Background
Entertainment Rights Plc is a global entertainment media company, with a portfolio that includes some of the world's most popular children's, family and pop-culture brands including Postman Pat, Where's Waldo?, Tinga Tinga Tales, Lassie, Casper The Friendly Ghost, The Lone Ranger, He-Man and the Masters of the Universe, She-Ra and Rudolph the Red-Nosed Reindeer
The significant amount of debt taken on by Entertainment Rights for the acquisition of Classic Media, followed by the financial difficulties of its US DVD distributor, had left the Company with £130m of debt by September 2008 and had made a covenant breach inevitable
Process and outcome
Close Brothers was engaged in September 2008 to advise the Company on a strategic review and investigation of restructuring options
Close Brothers negotiated a covenant waiver from the Company’s lender as well as additional short term facilities of £13m and a commitment to support the business through the restructuring process
Close Brothers then worked with the Board and the Company’s lender to conduct a full review of the available strategic options, including the possibility of restructuring or refinancing the Company's debt, a debt-for-equity swap, raising new equity and a sale of all or parts of the business
In December 2008, the Board and the Company’s lender recognised a further cash need of £15m and asked Close Brothers to run a rapid sale process with a small number of highly qualified bidders in the UK, continental Europe, US and Canada to market test the value that might be achieved for stakeholders
In April 2009, Close Brothers negotiated and agreed a sale (by means of a pre-packed administration) to the best bidder, Boomerang Media, who over time intend to invest up to $200 million in equity capital to build leading franchises for the Group’s iconic, branded entertainment. The sale resulted in a significant upfront cash payment to the lender and the roll over of a portion of its facilities to the new owner
Close Brothers’ sale of Entertainment Rights to Boomerang Media secures the ongoing trading activities of the Entertainment Rights business and provided the highest available return to the Company’s creditors
Throughout the process, Close Brothers advised the Company in all dealings with its lender, the administrator, bidders in the sale process and the relevant regulators, including the UKLA, Takeover Panel and FSA
For more information regarding this transaction, please contact Richard Madden, Guy Ballantine or Tom Biddle on +44 (0)20 7655 3100