Press Relase Intertainment AG


Witness admits budgets systematically inflated by Franchise

Third week of trial relating to compensation for damages of Intertainment begins 


Ismaning near Munich, May 4, 2004 - The trial relating to compensation for damages of Intertainment AG, Ismaning near Munich, against American film producer Franchise Pictures and others is today, Tuesday, going into the third week of the hearing. The first witness to testify will be Elie Samaha, CEO of Franchise Pictures. He was already in the witness stand last Thursday, the preceding day of the trial.

During the course of the trial, important witnesses have testified how Samaha, Franchise Pictures - and in some cases also the business partners of the company - proceeded when doing business with films. It was confirmed that Franchise Pictures systematically and fraudulently inflated budgets. This was elaborated by James Holt, Vice President of Franchise Pictures responsible for production and finance. He said that on the instructions of Elie Samaha he had inflated the actual production costs for the disputed films - and did not sent Intertainment any film budgets without first consulting with Elie Samaha, in order to establish by what amount he should inflate the actual film budget.

Holt also admitted that the inflated budgets were not only submitted to Intertainment, they were also forwarded to other foreign distribution partners of Franchise. This involved a total of 16 companies. This admission indirectly contradicted the arguments put forward by the lawyers of Franchise Pictures. As anticipated, they are maintaining in the trial that Intertainment had from the outset known about and approved the fact that Franchise Pictures were invoicing Intertainment with inflated budgets.

Holt also admitted that the insurance companies which issued the completion bonds for the films had received both the actual and the inflated budgets from Franchise Pictures in advance. In this connection, Intertainment's lawyer Scott Edelman demonstrated by submitting documentation that the insurance companies confirmed the inflated budgets to Intertainment, although they had only provided insurance cover for the actual, much lower budgets.

Intertainment filed a lawsuit against its former partner Franchise Pictures on account of fraudulently inflated film budgets for numerous films, involving compensation for damages of at least 100 million dollars. The trial is being held in Santa Ana near Los Angeles. The judgment should be handed down at the latest on June 11.



Contact:

Intertainment AG, Dr. Marietta Birner, Investor Relations, Osterfeldstrasse 84, D-85737 Ismaning, Germany
Tel.: + 49 (0)89 21699-0, Fax: + 49 (0)89 21699-11
Internet: www.intertainment.de, E-mail: investor@intertainment.de
 

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