Transaction Overview
DC Dwek Corporate Finance has completed the disposal of two media businesses
for Sky to the full satisfaction of the shareholder, management team and
the financial purchaser. For further details, click
here
DC Dwek Corporate Finance formed a consortium for Subsea Infrastructure
that won a tender with the Government of Cyprus for a mobile water desalination
project. We also arranged the financing for Subsea Infrastructure. A local
company Silnir Cyprus has been incorporated. David Dwek is a Director
of both companies. For a description of the activities,
click here
Gilat Satcom, an international telecom operator was successfully de-listed
in July 2008 following its flotation on AIM in 2005. The company was turned
around with a new CEO and controlling shareholder. David Dwek was a non-executive
Director of Gilat Satcom during its public listing in London. For background
information, click here
Background of the Transactions
Headland Media
is involved in the in-store media business including bespoke music and
screen services as well as the provision of news and DVD services to the
cruise, merchant ship and hotel markets,. British Sky Broadcasting (Sky)
purchased these two separate businesses as part of its acquisition of
365 Media Group ("365") in early 2007.
Whilst the two businesses had been profitable for many years, they did not form part of Sky’s future strategy. DC Dwek Corporate Finance commenced the sale process by engaging the management team and ensuring that their objectives were aligned with those of the selling shareholder. We offered the two companies either as a combined entity or alternatively as two separate businesses. In particular, the management team was excited to develop the two businesses as a combined entity due to the significant marketing and operational synergies available.
The preliminary information was analysed and a valuation range agreed based on the prospective cash flows of the business and multiple analysis of comparable companies in the sector. Once all parties agreed on the information memorandum, we approached around 50 potential purchasers. These included both trade purchasers for either the in-store media and/or the news businesses. We also approached the private equity community in the UK and Europe due to the cash generating potential and the opportunity of leveraging the balance sheets.
After the review of the preliminary information provided, interested parties were requested to provide a non binding indicative offer for the businesses. This allowed us to gauge the level of interest and to invite these parties to presentations with the management team.
We narrowed the group down to six parties and a more detailed management presentation was prepared with further financial breakdowns. This enabled the potential purchasers to discuss their objectives with the management team and to assess the fit into alternate business models.
Further information was provided and the interested bidders submitted revised offers. Once the revised bids were received, it was apparent that both trade and private equity interest remained.
Our objective was to complete the process as rapidly as possible, but to retain competitive tension. Three parties were left with significant interest and further discussions with management took place, analysing more detailed monthly and quarterly financial data. A final round of indicative bids was received and one bidder was eliminated.
A draft version of the Sale and Purchase Agreement (SPA) was dispatched and negotiations commenced. One party was selected, an exclusive period agreed and detailed negotiations commenced. Time pressure was maintained to ensure that the transaction finished rapidly. Although final negotiations were tense, a deal was finally agreed that satisfied the management team, the selling shareholder and the purchaser, the private equity firm controlled by Peter Dubens.
In conclusion, the transaction was successful due to strong teamwork between the selling shareholder, the management team and the advisor to peacefully resolve issues as rapidly and positively as possible. Negotiations were often tense with the advisor ensuring that momentum was maintained until the deal was finalised.
Sky commented: "Your sound advice and transaction management skills enabled us to achieve a great result for both Sky and the management team."
Headland Media summarised the process as follows : “David represented all the stakeholders with great skill, persistence and enthusiasm. His tenacity and negotiating skills were paramount in concluding a deal for the management team in the face of a collapsing credit market."
Subsea Infrastructure
is a marine engineering firm involved in the subsea pipelines and engineering
for sectors such as undersea cables, oil and gas, the water desalination
sector. The company has used this expertise to develop a rapidly deployable
large scale mobile desalination solution. This has been successfully deployed
in Cyprus and there are increasing opportunities to provide water solutions
in many areas of the world where water is an increasingly finite resource.
In September 2007, Subsea Infrastructure formed a consortium with a desalination equipment manufacturer and a Cypriot local partner to tender for 20,000 cubic meter per day (20 million litres per day) mobile desalination plant in Limassol. The equipment can be removed to an alternate location or placed onto a barge at the end of the contract. The total capital expenditure requirement is in the order of €20m. The tender procedure followed EU procurement rules and was very detailed. Bank guarantees and strict expertise from the main contractor and the subcontractors were required.
Our consortium was awarded
the contract in December 2007 with signing taking place in February 2008.
The equipment was installed during a 9 month period which represents the
fastest execution of a large scale desalination plant to date. A number
of local and international banks were approached for the debt financing
of the project. This represented an attractive opportunity for the banks
as the cash flow was stable with revenues guaranteed by the Cypriot Government
once the plant became operational. The Bank of Scotland provided the debt
finance for the project.
The construction was completed according to the delivery schedule and following the commencement of the water delivery in December 2008, the Government will purchase the water produced at a fixed price for duration of the three year contract. (Insert photo of water desalination plant. Have text go around the picture) Taking into account the global climate change and the increasing water stress, the company plans to continue building mobile onshore and offshore desalination plants.
Gilat Satcom is a broadband
and voice satellite service provider focusing on the emerging markets.
The company was listed on AIM in 2005.
Following a change of major shareholder and CEO in 2007, a strong recovery took place in the business. However, the volume of shares traded on the AIM market was very low as well as the company valuation and a decision was taken by the Board to take the company private. This was successfully completed in July 2008. David Dwek was a non executive director of Gilat Satcom whilst the Company was listed on AIM and contributed to focus the management team and the shareholders on the key strategic and financial issues for the development of the business.
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