Cinedigm Signs Definitive Stock Purchase Agreement to Acquire 29% Stake in Leading Chinese Entertainment Company Starrise Med...
January 02 2020 - 4:50PM
Cinedigm Corp. (NASDAQ: CIDM) today announced the Company signed a
definitive Stock Purchase Agreement on Friday, December 27, 2019 to
acquire approximately 29% of the outstanding equity of leading
Chinese entertainment company Starrise Media Holdings Limited
(Starrise) (1616. HK) from two existing holders.
The Company has agreed to issue to the sellers, as
consideration, a total of 54,850,103 shares of its Class A Common
Stock, par value $0.001 per share (the “Common Stock”). The
Stock Purchase Agreement contains certain conditions to closing,
including that the Company obtain approval of its stockholders,
applicable lenders, and regulatory authorities, as applicable.
The Company expects to obtain the approval of the Share
Acquisition by the Company’s majority stockholder and to mail a
copy of an information statement relating thereto to its
stockholders.
“Now that we have signed the definitive agreement to acquire
approximately 29% of Starrise, we will move rapidly to close this
transaction while developing operational plans to increase
Cinedigm’s presence and leverage in both the Chinese and North
American markets,” said Chris McGurk, Cinedigm Chairman and CEO.
“These are the two biggest entertainment markets in the world, with
combined Film and Television revenues estimated to be approximately
US$180 billion in 2018. Following the close of this
transaction, Cinedigm will be uniquely well positioned to grow our
content distribution and OTT streaming businesses in both key
territories.”
“This proposed transaction is a strong additional measure of
support for Cinedigm by Bison Capital, our largest shareholder,”
said Gary Loffredo, Cinedigm Chief Operating Officer. “We look
forward to working with Bison to identify additional opportunities
to build our business, particularly in the fast growing AVOD OTT
streaming segment as well as further strengthening our balance
sheet.”
Leveraging its unique OTT and independent content distribution
capabilities, Cinedigm has already been working closely with Bison
to develop strategies and forge partnerships to release
entertainment content and develop OTT channels in China while,
reciprocally, releasing Chinese content and new OTT channels in
North America, such as the recently launched Chinese language
content channel, Bambu.
The Agreement contains representations and warranties and
covenants as are customary for transactions of this type. The
Company expects to close the Share Acquisition in the first
calendar quarter of 2020.
Starrise’s ordinary shares are listed on the main board of the
Stock Exchange of Hong Kong Limited. In calendar year 2018,
Starrise reported approximately US $139 million in total revenues
and gross profits of US $31 million, a 97% increase from 2017
revenues and 196% increase in gross profits. Cash and cash
equivalents at the end of calendar year 2018 were approximately US
$41 million. In the first half of calendar year 2019, the company
reported revenues of approximately US $67 million and gross profits
of US $19 million, a 11% increase in revenues and 104% increase in
gross profits. Cash & cash equivalents at the end of the first
half of calendar year 2019 were approximately US$35 million.
(1.)
Starrise’ Film/TV business segment mainly invests in film,
television and other short form content. Starrise distributes film
content theatrically and to all key media platforms in China and is
committed to significantly growing its investment in entertainment
content for the rapidly expanding Chinese theatrical and digital
marketplaces. Recent prominent film investments by Starrise
include The Wandering Earth, one of the most successful
Chinese films ever released, generating almost US $700 million at
the box office in China in 2019 and The Grandmaster of Kung
Fu, a successful internet-released action movie.
Notes: (1.) Calculated at an exchange rate of 6.9 Chinese Yuan
to 1 US dollar
ABOUT CINEDIGMSince inception, Cinedigm
(NASDAQ: CIDM) has been a leader at the forefront of the digital
transformation of content distribution. Adjusting to the rapidly
transforming business needs of today’s entertainment landscape,
Cinedigm remains a change-centric player focused on providing
content, channels and services to the world’s largest media,
technology and retail companies. Cinedigm’s Content and Networks
groups provide original and aggregated programming, channels and
services that entertain consumers globally across hundreds of
millions of devices. For more information, visit
www.cinedigm.com.
Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of
Cinedigm Corp. www.cinedigm.com. [CIDM-G]
Safe Harbor Statement
Investors and readers are cautioned that certain statements
contained in this document are "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the "Act"). Forward-looking statements include statements that are
predictive in nature, which depend upon or refer to future events
or conditions, which include words such as "expects,"
"anticipates," "intends," "plans," "could," "might," "believes,"
"seeks," "estimates" or similar expressions. In addition, any
statements concerning completion of the transactions described in
this document, future financial performance (including future
revenues, earnings or growth rates), ongoing business strategies or
prospects, and possible future actions, which may be provided by
Cinedigm's management, are also forward-looking statements as
defined by the Act. Forward-looking statements are based on current
expectations and projections about future events and are subject to
various risks, uncertainties and assumptions about Cinedigm, its
technology, economic and market factors and the industries in which
Cinedigm does business, among other things. These statements are
not guarantees of future performance and Cinedigm undertakes no
specific obligation or intention to update these statements after
the date of this release.
Notes: (1.) Calculated at an exchange rate of 6.9 Chinese Yuan
to 1 US dollar
Contact
Cinedigm Jill Newhouse Calcaterra 310-466-5135
jcalcaterra@cinedigm.com
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