Live Entertainment Inc. is officially back in business, which is also good news for 49.9% owner Carolco.
As expected, a U.S. bankruptcy judge greenlighted the company’s prepackaged Chapter 11 bankruptcy reorganization in U.S. bankruptcy court in Los Angeles yesterday, less than two months after the Feb. 2 filing.
The ruling was required because only 90% of the required 95% of voting shareholders had approved the plan.
Before the hearing, Michael White, Live Entertainment’s senior VP general counsel, told Daily Variety that Live needed “the court’s assistance to make the 9% who didn’t vote or 1% who voted ‘no’ to take the same deal that the majority took in an almost 90% vote (for both preferred and notes).”
White also confirmed analysts’ reports that this judgment will likely make Carolco’s pending bankruptcy restructuring smoother, and that “post-Carolco re-structuring, Carolco’s strategic investors (Canal Plus, Rizzoli and Pioneer) will own more than 60% of each Carolco and Live.”
More important, White said, “post-Carolco restructuring, Carolco won’t own any Live stock but we will be sister companies instead of parent/child.
“Post-restructuring of Live, Carolco will own approximately 35% of voting stock, and (investor/partner) Pioneer will own approximately 30% of voting stock.”
The approved restructuring — which will be completed by Tuesday — includes the exchange of Live’s 14.5% senior subordinated notes (due 1999) and Series A preferred stock for a combination of $ 8 million in cash, $ 40 million in principal amount of new 10% senior subordinated notes and $ 60 million in new Series B preferred stock.
There’s a March 30 deadline with bondholders, White said.
“As bankruptcy goes, this is as smooth as it gets,” noted David Millison of Dabney/Resnick and Wagner Inc., which specializes in distressed securities investment.
“This means they’re back in business because they’ve successfully restructured their balance sheet, which means they can continue buying rights for homevideo, and that’s the business they’re in,” Millison said.
In a joint statement, Tony Scotti, Live’s chairman, and Dave Mount, the company’s prez/CEO, said: “Today’s plan confirmation marks the last step in a financial restructuring process begun almost a year ago. We have reduced our public debt by $ 70 million and lowered our annual public dividend and interest costs by over $ 11 million.”
Live’s survival is also good news for for indies. Ronna Wallace, senior veepee programming for subsid/cash cow Live Home Video, noted the company is investing in many productions and taking an exec producer credit to guarantee it gets the homevid rights.
In its little-known role as investor, Live Home Video “winds up being 50% of the total budget (in many cases) in order to get all domestic rights,” Wallace said.