Bac Majestic, arguably France's most admired distribution group, is to raise $12.3m (Euros13m) in a bid for survival.
In a statement to the Paris stock-market yesterday, Bac revealed that it has teamed up with an unnamed "European investor" with a view to "rebuilding its equity capital".
The company, which put out a profit warning in mid-May, was last month believed to be close to signing a deal with a Russian investor which would have delivered a major cash injection. It is not clear whether the partner announced yesterday is the mysterious Russian or another white knight.
The lifeline will take the form of a new holding company whose capital will be made up of cash from the mystery investor and Jean Labadie's shares in Bac Majestic. At last year's June annual general meeting Labadie owned 59.7% of the group. "The purpose of the new company is to take part in a capital increase amounting to greater than Euros13m," it said in the statement.
Bac also said "this operation will dynamise the activity of the company and allow it to continue to be re-centred around its principal activity: film distribution."
Although Bac Majestic was floated on the stock-market in July 2000 as a mini-major with activities spanning distribution, games and exhibition, it sold off its Paris theatre chain to heiress Sophie Dulac and art-house exhibitor Jean Henochsberg in December last year. At the time of flotation at Euros11.85 the company was valued at $109m (Euros115m) and at its height the company was worth $160m (Euros170m). Yesterday, with the shares trading at Euros0.59 prior to the announcement, the group's value had collapsed to $5.43m (Euros5.75m).
The company's financial difficulties appear to stem chiefly from exhibition and pre-date last month's official rupture with Miramax International, which has been Bac Films' highest profile supplier of foreign product. Miramax owns a 1.6% stake in Bac Majestic.
Last month's profit warning said that the group would lose a total of $12.3m (Euros13m) for the 2001 financial year, compared with a Euros0.2m profit in 2000, despite a 20% increase in turnover to $88.8m (Euros94.1m). It also warned that it would miss its forecasts for the current 2002 financial period. On flotation it forecast a net profit for 2002 of $3.89m (Euros4.12m).