Seven Arts Closes First Three Tranches of Production and Distribution
Financing and Receives over $10 Million (£5,000,000)
of Net Cash Proceeds
Significant Event – Seven Arts receives over
$10,000,000 in three Tranches from the Zeus Capital LLP Production and
Distribution Financing
LONDON (Business Wire EON) May 1, 2008 --
Seven Arts Pictures plc (the Company) (PLUS:SAPP) (OTCBB:SAPXF)
announced today that Zeus Partners LLP (“Zeus”)
has closed the first 3 tranches of production and distribution financing
and Seven Arts has received over $10 million (approximately £5,000,000)
of net cash proceeds from the capital raised by Zeus for investment into
the production and distribution costs of Seven Arts existing and future
motion picture productions and acquisitions (the “Transaction”).
The three tranches were closed since Wednesday, 19 March 2008. Seven
Arts expects to close the balance of the investment before the 2008
fiscal year end on 30 June 2008.
Management expects the net proceeds from the Transaction to be accounted
for as, in part, a reduction in the carrying value of the film costs in
the balance sheet and in part as a reserve against future film costs
included in the Transaction. If the maximum amount of the investment is
raised by Zeus, the Company anticipates a reduction in its current and
future film costs by approximately $16,000,000 USD (approximately £8,000,000).
Peter Hoffman, CEO of Seven Arts, commented, “This
transaction is very significant since it validates the value of our film
library and has provided net cash to Seven Arts of slightly over $10
million (£5,000,000) so far without suffering
any dilution to the issued and outstanding shares. The net cash
generated from the Transaction will significantly improve our balance
sheet and is expected to increase our gross margins substantially in FY
2008 and FY 2009.”
The Transaction is expected to reduce cost of good sold (COGS) and
increase gross margin by as much as $16,000,000 (£8,039,393)
in the fifteen months ending 30 June 2008 and the fiscal year ended 30
June 2009, if the Transaction is completed as anticipated. The net
proceeds received will be principally used to reduce the Company’s
indebtedness, for payment of general and administrative costs, and/or to
finance investments in future development or acquisition of films.
About Seven Arts:
Seven Arts Pictures plc (“SAP”,
“7 Arts” or the “Company”)
was founded in 2002 as an independent motion picture production and
distribution company engaged in the development, acquisition, financing,
production, and licensing of theatrical motion pictures for exhibition
in domestic (i.e. the United States and Canada) and foreign theatrical
markets, and for subsequent worldwide release in other forms of media,
including home video and pay and free television.
About Zeus:
Zeus Capital is a rapidly growing investment banking operation based in
Manchester and is a member of The Zeus Group.
Zeus Capital provides the highest quality financial advice and execution
expertise on all types of transactions, including flotations, mergers
and acquisitions, debt restructuring, private placements and
fundraisings in public and private markets. We can offer a wide range of
corporate finance services and strive to give the highest standards of
personal attention and professionalism to our corporate clients.
We are uniquely placed to advise companies in both public and private
markets giving us the ability to operate a genuine best advice model for
all businesses regardless of their size or position in the current
market.
Cautionary Information Regarding Forward-Looking Statements:
Included in this news release and other information that we make
publicly available from time to time are forward-looking management
comments and other statements that reflect management's current outlook
for future periods. These statements include, among others, statements
regarding the anticipated benefits from the development, production, or
acquisition of new film projects as well as anticipated revenue from
other sources and which may be critical to the overall revenue and
profits of the Company.
These statements and expectations are based on currently available
competitive, financial and economic data along with our operating plans,
and are subject to future events and uncertainties that could cause
anticipated events not to occur or actual results to differ materially
from historical or anticipated results. Among the events or
uncertainties which could adversely affect future periods are: changes
in legal contingencies; issues surrounding labor disputes with unions
such as the Screen Actors Guild, the Director’s
Guild, and the Writer’s Guild; our use of
estimates and assumptions; and the concentration of our capital stock
ownership. The forward-looking statements in this news release should be
read in conjunction with the more detailed descriptions of the risk
factors located in our Registration Statement filed with the United
States Securities and Exchange Commission as amended on Form 20-F
(annual report pursuant to Section 13 or 15(d) of the Exchange Act) for
the year ended March 31, 2007 and as updated to December 31st, 2007
under Part 1 Item 3 Section 3.D entitled “Risk
Factors”. The Company undertakes no
obligation to update or revise any forward-looking statements contained
in this release as a result of new information or future events or
developments.
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