ErosSTX enters into a definitive agreement for the sale of its STX Entertainment subsidiary to The Najafi Companies

Eros STX Global Corporation (NYSE: ESGC) (“ErosSTX”, “ESGC”, the “Company”, “we” or “our”), a global entertainment company, today announced it has entered into a definitive agreement to sell its STX Entertainment subsidiary (“STX Entertainment”), to an affiliate of The Najafi Companies (“Najafi”), an entrepreneurial and mission-driven private investment company with significant holdings in consumer, media, talent-driven brands, ecommerce, tech, and sports.

Transaction
At the closing of the transaction contemplated by the purchase agreement, an affiliate of Najafi will acquire STX Entertainment through the purchase of all of the issued and outstanding shares of common stock of a parent entity of STX Entertainment and wholly-owned subsidiary of ESGC. The purchase price at Closing will be $173 million, subject to customary adjustments for transaction expenses and debt, including repayment of the indebtedness of STX Entertainment, which is currently approximately $148 million.

The purchase agreement also provides ESGC with a go-shop period, during which the board of directors of ESGC, with the assistance of its financial advisor, Lazard, will solicit alternative proposals from third parties for a period of 45 days. The purchase agreement provides for ESGC to pay a termination fee of $4.5 million (plus the return of $2 million that Najafi has funded as a deposit) to Najafi if ESGC terminates the purchase agreement in connection with accepting a superior proposal. Under specified circumstances set forth in the purchase agreement, Najafi will be required to pay ESGC a termination fee of $4.5 million (less the $2 million Najafi deposit) if Najafi fails to close the transaction.

A transaction is expected to close by the end of January 2022. The transaction with Najafi is subject to customary closing conditions, including its lender’s confirmatory due diligence. Najafi has exclusively partnered with The Forest Road Company, as its lender, who is expected to repay STX Entertainment’s indebtedness and provide it with working capital going forward.

ESGC does not intend to disclose developments with respect to the solicitation process unless and until the board of directors of ESGC has made a decision with respect to any potential superior proposal. There can be no assurance that this process will result in a superior proposal.

STX Debt Extension
As noted in the November 16, 2021 press release, because the Company has executed a definitive agreement to sell the STX Entertainment subsidiary, the maturity and delivery date of financial statements under STX Entertainment’s Senior Credit Agreement has been extended to January 4, 2022, and may be further extended to February 3, 2022 if such sale agreement remains in effect on January 4, 2022.

Advisors
Lazard is serving as financial adviser to ESGC and Kirkland & Ellis LLP and Gibson, Dunn & Crutcher LLP are serving as its legal advisers. Ballard Spahr LLP is serving as legal adviser to The Najafi Companies. Business Wire