MDIF delays hearing on merger
EmptyTORONTO -- Toronto-based Movie Distribution Income Fund on Wednesday said it has delayed its legal bid to block CanWest Global Communications Corp. and Goldman Sachs and Co.'s CAN$2.3 billion ($1.96 bilion) purchase of Alliance Atlantis Communications. Originally scheduled for May 18, the company's hearing has been pushed to June 15.
The company argues that its 49% stake in Canadian film distributor Motion Picture Distribution LP, gives it a veto over the sale of Alliance Atlantis, which owns the remaining 51% in the indie distributor.
On April 11, Movie Distribution Income Fund first agreed with CanWest Global and Alliance Atlantis to a May 18 fairness hearing at the Ontario Superior Court of Justice. But Rubin Osten, chair of the special committee of the board at Movie Distribution Income Fund, said Wednesday that the income trust has held recent discussions with Goldman Sachs, providing them with "information with which they might formulate proposals to address our concerns."
Movie Distribution Income Fund did not expand on its talks with Goldman Sachs, but its legal gambit to halt the takeover is thought to be aimed at extracting a higher price for its 49% stake in MPD, higher than the $9 per-unit value already placed by Goldman Sachs on Alliance Atlantis' controlling 51% stake.
John Bailey, CEO of the Movie Distribution Income Fund, on Wednesday told analysts that the new June 15 court date will "provide ample time for this process to run its course."
In fall 2006, Alliance Atlantis said it would work with Movie Distribution Income Fund to sell both its 51% controlling stake in MPD and the income trust's minority stake. But that pact was undone by Alliance Atlantis controlling shareholder Michael MacMillan, who opted to sell the company to CanWest Global and equity partner Goldman Sachs, a deal first announced in January.
Under the terms of that $53 per-share deal, CanWest Global will acquire Alliance Atlantis' 13 specialty channels, while Goldman Sachs will pick up the 51% stake in MPD and a half-stake in the "CSI" franchise.
Also Wednesday, Movie Distribution said MPD posted CAN$4.4 million ($3.9 million) in earnings for the three months to March 31 on revenue of CAN$110 million ($99 million), compared with a profit of CAN$5.2 million on revenues of CAN$102.8 million in 2006.
The income trust said lower revenue from a mostly Hollywood release slate during the latest quarter was offset by higher revenue from its movie distribution arms in the U.K. and Spain.