Tiscali 2014 Annual Report Download - page 106

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
-
Annual Report as at 31
December 2014
106
Financial covenants
Balance as at 31 December
2015
Balance as at 31 December
2016
Debt Service Cover Ratio
1.10:1(*)
1.10:1(*)
Net indebtedness/EBITDA
1.70x(**)
0.98x
EBITDA/net interest
3.15x
5.18x
(*) The covenant in question will not be understood as violated if, at the time of two non-consecutive
verification dates, the ratio should be lower than 1.10:1, but in any event higher than 1.05:1.
(**) For the purpose of calculating the covenants, the EBITDA is taken gross of the provisions and
other write-downs, while in the calculation of the financial indebtedness the payable for property
leases is not considered.
Furthermore, the Tiscali Group companies shall not have to exceed specific investment thresholds
(CAPEX), established in accordance with the Restructuring Agreements to the extent of EUR 14.0
million with reference to the last quarter of 2015 and EUR 11.9 million with reference to the last quarter
of 2016.
These indicators are what is more consistent with the dynamics envisaged in the Business Plan
approved by the Company on 19 March 2015.
The check with regard to the afore-mentioned financial covenants shall take place on a quarterly
basis, 31 March, 30 June, 30 September and 31 December of each year, with the last verification
dated envisaged for 30 September 2017.
The first recognition of the covenants will take place on 31 March 2015. However, on the basis of the
Restructuring Agreements any possible overrun of said covenants at that date shall not be considered
to be an event of default.
Commitments of Tiscali UK, Tiscali and the Guarantors
Furthermore, the Restructuring Agreements envisage that Tiscali, Tiscali UK and the Guarantors, as
well as their subsidiary companies as identified in the same agreements, be responsible for observing,
amongst other aspects, non-financial commitments, which - subject to the contractual exceptions
envisaged - involve limitations, including: (i) the payment of dividends; (ii) the acquisition or execution
of investments; (iii) the realisation of payments which are not subordinate to the claims of the Senior
Financiers as per the Restructuring Agreements or the related guarantees; (iv) the granting of secured
guarantees; (v) the achievement of extraordinary transactions; (vi) the undertaking of debt and the
granting of the related guarantees; (vii) the creation of assigned assets as per Article 2447 ter of the
Italian Civil Code; (viii) the amendment of the Business Plan.
In conclusion, in accordance with the Restructuring Agreements, it is envisaged that Tiscali transfer to
Tiscali Italia - within 6 months of the date of efficacy of said agreement and in any event subordinate to
the recurrence of certain conditions - its entire holding in Tiscali UK.
Events of default
The Restructuring Agreements also envisage a number of events of default, including: (a) the breach
of the obligations to repay the debt; (b) the breach of the commitments contractually envisaged (some
of which indicated above); (c) the failure to observe the financial covenants (in this connection it being
understood that any violation of said covenants recognised as at 31 March 2015 shall not represent an
event of default); (d) the start of bankruptcy proceedings against any of the main Group companies
indicated in the agreements; (e) the breach of the obligations deriving from any debt or guarantee
instrument of Tiscali and any of its subsidiaries for an amount greater than EUR 1 million.
On occurrence of an event of default, the agent may also - via notification to Tiscali - immediately
declare all the sums due in accordance with the Restructuring Agreements as payable.