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IMAX bondholder alleges default on 9 5/8% notes despite default waiver
By Caroline Salls
Pittsburgh, May 11 - IMAX Corp. received a notice of default on its $160 million of 9 5/8% senior notes due Dec. 1, 2010 from a single activist bondholder and that bondholder's custodian, according to an 8-K filed with the Securities and Exchange Commission.
As previously reported, IMAX received consents from holders of about 60% of the notes in April to amend the indenture to provide that any failure of the company to comply with reporting covenants between March 30 and May 31, or, at the company's option, June 30, will not constitute a default under the notes indenture.
IMAX also obtained waivers of any past default or event of default resulting from its failure to comply with the financial reporting covenant in the notes indenture.
However, the bondholder's default notice alleges defaults for the company's failure to comply with a reporting covenant and the obligation to provide compliance certificates.
In addition, the bondholder filed a lawsuit against IMAX on May 10 seeking a court declaration that an amendment and waiver consent solicitation was invalid and ineffective and that the company is still in default under the indenture.
IMAX said it believes it is in compliance with the notes indenture and that the lawsuit claims are meritless.
According to the 8-K, the bondholder that sent the notice of default made a previous unsuccessful attempt to convince the indenture trustee to place the company in default, and the bondholder unsuccessfully attempted to organize opposition to the amendment and waiver consent solicitation.
IMAX is a Toronto-based motion picture technology company and theater operator.
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