De Laurentiis to Sell Domestic Rights to Films

De Laurentiis Entertainment Group disclosed Tuesday that it has begun negotiations to sell off the domestic television and video rights to its film library to British financier Michael W. Stevens. He agreed in March to buy the foreign rights for $69 million.

At the same time, the troubled Beverly Hills movie firm announced that it is unlikely to be able to make the June 1 interest payment due to its noteholders. However, the company said it plans an offer to swap new senior notes and stock for the present 12.5% senior subordinated notes.

Negotiations with Stevens are in the preliminary stages, the company said. When the earlier sale of foreign rights was announced, DEG said the money would go to pay off its $57-million bank debt, with the rest used for working capital.

That sale is expected to be completed in June. The library includes such titles as “Carnal Knowledge,” “Serpico” and “The Producers.”

Meanwhile, De Laurentiis also said Tuesday that a waiver from its lending banks on certain provisions of its revolving credit agreement has expired. The company said it is negotiating with the banks and “anticipates” that the waiver will be extended until the closing of the foreign rights sale.

The company said there is a 30-day grace period before its note payments would be in default. It plans to offer $100 principal amount of 17.5% senior notes and 65 shares of a proposed new class of common stock for each $1,000 principal amount of the existing 12.5% notes.

De Laurentiis noted that it is continuing a restructuring made necessary by “disappointing” box-office results from its motion pictures.

Besides selling foreign television and video rights on the library, the company said it has substantially reduced its overhead, including elimination of its domestic distribution system.

In February, the company’s founder, Dino De Laurentiis, resigned.