Kramer Levin Team Handles GT Interactive Software / Infogrames Entertainment Deal

On November 15, 1999, Infogrames Entertainment, a leading developer, publisher, and distributor of interactive entertainment, announced that it has reached an agreement to acquire control of Kramer Levin client GT Interactive Software (GTIS) for a total investment of $135 million. This transaction will benefit the shareholders of both companies. GTIS will have enhanced financial, distribution, and managerial resources and will remain listed on NASDAQ. This unique industry partnership will continue Infogrames' global expansion by firmly establishing it in the North American interactive entertainment market, estimated to reach $7 billion in sales next year.

Infogrames will purchase 33.4 million GTIS common shares from the founding Cayre family for $25 million. The Cayre family also has committed to provide Infogrames with a proxy for the 1.3 million shares that will still be owned by the family upon the closing of the transaction. Infogrames will purchase 28.6 million newly issued shares for $50 million. Infogrames will also purchase a convertible note from GTIS for approximately $60.5 million, which will be convertible into GTIS common shares at $1.85 per share for a total of 32.7 million shares. As part of the consideration for the $60.5 million convertible note, Infogrames will acquire and surrender to GTIS the $10.5 million junior debt owned by members of the Cayre family. GTIS will issue a new $50 million convertible note to funds managed by General Atlantic Partners, in exchange for $30 million in preferred stock and a $20 million subordinated note held by General Atlantic Partners. The note will be convertible into GTIS common shares at $4.00 per share. In addition, General Atlantic Partners will transfer to Infogrames warrants for the purchase of 4,500,000 GTIS common shares. At the same time, GT amended its bank credit facility to contemplate the transaction and provide additional flexibility for GTIS.

The Kramer Levin attorneys involved in this complex and multi-party transaction were David Levin, Thomas Molner, Dinh Doan, Sharon Makower, Arielle Schiffman, Elizabeth O'Connor, Robert Schmidt, and Cathy Verhoff, with expert specialty assistance from Cynthia Mann, Randy Lipsitz, Tom Kratochvil, and paralegals Sheryl Federiciano and Lou Petrocelli.