Combination To Expand Video Capabilities Across
OTT, CTV, FAST Channels, and OTA As Well As Significant Advertising
and Capital Commitments
Company will Extend and Amend Long-Term Debt,
Strengthening Balance Sheet
Simplify Inventions to Invest $50 Million in
Cash, Contribute its Bridge Media Network Business and Certain
Other Assets and Commit to a Guaranteed Advertising Commitment of
$60 Million
Investment Consists of Purchase of 5 Million
Shares at $5, $25 Million of Preferred Stock and the Contributions
of Assets and Advertising Commitment That Will Result in 65%
Ownership of Arena
The Arena Group Holdings, Inc. (NYSE American: AREN) (“we,”
“us,” “our,” the “Company” or “The Arena Group”), a technology
platform and media company home to more than 265 brands, including
Sports Illustrated, TheStreet, Parade Media (“Parade”), Men’s
Journal, and HubPages, today announced that it has signed a binding
letter of intent with Simplify Inventions, LLC (“Simplify”) and its
founder, Manoj Bhargava, founder of 5-hour ENERGY®, to acquire
certain assets of its subsidiary Bridge Media Networks, a dynamic
and innovative, privately held media group with two national
television networks distributed across more than 100 owned and
affiliated Over-The-Air (“OTA”) stations, 35 OTT, CTV agreements,
and multiple MVPD and cable agreements, creating a
well-capitalized, growing media leader with digital, commerce,
print and video capabilities all supported by a unified technology
platform.
Highlights of the proposed combination include:
- The existing assets of The Arena Group will be combined with
the video programming, distribution, and production assets of
Bridge Media Networks, including its two 24-hour networks, NEWSnet
and Sports News Highlights, as well as the automotive and travel
properties Driven and TravelHost, further expanding The Arena
Group’s vertical business ecosystems.
- As part of the transaction, The Arena Group will receive a $50
million cash investment, a five-year guaranteed advertising
commitment of approximately $60 million from a group of consumer
brands also owned by Simplify, including 5-hour ENERGY®, and the
Bridge Media Networks operations. As consideration, Simplify will
receive $25 million of preferred stock at a 10% non-cash
payment-in-kind (“PIK”) coupon with a term of five years from the
closing date, and common equity which will represent approximately
65% ownership of the combined company on a fully diluted basis
based on $5 per share.
- The Arena Group intends to use a portion of this cash to reduce
its debt by $20 million from current levels.
- B. Riley Financial has agreed to extend the maturity of the
remaining debt held by it from December 31, 2023 to December 31,
2026 at a fixed rate of 10%.
The addition of Bridge Media Networks’ assets is expected to be
accretive to The Arena Group’s earnings in 2024 and beyond. The
proposed transaction is subject to finalization of a definitive
agreement, the completion of due diligence, approval by The Arena
Group’s shareholders, the receipt of any required regulatory
approvals, and certain other closing conditions. Closing is
expected in the fourth quarter of 2023.
“This strategic combination dramatically accelerates our planned
expansion across the video ecosystem. Our immediate opportunity to
create, distribute and monetize premium video content across all
linear, digital and connected ecosystems provides a lucrative
opportunity for The Arena Group. The production capabilities and
opportunities with advertisers will further diversify our
offerings,” commented Ross Levinsohn, Chairman and Chief Executive
Officer of The Arena Group. “By combining with two established
networks with significant linear and digital distribution, The
Arena Group will have a significant presence in OTT, CTV, and Free
Ad Support Television (“FAST”) channels, some of the
fastest-growing segments of the video market. The production
resources of Bridge Media Networks will provide a dramatic boost to
our video capabilities which we believe will unlock significant
revenue opportunities for the combined company. The result will be
a more diverse and distributed organization with additional ways to
reach consumers and support advertising clients across video
platforms.”
“Simultaneously, this proposed transaction will extend the
maturity of our debt by three years at a very favorable rate,
providing us optionality and a more stable foundation from which to
operate,” added Levinsohn. “Combined, we expect to have a
diversified, multi-platform, well-capitalized organization, with
greater scale, expanded margins, and an accelerated path to
profitability.”
“This combination of broadcast, digital and brands will be ‘one
plus one is eleven’ – not two or even three. And we’re just getting
started,” commented Manoj Bhargava, the founder and CEO of
Innovations Ventures LLC (dba Living Essentials LLC), the company
known for producing the 5-hour ENERGY® drink. Simplify Inventions
LLC, IV Media LLC and Bridge Media Networks LLC are all founded and
led by Bhargava. He is a global philanthropist and is dedicating
most of his wealth to help the poorest third of the world. He also
owns or is a major investor in other companies, including HANS
Premium Water, Diagnostic Green, Stage2 Innovations, and Bleecker
Street Entertainment.
Bryant Riley, Chairman and Chief Executive Officer of B. Riley
Financial, currently the largest equity and debt holder of The
Arena Group, added, “We believe this is a transformational
transaction for The Arena Group, combining an experienced
management team with a history of making accretive acquisitions
with a well-financed partner who shares the vision that the media
space is ripe for investment and opportunity.”
In 2022, The Arena Group doubled its verticals through organic
and inorganic growth, including acquiring Parade, Men’s Journal,
Fexy Studios, and the Adventure Network, and grew annual revenue
growth from $53.3 million in 2019 to $220.9 million in 2022.
Despite a challenging advertising market, The Arena Group delivered
improved second quarter financial results across key operating
metrics, including top-line revenue growth.
Proposed Transaction Timeline
- The transaction is expected to close in the fourth quarter of
2023, subject to negotiation of definitive agreements, the
completion of due diligence, the approval of The Arena Group’s
shareholders, the receipt of any required regulatory approvals, and
certain other closing conditions.
- The Company anticipates that integration of the respective
businesses will be completed in early 2024.
- Additional details regarding the transaction are available in
the Form 8-K filed with the Securities and Exchange Commission
(“the SEC”) today, August 14, 2023.
Conference Call
Ross Levinsohn, The Arena Group’s Chief Executive Officer, Doug
Smith, Chief Financial Officer, and Andrew Kraft, Chief Operating
Officer, will host a conference call and live webcast to review the
Company’s second quarter financial results and discuss select
details of this proposed transaction. The call will take place at
4:30 p.m. ET today. To access the call, please dial 800-285-6670
(toll free) or 713-481-1320. The conference call will also be
webcast live on the Investor Relations section of The Arena Group’s
website at
https://investors.thearenagroup.net/news-and-events/events.
Following the conclusion of the live call, a replay of the
webcast will be available on the Investor Relations section of the
Company’s website for at least 90 days. A telephonic replay of the
conference call will also be available from 7 p.m. ET on August 14,
2023 until 11:59 p.m. ET on August 28, 2023 by dialing 877-481-4010
(United States) or 919-882-2331 (international) and using the
passcode 48775.
About The Arena Group
The Arena Group (NYSE American: AREN) is an innovative
technology platform and media company with a proven cutting-edge
playbook that transforms media brands. Our unified technology
platform empowers creators and publishers with tools to publish and
monetize their content, while also leveraging quality journalism of
anchor brands like Sports Illustrated, TheStreet, Parade, Men’s
Journal, and HubPages to build their businesses. The company
aggregates content across a diverse portfolio of over 265 brands,
reaching over 100 million users monthly. Visit us at
thearenagroup.net and discover how we are revolutionizing the world
of digital media.
About Bridge Media Networks
Bridge Media Networks is a dynamic and innovative media group
that offers a wide range of platforms for delivering the latest
news, sports, automotive, and travel content. Bridge Media
Networks’ portfolio includes over-the-air television stations, two
national television networks, cutting-edge streaming platforms, and
dynamic websites designed to keep viewers informed and entertained.
Bridge Media Networks’ unwavering commitment is to provide viewers
with the most comprehensive and impartial content possible through
its flagship brands: NEWSnet, Sports News Highlights, Driven, and
TravelHost.
Forward Looking Statements
In addition to historical information, this communication
contains forward-looking statements within the meaning of
applicable securities law, including statements regarding the
expected timing, completion and effects of the proposed transaction
with Bridge Media Networks (the “Proposed Transaction”). These
forward-looking statements include, but are not limited to,
statements regarding the expected execution of definitive
documentation relating to the Proposed Transaction and the timing
and completion of the Proposed Transaction. You can identify these
statements by the use of terminology such as “believe”, “expect”,
“will”, “should”, “could”, “estimate”, “anticipate” or similar
forward-looking terms. You should not rely on these forward-looking
statements as they involve risks and uncertainties that may cause
actual results to vary materially from the forward-looking
statements. Factors that might contribute to such differences
include, among others, the inability of the Company and Simplify to
agree on mutually satisfactory terms and conditions to the
definitive documentation related to the Proposed Transaction, the
possibility that the conditions precedent to the Proposed
Transaction may not be satisfied or waived; rejection of the
Proposed Transaction by the Company’s stockholders; delay in
closing the Proposed Transaction or the possibility of
non-consummation of the Proposed Transaction, expected revenues,
synergies and other benefits of the Proposed Transaction might not
be realized within the expected time frames or at all and costs or
difficulties relating to integration matters, the requisite
regulatory approvals and clearances for the Proposed Transaction
may be delayed or may not be obtained, the definitive documentation
for the Proposed Transaction may be terminated, business
disruptions may occur following or in connection with the Proposed
Transaction and diversion of management’s attention due to the
Proposed Transaction. For more information regarding the risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in these forward-looking
statements, as well as risks relating to the Company’s business in
general, please refer to the “Risk Factors” section of the
Company’s SEC filings, including the Company’s most recent Annual
Report on Form 10-K and subsequently filed Quarterly Reports on
Form 10-Q. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and the Company does not give any
assurance that it will achieve its expectations. The Company
undertakes no obligation to update any of these forward-looking
statements for any reason after the date of this communication or
to conform these statements to actual results or revised
expectations, except as required by law.
No Offer or Solicitation
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the Proposed Transaction or
otherwise.
Additional Information and Where to Find It
In connection with the Proposed Transaction, the Company intends
to file relevant materials with the SEC, including a preliminary
and definitive proxy statement to be filed by the Company. The
definitive proxy statement and proxy card will be delivered to the
stockholders of the Company in advance of the special meeting
relating to the Proposed Transaction. THE COMPANY’S STOCKHOLDERS
ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT IN ITS ENTIRETY
WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED BY THE
COMPANY WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR
INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE
PARTIES TO THE PROPOSED TRANSACTION. Investors and security holders
will be able to obtain a free copy of the proxy statement and such
other documents containing important information about the Company,
once such documents are filed with the SEC, through the website
maintained by the SEC at www.sec.gov. The Company makes available
free of charge at the Company’s website copies of materials it
files with, or furnishes to, the SEC. The contents of the websites
referenced above are not deemed to be incorporated by reference
into the proxy statement.
Participants in the Solicitation
This document does not constitute a solicitation of proxy, an
offer to purchase or a solicitation of an offer to sell any
securities. The Company and its directors, executive officers and
certain employees may be deemed to be participants in the
solicitation of proxies from the stockholders of the Company in
connection with the Proposed Transaction. Information regarding the
special interests of these directors and executive officers in the
Proposed Transaction will be included in the definitive proxy
statement referred to above. Security holders may obtain
information regarding the names, affiliations and interests of the
Company’s directors and executive officers in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2022 and
its definitive proxy statement for the 2023 annual meeting of
stockholders. Additional information regarding the interests of
such individuals in the Proposed Transaction will be included in
the definitive proxy statement relating to the Proposed Transaction
when it is filed with the SEC. These documents (when available) may
be obtained free of charge from the SEC’s website at www.sec.gov
and the Company’s website. The contents of the websites referenced
above are not deemed to be incorporated by reference into the proxy
statement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814352125/en/
Investor Relations Contact Rob Fink FNK IR Aren@fnkir.com
646.809.4048
Media Contacts: Rachael Fink Manager, Public Relations,
The Arena Group Rachael.fink@thearenagroup.net
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