Appetite for acquisition leaves indie's owner deep in red ink
A flagging economy hasn’t dulled the appetite among media players of all types for mergers and acquisitions.
But Toronto tech company Itemus’ recent purchase of the Shooting Gallery is proof that the cost of those acquisitions is sometimes too much to stomach.
Faced with mounting debts, the Shooting Gallery last month lurched toward Chapter 11, shuttering its Gotham offices and firing its staff.
But the company’s debts keep getting bigger, and now threaten to swallow Itemus.
Itemus said late last week it had been hit with a lawsuit from one of Shooting Gallery’s creditors. And other suits are coming out of the woodwork.
One of Shooting Gallery’s landlords, 575 Greenwich Realty, has filed a petition seeking $175,000 in unpaid rent; and Maria Follini, the mother of C.J. Follini, former prexy of Shooting Gallery production facility Gun-For-Hire, is seeking $350,000 of the $500,000 she invested in the shingle.
Follini has recouped $150,000 of her investment, which she sank into the Shooting Gallery, “out of the goodness of her heart to assist them financially,” says her lawyer, Andrew Greene of Greene & Zinner.
“Unfortunately,” he says of the remaining coin, “the Shooting Gallery did not repay those funds.”
Itemus, which remains liable for $10 million in Shooting Gallery debts under the terms of its acquisition, plans to offer its creditors payment in the form of Itemus stock.
But that offer isn’t likely to be very popular. At the end of the day July 6, Itemus stock was trading at 6¢ a share on the Toronto Stock Exchange.
If Itemus can’t fend off its creditors or raise additional funds, it may face bankruptcy.
In the meantime, Itemus won’t see any rent from the last remaining tenants of the Shooting Gallery’s once-opulent offices — production units for pics like “Men in Black II” and “Unfaithful,” who now deal directly with the building managers.
As one producer put it, “It sounds like it was a house of cards. And it all fell down.”