Relativity Media Plans to Raise Capital Ahead of Planned IPO

June 19 (Bloomberg) -- Relativity Media CEO Ryan Kavanaugh speaks with Bloomberg's Jon Erlichman about the company's IPO plans, its expansion in China, the upcoming film "Earth to Echo" and Relativity's latest TV project, "The Grant." (Source: Bloomberg)

Relativity Media LLC, the company that helped fund “The Social Network,” is working with Jefferies Group LLC to raise money ahead of a planned initial public offering, Chief Executive Officer Ryan Kavanaugh said.

The independent film and television studio is targeting an IPO within the next 18 months, Kavanaugh said in an interview with Bloomberg Television from New York. The company plans to refinance debt and raise equity in preparation for the share sale, he said.

“There’s a dual process,” Kavanaugh said. “We’re in the process of doing our pre-IPO raise. And at the same time, we’re refinancing our debt to be more appropriate debt for a public company.”

A public listing would give Relativity currency for use in acquisitions, Kavanaugh said. The company has diversified from movie financing into film and TV production, sports management and music publishing, while expanding geographically with partnerships in China and India.

Relativity recently made takeover attempts for digital video network Maker Studios, since bought by Walt Disney Co. (DIS), and had talks with Fullscreen Inc. The company’s latest TV project is a reality show, “The Grant,” that aims to solve the planet’s biggest problems and is made in partnership with social investment fund Echoing Green.

This week, the company announced a production and distribution agreement in China with Jiangsu Broadcasting Corp., and a strategic advisory agreement with Industrial & Commercial Bank of China Ltd.

‘Chinese Company’

The company will co-finance, produce and distribute films and TV programs with Jiangsu, a broadcaster, which made an unspecified equity investment in Relativity. SeedShine Capital, a Chinese investment firm focused on media, agreed to invest in Relativity.

Relativity considers itself “as much a Chinese company as we do a U.S. company,” Kavanaugh said. The company is considering listing its stock in both Hong Kong and New York, he said.

The executive, who earlier financed film slates in Hollywood, wouldn’t say how much Relativity will raise, describing it as “a chunk of capital, which is a good size.”

The New York Post reported last week that Relativity planed to raise as much as $1 billion, citing unnamed sources. Kavanaugh said that number is too high.

In April 2013, Relativity secured a $115 million five-year revolving credit facility with OneWest Bank, Barclays Plc and City National Bank. The facility could be increased to up to $300 million, according to a statement at the time.

Equity being raised privately or in the IPO won’t go to pay down debt, Kavanaugh said.

A Relativity spokesman declined to comment on the company’s current debt.

To contact the reporters on this story: Anousha Sakoui in London at asakoui@bloomberg.net; Jonathan Erlichman in New York at jerlichman1@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Ben Livesey

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