Attached files
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| 8-K - EDCI 8-K DATED 08/24/2010 - EDCI HOLDINGS, INC. | edci8-k_082410.htm |
EXHIBIT 99.1
EDCI
Holdings, Inc. Announces Interim Injunction Settlement with Universal
International Music B.V. on NDU Matter
NEW YORK,
Monday, August 23, 2010 /PRNewswire / -- EDCI Holdings, Inc. (Nasdaq: EDCI)
("the Company" or “EDCI”), the majority shareholder of Entertainment
Distribution Company, LLC (“EDC”), a European provider of supply chain services
to the optical disc market, today announced the following update with regard to
the previously disclosed interim injunction proceedings related to Universal
International Music B.V. (“UIM”), EDC’s largest customer.
As
previously disclosed, in April 2010, UIM indicated to EDC’s Hannover, Germany
subsidiary (“EDC Hannover”) its intent to procure the distribution of certain
units currently serviced in accordance with the EDC / UIM Distribution
Agreement, from third parties before the end of 2010 (the “NDU
Plan”). EDC Hannover believes UIM’s plans would result in the removal
of approximately 40% of the annual distribution volume EDC Hannover previously
has provided to UIM. However, based on correspondence from UIM citing
their legal grounds for their plan, and after consultation with counsel, EDC
Hannover believes that substantially all of such units are part of the
contractually committed volumes under the appropriate agreements, and thus EDC
Hannover determined to pursue legal remedies should UIM order such units from
third parties, including seeking injunctive relief as well as by pursuing
arbitration. In addition, EDC Hannover engaged in discussions with
UIM to determine if there is a commercial solution, but those discussions were
unsuccessful. As the removal of 40% of UIM’s distribution
volume constitutes approximately 37% of EDC Hannover’s (and thus EDC’s) overall
distribution volume, if UIM began to order such volumes from third parties, and
based on the high fixed cost nature of EDC’s operations, UIM’s actions could
have a material adverse effect on EDC’s profitability.
On August
4, 2010, EDC Hannover initiated interim injunction proceedings before the
District Court in Utrecht, the Netherlands, requesting an order to prohibit UIM
from procuring any International NDU Units from a third party pending
arbitration on the matter in accordance with the relevant supply agreements. The
hearing was set for August 18, 2010.
However,
on August 18, 2010, shortly before the hearing, UIM and EDC entered into an
interim settlement agreement initiated by UIM pursuant to which both parties
agreed to expedited arbitration on the matter, UIM agreed not to implement its
NDU Plan pending the conclusion of arbitration on the matter, and EDC has
therefore withdrawn the interim injunction proceedings and agreed to expedited
arbitration. Notwithstanding the interim settlement agreement, both
parties have reserved all rights with regard to final resolution in the
arbitration. In particular, UIM reserved the right to seek as damages in
arbitration any fees paid to EDC during the interim period for the contested
volume.
The
parties are currently establishing a schedule for the arbitration. EDC
does not believe UIM’s claim has merit and intends to vigorously defend its
position in arbitration but at this early stage in these matters, EDC is not
able to assess the likelihood of a favorable outcome.
About
EDCI Holdings, Inc.
EDCI
Holdings, Inc. (Nasdaq: EDCI) is engaged in carrying-out its Plan of Complete
Liquidation and Dissolution (“Plan of Dissolution”) that was approved by EDCI’s
shareholders on January 7, 2010. EDCI is also the majority equity-holder of
Entertainment Distribution Company, LLC (“EDC”), a European provider of supply
chain services to the optical disc market. For more information, please visit
www.edcih.com.
Cautionary
Statement About Forward Looking Statements
This
press release contains forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995 in regards to future sales
volumes and operating results, and are based upon EDCI’s current forecasts,
expectations and assumptions, which are subject to a number of risks and
uncertainties that could cause the actual outcomes and results to differ
materially. Actual results may differ materially from the results
predicted. EDCI assumes no obligation to update any forward-looking
statements and does not intend to do so except where legally
required.
Source:
EDCI Holdings, Inc.
CONTACT:
Matt Behrent (646) 201-9549
Web site:
www.edcih.com