Image / Nyx: The Soap Opera Continues

Mar. 5.09 | About: Image Entertainment, (DISK)

Image Entertainment Inc. (OTC:DISK), a leading independent licensee, producer and distributor of home entertainment programming in North America, recently announced that it had informed Nyx Acquisitions, Inc., an affiliate of Q-Black, LLC and Joe Q. Bretz, that Nyx was in breach of their November 2008 merger agreement. Under that agreement, set to go into effect this first quarter, 2009, Image shareholders, who voted to approve the deal, were to receive $2.75/share.

It's all been looking very "iffy" - but now seems to now "getting better." Until the next relationship hiccup, that is. A real stock market soap opera.

Yesterday, under the continuing threat of Image terminating the agreement for cause, Image agreed that if Nyx, by March 6, 2009, deposits the remaining $200,000 of a half-million dollar additional deposit fee relating to completion of the merger, its completion date would be extended to March 20, 2009 - while Nyx comes up with the necessary funds to finalize the deal.

The ongoing saga has sent Image shareholders on a roller coaster ride, to say the least, with each modification and extension.

This is not the first time that Image has found itself in troubling merger territory. A 2007 planned-merger between BTP Acquisition Company and Image ultimately became entrenched in an elongated "each side blaming the other" merger fiasco, which, in the end, fell apart in early 2008 - leaving shareholders to raise serious questions in regard to the affair.

Also, a few years back, Image was the target of a hostile takeover attempt from Lion's Gate (NYSE:LGF), in which Lion's Gate sent a 10-page a letter to Image stockholders urging the election of six independent board members "to replace Image's current directors." Lion's Gate made two separate offers over 13 months for $4/share - which Image decided was "inadequate" and accused Lion's Gate of keeping Image's share price from increasing due to its actions, hoping to have Image shareholders accept the $4/share offer.

Furthermore, in response to Nyx Acquisitions' November 2008 agreement to buy Image for $2.75/share, certain Image shareholders objected to that offer on the basis that it was too low, hiring a law firm to investigate Image for potential breaches of fiduciary trust and other violations of state law by Image's Board of Directors.

So, the latest merger saga, this time with Nyx, may come as not much of a surprise to shareholders or observers of all things Image Entertainment. It's incredibly aggravating nonetheless - although it would certainly seem to make for great day-trading.

Could it could be a similar BTP Acquisition-type love in the afternoon quarrel all over again? Shareholder deja vu, indeed.

The only very positive common thread running through Image merger infamy, as consolation to shareholders, is that at least through all of the battling, Lion's Gate, BTP and Nyx suitors all prized Image at a minimum of $2.75/share, and up through $4.68/share (BTP). Image had also entertained serious potential offers (in the $2-$3/share range) from two additional suitors in 2008 - but had decided to go with the Nyx deal instead.

So today's closing stock price of $1.14, from that perspective, is very low (discounting current broad market conditions).

One hopes, for Image shareholders' sake, that Nyx Acquisitions, Inc. makes good from its end. Obviously, Image Entertainment can attract suitors - which speaks nicely as to its value on various business levels.

Fellas- can't you all just get along?

Stay tuned... and certainly, don't change that channel.