After a slew of content additions and corporate acquisitions film subscription companies Fandor and The Film Detective, growing streaming service Cinedigm has consummated the sale of 5.6 million shares of its Class A common stock.
The shareholding has a purchase price of $1.25 per share in a registered direct offering to a single institutional investor and the company plans to use the proceeds from the sale to retire the remainder of approximately $3.2 million in second lien debt and for further content and streaming channel acquisitions, in addition to other general corporate uses. Following the retirement of the remaining second lien debt, the Company’s only recourse debt will be its revolving credit facility with East West Bank, an asset-backed loan that currently has a balance of less than $3 million and an interest rate of 3.75%
The loan reduction plan is the latest step in Cinedigm’s initiative to reduce its debt and interest expense. The firm noted that since 31 December 2019 it has reduced overall debt by $35.0 million, or 68% and has converted $15 million in convertible notes to equity at $1.50 per share, reduced second lien loans from $8.1 million to zero, reduced our asset-based revolving loan by $13.5 million, or 85%, to $2.7 million, and reduced non-recourse legacy cinema equipment business debt by $523 thousand to the current balance of $12 million.
The proceeds of this offering will also be used to accelerate Cinedigm’s streaming acquisition roll up strategy which the company plans to continue based on the new funding. The intention is to acquire additional enthusiast-supported streaming channels that Cinedigm insists can immediately benefit from its scale, content library, distribution footprint, infrastructure and technical prowess.
“Following this registered direct offering and planned retirement of all remaining second lien debt, our balance sheet will be stronger than ever,” said Cinedigm president and COO Gary Loffredo. “We will be virtually debt-free now with a small revolving credit facility with a very favourable interest rate. Just as important, we will have the cash and balance sheet firepower to continue the rapid execution of our streaming roll-up strategy, with more impactful, accretive and cash-positive acquisition targets like The Film Detective and Fandor (pictured) that will immediately benefit from Cinedigm’s market leading streaming technology, distribution reach, infrastructure and digital content library.”
The loan reduction plan is the latest step in Cinedigm’s initiative to reduce its debt and interest expense. The firm noted that since 31 December 2019 it has reduced overall debt by $35.0 million, or 68% and has converted $15 million in convertible notes to equity at $1.50 per share, reduced second lien loans from $8.1 million to zero, reduced our asset-based revolving loan by $13.5 million, or 85%, to $2.7 million, and reduced non-recourse legacy cinema equipment business debt by $523 thousand to the current balance of $12 million.
The proceeds of this offering will also be used to accelerate Cinedigm’s streaming acquisition roll up strategy which the company plans to continue based on the new funding. The intention is to acquire additional enthusiast-supported streaming channels that Cinedigm insists can immediately benefit from its scale, content library, distribution footprint, infrastructure and technical prowess.
“Following this registered direct offering and planned retirement of all remaining second lien debt, our balance sheet will be stronger than ever,” said Cinedigm president and COO Gary Loffredo. “We will be virtually debt-free now with a small revolving credit facility with a very favourable interest rate. Just as important, we will have the cash and balance sheet firepower to continue the rapid execution of our streaming roll-up strategy, with more impactful, accretive and cash-positive acquisition targets like The Film Detective and Fandor (pictured) that will immediately benefit from Cinedigm’s market leading streaming technology, distribution reach, infrastructure and digital content library.”
