Real-Estate Deal Will Net Image $2.9 Million5 Sep, 2002 By: Hive News
Image Entertainment, a licensee and distributor of DVD programming has announced tit will sell and leaseback its Las Vegas distribution facility. RDS Investments & Development, LLC will pay Image $6 million to purchase approximately 8.11 acres, consisting of Image's 76,000-square-foot warehouse and distribution facility on more than 4 acres and the adjacent 4.07 acres of vacant land.
Image estimates it will receive net proceeds of approximately $2.9 million, after deducting transactional costs and an approximate $2.8 million pay-down of its revolving credit facility with Bank of America that is secured by real estate. The company plans to use the net proceeds to further reduce its existing debt.
At the time of sale, Image will enter into two lease agreements with the buyer: a 10-year building lease for the existing warehouse and distribution facility with three five-year options, and a five-year lease for the adjacent vacant land which may be used for future expansion of the warehouse.
The deal is expected to close no later than Nov. 30, 2002.
Closing is contingent on buyer financing, approval of Image's lenders, and customary due diligence.
"This transaction is a significant step in implementing our ongoing strategy to strengthen the company's balance sheet, by paying down debt and freeing up cash," said Martin W. Greenwald, Image's president and CEO, in a statement.
"While the company will receive approximately $2.9 million in needed working capital, our operations will be unaffected by the transaction," Greenwald said. "The leaseback will allow distribution and fulfillment of both Image and DVDPlanet.com orders to continue uninterrupted, and the adjacent land lease will allow us to expand our distribution capability as our business grows."