DGAP-News: Sky Deutschland AG: Sky Deutschland announces financing measures to raise a minimum of EUR340 million and drive growth initiatives
(firmenpresse) - Sky Deutschland AG / Corporate Action
02.08.2010 18:03
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- Subscription rights offering from authorized capital planned, potentially
combined with a convertible bond using contingent capital and/or a
shareholder loan. Total gross proceeds from these measures to be a minimum
of EUR340m
- News Corporation to backstop EUR340m
- Proceeds to go towards securing the financial position of the business
and investment in key drivers of growth including:
1. an expansion of HD services
2. accelerated deployment of Sky+
3. further innovations and product extensions
4. new distribution initiatives
5. enhanced customer service
Q2 2010 highlights
- Subscription revenues up 18.7% year on year; ARPU of EUR28.62 (Q2 2009:
EUR25.20)
- EBITDA of negative EUR47.4m (Q2 2009: negative EUR63.4m), an improvement
of EUR16m
- Subscriber net growth of 6,000 (Q2 2009: negative 7,000) to 2.476m total
subscribers
- Quarterly annualized churn rate down to 16.3% (Q2 2009: 20.8%), the
lowest level in four years
- HD penetration increased to 14.9% (Q2 2009: 8.4%), almost doubled year on
year
- Three new and exclusive Sky HD channels announced, launching August 13th
- Sky+ PVR and Sky Multiroom service launched
- 'Sky Sports' iPad app launched and downloaded more than 33,000 times
- Partnerships agreed with Kabel BW, NetCologne, Versatel Telekabel and
Telecolumbus
Outlook
Full year 2010 EBITDA will remain negative and will be significantly lower
than previously indicated due to the slower than expected subscriber
development and increased investment in key initiatives following the
financing measures. Full year 2011 EBITDA is expected to be significantly
better than 2010, but will still remain negative.
Munich, 2 August 2010. Sky Deutschland AG, Unterföhring, (ISIN
DE000SKYD000) plans to initiate financing measures to raise gross proceeds
of at least EUR340 million through a combination of a rights offering, the
issuance of a convertible bond and/or a shareholder loan from News Adelaide
Holdings B.V. News Adelaide Holdings, a fully-owned indirect subsidiary of
News Corporation, currently holding 45.42 percent of Sky Deutschland's
registered share capital, has agreed to backstop these financing measures
to ensure gross proceeds of not less than EUR340 million in total. The
backstop is subject to certain conditions such as the absence of a material
adverse change in Sky Deutschland's business.
Brian Sullivan, CEO of Sky Deutschland AG, said: 'I have been in this role
for almost four months and I see many encouraging signs in the business. A
year after the launch of Sky Deutschland, those customers who have chosen
to subscribe to our services are showing increasing appreciation of the
range and quality we offer. Net growth and ARPU are up, churn is down
significantly, HD penetration is growing rapidly and customer satisfaction
is at a three-year high. We have a strong foundation on which to build.
However, while I am happy that the business is moving in the right
direction, I am not satisfied withthe pace of development. In my time at
Sky Deutschland, it has become clear to me that we must further invest now
in those areas that fundamentally differentiate us for customers, and that
will accelerate growth in subscribers and ARPU. We also need to shore up
our financial position to enable us to focus on growth. I am confident this
will allow us to achieve the necessary momentum to build a sustainable
business for the future.'
Focus on growth
Sky Deutschland intends to focus its investment on the following five
areas:
1. Differentiate through sharper HD and core content quality and
exclusivity
The penetration of HD subscribers of Sky Deutschland has almost doubled in
the past year, increasing from 8.4 percent in Q2 2009 to 14.9 percent in Q2
2010. The broadcaster already delivers the most comprehensive HD service in
Germany and Austria, making it the best choice for the at least 18 million
HD-ready flat screen TV sets currently in the market. On 13 August, it is
launching three new and exclusive Sky HD channels - Sky Sport HD 2, Sky
Action HD and Sky Cinema Hits HD - which will further expand its HD service
to 10 HD channels. Only Sky Deutschland offers most of its HD programs with
a true HD signal - in contrast to the widely up-converted content broadcast
by others - delivering twice the true HD content of all other broadcasters
combined.
2. Accelerate net growth through PVR deployment
A key element in Sky Deutschland's strategy is Sky+, which was launched in
May 2010 for satellite customers. It is a new fully-integrated HDTV digital
video recorder/receiver that is optimally tailored to the Sky Deutschland
programming. A cable version of Sky+ is planned for the end of 2010. Sky+
is already delivering some of the company's highest satisfaction and
recommendation levels. The company plans to rapidly accelerate development
and sales for Sky+ with the aim of making it a fundamental driver of
subscriber and ARPU growth. Sky+ attracts new subscribers who tend to take
more packages and services and who churn at substantially lower levels, as
it unlocks the potential of all the great programming Sky has to offer and
delivers customers an unparalleled TV experience through its Time Shift,
Archive and Series Link functions.
3. Differentiate and expand through key innovations and product extensions
Continuous innovations and product extensions are further key business
drivers for Sky Deutschland. They provide value to customers and improve
the overall competitive positioning of the Sky service. In June 2010, Sky
Multiroom launched, allowing everyone in the house to enjoy Sky's great
entertainment in different rooms at the same time. At the beginning of the
FIFA World Cup in South Africa, Sky launched the 'Sky Sports' app for the
iPad - a world first - giving customers live access to all Sky Sports
channels. The app has been downloaded more than 33,000 times since launch,
far exceeding expectations. To build on this momentum, Sky is planning a
number of new and exciting services to give customers the ability to watch
Sky's top-quality programs Anywhere and at Anytime.
4. Expand distribution
Since May 2010, Sky Deutschland has announced unique partnerships with
Kabel BW, NetCologne, Versatel Telekabel and Telecolumbus, each focused on
delivering customers more choice and greater value. Going forward, the
company will develop additional opportunities through partnerships with
existing operators as well as new, direct distribution channels.
5. Continue to develop market-leading customer service
In a market where most households receive their television through passive
cable or satellite connections, Sky Deutschland sees a clear opportunity to
differentiate through an inclusive, fully-supported and outstanding
customer service. Customer satisfaction through superior service is an
integral element of the Sky Deutschland strategy as it supports upselling
and lowers churn. Since November 2009, all Sky customers taking a box from
Sky receive full warranty cover, backed by 24/7 customer support. Sky
Deutschland aims to set a benchmark for a great customer experience through
further investments in technology, processes and people.
Rights offering expected in September/October 2010
The rights offering is expected to take place in September/October 2010
using Sky Deutschland's authorized capital, which consists of up to
269,580,929 new registered shares. News Adelaide Holdings is committed to
backstop the rights issue at a price no lower than the legally permissible
net minimum price (EUR1) and is committed to backstop the rights issue such
that its holding does not exceed a level of 49.9 percent of Sky
Deutschland's share capital after completion of the rights offering.
The terms and the size of the rights offering will be decided shortly
before the start of the subscription period and will depend on market
conditions. The Royal Bank of Scotland and UniCredit Bank AG will act as
Joint Global Coordinators and Joint Lead Managers in such a rights
offering.
Depending on the amount raised through the rights offering, and in order to
ensure that the overall gross proceeds amount to at least EUR340 million, a
convertible bond with up to 53,916,185 underlying ordinary registered
shares of the company from contingent capital will be issued and/or a
shareholder loan will be provided by News Adelaide Holdings by no later
than 31 January 2011.
The potential convertible bond would be issued via a private placement to
News Adelaide Holdings and/or a News' designee unless otherwise agreed
between News Adelaide Holdings and Sky Deutschland. The bond would be
unsecured and subordinated to the existing credit facilities. Subject to
market conditions, it would have a four-year maturity with an expected cash
pay coupon between 5.50 to 6.50 percent and an initial conversion premium
of 25 to 30 percent with a minimum conversion price of EUR1. The potential
shareholder loan from News Adelaide Holdings would be subordinated to Sky
Deutschland's existing credit facilities, have a maturity up to 31 March
2014 and carry an interest rate of 12 percent per annum, which would accrue
and be payable at maturity. The shareholder loan could be converted into
equity by News Adelaide Holdings at a later stage. The conversion of the
shareholder loan into equity would be subject to the approval of Sky
Deutschland and its shareholders.
Sky Deutschland has asked its lending bank syndicate to waive mandatory
prepayment from the proceeds of the planned capital measures and to adjust
financial covenants in its credit facilities to reflect the financing
measures and the increased investments. The two largest lenders to Sky
Deutschland have already consented to the waiver and the amendments to the
facilities. The formal consent of the full lender group is expected in the
next few weeks, prior to the rights issue.
Except for these amendments, the existing credit facilities of EUR525
million remain unchanged. Sky Deutschland's credit facilities consist of
two term loans amounting to EUR275 million in aggregate, a revolving credit
facility of EUR125 million and a guarantee facility of EUR125 million.
Nomura acted as financial advisor to Sky Deutschland in this transaction.
Preliminary Q2 2010 results
In Q2 2010, Sky Deutschland showed net subscriber growth of 6,000 compared
to a net subscriber loss of 7,000 in Q2 2009 - the first positive net
growth in a second quarter since 2005. The total number of subscribers
reached 2.476 million at the end of Q2 2010.
Customer retention improved and the quarterly annualized churn rate was
significantly reduced to 16.3 percent in Q2 2010 compared to 20.8 percent
in Q2 2009. This is the lowest level of quarterly annualized churn reported
by the business in four years. The 12-month rolling churn rate continued to
decrease to 20.1 percent in Q2 2010 from 22.4 percent in Q2 2009. Sky
Deutschland had 107,000 gross additions in the quarter (Q2 2009: 117,000).
The penetration of HD subscribers almost doubled to 14.9 percent in Q2
2010, up from 8.4 percent in Q2 2009.
In Q2 2010 Sky Deutschland generated total revenues of EUR236.1 million (Q22009: EUR230.6 million). Subscription revenues went up by 18.7 percent on a
year-on-year comparison and amounted to EUR212.4 million (Q2 2009: EUR179.0
million). As expected, this increase was almost offset by a reduction in
wholesale, hardware and other revenues. The average revenue per user (ARPU)
increased considerably by EUR3.42 on a year-on-year basis to EUR28.62 (Q2
2009: EUR25.20).
Mainly due to lower costs for broadcasting of the Bundesliga and other
program rights, total operating expenses decreased to EUR294.3 million (Q2
2009: EUR305.3 million). EBITDA was negative EUR47.4 million in Q2 2010 (Q2
2009: negative EUR63.4 million), but improved on a year-on-year comparison
by EUR16 million mainly due to higher subscription revenues and lower
programming expenses. The result for the period amounted to a net loss of
EUR81.9 million (Q2 2009: negative EUR365.8 million, which included the
write off of the Premiere trademark which had a negative net effect of
EUR253.9 million in that quarter).
Cash flow from operating activities was negative EUR111.5 million in Q2
2010 (Q2 2009: negative EUR38.4 million). As per 30 June 2010, net debt
amounted to EUR253.9 million (31 December 2009: EUR 162.4 million).
Contact for press:
Dr. Hans-Jürgen Croissant
Senior Vice President Communications
Tel.: +49 89/99 58-63 97
hans-juergen.croissant(at)sky.de
Contact for investors and analysts:
Christine Scheil
Vice President Investor Relations
Tel.: +49 89/99 58-10 10
christine.scheil(at)sky.de
This publication constitutes neither an offer to sell nor a solicitation to
buy securities. The offer will be made solely by means of, and on the basis
of, a securities prospectus which is to be published. An investment
decision regarding the publicly offered securities of Sky Deutschland AG
should only be made on the basis of the securities prospectus. The
securities prospectus will be published promptly upon approval by the
Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and will be
available free of charge from The Royal Bank of Scotland N.V. (London
Branch) (250 Bishopsgate, EC2M 4AA London, United Kingdom) or UniCredit
Bank AG (Arabellastraße 12, 81925 Munich, Germany) or on the Sky
Deutschland AG website.
These materials do not constitute an offer of securities for sale or a
solicitation of an offer to purchase securities in the United States,
Germany or any other jurisdiction. The shares (the 'Shares') of Sky
Deutschland AG (the 'Company') may not be offered or sold in the United
States absent registration or an exemption from registration under the U.S.
Securities Act of 1933, as amended. The Company does not intend to register
any portion of the offering in the United States or to conduct a public
offering of Shares of the Company in the United States.
This release contains statements regarding future developments that have
been based on current evaluations and have been made to best of the
knowledge of the management of Sky Deutschland AG. Such statements with
regard to future developments are subject to known and unknown risks,
uncertainties and other factors that could cause the profit situation,
profitability, value development or the performance of Sky Deutschland AG
or the success of the media industry to diverge from those profit
situations, profitability, value development or performance results that
are assumed expressly or implied or described in these statements regarding
the future. Considering these risks, uncertainties and well as other
factors, readers of these documents should not rely in an incommensurate
manner on these statements dealing with future developments. Sky
Deutschland AG has no obligation to behave in keeping with such statements
regarding future developments or to alter its behavior to accommodate
future events and developments.
02.08.2010 18:03 Ad hoc announcement, Financial News and Press Release distributed by DGAP. Medienarchiv atwww.dgap-medientreff.deandwww.dgap.de---------------------------------------------------------------------------
Language: English
Company: Sky Deutschland AG
Medienallee 4
85774 Unterföhring
Deutschland
Phone: +49 (0)89 9958-02
Fax: +49 (0)89 9958-6239
E-mail: ir(at)sky.de
Internet: info.sky.de
ISIN: DE000SKYD000
WKN: SKYD00
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, München, Hannover, Düsseldorf, Stuttgart, Hamburg
End of News DGAP News-Service
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Datum: 02.08.2010 - 18:03 Uhr
Sprache: Deutsch
News-ID 31861
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