Published on 17/10/2016 – www.stockmarketdaily.co – Follow us on Twitter: @SMDailyCo.
RLJ Entertainment (NASDAQ: RLJE) is a nano-cap global entertainment content distribution company that few investors are familiar with given its low market capitalization and an average daily trading volume of just 66,482 shares.
The company’s library title is just as unfamiliar to North American investors and includes the rights to to a UK mystery show called “Foyle’s War.” The company also owns a majority stake in Agatha Christie Limited which holds the rights to stories of the iconic sleuths “Miss Marple” and “Poirot.”
On Monday the stock soared higher by more than 25 percent and more than four million shares traded hands after the relatively unknown company inked a deal with a very well known media company, AMC Networks (NASDAQ: AMCX).
As part of a new partnership, AMC Networks, the parent company behind iconic TV brands such as AMC, BBC America and WE tv, will invest $65 million in the form of loans to RLJ Entertainment for the purpose of refinancing its existing senior credit facility, add working capital, reduce the cost of capital through lower interest rates and provide revised covenants that will allow for increased operational flexibility.
AMC’s investment will provide RLJ Entertainment with the necessary resources to accelerate the distribution and development of its content.
RLJ Entertainment also said that the partnership will accelerate the distribution and development of content and independent films from its direct-to-consumer streaming video-on-demand channels.
The agreement gives RLJ the opportunity to cross-promote, develop and distribute content across AMC’s much larger network and introduce its high-quality dramas to new audiences.
Moreover, AMC Networks has obtained warrants that if exercised would give it a stake of at least 50.1 percent of RLJ Entertainment’s stock on a fully diluted basis.
“I am both delighted and excited that RLJ Entertainment is joining with the AMC Networks family to help capitalize on the opportunities that exist to provide consumers with more diverse content across multiple platforms,” RLJ Entertainment Chairman Bob Johnson said in the company’s press release.
“We have deep respect for Bob Johnson and the many businesses he’s built, from BET to Acorn TV and UMC” said Josh Sapan, President and CEO of AMC Networks. “Bob is a talented entrepreneur with a real understanding of the power of strong brands and a proven ability to identify and provide premium content to a wide range of audiences by tapping into the demand for content that uniquely fits their specific consumer interests.