The deal to pump life into Cannon Pictures has apparently fallen through, as would-be rescuer Panda Pictures filed a $ 20 million suit that accuses the indie of, among other things, lying about its financial condition.
In a suit filed in a Los Angeles federal court late Tuesday, Panda alleges that Cannon stymied efforts to determine its fiscal health. In addition to Cannon, Panda’s suit names Cannon prexy and majority shareholder Christopher Pearce and Cannon Television Inc., as well as Panda’s financial adviser, TriCap Intl., and its top execs, Runa Alam and Richard Hadar.
Cannon said it has not been served with the suit and declined to comment.
Michael Rosenbaum, TriCap’s lawyer, also had not seen the suit. But when told of the allegations, he called them “specious.”
Panda appeared to be something of a white knight when it first considered taking control of Cannon last November. It offered to pay Pearce roughly $ 4 million for his 60% stake in the beleaguered company. Panda said at the time that if it closed the deal, it would line up financing from the Belzberg family, three brothers who built a fortune buying and selling companies in the 1980s.
According to the suit, the deal began to unravel quickly. The deal called for Panda to either close the deal by Jan. 15 or pay Pearce $ 125,000. Panda alleges that through December, Cannon execs stalled in turning over financial records that were pertinent to Panda’s decision.
Panda also accuses Cannon of failing to participate in debt reduction talks with its bank, Credit Lyonnais Bank Nederland, even though it had agreed to do so. And Panda claims that Cannon and Pearce never disclosed claims against it by creditors, the amount and terms of its debt, contracts with others or rights by others to buy Cannon stock.
The suit accused TriCap execs of meeting with Pearce without notifying Panda, its client at the time, and of telling Pearce that Panda did not have the financial ability to buy Pearce’s stock.