162 / 348
4
Section 1 - Significant events
Financial Report
| Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated
Financial Statements | Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
1.1.2.
Sale of SFR
On November 27, 2014, pursuant to an agreement entered into on June 20, 2014 and following approval by the French Competition Authority on
October 27, 2014 subject to conditions (see below), Vivendi announced the closing of the combination between SFR and Numericable. The main terms
of this transaction are as follows:
Cash proceeds
€13.5 billion, subject to the sale price adjustment: on November 27, 2014, Vivendi received €13.366 billion in cash and,
on December 3, 2014, Vivendi made a contribution of €200 million to the financing of the acquisition of Virgin Mobile
by Numericable Group. Under the terms of the agreement, the price adjustment to be calculated is based, among
other things, on any exceptional changes in the net working capital, SFR’s net debt, as well as certain restatements
as contractually defined by the parties and is subject to a contradictory accounting analysis in accordance with the
contract.
Vivendi’s interest
in the combined entity
20% of Numericable-SFR (publicly-listed).
Altice’s interest
in the combined entity
Approximately 60% of Numericable-SFR (approximately 20% free float).
Earn-out
Earn-out of €750 million if the EBITDA-Capex aggregate of the combined entity is equal to or higher than €2 billion
during any fiscal year, ending not later than December 31, 2024.
Commitments given
Limited representations and warranties.
Governance
p
p
Minority representation for Vivendi on the Board of Directors, or 2 out of 10 Directors, subject to Vivendi retaining
a 20% interest in Numericable-SFR (1 Director if Vivendi holds an interest between 10% and 20%).
p
p
Veto rights on certain exceptional matters subject to Vivendi retaining a 20% interest in Numericable-SFR.
p
p
Numericable-SFR has notably given the French Competition Authority an undertaking not to disclose any strategic
information on the pay-TV market, the distribution of pay-TV services, or ultramarine telecommunications markets
to Vivendi.
Liquidity – Lock-up period
p
p
Standard 180-day lock-up period, including restrictions on any disposal or transfer of shares or equivalent
transactions, following the date of settlement-delivery of the rights issue of Numericable Group (on November 20,
2014), at the request of the underwriting banks.
p
p
Lock-up period until the end of November 2015, after which Vivendi may sell or distribute its Numericable-SFR
shares, without restrictions, with a right of priority granted to Altice (pre-emption right or right of first offer).
p
p
Vivendi has agreed not to acquire any Numericable-SFR shares, directly or indirectly, until June 30, 2018.
p
p
Subject to Vivendi retaining its shares, Altice will have a call option at market value (subject to a floor
(a)
)
on Vivendi’s interest, exercisable in three tranches (7%, 7%, 6%) over one-month window periods starting
on June 1, 2016, June 1, 2017 and June 1, 2018.
p
p
Tag-along rights for Vivendi if Altice sells its shares.
(a)
Volume Weighted Average Price (VWAP) of Numericable Group’s share price over the 20 business days before the closing date (which occurred on
November 27, 2014), €29.46, grossed-up at an annual rate of 5% during the period ranging from the closing date until the date of exercise of the call
option.
As from the first quarter of 2014, SFR was presented in the Consolidated
Statement of Earnings, the Statement of Cash Flows and in the
Statement of Financial Position of Vivendi as a discontinued operation.
The capital gain on the sale of SFR amounted to €2,378 million (after
taxes), recognized in the Consolidated Statement of Earnings under
the line “Earnings from discontinued operations”. Excluding the
discontinuation
(1)
of amortization since April 1, 2014, in accordance with
IFRS 5, the capital gain on the sale of SFR amounted to €3,459 million
(please refer to Note 3.1 to the Consolidated Financial Statements for the
year ended December 31, 2014).
■
■
Recognition of 20% interest in Numericable-SFR
On November 27, 2014, Vivendi sold 100% of its interest in SFR
to Numericable and received €13.166 billion in cash as well as
97,387,845 shares in the new combined entity Numericable-SFR,
which represents a 20% interest and voting rights. Since that date,
Vivendi deconsolidated SFR. Given the significant restrictive nature of
the commitments given by Vivendi and Numericable-SFR to the French
Competition Authority with respect to all Numericable-SFR’s operations,
Vivendi’s minority representation on Numericable-SFR’s Board of Directors
together with the other specific rights granted to Vivendi by Numericable-
SFR’s governance (see above) helps Vivendi adequately protect its
proprietary interests as a minority shareholder. Vivendi considers that
it does not have the right to participate in Numericable-SFR’s financial
and operational policy-making processes, according to IAS 28. Without
having a significant influence, the 20% interest in Numericable-SFR was
recognized as an “available-for-sale securities” in Vivendi’s Consolidated
Statement of Financial Position, and, in accordance with IAS 39, was
revalued at the stock market price at each reporting date (€3,987 million
as of December 31, 2014) as the unrealized gains or losses were directly
recognized in equity. From November 27, 2014 to December 31, 2014,
the re-evaluation of Vivendi’s interest in Numericable-SFR resulted in an
unrealized gain of €743 million (before taxes).
(1)
When an operation is discontinued, IFRS 5 requires the discontinuation of the amortization of the operation’s tangible and intangible assets. Therefore, for SFR, reported as
a discontinued operation since March 31, 2014, Vivendi discontinued the amortization of tangible and intangible assets as from the second quarter of 2014, resulting in a
positive impact, attributable to Vivendi SA shareholders, of €1,081 million on earnings from discontinued operations from April 1 to November 27, 2014.
162
Annual Report 2014