Pierre & Vacances-Center Parcs Group Confirms Its Reinvention Strategy and Presents Its Revised Financial Objectives

Update on the restructuring process of the Pierre & Vacances-Center Parcs Group

PARIS--(BUSINESS WIRE)--Regulatory News:

Pierre & Vacances-Center Parcs (Paris:VAC):

1. Strategic Plan ReInvention

On 18 May 2021, the Pierre & Vacances-Center Parcs Group announced its strategic plan, ReInvention 2025, with the ambition of becoming the leader and precursor of a new, reinvented and value-creating local tourism, by:

• a radical modernization of its offer, 100% experience-based, personalised and service-focused, supported by a general premiumisation,
• a sustainable performance, with a selective and responsible development, favouring alternative contracting methods to leasing, and a more agile and efficient organization, with lower structural costs.

In the context of the agreement related to the restructuring of the Group concluded on 10 March 2022, Alcentra, Fidera and Atream (the "Investors") confirmed that they share the strategic orientations of ReInvention 2025, specifying that an additional delay of up to 12 to 24 months in the achievement of the financial objectives initially set (and slightly revised in fall 2021) could not be excluded in consideration of the current health and international context.

The update of the financial objectives of the Group’s plan include this calendar shift, as well as the following main elements:

• a more selective approach to development projects included in the business plan and a postponement of certain programs (impact on real estate and tourism margins);
• full consolidation of Villages Nature as of 15 December 2022 (previously 50%);
• higher raw material and energy costs, and wage inflation on site (pressure on the labor market in certain sectors - especially cleaning and catering);
• a more conservative approach to the evolution of average sales prices and occupancy rates, and generally a more cautious approach to objectives, particularly for the last two years of the plan for which the predictive accuracy is more uncertain.

This update of the strategic orientations was agreed with the Investors, it being recalled that the Group's business plan, which involves an ambitious transformation project, is by its very nature the subject of ongoing work.

Main objectives¹ expressed according to operational reporting² (vs. revised objectives in fall 2021)

- Revenue from tourism activities: €1,620 million in 2023 (vs. €1,581 million) and €1,795 million in 2025 (vs. €1,805 million);

- Group adjusted EBITDA³: €105 million in 2023 (vs. €137 million) and €170 million in 2025 (vs. €268 million), mainly generated by tourism activities;

- Group operating cash-flows⁴: €37 million generated in 2023 (vs. €33 million) and €65 million in 2025 (vs €156 million).

The Group also plans to finance €381 million in CAPEX over the period 2022-2025 (vs. €375 million), in addition to nearly €290 million in investments financed by the owners of the Center Parcs estates over the same period.

The business plan has also been forecasted until 2026, with the final year's objectives as follows:

- revenue from tourism activities of €1,877 million;

- €187 million in Group adjusted EBITDA;

- €93 million in Group operating cash flows.

Finally, for the current fiscal year 2021/2022, the Group expects:

- revenue from tourism activities above budget (growing by nearly 7% over the revenue achieved in 2019);

- Group adjusted EBITDA also higher than budget, estimated at €83 million excluding the benefit of non-recurring items (which could amount to a positive total of more than €50 million, including in particular the so-called "closure" aid received in France, subsidies requested from the German federal government and the impact of the agreements concluded with the Group's lenders)

This adjusted EBITDA has been revised upwards compared with the previous communication of 10 March 2022 (Group adjusted EBITDA then expected to be €95 million, or €72 million excluding non-recurring items).

- a cash position estimated to date at €438 million euros as of 30 September 2022, including the benefit of the aforementioned aid and after completion of the Restructuring Operations. As a reminder, the cash position as of 30 September 2022 mentioned in the press release of 10 March 2022 was €390 million, before taking into account the so-called "closure" aid received in France.

2. Update on the Group’s restructuring process

In accordance with the announcements made in the press release dated 10 March 2022, the Group is committed to completing the preliminary transactions and lifting the conditions precedent to the completion of the Restructuring Transactions.

To date, the Group confirms the following main elements:

1. the capital reduction by way of a reduction in the par value of the shares from €10 to €0.01 has been implemented by the Board of Directors upon the authorization of the Annual General Meeting of 31 March 2022. The capital reduction should be realized in the next few days. After such reduction, the number of outstanding shares, i.e. 9,893,463, will remain unchanged, and the share capital will be reduced to €98,934.63;
2. the so-called "closure" aid to compensate for the uncovered fixed costs of companies whose activity was particularly affected by the covid-19 pandemic has been received in the amount of 24 million euros. As announced in the press release of 10 March 2022, the Group will pay back a portion of this aid to certain individual lessors, in accordance with the agreements concluded with them in the context of the conciliation procedure initiated in 2021;
3. discussions with the institutional lenders concerned are continuing in the context of the completion of the Restructuring Transactions;
4. on 6 April 2022, the required application for approval by the German Competition Authority under the applicable merger control regulations was filed. The decision of the German Competition Authority is expected in May 2022;
5. the transactions relating to S.I.T.I., the Company's current controlling shareholder, referred to in the press release dated 10 March 2022, were formalized by an agreement dated 11 March 2022, under the terms of which the mandatory transfer by S.I.T.I. to Alcentra and Fidera of all the preferential subscription rights (DPS) to be received in the Right Issue (as this term is defined in the press release dated 10 March 2022) was reaffirmed. In this context, Alcentra and Fidera have granted a minimum price of €0.19 per preferential subscription right, offered to all Pierre & Vacances SA’ shareholders within the framework of the liquidity offer, the maximum price of €0.22 remaining unchanged.

The indicative date of 16 September 2022 announced in the press release of 10 March remains the target date for the completion of the Restructuring Transactions.

Forward-looking information

This press release contains prospective information relative to the targets and strategy of the Pierre & Vacances Center Parcs Group. Although Pierre & Vacances-Center Parcs’ management considers that this prospective information is based on reasonable estimates, forecasts and assumptions, it provides no guarantee as to the future performance of the Pierre & Vacances-Center Parcs Group. The actual results may be very different to these prospective statements, due to a certain number of risks and uncertainties, known or unknown at the present date, the majority of which are out of the control of the Pierre & Vacances Center Parcs Group, in particular risks related to the economic environment and the health situation in which the Group is active, delivery of the strategic plan and the risks described in the documents registered by Pierre & Vacances Center Parcs with the AMF, including those set out in section 2.2 of the Group’s universal registration document registered with the AMF on 17 March 2022 under the number D.22-0119 (the “Universal Registration Document”). Copies of the Universal Registration Document are available free of charge at the Pierre & Vacances head office and on the Pierre & Vacances and AMF websites (www.groupepvcp.com).

¹ The full financing of the strategic plan remains subject to the completion of the restructuring transactions mentioned in the press release dated 10 March 2022 (the “Restructuring Transactions”). The objectives mentioned prevail over any contrary objective previously communicated by the Group and assume the financing by the real estate company to be formed by Atream of the real estate projects planned over the duration of the business plan.
² In order to reflect the operational reality of the Group's activities and the clarity of their performance, the Group's financial communication, in line with operational reporting as monitored by management, includes the results of joint ventures on a proportional basis and does not include the application of IFRS 16.
³ Adjusted EBITDA = operating income before non-recurring items (consolidated operating income before other non-recurring operating income and expenses, excluding the impact of IFRS 11 and IFRS 16), adjusted for provisions and net depreciations on fixed operating assets.
⁴ Operating cash flow, after capex and before non-recurring items and financing activities.