Capital increase to finance production, acquisitions

BERLIN — Senator Entertainment is set to raise up to €11.5 million ($14 million) through a capital increase aimed at boosting film acquisitions and beefing up production.

The company said Friday that the injection of capital would increase its equity by 50%, and create a stable base to implement previously announced output deal with Relativity Media, as well as ambitious production plans.

As part of the output deal with Relativity, Senator said in December that Ryan Kavanaugh’s mini-major would take a significant stake in the Berlin-based company, something the Hollywood studio has yet to do.

Senator’s share increase offering is limited to current shareholders and holders of warrant bonds.

In Germany, shareholders must notify publicly listed companies if they own more than 3%. Relativity has not issued such a notification, but it could still make use of the share offering and take a stake in Senator if it owns less than 3% or company bonds; whether Relativity is currently a bondholder or minority shareholder remains unclear.

Senator is issuing up to 9,981,606 new shares priced at $1.42. Shareholders and holders of warrant bonds have a right to buy one share for every three shares or warrant bonds owned. The subscription period for the new shares is expected to run from Tuesday to June 19.

Relativity itself is set to raise $350 million, including at least $250 million to fund expansion plans.

Senator, meanwhile, has been flying high thanks to the stratospheric success of “The Intouchables,” which has become the most successful film so far this year in Germany with more than $72 million at the box office.

“In addition to the outstanding result that ‘The Intouchables’ will deliver in 2012, the capital increase will help us to implement our strategy for the future of Senator,” said Senator CEO Helge Sasse. “In addition to the output agreement with Relativity, we also want to boost the number of our own domestic and international productions.”

Senator recently took a 50% stake in Bavaria Pictures, a joint venture with entertainment giant Bavaria Film, which produced the upcoming Michael Caine starrer “Mr. Morgan’s Last Love” and “Death of a Superhero,” starring Andy Serkis.

The company is also co-producing Anton Corbijn’s John le Carre adaptation “A Most Wanted Man,” with Philip Seymour Hoffman, and is moving forward on its English-language adaptation of the Hermann Hesse classic “Narcissus and Goldmund.”

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