A unit of Pioneer Electronic Corp. bought a 10% interest in Carolco Pictures Inc., a leading independent producer of motion pictures, in a $60-million deal announced Thursday.
The purchase gives the Japanese, who already own Columbia Pictures Entertainment, an even greater toehold in Hollywood. At the same time, Carolco will get a major infusion of capital.
The deal calls for Pioneer LDCA Inc., a wholly owned division of the Japanese electronics giant, to receive a new series of preferred shares convertible into 3.24 million common shares at $18.50 a share. The preferred stock will pay a yearly dividend of 5%. Pioneer also is entitled to purchase 300,000 more Carolco shares at $18.50 a share.
Pioneer also gets distribution rights for the upcoming slate of Carolco films in Japan. Pioneer will appoint two members to the Carolco board and will have first-refusal rights to all Carolco titles on laser disc.
Pioneer LDCA is the leading laser-disc distributor in the United States. Its parent is the world leader in laser-disc hardware and software manufacturing and distributing.
The agreement comes just one week after Carolco signed a $30-million deal with Canal Plus, giving the major European communications company a 5% stake in Carolco. President Peter Hoffman said the two agreements will strengthen Carolco's worldwide position in laser disc and cable television, two of the fastest-growing communications markets.
The additional cash from the deals will also make it possible for Carolco Chairman Mario Kassar to pay off about $45 million in bank debt, Hoffman added.
"They are great partners and we are thrilled to be in business with them," Hoffman said.
Carolco, best known for the "Rambo" pictures, produced "Total Recall," a $60-million to $70-million summer release starring Arnold Schwarzenegger. Other upcoming Carolco films include "Terminator II" and "The Doors."
Pioneer, a major Japanese consumer electronics manufacturer, is best known for its line of home and car-based equipment.
One of Pioneer's major Japanese competitors, Sony Corp., purchased Columbia Pictures Entertainment for $3.4 billion last November.