Cinedigm Corp. signed a nonbinding letter of intent to buy about 29% of the outstanding current common shares in Chinese entertainment company Starrise Media Holdings Ltd. from existing holders.

Under the terms of the transaction, Cinedigm will purchase roughly 29% of Starrise's current common shares from two major Starrise shareholders in exchange for shares of Cinedigm's class A common stock. This all-stock purchase will be based on the trailing volume-weighted average prices of the two companies' common stock over a time period, which will be determined by the parties involved in the deal.

The all-stock purchase is anticipated to close in the first quarter of 2020, subject to the completion of a definitive purchase agreement as well as the receipt of the approval of Cinedigm's stockholders and other applicable regulatory approvals, according to a Dec. 19 company release.

The two companies have had previous business dealings with Cinedigm inking a distribution agreement with Starrise to release films in China theatrically. Cinedigm also signed a content licensing deal with the Chinese company to release Starrise productions under its Chinese content entertainment channel, Bambu.