LOS ANGELES, DEC. 8 -- The financially ailing movie company Cannon Group would be blended into a collection of European tourism, banking, hotel and real estate interests under a proposed reorganization made public today.
The conglomerate would include affiliates of Interpart SA of Luxembourg, which owns 40 percent of Cannon. Since last June, Interpart has made huge cash infusions in the battered movie producer and theater owner.
The new entity would be called Cannon-Melia Group. Cannon's longtime top officers, Chairman Menahem Golan and President Yoram Globus, are expected to continue as two of the four executives at the helm of Cannon-Melia, with Cannon as the "senior company," the announcement said.
Cannon also said it expected to have a budget to produce 60 new films for the next three years. And it reported that its $300 million sale of its U.S. and European theaters to a Spanish affiliate of Interpart is "moving forward."
Cannon unveiled the proposed reorganization plan at a press conference today in London. The plan had been postponed until settlement of a securities fraud complaint brought by the Securities and Exchange Commission. Major details of the plan remain to be developed, the announcement said.
The company also said the restructuring is subject not only to shareholder and other approvals but also to "satisfactory and timely resolution" of stockholder suits pending against Cannon.
Several suits were filed last year in U.S. District Court in Los Angeles. They are still in early stages, according to Ernest Kaufmann, attorney in a class action against Cannon, and no settlement talks have been held. The suits allege that Cannon misrepresented its finances and falsely inflated its stock price. The actions predated the SEC's suit, which was filed Nov. 9 simultaneously with a consent agreement signed by Cannon.
Cannon said the formal reorganization proposal will include appointment of an executive committee comprising Golan and Globus, along with Frederic Scheer and Giancarlo Parretti of Interpart, who became Cannon officers and directors this year. The committee will "manage the day-to-day operations of the new Cannon-Melia Group," the announcement said.