Deluxe Entertainment has reached a debt-for-equity deal with the majority of its lenders that will help the company avoid bankruptcy. The post-production and effects house has been owned by Ronald …
has reached a debt-for-equity deal with the majority of its lenders that will help the company avoid bankruptcy.
The company has been struggling with negative cash flows caused by fewer wide releases, delays of film projects, and the decline in DVD and Blu-ray sales, according to an Aug. 16 report from Moody’s Investors Service. The ratings agency downgraded Deluxe’s debt after the company abandoned a plan to deleverage by spinning off its creative services division. The company has been engaged in negotiations to restructure its balance sheet.
“The agreement is a positive step forward for Deluxe that will dramatically improve our liquidity and optimize the business,” said CEO John Wallace, in a statement. “Our business is strong, and upon completion of the comprehensive deleveraging, we’ll be further positioned for long-term growth and success.”
“MacAndrews & Forbes has been a proud sponsor of Deluxe for nearly 15 years,” the holding company said. “We have been fully supportive of the refinancing and restructuring process however, we have decided not to participate in the refinancing. We believe this refinancing will enable the company to continue to service its customers and partners well as it has for the last 100 years.”
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