The Orchard Signs Merger Agreement with Dimensional Associates
16 Marzo 2010 - 7:15AM
Business Wire
The Orchard (NASDAQ: ORCD), a global leader in music and video
distribution and comprehensive digital strategy, announced today
that it has entered into a definitive merger agreement with
Dimensional Associates, LLC, a private equity affiliate of JDS
Capital, L.P. Dimensional currently owns approximately 42% of the
Company’s outstanding common stock and 99% of the Company’s
outstanding Series A Preferred Stock, representing an aggregate of
approximately 53% of the Company’s voting securities.
Following the unanimous recommendation and approval of a Special
Committee of independent and disinterested directors, the Board of
Directors of The Orchard (other than Daniel C. Stein, who abstained
from voting on the matter due to his position as an executive of
Dimensional Associates) has approved the merger agreement and is
recommending to The Orchard’s stockholders that they adopt and
approve the merger agreement. Under the terms of the merger
agreement, Dimensional Associates will acquire all of the common
stock of The Orchard not currently owned by it or its affiliates
for $2.05 per share and stockholders will also receive a contingent
right to receive additional consideration, under certain
circumstances post-closing if Dimensional Associates or any of its
affiliates enters into a commitment to sell at least 80% of The
Orchard’s voting securities or assets within six months of the
consummation of the merger. The $2.05 per share consideration
represents a 52% premium to the closing price of The Orchard’s
common stock on October 14, 2010, the day before Dimensional
Associates first presented its acquisition proposal to The
Orchard’s Board of Directors and a 21% premium to the closing price
of The Orchard’s common stock on March 15, 2010, the last trading
day prior to the announcement of the execution of a definitive
merger agreement.
The proposed transaction is expected to close in the third
quarter of this calendar year, subject to customary closing
conditions, including the absence of any material adverse change
affecting The Orchard’s business prior to closing. In addition, the
transaction is subject to the approval of the merger agreement by
holders of a majority of the outstanding shares of The Orchard’s
common stock not owned by Dimensional Associates or it's
affiliates, at a meeting of stockholders which will be held on a
date to be announced. If The Orchard’s stockholders approve the
merger, following the closing under the merger agreement, The
Orchard will be owned by Dimensional Associates and will return to
private company status.
Under the terms of the merger agreement, The Orchard’s Special
Committee will oversee a 30 day go-shop period ending April 14,
2010 to determine if there are any other interested buyers for The
Orchard. The Special Committee has retained Craig-Hallum Capital
Group LLC to coordinate its solicitation activities during the
go-shop period.
"The Special Committee of the Board has an obligation to our
shareholders to review and evaluate The Orchard's options for
creating shareholder value," said Michael Donahue, Chairman of the
Board and the Special Committee for The Orchard. "We have
undertaken an intensive review of The Orchard and its value, both
independently and with the assistance of a financial advisor. We
have negotiated a fair price, while also demanding the right to
solicit additional potential buyers. In order to ensure that our
shareholders concur with our conclusion, we have conditioned the
consummation of the merger on its approval by a majority of the
minority shareholders."
“Dimensional Associates has always been a strong supporter of
The Orchard and our management team in delivering services and
content to our clients and retail partners,” said Brad Navin, CEO
of The Orchard.
Dimensional Associates was the primary owner of The Orchard from
2003 until the reverse merger with DMGI in November 2007 and has
continued to be the majority owner. Daniel C. Stein, an executive
of Dimensional Associates, has been a member of The Orchard’s Board
of Directors since 2007.
About The Orchard(R)
Headquartered in New York and London with operations in 25
markets around the world, The Orchard (NASDAQ: ORCD) is an
independent music and video distributor specializing in
comprehensive digital strategies for content owners. Through
innovative global marketing and promotions, The Orchard drives
sales across more than 660 digital and mobile storefronts in 75
countries, as well as physical retailers across North America and
Europe. The company was founded in 1997 as a business partner that
fosters creativity and independence within its global clients. For
further information, please visit www.theorchard.com.
Forward Looking Statements
This release may contain certain forward-looking statements
regarding The Orchard's expectations regarding future events and
operating performance within the meaning of Federal Securities laws
that are subject to certain risks and uncertainties and involve
factors that may cause actual results to differ materially from
those projected or suggested. Factors that could cause actual
results to differ include, but are not limited to: the growth of
the digital music and video markets; the impact of the general
economic recession and management’s ability to capitalize on our
business strategy and take advantage of opportunities for revenue
expansion; satisfaction of the conditions of the pending merger
with Dimensional Associates, including the approval of a majority
of the stockholders unaffiliated with Dimensional Associates; the
costs and expenses associated with the pending merger; contractual
restrictions on the conduct of The Orchard’s business included in
the merger agreement; the potential loss of key personnel,
disruption of our sales and operations or any impact on The
Orchard’s relationships with third parties as a result of the
pending merger; any delay in consummating the proposed merger with
Dimensional Associates or the failure to consummate the
transaction; and the outcome of, or expenses associated with, any
litigation which may arise in connection with the pending merger
with Dimensional Associates. Undue reliance should not be placed on
such forward-looking statements as they speak only as of the date
hereof, and The Orchard undertakes no obligation to update these
statements to reflect subsequent events or circumstances except as
may be required by law. Additional factors that could cause actual
results to differ materially from those projected or suggested in
any forward-looking statements are contained in The Orchard's most
recent periodic reports on Form 10-K and Form 10-Q that are filed
with the Securities and Exchange Commission (the “SEC”). The
Orchard intends to file with the SEC a preliminary proxy statement
in connection with the proposed merger and to mail a definitive
proxy statement and other relevant documents to The Orchard’s
stockholders. Stockholders of The Orchard and other interested
persons are advised to read, when available, The Orchard’s
preliminary proxy statement, and amendments thereto, and definitive
proxy statement in connection with The Orchard’s solicitation of
proxies for the stockholders meeting to be held to approve the
merger and the merger agreement because these proxy statements will
contain important information about The Orchard, Dimensional and
the proposed merger. The definitive proxy statement will be mailed
to stockholders as of a record date to be established for voting on
the merger and the merger agreement. Stockholders will also be able
to obtain a copy of the preliminary and definitive proxy
statements, without charge, once available, at the SEC’s internet
site at http://www.sec.gov or by directing a request to: Attention:
Secretary, The Orchard Enterprises, Inc., 23 East 4th Street, 3rd
Floor, New York, New York 10003.
The Orchard and its directors and executive officers may be
deemed participants in the solicitation of proxies from The
Orchard’s stockholders. A list of the names of those directors and
the executive officers and descriptions of their interests in The
Orchard is contained in The Orchard’s proxy statement dated April
29, 2009, and The Orchard’s Form 8-K dated February 22, 2010, which
are filed with the SEC, and will also be contained in The Orchard’s
proxy statement when it becomes available. The Orchard’s
stockholders may obtain additional information about the interests
of its directors and executive officers in the merger by reading
The Orchard’s proxy statement when it becomes available.
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