Significant capital injection and takeover offer:
Tele Columbus focuses on delivering on its planned fiber expansion together with Morgan Stanley Infrastructure Partners and United Internet
- Tele Columbus AG wins Morgan Stanley Infrastructure Partners as partner for implementation of Fiber Champion strategy
- Kublai GmbH, an affiliate of funds advised by Morgan Stanley Infrastructure Inc., announces voluntary public takeover offer at EUR 3.25 per Tele Columbus share; Tele Columbus supports the offer
- Anchor shareholder United Internet AG will contribute minority interest of 29.90 percent to the Bidder if takeover offer is successful
- Extraordinary General Meeting convened with resolution on capital increase through Rights Offering in amount of EUR 475 million; Bidder guarantees capital increase
- Further equity capital of up to EUR 75 million committed by Bidder for implementation of Fiber Champion strategy
- Pre-contract signed with 1&1 Drillisch AG to conclude a wholesale agreement for broadband lines
Berlin, 21 December 2020. Tele Columbus AG (ISIN: DE000TCAG172, WKN: TCAG17, "Tele Columbus", "the Company"), one of Germany's leading fiber network operators, has won Morgan Stanley Infrastructure Partners as a partner to implement its Fiber Champion strategy by concluding an investment agreement with UNA 422. Equity Management GmbH (in the future: Kublai GmbH). Kublai GmbH (the "Bidder") is a bidding company backed by Morgan Stanley Infrastructure Partners, a long-term oriented infrastructure investor. Today, Kublai GmbH announced a voluntary public takeover offer at a price of EUR 3.25 per Tele Columbus share, which Tele Columbus supports. The offer price corresponds to a premium of 37.5 percent on the volume-weighted three-month average price of the Tele Columbus share on 18 December 2020 and a premium to the share price before the day of the AGM invitation (07 December) of 41.3%.
United Internet has agreed to contribute its indirect stake of approximately 29.90 percent in Tele Columbus to the Bidder if the takeover offer is successful. As shareholders of the Bidder, Morgan Stanley Infrastructure Partners and United Internet will support Tele Columbus in implementing the Fiber Champion strategy. Rocket Internet, which holds approximately 13.36 percent of the shares in Tele Columbus, also supports the takeover offer and signed an irrevocable commitment to tender its shares into the offer.
At an Extraordinary General Meeting on 20 January 2021, a capital increase through a Rights Offering in the amount of EUR 475 million and an authorized capital are to be resolved. The Bidder has guaranteed the amount of the capital increase in the Investment Agreement subject to successful completion of the offer. Subject to the subscription rights of other shareholders, the Bidder will subscribe for enough shares to ensure that the amount of EUR 475 million will be reached in any case. The Bidder has also agreed to provide further equity of up to EUR 75 million in the future for the implementation of the Fiber Champion strategy.
The Management Board and the Supervisory Board of Tele Columbus welcome the takeover offer and intend to recommend to the shareholders of Tele Columbus to accept the takeover offer. In the opinion of the Management Board and Supervisory Board, the takeover offer reflects the inherent value of the shares and includes an attractive premium to the volume-weighted average price of the last three months. This transaction will enable Tele Columbus to deliver on its planned expansion of its superior fiber-based infrastructure in the interest of customers and partners, make the company more sustainable in the future and thus secure jobs.
The Bidder supports the existing management of Tele Columbus. No changes in the Tele Columbus Management Board are planned. Following the completion of the transaction, the Bidder shall be represented on the Supervisory Board in accordance with its stake in Tele Columbus. A domination agreement is not planned.
The acceptance period of the offer is to be six weeks. The takeover offer is expected to close in the second quarter of 2021, subject to regulatory approvals. The key offer conditions are a minimum acceptance threshold of 50 percent, waivers by bond and loan creditors of termination rights due to change of control in sufficient numbers, and regulatory approvals.
"In a structured bidding process, we have found an excellent partner in Morgan Stanley Infrastructure Partners, which is also supported by our existing anchor shareholder United Internet. This will enable us to reduce our debt and provide new capital to implement our Fiber Champion strategy in the interest of our customers and partners. Furthermore, Tele Columbus will remain a standalone company. The takeover offer allows our shareholders to tender their shares to the Bidder at an attractive consideration. In alternative scenarios, all shareholders would have had to inject additional capital themselves in order to implement the Fiber Champion strategy and to ensure Tele Columbus' competitiveness in the long term," says Dr. Daniel Ritz, Chief Executive Officer (CEO) of Tele Columbus AG.
"We support the Fiber Champion strategy and the management of Tele Columbus and are pleased to provide the financing for the implementation of the strategy and the further fiber expansion. We see our stake as a long-term investment and will accompany the future course of Tele Columbus as a standalone company," says Christoph Oppenauer, Executive Director at Morgan Stanley Infrastructure Partners.
Ralph Dommermuth, Chief Executive Officer of United Internet AG, adds: "As an anchor shareholder, we welcome the fact that Tele Columbus has found a sustainable solution to create a solid capital structure that will allow the Management Board to successfully implement the Fiber Champion strategy. We look forward to the future long-term partnership cooperation with Tele Columbus and Morgan Stanley Infrastructure Partners."
Capital increase of EUR 475 million planned; further equity capital committed by Bidder of up to EUR 75 million
Tele Columbus intends to have a capital increase through a Rights Offering in the amount of EUR 475 million resolved at an Extraordinary General Meeting on 20 January 2021, which is to be carried out after the completion of the takeover offer. The subscription price shall be determined closer to the time of the rights offering and will not exceed the offer price. The resolution requires the approval of a simple majority of the capital represented at the time of the resolution. The Rights Offering shall be completed as soon as possible after the successful completion of the takeover offer. The Bidder has also agreed to make available additional equity capital of up to EUR 75 million after completion of the transaction for the implementation of the Fiber Champion strategy.
Reduction of net debt also in the interest of lenders
The transaction is expected to significantly reduce the net debt of Tele Columbus. It is expected that this will lead to a better risk assessment of the outstanding loans and bonds. "We believe that this transaction is also in the best interest and to the benefit of our lenders and bondholders as the company's debt ratio will be significantly reduced due to the substantial equity injection. This in turn will considerably improve the company's credit rating and thus the risk structure of the lenders," says Eike Walters, CFO of Tele Columbus AG.
Fiber champion strategy: Wholesale pre-contract with 1&1 Drillisch
With a sustainably strengthened capital base, Tele Columbus will be able to deliver on its plans for fiber infrastructure expansion in Germany as part of the Fiber Champion strategy. Over the next ten years, Tele Columbus plans to invest almost EUR 2 billion in network infrastructure and fiber expansion. Currently, 2.4 million households are connected to Tele Columbus' broadband network. By 2030, approximately 2 million households are to be supplied with gigabit bandwidths via fiber optic networks.
Part of the Fiber Champion strategy is also to attract additional wholesale partners. This weekend, Tele Columbus has signed a binding pre-contract with 1&1 Drillisch for the utilization of Tele Columbus' fiber network for the marketing of their own broadband products. The wholesale pre-contract is subject to the successful execution of the takeover offer. A wholesale agreement with Telefónica Deutschland has been in force since October 2019 and is currently being implemented.
"Further expansion of wholesale partnerships is an important part of our Fiber Champion strategy to drive forward the expansion of fiber-based broadband in Germany. This will increase network utilization and helps us secure additional funds for investments. Our housing clients and their tenants will benefit from an even greater variety of products," says Dr. Daniel Ritz.
Tele Columbus is being advised on the transaction by BofA Securities and Kirkland & Ellis.
Analyst and investor webcast today (21 December 2020) at 12:30pm CET, click here.
About Tele Columbus
Tele Columbus AG is one of Germany's leading fibre network operators, which reaches more than three million homes. Through its brand PŸUR, the Company offers high-speed internet including telephony and more than 250 TV channels on a digital entertainment platform that combines linear TV with video on demand entertainment. To its housing association partners the Tele Columbus Group offers tailored models of cooperation and state-of-the-art services such as telemetric and tenant portals. As a full-service partner for municipalities and regional utilities, the Company is actively supporting the fibre-based infrastructure and broadband internet expansion in Germany. For its business customers, the Group offers carrier services and corporate solutions on its proprietary fibre network. Besides its headquarter in Berlin, the Company has locations in Hamburg, Leipzig, Ratingen and Unterföhring. Since January 2015, Tele Columbus AG is listed on the regulated market (Prime Standard) of the Frankfurt Stock exchange.
This release may contain forward-looking statements. These statements reflect the Company's current knowledge and expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Such risks, uncertainties and assumptions may cause our actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
All information contained in this release has been carefully prepared. However, no reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness.
This release does not constitute or form part of, and should not be construed as, and offered to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire, securities of the Company, or an inducement to enter into investment activity in the United States. No part of this release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
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