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STX Entertainment Sold by ErosSTX to Najafi Companies for $173 Million

Indian movie studio is unloading Hollywood indie just one year after merger

STX Entertainment will split off from ErosSTX Global Entertainment Company and be acquired by The Najafi Companies for $173 million, ErosSTX announced Tuesday. The closing is expected around January 2022, pending “customary closing conditions.”

The deal includes the need for STX Entertainment to repay approximately $148 million in debt and comes. The purchase agreement also gives Eros a “go-shop period,” per a release, during which time the board (with help from financial advisor Lazard) will solicit other proposals for 45 days.

Eros will pay a termination fee of $4.5 million in addition to $2 million that Najafi funded as a deposit. It’s unclear whether STX Eros CEO and co-chairman Robert Simonds will remain on with the company after the transaction is completed.

Najafi has partnered with the Forest Road Company as its lender. Forest Road is expected to repay STX’s debt and provide it with working capital in the future.

Eros executed a definitive agreement to sell STX, which was announced in November. The maturity and delivery date of financial statements under STX’s Senior Credit Agreement has been extended to Jan. 4, 2022, but may be extended again to Feb. 3 if the sale agreement is still in effect on the January date. STX has been facing a repayment of its credit agreement that totals $127 million.

“This is a complicated, international public company carve-out transaction, and after countless hours over the past several months, we are thrilled to announce this new chapter with STX,” Jahm Najafi, founder and CEO of The Najafi Companies, said in a statement. “First and foremost, we believe in the power of storytelling and fostering an entertainment studio that is artist-friendly and supportive of storytellers. We are also happy to exclusively partner with The Forest Road Company on this new and multi-faceted endeavor given their expertise and partnership approach.”

STX Entertainment, which is behind hits such as “Hustlers” and “Bad Moms,” merged with Eros as ErosSTX in 2020, but the company was hit hard by the pandemic and has struggled to find other successes at the box office. Some of the other titles upcoming on STX’s slate include the sports drama “National Champions,” as well as a sequel to the Gerard Butler disaster film “Greenland,” a rock biopic about Joey Ramone starring Pete Davidson, Guy Ritchie’s next thriller “The Interpreter” and a Vin Diesel action movie “Muscle.”

STX Entertainment was launched by Robert Simonds. The Najafi Companies was founded by Jahm Najafi in 2002 and invests across industries, with holdings in consumer, media, brands, ecommerce, tech and sports. Najafi is based in Phoenix with offices in Los Angeles and New York.