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Harry Sloan and Jeff Sagansky are returning to the public market to raise another $250 million (and possibly as much as $287.5 million) for Silver Eagle Acquisition Corp., which is expected to use the proceeds to make acquisitions in media and entertainment businesses all over the world.
Silver Eagle is what Wall Street calls a “blank check” company. That means investors are asked to ante up even though it is not clear what Sloan and Sagansky will do with the funding. They are betting the two veteran executives will use the money to buy companies around the world that will grow and over time be sold, creating a return on the investments.
If investors snap up all of the available shares, they would own about 85 percent of the new company. Sloan, Sagansky and chief financial officer James Graf would divide the remaining 15 percent as their share.
If the stock when publicly traded hits a price of $16, those three would get an additional 5 percent, raising their stake in Silver Eagle to 20 percent of the total.
This is the second “blank check” company they have formed. Sloan and Sagansky previously raised $190 million in 2012 for Global Eagle Acquisition..
Silver Eagle is their newest fund; the initial public offering hopes to sell 25 million units at a price of $10 each. A unit consists of a share of common stock and a warrant to purchase one-half of one share at an exercise price of $5.75 per half-share (or $11.50 per share). There is no guarantee they will sell all the shares.
They also are offering underwriters a 45-day option to purchase another 3.75 million units, which if sold would raise an additional $37.5 million for Silver Eagle.
If Silver Eagle does not make acquisitions using the funding within 22 months, they will have to give all the money back to the investors. That seems unlikely, given their track record.
Sloan and Sagansky leveraged the last money raised to complete a $430 million deal when they acquired several companies in the airline industry, including Row 44, which provides broadband and other services to airlines (and last week made a deal to provide wireless entertainment to Southwest Airlines); and Advanced Inflight Alliance AG, a Frankfurt, Germany, company that supplies games, movies and general entertainment to the airline industry.
Sloan started his career in Hollywood as an attorney before becoming an executive and dealmaker. From 2005-2009, Sloan was chairman and CEO of MGM. He also made millions developing media in Scandinavia as chairman and CEO of SBS Broadcasting between 1990-2001.
Sagansky was president of CBS Entertainment from 1990-94. He was co-president of Sony Pictures Entertainment from 1996-98. He was CEO of Paxson Communications from 1998-2002. He also held positions at Peach Arch, RHI Entertainment, Winchester Capital Management and Elm Tree Partners, a privately held casino development company.
Deutsche Bank Securities is the sole bank leading the Silver Eagle IPO.
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