Funds earmarked for acquisitions and
investments to drive WildBrain's content and brand strategy, with
special focus on its AVOD business, WildBrain Spark
HALIFAX, NS, June 24, 2020 /PRNewswire/ - WildBrain Ltd.
("WildBrain" or the "Company") (TSX: WILD), a global leader in kids
and family entertainment, has completed an initial closing of the
previously announced financing with its largest shareholder, Fine
Capital Partners L.P. ("Fine Capital"), on behalf of certain
funds managed by Fine Capital. The proceeds of the financing will
be denominated in US dollars – as a result, Fine Capital has agreed
to purchase up to US$18,497,5001 (the US dollar
equivalent of CAD$25 million) of
exchangeable secured debentures (the "Exchangeable
Debentures") issued by a newly formed subsidiary of the Company
("Subco").
At the initial closing of the financing, Fine Capital subscribed
for an aggregate principal amount of US$12,208,3501 of Exchangeable
Debentures with the balance of the commitment available to be
called by Subco at any time, subject to certain conditions, up
until March 24, 2023. The
Exchangeable Debentures issued at the initial closing will be
exchangeable for Variable Voting Shares of the Company (the
"Variable Voting Shares") at a price of US$1.0728551 per Variable Voting Share
(the US dollar equivalent of CAD$1.45).
Concurrently, the Company has issued to Fine Capital warrants
(the "Warrants") to purchase 5,000,000 Variable Voting
Shares at a price of CAD$1.45 per
Variable Voting Share, which expire five years from today's date.
Net proceeds from the Exchangeable Debentures will be used by Subco
to fund acquisitions and other investments to drive WildBrain's
content and brand strategy across the Company, with a special focus
on its ad-supported video-on-demand business ("AVOD"). The
financing structure does not increase the Company's leverage ratio
for covenant purposes under its senior credit
facility2.
"One of the most exciting growth opportunities in the media
industry is the rise of AVOD," said Eric
Ellenbogen, CEO of WildBrain. "This capital will allow us to
finance accretive investments across areas such as content, IP, and
technology, especially in our AVOD business, WildBrain Spark. With
four billion monthly views across over 800 channels, WildBrain
Spark attracts one of the largest and most engaged global audiences
in the kids and family space. We see it as a key driver of IP for
our business."
"We are pleased to increase our investment in WildBrain during
this exciting period for the children's media industry," said
Jonathan Whitcher, CEO and Chief
Investment Officer of Fine Capital, and a non-executive and
independent director of WildBrain. "With its vast content library,
powerful WildBrain Spark asset and its integrated strategy of
production, distribution and licensing, WildBrain is ideally
positioned to exploit the remarkable opportunity set that exists
today for acquisitions, partnerships and investment across the
children's media landscape."
As a condition to the closing of the financing, Mr. Whitcher was
appointed to the Corporate Finance Committee of WildBrain's board
of directors, effective as of today's date.
Fine Capital currently owns, or has control or direction of
57,472,888 Variable Voting Shares, which represent approximately
33.60% of the outstanding Variable Voting Shares and common voting
shares of WildBrain (the "Common Voting Shares" and together
with the Variable Voting Shares, the "Voting Shares") and
approximately 14.26% of the voting power attached to the
outstanding Voting Shares. Assuming (i) the Company opts to draw
down on the full US$18,497,500 aggregate amount of
Exchangeable Debentures, (ii) an exchange price of US$1.072855 and (iii) the receipt of
shareholder approval to remove limitations on the number of
Variable Voting Shares that may be issued pursuant to the terms of
the financing, as is further described in the transaction
documents, the maximum number of Variable Voting Shares issuable
upon the exchange, redemption or maturity of the Exchangeable
Debentures and exercise of the Warrants is 22,241,379 (the
"Maximum Share Issuance"). Assuming the Maximum Share
Issuance, Fine Capital will hold, or have control or direction over
79,714,267 Variable Voting Shares, which would represent
approximately 41.24% of the issued and outstanding Voting Shares
following the issuance of such Variable Voting Shares and
approximately 16.97% of the voting power attached to the
outstanding Voting Shares.
Additional details on the financing can be found in the
Company's press release dated May 13,
2020 and the material change reports and transaction
documents that have been or will be filed on SEDAR
at www.sedar.com.
1.
|
F/x exchange rate
of 1.3516 CAD to USD.
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|
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2.
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Net debt includes
long-term debt, lease liabilities and bank indebtedness less cash,
and excludes interim production financing. Net leverage ratio as
discussed in this press release is a reference to the Total Net
Leverage Ratio as defined in the Company's senior secured credit
agreement available on SEDAR at www.sedar.com.
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For more information, please contact:
Investor Relations: Nancy Chan-Palmateer - Director,
Investor Relations, WildBrain
nancy.chanpalmateer@wildbrain.com
+1 416-977-7358
Media: Shaun Smith - Director,
Corporate & Trade Communications, WildBrain
shaun.smith@wildbrain.com
+1 416-977-7230
About WildBrain
At WildBrain we make great content for kids and families. With
approximately 13,000 half-hours of filmed entertainment in our
library - one of the world's most extensive - we are home to such
brands as Peanuts, Teletubbies, Strawberry
Shortcake, Caillou, Inspector Gadget, Johnny Test and Degrassi. Our shows
are seen in more than 150 countries on over 500 telecasters and
streaming platforms. Our AVOD business - WildBrain Spark -
offers one of the largest networks of kids' channels on YouTube,
with over 168 million subscribers. We also license consumer
products and location-based entertainment in every major territory
for our own properties as well for our clients and content
partners. Our television group owns and operates four family
entertainment channels that are among the most viewed in
Canada. WildBrain is headquartered
in Canada with offices worldwide
and trades on the Toronto Stock Exchange (WILD). Visit us at
www.wildbrain.com.
Forward-Looking Statements
This press release contains "forward-looking statements" under
applicable securities laws with respect to the Company including,
without limitation, statements regarding an exchangeable secured
debenture financing arrangement, terms and conditions applicable to
such financing, expected use of net proceeds from such financing,
impact of the financing on the Company's leverage, future growth
and financial and operating performance of WildBrain Spark, the
markets and industries in which the Company and its subsidiaries
operate, impacts of the COVID-19 situation on the Company, its
business, the markets and industries in which it operates, and
future financial and operating results, production capacity
utilization, reorganization initiatives and expected financial
impacts from such initiatives, the business strategies and
operational activities of the Company and its long-term prospects.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, such statements
involve risks and uncertainties and are based on information
currently available to the Company. Actual results or events may
differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results
or events to differ materially from current expectations, among
other things, include the ability of the Company to finalize the
long form agreements for the financing in a timely manner and
complete the other conditions to closing, the availability of
investment opportunities and at acceptable valuations, epidemics,
pandemics or other public health crises, including the current
outbreak of COVID-19, the magnitude and length of economic
disruption as a result of the worldwide COVID-19 outbreak, the
reliance of the Company on the Internet and other technologies to
continue to conduct its business, failure to meet covenants under
the senior credit facility of the Company, the ability of the
Company to execute on its business strategies and investment
opportunities, the ability of the Company to realize expected
operating cost savings, consumer preferences, market factors,
conditions in the AVOD, entertainment and brands industries, the
ability of the Company to execute on production and licensing
arrangements, and risk factors discussed in materials filed with
applicable securities regulatory authorities from time to time
including matters discussed under "Risk Factors" in the Company's
most recent Annual Information Form and annual Management
Discussion and Analysis. These forward-looking statements are made
as of the date hereof, and the Company assumes no obligation to
update or revise them to reflect new events or circumstances,
except as required by law.
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SOURCE WildBrain Ltd.