Crown Media Caps Deal (Finally)

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Hallmark Channel parent
Crown Media Holdings wrapped
up a $1.2 billion recapitalization with
Hallmark Cards
Inc., its largest
debt and equity
holder, that was
more than a year
in the works.

The deal,
completed on June 29 and first announced
in May 2009, saw Hallmark
Cards exchange about $1.2 billion in
debt owed by Crown for $315 million
in new debt and $185 million in convertible
preferred shares. Another 600
million in debt converted into Crown
Media common shares that reverted to
Hallmark Cards.

Crown gains breathing room by
extending debt maturities to 2013.
Hallmark Cards solidifies its control
of Crown, as its equity stake in Crown
rises to 90.1% from
about 70%.

Despite the
apparent end to
the lengthy deal
talks, a potential
wrench could still
come from recalcitrant shareholder
S. Muoio & Associates. Muoio owns
about 6% of Crown’s outstanding
shares and sued in Delaware Chancery
Court last July to block the deal. A
Sept. 21 trial date is planned. S. Muoio
& Associates principal and chief investment
officer Salvatore Muoio declined
to comment last week.

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