Technicolor unveils new financial strategy

Technicolor has unveiled a new strategic plan that aims to see the company boost its capital structure and strategic flexibility between 2020 and 2022.

The new strategic plan, announced by the company at the end of last week, follows a comprehensive review of the business by Technicolor’s senior executives.

It follows rating agency Moody’s decision to downgrade Technicolor’s financial rating from a B2 negative outlook to a B3 negative outlook in October.

This followed the announcement that rival content services firm Deluxe Entertainment Services Group had filed for bankruptcy.

• Read more: Deluxe files for bankruptcy

Technicolor has outlined three core transactions that will aim to strengthen the company’s finances. These are:

• A capital increase with preferential subscription rights for shareholders for a total gross amount of c. €300 million, issue premium included
• Extension of credit lines from 2021, when they were due to mature, to 2023, subject to the successful completion of a Rights Issue
• $110 million short-term facility to provide additional liquidity headroom

The aim of the plan is to create a “sound and sustainable future” for the company in the face of Deluxe’s filing for bankruptcy last year. This will allow it to “better serve clients, take advantage of market opportunities, deliver profitable growth and create value for shareholders” Technicolor said.

The new strategy will be overseen by Technicolor CEO Richard Moat, who joined the firm in November. Former Eir boss Moat replaced Frédéric Rose, who left the company he’d helmed for a decade after reaching a mutual agreement with the board.

In the review, Technicolor said it will “endeavour to streamline all operations” with a number of key areas identified across the company’s portfolio.

Technicolor said in a statement: “A number of these initiatives are already in progress and the Strategic Plan will benefit all of our stakeholders: shareholders, employees, clients, suppliers and lenders.

“Actionable initiatives and priorities for each of Technicolor’s divisions have been identified. In Production Services, Technicolor is well placed to benefit from the burgeoning growth of streaming platforms and the unprecedented demand for original content and is well-positioned to capture outsized market share in Film & Episodic, Advertising, and Animation.

• Read more: Technicolor appoints Moat as new CEO

“DVD Services has already started creating a more resilient business model through its ongoing cost optimization efforts and the renewal of key major customer contracts under volume-based pricing schemes. Finally, in Connected Home, Technicolor will focus on Broadband gateway activities, which are experiencing an improved trading environment.”