Image to continue releasing ThinkFilm titles

Court grants supplier right despite merger collapse

By Susanne Ault -- Video Business, 2/12/2008

FEB. 12 | Image Entertainment has won the ability to continue distributing ThinkFilm titles through its output agreement with label parent CT1 Holdings, even though the planned merger between Image and CT1 affiliate BTP Acquisition Co. has been dismantled.

Going forward, Image will be able to release certain agreed-upon new ThinkFilm-branded acquisitions and existing catalog titles. It’s not clear if the latest terms between Image and CT1, which also houses Capitol Films, are different from the terms in the original output agreement signed last year.

Last month, when BTP’s purchase of Image started to collapse, CT1 terminated the output agreement. But Image sued CT1 in Los Angeles Superior Court in order to get the pact reinstated. As of last week, ThinkFilm’s In the Shadow of the Moon was not expected to street today as initially scheduled because of the stalled agreement.

In announcing the continuation of the pact today, Image did not specify when In the Shadow of the Moon would roll out to retail. Amazon.com lists a March 15 date for the title. Image management did not immediately respond for comment.

Despite this resolution, relations between the parties remain strained due to the called-off merger. On Feb. 11, Image filed a complaint with the Court of Chancery of the State of Delaware in order to force BTP to pay a $4.2 million business interruption fee, plus attorney fees. Image contends that BTP agreed to this compensation if BTP was at fault for the transaction failing to close, according to the merger terms.

According to an excerpt from the agreement, “the Merger Agreement provides that, upon termination of the Merger Agreement by Image Entertainment…including without limitation as a result of [BTP] breaching their respective obligation to effect the Closing.” Consequently, reads the filing, “BTP is required to pay Image Entertainment a $4.2 million Business Interruption Fee.”

Shortly after the companies broke off the merger, BTP claimed that Image was not entitled to call off the merger and in fact owed BTP $1.5 million as a termination fee.