RLJ Entertainment Inc (NASDAQ: RLJE)
RLJ Entertainment is having an incredible day in the market today, and for good reason. The company has entered into a definitive agreement with Digital Entertainment Holdings LLC. Today, we’ll talk about the details of the agreement, how the stock reacted to the news, and what we can expect to see moving forward. So, let’s get right to it…
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RLGE Enters Agreement With Digital Entertainment Holdings (AMC)
As mentioned above, RLJ Entertainment is soaring in the market today after announcing that it has entered into a definitive investment agreement with Digital Entertainment Holdings LLC. While you may not recognize the name Digital Entertainment Holdings, you will likely recognize it’s parent company, AMC Networks Inc.
Under the terms of the agreement, AMC will be providing a couple of large loans to RLJE. The first of these loans will be a $60 million loan with a 7-year term. The second of these loans will be a $5 million loan with a term of 1 year. On top of the loans, the company has agreed to grant AMC warrants to purchase a massive number of shares. In fact, the total number of shares covered under these warrants will be at least 20 million.
Another big part of this agreement lies in the management of RLJE. According to the agreement, the company has agreed to give AMC the right to designate two directors to the company’s board of directors. Of course, this will take place after the closing date on the deal. Finally, upon the full exercise of the AMC warrants, RLJ Entertainment has agreed to give AMC the right to designate at least a majority of the company’s board of directors.
While this deal, as always, is conditional, based on a vote and other conditions that need to be met, it looks like it will go through relatively simply. Investors are clearly excited based on what we’re seeing in the market today. Also, certain directors, executives, and principal stockholders in the company have already agreed to vote to approve the transaction.
How The Stock Is Reacting To The News
As investors, one of the first lessons that we learn is that it’s important to watch the news. After all, the news moves the market. Any time positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company. Adversely, negative news will lead to declines. In this case, the news released with regard to RLJE was overwhelmingly positive. After all, this definitive investment agreement reads more like a partnership agreement. With the other party being AMC, a widely respected leader in entertainment, things are looking up for the stock. Currently (2:02), RLJ Entertainment stock is trading at $3.23 per share after a gain of $1.27 per share (64.88%) thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from RLJE. The new agreement between the company and AMC is likely to lead to incredible gains in the long run. The synergies between the companies are clear, and the support that AMC can offer with regard to growth is tremendous. All in all, I’m expecting to see gains ahead.
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What Do You Think?
Where do you think RLJE is headed moving forward? Join the discussion at TalkTRENDZ!
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