SOURCE: Seven Arts Pictures plc

Seven Arts Pictures plc

January 05, 2011 12:02 ET

Seven Arts Pictures Announces Investment Agreement With BRG Investments

Agreement Expected to Result in Formation of Joint Venture to Produce and Distribute Movies Developed by Seven Arts

HOLLYWOOD, CA--(Marketwire - January 5, 2011) - Seven Arts Pictures Plc (NASDAQ: SAPX) announced today that it and the ultimate successor to its assets, Seven Arts Entertainment Inc. ("Seven Arts"), have entered into an agreement with BRG Investments, LLC ("BRG"), an affiliate of Fletcher Asset Management, for the investment by BRG of up to $30,000,000 in preferred stock of Seven Arts and the formation of a joint venture ("Venture") to, among other things, produce and distribute motion pictures and make investments. 

Under the terms of the agreement, and upon the satisfaction of certain conditions, BRG will contribute cash and other property valued at $10,000,000 to the Venture and will transfer to Seven Arts interests initially representing 17.5% of the Venture. In exchange, Seven Arts will issue to BRG $1,750,000 of its newly created Series A Cumulative Convertible Preferred Stock ("Seven Arts Preferred"), convertible into common stock of Seven Arts at $1.176 per share, subject to adjustments provided in the transaction's documents. The Seven Arts Preferred will bear dividends at the rate of 12% per annum payable in additional Seven Arts common shares under specified conditions. BRG may elect to make additional capital available to the Venture. BRG retains the right to acquire an additional $28,250,000 of Seven Arts Preferred for cash or additional interests in the Venture, but Seven Arts may pay cash to BRG in lieu of issuing Seven Arts Preferred stock.

Peter Hoffman, CEO of Seven Arts, commented, "This agreement represents a milestone achievement in Seven Arts' film production history. The Venture is intended to expand the worldwide distribution and licensing opportunities for Seven Arts' films as well as provide a springboard to bring in-development Seven Arts projects to completion and for theatrical release in 2011."

The purpose of the Venture includes the production and distribution of motion pictures, which may include those developed by Seven Arts. The Venture designates four Seven Arts motion pictures as potential projects for the Venture, including Seven Arts' current completed films, Pool Boys and Nine Miles Down, and Seven Arts' projects in development Neuromancer and Winter Queen. Additionally, Seven Arts expects to handle the worldwide licensing of the Venture projects. All investment and other decisions on behalf of the Venture will be made by a Board of Managers designated by BRG.

Concurrently with the execution of the investment agreement, Fletcher International Ltd., an affiliate of BRG, has acquired approximately 440,000 ordinary shares of SAPX (Seven Arts Pictures plc) at the five-day weighted average trading price on NASDAQ through December 30, 2010, or about $.83 per share. 

The conditions to closing of the initial investment under the investment agreement include completion of the asset transfer and issuance of new common stock of Seven Arts Entertainment to the existing shareholders of Seven Arts, conclusion of certain regulatory matters, board approvals and continuing correctness of Seven Arts warranties. Seven Arts expects the Venture will be formed and closing will occur prior to January 31, 2011. 

The description of the transactions contained in this press release is qualified in its entirety by reference to the transaction's final, executed documents.

Cautionary Information Regarding Forward-Looking Statements:

Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.

Contact Information