Ymagis' bid to take over Eclair Group’ businesses accepted by the Nanterre Commercial Court.
Ymagis Group (ISIN: FR0011471291, TICKER: MAGIS), the European specialist in digital technologies for the cinema industry, has announced that its offer to take over the businesses and certain assets of Eclair Group was accepted today by the Nanterre Commercial Court as part of the company's rehabilitation proceedings, which began on 12 June 2015
Eclair was founded in 1907 by industrialist Charles Jourjon, who joined the tradition of the great pioneers of French cinema such as Léon Gaumont and Charles Pathé. The Group has a very long history as a trustworthy partner for the film industry. Its name is recognised worldwide for the quality of its services, as well as several innovations that have marked the motion picture industry, especially the invention of different type of cameras.
Over the last few years, Eclair Group has been severely hit by the sharp decline in its photochemical activities due to the transition of the whole industry from film print to digital. The group significantly reduced its revenue and workforce, which considerably affected its financial position. After several years of restructuring, the Group has refocused on future-oriented activities grounded in four major areas: localisation businesses (subtitling, dubbing, etc.), content distribution services, film and video restoration, and postproduction. Eclair Group's consolidated financial statements show that in 2014 it generated €37.7m in revenue, almost entirely from the French market, and negative operating income of €3.5m.
Under the terms of the offer, Ymagis will purchase Eclair Group's operating activities, its holdings in several subsidiaries in France, Germany and Morocco, tangible assets including property and some intangible assets. Ymagis will not take over any liabilities incurred by Eclair Group before the judgment deciding about the cession plan.
To manage the businesses acquired, Ymagis will create two new subsidiaries that will be wholly-owned by Ymagis SA: Eclair Media SAS taking over the content distribution and localisation services, and Eclair Cinéma SAS being responsible for postproduction and restoration.
These businesses will complement Ymagis Group's existing "Content Services" division in terms of digital content delivery to movie theatres, opening the group up to new developments in video businesses (services for TV channels, VOD platforms, etc.). Ymagis' goal is to develop these activities internationally once Eclair's restructuring has been completed.
Of the 320 people currently employed by Eclair Group, 233 will join the new structures Eclair Media SAS and Eclair Cinéma SAS as well as the subsidiaries taken over. A team of specialists dedicated to managing these activities will be recruited and will report to Ymagis' management committee.
Ymagis will pay €670k to acquire these assets, including inventory. Furthermore, Ymagis will contribute €217k to the redundancy programme for employees not kept on, and will assume responsibility for €337k in fees owed to specific suppliers in order to ensure the businesses can continue operating. The total amount of approximately €1.2m will be fully financed by the company's own equity. The Group is now in talks with its financial partners to optimise the financing of its operational cash flow.
The takeover comes into effect on 1 August 2015. The Eclair Group's earnings will be consolidated starting from that date.
"We are very pleased that Eclair Group, whose name is firmly imprinted in the cinema history, has joined our team. This transaction will create an alliance between tradition and modernity and is part of our strategy to develop our business portfolio. Eclair will help Ymagis Group offer new services to content providers, with promising opportunities for further international expansion", said Jean Mizrahi, Chairman and Chief Executive Officer of Ymagis. "We will put our expertise, technical knowledge, business skills and international network to work in rejuvenating the century-old company, whose name is respected worldwide. The goal is to help Eclair recover its past glory."
Next publication: H1 revenue, Tuesday, 4 August after market close.
Founded in 2007 and managed by professionals from cinema and high-tech industries, YMAGIS (www.ymagis.com) is specialized in services for digital cinema. YMAGIS provides services to producers, distributors of movies and alternative content, advertising sales agencies and cinema exhibitors, to ensure a smooth transition of their operations from 35-mm to digital, while keeping costs under control and producing the best possible mix in terms of creativity, marketing and financing. YMAGIS’ offer covers three main business areas: the management of VPF(2), services to exhibitors (“Exhibitor Services”) and services to producers / distributors (“Content Services”). The services to exhibitors cover sale and installation of equipment for cinemas, maintenance and online support services for digital projection equipment, sale and leasing of 3D glasses, while the services to producers and distributors cover post-production of content as well as preparation and distribution of DCPs(3) and KDMs(4). YMAGIS’ digital laboratories deliver thousands of DCPs and KDMs to cinemas each week on behalf of its distributor and advertising sales agency clients. During the 2014 fiscal year, the Group generated consolidated revenues of €84.6 million, an increase of 78.9% compared with 2013, including dcinex sales beginning October 1, 2014. The consolidated pro-forma (1) full year 2014 revenues stand at €150.4 million compared to €139 million in 2013 (+8.2%).
- Pro-forma revenues are based as if dcinex acquisition was carried out as of January 1, 2013.
- VPF or Virtual Print Fee: Fee paid to YMAGIS Group by the supplier of digital content, mainly the distributors of feature-length films, in order to allow the projection of this content in a theater under VPF contract with YMAGIS Group, regardless of the equipment financing model chosen by both parties (Third Party Investors – financing carried out by YMAGIS Group - or Third-party Collector – financing carried out by the exhibitor). The VPF collection makes it possible to cover a significant part of the financing of digital projection equipment, the balance being supported by the exhibitor under contract with YMAGIS Group.
- DCP: Digital Cinema Package - group of digital files comprising feature-length films, trailers and commercials, or any other content shown via a digital projector.
- KDM: Key Delivery Message or contents’ unlocking key. The distributor sends an electronic message to the exhibitor, containing the key enabling the digital copy (or DCP) to be played.