Virgin Media Announces Next Phase of Capital Return Programme
Virgin Media’s results over recent years have demonstrated our ability to grow revenue, control costs, refinance debt and generate cash. Since beginning our share repurchase programme in July 2010, we have repurchased 73 million shares of common stock for £1.127bn, representing around 22% of our share count at that time.
We have also made significant progress in refinancing high coupon debt, having issued £2.2bn of low coupon bonds and deleveraging the business since we set our circa 3.0x leverage target two-and-a-half years ago. As a result, we are announcing today that going forward we plan to manage the business in a leverage range of 3.0x to 3.25x Net Debt to OCF1 and we expect to progressively achieve this range over the coming quarters.
With the near completion of our existing authorised capital returns programme, we are also announcing that our Board of Directors has authorised a new share buyback programme of at least £1.122bn to be completed before the end of 2014. This represents approximately 19% of our current market capitalisation and includes the £122m remaining under our pre-existing Board authority.
Our Board has also authorised the use of up to £200m in transactions related to our debt and convertible debt, which may be effected through open market, privately negotiated, and/or derivative transactions until the end of 2014. Our present intention is to maintain our existing dividend of 4 cents per share per quarter in 2013.
Today’s announcement further underscores our commitment to both financial discipline and to offering attractive returns to investors. Together with our leverage range, this will allow for meaningful flexibility to reinvest in our business, maintain our strong credit quality, complete our likely refinancing activity and maximise the total returns to our stockholders.
The transactions described above may be implemented by brokers for the company within certain pre-set parameters and purchases may continue during closed periods in accordance with applicable restrictions. The stock so acquired will be held in treasury or cancelled. Also, in connection with certain derivative and accelerated buyback transactions, the associated counterparties may hedge their liabilities through transactions in our common stock.
1 Net Debt to OCF is Net Debt on a hedged basis divided by OCF for the last twelve months. Net Debt and Net Debt to OCF are non-GAAP financial measures. OCF is operating income before depreciation, amortization, goodwill and intangible asset impairments and restructuring and other charges. OCF is a non-GAAP financial measure and the most directly comparable GAAP measure is operating income. Net Debt is long term debt inclusive of current portion, less cash and cash equivalents. Net debt is a non-GAAP financial measure and the most directly comparable GAAP measure is long term debt (net of current portion.) The hedged amount is defined as the amount in sterling we would repay at maturity relating to debt obligations, net of any payments or receipts on related derivative instruments.
Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
Various statements contained in this press release constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. Works like "believe", "anticipate", "should", "intend", "plan", "will", "expects", "estimates", "projects", "positioned", "strategy", and similar expressions identify these forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or budgeted, whether expressed or implied, by these forward-looking statements.
These factors, among others, include the following:
• We operate in highly competitive markets which may lead to a decrease in our revenue, increased costs, customer churn or a reduction in the rate of customer acquisition;
• The sectors in which we compete are subject to rapid and significant changes in technology, and the effect of technological changes on our businesses cannot be predicted;
• Our fixed line telephony is in decline and unlikely to improve;
• A failure in our network and information systems could significantly disrupt our operations, which could have a material adverse effect on those operations, our business, our results of operations and financial conditions;
• Unauthorized access to our network resulting in piracy could result in a loss of revenue;
• We rely on third-party suppliers and contractors to provide necessary hardware, software or operational support and are sometimes reliant on them in a way which could economically disadvantage us;
• The “Virgin” brand is not under our control and the activities of the Virgin Group and other licensees could have a material adverse effect on the goodwill towards us as a licensee;
• Our inability to provide popular programming or to obtain it at a reasonable cost could potentially have a material adverse effect on the number of customers or reduce margins;
• Adverse economic developments could reduce customer spending for our TV, broadband and telephony services and could therefore have a material adverse effect on our revenue;
• We are subject to currency and interest rate risks;
• We are subject to tax in more than one jurisdiction and our structure poses various tax risks;
• Virgin Mobile relies on Everything Everywhere’s networks to carry its communications traffic;
• We do not insure the underground portion of our cable network and various pavement-based electronics associated with our cable networks;
• We are subject to significant regulation, and changes in the U.K. and EU laws, regulations or governmental policy affecting the conduct of our business may have a material adverse effect on our ability to set prices, enter new markets or control our costs;
• We have substantial indebtedness which may have a material adverse effect on our available cash flow, our ability to obtain additional financing if necessary in the future, our flexibility in reacting to competitive and technological changes and our operations;
• We may not be able to fund our debt service obligations in the future; and
• The covenants under our debt agreements place certain limitations on our ability to finance future operations and how we manage our business;
These and other factors are discussed in more detail under “Risk Factors” and elsewhere in our annual report on Form 10-K for the year ended December 31, 2011, or the 2011 Annual Report, as filed with the U.S. Securities and Exchange Commission, or SEC, on February 21, 2012 and on Form 10-Q as filed with the SEC, on October 31, 2012. We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements.
Virgin Media Investor Relations
+44 (0) 1256 753037
+44 (0) 1256 752347
+44 (0) 1256 752677
Media - Tavistock Communications
+44 (0) 20 7920 3150
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