Cinram International Income Fund announced that Najafi Companies plans to acquire its assets and businesses in the United States, Canada, the United Kingdom, France and Germany.
Additionally, the company has filed for reorganization protection under the Companies’ Creditors Arrangements Act (Canada) in the Ontario Superior Court. Concurrently with that filing, Cinram’s US subsidiaries filed under Chapter 15 of the United States Bankruptcy Code in the District of Delaware.
For more information visit: www.cinram.com
Unedited press release follows:
Najafi Companies to Acquire Assets and Business of Cinram
TORONTO, June 25, 2012 – Cinram International Income Fund (TSX: CRW.UN) (together with its subsidiaries, “Cinram” or the “Fund”), one of the world’s largest providers of multi-media products, announced today that it has reached agreements with newly formed subsidiaries of Najafi Companies (collectively, “Najafi”) for the sale of substantially all of Cinram’s assets and businesses in the United States, Canada, the United Kingdom, France and Germany.
“Cinram is a market leader in its industries with a long track record of best in class performance,” said Jahm Najafi, CEO, Najafi Companies. “We look forward to a seamless transition for our customers, and to build on Cinram’s significant base of strengths and expertise.”
“We look forward to joining with Najafi Companies,” said Steve Brown, CEO, Cinram. “Cinram will continue its focus on strengthening its competitive position in the market with a much stronger financial footing.”
Details of the transaction terms and process are summarized in the schedule to this release.
Moelis & Company acted as financial advisor to Cinram.
About Cinram
Cinram International Inc., an indirect, wholly-owned subsidiary of the Fund, is one of the world’s largest providers of pre-recorded multimedia products and related distribution and logistics services. With facilities in North America and Europe, Cinram International Inc. manufactures and distributes pre-recorded DVDs, Blu-ray discs, audio CDs, and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world.. The Fund’s units are listed on the Toronto Stock Exchange under the symbol CRW.UN. For more information, visit our website at www.cinram.com.
About Najafi Companies
Najafi Companies is a private investment firm whose current portfolio companies include Direct Brands, Actissia, SkyMall, Trend Homes and Snowflake Power. The firm makes highly-selective investments up to $1 billion in transaction value in companies with strong management teams across a variety of industries. The firm takes a long-term view on its investments and focuses its efforts to create value through growth and superior performance.
Schedule – Summary of Transaction Terms
Implementation Process
The transaction will be implemented through a court-supervised process. Cinram has applied for and obtained an order from the Ontario Superior Court of Justice (Commercial List) to commence proceedings under the Companies’ Creditors Arrangement Act (CCAA). These proceedings are limited to Cinram’s operations in North America, Cinram will also be seeking recognition of its CCAA proceedings under applicable U.S. laws. These CCAA proceedings do not apply to Cinram’s European businesses.
The hearing for the approval of the sale transaction and a vesting order of the purchased assets will be scheduled before the Ontario Superior Court of Justice (Commercial List).
The court restructuring process is not expected to affect Cinram’s day-to-day operations. Cinram has access to the funding necessary to maintain its operations and the operations will continue without disruption during this period. Cinram will operate its business in the ordinary course, including continuing to pay its suppliers for all goods and services through the course of the court restructuring process.
Lender Support
The sale transaction has the support of members of the steering committee of lenders under Cinram’s senior secured credit facilities. Cinram anticipates further support of the sale transaction from additional lenders following the public announcement of the transaction.
Details of the sale transaction
The sale transaction includes the following key elements:
• Najafi will purchase substantially all of the assets used in Cinram’s core businesses for the manufacture of pre-recorded multimedia products and the provision of related logistics services, digital media solutions and outsourced vendor management inventory services in North America and substantially all of the European business.
• The sale transaction is subject to customary conditions, including receipt of approval under the Investment Canada Act and completion of other regulatory processes, and receipt of any other requisite approvals, in North America and Europe.
• Najafi will continue to fulfill Cinram’s obligations to its customers and suppliers in respect of any of the acquired assets or business.
• The sale transaction is expected to close by early August, 2012, although the transfer of portions of the business may occur later in the year.
Assets excluded from the sale transaction include the assets used in Cinram’s telecommunications products logistics services (the “Wireless Business”) and certain real estate assets.
The proceeds of the sale transaction, and proceeds generated from the excluded assets, will be used to repay Cinram’s senior creditors (and will not be available for distribution to unitholders).