Cinedigm CEO Chris McGurk says the company plans to buy back up to 10 million shares of its beleaguered stock over the next 12 months as it looks to avoid getting delisted from the Nasdaq.
In a letter to shareholders, the former senior exec at Universal, Disney and MGM who has been in the top job at Cinedigm since 2011 also said the company plans to rename itself in the coming months. Having recently wrapped a years-long effort to shift its strategic focus from cinema technology to streaming, the company sees the rebrand as helping it to “reflect this momentous turning point” and “accentuate our position and narrative,” McGurk wrote.
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Shares in Cinedigm gained 5% on nearly triple their average trading volume to close at 52.5 cents. That’s roughly the mid-point of the stock’s range over the past year, but also well below the one-dollar threshold established by the Nasdaq for all companies listed on its exchange. Shares got to a recent high of around $2.50 in September 2021. Last fall, the company reached an agreement for a 180-day “cure period” with Nasdaq after having been warned of a potential delisting. Getting delisted is a crippling blow to a publicly traded company, as it unplugs it from vital funding sources and does reputational harm.
The extension with Nasdaq will expire on April 3, though it’s common for companies to be granted multiple extensions. “I believe there is potential to further extend our cure period,” McGurk wrote. He added that Cinedigm shares, like others in media and tech, have recently been hit hard by “macroeconomic and geopolitical factors.”
Stock buybacks are generally viewed as a positive by Wall Street, though enthusiasm is not guaranteed in all corners. Toward the end of Philippe Dauman’s tenure as CEO of Viacom as CEO, in one famous example, the exec ran afoul of controlling shareholder National Amusements in part by pursuing $15 billion in buybacks as the stock continued to drift. That money would have been better spent on M&A or digital investments, the critique went.
“I personally own more than two million shares of Cinedigm stock,” McGurk explained in his letter, “so I understand the frustration that all our shareholders are feeling now.” As to M&A, he pointed out the company’s recent purchase of faith and family media properties Dove.org and Christian Cinema from the Giving Company, the company’s eighth acquisition in the past two years.
Cinedigm’s board of directors recently re-elected two board members who are industry contemporaries of McGurk’s: former AMC Entertainment CEO Peter C. Brown and Hyde Park Entertainment CEO Ashok Amritraj. The company, which has a library of 60,000 film and TV titles and runs streaming outlets like Cineverse, Fandor and Screambox, last month reported fiscal third-quarter revenue of $27.9 million, up 98% over the prior-year period.
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