Cinedigm‘s picking up GVE (for Gaiam Vivendi Entertainment) which is a power in distribution of DVDs and Blu-ray discs — and complements Cinedigm’s efforts in theaters and digital. The goal is to make the company “a huge force in the independent content distribution business,” CEO Chris McGurk tells me. GVE has strong relationships with retailers including Walmart and Target, and rights to videos from WWE, NFL, Discovery, Henson, and National Geographic. He says the acquisition will result in higher earnings: The company expects the deal to boost annual cash flow by $15M. It also will add GVE President Bill Sondheim to its executive roster as President of Cinedigm’s Entertainment Group (CEG), reporting to McGurk and COO/CFO Adam Mizel. But Cinedigm had to do a little financial juggling to pay for GVE. It announced a new $55M credit facility, a $5M subordinated 5-year loan facility, $3M of restricted stock ($1M to Gaiam and $2M to “an existing shareholder”), and an underwritten public offering of up to $13M. Some investors apparently want to sit on the sidelines until they see how the public offering will be priced — expected tomorrow. Cinedigm shares fell 7.8% in after hours trading. The company hoped to reassure the market by forecasting “strong financial results” for the second half of its fiscal year with revenues as high as $86M. While it won’t release results for its most recent quarter until next month, Cinedigm says it “experienced continued growth even with timing delays in both DVD shipments and subscription VOD revenue recognition reducing net revenue and EBITDA by approximately $0.7M and $0.6M, respectively.” The company will brief investors and analysts on the deal tomorrow.
By DAVID LIEBERMAN, Financial Editor | Thursday October 17, 2013 @ 6:40pm EDTTags: Big Deals Film, Cinedigm
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