ErosSTX Receives Notification from NYSE Regarding its Annual Report Filing Delay and Common Stock Trading Price
5:09 PM ET 8/25/21 | BusinessWire
-- The NYSE has granted the Company an initial cure period of up to six
months to regain compliance, subject to ongoing NYSE monitoring
-- The Company is providing an update on its ongoing financial review
process and debt restructuring
DOUGLAS, Isle of Man & BURBANK, Calif.--(BUSINESS WIRE)--August 25, 2021--
Eros STX Global Corporation (NYSE: ESGC) ("ErosSTX" or the "Company") announces that the New York Stock Exchange (the "NYSE") notified the Company that it is not in compliance with the NYSE Listed Company Manual listing requirements for (i) the timely filing of its Annual Report and (ii) the minimum trading price for its common stock.
Such notifications are standard operating procedure for the NYSE in such situations, as is this announcement by the Company. The NYSE notifications have no immediate impact on the listing of the Company's common stock, which will continue to trade on the NYSE, subject to the Company's compliance with the other continued listing requirements of the NYSE. Under the NYSE rules, the Company has up to six months to regain compliance, subject to monitoring by the NYSE.
The Company is also providing an update on its ongoing financial review process and debt restructuring.
Annual Report Filing Delinquency and Ongoing Financial Review Process Update
On August 18, 2021, the NYSE notified the Company that it is not in compliance with Section 802.01E of the NYSE Listed Company Manual due to the Company's previous disclosure of the delay in filing with the Securities and Exchange Commission ("SEC") its Annual Report on Form 20-F for the fiscal year ended March 31, 2021. Under the NYSE rules, the Company will have up to six months from August 18, 2021 to file its Annual Report. The Company can regain compliance with the NYSE listing standard by filing the Annual Report before such date. If the Company fails to file its Annual Report within six months from the filing due date, the NYSE may, in its sole discretion, allow the Company's securities to trade for up to an additional six months depending on specific circumstances, as outlined in Section 802.01E of the NYSE Listed Company Manual. It is expected by the NYSE that the Company will submit an official request for the NYSE's consideration at the appropriate time. If the NYSE determines that an additional six month trading period is not appropriate, suspension and delisting procedures will commence pursuant to Section 804.00 of the NYSE Listed Company Manual. If the NYSE determines that an additional trading period of up to six months is appropriate and the Company fails to file its Annual Report and any subsequent delayed filings by the end of that period, suspension and delisting procedures will generally commence. Regardless of the procedures described above, the NYSE may commence delisting proceedings at any time during the period that is available to the Company to complete the filing of the Annual Report, if circumstances warrant.
As previously disclosed in a Form 12b-25 filed with the SEC on August 3, 2021, the Company is unable to file its Annual Report without unreasonable effort or expense primarily because the Company's Audit Committee is currently conducting a formal internal review of certain accounting practices and internal controls related to its Eros subsidiaries. Significant revenue from the Eros subsidiaries may not have been appropriately recognized during the fiscal year ending March 31, 2020, which was before the completion of the merger with STX Filmworks, Inc ("STX").
Even though the Audit Committee has not completed the internal review, during the course of its review it has determined that approximately $85.5 million of Eros pre-merger revenue was not properly recognized in the fiscal year ended March 31, 2020. The Company cannot determine at this time when it will conclude the remaining work necessary to complete the internal review, preparation of the financial statements and assessment of its internal controls over financial reporting.
Share Price Below Compliance Standard
On August 20, 2021, the NYSE notified the Company that it is not in compliance with Section 802.01C of the NYSE Listed Company Manual because the Company's average closing share price was less than $1.00 over a consecutive 30 trading-day period. Under the NYSE rules, the Company will have up to six months from August 20, 2021 to cure the price condition. The Company can regain compliance at any time during the cure period if on the last trading day of any calendar month the Company has (i) a closing share price of at least $1.00 and (ii) an average closing share price of at least $1.00 over a consecutive 30 trading-day period.
Debt Restructuring Update
The Company is progressing with its plan to address requirements to have delivered audited financial statements by July 31, 2021 and the near-term debt maturities in connection with (i) the $150.1 million outstanding under the Asset-backed credit facility with JPMorgan (the "JPM Facility") that matures October 7, 2021, (ii) the $22.7 million outstanding under the STX Mezzanine Debt Facility that matures July 7, 2022 ("STX Mezzanine Debt") and (iii) the Company's GBP50 million ($69 million) 6.50% UK retail bonds that mature October 15, 2021 (the "UK Retail Bonds").
In the Company's press release dated August 3, 2021, STX announced its possible plan to repay both the JPM Facility as well as the STX Mezzanine Debt. Since then, the JPM Facility and STX Mezzanine Debt financial statement delivery date has been extended from July 31, 2021 to September 27, 2021.
To address the UK Retail Bonds, the Company has submitted a request to bondholders to, among other things, extend the fiscal 2021 financial statement delivery date from July 31, 2021 to November 30, 2021, as well as to extend the maturity date of the bonds to April 15, 2023, as disclosed in the Company's Form 6-K furnished to the SEC on August 10, 2021. The bondholder meeting will be held on September 3, 2021. The meeting requires a quorum of at least 75% of the Bonds outstanding and for the proposal to pass at least 75% of the votes cast must be in favor. If the quorum is not achieved at this first meeting, the Company has the right, and expects to, adjourn and convene a second meeting as soon as September 17, 2021. The second meeting requires a quorum of at least 25% of the Bonds outstanding and at least 75% of the votes cast in favor of the proposal.
Nothing in this document constitutes an offer to buy or the solicitation of an offer to sell securities in any jurisdiction in which such offer or solicitation would be unlawful
