Imax financials target of suit in Ontario

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TORONTO -- Turning up the heat on Imax, Catalyst Fund said that it will go ahead with a lawsuit in an Ontario court over recent delays in the giant-screen exhibitor filing its financial statements.

Toronto-based equity investor Catalyst Fund, which holds senior notes and stock in Imax, said Friday that it has gone to the Ontario Superior Court to seek redress for the Canadian exhibitor's "continuing misrepresentations, inaccurate financial reporting, and its defaults under the indenture that governs the senior notes."

Catalyst Fund also disputed Imax's reporting Thursday that the equity fund has withdrawn a New York state lawsuit over waivers Imax received in April from certain bondholders granting more time to file its annual financial results (HR 10/12).

Catalyst Fund said it was not "giving up its challenge to Imax's conduct," and instead dropped the New York action because it can potentially secure additional remedies in the Ontario courts not available in New York.

The Canadian equity fund is attempting to invalidate a waiver Imax secured in April from most holders of $160 million in senior notes to extend the deadline for filing its annual report.

The legal action comes as Imax continues to clean up its balance sheet amid ongoing probes into its financial books by the U.S. Securities and Exchange Commission and the Ontario Securities Commission.

In July, Imax restated faulty financial results for fiscal 2002 through 2005. Then, last week, Imax said it planned yet again to restate its earnings for fiscal 2006 and the first two quarters of 2007 after it uncovered another accounting error (HR 10/5).

Catalyst Fund said Imax wrongly insisted in July that it had completed restating its financial results after it recently admitted to a further accounting error and "confirmed that its financial reports should not be relied upon."

Imax executives were not readily available for comment.
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