UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
PINNACLE CONTENT HOLDINGS, INC. (Name of Subject Company (Issuer))
AURELIUS MEDIA HOLDINGS LLC AURELIUS GLOBAL MEDIA GROUP PLC (Names of Filing Persons (Offeror))
COVER PAGE
Subject Company: Pinnacle Content Holdings, Inc.
Subject Company CIK: 0001847263
Subject Company Ticker Symbol: PCHL (The Nasdaq Stock Market LLC)
Subject Company Address of Principal Executive Offices: 2300 Magnolia Boulevard, Suite 1100, Burbank, California 91502
Filing Persons:
(1) Aurelius Media Holdings LLC, a Delaware limited liability company (Delaware Secretary of State file number 7894512; registered agent: Cascade Systems, 160 Greentree Drive, Suite 101, Dover, Delaware 19904).
(2) Aurelius Global Media Group PLC, a public limited company organized under the laws of England and Wales (Companies House registered number 08541276; headquarters: 44 Lombard Crescent, London EC3V 9BQ, United Kingdom).
SEC File No.: 005-92847
Date of Event Which Requires Filing of This Statement: September 8, 2021
Title of Class of Securities: Common Stock, par value $0.001 per share
CUSIP Number: 72348K 10 9
Check the box if the filing relates to preliminary copies of, or requests for, confidential treatment of, the tender offer statement, or any amendment thereto, filed under cover of Schedule TO. — Not applicable.
Check the box if any transaction fee is required to be paid pursuant to Rule 0-11 under the Securities Exchange Act of 1934.
Check the appropriate boxes below to designate any transactions to which the statement relates:
Third-party tender offer subject to Rule 14d-1.
Issuer tender offer subject to Rule 13e-4.
Going-private transaction subject to Rule 13e-3.
Amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results of the tender offer:
This Tender Offer Statement on Schedule TO (this "Schedule TO") relates to the offer by Aurelius Media Holdings LLC, a Delaware limited liability company ("AMH LLC" or the "Offeror"), a wholly owned subsidiary of Aurelius Global Media Group PLC, a public limited company organized under the laws of England and Wales ("Aurelius" or "Aurelius PLC" and, together with AMH LLC, the "Filing Persons"), to purchase up to 6,980,050 shares (the "Maximum Amount") of common stock, par value $0.001 per share (the "Shares"), of Pinnacle Content Holdings, Inc., a Delaware corporation (the "Company" or "Pinnacle"), at a purchase price of $4.01 per Share, net to the seller in cash, without interest and subject to any applicable withholding taxes (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 8, 2021 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal" and, together with the Offer to Purchase and any amendments or supplements thereto, the "Offer"), copies of which are filed as Exhibits (a)(1)(A) and (a)(1)(B) hereto, respectively.
The information set forth in the Offer to Purchase and the related Letter of Transmittal, together with the other exhibits filed herewith, is hereby incorporated by reference in answer to each Item of this Schedule TO to which such information is responsive, as more particularly specified below.
Name, address, and telephone number of person authorized to receive notices and communications on behalf of the Filing Persons:
James Prentice, Esq. Calderwood & Harkness LLP 787 Seventh Avenue, 42nd Floor New York, New York 10019 Telephone: (212) 555-0147 Facsimile: (212) 555-0148
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ITEM 1. SUMMARY TERM SHEET
The information set forth in the section entitled "Summary Term Sheet" in the Offer to Purchase, which is filed as Exhibit (a)(1)(A) hereto, is incorporated herein by reference. The following is a summary of the principal terms of the Offer and is qualified in its entirety by reference to the more detailed information contained in the Offer to Purchase and the Letter of Transmittal, copies of which are attached to this Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively.
Offeror. Aurelius Media Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of Aurelius Global Media Group PLC, a public limited company organized under the laws of England and Wales.
Subject Company. Pinnacle Content Holdings, Inc., a Delaware corporation, the common stock of which is listed and traded on The Nasdaq Stock Market LLC ("Nasdaq") under the ticker symbol "PCHL."
The Offer. The Offeror is offering to purchase up to 6,980,050 Shares of common stock of Pinnacle at a price of $4.01 per Share, net to the seller in cash, without interest and subject to applicable withholding taxes. The aggregate consideration for the maximum number of Shares sought in the Offer is approximately $28,000,000 (calculated as 6,980,050 Shares multiplied by $4.01 per Share, which equals $27,989,000.50, rounded to the nearest million for convenience of reference).
Percentage Sought. The 6,980,050 Shares sought in the Offer represent approximately 34.9% of the 20,000,000 Shares of common stock outstanding as of the most recent practicable date, as reported in Pinnacle's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the Securities and Exchange Commission (the "SEC").
Premium. The Offer Price of $4.01 per Share represents a premium of approximately 17.25% over the closing price of $3.42 per Share on Nasdaq on August 27, 2021, the last full trading day before the public announcement of the Offer. This premium was calculated as follows: ($4.01 – $3.42) / $3.42 = 0.1725, or approximately 17.25%.
Implied Equity Value. The Offer Price implies a value of $80,200,000 for 100% of Pinnacle's outstanding Shares (calculated as 20,000,000 Shares multiplied by $4.01 per Share).
Minimum Tender Condition. The Offer is conditioned upon, among other things, at least 5,000,000 Shares (representing approximately 25.0% of the outstanding Shares) having been validly tendered and not properly withdrawn prior to the expiration of the Offer (the "Minimum Tender Condition"). The Offeror will not waive the Minimum Tender Condition.
Proration. If more than 6,980,050 Shares are validly tendered and not properly withdrawn prior to the expiration of the Offer, the Offeror will accept Shares for payment on a pro rata basis (with appropriate adjustments to avoid purchases of fractional Shares and to give effect to conditional tenders and odd-lot priority provisions), in accordance with the provisions described in the Offer to Purchase.
Offer Period. The Offer will commence on September 8, 2021 and will expire at 12:00 midnight, New York City time, at the end of October 8, 2021 (such date and time, as it may be extended, the "Expiration Date"), unless extended by the Offeror in accordance with the terms of the Offer. The Offer will remain open for a period of twenty (20) business days from the date of commencement, as calculated in accordance with Rule 14d-1(g)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Depositary. Continental Fiduciary Services, Inc. has been retained to serve as the depositary and paying agent for the Offer (the "Depositary").
Information Agent. Ridgeway Proxy Advisors LLC has been retained to serve as the information agent for the Offer (the "Information Agent").
Withdrawal Rights. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. In addition, pursuant to Rule 14d-7 under the Exchange Act, tendered Shares may be withdrawn after the expiration of forty (40) business days from the commencement of the Offer if such Shares have not been previously accepted for payment by the Offeror.
Conditions to the Offer. The Offer is subject to the satisfaction or waiver of several conditions, including: (i) the Minimum Tender Condition; (ii) the absence of any legal restraint, injunction, order, or decree prohibiting the consummation of the Offer; (iii) the expiration or early termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (iv) the absence of any material adverse effect with respect to Pinnacle; (v) the availability of committed financing (as more fully described herein and in the Offer to Purchase); and (vi) the absence of any shareholder rights plan, "poison pill," or similar anti-takeover arrangement that would materially impair the Offer. The Offeror reserves the right to waive any condition to the Offer other than the Minimum Tender Condition. A complete description of all conditions is set forth in Section 15 of the Offer to Purchase.
ITEM 2. SUBJECT COMPANY INFORMATION
(a) Name and Address
The name of the subject company is Pinnacle Content Holdings, Inc. The address of the principal executive offices of Pinnacle is:
Pinnacle Content Holdings, Inc. 2300 Magnolia Boulevard, Suite 1100 Burbank, California 91502 Telephone: (818) 555-0234
Pinnacle is a Delaware corporation. Its common stock is listed and traded on Nasdaq under the ticker symbol "PCHL."
(b) Securities
The title of the class of equity securities to which this Schedule TO relates is the common stock, par value $0.001 per share, of Pinnacle. According to Pinnacle's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, as filed with the SEC, there were 20,000,000 Shares of common stock outstanding as of the most recent practicable date reported therein. The Offeror is seeking to purchase up to 6,980,050 Shares, representing approximately 34.9% of the outstanding Shares.
As of the date of this Schedule TO, the Filing Persons are not aware of any other class of equity securities of Pinnacle that is registered under Section 12 of the Exchange Act. The Filing Persons have relied on Pinnacle's public filings for the number of Shares outstanding and have not independently verified such number.
(c) Trading Market and Price
Pinnacle's common stock is listed and traded on Nasdaq under the ticker symbol "PCHL." On August 27, 2021, the last full trading day before the public announcement of the Offer, the closing price of the Shares on Nasdaq was $3.42 per Share. The Offer Price of $4.01 per Share represents a premium of approximately 17.25% over such closing price.
The Offer to Purchase contains a more detailed description of the trading history of Pinnacle's common stock, including historical high and low sale prices and trading volume, which information is incorporated herein by reference. Shareholders of Pinnacle are urged to obtain current market quotations for the Shares before making a decision with respect to the Offer.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON
(a) Name and Address of Each Filing Person
This Schedule TO is filed by the following Filing Persons:
Aurelius Media Holdings LLC ("AMH LLC")
AMH LLC is a Delaware limited liability company, assigned Delaware Secretary of State file number 7894512. AMH LLC was formed on August 12, 2021 under the Delaware Limited Liability Company Act for the sole purpose of serving as the offeror entity in connection with the Offer and holding Shares of Pinnacle acquired in the Offer and through open-market purchases. AMH LLC has no operations, employees, assets, or liabilities other than those related to the Offer and the open-market purchases of Shares described herein.
The sole member of AMH LLC is Aurelius Global Media Group PLC. AMH LLC does not have its own board of directors or officers; it is managed by its sole member through its authorized officers.
Registered Agent: Cascade Systems 160 Greentree Drive, Suite 101 Dover, Delaware 19904
Principal Office (c/o Aurelius Global Media Group PLC): 44 Lombard Crescent London EC3V 9BQ, United Kingdom Telephone: +44 (0)20 7555 8800
Aurelius Global Media Group PLC ("Aurelius" or "Aurelius PLC")
Aurelius PLC is a public limited company organized under the laws of England and Wales, registered with Companies House under registered number 08541276. Aurelius PLC is the sole member of AMH LLC and, as such, may be deemed a Filing Person with respect to this Schedule TO. Aurelius PLC is listed on the London Stock Exchange under the ticker symbol "AGMG," with a market capitalization of approximately £2.1 billion as of September 2021.
Headquarters: 44 Lombard Crescent London EC3V 9BQ, United Kingdom Telephone: +44 (0)20 7555 8800 Facsimile: +44 (0)20 7555 8801
(b) Business and Background of Filing Persons
Aurelius Global Media Group PLC is a diversified media, entertainment, and e-commerce conglomerate. Aurelius owns and operates broadcast networks, digital streaming platforms, and a portfolio of content studios across Europe and North America. Founded in 1998, Aurelius has grown through organic expansion and strategic acquisitions to become one of the leading independent media groups in the United Kingdom and continental Europe. For the fiscal year ended December 31, 2020, Aurelius reported consolidated revenue of approximately £1.48 billion and adjusted EBITDA of approximately £312 million. Aurelius employs approximately 8,400 persons worldwide.
Aurelius's principal business activities include: (i) the operation of free-to-air and pay television channels in the United Kingdom, Germany, France, and Scandinavia; (ii) the development and licensing of original programming through its content studio division, Aurelius Studios; (iii) digital media distribution through its streaming platform, AureliusNow; and (iv) e-commerce operations through its home shopping and digital marketplace businesses.
The following individuals serve as directors and/or executive officers of Aurelius PLC:
Sir Marcus Prumvane — Chief Executive Officer, age 62. Sir Marcus is a co-founder of Aurelius and has served as Chief Executive Officer since the company's incorporation in 1998. Prior to founding Aurelius, Sir Marcus served in senior executive positions at the Sterling Reach Corporation ("BBC") and Ridgeline Enterprises, where he held various roles in programming, strategy, and business development over a period of approximately fifteen years. Sir Marcus is a citizen of the United Kingdom and his principal occupation is serving as Chief Executive Officer of Aurelius. His business address is 44 Lombard Crescent, London EC3V 9BQ, United Kingdom.
Elena Markov — Chief Financial Officer, age 49. Ms. Markov joined Aurelius in 2016 and has served as Chief Financial Officer since January 2017. Prior to joining Aurelius, Ms. Markov served as a Managing Director in the media and telecommunications investment banking group at Braxton Whitfield Capital Partners in London from 2008 to 2016. Ms. Markov is a citizen of the United Kingdom and holds dual citizenship with the Republic of Bulgaria. Her principal occupation is serving as Chief Financial Officer of Aurelius. Her business address is 44 Lombard Crescent, London EC3V 9BQ, United Kingdom.
Hugh Pemberton — General Counsel and Company Secretary, age 55. Mr. Pemberton joined Aurelius in 2011 and has served as General Counsel and Company Secretary since that time. Prior to joining Aurelius, Mr. Pemberton was a partner at Dunmore Asset Advisors Chambers LLP in London, where he specialized in media, entertainment, and intellectual property law. Mr. Pemberton is a citizen of the United Kingdom. His principal occupation is serving as General Counsel and Company Secretary of Aurelius. His business address is 44 Lombard Crescent, London EC3V 9BQ, United Kingdom.
Rupert Ashford — Head of Corporate Development, age 44. Mr. Ashford joined Aurelius in 2014 and has served as Head of Corporate Development since 2018. Mr. Ashford is responsible for identifying, evaluating, and executing strategic acquisition and investment opportunities for Aurelius. Prior to joining Aurelius, Mr. Ashford held positions at Cascade National Bank in London and Westvale Group in New York. Mr. Ashford is a citizen of the United Kingdom. His principal occupation is serving as Head of Corporate Development of Aurelius. His business address is 44 Lombard Crescent, London EC3V 9BQ, United Kingdom.
Dame Catherine Forsyth — Board Chair, Independent Non-Executive Director, age 67. Dame Catherine has served as Chair of the Board of Directors of Aurelius since 2019 and as an independent non-executive director since 2015. Dame Catherine is a former Chief Executive of the British Film Institute and has served on the boards of several public and private companies in the media and cultural sectors. Dame Catherine is a citizen of the United Kingdom. Her principal occupation is serving as an independent non-executive director of Aurelius and other companies. Her business address is 44 Lombard Crescent, London EC3V 9BQ, United Kingdom.
Aurelius Media Holdings LLC is a single-purpose Delaware limited liability company formed solely for the purpose of the Offer. AMH LLC has no independent operations, assets, or liabilities other than those arising in connection with the Offer and the open-market purchases described herein. AMH LLC has no directors or officers of its own. AMH LLC is managed by its sole member, Aurelius PLC, through its authorized officers as identified above.
The information set forth in Schedule I to this Schedule TO regarding the directors and executive officers of the Filing Persons is incorporated herein by reference.
(c) Relationships with Subject Company
As of the date of this Schedule TO, AMH LLC currently holds 980,000 Shares of Pinnacle common stock, representing approximately 4.9% of the 20,000,000 Shares outstanding. All 980,000 Shares were acquired through open-market purchases on Nasdaq between June 1, 2021 and August 25, 2021, at prices ranging from $3.05 to $3.52 per Share, with a volume-weighted average purchase price of approximately $3.28 per Share. The aggregate cost of such purchases was approximately $3,214,400. A detailed schedule of all such purchases is set forth in Schedule II to this Schedule TO.
In accordance with Section 13(d) of the Exchange Act, AMH LLC, together with Aurelius PLC, filed a Schedule 13D with the SEC on August 26, 2021, disclosing their beneficial ownership of 980,000 Shares (4.9% of outstanding). Aurelius PLC, as the sole member of AMH LLC, may be deemed the beneficial owner of the 980,000 Shares held by AMH LLC.
If the Offer is fully subscribed and 6,980,050 Shares are validly tendered and accepted for payment, AMH LLC's combined holdings would total 7,960,050 Shares, representing approximately 39.8% of Pinnacle's outstanding common stock (calculated as 980,000 Shares currently held plus 6,980,050 Shares to be acquired in the Offer, divided by 20,000,000 Shares outstanding).
Except as described herein, none of the Filing Persons, nor any of their respective directors, executive officers, or controlling persons, has any contract, arrangement, understanding, or relationship (legal or otherwise) with any person with respect to any securities of Pinnacle, including, but not limited to, any contract, arrangement, understanding, or relationship concerning the transfer or voting of any securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.
No representative or agent of any Filing Person has had any communication with any director, officer, or affiliate of Pinnacle regarding the Offer, other than the delivery of the Offer materials and the filing of the Schedule 13D referenced above.
ITEM 4. TERMS OF THE TRANSACTION
(a) Material Terms
The information set forth in the Offer to Purchase, a copy of which is filed as Exhibit (a)(1)(A) hereto, is incorporated herein by reference. The following is a summary of the material terms of the Offer and is qualified in its entirety by reference to the Offer to Purchase.
Offer Price. The Offeror is offering to purchase Shares at a price of $4.01 per Share, net to the seller in cash, without interest and subject to any applicable withholding taxes (the "Offer Price").
Maximum Number of Shares. The Offeror is offering to purchase up to 6,980,050 Shares (the "Maximum Amount"), representing approximately 34.9% of the 20,000,000 Shares outstanding as of the most recent practicable date.
Minimum Tender Condition. The Offer is conditioned upon at least 5,000,000 Shares (representing approximately 25.0% of the outstanding Shares) having been validly tendered and not properly withdrawn prior to the Expiration Date (the "Minimum Tender Condition"). The Offeror will not waive the Minimum Tender Condition.
Proration. If more than 6,980,050 Shares are validly tendered and not properly withdrawn prior to the Expiration Date, the Offeror will accept Shares for payment on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares. For purposes of proration, the number of Shares to be accepted from each tendering shareholder will be determined by multiplying the number of Shares validly tendered by such shareholder by a proration factor. The proration factor will be equal to the Maximum Amount (6,980,050) divided by the total number of Shares validly tendered and not withdrawn. Shares tendered by holders of "odd lots" (holders who own beneficially or of record an aggregate of fewer than 100 Shares and who validly tender all such Shares) will not be subject to proration. The Offeror will announce the final proration factor and results of proration promptly after the Expiration Date. Preliminary results may be announced by the Offeror or the Information Agent before such time, but such preliminary results will not be binding.
Expiration Date. The Offer will expire at 12:00 midnight, New York City time, at the end of October 8, 2021 (such date and time, as it may be extended, the "Expiration Date"), unless extended by the Offeror. The Offer will remain open for a period of twenty (20) business days from the date of commencement, as required by Rule 14e-1(a) under the Exchange Act.
Extension of the Offer. The Offeror expressly reserves the right, in its sole discretion, to extend the Offer for one or more additional periods of time, for any reason, including the failure of any condition to the Offer to be satisfied or waived. If the Offeror extends the Offer, it will make a public announcement of such extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the right of each tendering shareholder to withdraw its Shares at any time prior to the extended Expiration Date.
Withdrawal Rights. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. In addition, pursuant to Section 14(d)(5) of the Exchange Act, Shares tendered may be withdrawn at any time after November 7, 2021 (the 40th business day following the commencement of the Offer), unless such Shares have been previously accepted for payment. To be effective, a written notice of withdrawal must be timely received by the Depositary at one of its addresses set forth in the Letter of Transmittal.
Acceptance and Payment. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Offeror will accept for payment and pay for all Shares validly tendered and not properly withdrawn (subject to proration, if applicable) promptly after the Expiration Date. The Offeror will pay for such Shares by depositing the aggregate Offer Price with the Depositary, which will act as agent for tendering shareholders for purposes of receiving payment and transmitting payment to tendering shareholders.
Conditions to the Offer. The Offer is subject to the satisfaction or waiver (to the extent permissible) of each of the following conditions, as more fully described in Section 15 of the Offer to Purchase:
(i) Minimum Tender Condition. At least 5,000,000 Shares shall have been validly tendered and not properly withdrawn prior to the Expiration Date.
(ii) No Legal Restraint. No temporary restraining order, preliminary or permanent injunction, or other order, decree, or ruling issued by any court of competent jurisdiction or any governmental body, and no statute, rule, regulation, governmental order, or injunction shall be in effect that would prohibit, render illegal, or otherwise make unlawful the Offeror's acceptance for payment of, or payment for, any Shares tendered pursuant to the Offer.
(iii) HSR Act. Any applicable waiting period under the HSR Act shall have expired or been terminated, and any agreement with any governmental entity not to consummate the Offer shall have terminated or been waived.
(iv) No Material Adverse Effect. Since August 27, 2021, there shall not have occurred any event, change, effect, development, condition, or occurrence that, individually or in the aggregate, has had, or would reasonably be expected to have, a material adverse effect on the business, financial condition, assets, liabilities, or results of operations of Pinnacle and its subsidiaries, taken as a whole (a "Material Adverse Effect").
(v) Financing Condition. The committed financing described in Item 7 of this Schedule TO shall be available to the Offeror on terms substantially consistent with the Commitment Letter (as defined below), and the conditions to funding set forth therein shall have been satisfied or waived.
(vi) No Rights Plan. No shareholder rights plan, "poison pill," or similar anti-takeover arrangement shall have been adopted, triggered, or become applicable to the Offer or the purchase of Shares pursuant thereto that would materially impair the Offeror's ability to consummate the Offer. As of the date of this filing, the Offeror is not aware of any such plan or arrangement.
The Offeror reserves the right, in its sole discretion, to waive any condition to the Offer (other than the Minimum Tender Condition) and to make any change in the terms of or conditions to the Offer, subject to applicable law. The failure by the Offeror at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, and each such right will be deemed an ongoing right that may be asserted at any time and from time to time.
(b) Purchases
During the period from June 1, 2021 through August 25, 2021, AMH LLC purchased a total of 980,000 Shares of Pinnacle common stock through open-market purchases on Nasdaq at prices ranging from $3.05 to $3.52 per Share, with a volume-weighted average purchase price of approximately $3.28 per Share. The aggregate cost of such purchases was approximately $3,214,400. A detailed schedule of all such transactions is set forth in Schedule II to this Schedule TO. No Shares were purchased by any other Filing Person or by any director or executive officer of any Filing Person during such period.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS, AND AGREEMENTS
(a) Agreements Involving the Subject Company's Securities
Except for (i) the open-market purchases of 980,000 Shares of Pinnacle common stock by AMH LLC between June 1, 2021 and August 25, 2021, as described in Items 4(b) and 8 of this Schedule TO and in Schedule II hereto, and (ii) the Offer described herein, there are no contracts, arrangements, understandings, or relationships (legal or otherwise) between the Filing Persons (or any of their respective affiliates, directors, or executive officers) and any other person with respect to any securities of Pinnacle.
The Filing Persons have not entered into any agreements, arrangements, or understandings with Pinnacle, its directors, officers, or affiliates with respect to the purchase, transfer, voting, or tendering of Pinnacle securities in connection with the Offer or otherwise. No Filing Person has entered into any standstill agreement, voting agreement, registration rights agreement, or similar arrangement with Pinnacle or any of its affiliates.
No Filing Person has entered into any agreement with any other person regarding the transfer, voting, or tendering of any securities of Pinnacle. There are no lock-up agreements, support agreements, or commitments by any shareholder of Pinnacle to tender Shares in the Offer.
(b) Significant Corporate Events
Except for the Offer described herein and the open-market purchases described above, the Filing Persons have not had any negotiations, transactions, or material contacts with Pinnacle or its officers, directors, employees, agents, or other representatives concerning: (i) a merger, consolidation, or acquisition; (ii) a tender offer for or other acquisition of any class of securities of Pinnacle; (iii) an election of directors of Pinnacle or any change in the present management of Pinnacle; (iv) a sale or transfer of a material amount of assets of Pinnacle; or (v) any other material change in the present business or corporate structure of Pinnacle.
On September 1, 2021, the Board of Directors of Aurelius Global Media Group PLC, at a duly convened meeting at which a quorum was present, adopted a resolution authorizing the commencement of the Offer on the terms and conditions described herein and in the Offer to Purchase, including the formation of AMH LLC as the offeror entity, the retention of advisors and agents, and the execution of the Commitment Letter with Brindoval National Bank, N.A. The resolution was adopted by a vote of the Board of Directors, with all directors present voting in favor. A copy of the board resolution has not been filed as an exhibit to this Schedule TO, but a description of the substance of the resolution is provided in the Offer to Purchase.
The Filing Persons have not engaged in any discussions, negotiations, or communications with any third party regarding a potential joint bid, co-investment, or other collaborative arrangement in connection with the Offer or any potential acquisition of Pinnacle.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) Purposes
The purpose of the Offer is to acquire a significant minority equity interest (up to approximately 34.9% of the outstanding Shares) in Pinnacle Content Holdings, Inc., establishing a strategic position in Pinnacle's content library and streaming licensing pipeline. Pinnacle maintains an extensive and well-regarded content library comprising approximately 1,800 hours of programming across drama, documentary, and reality television formats. Aurelius believes that Pinnacle's content library and its existing relationships with major streaming platforms and international distributors are complementary to Aurelius's own media and entertainment operations, including its AureliusNow digital streaming platform and its Aurelius Studios content production division.
Aurelius believes that a significant minority stake in Pinnacle would provide Aurelius with the opportunity to participate in the future growth and value creation of Pinnacle's business, including the monetization of Pinnacle's content library through digital distribution, the expansion of Pinnacle's programming pipeline, and the potential for strategic collaboration between Aurelius and Pinnacle in content development and distribution.
The Filing Persons do not presently intend to acquire 100% of the outstanding Shares of Pinnacle or to take Pinnacle private. The Offer is structured as a partial tender offer for a non-controlling position. Aurelius believes that the Offer Price of $4.01 per Share represents an attractive premium to Pinnacle's undisturbed trading price and fair value for a minority stake, and provides Pinnacle's shareholders with a meaningful opportunity to realize liquidity at a premium to the prevailing market price.
(b) Plans or Proposals
Following completion of the Offer, Aurelius may, depending on the outcome of the Offer and the circumstances existing at the time, seek to obtain representation on Pinnacle's Board of Directors. The number and nature of any board seats sought will depend on discussions between Aurelius and Pinnacle's Board of Directors and management, the number of Shares acquired in the Offer, and other factors. As of the date of this Schedule TO, no specific proposals for board representation have been made or discussed with Pinnacle.
Aurelius expressly reserves the right, subject to applicable law (including the Exchange Act and the rules and regulations thereunder), to purchase additional Shares of Pinnacle common stock in the open market, in privately negotiated transactions, or through one or more additional tender offers, subject to Aurelius's assessment of Pinnacle's business and prospects, market conditions, applicable legal and regulatory requirements, and other factors. Any such additional purchases may be at prices above, below, or equal to the Offer Price and may be effected at any time following the consummation or termination of the Offer. There can be no assurance that any such additional purchases will be made.
Except as described above, the Filing Persons do not currently have any plan or proposal to:
(i) effect any extraordinary corporate transaction involving Pinnacle or any of its subsidiaries, such as a merger, consolidation, reorganization, or liquidation;
(ii) sell or transfer a material amount of assets of Pinnacle or any of its subsidiaries;
(iii) change the Board of Directors or management of Pinnacle, other than as described above with respect to potential board representation;
(iv) change Pinnacle's present capitalization or dividend policy;
(v) change Pinnacle's corporate structure, charter, or bylaws;
(vi) cause a class of securities of Pinnacle to be delisted from a national securities exchange or to cease to be authorized for quotation in an inter-dealer quotation system of a registered national securities association; or
(vii) cause a class of equity securities of Pinnacle to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act.
Notwithstanding the foregoing, Aurelius reserves the right to change its plans and intentions at any time, as it deems appropriate, based on its ongoing review of Pinnacle's business, financial condition, and prospects, general market conditions, regulatory developments, and other factors. Any changes in Aurelius's plans and intentions will be disclosed in accordance with applicable law.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) Source of Funds
The total amount of funds required to purchase the maximum number of Shares sought in the Offer and to pay all related fees and expenses is estimated to be approximately $30,000,000, consisting of: (i) up to approximately $27,989,000.50 for the purchase of up to 6,980,050 Shares at the Offer Price of $4.01 per Share; and (ii) estimated fees and expenses of approximately $2,000,000 in connection with the Offer.
The Offer will be funded through a combination of available cash on hand at Aurelius Global Media Group PLC and borrowings under a committed senior secured term loan facility. The specific sources of funds are as follows:
Brindoval National Bank, N.A. Commitment Letter. Pursuant to a commitment letter dated August 20, 2021 (reference number: CL-2021-MTC-00487) (the "Commitment Letter"), a copy of which is filed as Exhibit (b)(1) hereto, Brindoval National Bank, N.A. ("Brindoval"), with offices at 383 Madison Avenue, New York, New York 10179, has committed to provide a senior secured term loan facility (the "Term Loan Facility") to Aurelius Media Holdings LLC, as borrower, in an aggregate principal amount of up to $30,000,000. The Term Loan Facility is guaranteed by Aurelius Global Media Group PLC. The principal terms of the Commitment Letter are as follows:
Borrower: Aurelius Media Holdings LLC
Guarantor: Aurelius Global Media Group PLC
Lender: Brindoval National Bank, N.A.
Facility Amount: $30,000,000 senior secured term loan
Interest Rate: LIBOR (London Interbank Offered Rate) plus 3.25% per annum, subject to a LIBOR floor of 0.50%
Maturity: Three (3) years from the date of initial funding
Commitment Expiration: The commitment will expire at 11:59 p.m., New York City time, on December 31, 2021, unless extended by mutual agreement of the parties
Commitment Fee: 0.50% per annum on undrawn amounts under the commitment (equivalent to approximately $150,000 per annum on the full $30,000,000 commitment)
Security: A first-priority pledge of the Shares of Pinnacle acquired by AMH LLC in the Offer and through open-market purchases, and a pledge of all equity interests of AMH LLC held by Aurelius PLC
Lead Arranger: Brindoval National Bank, N.A.
Lead Arranger Contact: Thomas Brierly, Director, Media & Telecom Lending, Brindoval National Bank, N.A., 383 Madison Avenue, New York, New York 10179, Telephone: (212) 555-0322
The Commitment Letter provides that the Term Loan Facility will be available in a single draw on the closing date of the Offer, subject to the satisfaction (or waiver) of certain conditions precedent. The proceeds of the Term Loan Facility, together with available cash on hand at Aurelius PLC, will be sufficient to fund the full purchase price for the maximum number of Shares sought in the Offer, plus all related fees and expenses.
The Offer is conditioned upon the availability of committed financing as described in the Offer to Purchase and in this Item 7. The Filing Persons believe, based on the terms of the Commitment Letter and the representations and undertakings of Brindoval, that the committed financing will be available to fund the Offer.
(b) Conditions to Financing
The Term Loan Facility provided under the Commitment Letter is subject to certain customary conditions precedent to funding, including: (i) the execution and delivery of definitive loan documentation in form and substance reasonably satisfactory to Brindoval and AMH LLC; (ii) the accuracy in all material respects of the representations and warranties of AMH LLC and Aurelius PLC in the definitive loan documentation on the date of funding; (iii) the absence of any event of default or any event that, with the giving of notice or the lapse of time, would constitute an event of default; (iv) the absence of any material adverse change in the business, financial condition, operations, or prospects of Aurelius PLC and its consolidated subsidiaries (taken as a whole) since December 31, 2020; (v) the satisfaction (or waiver) of the conditions to the Offer set forth in Section 15 of the Offer to Purchase; (vi) the delivery of customary opinions of counsel, officers' certificates, and other closing documents; and (vii) the perfection of security interests in the collateral described above.
The Filing Persons do not believe that any of the conditions to the financing described above are unlikely to be satisfied.
(c) Expenses
The estimated fees and expenses to be incurred by the Filing Persons in connection with the Offer are as follows:
The Offeror will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than the fees payable to the Information Agent and the Depositary as described above). Brokers, dealers, commercial banks, trust companies, and other nominees will, upon request, be reimbursed by the Offeror for customary mailing and handling expenses incurred by them in forwarding the Offer materials to the beneficial owners of Shares held by them as nominee or in a fiduciary capacity.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) Securities Ownership
As of the date of this Schedule TO, AMH LLC beneficially owns 980,000 Shares of Pinnacle common stock, representing approximately 4.9% of the 20,000,000 Shares outstanding (based on the number of Shares outstanding as reported in Pinnacle's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021). All 980,000 Shares are held directly by AMH LLC.
Aurelius Global Media Group PLC, as the sole member of AMH LLC, may be deemed to be the beneficial owner of the 980,000 Shares held by AMH LLC, in accordance with Rule 13d-3 under the Exchange Act. Aurelius PLC disclaims beneficial ownership of such Shares except to the extent of its pecuniary interest therein by reason of its status as the sole member of AMH LLC.
No other Filing Person, and no director or executive officer of Aurelius PLC or AMH LLC, directly or indirectly owns, beneficially or of record, any Shares or other securities of Pinnacle, or has any right to acquire any such securities, whether through the exercise of options, warrants, conversion privileges, or otherwise. None of the persons listed in Schedule I hereto beneficially owns any Shares other than as described above with respect to AMH LLC.
(b) Securities Transactions
During the sixty (60) days preceding the date of this Schedule TO, the following transactions in Shares of Pinnacle common stock were effected by the Filing Persons:
AMH LLC purchased an aggregate of 980,000 Shares through open-market purchases on Nasdaq during the period from June 1, 2021 through August 25, 2021, at an average price of approximately $3.28 per Share. The aggregate cost of such purchases was approximately $3,214,400. A detailed schedule of all such transactions, including the date, number of Shares, and price per Share for each transaction, is set forth in Schedule II to this Schedule TO, which is incorporated herein by reference.
No other Filing Person, and no director or executive officer of any Filing Person, effected any transactions in Shares or other securities of Pinnacle during the sixty (60) days preceding the date of this Schedule TO.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED, OR USED
(a) Solicitations or Recommendations
The following persons have been retained, employed, compensated, or used by the Filing Persons in connection with the Offer:
Strathmore Corporation Harcourt Partners. The Filing Persons have retained Strathmore Corporation Harcourt Partners ("Strathmore Corporation Harcourt"), a financial advisory firm with offices at 280 Park Avenue, 18th Floor, New York, New York 10017, as financial advisor to Aurelius in connection with the Offer. Strathmore Corporation Harcourt has provided and is providing strategic and financial advisory services in connection with the structuring, pricing, and execution of the Offer. The engagement is led by Genevieve Tran, Managing Director, Cross-Border M&A. Strathmore Corporation Harcourt is entitled to a commencement fee of $400,000, which was paid upon the launch of the Offer, and a success fee of $600,000, which will become payable upon the acceptance for payment of Shares tendered pursuant to the Offer. In addition, Aurelius has agreed to reimburse Strathmore Corporation Harcourt for its reasonable out-of-pocket expenses and to indemnify Strathmore Corporation Harcourt and certain related persons against certain liabilities and expenses, including certain liabilities under the federal securities laws, in connection with its engagement.
Ridgeway Proxy Advisors LLC. The Filing Persons have retained Ridgeway Proxy Advisors LLC ("Ridgeway"), with offices at 105 Madison Avenue, Suite 1200, New York, New York 10016, as the information agent for the Offer. Ridgeway will assist with the dissemination of the Offer materials to shareholders of Pinnacle and will respond to inquiries from shareholders and their representatives concerning the terms and conditions of the Offer. The engagement is led by Martin Cheswick, Senior Managing Director. Ridgeway will receive customary compensation for its services as information agent, will be reimbursed for its reasonable out-of-pocket expenses, and will be indemnified by the Offeror against certain liabilities and expenses, including certain liabilities under the federal securities laws, in connection with its engagement.
Continental Fiduciary Services, Inc. The Filing Persons have retained Continental Fiduciary Services, Inc. ("Continental"), with offices at 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, New York 10004, as the depositary and paying agent for the Offer. Continental will receive, hold, and process all Shares tendered and will distribute payment for Shares accepted for payment. The engagement is led by Lisa Pryor, Vice President, Corporate Actions. Continental will receive customary compensation for its services as depositary, will be reimbursed for its reasonable out-of-pocket expenses, and will be indemnified by the Offeror against certain liabilities and expenses in connection with its engagement.
Calderwood & Harkness LLP. Calderwood & Harkness LLP ("Calderwood & Harkness"), with offices at 787 Seventh Avenue, 42nd Floor, New York, New York 10019, serves as U.S. mergers and acquisitions counsel to Aurelius and AMH LLC in connection with the Offer. The responsible partner is James Prentice, and the billing partner is Sandra Tung. Calderwood & Harkness has prepared and is assisting with the preparation of all SEC filings, the Offer to Purchase, the Letter of Transmittal, and other Offer materials, and is providing legal advice on all aspects of the Offer, including compliance with the Exchange Act, the HSR Act, and applicable state laws. Calderwood & Harkness is being compensated on an hourly basis for its services, with total fees estimated at $350,000 to $500,000, subject to the scope and duration of the engagement.
Dunmore Asset Advisors Chambers LLP. Dunmore Asset Advisors Chambers LLP ("Dunmore Asset Advisors Chambers"), with offices at 12 King's Bench Walk, London EC4Y 7EL, United Kingdom, serves as English law counsel to Aurelius in connection with the Offer. The engagement is led by Alistair Drummond, Partner. Dunmore Asset Advisors Chambers is advising Aurelius on its disclosure and reporting obligations under the rules and regulations of the London Stock Exchange and the UK Financial Conduct Authority, as well as the applicability (or non-applicability) of the UK City Code on Takeovers and Mergers (the "UK Takeover Code") to the Offer. Dunmore Asset Advisors Chambers is being compensated on an hourly basis for its services.
Except as described above, no person has been employed, retained, or compensated to make solicitations or recommendations to the holders of Shares in connection with the Offer. Neither the Offeror nor any of the other Filing Persons has authorized any person to make any solicitation or recommendation in connection with the Offer other than as contained in the Offer to Purchase and the related materials filed as exhibits hereto.
ITEM 10. FINANCIAL STATEMENTS
The Filing Persons are not required to furnish financial statements pursuant to Instruction 9 to Schedule TO because: (i) the consideration to be paid in the Offer consists solely of cash; (ii) the Offer is not subject to a financing condition that is not reasonably likely to be satisfied; and (iii) the Filing Persons are not the subject company. Accordingly, no financial statements of the Filing Persons are included in or filed as part of this Schedule TO.
Notwithstanding the foregoing, the Filing Persons note the following for the information of shareholders of Pinnacle:
Aurelius Global Media Group PLC. The most recent audited consolidated financial statements of Aurelius PLC are included in Aurelius PLC's Annual Report and Accounts for the fiscal year ended December 31, 2020 (the "Aurelius Annual Report"), which was prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The Aurelius Annual Report is available on the London Stock Exchange's Regulatory News Service and on Aurelius's corporate website. Aurelius's independent auditor is Kingsley Dunbar LLP, Chartered Accountants and Statutory Auditors, with offices at 1 Finsbury Square, London EC2A 1AE, United Kingdom. For the fiscal year ended December 31, 2020, Aurelius reported consolidated revenue of approximately £1.48 billion and adjusted EBITDA of approximately £312 million.
Pinnacle Content Holdings, Inc. Pinnacle's most recent audited financial statements are included in Pinnacle's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC and available through the SEC's EDGAR system (www.sec.gov). Pinnacle's most recent unaudited financial statements are included in Pinnacle's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, also available through EDGAR. For the fiscal year ended December 31, 2020, Pinnacle reported total revenue of approximately $112,400,000 and EBITDA of approximately $14,600,000. Pinnacle's independent registered public accounting firm is Pryor Keating & Associates LLP, with offices at 350 South Grand Avenue, Suite 3600, Los Angeles, California 90071.
ITEM 11. ADDITIONAL INFORMATION
(a) Agreements, Regulatory Requirements, and Legal Proceedings
Hart-Scott-Rodino Antitrust Improvements Act of 1976. On August 30, 2021, the Filing Persons filed a Premerger Notification and Report Form (the "HSR Notification") under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") with respect to the proposed acquisition of Shares in the Offer. The HSR Transaction Number assigned to the notification is 20211892. The applicable HSR filing fee of $45,000 was paid at the time of filing. The fee was calculated based on the 2021 filing thresholds; the aggregate transaction value of approximately $28,000,000 fell within the applicable threshold band requiring a $45,000 fee.
The Offer is conditioned upon the expiration or early termination of the applicable waiting period under the HSR Act. Under the HSR Act, the initial waiting period applicable to the acquisition of Shares in the Offer is 15 calendar days after the date of filing of the HSR Notification (or, if such 15th day is not a business day, the next business day). During the waiting period, the FTC or the DOJ may request additional information or documentary material (a "Second Request") from the Filing Persons. If a Second Request is made, the waiting period would be extended until 10 calendar days after the date of substantial compliance by the Filing Persons with such request. The FTC or the DOJ may also seek to enjoin the consummation of the Offer if it determines that the acquisition would violate the antitrust laws.
As of the date of this Schedule TO, the initial HSR waiting period had not yet expired. The Filing Persons note that early termination of the waiting period was subsequently granted by the FTC on September 15, 2021.
State Takeover Statutes. The Filing Persons have reviewed the applicability of various state anti-takeover statutes to the Offer, including Section 203 of the Delaware General Corporation Law ("DGCL Section 203"). DGCL Section 203 generally prohibits a Delaware corporation from engaging in a "business combination" (as defined therein) with an "interested stockholder" (generally, a person who owns 15% or more of the corporation's outstanding voting stock) for a period of three years following the time such person became an interested stockholder, unless certain conditions are met. Because the Offer is a partial tender offer for less than a majority of the outstanding Shares and because AMH LLC is not currently an "interested stockholder" within the meaning of DGCL Section 203, the Filing Persons believe that DGCL Section 203 does not currently apply to the Offer as structured. However, if the Offer is consummated and AMH LLC acquires 15% or more of Pinnacle's outstanding voting stock, DGCL Section 203 could apply to any subsequent "business combination" between AMH LLC (or its affiliates) and Pinnacle. The Filing Persons do not currently intend to engage in any transaction that would constitute a "business combination" within the meaning of DGCL Section 203.
The Filing Persons have also considered the applicability of the anti-takeover statutes of the State of California, where Pinnacle maintains its principal executive offices, as well as any other state anti-takeover statutes that may apply. The Filing Persons do not believe that any such state anti-takeover statutes apply to the Offer or would impair the consummation thereof. If any applicable state anti-takeover statute is found to apply to the Offer, the Offeror may seek to challenge the applicability or validity of such statute or take such other action as the Offeror deems appropriate.
UK Regulatory Considerations. Dunmore Asset Advisors Chambers LLP has advised Aurelius on the implications of the UK City Code on Takeovers and Mergers (the "UK Takeover Code") and the rules and regulations of the London Stock Exchange (the "LSE Rules"), including the Listing Rules of the Financial Conduct Authority, in connection with the Offer. Because Pinnacle is a United States corporation incorporated in the State of Delaware and listed on Nasdaq, and because the Offer does not involve a UK-listed target company, the UK Takeover Code does not apply to the Offer. Aurelius's disclosure and reporting obligations as a listed company on the London Stock Exchange under the LSE Rules, the Disclosure Guidance and Transparency Rules, and the Market Abuse Regulation are being addressed separately by Aurelius and its advisors.
No Appraisal Rights. The Offer does not give rise to statutory appraisal rights under the DGCL. Shareholders who tender their Shares in the Offer will not be entitled to exercise appraisal rights in connection with the Offer.
Antitrust. Other than the HSR Notification described above, the Filing Persons are not aware of any other regulatory or antitrust filing requirements in any jurisdiction in connection with the consummation of the Offer. The Filing Persons do not believe that the acquisition of Shares in the Offer raises any material antitrust or competition law concerns.
Litigation. As of the date of this Schedule TO, there are no material legal proceedings relating to the Offer pending or, to the knowledge of the Filing Persons, threatened.
(b) Other Material Information
The Offer to Purchase filed as Exhibit (a)(1)(A) hereto contains additional material information relating to the Offer that is not summarized in this Schedule TO, including, without limitation: (i) a detailed description of Pinnacle's business and operations; (ii) the background of the Offer, including the process by which Aurelius identified Pinnacle as a potential investment opportunity and determined to commence the Offer; (iii) a detailed description of the source of funds for the Offer and the terms of the committed financing; (iv) a complete description of the conditions to the Offer; (v) a description of the proration mechanics applicable in the event that more than 6,980,050 Shares are tendered; (vi) a description of the procedures for tendering Shares, including through the use of the Letter of Transmittal and the Notice of Guaranteed Delivery; (vii) a detailed description of withdrawal rights; (viii) a discussion of certain United States federal income tax consequences of the Offer to tendering shareholders; (ix) a discussion of the regulatory approvals required for the Offer; and (x) other information that may be material to a shareholder's decision whether to tender Shares in the Offer. All such information is incorporated herein by reference.
The audited and unaudited financial statements and other financial information of the Filing Persons are publicly available through the channels described in Item 10 of this Schedule TO. Shareholders are encouraged to read the Offer to Purchase and the related materials carefully and in their entirety before making a decision with respect to the Offer.
ITEM 12. EXHIBITS
The following documents are filed as exhibits to this Schedule TO:
\* Filed herewith.
\\ Portions of this exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act, and the redacted portions have been filed separately with the SEC.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3
Not applicable. This transaction is not a "going-private" transaction within the meaning of Rule 13e-3 under the Exchange Act. The Offer is a partial tender offer for a non-controlling minority interest in Pinnacle and is not intended to result, and is not reasonably likely to result, in the Shares being held of record by fewer than 300 persons, the delisting of the Shares from Nasdaq, the termination of the registration of the Shares under Section 12(g) of the Exchange Act, or the suspension of Pinnacle's reporting obligations under Section 15(d) of the Exchange Act.