- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
The struggles continue for Bob Simonds’ once hyped mini-studio STX Entertainment.
Eros STX Global Corp., the publicly listed entity that was formed through the unlikely merger of STX and Bollywood media company Eros International last year, revealed in a filing this week that it is shopping rights to its film library in order to pay off over $150 million in debt.
Eros STX’s shares plunged on the New York Stock Exchange in response to the announcement, closing at $.70 on Thursday, down 30 percent from where they started Wednesday. The slide puts Eros STX’s stock in risk territory. The NYSE can delist a stock if it trades below $1 for 30 days in a row, or fails to meet other benchmarks.
Eros STX also said it would not be able to hit the SEC’s annual reporting deadline for its fiscal full-year results “because the company’s Audit Committee is currently conducting a formal internal review of certain accounting practices and internal controls related to its Eros subsidiaries.”
“Significant revenue from these subsidiaries may not have been appropriately recognized during the fiscal year,” the statement added.
STX’s various debt obligations include a £50 million UK retail bond that matures in October, $150.1 million outstanding on a credit facility backed by JPMorgan and $22.7 million in mezzanine debt.
The company’s statement to regulators revealed that it has “entered into an exclusive negotiation period with a third party to monetize the revenue from 46 films in its library.” The identity of the third party was not revealed. The filing said STX is shopping the library revenue stream and will retain derivative and ancillary rights, allowing STX to develop remakes and sequels based on the existing IP. The STX library includes a number of breakout hits, such as the Bad Moms franchise, Hustlers and last year’s streaming success Greenland, as well as quite a few box-office disappointments, including the failed franchise starter Ugly Dolls, The Happytime Murders and The Circle.
STX Eros is shopping the titles in a seller’s market, though, as established and nascent streaming services compete to bolster their content arsenals. Recent headline deals include Amazon’s $8 billion acquisition of MGM and the Blackstone-backed buyout of Reese Witherspoon’s Hello Sunshine.
Eros STX said additional moneys generated by any successful library deal would go to its balance sheet.
STX made its surprise merger with Eros in 2020 after previously attempting, but failing, to go public on its own on the Hong Kong Stock Exchange. Eros has one of Bollywood’s largest film libraries and justified the deal as providing it with a library of Hollywood content to power its Indian streaming operation, Eros Now.
The combined company is led by co-chairmen Kishore Lulla, the son of Eros founder Arjan Lulla, and STX’s founder Simonds. The joint entity gave hints in this week’s filing that merging the two companies internal cultures and accounting practices has been as challenging as one might expect. It said that when it files its delayed full-year report “one or more material weaknesses in internal controls over financial reporting are likely to be reported.”
Sign up for THR news straight to your inbox every day
Regal Entertainment Group
radio city music hall