HOUSTON, Sept. 6, 2006 (PRIMEZONE) -- TNR Entertainment Corp., the nation's largest owner and operator of self-service DVD rental kiosks in supermarkets and grocery stores under the name The New Release(tm), announced today that it has completed a capital infusion of $45 million with MCG Capital Corporation, a leading specialized financial services company and financial advisor. The funding, which comprised $35 million in debt financing and $10 million in equity, will be used to support TNR's major expansion into nationwide markets, more than doubling its installed base and establishing 25 new geographic markets.
In making the announcement, Richard B. Cohen, Chief Executive Officer of TNR Entertainment, said the funding for the Company's aggressive expansion will create a truly nationwide organization, adding 1,300 DVD kiosks in retail outlets across 25 geographic markets over the next six months, while building the infrastructure necessary to support the company's continued planned growth.
"We've significantly exceeded our growth plans to date, with extraordinarily strong customer response and increasing profits for our supermarket partners that support a nationwide rollout. This additional capital means we can accelerate our plans, penetrating new underserved markets and taking advantage of economies of scale," Cohen stated.
TNR's rapid growth has been fueled recently by an expanded enterprise partnership with The Kroger Co., which has agreed to install additional TNR automated DVD rental kiosks at 1,300 selected locations across the country. Deployment of the kiosks under the new Kroger agreement is set to begin immediately and is expected to be completed by the first quarter of 2007.
Privately-held TNR, based in Houston, already dominates the self-service DVD rental category in the grocery channel, having served nearly one million customers and rented more than five million DVDs since its inception in 2002. Led by TNR Entertainment's new management team of Cohen and Jeffrey Karbowiak, Chief Operating Officer, the company has launched an aggressive expansion of its retail locations this year with the goal of quadrupling its kiosk network by 2007. TNR currently serves over 200,000 customers monthly across more than 600 locations in such grocery chains as A&P, Food Lion, H-E-B, Kroger/King Sooper, Publix, Roundy's/Pick 'N Save, Safeway/Randall's and Spartan/Family Fare.
The New Release automated DVD rental kiosks provide supermarket customers with a more convenient one-stop shopping experience. As the Company's kiosks are introduced in new markets, more consumers will be able to enjoy renting the latest DVD titles for $1-a-day and no late fees -- a simple and affordable pricing structure that TNR was the first to successfully market. TNR's kiosks house up to 1,000 units each, representing more than 200 titles, including top new releases. The fully-automated kiosks operate on a wireless communications network and next-generation DVD kiosk operating system.
TNR Entertainment Corp. is backed by an institutional investor group including Celerity Partners, LP of Los Angeles; Chapton Partners, LP, a Houston family partnership; and Laminar Direct Capital, L.P., a member of the D.E. Shaw group of companies. All current institutional shareholders participated in the recent equity round with MCG Capital.
Steve Adamson, Managing Partner of Celerity Partners, stated, "This added capital, and what it signifies in terms of TNR's expansion, is further validation of the original business model that identified specific opportunities in a dynamic $27 billion DVD industry. This is a significant step forward, allowing the Company to capitalize on these opportunities, specifically in the rapidly growing area of alternative DVD distribution it pioneered just four years ago."
Brookwood Associates served as advisor to TNR on the financing. Managing Director David M. Felts said, "Brookwood has continued to support TNR in securing financing for the Company, which has achieved great momentum and we believe has exceptional longer-term prospects. We are confident that the resulting expansion will yield even greater profit for TNR as its customer base grows and for its supermarket partners as well."
About MCG Capital Corporation
MCG Capital Corporation (Nasdaq:MCGC) is a solutions-focused specialized commercial finance company providing financing and advisory services to middle market, growth-oriented companies throughout the United States. MCG Capital's investment objective is to achieve current income and capital gains. Its capital is generally used by our portfolio companies to finance acquisitions, recapitalizations, management buyouts, organic growth and working capital.
About Brookwood Associates
Brookwood Associates was founded in 1989 and is one of the nation's leading privately held investment banking firms dedicated to serving middle-market companies. It assists clients in evaluating and executing a broad range of complex transactions, including mergers, acquisitions, divestitures, restructurings and financings. Brookwood is based in Atlanta and Charlotte, North Carolina. Additional information is available at www.brookwoodassociates.com.
About Celerity Partners
Celerity Partners is a private equity fund whose objective is to build businesses, in partnership with management, to preeminence in their respective markets. Since its inception in September 1995, Celerity has invested in over 50 companies with an aggregate transaction value in excess of $2 billion. Celerity currently manages approximately $200 million of equity capital and has offices in Los Angeles and Menlo Park, California. For further information, see www.celeritypartners.com.
About Laminar Direct Capital, L.P.
Laminar Direct Capital L.P. ("LDC"), a member of the D. E. Shaw group, is focused on providing debt and equity capital to businesses across all industry sectors throughout North America. Founded in 1988 and headquartered in New York, the D. E. Shaw group is a specialized investment firm that encompasses a number of closely related entities with over US$2.0 billion in capital under management. LDC was established by the D.E. Shaw group to provide direct capital solutions across the entire capital spectrum. LDC's broad mandate allows for the exploration of investment opportunities in all industries and situations.