Solocal reaches a major step in its financial restructuring thanks to an agreement in principle signed with Ycor and with the Group's main creditors and shareholders

                 Press release                                                                             Boulogne-Billancourt, 12 April 2024

Solocal reaches a major step in its financial restructuring thanks to an agreement in principle signed with Ycor and with the Group's main creditors and shareholders

Cédric Dugardin, Solocal’s Chief Executive Officer, declares: “We have reached a major step in the financial restructuring of Solocal. After months of intense discussions, a solution in the interests of the company, its employees, customers and partners has been confirmed.

I would like to thank all the parties involved for their commitment and sense of responsibility, and for finding a compromise that will enable Solocal to ensure favorable and sustainable perspective. I would also like to thank Solocal's teams and advisors, who were mobilized in these complex and technical discussions.

We have a challenging legal roadmap to finalize this restructuring. This regulatory process will take several weeks, with the aim of moving as quickly as possible.

In the meantime, all Solocal employees remain particularly mobilized to support our customers in their digital projects and help them cope with a difficult economic environment by developing the visibility of their business.”

Main characteristics of the Agreement in Principle

An agreement in principle on the terms of the financial restructuring of Solocal Group (the “Company”) was entered into on 12 April 2024 between the Company, the company Ycor SCA (“Ycor”), a group of lenders representing 78.6%^[1] of the principal amount of the RCF (the “RCF Lenders”) and a certain number of institutions holding Bonds, the Mini Bonds and Company’s shares, (the “Bondholder Group”) representing c. 84% of the total principal amount of the Bonds, 100% of the principal amount of the Mini Bonds and c. 29% of the Company’s share capital (the “Agreement in Principle”). Its conclusion was unanimously approved by the members of the Board of Directors of the Company. This Agreement in Principle was concluded within the framework of the conciliation procedure, under the aegis of the SELARL FHB, taken in the person of Me Hélène Bourbouloux, and of the accelerated financial safeguard plan under the aegis of the SELARL C. Basse, taken in the person of Me Christophe Basse, commissaire à l’exécution du plan.

In order to implement the agreement in principle that has been entered into, the next steps will be :

-          The proposal to amend the Company's accelerated financial safeguard plan in order to reflect the terms agreed in the Agreement in Principle and to which the members of the Bondholders' Group have already undertaken to vote in favor will be submitted to the vote of the bondholders at the bondholders’ general meeting on 22 April 2024 (the "BGM");

-          The conclusion of a conciliation protocol with the RCF Lenders and the holders of the Mini Bond, which will reflect the agreement of the latter on the terms agreed in the Agreement in Principle (as reminded below); and

-          The organization of a shareholders' general meeting to approve the various key steps of this financial restructuring, involving amendments to the Company's bylaws (including the contemplated transactions on the share capital), it being specified that the members of the Bondholders' Group who are also shareholders representing c. 29% of the Company's capital and voting rights have already undertaken to vote in favor of its implementation at this shareholders' general meeting.

The Agreement in Principle, the terms of which are detailed below, provides for, in particular:

-          a contribution of 43 million euros exclusively in equity, including a maximum amount of 38 million euros from Ycor through share capital increases with or without maintaining shareholders' preferential subscription rights^[2]; 

-          the contribution in kind of all shares issued by Regicom Webformance SAS (“Regicom”) to the Company;

-          at the date of effective completion of the contemplated share capital increases and issuance of securities, a partial repayment of existing RCF debt, in an amount of 20 million euros, with part of the proceeds from the above-mentioned equity contributions; 

-          a massive reduction in the nominal amount of the Company's existing gross bond debt (including interests) by approx. 85%, with different amortization or conversion profiles depending on the nature of the reinstated debt. 

After the full implementation of this Agreement in Principle, the Company would be controlled by Ycor. 

Solocal Group's current shareholders would be massively diluted (their existing shares would represent less than 1% of the capital)

Context

On 7 June 2023, the Company announced its intention to intitiate discussions with its financial creditors. In order to facilitate these discussions, the Company requested the opening of mandat ad hoc proceedings for its benefit and invited its financial creditors to organize themselves to participate in these discussions with the Company. 

On 14 June 2023, the President of the Nanterre Commercial Court appointed SELARL FHB, represented by Me Hélène Bourbouloux, as mandataire ad hoc.

Alongside its discussions with its financial creditors, the Company has initiated a search for an industrial partner and/or a potential buyer.

As part of this competitive process, several industrial players expressed their interest. Among these, Ycor submitted a binding offer on 16 January 2024, revised and improved several times, and most recently on 8 February 2024 (the "Ycor Offer").

On 12 February 2024, the Company also received an improved version of the stand-alone financial restructuring proposal from its bondholders (also shareholders for certain of them) (the “Stand Alone Offer”), further to several discussions with its bondholders for the past several months.

In its 13 March 2024 press release, the Company indicated that the Ycor Offer had received the unanimous support of the Company's Board of Directors, management team and RCF Lenders^[3], being at this stage the only one capable of ensuring the Company's sustainable future, both operationally and strategically. The Company also indicated that it wished to encourage its bondholders to support Ycor's Offer, so that it could be implemented on a consensual basis. 

This objective, which was in the best interest of Solocal group (the “Group”), was achieved by modifying the terms of the Ycor Offer and by reaching an agreement with a majority of creditors of the Group on these terms.

Evolution and description of the Ycor Offer

Governance 

The Agreement in Principle provides that the Board of Directors will be composed in accordance with the following principles:

                               - The Board of Directors will be composed of 8 members:                  

o   the Chairman and Chief Executive Officer, appointed by Ycor; o three other members appointed by Ycor; 

o   three independent members within the meaning of the AFEP-MEDEF Code; and  o one director representing employees, - Directors' terms of office: 4 years.

At Ycor's discretion, some or all of the above appointments may be made by co-optation (subject to the prior resignation of members of the current Board of Directors). 

The above governance structure will be effective no later than the date of effective completion of the contemplated share capital increases and issuance of securities, unless the Company and Ycor agree on a different date.

From the date of completion of the contemplated share capital increases and issuance of securities, the Company will continue to comply with the principles of the AFEP-MEDEF Code.

It is also specified that in the context of the financial restructuring and the entering into of the Agreement in Principle, the Board of directors of the Company has decided, during its meeting held on 4 April 2024, that, on the date on which the mandate of CEO of the Company of Mr Cédric Dugardin will cease (i.e. on the date of effective completion of the contemplated share capital increases and issuance of securities or such other termination date agreed with Ycor), he will be requested to comply with a non-compete undertaking vis-à-vis companies operating in the same business domain as that of the Group in France and will receive a non-compete indemnity of a gross amount of EUR 225,000 paid in a single installment. 

The payment of this non-compete indemnity will occur on the date on which the mandate of CEO of the Company of Mr Cédric Dugardin will cease.

Conditions precedent

The approval of the amendment to the accelerated financial safeguard plan remains subject to the fulfillment of the main following conditions precedent:

− the approval by the general meeting of the shareholders of the resolutions required to implement the plan no later than 28 June 2024 (except if Ycor agrees on a later date);

− the adoption of all decisions by the Company's board of directors necessary to implement the contemplated governance arrangements at the latest on the date of completion of the contemplated issuances of securities and of all resolutions submitted to the Company’s general meeting of shareholders necessary to implement the accelerated financial safeguard plan, and the rejection of any resolution that would be contrary to the implementation of the accelerated financial safeguard plan;

− obtaining, if necessary, an unconditional decision by any competition authority authorising or not opposing (where such non-objection is, under applicable law, construed as an authorisation to carry out the proposed restructuring) the restructuring as contemplated by the accelerated financial safeguard plan;

− obtaining a waiver, valid and in force, from the Autorité des Marchés Financiers (AMF) from the obligation for Ycor to make a public tender offer for the Company's shares (the "AMF Share Capital Increase Exemption") on the basis of article 234-9, 2° of the AMF General Regulations;

− as the case may be, obtaining a waiver, valid and in force, from the AMF from the obligation for Ycor to make a public tender offer for the shares of the Company (the "AMF Contribution Exemption") in relation to the contribution of Regicom on the basis of Article 234-9, 3 of the valid and current General Regulations of the AMF; 

− the delivery of the report of the contribution auditor to be appointed for the purposes of potentially implementing the share capital increase to be subscribed by Ycor in the context of the contribution in kind of Regicom to the Company;

− the delivery of the report of the independent expert to be appointed by the Company's board of directors, pursuant to article 261-3 of the General Regulations of the Autorité des marchés financiers, on the fairness of the financial terms of the restructuring for the existing shareholders;

− obtaining the approval from the Autorité des Marchés Financiers for the prospectus relating to the share capital increases and the issuance of Warrants;

−    the agreement of the creditors under the BPI Atout Loan on the extension of this debt (unless otherwise agreed by Ycor);

− the approval of the accelerated financial safeguard plan by the BGM at the required majority on 22 April 2024 at the latest (unless Ycor and the Company agree on a later date);

− the signature of a conciliation protocol on 30 April 2024 at the latest (unless Ycor and the Company agree on a later date) and the acknowledgment or homologation of this conciliation protocol simultaneously with the approval of the accelerated financial safeguard plan (unless Ycor and the Company agree on a later date); 

− the signature or the adherence to the Agreement in Principle, at the latest on the BGM date (unless Ycor waives or agrees on a later date) by the holders of Bonds and Mini Bonds represented by White & Case and Lazard (the “Representative Holders”), representing all holders of Mini Bonds and and at least 2/3 of the holders of the Bonds;

− obtaining, within 5 business days of the signing of the Agreement in Principle (unless Ycor agrees on a later date) of the backstop commitment of the holders of Bonds in connection with the share capital increase with preferential subscription rights, for a total amount of EUR 5 million.

In addition, the implementation of the financial restructuring of the Company remains subject to the fulfillment of the following conditions precedent:

− the finalization of the implementation documents required to implement the accelerated financial safeguard plan;

            −                the purge of all appeals against the AMF Share Capital Increase Exemption^[8];

            −              the purge of all appeals against the AMF Contribution Exemption^[9].

In the event that (i) the BGM votes in favor of the financial restructuring but the Company's shareholders reject it, or (ii) the BGM votes against the financial restructuring, the Company will implement the financial restructuring under a new collective proceeding that will follow the termination of the Company's restructuring plan adopted in 2020, subject to the legal conditions for such termination and the opening of such new collective proceeding being met.

Appointment of an independent expert

Given the significant dilution expected from the capital increases provided for in the Agreement in Principle, the board of directors has set up an ad hoc committee of independent directors, composed of Mr. Philippe Mellier, Mrs. Ghislaine Mattlinger and Mrs. Delphine Grison, with the mission to propose an independent expert who will be appointed by the board of directors of the Company on a voluntary basis in accordance with article 261-3 of the AMF General Regulations, for the purpose of ruling on the fairness of the financial restructuring of the Company for the shareholders.

The independent expert will deliver a report containing a fairness opinion which will be made available to the shareholders at least 10 trading days before the date of the the general meeting of shareholders of the Company convened to decide on the key steps of the financial restructuring involving amendments to the Company's bylaws (including the contemplated transactions on the share capital and issuance of securities).

Appointment of a contribution auditor

The Company will request from the President of the Nanterre Commercial Court the appointment of a contribution auditor (commissaire aux apports) to issue a report on the contribution in kind of Regicom to the Company.

In accordance with the provisions of articles L. 225-147, R. 225-136 and R. 22-10-8 of the French Commercial Code, this contribution auditor will assess the value of Regicom and confirm that this value corresponds at least to the nominal value of the shares to be issued, increased if any by the issue premium.

His/her report will be made available to the shareholders prior to the general meeting of the shareholders, in accordance with the conditions provided for by laws and regulations.

Indicative timeline

The effective completion of the share capital increases and contemplated issuance of securities should take place during the third quarter of 2024.

“Bonds” means the bonds in an aggregate principal amount of €176,689,747.06 (as of 31 December 2023) bearing interests at Euribor rate (three-month Euribor rate floored at 1%) + 7% spread and with maturity date at 15 March 2025 (ISIN: FR0013237484) issued by Solocal Group.

“Mini Bonds” means the bonds in an aggregate principal amount of €18,743,702.88 (as of 31 December 2023) bearing interests at Euribor rate (three-month Euribor rate floored at 1%) + 7% spread and with maturity date at 15 March 2025 (ISIN: FR0013527744) issued by Solocal Group.

"RCF" refers to the senior revolving credit facility in a principal amount of €34,000,000 bearing interest at Euribor (with Euribor rate floored at 0%) + 5% margin.

Public information 

Solocal confirms that information that could be qualified as inside information within the meaning of Regulation No. 596/2014 of 16 April 2014 on market abuse and that may have been given on a confidential basis to certain financial creditors has been published to the market in the context of this press release with the aim of re-establishing equal access to information relating to Solocal between investors.           

Disclaimer

This press release has been prepared by Solocal Group exclusively for information purposes. It does not constitute or include any advice or recommendation by Solocal Group (or any other person) regarding the securities of Solocal Group or as to the merits of any transaction or the making of any investment decision. It does not constitute or include any confirmation or commitment by Solocal Group (or any other person) regarding the present or future value of the business of Solocal Group, its securities, its affiliates or any of Solocal Group’s or their assets.

This press release is not an offer to sell or a solicitation of an offer to buy or exchange or acquire securities in the United States or in any other jurisdiction. The securities referenced in this press release may not be offered, sold, exchanged or delivered in the United States absent registration or an applicable exemption from the registration requirement under the U.S. Securities Act of 1933, as amended. The securities mentioned in this press release are not, and will not be, registered in the United States. This press release is not directed at, or intended for distribution, publication, availability to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law or regulation, or which would require any registration or licensing within such jurisdiction. Nothing in this press release constitutes or contemplates an invitation to participate in the solicitations by a holder in any circumstances in which such participation is unlawful. 

This press release includes forward-looking statements based on current beliefs and expectations about future events. Such forward-looking statements may include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product development, as well as statements, regarding performance or events. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”, “projects”, “may”, “would”, “should” or the negative of these terms and similar expressions. Forward looking statements are not guarantees of future performance and are subject to inherent risks, uncertainties and assumptions about Solocal Group and its subsidiaries and investments, trends in their business, future capital expenditures and acquisitions, developments in respect of contingent liabilities, changes in economic conditions globally or in Solocal Group’s principal markets, competitive conditions in the market and regulatory factors. Those events are uncertain; their outcome may differ from current expectations which may in turn materially affect expected results. Actual results may differ materially from those projected or implied in these forward- looking statements. Any forward-looking statement contained in this press release is made as of the date of this press release. Other than as required by applicable law, Solocal Group does not undertake to revise or update any forward-looking statements in light of new information or future events. The results and the Group's performance may also be affected by various risks and uncertainties, including without limitation, risks identified in the "Risk factors" of the Universal Registration Document registered by the Autorité des marchés financiers on April 28, 2023 and also available on the Group's website

EN - Solocal - Solocal is the digital partner for all local companies in France, from VSEs, to SMBs or Large Companies with networks. Our job; vitalize local life. We strive every day to unveil the full potential of all companies by connecting them to their customers thanks to our innovative digital services. We advise over 260 000 companies all over France and support them to boost their activity thanks to our digital services (Relational Presence, Websites and Digital advertising). We also bring users the best possible digital experience with PagesJaunes, and our GAFAM* partners. We provide professionals and the public with our high audience services (15M views for PagesJaunes), geolocalised data, scalable technology platforms, unparalleled commercial coverage across France, our privileged partnerships with digital companies and our talents in terms of data, development and digital marketing. Solocal moreover benefits from the "Digital Ad Trust" label. To know more about Solocal (Euronext Paris “LOCAL”): let's keep in touch @solocal *GAFAM : Google,

Microsoft/Bing,, Facebook, Apple, Amazon. Committed to a CRS strategy since 2013, Solocal fully endorses the United Nations Sustainable Development Goals. The company is certified bronze by Ecovadis and sylver by Gaia Ethifinance