Approval for the acquisition of Emitel
7 November 2022 This announcement contains inside information
LEI: 213800T8RBBWZQ7FTF84
Cordiant Digital Infrastructure Limited
Approval for the acquisition of Emitel
Cordiant Digital Infrastructure Limited (the "Company", "CORD"), an investor in the core digital infrastructure that enables modern communications and the internet, is pleased to announce that it has received the final required regulatory approval from the Polish Ministry of the Interior for the acquisition of Emitel S.A. ("Emitel") from funds managed by Astatine Investment Partners LLC. The acquisition is expected to complete by mid-November 2022.
Emitel is the second large, diversified digital infrastructure platform acquired by CORD and the Company's largest investment since launch. The Company is acquiring Emitel for an equity consideration of PLN 1920 million before customary transaction costs and expenses. The Company acquired the Polish Zloty through a forward buying programme in the first half of the year.
Over the full financial year to December 2021, Emitel delivered revenues of PLN 486 million and EBITDA of PLN 319 million. As at 31 December 2021, Emitel had outstanding debt of PLN 1462 million, and PLN 131 million in cash on hand. Emitel also has an interest rate swap (IRS) in place, which hedges 66% of the outstanding debt in relation to interest rate movements. The transaction represents an enterprise value to the last 12 months EBITDA multiple of approximately 9.4x.
Emitel has shown consistent year-over-year growth with a stable business model and high revenue and cash flow visibility. Emitel's broadcast revenue contracts have a weighted average duration of 8 years, while its mobile contracts average 13 years for anchor tenants. Approximately 75% of Emitel's revenues have either full or partial CPI inflation linkages. It has long been committed to ESG principles and buys 100% of its power from renewable sources. Emitel also routinely purchases 50-60% of its annual electricity requirement 1-2 years in advance via Power Purchase Agreements (PPAs) which provides significant hedging protection in a volatile price environment. Emitel's management is supported by an organisation of around 410 operational and financial professionals with an average tenure of more than 19 years.
The Company is pleased to confirm its dividend guidance. It was previously announced that, pending the successful completion of the Emitel transaction, the dividend target for the year to March 2023 would be increased from 3.0p to 4.0p per ordinary share. As a consequence of the completion of the acquisition of Emitel and Emitel's strong earnings generation, the Company expects to pay the dividend target of 4.0p in respect of the year to 31 March 2023.
The Company also confirms that, with the completion of the Emitel transaction, it will have secured the potential for full utilisation of its Eurobond facility of €200 million (the "Facility" or "Eurobond") announced in June 2022, €80 million of which was conditional on the closing of the acquisition. The Eurobond is presently unissued and matures on 30 September 2026. €165 million, or 83%, of the Eurobond is in the form of a fixed rate tranche with a coupon of between 6.02% and 6.27% depending on the net leverage of the issuing company within the group that holds CRA and will hold Emitel. The remaining tranche is in the form of a floating rate note which has a margin over 6-month Euribor of 4.5% to 4.75% also dependent on net leverage.
Shonaid Jemmett-Page, Chairman of Cordiant Digital Infrastructure Limited, said:
"The completion of the acquisition of Emitel will be a further strategic milestone for the Company. It is a significant acquisition of a profitable and diversified platform in a market where data consumption growth is among the most robust in Europe. CORD has constructed a high-quality portfolio, with predictable revenues and cash-flows supported by long tenure contracts and a blue-chip client base. This aligns with the Company's Buy, Build & Grow strategy and offers the potential to generate additional value and further attractive returns to shareholders."
Steven Marshall, Chairman of Digital Infrastructure at Cordiant Capital, added:
" Emitel is a strong addition to the Company's portfolio. It is a dynamic and well-managed company with an attractive future growth trajectory. It also brings an effective ESG programme aligned with CORD's goals in this area, including the use of green energy. The Emitel multi-asset infrastructure platform brings contracts with inflation linkage, strong margins and cash generation characteristics ."
Benn Mikula, CEO and Managing Partner at Cordiant Capital, added:
"Emitel is an important component in our strategy for portfolio construction at CORD. As was the case with CRA, it is a proven, profitable and diversified platform of digital infrastructure assets able to augment the portfolio's strong cash flow profile. This will provide a firm foundation for CORD's dividend and enable further growth capital expenditure that should enhance shareholder returns. We look forward to building CORD in North America and Europe."
Analyst Call
The Investment Manager will host a remote presentation for analysts at 9.00 a.m. GMT today. For those wishing to log in to this please contact Ali AlQahtani at Celicourt via CDI@celicourt.uk .
About Emitel S.A.
Emitel is a market leading digital services platform in Poland with a diverse portfolio of infrastructure assets, including:
· a nationwide network of over 577 communication towers, providing terrestrial coverage for 99% of the country;
· a blue-chip customer base that includes Poland's leading mobile operators, national broadcast television and radio companies;
· a supporting fibre-optic network; and
· an 'Internet of Things' sensor network serving utilities and municipalities and the national government.
Emitel is organised around four operating segments:
TV and Radio Broadcasting - the major distributor digital terrestrial television (DTT) using the DVB-T2 standard and Hybrid broadcast broadband TV (HbbTV), as well as Internet Protocol television (IPTV), over the top (OTT) services, and Video on Demand (VoD). Emitel is also the incumbent analogue and digital radio broadcasting (DAB) services provider.
Mobile - serving all 4 mobile telecommunications operators through a growing portfolio of mobile service towers (a substantial proportion of which are 'tall towers') with an average tenancy ratio of 2.0x. Emitel continues to expand its towers with a build-to suit programme with Orange.
"Internet of Things" - data transmission infrastructure, distributed antennae systems (DAS) and sensor-based services for government entities and large utilities.
Transmission - digital transmission and backhaul services to telecoms operators and the government through its fibre-optic network as well as microwave links.
About the Company
Cordiant Digital Infrastructure Limited primarily invests in the core infrastructure of the digital economy - data centres, fibreoptic networks and broadcast and telecommunication towers - "the plumbing of the internet" - in the UK, Europe and North America. Further details of the Company can be found on the Company's website at www.cordiantdigitaltrust.com.
About the Investment Manager
Cordiant Capital Inc., the Company's investment manager, is a sector-focused investment manager with particular expertise and experience in digital infrastructure. Cordiant invests in global infrastructure and real assets, running infrastructure private equity and infrastructure private credit strategies through limited partnership funds and managed accounts. Cordiant's current client base consists of global insurance companies, pension plans and family offices.
Inside Information
This announcement is being disclosed in accordance with the Market Abuse Regulation (EU596/2014) which is part of UK law pursuant to the Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) and has been determined to contain inside information in line with the definition therein.
Disclaimer
All information contained herein is subject to updating, revision and/or amendment (although there shall be no obligation to do so). This document contains information from third party sources.
This document contains certain forward-looking statements. In some cases, forward looking statements can be identified by the use of terms such as "believes", "estimates", "anticipates", "projects", "expects", "intends", "may", "will", "seeks" or "should" or variations thereof, or by discussions of strategy, plans, objectives, goals, future events or intentions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-thinking statements.
Nothing contained herein constitutes either an offer to sell or an invitation to purchase any assets, shares or other securities or capital or to enter into any agreement or arrangement in relation to matters discussed in this announcement. Nothing herein should be taken as a recommendation to enter in to any transaction.
For further information, please visit www.cordiantdigitaltrust.com or contact:
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Cordiant Capital Inc. Investment Manager Stephen Foss, Managing Director |
+44 (0) 20 7201 7546 |
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Celicourt PR Adviser Philip Dennis / Felicity Winkles
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+44 (0)20 8434 2643
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Investec Bank plc Joint Corporate Broker Tom Skinner (Corporate Broking) Lucy Lewis (Corporate Finance) |
+44 (0) 20 7597 4000 |
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Jefferies International Limited Joint Corporate Broker Stuart Klein / Gaudi Le Roux
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+44 (0) 20 7029 8000
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