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Film Roman, Pentamedia modify deal

Our Bureau

CHENNAI, May 3

FILM Roman Inc, has announced that it has reached an agreement with Pentamedia Graphics Ltd to modify the transaction between them. As per the new terms, Pentamedia will be issued one new share of Film Roman's common stock for each $1.17 in value it rece ives from Pentamedia.

On completion of the transaction, Pentamedia will own up to 49.94 per cent of Film Roman's common stock, with an overall valuation of up to $10,000,000. However, as per the original terms, Pentamedia was to purchase 60 per cent of the newly-issued common stock of Film Roman for $15,000,000.

The specifics of the restructured transaction were being finalised by the two companies and any necessary approvals would be sought in the near future, said a Film Roman press release.

In a joint statement, Mr V. Chandrasekaran, Chief Executive Officer of Pentamedia, and Mr John Hyde, Chief Executive Officer of Film Roman, said: ``We have restructured the agreement between us and look forward to finalising the transaction so that we ca n start building on the strengths of our respective companies.''

The new development follows a recent filing by Film Roman with the Securities and Exchange Commission stating that Pentamedia was in material breach of the Stock Purchase Agreement signed January 31, 2001.

Film Roman, at Pentamedia's request, extended the payment date from the original date of March 26, 2001, until April 13, 2001. However, Pentamedia failed to make such payment.

Pentamedia Graphics informed Film Roman in early March that it was considering alternatives to restructure the fixed payment under the SPA, following drastic fall in Pentamedia's share price and the cancellation on March 5, 2001, by Lazard of Pentamedia' s $35,000,000 offering of global depositary receipts.

In an attempt to restructure the entire deal, Pentamedia made a series of proposals lowering the initial cash to be paid and extending the remainder of the cash payments into the future.

Finally, Pentamedia indicated that it could not pay any cash and proposed to change the all-cash payment to a payment consisting entirely of global depositary receipts of Pentamedia, which trade on the Luxembourg Exchange, with no guaranteed floor on the market value of the GDRs. The Film Roman board of directors had rejected this offer as not in the best interests of its shareholders, Mr Hyde stated in the SEC filing.