Tinopolis has restructured and recapitalised, in a move that has reportedly left out of pocket many of the founders of indie labels acquired by the group.
According to the Financial Times, many of Tinopolis’ indie businesses were acquired for a combination of cash, equity and loans – and now many of their founders stand to collect substantially less from the sale of their business.
“It’s just outrageous,” Stuart Carter, the co-founder of Pioneer Productions, who reportedly held loan notes worth more than £2m, told the FT. “Everybody knows you’re being given bits of paper and they may not be worth what you think. But to get zero point zero pounds for 45 per cent of my company is not right.”
The FT reported that Sally Miles held just over £2m of loan notes after selling Passion Distribution to Tinopolis. The newspaper reported that Dan Cutforth and Jane Lipsitz, who sold Magical Elves to Tinopolis and left in 2019, stand to lose up to £25m. Arthur Smith, chair of Tinopolis USA, is reportedly owed a similar sum.
In a statement yesterday, Tinopolis said that – in line with the rest of the global media industry – it has been adversely affected by the pandemic. The group said the closure or postponement of sporting events during the first lockdown damaged the Group’s cash generation and working capital. In addition, the extreme Covid outbreak and severe local regulations in California slowed or stopped its operations in the USA.
Tinopolis said its banks and institutional funders have now committed to invest “significant new funds to enable the group to restore its trading to pre-pandemic levels,” and that the management team has provided significant new investment.
Tinopolis explained that a majority holding in the continuing business will be sold to a new company owned by these management investors.
As part of the wider restructuring, a non-trading group company in which Loan Notes owned by current and former management are held, will be closed and enter liquidation.
Tinopolis owned indies also include Sunset and Vine and Mentorn.
Ron Jones, Chairman of Tinopolis, said: “The damage caused by COVID has been significant and a complete recovery will not be easy. However, our underlying business has shown considerable resilience in the last 12 months and is now on a sound footing. Equally, our relationships with key commercial partners have remained strong during a difficult time and we value their continued support.
“Tinopolis has an encouraging pipeline of projects and new contracts. The management team is committed, personally invested and incentivised to continue building a world-class production and distribution business in the UK and US, so we look forward to working with our talented staff to return the group to its former success and beyond.”
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