Davis Polk is advising the board of directors of Solocal Group S.A. in connection with its recent financial restructuring. The restructuring agreement, executed on July 3, 2020, which remains subject to the approval of the shareholders (scheduled to occur on July 24, 2020, during the Combined General Meeting), will enable Solocal to secure a €117 million liquidity injection. This financial restructuring, unanimously approved by the board of directors, relies mainly on a €347 million capital increase, open to all existing shareholders and fully backstopped by bondholders, that will enable (i) a €252 to €262 million debt reduction (principally by way of debt conversion) and (ii) an €85 million cash injection. This cash injection will be completed by a €32 million additional financing fully underwritten by bondholders, in case Solocal is not able to execute a Prêt Garanti par l’Etat (PGE) before the Combined General Meeting. This transaction will require a decrease in share nominal value and will be followed by a reverse stock split (100 old shares for 1 new share). Prior to the implementation of the €347 million capital increase, existing shareholders will benefit from a 627 million free shares allocation in order to reduce the dilutive impact of the transaction. If approved, the transactions may take place at the end of September 2020.

Should the plan be rejected by the Combined General Meeting on July 24, 2020, Solocal Group will have to request the termination of the existing safeguard plan (plan de sauvegarde) and the closing of the conciliation proceedings opened in March 2020. In this case, Solocal would have to announce that it is in a state of suspension of payments (état de cessation des paiements). In anticipation of this eventuality, the company already applied for a hearing with Nanterre’s Commercial Court (Tribunal de commerce de Nanterre) in order to request the opening of a receivership proceeding (redressement judiciaire) as the case may be.

Solocal Group S.A. is the leading French provider of digital local media and marketing.

The Davis Polk team includes counsel Georges Terrier and associates Géraldine Fromage and Ferdinand Barbé. All members of the Davis Polk team are based in the Paris office.