SCHEDULE: Atlas Investissement Boosts Millicom Stake to 44.1% via Equity Swap

Atlas Investissement SAS has entered into an equity derivative transaction to acquire an additional 3.35 million shares of Millicom International Cellular S.A., increasing its beneficial ownership to 44.1%.

Summary

• Atlas Investissement SAS, along with its controlling entities and the Niel Family, has increased its beneficial ownership in Millicom International Cellular S.A. (TIGO US).
• The reporting group now beneficially owns 73,820,018 common shares, representing 44.1% of Millicom's outstanding shares.
• This increase includes 70,470,018 currently held shares and an additional 3,350,000 common shares expected to be purchased through an equity derivative transaction.
• The equity derivative transaction, a share swap with Societe Generale, is expected to settle on or before June 30, 2026.
• Funding for the additional shares is anticipated from an upsizing of an existing equity financing arrangement or through loans from an Atlas Investissement affiliate.
• Under the swap, Atlas Investissement will pay cash for shares, and Societe Generale will deliver them physically at settlement, with Atlas Investissement having the option for earlier settlement of Tranche 2.
• Atlas Investissement will receive 85% of cash dividends paid on shares not yet delivered.
• Atlas Investissement will not have voting or dispositive control over shares held by Societe Generale for hedging purposes until physical delivery.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development, indicating a significant investor's continued confidence and increased strategic commitment to Millicom, although the lack of immediate voting rights on the new shares introduces a minor caveat.

Positives

• Increased beneficial ownership by a significant investor (Atlas Investissement and Niel Family) signals confidence in Millicom International Cellular S.A.
• The structured equity derivative transaction allows for a controlled acquisition of shares.
• The ability for Atlas Investissement to request an earlier settlement date for Tranche 2 provides flexibility.
• The transaction is structured to comply with U.S. securities regulations, including Rule 10b-18 guidelines for the Bank's hedging activities.

Negatives

• Atlas Investissement will not have voting rights over the 3,350,000 shares held by Societe Generale for hedging until physical settlement, potentially impacting its influence during the hedging period.
• Societe Generale may vote the hedging shares for its own benefit, which could be detrimental to Atlas Investissement's interests.
• The Bank's other proprietary transactions involving Millicom shares may adversely affect Atlas Investissement's position under the transaction.

Risks

• Market Risk: The value of the shares could fluctuate during the hedging period, impacting the final cost or value of the transaction.
• Hedging Disruption: The Bank may face difficulties in establishing or maintaining its hedge positions, potentially affecting the transaction.
• Increased Cost of Hedging: The Bank may incur increased costs for hedging, which could impact the transaction terms or profitability.
• Change in Law: Changes in applicable laws or regulations (including tax laws) could make it illegal for the Bank to hold/acquire/dispose of hedge positions or result in increased taxes/fees for hedging activities.
• Failure to Deliver: Risk that the Bank may fail to deliver the shares as agreed.
• Insolvency Filing: Risk related to insolvency of either party.
• Counterparty Risk: Risk associated with Societe Generale's ability to fulfill its obligations under the swap agreement.
• Funding Risk: Atlas Investissement's ability to secure the necessary financing (upsized equity financing or affiliate loan) to settle the transaction.

Future Outlook

Atlas Investissement expects to complete the acquisition of up to 3,350,000 additional common shares of Millicom International Cellular S.A. by June 30, 2026, significantly increasing its stake and potential influence in the company. The funding for this acquisition is planned through either an upsizing of existing equity financing or an affiliate loan.

Management Comments

• Counterparty has the power to enter into, perform and deliver, and has taken all necessary action to authorise the entry into, performance and delivery of, this Confirmation and the Transaction, and such entry into, delivery and performance (x) do not violate or conflict with any law applicable to it, any provision of its articles of association (statuts) (y) nor constitute a breach of any obligation or result in a default under any agreement to which it is subject or by which it is, or its property are, bound.
• it is entering into this Transaction in good faith and not as part of a plan or scheme to evade the prohibitions of Section 10(b) of and Rule 10b-5 under the Exchange Act or any other antifraud or anti-manipulation provisions of the federal or applicable U.S. state securities laws and Counterparty further agrees to act in good faith during the term of this Transaction, has not entered into or altered and will not enter into or alter any corresponding or hedging transaction or position with respect to the Shares except as permitted under this Confirmation, and any amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification, waiver or termination shall be made at any time at which Counterparty is aware of any material non-public information regarding Counterparty or the Shares.

Industry Context

StockSavvy.ai notes that this increased stake by Atlas Investissement, a vehicle associated with Xavier Niel, a prominent figure in the European telecommunications sector, suggests a continued strategic interest in Millicom's operations, particularly in Latin America. This move could signal a long-term commitment and potentially lead to greater strategic alignment or influence, which is a common trend among large investors seeking to consolidate positions in key regional players.

Comparison to Industry Standards

• The use of equity derivatives for stake building is a common strategy among activist investors or strategic partners to accumulate shares without immediate market impact or full capital outlay.
• The 44.1% stake is substantial, approaching a controlling interest, which is a significant position compared to typical institutional investor holdings in publicly traded companies. For example, while a 5-10% stake might be considered significant for an activist, a near-majority stake like this suggests a deeper strategic intent, similar to how SoftBank has built large positions in various tech companies or how private equity firms approach public-to-private transactions.
• The inclusion of Rule 10b-18 guidelines for the Bank's hedging activities is standard practice for ensuring compliance with market manipulation rules during share repurchases or similar transactions in the U.S. market.

Related Party Transactions

• The funding for the Equity Derivative Transaction may come from funds borrowed from one of the affiliates of Atlas Investissement.
• Iliad Holding SAS, Maya SAS, and the Niel Family are deemed to have shared beneficial ownership over the Common Shares beneficially owned by Atlas Investissement, indicating a related group of reporting persons.

Stakeholder Impact

• Shareholders: Increased concentration of ownership by a major investor could lead to greater stability or, conversely, reduced liquidity and potential for a controlling shareholder to exert significant influence over company decisions. The market may view this as a positive signal of long-term commitment.
• Management: The increased stake by Atlas Investissement could lead to greater oversight or strategic alignment with the Niel Family's vision for Millicom.
• Creditors: The potential upsizing of equity financing or affiliate loans to fund the acquisition could impact the company's capital structure or debt profile, depending on how it's structured.

Next Steps

• Societe Generale will purchase up to 3,350,000 common shares of Millicom International Cellular S.A. to establish hedge positions.
• Atlas Investissement will settle the equity derivative transaction by paying cash for the shares.
• Societe Generale will physically deliver the shares to Atlas Investissement on or before June 30, 2026, or earlier for Tranche 2 if requested by Atlas Investissement.
• Atlas Investissement will secure funding for the acquisition, either through an upsizing of existing equity financing or an affiliate loan.

Key Dates

Recommendation

The increased stake by Atlas Investissement is a significant development, signaling strong conviction from a major investor. However, the shares are being acquired through a derivative, meaning the full impact on market dynamics and Atlas Investissement's direct control is not immediate. While the long-term implications are likely positive, the immediate price reaction might be limited as this is an expected continuation of a previously disclosed strategy. Investors should hold to observe the full integration of this increased stake and any subsequent strategic moves by Atlas Investissement.

Keywords

Millicom International Cellular, TIGO US, Atlas Investissement, Societe Generale, Equity Derivative, Share Swap, Schedule 13D, Beneficial Ownership, Stock Acquisition, Xavier Niel, Telecommunications, Latin America, Luxembourg