Private equity companies have emerged as the most likely to buy Line Of Duty distributor Kew Media Group (KMG), which saw its shares fall another 20% yesterday after the company defaulted on its credit facility.
Kew initiated a strategic review of the business last week, admitting the company could be split up or sold and confirming the exit of its chief financial officer Geoff Webb, who left the business after some of his reports had contained “inaccurate information regarding working capital,” according to the Canadian firm.
The Peter Sussman and Steven Silver-led outfit then announced on Monday that lenders had provided notice of an event of default under its senior credit facilities, which Kew said was due to the “inaccurate information” provided to them by the former CFO.
The senior lenders, Kew added, “had not taken action to enforce or accelerate” following the default and the Line Of Duty distributor said it “continues to discuss its short-term liquidity requirements.”
That did not placate markets however, with shares falling a further 20% yesterday to C$1.53 ($1.17), down from the C$6.14 they were worth six weeks ago, prior to disappointing third-quarter figures released in mid-November.
The slump values Kew – which owns companies including Content Media Corp, Bristow Global Media, Frantic Films, TCB Media Rights and Sienna Films – at just over C$21m.
Sources have told TBI that the most likely buyers of KMG will be private equity investors, which will likely take the outfit off the stock market and restructure its operations.
Others have suggested individual companies could look to buy themselves out, although it is unclear whether Kew’s financial structure could allow that.
Kew, which has named former Metro Goldwyn Mayer exec Michael Corrigan as interim CFO, has already received “expressions of interest” from a number of parties with a special committee of independent directors examining options for the company going forwards.
That could include a sale of part or all of the company, a merger or new capital initiatives, it said, adding that it “is actively engaging in discussions regarding a number of potential transactions.”
Kew was launched by Sussman and Silver in 2017, using an investment vehicle to acquire Content Media Corp and six other producers for a combined C$104.1m. It has since added TCB and Sienna to its ranks and also has stakes in Two Rivers Media and Awesome Media & Entertainment.
The company has offices in LA, New York, London, Sydney and Toronto, with 2,000 hours of content developed and produced each year. It also oversees a library in excess of 14,000 hours.
Kew has been contacted for comment.