Film Roman starts arbitration against Pentamedia for breach of pact  ( June '8,2001, FE)

THE soap opera featuring Indian entertainment titan Pentamedia Graphics Ltd (Pentamedia) and Hollywood-based independent production house Film Roman Inc, USA has reached a climax. Film Roman is seeking damages from Pentamedia for breach of agreement, including a break-up fee, damages for fraudulent inducement and misrepresentation and reimbursement of attorneys’ fees, accountant fees and related costs, according to Film Roman’s filing with the Securities and Exchange commission, USA. Pentamedia officials could not be reached for comment despite repeated attempts.

According to Film Roman, it has submitted to Pentamedia, on Tuesday, a demand for arbitration pursuant to the stock purchase agreement and the subsequent memorandum of understanding signed by the two companies on January 31, 2001 and April 24, 2001, respectively. Film Roman bases its claims on Pentamedia’s breach of the terms of both agreements between the two companies.

It may be recalled that Pentamedia, as per the last amended agreement, was to acquire a 49.9 per cent stake in Film Roman for a overall consideration of $10 million. The initial agreement between the companies was originally entered into during October last year. About mid-May Film Roman has called off the deal with Pentamedia.

Initially, Pentamedia has proposed an all cash deal whereby it was supposed to pick up a 60 per cent stake in Film Roman for a consideration of $ 15 million. Later, it deal was reworked to an all stock one but fell through as Pentamedia could not guarantee the floor price of the stock it was to issue to Film Roman.

According to a Chennai-based analyst, the stock market would view the development negatively and the stock could seek lower levels. He added that Pentamedia had not been transparent about the acquisitions in the past.