Remember Relativity Media’s blistering attack the other day on VII Peaks Capital? This was the one we ran in full as CEO Ryan Kavanaugh charged the financial services firm with having reneged on an agreement to contribute $30 million to his effort to buy the studio’s senior debt.
Well, as Saturday Night Live’s Emily Litella used to say, “never mind.” The two are trying to resolve their differences, Relativity told the U.S. Bankruptcy Court in New York today. It has it dropped its adversary proceeding against VII Peaks which was on the court schedule to be argued yesterday but surprisingly was not raised.
And Relativity wants to eat its words. More precisely, according to the filing, it “has agreed to contact verbally the media outlets that ran a statement Relativity made…and ask those media outlets to retract the Statement.”
That seems to mean Relativity takes back its allegation that VII Peaks “is attempting to obfuscate its own failure to perform by shifting responsibility to the investors.” The studio also apparently takes back its charge that VII Peaks likely would “concoct some claim of fraud in an effort to disguise the simple fact that they could not close. We have also learned this is not the first time they have misrepresented their capital capabilities and oversight.”
In addition to Relativity’s effort to scuttle its PR initiative, it has agreed to terms for continuing its discussions with VII Peaks. The San Francisco-based firm has agreed to put $3 million into a trust account by Friday night pending “the commencement of face-to-face negotiations” between the two sides — which must begin by November 4 — according to the filing.
The companies “agree to negotiate in good faith regarding a potential settlement,” ahead of a November 13 court hearing, if needed.
Relativity said in its earlier complaint to the Bankruptcy Court that on October 1 VII Peaks signed an Equity Commitment Letter that agreed to supply $30 million in cash to Kavanaugh’s war chest by October 20.
But on October 14 the investment firm said it “believed certain conditions existed to its obligation,” Relativity lawyer Van Durrer II told the court. The conditions would bar Relativity from issuing debt that would be more senior to VII Peaks. It wanted to raise its board representation to two seats from one. VII Peaks also asked to finance P&A for five domestic films a year, and to service Relativity’s movie and music libraries.
Relativity told the court that the conditions are not in the Commitment Letter and “are inchoate on their face.”
After talking to VII Peaks, it became clear that the firm “did not intend to follow through” with its funding, which put Relativity’s reorganization plan “in serious jeopardy,” Van Durrer said.