In a bidding war for rights to debt-wracked Sovereign Pictures’ arthouse library, it appears Cinergi’s foreign sales arm Summit Export Group could be the victor over rival the Movie Group (TMG), sources said yesterday.
Both TMG and Cinergi’s Summit have been trying to outmatch each other’s offer for weeks. But a high-level source involved with those negotiations said yesterday an announcement will probably be made in a day or two. And at this point, “The nod appears to be leaning toward Cinergi,” he said.
Jed Daly, senior vice president of TMG, acknowledged his company “made an aggressive” counterbid to Andy Vajna’s Cinergi offer.
TMG reportedly was willing to take a lower percentage of the film library servicing fees and allow some of Sovereign’s principals to remain as paid consultants, sources said.
“We do feel the value of our bid is stronger and that we made an attractive offer,” said Daly, but declined further comment.
Specifics of the exact bids were unclear. But one source involved in the discussions said Cinergi would be paid a fee based on about 10% to 15% of library revenues generated under the servicing arrangement.
Both companies reportedly had offered to put up “good faith money” in the single-digit million dollar range. Again, specifics were withheld.
Although Sovereign is not technically bankrupt, the company was expected to be liquidated if it could not find a suitor for its library.
That library includes such arthouse and studio product as “Hamlet” starring Mel Gibson, Oscar winner “Reversal of Fortune,””My Left Foot,””Cinema Paradiso, “”The Commitments,””Impromptu” and “Vincent and Theo.”
The indie, which underwent a restructuring in April and has since laid off the bulk of its 18-member staff, represents yet another troubled loan for France’s Credit Lyonnais — the government-owned bank which has been trying to resolve its troubled entertainment portfolio in the U.S. for more than a year. CL wants to use any revenues generated from servicing Sovereign’s library to pay off the indie’s undisclosed existing debts.
Sources in the ongoing negotiations noted once the bid is resolved, Sovereign undoubtedly will exist in name only.
Sovereign chairman Ernst Goldschmidt declined to comment on his company’s fate or the status of the ongoing negotiations. All he would say is, “This may all be clarified in a day or so.”
Cinergi’s Vajna could not be reached for comment yesterday.
But Daly said the main reason his company was pursuing Sovereign’s library “is because we want it for overseas product. We are very well capitalized and while we’ve been associated with B product, we are expanding into the A-product arena. That is why Sovereign’s product would be a fit.”
He noted that Intermedia had put together TMG’s proposal.