RLJ Acquisition, Inc. (OTCQB: RLJAU; RLJA; RLJAW) (the “Company”) announced today that it anticipates the closing of the business combination with Image Entertainment, Inc. (OTCQB:DISK) (“Image”) and Acorn Media Group, Inc. (“Acorn”), two highly complementary media content distribution companies, to form RLJ Entertainment, Inc. (“RLJ Entertainment”), will occur on October 3, 2012. The transactions contemplated by the business combination have been previously approved by the Company’s, Image’s and Acorn’s respective shareholders. As a result of the business combination, if consummated, RLJ Entertainment will become one of the largest independent global distributors of digital and video content. Holders of the Company’s common stock may revoke their redemption requests up to 5:00 p.m. EDT on October 1, 2012, the date that is two business days prior to October 3, 2012, the anticipated closing date of the business combination.
In connection with the anticipated closing, the preferred shareholders of Image and the shareholders of Acorn each have agreed to reduce the cash consideration due to them by $5 million in exchange for 575,000 shares of common stock and warrants to purchase 150,000 shares of RLJ Entertainment common stock. To minimize the impact of such transactions, RLJ SPAC Acquisition, LLC, the sponsor of the Company and an entity controlled by Robert Johnson (the “Sponsor”), has agreed to surrender 150,000 shares of its common stock and warrants to purchase 300,000 shares of RLJ Entertainment common stock for no consideration, effectively making the changes to the overall transaction the same as if one million less shares of the Company’s common stock had been redeemed. The Sponsor also will surrender 325,000 shares of common stock and warrants to purchase 550,000 shares of RLJ Entertainment common stock for no consideration to offset the same number of shares of common stock and warrants, which RLJ Entertainment has agreed to issue to an unrelated third party consultant that is a significant stockholder of the Company in connection with matters of strategic advice, subject to the closing of the business combination.
In conjunction with and to provide funding for these acquisitions and RLJ Entertainment’s ongoing working capital needs, RLJ Entertainment anticipates entering into a $70 million credit agreement with a group led by SunTrust Bank, which includes a five-year $15 million revolving credit facility and three tranches of term loans totaling $55 million with final maturities ranging from five to five and one-half years, at interest rates ranging from prime rate plus 5% to 6.25% or LIBOR plus 6% to 7.25%, plus an additional 3% per annum paid in kind on the last $15 million of the facilities. In connection with the closing of the financing, RLJ Entertainment will issue warrants to purchase 1,000,000 shares of RLJ Entertainment common stock to the lender for the junior term loan. The Sponsor has agreed to surrender warrants to purchase the same number of shares of RLJ Entertainment common stock for no consideration to facilitate the financing.
Upon the closing of the business combination and assuming no holders of the Company’s common stock revoke their redemption requests, the Company expects that there will be approximately 13,340,525 million shares of common stock of RLJ Entertainment outstanding, including shares held by the Sponsor and other founders of the Company. RLJ Entertainment’s shares of common stock have been approved for listing on the NASDAQ Capital Market under the symbol RLJE, subject to official notice of issuance. The Company anticipates that the common stock of RLJ Entertainment will commence trading on the NASDAQ Capital Market the day after the closing date of the business combination and the warrants of RLJ Entertainment will commence trading on the Over-The-Counter Bulletin Board under the symbol RLJEW shortly thereafter.
No assurance can be given that the business combination or the financing will close on the anticipated closing date or at all.