German major Kinowelt has sold half of its shares in Canada's Alliance Atlantis Communications (AAC), but says that the strategic alliance between the two groups will continue.
After the German stock market closed yesterday (Tuesday) Kinowelt announced that it had sold 6.3 million class B shares, its entire holding of the non-voting stock. The move, brokered by Merrill Lynch at C$18.75, compared with Monday night's closing price of C$20.50, brings Kinowelt some US$78m (DM166m) of cash.
Kinowelt, which last autumn was beset by rumours of financial difficulties, previously sold one million B shares, raising approximately $13m, part of which it said would be funnelled into Momentum Pictures, the UK distribution company it controls equally with AAC (ScreenDaily Oct 26, 2000). In a statement yesterday Kinowelt said: "with the resources thus released, the Kinowelt Media Group intends to continue to expand its market position."
The group said that it will keep its holding of 22% of AAC's A Class voting shares as a long-term measure. It added that the synergies created from co-operation between the groups "will show positive results in the figures of both companies." Kinowelt bought into Alliance in summer 1999, initially taking a 20% stake in AAC and a 25% stake in Alliance Releasing, since renamed Momentum Pictures.
Paul Laberge, senior vice president, corporate development & general counsel, for AAC told ScreenDaily the sale would not have an impact on the relationship between the two companies. "From our perspective it's business as usual. They continue to be a significant Class A shareholder."
AAC breathed a sigh of relief when such a large tranche passed through the market. "We were pleased it didn't cause any more overhang," said Laberge. "We expect the stock to rebound."
Denis Seguin IN TORONTO contributed to this report.