The total net debt will be reduced by more than 30% and it is expected to achieve 275 million to strengthen its liquidity.

The total net debt will be reduced by more than 30% and it is expected to achieve 275 million to strengthen its liquidity.

The total net debt will be reduced by more than 30% and it is expected to achieve 275 million to strengthen its liquidity.

Headquarters of the Prisa Group

Prisa has closed the refinancing of its debt, which extends its maturity until 2025 in the midst of a strong liquidity crisis, the fall of the share and the minimum turnover driven by the Covid crisis. At the same time, it has agreed the sale of santillana Spain to the Finnish Sanoma for 465 million euros.

In this way, the company has achieved an important financial lifeline amid criticism from its main shareholder Amber Capitalwhich calls for corporate operations to be speeded up, especially the spin-off corporate of Santillana agreed in June this year.

In the face of these criticisms, Prisa indicates that the sale of its business in Spain -paradoxically, the one that gave birth to the group in 1958 at the hands of Jesús de Polanco- is a good business that generates value and that lays the foundations, precisely, for the separation of their businesses.

In fact, regarding Santillana They indicate privately that the bulk of the business is in Latin America and not in Spain. Santillana Spain represents 21% of the global business and, in turn, the entire group generates more than 75% of the turnover of the entire company.

According to Prisa, the price for the sale of Santillana Spain has been established on a company value of 465 million euros, which represents a multiple of 9.6 times the average EBITDA of the educational cycle of the 2017/2019 period, above the multiples of the main comparable transactions in the sector.

Agreement with the bank

The price will be paid in full in cash on the closing date of the operation, once the net debt of the business as of June 30, 2020, estimated at 53 million euros, has been discounted. The sale will generate a capital gain at a consolidated level estimated at 385 million euros, according to Rush.

In the case of the debt refinancing agreement, it supposes extend its maturity until March 2025, with an initial cost of 5.5% and an average total cost of 7% over the life of the contract. It provides for the amortization of 400 million debt (with which the total net debt will be cut by more than 30%) and establishes the framework for a future effective separation of the Education and Media businesses.

In June, BNP Paribas, HSBC and some backgrounds like CVC promised better conditions for debt refinancing for Rush, which reaches -until before this operation- 1,500 million. These entities asked for shareholder peace and stability to refinance with new conditions and accelerated the agreement between all the shareholders to keep Monzón in office.

Prisa had to carry out two partial amortizations and mandatory debt on December 31, 2020 and 2021 for amounts of 15 and 25 million euros, respectively. And he had to pay the bulk of the debt in November 2022. In September, a Lazard to launch the refinancing and smooth the spin-offbut there is no news about it either.

With this refinancing, the company will also have around 275 million to strengthen its liquidity and facilitate the development of its business strategic plans. With this, it reinforces its cash to face more immediate payments and maintain the operational progress of the company, waiting for billing to improve in 2021.

stock market crash

With these operations, in Prisa they hope that the situation will begin to improve. The company’s share remains at record lows (it closed on Friday at 0.54 euros), with a rock-bottom stock market valuation of 380 million and a 62% drop so far this year.

A crisis that makes opportunistic funds begin to take positions – the manager Melqart raised its stake to 4.1% – and others listen to offers, such as Telefónica, which is open to selling if a good offer arrives.

In the same way, the income for the first semester will not be good and will reflect a significant setback due to the covid. Likewise, those of the third quarter are not improving as expected.

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