Indie distributor Skouras Pictures could be scrambling for funds in coming months, following last week’s abrupt cancellation of a $5.7 million public offering just before it was due to close.
Skouras, which has an output deal with Paramount Pictures, said through a spokesman that the issue was canceled because the underwriter “wasn’t able to complete the deal.” A spokesman for the underwriter, little-known firm Baraban Securities, said on Feb. 24, “It’s not an issue we want to discuss in public at this time.”
The abandonment of the offering will make life tough for Skouras. It said in its prospectus for the issue, which was filed with the Securities & Exchange Commission, that the money raised would go toward payment of $650,000 in back taxes, repayment of some debt and future acquisition of films.
Without the money from the issue, Skouras will be forced to keep relying on Paramount for its financing under a $10 million revolving facility now in place. But this deal comes up for renewal in August 1996 and Skouras acknowledged in its filing that any disruption to the agreement would pose big problems.
Skouras also had plans to use the money from the issue to acquire international distribution rights. Paramount, which is a 17.9% shareholder in Skouras, limits its financing to acquisition of films for domestic distribution.
A spokesman for Skouras said he expected the company to find another underwriter and make another attempt at a public offering.
Cancellation of the issue left some Wall Street traders bewildered. The stock had already started trading, although Skouras’ spokesman said no investors should have paid out money yet because the offering had not been completed.