TVN SA From: TVN S.A.
Issued on: July 20, 2015
Subject: The position of the Management Board regarding the tender offer for shares of
TVN S.A. published by Southbank Media LimitedCurrent report no. 52/2015
The Management Board of TVN S.A., acting pursuant to Article 80 of on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies dated July 29, 2005, hereby discloses the position of the Management Board regarding the tender offer for shares of TVN S.A., published by Southbank Media Limited on 6 July 2015. The fairness opinion prepared by a third party (an expert) - Nomura International plc - is attached to the Position of the Management Board as the attachment.
Legal basis: article 80 sec. 1 and 3 of Act on Public Offering, Conditions Governing the
Introduction of Financial Instruments to Organized Trading, and Public Companies dated July
29, 2005. Signed by:
Markus Tellenbach
President of the Management Board
John Driscoll
Member of the Management Board
20 July 2015
Position of the Management Board of TVN S.A. regarding the Tender Offer for shares in TVN S.A. announced by Southbank Media Limited on 6 July 2015
The Management Board of TVN S.A. with its registered office in Warsaw (the
"Management Board"; "TVN" and the "Company"), acting pursuant to Article 80 sections
1-3 of the Act on Public Offerings and the Conditions for Introducing Financial Instruments to the Organized Trading System and on Public Companies of 29 July 2005 (the "Act"), hereby presents its position regarding the Tender Offer (the "Tender Offer") announced on
6 July 2015 by Southbank Media Limited ("Southbank" or the "Offeror") for all outstanding shares in TVN. Pursuant to the Tender Offer, the Offeror belongs to the capital group of Scripps Networks Interactive Inc. ("SNI"), a company listed on the NYSE, with its seat in Knoxville, Tennessee (USA).
Pursuant to the content of the Tender Offer, the Offeror intends to acquire under the Tender Offer announced pursuant to Article 73 section 2 and Article 74 section 1 of the Act all outstanding shares issued by the Company, that is 160,952,702 (one hundred and sixty million nine hundred and fifty two thousand seven hundred and two) shares with a nominal value of PLN 0.20 (20 groszes) per share (the "Shares"), all of them ordinary bearer shares of the Company, officially listed and traded on the main market organized by Giełda Papierów Wartościowych w Warszawie S.A. (the Warsaw Stock Exchange, the "WSE"), dematerialized and registered with Krajowy Depozyt Papierów Wartościowych S.A. (the National Depository for Securities) under ISIN: PLTVN0000017.
Pursuant to the Tender Offer, prior to the registration of the redemption of the treasury shares held by the Company as a result of the share buy-back the Offeror indirectly held
191,795,606 (one hundred and ninety one million seven hundred and ninety five thousand six hundred and six) shares in TVN corresponding to 191,795,606 (one hundred and ninety one million seven hundred and ninety five thousand six hundred and six) votes at the general meeting of the Company, including:
a. 5,326,426 (five million three hundred and twenty six thousand four hundred and twenty six) shares in TVN corresponding to 5,326,426 (five million three hundred and twenty six thousand four hundred and twenty six) votes at the general meeting of the Company held by a subsidiary of the Offeror, N-vision B.V. with its registered office in Amsterdam, the Netherlands;
b. 173,969,180 (one hundred and seventy three million nine hundred and sixty nine thousand one hundred and eighty) shares in TVN corresponding to 173,969,180 (one hundred and seventy three million nine hundred and sixty nine thousand one hundred and eighty) votes at the general meeting of the Company held by a subsidiary of the Offeror, Polish Television Holding B.V. with its registered office in Amsterdam, the Netherlands and
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c. 12,500,000 (twelve million five hundred thousand) shares in TVN corresponding to
12,500,000 (twelve million five hundred thousand) votes at the general meeting of the
Company held by a subsidiary of the Offeror, the Company.
The registration of the decrease in the share capital of the Company and redemption of the treasury shares held by the Company was finalized on 6 July 2015. Therefore, after the redemption of the treasury shares the Offeror ultimately indirectly held 179,295,606 (one hundred and seventy nine million two hundred and ninety five thousand six hundred and six) shares in TVN corresponding to 179,295,606 (one hundred and seventy nine million two hundred and ninety five thousand six hundred and six) votes at the general meeting of the Company, including:
a. 5,326,426 (five million three hundred and twenty six thousand four hundred and twenty six) shares in TVN corresponding to 5,326,426 (five million three hundred and twenty six thousand four hundred and twenty six) votes at the general meeting of the Company held by a subsidiary of the Offeror, N-vision B.V. with its registered office in Amsterdam, the Netherlands and
b. 173,969,180 (one hundred and seventy three million nine hundred and sixty nine thousand one hundred and eighty) shares in TVN corresponding to 173,969,180 (one hundred and seventy three million nine hundred and sixty nine thousand one hundred and eighty) votes at the general meeting of the Company held by a subsidiary of the Offeror, Polish Television Holding B.V. with its registered office in Amsterdam, the Netherlands.
Pursuant to the Tender Offer, neither the Offeror nor any of its subsidiaries or parent companies is a party to the agreement referred to in Art. 87, section 1, point 5 of the Act.
Under the Tender Offer, the Offeror intends to acquire all outstanding shares in TVN, i.e. after the Tender Offer it intends to control 100% of the total number of shares and votes at the general meeting of the Company, i.e. 340,248,308 (three hundred and forty million two hundred and forty six thousand three hundred and eight) shares in the Company corresponding to 340,248,308 (three hundred and forty million two hundred and forty eight thousand three hundred and eight) votes at the general meeting of the Company as of 6 July
2015, i.e. after the registration of the redemption of the treasury shares held by the Company. The Tender Offer is unconditional.
In order to express its position, the Management Board has become acquainted with the following available information and data relating to the Tender Offer:
a) the content of the Tender Offer,
b) the price of the Company's shares quoted on the stock exchange during the last three
and six months preceding the announcement of the Tender Offer; and
c) other material the Management Board deems necessary in connection with this position.
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In order to verify whether the price proposed in the Tender Offer corresponds to the fair value of TVN's shares, the Management Board, acting pursuant to Article 80 section 3 of the Act, also requested that Nomura International plc ("Nomura") prepare an independent opinion on the price offered for the Shares in the Tender Offer (the "Fairness Opinion").
Effects of the Tender Offer on the interests of the Company, including employment in the Company, strategic plans of the Offeror for the Company and their likely impact on employment in the Company and the location of its business
In the opinion of the Management Board, the Tender Offer is in line with the Company's interests since, according to the declaration made in the Tender Offer, the Offeror expects that: "The acquisition of TVN by SNI will enable the Company to continue implementing its international development strategy, strengthening the position of SNI as a key global player on the TV entertainment market. The transaction will ensure that the Company has an important place on the European market and is an additional important strategic point for SNI in its business in Europe. With 20 years' experience in creating important lifestyle content, SNI's thorough understanding of this field will prove invaluable during the further optimisation of TVN's offer for consumers and advertisers and will also increase the international distribution of its existing portfolio of channels. SNI will work closely with the Company's experienced management team and employees to ensure the Company continues to develop over the long term."
Furthermore, SNI underlined in its communications to the market that "TVN is a strong and compelling business in one of Europe's key media markets, and under Markus Tellenbach's leadership, it will play an important role in our continued expansion in the region."
All this shows that the Company currently plays, and will continue to play, an important role in the realization of the international development strategy of the SNI group. Taking into account the intentions stated directly in the Tender Offer as well as public declarations made by SNI's officials to date, the Management Board is of the opinion that SNI's equity commitment in TVN is a key step to further developing the Company in Poland and in the region. With strategic support from the new majority shareholder, the Company will be in an ideal position to strengthen its premium programming portfolio and expand the scope of national and international content exploitation across multiple digital media platforms. The Management Board is of the opinion that such cooperation will be beneficial for the Company.
The Management Board notes that in the event of the Offeror, its subsidiaries and parent companies achieving jointly 90% or more of the total number of votes at the General Meeting as a result of the Tender Offer, the Offeror shall take measures to carry out the compulsory acquisition of such shares that are not purchased in the Tender Offer (so called squeeze-out). Subsequently, it will procure the Company's shares to be rematerialized and delisted from the Warsaw Stock Exchange.
The Management Board also notes that in the event of the Offeror, its subsidiaries and the parent companies achieving jointly 80% or more of the total number of votes at the General Meeting as a result of the Tender Offer, the Offeror will consider taking action to eliminate the dematerialization of the Shares and the withdrawal of the Shares from trading on the regulated market on the Warsaw Stock Exchange.
In the Tender Offer document the Offeror did not present any detailed information on the impact of the Tender Offer on employment in TVN and the location of its business.
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However, the Offeror pointed out that its intention is to continue cooperating with the experienced management and employees of the Company in order to ensure that the business continues to grow in the long term. In the opinion of the Management Board, there are no grounds for stating that the Tender Offer will have an adverse impact on employment in the Company. Taking into account the SNI's officers' above-mentioned declarations of cooperation with the business staff of the Company as well as the expected support to be provided to the Company by SNI in the implementation of the development strategy and long-term development, the Management Board believes that the Tender Offer will have no adverse impact on employment at the Company.
Furthermore, based on the content of the Tender Offer as well as the above-mentioned declarations, there are no grounds for stating that the Offeror intends to change the location of TVN's business.
Taking into account the content of the Tender Offer and the declaration that the strengthening of TVN's position and competences will enable the continued growth of the Company the Management Board believes that it is in the interests of the Company to acquire a strong and stable strategic investor such as SNI. In the Management Board's opinion, based on the content of the Tender Offer and press releases made by the Offeror, the Offeror considers the acquisition of the shares of the Company to be a long-term investment and an important milestone in the ongoing strategic development of the Offeror's international business, which is consistent with the interests of the Company, its employees and contractors. In the Management Board's opinion, such integration with a strategic investor will also provide the Company access to additional sources of financing or re-financing necessary for the implementation of its long-term strategy.
Polish securities law provides for the concept of minimum price, i.e. the price that sets the floor for the price that could be offered in a tender offer for shares in a company listed on the Warsaw Stock Exchange. Pursuant to Article 79 of the Act, the price of the Company's shares proposed in the Tender Offer may not be lower than:
a. the arithmetic average of the average daily prices weighted by the volume of trade in the shares on the main market, for the period of the three months preceding the date of announcement of the Tender Offer;
b. the arithmetic average of the average daily prices weighted by the volume of trade in the shares, for the period of the six months preceding the announcement of the Tender Offer in which the shares were traded on the main market;
c. the highest price at which the entity obliged to announce the Tender Offer, its subsidiaries or its parent companies, or entities which are parties to the agreement signed with it pursuant to Article 87 section 1 subsection 5 of the Act paid within the period of 12 months preceding the announcement of the Tender Offer for the shares that are the subject matter of the Tender Offer, or
d. the highest value of the tangible assets or rights which the entity obliged to announce the Tender Offer, its subsidiaries or its parent companies, or entities which are parties to an agreement signed with it pursuant to Article 87 section 1 subsection 5 of the Act
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delivered within the 12 months preceding the announcement of the Tender Offer in exchange for the shares that are the subject matter of the Tender Offer.
Pursuant to the contents of the Tender Offer:
a. The arithmetic average of the average daily prices weighted by the volume of trade for the period of the three (3) months preceding the date of announcement of the Tender Offer during which the shares were traded at the WSE main market amounts to PLN 17.83(seventeen zlotys 83/100).
b. The arithmetic average of the average daily prices weighted by the volume of trade for the period of the six (6) months preceding the date of announcement of the Tender Offer during which the shares were traded on the WSE main market amounts to PLN 17.71 (seventeen zlotys 71/100).
c. The Company acquired its own shares as part of the buy-back. The Company is a subsidiary of the Offeror. The highest price at which during the 12 (twelve) months preceding the announcement of the Tender Offer, the Company acquired Shares amounts to PLN 20.00 (twenty zlotys).
d. The subsidiary of the Offeror acquired as an in-kind contribution shares in the Company. In exchange for the shares in the Company, i.e. 5,326,426 (five million three hundred and twenty six thousand four hundred and twenty six) bearer shares in TVN, 2,748,212 (two million seven hundred and forty eight thousand two hundred and twelve) shares in N-vision with a nominal value of EUR 1 (one euro) per share and a total nominal value of 2,748,212 (two million seven hundred and forty eight thousand two hundred and twelve euro) were delivered, which corresponds to EUR
4.21 (four euro 21/100) per share in TVN, that is PLN 17.57 (seventeen zlotys
57/100) converted at the mid rate of exchange at the NBP on the date of the agreement.
The Offeror is not and, in the period of the 12 (twelve) months preceding the day of the Tender Offer, was not a party to any arrangement referred to in Article 87 section 1 point 5 of the Act.
The price offered in the Tender Offer amounts to PLN 20.00 (twenty zlotys) per Share in the Company and therefore is not lower than the price paid in the transactions listed in points a-d above.
According to the Fairness Opinion prepared by Nomura dated 16 July 2015, the price proposed in the Tender Offer for the Shares in TVN is fair.
After having become acquainted with the Fairness Opinion prepared by Nomura, and based on the evidence presented above, the Management Board concludes that the share price offered by the Offeror in the Tender Offer is fair, taking into account the fair value of the Company.
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Disclaimer
With the exception of commissioning Nomura to prepare an opinion on the price offered in the Tender Offer for the Shares in the Company, the Management Board did not outsource the preparation of any additional studies or analyses in connection with the Tender Offer and its content, nor did it consult any external entities as regards the content of the Tender Offer. In connection with the preparation of this position, neither the Management Board nor the Company took any specific actions to seek, collect, organize or verify information that was not provided by the Company, nor did they commission other entities to take such or similar actions on their behalf.
Subject to information provided by the Company and concerning its activities, the Management Board does not assume any responsibility for the accuracy, reliability, completeness or adequacy of the information based on which this position is presented.
Neither the Management Board nor the Company is in possession of any inside information within the meaning of the Act on Trading in Financial Instruments of 29 July 2005 which should be disclosed, and, to the best of their knowledge, they do not possess knowledge of facts about the Company or its shares that are or could be considered inside information relevant to the evaluation of the Tender Offer and that the Company has not already disclosed to the public.
On 16 July 2015, Nomura presented to the Management Board the Fairness Opinion, a written opinion on whether the price offered in the Tender Offer is fair taking into account the value of the Company. The Fairness Opinion is subject to certain assumptions, restrictions and disclaimers. Nomura provides services in accordance with an agreement concluded with the Company, and it does not represent any other entity in connection with the Tender Offer, nor is it responsible to any other entity, besides TVN, for providing services in connection with the Tender Offer or the content of the Fairness Opinion document. The opinion of Nomura is an attachment to this position of the Management Board.
The position of the Management Board presented herein does not constitute a recommendation to acquire or dispose of financial instruments referred to in Article 42 of the Act on Trading in Financial Instruments of 29 July 2005.
Any investor making an investment decision in connection with this opinion of the Management Board on the Tender Offer should perform its own assessment of the investment risk associated with the disposal or acquisition of financial instruments on the basis of all information provided by the Offeror and by the Company, in particular in connection with the performance of its obligations related to the provision of information, including obtaining individual advice or a recommendation from licensed advisors to the extent necessary to make an appropriate decision. The decision regarding the sale of the Company's Shares in response to the Tender Offer should be an independent decision of each of the Company's shareholders. In particular, each shareholder of TVN, when analysing a possible response to the Tender Offer, should assess the investment risk associated with it as well as any legal and/or tax implications thereof.
The Management Board points out that there may exist opinions on TVN's value that differ
from those presented herein.
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Nomura lnternational pie
1 Angel Lane, London EC4R 3AB
Tel 44 (0)20 7102 1000 Fax ,14 (0)20 7102 9090
TVN SA
166 Wiertnicza Street
02-952 Warsaw
Poland
For the attention of: The Management Board of TVN SA
16July 2015
Dear Sirs,
You have engaged Nomura lnternational pie ("Nomura") as financial adviser to TVN SA (the "Company'') and have requested Nomura's opinion as to the fairness from a financial point of view of the price of PLN 20 per share, offered by Southbank Media Ltd, a subsidiary of Scripps Networks lnteractive Ltd. ("Scripps") in the tender offer announced on 7 July 2015 for ali outstanding shares of the Company (the "Tender Offer").
This opinion will be used by the Management Board of the Company in considering and providing its own opinion pursuant to Art. 80 of the Act of 29 July 2005 on Public Offerings, Conditions Governing the lntroduction of Financial lnstruments to Organised Trading, and Public Companies.
The Tender Offer will be open for acceptances from 24 July 2015 to 24 August 2015 pursuant to the terms of the tender offer document dated 7 July 2015 with the proposed date of share purchase transaction on the Warsaw Stock Exchange on 27 August 2015 and settlement date on 1 September 2015.
In connection with this opinion, we have reviewed the following documents and information obtained from publicly available sources and/or provided to us:
1. a translation of the draft Tender Offer document received from the Company on 7 July 2015;
2. the press releases and investor presentations published by the Company and Scripps on 16 March
2015 and subsequently, in relation to the Scripps' indirect acquisition of a controlling stake in the
Company from ITI and Canal+;
3. the annua! reports of the Company for the years ended December 2013 and 2014 and the quarterly reports for the quarter ended March 2015;
4. certain internai financial statements and other financial and operating data, including certain forecasts and projections prepared by the Company with respect to its future business prospects and those of its main associate nC+, in each case prepared by their respective management;
5. the reported prices and trading activity far the Company's listed equity securities from Bloomberg;
6. certain financial projections for the Company and other comparable publicly traded companies (in each case as we deemed relevant) contained in certain securities analysts' research reports;
7. the financial and operating performance of the Company and the prices and trading activity of the Company's listed equity securities compared to publicly available information relating to certain other comparable publicly traded companies and their securities (in each case as we deemed relevant); and
Nomura lnternational pie. Authorised by the Prudenttal Regulation Aulhority and regulated by the Financial Conduct Authonty and t t1e Prudenuat Regulation Authorily. Membcr of lhe London Stock Exchange. Registered in England no. 1550505 VAT No. 447 2492 35. Registercd Office: 1 Angel Lane London EC4R 3AB. A member ol lhe Nornura group of companies.
NOAURA
8. certain written reports and studies which were provided to Nomura on a non-reliance and confldential basis pursuant to the terms of a non-disclosure agreement dated 14 October 2014 between Nomura and the Company,
and we have performed such other studies and analyses and considered such other factors as we have deemed appropriate in this context.
We have relied upon, without independent verification, the accuracy and completeness of ali of the financial, accounting, tax and other information, reports and documents reviewed by us or conveyed to us in connection with this opinion (however obtained by or provided to us and including any information provided to us in discussions with members of the senior management of the Company) and we have assumed such accuracy and completeness far the purposes of rendering this opinion. We have had discussions with the Company's management concerning the business, operations, assets, financial condition and prospects. In particular, we have reviewed the Company's business pian and have agreed with management that we may assume that the information, forecasts and projections contained therein have been reasonably prepared on a basis reflecting the best estimates and judgments of management as to the financial performance of the Company at the time it was produced. In particular, we have not made an independent evaluation or appraisal of the assets and liabilities (including derivatives, off balance sheet assets and liabilities and other contingent liabilities or loan-loss reserves) of the Company or any of its respective subsidiaries and have not been furnished with any such evaluation or appraisal. We have assumed that ali of the respective balance sheets, profit and loss statements, financial and other estimates, profit and cash flow forecasts, including future capitai expenditure projections, and ali other information, estimates and projections that were provided to us or discussed with us, have been prepared reasonably and on a basis reflecting the best currently available information, estimates and judgments of the management of the Company as to the expected future results of operations and financial condition of the Company or such other entity to which such analyses or forecasts relate and that such analyses or forecasts will be realised in the amounts and at the times contemplated thereby. We have not independently verified them.
We are financial advisers only and therefore have relied upon, without independent verification, the assessment of the Company and its legai, tax, regulatory or accounting advisers with respect to such matters. In addition, we have assumed that the Tender Offer will be consummated in accordance with the terms set forth in the tender offer document without any waiver, amendment or delay of any terms or conditions. We have assumed that in connection with the receipt of ali the necessary governmental, regulatory or other approvals and consents required far the proposed Tender Offer, no delays, limitations, conditions or restrictions will be imposed that would have an adverse effect on the contemplated benefits expected to be derived in the proposed Tender Offer.
We have specifically not reviewed any private reports or other studies commissioned by the Company in connection with the Tender Offer. We have not provided, obtained or reviewed any specialist advice, including but not limited to, legai, accounting, actuarial, environmental, information technology or tax advice, and accordingly our opinion does not take into account the possible implications of any such specialist advice. In addition we have not reviewed or analysed, and shall not be reviewing or analysing in arriving at our opinion, the legai or regulatory requirements in connection with the consummation of the Tender Offer.
Our opinion is necessarily based an financial, economie, market, regulatory and other conditions as in effect on, and the information made available to us as of, the date of this letter and we express no opinion as to whether any such conditions will continue to prevail, or to what effect, if any, a change in such conditions would have on the opinions expressed herein. Events occurring after the date hereof may affect this opinion and the assumptions used in preparing it, and we do not assume any obligation to update, revise or reaffirm this opinion. In arriving at our opinion, we were not authorised to solicit, and did not solicit, interest from any party with respect to the acquisition, business combination or other extraordinary transaction involving the Company.
2
NOAURA
We are acting as financial adviser to the Company in connection with the Tender Offer and will receive a fee far our services (including a fee far rendering our opinion in this letter). In addition, the Company has agreed to reimburse our expenses and indemnify us against certain liabilities arising aut of our engagement In the past, Nomura and its affiliates have provided financial advisory and financing services far the Company and have received fees far the rendering of these services.
In the ordinary course of our trading, brokerage, investment management and financing activities, Nomura or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, far our own account or the accounts of customers or Nomura affiliates, in debt or equity securities or senior loans of the Company, Scripps or any other company or any currency or commodity that may be involved in the Tender Offer.
This opinion is addressed to, and is solely far the use and benefit of, the Management Board of the Company in connection with its consideration of the Tender Offer and shall not be relied upon by or create any obligations towards, any third party without our prior written approvai.
In particular we have not been requested to apine as to, and this opinion does not in any manner address, the underlying business decision of the Company or the Company's shareholders to proceed with or effect the Tender Offer or any other transaction, business strategy or other matter. This opinion does not constitute a recommendation to the shareholders of the Company to accept the Tender Offer.
Based upon and subject to the foregoing, and based upon such other matters as we consider relevant, it is our opinion that as at the date of this letter the price offered to the shareholders of the Company pursuant to the Tender Offer is fair, from a financial point of view, to the shareholders of the Company.
Yours faithfully,
Christopl).er Caesar
.A.ndrew McNaught
MHeaanpag;m7gn
ltor
Banking EMEA
Managing Director
COO Glob Co-Head M&A EMEA
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