Crown Media Holdings, Inc. has announced the issuance of $265 million of 6.75 per cent subsidiary trust preferred securities and contingent appreciation certificates in a private placement with institutional investors.

The certificates entitle the holder to receive cash or, at the holder's option, to purchase shares of Crown Media's Class A common stock at $13.07 per share. The certificates, if converted, would represent approximately 10.1 million shares of Class A common stock.

Crown Media will use a portion of the proceeds to reduce the amount outstanding under its bank credit facility and for working capital. The company will also repay certain debt outstanding under lines of credit provided by a subsidiary of Hallmark Cards and amounts payable to Hallmark Entertainment Distribution pursuant to certain programme license agreements, a company release says. In a related development, Crown Media has increased the size of its bank credit facility by $35 million to a total of $320 million.

In connection with the private placement, Crown Media is filing a Current Report on Form 8-K with the Securities and Exchange Commission.