Inovision Corp., a successor company of bankrupt indie Vestron Inc., won a $ 100 million out-of-court settlement Friday from Bank of America.
The banking giant settled an old law suit filed against Security Pacific National Bank — later acquired by BofA — for reneging on a $ 100 million line of credit in 1988 to Vestron, best known for producing the sleeper hit “Dirty Dancing.”
Inovision was originally set up by Ross Perot in ’79 as part of Electronic Data Systems, bought by Vestron in 1981, and has been a public holding company since then.
On Thursday, Inovision’s shares were worth about “a penny each,” according to shareholder John Teissinger, former Vestron prexy and president of CapCities/ABC’s video division.
Overnight, the 37 million-plus shares rocketed to about $ 2.70 each. The New York-based company that few had ever heard of a week ago suddenly has $ 100 million cash and no debt.
“It is a tremendous final chapter to the Vestron story. It is great vindication for the former Vestron management,” said Teissinger.
The team that was once Vestron amounts to some of the best known exex in today’s entertainment industry.
Former Vestronians include Strauss Zelnick, prexy/COO of Twentieth Century Fox; Steven D. Reuther, prexy of New Regency Productions; and Gary Barber, COO Morgan Creek Productions, the indie that produced “Robin Hood: Prince of Thieves.”
“It was an amazing group of people that built an amazing company,” Teissinger said. “If the bank hadn’t reneged on its credit line, I have no doubt that Vestron would be a substantial player in the industry today.”
Shortly after the bank pulled the plug, Live Home Video — now owned by Carolco Pictures — acquired Vestron Inc. “When Vestron sold world domestic homevideo (rights) to Live, it also sold the trademark,” Teissinger explained. Those Vestron titles generated some $ 7.4 million in net sales in the first three months of ’92, according to Carolco’s Securities & Exchange Commission filing.
Teissenger believes this settlement also separates Vestron from other indies which went bankrupt.
“When the Cannons and Hemdales were falling off the edge of the world, Vestron got lumped in the same group. But with this judgment, I think it becomes obvious that there was a significant asset base in the company and there was substantial value that had been built within Vestron,” he said.
At its peak, Vestron was producing some profitable films and Teissenger said the settlement doesn’t compensate for all that was lost.
“This $ 100 million settlement, as substantial as it is, does not fully compensate the shareholders for the value that was in place the day the bank reneged on the credit line. On the day before the bank pulled back, the market value of the shares was $ 340 million,” per Teissinger.
Inovision chairman/CEO Austin Furst, said in a prepared statement: “Although this settlement doesn’t make up for the losses suffered by shareholders of Inovision and its predecessor, Vestron, it does provide Inovision with a meaningful asset.”
The windfall settlement came as such a surprise to Teissinger and other former Vestron exex that none would speculate on how the funds would be invested.
But, Teissinger added with a laugh, “it will certainly be an interesting story as it unfolds.