Image Entertainment, Inc. (NASDAQ: DISK), one of the largest
independent home entertainment distributors in North America and a
leading pioneer of the multi-billion dollar optical disc
industry, announced today that it closed the previously announced
sale of 22,000 shares of newly authorized Series B Cumulative
Preferred Stock and 196,702 shares of Series C Junior
Participating Preferred Stock to certain affiliates of JH Partners,
LLC, a San Francisco-based private equity firm focused on building
sustainable, long-term equity value in consumer and
marketing-driven growth companies, (the "Investors") for an
aggregate purchase price of $22.0 million. As a result of this
transaction, the Investors acquired control of Image.
After payment to the Investors of a transaction fee,
reimbursement of the Investors' expenses and other
transaction-related expenses, Image expects to receive net proceeds
of approximately $19 million. Image used $15.0 million of the net
proceeds, along with the issuance of 3.5 million shares of common
stock, to repay in full and retire its senior secured convertible
note due 2011. The remainder of the net proceeds will be used to
repay other outstanding indebtedness and outstanding liabilities
and for general working capital. In connection with the
transaction, Image's senior lender waived the existing event of
default under its loan agreement resulting from the default under
the senior secured convertible note.
Pali Capital, Inc. acted as financial advisor to JH Partners,
Inc. on this transaction and Houlihan Lokey served as financial
advisors to Image Entertainment.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein.
The securities offered have not been registered under the
Securities Act of 1933 and may not be offered or sold in the United
States absent registration or an applicable exemption from
registration requirements.
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.
About JH
Partners
JH Partners is a San Francisco-based private equity firm focused
on building sustainable, long-term equity value in consumer and
marketing-driven growth companies.
JH Partners' professionals work closely with the management
teams of partner companies, providing strategic, operating and
financial guidance to facilitate the growth and success of these
companies and to provide meaningful returns to investment and
management partners. JH Partners' relationships with management are
long-term in nature, which enables JHP to provide close
collaboration over a range of strategic issues.
The principals of JH Partners have invested, on behalf of
themselves and their co-investors, approximately $600 million and
are currently investing a $390 million fund raised in 2008. JH
Partners' principals consistently commit significant amounts of
personal capital to JHP investments and view themselves as
co-investors, not money managers.
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 amount and use of net proceeds
from the sale of the preferred stock. 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 management’s 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
Company’s ability to continue as a going concern, (b) the
Company’s ability to service its principal and interest obligations
on its outstanding debt or otherwise renegotiate or refinance 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 Company’s limited funds and the Company’s
inability to raise additional funds on acceptable terms or at all,
(d) the Company’s ability to borrow against the Company’s
revolving line of credit, (e) the Company’s ability to secure
media content on acceptable terms, (f) the Company’s 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 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 Company’s 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 Company’s industry,
(l) further sales or dilution of the Company’s equity, which
may adversely affect the market price of the Company’s common
stock, (m) changes in the Company’s 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.
For further details and a discussion of these and other risks
and uncertainties, see “Forward-Looking Statements” and “Risk
Factors” in the Company’s most recent Annual Report on Form 10-K,
and the Company’s 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 Entertainment’s
ability to control or predict. Actual results may differ materially
from management’s 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.
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