MTG: MTG PUBLISHES INFORMATION BROCHURE REGARDING PROPOSED DISTRIBUTION OF NENT GROUP WITH NEW FINANCIAL TARGETS AND DIVIDEND POLICY AND PROPOSES AUTH
As previously communicated, the Board of Directors of Modern Times
Group MTG AB (publ) (MTG) has initiated a process to split MTG into
two companies by distributing all of the shares in Nordic
Entertainment Group AB (NENT Group) (comprising the groups Nordic
Entertainment and Studios operations) to MTGs shareholders, and
listing these shares on Nasdaq Stockholm.
The MTG Board of Directors is proposing to an Extraordinary General
Meeting of MTG shareholders, to be held on 7 February 2019 in
Stockholm, that it resolve to distribute all of the shares in NENT
Group to MTGs shareholders. Information regarding the proposed
distribution of shares in NENT Group has today been published and is
available in the form of an information brochure,
https://www.mtg.com/mtg-nordic-entertainment-split/. Furthermore, the
Boards of Directors of MTG and NENT Group, respectively, have today
decided on new financial targets and dividend policies, which are
included in the information brochure.
Finally, the MTG Board of Directors is proposing that the EGM
authorises the Board of Directors to be able to resolve on the
potential issue of Class B shares corresponding in aggregate to up to
20.0% of the total number of outstanding MTG Class B shares, in order
to fund potential acquisition opportunities in line with its
strategy. Such Class B shares will not be issued prior to the
distribution and listing of the shares in NENT Group and will hence
not carry the right to receive any share in NENT Group.
The MTG Board and management believe that long-term shareholder value
will be created by splitting the group into two separate and publicly
listed companies, whose leading brands can shape the future of their
respective industries. The split will provide both businesses with
enhanced focus and agility to capitalise on consumer trends, capture
growth opportunities, and generate sustainable value for all
stakeholders. It will also provide two clear investment cases and
equity stories with distinct financial profiles and capital
allocation models. The split is expected to accelerate both
companies development in line with their strategic objectives.
The distribution is proposed to be made by means of what is known as a
Lex Asea distribution of all of the shares in NENT Group to MTGs
shareholders. Each MTG Class A share and MTG Class B share will
entitle the holder to receive one NENT Group share of the same class.
The information brochure published today constitutes decision-making
documentation for MTGs shareholders in respect of the Board of
Directors proposal to spin-off and list NENT Group. The brochure
contains historical information, such as separate income statements,
balance sheets and cash flow statements for MTG and NENT Group. The
brochure also presents the background and reasons for the proposed
NENT GROUP IN BRIEF
NENT Group has two reporting segments: Broadcasting & Streaming and
Studios. The Broadcasting & Streaming segment primarily provides TV
and radio services that are distributed on a scheduled and on-demand
basis, both on NENT Groups own and third party networks, and are
funded by advertising and subscription revenues. The Studios segment
creates, produces and distributes scripted, non-scripted and digital
content for in-house and third party distribution platforms.
Financial targets and dividend policy
NENT Group does not provide formal financial performance targets or
guidance. NENT Groups objective is to deliver sustainable profitable
growth in the form of organic sales growth and growth in total
operating income before items affecting comparability. Group central
operations in 2019 will include costs related to becoming a separate
and listed company, so 2019 is the starting reference year with
regard to operating income growth and the operating income growth
will be from 2020 onwards. The combined operating business segments
(excluding items affecting comparability and central operations) are
expected to continue to grow profitably in 2019.
NENT Group intends to maintain its balance sheet leverage ratio of no
more than 2x net debt to the trailing twelve months adjusted EBITDA,
or 2.5x net debt when adjusted for leases. NENT Groups leverage may
exceed these levels temporarily from time to time, in order to
finance acquisitions or due to short term effects such as the
scheduling of content payments. The net debt level at listing will be
in line with NENT Groups leverage ambition when adjusted for leases.
NENT Groups dividend policy is to distribute an annual cash dividend
of between 30% and 50% of adjusted net income. The intended proposed
NENT Group annual cash dividend for 2018 will be announced in
connection with MTGs Q4 2018 results, and will be subject to the
approval of the distribution and listing of NENT Group by the MTG EGM
to be held on 7 February 2019, and then the approval of the NENT
Group AGM to be held on 22 May 2019. NENT Groups results for the
financial year 2018 did not include the full run rate costs of being
a separate and listed company, so the dividend to be declared may be
at the low end of the range as the 2018 adjusted net income will be
positively impacted by the lower costs.
NENT Group is currently financed primarily through intra-group
financing from MTG. In connection with the listing of NENT Groups
shares, the intra-group financing in NENT Group from MTG will be
refinanced with bank loans and existing cash. NENT Group has obtained
financing commitment from a bank consortium for a SEK 4.0 billion
Revolving Credit Facility to be utilised for general corporate
purposes. NENT Group also intends to arrange both a medium term note
and a commercial paper programme, which are intended to be used for
capital markets funding as soon as possible before or after the
listing of NENT Group. There will be no loans or derivatives
outstanding between NENT Group and MTG after the listing date.
MTG EXCLUDING NENT GROUP IN BRIEF
Following completion of the split, MTG will primarily comprise a
portfolio of high growth digital entertainment operations focused on
two verticals - Esports and Online Gaming - as well as shareholdings
in a number of other entertainment companies including Nova
Broadcasting Group and Zoomin.TV.
MTG does not provide formal financial performance targets or guidance.
MTGs objective is to continue to grow its revenues through both
organic sales growth and complementary acquisitions. MTG expects its
profitability to gradually increase as organic sales growth exceeds
its investments, due to fixed costs stabilising and the contribution
of high incremental margin sales lines. MTG will have a net cash
position immediately following the distribution of NENT Group and has
the funding in place to continue to pursue its standalone strategy
with the ability to draw down on its borrowing facilities from time
to time. MTG will invest its profits and cash flows in the further
development of its portfolio of holdings, and does not therefore
expect to pay dividends or buy back shares in the foreseeable future.
In addition, and in order to finance potential acquisition
opportunities as they arise and that are in line with its strategy,
the MTG Board of Directors is proposing that the Extraordinary
General Meeting of MTG shareholders to be held on 7 February 2019
authorises the Board to be able to resolve on potential new share
It is intended that MTG excluding NENT Group will be financed with
equity and have a net cash position after the listing of NENT Group.
MTG has also secured a 3 year SEK 1.0 billion multi-currency
revolving credit facility from Nordea, to be drawn down and utilised
for general corporate purposes as and when required. The facility is
based on the cash flows generated from MTGs 95% ownership in Nova
Broadcasting Group in Bulgaria and, upon disposal of the asset in
part or whole, must be immediately repaid and cancelled in full. MTG
intends to sell Nova Broadcasting Group and invest the proceeds in
the development of its broader business. There will be no loans or
derivatives outstanding between NENT Group and MTG after the listing
New Issue Authorisation
The Board of Directors proposes that the Extraordinary General Meeting
of MTG shareholders authorises the Board of Directors to, on one or
more occasions up until the 2019 Annual General Meeting, resolve upon
the issue of class B shares representing no more than 20.0 per cent
in aggregate of the total number of MTG class B shares at the time of
the Extraordinary General Meeting. Any new issue of shares may be
effected through a new issue with preferential rights to all
shareholders and / or as a directed issue to one or more strategic
investors with the right to deviate from the shareholders
preferential rights against payment in cash, in kind or through
set-off. Class B shares will not be issued under this authorisation
prior to the distribution and listing of the shares in NENT Group and
will hence not carry the right to receive any NENT Group shares.
The purpose of the authorisation, and the reason for the potential
deviation from the shareholders preferential rights, is to enable
the company to raise capital on an accelerated basis, in order to
pursue potential acquisition opportunities as they arise and in line
with its strategy. MTG will focus on both organic and inorganic
investment opportunities, and management believes the current market
environment will continue to present several attractive acquisition
opportunities in its two verticals and online gaming in particular,
on which it will need to be able to execute quickly. The Board of
Directors believes that the ability to act quickly on opportunities
that may otherwise not be actionable will be a key competitive
advantage. In addition, it may allow MTG to raise capital from
potential strategic partners, which could also bring operational
advantages and synergies including accelerated access to new markets.
The company remains well capitalised to execute on its standalone
plan, and no decision has been made to pursue a capital raise or
regarding the form, size or timing of such a potential capital raise.
In order for the resolution to be valid, it must be supported by
shareholders holding no less than two-thirds of both the votes cast
and of the shares represented at the Extraordinary General Meeting.
1 February 2019
Record date for attendance and final date to provide notification
of attendance at MTGs Extraordinary General Meeting.
5 February 2019
Publication of MTG Q4 and Full Year 2018 Financial Results.
7 February 2019
Extraordinary General Meeting of MTGs shareholders.
During March 2019
Publication of prospectus regarding the listing of the shares in
Capital Markets Days for MTG and NENT Group.
Distribution of, and first day of trading in, NENT Group Class A
and Class B shares on Nasdaq Stockholm.
NOTES TO EDITORS
MTG (Modern Times Group MTG AB (publ)) is a leading international
digital entertainment group and we are shaping the future of
entertainment by connecting consumers with the content that they love
in as many ways as possible. Our brands span TV, radio and next
generation entertainment experiences in esports, digital video
content and online gaming. Born in Sweden, our shares are listed on
Nasdaq Stockholm (MTGA and MTGB).
This information is information that MTG is obliged to make public
pursuant to the EU Market Abuse Regulation. The information was
submitted for publication, through the agency of the contact persons
set out below, at 07.00 CET on 15 January 2019.
firstname.lastname@example.org (or Tobias Gyhlénius, Head of Public Relations; +46 73
699 27 09)
email@example.com (or Stefan Lycke, Head of Investor Relations; +46 73
699 27 14)
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