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Reminder on financing operations and group's activities

Mercredi 08 Nov 2017 à 07:30

Press release
Boulogne-Billancourt, 8 November 2017

Over the past few weeks, Sequana (SEQ) has noted that incomplete and erroneous information has been circulating on internet forums. As the information in question could be harmful to the interests of the Company, its subsidiaries – including Antalis International (Antalis), which is also listed on the Paris stock market (ANTA) – and its shareholders, Sequana wishes to stress the following points.

Reminder on financing operations and their impact on Antalis' capital
In November and December 2016, Sequana was granted loans by its shareholders Bpifrance Participations and Impala Group, for a total amount of €25 million.

In September 2017, in accordance with the safeguard plan approved by the Commercial Court of Nanterre on 12 June 2017, Sequana repaid 45% of the outstanding amount on these loans in the form of Antalis shares, representing 6.5% of Antalis' capital. Once this operation had been completed, Bpifrance Participations held an 8.5 % stake in Antalis and, as far as Sequana is aware, there has not been any change in this figure since then. Sequana's share in Antalis capital fell to 75.2% and the remainder (16.3%) was held in free float.

In accordance with the safeguard plan, the outstanding balance on these loans (€14 million) will be repaid in ten increasing annual cash instalments beginning in June 2018.

In April and September 2017, Bpifrance Participations granted Sequana new loans totalling €37 million, repayable either in the form of Antalis International shares or in cash, at the lender's discretion. If these amounts were to be repaid in the form of shares, the exact number of shares would be determined based on the volume-weighted average share price in the days preceding repayment, less a discount.

If Bpifrance Participations were to request repayment in the form of Antalis shares, Sequana's stake in Antalis could fall further, knowing that Bpifrance participations has stated that its holding shall not exceed 29%. In this case, Sequana should then own 54.8%.

The loans granted to Sequana were mainly used to finance Arjowiggins and to fund the operational requirements of its Security division and the balance of the disbursements related to the closure of the Wizernes and Charavines mills.

Sequana has also indicated that it may sell further shares in order to raise the FINANCIAL resources it needs to conduct its operations and meet its obligations. However, in order not to adversely impact the share price, any such divestment will be in the form of blocks of shares within an organised process and not on an ad hoc basis.

All information relating to these loans was the subject of detailed disclosures by Sequana in various different documents – 2016 registration document (AMF visa No. D.17-0469 of 28 April 2017), convening notice to the Annual General Meeting of 6 June 2017, Half-Yearly report for 2017 (information notice published on 27 September 2017) – and in statutory declarations filed by Sequana (AMF disclosure nos. 2017DD512824 and 2017DD513300 of 4 and 9 October 2017, respectively) and Bpifrance Participations (AMF disclosure nos. 2017C2276 and 2017C2277 of 28 September 2017).

Antalis' operating situation
As regards Antalis' operating situation, performances in the nine months to 30 September were in line with financial guidance provided to the markets in June with growth in ebitda margin, driven by an enhanced gross margin combined with lower operating costs.

Based on the market outlook for the rest of the year and the slight improvement in the economic environment – with the exception of the UK where all of the economic players have noted a slowdown in business – Antalis confirms that, excluding acquisitions and at constant exchange rates, consolidated full-year sales should register a low single-digit decrease and EBITDA margin should come in at between 3.4% and 3.8%.

Antalis continues to study various different solutions to refinance its credit facilities which expire on 31 December 2018 and is confident that it will be able to deploy a financing solution before it publishes its accounts for 2017.

Furthermore, as regards the legal dispute with BAT, Sequana does not believe that the forthcoming decision to be handed down by the Court of Appeal will impact the operations of Antalis, which is not a party to the dispute.

Arjowiggins' operating situation
During the first six months of 2017, the Graphic and Creative Papers divisions delivered pro forma operating performances that were slightly down on those for the same period in 2016 (on a like-for-like basis). In the fourth quarter – as in the third quarter -, the Graphic division will have to contend not with lower volumes but with higher raw material prices (mainly pulp), partially offset by higher selling prices. Arjowiggins' Creative Papers division will continue to be hit by lower volumes and a deterioration in the product mix in the fine papers segment. Both divisions will generate positive cash flow for the year as over the coming years.

As regards the Security division, the Group is continuing to deploy its strategic plan and a first milestone was achieved with the sale of Arjowiggins Security BV to Oberthur Fiduciaire. Over the coming months, Sequana intends to sell this currently loss-making division and it has initiated a disposal process for this purpose – if this process does not complete, the division may be restructured. In accordance with consultation procedures, priority will be given to informing the relevant work councils.

Legal dispute with BAT
Hearings before the Court of Appeal in London are scheduled for June 2018. Aside from this date, the procedural timeframe is not known however, the Group considers it unlikely that the Court of Appeal will hand down its decision before the second-half of 2018. On the basis of issues raised in the decision handed down by the High Court of Justice and its own legal advice, Sequana considers that it still has solid legal arguments to raise on appeal. In any event, Sequana does not believe that the Appeal Court's decision will impact the operations of Antalis International, which is not a party to the dispute.

About Sequana

Sequana (Euronext Paris: SEQ) is a major player in the paper industry, boasting leading positions in each of its two businesses:
- Antalis: European leader in the distribution of paper and packaging products, with around 5,600 employees based in 43 countries.
- Arjowiggins: World leader in creative and technical papers, with approximately 2,800 employees.
Sequana reported sales of €3 billion in 2016 and employed some 8,500 people worldwide.

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