Press Release for Intertainment AG
Intertainment: Updated information about the current status of the legal
disputes in the USA
Ismaning near Munich, 18 April, 2005 – The legal disputes involving
Intertainment AG in the USA have progressed since the last press release on
these matters issued on January 18. Intertainment is providing information in
this new press release about the current status of the individual proceedings.
Arbitration proceeding against Comerica Bank
The arbitration proceeding is currently still in the discovery phase. A meeting
was held between the partners involved and the arbitrators on March 18, 2005 as
part of the arbitration proceeding. During this meeting, Comerica Bank submitted
a number of petitions, including an application to exclude all claims by
Intertainment from the proceeding. Another meeting is planned for April 27. It
is possible that the arbitrators will announce the schedule for the proceeding
at this meeting.
The arbitration proceeding relates to fraudulently inflated budgets for films
that were produced mainly during the years 1999 and 2000. In this context,
Intertainment had originally filed lawsuits against a number of parties
including Comerica Bank, executives of the bank, and bond companies, relating to
compensation for damages amounting to at least 100 million dollars. The
fraudulent budgets were submitted to Intertainment in conjunction with
documentary credits from the bank and the bond companies. The opposing side has
filed a claim against Intertainment for payment of around 70 million dollars on
account of non-payment of the second installment for a number of films.
A settlement has meanwhile been closed with the bond companies, and now Comerica
Bank and its executives are the only parties opposing Intertainment in the
arbitration proceeding.
Proceedings against former Franchise CEO Elie Samaha
The former CEO of the company, Elie Samaha, and other parties were found liable
during the course of the trial for damages against the American film producer
Franchise Pictures heard in the summer of last year, and Intertainment was
granted substantial damages. Mr. Samaha was required to give testimony about his
personal assets at a Judgment Debtor Examination which commenced on January 24,
2005. Intertainment is currently analyzing Mr. Samaha's statements as well as
reviewing documents Mr. Samaha had to produce at the examination. Intertainment
also has taken other post judgment enforcement measures by officially levying on
Mr. Samaha’s individual assets e.g., his ownership interests in certain business
entities. Intertainment continues to evaluate its options to proceed with other
post judgment enforcement remedies. A second date for a court hearing to
continue with Mr. Samaha's examination pertaining to his individual assets has
now been postponed with the consent of Intertainment to June 27, 2005.
Status of the insolvency proceedings relating to Franchise Pictures
Franchise Pictures and the subsidiaries found liable continue to be subject to
protection against creditors under chapter 11 of the US Bankruptcy Code. Efforts
are currently being made to ensure that the assets of companies in the Franchise
Group that are not subject to insolvency proceedings are also included in the
estate.
Post Trial Motions
In the context of the Franchise trial, a number of Post Trial Motions were
submitted by both sides after the judgment was handed down last year. A hearing
relating to these petitions has already been postponed a number of times. The
current schedule provides for this hearing to be held on May 2, 2005 but
Intertainment expects that date will shortly be moved to May 16, 2005 so that
they can be heard with a recent petition by Elie Samaha and Glickson Investment
International LLC. This petition asks that the court should declare the judgment
to be null and void and order a complete retrial. The Franchise companies
currently subject to insolvency proceedings also acceded to this petition.
Arbitration proceeding in the case of “Viva Las Nowhere”
In the context of the Franchise trial, the Franchise subsidiary VLN Productions
Inc. was also found liable for budget fraud. The company had produced the film
“Viva Las Nowhere”. In April 2004, Intertainment already filed a claim in the
USA against Westdeutsche Landesbank (WestLB), the Lewis Horwitz Organization and
the Federal Deposit Insurance Corp. in connection with the film and this claim
is now being pursued in an arbitration proceeding. WestLB was involved in
financing the film. In the context of the arbitration proceeding, Intertainment
is requesting the repayment of an advance payment amounting to around 1.3
million dollars plus interest. Intertainment had only made this advance payment
on the basis of submission of the fraudulent budget.
In a countermove, WestLB has now filed counterclaims against Intertainment
amounting to approximately 900,000 dollars. Arbitrators are currently being
selected to preside over this proceeding.
End of the Press Release
Contact:
Intertainment AG, Investor Relations, Osterfeldstrasse 84, D-85737 Ismaning, Germany
Tel.: + 49 (0)89 21699-0, Fax: + 49 (0)89 21699-11
Internet: www.intertainment.de, E-mail: investor@intertainment.de