NEW YORK, May 17, 2021 /PRNewswire/ -- Redbox, America's
destination for affordable new-release movies and entertainment,
announced today that it has entered into a definitive agreement to
combine with Seaport Global Acquisition Corp. (Nasdaq: "SGAM",
"SGAMU," and "SGAMW") ("Seaport Global Acquisition"), a publicly
traded special purpose acquisition company. The transaction will
result in Redbox becoming a publicly traded company with an
enterprise value of $693 million.
Upon closing, Redbox's common stock is expected to trade on Nasdaq
under the ticker symbol RDBX.
![Seaport Global Acquisition Corp. Seaport Global Acquisition Corp.](https://mma.prnewswire.com/media/1511505/Seaport_Global_Acquisition_Corp.jpg)
As part of the transaction, all existing shareholders will roll
100% of their equity in Redbox, including funds managed by
affiliates of Apollo Global Management, Inc. (together with its
consolidated subsidiaries, "Apollo") (NYSE: APO), which acquired
Redbox through the acquisition of Outerwall in September 2016. Upon close of the combination,
these existing shareholders will hold approximately 59% of the
outstanding common stock.
An Established Leader Poised to Capitalize on Favorable
Business Trends
Redbox, a leader in quality home entertainment for nearly two
decades, has been undergoing a transformation to offer customers
and partners a multi-product experience across physical and digital
channels. Capital raised from the transaction will be used to pay
down debt as well as invest in innovation and accelerate this
transformation, which spans multiple entertainment windows and
business models, including film distribution, transactional video
on demand (TVOD), premium video on demand (PVOD), ad-supported
linear and on demand (AVOD). Redbox is also building technology to
offer subscription on demand (SVOD) services as a third-party
retailer.
Today Redbox serves a differentiated and value-oriented customer
base, with more than 39 million loyalty members. Through this
transaction, Redbox will be well positioned to build on its legacy
DVD rental business, accelerate its digital transformation and
capture a significant and growing market opportunity.
Redbox has a strong foundation for long-term growth and success,
and with support from Seaport Global Acquisition, will be better
equipped to take advantage of its competitive value drivers, which
include:
Strategic Rationale Highlights
- Strong Legacy DVD Rental Business Provides Significant
Growth Opportunity. Redbox serves its customers through 40,000
kiosks across more than 150 retail partners with the lowest priced
rentals for new theatrical releases. Approximately 70% of these
customers identify as late adopters of new technology, providing
Redbox with a unique opportunity to convert customers to its
digital platforms over time.
- Uniquely Positioned to Meet Growing Market Demand.
Today's audiences are fueling an unprecedented demand for premium
quality on-demand content that is both through subscription and
free with advertising. In fact, the AVOD and SVOD markets are
expected to grow to a combined $44
billion by 2022. With Free on Demand and Free Live TV,
Redbox is building an affordable multi-product ecosystem in a large
and fast-growing total addressable market. As the shift to digital
intensifies, Redbox's existing AVOD and future SVOD businesses are
positioned to capture significant upside potential.
- Expansive Marketing Reach and Scaled Loyalty Program.
The Company reaches more than 46 million consumers via email, more
than 43 million mobile app downloads, more than 7 million followers
on social media and 6 million SMS subscribers. Through the Redbox
Perks loyalty program, the Company engages and incentivizes 39
million members, resulting in higher average revenue per user and
reduced churn.
- Redbox Entertainment Creates Exclusive Content and Drives
Incremental Margin Growth. The Company offers exclusive and
original content through Redbox Entertainment, a new content
acquisition and production division, which is expected to be a key
driver of future growth. To date, Redbox has released 16 titles
through Redbox Entertainment and has 26 more titles committed for
future release. The Company is targeting to ramp to more than 36
new releases per year to grow its exclusive content library.
- Attractive Financial Profile Represents Solid Foundation for
Future Growth and Value Creation. The Company generated
$114 million of Adjusted EBITDA in
2020, despite limited new theatrical content and lockdowns stemming
from the COVID-19 pandemic. Redbox converts on average over 80% of
its Adjusted EBITDA directly into free cash flow and expects strong
growth of Adjusted EBITDA and free cash flow through 2023, driven
by an increase of theatrical content as releases return to
historical levels as well as digital revenue
growth.
- Proven Leadership Team: Following the completion of the
transaction, Galen Smith, who has
served as Redbox's CEO since 2016, will continue to lead the
Company along with the existing management team.
Management Comments
Galen Smith, CEO of Redbox,
said:
"Redbox has built one of the most trusted brands in
entertainment by consistently delivering on three core tenets:
value, convenience and simplicity. Today's announcement brings us
one step closer to building an entertainment ecosystem and
underscores our steadfast commitment to enhancing our customer
value proposition. We are pleased that Seaport Global Acquisition
shares our confidence in the opportunities ahead and are grateful
for their team's expertise and support. In Redbox's next chapter as
a public company, we will be focused on delivering a
differentiated, affordable entertainment experience for our
millions of loyal customers, and seeking profitable growth for
shareholders."
Stephen Smith, Chairman and
CEO of Seaport Global Acquisition, said:
"We've long admired Redbox's team for the incredible
reputation they've established in the industry, as well as the
innovative, scalable business model they've built. Over the past
year in particular, the resilience Redbox has demonstrated through
the challenges associated with the COVID-19 pandemic reaffirms our
confidence in the value and growth potential of the business. We
are thrilled to partner with Redbox's team as they work to
transform in-home entertainment and deliver long-term
growth."
Transaction Overview
The transaction has been unanimously approved by the board of
directors of Seaport Global Acquisition and Redbox and is expected
to close in the third quarter of 2021, subject to the satisfaction
of customary closing conditions.
The transaction, which values Redbox at an enterprise value of
$693 million, will be funded by a
combination of $145 million of cash
held in the trust account of Seaport Global Acquisition, and a
fully committed PIPE of $50 million
led by Ophir Asset Management. Strategic investors include
global content leader Lionsgate (LGF.A, LGF.B), Legendary
Entertainment, Screenvision and Basil
Iwanyk, producer of the John Wick series and founder
of Thunder Road Films. Upon completion of the transaction, Redbox
expects to have approximately $209
million in cash that will be used to pay down existing debt
and fund digital expansion, content acquisition and marketing
initiatives. All references to cash on the balance sheet, available
cash from the trust account and retained transaction proceeds are
subject to any redemptions by the public stockholders of Seaport
Global Acquisition and payment of transaction expenses.
Additional information about the proposed transaction, including
a copy of the merger agreement and investor presentation, will be
provided in a Current Report on Form 8-K to be filed by Seaport
Global Acquisition today with the Securities and Exchange
Commission ("SEC") and available at www.sec.gov.
Advisors
B. Riley Securities is acting as capital markets advisor to
Seaport Global Acquisition and lead placement agent on the PIPE.
BTIG, LLC is acting as lead financial advisor and capital markets
advisor to Redbox. Moelis & Company LLC is also serving as a
financial advisor to Redbox. Apollo Global Securities and BTIG, LLC
also served as placement agents on the PIPE.
Paul Hastings LLP is acting as legal advisor to Seaport Global
Acquisition. Paul, Weiss, Rifkind, Wharton & Garrison LLP
is acting as legal advisor to Redbox. Kirkland & Ellis LLP
acted as legal advisor to the placement agents.
Conference Call Information
Redbox and Seaport Global Acquisition will host a joint investor
conference call to discuss the transaction and review the investor
presentation today, Monday, May 17,
2021, at 7:00 a.m. CT. The
conference call can be accessed by dialing +1 877-876-9176 within
the U.S. or +1 785-424-1670.
A webcast of the conference call, associated presentation
materials, and the conference call replay will be accessible on
Redbox's investor relations website at
https://www.redbox.com/investor-relations and on Seaport Global
Acquisition's news page at
https://seaportglobalacquisition.com/news/.
About Redbox
Redbox is America's leading destination
for new-release movies and entertainment with more ways to watch
than any other home entertainment provider. Redbox delivers value
and convenience through unparalleled choice across content,
platforms, rental and purchase options, and price points. The
company's expanding streaming offering includes digital rental and
purchase as well as free live TV and free On Demand content, and
complements Redbox's nationwide footprint of more than 40,000
entertainment kiosks, conveniently located where consumers already
shop. Redbox Entertainment, a new content acquisition and
production division, has further transformed Redbox into a
multi-channel content provider. For more information, visit
redbox.com.
About Seaport Global Acquisition Corp.
Seaport Global
Acquisition Corp. is a blank check company formed for the purpose
of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with
one or more businesses. The Company is led by Chairman and Chief
Executive Officer, Stephen C. Smith,
and Chief Financial Officer, Michael
Ring. The Company is affiliated with Seaport Global
Holdings, a full-service, mid-sized independent investment bank
that offers capital markets advisory, sales, trading and research
services.
Redbox Non-GAAP
Reconciliation
|
$ in
MM
|
2020A
|
Net
Income/(Loss)
|
$(90)
|
Depreciation and
other
|
65
|
Amortization of
goodwill and other intangible assets
|
93
|
Interest and other
expense, net
|
33
|
Income tax expense /
(benefit)
|
(26)
|
Non-core and
non-recurring expenses
|
39
|
Adjusted
EBITDA
|
$114
|
Important Information About the Business Combination and
Where to Find It
In connection with the proposed business
combination, Seaport Global Acquisition intends to file preliminary
and definitive proxy statements with the Securities and Exchange
Commission ("SEC"). The preliminary and definitive proxy statements
and other relevant documents will be sent or given to the
stockholders of Seaport Global Acquisition as of the record date
established for voting on the proposed business combination and
will contain important information about the proposed business
combination and related matters. Stockholders of Seaport Global
Acquisition and other interested persons are advised to read, when
available, the preliminary proxy statement and any amendments
thereto and, once available, the definitive proxy statement, in
connection with Seaport Global Acquisition's solicitation of
proxies for the meeting of stockholders to be held to approve,
among other things, the proposed business combination because the
proxy statement will contain important information about Seaport
Global Acquisition, Redbox and the proposed business combination.
When available, the definitive proxy statement will be mailed to
Seaport Global Acquisition's stockholders as of a record date to be
established for voting on the proposed business combination.
Stockholders will also be able to obtain copies of the proxy
statement, without charge, once available, at the SEC's website at
www.sec.gov/ or by directing a request to: Seaport Global
Acquisition Corp., 360 Madison Avenue, 20th Floor, New York, NY 10017, Attention: Secretary,
telephone: (212) 616-7700. The information contained on, or that
may be accessed through, the websites referenced in this
communication is not incorporated by reference into, and is not a
part of, this communication.
Participants in the Solicitation
Seaport Global
Acquisition, Redbox and their respective directors and executive
officers may be deemed participants in the solicitation of proxies
from Seaport Global Acquisition's stockholders in connection with
the business combination. Seaport Global Acquisition's stockholders
and other interested persons may obtain, without charge, more
detailed information regarding the directors and officers of
Seaport Global Acquisition in Seaport Global Acquisition's final
prospectus filed with the SEC on December 1,
2020 in connection with Seaport Global Acquisition's initial
public offering. Information regarding the persons who may, under
SEC rules, be deemed participants in the solicitation of proxies to
Seaport Global Acquisition's stockholders in connection with the
proposed business combination will be set forth in the proxy
statement for the proposed business combination when available.
Additional information regarding the interests of participants in
the solicitation of proxies in connection with the proposed
business combination will be included in the proxy statement that
Seaport Global Acquisition intends to file with the SEC.
No Offer or Solicitation
This communication shall
neither constitute an offer to sell or the solicitation of an offer
to buy any securities, nor shall there be any sale of securities in
any jurisdiction in which the offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction.
Forward-Looking Statements
This communication includes
certain statements that are not historical facts but are
forward-looking statements for purposes of the safe harbor
provisions under the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements generally are
accompanied by words such as "believe," "may," "will," "estimate,"
"continue," "anticipate," "intend," "expect," "should," "would,"
"plan," "predict," "potential," "seem," "seek," "future,"
"outlook," and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters.
All statements, other than statements of present or historical fact
included in this communication, regarding Seaport Global
Acquisition's proposed business combination with Redbox, Seaport
Global Acquisition's ability to consummate the transaction, the
benefits of the transaction and the combined company's future
financial performance, as well as the combined company's strategy,
future operations, estimated financial position, estimated revenues
and losses, projected costs, prospects, plans and objectives of
management are forward-looking statements. These statements are
based on various assumptions, whether or not identified in this
communication, and on the current expectations of the respective
management of Seaport Global Acquisition and Redbox and are not
predictions of actual performance. These forward-looking statements
are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on as, a guarantee, an assurance,
a prediction or a definitive statement of fact or probability.
Actual events and circumstances are difficult or impossible to
predict and will differ from assumptions. Many actual events and
circumstances are beyond the control of Seaport Global Acquisition
or Redbox. Potential risks and uncertainties that could cause the
actual results to differ materially from those expressed or implied
by forward-looking statements include, but are not limited to,
changes in domestic and foreign business, market, financial,
political and legal conditions; the inability of the parties to
successfully or timely consummate the business combination,
including the risk that any regulatory approvals are not obtained,
are delayed or are subject to unanticipated conditions that could
adversely affect the combined company or the expected benefits of
the business combination or that the approval of the stockholders
of Seaport Global Acquisition or Redbox is not obtained; failure to
realize the anticipated benefits of business combination; risk
relating to the uncertainty of the projected financial information
with respect to Redbox; the amount of redemption requests made by
Seaport Global Acquisition's stockholders; the overall level of
consumer demand for Redbox's products; general economic conditions
and other factors affecting consumer confidence, preferences, and
behavior; disruption and volatility in the global currency,
capital, and credit markets; the financial strength of Redbox's
customers; Redbox's ability to implement its business and growth
strategy; changes in governmental regulation, Redbox's exposure to
litigation claims and other loss contingencies; disruptions and
other impacts to Redbox's business, as a result of the COVID-19
pandemic and government actions and restrictive measures
implemented in response, and as a result of the proposed
transaction; Redbox's ability to retain and expand customer
relationships; competitive pressures from many sources, including
those using other distribution channels, having more experience,
larger or more appealing inventory, better financing, and better
relationships with those in the physical and streaming movie and
television industries; developments in the home video distribution
market as newer technologies and distribution channels compete for
market share, and Redbox experiences a secular decline in the
physical rental market; the impact of decreased quantity and
quality of movie content availability for physical and digital
distribution due to changes in quantity of new releases by studios,
movie content failing to appeal to consumers' tastes, increased
focus on digital sales and rentals, and other general
industry-related factors; the termination, non-renewal or
renegotiation on materially adverse terms of Redbox's contracts or
relationships with one or more of its significant retailers or
studios; Redbox's inability to obtain licenses to digital movie or
television content for home entertainment viewing; Redbox's
reliance upon a number of partners to make its digital service
available on their devices; unforeseen costs and potential
liability in connection with content Redbox acquires, produces,
licenses and/or distributes through its service; the impact of the
COVID-19 pandemic on Redbox's business, results of operations and
financial condition, its suppliers and customers and on the global
economy; the impact that global climate change trends may have on
Redbox and its suppliers and customers; Redbox's ability to protect
patents, trademarks and other intellectual property rights; any
breaches of, or interruptions in, Seaport Global Acquisition's
information systems; fluctuations in the price, availability and
quality of electricity and other raw materials and contracted
products as well as foreign currency fluctuations; changes in tax
laws and liabilities, tariffs, legal, regulatory, political and
economic risks.
More information on potential factors that could affect Seaport
Global Acquisition's or Redbox's financial results is included from
time to time in Seaport Global Acquisition's public reports filed
with the SEC, including its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, and Current Reports on Form 8-K as well as
the preliminary and the definitive proxy statements that Seaport
Global Acquisition intends to file with the SEC in connection with
Seaport Global Acquisition's solicitation of proxies for the
meeting of stockholders to be held to approve, among other things,
the proposed business combination. If any of these risks
materialize or Seaport Global Acquisition's or Redbox's assumptions
prove incorrect, actual results could differ materially from the
results implied by these forward-looking statements. There may be
additional risks that neither Seaport Global Acquisition nor Redbox
presently know, or that Seaport Global Acquisition and Redbox
currently believe are immaterial, that could also cause actual
results to differ from those contained in the forward-looking
statements. In addition, forward-looking statements reflect Seaport
Global Acquisition's and Redbox's expectations, plans or forecasts
of future events and views as of the date of this communication.
Seaport Global Acquisition and Redbox anticipate that subsequent
events and developments will cause their assessments to change.
However, while Seaport Global Acquisition and Redbox may elect to
update these forward-looking statements at some point in the
future, Seaport Global Acquisition and Redbox specifically disclaim
any obligation to do so, except as required by law. These
forward-looking statements should not be relied upon as
representing Seaport Global Acquisition's or Redbox's assessments
as of any date subsequent to the date of this communication.
Accordingly, undue reliance should not be placed upon the
forward-looking
statements.
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