Peace Arch, ContentFilm Restructure U.S. DVD Business

LONDON/LOS ANGELES: Peace Arch Entertainment Group and ContentFilm have restructured their North American home-entertainment business, which is led by Berry Meyerowitz, transferring a majority interest in the venture to Meyerowitz’s new outfit, Phase 4 Films.

Peace Arch has sold all of the shares of its North American home-entertainment operations to Phase 4 Films. The transaction includes the sale of all of Peace Arch’s home entertainment operations in the United States and Canada, including Peace Arch’s 50-percent interest in Peace Arch Home Entertainment, a 50/50 joint venture with ContentFilm. Phase 4 assumes approximately $7.75 million of debt currently owed by Peace Arch and its subsidiaries to various parties and relieves Peace Arch of a loan guaranty of $2.95 million. Peace Arch also becomes an 8.8-percent shareholder in Phase 4, with whom it has entered into a long-term distribution agreement. ContentFilm has agreed to contribute its 50-percent interest in Peace Arch Home Entertainment to Phase 4 in consideration for receiving a 22.5-percent stake in the ordinary equity of Phase 4. ContentFilm is being relieved of its obligation to make ongoing capital contributions to Peace Arch Home Entertainment and will not make any further ongoing capital contributions to Phase 4. ContentFilm will distribute its home video library in North America through Phase 4.

"The sale of our home entertainment division allows Peace Arch to focus on its core businesses of high-quality television production and motion picture licensing while at the same time cutting our overhead, reducing our outstanding indebtedness and strengthening our balance sheet,” said John Flock, Peace Arch’s president and COO. “Although home entertainment has been a major contributor to our revenues, the capital required to further grow this division did not align with our overall plans for reorganizing and rebuilding Peace Arch. Nonetheless, we believe that Berry and the Phase 4 team will be able to expand that business as a standalone operation, and we are pleased to be both a shareholder and a supplier of content to the new operation."

John Schmidt, the CEO of ContentFilm, stated: “This is a positive development for ContentFilm. In place of a 50-percent stake in a U.S. joint venture with ongoing capital commitments, we now have a minority stake in a larger North American venture with no ongoing capital commitments. We are believers in Berry Meyerowitz and his team and we are pleased that Berry has acquired the business with the support of ContentFilm and his new financiers. We are looking forward to working with Berry to build his business and ultimately realise value for our equity stake.”