Attached files
file | filename |
---|---|
8-K - FORM 8-K - IMAGE ENTERTAINMENT INC | c93988e8vk.htm |
EX-4.1 - EXHIBIT 4.1 - IMAGE ENTERTAINMENT INC | c93988exv4w1.htm |
EX-10.1 - EXHIBIT 10.1 - IMAGE ENTERTAINMENT INC | c93988exv10w1.htm |
Exhibit 99.1
IMAGE ENTERTAINMENT TO SELL
UP TO $30 MILLION OF SERIES B AND SERIES C PREFERRED STOCK
UP TO $30 MILLION OF SERIES B AND SERIES C PREFERRED STOCK
Initial Closing to Occur On or Before January 8, 2010
CHATSWORTH,
Calif., December 21, 2009 Image Entertainment, Inc. (NASDAQ: DISK), a leading
independent licensee and distributor of entertainment programming in North America, announced today
that its board of directors had approved the sale of up to $30 million of newly authorized Series B
Cumulative Preferred Stock (Series B Preferred Stock) and Series C Junior Participating Preferred
Stock (Series C Preferred Stock) to certain affiliates of JH Partners, LLC (the Investors).
Pursuant to the terms of a securities purchase agreement dated December 21, 2009, the Company will
sell 22,000 shares of Series B Preferred Stock and 196,702 shares of Series C Preferred Stock for
an aggregate purchase price of $22.0 million and use the net proceeds for the repayment of
outstanding indebtedness, other outstanding liabilities and general working capital. The issuance
of the shares is scheduled to occur on or before January 8, 2010 (the Initial Closing Date). The
transaction is not subject to a financing condition.
The securities purchase agreement also grants the Investors the right to purchase up to an
additional 8,000 shares of Series B Preferred Stock and 71,528 shares of Series C Preferred Stock,
for an aggregate purchase price of $8.0 million, in two tranches, each consisting of 4,000 shares
of Series B Preferred Stock and 35,764 shares of Series C Preferred Stock. The Investors may
exercise the first tranche in whole or in part and in one or more closings within 120 days of the
Initial Closing Date. The second tranche may be similarly exercised within 360 days of the Initial
Closing Date. The net proceeds from the sale of any additional shares may only be used by the
Company to (i) acquire rights to additional audio and video entertainment programming, (ii) repay
any over-advance under the Companys senior loan and security agreement, as amended (the Loan
Agreement), or (iii) repay accounts payable incurred by the Company in the ordinary course of
business.
As conditions to the initial closing, among other things, (i) the Company must pay to the Investors
a $1.0 million transaction fee and reimburse the Investors for their out-of-pocket fees and
expenses in an amount up to $1.0 million, (ii) all but one of the current members of the Companys
board of directors shall have resigned and (iii) the board of directors shall have appointed four
individuals designated by the Investors to the board of directors. The Investors have agreed to
provide to the lenders under the Loan Agreement credit support in an amount up to $5.0 million to
induce the lenders to increase availability under the line of credit contemplated by the Loan
Agreement until a new facility can be documented and funded.
The securities purchase agreement may be terminated under certain circumstances, including by
mutual agreement of the parties, by either the Company or the Investors if the transaction does not
close by January 8, 2010 or by the Investors on or before the close of business on December 24,
2009 if the Company and the Investors have not achieved by such date a reduction in obligations to
the Companys creditors that is satisfactory to the Investors in their sole discretion.
Under certain circumstances related to termination of the securities purchase agreement due to
certain actions taken with respect to other acquisition proposals received after the date of the
securities purchase agreement, the Company would be obligated to pay a termination fee of $1.0
million and to reimburse the fees and expenses of the Investors in an amount up to $1.0 million.
The Series B Preferred Stock is not convertible into shares of common stock, is not entitled to
voting rights other than those rights required by law and limited voting rights with respect to
matters affecting the rights and privileges of the Series B Preferred Stock, is not redeemable by
the Company or the Investors and bears a cumulative compounding dividend equal to 12% per annum of
the liquidation preference of $1,000 per share (subject to adjustment). Accrued but unpaid
dividends will be added to the liquidation preference. The Series C Preferred Stock does not bear
a dividend, but each share is entitled to 1,000 times the aggregate per share amount of all cash
and non-cash dividends and other distributions paid on a share of common stock. The Series C
Preferred Stock votes with the common stock, is convertible into shares of common stock at a ratio
of 1,000 shares of common stock for each share of Series C Preferred Stock and entitles the holder
to 1,000 votes for each share held on all matters submitted to a vote of stockholders. The Series
C Preferred Stock will automatically convert into shares of the Companys common stock when there
are sufficient authorized but unissued shares of common stock to effect the conversion. The
issuance of the initial 196,702 shares of Series C Preferred Stock will result in the holders of
those shares holding 90% of the voting power of the Companys outstanding capital stock. If the
Company issues all of the additional 71,528 shares of Series C Preferred Stock, the holders of
Series C Preferred Stock will hold approximately 92.5% of the voting power of the Companys
outstanding capital stock. The Company will not call a stockholders meeting to approve the issuance
of the Series B or Series C Preferred Stock.
Jeff Framer, President of the Company said We are excited about the opportunities for the Company
this new investment brings. The Company has struggled in recent periods because of a lack of
resources. The Companys new investors bring a wealth of entertainment industry experience coupled
with access to sufficient capital to allow the Company to continue growing.
About Image Entertainment
Image Entertainment, Inc. is a leading independent licensee and distributor of entertainment
programming in North America, with approximately 3,200 exclusive DVD titles and approximately 340
exclusive CD titles in domestic release and approximately 400 programs internationally via
sublicense agreements. For many of its titles, the Company has exclusive audio and broadcast
rights and, through its subsidiary, Egami Media, Inc. has digital download rights to approximately
2,000 video programs and over 300 audio titles containing more than 5,100 individual tracks. The
Company is headquartered in Chatsworth, California. For more information about Image
Entertainment, Inc., please go to www.image-entertainment.com.
Forward-Looking Statements:
This press release includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 relating to, among other things, the execution of the securities
purchase agreement and the consummation of the transactions contemplated by the securities purchase
agreement. These statements may be identified by the use of words such as will, may,
estimate, expect, intend, plan, believe, and other terms of similar meaning in connection
with any discussion of future operating or financial performance or other events or developments.
All forward-looking statements are based on managements current expectations and involve inherent
risks and uncertainties, including factors that could delay, divert or change any of them, and
could cause actual outcomes and results to differ materially from current expectations.
These factors include, but are not limited to, (a) the Companys ability to continue as a going
concern, (b) the Companys ability to service its principal and interest obligations on its
outstanding debt or otherwise renegotiate or refinance such outstanding debt, including curing the
existing defaults on such outstanding debt, which renegotiation may not be successful and
refinancing may not be available on acceptable terms, if at all, which may trigger defaults under
its other debt agreements, create liquidity issues, potentially force the Company to file for
protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code and prevent the Company
from continuing as a going concern, (c) the Companys limited funds and the Companys inability to
raise additional funds on acceptable terms or at all, (d) the Companys ability to borrow against
the Companys revolving line of credit, (e) the Companys ability to secure media content on
acceptable terms, (f) the Companys DVD manufacturer continuing to manufacture and fulfill orders
to Company customers while the Company is past due on its payables to such manufacturer, (g) the
Companys decision to appeal the delisting determination, the ability of the Company to
successfully appeal the delisting determination issued by the Staff of The Nasdaq Stock Market on
December 15, 2009 and the ability of the Companys common stock to continue trading on The Nasdaq
Stock Market, (h) the performance of business partners upon whom the Company depends upon, (i)
changes in the retail DVD and digital media and entertainment industries, (j) changing public and
consumer taste and changes in customer spending patterns, (k) decreasing retail shelf space for the
Companys industry, (l) further sales or dilution of the Companys equity, which may adversely
affect the market price of the Companys common stock, (m) changes in the Companys business plan,
(n) heightened competition, including with respect to pricing, entry of new competitors, the
development of new products by new and existing competitors, (o) changes in general economic
conditions, including the performance of financial markets and interest rates, (p) difficult,
adverse and volatile conditions in the global and domestic capital and credit markets, (q) claims
that the Company infringed other parties intellectual property, (r) changes in accounting
standards, practices or policies, and (s) adverse results or other consequences from litigation,
arbitration or regulatory investigations.
In addition, the Company may not be able to complete the proposed transaction on the proposed terms
or other acceptable terms, or at all, due to a number of factors, including: (a) the occurrence of
any event, change or other circumstances that could give rise to the termination of the securities
purchase agreement; (b) the outcome of any legal proceedings that have been or may be instituted
against the Company and others following announcement of the securities purchase agreement; (c)
the inability to complete the transaction due to the failure to obtain the necessary approvals or
otherwise satisfy the applicable closing conditions; (d) risks that the proposed transaction
disrupts current plans and operations and the potential difficulties in employee retention as a
result of the transaction; and (e) the amount of the costs, fees, expenses and charges related to
the transaction.
For further details and a discussion of these and other risks and uncertainties, see
Forward-Looking Statements and Risk Factors in the Companys most recent Annual Report on Form
10-K, and the Companys most recent Quarterly Reports on Form 10-Q. Many of the factors that will
determine the outcome of the subject matter of this press release are beyond Image Entertainments
ability to control or predict. Actual results may differ materially from managements
expectations. Unless otherwise required by law, the Company undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new information, future events or
otherwise.
# # #
Contact:
|
Steve Honig | |
The Honig Company, Inc. | ||
818-986-4300 | ||
press@honigcompany.com |