Form 6-K Eros STX Global Corp For: Dec 07

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Section 13(a)-16 or 15(d)-16

of the Securities Exchange Act of 1934

For the month of December, 2021

001-36176

(Commission file number)

EROS STX GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

3900 West Alameda Avenue, 32nd Floor

Burbank, California 91505

Tel: (818) 524-7000

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F  ☒ Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Stock Purchase Agreement

On December 6, 2021, Eros STX Global Corporation, an Isle of Man company limited by shares (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) by and among the Company, England Holdings 3, Inc., a Delaware corporation (“Holdings”), and ST Acquisition 1221, Inc., a Delaware corporation (“Buyer”), and an affiliate of The Najafi Companies (“Najafi”), which provides for the sale by the Company of all of the issued and outstanding capital stock of Holdings to Buyer. Holdings is the parent entity of the Company’s STX Entertainment subsidiary (“STX”).

On the terms and subject to the conditions of the Purchase Agreement, at closing, the Buyer will pay a cash amount equal to $173 million, minus the $2.0 million deposit previously paid by the Buyer, subject to post-closing adjustments for transaction expenses and debt at closing. A portion of the purchase price will be deposited into an escrow account to serve as security for certain income taxes.

Until January 19, 2022, the Company has a customary go-shop right to solicit or discuss with third parties competing proposals, subject to a topping right by the Buyer as specified in the Purchase Agreement. After January 19, 2022, the Company is subject to a customary restriction that prevents it from engaging in solicitations or discussions with third parties regarding a proposal, subject to a fiduciary out where the board of directors of the Company determines in good faith that a proposal received during the go-shop period would reasonably be expected to lead to a superior proposal.

The completion of the transactions contemplated by the Purchase Agreement are subject to customary closing conditions, including the Buyer’s lender’s confirmatory due diligence. The Purchase Agreement also includes customary representations and warranties of the Company and the Buyer that terminate at closing, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of business during the interim period between execution of the Purchase Agreement and the closing and the non-solicitation obligations described above.

The Purchase Agreement provides for certain customary termination rights for both the Company and the Buyer, including in the event the conditions to their respective obligations have not been satisfied by March 6, 2022. The Company has agreed to pay to the Buyer a termination fee of $4.5 million and return its $2.0 million deposit if the Company terminates the Purchase Agreement in order to enter into a superior proposal. In addition, the Buyer has agreed to pay to the Company a termination fee of $4.5 million (less its $2.0 million deposit) under certain circumstances.

Credit Facilities

As previously announced, upon execution of the Purchase Agreement, the maturity date and the delivery date of financial statements under the Senior Credit Agreement of STX, were extended to January 4, 2022, and may be further extended to February 3, 2022 if the Purchase Agreement remains in effect on January 4, 2022. In addition, STX previously entered into an amendment to its subordinated credit agreement to, among other things, permit STX to promptly deliver the required financial statements once they become available. As of December 1, 2021, $124.0 million remained outstanding under the Senior Credit Agreement, and $24.0 million remained outstanding under the subordinated credit agreement. It is currently anticipated that all such amounts will be repaid in full at the closing of the transactions contemplated by the Purchase Agreement.

Important Note

The representations, warranties and covenants contained in the Purchase Agreement described above were made only for purposes of the Purchase Agreement and as of the specified dates set forth therein, were solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by those parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between those parties instead of establishing particular matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on these representations, warranties or covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the parties or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Accordingly, the Purchase Agreement is described in this filing only to provide investors with information regarding the terms of such agreement and not to provide investors with any other factual information regarding the parties or their respective businesses.

Press Release

On December 7, 2021 the Company issued a press release announcing the execution of the Purchase Agreement. A copy of the press release is furnished as Exhibit 99.1 to this Report of Foreign Private Issuer on Form 6-K and incorporated by reference herein.

Special Note Regarding Forward Looking Statements:

Information provided in this communication includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbors created thereby. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “approximately,” “anticipate,” “believe,” “estimate,” “continue,” “could,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will”, “trending” and similar expressions. All such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation: our ability to successfully and cost-effectively source film content; the Company’s ability to achieve the desired growth rate of Eros Now; our ability to maintain or raise sufficient capital; delays, cost overruns, cancellation or abandonment of the completion or release of the Company’s films; our ability to predict the popularity of its films, or changing consumer tastes; our ability to maintain existing rights, and to acquire new rights, to film content; our ability to successfully defend any future class action lawsuits we are a party to in the U.S.; anonymous letters to regulators or business associates or anonymous allegations on social media regarding the Company’s business practices, accounting practices and/or officers and directors; our ability to recoup the full amount of box office revenues to which it is entitled due to underreporting of box office receipts by theater operators; our dependence on our relationships with theater operators and other industry participants to exploit the Company’s film content; our ability to mitigate risks relating to distribution and collection in international markets; our ability to compete with other forms of entertainment; our ability to combat piracy and to protect our intellectual property; our ability to maintain an effective system of internal control over financial reporting; contingent liabilities that may materialize, our exposure to liabilities on account of unfavorable judgments/decisions in relation to legal proceedings involving the Company or its subsidiaries and certain of its directors and officers; our ability to successfully respond to technological changes; our ability to satisfy debt obligations, fund working capital and pay dividends; the monetary and fiscal policies of countries around the world, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices; our ability to address the risks associated with acquisition opportunities; risks that the ongoing novel coronavirus pandemic and its spread, and related public health measures, may have material adverse effects on our business, financial position, results of operations and/or cash flows; challenges, disruptions and costs of the Merger and related transactions, integrating the Eros and STX businesses and achieving anticipated synergies, and the risk that such synergies will take longer to realize than expected or may not be realized in whole or in part; the amount of any costs, fees, expenses, impairments and charges related to the specific transactions of the Company; completion of the contemplated transactions; uncertainty as to the long-term value of the Company’s ordinary shares; and the completion of the Company’s fiscal 2021 audit and filing of its Annual Report on Form 20-F.

The forward-looking statements contained in this communication are based on historical performance and management’s current plans, estimates and expectations in light of information currently available and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should any of the Company’s assumptions prove to be incorrect, the Company’s actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. The Company cautions that you should not place undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

Exhibit Index

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Exhibit 99.1

ErosSTX Enters into a Definitive Agreement for the Sale of its

STX Entertainment Subsidiary to The Najafi Companies

Agreement Includes a “Go-Shop” Period to Maximize Sale Value

Douglas, ISLE OF MAN and Burbank, CALIFORNIA – December 7, 2021 – Eros STX Global Corporation (NYSE: ESGC) (“ErosSTX”, “ESGC”, the “Company”, “we” or “our”), a global entertainment company, today announced it has entered into a definitive agreement to sell its STX Entertainment subsidiary (“STX Entertainment”), to an affiliate of The Najafi Companies (“Najafi”), an entrepreneurial and mission-driven private investment company with significant holdings in consumer, media, talent-driven brands, ecommerce, tech, and sports.

Transaction

At the closing of the transaction contemplated by the purchase agreement, an affiliate of Najafi will acquire STX Entertainment through the purchase of all of the issued and outstanding shares of common stock of a parent entity of STX Entertainment and wholly-owned subsidiary of ESGC. The purchase price at Closing will be $173 million, subject to customary adjustments for transaction expenses and debt, including repayment of the indebtedness of STX Entertainment, which is currently approximately $148 million.

The purchase agreement also provides ESGC with a go-shop period, during which the board of directors of ESGC, with the assistance of its financial advisor, Lazard, will solicit alternative proposals from third parties for a period of 45 days. The purchase agreement provides for ESGC to pay a termination fee of $4.5 million (plus the return of $2 million that Najafi has funded as a deposit) to Najafi if ESGC terminates the purchase agreement in connection with accepting a superior proposal. Under specified circumstances set forth in the purchase agreement, Najafi will be required to pay ESGC a termination fee of $4.5 million (less the $2 million Najafi deposit) if Najafi fails to close the transaction.

A transaction is expected to close by the end of January 2022. The transaction with Najafi is subject to customary closing conditions, including its lender’s confirmatory due diligence. Najafi has exclusively partnered with The Forest Road Company, as its lender, who is expected to repay STX Entertainment’s indebtedness and provide it with working capital going forward.

ESGC does not intend to disclose developments with respect to the solicitation process unless and until the board of directors of ESGC has made a decision with respect to any potential superior proposal. There can be no assurance that this process will result in a superior proposal.

STX Debt Extension

As noted in the November 16, 2021 press release, because the Company has executed a definitive agreement to sell the STX Entertainment subsidiary, the maturity and delivery date of financial statements under STX Entertainment’s Senior Credit Agreement has been extended to January 4, 2022, and may be further extended to February 3, 2022 if such sale agreement remains in effect on January 4, 2022.

1

Advisors

Lazard is serving as financial adviser to ESGC and Kirkland & Ellis LLP and Gibson, Dunn & Crutcher LLP are serving as its legal advisers. Ballard Spahr LLP is serving as legal adviser to The Najafi Companies.

About Eros STX Global Corporation

Eros STX Global Corporation (NYSE: ESGC) is a global entertainment company that acquires, co-produces and distributes films, digital content and music across multiple formats such as theatrical, television and OTT digital media streaming to consumers around the world. Eros International Plc changed its name to Eros STX Global Corporation pursuant to the July 2020 merger with STX Entertainment, merging two international media and entertainment groups to create a global entertainment company with a presence in over 150 countries. ErosSTX delivers star-driven premium feature film and episodic content across a multitude of platforms at the intersection of the world’s most dynamic and fastest-growing global markets, including US, India, Middle East, Asia and China. For further information, please visit ErosSTX.com.

About The Najafi Companies

The Najafi Companies, based in Phoenix with offices in Los Angeles and New York, is an entrepreneurially driven private investment company founded by Jahm Najafi in 2002. The Company makes investments across industries, with significant holdings in consumer, media, brands, ecommerce, tech and sports. The Najafi Companies is not a fund and does not manage third party capital. By utilizing its own capital, the team is empowered to be extremely selective, think long-term, move quickly and operate in true alignment with management. Their passion is to invest, acquire businesses and create value in areas that are underserved or undergoing rapid transformation. And the Company’s mission is to “do well and do good,” and partner with world-class, entrepreneurial teams.

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Information provided in this communication includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbors created thereby. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “approximately,” “anticipate,” “believe,” “estimate,” “continue,” “could,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will”, “trending” and similar expressions. Those statements include, among other things, the discussions of the Company’s business strategy and expectations concerning its and the Company’s market position and future operations. All such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation: our ability to successfully and cost-effectively source film content; the Company’s ability to achieve the desired growth rate of Eros Now; our ability to maintain or raise sufficient capital; delays, cost overruns, cancellation or abandonment of the completion or release of the Company’s films; our ability to predict the popularity of its films, or changing consumer tastes; our ability to maintain existing rights, and to acquire new rights, to film content; our ability to successfully defend any future class action lawsuits we are a party to in the U.S.; anonymous letters to regulators or business associates or anonymous allegations on social media regarding the Company’s business practices, accounting practices and/or officers and directors; our ability to recoup the full amount of box office revenues to which it is entitled due to underreporting of box office receipts by theater operators; our dependence on our relationships with theater operators and other industry participants to exploit the Company’s film content; our ability to mitigate risks relating to distribution and collection in international markets; our ability to compete with other forms of entertainment; our ability to combat piracy and to protect our intellectual property; our ability to maintain an effective system of internal control over financial reporting; contingent liabilities that may materialize, our exposure to liabilities on account of unfavorable judgments/decisions in relation to legal proceedings involving the Company or its subsidiaries and certain of its directors and officers; our ability to successfully respond to technological changes; our ability to satisfy debt obligations, fund working capital and pay dividends; the monetary and fiscal policies of countries around the world, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices; our ability to address the risks associated with acquisition opportunities; risks that the ongoing novel coronavirus pandemic and its spread, and related public health measures, may have material adverse effects on our business, financial position, results of operations and/or cash flows; the occurrence of any event, change or other circumstances that could give rise to the termination of the purchase agreement or the failure to satisfy the closing conditions; the possibility that the consummation of the transactions contemplated by the purchase agreement is delayed or does not occur; uncertainty as to whether the parties will be able to complete the transactions contemplated by the purchase agreement on the terms set forth therein; the outcome of any legal proceedings that may be instituted against the parties or others following announcement of the transactions contemplated by the purchase agreement; challenges, disruptions and costs of the transactions contemplated by the purchase agreement and related transactions; risks that the transactions contemplated by the purchase agreement disrupt current plans and operations that may harm the Company’s businesses; the amount of any costs, fees, expenses, impairments and charges related to the transactions contemplated by the purchase agreement; uncertainty as to the effects of the announcement or pendency of the transactions contemplated by the purchase agreement and related transactions on the market price of the Company’s A Ordinary Shares and/or the Company’s financial performance; completion of the contemplated refinancing or strategic transactions; uncertainty as to the long-term value of the Company’s ordinary shares; and the completion of the Company’s fiscal 2021 audit and filing of its Annual Report on Form 20-F.The forward-looking statements contained in this communication are based on historical performance and management’s current plans, estimates and expectations in light of information currently available and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should any of the Company’s assumptions prove to be incorrect, the Company’s actual results may vary in material respects from what the Company may have expressed or implied by these forward-looking statements. The Company cautions that you should not place undue reliance on any of its forward-looking statements. Any forward-looking statement made by the Company in this communication speaks only as of the date on which the Company makes it. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

3

Contact Information

Drew Borst

EVP, Investor Relations & Business Development

ErosSTX Global Corporation

[email protected]

4