TORONTO (CP) _ An Ontario court has set a May 18 date to hear arguments about whether Movie Distribution Income Fund (TSX:FLM.UN) has the power to block a proposed takeover of its partner Alliance Atlantis Communications Inc. (TSX:AAC.B) by a group involving CanWest and Goldman Sachs.
The fund and Alliance Atlantis jointly own a motion-picture distribution business, which had been up for sale before CanWest teamed up with the U.S. investment firm to bid $2.3-billion for Alliance Atlantis, owner of several specialty cable TV channels and other media assets.
When that deal was struck, Alliance Atlantis and its prospective new owners agreed that the 51 per cent of the movie distribution business owned by Alliance Atlantis would be transferred to a Canadian subsidiary of Goldman Sachs.
The fund, which indirectly owns the other 49 per cent of Motion Picture Distribution, referred to as MPD, announced last week that the Alliance Atlantis takeover can’t be completed without the fund’s approval. Alliance Atlantis says it doesn’t think the fund’s approval is required.
Alliance Atlantis shareholders voted nearly unanimously last week to accept the offer from subsidiaries of CanWest Global Communications Corp. (TSX:CGS) and Goldman Sachs.
"As we stated in our April 4, 2007, release, we believe that our consent is required in connection with the proposed transaction," Rubin Osten, chair of a special committee at the fund and an associated holding trust.
"We have held discussions with Goldman Sachs and, together with MPD management, provided Goldman Sachs with information with which they might formulate proposals to address our concerns."
With five weeks before hearing date, Osten said there will be time for the parties to discuss the issues "and we are hopeful that the parties will reach a satisfactory understanding but, of course, we cannot currently predict the outcome."
David Lazzarato, chief financial officer of Alliance Atlantis, echoed those words in a separate release.
In addition, Lazzarato said "we do not expect the new date to have any impact on the timing of closing of the plan of arrangement, which is currently expected to occur in July or early August."
The fund’s units traded Wednesday at $8.68, down seven cents. Alliance Atlantis shares traded at $50.91, down one cent. CanWest shares traded at $11.35, down 20 cents, at the Toronto Stock Exchange.