TMCnet News
ErosSTX Files an Extension for its Fiscal 2021 Annual Report; Provides Debt Restructuring UpdateEros STX Global Corporation (NYSE: ESGC) ("ErosSTX" or the "Company") filed a Form 12b-25 with the SEC (News - Alert) regarding an extension of the filing deadline for the Company's Annual Report on Form 20-F for fiscal 2021 (ended March 31, 2021), which was originally due on August 2, 2021 (within four months of the end of the fiscal year). The Form 12b-25 filing automatically grants the Company a 15-day extension to file its Annual Report on or before August 17, 2021. In addition, the Company is providing an update on its debt restructuring.
Form 12b-25
The Form 12b-25 states that the Company is unable to file its Annual Report on Form 20-F for the fiscal year ended March 31, 2021 by the August 2, 2021 due date, without unreasonable effort or expense, primarily because the Company's Audit Committee is currently conducting a formal internal review of certain accounting practices and internal controls related to its Eros subsidiaries. Significant revenue from these subsidiaries may not have been appropriately recognized during the fiscal year ended March 31, 2020. Further, a significant portion of the receivables associated with such revenue was valued at zero for the six months ended September 30, 2020, as part of the Company's preliminary purchase price allocation for the Merger transaction, as reflected in the Form 6-K furnished by the Company on March 31, 2021 (the "Form 6-K"). The Audit Committee has not yet completed the internal review. Even though the internal review has not been completed, the Company currently expects that substantially all of the intangible assets and goodwill reflected in the Form 6-K are likely to be impaired and that one or more material weaknesses in internal controls over financial reporting are likely to be reported. The Company cannot determine at this time when it will conclude the remaining work necessary to complete the preparation of the financial statements and assessment of its internal controls over financial reporting.
Debt Restructuring Update
STX Financing LLC, a subsidiary of the Company, currently has $150.1 million outstanding on the JPMorgan Asset-backed Credit Facility (the "JPM Facility") that matures on October 7, 2021 and $22.7 million outstanding on a mezzanine facility (the "STX Mezzanine Debt") that matures on July 7, 2022. Under these arrangements, the Company was required to deliver audited financial statements by July 31, 2021. The Company is currently working with these lenders on several options, including a waiver and extension of this deadline to deliver audited financial statements or paying off the debt. The Company cannot provide any assurances that it will be successful in obtaining any extensions or paying off the debt. STX Financing has entered into an exclusive negotiation period with a third party to monetize the revenue from 46 films in its library, the proceeds of which would be used to repay both the JPM Facility as well as the STX Mezzanine Debt, which represents the entire debt balance of STX Financing, with additional amounts going to the Company's balance sheet. If any transaction is agreed to, the Company expects that STX Financin will continue to administer and distribute the 46-film catalog for a fee, and will retain derivative rights to the 46 films, including sequels, remakes and prequels. This transaction is subject to negotiation of definitive documentation, and the Company cannot provide any assurances that it will be successful in completing the transaction. In addition, Eros International Media Limited (EIML), the Company's majority-owned and consolidated subsidiary in India, recently reached an agreement with its India Banking Consortium to refinance $63 million (INR 4.68 billion) of outstanding debt. The agreement was completed under the Reserve Bank of India's Resolution Framework for COVID-19 Related Stress policy. The agreement reduces the annual interest rate on the debts to 9.0% from an average of 14.5% and extends the average maturity so that less than $10 million of the debt matures in the second half of fiscal 2022, with the remainder maturing in fiscal 2023 and 2024.
About Eros STX Global Corporation:
Special Note Regarding Forward Looking Statements:
The forward-looking statements contained in this communication are based on historical performance and management's current plans, estimates and expectations in light of information currently available and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond the Company's control. Should one or more of these risks or uncertainties materialize or should any of the Company's assumptions prove to be incorrect, the Company's actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. The Company cautions that you should not place undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks only as of the date on which the Company makes it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210803006088/en/ |