MONTREAL — Chapman Capital, a Los Angeles-based hedge fund, acquired 1 million shares of troubled Canuck entertainment firm Cinar on Friday, paying $2.34 per share.
Chapman Capital managing partner Robert Chapman said it bought the shares, just under 5% of total, from a major U.S. mutual-fund company, but wouldn’t specify which one.
Chapman Capital specializes in buying small stakes in troubled companies and then pressuring execs to sell. Chapman confirmed that this is what his company plans to do in Cinar’s case.
The kids-TV producer has been mired in legal and financial trouble following allegations of fraud and misuse of funds. Its shares have been delisted from both the Toronto and Nasdaq exchanges.
Chapman said the Montreal-based company is taking too long to find a buyer for its assets. Cinar hired Merrill Lynch last August to snare a buyer, but there has been no news since then.
“There comes a point where one has to check into the management of the company and make sure they’re acting as aggressively as is reasonable,” Chapman said. “They should be in the eighth inning here and if they’re not, I want to know why.”
Chapman said he believes Cinar is close to a deal to sell all or part of its assets, saying the leading suitors are Corus Entertainment, Alliance Atlantis, Astral Media and Nickelodeon.
A Cinar spokesman had no comment on the share buy or the sale.