AMC Networks has proposed a deal to acquire the outstanding shares of RLJ Entertainment it doesn’t currently own for $4.25 per share in cash.
If the deal is approved, RLJ, which operates OTT services including Acorn TV and Urban Movie Channel, will become a privately owned subsidiary of AMC Networks while company head Robert Johnson would retain a minority stake.
AMC Networks did not disclose the purchase price but did say its deal represents a 10% premium to the closing price of the RLJ Entertainment common stock on Friday, February 23.
In October 2016, AMC Networks and RLJE Entertainment formed a strategic partnership, and AMC Networks invested $65 million in RLJ Entertainment. At the time, AMC Networks received warrants providing it with at least 50.1% of the outstanding RLJ Entertainment common stock. AMC currently owns 26% of outstanding shares of RLJ Entertainment, and Johnson currently own approximately 47%.
Last year, AMC ramped up its content investments and other strategic initiatives for RLJ Entertainment.
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.
The next steps, according to AMC Networks, are for RLJ’s board to form a special committee of independent directors to consider the proposal with the assistance of an outside financial advisor and legal counsel and to negotiate the proposal with RLJ Entertainment. AMC Networks will not participate in the evaluation of the proposal.