Viaplay Group announced today its proposal of a comprehensive recapitalization to address its near-term financial commitments and provide for the future development of the Group.

The recapitalization follows negotiations with its largest shareholders, its debt providers and its bondholders to agree on a recapitalization of the Group, and is subject to support and approvals by shareholders, debt providers and bondholders. The proposed recapitalization includes an equity capital injection of SEK 4 billion, which is supported by shareholders including Canal+ and PPF, by means of an approximately SEK 3.1 billion directed share issue and an approximately SEK 0.9 billion rights issue, with Nordea Asset Management, representing funds holding approximately 7.7 per cent of the capital and votes in the Group having stated an intention to defend their ownership by taking part of the issues and to vote in favor of the proposals at the Extraordinary General Meeting ("EGM"); a SEK 2 billion write-down of existing debt obligations, of which SEK 0.5 billion is to be converted into equity; an amendment and extension of existing bank and bond commitments totaling SEK 14.6 billion; and a range of self-help measures to improve the Group's liquidity and profitability. The subscription price per class B share is priced at SEK 1.0 in each of the directed share issue, the rights issue, and the debt-for-equity swap, consequently indicating a significant dilution of the existing shares.

The proposal of these combined transactions follows a comprehensive strategic review of the Group's operations, finances, and forward commitments, and would leave the Group well-capitalized to achieve its objectives of focusing on its core Nordic, Netherlands, and Viaplay Select operations and gradually returning to double digit operating profit (EBIT) margins and healthy cashflow generation. The completion of the recapitalization is subject to, among other things, the approval of (and subsequent subscription for) the share issues by an extraordinary general meeting of the Group's shareholders; the approval of the bond refinancing by bondholders' meetings; credit approvals by each lending bank, guarantor and the debt private placement provider; satisfactory long-form documentation; and the fulfilment by Viaplay Group of conditions precedent relevant to the transactions.

The Board has carefully evaluated various alternative solutions and believes that the coherent recapitalization program is the preferred way to secure the survival of Viaplay Group given the current circumstances. Should the EGM or bondholders' meetings not vote in favor of the recapitalization, or should the equity capital not be fully subscribed for, the Group would have to pursue other less optimal funding solutions and, if not successful, may have to enter into insolvency proceedings. The equity capital injection of SEK 4 billion will be a requirement by the debt providers and its bondholders for their respective completion of the recapitalization program, and consequently significant ownership changes in Viaplay Group can be expected on completion of the proposed recapitalization program.

In addition to the recapitalization, the Group has implemented a range of self-help measures, including the initiatives announced in conjunction with the Group's Q2 2023 interim report, in order to improve the Group's liquidity and profitability. The Group has recently entered into an innovative new strategic partnership with Formula One in the Netherlands, and has also entered into agreements to sell or sublicense its content and content rights to third party platforms, to sell its UK operations (subject to regulatory approval), to sell its Paprika Studios business (subject to EGM approval), and to exit the Baltic and Polish markets by the summer of 2025. These initiatives will improve the Group's cash flows and limit the free cash outflow in its non-core international exit markets to approximately SEK 2.2 billion between 2024 and 2028.

During the summer, the Group appointed advisers and explored the sale of its operations in the UK, Poland and the Baltics. However, the bids received would not have created meaningful shareholder value, or allowed an exit from any market at a breakeven value. As a result, and due to continued deterioration in the operating performance of the international operations, the Group was left with significant committed net cash outflow for the international exit markets in 2024-2029. Through incremental self-help measures and liquidity enhancing actions, the Group already expects to be able to limit the net cash outflow from the international exit markets to approximately SEK 2.2 billion in 2024-2028.

Over recent months, the Group has, together with its financial advisors, worked intensely with its largest shareholders, its debt providers and its bondholders to agree a recapitalization of the Group to address its bank covenant and funding challenges. A pivotal component for such a recapitalization and agreement with the Group's debt providers has been a new capital injection of SEK 4 billion. The Group has thoroughly vetted the possible means of securing subscription guarantees for such a capital injection, and has concluded that the proposed actions, with a directed share issue complementing a rights issue, constitute the only viable alternative due to the scale and urgency of the recapitalization.

The subscription price for all share issues in the recapitalization process has been set at SEK 1.0 per class B share. This price is the outcome of extensive negotiations with stakeholders and the conclusion that, given the capital structure and operational performance, the Group has no current equity value. Under such circumstances, the rights issue, supported by the directed share issue, has been considered the only viable alternative to ensure the SEK 4 billion capital injection. The Board has carefully evaluated the possibility to carry out a rights issue in order to cover the SEK 4 billion equity capital injection. In this evaluation, the Board has considered the prospects of reaching a full subscription of SEK 4 billion, in order to meet the conditions for the recapitalization from the Group's debt providers. Following such evaluation, it has been concluded by the Board, supported by Viaplay Group's financial and legal advisors, that such full subscription cannot be met in the absence of subscription guarantees (which, due to the scale and urgency of the necessary capital injection, are not available), and that the risk of failure to raise the required SEK 4 billion would be significant, thereby jeopardizing the survival of the Group. Consequently, the Board believes that the proposed rights issue, supported by the directed share issue, is the only way for Viaplay Group to confidently raise the SEK 4 billion required equity capital injection.

The proceeds from the transaction will be used to address the Group's urgent funding challenges; to fund the interim negative cash flow development from the total operations; and to partly repay the now fully drawn SEK 4 billion revolving credit facility. The SEK 4 billion in total proceeds, together with the renegotiation of the outstanding debt, is expected to bring Viaplay Group's pro forma Financial Net Debt to a net cash position of approximately SEK 850 to 1,050 million based on year end 2023. The proceeds will enable the Group to extend the RCF and guarantees with lending banks, as well as to extend the maturities of the outstanding bonds. The net proceeds of the new share issues will be less than SEK 4 billion, due to the approximately SEK 0.3 billion of anticipated advisory and transaction costs during the extended transaction negotiation and implementation period.