Melita Capital Plc Presentation 25 th August2009 25 th August 2009 - - PowerPoint PPT Presentation

Melita Capital Plc Presentation 25th August2009 25th August 2009

Introductions–Panel Introductions –Panel

b i i Joe Gasan Sebastian Sipp

• Chairman of Melita Capital
• Chairman of the Gasan Group
• Co‐founder of Melita in 1992
• Principal at GMT Communications Partners LLP.
• Involved in the management of GMT portfolio

companies P i i i bl ti

Gary Quin Vincent E Rizzo

• Prior experience in cable operations
• Director of Melita Capital and CEO of Blackrock
• Director of Rizzo Farrugia

Charles Borg

• Director of Melita Capital and CEO of Blackrock

Communications

• Extensive experience from the roll‐out of international

mobile operations

• Significant capital market experience

Director of Rizzo Farrugia

• Chief Officer, Financial Markets, Bank of Valletta

In attendance: Stephen Wright – CEO ‐ Melita Andrei Torriani – COO ‐ Head of Melita Mobile Michael Maltby – CFO ‐ Melita

2

Michael Maltby – CFO ‐ Melita

WhyMelita Capital? Why Melita Capital?

• Over €50m has already been invested in Melita Mobile and Melita

Over €50m has already been invested in Melita Mobile and Melita Infrastructure – our submarine cable company

• The terms of the 2007 leveraged buyout of Melita Cable restrict

changes in the company’s capital structure

• As a result Melita Capital has been established as the new

financing/holding company of the new business of Melita financing/holding company of the new business of Melita

• Bondholders will be investing in a major Maltese brand, whose

value has been recognised and backed by successful international a ue as bee ecog sed a d bac ed by success u te at o a investors

• They will be directly expanding Malta’s national infrastructure

which in turn will facilitate further foreign direct investment as well as providing value and infotainment to Malta’s citizens

3

ExecutiveSummary Executive Summary

• Melita Capital intends to raise up to €30m through a 7 year

Melita Capital intends to raise up to €30m through a 7 year unsecured bond issue on the Alternative Companies List of the Malta Stock Exchange – subject to final MFSA approval

• Melita Capital owns 100% of Melita Infrastructure and 30% of

Melita Mobile

• More than sufficient funds to meet interest payments through
• More than sufficient funds to meet interest payments through

Melita Infrastructure

• Sufficient funds to meet sinking fund requirements

Su c e t u ds to eet s g u d equ e e ts

• Opportunity to invest in one of Malta’s best known brands
• The bond will finance one of Malta’s fastest growing companies

backed by the strong, stable cash flows associated with an infrastructural investment

4

Useof Proceeds Use of Proceeds

• €7.5m loan to Melita Infrastructure refinancing

project funding

• €17‐22m loan to Melita Mobile refinancing project

funding and facilitating future financing needs

• Leading local bank will continue to provide funding

support to the Melita Capital group suppo

• e

e a ap a g oup

5

MelitaSuccessStory Melita Success Story

• Melita launched its Cable TV services in June 1992 providing

home entertainment to virtually all homes across Malta and Gozo

• Today the leading entertainment provider in Malta
• Today the leading entertainment provider in Malta

– #1 Television provider with approximately 100,000 subscribers – #1 Broadband provider with the country’s fastest broadband #1 Broadband provider with the country s fastest broadband service (50Mbps) – #2 Fixed‐line telephony provider (launched two years ago) p y p ( y g )

• Melita Capital will provide Melita’s next stage of growth through

– Funding the third generation (3G) mobile network rollout – Operating Melita’s newly constructed Submarine Cable

6

MelitaCapital Plc Melita Capital Plc

• Melita Capital owns 100% of Melita Infrastructure 30% of Melita Mobile
• Melita Capital owns 100% of Melita Infrastructure, 30% of Melita Mobile

and a pledge on the remaining 70% of Melita Mobile (held by Melita Plc)

• The main purpose of the bond is to finance the growth of Melita Mobile,

Malta’s fastest growing mobile operator – This will involve a mixture of subscriber acquisition costs and further capital expenditure to meet the demands of an increasing subscriber capital expenditure to meet the demands of an increasing subscriber base

• Melita Capital also owns Melita Infrastructure

– The recently completed submarine cable company connecting Malta with Sicily – Highly cash generative with excellent margins Highly cash generative with excellent margins – Set to win significant contracts connecting the Island’s institutions to high speed internet hubs in Europe

7

TheMelitaGroup The Melita Group

The Sponsors(1) 100% Melita Capital plc Honey Group 100% 100% Melita Melita Plc 100% 100% Melita Infrastructure 70% 30% Melita Mobile

(1) The Sponsors are GMT Communications Partners MC Venture Partners Gasan and Blackrock Communications (1) The Sponsors are GMT Communications Partners, MC Venture Partners, Gasan and Blackrock Communications 8

MelitaShareholders Melita Shareholders

GMT GMT C i ti P t i l di i t it fi f i i t t i th

• GMT ‐ GMT Communications Partners is a leading private equity firm focusing on investments in the

European communications industry. GMT has established three funds since its launch in 1993 and has since made 28 investments across 18 countries. GMT has organised syndicated portfolio financings ‐ including equity and debt ‐ with a total value in excess of €3.5 billion.

• MC ‐ M/C Venture Partners is a venture capital firm focused exclusively on the communications, media

and information technology sectors. Since inception M/C Venture Partners has invested over 1.8 billion US Dollars in almost 100 emerging companies of all stages of growth. The firm’s current investment vehicle, M/C Venture Partners VI, is a US$550 million fund.

• Gasan Group ‐ Besides its interest in the Melita Group, the Gasan Group holds a diversified portfolio of
• ther assets, including shares in property development companies and listed securities. The Gasan Group

is also engaged in the operation of motor vehicle dealerships and related services, the provision of insurance services, the holding and renting of property as well as the provision of electrical and mechanical engineering contracting services, lifts and air conditioners.

• Blackrock Communications ‐ Blackrock Communications is a private equity vehicle focused on

telecommunications opportunities , with a sectoral bias towards mobile opportunities. Blackrock’s principals have been involved in over 30 mobile launches and have raised over $3bn in bonds related to p p $ these operators.

9

MelitaInfrastructure Melita Infrastructure

• The Sponsors laid a Submarine Cable between

Malta and Sicily to provide international bandwidth to Melita’s Internet and Telephony customers

• Investment rationale to develop Melita

Infrastructure include – High margin business with attractive growth profile Avoid dependency on competitors for – Avoid dependency on competitors for international bandwidth supply

• Melita Infrastructure is able to provide secure,

high speed access to Maltese institutions including Melita plc

10

MelitaInfrastructure–FutureProofNetwork Melita Infrastructure –Future Proof Network

h fl f l d d l f l ’

• Secure, growing cash flow profile generated predominantly from Melita’s

internet customers – Melita ranks #1 as Internet provider with >50% market share p – Provider of the fastest internet product on Maltese Islands

• Fiber optic network technology future proof with bidirectional capacity of

320G / il bl b i l d d l 320GB/s available between European mainland and Malta – Melita plc projects bandwidth requirement of 26 GB/s by 2015 – Ample capacity remaining to serve Maltese institutional and corporate Ample capacity remaining to serve Maltese institutional and corporate customers

• NEWS: The Group just won a tender from the University of Malta to

id i i h i i i provide it with next generation connectivity – Project value of €1.5m

11

MelitaInfrastructure–BusinessPlan Melita Infrastructure –Business Plan

• IP connectivity / bandwidth generate revenues of €3.3m in 2010, with an

expected growth rate over the next 3 year of a CAGR of 33%

• Highly cash generative, achieving EBITDA margins in excess of 45%

Highly cash generative, achieving EBITDA margins in excess of 45%

• Bandwidth consumption expected to increase rapidly as:

– The Melita subscriber base grows (more broadband and mobile subs) – Increasing bandwidth consumption (+50Mbps)

• Significant Revenue upside achievable providing secure, premium

bandwidth (IP transit) products and hosting solutions to Maltese bandwidth (IP transit) products and hosting solutions to Maltese institutions – Additional business not reflected in Melita Capital’s business plans

• Melita Infrastructure’s cash flows will service the bond interest

12

MelitaSponsors’ TelecomsExperience Melita Sponsors Telecoms Experience

• Sponsors of Melita Capital have been involved in over 30 mobile
• Sponsors of Melita Capital have been involved in over 30 mobile

launches and 10 cable companies since 1995

• Cable and broadband successes have included Casema in the

Cable and broadband successes have included Casema in the Netherlands, Pepcom in Germany, Invitel in Hungary and GTS Central Europe

• Most mobile launches have been in well penetrated, densely

populated island economies ll b l l h h b b

• All mobile launches have been number 2 or 3 operators

competing against large international players

• Mobile examples include Esat in Ireland Digicel in Jamaica and
• Mobile examples include Esat in Ireland, Digicel in Jamaica and

the Caribbean, Metro PCS in the USA, Mobifon in Romania

13

TheOpportunity MalteseMobileMarket The Opportunity ‐Maltese Mobile Market

M k ill d d i h 93% f l h i SIM

• Market still under‐penetrated with 93% of people having a SIM

card – The European average is 128%(1) – The European average is 128%( )

• Market split assumed to be Prepaid 60% / Postpaid 40% by 2015

coming from 86% / 14% as market saturates. g / – High value post‐paid subscribers in the Maltese market

• Potential of 3G services largely untapped with current unexploited

market demand. Recent shift in consumption behavior from SMS to Voice, pushed by Melita mobile’s attractive postpaid packages 3G h l b ld id d d f i i

• 3G technology best worldwide standard for communication

(1) Merrill Lynch Wireless Matrix 13 April 2009 14

Melita Mobile Overview

• License awarded August 2007 with a 15 year term

Melita Mobile Overview

License awarded August 2007 with a 15 year term – Launched 1 February 2009 backed by Melita’s high quality fiber network and strong brand name

• Key Milestones

– Over 25,000 Maltese consumers have connected to Melita Mobile Post paid packages in high demand (85% of current subscribers) – Post‐paid packages in high demand (85% of current subscribers) – Full 3G coverage of the Maltese Islands

• Significant further growth potential for Melita Mobile

g g p

• Potential to use video rich content from Melita to benefit Maltese

consumer via Melita Mobile’s 3G services M li i hi k h f fif h f h M l bil

• Melita aims to achieve a market share of one fifth of the Maltese mobile

market in the medium term

15

MelitaMobile–BusinessPlan MelitaMobile –Business Plan

• Melita Mobile bases its potential to grow its subscriber base on
• Melita Mobile bases its potential to grow its subscriber base on

the back of its (1) world class network, (2) affordable pricing model and (3) high quality cable customer base

• The primary sources of revenues for Melita Mobile is currently

voice calls. The future contribution of Data is assumed to increase significantly significantly

• Melita Mobile is projected to turn EBITDA positive in 2010 and free

cash flow positive in 2011 and will provide the necessary funds for cash flow positive in 2011 and will provide the necessary funds for Melita Capital’s sinking fund

16

ProFormaCapitalizationOverview Pro Forma Capitalization Overview

8.7 cash Pre Bond Post Bond 36.7 28 0 net debt d b bond/ debt 20.3 28.0 net debt debt debt 31.5 31.5 31.5 SI/equity SI/equity SI/equity

Note: IFRS treatment of gearing ratio includes accounting net losses within total equity position implying a reduction to €22 5m 17 Note: IFRS treatment of gearing ratio includes accounting net losses within total equity position implying a reduction to €22.5m

Sinking Fund Sinking Fund

• Melita Capital will for the 5 years from the end of FY 2011

build a sinking fund equivalent to at least 50% of the value of the bonds to create a cash reserve to meet part of the the bonds to create a cash reserve to meet part of the redemption proceeds

• The Sinking fund will be built from Melita Mobile cash

The Sinking fund will be built from Melita Mobile cash resources

• The Sinking fund will be invested in low risk fixed income

g securities by an authorised independent trustee

18

BondIssueSalient Points Bond Issue Salient Points

• Issuer

Melita Capital Plc

• Amount

€25m + €5m Amount €25m + €5m

• Coupon

7.15%

– Semi annual payments in March and September

• Term

2014 – 2016 Term 2014 2016

• Final Maturity Date

30 S t b 2016 30 September 2016

19

BondIssue OtherIssues Bond Issue ‐Other Issues

• Other bonds – property and tourism sectors

are most exposed internationally and in Malta p y to recessionary environment

• Telecoms are internationally recognised as
• Telecoms are internationally recognised as
• ne of the most defensive and least impacted

in a recessionary environment

20

Timetable Timetable

• August 28th

Expected approval by MFSA

• August 28th – Expected approval by MFSA
• September 7th – Formal notice
• September 11th – Application forms and

prospectus available prospectus available

• September 24th – Preplacements (60% of

€30m) and Preferred Applicants

• September 28th – Opening of Subscription lists

September 28 Opening of Subscription lists

• October 2nd ‐ Closing

21

ApplicationProcedure Preplacement Application Procedure ‐Preplacement

h

• Preplacement – September 24th @ 1200 CET

– €18m on offer

• Preferred applicants

– €3m reserved – €3m reserved

• Minimum subscription per intermediary ‐ €200,000
• Minimum underlying application ‐ €10,000

22

ApplicationProcedure–GeneralOffer Application Procedure –General Offer

• Opening – September 28th @ 8.30am
• Closing – October 2nd @ 5pm

Closing October 2 @ 5pm

• Minimum subscription ‐ €1000 and multiples

f €100 h f

• f €100 thereafter

23

IssuerAdvisers Issuer Advisers

• Legal Counsel – Camilleri Preziosi
• Reporting Accountants and Auditors – PWC

Reporting Accountants and Auditors PWC

• Manager and Registrar – Bank of Valletta
• Sponsor – Rizzo Farrugia & Co Stockbrokers

24

WrapUp Wrap Up

• Melita Capital ties the strong cash flow

generation of Melita Infrastructure with the superior growth potential of Melita Mobile

• Melita Capital’s investments in Melita

Melita Capital s investments in Melita Infrastructure and Melita Mobile are supported by solid business fundamentals both present and by solid business fundamentals, both present and future, but they are also an investment in the future of Malta as an information society future of Malta as an information society.

25

NextSteps Next Steps

• You will all have received a USB key with the following info –

You will all have received a USB key with the following info

1) A copy of the presentation 2) Pro forma Consolidated Financial Information of Melita Capital plc and Accountants’ Report as at 31 May 2009; 3) Audited Financial Statements of Melita Capital plc for the period commencing on the date of registration of the Issuer and ended 24 commencing on the date of registration of the Issuer and ended 24 July 2009; 4) Audited Financial Statements of Melita Infrastructure Limited for the f l d d d financial period ended 31 May 2009; 5) Audited Financial Statements of Melita Mobile Limited for the financial period ended 31 May 2009 p y

• Contact info – Bank of Valletta +356 2275 5005

26

Thank You