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Alliance accepts 2.3B takeover

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TORONTO (CP) _ Ignoring a last-minute veto effort, shareholders of Alliance Atlantis Communications Inc. (TSX:AAC.B) have voted more than 99 per cent to accept a $2.3-billion takeover offer from CanWest Global Communications Corp. (TSX:CGS) and New York investment bank Goldman Sachs.

"That was a squeaker," Alliance Atlantis executive chairman Michael MacMillan said as stockholders laughed after the results were announced at a special meeting Thursday morning.

The major entertainment company said 99.7 per cent of Class A shareholders who voted approved the takeover, amounting to $53 a share, and 99.9 per cent of Class B shareholders approved it.

MacMillan said operating Alliance Atlantis has been "a heck of a long ride" and he felt privileged and proud to have helped run the company, which has been operating for nearly three decades.

"I’m equally proud to be able to sell it for $2.3 billion and to expect that in the future this business is going to grow and to thrive in a new way, in a new configuration," MacMillan said. "I’m very, very optimistic for the future of the business."

Alliance Atlantis and multimedia giant CanWest said the takeover remains on track despite a veto bid by Movie Distribution Income Fund (FLM.UN). The fund said Wednesday evening it is going to court to seek a veto.

At issue is the Motion Picture Distribution Limited Partnership, a major movie distributor in Canada, which is owned 49 per cent by the Movie Distribution Income Fund and 51 per cent by Alliance Atlantis.

The trust said it would file a court application Thursday, seeking an order that the takeover can’t be completed without its consent, and that the trust must be fully informed about the transaction.

"We do not believe the (takeover) arrangement itself requires the consent of the trustees of the fund," David Lazzarato, Alliance Atlantis’s chief financial officer, said earlier Thursday in a release.

"The trustees of the fund apparently believed they needed to take legal steps to preserve the rights of the fund in advance of the special meeting of Alliance Atlantis shareholders … ."

He said the trustees, the management of MPD and the bidders "continue to engage in discussions" and should be able to "satisfactorily address any concerns that the fund’s trustees may have regarding the consequences to MPD from the arrangement."

On behalf of CanWest Global, executive vice-president Tom Strike said the bidders would "continue to pursue a satisfactory resolution with the trustees of the fund and would take whatever legal action it deemed necessary to maximize the likelihood of a timely completion of the arrangement.’

Under the proposed deal, the CanWest will contribute $200 million to the takeover of Alliance Atlantis, whose key assets are 13 specialty TV channels including Showcase, History Television, Slice and Discovery Health. It also owns part of the CSI television crime series.

Goldman Sachs will hold 71 per cent while CanWest will have a 29 per cent stake, aiming to increase its ownership by 2011.

The ultimate ownership split depends on the performance of the combination of the Alliance Atlantis broadcast assets with Winnipeg-based CanWest’s Global TV network.

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Movie Income Fund Q4 profit rises

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TORONTO (CP) _ Movie Distribution Income Fund (TSX:FLM.UN) said Wednesday the limited partnership’s fourth-quarter profit rose to $18 million from $14.1 million a year earlier, primarily on foreign exchange gains.

Consolidated revenue for the three months ended Dec. 31 was $138.3 million, up 21 per cent from $114.3 million the year before, with increases in all territories.

Movie Distribution Income Fund holds an indirect 49 per cent interest in Motion Picture Distribution LP while Alliance Atlantis Communications Inc. (TSX:AAC.B) indirectly holds the remaining 51 per cent.

Last month, CanWest Global Communications Corp. (TSX:CGS) paired up with Wall Street bank Goldman, Sachs & Co. to acquire Alliance Atlantis in a $2.3-billion deal.

Under the proposed deal, a Canadian partner of GS Capital Partners, a private equity affiliate of the New York-based bank involved in the acquisition, would take control of Alliance’s interest in Motion Picture Distribution.

In Canada, the partnership’s revenue rose to $86.1 million from $65.5 million, as weaker theatrical slate was more than offset by stronger DVD releases in the quarter.

DVD sales included Passe-Partout, Bon Cop Bad Cop, Clerks II and Fearless.

Television revenue increased to $25.5 million from $15.4 million, while total library sales in Canada during the quarter were $25.9 million.

In the United Kingdom, revenue of $36.6 million was up slightly from $35.9 million the year before, while revenue in Spain was $15.6 million _ a 21 per cent increase.

The unrealized foreign exchange gain for the quarter was $2.9 million, compared to a loss of $900,000 in the prior year’s quarter.

"Despite a year of challenges, our model of distributing a portfolio of movies across a variety of platforms continued to show strength and resiliency," stated CEO John Bailey.

"Our Canadian operations benefited from a solid DVD slate and continued strong sales from our domestic library of 3,600 titles."

For the year, the partnership’s net income was $42.8 million, compared with $28.6 million in 2005. Consolidated revenue rose to $449 million from $431.2 million in the prior year’s period.

Looking forward, the company is expecting to generate solid sales from the expanded release of Oscar-nominated film Pan’s Labyrinth, as well as Rush Hour 3, The Golden Compass, Grind House, and Hairspray.

On the TSX Wednesday morning, Movie Distribution units were unchanged at $8.40.

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Alliance no longer selling MPD

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TORONTO (CP) _ Movie Distribution Income Fund said late Wednesday that Alliance Atlantis Communications Inc. is "no longer interested" in trying to sell Motion Picture Distribution LP outright.

Alliance holds an indirect 51 per cent stake in the Canadian film distribution company, while the fund has a 49 per cent stake.

However, CanWest Global Communications Corp. (TSX:CGS) announced late Wednesday that it had paired up with Wall Street bank Goldman, Sachs & Co. to acquire Alliance Atlantis in a $2.3 billion deal.

Under the proposed deal, a Canadian partner of GS Capital Partners, a private equity affiliate of the New York-based bank involved in the acquisition, would take control of Alliance’s interest in Motion Picture Distribution.

"The special committee of the fund continues to monitor circumstances, including those related to the proposed AACI sale transaction announced today, and their implications on the process to explore ownership alternatives in relation to MPD previously announced by the fund, including its effect on the nature of the transactions that may be available to unitholders of the fund (if any)," Movie Distribution said in a release.

Alliance Atlantis, a specialty broadcaster whose marquee property is the "CSI" TV-series franchise, said last October it wanted to sell its stake in Motion Picture Distribution, a leading movie distributor in Canada with other operations in Britain and Spain.

A few weeks later, Movie Distribution Income Fund said that it would join Alliance Atlantis in putting the distribution business up for sale. Each side needed the approval of the other to sell its interest in the partnership.

Potential buyers have been eyeing the fund since earlier in 2006, with the most talked-about candidate being London-based Marwyn Investment Management LLP, which had said it was prepared to pay about $400 million for the company. A formal offer was never put on the table. Goldman Sachs was another possible suitor.