Press Release by Intertainment AG
Intertainment takes tough action to cut costs
Arbitration case against Comerica Bank and insurers Film Finances and WorldWide Film Completion about to commence
Ismaning near Munich, September 22, 2003 - Intertainment AG, Ismaning near Munich, has stepped up its cost-cutting program following the recent postponement of the trial relating to compensation for damages against American film producer Franchise Pictures. Rüdiger Baeres, Chairman of the Board of Management at Intertainment, announced this at the Annual General Meeting of the company.
Immediately after the postponement was announced in July 2003, all the members of the Board of Management substantially reduced their salary. "We are also working on other measures geared to reducing costs. This action includes all areas of the company and all partners," commented Baeres.
The aim of the measures is to secure the future of Intertainment and to facilitate continued financing of legal proceedings. Baeres continued that Intertainment, was also conducting talks relating to a loan which falls due at the end of June next year. This was currently still 14.2 million euros.
Intertainment was taking steps to try and achieve a start to the proceedings relating to compensation for damages which were pending before the Federal District court in Los Angeles before the end of the year. An application to this end had been submitted at the end of July of this year, although a decision had not yet been reached.
Intertainment had already filed the lawsuit against Franchise Pictures at the end of 2000. Intertainment claimed in the lawsuit that Franchise had defrauded Intertainment by more than 100 million US dollars as a result of inflated budgets. In the year 2002, Intertainment was also given leave to pursue two RICO claims against Franchise and the two Chief Executive Officers of the company. RICO claims are a special feature of the American legal system. They permit the victims of organized criminal activities to sue for three times the actual compensation sum. This means that the Franchise lawsuit now relates to a claim for more than 300 million US dollars.
According to statements made by Baeres, the fact that Franchise invoiced Intertainment with inflated budgets is meanwhile no longer in dispute. He stated that Elie Samaha, CEO of Franchise, had admitted under oath in a pre-trial hearing that Franchise had inflated the budgets with fictitious payment obligations.
The fraud perpetrated by Franchise was only possible with the collusion of Comerica Bank and the two film insurers WorldWide Film Completion and Film Finances. Baeres said that Intertainment had therefore also filed a lawsuit against these companies for more than 100 million US dollars in December 2002. As a consequence, Comerica Bank commenced arbitration proceedings in February 2003 in which it demanded the payment of two installments relating to the Franchise film "Driven". Intertainment thereupon filed all the counterclaims against Comerica Bank and the insurance companies in the context of this arbitration case. The same facts relating to the same sum in compensation for damages are now being heard in the arbitration case and in the lawsuit filed by Intertainment against these parties. Intertainment is assuming that this arbitration case will commence soon and that it will have been concluded within nine months to a year.
Baeres also stated that the two members of the Board of Management of Intertainment - Baeres himself and Chief Financial Officer Achim Gerlach - had extended their contracts by three years at reduced conditions.
Intertainment AG, Dr. Marietta Birner, Investor Relations, Osterfeldstraße 84, 85737 Ismaning
Telefon: 0 89 / 216 99 - 0, Telefax: 0 89 / 216 99 - 11,
Internet: www.intertainment.de , E-Mail: email@example.com
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