ContentFilm finds Peace for $35 mil

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LONDON -- Media rights company ContentFilm is in the early stages of a deal with Canada's Peace Arch Entertainment that will see Peach Arch snap up the London content king for $35 million.

ContentFilm told the Alternative Investment Market stock exchange Thursday that it has entered into a letter of intent with Peace Arch for the buyout.

Peace Arch CEO Jeff Sagansky told analysts during a conference call that the proposed acquisition of ContentFilm will create a powerful indie North American distributor with direct relationships with Walmart on both sides of the U.S.-Canadian border.

He said that the deal will see Peace Arch join Lionsgate, Anchor Bay and Genius as the only other indie distributors outside of the major studios to have secured a direct relationship with Walmart.

"We won't be as big as Lionsgate, but we'd be in the Anchor Bay area. We'd be significant," Sagansky said.

ContentFilm said that the Canadian sales house is considering an offer for all of the issued and to-be-issued ordinary share capital of ContentFilm for a cash consideration of 0.20 pounds per ordinary share of 0.01 pounds each or, at the election of each holder, 0.2 PAE common shares for each ordinary share up to a total of 19,500,000 PAE common shares (the Share Alternative).

ContentFilm has 174,027,323 ordinary shares in issue, 17,169,998 in the money options and 3,048,518 in the money warrants. Any PAE shares issued as part of this transaction will be subject to a 12-month lockup period, the company said.

The letter of intent is nonbinding -- save for the provisions relating to exclusivity and confidentiality --and requires at least 50% shareholder approval and board approval from both companies.

Sagansky said that Peace Arch intends to put a formal offer for ContentFilm on the table in six weeks, after it secures bank financing to underpin the deal and both sides complete their due diligence.

Peace Arch added that it expects to close the deal in March.

ContentFilm additionally posted interim results for the six months ending Sept. 30.

Profit before tax dropped slightly to 5.2 million pounds ($10.3 million) during the six months from 5.3 million pounds in the same period last year.

Turnover fell to 10.2 million pounds ($20.3 million), down from 10.7 million pounds during 2006 while normalized EBITDA during the first six months of 2007 plummeted to 1.4 million pounds ($2.8 million) from 2.9 million pounds last year.
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