Panavision Chairman Perelman Retires Company Debt Media & Technology by Carlos Martinez Woodland Hills-based motion picture camera-maker Panavision Inc. has sold a 20-percent stake in Efilm LLC, a wholly owned subsidiary of the company, to Deluxe Laboratories Inc. of Los Angeles for an undisclosed sum. A Panavision spokesman said the deal with Deluxe will help the company better position itself in the digital cinema market because it will free up more capital. Efilm provides high resolution scanning of film, digital color timing, laser film recording of digital video and high definition images for film and digital mastering to film studios. The debt-burdened Panavision also announced last week that it had retired $37.7 million of debt to Mafco Holdings Inc. in exchange for $10 million in cash. Mafco had earlier loaned the money to Panavision to start up Efilm. Mafco also received 49,199 shares in preferred stock with a value of $1,000 per share. The stock has an annual dividend rate of 10 percent and is redeemable at any time by Panavision. Mafco is owned by Ronald O. Perelman, who is also Panavision’s chairman and its majority shareholder. Panavision’s primary revenue comes from the rental of its sophisticated Panaflex cameras and related camera equipment. The company manufactures but does not sell its equipment. It also operates Lee Filters, a lighting equipment rental firm. Mafco is a New York-based holding company that operates a number of tobacco products businesses. In an unrelated deal, Mafco also agreed to purchase $78.4 million of Panavision’s notes in exchange for $50.9 million. In May, Panavision planned a tender offer for $193 million in bonds to reduce its debt, but was forced to cancel when Moody’s Investors Service Inc. lowered the company’s rating to high risk. Last year, Panavision lost $14 million on $190.8 million in revenue, compared to a year earlier when it lost $23 million on $204.6 million in revenue. The company last saw an annual profit in 1997 the same year Perelman acquired the firm. Panavision’s debt has grown from $176 million in 1996 to $533.4 million as of March 31. Image Extends Credit Agreement Image Entertainment Inc., a distributor of DVDs and videocassettes based in Chatsworth, has amended its credit agreement for a $5 million note with Image Investors Co., extending its maturity date from October 2002 to October 2005. The pact allows the note to convert into Image common stock at any time during the term of the agreement. Image Entertainment’s main business is acquiring rights to film and video titles and distributing them as DVDs and videocassettes at large retailers like Sears, Best Buy and Amazon.com. “This will significantly assist in our ongoing efforts to improve the company’s liquidity position as we continue to execute our growth strategy,” said Image CEO Martin W. Greenwald. Image Investors is Image’s largest shareholder and is controlled by John W. Kluge and Stuart Subotnick, who hold 40 percent of Image’s stock. The company was hit hard last year by the loss of its exclusive agreement with Universal Entertainment Group and Orion Pictures to distribute DVDs of their films. For the quarter ending March 31, the company reported a net income of $553,000 on revenues of $26.7 million, compared to net income of $678,000 on revenues of $25.8 million a year earlier. Metro Studios West Lays Off Workers Metro Studios West, a Chatsworth-based unit of adult video producer Metro Global Media Inc. of Rhode Island, has eliminated its publicity department and laid off six other workers. Sam Nelson, Metro Studios general manager, said the layoff was part of a company-wide restructuring meant to reduce the company’s costs. Last year, Metro Global lost $5.2 million on revenues of $25.4 million, compared to a year earlier when it lost nearly $1 million on revenues of $27.8 million. The company cut its publicity department and laid off publicity director Harry Weiss and an assistant. Other cuts came from postproduction, editing and warehouse operations. Metro Global produces and distributes adult videos on videocassettes and DVDs, with distribution rights to more than 4,000 video titles. Biotech Encouraged by Trial Results Advanced Biotherapy Inc., of Woodland Hills, said early results of clinical test trials of its new treatment using antibodies to gamma interferon have shown it can halt the body’s rejection of corneal transplant on eye patients. Dr. Simon Skurkovich, vice president of research and development for the company, said the treatment on 13 patients who were experiencing rejection of their transplanted corneas showed that all but three had improved their visual acuity without signs of rejection. “These encouraging results open the door to treating, in my view, rejection of other transplanted organs and tissue, including bone marrow using antibodies to gamma interferon,” Skurkovich said. Company CEO Edmond Buccellato said the study gives hope to corneal transplant patients who experience organ rejection. According to studies, about 10 percent of 50,000 corneal transplants conducted in the U.S. are rejected. Although more studies are needed over the next few years, Buccellato said he was encouraged by these results. The three-year-old company has no products, but it is researching and developing therapies in the treatment of autoimmune diseases in humans such as multiple sclerosis and rheumatoid arthritis. With a market cap of $14.9 million and no revenue, the company reported a net loss of $176,203 for the quarter ending March 31. Its stock is listed on Nasdaq’s bulletin board, with a value last week hovering around the 35-cent mark. The stock was last valued over $1 in February 2000. It’s 52-week high was 65 cents and its 52-week low was 16 cents. Business Journal reporter Carlos Martinez may be reached at (818) 676-1750 ext. 17 or by e-mail at [email protected].
