Catalyst Fund takes Imax to court

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TORONTO -- Turning up the heat on Imax Corp., private equity manager Catalyst Fund Limited Partnership on Monday said it is going to court to resolve recent differences with the giant-screen exhibitor over the accuracy of its accounting.

Toronto-based Catalyst, a shareholder with $67 million in Imax notes, said it is seeking financial compensation in the Ontario Superior Court under so-called investor-oppression remedy provisions of the Canada Business Corporations Act.

The first hearing in the legal action is set for Thursday.

The move came as Imax held its annual general meeting Monday morning in New York. That meeting follows July's restatement of faulty financial results for fiscal 2002-05 (HR 7/10).

Catalyst said it will ask the Ontario court to name an inspector to resolve on-going probes by the U.S. Securities and Exchange Commission and the Ontario Securities Commission and to establish the accuracy of Imax accounting.

If the court decides against an inspector, Catalyst is seeking an order forcing Imax to produce key documentation related to ongoing inquiries by the securities regulators. The Canadian equity player also wants disclosure of the "full particulars of any transactions that put Imax offside of its debt covenants or the related parties transaction provisions of the indenture."

Catalyst Fund has put persistent pressure on Imax since it first reported in April that it faced accounting probes and needed to delay and restate past financial results.

In addition, Catalyst has consistently opposed requests by Imax for a waiver on about $160 million in senior bond debt covenants while it restated its financial results.

Imax executives were not available for comment.
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