The nation’s largest owner/operator of DVD rental kiosks strategically located in grocery stores. TNR was founded in late 2003 and had 215 deployed kiosks as of October 2005.
Brookwood Associates advised TNR, including its majority owner, Celerity Partners, on the placement of $10 million in growth financing to support its plan to rollout an additional 2,000 kiosks over the next 24 months.
Engagement Process and Outcomes
Need for Capital – Although TNR had secured contracts with many of the nation’s leading grocery store chains, their inability to meet the overwhelming demand for kiosks was significantly hindering growth. In order for TNR to meet its contractual agreements and maintain favorable relationships with its grocery partners, it was Brookwood’s challenge to run a very thorough yet efficient and extremely fast-paced process.
Thorough, Effective Process – Brookwood drafted a comprehensive information memorandum and management presentation that effectively positioned the business by highlighting the compelling unit economics, emphasizing TNR’s leadership in operations and management, and explaining the sustainability of the DVD rental industry. Additionally, Brookwood effectively marketed the opportunity to a large potential investor base.
Excellent Results – The expedited process generated numerous interested investors. In a very short period of time, TNR received the capital infusion needed to rapidly expand the business and grow its leadership position in the grocery channel. Through a non-control sale of stock, TNR’s shareholders received an attractive valuation, a favorable transaction structure and a capital partner with additional resources to support future growth capital needs.
Press Release Excerpt
We are pleased to announce that Brookwood Associates advised The New Release ("TNR"), a portfolio company of Laminar Direct Capital (a unit of D.E. Shaw), Celerity Partners and Chapton Partners, on a $35 million senior and subordinated debt facility provided by MCG Capital Corporation and a $10 million equity investment provided by MCG and the existing shareholders. TNR is the nation's largest owner / operator of DVD rental kiosks located in grocery stores. This growth financing supported TNR's national roll-out of kiosks in Kroger stores. Highlights of this assignment include:
Repeat Client: This is Brookwood's second transaction for TNR. Brookwood successfully raised $10 million of growth equity for TNR on attractive terms in December 2005.
Immediate Need for Capital: In July 2006, TNR secured the contract to deploy its DVD rental kiosks in Kroger grocery stores nationwide. TNR challenged Brookwood to run a fast-paced process to secure over $25 million required to support the rapid deployment timeline.
Thorough, Effective Process: Brookwood quickly revamped TNR's prior equity-oriented materials into a debt-focused document emphasizing: (i) the compelling unit economics, track record and underlying cash flows; (ii) TNR's leading market position, management strength and infrastructure; and (iii) the sustainability of the DVD rental industry. Brookwood tapped its extensive network of traditional senior debt, mezzanine and private equity sources, plus emerging hedge fund and one-stop capital providers.
Excellent Results: The expedited process generated numerous interested investors. Ultimately, strong capital-provider interest allowed TNR to close on a larger $35 million debt facility and an attractively priced $10 million equity round. In addition, TNR adds a new financing partner in MCG that offers substantial resources to support future growth.
This transaction is another example of Brookwood's ability to effectively position and market a rapidly growing business in a niche market segment and to exceed the goals of our client. We welcome the opportunity to speak with you about our debt and equity financing advisory capabilities - as well as our M&A, bankruptcy / restructuring advisory and fairness opinion expertise.