Viaplay Group AB (publ)

STO:VPLAY B

Earnings Call Analysis

Company Fortifies Financial Position Amid Challenges

Amid financial pressures, the company executed a recapitalization program to strengthen its position, comprising a SEK 2 billion debt write-down and a SEK 4 billion equity raise. It lowered free cash flow guidance by 35% this year and adjusted next year's forecast due to international cash drag, alongside a 7% reduction in subscriber targets for 2023. The company incurred a loss from selling Premier Sports—the sale seen as shedding uncompetitive international operations to refocus on the Nordic and Dutch markets. Viaplay expects free cash flow positivity by 2027 as it navigates through the restructurings.

Recapitalization and Rights Issue

The company has laid out a detailed recapitalization plan following the failure to sell its loss-making international business, which was not attractive to bidders and would not cover the necessary value. The plan includes equity and debt restructuring measures, which aim to steer the company back onto a path of profitability and sustained growth. This involves a direct share issue, a rights issue, an aggressive debt restructuring plan, a cost reduction program, and a focused exit from noncore international markets.

Operational Restructuring and Cost Savings

Significant cost savings have been realized since summer. The workforce has been reduced from 1,800 to 1,200 employees, thus lowering operational costs. The business has transitioned to a country-based model, prioritizing competitiveness in local markets while trimming unnecessary expenses. The strategic shift from volume to value, optimizing average revenue per user, and right-sizing prices aim to ensure sustainable revenue, profit, and cash flow.

Cash Flow and Capital Needs

The company has encountered challenges, including anticipated negative cash flows of SEK 4 billion to SEK 5 billion in 2023 and 2024. Efforts to sell international operations in the UK, Poland, and the Baltics did not present viable exit strategies, leading to the decision to close these operations by summer 2025. The net cash outflow from these markets is expected to be approximately SEK 2.2 billion between 2024-2028, with strategies in place to reduce this amount further.

Financial Restructuring

Given the company's financial struggles, the issue price for the recapitalization has been set at SEK 1 per share, reflecting a level where new equity providers are willing to invest and where banks and bondholders can accept write-downs. This includes an equity capital injection, a SEK 2 billion write-down of debt with a quarter of that being converted into shares, and an extension of financial commitments until 2028. This move is designed to generate a more solid financial position for the company, bringing the net debt down significantly.

Strategic Focus on Core Markets

The company's strategy moving forward centers on its core markets, optimizing its content strategy for value and quality, and focusing on premium sports and nonsport content. This refocus, coupled with optimized pricing strategies, is expected to drive organic sales growth, double-digit margins, and healthy free cash flows, ultimately leading to a strong balance sheet. The company anticipates becoming cash flow positive by 2027 at the earliest.

Earnings Call Transcript 2023-Q3

[Matthew Hooper, executive]

Good morning, everyone, and welcome to today's call. My name is Matthew Hooper, and I will be your host today. Joining me here on the call are our CEO, Jorgen Madsen Lindemann and our CFO, Enrique Patrickson; as well as our advisers from [ Carnegie and Ganoth and Daniels ]. We're sorry that the announcements were published so late last night with a lot of stakeholders to align ahead of being able to publish the recapitalization plan. But thank you very much for reading this quickly and coming on to the call this morning. In order to make the most of the time that we have with you this morning, we will focus primarily on the recapitalization and rights issue and then take your questions. If you have any questions on the Q3 report, we would, of course, be happy to answer those and to take meetings with you. So please do reach out to my colleague, Anna or me if you would like to take that.

You can find the presentation deck for this meeting in the new Recapitalization and Rights Issue '23 to '24 section of the Investor Relations section of our website. If you are joining via the webcast link, you will be able to follow the slides as we present them. [Operator Instructions]

So I'll now hand the call over to Jorgen to walk through the key points of the transaction we are in the process of launching. So please go ahead, Jorgen.

[Jorgen Lindemann, executive]

Yes. Thank you, Matthew, and good morning, everyone. So we have been holding discussions for quite some time now with a range of stakeholders and have now announced a proposed recapitalization package that will address our immediate liquidity issues, enable us to execute on our strategy for the future Viaplay business, which will consist of the Nordics, Netherlands and select and satisfy the requirement of all of our different stakeholders.

The recapitalization package we have launched includes an equity raise of SEK 4 billion consisting of directed share issue of approximately SEK 3.1 billion and a rights issue of approximately SEK 900 million and the refinancing package amounting to a total of SEK 14.6 billion of renegotiated and amended debt. Furthermore, several self-help measures have been made to reduce our costs. We'll walk you through the details of these components and the details throughout this presentation.

Since the summer, we have further scrutinized the business plan and the assumptions and have identified that we need more funds to honor our commercial agreements and overall liabilities and ambitions for the future Viaplay business and that we would need to adjust the terms of our debt agreements. This, of course, posed a serious risk to the company's financial stability and operations. We initiated dialogues with our debt holders and it was clear that a significant equity injection combined with substantial self-help measures would be required in exchange for debt holders extending the tenure of our facilities and renewing other commitments in order for us to honor and facilitate a range of commercial agreements. So we therefore had to find a solution before the end of November, a new major commitments become due.

We explored a wide range of initiatives to minimize the need for new capital, which we'll walk you through in the next couple of slides. The initiative of selling the loss-making international business did not materialize as the bids we were -- as the bids were underwhelming and would not recover sufficient value, which made it clear that we would need to raise more equity on the market.

We have, together with stakeholders and our advisers put together a package that meets largely consensus from all stakeholders' demand, including equity holders, debt holders and rights owners. The package which we are presenting in this presentation includes a direct share issue, a rights issue, a debt restructuring and a cost reduction program as well as our exit from noncore international markets. We're happy that we all have found a solution that will enable us to overcome the short-term challenges and pursue our future growth and development as a much more focused and disciplined company.

We have made significant progress with regards to cost savings since the summer. We have steadily reduced our workforce from 1,800 to 1,200 people, which has lowered our operational cost. The business has been reorganized with a country-based setup, which has enabled us to be even more competitive in our local markets and serve customers while cutting unnecessary costs. We have reset our budgets and implemented a wide range of initiatives focused on achieving and sustaining revenue, profit and cash flow and proper ROI. Our strategy has shifted from volume to value as we focus more on average revenue per user instead of numbers of subscribers to reflect that -- to reflect the quality and variety of our content.

We have also rightsized our SVOD prices. And additionally, we have cleaned up our balance sheet and written off underperforming assets and content. In the sports segment, we have secured our competitive edge by prolonging key sports right contract on competitive terms. Moreover, we have overhauled our content spending to move away from high-cost original scripted line production back towards highly popular acquired Hollywood content and nonscripted reality and other formats. Finally, we have signed an innovative new partnership with the Formula One to ensure our profitability in the Netherlands.

The above measures, combined with the initiatives announced in conjunction with the Q2 report, have improved our financial situation, but we still faced a significant capital need given the projected negative cash flow of SEK 4 billion to SEK 5 billion in 2023 and 2024, which we highlighted in our Q2 report. During the summer, we appointed advisers to help us sell our international operations in U.K., Poland and the Baltics. The outcome of this process did not offer us any attractive exit options. It was therefore clear that we would not be able to sell our international operation at a value resulting in lower losses for shareholders.

So we would still need -- still have to bear cost and obligations moving towards -- moving forward in these markets. This, combined with further deterioration of operating performance of the noncore international operations left us with a significant commitment to net cash outflow for the international exit markets in 2029 to -- 2024 sorry, to 2029. So as a result, the Baltics and Polish operations would be run until summer '25 when they will be closed down.

Through incremental self-help measures and liquidity enhancing options, including commercial deals with sports rights owners, the sale of U.K. operation and of various packages of non-sport content, we have managed to limit the net cash outflow from the national exit markets to approximately SEK 2.2 billion for the period 2024 to 2028. And to be clear, this is where we stand today, and we do expect the actions that we are taking to further reduce this number moving forward. Isolating the issues and finding ways to grow profitability for our core business Nordic and Netherlands business is now our key mission. And now I will hand over to Enrique to take you through the free cash flow forecast.

[Enrique Patrickson, executive]

Yes. So let us -- Good morning. So let us now look at the cash flows and what it means for capital requirements. So on the left-hand side of this chart, we have illustrated our free cash flow for our total operations in 2023 which we now expect to amount to a negative SEK 3.6 billion to SEK 3.8 billion, out of which SEK 1.9 billion relates to the first 9 months of the year.

The remaining fourth quarter amount is higher than previously expected and reflects the fact that our current discussions with banks have meant that working capital programs have been withdrawn or put on hold. Conversely, our cash flow then for 2024 and the free cash flow guidance now is at SEK 1.7 billion to SEK 2.2 billion for 2024. And that is better than earlier. And when you consider that this includes approximately SEK 600 million to SEK 800 million cash drag from the noncore international operations. This is part of the SEK 2.2 billion total Jorgen just mentioned, on negative free cash flow between '24 and '28.

We have sold our U.K. operations back to the previous owner and we have received a contracted sports content cost, which we are seeking to sublicense. And as mentioned, the Baltics and Polish operations will be run until the summer '25 and then will be closed down. The 2024 cash flow guidance includes as well the continued impact of not having supply chain financing facility, but we do expect that the planned recapitalization to result in the establishment of other working capital programs.

And to be clear, our trajectory to double-digit EBIT margins, here we have a clear ambition to -- for our core Nordic and Netherlands business to be slight cash flow positive in 2025 or at the latest in '26 and the total group to be free cash flow positive already in 2027 when we -- also when we include the cash drag from existing international -- and international markets.

As previously mentioned, the recapitalization consists of several parts, including new equity, a significant debt package and self-help measures. Viaplay will receive SEK 4 billion cash injection from shareholders. CANAL+ and PPF are supporting this through a directed share issue and a rights issue. Nordea Funds have also indicated their support. The equity issue will be through approximately SEK 3.1 billion of our direct share issue and approximately SEK 0.9 billion from a rights issue.

Given the liabilities and the lack of a proper capital structure and operational performance of the group, there is currently no perceived equity value for the company. And the issue price for the recapitalization, in other words, the direct placement, the rights issue and the debt-to-equity swap have therefore been set at SEK 1 per share. The value has been at a level where both new equity providers are willing to commit new capital and banks and bondholders could accept write-downs. The equity capital injection will pave the way for the restructuring and launch of our comprehensive debt package, which includes a SEK 2 billion write-down of debt which 1/4 will be converted to shares in the company. SEK 14.6 billion of bank and bond commitments will be amended and extended until 2028. And a new revolving credit facility will be reinstated in addition to extension of guarantee facilities also to 2028.

Lastly, for the last couple of months, we have had discussions with content owners and driven processes regarding the sale of some of our assets. These set of measures have concluded a significant future reduction of potential cash drag due to international losses and put us in a better position moving forward. We've been focused on -- we have been focused to secure the future of our company, our employees and customers and have engaged in intense discussions and with our stakeholders, such as the creditors and shareholders and rights holders who have shown their support for our vision and long-term potential.

Of course, there have been varying views among the stakeholders on our operating outlook and capital requirement. It was discussed and agreed that stakeholders would need to take write-downs, we would need to implement set up measures and find a long-term solution by the end of November. We're happy that all parties have now reached this agreement in a various solutions-oriented manner. A number of shareholders have agreed to support the company with a new equity injection while lenders and bondholders have agreed to extend maturities of their loans and accepted partial write-downs and swap for some debt for equity.

We've also secured commercial agreements in the markets we want to exit and around the products which we couldn't capitalize on which others can do in a better way. So we're extremely grateful for the support and cooperation from all these stakeholders.

On this next page, we illustrate a material change in our debt maturities. This will allow us to seek refinancing when we have reached a healthy profitability and cash flow levels. We are in discussions and negotiations with certain larger holders of the 3 outstanding bonds. The agreements with the larger holders of MTN bond is subject to the approval of 90% of the quorum by way of bondholders meeting. As presented earlier, the recapitalization program comprises a debt write-down of SEK 2 billion, of which SEK 500 million is converted to equity. This will result in a significantly stronger financial position for Viaplay and the extension of the bank and private placement debt until June 2028 and the outstanding MTNs to December 2028, with no significant maturities for the next few years, and that will enable us to focus on operational performance without refinancing pressures.

The recapitalization will have a significant positive impact on our net debt position. Prior to the recapitalization, the estimated net debt at the end of 2023 will be at about SEK 4.7 billion to SEK 4.9 billion as a result of the Q3 net debt of SEK 3 billion and the negative cash flow during Q4 of around SEK 1.7 billion to SEK 1.9 billion. Gross and equity proceeds of SEK 4 billion combined with debt write-down of SEK 2 billion will take the company to a proforma net cash position of about SEK 0.7 billion to SEK 1 billion. This restored financial position will cater for operational losses incurred [indiscernible] unwind of certain international markets and the turnaround on the remaining businesses. As we mentioned before, there is no percent equity value for the company. And given the issue price for the recapitalization of SEK 1 implies a pre-money equity value of about SEK 79 million. Following the recapitalization, the company will have received SEK 4.5 billion in new equity and 4.5 billion new shares.

Just a couple of highlights on the timetable on this page. The full recapitalization package is subject to approval from the bondholders meeting at the end of December and a 2/3 approval at the EGM that is preliminary to be held on the 10th of January. The process is indicatively set to be finished on the 9th of February, when we will have the new funds available and a completely new capital structure in place which will enable us to continue to deliver on our long-term value-creating strategy. So with that, over back to you, Jorgen.

[Jorgen Lindemann, executive]

Thank you very much, Enrique. So as we said before, we will focus on developing our markets -- our market-leading position in our core markets. So to deliver on our ambitions, we have set of an efficient new country-based organization model. Our refocused content strategy is all about value and quality. We will prioritize acquiring, distributing and monetizing a broad range of premium sports and nonsports content on Viaplay in our linear TV and radio channels, all of which generate subscription and advertising revenues.

Alongside this, we have executed transformation initiatives to refocus our top line and optimize our cost base. Looking at our focus areas, we have addressed pricing levels in each of our markets to ensure we focus on subscriber value rather than volume. Supported by our content strategy, we are further developing our partner relationship to ensure that we get the most from Viaplay's products together. All this to deliver on our long-term ambition of organic sales growth, double-digit margins, healthy free cash flows and a strong balance sheet.

So thanks to our partners and stakeholder support, we have secured a strong operating platform for the future of our company. All stakeholders are providing concessions in order to provide a sustainable future and we have already executed a wide range of self-help measures. The recapitalization is, as I mentioned previously, subject to bondholders' meeting and EGM approval by our shareholders.

The recapitalization package is the best available solution to enable the rebuilding of a healthy financial position. It secures our immediate funding requirements and provide us resources to achieve our long-term ambitions of significant value creation. With our new financial situation backed by strong strategic investors, we look forward to executing on our strategy and to becoming a cash flow positive company from 2027 onwards, if not earlier.

We are more than grateful for the trust that we have received for the past couple of months from new shareholders, our long-term shareholders, the banks and bondholders in regards to the recapitalization, rights holders and other partners and not forgetting our staff who has continued to focus on delivering products to our more than 6 million customers and our local partners, deepest respect from all of us, and thank you for your fantastic support. That concludes the presentation of our proposed recapitalization transaction. So I will now hand the call back to you, Matthew.

[Matthew Hooper, executive]

Thank you, Jorgen, and thank you, Enrique. We're now ready to take your questions. [Operator Instructions].

Okay. So the first question today, we will take from the conference call line. And that first question comes from Derek Laliberte from ABG. So Derek, over to you for your question.

[Derek Laliberte, analyst]

Just wanted to clarify, you probably have this in the material, but I haven't been able to go through everything, but what's the exact time line here on the directed issue and mentioned the interest from CANAL+ and PPF. I mean part what type of interest volume-wise do you have on that one?

[Enrique Patrickson, executive]

So the -- so sorry, just to understand your question. So the total directed share issue is of SEK 3.1 billion.

[Derek Laliberte, analyst]

Yes. And the interest to participate in that, to what extent is that interest?

[Enrique Patrickson, executive]

I mean it's the -- I mean, to a very large extent, already secured.

[Jorgen Lindemann, executive]

Yes. So Derek, just to be clear, you'll read in the press release, if you look -- sorry, that it's SEK 2.7 billion there that comes from other parties. So if you take that as a percentage of the total SEK 4.5 billion, you can see where that ends on that basis. Okay? So that gives you a feeling for that part of it. As we've said, it's various shareholders involved here. So we just mentioned a few names, as you can see.

[Derek Laliberte, analyst]

Okay. Great. And what's the exact proposal when it comes to the debt write-down here with regards to the bank loans and what the sort of the suggestion for the bonds here?

[Enrique Patrickson, executive]

So I mean, we have not disclosed the exact details of this. But I mean in total, it's -- is a debt write-down of SEK 2 billion and of which SEK 500 million is converted into equity. There are multiple stakeholders involved in that.

[Derek Laliberte, analyst]

And conversion to equity is that the bank loans that are being converted to equity or?

[Enrique Patrickson, executive]

I mean yes. I mean partly, there is bonds, there's private placement. Yes, there's just multiple parts here as well as there is an extension of guarantee facility and reinstated dollar revolving credit facility, yes.

[Derek Laliberte, analyst]

Okay. Okay. And the rights issues is that partly or fully guaranteed?

[Enrique Patrickson, executive]

I mean it is partly guaranteed with the largest shareholders, which we mentioned a few there in the release.

[Derek Laliberte, analyst]

All right. All right. And finally, from my side, I think you mentioned some sublicensing or divesting -- divestment of content here, what have you done on that front exactly? I mean, have you been able to sublicense or sort of hand over some of the rights in Poland, for example, or can you share some more details on that?

[Jorgen Lindemann, executive]

Yes. So we have obviously made, as we talked about a range of self-help measures, as we call them and that includes selling of businesses. So we sold the U.K. business as part of us exiting U.K., we have also sold our production business, Paprika as well. So there's a range of assets we have that go off. And then at the same time, as you correctly pointed out, we will be exiting Poland and Baltics in Summer '25. And there, we have also made commercial arrangement with different parties, and we have sold back rights and so forth.

So that has been quite a big package. In order for us to be able to focus our capital and also our time to be fair on the future of the very strong Nordic proposition we're having together with the Netherlands. So that is what we have been -- also been working on the last couple of months.

[Matthew Hooper, executive]

I think we're going to take one of the questions that's coming on the message board now as well, which is regarding why we didn't do a rights issue that all could participate in? Hopefully, it's clear from the release that there is an element of this, which is a rights issue, which all can participate in. We've been in a dialogue with a number of different stakeholders about the best way to effect this to make sure we can deliver the capital necessary for the development of the company and the meeting of the short-term financial requirements we have and we felt we're under advised that this is the best structure to achieve those goals. But rest assured, there is a portion of this that is available for all shareholders to participate in providing them qualifying in this context.

So I think we'll then go to the conference line again. And this time, we'll go to Martin Arnell from DNB.

[Martin Arnell, analyst]

More about the cash flow. The free cash flow guidance, you lowered it by 35% for this year and also lowered for next year? And if you -- if you could just help us understand the components in that.

[Enrique Patrickson, executive]

Yes. So Martin, so for this year, essentially, we have a number of -- I mean, it's especially working capital that has moved overall between '23 and '24, there is like deterioration of about SEK 400 million because I mean when we guided to '24, we did not include the international cash drag, which we now have narrowed down or kind of secured much more what the amount is. So there is an element of deterioration in '24 and underlying performance improvement in -- sorry, a deterioration in '23 and then an underlying improvement in '24. But then we have part of that SEK 2.2 billion cash drag that is impacting in the '24 numbers that we now have added to that guidance.

[Martin Arnell, analyst]

Okay. How confident can you be about working capital in this free cash flow guidance for next year, for example?

[Enrique Patrickson, executive]

I mean we're quite confident on that some of the programs will come back, and we will have a reversal of programs that have been put on hold. But as we -- and I mean we have quite a good visibility. I mean, in terms of like what is the payment that we're having, the inventory buildup. So it's more about how our business performance operates.

[Martin Arnell, analyst]

And on the subscribers, that target was lowered, 7% for 2023. Can you elaborate on that?

[Jorgen Lindemann, executive]

Yes. As we also did in connection to the Q2 report, we made an assessment on the customer base as well and understanding what was valuable customers, what were high ARPU driving customers. So it is international, which is lowering -- which has lower customers, we are doing better in the Nordics actually. So it is international phenomenon, which just in all fairness, on the line, the right decision of not competing there because clearly, going forward, we are not competitive in these markets, therefore, is great to get out of it.

[Martin Arnell, analyst]

So it's mainly these B2B deals that you're continuing to sort of clean up [indiscernible] to say.

[Jorgen Lindemann, executive]

Yes, also the D2C. So it was everything. It was also the customers are turning out, it is normal in all fairness. What you normally then would do, of course, is that you would be entering into a new agreement as well. And that has been a little bit difficult for us as well. You can imagine international since we wanted to sell the businesses. And if you would have a strategic investor coming in, buying those businesses as well. Obviously, if everything was locked up in long-term agreements with other parties, that would have been a problem, first of all.

Secondly, there's also when you have binding periods and so forth. There's only so much we can sell in those markets as well since we understood we needed to exit. And that is what we wanted to do. So that we have been a little bit hampered in the options that we have had international. So therefore, we are very happy about that we have a solution now to be able focus in the Nordics.

[Martin Arnell, analyst]

And just a final question here. On the sports content cost that you can sort of sublicense to some extent, how should we think about the balance between you sublicensing, sports versus the ambition to raise prices on the product in the Nordics?

[Jorgen Lindemann, executive]

But you made, of course, a quite clear analysis and say, what kind of content is available in the market. Let me give you an example since the advertising market, as you know, is a little -- is down as an examining in Q3. So to have a lot of free TV assets is probably not a winner when it comes to -- when it comes to sport, if you can't monetize on advertising.

So that's, of course, something you're looking at as well and understand this and others will be able to monetize better than we would be or have more can capitalize better on that content. So we constantly optimize our portfolio to make sure we have the right offerings, both for the customers, of course, is [indiscernible] have been successful. And also, of course, in terms of ROI, meaning where can we capitalize on the content. So that is an optimization, which you will see us do going forward.

[Martin Arnell, analyst]

Yes. Okay. And my final question is just on this very long-term comment that you made for -- did you say that you expect group cash flow -- free cash flow to be positive first in 2027?

[Enrique Patrickson, executive]

Yes, that is correct. As a total company, as we kind of that international cash drag tapers off. I mean we're starting in '24 with a number of between SEK 600 million, SEK 800 million, and then it's gradually declining in terms of the commitments that we are exiting from.

[Matthew Hooper, executive]

We've got a few questions on the Message Board now. So the first one from [ Jan at Finance Media ] is apart from CANAL+ and PPF, who is taking part in the directed issue?

I think as you can probably see, on in the press release, the other name that we've mentioned is Nordea Funds. Other than that, we just referred to shareholders. So it's kind of obvious PPF and Nordea Funds are the ones that we have mentioned. There are questions about other parties who may be there. But I mean, these are the only names that we've mentioned. So that's as much as we can say at this stage.

Then there's a question, I think, for you, Jorgen. Which comes from [ Amel ] at Media watch, which is how much did you sell Premier Sports for? And was it at a loss?

[Jorgen Lindemann, executive]

Yes. Yes, it was at a loss, meaning that we sold it cheaper than we acquired the company for. So that is -- I don't know if the figures was public. Actually, I don't think it was.

[Enrique Patrickson, executive]

When we bought it, we published that number. So yes, I mean it was the -- last we don't expect any P&L impact from it as we already took a provision in the second quarter for the goodwill.

[Jorgen Lindemann, executive]

I think important to say with Premier Sport of [indiscernible] the liabilities -- the range of the liabilities that we're having in the U.K. than in terms of rights and so forth that goes with Premier Sport. So that was -- that's part of the deal as well.

[Matthew Hooper, executive]

Okay. And then I'm going to keep going. There's another question from Jan as well, actually, which is you say -- you've perceived the equity value at SEK 1 per share. Why has this not been communicated earlier? And Jan, I hope as we explained that the reason for that is it's a part of a broad set of discussions here with a lot of different parties, and there are concessions being made across the piece here.

So I'm afraid that, that is part of that process that it is priced where it is, but of course, entitles people to participate in the rights as you as well. And I think going hand-in-hand in this, and I'll hand this one over to Jorgen is a question from [ Osco ], which is this is a major blow to existing shareholders. Most of them not even close to being in the top 10. The dilution is massive. How should such an owner handle this situation, except the total loss or question mark?

[Jorgen Lindemann, executive]

No. I think as we said, everybody can obviously participate as well if you are a shareholder. And it's just important to understand as well that we -- just to be clear, if we wouldn't have had this solution, then the situation would have been very different, yes, because we had a range of commitments coming up and liabilities coming up. And obviously, with the cash drag that we have seen and the cash outflow of the company, obviously, we need it -- cash in order to meet these obligations in all fairness. And we wouldn't have done that, we would be a material breach. And as I said, the company would have been in a different situation.

Now we have a solution. So we can continue to invest in the Nordic business. We are coming out strong out of this exercise due to the support of shareholders and bondholders and banks and other partners as well. So going forward, the company will be able to be very competitive in the market. But -- and as I said, everybody can participate. But of course, it is a different from being a shareholder before and now but again, the opportunity that we're seeing in the Nordic for our shareholders, our existing and new shareholders as well is quite an interesting opportunity for an order which we laid out.

[Matthew Hooper, executive]

Okay. And then another question is time from [indiscernible]. What does CANAL+ investment in Viaplay mean for a potential partnership between the 2 parties and other areas? And what is the state of the conversations regarding Schibsted's investment in Viaplay? Is it still ongoing?

[Jorgen Lindemann, executive]

Yes. On the latter question, that is -- [indiscernible] is better answering that then also, I think we should address the latter question to Schibsted. We're very happy with having CANAL+ and PPF in as shareholders long-term professional business people in the industry that we are in. And obviously, where we see benefit for the company, that means for all our shareholders, of course, then of course, we will do all the partnerships where we see the benefit. So obviously, we will explore with CANAL+ like everybody else, which we constantly are doing, where can we do more together? Where can we help each other, where can we save money for each other or where can we be smart in sharing content, whatever with each other.

So of course, that is an opportunity for us to do even more and to get even more content to our platform since CANAL+ as an example, or PPF are international players in our space as well. So that is good news for us to be.

[Matthew Hooper, executive]

Okay. I think we're going to move back to the conference line now. So live questions. And next up on the list is Tom Singlehurst from Citi.

[Thomas Singlehurst, analyst]

Obviously, a fairly -- well, more than fairly disappointing outcome for existing shareholders, but I guess we are where we are. And it's somewhat academic, but I'm interested in just the international asset sort of disposal process and really just trying to gauge whether that the failure to sort of take more concrete action there was a function of lack of interest? Or was it just the mechanics of when you could have got sort of cash out of those assets? Just wondering how sort of close to the line that was as a process. I mean, obviously, it's slightly academic now because with the fall on the structure going. But I'd be interested in any insights on that process.

[Jorgen Lindemann, executive]

Yes. No, of course. So basically, what we did immediately after we understood that these businesses were not for us, and we couldn't capitalize on the content that we have invested in and our products were not competitive. I think that was quite clear when you look at the financial forecast for these businesses, which also, as you can see now has got a bit worse to be fair. So we initiated a process with -- yes, with 2 investment banks [ Morgenstern ] and LionTree to see the appetite -- a structured process to see the appetite for acquiring those businesses. And the appetite was, at this point in time, extremely low.

So the offers we got in was very disappointing to be fair. And there are probably many reasons for that. But of course, one simple reason as well if you are strategic in a market and you are losing a right. Then you would normally try to compensate for that loss by buying a new right. And that means you have cost for that new right you acquired. And so therefore, just to go out and buy back the right you lost at the same time, you had the cost for your new right, that was probably not a winner to be fair.

So therefore, there was a range of dynamics around this, then you can speculate in, the people were speculating and whether we would make it or not and so forth. But basically, the outcome was what we looked at was very bad offers, if any, in some markets. And therefore, we simply needed to take action there. Otherwise, the cash drag for shareholders and value destruction for shareholders would be too big. So we started to discuss opportunities with relevant parties and luckily concluded with relevant parties that we could sell back the rights to them with a loss to be fair.

But that meant also that we could focus and we can now focus on our Nordic business, our Viaplay and the Dutch business, both our capital and also our time. So that is a good outcome. Tough for the people in International markets, it was worked -- extremely hard to make this work. But there's no doubt that we are subscale, we're subscale scale in those markets, and we were not competitive. And therefore, there's no reason to have a media company, if you can't entertain and you can't make money. So that's why we are getting out.

[Matthew Hooper, executive]

Okay. Thanks so much, Tom. Just going back to message board again, there's an anonymous question here. Why were the sales communicated separately yesterday and not communicated along with the reports since they didn't have any significant impact in comparison to the recapitalization package announced today?

I'm thinking that, that probably refers to the sale of the Premier Sports business. And if not, please correct me in the message board. If it does, that was communicated locally. We had to obviously communicate with the staff as soon as that transaction was affected. It is subject to regulatory approval and therefore, that news did come out yesterday, but not through an announcement from our side actually. So I think that's what it refers to, but if not, please let me know in the message board.

Another question here is, do you believe -- or do you believe that you will be able to, with this cash, invest and uphold your commitments towards the different production companies that you're working with?

I'm assuming in this that the write-offs are mainly towards credit shareholders and not private companies. I think the question really is the use of proceeds and whether that's going to be invested in further production commitments.

[Jorgen Lindemann, executive]

Yes. But the proceeds are going to be invested in taking Viaplay forward in the Nordics and invest in the content which we understand resonates well with our customers and our partners. We have, of course, a return of investment calculation on the content we're investing in as well to make sure that it makes sense for us also financially and not just because it is -- it probably is good content. So we will continue to invest going forward. We will have -- as we always have had in the company, proper return on investment calculations and understand what the content we're investing in will bring to our customers. So that is -- that's an ongoing process. And the good news is, of course, that this recapitalization will enable us to become stay strong and stay competitive in the Nordics, which is our home turf in a market we have been in for many years and knows very well.

[Matthew Hooper, executive]

Yes. So I think next up, we are going to have Rasmus Engberg on the live conference line, Rasmus from Handelsbanken.

[Rasmus Engberg, analyst]

You anticipate cash flow breakeven in '27 for the group. I understand from your answers. When do you expect the Nordic and Dutch businesses to have a cash flow to have positive cash flow in aggregate?

[Enrique Patrickson, executive]

I mean we -- Rasmus, we are looking to be -- I mean, I think I said that we have the ambition to be a slight cash flow positive in '25 and then as a total group in '27. So the reference '25 was for the core Nordic and Dutch business.

[Matthew Hooper, executive]

[Operator Instructions]. I think just coming back to the earlier question that was asked, maybe that referred to whether the creditor treatment here apply to commercial creditors rather than financial creditors, it is to financial creditors that this same structure applies if there's any doubt right. And similarly, when we talk about the direct to equity or the equity swap element, that applies across the different banks and lender community, not just for bondholders, right? So be clear on that one.

There's no other questions on the live line at the moment. So I'm just looking to see if there's anything else on the message board here. No, nothing else at the moment. So I think that brings us to a close on that at the moment. So I think I'd just like to say that, that's the end of the Q&A session. We're very aware of the fact. Sorry, we have one other person coming in actually -- so we have [ Rickard Hellman ] from Nordea.

[Unknown Analyst]

You said that you have not provided any details around the write-down of debt except for bondholders. But can you please just confirm that it is the bondholder suggesting stays at the announced amount of SEK 920 million, I believe, and the rest will then be to other debt holders.

[Jorgen Lindemann, executive]

Yes. I'm going to hand this question to our advisers from [ Carnegie]. So, [Fredrick], go ahead.

[Unknown Attendee]

This is [indiscernible] and that is confirmed that it's roughly SEK 920 million that goes to bondholders and the remainder cuts across the private placement provider and banks.

[Unknown Analyst]

Okay. And you don't have any distribution between those debt provider?

[Unknown Attendee]

No, we haven't disclosed that.

[Matthew Hooper, executive]

And we have another call on the live line as well. So this is [ Kyle ] from Swedbank.

[Unknown Analyst]

It was similar to the last one, but just one more item, I guess, to confirm or think about. Can you talk a little bit about the potential covenant breach that occurred? Was the company, in fact, in breach in the third quarter according to your definition of Nordic EBITDA? And in that case, how was the company able to, I guess, fully draw on the revolver after the close of the third quarter?

[Jorgen Lindemann, executive]

[ Kyle ], yes, thanks for the question. No, we were not in breach at the end of the third quarter. That very simple answer, so yes.

[Matthew Hooper, executive]

That's it actually for the questions now. But as I was about to say, I mean we're very conscious that's a lot of information to digest, published in the middle of the night. So again, apologies for that. But if you have any follow-up questions, please approach Anna or me, all our details are available. And we are very much available to take meetings with any of you who would like to see us either today or through the course of next week. So please don't hesitate to reach out. Thank you again for your time. We appreciate that this is complex and not very welcome news for a lot of people. And thank you for your time, and look forward to speaking or seeing you soon.