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Image Offers Stock in BTP Deal

27 Jun, 2007 By: Erik Gruenwedel

Image Entertainment last week sweetened the deal for shareholders in its planned deal with BTP Acquisition Co. LLC.

Image plans to offer from 5% to 9% common stock in the post-merger company to its shareholders.

In March, Image entered into a definitive agreement with BTP, an investor group led by film financier and producer David Bergstein, to be acquired for $95 million in cash, including assumption of a $9 million replication advance from Sonopress LLC, and the repayment of about $24 million of debt.

The transaction, which is valued at $132 million, is expected to close Sept. 30 upon shareholder approval.

Image said it intends to remain a publicly traded company following the merger.

Expenses related to the merger and the April bankruptcy of hip-hop content provider Source Entertainment contributed to Image posting a fourth-quarter (ended March 31) loss of more than $3 million.

Chatsworth, Calif.-based Image posted a loss of $283,000 during the same period last year.

Revenue for the quarter exceeded $30.2 million, compared to $30.4 million last year. Revenue for the year fell nearly 11% to $99.8 million, from about $112 million last year.

Image posted a fiscal-2007 loss of $12.6 million, compared to a loss of $207,000 in the previous fiscal year.

“For the year, we are obviously disappointed by the contraction of our revenues and the sizeable loss that we posted,” said Martin Greenwald, president and CEO of Image. “The uncertainty surrounding our company as a result of the Lionsgate proxy contest and our special committee's strategic process … created not only expense ramifications but also difficulties for us at retail.”

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