INTRODUCTION
This Rule 13E-3 Transaction Statement on Schedule 13E-3, together with the exhibits hereto (this “Schedule 13E-3” or “Transaction Statement”), is being filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”), jointly by the following persons (each, a “Filing Person,” and collectively, the “Filing Persons”): (i) Hemisphere Media Group, Inc. (“Hemisphere” or the “Company”), a Delaware corporation and the issuer of the Class A common stock, par value $0.0001 per share (the “Class A Shares”), and the Class B common stock, par value $0.0001 (together with the Class A Shares, the “Shares”), that is subject to the Rule 13e-3 transaction, (ii) Hemisphere Media Holdings, LLC, a Delaware limited liability company and wholly owned indirect subsidiary of the Company (“Holdings LLC”), (iii) HWK Parent, LLC, a Delaware limited liability company (“Parent”), (iv) HWK Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub 1”), (v) HWK Merger Sub 2, LLC, a Delaware limited liability company and wholly owned subsidiary of Merger Sub 1 (“Merger Sub 2”), (vi) Searchlight II HMT, L.P., a Delaware limited partnership (“Searchlight II LP”), (vii) Searchlight II HMT GP, LLC, a Delaware limited liability company and general partner of Searchlight II LP (“Searchlight II GP”), (viii) Eric Zinterhoffer, one of two managing members of Searchlight II GP, (ix) Andrew Frey, one of two managing members of Searchlight II GP, (x) Gato Investments LP, a Delaware limited partnership and sole member of Parent (“Gato”), (xi) Gemini Latin Holdings, LLC, a Delaware limited liability company and general partner of Gato (“Gemini”) and (xii) Peter M. Kern, the controlling person of Gemini. Parent, Merger Sub 1, Merger Sub 2, Gato, Gemini and Peter M. Kern are Filing Persons of this Transaction Statement because they are affiliates of the Company under the SEC rules governing “going-private” transactions.
On May 9, 2022, the Company, Holdings LLC, Parent, Merger Sub 1 and Merger Sub 2 entered into an Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, subject to the satisfaction or waiver of certain conditions and on the terms set forth therein, (i) Merger Sub 1 will merge with and into the Company, with the Company as the surviving corporation (the “Company Merger”) and (ii) substantially simultaneously with the Merger, Merger Sub 2 will merge with and into Holdings LLC, with Holdings LLC as the surviving company (together with the Company Merger, the “Mergers”). Concurrently with the filing of this Schedule 13E-3, the Company is filing with the SEC a definitive Proxy Statement (the “Proxy Statement”) under Regulation 14A of the Exchange Act, relating to a special meeting of the stockholders of the Company (the “Special Meeting”) at which the stockholders of the Company will consider and vote upon a proposal to approve and adopt the Merger Agreement, a non-binding, advisory vote to approve certain items of compensation that are based on or otherwise related to the Mergers and may become payable to certain named executive officers of the Company under existing agreements with the Company and a proposal to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement. The adoption of the Merger Agreement will require the affirmative vote of (i) the holders of a majority of the voting power of all outstanding Shares entitled to vote, voting as a single class, and (ii) the holders of a majority of the voting power of the outstanding Shares held by Disinterested Stockholders, in each case outstanding as of the close of business on the record date for the Special Meeting. A copy of the definitive Proxy Statement is attached hereto as Exhibit (a)(2)(i) and incorporated herein by reference. A copy of the Merger Agreement is attached hereto as Exhibit (d)(i) and is also included as Annex A to the definitive Proxy Statement and incorporated herein by reference.
Under the terms of the Merger Agreement, if the Mergers are completed, each Share outstanding immediately prior to the consummation of the Mergers, other than as provided below, will be converted into the right to receive $7.00 in cash (the “Merger Consideration”), without interest and less any applicable withholding taxes. The following Shares will not be converted into the right to receive the Merger Consideration in connection with the Merger: (i) Shares issued and held by the Company or any of its direct or indirect wholly-owned subsidiaries immediately prior to the Mergers becoming effective (the “Effective Time”), (ii) Shares owned by Parent, Merger Sub 1, Merger Sub 2 or any of their respective wholly-owned subsidiaries immediately prior to the Effective Time or Shares held in the treasury of the Company, (iii) Shares contributed to Parent by Gato immediately prior to the Effective Time and (iv) Shares that are issued and outstanding immediately prior to the Effective Time and that have not been voted in favor of
