Entertainment Rights denies bankruptcy speculation

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CANNES -- Speculation is mounting that U.K.-listed character licensing group Entertainment Rights is struggling to survive after shares collapsed last week. The company strenuously dismissed the speculation, saying that any suggestions it was facing margin calls were "materially misrepresenting the situation."

"The company is certainly neither poised to file for bankruptcy nor is it facing margin calls of any sort. Indeed, there is not even a financial instrument in existence that would trigger a margin call," it said Monday.

Entertainment Rights, which owns rights to the "Lone Ranger" character currently being revisited by Jerry Bruckheimer in a feature that will star Johnny Depp as Tonto, issued a profits warning last week, prompting shares to dive.

Sources close to the company admitted that Entertainment Rights bosses, including chief executive Nick Phillips, who joined in March, have been talking to bankers about how to cut the company's 127 million pounds ($217 million) of debt.

In recent years, Entertainment Rights, which also owns licensing rights to "Basil Brush" and "Postman Pat," has pursued an aggressive growth strategy, focusing on the U.S. as a key market. In January 2007, the company acquired Classic Media and Big Idea, giving it rights to such characters as "She-Ra" and "Casper the Friendly Ghost."

Entertainment Rights shares closed out last week at an all-time low of 1.7 pence (3 cents), valuing the entire company at 12.47 million pounds ($21.3 million), barely more than a tenth of its total debt.

Shares rallied Monday though, jumping 23% to 2.1 pence (3.6 cents) valuing the company at 15.4 million pounds ($26.6 million), but still trading at less than a tenth of its 52-week high of 26.6 pence.
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