RMG Special Committee Concludes “Go-Shop” Process; Receives Alternative Acquisition Proposal

The special committee of the Board of Directors of RMG Networks Holding Corporation (NASDAQ:RMGN) announced that the “go-shop” period has ended.

The “go-shop” period was provided for the existing merger agreement between the company and the entities owned by Gregory Sachs, the company’s executive chairman.

Further, it has elicited an alternative acquisition proposal from a third party to engage in a recapitalization transaction with the company.

As quoted in the press release:

Under the terms of the Acquisition Proposal, the company, or a successor to the company, would remain a public company.  The company’s existing stockholders would not receive any cash consideration and would continue to own their shares of the company’s stock (or receive shares in a successor entity).

Under the terms of the Merger Agreement, the company and its advisors were permitted to actively solicit and negotiate alternative acquisition proposals from third parties during a “go-shop” period.  During the “go-shop” period, representatives of Carl Marks Securities LLC (“Carl Marks”), financial advisor to the Special Committee, undertook a broad solicitation effort, contacting 137 potential acquirers, including 35 strategic parties and 102 financial parties that the Special Committee and Carl Marks believed might be interested in a possible alternative transaction. As a result of these efforts, the company received the Acquisition Proposal. The Special Committee has designated the third party which submitted the Acquisition Proposal as an “Excluded Person” (as defined in the Merger Agreement) and intends to continue negotiations with it.

Pursuant to the Merger Agreement, subject to certain requirements, the Special Committee has the right to terminate the Merger Agreement in order to accept a “Superior Proposal” (as defined in the Merger Agreement). The Special Committee has not determined that the Acquisition Proposal in fact constitutes a Superior Proposal under the Merger Agreement and the Acquisition Proposal is not at this stage sufficiently detailed or definitive for such a determination to be appropriate. The Acquisition Proposal is subject to several conditions, including satisfactory completion of due diligence, mutual agreement as to transaction structure and the negotiation of a mutually acceptable definitive agreement. There can be no assurance that the Acquisition Proposal will ultimately lead to a Superior Proposal. At this time, the Special Committee has not changed its recommendation with respect to, and continues to support, the company’s pending sale to an entity controlled by Mr. Gregory Sachs.

Subject to applicable laws and regulations, the Special Committee undertakes no obligation to provide updates or make further statements regarding the Acquisition Proposal, any revised proposals that may be received from the third party which submitted the Acquisition Proposal or the status of discussions with them, unless and until a definitive agreement is reached or such discussions are terminated.

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