Technicolor announced plans to spin off Technicolor Creative Studios, housing its visual effects and animation businesses including MPC Film (formerly known as the Moving Picture Co.), through a share distribution to company shareholders.
Paris-based Technicolor will remain listed on Euronext Paris. Following the spinoff of Technicolor Creative Studios, the parent company will retain up to 35% ownership. Technicolor will have two main lines of business following the transaction: Connected Home, a provider of broadband and Android TV tech solutions; and DVD Services, which provides replication, packaging and supply chain solutions for packaged media and related products for across film, TV, games and music industries.
Along with the TCS spin, Technicolor expects to refinance its debt with the issuance of €300 million ($336 million) in mandatory convertible notes. The refinancing and the spin-off are expected to be completed by the third quarter of 2022, subject shareholder and regulatory approvals.
In addition, Paris-based Technicolor said it received a binding offer to sell its trademark licensing operations for about €100 million ($112 million) in cash. The transaction will let the company “further simplify its structure with the sale of non-core assets, and to increase Technicolor financial flexibility,” it said.
“After a comprehensive review, we determined that pursuing the partial spin-off of TCS from the Group along with the full refinancing of the existing debt will be the solution that best aligns strategy, value creation and financial objectives for all of Technicolor’s stakeholders,” Technicolor CEO Richard Moat said in a statement.
The company announced the Technicolor Creative Studios spinoff plans and the deal to sell the trademark licensing unit as part of reporting full-year 2021 results. Revenue declined 4%, to €2.9 billion, while it narrowed its net loss to -€140 million (versus -€211 million in 2020).
The latest moves come after Technicolor sold its postproduction division in April 2021 to L.A.-based Streamland Media for $36.5 million. That followed Technicolor’s bankruptcy reorganization in 2020 to restructure its nearly $1.6 billion in debt.
Technicolor forecast strong demand for Technicolor Creative Studios’ VFX creative and technology services. The newly spun-off division is “expected to continue to grow significantly throughout 2022,” Technicolor said. The division has won multiple new projects, resulting in approximately two-thirds of the revenue pipeline for MPC and Mikros Animation “being already committed for 2022,” per Technicolor’s announcement.
MPC’s credits include work on the upcoming “Top: Gun Maverick” and Disney’s live-action “The Little Mermaid,” as well as on Steven Spielberg’s “West Side Story,” “The One and Only Ivan,” “1917,” “Ghostbusters: Afterlife,” “Cruella,” “The Martian” and “Guardians of the Galaxy.”