pays a coupon of around 7.9%
The 7.9% coupon reflects:
a/ EADS share price upside exposure mechanism
- Under the terms of the bond issue, Lagardère SCA is entitled to receive the full benefit of any upside in the EADS share price up to a maximum of 115% of the reference price. However, in the event of a decline in the EADS share price, Lagardère SCA is guaranteed a sale at the reference price.
- The upside exposure mechanism may result in fewer shares being delivered on redemption of the bond issue.
b/ Share ownership position
Lagardère SCA will:
- Continue to receive EADS dividends attached to the shares covered by the bonds, in proportion to the number of undelivered shares.
- Retain ownership of the EADS shares until they are delivered. Subject to any adjustments related to the upside exposure mechanism, its interest in EADS will be reduced from 15% to 12.5% on June 25, 2007; from 12.5% to 10% on June 25, 2008; and from 10% to 7.5% on June 25, 2009.
Position on completion of the market placement
Lagardère SCA will:
- Report no change in net debt. The final amount of the bond issue will increase the debt recognized in the Lagardère SCA balance sheet and the issue proceeds will be recognized as cash, giving a zero impact on net debt.
- Retain exposure to potential upside on the EADS share price thanks to the upside exposure mechanism built into the bond issue and to the EADS shares not included in the transaction (7.5% of the capital of EADS).
- Fully maintain its role as core shareholder in the controlling ownership structure of EADS.
- Reduce its high technology exposure and continue its strategic refocusing on media activities.
EADS: the shareholders’ pact
These transactions are being carried out in full co-ordination with all the shareholders involved.
Within the controlling ownership structure of EADS, the balance of power between the French State and Lagardère within the French bloc, and between the French and German blocs, will remain strictly unchanged.
The Lagardère Group is a market leader in the media sector (books, press, audiovisual, distribution/ retailing of cultural products). The Group also has interests in the high technology sector via a 14.95% stake in EADS.
The Lagardère Group is listed on the Premier Marché of the Paris Stock Exchange.
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