IMAX receives acceleration notice on 9 5/8% notes; bondholder asks indenture trustee to file lawsuit

By Caroline Salls

Pittsburgh, Oct. 31 - IMAX Corp. received a notice of acceleration from Catalyst Fund LP II, a holder of more than 33% of IMAX's 9 5/8% senior notes due 2010, according to a Catalyst news release.

According to the release, Catalyst has sent multiple notices of default to IMAX since April, and IMAX has denied that any events of default have occurred and has refused to provide requested financial information for stakeholders.

IMAX said in a company news release that it has complied with the notes indenture covenants and cure periods at all times, and IMAX said it is still in compliance with the notes indenture.

Catalyst said it has asked the notes' indenture trustee to file a lawsuit against IMAX to enforce all remedies under the notes indenture. If the indenture trustee does not file the lawsuit, Catalyst said it will be free to file its own suit against IMAX.

Catalyst said it is also proceeding with a separate oppression remedy application filed against IMAX before a Canadian court, challenging the reliability of IMAX's financial reporting.

After that application was filed, Catalyst said IMAX announced on Oct. 5 that it would restate its past financial reports, which it had just restated in July.

According to the release, IMAX said in August and during its September annual shareholders' meeting that its restatement process was complete.

Catalyst said it has included a New York law expert's opinion in the Canadian application to support Catalyst's argument that IMAX is in default under the notes indenture.

However, IMAX said in its news release that Catalyst's latest attempt to place it in default and disrupt its business is a publicity stunt.

IMAX said Catalyst has been trying to find ways to default the company under the 9 5/8% notes for more than seven months.

"After an unsuccessful attempt to oppose the company's April 2007 consent solicitation to its bondholders, and seven failed attempts to trigger a default under the indenture, Catalyst now purports to accelerate the maturity of the senior notes, despite the fact that it has no rights or grounds to do so under the indenture," IMAX said in its release.

In May, IMAX said Catalyst disregarded the limitations of the notes indenture and began filing lawsuits against the company, including a civil action in New York that claimed that IMAX committed fraud in connection with the solicitation process.

Then, in September, IMAX said Catalyst filed the application in Canada that repeated the allegations made in New York.

IMAX is a Toronto-based motion picture technology company and theater operator.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.