SOURCE: Peace Arch Entertainment Group Inc.

December 20, 2007 02:00 ET

Peace Arch Entertainment Enters Negotiations to Acquire ContentFilm plc

TORONTO--(Marketwire - December 20, 2007) - Peace Arch Entertainment Group Inc. (AMEX: PAE) (TSX: PAE) ("PAE"), an integrated global entertainment company creating and acquiring critically acclaimed film, television and DVD content for worldwide distribution, today announced that it has entered into a non-binding Letter of Intent with London-based film and television sales company ContentFilm plc (AIM: CFL) ("ContentFilm") in which PAE has indicated that it is considering making an offer for all of the issued and to be issued ordinary share capital of ContentFilm for a cash consideration of GBP 0.20 per ordinary share of GBP 0.01 each ("Ordinary Share") or, at the election of each holder, 0.2 PAE common shares for each Ordinary Share up to a total of 19,500,000 PAE Common Shares (the "Share Alternative"). Assuming elections are made to take up the Share Alternative in full, the total cash payable would be approximately $35,000,000.00.

ContentFilm has 174,027,323 Ordinary Shares in issue, 17,169,998 in the money options and 3,048,518 in the money warrants. Any PAE shares issued as part of this transaction will be subject to a twelve-month lock-up period. In addition, the 34,840,262 Convertible Redeemable Preference Shares in ContentFilm will be rolled over into a similar instrument of PAE at a ratio of 5:1, for a total of 6,968,052 Convertible Redeemable Preference Shares of PAE with a redemption price of C$2.60 and a redemption date of June 2010.

The Letter of Intent is non-binding (save for the provisions relating to exclusivity and confidentiality) and is subject to various conditions, including negotiation and execution of definitive financing agreements, formal offer conditions, at least 50% of the shareholders of ContentFilm entering into irrevocable undertakings or letters of intent to accept the Share Alternative, completion of due diligence by both parties and approval by the Board of Directors of each entity. Peace Arch reserves the right to waive these conditions should they not be satisfied. This announcement does not constitute a firm intention to make an offer by PAE under Rule 2.5 of the City Code on Takeovers and Mergers. Accordingly, there can be no certainty at this time that PAE will proceed with the making of an offer for ContentFilm even if these conditions are satisfied, or that any offer made will be successful.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

About Peace Arch Entertainment Group Inc.

Peace Arch Entertainment produces, acquires and distributes feature film and television programming throughout the world, both directly and via third party licensees. It has three operating divisions -- film, television and home entertainment -- with offices in Toronto, Los Angeles, New York and Vancouver. Peace Arch owns one of the largest libraries of top quality independent feature films in the world, featuring more than 1,000 classic and contemporary titles.

Forward-Looking Statements

This press release includes statements that may constitute forward-looking statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of PAE's products and services in the marketplace, competitive factors, dependence upon third-party vendors, availability of capital (including, but not limited to, financing for the proposed transaction on terms acceptable to PAE), all other conditions of the Letter of Intent with ContentFilm being met in a manner consistent with the terms therein and other risks detailed in our periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, PAE undertakes no obligation to update these statements for revisions or changes after the date of this release.


Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any person is, or becomes 'interested' (directly or indirectly) in 1% or more of any class of 'relevant securities' of PAE or ContentFilm, all 'dealings' in any 'relevant securities' of that company (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant' securities' of PAE or ContentFilm, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of PAE or ContentFilm, or by any of their respective 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at

'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to securities.

Terms in quotation marks are defined in the Code, which can be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8, you should consult the Panel.

If you are in any doubt as to the application of Rule 8 to you, please contact an independent financial advisor authorized under the Financial Services and Markets Act 2000, consult the Panel's website at or contact the Panel on telephone number +44 20 7638 0129; fax +44 20 7236 7013.

Contact Information

  • Contact:

    Roy Bodner
    Senior Vice President
    Marketing and Communications
    Peace Arch Entertainment
    (310) 776-7208
    Email Contact: Email Contact


    Financial Communications
    Trilogy Capital Partners
    Ryon Harms
    (800) 592-6067
    Email Contact: Email Contact