Cinedigm Secures Infusion of Capital from Sageview

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Fri, 08/28/2009 - 20:00 -- Nick Dager

Cinedigm Digital Cinema has completed a $75 000 000 private placement of securities to Sageview Capital consisting of a senior note due 2014 and a warrant to purchase common stock. According to Cinedigm the capital infusion significantly strengthens the company’s balance sheet extends debt maturities provides capital for the company’s continued growth and introduces a key long-term investor into the shareholder base.   Under the terms of the transaction the principal has an interest rate (subject to potential adjustments) of eight percent per year to be paid in kind and seven percent per year to be paid in cash. The new senior notes have a five-year term with a scheduled maturity date of August 11 2014 (subject to potential extension). In addition the company issued to Sageview a seven-year warrant to purchase up to 16 000 000 shares of Class A common stock of CIDM at an initial exercise price of $1.37 per share representing approximately 35.3 percent of the company’s fully diluted shares outstanding pro forma for the closing of this transaction and a 38.4 percent premium to the CIDM closing price on August 10 2009. The company also appointed Ned Gilhuly a managing partner of Sageview to its board of directors immediately and subject to shareholder approval will add a second designee of Sageview as a director following its upcoming shareholder meeting. Gilhuly says “We are excited to be investing in Cinedigm and we are confident that we can help the Company take advantage of the growth opportunities ahead. We believe the transformation of the theater exhibition industry from film to digital presents a significant and imminent opportunity and that Cinedigm has laid the groundwork to be a major beneficiary of that transition. Cinedigm has an attractive mix of predictable cash flow from the virtual print fees generated by its Phase 1 deployment as well as distribution and other services businesses that should grow significantly with the digital cinema roll out. We look forward to working with Bud Mayo and his management team to help the Company achieve its potential.”   Mayo chief executive officer of Cinedigm says “We are thrilled to have Sageview as a strategic investor and Ned as a board member of our company and we are pleased that Sageview has recognized the unique capabilities and growth potential that Cinedigm has to offer. This investment significantly strengthens our balance sheet and provides additional financing for our continued expansion.  The new senior notes have a maturity in 2014 after the retirement of our Phase 1 debt and allow us to expand the covenant cushion on our Phase 1 subsidiary’s credit facility by pre-paying some of its outstanding principal.  Furthermore this new capital provides additional funding to help support continued execution of our business plan to drive transformation in the theatre industry to digital.” Imperial Capital acted as Cinedigm’s financial advisor and placement agent.   Cinedigm Sageview Capital