Shares of RLJ Entertainment, Inc. (NASDAQ:RLJE) Skyrocket Upon News of Possible AMC Network Takeover

Content distribution company, RLJ Entertainment, Inc. (NASDAQ:RLJE) has received $65M in loans from AMC Networks, with a stipulation that AMC would be able exercise warrants to buy 50.1% of common stock.

AMC Networks has invested $65 million in loans to RLJ Entertainment, the content distribution company led by (and named after) the founder of BET Networks.

Under the deal, AMC has received warrants that, if exercised, would enable it to buy 50.1 percent of RLJ (NASDAQ: RLJE) common stock.

“As founder of RLJ Entertainment, I look forward to the future of this new chapter in our business,” said Chairman Robert L. Johnson.

The agreement includes a $60 million seven-year term loan and a $5 million one-year term loan. RLJ will use the money to refinance its existing senior credit facility, add working capital, reduce the cost of capital through lower interest rates, and provide revised covenants that will allow for increased operational flexibility.

The move will also push RLJ’s diverse content across multiple platforms. The company owns and operates Acorn TV, a streaming service for British mystery and drama with more than 370,000 paying monthly subscribers, and UMC — aka Urban Movie Channel — with thousands of hours of programming for a growing fan base of African-American and urban viewers.

Founded in 2012, RLJ also owns 64 percent of Agatha Christie Limited, which manages the intellectual property and publishing rights to iconic sleuths Miss Marple and Poirot.

AMC (NASDAQ: AMCX) is home to AMC, BBC America, WE tv and IFC Films, which serve similar audiences as Acorn TV and UMC, so the two companies could cross-promote, -develop and -distribute content to reach more viewers.

Our investment is a strategic opportunity to provide capital and additional resources to RLJ Entertainment as they continue to explore their many opportunities for growth, and while we consider the many potentially powerful synergies with our innovative partners at the BBC, and our own WE tv network,” said AMC Networks President and CEO Josh Sapan in a statement.

“As founder of RLJ Entertainment, I look forward to the future of this new chapter in our business and entering into a relationship with one of the most dynamic and creative content companies in the entertainment industry,” added RLJ Chairman (and BET founder) Robert L. Johnson.

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RLJ Entertainment, Inc. (NASDAQ:RLJE) shares are trading +14.00% on the news and in the range of $2.21 – 2.80 during the current trading session.  When taking a look at which direction the stock might be headed, investors often look to brokerage analysts who cover the stock.  Sell-side research firms on Wall Street currently have a consensus one-year price target of $8.00 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.

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Sell-side analysts are projecting earnings per share of $0.00 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-1.85 per share according to First Call.

in looking at where the stock is trading on a technical level, the stock is trading +7.39% away from its 50 day moving average of $2.12.  Based on the most recent available data, the equity is -48.65% off of its 52-week high of $4.44 and +68.89% away from its 52-week low which is $1.35.

Today, the stock opened at $2.63 and the last bid at the time of writing stood at $2.28.  During the session thus far, the equity dipped down to $2.21 and touched $2.80 as the high point.  RLJ Entertainment, Inc. (NASDAQ:RLJE) has a market cap of $10.19M and has seen an average daily volume of 219138 over the past three months.

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