Global leader in digital media technology
Technicolor is a global media technology company serving a wide range of customers through three main business units:
- Technology Licensing provides patented innovative techniques and technologies to technology and media companies around the world.
- Entertainment Services provides a broad range of services for Hollywood studios including DVD replication, distribution, visual effects and animation.
- Connected Home provides set-top boxes and gateways for PayTV operators.
Insight & Approach
Technicolor was highly levered after a series of acquisitions in the early 2000s. Vector’s credit fund invested in the Company’s debt in 2011, and while the value of the company’s debt recovered substantially, the share price languished due to the still heavy debt load. Vector proposed an equity investment to bolster the company’s balance sheet and provide the management with flexibility to execute on its strategic plan. Vector completed its $166 million investment in 2012.
Vector Value Add
Vector worked with the remunerations committee and the board of directors to align the incentives of shareholders and the management team through the creation of an 8% stock option incentive plan. Vector helped negotiate a $1.1 billion refinancing that extended maturities, reduced interest expense, and provided more flexible credit terms. Vector assisted the company in strengthening the management team and board of directors with world-class experts in intellectual property licensing and financial structuring.
Vector’s efforts resulted in a company that was more capable, focused, and financially stable. Over the three years of Vector's active involvement, Technicolor's free cash flow grew from under $50 million to over $250 million. This created the foundation for the company to pursue a number of accretive acquisitions, culminating with the purchase of Cisco's Scientific Atlanta division. By the time we exited our position in December 2015, the stock price had more than tripled from the date of our initial investment.