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Money Lagardère forced by its creditors to reduce its dividend

20:25  03 may  2021
20:25  03 may  2021 Source:   pressfrom.com

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Lagardère contraint par ses créanciers de réduire son dividende © Renaud Khanh / abaca Lagardère forced by its creditors to reduce its dividend The creditors of the group, whose state, have required no dividend in 2021 nor 2022, and not exceed 0.5 euro per share in 2023.

"I confirm that the Lagardère group will not pay a dividend in 2022 for the year 2021," said Arnaud Lagardère at the Figaro last week . But the co-manager forgot to say that this deletion of the dividend was requested by his creditors, that is to say the banks and the state. Indeed, according to the capital information, the funding agreements of the group passed with them caps the dividend over the coming years. Precisely, these agreements stipulate that no dividend will be paid in 2021 or 2022. In 2023, the dividend paid shall not exceed 0.5 euros per share, or 70.5 million euros, provided that the net debt less than 2 billion euros (it amounted to 1.7 billion euros at the end of 2020). Finally, in 2024, the dividend will be up to 1.3 euro, or 180 million euros.

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This austerity cure does not make the business of the shareholders of the group, accustomed to collecting since 2008 a Generous dividend of 1.3 euro per share. So generous that it often absorbed the entire net result, or even more.

One of the main shareholders is Arnaud Lagardère himself, who has so far held 7% of the capital, and will go up to 14% with the end of the sponsorship. The dividend was a major sources of income, bringing it around 12 million euros a year. His detractors accused him to maintain a high dividend to maximize his personal income, and thus reduce his heavy personal debt, but he has always been defended. "The dividend is not the obsession of Arnaud Lagardère, who does not have to deal with cash requirements that could feed such an obsession," held his right arm Pierre Leroy in 2017 at the General Assembly. .

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but the health crisis hard hit the results of the group, which lost 660 million euros last year, making it unreasonable the payment of a dividend. Above all, if Lagardère sees his capped dividend, it is because the banks as the state asked him this condition to lend him money.

and the group needed new loans, because its main bank credit was no longer holding.

Indeed, this line of 1.25 billion euros imposed that the net debt remains less than 3.5 times the gross operating surplus (EBITDA). Otherwise, credit should be refunded immediately. With the crisis, this eBitda collapsed, and therefore the ceiling was exceeded. In April 2020, the Group obtained a stay of its banks, allowing it not to respect this ceiling until the end of 2020.

finally, in December 2020, a new bank credit was concluded. It amounts to 1.1 billion euros maximum. The debt ratio was raised from 3.5 to 4.5 times the EBITDA and will only be applied from the end of 2022. But a minimum level of cash is now required, ranging from 750 million euros in March 2021 to one billion euros in September 2022. In order to return this cash, the Group obtained at the end of December a loan guaranteed to 80% by the State (EMP) of 465 million euros. Signed on December 18, 2020, the loan was drawn from January 8, 2021. This loan was coordinated by Crédit Agricole, which is also the bank with which Arnaud Lagardère is personally indebted. Seven other banks contributed to the EMP: BNP Paribas, Commerzbank, LCL, Ing, Natixis, Societe Generale and Unicredit.

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Note that creditors have also imposed that stock market buybacks remain below 5 million euros a year, as long as debt will be greater than 3.5 times the EBITDA. The general conditions of the PGE on the site of Bercy are less drastic: do not pay dividend in 2020, and not to redeem actions in 2020.

should also note that 300 million euros were drawn the Last year on bank credit of 1.25 billion euros, mainly to repay cash notes. It remains 950 million euros not drawn. In its accounts, the Lagardère Group estimates its cash, plus these 950 million euros, are "sufficient to cover its financing needs in 2021, both operational as those related to the reimbursement of maturities due to € 493 million "

contacted, the Lagardère group did not respond.

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