Agreement Includes a “Go-Shop” Period to
Maximize Sale Value
Eros STX Global Corporation (NYSE: ESGC) (“ErosSTX”, “ESGC”, the
“Company”, “we” or “our”), a global entertainment company, today
announced it has entered into a definitive agreement to sell its
STX Entertainment subsidiary (“STX Entertainment”), to an affiliate
of The Najafi Companies (“Najafi”), an entrepreneurial and
mission-driven private investment company with significant holdings
in consumer, media, talent-driven brands, ecommerce, tech, and
sports.
Transaction
At the closing of the transaction contemplated by the purchase
agreement, an affiliate of Najafi will acquire STX Entertainment
through the purchase of all of the issued and outstanding shares of
common stock of a parent entity of STX Entertainment and
wholly-owned subsidiary of ESGC. The purchase price at Closing will
be $173 million, subject to customary adjustments for transaction
expenses and debt, including repayment of the indebtedness of STX
Entertainment, which is currently approximately $148 million.
The purchase agreement also provides ESGC with a go-shop period,
during which the board of directors of ESGC, with the assistance of
its financial advisor, Lazard, will solicit alternative proposals
from third parties for a period of 45 days. The purchase agreement
provides for ESGC to pay a termination fee of $4.5 million (plus
the return of $2 million that Najafi has funded as a deposit) to
Najafi if ESGC terminates the purchase agreement in connection with
accepting a superior proposal. Under specified circumstances set
forth in the purchase agreement, Najafi will be required to pay
ESGC a termination fee of $4.5 million (less the $2 million Najafi
deposit) if Najafi fails to close the transaction.
A transaction is expected to close by the end of January 2022.
The transaction with Najafi is subject to customary closing
conditions, including its lender’s confirmatory due diligence.
Najafi has exclusively partnered with The Forest Road Company, as
its lender, who is expected to repay STX Entertainment’s
indebtedness and provide it with working capital going forward.
ESGC does not intend to disclose developments with respect to
the solicitation process unless and until the board of directors of
ESGC has made a decision with respect to any potential superior
proposal. There can be no assurance that this process will result
in a superior proposal.
STX Debt Extension
As noted in the November 16, 2021 press release, because the
Company has executed a definitive agreement to sell the STX
Entertainment subsidiary, the maturity and delivery date of
financial statements under STX Entertainment’s Senior Credit
Agreement has been extended to January 4, 2022, and may be further
extended to February 3, 2022 if such sale agreement remains in
effect on January 4, 2022.
Advisors
Lazard is serving as financial adviser to ESGC and Kirkland
& Ellis LLP and Gibson, Dunn & Crutcher LLP are serving as
its legal advisers. Ballard Spahr LLP is serving as legal adviser
to The Najafi Companies.
About Eros STX Global Corporation
Eros STX Global Corporation (NYSE: ESGC) is a global
entertainment company that acquires, co-produces and distributes
films, digital content and music across multiple formats such as
theatrical, television and OTT digital media streaming to consumers
around the world. Eros International Plc changed its name to Eros
STX Global Corporation pursuant to the July 2020 merger with STX
Entertainment, merging two international media and entertainment
groups to create a global entertainment company with a presence in
over 150 countries. ErosSTX delivers star-driven premium feature
film and episodic content across a multitude of platforms at the
intersection of the world’s most dynamic and fastest-growing global
markets, including US, India, Middle East, Asia and China. For
further information, please visit ErosSTX.com.
About The Najafi Companies
The Najafi Companies, based in Phoenix with offices in Los
Angeles and New York, is an entrepreneurially driven private
investment company founded by Jahm Najafi in 2002. The Company
makes investments across industries, with significant holdings in
consumer, media, brands, ecommerce, tech and sports. The Najafi
Companies is not a fund and does not manage third party capital. By
utilizing its own capital, the team is empowered to be extremely
selective, think long-term, move quickly and operate in true
alignment with management. Their passion is to invest, acquire
businesses and create value in areas that are underserved or
undergoing rapid transformation. And the Company's mission is to
"do well and do good," and partner with world-class,
entrepreneurial teams.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information provided in this communication includes
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, and
such statements are subject to the safe harbors created thereby.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as “approximately,”
“anticipate,” “believe,” “estimate,” “continue,” “could,” “expect,”
“future,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “will”, “trending” and similar
expressions. Those statements include, among other things, the
discussions of the Company’s business strategy and expectations
concerning its and the Company’s market position and future
operations. All such forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ
materially from those that we are expecting, including, without
limitation: our ability to successfully and cost-effectively source
film content; the Company’s ability to achieve the desired growth
rate of Eros Now; our ability to maintain or raise sufficient
capital; delays, cost overruns, cancellation or abandonment of the
completion or release of the Company’s films; our ability to
predict the popularity of its films, or changing consumer tastes;
our ability to maintain existing rights, and to acquire new rights,
to film content; our ability to successfully defend any future
class action lawsuits we are a party to in the U.S.; anonymous
letters to regulators or business associates or anonymous
allegations on social media regarding the Company’s business
practices, accounting practices and/or officers and directors; our
ability to recoup the full amount of box office revenues to which
it is entitled due to underreporting of box office receipts by
theater operators; our dependence on our relationships with theater
operators and other industry participants to exploit the Company’s
film content; our ability to mitigate risks relating to
distribution and collection in international markets; our ability
to compete with other forms of entertainment; our ability to combat
piracy and to protect our intellectual property; our ability to
maintain an effective system of internal control over financial
reporting; contingent liabilities that may materialize, our
exposure to liabilities on account of unfavorable
judgments/decisions in relation to legal proceedings involving the
Company or its subsidiaries and certain of its directors and
officers; our ability to successfully respond to technological
changes; our ability to satisfy debt obligations, fund working
capital and pay dividends; the monetary and fiscal policies of
countries around the world, inflation, deflation, unanticipated
turbulence in interest rates, foreign exchange rates, equity prices
or other rates or prices; our ability to address the risks
associated with acquisition opportunities; risks that the ongoing
novel coronavirus pandemic and its spread, and related public
health measures, may have material adverse effects on our business,
financial position, results of operations and/or cash flows; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the purchase agreement or the
failure to satisfy the closing conditions; the possibility that the
consummation of the transactions contemplated by the purchase
agreement is delayed or does not occur; uncertainty as to whether
the parties will be able to complete the transactions contemplated
by the purchase agreement on the terms set forth therein; the
outcome of any legal proceedings that may be instituted against the
parties or others following announcement of the transactions
contemplated by the purchase agreement; challenges, disruptions and
costs of the transactions contemplated by the purchase agreement
and related transactions; risks that the transactions contemplated
by the purchase agreement disrupt current plans and operations that
may harm the Company’s businesses; the amount of any costs, fees,
expenses, impairments and charges related to the transactions
contemplated by the purchase agreement; uncertainty as to the
effects of the announcement or pendency of the transactions
contemplated by the purchase agreement and related transactions on
the market price of the Company’s A Ordinary Shares and/or the
Company’s financial performance; completion of the contemplated
refinancing or strategic transactions; uncertainty as to the
long-term value of the Company’s ordinary shares; and the
completion of the Company’s fiscal 2021 audit and filing of its
Annual Report on Form 20-F.The forward-looking statements contained
in this communication are based on historical performance and
management’s current plans, estimates and expectations in light of
information currently available and are subject to uncertainty and
changes in circumstances. There can be no assurance that future
developments affecting the Company will be those that it has
anticipated. Actual results may differ materially from these
expectations due to changes in global, regional or local political,
economic, business, competitive, market, regulatory and other
factors, many of which are beyond the Company’s control. Should one
or more of these risks or uncertainties materialize or should any
of the Company’s assumptions prove to be incorrect, the Company’s
actual results may vary in material respects from what the Company
may have expressed or implied by these forward-looking statements.
The Company cautions that you should not place undue reliance on
any of its forward-looking statements. Any forward-looking
statement made by the Company in this communication speaks only as
of the date on which the Company makes it. Factors or events that
could cause the Company’s actual results to differ may emerge from
time to time, and it is not possible for the Company to predict all
of them. The Company undertakes no obligation to publicly update
any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by applicable securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20211207005699/en/
Drew Borst EVP, Investor Relations & Business Development
ErosSTX Global Corporation drew@erosstx.com
Eros STX Global (NYSE:ESGC)
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