Seven Arts Pictures plc
OTC Bulletin Board : SAPXF

March 27, 2008 09:38 ET

Seven Arts Pictures plc: Production and Distribution Agreement With UK Financial Services Firm

LONDON, UNITED KINGDOM--(Marketwire - March 27, 2008) - Seven Arts Pictures plc (the Company) (PLUS:SAPP)(OTCBB:SAPXF) announced today that it has entered into an agreement with Zeus Partners LLP a Manchester based financial services firm to raise capital for investment into the production and distribution costs of Seven Arts existing and future motion picture productions and acquisitions (the 'Transaction'). The Company closed the first tranche of this investment on Wednesday 19 March, 2008 and expects to close the balance of the investment before the 2008 fiscal year end June 30th, 2008.

Management expects the net proceeds from the Transaction to be accounted for as, in part, a reduction in the carrying value of the film costs in the balance sheet and in part as a reserve against future film costs included in the transaction. If the maximum amount of the investment is raised by Zeus, the Company anticipates a reduction in its current and future film costs by approximately Pounds Sterling 8,000,000 ($16,000,000 USD).

Management anticipates this Transaction will reduce cost of goods sold (COGS) and increase gross margin by as much as Pounds Sterling 8,000,000 ($16,000,000) in the fifteen months ending 30 June 2008 and the fiscal year ended 30 June 2009, if the Transaction is completed as anticipated. Net proceeds received from the Transaction will be principally used to reduce the Company's indebtedness, for payment of general and administrative costs, and/or to finance investments in future development or acquisition of films.

Information regarding films included in the Transaction:

The Company plans the United States theatrical release of its motion picture Deal (Burt Reynolds/ Shannon Elizabeth) through MGM on April 25, 2008 and the release of its motion picture Noise (Tim Robbins/William Hurt) through ThinkFilm on May 9, 2008. The Company will deliver in its current fiscal year ended 30 June 2008 its motion picture entitled American Summer (Matthew Lillard/Tom Arnold) from the producer of American Pie and its motion picture entitled Autopsy (Robert Patrick).

About Seven Arts:

Seven Arts Pictures plc ('SAP', '7 Arts' or the 'Company') was founded in 2002 as an independent motion picture production and distribution company engaged in the development, acquisition, financing, production, and licensing of theatrical motion pictures for exhibition in domestic (i.e. the United States and Canada) and foreign theatrical markets, and for subsequent worldwide release in other forms of media, including home video and pay and free television.

About Zeus:

Zeus Capital is a rapidly growing investment banking operation based in Manchester and is a member of The Zeus Group.

Zeus Capital provides the highest quality financial advice and execution expertise on all types of transactions, including flotations, mergers and acquisitions, debt restructuring, private placements and fundraisings in public and private markets. We offer a wide range of corporate finance services and strive to give the highest standards of personal attention and professionalism to our corporate clients.

We are uniquely placed to advise companies in both public and private markets giving us the ability to operate a genuine best advice model for all businesses regardless of their size or position in the current market.

Cautionary Information Regarding Forward-Looking Statements:

Included in this news release and other information that we make publicly available from time to time are forward-looking management comments and other statements that reflect management's current outlook for future periods. These statements include, among others, statements regarding the anticipated benefits from the development, production, or acquisition of new film projects as well as anticipated revenue from other sources and which may be critical to the overall revenue and profits of the Company.

These statements and expectations are based on currently available competitive, financial and economic data along with our operating plans, and are subject to future events and uncertainties that could cause anticipated events not to occur or actual results to differ materially from historical or anticipated results. Among the events or uncertainties which could adversely affect future periods are: changes in legal contingencies; issues surrounding labor disputes with unions such as the Screen Actors Guild, the Director's Guild, and the Writer's Guild; our use of estimates and assumptions; and the concentration of our capital stock ownership. The forward-looking statements in this news release should be read in conjunction with the more detailed descriptions of the risk factors located in our Registration Statement filed with the United States Securities and Exchange Commission as amended on Form 20-F (annual report pursuant to Section 13 or 15(d) of the Exchange Act) for the year ended March 31, 2007 and as updated to December 31st, 2007 under Part 1 Item 3 Section 3.D entitled 'Risk Factors'. The Company undertakes no obligation to update or revise any forward-looking statements contained in this release as a result of new information or future events or developments.

The Directors of the Issuer accept responsibility for this announcement.

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