MONTREAL — Troubled Canadian children’s TV producer Cinar has settled out-of-court with two of its subsidiaries, U.S. publishing companies Carson-Dellosa Publishing and HighReach Learning.
Cinar bought both in the late 1990s in deals involving large amounts of Cinar stock, which plummeted in value following allegations of tax-credit fraud and financial wrongdoing at the Montreal-based company.
The firms accused Cinar of providing misleading information that deflated the value of the deals, among other claims.
Friday’s announcement ends lawsuits filed two years ago by the companies which produce material for the preschool marketplace and are part of Cinar Education, accounting for 62% of Cinar’s revenues.
Cinar bought Carson-Dellosa in 1997 for approximately $38 million, including $22 million in cash and 930,570 limited voting shares of Cinar. In the settlement with Carson-Dellosa owners Stephen Carson, Patricia Carson and Janet Dellosa, Cinar agreed to pay the three plaintiffs $13.2 million, of which $7 million was paid Thursday. The balance is payable in two interest-bearing installments of $3.1 million each in March 2003 and March 2004. Deal also includes new five-year employment contracts at Cinar for Stephen Carson, who is president of Cinar Education, and Patricia Carson.
Cinar bought HighReach in 1998 for approximately $25 million, including $18 million in cash and 422,000 limited voting shares. Cinar has agreed to pay HighReach owners Philip Kelley, Kathy Kelley, Michael Mayberry and Sharon Mayberry $6.6 million, of which $4 million was paid Thursday and the balance is to be paid in three installments of $867,000 in September 2002, March 2003 and March 2004. In addition, Michael Mayberry and Sharon Mayberry signed new five-year employment contracts with Cinar Education.
This follows the announcement a week ago that Cinar had settled a number of class-action lawsuits for a total payout of $25 million.
“This is very important for the company,” said Cinar spokesman Louise Sansregret. “Now we can look to the future and look to new business opportunities.”
There is still one other suit outstanding, involving the owners of Twin Sisters Prods., a U.S. company that Cinar acquired two years ago. But the value of the suit is much lower than the other lawsuits, said Sansregret.