by Chris Nolter | Published May 1, 2012 at 2:53 PM
Shares of Central European Media Enterprises Ltd. surged Tuesday, May 1, following news that investors Time Warner Inc. and founder Ronald Lauder are making debt and equity investments totalling $386 million.
CME is a Bermuda company that owns broadcast, video on demand and other media operations in Central and Eastern Europe.
On Tuesday morning, CME's shares rose $1.20, or 15%, to $9.10. The company trades on the Nasdaq Global Select Market and the Prague Stock Exchange.
As part of the financing package announced Monday, Time Warner will provide the company with a $300 million loan to buy back notes due in 2013, 2014 and 2016.
The New York media company and Lauder's RSL Capital LLC will also purchase 11.5 million Class A shares of CME at $7.51 each, for a total of about $86.4 million. CME said it will use the equity proceeds to repay Time Warner's loan.
Time Warner and Lauder will also convert their Class B shares into Class A shares. Time Warner will increase its stake to 40%, and if the loans are outstanding after 180 days could push its position to 49.9%.
The company also filed a shelf registration for a possible offering of up to $500 million in Class A stock.
Lauder, who is the son of cosmetics entrepreneur Estée Lauder, founded CME in 1994. The company's board includes Eric Zinterhofer, Lauder's son-in-law, who is the founder of New York private equity firm Searchlight Capital Partners LLC and a former senior partner at Apollo Management LP.
A special committee of CME's board retained J.P. Morgan for advice on the investment; CME hired BNP Paribas SA.
Citigroup Global Markets Inc. bankers Ketan Mehta, Steve Becton, Dan Richards and Rob Murphy advised Time Warner, which received counsel from Willkie Farr & Gallagher LLP lawyers William Gump, Thomas Mark and William Hiller