IMAX Sells $18 Million Worth Of Shares

http://www.digitalcinemainfo.com/IMAX_05_06_08.php

 

May 6, 2008

 

Source: The Canadian Press

 

IMAX Corp. has announced that the Douglas family, its largest shareholder, is adding to its stake by buying 2.7 million shares for $18 million in a private placement. As a result of the move, the Douglas family now owns 19.9 per cent of the company.

 

In addition, IMAX also said Wachovia Capital Finance Corp. has agreed to expand and ease the terms of its credit facility.

 

These transactions will help fund the roll-out of the IMAX digital projection system.

 

Press Release:

Imax Corp.said today that the Douglas family, its largest shareholder, is adding to its stake by buying 2.7 million shares for $18 million in a private placement.

 

The big-screen movie technology company also said Wachovia Capital Finance Corp. has agreed to expand and ease the terms of its credit facility.

 

The transactions will help fund this summer's roll-out of the Imax digital projection system, and Imax stock rose more than eight per cent on the news.

 

"The good news is that as a result of today's announcements, we do not believe we will need additional financing to fund our digital rollout under the current business model," stated Imax co-CEOs Richard Gelfond and Bradley Wechsler.

 

The Douglas family will own 19.9 per cent of the company after the latest purchase, priced at $6.60 per share. Imax stock had closed Monday at $6.76, with a 52-week TSX range between $7.99 and $3.89. It rose 56 cents to $7.32 Tuesday morning.

 

The amendment with Wachovia extends the loan facility to Oct. 31, 2010 and eliminates an operating-profit covenant.

 

"The amended terms of the line allow us to draw down approximately $24.4 million today, and we believe that as our borrowing base increases in accordance with the terms of the agreement we may be able to take down close to $30 million," stated Imax co-CEOs Richard Gelfond and Bradley Wechsler.

 

"Coupled with our cash on hand, we expect that these deals will ultimately provide us with access to roughly $55 million to $60 million in funding."

 

Meanwhile, the Douglas family has agreed to a five-year standstill period during which it will not increase its percentage ownership or engage in change-of-control transactions.

 

"The Douglas family has been an extremely supportive shareholder group, and we're pleased that they have recognized the potential in Imax and the opportunity to invest at this level at this time," said Gelfond and Wechsler.

 

They added that cinema operators have been "extremely enthusiastic" about the transition from Imax's bulky and complex wide-format film to digital technology, signing deals for 170 digital systems in the past two quarters.