1.8 Major contracts AFR

1.8.1 MAJOR CONTRACTS BINDING THE GROUP

In the two years immediately preceding publication of this Universal Registration Document, the Company signed the following major contracts (other than those entered into in the normal course of business):

SALE OF THE TELEVISION BUSINESS (EXCLUDING MEZZO) TO THE M6 GROUP
On 24 May 2019, Lagardère and the M6 group signed the sale agreement for the Lagardère group’s Television business (excluding Mezzo). The business included Gulli and its international extensions, Canal J, TiJi, Elle Girl TV, MCM, MCM Top, RFM TV, and the related advertising sales brokerages.
Following approval by the French broadcasting authority (CSA) and the country’s competition authorities, the transaction closed on 2 September 2019, The deal was based on a valuation of €215 million (enterprise value).

SALE OF MEZZO TO THE LES ÉCHOSLE PARISIEN AND CANAL+ GROUPS
On 17 July 2019, the Lagardère group, together with France Télévisions, sold its stake in Mezzo to the Les Échos-Le Parisien and Canal+ groups.

ACQUISITION BY LAGARDÈRE TRAVEL RETAIL OF INTERNATIONAL DUTY FREE (IDF), BELGIUM’S LEADING TRAVEL RETAIL OPERATOR
On 19 September 2019, Lagardère Travel Retail completed the acquisition of International Duty Free (IDF), the travel retail market leader in Belgium, which also has operations in Luxembourg and Kenya.
Announced on 25 July 2019, this acquisition has cemented Lagardère Travel Retail’s position as the world’s third-largest operator of Duty Free airport points of sale and as the European leader in Travel Retail, raising its annual revenue to €5.3 billion(1). It has also enabled Lagardère Travel Retail to extend its presence to a major new European hub, Brussels, with high-quality operations, while consolidating its positions in Luxembourg and in Africa with entry into Kenya. Lagardère Travel Retail is also able to capitalise on IDF’s experience in the expanding premium Belgian chocolate segment to strengthen its international operations in this category.
The acquisition was valued at €250 million(2), or around 8x IDF’s pro forma EBITDA(3) for 2020, factoring in €7 million in recurring synergies expected to be unlocked through to 2022.

SALE OF LAGARDÈRE SPORTS TO H.I.G. CAPITAL
On 22 April 2020, the Lagardère Group sold a 75% stake in Lagardère Sports to the H.I.G. Capital private equity fund. The transaction valued the business alone at some €110 million(4) and the entire Lagardère Sports and Entertainment division at around €150 million(5). This valuation does not include the future value creation potential of the Group’s residual 25% interest in Lagardère Sports, or any potential gains from the Confederation of African Football (CAF) agreement.

SALE OF LAGARDÈRE STUDIOS TO MEDIAWAN
On 19 June 2020, the Lagardère group received an offer from Mediawan to acquire all outstanding shares of Lagardère Studios. The transaction, which closed on 30 October 2020, priced Lagardère Studios at an enterprise value of €100 million, of which €85 million was paid on closing (including around €20 million paid in Mediawan shares immediately sold by the Group) and up to €15 million in contingent consideration payable in 2023.

Items appearing in the Annual Financial Report are cross-referenced with the following symbol AFR

(1) Based on 100% of 2018 revenue, including the pro forma contribution of HBF on a full-year basis, which would translate into consolidated pro forma revenue of €4.1 billion.
(2) Enterprise value based on zero cash and debt.
(3) Pro forma EBITDA corresponds to estimated budgeted EBITDA for 2020 (first year of operation), plus recurring run-rate synergies of €7 million.
(4) The enterprise value breaks down as €55 million in net investment income payable subject to various time scales and conditions, and €55 million in liabilities (pension obligations and non-controlling interests). The estimated €55 million impact on net cash breaks down as: (i) €22.5 million receivable on the closing of the transaction; (ii) €63 million in the form of a vendor loan reimbursable in line with cash receipts from the Asian Football Confederation (AFC); (iii) €35 million in the form of a vendor loan reimbursable on 31 December 2025 (or earlier, in the event of a change of control); and (iv) €(66) million in cash deconsolidated, as estimated for the expected closing date of the transaction.
(5) The Lagardère group retains its entire interest in Lagardère Live Entertainment, valued in its financial statements at just over €40 million.

1.8.2 CONTRACTS INVOLVING MAJOR COMMITMENTS FOR THE WHOLE GROUP

Lagardère and/or its subsidiaries have also entered into a certain number of major contracts (other than those entered into in the normal course of business) involving an obligation or major commitment for the whole Group. The contracts concerned are the financing contracts referred to in Chapter 6, note 26 to the 2020 consolidated financial statements, particularly the following:

  • on 11 May 2015, Lagardère SCA arranged a €1.25 billion multi-currency syndicated credit facility for general corporate purposes, which replaced the previous €1.645 billion facility, signed in 2011. At the end of its initial five-year term, the facility was extended for two years, to May 2022. On December 18, 2020, Lagardère SCA and its partner banks agreed to amend the facility to lower the line of credit to €1.1 billion, extend the maturity of a €1.0 billion tranche from 2022 to March 2023 and redefine the financial covenants to reflect the impact of the health crisis on all of the Lagardère Group’s businesses (see note 28.1 to the consolidated financial statements);
  • on 6 April 2016, Lagardère SCA issued a total of €500 million worth of seven-year bonds on the Luxembourg stock market, maturing in April 2023 and paying an annual coupon of 2.75%;
  • on 14 June 2017, Lagardère SCA carried out a seven-year €300 million bond issue on the Luxembourg stock market, maturing in June 2024 and paying an annual coupon of 1.625%;
  • on 26 June 2019, Lagardère SCA raised €250 million through the private placement of German Schuldscheindarlehen debt instruments. The placement consisted of four euro-denominated tranches issued with five- and seven-year maturities at fixed and floating rates;
  • on 9 October 2019, Lagardère SCA issued a total of €500 million worth of seven-year bonds on the Luxembourg stock market, maturing in October 2026 and paying an annual coupon of 2.125%;
  • on 18 December 2020, Lagardère SCA Lagardère arranged a €465 million French government-backed loan, with a lending syndicate comprising BNP Paribas, Commerzbank, Crédit Agricole Corporate and Investment Bank, Crédit Agricole Île de France, LCL, ING, Natixis, Société Générale and UniCredit. The loan, whose initial one-year maturity may be extended at the Group’s option by up to five more years, is 80%-guaranteed by the French State, in accordance with a decision of the Ministry of the Economy, Finance and Recovery on 31 December 2020, in application of article 6 of law 2020-289 of 23 March 2020 amending the 2020 Finance Act (see note 28.1 to the consolidated financial statements).