Cash collected thanks to the ipo will be used by Cerved Group for reimbursing a 250 million euros floating rate high yield bond maturing in 2019, ceo Gianandrea De Bernardis told yesterday in a press conference in Milan for the launch of the global offer (see here a previous post of BeBeez).
The bond will be paid back at a 101 price as a call option is going to be exercised next June 30th. While the first day of trading has been fixed on June 24th. The public offer started yesterday while the institutional offer began last Friday. The global offer will end next June 18th (download here the Prospectus).
The global offer will consist both in a capital increase and in a sale of shares by Chopin Holding sarl, controlled by CVC Capital Partners. Before the capital increase, the equity of the group has been valued between 750 and 975 million euros for a minium price of 5 euros per share and a maximum procaof 6.5 euros per share. After the capital increase, if all the the offered shares had been subscribed, the group’s equity would be valued between 975 millions and 1.267 billions. The latter, after the bond reimbursement, would correspond to an enterprise value of 1,5-1,7 billions.
After having paid back the bond, interest costs will drop to 39 million euros per year from 54 millions, while starting on January 2016 it will be possibile to refinance the other two bonds paying a fix coupon and maturing in 2020 and 2021. At the moment it would be too expensive to pay them back in advance (about 80 millions) as they take a “make whole call” with them which force the issuer to pay the bondholders all the coupons that should be paid till maturity discounted at the Bund yield plus 50 basis points.
“Post ipo leverage will be lower than 3x ebitda. Now it is 5.5x”, ceo De Bernardis said, adding that after January 2016 interest expenses will go down to 22 millions after having refinanced the other two bonds, All these savings will increase the free cash flow. In 2013 operating free cash flow was 125 million euros (from 118 millions in 2012) and free cash flow available for m&a and dividends was more than 50 million euros.
A richer free cash flow will mean more m&a and higher dividends for investors. As for m&a, Cerved will go on buying small and medium companies in Italy.
CVC Capital Partners, through Chopin Holdings sarl, will remain as a major shareholder in the company. If all the offered share are fully subscribed, Chopin will retain a 56.9 pct stake or a 50.8 pct stake if the overallottment option is exercised. CVC has a lock up of 180 days starting from the first day of trading on the Italian Stock Exchange while CVC managing partner Giampiero Mazza, said that “CVC will disinvest the whole stake between 2016 and 2017”. The company has a 365 days lock up and the managers will be able to exercise their warrant jsut after CVC will have trimmed its stake under 30 pct in Cerved’s capital.