The board of Digital 9 Infrastructure (DGI9) has provided a progress update on the closing conditions required for the sale of the Verne Global group of companies, a transaction that is key to repaying DGI9’s revolving credit facility (RCF).
The board notes that the RCF lenders have granted their approval to proceed with the completion of the Verne Transaction, and that lenders under the debt facility in respect of the Icelandic branch of Verne Global granted conditional consent to the change of control. In effect this means that the closing of the Verne Transaction is now conditional on receiving approval from the relevant regulators, specifically on applicable merger control approval in Iceland and on Foreign Direct Investment approval in Finland.
DGI9 has also entered into an amendment letter regarding the RCF terms which defines the range of the anticipated RCF repayment following completion of the Verne Transaction (excluding receipt of the potential earn-out payment). The result of this amendment will be an interest rate expense saving of c.£25m, and group debt in aggregate between £250m and £260m. The Verne Transaction’s closing will enable DGI9 to accelerate its balance sheet deleveraging and deliver the cash resources necessary for DGI9 and group to strengthen their position.
[QD comment: “While we welcome any positive new around DGI9, given the sheer volume of capital that is primed to be returned to shareholders the announcement today is not a transformative as one may think. We doubt that either Verne or the creditors would have ever set out to challenge the sale, especially now that the whole company is being unwound. Likewise, the reduction in the cost of debt is welcome, but pales in comparison to potential value left to unlocked in the trust. Ultimately the regulatory hurdles remain a (possibly unexpected) unknown in the Verne transaction, and something that none but industry experts are able to give any real judgment on. Given that the debt repayment is effectively gatekeeping the rest of the realisations, the near-term future of DGI9 seems to still be in the hands of the Nordic regulators.”]