The conversion of convertible debt into common stock will reduce Cinedigm’s overall debt and interest expense.
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The American-based entertainment company, Cinedigm Corp. (CIDM) recently reported that it has made an agreement with two of its largest stockholders, Global Investment SPC-Bison Global No. 1 SP and MingTai Investment LP. The parties have agreed to convert an aggregate of $15 million in convertible note debt to common equity at a per share price of $1.50 pursuant to the terms of the debt.
Both the stockholder firms are affiliates of Peixin Xu, the Chairman of Bison Capital Holding Company Limited, which is indirectly Cinedigm’s largest stockholder.
The debt notes have a $10 million principal amount with an 5% annual interest rate, and also include a $5 million principal amount with an 8% annual interest rate. This conversion of $15 million debt to common stock will help the company to balance its financial status by significantly reducing its annual interest expenses and strengthening its balance sheet.
The Chairman and CEO of Cinedigm, Chris McGurk said:
“This is not only a very strong step forward for us financially, it is also a very positive affirmation of the value of our equity by Bison Global and MingTai Investment LP.”
Bison Capital believes that Cinedigm is committed to growing in network globally and the company has the potential to make an impactful growth in the global streaming business. A strong balance sheet will be more profitable and will bring opportunities for the company.
The Chairman of Bison Capital, Peixin Xu commented that they will continue to support Cinedigm Corp. (CIDM) as the entertainment firm swiftly builds out its streaming channel portfolio and global OTT footprint.
The company has made notable progress to strengthen its balance sheet and with the following debt to equity conversion of $15 million, CIDM moves one step ahead in that regard. The company has reduced its total debt by $36.1 million including $15 million in debt to equity conversion. This shows a 55% reduction in total debt since the end of Fiscal Year 2019. Moreover, Cinedigm has also lowered its annual interest costs by $3 million, which reflects a 50% reduction over the same period.
On Friday, Cinedigm shares made a massive move and the stock price surged above $1 price mark after August 20, 2020. The recent surge in CIDM shares was driven by the $15 million debt to equity conversion.
In addition, Cinedigm recently collaborated with Canela.TV to bring MyTime Movie Network to Spanish-language speaking audiences. This partnership shows that Cinedigm is focused to expand its network across the globe with various languages.
With the partnership with Canela.TV, the company will use Canela’s services in Spanish language advertising as a demand partner to help sell advertising across its channel business.
Market Overview
Cinedigm Corp. (CIDM) closed the trading session Friday on a high with +27.09%, trading at $0.9087. CIDM traded at day’s highest at $1.15 as of 2:46 P.M. EDT.
