Toronto-based entertainment company Boat Rocker Media Inc. has filed preliminary documents for a $175-million initial public offering on the Toronto Stock Exchange, which would help the company fund new productions, acquire intellectual property and repay more than $90-million in debt.
Boat Rocker has produced scripted television hits such as Orphan Black and Being Erica, and reality series like Big Brother Canada and MasterChef Canada. Its shows have been distributed to entertainment giants such as Netflix Inc., Walt Disney Co. and ViacomCBS Inc. It is currently producing a show for Apple TV+ and has a 51-per-cent stake in Untitled Entertainment, a talent agency that manages several Hollywood A-listers.
Fairfax Financial Holdings Ltd., which took a majority stake in Boat Rocker in 2015, will hold approximately 44 per cent of outstanding shares post-IPO, according to the company’s prospectus.
The shares are expected to trade between $12 and $14, and the IPO could grow to $201-million if an overallotment option is fully exercised.
As part of a secondary offering, Boat Rocker co-founders David Fortier and Ivan Schneeberg, and chief executive John Young will sell 459,097 shares they own in the company. Post-IPO, they will collectively own 19.2 per cent of Boat Rocker’s shares, all of which will be multiple voting shares (in this case, each share will be worth 10 votes). Fairfax will also have multiple voting shares.
In a letter included with the prospectus, the company’s co-founders describe Boat Rocker as “lean and nimble and unburdened by any of the declining legacy businesses with which many of our competitors are saddled.
“Boat Rocker has constructed the platform for a next generation entertainment company, not out of bricks and mortar, but imagination, creativity and integrity.”
Boat Rocker will use capital from the IPO to fully repay the $91-million owed from a $120-million credit facility from Bank of Montreal. The rest will go toward developing shows and acquiring intellectual property that can be developed for the screen. The company forecasts $700-million in revenue in 2021.
COVID-19 affected production on several Boat Rocker shows in 2020. In the nine months ended Sept. 30, it had a net loss of $43.8-million on $171.2-million in revenue. The company was also in breach of a covenant on its BMO credit facility because its earnings were below a target. The company received government assistance in 2020, accessing $13.9-million from the Canada Emergency Wage Subsidy.
In 2019, Boat Rocker generated revenue of $244-million and saw a net loss of $19.5-million.
From 2016 to 2019, Boat Rocker acquired nine companies, including Insight Productions, which makes several popular reality shows in Canada, such as Top Chef Canada and The Amazing Race Canada. In February, 2020, a $35-million class-action lawsuit was filed against Insight, claiming that it had breached the Employment Standards Act in Ontario. The prospectus says Cavalluzzo LLP, which filed the suit, has not yet filed materials to support the claim.
RBC Dominion Securities Inc. and TD Securities Inc. are the lead underwriters on the IPO, along with J.P. Morgan Securities Canada Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., Cormark Securities Inc. and Canaccord Genuity Corp. Stikeman Elliott LLP is the legal adviser to Boat Rocker.
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