One of the more notable aspects of the transaction is the thorough routing of Apollo by creditors in the run up to the CSSE deal. This is what is called a ‘gun to the head’. Most importantly, Redbox had until May 10 to sign a deal with a buyer for the company, or it would be in default under the new credit agreement (it re-engaged with CSSE in February ‘22). In addition, Apollo and Seaport agreed to vote in favor of any M&A deal approved by the board. HPS received conditional penny warrants to acquire 20% of the company. That is, 10 weeks after the deSPAC closing, the Company was in a state that suggested a very high likelihood of default within the next fiscal year.Īlso on April 15, Redbox announced a new $50mm credit facility with HPS. On April 15, Redbox published its 10K which revealed a going concern opinion as of 12/31/21.
Liquidity was effectively zero at this point and Redbox was negotiating with its lead lender, HPS, for an expanded credit line. On April 1, Redbox announced a layoff of 150 people, and that it would not file its 10K on time. RILY which performed “due diligence” for Seaport on the deSPAC deal. Let’s pause here briefly in the story and pour one out for B. Shortly thereafter, Redbox hired both Weil Gotshal & Manges LLP and Alvarez & Marsal LLC as advisors - both firms are obviously well-known for their work with bankrupt or financially distressed clients - and began a search for additional financing or a merger partner. On February 2, 2022, barely 3 months past the deSPAC merger with Seaport, Redbox announced that it was fully drawing its credit lines, and starting a “ strategic alternatives ” process in response to “ materially lower financial results. The Burning Platform known as Redbox was about to turn into a raging inferno. That respite would prove to be very short-lived. The $50mm of deSPAC proceeds used to pay down Redbox debt was a Hail Mary pass to buy some breathing room. The company added a small revolving credit facility with Union Bank in Q420, and Apollo itself had to write a check in Q121 to keep the lights on. The signs of financial stress at Redbox were manifold.īeginning in Q320, Redbox employed various amend and extend gambits to stave off a default, including two maturity extensions, the elimination of amortization payments, and eventually a PIK interest election. The exclusivity period lapsed in February ‘21, at which point Apollo was faced with funding an entity with a rapidly fading cash cow unit and a quickly ramping content acquisition budget for its nascent streaming business. CSSE in Q120 which progressed to a non-binding term sheet in November '20 and a 90-day exclusivity period. Redbox had strategic discussions with Chicken Soup for The Soul Entrtnmnt Inc. Having sucked all the juice from the Redbox coconut, Apollo likely tried to pass it off to other PE shops, but apparently whiffed.
#Red box movies rar
In 2018, RAR added an $85mm TL B-1 to its capital stack and Apollo paid itself another $115mm dividend. Redbox subsidiary, Redbox Automated Retail, LLC (RAR), entered into a refinancing transaction in October 2017 which provided for a $425mm term loan and a $30mm RCL, and allowed Apollo to dividend $160mm to itself. Soon after buying the business and trisecting it, Apollo rang the register with $275mm in dividend recaps from Redbox: That’s right: long ago and far away, Redbox was part of Outerwall, a past-its-prime public company that Leon Black and the boys at Apollo saw could be busted up for parts. And, more importantly, because meme stonks abound … again … such as GameStop Inc. Why are we doing this? Because we literally couldn’t have said it better ourselves. Shorts whether we could republish it and Mr. Lest its genius get lost in the Twitter ether, we asked Mr. Luckily a “fintwit” acquaintance of ours - a user who goes by the (amusing) handle - recently wrote a deep synopsis of what happened with the name and published it in a lengthy tweet storm. (“Redbox”) is a name we followed for a long time but never got around to profiling. We’ve never in our now-multi-year history, featured anyone else’s content or promoted “user generated content” in any way. For those of you who are unaware or are otherwise new to PETITION (welcome!), you should know that our content is 100% produced in-house.
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