Image Entertainment’s investors have acquired control of the company and a new board of directors and management team has been appointed.
Furthermore the Nasdaq Stock Market has delisted the company’s common stock. Following a request by Image to continue its listing on Nasdaq, the company’s stock will be suspended from trading on Nasdaq on February 3.
Image sources said the company expected its common stock would be quoted on the Pink Sheets, a centralised electronic quotation service for over-the-counter securities, although this is contingent on market makers showing an interest in trading in the company’s common stock.
Image does not intend to deregister its common stock with the SEC. Accordingly, it will continue to file periodic, quarterly and annual reports with the SEC.
On January 27 the company received a Nasdaq staff deficiency letter citing violations of Nasdaq listing rules related to the company’s issuance of 3.5m shares of common stock on January 8 to the holder of its senior secured convertible note due 2011 in exchange for $10,000 in principal amount of the note.
The move by investors to acquire control is understood to have stemmed from the sale of preferred stock to certain affiliates of San Francisco-based private equity firm JH Partners for an aggregate purchase price of $22m, announced on January 8.
The company used a portion of the net proceeds from the sale, along with the issuance of shares of common stock, to repay in full and retire its senior secured convertible note due 2011.
The remainder of the net proceeds will be used to repay other outstanding debts and liabilities and for general working capital.