Cedacri Prices New €275M Bond to Pay €50M Tax and €150M Extra Dividend

Cedacri spa (ION Group), a group specializing in outsourcing IT and back office services to banks, priced a new €275 million bond last May. The bond was issued at a price of 94 cents of the nominal amount with a coupon equal to the Euribor rate (with zero floor) plus a spread of 550 basis points, and the size was increased from the €250 million initially proposed. The bond was listed on the Vienna Stock Exchange.

The resources raised from the issue will be used in particular for a one-time payment of substitute tax under the step-up tax regime applicable under Italian tax law and to pay an extraordinary dividend to shareholders.

As further explained in the statement in which Fitch Ratings raised Cedacri’s outlook to negative from stable, while affirming its corporate rating at B, the new debt issue will finance the payment of about €50 million in taxes, which will allow Cedacri to access tax savings. The issue will also finance about €150 million in distributions to shareholders.

In 2021, the acquisition of Cedacri by ION Investments, a global technology provider to the financial sector founded more than 20 years ago by Italian entrepreneur Andrea Pignataro, had been financed in part with a €650 million senior secured bond issued by Cedacri’s parent Cedacri Mergerco spa maturing in 2028 that was priced at par and pays a variable coupon indexed to the Euribor rate plus a spread of 4.625 percent with a 0 percent floor.

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The bond proceeds had also been used to refinance Cedacri’s debt

The bond represented the bulk of Cedacri’s debt, which in addition to the bond had also obtained a €60 million super senior revolving credit facility. That bond is also listed on the Vienna Stock Exchange. In May 2022 Cedacri MergerCo had then placed in private placement another €105 million of the same bond, thus bringing the total size of the issue to €755 million.

As stated in the Report to Cedacri’s 2022 Annual Report, and as recalled in the release in which Moody’s assigned a B3 rating to the new bond issue, the reverse merger of Cedacri Mergerco into Cedacri had been conducted at the end of last year. The group ended 2022 with €349 million in consolidated revenues (up from €335.2 million in 2021), EBITDA of €120.5 million (up from €88.5 million), and net financial debt of 598 million (up from 216.1 million).

In the release of the new bond launch last May 10th, Cedacri released its first numbers on business performance in 2023: for the months of January and February 2023, recurring revenues increased by about 8 percent, total revenues increased by about 5 percent, and adjusted ebitda increased by about 6 percent compared to the same period in 2022. For the twelve months ended February 2023, pro forma adjusted EBITDA remained stable at about €191 million, and the ratio of net debt to pro forma LTM adjusted EBITDA remained at about 3.8 times, both in line with December 31st, 2022. These trends continued in March 2023.

Recall that Cedacri had been acquired by ION, controlled by Andrea Pignataro, in 2021 based on an enterprise value of €1.5 billion. The sellers had been the FSI fund, led by Maurizio Tamagnini, which owned 27.1 percent, and several Italian banks. FSI reinvested in the acquisition vehicle.

As for ION, we recall that last May it finally reached an agreement with banks on financing to cover more than half of the price for the acquisition of Prelios, a group active in alternative asset management and specialized real estate services, with €40 billion in assets under management, controlled by Davidson Kempner Capital Management and on the market since late 2020.

Indeed, Prelios chairman Fabrizio Palenzona, speaking last Tuesday, May 23rd, at the first Bain Banking Event in Milan, commented, “We are well underway, we are optimistic and we hope to enter the future soon together with the ION group. As for the timing, the shareholders are in charge, but I hope to close by the summer-I am anticipating and rooting for it to happen. Let’s see what the shareholders will say, but we are optimistic.” And Luca Peyrano, managing director of ION, speaking in turn at the conference, confirmed, “Those in Cedacri, Cerved and List may not be the group’s last investments in Italy (without contrate the 9.8 percent in illimity and 2 percent in MPS, ed.). I look to my right (where Palenzona was sitting, ed.) then the shareholders will decide.” Last December ION secured exclusivity to deal on the basis of a valuation of 1.3 billion euros.

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(Featured image by geralt via Pixabay)

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First published in Be Beez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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