SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 13, 1994
CAROLCO PICTURES INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9264 95-406437
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
Incorporation)
8800 Sunset Boulevard, 90069
Los Angeles, California
(Address of principal
executive offices) (zip code)
Registrant's telephone number, including area code:
(310) 859-8800
N/A
(Former name or former address, if changed since last report)
Exhibit Index at page 6
Page 1 of 6 pages
Item 5. Other Events.
A. Termination of Proposed Merger with LIVE Entertainment Inc.
LIVE Entertainment Inc., a Delaware corporation ("LIVE"),
Carolco Acquisition Corp., a wholly owned subsidiary of LIVE
("CAC") and Carolco Pictures Inc., a Delaware corporation
("Carolco") entered into a Termination Agreement dated as of
October 13, 1994 (the "Termination Agreement") providing for
the termination of that certain Agreement and Plan of Merger
dated as of August 10, 1994 by and among LIVE, CAC and Carolco
(the "Merger Agreement") and the abandonment of the proposed
merger contemplated thereby. The Termination Agreement also
provides for the termination of all rights and obligations of
the parties under the Merger Agreement and the mutual release
by the parties of all claims of any kind or nature, by reason
of or with respect to the Merger Agreement.
B. Consummation of Interim Financing Arrangements.
Carolco has recently consummated certain interim financing
arrangements which provided Carolco with additional cash of
approximately $18.5 million. The arrangements consist of the
following transactions:
1. Carolco Production Services Inc., an indirect wholly-
owned subsidiary of Carolco ("CPSI"), and Chargetex 6,
S.A., an affiliate of the French company Chargeurs
("Chargetex"), entered into a Purchase and Sale Agreement
dated as of October 18, 1994 whereby CPSI transferred to
Chargetex all of its rights in the motion picture Showgirls,
which commenced principal photography on October 23. The
purchase price consisted of (i) the reimbursement of CPSI's
and/or Carolco's direct costs incurred in connection with the
development and production of the motion picture through the
date the rights in the picture were transferred to Chargetex
and (ii) the assumption by Chargetex of all of CPSI's and/or
Carolco's obligations relating to the development and
production of the motion picture. Approximately $8.9 million
was paid by Chargetex upon closing of the transaction with
additional amounts to be paid as accountings are provided to
Chargetex. CPSI will be entitled to a percentage of the
adjusted gross receipts from the exploitation of the completed
motion picture after Chargetex has recouped certain costs and
expenses incurred in connection with the motion picture plus
an additional $10 million. Pursuant to a separate agreement
between CPSI and Chargetex dated as of October 18, 1994, CPSI
was granted an option to purchase at any time until February
28, 1995 a 50% interest in all adjusted gross revenues that may
be derived by Chargetex from the distribution and exploitation
of the motion picture and the ancillary rights therein. CPSI
may exercise such option by paying Chargetex an amount equal to
50% of the direct out-of-pocket expenses (plus interest
thereon) incurred by Chargetex in connection with Showgirls
through the time CPSI exercises such option. Upon exercise of
such option, CPSI will assume an undivided 50% responsibility
for all Chargetex's executory obligations in connection with
Showgirls and will assume and pay 50% of all subsequent costs
relating to the production of the motion picture as and when
due. In addition,
Page 2 of 6 pages
as a condition to CPSI's right to exercise such option, CPSI
will be required to post security reasonably adequate to
Chargetex to secure CPSI's obligations.
2. Pioneer LDCA, Inc. ("PLDCA"), Pioneer LDC, Inc., an
affiliate of PLDCA, and Carolco entered into an Agreement
dated as of October 14, 1994 pursuant to which Carolco received
approximately $6.7 million in payments that will be due under
licenses of Cliffhanger and Terminator 2: Judgment Day in
Japan. PLDCA and its affiliates own approximately 41.2% of
Carolco's voting stock.
3. Carolco and RCS Video International Services B.V. ("RCS")
entered into a Waiver, Assignment and Acknowledgment Agreement
dated as of October 14, 1994 (the "RCS Waiver Agreement")
whereby RCS waived certain conditions subject to which RCS was
required to purchase Carolco 7% Subordinated Notes (the "7%
Notes") in December 1994 under that certain Standby Agreement
by and among Carolco, RCS, Cinepole Productions B.V.
("Cinepole"), Le Studio Canal+ ("Le Studio"), PLDCA and Tele-
Communications, Inc. ("TCI") (the "Standby Agreement"). In
exchange for the accommodations by RCS, the parties agreed to
reduce the principal amount of 7% Notes to be purchased by RCS
under the Standby Agreement from $2.5 million to $1 million and
RCS agreed to purchase a portion of Carolco's interest in the
motion picture Cutthroat Island for $1.5 million on terms that
are no less favorable than those applicable to TCI and Le
Studio in that certain Co-Production Financing Commitment
Agreement dated as of August 9, 1993 by and among Carolco, Le
Studio and TCI.
Carolco obtained a bank loan from Credit Lyonnais Bank
Nederland N.V. ("CLBN") for approximately $1 million, and as
security for such loan, Carolco assigned to CLBN its right to
receive RCS' payment for 7% Notes due in December 1994. RCS
delivered a letter of credit to CLBN to secure its obligation
to purchase 7% Notes. RCS and its affiliates own approximately
5.7% of Carolco's voting stock.
4. Carolco and Le Studio Canal+ (U.S. ) ("Le Studio U.S.")
entered into an Amendment to Exclusive Agency Agreement dated
as of October 14, 1994 whereby Le Studio U.S. prepaid $2
million of sales commissions that are anticipated to be due to
Carolco in late 1994 for serving as the foreign sales agent for
the motion picture Stargate. Cinepole, an affiliate of Le
Studio Canal+, owns approximately 17% of Carolco's voting
stock.
A portion of the funds received from these interim financing
arrangements will be used to fund principal photography on
Cutthroat Island, which commenced in Malta at the end of
October. Carolco continues to work toward completing the steps
required to access the production loan for Cutthroat Island.
In the event Carolco is unable to access the Cutthroat Island
production loan on a timely basis and is unable to enter into
alternative financing arrangement for the production of the
film, it is likely that Carolco will be forced to cease
production of Cutthroat Island and Carolco may be unable to
meet its other obligations and may be unable to continue to
operate as a going concern.
Page 3 of 6 pages
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
The Exhibits listed below are filed as part of this Report.
Exhibit No. Description of Exhibit
10.1 Termination Agreement dated as of October 13,
1994 by and among LIVE Entertainment Inc.,
Carolco Acquisition Corp. and Carolco Pictures
Inc.
10.2 Waiver, Assignment and Acknowledgment Agreement
dated as of October 14, 1994 by and between
Carolco Pictures Inc. and RCS Video
International Services B.V.
99.1 Press Release dated October 13, 1994.
99.2 Press release dated October 24, 1994.
Page 4 of 6 pages
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CAROLCO PICTURES INC.
By: /s/ Robert W. Goldsmith
Robert W. Goldsmith,
Senior Vice President,
General Counsel and Secretary
Date: November 4, 1994
Page 5 of 6 pages
EXHIBIT INDEX
Exhibit No. Description of Exhibit
10.1 Termination Agreement dated as of October 13,
1994 by and among LIVE Entertainment Inc.,
Carolco Acquisition Corp. and Carolco Pictures
Inc.
10.2 Waiver, Assignment and Acknowledgment Agreement
dated as of October 14, 1994 by and between
Carolco Pictures Inc. and RCS Video
International Services B.V.
99.1 Press Release dated October 13, 1994.
99.2 Press release dated October 24, 1994.
Page 6 of 6 pages