The stock is up 13.1% this afternoon after the digital cinema company unveiled the deals. It has a $125M senior non-recourse credit facility from a group led by Societe Generale Corporate & Investment Banking, and a $70M non-recourse credit facility from Prospect Capital Corporation. Added to the company’s own cash flow, Cinedigm says that it will refinance its existing $92M non-recourse senior 2010 Term Loan and $98M recourse Note. The refinancing takes advantage of today’s low interest rates. CEO Chris McGurk adds that it also “reaffirms the value of the Company’s digital cinema asset base and positions Cinedigm to accelerate our growth plans.” B. Riley analyst Eric Wold says that the changes should cut $5M from annual interest expenses, and — by removing the recourse debt — eliminates what had been “a major overhang on the stock for years.” He also notes that Moody’s Investor Service just reclassified Cinedigm debt as investment grade, up from speculative. That could help the company to become “a major player in the distribution of indie films and alternative content,” Wold says. Blackstone Advisory Partners advised Cinedigm in the transactions.
Cinedigm CEO Chris McGurk broke from the traditional gloom and doom many Los Angeles Film Festival keynoters have expressed regarding the future of showbiz. Noting that one previous speaker said, “and I quote: “The sky really is falling”, McGurk pointed out that “the only thing Hollywood has done better than building an industry is predicting its imminent demise.” Once again “doomsayers seem to be proclaiming the Seven Signs of the coming Indie Apocalypse” but McGurk said he sees “the Seven Signs of its Renaissance” — thanks to lower production and distribution costs because of the “digital revolution.” Despite having what he described a reputation as being “a suit” he said “I think I’ve actually become somewhat of a softie in regard to at least one aspect of the film business. Somewhere along my corporate ride in Hollywood, I fell in love with independent film.” McGurk sees enormous targeted opportunities for filmmakers, distributors, marketers and exhibitors. And variety that can satisfy broadly different kinds of people who love movies.
LOS ANGELES (May 24, 2012) – The Association of Film Commissioners International (AFCI) today announced the lineup of speakers and panel sessions for the 2012 Locations Show, which includes industry leaders, filmmakers and the creative teams behind some of the most talked-about films of the last two years. More than 200 exhibitors from 40 countries are already confirmed for the show, which will be held at the Los Angeles Convention Center during the opening weekend of Film Independent’s Los Angeles Film Festival on June 15 – 16, 2012.
In a move that creates another formidable buyer at Sundance, Cinedigm Entertainment Group and New Video will partner to bring more independent films into theaters nationwide by fully leveraging advanced digital technology. Cinedigm and New Video will together acquire North American distribution rights to indie films that will be released theatrically, followed by platform release across cable, VOD, digital, and DVD/Blu-ray. The partnership takes advantage of Cinedigm’s position as a digital exhibitor of independent film and alternative content in theatres, and New Video’s digital and physical distribution capabilities. Cinedigm CEO Chris McGurk and New Video co-president Steve Savage feel this gives indie filmmakers a viable alternative and a strong ride through the ancillary road these indie films travel.
Cinedigm Digital Cinema Corp said today that it has named Adam Mizel its Chief Operating Officer and Chief Financial Officer and Gary Loffredo its President of Digital Cinema Services. Both had been co-CEOs since 2010, when founder Bud Mayo retired. Mizel and Loffredo will report to chairman and CEO Chris McGurk, and Loffredo will keep his General Counsel title. The company has been shifting its focus of late to software and content distribution, leveraging its existing digital-cinema platform.
Cinedigm Digital Media Corp announced today that it has sold off its in-theater advertising business UniqueScreen Media to Screenvision, an agreement that will also see Cinedigm partner with Screenvision to provide alternative content marketing and distribution via that growing ad network. This is another part of Cinedigm’s transformation from a distribution and hardware company to a content and software one; back in July, Cinedigm eliminated another noncore asset, selling its physical and electronic distribution business to Technicolor. It’s part of CEO Chris McGurk’s plan to focus his company on being a provider of digital entertainment to exhibitors during times when it’s tougher to fill seats at the multiplexes. In announcing the Technicolor deal, he said he envisions deals with theater owners that will let Cinedigm program venues like a TV network — offering action sports, Broadway plays, or opera on certain nights — while also providing one-off events like showing live concerts in 3D.
For Screenvision, the acquisition of UniqueScreen Media boosts its nationwide cinema-advertising network to more than 15,200 screens and its digital footprint to more than 10,600 screens. It is the market leader in the space, offering on-screen advertising, in-lobby promotions and integrated marketing programs to advertisers and exhibitors.
EXCLUSIVE: I’ve just learned that former Overture Films CEO and MGM Vice Chairman Chris McGurk is calling studios to let them know he has landed a new gig. The 53-year-old executive has been named chairman/CEO of the publicly traded Cinedigm Digital Cinema Corp, a leader in the digital cinema industry, effective today. McGurk will be based in Los Angeles. Co-Chief Executive Officers Adam Mizel and Gary Loffredo will continue with the company. I hear the deal to bring in McGurk was brokered by ROAR management company.
UPDATE: Cinedigm Digital Cinema just made the announcement. McGurk said he is “impressed with the progress Cinedigm has made in the past six months”. According to the company, in addition to a significant personal purchase of common stock in Cinedigm, McGurk “will receive an option grant to align his interests with those of our shareholders. Under the terms of his employment agreement, pursuant to NASDAQ listing Rule 5635(c)(4), Mr. McGurk will receive an inducement grant of non-statutory options to purchase 4,500,000 shares of the Company’s Common Stock (the “Options”). The Options are grouped in three tranches, consisting of Options for 1,500,000 shares having an exercise price of $1.50 per share, Options for 2,500,000 shares having an exercise price of $3.00 per share and Options for 500,000 shares having an exercise price of $5.00 per share. One-third of the Options in each …
UPDATE: Lionsgate has just issued a reaction (see below). It’s now officially a fight between white (LG’s) and gold (Icahn’s) proxy cards.
Carl Icahn today assembled his slate of 5 board members hoping to unseat Lionsgate’s current 5 board of directors – including the film/TV studio’s Vice Chairman Michael Burns — at the scheduled December 14th shareholders meeting in Los Angeles. (All those dinners where Burns attempted a rapprochement with Icahn obviously came to nothing.) It’s now confirmed that, as I previously reported, Icahn’s slate includes Chris McGurk, 53, the former MGM President and COO and Vice Chairman and Overture Films CEO, as well as filmmaker Jay Firestone, 54, a one-time vice chairman of Alliance Communications in Canada and founder of Fireworks Entertainment who is now head of Toronto-based Prodigy Pictures. Today Icahn revealed that also on Icahn’s list are: Dr. Michael Dornemann, 65, the former CEO of Bertelsmann Entertainment and an entertainment and marketing executive with more than 30 years of management consulting, corporate development, strategic advisory and media experience who is now on the board of Columbia Music; Daniel Ninivaggi, 46, who is President of Icahn Enterprises; and Dr. Harold Shapiro, 75, Princeton university’s 18th president until 2001 and currently a professor of economics and public affairs there. Icahn wants them to replace Michael Burns, Harald Ludwig, G. Scott Paterson, Mark H. Rachesky, and Hardwick Simmons on the current Lionsgate board. Today’s Icahn proxy statement says:
“Given that Carl Icahn and the other Participants believe that the Company has not yet been able to, among other things,
WEDNESDAY UPDATE, 12:30 PM: Here’s another potential Lionsgate board member whom Carl Icahn is wrangling — filmmaker Jay Firestone, a one-time vice chairman of Alliance Communications in Canada. According to insiders, it makes sense for Icahn to want an executive from Up North since Lionsgate is based there and in Santa Monica. Also, the two men have movie history together: Fireworks Entertainment, which Firestone started when he left Alliance in 1995, was partnered in IDP Distribution along with Samuel Goldwyn Films and Icahn’s film company Stratosphere Entertainment. Sources tell me Fireworks burned through $100 million in financing from parent company CanWest Global Communications, which in 2003 didn’t renew founding president and CEO Firestone’s 5-year contract. Fireworks initially specialized in genre TV production, then expanded into feature film production and distribution when it was acquired by CanWest, opening offices in LA and London. But it had little success: 1999′s Onegin, 2000′s Rules Of Engagement, 2001′s Rat Race, and 2002′s Who Is Cletis Tout. Fireworks was shuttered by CanWest in April 2004. Firestone now runs Prodigy Pictures.
TUESDAY UPDATE, 1 PM: Carl Icahn right now is assembling his slate of board members hoping to unseat Lionsgate’s current board of directors at the film/TV studio’s scheduled December 14th shareholders meeting in Los Angeles. And I hear that Chris McGurk, the former MGM President and COO and Vice Chairman and Overture CEO, may join Icahn’s proposed slate because of his MGM experience now that Icahn and Lionsgate want that company, too. One of my Lionsgate insiders claims McGurk is lobbying for the board seat. But others tell me Icahn called McGurk out of the blue on Monday morning and offered it to him. Icahn won’t be packing the board with Hollywood types, however: instead, sources tell me he’s going after “people from other industries who are above approach from the SEC” since the crux of his problems with Lionsgate are the board’s alleged SEC violations. As for McGurk, he’ll have to see whether joining the Lionsgate board presents any conflicts of interest now that he’s figuring out his next movie. “He’s playing hard to get, if anything,” an insider tells me.
Usually, a proxy fight like the one Icahn has pledged to wage against Lionsgate is a very expensive proposition that takes months of preparation and involves contacting every shareholder. But this is being done with virtually no time and little expense. Just today, Icahn, who owns 33% of Lionsgate, extended his $7.50-per-share tender offer to December 2nd.
That’s the same day that MGM is supposed to receive confirmation of its pre-packaged bankruptcy plan. Icahn owns 15%-18% of MGM’s debt. There continue to be reports of an Indian company, and a Chinese company sniffing around, as well as Lionsgate, who may make another play for MGM. I’m told by a source that Lionsgate’s merger proposal is “gaining a lot of steam with many of the hedge funds in the credit. Not sure where the Big Four stand (Highland, Anchorage, Davidson Kempner, and Solis) but for many of the hedge funds, a merger with LGF gives them a liquidity option.” Meaning the MGM creditors will own a public stock that they can sell whenever they want to — a big plus. But ”$500 mil plus 55/45 won’t get it done. They will probably have to raise the offer to 60/40 and demonstrate that the merged entity is viable.”
As for McGurk, he most recently was CEO of Anchor Bay Entertainment. McGurk was with MGM from 1999 to 2005 and was responsible for all operating and planning activities for the Motion Picture Group, as well as all international operations, worldwide home entertainment, exhibition (UCI and Loew’s Cineplex), October Films and Polygram Filmed Entertainment. According to his official bio, McGurk “played the leading role in MGM’s reinvigoration, spearheading efforts that resulted MGM’s industry leadership in Home Entertainment library sales, marketing and distribution. Mr. McGurk maximized the asset value of Hollywood’s largest modern film library, transformed the Hollywood’s largest modern film library’s United Artist’s label into a specialty film unit and negotiated strategic alliances with Twentieth Century Fox and NBC.”
So let’s look at the last 6 months regarding Icahn and Lionsgate and MGM:
After the failed auction sale, MGM creditors explored every avenue. Lionsgate was talking to them about a merger since June, trying to get real financials as well as a governance plan. (Later press reports saying MGM creditors had rejected Lionsgate’s proposal were not accurate.) Icahn, in the midst of his Lionsgate battle, opposed the idea and publicly likened Lionsgate’s desire to merge with MGM to overstretched homebuyers. “It’s analogous to a couple not being able to pay their mortgage on a little house and starting to negotiate on a big, overpriced mansion that’s rumored to be haunted.” By June 21st, the MGM Steering Committee’s support of the Spyglass plan was leaked. The hedge fund guys with big MGM debt also like the fact that Spyglass’ Gary Barber and Roger Birnbaum have figured out how to operate successfully with its money from Cerebrus. (Others think it was a disaster) No matter: that money is due to run out which is why Spyglass wants to run MGM.
My pal Claudia Eller has a funny little scoop on the LA Times website about how Starz chief Chris Albrecht made a Blackberry mistake that led to Chris McGurk and Danny Rosett’s exit from Overture. (So I gotta ask: is this why moguls like Alan Horn and Ron Meyer refuse to use smart phones or even computers?) On July 1, Albrecht began a vacation in Majorca and read a hush-hush e-mail about the future of the Overture duo. Albrecht tapped out a confidential response suggesting that when he returned on July 12th there should be a discussions about removing the pair. But the reply went to approximately 400 Starz employees and senior executives — including McGurk and Rosett.
Enough is enough is enough. Starz topper Chris Albrecht at first was just going to shut down Overture and its home video arm Anchor Bay. (Founded in November 2006, Overture Films has been a wholly owned subsidiary of Starz LLC, which is a unit of Liberty Media Corp and which Albrecht runs along with the Starz Entertainment premium television business and the Starz Media production and distribution company.) Then he gave Chris McGurk and Danny Rosett months and months to find a buyer. But the time came today not to drag out this painful endgame. So Albrecht formally announced the departures of the Overture CEO and COO. Only patsies like the trades would believe the duo jumped before they were pushed over “strategic differences”. I’ve learned that the duo were told they would be fired if they didn’t resign first. Albrecht issued this terse statement: “I want to thank Chris and Danny for their dedication and hard work in building the studio from the ground up, and wish them well in their future business endeavors.” Now Peter Adee, president of worldwide marketing and distribution and new media, will oversee day-to-day operations of Overture. I’ll write more about the past, present, and future of Overture in a bit.