TelVue converting debt to equity


Publicly traded IP broadcasting and Internet video streaming company TelVue Corporation announced that it has cut a deal to convert $30.6 million owed to its Chairman and majority stockholder, H.F. “Gerry” Lenfest, to equity. If other shareholders approve, the deal will eliminate all debt owed to Lenfest.

Under the terms of the agreement, a promissory note recently issued to Lenfest in the principal amount of $5.0 million, which was designed to provide funding for development, would be converted into a new class of redeemable convertible preferred stock, with a conversion price of $0.35 per share. The new class of preferred stock would have an annual dividend of 4% payable in cash or in kind, at TelVue’s option. Under the terms of the agreement, the remaining debt and accrued interest through the effective date would be converted into common stock at a price per share of $0.35.

That conversion price is well above the recent trading price of the thinly traded penny stock, which has been in the 10-20 cents area. So the 35-cent price is favorable to other shareholders and unfavorable to Lenfest.

“This agreement represents a major step forward for TelVue,” said Jesse Lerman, TelVue’s President and CEO, “We believe that, pending stockholder approval, the Company’s balance sheet, fortified with the recent $5.0 million funding and debt conversion, provides TelVue with a solid foundation for expansion of its current broadcast products and services and will assist in establishing TelVue as the provider of choice in the rapidly growing area of cloud-based video services.”