EDCI Holdings (EDCI) Announces Board Recommendation that the Company be Dissolved

September 14, 2009 8:43 AM EDT

EDCI Holdings, Inc. (Nasdaq: EDCI) announced that its Board unanimously determined that it would be advisable to dissolve EDCI and all of its wholly-owned subsidiaries, excluding EDC. The ultimate goal is to effect a distribution of the maximum available cash of EDCI to its shareholders while retaining sufficient reserves to maximize the value of any remaining assets and manage down both known and unknown liabilities in accordance with state law requirements. EDCI is working with legal, accounting and other advisors in establishing these reserves. As the dissolution plan excludes EDC, EDCI intends to continue its role as an active owner of EDC, including continuing to seek strategic alternatives for its investment in EDC.

Dissolution will be subject to stockholder approval and EDCI is preparing proxy materials that it expects to file with the SEC in October. EDCI anticipates that the ultimate plan of distribution of the Company's assets will provide for an orderly wind down of EDCI's business and operations during the statutory three-year dissolution period. If the dissolution is approved by the shareholders, EDCI expects to make an initial distribution of cash to its shareholders of up to $30 million. Additional distributions will be made as the required reserves, discussed below, may be released over time. In addition, EDCI is also considering using a portion of the initial distribution of up to $30 million to effect a tender offer in conjunction with the dissolution process. Such an approach would afford additional flexibility to shareholders who prefer a fixed amount of cash and immediate recognition of any tax-losses, to so elect for a portion of their shares.

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