Cinedigm, which provides films and TV shows to retail, pay-TV and digital outlets, has found a solution to its massive debt: selling to China.
Thursday, the company announced that Hong Kong-based Bison Capital has agreed to buy 20 million newly issued shares in Cinedigm for as much as $30 million in a move Cinedigm Chairman and CEO Chris McGurk called a “transformative event for the company” in a statement announcing the deal.
Cinedigm, which started out helping theater chains transition to digital, has evolved into a full-fledged production company and distributor with more than 50,000 films and TV shows in its library, as well as three over-the-top streaming services. But while China’s streaming services continue to proliferate and grow in popularity, they need to add quality content to keep up — which explains Bison’s interest in Cinedigm. In the statement, Bison Founder Peixin Xu also floated the idea of launching Chinese content channels in the U.S. using Cinedigm’s streaming infrastructure.
As part of the deal, Bison has also agreed to provide a $10 million loan for working capital, and Cinedigm and Bison will work together to refinance and retire Cinedigm’s remaining debt. Cinedigm is also working to exchange its 5.5 percent convertible notes due in 2035. The company had about $115 million in long-term debt as of March 31.
In addition, Bison will also appoint two members to Cinedigm’s board, raising the total count to seven.
“Under the leadership of Peixin Xu, Bison Capital has become a major force in the media and entertainment business in China,” McGurk said in the statement. “We believe Bison Capital’s significant investment and potential additional refinancing and debt retirement will be a transformative event for the Company, solidifying our position as the leading independent content distributor in North America and opening up significant new growth opportunities for our content, OTT channel/services and digital cinema businesses in China, as well as other emerging markets.”
“Despite its rapid growth, China remains greatly underserved in terms of content quality and diversity,” Xu said in the statement. “Through our investment, we will leverage Cinedigm’s content access and distribution capabilities to bring more premium, independent content into the China market. We also see an opportunity to leverage Cinedigm’s OTT capabilities to launch Chinese content channels in the North American market. Our long-term goal is to help build Cinedigm into a leading distributor of global content, as well as help the company unleash the residual value of the digital cinema equipment.”