Archive for the ‘Vertical: Entertainment’ Category

Zynga Valued Over $7 Billion, Will The Company Go Public?

Wednesday, February 16th, 2011

Zynga Inc., the social gaming company, has already raised $360 million from venture capital and investment firms, not including an undisclosed amount from Google. The company recently began raising another $250 million in a new round of funding in hopes to value the company between $7 billion and $9 billion. By publishing titles like FarmVille and CityVille, which have 96 million and 51 millions active players, respectively, the company has made $850 million in revenue, and $400 million in profit. Hiring Dave Wehner from Allen & Co. as their chief financial officer last year has increased interest from potential investors who believe the company will go public soon. Many investors wish to get a piece of the company through privately negotiated deals with current or former employes, or by investing in limited liability companies. Larry Albukerk, managing director of the San Francisco based investment firm, EB Exchange Funds, says he has gotten many requests from wealthy clients hoping to invest in Zynga even before it goes public.

Social-gaming company Zynga Inc. is holding discussions with potential investors about raising around $250 million in new funding in a deal that could value the three-year-old start-up at between $7 billion and $9 billion, according to people familiar with the matter.

In April Zynga filed papers authorizing the issuance of new stock that valued the company at about $4 billion.

The discussions are the latest sign of the investor frenzy around a small class of large, fast-growing Web start-ups focused on the consumer market that have yet to go public. Facebook Inc., Twitter Inc. and the group-buying service Groupon Inc. have all recently raised large rounds of funding at sky-high valuations, with some recent discussions concerning Twitter valuing the micro-blogging service at $8 billion to $10 billion. The business social network Linked In Corp. and Internet radio service Pandora Media Inc. recently filed to go public.

Any decision to raise a fresh round of funding by San Francisco-based Zynga, which sells virtual goods in Facebook games, could be weeks away and may not happen, said the people familiar with the matter. Although valuations of the most successful Internet start-ups are getting pricey—topped by Facebook’s eye-popping $50 billion value in its latest round of funding—part of Zynga’s appeal is that it has tapped into a lucrative method of making money online.

The company makes an addictive array of games like FarmVille and CityVille in which people spend real money to buy virtual goods, such as seeds to produce crops in FarmVille and virtual cash to construct buildings in CityVille. Using the social connections people maintain on Facebook to spread virally, City Ville and Farmville now have 96 million and 51 million active monthly players, respectively, according to AppData.com, which tracks Facebook statistics.

The huge audience for its games—Zynga has a total of 275 million active monthly users across all its titles—helped Zynga generate about $400 million in profit last year on approximately $850 million in revenue, said another person familiar with its finances. A spokeswoman for Zynga declined to comment.

The company has no immediate need for financing because it is profitable and has raised a sizable war chest already, several people familiar with the matter said. Zynga has said it has raised $360 million from a range of venture-capital and other investment firms. That figure doesn’t include an undisclosed amount from search-giant Google Inc.

Zynga is in conversations with at least one major bank about raising financing, as well as mutual funds and others, according to people familiar with the matter.

According to a person familiar with the company, Zynga has been barraged with interest from potential investors, who view the company as a likely candidate to go public within the next one to two years.

Zynga last year hired investment banker Dave Wehner from Allen & Co. as its chief financial officer in a move that was seen as readying itself for an eventual initial public offering.

One financing method Zynga will likely avoid is a “special-purpose vehicle” akin to the one Goldman Sachs Group Inc. created to allow wealthy foreign clients to invest in Facebook during the social-networking company’s recent round of financing. Goldman teamed up with Russian Internet investment firm Digital Sky Technologies to invest $500 million in Facebook in January and raised an additional $1 billion through the special-purpose vehicle.

But Goldman decided against letting U.S. clients invest in Facebook because it feared it could run afoul of certain regulations relating to private placements of stock. The episode has soured people on structuring such deals, and Zynga isn’t seriously looking at that option, according to a person familiar with the matter.

Zynga could use any new financing to help fuel its torrid acquisition pace. The company has averaged one acquisition a month for the past nine months, most of them involving smaller game developers. The company hired more than 800 people last year and now has roughly 1,500 employees.

The heat around Zynga is creating a frenzy among investors who are trying to get a piece of the company in the private-company share market, otherwise known as the secondary market. Some investors can purchase stock of private companies by investing in limited liability companies created to purchase such shares, or through deals brokered with current or former employees.

Larry Albukerk, the managing director of San Francisco-based investment firm EB Exchange Funds, has already brokered tens of millions of dollars of such deals for shares of hot private Internet start-ups such as Facebook, LinkedIn and Twitter. He finds employees who want to sell and then connects them to interested buyers, helping to negotiate the deal at an agreed-upon price.

Mr. Albukerk said he has gotten calls about Zynga lately from more than 100 wealth managers and professional investors. After Facebook, Mr. Albukerk said, Zynga is the hottest company. “Guys call me up and tell me just go out and get it,” he said. “The number of requests and activity is crazy compared to last year.”

Six Flags in Bankruptcy!

Wednesday, March 10th, 2010

March 10, 2010

Six Flags filed bankruptcy at the end of 2008, at which time CFO Jeff Speed assured investors the bankruptcy would only take 4-5 months.  Over one year later, the company is still contending against its creditors.  The company operates 20 theme parks in the United States and has been a headache for its largest shareholder Daniel Snyder, owner of the Washington Redskins.

According to Bloomberg, “The New York-based owner of 20 theme parks filed a petition in U.S. Bankruptcy Court in Wilmington, Delaware, on June 13, listing assets of $3 billion and debt of $2.4 billion as of Dec. 31. Six Flags is seeking court approval of a prearranged reorganization plan to cut its debt by about $1.8 billion and to eliminate more than $300 million in preferred stock obligations, the company said in a statement.

Emerging from bankruptcy before the end of the year is an “aggressive” estimate, said Joseph Stauff, an analyst at CRT Capital Group LLC in Stamford, Connecticut.

Under the proposed plan, senior secured lenders would receive about 90 percent of the stock in the reorganized company, while unsecured bondholders would get about 10 percent, CreditSights Inc. analysts Chris Snow and Frank Lee wrote in a report. Six Flags offered unsecured bondholders 85 percent in a recent debt-for-equity exchange, they said.

Six Flags’s largest shareholders include Chairman Daniel Snyder, owner of the National Football League’s Washington Redskins. He owned 5.4 percent of Six Flags, or 5.28 million shares, as of October 2007, according to data compiled by Bloomberg.

Snyder won a proxy fight in late 2005, ousted then-Chief Executive Officer Kieran Burke and appointed himself, now-CEO Mark Shapiro and director Dwight Schar to the board. Under Shapiro, the company has sought to clean up the parks and add family-focused attractions, such as Thomas the Tank Engine and Looney Tunes.”

According to Maureen Bavdeck of Reuters, “Warring creditors of Six Flags Inc (SIXFQ.OB) take their battle for the theme park operator before a bankruptcy judge on Monday, with the outcome likely hanging on how much debt the company can afford.

Holders of senior bonds will tout their plan, which leaves them in control of the company, as the best way to bring Six Flags out of bankruptcy with a manageable amount of debt.

Junior bondholders are likely to argue that the operator of 19 regional parks can borrow more and pay all creditors what they are owed. Their plan would leave them in control of the company.

The junior bondholders will also argue the senior bondholder’s plan cannot be confirmed because they voted to reject it.

The trial is scheduled to last two weeks, with potentially dozens of witnesses taking the stand and thousands of documents entered as exhibits with the aim of convincing Judge Christopher Sontchi of the company’s true value and each plan’s viability.

However, the hearings will go forward without Six Flags’ Chairman Dan Snyder, who will not testify, according to the company’s attorney.

Senior bondholders, known as SFO Noteholders, have drafted a plan that has been adopted by the company. Led by Avenue Capital Group, which invests in financially troubled companies, the plan will fund the exit from bankruptcy with some $830 million in debt. The SFO Noteholders would also invest $450 million in equity.

Under the SFO Noteholders’ plan, most secured claims would be paid in full. Junior bondholders, known SFI Noteholders, would get about 7.3 percent of the reorganized company’s equity and the rest would go to holders of SFO notes and management.

The Avenue Capital-led group has been arguing that is only one plan because the SFI Noteholders could not finance their plan. “This long-promised plan remains just that — an unfilled promise,” SFO Noteholders said in court papers of the alternative plan.

That changed on Friday, when the SFI Noteholders informed the court they had committed funding for their plan, which includes $1.17 billion of debt and $582 million of equity.

The SFI Noteholders proposed paying everyone senior of their own debt in full and taking control of the company.

With the committed financing, the SFI Noteholders will be able to argue the market has spoken about the value of the company. As a result, the outcome may hinge on more technical issues about the structure of the company’s plan, voting procedures and certain assets that attach to SFI bonds.

While the trial plays out in public, behind-the-scenes talks are likely to continue, although the burden is on the SFI Noteholders to craft an offer to win over Avenue Capital.

Six Flags might seem to be an unlikely target of such an expensive tussle. The company has largely been unprofitable for more than a decade.

However, some of the debt that sunk the company was incurred to build bigger and better attractions and roller coasters, which now will protect the company from potential competition.

In addition, a sluggish economic recovery has made the regional theme parks an affordable “stay-cation” alternative to long-distance holidays for cash-strapped American families.

The case is In re: Premier International Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-12019.”

Icahn Back in Action – Lion’s Gate

Friday, February 19th, 2010

According to Bloomberg’s Michael White and Andy Fixmer , Carl Icahn is Seeking to boost his stake in Lion’s Gate Entertainment to 30%:

“Carl Icahn offered to buy as many as 13.2 million shares of Lions Gate Entertainment Corp. for $6 each, a move that would make him the largest shareholder at almost 30 percent.

The offer by Icahn, who owns 19 percent, also includes a condition seeking to block Vancouver-based Lions Gate, maker of the “Saw” films, from undertaking acquisitions of more than $100 million, according to a statement from the investor today.

The offer would move Icahn, who turns 74 today, ahead of Lions Gate board member Mark Rachesky, currently the largest shareholder at 19.7 percent, according to data compiled by Bloomberg. Icahn may be seeking to prevent the studio from buying Metro-Goldwyn-Mayer Inc. or Walt Disney Co.’s Miramax, which are for sale, said David Joyce, an analyst at Miller Tabak & Co. in New York.

“Icahn did not favor their buying TV Guide Network last year, as they were using a lot of credit line capacity to do so,” Joyce said in an e-mail.

Icahn, who turns 74 today, said in the statement that he won’t withdraw his tender offer if a change-of-control provision in the company’s loan agreements triggers a default or acceleration in payments. A call to his New York office wasn’t returned.

If Icahn triggers a default, the studio could obtain a waiver from lenders, prepay its loan or eliminate the senior revolving credit facility, according to the statement from the investor.

Default Risk

Lions Gate had drawn $12 million of its $340 million secured revolving credit facility at the end of 2009, according to a Feb. 9 regulatory filing. Lenders can declare a default if a shareholder passes 20 percent ownership, or if board control changes in certain ways.

The studio, run from Santa Monica, California, urged shareholders in a statement not to take any action until the company makes a recommendation on Icahn’s offer.

Lions Gate gained 25 cents to $5.48 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have fallen 5.7 percent this year.

Rachesky is co-founder and president of New York-based MHR Fund Management LLC.

Lions Gate films have taken in $70.4 million in U.S. ticket sales this year, according to Box Office Mojo, a film researcher based in Sherman Oaks, California. The company has released three films and has seven others planned for this year, according to the Box Office Mojo Web site.

Morgan Stanley is advising Lions Gate on the tender offer and Wachtell, Lipton, Rosen & Katz is legal adviser, the studio said.”

~Sourced by I.S.

Blackstone Negotiates Deal for Anheuser Busch Theme Parks

Sunday, November 8th, 2009

Blackstone Logo

On October 7, 2009, Blackstone Capital Partners V L.P. entered into a definitive agreement with Anheuser-Busch InBev (NYSE: BUD) to purchase its entertainment business for USD 2.7 billion.  Busch Entertainment corporation currently operates 10 entertainment parks across the United States with 25 million annual visitors.  Parks include three Seaworld parks in Orlando, San Antonio, and San Diego, two Busch Gardens parks in Tampa and Williamsburg, and other family entertainment locations in the U.S.

Blackstone already owns Madame Tussauds, as well as a stake in Universal Studios in Orlando.

This deal was one of the largest announced this year following the credit crisis, and will help Anheuser-Busch Inbev pay down the debt it accumulated in its July of 2009 merger.  The merger of InBev and Anheuser-Busch last year created one of the world’s five largest consumer products companies globally.  At the time of the merger, the combined company was projected to have pro forma revenues of $36.4 billion and EBITDA of $10.7 billion.

Anheuser-Busch Inbev also sold its South Korean brewery for $1.8 billion to KKR earlier this year to pay down the acquisition debt incurred from the earlier merger.

According to Anheuser’s PR department:

Carlos Brito, Chief Executive Officer of Anheuser-Busch InBev, said: “Busch Entertainment Corporation is a high performing asset with a world-class management team, but not a core business for Anheuser-Busch InBev. We are pleased to have reached an agreement with a buyer who understands the industry and has a strategic vision for the business. The sale of BEC represents another important milestone in our commitment to de-leverage the company and will also allow us to continue to focus on our core brewing business.

“The Blackstone Group is a preeminent private equity firm and we are very happy to have reached an agreement with Blackstone. We have great respect for BEC’s management and employees and know they will continue to prosper under Blackstone’s ownership.”

Joseph Baratta, Senior Managing Director of The Blackstone Group, said: “We have long admired the Busch Entertainment Corporation parks. They are the premier collection of entertainment parks in the United States and offer a unique family experience. We are pleased to have the opportunity to acquire this business. We have deep sector experience and look forward to working with the excellent BEC management team to continue to invest in and grow the company.”

The financing for the acquisition consisted of senior secured credit facilities and mezzanine debt.  The senior credit facilities were provided by BofA Merrill Lynch, Barclays Capital, Deutsche Bank Securities Inc., Goldman Sachs Loan Partners and Mizuho Corporate Bank Ltd. The mezzanine financing was provided by Goldman Sachs Mezzanine Partners and funds managed by GSO Capital Partners LP.

Simpson Thacher & Bartlett LLP acted as legal counsel to Blackstone.

J.P. Morgan and Lazard acted as financial advisors to Anheuser-Busch InBev.

Sullivan & Cromwell LLP acted as legal counsel to Anheuser-Busch InBev.

Please see Anheiser-Busch press release…