TIDMERO1
Eros STX Global Corporation (NYSE: ESGC) ("ErosSTX" or the
"Company") filed a Form 12b-25 with the SEC regarding an extension
of the filing deadline for the Company's Annual Report on Form 20-F
for fiscal 2021 (ended March 31, 2021), which was originally due on
August 2, 2021 (within four months of the end of the fiscal year).
The Form 12b-25 filing automatically grants the Company a 15-day
extension to file its Annual Report on or before August 17, 2021.
In addition, the Company is providing an update on its debt
restructuring.
Form 12b-25
On July 30, 2020, a subsidiary of Eros STX (formerly known as
Eros International Plc) merged with and into STX Filmworks, Inc.
("STX"), with STX surviving as an indirect and wholly owned
subsidiary of the Company (the "Merger"). The Merger was accounted
for as a business combination using the acquisition method of
accounting under the provisions of ASC 805, with STX as the
accounting acquirer of the Company.
The Form 12b-25 states that the Company is unable to file its
Annual Report on Form 20-F for the fiscal year ended March 31, 2021
by the August 2, 2021 due date, without unreasonable effort or
expense, primarily because the Company's Audit Committee is
currently conducting a formal internal review of certain accounting
practices and internal controls related to its Eros subsidiaries.
Significant revenue from these subsidiaries may not have been
appropriately recognized during the fiscal year ended March 31,
2020. Further, a significant portion of the receivables associated
with such revenue was valued at zero for the six months ended
September 30, 2020, as part of the Company's preliminary purchase
price allocation for the Merger transaction, as reflected in the
Form 6-K furnished by the Company on March 31, 2021 (the "Form
6-K"). The Audit Committee has not yet completed the internal
review.
Even though the internal review has not been completed, the
Company currently expects that substantially all of the intangible
assets and goodwill reflected in the Form 6-K are likely to be
impaired and that one or more material weaknesses in internal
controls over financial reporting are likely to be reported. The
Company cannot determine at this time when it will conclude the
remaining work necessary to complete the preparation of the
financial statements and assessment of its internal controls over
financial reporting.
Debt Restructuring Update
The Company is considering its options under various debt
arrangements, including the GBP50 million 6.50% UK retail bond that
matures on October 15, 2021, and the requirements to deliver
audited financial statements by July 31, 2021.
STX Financing LLC, a subsidiary of the Company, currently has
$150.1 million outstanding on the JPMorgan Asset-backed Credit
Facility (the "JPM Facility") that matures on October 7, 2021 and
$22.7 million outstanding on a mezzanine facility (the "STX
Mezzanine Debt") that matures on July 7, 2022. Under these
arrangements, the Company was required to deliver audited financial
statements by July 31, 2021. The Company is currently working with
these lenders on several options, including a waiver and extension
of this deadline to deliver audited financial statements or paying
off the debt. The Company cannot provide any assurances that it
will be successful in obtaining any extensions or paying off the
debt.
STX Financing has entered into an exclusive negotiation period
with a third party to monetize the revenue from 46 films in its
library, the proceeds of which would be used to repay both the JPM
Facility as well as the STX Mezzanine Debt, which represents the
entire debt balance of STX Financing, with additional amounts going
to the Company's balance sheet. If any transaction is agreed to,
the Company expects that STX Financing will continue to administer
and distribute the 46-film catalog for a fee, and will retain
derivative rights to the 46 films, including sequels, remakes and
prequels. This transaction is subject to negotiation of definitive
documentation, and the Company cannot provide any assurances that
it will be successful in completing the transaction.
In addition, Eros International Media Limited (EIML), the
Company's majority-owned and consolidated subsidiary in India,
recently reached an agreement with its India Banking Consortium to
refinance $63 million (INR 4.68 billion) of outstanding debt. The
agreement was completed under the Reserve Bank of India's
Resolution Framework for COVID-19 Related Stress policy. The
agreement reduces the annual interest rate on the debts to 9.0%
from an average of 14.5% and extends the average maturity so that
less than $10 million of the debt matures in the second half of
fiscal 2022, with the remainder maturing in fiscal 2023 and
2024.
About Eros STX Global Corporation:
Eros STX Global Corporation, ("ErosSTX") (NYSE: ESGC) is a
global entertainment company that acquires, co-produces and
distributes films, digital content and music across multiple
formats such as theatrical, television and OTT digital media
streaming to consumers around the world. Eros International Plc
changed its name to Eros STX Global Corporation pursuant to the
July 2020 merger with STX Entertainment, merging two international
media and entertainment groups to create a global entertainment
company with a presence in over 150 countries. ErosSTX delivers
star-driven premium feature film and episodic content across a
multitude of platforms at the intersection of the world's most
dynamic and fastest-growing global markets, including US, India,
Middle East, Asia and China. For further information, please visit
ErosSTX.com.
Special Note Regarding Forward Looking Statements:
Information provided in this communication includes
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, and
such statements are subject to the safe harbors created thereby.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "approximately,"
"anticipate," "believe," "estimate," "continue," "could," "expect,"
"future," "intend, " "may," "plan," "potential," "predict,"
"project," "seek," "should," "will", "trending" and similar
expressions. Those statements include, among other things, the
discussions of the Company's business strategy and expectations
concerning its and the Company's market position and future
operations. All such forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ
materially from those that we are expecting, including, without
limitation: our ability to successfully and cost-effectively source
film content; the Company's ability to achieve the desired growth
rate of Eros Now; our ability to maintain or raise sufficient
capital; delays, cost overruns, cancellation or abandonment of the
completion or release of the Company's films; our ability to
predict the popularity of its films, or changing consumer tastes;
our ability to maintain existing rights, and to acquire new rights,
to film content; our ability to successfully defend any future
class action lawsuits we are a party to in the U.S.; anonymous
letters to regulators or business associates or anonymous
allegations on social media regarding the Company's business
practices, accounting practices and/or officers and directors; our
ability to recoup the full amount of box office revenues to which
it is entitled due to underreporting of box office receipts by
theater operators; our dependence on our relationships with theater
operators and other industry participants to exploit the Company's
film content; our ability to mitigate risks relating to
distribution and collection in international markets; our ability
to compete with other forms of entertainment; our ability to combat
piracy and to protect our intellectual property; our ability to
maintain an effective system of internal control over financial
reporting; contingent liabilities that may materialize, our
exposure to liabilities on account of unfavorable
judgments/decisions in relation to legal proceedings involving the
Company or its subsidiaries and certain of its directors and
officers; our ability to successfully respond to technological
changes; our ability to satisfy debt obligations, fund working
capital and pay dividends; the monetary and fiscal policies of
countries around the world, inflation, deflation, unanticipated
turbulence in interest rates, foreign exchange rates, equity prices
or other rates or prices; our ability to address the risks
associated with acquisition opportunities; risks that the ongoing
novel coronavirus pandemic and its spread, and related public
health measures, may have material adverse effects on our business,
financial position, results of operations and/or cash flows;
challenges, disruptions and costs of the Merger and related
transactions, integrating the Eros and STX businesses and achieving
anticipated synergies, and the risk that such synergies will take
longer to realize than expected or may not be realized in whole or
in part; the amount of any costs, fees, expenses, impairments and
charges related to the Merger and related transactions; completion
of the contemplated refinancing transactions; and uncertainty as to
the long-term value of the Company's ordinary shares, and the
completion of the Company's fiscal 2021 audit and filing of its
Annual Report on Form 20-F.
The forward-looking statements contained in this communication
are based on historical performance and management's current plans,
estimates and expectations in light of information currently
available and are subject to uncertainty and changes in
circumstances. There can be no assurance that future developments
affecting the Company will be those that it has anticipated. Actual
results may differ materially from these expectations due to
changes in global, regional or local political, economic, business,
competitive, market, regulatory and other factors, many of which
are beyond the Company's control. Should one or more of these risks
or uncertainties materialize or should any of the Company's
assumptions prove to be incorrect, the Company's actual results may
vary in material respects from what the Company may have expressed
or implied by these forward-looking statements. The Company
cautions that you should not place undue reliance on any of its
forward-looking statements. Any forward-looking statement made by
the Company in this communication speaks only as of the date on
which the Company makes it. Factors or events that could cause the
Company's actual results to differ may emerge from time to time,
and it is not possible for the Company to predict all of them. The
Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
applicable securities laws.
Investor Contact:
Drew Borst
EVP, Investor Relations & Business Development
ErosSTX Global Corporation
drew@erosstx.com
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CONTACT:
Eros STX Global Corporation
SOURCE: Eros STX Global Corporation
Copyright Business Wire 2021
(END) Dow Jones Newswires
August 04, 2021 07:52 ET (11:52 GMT)
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