Company sells 15,000 preferreds at $1,000.00 apiece to its chairman
By Devika Patel
Knoxville, Tenn., April 16 – RLJ Entertainment Inc. completed a $15 million private placement of bridge preferred stock with its chairman Robert L. Johnson on April 15, according to an 8-K filed Thursday with the Securities and Exchange Commission. It hopes to complete a private placement of between $15 million and $30 million of convertible preferred stock.
The company sold 15,000 preferreds at $1,000.00 per preferred. They are exchangeable for 8% convertible preferred stock, which would be issued with 30% warrant coverage. The convertible preferreds must be redeemed after five years.
The convertible preferreds will convert into common stock at $1.00 per share, which is a 31.97% discount to the April 14 closing share price of $1.47.
The warrants are exercisable at $1.50 for five years. The strike price is a 2.04% premium to the April 14 closing price.
The company used $10 million of the proceeds to make a partial payment on its senior credit facility.
The company also amended its senior credit facility and its subordinated notes.
The credit facility lenders agreed to waive defaults under the agreement upon receiving a $10 million payment. The investors also agreed to change the facility’s interest rate to Libor plus 1,064 basis points.
The noteholders agreed to convert 50% of the notes into convertible preferred stock with the same terms as the convertible preferred that will be issued to Johnson. The remaining notes were revised to decrease the coupon to 1.5% from 12% for the two-year period from Jan. 1, 2015 to Dec. 31, 2016. The coupon will revert to 12% after the period ends.
“I am excited about the financial commitment and continued support from our chairman Mr. Johnson,” chief executive officer Miguel Penella said in a press release. “Over the past year, we have made great advancements towards improving our operations. The company has brought in new equity, restructured its capital structure and dramatically de-levered its balance sheet and lowered its interest expense.
“Beyond addressing the balance sheet, as we look ahead to the remainder of 2015, we are focused on four key areas. These include the acquisition of long-term and exclusive broad exploitation rights for content across key genres, the production and purchase of new intellectual property rights, the expansion of content offerings on current and emerging digital platforms and the expansion of our international distribution footprint. Ultimately, we are confident that these initiatives will position the business for growth in the quarters and years ahead,” Penella said.
The creator, owner and distributor of media content is based in Silver Spring, Md.
| Issuer: | RLJ Entertainment Inc.
|
| Issue: | Bridge preferred stock
|
| Amount: | $15 million
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| Shares: | 15,000
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| Price: | $1,000.00
|
| Dividends: | 8% upon exchange
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| Conversion price: | $1.00 upon exchange
|
| Call: | After five years upon exchange
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| Warrants: | 30% coverage upon exchange
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| Warrant expiration: | Five years
|
| Warrant strike price: | $1.50
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| Investor: | Robert L. Johnson
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| Pricing date: | April 5
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| Announcement date: | April 16
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| Settlement date: | April 15
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| Stock symbol: | Nasdaq: RLJE
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| Stock price: | $1.47 at close April 14
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| Market capitalization: | $16.39 million
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