Tiscali 2013 Annual Report Download - page 129

Annual financial report as at 31 December 2013
Date
File Name
Status
Page
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Annual Report as at 31
December 2013
129
due as per the GFA. On the basis of the matters set forth above, the Directors, when evaluating the
existence of the conditions of the Group as a going concern in the current macro-economic context,
and in the current competitive scenario, identified the following factors which indicate the existence of
a number of significant uncertainties:
i. the unbalanced equity, financial and economic situation which the Group is headed into, as
shown by the negative consolidated shareholders’ equity for EUR 151.9 million, due mainly to
the negative economic performance and weight of the considerable debt;
ii. the afore-mentioned presence of a so-called Event of Default as per the GFA, deriving from the
violation of the financial parameters envisaged therein;
iii. the approach of the expiry date of Tranche A of the loan disbursed as per the GFA (i.e. 3 July
2014), when the Company should repay the entire residual amount of this tranche amounting to
around EUR 82.5 million for principal plus PIK interest accrued as of the date of 3 July 2014. At
31 December 2013, this interest amounted to EUR 22 million.
In light of these factors of uncertainty, the establishment of a balanced equity, financial and economic
situation for the Group over the long-term depends on the need to finalise a restructuring transaction
with the financing institutions for the Tiscali Group’s financial debt, which envisages amongst other
aspects: (1) the waiver by the financing institutions of availing themselves of the contractual remedies
envisaged by the GFA in the presence of the occurrence of the afore-mentioned Events of Default, (2)
the rescheduling of the debt deriving from the GFA currently falling due in July 2014 and July 2015, for
an amount of around EUR 104.9 million and EUR 26.9 million, respectively, (3) the redefinition of the
financial covenants on the basis of the results envisaged in the business plan, approved by the Board
of Directors on 13 June 2014, which in turn presupposes the realisation of forecasts and assumptions
contained therein, and in particular, with reference to the evolution of the telecommunications market
and achievement of the growth objectives set out (in a market context characterised by heavy
competitive pressure).
In this context:
 as from the first few months of 2013, the Company - also in the interests of the other Tiscali
Group companies - made a number of preliminary assessments and launched the first
negotiations with said financing institutions as per the GFA so as to reschedule the debt;
 in April 2013, the Company submitted a debt restructuring proposal to all the creditors as per
the GFA;
 in June 2013, a financial advisor was appointed to support the Tiscali Group with the
restructuring of its financial debt;
 further to the negative response from some of the financing institutions, the Company drew up
- with the support of the financial advisor - a new restructuring proposal which was submitted
to the financing institutions during the first few days of August 2013;
 despite the positive responses of the Group’s two main financial creditors, in October 2013 it
emerged that the proposal had not met with the unanimous consent of the financing
institutions as per the provisions of the GFA;
 after various meetings and further discussions with the financing institutions as per the GFA, in
March 2014 a number of these financing institutions presented the Group with a restructuring
proposal which the Group deemed somewhat impracticable since it would have led to a
considerable disparity in the treatment of the various Group creditors and would have made it
practically impossible to obtain the necessary consent of the creditors penalised the most, as
well as unfairly; on 13 March and then on 20 March 2014, the Company therefore drew up and
sent to all the financing institutions as per the GFA two different drafts of a Term Sheet
containing the main terms and conditions of a new proposal for a debt restructuring