SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (State of earliest event reported): September 28, 1999
UNAPIX ENTERTAINMENT, INC.
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Exact Name of Registrant as specified in charter
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-11976 95-4404537
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Commission file No. I.R.S. Employer Identification No.
200 MADISON AVENUE, 24TH FLOOR, NEW YORK
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(Address of Principal Executive Offices)
(212)252-7600
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(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events
On September 28, 1999, Unapix Entertainment, Inc. (the "Company") and its
direct and indirectly owned subsidiaries (collectively, the "Borrowers") entered
into a credit facility (the "Facility") with General Electric Capital
Corporation ("GECC") providing for borrowings of up to $40,000,000 (the "Maximum
Amount"). Loans are extended and required to be repaid based upon the then
"Borrowing Base" [as such term is defined in the Credit and Security Agreement,
dated September 28, 1999 (the "Credit Agreement"), by and among Borrowers and
GECC]. The Borrowing Base consists of certain of the Company's accounts
receivable and other contractual rights to payment as well as a specified amount
that the Borrowers are permitted to borrow based upon the value of their library
of films and other entertainment programming (such portion of the borrowing base
is referred to as the "Library Credit"). The Library Credit is initially
$26,000,000 and is required to be reduced by $500,000 per quarter, $1,000,000
per quarter, $2,000,000 per quarter and $3,000,000 per quarter during the
second, third, fourth and fifth years of the Facility, respectively. The Library
Credit also is required to be pre-paid under certain other circumstances. The
Maximum Amount will be reduced by an amount equal to the amount that the Library
Credit is reduced. Voluntary prepayments are subject to certain restrictions and
a prepayment premium of 2%. The Borrowers paid to GECC a closing fee of $200,000
in addition to GECC's out-of-pocket expenses incurred in connection with the
transaction. The Borrowers are also required to pay an unused line fee (the
"Unused Line Fee") at a rate that is initially 0.5% per annum of the sum by
which the Maximum Amount exceeds the average daily closing loan balance of the
loans outstanding under the Facility during the period for which such fee is
due.
Interest on the outstanding loan balance accrues at a rate equal to, at
the Borrowers' option, either (i) a floating rate equal to the "Index Rate" plus
the "Applicable Margin" (as such terms are defined below) or (ii) a fixed rate
for the periods of one, two or three months equal to the reserve adjusted London
Interbank Offered Rate ("LIBOR RATE") plus the Applicable Margin. The "Index
Rate" is the higher of the prime rate as reported by The Wall Street Journal or
the overnight Federal Funds rate plus 50 basis points. The "Applicable Margin"
for an Index Rate loan is initially 1.25% per annum and the Applicable Margin
for a LIBOR loan is initially 3.25% per annum. Commencing with the fiscal
quarter ended September 30, 2001, the Applicable Margins will be increased or
decreased quarterly based upon the Borrowers' consolidated fixed charge coverage
ratio for the immediately preceding four quarters.
The term of the Facility expires on September 28, 2004. Outstanding
amounts under the Facility are secured by a security interest in substantially
all of the Borrowers' assets. The Facility contains restrictive covenants that
require the Company to maintain minimum fixed charge coverage ratios, to achieve
minimum "EBITDA" (earnings before interest, taxes, depreciation and
amortization) thresholds, and to maintain minimum ratios of film library values
to accounts payable and certain other costs, all determined monthly based upon
the preceding 12 months. The covenants also, among other things, limit the
payment of cash dividends on the Company's common stock and restrict (i)
interest and principal payments on subordinated debt, (ii) the amount of costs
that the Company can incur in developing, producing, financing or
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acquiring entertainment properties, (iii) the amount of costs and expenses that
the Borrowers may incur with respect to theatrical release of films and (iv) the
amount of unreleased completed product .
The Facility replaces the Company's previous credit facility with Imperial
Bank that permitted borrowings of up to $18,000,000 (the "Imperial Facility").
Proceeds from the Facility were utilized to repay the Imperial Facility in full.
Approximately $6,000,000 of proceeds were used to repurchase $5,595,000
principal amount of the Company's outstanding subordinated indebtedness together
with accrued and unpaid interest and a prepayment premium thereon.. In
connection with such repurchase, an additional $5,395,000 principal amount of
subordinated indebtedness (as well as accrued and unpaid interest and prepayment
premiums thereon) was converted into, or exchanged for, shares of the Company's
common stock at a price of $2.51875 per share. A total of 2,282,375 shares were
issued in connection with such exchanges and conversions. Other proceeds from
loans under the Facility have been, and will be, used for working capital
purposes, including enabling the Borrowers to acquire distribution rights with
respect to entertainment programming.
Prior to the Company's entering into the Facility, the Company's
wholly-owned subsidiary, Miramar Images, Inc., was merged into the Company.
Item 7. Financial Statements and Exhibits
10.1 Credit and Security Agreement, dated as of September 28, 1999, among
Unapix Entertainment, Inc., and its subsidiaries and GECC.
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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 hereunto duly authorized.
UNAPIX ENTERTAINMENT, INC.
By: /s/ DAVID A. DREILINGER
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David A. Dreilinger, Chief
Operating Officer
Date: October 11, 1999