10-Q
RLJ ENTERTAINMENT, INC. filed this Form 10-Q on 11/09/2017
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RLJ Entertainment, Inc.

 

Notes To Consolidated Financial Statements

(Unaudited)

 

NOTE 7. DEBT

Debt consists of the following:

 

 

 

Maturity

 

Interest

 

 

September 30,

 

 

December 31,

 

(In thousands)

 

Date

 

Rate

 

 

2017

 

 

2016

 

Senior secured term notes

   with AMC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tranche A Loan

 

Beginning June 30, 2020

 

 

7.0%

 

 

$

23,000

 

 

$

5,000

 

Tranche B Loan

 

Beginning October 14, 2021

 

 

6.0%

 

 

 

54,999

 

 

 

60,000

 

Less: debt discount

 

 

 

 

 

 

 

 

(26,400

)

 

 

(31,565

)

Total senior-term notes, net of

   discount

 

 

 

 

 

 

 

 

51,599

 

 

 

33,435

 

Subordinated notes payable to prior

   Image Shareholders

 

Repaid January 31, 2017

 

1.5% through 2016 then 12%

 

 

 

 

 

 

8,618

 

Debt, net of discount

 

 

 

 

 

 

 

$

51,599

 

 

$

42,053

 

 

Future minimum principal payments, exclusive of debt discount, as of September 30, 2017 are as follows:

 

(In thousands)

 

Senior Notes

 

Remainder of 2017

 

$

 

2018

 

 

 

2019

 

 

 

2020

 

 

13,000

 

2021

 

 

25,000

 

2022

 

 

30,000

 

2023

 

 

9,999

 

 

 

$

77,999

 

 

Senior Term Notes

On October 14, 2016, we entered into a $65.0 million Credit and Guaranty Agreement (the AMC Credit Agreement) with Digital Entertainment Holdings LLC, a wholly owned subsidiary of AMC Networks Inc. (or AMC). Concurrent with entering into the AMC Credit Agreement, we also issued AMC three warrants (the AMC Warrants) to acquire a total of 20.0 million shares of our common stock at $3.00 per share. The entering of the AMC Credit Agreement, the issuance of the AMC Warrants and the associated transactions are referred to as the AMC Transaction.

The proceeds received from the AMC Credit Agreement were used to repay our prior senior secured term notes of $55.1 million, including accrued interest, and transaction expenses of approximately $1.7 million, which includes a prepayment penalty of $0.8 million. Initially, the AMC Credit Agreement consisted of (i) a term loan tranche in the principal amount of $5.0 million (or Tranche A Loan), which was due on October 14, 2017, and (ii) a term loan tranche in the principal amount of $60.0 million (or Tranche B Loan) of which 25% is due after five years, 50% is due after six years and the remaining 25% is due after seven years. The Tranche A Loan bears interest at a rate of 7.0% per annum and the Tranche B Loan bears interest at a rate of 6.0% per annum. Interest is payable quarterly whereby 4.0% was payable in cash and the balance is payable in shares of common stock determined using a per-share value of $3.00. The loan is secured by a lien on substantially all of our consolidated assets.

On January 30, 2017, to repay prior debt obligations under the subordinated notes payable we amended the AMC Credit Agreement and borrowed an additional $8.0 million, thereby increasing our Tranche A Loan from $5.0 million to $13.0 million. We also extended the maturity date for our Tranche A Loan from October 14, 2017 to June 30, 2019. When doing so, we did not incur a prepayment penalty.

On June 16, 2017, to fuel the growth of our business we expanded the AMC Credit Agreement and borrowed an additional $10.0 million, thereby increasing our Tranche A Loan from $13.0 million to $23.0 million. Further, we extended the maturity date for

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