Post by The Ultimate Nullifier on Aug 26, 2014 20:08:48 GMT -6
Pathe in Sale To Cannon
Published: November 7, 1990
Cannon Pictures Inc. said today that it would acquire for a $5 million note the Cannon common stock and warrants now owned by the Pathe Communications Corporation.
Cannon, through its chief executive, Christopher Pearce, also agreed to acquire from a Pathe affiliate an office building in Beverly Hills, Calif., in which it has offices for a $9 million promissory note.
Last Thursday, Pathe completed its aquisition of the MGM/UA Communications Company for $1.36 billion. Pathe's president, Giancarlo Parretti, who had truble lining up bank lenders for the acquisition, raised money by promising the rights to MGM and UA film and television libraries.
Analysts have expressed concern that the Italian financier may face difficulty resurrecting MGM, where film production virtually dried up in the two and a half years it was up for sale.
Mr. Parretti got into the film business in March 1987 with the acquisition of a stake in the Cannon Group, a producer of low-budget action films.
Cannon's chief executive has agreed to vote the common stock acquired from Pathe so that Pathe will have one nominee on the Cannon board as long as the promissory notes remain unpaid, Cannon said.
Also under the agreement, Mr. Parretti; Comfinance S.A., a Pathe subsidiary, and Pathe will be released from obligations to lend money to Cannon for motion picture production and overhead, Cannon said.
Post by The Ultimate Nullifier on Aug 26, 2014 20:11:01 GMT -6
Pathe's Sale of Cannon Pictures Collapses
E. SCOTT RECKARD, Associated Press
Jul. 9, 1990 9:10 PM ET
BEVERLY HILLS, CALIF. BEVERLY HILLS, Calif. (AP) _ Pathe Communications Corp.'s deal to sell its 60 percent stake in action film maker Cannon Pictures Inc. fell through when the buyer failed to arrange financing on time, the companies said Monday.
The news was seen widely as another signal that Pathe's $1.3 billion bid for MGM-UA Communications Co. may be in jeopardy. Also threatened is $200 million in nonrefundable down payments Pathe mogul Giancarlo Parretti already has paid toward the purchase of MGM-UA.
''It sure looks bad,'' said Craig Davis, an analyst of financially troubled special situations for the R.D. Smith & Co. research firm in New York. ''It looks like the money's practically gone.''
Trihoof Investments B.V. was expected to buy Cannon Pictures. Trihoof's president, horror film maker Ovidio Assonitis, owns 20 percent of Cannon and had been its chairman and chief executive.
Assonitis ''was severed'' from those jobs and forced off the board of directors, Pathe said in a statement from its Beverly Hills headquarters.
Also fired was Trihoof vice chairman and director William Immerman, who said he and Assonitis were conferring with lawyers about whether their firings breached their contracts with Pathe.
Immerman said Assonitis was in Europe pursuing other financing to replace the money from Los Angeles sources that fell through.
He said Cannon had shut down its marketing and casting operations, apparently trying to cut overhead through layoffs.
''I don't know what their plans are,'' Immerman said. ''Nobody has told us.''
Neither Pathe's spokesman, Craig Parsons, nor its general counsel, Edmund Hamburger, could describe the layoffs. Yoram Globus, the former co-owner of Cannon who is now a Cannon director as well as Pathe's international distribution chief, did not immediately return a phone call.
It was the latest in a series of jolts as Parretti struggles to finance his attempt to buy MGM-UA.
Last month, Pathe said the deal to sell Cannon Pictures and the related sale of Cannon's headquarters building in Beverly Hills would result in an additional $24 million it could borrow toward the purchase.
Parretti's chief backer, Time Warner Inc., later filed a $100 million breach of contract suit against Pathe after a stalemate in negotiations for Time Warner to lend Pathe $650 million.
Compared to the need to find a new source for the $650 million, the $24 million is unimportant, Parsons said. ''In the scheme of things, it's not a crippling event,'' he said.
Parretti's $200 million in down payments, along with another $53 million from Parretti, is to be distributed to MGM-UA shareholders July 20 under his latest agreement with Kirk Kerkorian, the billionaire who controls MGM-UA.
Many in Hollywood believed Parretti never would have made the $200 million investment without a way to finance the deal.
Time Warner Inc. had agreed to lend Pathe half the money to buy MGM-UA, but only if the rest was in non-borrowed funds, with Pathe putting up $450 million itself. Pathe was unable to do so and failed to persuade Time Warner to renegotiate the equity part of their agreement.