Relativity Bankruptcy: Stalking Horse Bidder to Pay $125M for TV Assets

Relativity's Ryan Kavanaugh

Former creditors of Relativity became the lead bidder in an auction held on Friday after putting up $45 million in debtor financing and essentially swapping debt for equity.

Most of Relativity's television assets are now primed to go to a group of financial firms who acted as the stalking horse bidder in the company's Chapter 11 bankruptcy.

Anchorage Capital Group, Luxor Capital Group and Falcon Investment Advisors — former creditors of Relativity — became the lead bidder in an auction held on Friday after putting up $45 million in debtor financing and essentially swapping debt for equity.

The firms were originally set to make a $250 million bid for nearly all of Relativity 's assets including its film, music and fashion division (but not sports, which wasn't part of the bankruptcy), but according to a court filing late Friday, no other bidder stepped forward for all of the bankrupt studio's assets.

So the stalking horse bidder cut their offer in half for just the TV division, which is seen as the company's cash cow with hits like MTV's Catfish and CBS' new series Limitless. The proposed deal, which requires a judge's approval, is for substantially all of the TV assets. It's still unclear what is being left out. 

"We are very pleased about the outcome of the auction and excited about beginning the process of further strengthening Relativity Television. As one of the largest suppliers of high quality television programming in the United States, we believe there are attractive opportunities to drive innovation, creativity and growth to enable the business to realize its full potential," the Investor Group said in a statement. "Upon completion of the sale, Relativity Television will be well-capitalized with a strong and creative senior leadership team, incredible human resources and valuable partner relationships, and we are confident that the business will be extremely well-positioned to achieve sustainable, long term success."

That puts Relativity 's film division still awaiting sale. According to sources, Relativity CEO Ryan Kavanaugh has been in negotiations with the stalking horse group to buy the company's other assets with the help of backers, who have not yet been disclosed. According to the filing, "The Debtors intend for the remainder of the Debtors' assets to form the basis of a plan of reorganization."

In a surprise development, when the auction began Thursday, Kavanaugh — whose Relativity Media was forced to file for bankruptcy protection in July — made an offer to the stalking horse group to buy the studio's assets with the exception of the TV division.

A hearing before U.S. Bankruptcy Court Judge Michael Wiles is scheduled for Oct. 5 to approve the bid for Relativity's TV assets, currently run by CEO Thomas Forman.  

Neither Relativity or Kavanaugh had any comment on the latest developments.

 

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