Image Entertainment ends merger deal with BTP Acquisition, seeks $4.2 million fee

By Lisa Kerner

Charlotte, N.C., Feb. 5 - Image Entertainment, Inc. said it has notified BTP Acquisition Co., LLC that it is terminating the companies' amended and restated merger agreement dated June 27, 2007.

In addition, Image demanded the "prompt payment" of the $4.2 million business interruption fee under the merger agreement.

The discussions between Image and BTP that began on Feb. 1 have also ended, according to a company news release.

The merger was slated to close on Feb. 1, but the two sides had agreed to extend the deadline until 5 p.m. ET on Feb. 5.

"Image granted numerous requests made by BTP to extend the closing date to allow BTP the time to finalize the required financing for the merger. We are very disappointed that despite Image's willingness to close the merger and enormous patience, BTP was either unable or unwilling to finance the transaction," an Image spokesman said in the release.

Image also announced the company amended its shareholder rights plan by decreasing the defined "acquiring person" threshold to 15% from 30%, with exceptions for certain existing shareholders.

It was previously reported that BTP and Image had notified each other of an anticipated breach in their agreement.

Image previously notified CT1 Holdings that CT1 is in breach of their output distribution agreement, dated Dec. 7, while CT1 revoked the authority for Image to distribute its programming under the agreement.

BTP agreed to acquire Image for $4.40 per share in a cash transaction valued at $132 million, including debt.

Image Entertainment is an independent licensee, producer and distributor of home entertainment programming in North America based in Chatsworth, Calif.

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