PORT ST. LUCIE — Digital Domain Media Group announced Wednesday it received an extension on $35 million in loans.
The company has an undisclosed amount of time to finalize a deal that would satisfy its lenders, led by Tenor Capital, according to a news release. The lenders must give Digital Domain 48 hours notice if they revoke the extension, the release says.
The Tradition-based digital special effects and animation company made news Tuesday by disclosing in a Securities and Exchange Commission filing that it had defaulted on its six loans, triggering a spike in the loans to $51 million. Digital Domain did not miss a payment, but rather did not have enough cash on hand to satisfy the terms of the loans.
Digital Domain is working on a deal with a third party that could infuse the company with cash and refinance the debt, but the negotiations have not been finalized, according to Tuesday's SEC filing. Digital Domain also is negotiating with the lenders. Digital Domain CEO John Textor announced in July that the company is considering strategic options, including selling a portion of the company.
If the plan does not work and Digital Domain cannot find another way to renegotiate the terms of the loans, the company could be in trouble and resolutions could include seeking bankruptcy protection.
Textor, however, told WPTV NewsChannel 5 that bankruptcy is not on his mind. The interview came after Textor addressed the West Palm Beach City Commission regarding the company's for-profit university in that city.
Digital Domain's stock price fell to a 52-week low of 86 cents per share at one point Wednesday, but climbed to a close of 98 cents per share, a 43 cent-per-share drop for the day. Shares had reached a 52-week high of $9.20 after the company gained notoriety from its hologram of deceased rapper Tupac Shakur "performing" at Coachella, an annual music and arts festival in California, in April.
The company is up-to-date on payments to Port St. Lucie and commitments to the state and St. Lucie County. The company promised to create 500 jobs by 2014 and make annual payments toward its $40 million Tradition Studio in exchange for a $71 million state and city incentive package.
Port St. Lucie owns the building, though Digital Domain would own it once the 20-year lease is up. Should the company go under or not meet requirements, the city would own the building, though the city would lose future property tax revenues.
In previous investor conference calls, Textor has said the way public grants appear in the company's accounting make noncash losses appear greater than they actually are, but the accounting is starting to catch up with the actual cash spent. He has said the company is difficult to gauge in terms of value because there are several different types of businesses under the corporate umbrella.