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Masorange sets a reinforced majority of 75% for ‘reserved matters’ of the council

Date: July 12, 2024 Time: 16:29:19

The shareholder funds of Másmóvil and Orange are obliged to understand each other. And the ‘joint venture’ establishes an agreement by which a reinforced majority will be needed for what is classified as “reserved matters” on the council. This means that you must have at least 60% of the votes for matters that have to reach the general meeting and 75% for the rest. In this distribution of power at the top, two advisory committees are created, one for remuneration and another for auditing. The president of the council, who will be the former CEO of Orange Spain, Jean François Fallacher, will not have a casting vote in any case. The shareholders’ agreement establishes the blocking period for the sale of shares during the first two years, until March 2026.

In a joint venture company with equal percentage ownership, the rules must be set out very clearly. And in fact it is one of the aspects that the group has highlighted to financial entities in its formal presentations. They aim for “robust and balanced” governance. The key is that an agreement will be necessary, since each of the parties will have four directors in the administrative body and the president will not be able to break the tie. As reflected in the bylaws, consulted by La Información, this reinforced majority will be needed for relevant company matters.

Among these “reserved matters” are very relevant corporate aspects such as the modification of the dividend policy – the ‘veto’ of these distributions has been included by contract in the first years in order to reduce debt – the appointment of the top management and, until March 26, 2026, the dismissal of the same; any acquisition of a company with a valuation of more than €50 million; the approval of “strategic decisions” regarding brands or market positioning – a reorganization of the more than fifteen brands will have to be carried out – or the execution of any relevant modification of the share capital.

The board – which must meet a minimum of six times a year – will have, like the management committee, eight members, four for each shareholder. On the Orange side, in addition to Jean François Fallacher as non-executive president, there will be the group’s financial chief, Laurent Martínez; the head of Orange Europe, Mari-Noelle Jego-Laveissiere, and the until now head of Human Resources of the gala teleco in Spain, Berta Durán.

From the Másmóvil side, as expected, Meinrad Spenger himself will be present, along with the three directors representing the funds that own the majority shareholding of the until now fourth operator. This is Iñaki Cobo, partner of KKR; Robert Sudo, ‘managing director’ of Providence Equity, and Miguel Segura, who has recently been promoted by the management company Cinven as a partner – until the end of last year he was ‘senior director’ in the Madrid office.

The two commissions

Masorange is not listed – despite being among the largest in the country in terms of turnover and staff size – but it has tried to build a corporate governance typical of a listed company. Two commissions have been created that will have a consultative nature regarding the decisions of the council, as reflected in two documents consulted by La Información. One of them is Remuneration. Among the tasks assigned is the assistance of the decision-making body in the salary policy of the CEO, Meinrad Spenger, and the heads of Technology, Operations, Network and Legal, who are ultimately called the ‘main executive team’.

This Remuneration Commission will also assist in policy changes regarding staff conditions, pension plans or potential collective redundancies (ERE). It will propose to the administrative body, at the proposal of Spenger himself, the adoption of the incentive plan for the leadership, its regulations and its modifications, “taking into account the principles of the shareholders’ agreement.” Secondly, the Audit and Risk Commission is created. It will put a magnifying glass on the quality and integrity of the financial information reported by the group; will monitor issues related to ESG and also both the draft annual budgets and the business plan, and will review the group’s transactions and potential future purchases.

IPO and lock-up for sale for two years

One of those ‘reserved matters’ of the council is a potential IPO. But this can only be done from March 26, 2026, just 24 months after the signing of the merger agreement. These two years represent what is known in jargon as ‘lock up’, that is, the period in which no transfer of shares by any of the parties is permitted – except to related entities or other subsidiaries – without has the written authorization of the other partners. From that date until September 2027, this purchase and sale of securities may be carried out but with rights linked to the rest of the partners (right of first refusal or accompaniment). If at the end of that year and a half the company has not been listed on the stock market, shares may be sold but without those ‘limitations’.

Orange has a preferential option to launch this IPO from March 2026. given that the partners’ agreement defines an IPO window “that fits well with the investment cycle of the funds and the right of consolidation” of the French group . Of course, the CEO himself, Meinrad Spenger, insisted in the presentation of the joint venture project a couple of weeks ago that it is a possibility but not an obligation.

Beyond the corporate agreements, what does the structure of the new company ultimately look like? The British parent company Orange Participations UK Limited owns 50% of the French group. On the Másmóvil side, Lorca JVCO, also based in the United Kingdom and until now the entity’s parent company, is the last company. From this ‘hangs’ Lorca Topco Limited and in turn Lorca Midco. The latter is the owner of the 50% stake. Below the Masorange SL parent company is the English company Lorca Holdcom, which controls Lorca Telecom Bidco and on which the direct assets – the telecommunications groups and the companies launched to finance financing – depend.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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