Image Entertainment Again Declares Nyx in Breach

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The rocky courtship of Image Entertainment Inc. and its San Francisco private equity suitor took another turn for the uncertain Tuesday when the Chatsworth home entertainment distributor said Nyx Acquisitions Inc. was again in breach of their merger agreement.

On Friday, Image agreed to give Nyx, an affiliate of Q-Black LLC and Joe Q. Bretz, more time to close the $100 million deal in exchange for increasing the business interruption fee Nyx would pay if the deal went sour.

But by the end of Monday’s business day, Nyx had not deposited the agreed upon additional $500,000 payment into an escrow account. The deposit would bring the fee Image would receive to $2.3 million, and Nyx would get until March 20 to close the transaction.

Image did say this morning that Nyx had assured the company of its intent to cure the breach by the close of business today.

Under terms of the amended merger agreement, Image may terminate the agreement, cause a release to Image of the $1.8 million being held in trust, and collect the $500,000 balance of the million business interruption fee due to Nyx’s failure make the deposit by the required time.

After bypassing richer deals over the past two years, Image in November agreed to sell itself to Nyx for $60.2 million in cash plus assumption of debt. Shareholders are to receive $2.75 per share in cash. The merger first hit the rocks in January when Nyx was late in making a required payment.

Image shares were down 19 cents, or 13 percent, to $1.22 in morning trading on the Nasdaq.

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