Hollywood Media Corp. Enters Agreement With Key Brand Entertainment Inc.

BOCA RATON, FL (CelebrityAccess MediaWire) – Hollywood Media Corp. announced that it has reached a definitive agreement with privately held Key Brand Entertainment Inc. for the sale of its Broadway Ticketing Division based in New York City, through the sale of all of the outstanding capital stock of Theatre Direct NY, Inc., a wholly-owned subsidiary of Hollywood Media. The Broadway Ticketing Division comprises Broadway.com and Theatre Direct. The transaction, which is subject to the approval of Hollywood Media's shareholders as well as other customary closing conditions, is expected to be completed in the first half of 2010. Total consideration for the transaction is estimated at approximately $45 million, assuming all contingent amounts are paid.

The consideration to be received in the transaction will consist of cash of $20 million (subject to a working capital adjustment), a five-year second lien secured promissory note from Key Brand in the initial principal amount of $8.5 million at an interest rate of 12% per annum, a warrant for Hollywood Media to purchase 5% of the common stock of Theatre Direct at an exercise price of $0.01 per share, an earnout of up to $14 million contingent upon reaching certain revenue targets, and the assumption of $1.6 million in certain seller liabilities. The Company expects that its net operating loss carryforwards (NOLs) will offset any federal income taxes other than the Alternative Minimum Tax of 2% on the gain.

Upon completion of the transaction, Hollywood Media expects to pay a one-time cash dividend to its shareholders of approximately $0.60 per share, totaling approximately $18 million.
Upon completion of the transaction, Hollywood Media will retain the following businesses and interests: its Ad Sales Division including the U.K.-based CinemasOnline, its 26.2% equity interest in MovieTickets.com, its Intellectual Properties Division consisting of Tekno Books and a 50% interest in NetCo Partners, an earnout from the Hollywood.com business, and the right to receive payments in connection with the announced sale of the Broadway Ticketing Division.. –by CelebrityAccess Staff Writers