Amcomri Enters Into Agreement for Sale of Its Television Business

VANCOUVER, British Columbia, June 26, 2024 (GLOBE NEWSWIRE) -- Amcomri Entertainment Inc. (“Amcomri” or the “Company”) (Cboe CA: AMEN) (Frankfurt: 25YO) (OTC: AMNNF) today announced that it has entered into a definitive agreement pursuant to which the Company has agreed to sell certain assets of the Company utilized for the sale and distribution of television productions through television, streaming and other platforms. The transaction constitutes a sale of all or substantially all of the Company’s undertaking pursuant to Section 301 of the Business Corporations Act (British Columbia) (the “BCBCA”).

“After much consideration, we are pleased to announce that Amcomri has entered into agreements to sell our television business interests, a move that we believe is in the best interests of our shareholders and other stakeholders,” said Robert Price, Chief Executive Officer of Amcomri. “Over the past couple of years, we’ve navigated challenging macroeconomic conditions that significantly impacted capital markets and the deal-making environment. During that time, our team executed well on growing our content libraries, investing in a diverse portfolio of productions, and delivering exceptional quality content. We believe this strategic move will best position our assets for continued success and growth under new ownership, ensuring that our passion for independent storytelling endures.”

Summary

The Company, Trinity Pictures Distribution Limited (“Trinity”), a wholly-owned direct subsidiary of the Company, Amcomri Productions Limited (“APL”, and together with the Company and Trinity, the “Vendors”), a wholly-owned direct subsidiary of Trinity, and Abacus Media Rights Limited (“Abacus”), a wholly-owned direct subsidiary of Trinity, have entered into a share and asset purchase agreement dated June 25, 2024 (the “Purchase Agreement”) with Sphere Media Inc. (the “Parent”), Sphere Media UK Ltd. (“Sphere Media UK”) and Sphere Media Distribution Inc. (“Sphere Media Distribution”, and together with Sphere Media UK and Abacus, the “Purchaser”), whereby: (i) the Company has agreed to sell all of the outstanding shares of Amcomri Canada Sales Limited (the “ACSL Shares”); (ii) Trinity has agreed to sell all of the outstanding shares of Abacus (the “Abacus Shares”, and together with the ACSL Shares, the “Purchased Shares”); and (iii) APL has agreed to sell all right, title and interest in certain property and assets of APL used in conducting the Company’s television production and distribution business (the “Purchased Assets”). The sale of the Purchased Shares and the Purchased Assets (collectively, the “Transaction”) constitutes a sale of all or substantially all of the Company’s undertaking pursuant to Section 301 of the BCBCA.

Aggregate Consideration and Other Terms

The aggregate consideration under the Transaction is $24.6 million, consisting of cash in the amount of $18.3 million and the assumption of certain production loans of Abacus and APL in the amount of approximately $6.3 million. A portion of the aggregate consideration will be used for the repayment in full of certain long-term debt of Abacus and APL in the amount of approximately $5.7 million, resulting in net cash proceeds of approximately $12.6 million to Amcomri.

In order to fund the completion of the Transaction, the Purchaser has partnered with Bell Media, Canada’s leading media and entertainment company and current shareholder of Sphere Media Inc. and obtained term sheets for financings from each of Export Development Canada, Société de développement des entreprises culturelles and Royal Bank of Canada (the “Financings”), which Financings are subject to certain conditions precedent. Closing of the Transaction is subject to completion of the Financings.

Pursuant to the Purchase Agreement, the Vendors have agreed to indemnify the Purchaser in respect of certain matters, including breaches of representations and warranties by the Vendors; however, the Purchaser has obtained representation and warranty insurance (the “RWI Policy”) and, other than losses arising from breaches of the Amcomri Group Companies Fundamental Representations and the Vendors’ Fundamental Representations (as such terms are defined in the Purchase Agreement), any losses of the Parent, the Purchaser and their respective representatives and affiliates (the “Purchase Indemnitees”) in connection with the Transaction will be solely satisfied from the coverage provided under the RWI Policy. The Vendors will have no obligation to indemnify or reimburse the Purchase Indemnitees for losses to the extent such losses are not covered by and recoverable under the RWI Policy.

The Purchase Agreement also provides for a reciprocal termination fee of $700,000 if the Purchase Agreement is terminated by the Vendors or the Purchaser, as the case may be, in certain specified circumstances.

Shareholder Approval

The Transaction requires the affirmative vote of not less than two-thirds (66?%) of the votes validly cast in respect of the Transaction by shareholders of the Company (the “Shareholders”) present in person or represented by proxy at an annual general and special meeting of Shareholders to be held to, among other things, consider and to vote on the Transaction (the “Meeting”), which Meeting is expected to be held in August 2024.

The Parent and the Purchaser have entered into support and voting agreements (the “Support and Voting Agreements”) with certain Shareholders (collectively, the “Supporting Shareholders”) pursuant to which each Supporting Shareholder has agreed, subject to the terms of the Support and Voting Agreements, to vote the common shares of the Company (the “Common Shares”) over which such Supporting Shareholder exercises direction or control in favour of the Transaction.

In the aggregate, Supporting Shareholders exercising direction or control over approximately 72.46% of the outstanding Common Shares have already agreed to vote in favour of the Transaction. In the event that the Purchase Agreement is terminated in accordance with its terms, the obligations under the Support and Voting Agreements will automatically terminate.

Closing Conditions

The completion of the Transaction is subject to customary conditions precedent for a transaction of this nature, including the approval of Shareholders and the completion of the Financings. The outside date to satisfy all conditions precedent to the Sale Transaction is September 19, 2024.

A copy of the Purchase Agreement will be made available under the Company’s profile on SEDAR+ at www.sedarplus.com.

Distribution(s) to Shareholders and Anticipated Dissolution and Possible Delisting

In the event that the Transaction is ultimately approved and completed in accordance with the Purchase Agreement, the Company’s primary asset will be cash and the Company may not have sufficient business operations or assets to meet the ongoing listing requirements of Cboe Canada Inc. (“Cboe Canada”). Accordingly, the Company expects to be delisted from Cboe Canada and to proceed with a voluntary windup and dissolution.

In connection with the foregoing, the Company intends to distribute the available portion of the net proceeds of the Transaction (after payment of, among other things, transaction costs and the payment of all liabilities and obligations of the Company) to Shareholders as a return of capital. There are many unknown variables that cannot be accurately predicted at this time, along with known items that are difficult to quantify, all of which will impact the ultimate amount, and the anticipated timing, of any distribution(s) payable to Shareholders.

Details of the Transaction, the planned windup and dissolution of the Company, the return of capital and the Company’s expected delisting from Cboe Canada, and the risks and procedures associated therewith, will be disclosed in greater detail in a management information circular (the “Circular”) expected to be provided to shareholders in the coming weeks in connection with the Meeting.

Advisors

Norton Rose Fulbright Canada LLP was retained by the Company as its legal advisor. Rex Media Capital Inc. was retained by the Purchaser as its financial advisor and DSL LLP was retained by the Purchaser as its legal advisor.

About Amcomri Entertainment Inc.

Amcomri Entertainment Inc. (Cboe CA: AMEN) (Frankfurt: 25Y0) provides global distribution capabilities for independent movie, documentary and TV series producers as well as for its own in-house productions. With decades of experience across all key media platforms, Amcomri is rapidly becoming the go-to team for independent producers seeking the broadest possible audience for their productions. The Amcomri Entertainment Inc. group of companies includes 101 Films, 101 Films International, Hollywood Classics International, Amcomri Productions, Appreciated Media Global, Amcomri Productions and Abacus Media Rights.

For further information about Amcomri, see its disclosure documents on SEDAR+ at www.sedarplus.com or visit the company’s website at https://amcomrientertainmentinc.com/.

ForwardLookingStatements

This news release includes “forward-looking information” and “forward-looking statements” as such terms are defined under applicable Canadian securities legislation. Forward‐looking information and statements include disclosure regarding possible events, that are based on assumptions about future economic conditions and courses of action, and, in certain cases, can be identified by the use of words such as “potential”, “propose”, “aim”, “depend”, “seeks”, “plans”, “expects”, “is expected”, “intends”, “anticipates”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “can”, “could”, “should”, “shall”, “would”, “might” or “will”, or the negative forms of any of these words and other similar expressions. Forward-looking statements in this news release include statements related to: the terms and conditions, and anticipated benefits (if any) to Shareholders and other stakeholders of the Company, of the Transaction, the planned windup and dissolution of the Company, the return of capital and the Company’s delisting from Cboe Canada (including any consideration thereunder, as applicable); the satisfaction of the conditions precedent to the Transaction, the planned windup and dissolution of the Company, the return of capital and the Company’s delisting from Cboe Canada (in each case, if at all); the timing and consummation of the Transaction, the planned windup and dissolution of the Company, the return of capital and the Company’s delisting from Cboe Canada; the availability of the Financings on the terms agreed; the amount of any return or capital or other distribution(s) to Shareholders; matters relating to the Circular and the Meeting, and the satisfaction or waiver of the conditions precedent to the Transaction. There can be no assurance that the proposed Transaction, windup and dissolution of the Company, return of capital and the Company’s delisting from Cboe Canada will be completed at all or on the terms and conditions contemplated therein and in this news release. Forward‐looking information and statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward‐looking information and statements. Such factors include, but are not limited to, risks relating to: approvals required in connection with the Transaction; the satisfaction or waiver of the conditions precedent to the Transaction (if at all) and adverse changes in applicable laws or regulations; indemnification claims by the Purchaser in connection with the Transaction; delay or inability of the Purchaser to pay the consideration contemplated by the Purchase Agreement; the expenses incurred to complete the Transaction, the planned windup and dissolution of the Company, the return of capital and the Company’s delisting from Cboe Canada, compliance by the Supporting Shareholders with the Support and Voting Agreements; the ability of the Company to pay all liabilities and obligations of the Company, general business, economic, competitive, political and social uncertainties, uncertain and volatile equity and capital markets. Actual results and future events could differ materially from those anticipated in such forward looking information. Accordingly, readers should not place undue reliance on forward‐looking information. All forward-looking information in this news release is made as of the date hereof and qualified by these cautionary statements and those in our continuous disclosure filings available on SEDAR+ at www.sedarplus.com. The Company disclaims any intention or obligation to update or revise such forward‐looking information, whether as a result of new information, future events or otherwise, except as required by law.

Investors are cautioned that, trading in the securities of the Company should be considered highly speculative. For a more detailed discussion of such risks and uncertainties, please see the section entitled “Risk Factors” in the Company’s annual information form dated June 2, 2024, and available under the Company’s profile on SEDAR+ at http://www.sedarplus.com/.