Equity Media Completes $18.5 Million Sale of RTN
June 26, 2008
Equity Media Holdings, (NASDAQ: EMDA) has completed the sale of its Retro TV network to a group created by the company“s largest shareholder and its former CEO. Luken Communications, led by Henry Luken III, purchased RTN for $18.5 million in cash.
Under deal terms, Little Rock, Ark.-based Equity retained the option to repurchase RTN through Dec. 24, for $27.75 million plus the amount Luken sinks into the network during its ownership period. Retro was launched specifically to provide TV stations with a secondary network for digital multicasts. It has 73 affiliates and reaches 38 percent of U.S. TV households.
Equity is working with Thomas Weisel Partners, a private equity firm in San Francisco, on the repurchase, potential strategic alliances and possibly starting more diginets using Equity“s centralized production and master control hub.
In addition to the network, Luken also bought $1.5 million in warrants to buy up more than 8 million shares of Equity for $1.10 a share. Equity is currently trading for around 75 cents. The warrants are good through early September.
Luken also put down a $5 million prepayment for several Equity TV stations affiliated with Univision and Telefutura, and located in Amarillo and Waco, Texas; Fort Myers, Fla.; Minneapolis; Oklahoma City and Tulsa, Okla. Another $12.5 million is due pending completion of the sale--subject to Univision“s first right of refusal and FCC approval.
Equity will use a portion of initial proceeds to pay off a $17.5 million credit facility, leaving it with a separate $38.5 million credit facility.