Lions Gate Entertainment has finalized a deal that will provide the company with an infusion of $33 million through the sale of new preferred stock and warrants — a pact orchestrated by former Columbia-TriStar TV topper Jon Feltheimer.
Paul Allen’s Vulcan Ventures, Euro station group SBS Broadcasting and German broadcaster and producer Tele Munchen are the lead investors in a deal that combines the purchase of preferred shares — convertible at $2.55 into 13 million common shares — and 5,525,000 common share purchase warrants, exercisable at $5.
News of the stock offering was first announced in early December (Daily Variety, Dec. 10), though none of the investors was on board at that time.
On word of the investors, Lions Gate shrugged off a dismal market Tuesday, as its stock rose nearly 13% to close at $2.75 a share.
Feltheimer’s involvement with the Lions Gate deal marks his first major showbiz move since ankling Columbia Tristar in September. Feltheimer had been president of the Columbia TriStar TV Group as well as executive veep at Sony Pictures Entertainment.
For Lions Gate, the move is intended to broaden the company’s capital base, expand its production and distribution abilities in film, television and new media, and extend its reach toward the global marketplace.
Along for the ride
Other investors subscribing to the new offering include Capital Research and Management Group, Fidelity Investments, Future Media Corp., and Jamie Dimon, former co-chair of Salomon Smith Barney, as well as Feltheimer.
The new investors combined will own approximately 36% of the company.
Lions Gate chairman and CEO Frank Giustra said: “With the completion of this financing, we have strengthened Lions Gate’s cash position and added strategic partners who will play key roles in the future expansion of Lions Gate Entertainment.
Giustra has named Tele Munchen chairman Herbert Kloiber, SBS vice chair-chief operating officer Howard Knight and Feltheimer to Lions Gate’s board of directors.
Feltheimer, along with board member Michael Burns, was instrumental in orchestrating the transaction.”This new pact will strengthen the Lions Gate brand name within the family of entertainment companies worldwide,” Feltheimer said.
Feltheimer added that, especially with Allen aboard, Lions Gate will be aggressive in expanding into new-media and broadband areas.
Feltheimer is expected to announce a number of additional initiatives for himself within the next few months.
A source close to Allen said: “Paul has invested in lots of content providers — including Pop.com, DreamWorks, Oxygen Media, USA Networks and ZDTV. His basic view is that in a digital world, the content creators have more avenues to sell their content. In this case, there was a lot of additional value being added to Lions Gate and he wanted to get aboard.
SBS Broadcasting has TV and radio interests in Western and Central Europe; Tele Munchen is primarily owned by Kloiber; Allen’s Vulcan Ventures is based in Bellevue, Wash.
Canadian investment bank Yorkton Securities acted as Lions Gate’s agent on the financing.
(Josef Adalian contributed to this report.)