BLOCKBUSTER ENTERTAINMENT CORP. TO MAKE $25 MILLION STRATEGIC INVESTMENT IN REPUBLIC PICTURES CORP.
LOS ANGELES, Jan. 22 /PRNewswire/ -- Republic Pictures Corp. (NASDAQ: RPICA) announced today that it has entered into an agreement with Blockbuster Entertainment Corp. (NYSE: BV) under which Blockbuster will acquire 2.5 million shares of newly issued Class A Republic Pictures Common Stock for $10 per share, or $25 million. In addition, Blockbuster's Chairman and Chief Executive Officer H. Wayne Huizenga and Vice Chairman Steven R. Berrard will be elected as new members of the Republic board of directors upon the closing of this investment, bringing Republic's total number of directors to eight. Russell Goldsmith, Republic Pictures' chairman and chief executive officer said, "We are very pleased to begin this strategic relationship with Blockbuster, one of the most outstanding companies in the United States. This investment significantly increases Republic's capital base and its capability to produce, acquire and distribute more quality filmed entertainment worldwide. We also look forward to Wayne Huizenga and Steve Berrard adding their considerable talents and expertise to our board of directors." Huizenga stated, "We are excited about the many opportunities to be created by our investment. We believe that Republic is an outstanding company with dynamic management at its helm. Blockbuster's relationship with Republic will enable both companies to capitalize on Republic's ongoing production, acquisition and distribution of filmed entertainment, including home video products." Republic said it initially intends to use the proceeds to eliminate its outstanding bank borrowings, currently at $22 million, under its $50 million bank credit facility with the principal long- term use to be increased production and acquisition of filmed entertainment. Republic also announced that it will simplify its capital structure through the elimination of its class B (preferred voting) common stock. This recapitalization calls for the conversion of each existing share of class B common stock into 1.2 shares of newly issued class A common stock. Following the completion of these transactions, there will be approximately 7.3 million shares of Republic Pictures common stock issued and outstanding, of which Blockbuster will own approximately 35 percent. Blockbuster will also obtain two five-year warrants to purchase an aggregate of up to an additional 810,000 shares of Republic Pictures common stock which would generate proceeds of approximately $9 million. These warrants entitle Blockbuster to acquire up to 210,000 common shares at an initial price of $10.00 per share, increasing to $11.50 for the last four years, and up to an addition 600,000 common shares at $11.50 per share during the full five-year term. The initial stock purchase is payable in cash and/or Blockbuster common stock of equal value. Any stock acquired upon exercise of the warrants is payable in cash. Additionally, Blockbuster is entitled to certain anti-dilution protection. These transactions, which are subject to customary consents and conditions, are expected to be completed during the second quarter of 1993. Republic Pictures is a leading independent producer and worldwide distributor of filmed entertainment. The company distributes its extensive classic library and contemporary product to the television, home video and theatrical marketplaces on a global basis. Republic Pictures Home Entertainment has grown to become the 10th largest distributor in the home video industry. On Friday, Jan. 22, the company will release the theatrical motion picture "Knight Moves" nationwide. The Republic library includes such classics as "The Quiet Man," "High Noon," and "Bells of St. Mary's," as well as the off-network television series "Bonanza" and "Beauty and the Beast." At Sept. 30, 1992, there were 2,989 stores in the Blockbuster video system. Of the total, 1,890 were company-owned (including approximately 775 stores which operate under the "Ritz" name in the United Kingdom), and 1,099 were franchise-owned. Blockbuster video stores serve 178 U.S. markets in 48 states and the District of Columbia as well as markets in nine other countries. The Blockbuster music division owns a combination of 236 Sound Warehouse and Music Plus music stores operating in 40 metropolitan areas. In addition, Blockbuster's music division and London-based Virgin Retail Group are partners in a joint venture which currently owns 15 existing major stores, known as "Megastores," located in continental Europe, Australia, and the United States. Republic also announced that consistent with prior years the company expects to report fourth quarter and full fiscal year financial results in March. As previously stated in November 1992, Republic's results for 1992 will be negatively affected by the lack of a major home video release or a new television movie delivery in the fourth quarter. Additionally, Republic has developed a new structure for its International Division to better capitalize on the growing opportunities in that marketplace. The redesign of this unit may involved reserves and other charges against income. The company anticipates that it may report a net loss for the fourth quarter of 1992 which, depending on its magnitude, could result in a net loss for the fiscal year. -0- 1/22/93 /CONTACT: Rachel McCallister of Rachel McCallister & Associates, 213-939-5991; or Steve Stern of Stern & Co., 310-471-5123, for Republic Pictures/ (RPICA BV)
CO: Republic Pictures Corp.; Blockbuster Entertainment Corp. ST: California IN: ENT SU:
KJ-JB -- LA042 -- 7707 01/21/93 21:07 EST
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|Date:||Jan 21, 1993|
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