AMC is ramping up its content investments and other strategic initiatives for RLJ Entertainment networks Acorn TV and Urban Movie Channel (UMC).
AMC Networks’ Tranche A term loan was expanded from $13 million to $23 million and AMC also extended the maturity on the base amount by one year to 2020 with the additional amount due in 2021. AMC will now receive payment of interest expense entirely in common stock at a fixed conversion price of $3 per share on both its Tranche A and B term loans, according to a news release.
AMC also exercised $5 million of its Tranche A warrants into RLJE common stock at $3 per common share and eliminated dividend payments RLJ Chairman Robert Johnson’s preferred stock by converting it to common stock.
All told, RLJ Entertainment expects to save $5 million in cash annually, which will allow it to “dramatically increase its content investment over the next five years.”
"AMC Networks has proven a stellar partner and collaborator in RLJ Entertainment's drive to more firmly establish Acorn TV and UMC as must-have destinations and impactful brands, and we thank AMC Networks President & CEO Josh Sapan and AMC Networks for their increased support. I believe in RLJE's ability and opportunity to accelerate digital channel market penetration and steepen our overall growth trajectory, and I am demonstrating my support by participating through pure common equity," said Johnson in a statement.
The revised financing arrangements for RLJ come after AMC signed on late last year for a $65 million investment in the streaming video upstart from Johnson, founder of BET Networks. As part of that deal, AMC received warrants that could result in it controlling 50.1% of the company, if fully exercised.