INTRODUCTION
This Transaction Statement on Schedule
13E-3,
together with the exhibits attached hereto (this
Schedule
13E-3
), is being filed with the Securities and Exchange Commission (the
SEC
) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the
Exchange Act
), jointly by the following persons (each, a
Filing Person
and collectively, the
Filing Persons
): (i) RLJ
Entertainment, Inc., a Nevada corporation (the
Company
or
RLJE
), the issuer of the common stock, par value $0.001 per share (the
Common Stock
), that is subject to the transaction pursuant to
Rule
13e-3
under the Exchange Act, (ii) AMC Networks Inc., a Delaware corporation (
AMC
), (iii) Digital Entertainment Holdings LLC, a Delaware limited liability company
(
Parent
or
DEH
), and (iv) Merger Sub Inc., a Nevada corporation and wholly owned subsidiary of Parent (
Merger Sub
, and collectively with AMC and DEH, the
AMC Entities
).
This Schedule
13E-3
is being filed in connection with the pending acquisition of RLJE pursuant to
the Agreement and Plan of Merger, entered into on July 29, 2018 (the
Merger Agreement
), by and among RLJE, AMC (solely for the purposes of Section 10.7 thereof), Parent and Merger Sub. Pursuant to the Merger Agreement,
Merger Sub will be merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the
Merger
).
Under the terms of the Merger Agreement, at the effective time of the Merger (the
Effective Time
), each share of Common
Stock issued and outstanding immediately prior to the Effective Time, except for certain excluded shares (which include shares beneficially owned by the AMC Entities), will be automatically converted into the right to receive $6.25 in cash without
interest (the
Per Share Merger Consideration
). The Merger Agreement also includes provisions for the payment at the Effective Time of consideration, calculated based on the amount of the Per Share Merger Consideration, to the
holders of outstanding RLJE preferred stock who elect to receive such cash consideration and holders of warrants to purchase Common Stock, except for certain excluded shares (which include shares beneficially owned by the AMC Entities). Such holders
of outstanding RLJE preferred stock will be entitled to receive $7.81 per underlying share of Common Stock, in accordance with the terms of the RLJE preferred stock, if they elect cash as their consideration. Such holders of outstanding warrants
will be paid the difference between $6.25 and the per share exercise price of their warrants.
Simultaneously with the execution of the
Merger Agreement, DEH entered into separate arrangements with RLJ SPAC Acquisition, LLC, a Delaware limited liability company, The RLJ Companies, LLC, a Delaware limited liability company, and Robert L. Johnson (together with RLJ SPAC Acquisition,
LLC and The RLJ Companies, LLC, the
Johnson Entities
) related to the contribution of their RLJE securities to DEH immediately prior to the Merger and their vote for and support of the Merger. As of August 28, 2018, the
Johnson Entities own approximately 43.5% of the issued and outstanding Common Stock. Upon completion of the Merger, RLJE will become a majority owned subsidiary of each of AMC and Parent, with the Johnson Entities owning a stake of 17% in RLJE.
Concurrently with the filing of the Schedule
13E-3,
RLJE is filing with the SEC a preliminary proxy
statement (the
Preliminary Proxy Statement
) pursuant to Regulation 14A under the Exchange Act, relating to a special meeting of RLJEs stockholders (the
Special Meeting
) at which the holders of Common Stock
will be asked to consider and vote on a proposal to approve the Merger Agreement. A copy of the Preliminary Proxy Statement is attached hereto as Exhibit (a)(2)(i), and a copy of the Merger Agreement is attached as Annex A to the Preliminary Proxy
Statement (as well as Exhibit (d)(i) to the Schedule
13E-3).
Concurrently with the filing of the Schedule
13E-3,
the Johnson Entities are also filing a Transaction
Statement on Schedule
13E-3.
The Special Committee of the Board of Directors of RLJE has
(a) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to and in the best interests of RLJE and its stockholders (other than AMC, the Johnson Entities and their respective
affiliates); (b) adopted the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger; (c) directed that the Merger Agreement be submitted by RLJE for approval by the stockholders of RLJE at the Special
Meeting; and (d) recommended that the stockholders of RLJE vote affirmatively at the Special Meeting to approve the Merger Agreement.
The cross references below are being supplied pursuant to General Instruction G to Schedule
13E-3
and
show the location in the Preliminary Proxy Statement of the information required to be included in response to the items of Schedule
13E-3.
Pursuant to General Instruction F to Schedule
13E-3,
the information set forth in the Preliminary Proxy Statement, including all annexes attached thereto, is incorporated in its entirety herein by reference, and the responses to each such item in this Schedule
13E-3
are qualified in their entirety by the information contained in the Preliminary Proxy Statement and the annexes thereto. Capitalized terms used but not defined herein shall have the meanings given to them in
the Preliminary Proxy Statement. As of the date hereof, the Preliminary Proxy Statement is in preliminary form and is subject to completion and/or amendment.