Michael J. Solomon, the company doctor attempting to resuscitate TEAM Communications, has taken an equity stake in the stricken US-German film and TV group and restated the losses incurred under the recently departed management.
The moves come at the end of a week in which no less than seven law firms announced that they are tabling lawsuits against the company.
Solomon, who previously warned that the losses could exceed the $21m he forecast at the time he boarded the company in early February (Screen Daily, Feb 13), said: "It nowappears that the write-downs will total $29m, $5m of which will be reflected in a restatement for 1999, and the write down for 2000 will be adjusted to $24m."
But he and his business partner believe they know how to put the business right. Solomon, who is chairman and chief executive officer, and Jay J Shapiro, the company's new president and chief operating officer, both agreed to take equity stakes in the company. Both have also entered into three-year employment agreements.
"We are betting on ourselves, and we are not gamblers," said Solomon. "I am more convinced than ever that TEAM has the creative talent, managerial expertise and dedicated staff to overcome its recent adversity and continue to be a significant producer and distributor of quality televisionprogramme content."
Although they vary in their interpretation of when the alleged improprieties occurred, thelaw firms charge that TEAM and certain of its officers violated the 1934 Securities Act by reporting reported "favourable but false financial results, causing its stock to trade at artificially inflated levels of as high as $12per share." They are seeking damages on behalf on investors. One, Shalov Stone& Bonner, noted that the company had reported transactions that "lackedeconomic substance."
Other firms filing suit include Charles J. Piven PA; Kaplan, Kilsheimer & Fox LLP;Cauley Geller Bowman & Coates LLP; Schiffrin & Barroway LLP; MilbergWeiss Bershad Hynes & Lerach LLP and Leo W Desmond.
In response, Shapiro said: "It is important to put these filings into their proper perspective. First, they involve the actions of individuals who are no longer connected or associated in any way with TEAM Communications. Secondly, these lawsuits will not divert our attention and focus on our number one objective -- to build long-termshareholder value."
He added: "In order to accelerate our return to profitability and clarify our financialposition, we made the decision to significantly write down the value of our feature film libraries. When sold and distributed worldwide, future revenues from these libraries will flow directly to the bottom line and make a significant profit contribution to the company".
Solomon said that the company is going to be very conservative when it comes toundertaking new production projects. "No project will be given a green light without first securing a domestic licence." He said that he has been actively pursuing acquisitions and strategic alliance opportunities in the American, Canadian, European and Australian markets, and he will have some announcements on these discussions in the "near future."