Solocal Group S.A. (LOCAL) Earnings Call Transcript & Summary

Hello, and welcome to the Solocal Financial Structure Strengthening Plan Presentation. My name is Rosie, and I'll be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your hosts, Pierre Danon, Chairman of the Board of Directors of Solocal; Eric Boustouller, CEO of Solocal; and Olivier Regnard, CFO of Solocal, to begin today's conference. Thank you.

Thank you, Rosie, and welcome to everybody on the call. I'm -- we are just off 3.5 months totally crazy. Since President Macron announced the lock in France, we have been working tirelessly to do whatever we can for our company, which has been hit very brutally by the crisis, by the COVID. So we are going to share with you what solutions we have come to. It is just signed. It has been signed at 1:00 this afternoon. I'm still signing some papers. It has been extremely intense phase of negotiation. We will take you through it as simply as we can and as honestly and transparently as we can. And I'm going to hand over to Eric, who is going to tell you where we were before COVID and how the COVID crisis did hit us. And then I will come back to explain to you what solution we have found and why.

Thank you, Pierre, and good afternoon, everyone, on the call. Yes. Let me take you back, in fact, you to the beginning of the year 2020 and where we are at the time. If you remember, Solocal embarked into a strategic plan back in 2018, in fact, in February 2018. That was supposed to be a 3-year plan. First year, 2018, was very much about the restructuring. The second year, 2019, was all about transforming across the board, the company. And 2020 was basically sort of a realization of that transformation, getting the return of that transformation. And when we started 2020, we were, let's say, optimistic on our ability to deliver on the plan and on expectations. Indeed, we define as guidance Digital revenue growth on the second half of the year, stabilization of our customer base for the year. And on the basis of the achievements that I just called out, we were also on the verge of possibly refinancing the company. Indeed, we were well ahead into the transformation of our plan. More than 50% of our customer base had shifted into a subscription model, basically becoming subscribers with auto renewal. Second, we were delivering on the promise of launching new digital services, including Presence and Priority Ranking, where we had registered already more than 100,000 customers by the time. And we had gone through a real revamp of all our sales organization, which ultimately was driving more productivity and efficiency. And that's basically turned into some positive traction back in Q3 and Q4 of 2019 when we could deliver growth in terms of Digital order intake. On the financial plan -- on the financial, let's say, dimension, we delivered after a year of stable EBITDA in 2018, for the first time in 9 years, we delivered, let's say, slight growth, reaching EUR 175 million pre-IFRS 16 norm in 2019. We returned to positive net income with EUR 32 million after a year of negative net income as a result of restructuring costs in 2018. And we started 2020 with sufficient liquidity, as we called out at the time for the year, yet with limited leeway. Indeed, we couldn't afford such sanitary crisis as we faced. Moving to Page 3. This is basically how you could have made a valuation of Solocal at the end of 2019. If you would just make the math and if I take you through the slide, share price of EUR 0.55 multiplied 620 million shares is worth -- equity is worth EUR 342 million, to which you can add the net debt to come to the enterprise value of EUR 764 million. And if you divide that by the EBITDA, which I called out earlier -- it's EUR 175 million, you would basically come to a 4.4 multiple. So that was basically the way you could again make new valuation of that company, which was poised to become a 100% digital company and also to turn into the real digital champion in France. Now Pierre mentioned that, this is no surprise to anyone on the call, we were really impacted violently, violently by the COVID-19. As a result of the lockdown, most of our customers were just stopped their activity. Our people internally were also basically out of work for a while. This had impact immediately on our sales. Sales declined by 75% in the last 2 weeks of March. This came to a minus 55% order intake during the lockdown period. And we estimated at the time that we would basically decline by EUR 100 million in terms of Digital order intake for the year between 2019 and 2020. I have to say that since the unlock of the economy, we've recovered. And step-by-step, week after week, we are recovering. And indeed, the last 3 weeks of June, we were roughly minus 6% versus 2019. So you see that we are making progress, but that progress cannot be enough to offset the real gap that we suffered as a result of the sanitary crisis. EBITDA is expected at EUR 122 million for 2020 compared to EUR 175 million in 2019. This is what we announced back in March. The liquidity need that we also defined is worth EUR 120 million, and the breakdown is as follows: EUR 75 million liquidity need over the next 12 months; EUR 20 million repayment of the tax and social security liabilities; EUR 15 million restructuring costs; and finally, EUR 10 million headroom to manage cash seasonality. And ultimately, we had a significant impact on our net debt, which climbed to EUR 530 million 2020 as per the forecast. That being said, let me hand over to Pierre.

So as Eric said, it has been a brutal shock for us. And if you just go back to where we were at the end of 2019 and you just simply think a few minutes, EBITDA was EUR 175 million. It's now EUR 122 million in 2020. Our multiple was 4.4. It's probably lower than that because the liquidity crisis is certainly not helping. Enterprise value, therefore, is below EUR 533 million. Gross debt on the opposite is EUR 500 million, and plus the liquidity shortfall at the end of 2020, you get to the EUR 530 million that Eric just mentioned. Which means that fundamentally, our equity value has been wiped out, and it has created an extremely difficult climate environment to find the liquidity we are looking for. It's a very challenging environment. In July -- in early August, the liquidity gap will start to materialize. So if we don't have money -- enough money at the beginning of August, we will have to file to the court. So that creates a huge stress. And of course, the gap will not be EUR 120 million right away, but it will be [ digged ] to EUR 120 million. And that means that we are in danger of having to file to the court in France. It's called redressement judiciaire. And it's a situation that we would like to try to avoid as much as we can. And we would like to find a solution, which is called in France, in bonis, means that amicable solution found with the different stakeholders. But to find that solution, in bonis, you -- we have to respect a few constraints. One of the constraint is our documentation, the bond documentation, which says very clearly that we cannot borrow more money without reimbursing the existing bond or we need to get the agreement from the bondholders. And in that frame, if the bondholders decide that they are okay to help us get the liquidity needs that we have, which Eric stated at EUR 120 million. So if the bondholders are okay to help us get the EUR 120 million, they have absolutely no reason to help anybody else help us. Now the reason why we don't want to get to the court situation is that we have 2 legal entities: We have the holding, holdco; and we have the opco, Solocal SA. In the holding, it's a very simple situation. There are no employees, no business. There is just the debt and the dividend coming from the daughter to pay the coupon, as simple as that. The daughter is the operational company, and that is where the EUR 120 million of liquidity needs to be provided. We think that taking that entity to redressement judiciaire would be a catastrophe, because remember that we have a net working capital which is negative, because our customers pay us in advance. And this is worth EUR 100 million. You can imagine that if we file to the court, there are lot of customers who will say, I don't want to pay 1 year in advance because I don't know if you will be still there in 3 months. So this EUR 100 million is going to shrink very quickly, and it's going to take us to a catastrophe in a matter of weeks, months. So that we don't want to do. And it has been a guiding factor. We need to avoid this at all cost because that would mean especially a huge risk on the employment of our people. Going after the redressement judiciaire of Solocal Group is more technical. As I said, there is no business. There are no employees. So it's kind of technical. But the reason why we are very nervous to get into that situation is that in that situation, the bondholders, all our debt bondholders, they have a guarantee on the titles of -- on the shares of pledge, on the shares of Solocal SA. And that means that they absolutely control the situation, no doubt. The only case where they could lose control of the situation and in the court, if they were not ready to fund Solocal SA. Because if they are not ready to fund Solocal SA, then the court could say, hey, the priority is to fund Solocal SA. If you guys cannot, I will find somebody else who can, and that would be bad news for the bondholders. But if the bondholders commit to fund Solocal SA, that's it. It's absolutely ended, and it means that they will fund, and they will have -- the court will authorize them to swap their debt to equity. And in that operation, the shareholders will be completely wiped out. So number one, redressement judiciaire on Solocal SA, we don't want, because it's the death of the company. Number two, redressement judiciaire on Solocal Group, we don't want because it means that all our shareholders are losing everything that they have invested in the company. We also looked for alternative solutions. Of course, we looked at amend and extend. No doubt about that. And I'm sure that our bondholders would have been interested to look at an amend and extend. The difficulties that we found is that in order to do an amend and extend, you still need to fund EUR 120 million to Solocal. And funding EUR 120 million has proven extremely difficult. A loan from the government or from the banks in France, because there is a guaranteed loan at 90%, only 10% at risk, that could be considered. But first of all, in France, we have no banks because exiting the last restructuring, all our funding is done by the bonds or by the FCF. So we don't have a French bank funding and in the balance sheet. So it's difficult because we don't have anybody to talk to. And on top of that, even some of the French banks, and especially one that is handling all our financial flows, has accepted to discuss with us. And I'm very grateful to them. But of course, they told us, okay, guys, you first restructure your debt. We are not going to put money in the balance sheet of a company who is doing EUR 122 million of EBITDA and is adding EUR 530 million of debt. That's out of question. So you need to restructure. So restructure has been a condition put by the bank and also, by the way, by the state. And honestly, of course, I regret it, but I perfectly understand it. It's rational. Anyway, we would never have found EUR 120 million, whether from a bank or from the state. So we need -- we would have needed a rights issue on that case. Rights issue, I don't know, EUR 50 million, EUR 60 million, EUR 70 million. But the point is that to do the rights issue in France, you need to have a backstop. And again, we discussed with a few investors. And we said, are you interested to backstop a reasonably small rights issue? And all the investors said, no. I'm not ready to backstop because why should I backstop a company who has EUR 120 million of EBITDA and EUR 530 million of debt. I'm not backstopping that. And therefore, we go to only one solution we had, and it's very important, and we still have today only one solution. That solution is to be -- to do a big rights issue, EUR 347 million. The only guys who are ready to backstop that are our creditors, and you can understand that. And that EUR 347 million has to be EUR 85 million in cash. Why EUR 85 million in cash? Because we think -- and I will come back to that. We think that if we have restructured the debt, we will get the banking loan guaranteed by the state of EUR 32 million. EUR 32 million plus EUR 85 million, equal EUR 117 million, which is almost the EUR 120 that we need. And actually, Eric and Olivier have done a good job in quarter 2 to put us -- the EUR 117 million actually is enough, if you take into account the good start of the new period. So you need EUR 347 million, EUR 85 million in cash. You will get the EUR 32 million, and I will come back to that, of PGE. And the rest of the money, EUR 262 million, is to reimburse the debt, to do a swap debt-to-equity in order to reduce the debt by fundamentally half. And that's the only solution that one could conceive. Debt holders have been actually quite helpful finding that solution, which is, again, the only solution that we can implement. We have received a couple of approaches. But at the end, they need to be absolutely safe and doable, and nobody has ever found a ground of agreement with the bondholders because after having done huge due diligence, they have agreed that Solocal is a good asset, that they are ready to fund. And as soon as they are ready to fund, nobody can really seriously play in the game. What do they do? I've heard in France, especially a couple of rumors, say, they don't do much. They take control of the company and not doing much. This is, I'm sorry to say, completely untrue. First of all, they backstopped EUR 347 million, which nobody wanted to do. But on top of that, they backstopped EUR 85 million in cash, which means that in case we would not get EUR 85 million in cash from the rights issue, well, they would put the cash. And they would put their money where they talk. The second thing is that they commit to a debt-to-equity conversion, which is taking the risk of Solocal. As I told you, they did their due diligence. They are comfortable that the asset is worthwhile doing a swap debt to equity, but it's a risk that they take. They also committed to fund the EUR 32 million of loan in case we would not get the PGE. And that was fundamental for our conciliator because in court, in France, what you need to bring to the court is certainty. Certainty that nothing bad will happen to the operational company and especially to the employees. The EUR 32 million of PGE is, we are working on it. I'm hopeful we can get it, but I cannot guarantee it. Actually, the bondholder said, "Okay, we guarantee. If you don't get the PGE, we will be there as from end of July," and we will start funding and especially the EUR 32 million that we absolutely need in August. And the last one that they have done and they have committed to fund Solocal for EUR 120 million in case of redressement judiciaire on Solocal holding. That's very important. That's the defining decision that they have taken because as I explained, if they fund Solocal in case of redressement judiciaire, EUR 120 million, that's a very substantial commitment that they have made. If they fund, they achieve 2 things: number one, the company is not at risk. And in case the general assembly would not vote in favor of the plan, what you have to know is that we automatically go to redressement judiciaire. Why? Because we don't have enough money in August. So there is no choice, we will have to go in front of the court. But when we will go in front of the court, the bondholders have prepared a term sheet where they say, we are here. We fund Solocal SA. So Solocal SA is not in danger. It's protected by the bondholders. The side effect is that, as I explained, as soon as they fund Solocal SA, it means that with their pledge, they have complete control of the legal operation and restructuring, fundamentally, what they will do and they will swap their debt to equity. But of course, if they do that in the context of redressement judiciaire following a negative vote at the assembly, they will certainly not make gift to the shareholders and the shareholders will be fundamentally wiped out with 0 possibility of recovery. So that's what the shareholder -- the bondholders have done, and that secure financially what we are doing. But beyond financials, which is fundamental for the company's interest, how do we feel about that, Eric Boustouller and myself? Well, actually, to tell you the truth, we feel good. We feel good. Why? Because we have discussed with the debt holders. And mostly, we have discussed with GoldenTree, which is the leading bondholder because they had 30% of the bond. And we know them well because they are with us since 4 years. And I must say that each time that we have discussed with them, each time that we have asked any kind of help, they've always been very happy to help. And for us, they are potentially good partner because they are debt and equity. So they know to manage situation where they are in debt or in equity or in both. They know very well our industry. They have done U.K., Italy, U.S., Canada. They know very well our industry, and they know how to handle it. Of course, they have found something, a curious animal with Solocal. Because usually what they have found over the world is what everybody has found, which is when you have an ex-directory company, it's extremely difficult to make it grow and generate cash. That's where the difficulty is. And it has fundamentally almost never happened, to my knowledge, never happened. So GoldenTree or not GoldenTree, the industry is an industry which is really challenged. And when they started their discussion with us, they said, "Hey, are you really sure that you can grow this business and deliver the cash targets that you have assigned to yourselves?" We discussed. We do due diligence and a lot of due diligence. And fundamentally, at the end, they said, okay. It has never happened, but we are ready to give it a try with you, but we put 3 conditions: First of all, you need to focus more on customer satisfaction. You don't focus enough on customer satisfaction. We would agree with that. So we take their point. Secondly, it's nice, everything that you have done on product, transformation, tools, positioning on the market. We see what you are doing. We believe in it, but you have not worked enough on operational efficiency. You need to focus more on operational efficiency. Point taken. And then they said, okay, guys, we are okay to support your strategy, but you have to deliver your free cash flow, and you have to deliver the numbers that you send to us. Well, I personally consider that it's a fair deal. And they absolutely agreed that we have done huge employment restructuring in this company, and that it's not on the agenda to do another. That's not the point. The point is customer satisfaction, operational efficiency. In terms of governance, we had discussions. And personally, I'm comfortable. First of all, they decided to trust me, which is nice, as a chairman. But what we have negotiated with them is that they will have 2 seats at the Board out of 8 seats, which is perfectly reasonable. We have also negotiated that if they would come below 15%, which is their minimum committed shareholding. If they would come below 15%, they would have to relinquish 1 of the 2 seats. We have also agreed that the major decisions of the Board will be taken at 6 votes out of 8, which means that with their 2 seats, they cannot have a veto. Usually, Boards, I manage with consensus. So I have -- it has never happened to me that I could not reach the consensus of my Board. Sometimes it's a bit difficult, but I have always managed to get to the consensus. But nonetheless, in case of a vote, they have 2 votes. Major decision is 6 to 8. So it means that it's a debate. It's not a full control. One very important point, very important in France and very important in terms of good practices, we absolutely agreed that Board members, me included, will not have any change in our compensation, will not have any kind of exceptional bonus, we'll not have any kind of long-term incentives. That's not what happens to Board directors. And that in a context where we are all working, and I am working as a non-Executive Chairman. I'm working day and night, 7 days out of 7 since 3.5 months. And that's not the point. The point is to save Solocal, and I'm happy to save Solocal. Now before I hand over to Olivier, I prefer to carry the kind of shocking news myself. Shocking news is that the rights issue will take place at EUR 0.03. And of course, when you know the history of Solocal, when you know where we come from, you have seen at the end of 2019, we were at EUR 0.55. So a rights issue at EUR 0.03. When I was first confronted to that number, I said, "Oh my God, this is really very bad." And honestly, I cannot say that it's very good. But why it is that? Because when we do such restructuring, the important negotiation that we had with the bondholder is how much do we leave to the shareholders knowing that the theoretical equity value is 0? But how much do we leave for the shareholders? We have reached an agreement at 9.8%. And when you look at the benchmark in France, it has always been between 5% and 15%. So I would say -- so this is a very correct deal. It's not the best possible deal, but it's a very correct deal. It's a fair deal. And we have accepted it. Now if you accept that -- and we have decided to structure it, this 9.8% around a free share attribution. So each existing share will get 1 free share, which means that we start at 626 million shares, and you add right away 626 million free shares, which means that you get to 1.2 billion shares. 1.2 billion shares is 10%, roughly, of the shareholding, which means that you have 12.8 billion total shares. EUR 330 million in the rights issue, it means EUR 0.03. So yes, I'm shocked by the EUR 0.03, but I must say, I understand the EUR 0.03. We could have done it a little bit differently. For example, we could have said it is EUR 0.06, but without free shares. The problem of that is that what is called the discount to TERP would have been not so good, which means that the attractivity of the investment would have been considered by the market as mediocre, and that would mean that the preferential right would be very much discounted. We have preferred to do it at EUR 0.03 with 1 free share for each share because that creates, we think, a very attractive opportunity to invest and therefore, a preferential right, which has, let's hope, because you cannot be sure, a certain value and that the shareholders who do not want to invest can get not only the share that they have, the free share, but also a certain value from the preferential right of subscription. And now I'm going to hand over to Olivier, who is going to take you through the mechanics of the transaction as we contemplate it.

Thanks a lot, Pierre. Good afternoon to everybody. So now let's dig up a little bit more in the details of the operations that are going to succeed if the AGM approve all these operations. So first, as already mentioned by Pierre, the capital increase amounts to EUR 347 million with -- in 2 steps. First step is a capital increase amounting to EUR 17, 1-7, million at maximum. By -- with this reserve capital increase, GoldenTree and potentially other bondholder if they want to join, will, let's say, take some share in the capital structure of the company. And then we absolutely wanted to be -- to do a large rights issue in order for you and in order for all our shareholders to be in a position to follow these operations. So this rights issue amounts to EUR 330 million, EUR 3-3-0 million, fully backstopped by our bondholders -- fully backstopped by the bondholders, which we have discussed, so 80 -- more than 80% of them. This backstop is expressed in -- by way of cash for up to EUR 85 million, 8-5. And then all the rest of the backstop will be done through debt to equity. So what does this mean for the company? In terms of liquidity, the company will be injected up to EUR 131 million. So while the low point is EUR 117 million through first EUR 85 million of rights issue, then an additional financing line of EUR 32 million and then with a potential additional haircut, up to a EUR 14 million, depending on the shareholders' take-up in the rights issue. Pro forma, the gross debt will amount to a little bit more than EUR 250 million, exactly between EUR 256 million and EUR 258 million. So now if we dig up a little bit more in the transaction. So first, we have a reserve capital increase, which will occur end of August, for an amount between EUR 10.5 million, which is the share that GoldenTree will subscribe to, up to EUR 17 million at EUR 0.08 price. Then there will be a large rights issue for EUR 330 million, fully backstopped by our bondholders. So EUR 85 million in cash; the rest through a debt-to-equity mechanism, if our shareholders were not to support the rights issue fully. So this is the 2 steps. This rights issue will occur before the end of the month of September, if we keep our schedule on track. Then there will be an allocation of free shares of 626 million shares. So these free shares will be allocated to all shareholders that will have shares before the reserve capital increase. And there will be 1 free share allocated to each existing share at the end of August, for example. And then there will be another reserve capital increase for EUR 13, 1-3, million as a remuneration or a fee for the backstop and arrangement commission. This globally amounts to 3% of the fully diluted capital after the operations. So just in terms of shareholding structure, pro forma. So let's focus on the EUR 17 million reserve capital increase scenario because it's for simplicity purposes. So what is important in this context, as already mentioned by Pierre, is what is the amount that is, let's say, let or left to our existing shareholders that will not be in a position to follow us in the rights issue. So in case -- and this amount is 9.8%. So almost 10% of the capital will be left to our existing shareholder, who will not want to follow us. On the other side, if 100% of our shareholders want to follow the rights issue, then they will own 74% of the company at the end of the operations. What is also important to notice is that GoldenTree, at minimum, will have -- in this scenario will have 15% of their shares, if all the shareholders are subscribing to the rights issue and 37% if none of our shareholders subscribe to the rights issue. So in terms of debt, you know that we have 2 types of debts. The first one is a bond and the second one is the RCF. Let's focus to the bond structure. So as you remember, we have a EUR 400 million bond with a maturity March 2022, and the coupon was 10% blended. It was 9% plus 1% EURIBOR floor. This bond today will -- well, at the end of September 2020, since we will not have paid any coupon for 2020, will amount to EUR 430 million. This bond after the operation will amount to EUR 170 million to EUR 185 million, depending on the take-up and the allocation to the RCF of nominal. The maturity of the bond will be extended to March 2025. So it's 3 years extension, bullet repayment. In terms of pricing, we achieved to decrease a little bit the pricing to 8%. Even though it may appear as still very high, nevertheless, when you are looking at the numbers, our leverage is still the same because -- currently, because of the crisis. So we have, today, 100 -- well, we guided on EUR 130 million plus IFRS 16. And clearly, we will have EUR 250 million debt. So we'll be close to 2x average. In order to preserve and to secure our liquidity and we, well, we negotiate to have a PIK and a cash structure until the end of 2021: so 50% PIK, 50% cash. In terms of other change in the bond, there is a non-call period of 2.5 years. Then while we negotiated a security package for, let's say, the French state related to the social liabilities that we, let's say, created during the COVID period. And then we remain our covenant unchanged, which is, let's say, okay, considering the decrease in the debt, but also consistent with the decrease in EBITDA. So in terms of -- now if we focus on the RCF. So just as a reminder, we had EUR 50 million RCF with a margin between 4.5% and 8.5% with a maturity September 2021. So this RCF, post operation, will amount to EUR 35 million to EUR 50 million, depending on the take-up. Clearly, how will it work? If the rights issue enable us to, let's say, to draw more than EUR 85 million, the first EUR 15, 1-5, million will be allocated to the repayment of the RCF. In terms of remuneration, so the coupon will not change until the end of September 2021. So the maturity of the initial RCF and then the, let's say, the coupon will be 8.5% from September 2021 to September 2024. One important thing is that we will have to, let's say, to repay our RCF. It will be amortized, but we will have the choice to repay in cash or in shares, and it will be in our end each year, September '21, September '22, September '23. We have the election to, let's say, extend the maturity of our RCF from September 2023 to September '24. If we have to repay the RCF at its, let's say, larger, longer maturity, which is September 2024, we will have to repay fully in cash. Then we will add an additional financing line, which is today fully backstopped by our bondholders -- by some of our bondholders, up to EUR 32 million -- for a total amount of EUR 32 million in case we did not get a PGE, a state-guaranteed loan, by -- before the AGM. So we are still confident that we will get this facility guaranteed by the state before the AGM. But in the case, we do not get it, then some bondholders will provide us with this amount. Now I leave the floor to Pierre another time.

Yes, I'm sorry about that. So we have really designed the operation to have a whole range of possibility of investment. If you think about it, what we need to do as shareholder of this company, and I'm talking here as a shareholder, is 2 things: First, we need to fill the gap. The COVID crisis has created a huge financial gap. We did not find any way to fill the gap other by calling on our shareholders. The gap is EUR 117 million. We can hope on a PGE of EUR 32 million. So the gap that we are asking the shareholders to fill is EUR 85 million, and that represents EUR 0.12 per share. But of course, we have to keep in mind that the PGE can only be -- get, obtained if the debt is reduced by half. So we need also, as shareholders, to contribute as much as we can to the reduction of the debt, and that is another -- and I'm sorry here, there is a clerical mistake. It's not EUR 0.27 that you should read. It's EUR 0.33, that you read that. That's perfect. The correction has been made. Thank you. And therefore, the possibility is to invest another EUR 0.33 in order to get to the maximum possibility of investments. So if you think about it, as a shareholder, if you have 1 share, you can do nothing, and you will get 2 shares. You can decide that you want to invest EUR 0.12, and if you want to invest EUR 0.12, that means 4 new shares, and you will have filled the cash gap. But you can also decide to fill the whole thing and finance, fund the deleverage of the company, and then you put 11 new shares, which gets you to 17 shares for a total of EUR 0.45 per share that you reinvest. The key question that people are going to ask themselves is, why should I do that? Yes, of course, I'm a shareholder, but I'm also financially driven. So why should I do that? Well, it's difficult for me to talk about it because you know that I'm forbidden to talk about that. Of course, I have made my own plans. The Board has [ moved ]. We have made projections, but this is something that we cannot share publicly. What we can share for the -- publicly is the work that we have commissioned with an independent expert, Finexsi, very strong reputation in France, probably the top. And they will render a fairness opinion on the equity on July 10, which is in 1 week from now. So let's be patient. Let's see what they say about this fairness valuation. Of course, they are using the plan, the ambition that Eric and Olivier have disclosed on 18th of May, which was the plan of getting back to the EUR 175 million pre-IFRS 16 in 2023. If you believe in that ambition, if Finexsi believes in that ambition and you do some sensibility around, you can probably listen to them, make your own model and decide if it is profitable for you to invest and how much. And you can also calculate how much you would recoup net of the reinvestment. That is the calculation that I have done for myself. I said, "Okay. So how much? Do I have a chance to recoup my investment?" You know that I have 700,000 shares. So my question is, can I? How much do I need to invest? What are my opportunities? I think that each shareholder will do that calculation. And we'll see in the rights issue where it ends and where you have decided to put the cursor. We hope that the rights issue will be well subscribed. It's very important. But now I'm going to hand over to Eric, who will give us kind of a flavor of what the Solocal post-restructuring could be.

Yes. Pierre, this is Solocal of 2 more that you're talking about here. And I think we need to think about what have been the drivers of our work in the last couple of months: One, it's to really make Solocal much, much, much stronger; two, to make it sustainable and do that in the interest of the company and its employees. One thing which was critical and is critical, and you could say this is long overdue, it's to reduce the debt in a big way. And the debt is going to be basically 2x less than what it has been the last couple of years with a financial cost of the debt, which is going to be drastically reduced from EUR 44 million per year in 2019 to EUR 19 million per annum as we move forward. It's a transformed company, largely transformed. The business model is different. That's subscription. New products, all digital, the company is going to be 100% digital by the end of the year. Sales and marketing has been completely revamped. And we know that priorities for us, as we move ahead, it's: one, customer satisfaction; two, it's operational excellence, and this is by any means top of the agenda. There is no plan whatsoever -- no redundancy plan whatsoever. Jobs are secured. And there is no cost attached to anything like this. And finally, for 2020 and 2021, our liquidity is secured. And structurally, we have a very strong cash generation profile. So as a company, Solocal is definitely poised for profitable growth moving ahead and to really materialize that in a digital champion in France.

Thank you, Eric. Thank you, Olivier. Rosie, we are ready to take questions, both from the potential voice calls, but also from web e-mails. So you want to start, Rosie?

[Operator Instructions] We currently have no questions coming through. [Operator Instructions] And we have a question coming through. This question comes from Jamie Lewis from Fidelity.