EDCI Holdings (EDCI) Announces Termination of Negotiations Regarding the Potential Sale of its EDC GmbH Subsidiary
EDCI Holdings, Inc. (Nasdaq: EDCI) announced that the potential purchaser of Entertainment Distribution Company, LLC's ("EDC") Entertainment Distribution Company GmbH ("EDC GmbH") subsidiary and certain related assets and entities (the "German EDC Business") has terminated further negotiations. As previously disclosed in EDCI's January 15, 2010 press release, the cooperation of Universal Music Group ("UMG") was critical to any such transaction. However, the potential purchaser has now advised EDCI that UMG conditioned such cooperation on demands for significant contractual modifications that it believes are "unbridgeable."
As part of the plan of dissolution approved by EDCI's stockholders, the Company's Board of Directors reserved $10 million of the proceeds available for the initial distribution to effect a tender offer, but deemed it advisable to delay the contemplated tender offer given the discussions related to the German EDC Business. As those discussions have ceased, EDCI intends to resume implementation of the tender offer and expects to provide updates as to the timing thereof in the coming weeks. The tender is designed to afford additional flexibility to stockholders who prefer a fixed amount of cash and immediate recognition of any tax-losses to so elect, for a portion of their shares. The total of up to $10 million would be reduced pro rata if the result of the tender would put EDCI's net operating losses at risk, as EDCI believes it is prudent to continue to protect those tax-loss carryforwards at this time. Any amount not successfully tendered would be subsequently distributed as a dissolution distribution payment.
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As part of the plan of dissolution approved by EDCI's stockholders, the Company's Board of Directors reserved $10 million of the proceeds available for the initial distribution to effect a tender offer, but deemed it advisable to delay the contemplated tender offer given the discussions related to the German EDC Business. As those discussions have ceased, EDCI intends to resume implementation of the tender offer and expects to provide updates as to the timing thereof in the coming weeks. The tender is designed to afford additional flexibility to stockholders who prefer a fixed amount of cash and immediate recognition of any tax-losses to so elect, for a portion of their shares. The total of up to $10 million would be reduced pro rata if the result of the tender would put EDCI's net operating losses at risk, as EDCI believes it is prudent to continue to protect those tax-loss carryforwards at this time. Any amount not successfully tendered would be subsequently distributed as a dissolution distribution payment.
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