Citigroup and Ryan Kavanaugh’s Relativity Media have settled their lawsuits over Citi’s attempt to restructure the terms of their five-year slate financing deal involving Sony Pictures Entertainment.
Citi and Relativity issued a brief joint announcement Thursday that they had mutually agreed to dismiss the suits “with prejudice” — meaning that the suits cannot be refiled.
“Both companies are pleased to have this matter behind them and look forward to continuing their business relationship,” the companies said.
Citi and Relativity Media exchanged lawsuits in November, with Relativity alleging that Citigroup had violated terms of of their 2007 Beverly I deal, resulting in a higher interest rate for Relativity’s revolving credit. Relativity alleged that Citigroup’s breach of the original deal terms would result in at least $50 million in damages.
Citigroup had termed Relativity’s suit “totally without merit” and countersued the same day. Its complaint alleged it “reserved the right, subject to certain limitations, to change all or any of the terms, structure, tenor or pricing of any of the facilities if such changes were needed, in Citigroup’s sole judgment, to ensure that the facilities are successfully syndicated.”
Relativity and Citigroup had struck the agreement in January 2007, when market conditions for pic financing and credit deals in general were markedly different, prior to the economy’s deterioration last fall. The financing pact provided Relativity the funds to co-finance 45 Sony films, including last summer’s “You Don’t Mess With the Zohan” and the Roland Emmerich disaster epic “2012,” due out in November.
Citigroup sustained huge losses last year as a result of the global financial crisis and was rescued by the federal government in November. The frozen credit markets made loan syndication — the practice of reselling debt to other institutions and investors to enable movie slate financing — much more difficult for even giant banks like Citigroup.