MONTREAL — Behaviour Communications is set to sell its Canuck distribution operation — again.
The Montreal-based film company announced Tuesday that it has inked a deal to sell its Canadian domestic film distrib to Industry Entertainment, another Montreal company, for C$4 million ($2.7 million).
In late May, Behaviour had announced that it was selling its Canuck distributor Behaviour Distribution to Montreal-based Remstar Corp., but, following due diligence, Remstar walked away from the deal on July 7.
Industry Entertainment is a small production and distribution company run by David Reckziegel and John Hamilton. Previous pics produced by Industry include the Tori Spelling thriller “Perpetrators of the Crime” and the low-budget psychodrama “The Drive.”
The controlling shareholder of Industry is a corporation owned by Reckziegel and Hamilton. Industry also has close ties to Behaviour. BHVR Communications, which is the majority shareholder of Behaviour, is a significant shareholder in Industry, and Reckziegel is on the board of directors at Behaviour.
Further, Reckziegel has been closely involved as a consultant with Behaviour Distribution over the past six months.
In the fold
Behaviour Distribution will be folded into Industry Entertainment to form a production-distribution entity, and the owners will unveil a new corporate moniker next month.
“It’ll be a smaller player,” Reckziegel said. “I don’t think we’ll be competing with Alliance. We’re going to be working with up-and-coming directors. We feel there’s a niche in the market for Canadian films. We believe we have acquired a company with a talented distribution team and an organization with great potential.”
Under terms of the agreement, Industry will acquire 100% of the issued and outstanding shares of Behaviour Distribution, which includes all tangible and intangible assets of Behaviour’s domestic film distribution operation.
Both parties agreed to try to close the deal as soon as possible so as not to hinder the company’s operations, and a target date of Sept. 2 was set.
Behaviour Distribution has not had a particularly busy release schedule over the past two years.
“We are very happy that we have been able to conclude a transaction with Industry,” said Bernard Legendre, president and CEO of Behaviour Communications.
“This divestiture will allow us to focus on our core strengths and expertise, which is our film production activities. We feel that this is the best decision possible to maximize shareholder value now and in the future,” he said.
With the sale of Behaviour Distribution, Behaviour’s activities will be almost exclusively focused on Los Angeles-based Behaviour Worldwide, which it acquired last year.
Credit and taxes
Behaviour also announced that BHVR has agreed to pay $2.3 million for a so-called numbered company, a wholly owned Behaviour subsidiary. It is an inactive company that contains approximately $23 million in unused business and capital losses available for tax purposes.
In addition, Behaviour recently reached an agreement to extend the revolving credit facility of $4.5 million for Behaviour Worldwide until Aug. 30.
Also, the company has abandoned its attempt to obtain a revolving credit facility of $20 million with Chase Manhattan Bank.
Behaviour has reduced its borrowing requirements as a result of the sale of a number of assets, according to a company statement.
Finally, Behaviour execs said that the company will be reporting a major operating loss for the quarter ended June 30, as well as provisions for anticipated losses due to the sale of certain Canadian assets.