Adam Dawtrey | Variety
March 3, 2004 :: Three months after announcing merger plans, London-based sales company Winchester Entertainment and Gotham-based production banner ContentFilm have finalized terms of a deal.
Winchester has agreed to acquire content for £9.1 million ($16.7 million) in new shares. It will raise a further $15.6 million via a stock issue to provide working capital for their combined operations.
The company, listed on London’s Alternative Investment Market, will be renamed ContentFilm plc, with Content partners John Schmidt and Ed Pressman as co-CEOs.
Corporate HQ will remain in London, with Schmidt dividing his time equally between the U.K. and New York.
The merged company has aggressive plans for expansion and intends to move quickly to acquire film libraries and distrib outlets, particularly in the U.S. and Europe.
Its market capitalization stands at around $47 million, but nonexec chairman-designate Alton Irby wants to multiply that tenfold.
“None of us are messing about in this business to be a $40 million company,” Irby said. “Think about Lions Gate, which started as a $40 million company and ended up as a $500 million one.”
Irby and John Muse acquired 11% apiece of Winchester during the summer after the merger of Winchester and their film sales and financing company, Cobalt. Cobalt exec Rodney Payne joined the Winchester board at that time and will remain with the company after its merger with Content, with responsibility for the group’s film financing activities.
Content chief financial officer Douglas Tulley will be chief operating officer. Winchester acting CEO Shawn Taylor will remain as CFO. Winchester U.K. distribution chief Mick Southworth will continue in that role for the new company. Jamie Carmichael, managing director of Content Intl., will run international sales and activities.
Further staffing details are not yet available. Content and Winchester have around 50 staff members between them and that is expected to be consolidated to around 35 post-merger.
The new Content will issue 32.69 million new shares, equivalent to 33.31% of the company’s enlarged equity, to raise $15.6 million before expenses to bankroll the group’s operations and growth. It also has lined up a $20 million revolving credit line with JPMorgan Chase.
Around two-thirds of these new shares will be bought by Winchester and Content’s existing shareholders, including Irby, Schmidt, and Pressman.
After the merger, which is subject to the approval of Winchester shareholders at a meeting March 26, the old Content investors (primarily Schmidt, Pressman, and Syntek Capital) will control 35.6% of the combined company.
