Under the framework agreement, Liberty Global and Vodafone will receive annual shareholder rights of approximately EUR 97 million, or EUR 114 million, in 2017. Vodafone will therefore receive additional charges of approximately 61 million euros, in addition to the 54 million euros of net charges paid to other operating companies of the group during the LTM at the end of September 30, 2016, which will be registered within Vodafone Netherlands. Shareholder fees, which are generally expected to be accounted for within the OCF or the EBITDA of the joint venture and the owners of the joint venture, include royalties that will vary over time depending on the volume and level of activity of the services provided. Mike Fries, CEO of Liberty Global, commented: “This joint venture is good news for Dutch consumers and businesses. VodafoneZiggo will be the most innovative provider of convergent communications services in the Netherlands, with a complete suite of leading television, broadband, fixed telephony and mobile phone products on the first day of the joint venture. We are also looking forward to our shareholders. This is a highly accredited transaction, with significant synergies and a predictable dividend flow. If, since the announcement of the agreement in February, more than 500 million euros of cash are included and exploited, Liberty`s total revenue will exceed 2.7 billion euros. We look forward to using this capital to drive long-term growth and investor returns. From 2017, fees and allowances for close relatives will be largely replaced by shareholder rights in accordance with the framework agreement, as stated in footnote 9.
Provides additional fees for shareholders under the underlying framework agreement for 2017. For more information on the framework agreement, see footnote 9. According to all the additional payments, VodafoneZiggo will have a gross debt of 10 billion euros11. As previously announced, the joint venture will distribute 100% of its available cash to both shareholders, subject to a minimum operating balance, and should carry out regular recapitalizations under market and operating conditions in order to maintain its target leverage ratio of 4.5x-5.0x. The parties agreed, separately and after a thorough review, to expand the scope of the services to be provided by the two parent companies after closing to ensure that VodafoneZiggo will benefit from the full and complementary expertise of each partner. As a result of this increase in volume and changes in the assumed underlying activity levels, the estimated amount of annual shareholder rights agreed for the joint venture has increased from EUR 182 million for the 2015 calendar to an estimate of EUR 211 million for the 2017 calendar. Vittorio Colao, Chief Executive Officer of Vodafone Group, said: “Today, a powerful integrated communications provider is being set up in the Netherlands, combining the complementary skills and experiences of Vodafone and Liberty to bring a number of benefits to consumers, businesses and the public sector. The merged entity will be a more powerful competitor in the Netherlands – one of our main European markets – and is another example of Vodafone`s ability to add value to its customers and shareholders through an effective convergence strategy. As part of the joint venture transaction, Liberty Global and Vodafone entered into a shareholders` agreement with VodafoneZiggo Group Holding on 31 December 2016 regarding VodafoneZiggo JV.