Goldman, EdgeStone launch MPD bid


TORONTO -- Goldman Sachs & Co. and Canadian partner EdgeStone Capital Partners on Tuesday unveiled a formal bid to acquire a controlling 51% stake in Canadian independent movie distributor Motion Picture Distribution LP from domestic Alliance Atlantis Communications.

The Wall Street giant and EdgeStone, a Toronto-based venture capital player, also said they plan to buy the remaining 49% stake in MPD from Movie Distribution Income Fund, a publicly traded company with whom it has been holding buyout negotiations.

The agreement comes ahead of a planned June 28 court date at which Movie Distribution Income Fund had threatened to block a CAN$2.3 billion ($1.99 billion) takeover of Alliance Atlantis by CanWest Global Communications Corp. and Goldman Sachs if the U.S. Investment bank did not sweeten its takeout price for the minority stake in MPD.

Goldman Sachs and EdgeStone said they have agreed to offer shareholders in Movie Distribution Income Fund CAN$10 ($9.34) per unit, or about CAN$193.3 million ($180.5 million).

The deal offers the first details on possible plans for MPD since the U.S. investment bank and Canadian broadcaster CanWest Global first unveiled their takeover deal for Alliance Atlantis -- which includes the 51% stake in MPD and a 50% stake in the popular "CSI" TV crime series franchise.

In a statement, Ruben Osten and David Richards, trustees for the Movie Distribution Income Fund, declared that the offer from Goldman Sachs and EdgeStone "fair" and recommended it to shareholders.

Those shareholders will now vote on the offer at an Aug. 3 meeting, about the same time that the takeover deal for Goldman Sachs and CanWest Global of Alliance Atlantis is expected to be completed.

Victor Loewy, the former MPD chairman who fought a court battle last year with Alliance Atlantis for control of the indie movie distributor, is expected to take the management reins at the newly constituted MPD after EdgeStone and Goldman Sachs assume control.

David Lazzarato, executive vp and CFO of Alliance Atlantis, said he was "pleased" by the successful end to buyout negotiations between Goldman Sachs and the Movie Distribution Income Fund, and that the 51% stake in MPD held by his company will now be transferred to the new entity to be controlled by EdgeStone and Goldman Sachs.

The next hurdle for the Alliance Atlantis and MPD takeover deals is regulatory scrutiny. The Canadian Radio-television and Telecommunications Commission will consider the takeover of Alliance Atlantis' 13 specialty channels by the U.S. investment bank and CanWest Global. Separately, federal Heritage Minister Bev Oda on Monday said that the takeover of MPD, as a culturally sensitive domestic movie distributor set to be acquired by a non-Canadian company, will be referred to her departments' Cultural Sector Investment Review board for scrutiny.

To secure government approval, David Zitzerman, an entertainment lawyer with Toronto-based Goodmans, said that Goldman Sachs and EdgeStone will need to structure the deal in such a way that the U.S. investment bank does not emerge with legal or defacto control of the domestic movie distributor
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