CEVA Group Plc Reaches Agreement with Major Note Holders to Recapitalize its Balance Sheet and Raise New Capital

  • Transaction Strengthens Balance Sheet by Eliminating Over €1.2 billion of Consolidated Net Debt
  • Reduces Annual Cash Interest Cost by Over €135 million; Approx. 50%
  • €205 million of Committed Capital Infusion for Investment in Company’s Business Plan
  • Transaction Agreed to by Holders of Approximately 83% of Company’s Senior Unsecured Debt and 69% of Company’s Second Lien Notes

CEVA125Hoofddorp, the Netherlands, 3 April, 2013 – CEVA Group Plc (“CEVA” or the “Company”), one of the world’s leading non-asset based supply chain management companies, today announced it has reached agreement with the largest holders of its second lien notes and senior unsecured debt on a consensual financial recapitalization plan that will reduce substantially CEVA’s overall debt and interest costs, as well as increase liquidity and strengthen its capital structure (the “Recapitalization or Recap”).  The Recap will enable CEVA to better serve its customers, accelerate its growth throughout the world and fund the development of new supply chain products and services.  Assuming successful completion of the Recapitalization, the Company will reduce its consolidated net debt by more than €1.2 billion, reduce its annual cash interest expense by over €135 million or approximately 50% and will receive a capital infusion of at least €205 million for investment in its business plan. 

“We have been working with our financial advisors over the past few months to develop a long-term financial plan for the Company, exploring various options to improve our balance sheet to enhance the Company’s financial flexibility in support of future growth.  We are pleased that a substantial majority of our creditors have already committed their support,” said Marvin O. Schlanger, CEVA’s Chief Executive Officer, adding that “CEVA anticipates a quick resolution to the transaction and will continue to provide customers with the effective and robust supply chain solutions and exceptional levels of service they have come to expect.”

In connection with the Recapitalization, CEVA has entered into a restructuring support agreement with parties representing approximately 83% of the outstanding principal amount of the 12.75% Senior Notes due 2020, the 12% Second-Priority Senior Secured Notes due 2014 and $113 million Senior Unsecured Bridge Loan (collectively, the “Senior Unsecured Debt”) and 69% of the outstanding principal amount of the 11.5% Junior Priority Secured Notes due 2018 (the “Second Lien Notes”) for the approval of the Recapitalization transaction. The restructuring support agreement provides, subject to the terms and conditions thereof, for commitments to invest approximately €205 million by three parties, consisting of (i) investment funds affiliated with Apollo Global Management, LLC (NYSE: APO) that are creditors of CEVA, (ii) certain funds advised by Capital Research and Management Company that are creditors of CEVA and (iii) the Company’s largest institutional investor.  These three parties will become the three largest shareholders of CEVA pursuant to the contemplated Recapitalization.

Consents to the Recapitalization, to be effectuated through exchange offers, will be sought from holders of the Senior Unsecured Debt and the Second Lien Notes pursuant to the terms and conditions that will be set forth in an offering memorandum, consent solicitation and disclosure statement.  CEVA expects to launch such exchange offers promptly.

Under the restructuring support agreement, the closing of the transaction will be conditioned upon, among other things, 98% of the aggregate principal amount of the Second Lien Notes and the Senior Unsecured Debt of CEVA being validly tendered and not withdrawn in the exchange offers.  In addition, in order to consummate the exchange offers, CEVA is seeking certain concessions from certain other creditors, including its asset based lenders and secured credit facility lenders.  As long as the restructuring support agreement remains in effect, each of the parties to the agreement has agreed to use commercially reasonable efforts to support and complete the Recapitalization.  In connection with the Recapitalization, CEVA did not make the interest payments due as of April 1, 2013 on the Second Lien Notes and the 12.75% Senior Notes due 2020; such action will not constitute an event of default during the 30-day cure period under their indentures, and holders of CEVA’s other debt will not be permitted to accelerate their debt before the expiration of the cure period.  As of 31 March 2013, the Company had approximately €200 million of total headroom.  The Company will seek to implement the Recapitalization during the 30-day cure period.

For more information, contact:

Mike Darcy
+31 622 482 604
mike.darcy@cevalogistics.com

CEVA – Making business flow

CEVA, one of the world’s leading non-asset based supply chain management companies, designs and implements industry leading solutions for large and medium-size national and multinational companies.  Approximately 50,000 employees are dedicated to delivering effective and robust supply chain solutions across a variety of sectors and CEVA applies its operational expertise to provide best-in-class services across its integrated network, with a presence in over 160 countries.  For the year ending 31 December 2011, CEVA reported revenues on a preliminary unaudited basis of €6.9 billion.  For more information, please visit www.cevalogistics.com

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