DG To Sell Television Ad Delivery Business To Extreme Reach - Quick Facts

(RTTNews) - DG (DGIT) announced that it has agreed to sell its television ad delivery business to Extreme Reach Inc. for $485 million. The transaction is expected to close in the first quarter of 2014.

The transaction is expected to be accomplished in two contemporaneous steps: DGIT will distribute its online business to DGIT shareholders in the form of a new publicly-traded company, and Extreme Reach will acquire the remaining DGIT business pursuant to a cash merger.

DG intends to use sale proceeds to pay off all outstanding debt and fund the majority of a planned cash distribution to DG stockholders of at least $3 per share. In addition, DG stockholders will receive a distribution of shares of a company that will hold DG's online business "The New Online Company."

The New Online Company's initial capital structure is forecasted to have approximately $20 million of cash and $50-60 million of net working capital.

In addition, DG committed to provide a potential equity investment of $40 million cash in Extreme Reach , if required, to close the transaction. If DG's equity investment is ultimately required, at closing, ER will provide DG with $45 million of preferred stock with terms and conditions consistent with ER's most recent offering.

If such $40 million investment is not required, ER will pay DG an additional $5 million in cash at closing and the incremental $45 million will then be available to fund stockholder distributions and working capital for The New Online Company, the company added.