ESGC - Eros STX Global: Proposed Sale Of STX Entertainment Likely To Leave Very Little For Common Shareholders

• Company surprisingly announces exclusive negotiations to sell the STX Entertainment business, effectively unwinding last year's merger.
• With creditors remaining firmly in the driver's seat, investors need to prepare for a fire sale without material cash proceeds to the ailing company.
• Discussing preliminary audit committee findings, NYSE listing status, and potential covenant violations on the company's UK retail bonds.
• Upcoming sale is going to leave the company with its highly non-transparent, scandal-ridden Eros International business which is hard to assign any value to at this point.
• Even in the case of a successful STX sale, a bankruptcy filing might still be in the cards given ongoing debt and liquidity issues as well as the recent accounting scandal. Investors should consider selling existing positions but abstain from an outright short sale at this point.

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