Re: Imax seeks new capitol, regain focus - Los Angeles Times 12/11/06
Imax no longer on block
Company has another setback
By Tamsen Tillson
December 18, 2006
Imax has for the second time taken itself off the block as an "acceptable" buyer has failed to materialize. The Toronto-based large-screen exhibitor put itself up for sale in March.
"While Imax received interest from multiple parties in our process of exploring a potential sale or merger of the company, none ultimately indicated a willingness to acquire the company at an acceptable valuation," said co-chairs and co-CEOs Rich Gelfond and Brad Wechsler.
News came after the markets closed Friday. Imax shares have slid from their 52-week high in mid-March of $10.85 to close Friday at $4.20.
The 39-year-old company, which has in recent years been enjoying improved fiscals and a higher profile with the unspooling of reformatted Hollywood tentpoles, hired investment banks Allen & Co. and UBS Warburg March 9. The hope was that a deep-pocketed buyer would help Imax move beyond its traditional business model of selling its projection systems to a more profitable one, a la HBO, in which it takes a share of the B.O. proceeds and can move back into production.
But instead of a white knight, the company was hit with a series of setbacks. The SEC and the Ontario Securities Commission had some questions. Chief financial officer Frank Joyce exited in August. And its share price, which had already begun a steady descent, plunged with the news in August that its ideal buyer was not forthcoming.
In its latest quarter, the company shed $12 million in red ink, and much-hyped "The Ant Bully" turned in disappointing B.O. In addition, the release of the 3-D Imax version of "Happy Feet" had to be downgraded to a 2-D release because the film was finished too late.
There's an unpleasant sense of deja vu for the company, which in 2000 put itself up for sale at the behest of its then-largest shareholder, Wasserstein Perella. Generalized woes in the exhibition industry were blamed for the subsequent freefall in the company's share price and its decision to pull itself off the block at the time.
Company brass are keeping a stiff upper lip, however, reporting plans to stay the current strategic course of international expansion -- there are 280 Imax theaters in 40 countries -- and the development of its money-saving digital projection system, skedded to roll out in 2008.