YuuZoo to invest up to US$150m in US film group
Yuuzoo Corporation Limited is planning to invest between
US$50 million and US$150 million in an American independent movie studio and
entertainment group which only recently exited bankruptcy.
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Andrea Soh
31 October 2016
Yuuzoo Corporation Limited is planning to invest between US$50 million and US$150 million in an American independent movie studio and entertainment group which only recently exited bankruptcy.
In an announcement on Sunday night, the group said that it has entered into a term sheet and letter of intent on Oct 28 with Relativity Holdings LLC.
Relativity - incorporated in 2008 in the state of Delaware - develops, produces, finances and distributes feature films and television programmes. The Beverly Hills-based company, founded by entrepreneur Ryan Kavanaugh, filed for bankruptcy in July last year after lawsuits and missing loan payments.
It emerged from bankruptcy in March this year after obtaining funding from billionaire Joseph Nicholas and other lenders.
Under the agreement, YuuZoo will be issued class A preferred shares in Relativity Holdings LLC (senior to all other existing equity units of Relativity) amounting to a 33.3 per cent stake for an initial investment of US$27.5 million. In return it will be given all of the company's film, television, sport, fashion and music asset for distribution on its YuuZoo platform on standard commercial terms.
Relativity's largest division Relativity Studios has produced, distributed or structured financing for over 200 movies, generating more than US$17 billion in worldwide box office revenue, according to YuuZoo.
The proposed investment is in line with its strategy to add high-quality media content for distribution through its social e-commerce platform and for online and mobile payments to be made using its payment system, YuuZoo added.
Following the first equity investment, YuuZoo will have one board seat out of three in Relativity's board. A second tranche of US$22.5 million will then be paid out after five months.
After that YuuZoo might invest up to US$100 million more - more than its market capitalisation of S$123 million - in the company in the one year following the closing date of the investment, if it is able to obtain certain equity stakes. The firm said that the investment will be funded by a mix of debt funding and other fund raising exercises it will carry out.
As part of the agreement, Relativity will not accept any other equity investment for 24 months without prior written approval from YuuZoo. It also agreed to use its "YuuPay" online and mobile payment platform for all online and mobile payments by the firm, its clients and users.
YuuZoo reportedly outbid other competitors such as tech giant Lenovo and Chinese media company Legend Holdings which were also vying for Relativity, according to US entertainment news agency The Wrap.
Relativity Media has also recently filed a lawsuit charging Netflix with breaching its agreement to stream its films, resulting in damages to the firm of over US$1.5 billion and forcing the company to put itself up for sale, Reuters reported.