Image Ends BTP Merger, Demands $4.2M5 Feb, 2008 By: Erik Gruenwedel
Image Entertainment Feb. 5 officially terminated its increasingly acrimonious merger agreement with BTP Acquisition Company and demanded “prompt payment” of a $4.2 million business interruption fee, according to a regulatory filing.
The deal, which originated last March, ran into a wall Jan. 23 when BTP — headed by film financier David Bergstein — issued a default notice to Image claiming the Chatsworth, Calif.-based DVD distributor had failed to satisfy various closing conditions, including obtaining approval from its current lender to help facilitate $60 million in cash toward the transaction.
Image, in turn, filed a notice of anticipatory breach claiming BTP did not intend to complete the $130 million merger. The transaction was slated to close Feb. 1 and then extended for a fifth time by Image to Feb. 5.
Image is requesting the $4.2 million fee be paid from $3 million BTP put into an escrow account as a condition of it extending the merger closure four times. The balance would paid by R2D2 LLC and CT1 Holdings, both controlled by Bergstein.
Santa Monica, Calif.-based BTP has sought a return of $3 million it deposited in the escrow.
“Image Entertainment's board has determined that the company is best served by terminating the merger agreement and the constraints it imposes on Image,” said a company spokesperson. “We are very disappointed that despite Image's willingness to close the merger and enormous patience, BTP was either unable or unwilling to finance the transaction.”
Separately, the spokesperson said termination of the merger agreement does not affect a DVD and electronic sellthrough distribution agreement with ThinkFilm and Capital Films.
CT1 is parent company of both companies.
“Image remains in full compliance with the distribution agreement and intends to fully enforce its rights under that agreement,” the spokesperson said.
A BTP spokesperson was not immediately available for comment.