Tender Offer on the Major Hollywood Studios

The Major Studios need to consolidate to increase selling clout and accelerate cost savings.
This is the right moment to acquire several studios and create a Hollywood Studios City like Cinecittà in Rome, Italy.

The Special Purpose Acquisition Company to buy and restructure major Hollywood Studios

Hollywood Current Situation

According to a Variety magazine article:

Now that the gravity of a growing coronavirus pandemic has settled in and people are looking to safeguard their health and their livelihoods, the entertainment industry is grappling with (…) essential questions: (…)

How high will the financial losses climb? And how will the business handle the unprecedented domino effect on Hollywood’s traditional calendar?

The avalanche of hasty cancellations and delays to events and premieres that fuel the industry’s engines of commerce will spread the impact of the COVID-19 catastrophe well past 2020. The likelihood that a recession is looming in the U.S. will magnify the pain for major media conglomerates. Industry observers say the freefall of the Dow Jones into bear market territory has put an instant chill, at least temporarily, on acquisition and investment pacts.

In fact, top executives privately say that the one certainty on the horizon is that only the strong will survive the fallout

Weaker businesses and industry traditions that were already past their prime — notably a host of conferences and trade shows, film festivals and the springtime ritual of the network upfronts — will have a hard time enduring the blow of a sudden shutdown. And with dozens and dozens of productions forced to go dark unexpectedly, including at least two dozen pilots for the 2020-21 broadcast TV season, industry insiders predict the bubble on the Peak TV phenomenon may finally burst.

“This may have the effect of reining in a lot of things that have been out of control for a long time,” says a veteran studio executive.

Opportunity

Because of this Hollywood situation and the paralyzed economy around it, combined with Wall Street craze for SPACS, it is the right momentum to acquire Hollywood Studios and Production companies through a Special Purpose Acquisition Company.

Hence the Hollywood SPAC!

Acquisition

In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder). The term refers also to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.

Management of the target company may or may not agree with a proposed takeover, and this has resulted in the following takeover classifications: friendly, hostile, reverse or back-flip. Financing a takeover often involves loans or bond issues which may include junk bonds as well as a simple cash offers. It can also include shares in the new company.

Restructuring

Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, better organized for its present needs. Other reasons for restructuring include a response to a crisis or major change in the business such as Covid, its consequences such as bankruptcies, repositioning, or liquidations. Restructuring may also be corporate restructuring, debt restructuring and financial restructuring.

The basic nature of restructuring is a zero-sum game. Strategic restructuring reduces financial losses, simultaneously reducing tensions between debt and equity holders to facilitate a prompt resolution of a distressed situation.

Corporate debt restructuring is the reorganization of companies’ outstanding liabilities. It is generally a mechanism used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over longer duration with smaller payments. This allows company’s ability to meet debt obligations. Also, as part of process, some creditors may agree to exchange debt for some portion of equity. It is based on the principle that restructuring facilities available to companies in a timely and transparent matter goes a long way in ensuring their viability which is sometimes threatened by internal and external factors. This process tries to resolve the difficulties faced by the corporate sector and enables them to become viable again.

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