Crown Media Holdings, parent of the Hallmark Channel, said Tuesday that it has completed a recapitalization of the company with its largest debt and equity holder, Hallmark Cards Inc.
The deal, first announced in May 2009, involves Hallmark Cards, the Kansas City greeting card giant, exchanging$1.2 billion in debt owed by Crown for $315 million in new debt and $185 million in convertible preferred shares. The balance of teh debt ($600 million) would be converted into Crown Media common shares whcih would revert to Hallmark Cards.
"We are pleased with the consummation of the Recapitalization which is a positive and important development for our company," Crown CEO Bill Abbott said in a statement. "The significant reduction in our outstanding debt will help us maintain the operating health of our company and position us for future financial success."
The deal was expected to dilute existing shareholders in the company --- Hallmark Cards would end up with about 90% of Crown's equity,compared to about 70% before the deal closed. One shareholder, S. Muoio & Associates, sued Crown in Delaware Chancery Court in July to block the deal. That suit is still active and a Sept. 21 trial date is scheduled.
Crown Media stock closed at $1.75 each on Tuesday, unchanged.
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